Dragon Mining Limited — Interim / Quarterly Report 2012

Dec 12, 2011

==> picture [275 x 71] intentionally omitted <==

==> picture [436 x 436] intentionally omitted <==

The board of directors (the “Board”) of Samson Paper Holdings Limited (the “Company”) is pleased to announce the unaudited condensed consolidated interim results of the Company and its subsidiaries (the “Group”) for the six months ended 30 September 2011 together with comparative figures for the corresponding period in 2010, and the unaudited condensed consolidated balance sheet of the Group as at 30 September 2011 with audited comparative figures as at 31 March 2011 as follows:

CONDENSED CONSOLIDATED PROFIT AND LOSS ACCOUNT

Note Revenue 3 Cost of sales Gross profit Other gains and income, net Selling expenses Administrative expenses Other operating expenses Operating profit 4 Finance costs Profit before taxation Taxation 5 Profit for the period Attributable to: Owners of the parent Non-controlling interests Earnings per share — Basic 6 — Diluted 6 Interim dividend per share Interim dividends 7

Unaudited Six months ended 30 September 2011 2010 HK$’000 HK$’000 2,676,451 2,303,948 (2,410,586) (2,075,718) 265,865 228,230 11,402 15,252 (94,220) (86,780) (87,966) (84,183) (2,332) (3,887) 92,749 68,632 (41,533) (24,483) 51,216 44,149 (10,547) (10,440) 40,669 33,709 40,479 34,701 190 (992) 40,669 33,709 (restated) HK3.4 cents HK3.2 cents HK3.2 cents HK2.7 cents HK0.5 cent HK1.0 cent 6,366 6,366

Interim Report 11/12

1

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Profit for the period Other comprehensive income Currency translation differences Other comprehensive income for the period, net of tax Total comprehensive income for the period Total comprehensive income attributable to: — Owners of the parent — Non-controlling interests	Unaudited Six months ended 30 September 2011 2010 HK$’000 HK$’000 40,669 33,709 11,862 26,137 11,862 26,137 52,531 59,846 52,666 60,456 (135) (610) 52,531 59,846

2

Samson Paper Holdings Limited

CONDENSED CONSOLIDATED BALANCE SHEET

As at 30 September 2011

Note Non-current assets Property, plant and equipment 8 Prepaid premium for land leases 8 Investment properties Intangible assets 9 Available-for-sale financial assets Non-current deposit Deferred tax assets Current assets Inventories Accounts receivable, deposits and prepayments 10 Financial assets at fair value through profit or loss Taxation recoverable Restricted bank deposits Bank balances and cash Current liabilities Accounts payable and accruals 11 Trust receipt loans 12 Taxation payable Borrowings 12 Net current assets Total assets less current liabilities Equity Equity attributable to owners of the parent Share capital 13 Reserves Proposed dividend Non-controlling interests Total equity Non-current liabilities Borrowings 12 Deferred tax liabilities	Unaudited 30 September 2011 HK$’000 1,358,699 42,836 150,000 43,724 4,327 15,228 7,216 1,622,030 818,277 1,575,287 8,433 2,881 127,280 534,027 3,066,185 1,189,073 871,812 15,574 583,004 2,659,463 406,722 2,028,752 127,315 1,118,395 6,366 1,124,761 1,252,076 10,009 1,262,085 709,629 57,038 766,667 2,028,752	Audited 31 March 2011 HK$’000 1,330,148 42,343 150,000 45,168 4,327 14,863 7,195 1,594,044 836,973 1,431,250 6,282 6,004 152,258 682,724 3,115,491 1,362,261 815,841 15,239 520,572 2,713,913 401,578 1,995,622 127,315
		1,072,095 12,731
		1,084,826 1,212,141 10,144 1,222,285 720,986 52,351 773,337 1,995,622

3

Interim Report 11/12

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 September 2011

Net cash outflow from operating activities Net cash outflow from investing activities Net cash inflow from financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at 1 April Effect of change in exchange rate on cash and cash equivalents Cash and cash equivalents at 30 September Analysis of balances of cash and cash equivalents Bank balances and cash Bank overdrafts

Unaudited Six months ended 30 September 2011 2010 HK$’000 HK$’000 (251,633) (124,529) (35,107) (155,597) 133,029 330,181 (153,711) 50,055 680,083 461,044 6,018 5,452 532,390 516,551 534,027 518,224 (1,637) (1,673) 532,390 516,551

