Dragon Mining Limited — Interim / Quarterly Report 2015

Dec 19, 2014

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Interim Report 2014 /15

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 2014 together with comparative figures for the corresponding period in 2013, and the unaudited condensed consolidated balance sheet of the Group as at 30 September 2014 with audited comparative figures as at 31 March 2014. The unaudited condensed consolidated interim financial statements have been reviewed by the Company’s audit committee.

CONDENSED CONSOLIDATED PROFIT AND LOSS ACCOUNT

Note Revenue 4 Cost of sales Gross profit Other gains and income, net Selling expenses Administrative expenses Other operating income Operating profit 5 Finance costs Profit before taxation Taxation 6 Profit for the period Attributable to: Owners of the Company Non-controlling interests Earnings per share — Basic 7 — Diluted 7 Interim dividend per share Interim dividends 8	Unaudited Six months ended 30 September 2014 2013 HK$’000 HK$’000 (Note 19) 2,751,969 2,577,012 (2,502,186) (2,339,711) 249,783 237,301 9,906 10,732 (82,761) (89,435) (100,844) (92,616) 3,783 19,244 79,867 85,226 (45,265) (51,157) 34,602 34,069 (6,842) (6,797) 27,760 27,272 24,706 26,525 3,054 747 27,760 27,272 HK2.1 cents HK2.2 cents HK1.9 cents HK2.1 cents HK0.4 cent HK0.4 cent 5,092 5,092

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CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Profit for the period Other comprehensive income Item that may be reclassified subsequently to profit and loss: — 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 2014 2013 HK$’000 HK$’000 27,760 27,272 18,972 15,771 18,972 15,771 46,732 43,043 42,456 41,182 4,276 1,861 46,732 43,043	Unaudited Six months ended 30 September 2014 2013 HK$’000 HK$’000 27,760 27,272 18,972 15,771 18,972 15,771 46,732 43,043 42,456 41,182 4,276 1,861 46,732 43,043
		15,771
		43,043
		41,182 1,861
		43,043

2 Samson Paper Holdings Limited

CONDENSED CONSOLIDATED BALANCE SHEET

As at 30 September 2014

Note Non-current assets Property, plant and equipment 9 Prepaid premium for land leases 9 Investment properties Intangible assets 10 Available-for-sale financial assets Non-current deposits Deferred tax assets Current assets Inventories Accounts receivable, deposits and prepayments 11 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 12 Trust receipt loans 13 Taxation payable Derivative financial instruments Borrowings 13 Net current assets Total assets less current liabilities	Unaudited 30 September 2014 HK$’000 1,845,805 170,628 226,000 45,353 5,490 10,064 6,382 2,309,722 735,527 2,157,563 791 3,450 197,437 383,153 3,477,921 122,773 3,600,694 1,638,934 681,848 27,462 349 893,841 3,242,434 358,260 2,667,982	Audited 31 March 2014 HK$’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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CONDENSED CONSOLIDATED BALANCE SHEET (CONTINUED)

As at 30 September 2014

Note Equity Equity attributable to owners of the Company Share capital 14 Reserves Proposed dividend Non-controlling interests Total equity Non-current liabilities Accounts payable 12 Borrowings 13 Deferred tax liabilities	Unaudited 30 September 2014 HK$’000 127,315 1,642,194 5,092 1,647,286 1,774,601 174,275 1,948,876 154,912 456,325 107,869 719,106 2,667,982	Audited 31 March 2014 HK$’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

4 Samson Paper Holdings Limited

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 September 2014

Net cash inflow from operating activities Net cash outflow from investing activities Net cash outflow from financing activities Net 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 2014 2013 HK$’000 HK$’000 180,174 148,851 (76,494) (40,866) (8,838) (104,739) 94,842 3,246 287,303 389,452 43 3,936 382,188 396,634 383,153 397,648 (965) (1,014) 382,188 396,634

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CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 September 2014

