Dragon Mining Limited — Interim / Quarterly Report 2013

Nov 23, 2012

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 INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2012

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 2012 together with comparative figures for the corresponding period in 2011, and the unaudited condensed consolidated balance sheet of the Group as at 30 September 2012 with audited comparative figures as at 31 March 2012. The unaudited condensed consolidated interim financial statements have been reviewed by the Company’s audit committee.

CONDENSED CONSOLIDATED PROFIT AND LOSS ACCOUNT

Note Revenue 2 Cost of sales Gross profit Other gains and income, net Selling expenses Administrative expenses Other operating expenses Operating profit 3 Finance costs Profit before taxation Taxation 4 Profit for the period	Unaudited Six months ended 30 September 2012 2011 HK$’000 HK$’000 2,419,228 2,676,451 (2,201,700) (2,410,586) 217,528 265,865 42,155 11,402 (86,404) (94,220) (95,190) (87,966) (2,690) (2,332) 75,399 92,749 (42,593) (41,533) 32,806 51,216 (6,593) (10,547) 26,213 40,669

– 1 –

Note Attributable to: Owners of the Company Non-controlling interests Earnings per share — Basic 5 — Diluted 5 Interim dividend per share Interim dividends 6	Unaudited Six months ended 30 September 2012 2011 HK$’000 HK$’000 25,287 40,479 926 190 26,213 40,669 HK2.1 cents HK3.4 cents HK2.0 cents HK3.2 cents HK0.4 cent HK0.5 cent 5,092 6,366	Unaudited Six months ended 30 September 2012 2011 HK$’000 HK$’000 25,287 40,479 926 190 26,213 40,669 HK2.1 cents HK3.4 cents HK2.0 cents HK3.2 cents HK0.4 cent HK0.5 cent 5,092 6,366
		40,669
		HK3.4 cents
		HK3.2 cents
		HK0.5 cent
		6,366

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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 Company — Non-controlling interests Total comprehensive income for the period	Unaudited Six months ended 30 September 2012 2011 HK$’000 HK$’000 26,213 40,669 2,170 11,862 2,170 11,862 28,383 52,531 27,458 52,666 925 (135) 28,383 52,531

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CONDENSED CONSOLIDATED BALANCE SHEET As at 30 September 2012

Note Non-current assets Property, plant and equipment Prepaid premium for land leases Investment properties Intangible assets Available-for-sale financial assets Non-current deposit Deferred tax assets Current assets Inventories Accounts receivable, deposits and prepayments 7 Financial assets at fair value through profit or loss Taxation recoverable Restricted bank deposits Bank balances and cash Non-current asset held for sale Current liabilities Accounts payable and other payables 8 Trust receipt loans Taxation payable Derivative financial instruments Borrowings Net current assets Total assets less current liabilities	Unaudited 30 September 2012 HK$’000 1,650,435 157,294 188,301 48,434 5,259 15,388 4,855 2,069,966 697,011 1,854,954 3,615 3,838 142,879 590,172 3,292,469 76,000 3,368,469 1,527,702 765,431 15,678 975 626,169 2,935,955 432,514 2,502,480	Audited 31 March 2012 HK$’000 (restated) 1,521,326 159,762 165,997 44,653 5,258 15,400 4,940 1,917,336 706,662 1,630,971 2,673 3,014 174,446 765,045 3,282,811 76,000 3,358,811 1,326,672 839,292 15,158 795 749,286 2,931,203 427,608 2,344,944

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Note Equity Equity attributable to owners of the Company Share capital Reserves Proposed dividend Non-controlling interests Total equity Non-current liabilities Accounts payable 8 Borrowings Deferred tax liabilities	Unaudited 30 September 2012 HK$’000 127,315 1,405,015 5,092 1,410,107 1,537,422 105,726 1,643,148 51,591 723,222 84,519 859,332 2,502,480	Audited 31 March 2012 HK$’000 (restated) 127,315
		1,382,649 12,477
		1,395,126 1,522,441 104,801 1,627,242 73,869 559,375 84,458 717,702 2,344,944

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Notes

1. BASIS OF PREPARATION AND ACCOUNTING POLICIES

These unaudited condensed consolidated interim accounts for the six months ended 30 September 2012 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 (“HKICPA”).