4

Samson Paper Holdings Limited

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 September 2011

Unaudited

			Unaudited	Unaudited
At 1 April 2010 Comprehensive income Profit for the period Other comprehensive income Currency translation differences Total comprehensive income Issuance of ordinary shares 2009–2010 final dividend payable Proposed 2010–2011 interim dividend At 30 September 2010 At 1 April 2011 Comprehensive income Profit for the period Other comprehensive income Currency translation differences Total comprehensive income 2010–2011 final dividend payable Reserves Proposed 2011–2012 interim dividend At 30 September 2011	Attributable to ow		ners of theparent Retained earnings Subtotal HK'000 HK'000 583,273 1,027,346 34,701 34,701 — 25,755 34,701 60,456 — 580 (12,731) (12,731)		Non- controlling interests HK'000 10,797 (992) 382 (610) — —	Total equity HK'000 1,038,143 33,709 26,137 59,846 580 (12,731)
	Share capital HK'000 63,585 — — — 72 —	Other reserves HK'000 380,488 — 25,755 25,755 508 —	Retained earnings HK'000 583,273 34,701 — 34,701 — (12,731)
	63,657 —	406,751 —	598,877 6,366	1,069,285 6,366	10,187 —	1,079,472 6,366
	63,657 127,315 — — — —	406,751 448,242 — 12,187 12,187 —	605,243 636,584 40,479 — 40,479 (12,731)	1,075,651 1,212,141 40,479 12,187 52,666 (12,731)	10,187 10,144 190 (325) (135) —	1,085,838 1,222,285 40,669 11,862 52,531 (12,731)
	127,315 —	460,429 —	657,966 6,366	1,245,710 6,366	10,009 —	1,255,719 6,366
	127,315	460,429	664,332	1,252,076	10,009	1,262,085

Other reserves comprise share premium, assets revaluation reserve, capital reserve and exchange fluctuation reserve.

Interim Report 11/12

5

Notes

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. The Group is also engaged in the trading of consumable aeronautic parts and marine services. Detailed analysis of these business segments are set out in note 3 to the accounts.

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 primary listing on The Stock Exchange of Hong Kong Limited.

These unaudited condensed consolidated interim accounts are presented in Hong Kong dollars, unless otherwise stated. These unaudited condensed consolidated interim accounts have been approved for issue by the Board of Directors on 28 November 2011.

2. BASIS OF PREPARATION AND ACCOUNTING POLICIES

These unaudited condensed consolidated interim accounts for the six months ended 30 September 2011 have been prepared in accordance with Hong Kong Accounting Standard (“HKAS”) 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants.

These unaudited condensed consolidated interim accounts should be read in conjunction with the annual consolidated accounts for the year ended 31 March 2011, which have been prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”).

Except as described below, the accounting policies adopted are consistent with those of the annual consolidated accounts for the year ended 31 March 2011, as described in those annual consolidated accounts.

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.

The following amendment to standard is mandatory for the first time for the financial year beginning 1 April 2011 and adopted by the Group::

• HKAS 24 (Revised), “Related Party Disclosures” is effective for annual period beginning on or after January 2011. It introduces an exemption from all of the disclosure requirements of HKAS 24 for transactions among government related entities and the government. Those disclosures are replaced with a requirement to disclose:

• The name of the government and the nature of their relationship;

• The nature and amount of any individually significant transactions; and

• The extent of any collectively-significant transactions qualitatively or quantitatively.

It also clarifies and simplifies the definition of a related party.

• Amendment to HKAS 34 ‘Interim financial reporting’ is effective for annual periods beginning on or after 1 January 2011. It emphasises the existing disclosure principles in HKAS 34 and adds further guidance to illustrate how to apply these principles. Greater emphasis has been placed on the disclosure principles for significant events and transactions. Additional requirements cover disclosure of changes to fair value measurement (if significant), and the need to update relevant information from the most recent annual report. The change in accounting policy only results in additional disclosures.

6

Samson Paper Holdings Limited

The following amendments and interpretations to existing standards effective in 2011 but not relevant to the Group:

• Amendment to HKAS 32 ‘Classification of rights issues’ is effective for annual periods beginning on or after 1 February 2010. This is not currently applicable to the Group, as it has not made any rights issue.

• Amendment to HK(IFRIC) — Int-14 ‘Prepayments of a minimum funding requirement’ is effective for annual periods beginning on or after 1 January 2011. This is not currently relevant to the Group, as it does not have a minimum funding requirement.

• HK(IFRIC) — Int 19 ‘Extinguishing financial liabilities with equity instruments’ is effective for annual periods beginning on or after 1 July 2010. This is not currently applicable to the Group, as it has no extinguishment of financial liabilities replaced with equity instruments currently.

• Third improvements to Hong Kong Financial Reporting Standards (2010) were issued in May 2010 by the HKICPA, except for amendment to HKAS 34 ‘Interim financial reporting’ as disclosed above and the clarification to allow the presentation of an analysis of the components of other comprehensive income by item within the notes, all are not currently relevant to the Group. All improvements are effective in the financial year of 2011.

The Group has not adopted any new HKFRSs that are not yet effective for the current accounting period.

3. SEGMENT INFORMATION

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 nature of products and services. 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 accounts.