At 1 April 2013 Comprehensive income Profit for the period Other comprehensive income Currency translation differences Total comprehensive income Transactions with owners 2012–2013 final dividend payable Proposed 2013–2014 interim dividend At 30 September 2013 At 1 April 2014 Comprehensive income Profit for the period Other comprehensive income Currency translation differences Total comprehensive income Transactions with owners 2013–2014 final dividend payable Proposed 2014–2015 interim dividend At 30 September 2014	Attrib	utable to own	Unaudited ers of the Company Retained earnings Subtotal HK$’000 HK$’000 737,216 1,617,966 26,525 26,525 — 14,657 26,525 41,182 (14,005) (14,005)	Unaudited ers of the Company Retained earnings Subtotal HK$’000 HK$’000 737,216 1,617,966 26,525 26,525 — 14,657 26,525 41,182 (14,005) (14,005)	Non- controlling interests HK$’000 107,446 747 1,114 1,861 —	Total HK$’000 1,725,412 27,272 15,771 43,043 (14,005)
	Share capital HK$’000 127,315 — — — —	Other reserves HK$’000 753,435 — 14,657 14,657 —	Retained earnings HK$’000 737,216 26,525 — 26,525 (14,005)
	127,315 —	768,092 —	744,644 5,092	1,640,051 5,092	109,307 —	1,749,358 5,092
	127,315 127,315 — — — —	768,092 841,656 — 17,750 17,750 —	749,736 774,633 24,706 — 24,706 (11,459)	1,645,143 1,743,604 24,706 17,750 42,456 (11,459)	109,307 169,999 3,054 1,222 4,276 —	1,754,450 1,913,603 27,760 18,972 46,732 (11,459)
	127,315 —	859,406 —	782,788 5,092	1,769,509 5,092	174,275 —	1,943,784 5,092
	127,315	859,406	787,880	1,774,601	174,275	1,948,876

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

6 Samson Paper Holdings Limited

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, marine services and retail business as well as in holding investment properties. Detailed analysis of these business segments are set out in note 4 to the financial statements.

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

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

These unaudited condensed consolidated interim financial statements are presented in Hong Kong dollars, unless otherwise stated. These unaudited condensed consolidated interim financial statements have been approved for issue by the Board of Directors on 20 November 2014.

2. BASIS OF PREPARATION AND ACCOUNTING POLICIES

These unaudited condensed consolidated interim financial statements for the six months ended 30 September 2014 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 financial statements should be read in conjunction with the annual consolidated financial statements for the year ended 31 March 2014, 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 financial statements for the year ended 31 March 2014, as described in those annual consolidated financial statements.

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

The following amendments to standard are mandatory for the first time for the financial year beginning 1 April 2014 and adopted by the Group:

HKAS 32 (Amendment)	Financial instruments: Presentation — offsetting financial assets and financial liabilities	1 January 2014
HKAS 36 (Amendment)	Recoverable amount disclosures for non-financial assets	1 January 2014
HKAS 39 (Amendment)	Financial instruments: Recognition and measurement — novation of derivatives	1 January 2014
HKFRS 10, HKFRS 12 and	Investment entities	1 January 2014
HKAS 27 (2011) (Amendment)
HK(IFRIC) — Int 21	Levies	1 January 2014

The adoption of the above new and revised standards and interpretation has no significant impact to the Group’s financial position for all periods presented in this report.

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2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONTINUED)

The following new and revised standards and interpretation have been issued but are not effective for the financial year beginning on 1 April 2014 and have not been early adopted by the Group:

		Effective for
		accounting
		periods
		beginning
		on or after
HKAS 19 (2011) (Amendment)	Defined benefit plans: Employee contributions	1 July 2014
HKAS 16 and HKAS 38	Clarification of acceptable methods of depreciation and amortisation	1 January 2016
HKAS 16 and HKAS 41	Agriculture: Bearer plants	1 January 2016
HKAS 27 (Amendment)	Equity method in separate financial statements	1 January 2016
HKFRS 9	Financial instruments	1 January 2018
HKFRS 10, HKFRS 28 (Amendment)	Sale or contribution of assets between an investor and its associate or joint venture	1 January 2016
HKFRS 11 (Amendment)	Accounting for acquisitions of interests in joint operations	1 January 2016
HKFRS 14	Regulatory deferral accounts	1 January 2016
HKFRS 15	Revenue from contracts with customers	1 January 2017
Annual Improvements Projects	Annual improvements 2010–2012 Cycle	1 July 2014
Annual Improvements Projects	Annual improvements 2011–2013 Cycle	1 July 2014
Annual Improvements Projects	Annual improvements 2012–2014 Cycle	1 January 2016

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

3. FINANCIAL RISK MANAGEMENT

3.1 Financial risk factors

The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, price risk and cash flow interest-rate risk), credit risk and liquidity risk.

The condensed consolidated interim financial information does not include all financial risk management information and disclosures required in the annual financial statements, and should be read in conjunction with the Group’s annual financial statements as at 31 March 2014. There have been no significant changes in the risk management policies since the year end.

3.2 Fair value estimation

The table below analyses financial instruments carried at fair value by valuation method. The different levels have been defined as follows:

• Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).

• Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).

• Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).

8 Samson Paper Holdings Limited

3. FINANCIAL RISK MANAGEMENT (CONTINUED)

3.2 Fair value estimation (continued)

The following table presents the Group’s assets/(liabilities) that are measured at fair value at 30 September 2014.