These unaudited condensed consolidated interim accounts should be read in conjunction with the annual consolidated accounts for the year ended 31 March 2012, 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 2012, 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 2012 and adopted by the Group:

In December 2010, the HKICPA amended HKAS 12, ‘Income taxes’, to introduce an exception to the principle for the measurement of deferred tax assets or liabilities arising on an investment property measured at fair value. HKAS 12 requires an entity to measure the deferred tax relating to an asset depending on whether the entity expects to recover the carrying amount of the asset through use or sale. The amendment introduces a rebuttable presumption that an investment property measured at fair value is recovered entirely by sale. The amendment is applicable retrospectively to annual periods beginning on or after 1 January 2012 with early adoption permitted.

The Group has adopted this amendment retrospectively for the financial period ended 30 September 2012 and the effects of adoption are disclosed as follows:

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

Effect on condensed consolidated balance sheet

				30 September	31 March
				2012	2012
				HK$’000	HK$’000
Decrease	in	deferred	tax liabilities	14,244	10,564
Increase	in	retained	earnings	14,244	10,564

Effect on condensed consolidated profit and loss account

			Six months ended 30 September	Six months ended 30 September
			2012	2011
			HK$’000	HK$’000
Decrease	in	taxation	3,680	—
Increase	in	net profit attributable to owners of the Company	3,680	—
Increase	in	basic earnings per share (“EPS”)	HK0.3 cent	—
Increase	in	diluted EPS	HK0.3 cent	—

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

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

2. 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 at 30 September 2012, 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.

– 7 –

The segment information for the six months ended 30 September 2012 and as at 30 September 2012 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

Unaudited Six months ended 30 September 2012 Paper trading Paper manufacturing Others Total HK$’000 HK$’000 HK$’000 HK$’000 2,175,788 390,193 68,210 2,634,191 (80,632) (132,174) (2,157) (214,963) 2,095,156 258,019 66,053 2,419,228 57,459 17,907 5,060 80,426 (5,027) 75,399 (42,593) 32,806 (6,593) 26,213 5,175 16,831 4,195 26,201 722 1,696 36 2,454 Unaudited As at 30 September 2012 Paper trading Paper manufacturing Others Total HK$’000 HK$’000 HK$’000 HK$’000 3,165,121 2,093,863 169,644 5,428,628 3,838 4,855 1,114 5,438,435

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The segment information for the six months ended 30 September 2011 and as at 31 March 2012 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

Unaudited Six months ended 30 September 2011 Paper trading Paper manufacturing Others Total HK$’000 HK$’000 HK$’000 HK$’000 2,154,439 717,062 65,595 2,937,096 (90,185) (162,229) (8,231) (260,645) 2,064,254 554,833 57,364 2,676,451 47,657 48,202 1,302 97,161 (4,412) 92,749 (41,533) 51,216 (10,547) 40,669 6,024 17,565 3,525 27,114 521 15 36 572 Audited As at 31 March 2012 Paper trading Paper manufacturing Others Total HK$’000 HK$’000 HK$’000 HK$’000 3,198,780 1,901,982 167,350 5,268,112 3,014 4,940 81 5,276,147

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

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

Hong Kong The PRC_(note)_ Singapore Korea Malaysia USA	Unaudited Six months ended 30 September 2012 2011 HK$’000 HK$’000 617,600 751,492 1,503,199 1,648,455 61,874 52,914 203,155 192,187 31,350 31,403 2,050 — 2,419,228 2,676,451	Unaudited Six months ended 30 September 2012 2011 HK$’000 HK$’000 617,600 751,492 1,503,199 1,648,455 61,874 52,914 203,155 192,187 31,350 31,403 2,050 — 2,419,228 2,676,451
		2,676,451

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.