As 30 September 2011, the Group is organised on a worldwide basis into three main business segments:

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

• (2) Paper manufacturing: manufacturing of paper products in Shandong, the People’s Republic of China (the “PRC”);

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

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

Interim Report 11/12

7

The segment information for the six months ended 30 September 2011 and as at 30 September 2011 are as follows:

SEGMENT RESULTS 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 period OTHER PROFIT AND LOSS ITEMS Depreciation Amortisation charges SEGMENT ASSETS Reportable segment assets Taxation recoverable Deferred tax assets Corporate assets Total assets	Six Paper Trading HK$’000 2,154,439 (90,185) 2,064,254 47,657 6,024 521 Paper Trading HK$’000 3,132,171	Unaudited months ended 30 September 20 Paper Manufacturing Others HK$’000 HK$’000 717,062 65,595 (162,229) (8,231) 554,833 57,364 48,202 1,302 17,565 3,525 15 36 Unaudited As at 30 September 2011 Paper Manufacturing Others HK$’000 HK$’000 1,373,707 171,598	11 Total HK$’000 2,937,096 (260,645)
			2,676,451
			97,161 (4,412)
			92,749 (41,533)
			51,216 (10,547)
			40,669
			27,114
			572
			Total HK$’000 4,677,476 2,881 7,216 642
			4,688,215

8 Samson Paper Holdings Limited

The segment information for the six months ended 30 September 2010 and as at 31 March 2011 are as follows:

SEGMENT RESULTS 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 period OTHER PROFIT AND LOSS ITEMS Depreciation Amortisation charges SEGMENT ASSETS Reportable segment assets Taxation recoverable Deferred tax assets Corporate assets Total assets	Paper Trading HK$’000 2,055,275 (33,381) 2,021,894 52,687 3,699 352 Paper Trading HK$’000 3,245,252	Unau Six months ended 3 Paper Manufacturing HK$’000 318,566 (91,212) 227,354 20,115 6,808 6 Aud As at 31 M Paper Manufacturing HK$’000 1,280,522	dited 0 September 2010 Others HK$’000 56,611 (1,911) 54,700 1,189 4,019 36 ited arch 2011 Others HK$’000 170,428	Total HK$’000 2,430,452 (126,504)
				2,303,948
				73,991 (5,359)
				68,632 (24,483)
				44,149 (10,440)
				33,709
				14,526
				394
				Total HK$’000 4,696,202 6,004 7,195 134
				4,709,535

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

9

Interim Report 11/12

An analysis of the Group’s revenue for the period by geographical areas is as follows:

Hong Kong The PRC_(note)_ Singapore Korea Malaysia	Unau Six months ende 2011 HK$’000 751,492 1,648,455 52,914 192,187 31,403 2,676,451	dited d 30 September 2010 HK$’000 887,363 1,226,163 50,112 113,513 26,797
		2,303,948

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

4. OPERATING PROFIT

Operating profit is stated after crediting and charging the following:

Crediting Interest income Provision for impairment on receivables written back Charging Depreciation of property, plant and equipment Amortisation of prepaid premium for land leases Amortisation of intangible assets Provision for impairment on inventories Provision for impairment on receivables	Unau Six months ende 2011 HK$’000 4,607 285 27,114 287 285 2,279 2,558	dited d 30 September 2010 HK$’000 3,543 7,382
		14,526 119 275 2,263 4,559

10 Samson Paper Holdings Limited

5. TAXATION

Hong Kong profits tax has been provided for at the rate of 16.5% (2010: 16.5%) on the estimated assessable profit for the period. Taxation on overseas profits has been calculated on the estimated assessable profit for the period at the rates of taxation prevailing in the countries in which the Group operates.

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

Hong Kong profits tax Overseas taxation Deferred taxation relating to origination and reversal of temporary differences	Unau Six months ende 2011 HK$’000 1,495 4,386 4,666 10,547	dited d 30 September 2010 HK$’000 4,085 1,569 4,786
		10,440

6. EARNINGS PER SHARE

On 20 January 2011, the Company issued 636,570,381 new ordinary shares through a bonus issue. The number of shares used for prior year calculations of earnings per share shown below have been adjusted for bonus issue in order to provide a comparable basis for the current year..

(a) Basic

Basic earnings per share is calculated by dividing the profit attributable to the owners of the parent less preference dividends of HK$1,321,000 (2010: HK$2,641,000) by the weighted average number of 1,141,076 (adjusted 2010: 1,009,011) ordinary shares in issue during the period.

Profit attributable to owners of the parent less preference dividend_(HK$’000) Weighted average number of ordinary shares in issue(’000)_ Basic earnings per share	Unau Six months ende 2011 39,158 1,141,076 HK3.4 cents	dited d 30 September 2010 (restated) 32,060
		1,009,011
		HK3.2 cents

Interim Report 11/12

11

(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 issued convertible non-voting preference shares in 2008 which are assumed to be converted into ordinary shares. The Company has a share option scheme but no share option (2010: Nil) has been granted under the scheme.

Profit attributable to owners of the parent_(HK$’000) Weighted average number of ordinary shares in issue(’000) Adjustments for: — Assumed conversion of preference shares(’000) Weighted average number of shares for diluted earnings per share(’000)_ Diluted earnings per share	Unau Six months ende 2011 40,479 1,141,076 132,065 1,273,141 HK3.2 cents	dited d 30 September 2010 (restated) 34,701
		1,009,011 264,130
		1,273,141
		HK2.7 cents

7. INTERIM DIVIDENDS

Proposed — HK$0.005 (2010: HK$0.01) per ordinary share Proposed — HK$0.005 (2010: HK$0.01) per preference share	Unau Six months ende 2011 HK$’000 5,706 660 6,366	dited d 30 September 2010 HK$’000 5,045 1,321
		6,366

At a meeting held on 28 November 2011, the Directors proposed an interim dividend of HK$0.005 per share. This proposed dividend is not reflected as a dividend payable in these condensed accounts, but will be reflected as an appropriation of retained earnings for the year ending 31 March 2012.