Financial assets at fair value through profit or loss — Trading securities Available-for-sale financial assets — Insurance policy — Other investment Derivative financial instruments — Interest rate swap	Level 1 HK$’000 791 — — — — 791	Level 2 HK$’000 — — — — (349) (349)	Level 3 HK$’000 — 4,321 1,169 5,490 — 5,490	Total HK$’000 791 4,321 1,169 5,490 (349) 5,932

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

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

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

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

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3. FINANCIAL RISK MANAGEMENT (CONTINUED)

3.2 Fair value estimation (continued)

The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value as instrument are observable, the instrument is included in level 2.

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

The following table presents the changes in level 3 instruments:

Opening Additions Disposals Net changes in fair value transferred to equity Closing	Unaudited 30 September 2014 HK$’000 5,490 — — — 5,490	Audited 31 March 2014 HK$’000 5,624 — (252) 118
		5,490

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

4. 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 financial statements.

As at 30 September 2014, 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, the provision of marine services to marine, oil and gas industries, retail business and investment property holding.

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.

10 Samson Paper Holdings Limited

4. SEGMENT INFORMATION (CONTINUED)

The segment information for the six months ended 30 September 2014 and as at 30 September 2014 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$’000 2,256,985 (12,744) 2,244,241 49,025 5,415 860 Paper trading HK$’000 2,929,674	Unaudited Six months ended 30 September 2014 Paper manufacturing Others HK$’000 HK$’000 492,253 84,700 (65,063) (4,162) 427,190 80,538 36,803 (764) 22,863 4,810 1,749 68 Unaudited As at 30 September 2014 Paper manufacturing Others HK$’000 HK$’000 2,451,814 517,743	Total HK$’000 2,833,938 (81,969) 2,751,969 85,064 (5,197) 79,867 (45,265) 34,602 (6,842) 27,760 33,088 2,677 Total HK$’000 5,899,231 3,450 6,382 1,353 5,910,416

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4. SEGMENT INFORMATION (CONTINUED)

The segment information for the six months ended 30 September 2013 and as at 31 March 2014 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$’000 2,264,038 (12,454) 2,251,584 62,115 5,206 857 Paper trading HK$’000 2,747,668	Unaudited Six months ended 30 September 2013 (Note 19) Paper manufacturing Others HK$’000 HK$’000 376,257 78,624 (126,040) (3,413) 250,217 75,211 21,241 6,686 21,361 4,261 1,788 38 Audited As at 31 March 2014 (Note 19) Paper manufacturing Others HK$’000 HK$’000 2,328,190 513,162	Total HK$’000 2,718,919 (141,907)
			2,577,012
			90,042 (4,816)
			85,226 (51,157)
			34,069 (6,797)
			27,272
			30,828
			2,683
			Total HK$’000 5,589,020 3,749 7,120 75
			5,599,964

12 Samson Paper Holdings Limited

4. SEGMENT INFORMATION (CONTINUED)

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	Unau Six months ende 2014 HK$’000 514,231 2,029,958 60,372 123,723 21,901 1,784 2,751,969	dited d 30 September 2013 HK$’000 (Note 19) 500,535 1,683,992 65,252 270,073 51,971 5,189
		2,577,012

Note: 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.

5. OPERATING PROFIT

Operating profit is stated after crediting and charging the following:

Crediting Interest income Provision for impairment on inventories written back 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 receivables	Unau Six months ende 2014 HK$’000 3,805 9,933 1,968 33,088 2,198 479 5,751	dited d 30 September 2013 HK$’000 5,149 4,720 16,710
		30,828 2,238 445 3,555

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6. TAXATION

Hong Kong profits tax has been provided for at the rate of 16.5% (2013: 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	Unau Six months ende 2014 HK$’000 2,060 4,782 6,842	dited d 30 September 2013 HK$’000 4,356 2,441
		6,797

7. 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$23,517,000 (2013: HK$25,072,000) by the weighted average number of 1,141,076,000 (2013: 1,141,076,000) ordinary shares in issue during the period.

(b) Diluted

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company has one category of dilutive potential ordinary shares: preference shares. The Company has a share option scheme but no share option (2013: Nil) has been granted under the scheme. Such scheme has been expired on 26 February 2014.

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	Unau Six months ende 2014 24,706 1,141,076 132,065 1,273,141 HK1.9 cents	dited d 30 September 2013 26,525
		1,141,076 132,065
		1,273,141
		HK2.1 cents

14 Samson Paper Holdings Limited

8. INTERIM DIVIDENDS

Proposed — HK$0.004 (2013: HK$0.004) per ordinary share Proposed — HK$0.004 (2013: HK$0.004) per preference share	Unau Six months ende 2014 HK$’000 4,564 528 5,092	dited d 30 September 2013 HK$’000 4,564 528
		5,092

At a meeting held on 20 November 2014, 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 financial statements, but will be reflected as an appropriation of retained earnings for the year ending 31 March 2015.