3. OPERATING PROFIT

Operating profit is stated after crediting and charging the following:

Crediting Fair value gain on investment properties 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	Unaudited Six months ended 30 September 2012 2011 HK$’000 HK$’000 22,304 — 9,482 4,607 1,365 285 26,201 27,114 2,140 287 314 285 4,188 2,279 3,318 2,558	Unaudited Six months ended 30 September 2012 2011 HK$’000 HK$’000 22,304 — 9,482 4,607 1,365 285 26,201 27,114 2,140 287 314 285 4,188 2,279 3,318 2,558
		27,114 287 285 2,279 2,558

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4. TAXATION

Hong Kong profits tax has been provided for at the rate of 16.5% (2011: 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	Unaudited Six months ended 30 September 2012 2011 HK$’000 HK$’000 1,872 1,495 4,575 4,386 146 4,666 6,593 10,547	Unaudited Six months ended 30 September 2012 2011 HK$’000 HK$’000 1,872 1,495 4,575 4,386 146 4,666 6,593 10,547
		10,547

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$1,294,000 (2011: HK$1,321,000) by the weighted average number of 1,141,075,827 (2011: 1,141,075,827) ordinary shares in issue during the period.

Profit attributable to owners of the Company less preference dividend_(HK$’000) Weighted average number of ordinary shares in issue(’000)_ Basic earnings per share	Unaudited Six months ended 30 September 2012 2011 23,993 39,158 1,141,076 1,141,076 HK2.1 cents HK3.4 cents	Unaudited Six months ended 30 September 2012 2011 23,993 39,158 1,141,076 1,141,076 HK2.1 cents HK3.4 cents
		1,141,076
		HK3.4 cents

(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 (2011: Nil) has been granted under the scheme.

Profit attributable to owners of the Company_(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	Unaudited Six months ended 30 September 2012 2011 25,287 40,479 1,141,076 1,141,076 132,065 132,065 1,273,141 1,273,141 HK2.0 cents HK3.2 cents	Unaudited Six months ended 30 September 2012 2011 25,287 40,479 1,141,076 1,141,076 132,065 132,065 1,273,141 1,273,141 HK2.0 cents HK3.2 cents
		1,141,076 132,065
		1,273,141
		HK3.2 cents

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6. INTERIM DIVIDENDS

INTERIM DIVIDENDS
Proposed — HK$0.004 (2011: HK$0.005) per ordinary share Proposed — HK$0.004 (2011: HK$0.005) per preference share	Unaudited Six months ended 30 September 2012 2011 HK$’000 HK$’000 4,564 5,706 528 660 5,092 6,366
		6,366

At a meeting held on 23 November 2012, the Directors proposed an interim dividend of HK$0.004 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 2013.

7. ACCOUNTS RECEIVABLE, DEPOSITS AND PREPAYMENTS

Trade receivables — net of provision Other receivables, deposits and prepayments	Unaudited 30 September 2012 HK$’000 1,191,928 663,026 1,854,954	Audited 31 March 2012 HK$’000 1,088,457 542,514
		1,630,971

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 2012 HK$’000 876,954 188,559 126,415 1,191,928	Audited 31 March 2012 HK$’000 771,218 132,868 184,371
		1,088,457

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.

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8. ACCOUNTS PAYABLE AND OTHER PAYABLES

Trade and bills payables Accruals and other payables Dividend payable Less: non-current portions: Accounts payable	Unaudited 30 September 2012 HK$’000 1,275,504 291,312 12,477 1,579,293 (51,591) 1,527,702	Audited 31 March 2012 HK$’000 1,167,892 232,649 — 1,400,541 (73,869) 1,326,672

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

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 2012 HK$’000 881,456 157,755 236,293 1,275,504	Audited 31 March 2012 HK$’000 900,106 170,658 97,128 1,167,892

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MANAGEMENT DISCUSSION AND ANALYSIS

The Economy

During the review period, the economic conditions in Hong Kong and China remained unstable as both areas were impacted by a lackluster global economy — principally the result of the sovereign debt crisis in Europe and modest economic growth in the United States.

The mainland economy grew by 7.4% in the third quarter of 2012, down from 7.6% in the previous quarter, marking the lowest growth rate since early 2009. With respect to China’s gross domestic product (“GDP”), a year-on-year increase of 7.7% was recorded for the first three quarters of 2012, reaching RMB35.35 trillion.