12 Samson Paper Holdings Limited

8. PROPERTY PLANT AND EQUIPMENT AND PREPAID PREMIUM FOR LAND LEASES

Six months ended 30 September 2010 Opening net book amount at 1 April 2010 Currency translation differences Additions Disposals Depreciation and amortisation Closing net book amount at 30 September 2010 Six months ended 30 September 2011 Opening net book amount at 1 April 2011 Currency translation differences Additions Disposals Depreciation and amortisation Closing net book amount at 30 September 2011	Property, plant and equipment HK$’000 429,090 5,396 17,498 (6,593) (15,453) 429,938 1,090,384 18,176 28,345 (12,554) (27,580) 1,096,771	Unaudited Prepaid premium for land leases HK$’000 41,884 522 — — (434) 41,972 42,343 780 — — (287) 42,836	Construction in progress HK$’000 344,828 5,906 205,781 — —
			556,515
			239,764 4,857 17,307 — —
			261,928

9. INTANGIBLE ASSETS

Six months ended 30 September 2010 Opening net book amount at 1 April 2010 Currency translation differences Addition Amortisation Closing net book amount at 30 September 2010 Six months ended 30 September 2011 Opening net book amount at 1 April 2011 Currency translation differences Amortisation Closing net book amount at 30 September 2011	Unaudited HK$’000 41,280 2,354 313 (275)
	43,672
	45,168 (1,159) (285)
	43,724

13

Interim Report 11/12

10. ACCOUNTS RECEIVABLE, DEPOSITS AND PREPAYMENTS

Trade receivables — net of provision Other receivables, deposits and prepayments	Unaudited 30 September 2011 HK$’000 1,256,089 319,198 1,575,287	Audited 31 March 2011 HK$’000 1,080,041 351,209
		1,431,250

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

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

The aging analysis of trade receivables is as follows:

Current to 60 days 61 to 90 days Over 90 days	Unaudited 30 September 2011 HK$’000 879,271 210,063 166,755 1,256,089	Audited 31 March 2011 HK$’000 835,826 156,488 87,727
		1,080,041

There was no concentration of credit risk with respect to trade receivables as the Group had a large number of customers, which were widely dispersed within Hong Kong, the PRC and other countries.

11. ACCOUNTS PAYABLE AND ACCRUALS

Trade and bills payables Accruals and other payables Dividend payable	Unaudited 30 September 2011 HK$’000 1,050,657 125,685 12,731 1,189,073	Audited 31 March 2011 HK$’000 1,208,880 153,381 —
		1,362,261

The carrying values of the gross accounts payable and accruals approximate their fair values.

14 Samson Paper Holdings Limited

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

Current to 60 days 61 to 90 days Over 90 days	Unaudited 30 September 2011 HK$’000 577,029 152,478 321,150 1,050,657	Audited 31 March 2011 HK$’000 812,794 208,759 187,327
		1,208,880

12. BORROWINGS

Non-current Bank loans — unsecured Bank loans — secured Finance lease liabilities Total non-current borrowings Current Trust receipt loans — unsecured Trust receipt loans — secured Bank loans — unsecured Bank loans — secured Bank overdrafts Finance lease liabilities Total current borrowings Total borrowings	Unaudited 30 September 2011 HK$’000 633,290 74,398 1,941 709,629 616,964 254,848 871,812 535,648 44,941 1,637 778 583,004 1,454,816 2,164,445	Audited 31 March 2011 HK$’000 631,700 89,034 252
		720,986
		600,803 215,038
		815,841
		478,086 39,171 2,641 674
		520,572
		1,336,413
		2,057,399

Interim Report 11/12

15

At 30 September 2011, the Group’s bank loans, bank overdrafts and trust receipt loans were repayable as follows:

Within one year In the second year In the third to fifth years inclusive	Bank ov Unaudited 30 September 2011 HK$’000 1,637 — — 1,637	erdrafts Audited 31 March 2011 HK$’000 2,641 — — 2,641	Bank Unaudited 30 September 2011 HK$’000 580,589 319,419 388,269 1,288,277	loans Audited 31 March 2011 HK$’000 517,257 366,191 354,543 1,237,991	Trust receipt loans Unaudited Audited 30 September 2011 31 March 2011 HK$’000 HK$’000 871,812 815,841 — — — — 871,812 815,841

The effective interest rates at the balance sheet date on bank loans, bank overdrafts and trust receipt loans ranged from 1.4% to 9.9% per annum (31 March 2011: 1.8% to 9.5% per annum).

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

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 After 5 years Future finance charges on finance leases Present value of finance lease liabilities The present value of finance lease liabilities is as follows: Not later than 1 year Later than 1 year and no later than 5 years After 5 years	Unaudited 30 September 2011 HK$'000 808 1,468 518 2,794 (75) 2,719 Unaudited 30 September 2011 HK$'000 778 1,433 508 2,719	Audited 31 March 2011 HK$’000 717 264 —
		981 (55)
		926
		Audited 31 March 2011 HK$'000 674 252 —
		926

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

16 Samson Paper Holdings Limited

13. SHARE CAPITAL

Authorised: Ordinary shares At the beginning and the end of period/year Convertible non-voting preference shares At the beginning and the end of period/year Total Issued and fully paid: Ordinary shares At the beginning of period/year Exercise of bonus warrants Issuance of bonus shares At the end of period/year Convertible non-voting preference shares At the beginning and end of period/year Total	Number of shares Unaudited 30 September 2011 1,456,913,987 143,086,013 1,600,000,000 1,141,075,827 — — 1,141,075,827 132,064,935 1,273,140,762	of HK$0.10 each Audited 31 March 2011 1,456,913,987 143,086,013 1,600,000,000 503,779,117 726,329 636,570,381 1,141,075,827 132,064,935 1,273,140,762	Share capital Unaudited Audited 30 September 31 March 2011 2011 HK$’000 HK$’000 145,691 145,691 14,309 14,309 160,000 160,000 114,108 50,378 — 73 — 63,657 114,108 114,108 13,207 13,207 127,315 127,315	Share capital Unaudited Audited 30 September 31 March 2011 2011 HK$’000 HK$’000 145,691 145,691 14,309 14,309 160,000 160,000 114,108 50,378 — 73 — 63,657 114,108 114,108 13,207 13,207 127,315 127,315
				14,309
				160,000
				50,378 73 63,657
				114,108
				13,207
				127,315

The shareholders of the Company adopted a share option scheme to comply with the requirements of Chapter 17 of the Listing Rules. As at 30 September 2011 and 31 March 2011, no share option was granted or outstanding.

14. BANK GUARANTEES

As at 30 September 2011, the Company continued to provided corporate guarantees on the banking facilities granted to the Group’s subsidiaries. The amount of such facilities utilised by the subsidiaries as at 30 September 2011 amounted to HK$2,162,000,000 (31 March 2011: HK$2,056,000,000).

15. COMMITMENTS

(a) Capital commitments

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

Property, plant and equipment Contracted but not provided for	Unaudited 30 September 2011 HK$’000 356,871	Audited 31 March 2011 HK$’000 351,935

Interim Report 11/12

17

• (b) As at 30 September 2011, the Company had commitment in respect of the injection of capital into certain subsidiaries in the PRC amounted to approximately HK$93,920,000 (31 March 2011: HK$93,920,000).

(c) Operating lease commitments

The Group leases various warehouses under non-cancellable operating lease agreements. The majority of lease agreements are renewable at the end of the lease period at market rate.

As at 30 September 2011, the future aggregate minimum lease payments under non-cancellable operating leases are as follows:

No later than one year Later than one year and not later than five years Later than five years	Unaudited 30 September 2011 HK$’000 24,063 5,202 2,240 31,505	Audited 31 March 2011 HK$’000 17,779 9,754 —
		27,533

(d) Operating lease receivable

The Group leases out various warehouses under non-cancellable operating leases agreement. The lease terms are 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 minimum lease payments receivable under non-cancellable operating leases are as follows:

No later than one year Later than one year and not later than five years	Unaudited 30 September 2011 HK$’000 6,032 9,805 15,837	Audited 31 March 2011 HK$’000 7,214 12,074
		19,288

16. CHARGE OF ASSETS

As at 30 September 2011, trust receipt loans of HK$254,848,000 (31 March 2011: HK$215,038,000) and bank loans of HK$119,339,000 (31 March 2011: HK$128,205,000) were secured by legal charges on the Group’s land and building and investment properties aggregate net book amount of approximately HK$289,218,000 (31 March 2011: HK$291,443,000).

18 Samson Paper Holdings Limited

17. RELATED PARTY TRANSACTIONS

Significant related party transactions, which were carried out in the normal course of the Group’s business are as follows:

(a) Purchase of merchandise from a related company	Unau Six months ende 2011 HK$’000 203,872	dited d 30 September 2010 HK$’000 —

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

(b) Payables to a related company The above transactions were conducted at negotiated prices between transacting parties. (c) Key management compensation Key management compensation	Unau Six months ende 2011 HK$’000 78,168 Unau Six months ende 2011 HK$’000 6,588	dited d 30 September 2010 HK$’000 —
		dited d 30 September 2010 HK$’000 6,452

19

Interim Report 11/12

MANAGEMENT DISCUSSION AND ANALYSIS

Economy Overview

During the period under review, the economic growth in the Hong Kong Special Administrative Region (“Hong Kong”) and the People’s Republic of China (the “PRC”) continued to boom. In the PRC market, the gross domestic product (“GDP”) growth rate was 9.4% during the first three quarters of 2011. According to the International Monetary Fund (“IMF”), the vibrant investment sentiment will continue to fuel rapid economic growth in the PRC. China will become the main engine for the world’s economic growth. It is expected that China’s real GDP growth rate on a year-round basis will reach 9.5%. Meanwhile, in Hong Kong, the real GDP growth rate in the first three quarters of 2011 was 4.6%, and the annual growth is anticipated to reach 5.9%. Stable performance was achieved.

Although Hong Kong and China showed stable economic performance during the period under review, the global market is facing a number of uncertainties, which include a slowdown in investment along with the credit crunch policy put forward by the PRC government, a brief interruption in the manufacturing supply chain as a result of the earthquake and the nuclear radiation crisis in Japan in March this year, the debt crisis threat in Europe is remained unsolved, as well as heightened concerns about the global double-dip economic recession. Given this scenario, market sentiment has become increasingly cautious and heavy pressure was imposed on the business activities of various industries.