Over the past three decades, China’s economy has grown at an average of approximately 10.0% per year, enabling it to overtake many developed countries to become the second largest economy in the world. However, in the last quarter, the economy slowed more than expected as weak consumption sentiment in Europe and the United States curbed demand for goods manufactured in China.

In Hong Kong, the economy experienced a modest growth, with real GDP in the third quarter of 2012 up by 1.3% over the preceding year, similar to the 1.2% pace in the second quarter. Exports remained weak in the face of the same sluggish global economic conditions that affected the motherland.

The Paper Industry

Against the stagnant market situation, customers were more cautious in procurement and tended to keep less stock for their operation and this further led to weaker demand for paper products. Startup of new paper machines in the PRC during the period further dampened market confidence in the sector. Under the imbalance of supply and demand, prices of book printing paper and packaging board decreased in the range of 10% as compared to those in the beginning of the period. However, the decreasing price trend has been stabilized in the fourth quarter of the year when the economy in the PRC appeared to have bottomed out.

The slowdown in demand growth as a result of the tight monetary policy and the feeble consumer confidence has caused competition to intensify, with competitors, especially in the paper manufacturing sector with new capacities coming on board sacrificing margins to maintain market share and liquidity position.

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

Overview of Operations

Financial Performance

Facing a surge in supply, deteriorating demand and high credit risk exposure from customers, the Group strategically shifted its focus to serving quality customers instead of just aiming for turnover growth. As a result, the Group’s turnover decreased by 9.6% year on year from HK$2,676,000,000 to HK$2,419,000,000.

– 14 –

To further combat the poor market conditions, the Group adopted stringent cost and risk control measures, which acted as a first line of defense for protecting the Group’s profitability. Profit attributable to the owners of the Company was recorded at HK$25,000,000 (2011/12: HK$40,000,000). Basic earnings per share were HK2.1 cents (2011/12: HK3.4 cents).

The Group has always been committed to controlling costs and minimizing credit risk. With tight monetary supply and more stringent credit policies in China, the management has accumulated an appropriate level of cash and bank balance (including restricted bank deposit), which reached HK$733,000,000 (31 March 2012: HK$939,000,000) as at 30 September 2012. This enables the Group to tap its own resources when necessary, lower interest costs and maintain a healthy gearing ratio — currently at approximately 45.7%. In terms of provisions for doubtful debt, it presently represents 0.14% of the Group’s total revenue. All of the measures taken also serve to highlight the Group’s healthy financial position.

In respect of turnover by business segment, paper trading, paper manufacturing and other businesses accounted for 86.6%, 10.7% and 2.7% of the Group’s total turnover respectively.

Paper Business

The Group adopted a conservative sales strategy for paper business, especially for the paper manufacturing business to mitigate the credit risk and the effect of the decreasing price trend. The Group’s paper product business reported a decrease of 10.2% in turnover to HK$2,353,000,000, compared with HK$2,619,000,000 for the same period last year. Operating profit reached HK$75,000,000 (2011/12: HK$96,000,000). In terms of total volume, the Group sold 407,900 metric tonnes of paper products during the review period, compared with 459,800 metric tonnes for the last corresponding period.

The Group’s effort to expand its presence in China has achieved notable results. The PRC continues to be the Group’s largest market, accounting for 63.7% of total turnover of paper products. Hong Kong — the Group’s second largest market — accounted for approximately 26.2% of total paper products sales whereas other Asian markets accounted for the remaining 10.1%.

As at 30 September 2012, the Group has sales offices in 20 cities across the country. While continuously strengthening its presence in China, the Group has also sought to optimize the efficiency of individual offices, and has started to reap the benefits of such effort. Turnover of the paper trading business increased by 1.5% to HK$2,095,000,000 against HK$2,064,000,000 for the same period last year with a 3.3% rise in sales tonnage, despite adverse economic conditions.

The shift of focus of the Group to defending profitability and serving quality customers prompted by adverse market conditions brought a decrease of 45.6% in the sales of paper products of the paper manufacturing business to HK$390,000,000 with the sales tonnage declining by 37.9%. As the PRC economy has bottomed out in the fourth quarter of the year, the decreasing price trend and the market situation has stablised. Operating profit of HK$18,000,000 was recorded for the period while operating profit margin stood at 6.9%.