Printing and Paper Industry

Amid this challenging business landscape, customers were more cautious in procurement and reduced stocks in their daily operation. This further depressed the demand for paper products. In book printing paper sector, during the period under review, with the commission and production of large-scale paper manufacturing machines in a number of paper mills in the PRC, confidence in the market was weakened. Under this imbalance supply and demand situation, prices of book printing papers and packaging boards became soften in the second quarter during the period under review. Under the situation of tightening monetary policy in the PRC and cautious market sentiment, the growth in demand was slowed down, particularly in the book printing paper sector. This led to intensified market competition. Some of the peer competitors attempted to maintain their market share at the expense of profit margins. As such, margin and profitability of the Group’s paper trading business were both under pressure.

Operations Review

Financial Performance

For the six months ended 30 September 2011, against the backdrop of tough operating environment, the Group registered a growth in both turnover and profit attributable to shareholders. Thanks to the adoption of flexible sales strategy, extensive sales network and strong growth in paper manufacturing business, our turnover rose by 16.2% from HK$2,303,948,000 in the same period last year to HK$2,676,451,000. Profit attributable to shareholders was HK$40,479,000, which had an increase of 16.7% over last year’s HK$34,701,000. During the period under review, the gross margin for the Group’s paper trading business was put under pressure by a short-term surge in the domestic paper supply, which has not yet been timely digested by the market. However, as the Group’s paper mill in Shandong, the PRC generated greater sales contribution during the period under review, and profits from paper manufacturing business were generally higher than those from paper trading business, the gross margin impact was partially offset. Accordingly, the Group’s overall gross profit margin was maintained at 9.9%, whereas net profit margin was maintained at 1.5%, which was a level similar to the same period last year. Earnings per share rose by 6.2% to 3.4 cents (2010/2011: 3.2 cents).

20 Samson Paper Holdings Limited

The Group has always made unwavering efforts to put stringent cost control measures in place. These efforts have been fully reflected in the period under review. The Group streamlined processes to improve operational efficiency. Our management also endeavoured to prudently predict inventory requirements at the beginning of the year, with a view to maintain the inventory to appropriate levels. Although the Group accelerated the pace of development last year by adding a third production line in a domestic mill and six sales offices, the Group’s inventory level was maintained at HK$818,277,000, which remained comparable to the previous financial year-end. On the other hand, in response to higher borrowing costs along with the domestic tightening credit policies, the Group reduced the level of cash on hand to HK$661,307,000 (31 March 2011: HK$834,982,000) in order to optimize the use of cash on hand and reduce interest expenditures. In addition, the increase in the level of accounts receivable to HK$1,256,089,000 was driven by the prominent business performance. However, the turnover days for the Group’s accounts receivable maintained at 81 days, thereby further reducing credit risk and raising working capital. The above facts have illustrated that the Group continued to maintain a healthy financial position.

By business segment, paper trading, paper manufacturing and other business accounted for 77.2%, 20.7% and 2.1% of the Group’s total turnover respectively.

Paper Business

The Group has actively consolidated its distribution network during the review period, so as to enhance the effectiveness of the existing sales offices. With these efforts, coupled with increased contribution from our paper manufacturing business, the turnover from our paper business grew by 16.4% from HK$2,249,248,000 in the same period last year to HK$2,619,087,000. Operating profit amounted to HK$95,859,000, representing an increase of 31.7% when compared to HK$72,802,000 in the same period last year. Sales volume soared by 25.8% to 459,764 tonnes over the same period last year.

Capitalizing on the smooth operation of the Group’s paper mill in Zaozhuang City, Shandong Province, the PRC, the Group has extended its business reach in China. Therefore, China will continue to be the most important market for the Group, accounting for 62.8% of the total turnover. Hong Kong and other markets accounted for about 28.7% and 8.5% of the Group’s total turnover.

Paper Trading Business

The Group is proud of owning an extensive sales network in the PRC. This presence will be considerably conducive to our paper trading business. During the period under review. The segment achieved satisfactory results with turnover increased by 2.1% from HK$2,021,894,000 in the same period last year to HK$2,064,254,000. Sales tonnage increased by 7.4% to 327,165 tonnes. The Group has been actively expanding the number of sales offices over the past few years, and has now built an extensive network, with a coverage stretching across more than 20 cities in the PRC. In this light, the Group devoted great endeavours to foster the development of regional sales offices during the period under review in order to further boost operational efficiency.

21

Interim Report 11/12

Paper Manufacturing Business

Paper manufacturing business continues to be the main growth driver for the Group. With the full reflection of the contribution from the Group’s paper mill during the period under review following the formal commission of the third production line (PM5) in February 2011, the annual production capacity of the Group’s paper manufacturing operations increased by over a double from 170,000 tonnes to 370,000 tonnes. Invigorated by this additional capacity, the turnover from this business line increased by 1.25 times to HK$717,062,000 after taking into account of the inter-company sales. Based on the sales volume, this figure represented a growth of 117.6% over the same period last year. Despite rising raw material costs, however, benefitted from enhanced operational efficiency, operating profit grew by 139.6% over the same period last year to HK$48,202,000. Operating profit margin was 8.7%. As the market demand for the paper products remained robust during the review period, the utilization rate of the production lines of the Group’s mill in Shandong was maintained at a desired level.

Other Business

The Group’s aeronautic parts and services business as well as marine services business recorded a turnover of HK$ 21,862,000 and HK$ 31,052,000 respectively in the period under review.

Prospects

There was a significant increase in the domestic supply of paper products in the past few months. However, the new addition of supply has not yet been fully absorbed by the market demand. Against this background, given that the domestic economy is blessed with an outlook that is more optimistic than other Western countries, the Group believes that these impacts will merely linger for a short term. In the long run, a balance can be striked between paper supply and demand. The paper industry can thus sustain positive development.

To flexibly keep ahead of the developments in the macro-economic environment, the Group will strive to make itself well-positioned to enhance its own strengths. In fact, the cost and financial control measures exercised by the Group have been proved to be effective. This is an indication of the adequate execution capacity of the Group. Looking ahead, the Group will further tighten customer credit in order to further reduce the turnover days of accounts receivable, and will use cash on hand even more efficiently. Also, we will offer high value-added services for quality customers to reduce credit risk. The Group believes that the said targeted measures will help the Group meet different challenges in the future.

Leveraging on the widespread distribution network built by the Group over the years, together with the synergies of the paper manufacturing business, a solid foundation has been laid for the Group’s business. The Group will adopt a flexible business development strategy. We will continue to enhance our competitive edges and capture each and every opportunity for promoting our development, with a vision to deliver the best return for our shareholders.

22 Samson Paper Holdings Limited

INTERIM DIVIDEND

The Board has resolved to declare the payment of an interim dividend of HK0.5 cent (2010: HK1 cent) per share for the six months ended 30 September 2011, which is comparable to the same period last year’s HK1 cent prior to the issurance of one-for-one bonus share. The interim dividend will be payable to all shareholders of the Company whose names appear on the register of members of the Company on 6 January 2012. The interim dividend will be paid on or about 16 January 2012.

CLOSURE OF REGISTER OF MEMBERS

The register of members of the Company will be closed from 4 January 2012 to 6 January 2012 (both days inclusive), during which period no transfers of shares of the Company will be registered. In order to qualify for the interim dividend, all transfers of shares accompanied by the relevant share certificates must be lodged with the Company’s branch registrar, Computershare Hong Kong Investor Services Limited at Shop 1712–16, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong for registration no later than 4:30 pm on 3 January 2012.

EMPLOYEES AND REMUNERATION POLICIES

As at 30 September 2011, the Group employed 1,861 staff members, 135 of whom are based in Hong Kong and 1,459 are based in the PRC and 267 are based in other Asian countries. The Group’s remuneration policies are primarily based on prevailing market salary levels and the performance of the Group and of the individuals concerned. In addition to salary payments, other staff benefits include performance bonuses, education subsidies, provident fund, medical insurance and the use of share option scheme to reward high-calibre staff. Training for various levels of staff is undertaken on a regular basis, consisting of development in the strategic, implementation, sales and marketing disciplines.

LIQUIDITY AND FINANCIAL RESOURCES

The Group normally finances short term funding requirements with cash generated from operations, credit facilities available from suppliers and banking facilities (both secured and unsecured) provided by our bankers. The Group uses cash flow generated from operations, long term borrowings and shareholders’ equity for the financing of long-term assets and investments. As at 30 September 2011, short term deposits plus bank balances amounted to HK$661 million (including restricted bank deposits of HK$127 million) and bank borrowings amounted to HK$2,162 million.

As at 30 September 2011, the Group’s gearing ratio was 54.4% (31 March 2011: 50.0%), calculated as net debt divided by total capital. Net debt of HK$1,503 million is calculated as total borrowings of HK$2,164 million (including trust receipt loans, short term and long term borrowings, and finance lease obligations) less cash on hand and restricted deposits of HK$661 million. Total capital is calculated as total equity of HK$1,262 million plus net debt. The current ratio (current assets divided by current liabilities) was 1.15 times (31 March 2011: 1.15 times).

With bank balances and other current assets of approximately HK$3,066 million as well as available banking and trade facilities, the directors of the Company (the “Directors”) believe the Group has sufficient working capital to meet its present requirement.

23

Interim Report 11/12

FOREIGN EXCHANGE RISK

The Group’s transaction currencies are principally denominated in Renminbi, United States dollars and Hong Kong dollars. 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 30 September 2011, bank borrowings in Renminbi amounted to HK$401 million (31 March 2011: HK$411 million). The remaining borrowings are mainly in Hong Kong dollars. The majority of the Group’s borrowings bear interest costs which are based on floating interest rates. As at 30 September 2011, the Group has HK$20 million interest rate swap contracts (31 March 2011: Nil).