Other Businesses

The aeronautic parts and services business and marine services business recorded turnover of HK$26,000,000 and HK$36,000,000 respectively during the period under review.

– 15 –

Prospects

Going forward, the management believes that global economies will continue to be restrained by unresolved economic, political and social issues affecting key industrialized nations. Fallout from the debt crisis in Europe and weak economic performance in the US have expectedly affected Asian economies, including Hong Kong where the export outlook has been less promising. However, given that Asian economies generally have better fundamentals than their Western counterparts allowing for greater room to maneuver in terms of stimulus policies, the slowdown in the East is not seen as a long-term issue.

With economic outlook remaining unclear, the management believes that taking a cautious yet farsighted approach towards business development will be essential. In terms of the paper trading business, the Group will focus on further growing a regional sales offices network. This will not only stimulate the paper trading business leading to greater sales for the Group’s paper products, but also benefit the manufacturing business over the long term.

To enhance the profitability in the paper manufacturing business, the Group will continue to optimize the productivity and energy usage of the machinery and develop its production lines to turn out a broader range of products, which include higher-margin items. Aside from the prudent management of the core businesses, the Group will also continue to practise safe financial measures, which include conservative cash management and complemented by close control of customer credit. The management is convinced that the Group has all necessary attributes to overcome the current economic malaise.

INTERIM DIVIDEND

The Board has resolved to declare the payment of an interim dividend of HK 0.4 cent (2011: HK 0.5 cent) per share for the six months ended 30 September 2012. The interim dividend will be payable to all shareholders of the Company whose names appear on the register of members of the Company on 4 January 2013. The interim dividend will be paid around 16 January 2013.

CLOSURE OF REGISTER OF MEMBERS

The register of members of the Company will be closed from 2 January 2013 to 4 January 2013 (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 31 December 2012.

EMPLOYEES AND REMUNERATION POLICIES

As at 30 September 2012, the Group employed 1,782 staff members, 127 of whom are based in Hong Kong and 1,320 are based in the PRC and 335 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.

– 16 –

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 2012, short term deposits plus bank balances amounted to HK$733 million (including restricted bank deposits of HK$143 million) and bank borrowings amounted to HK$2,115 million.

As at 30 September 2012, the Group’s gearing ratio was 45.7% (31 March 2012: 42.8%), calculated as net debt divided by total capital. Net debt of HK$1,382 million is calculated as total borrowings of HK$2,115 million (including trust receipt loans, short term and long term borrowings, and finance lease obligations) less cash on hand and restricted deposits of HK$733 million. Total capital is calculated as total equity of HK$1,643 million plus net debt. The current ratio (current assets divided by current liabilities) was 1.15 times (31 March 2012: 1.15 times).

With bank balances and other current assets of approximately HK$3,368 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.

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 2012, bank borrowings in Renminbi amounted to HK$468 million (31 March 2012: HK$439 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 2012, the Group has HK$20 million interest rate swap contracts (31 March 2012: HK$20 million).

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 2012 amounted to HK$2,115,000,000 (31 March 2012: HK$2,148,000,000).

CHARGE OF ASSETS

As at 30 September 2012, trust receipt loans of HK$195,563,000 (31 March 2012: HK$279,560,000) and bank loans of HK$74,524,000 (31 March 2012: HK$95,862,000) 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 2012 before it was tabled for the Board’s approval.

– 17 –

PURCHASE, SALE OR REDEMPTION OF SHARES

During the six months ended 30 September 2012, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company’s listed securities.

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 2012 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 INTERIM RESULTS ANNOUNCEMENT AND DESPATCH OF INTERIM REPORT

The interim results announcement is published on the web sites of the Company (www.samsonpaper.com) and the Stock Exchange (www.hkexnews.hk). The 2012/13 interim report will be despatched to the shareholders of the Company and available on the same web sites in due course.

By Order of the Board SHAM Kit Ying Chairman

Hong Kong, 23 November 2012

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 nonexecutive directors, namely Mr. PANG Wing Kin, Patrick, Mr. TONG Yat Chong and Mr. NG Hung Sui, Kenneth.

• for identification purposes

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