DIRECTORS’ AND CHIEF EXECUTIVES’ INTERESTS AND SHORT POSITIONS IN THE SHARES, UNDERLYING SHARES AND DEBENTURES

As at 30 September 2011, 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 for Securities Transactions by Directors of Listed Companies (the “Model Code”) are as follows:

(a) Long position in shares of the Company

Ordinary shares (the “Shares”) of HK$0.10 each

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

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

			Number of CP	shares beneficially held	shares beneficially held
		Personal	Corporate	Family
	Capacity	interest	interest	Interest	Total	Percentage
Mr. LEE Seng Jin	Beneficial owner	—	132,064,935	—	132,064,935	100.00%
			(note)

Notes: The 688,533,247 Ordinary Shares and 132,064,935 CP shares are held by Quinselle Holdings Limited which is wholly owned by Mr. Lee Seng Jin. Mr. Lee Seng Jin therefore deemed under the SFO to be interested in such Shares and CP Shares.

24 Samson Paper Holdings Limited

Save as disclosed above, as at 30 September 2011, none of the Directors and chief executives of the Company had any interests or short positions in the shares or 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 corporations (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 of the Company also hold shares of certain subsidiaries of the Company solely for the purpose of ensuring that the relevant subsidiary has more than one member.

At no time during the period was the Company, its holding company, its subsidiaries or its associated companies a party to any arrangement to enable any Director or chief executives 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 Par t 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.

(c) Share option scheme

At the Special General Meeting of the Company held on 26 February 2004, the shareholders of the Company approved the adoption of a share option scheme (the “Option Scheme”) to comply with the requirements of Chapter 17 of the Listing Rules. As at 30 September 2011, no option was granted under the Option Scheme. A summary of the terms and conditions of the Option Scheme are set out below.

(1) Purpose

The purpose of the Option Scheme is to provide incentives to Participants (as defined below) to contribute to the Group and to enable the Group to recruit high-calibre employees and attract human resources that are valuable to the Group and any entity in which the Group holds any equity interest (the “Invested Entity”).

(2) Participants

All directors and employees of the Group and suppliers, consultants, advisors, agents, customers, service providers, contractors, any member of or any holder of any securities issued by any member of the Group or any Invested Entity.

(3) Maximum number of shares

The number of shares which may be issued upon exercise of all options to be granted under the Option Scheme and any other share option scheme(s) of the Company must not exceed 10% in the nominal amount of the issued share capital of the Company as at the date of adoption of the Option Scheme. The maximum number of share available for issue under the Option Scheme is 42,925,803 as at the date of this report.

Interim Report 11/12 25

• (4) Maximum entitlement of each Participant

The maximum number of shares issued and to be issued upon exercise of the options granted to any one Participant (including both exercised and unexercised options) in any 12-month period shall not exceed one percent of the Shares in issue as at the date of grant.

• (5) Time of exercise of option

An option may be exercised in accordance with the terms of the Option Scheme at any time during the period to be notified by the Board to each grantee of the option at the date of grant provided that such period shall not exceed a period of ten years from the date of grant but subject to the provisions for early termination of the option as contained in the terms of the Option Scheme.

• (6) The eligible person shall pay HK$1.0 to the Company in consideration of the grant of an option upon acceptance of the grant of option.

(7) Exercise price

The option price per share payable on the exercise of an option is determined by the Board and shall not be less than the highest of

• i) the closing price of the shares as stated in the daily quotations sheet of the Stock Exchange on the date of grant;

• ii) the average closing price of the Shares as stated in the Stock Exchange’s daily quotations sheets for the five business days immediately preceding the date of grant; and

• iii) the nominal value of a share on the date of grant.

• (8) Remaining life of the Option Scheme

The Option Scheme will remain in force until 26 February 2014.

26 Samson Paper Holdings Limited

SUBSTANTIAL SHAREHOLDERS’ INTERESTS AND SHORT POSITIONS IN THE SHARES, UNDERLYING SHARES OF THE COMPANY

As at 30 September 2011, the interests and short positions of the shareholders of the Company other than a Director or chief executives of the Company and their associates, 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

	Number of
Name of shareholder	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
	Number of
Name of shareholder	CP shares	Percentage
Quinselle Holdings Limited_(Note)_	132,064,935	100.00%
Note: Quinselle Holdings Limited is a company 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 30 September 2011.

CONTINGENT LIABILITIES

The Company provided corporate guarantees on the banking facilities granted to its subsidiaries. The amount of facilities utilized by the subsidiaries as at 30 September 2011 amounted to HK$2,162 million (31 March 2011: HK$2,056 million).

CHARGE OF ASSETS

As at 30 September 2011, trust receipt loans of HK$255 million (31 March 2011: HK$215 million) and bank loans of HK$119 million (31 March 2011: HK$128 million) were secured by legal charge on certain properties of the Group.

AUDIT COMMITTEE

The Audit Committee of the Company (the “Committee”) was set up to review and provide supervision of the Group’s financial reporting process and internal controls. The Committee has reviewed the Group’s unaudited interim report for the six months ended 30 September 2011 before it was tabled for the Board’s approval.

PURCHASE, SALE OR REDEMPTION OF SHARES

During the six months ended 30 September 2011, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company’s listed securities.

27

Interim Report 11/12

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 interim report.

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 the Listing Rules during the six-month period ended 30 September 2011 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.

BOARD OF DIRECTORS

As at the date of this report, 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, 28 November 2011

28 Samson Paper Holdings Limited