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

Six months ended 30 September 2013 Opening net book amount at 1 April 2013 Currency translation differences Additions Transfer Disposals Depreciation and amortisation Closing net book amount at 30 September 2013 Six months ended 30 September 2014 Opening net book amount at 1 April 2014 Currency translation differences Additions Transfer Disposals Depreciation and amortisation Closing net book amount at 30 September 2014	Property, plant and equipment HK$’000 1,324,080 12,851 20,775 1,316 (1,057) (34,157) 1,323,808 1,393,880 11,373 9,717 63,014 (521) (36,436) 1,441,027	Unaudited Prepaid premium for land leases HK$’000 157,483 1,634 — — — (2,238) 156,879 153,876 1,398 17,552 — — (2,198) 170,628	Construction in progress HK$’000 371,746 3,857 34,298 (1,316) — — 408,585 414,694 3,412 49,686 (63,014) — — 404,778

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10. INTANGIBLE ASSETS

Six months ended 30 September 2013 Opening net book amount at 1 April 2013 Currency translation differences Additions Amortisation Closing net book amount at 30 September 2013 Six months ended 30 September 2014 Opening net book amount at 1 April 2014 Currency translation differences Additions Amortisation Closing net book amount at 30 September 2014	Unaudited HK$’000 47,536 (485) 21 (445) 46,627 46,323 (543) 52 (479) 45,353

11. ACCOUNTS RECEIVABLE, DEPOSITS AND PREPAYMENTS

Accounts receivable — net of provision Other receivables, deposits and prepayments	Unaudited 30 September 2014 HK$’000 1,470,923 686,640 2,157,563	Audited 31 March 2014 HK$’000 1,226,996 723,083
		1,950,079

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

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

The aging analysis of accounts receivable is as follows:

Current to 60 days 61 to 90 days Over 90 days	Unaudited 30 September 2014 HK$’000 1,105,163 170,392 195,368 1,470,923	Audited 31 March 2014 HK$’000 905,999 166,828 154,169
		1,226,996

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

16 Samson Paper Holdings Limited

12. ACCOUNTS PAYABLE AND OTHER PAYABLES

Accounts and bills payables Accruals and other payables Dividend payable Less: non-current portions: Accounts payable	Unaudited 30 September 2014 HK$’000 1,231,046 551,341 11,459 1,793,846 (154,912) 1,638,934	Audited 31 March 2014 HK$’000 1,217,049 304,348 —
		1,521,397 (126,702)
		1,394,695

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

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

Current to 60 days 61 to 90 days Over 90 days	Unaudited 30 September 2014 HK$’000 889,895 101,321 239,830 1,231,046	Audited 31 March 2014 HK$’000 733,272 176,890 306,887
		1,217,049

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13. BORROWINGS

Non-current Bank loans — unsecured Bank loans — secured_(note 17) Finance lease liabilities Total non-current borrowings Current Trust receipt loans — unsecured Trust receipt loans — secured(note 17) Bank loans — unsecured Bank loans — secured(note 17)_ Bank overdrafts Finance lease liabilities Total current borrowings Total borrowings	Unaudited 30 September 2014 HK$’000 408,975 43,461 3,889 456,325 607,761 74,087 681,848 858,181 32,100 965 2,595 893,841 1,575,689 2,032,014	Audited 31 March 2014 HK$’000 400,000 52,903 3,479
		456,382
		561,703 77,750
		639,453
		910,849 37,617 — 2,156
		950,622
		1,590,075
		2,046,457

18 Samson Paper Holdings Limited

13. BORROWINGS (CONTINUED)

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

Within one year In the second year In the third to fifth years inclusive Over five years	Bank ove Unaudited 30 September 2014 HK$’000 965 — — — 965	rdrafts Audited 31 March 2014 HK$’000 — — — — —	Bank l Unaudited 30 September 2014 HK$’000 890,281 417,201 34,717 518 1,342,717	oans Audited 31 March 2014 HK$’000 948,466 410,034 33,410 9,459 1,401,369	Trust receipt loans Unaudited Audited 30 September 2014 31 March 2014 HK$’000 HK$’000 681,848 639,453 — — — — — — 681,848 639,453	Trust receipt loans Unaudited Audited 30 September 2014 31 March 2014 HK$’000 HK$’000 681,848 639,453 — — — — — — 681,848 639,453
						639,453

The effective interest rates at the balance sheet date on bank loans, bank overdrafts and trust receipt loans ranged from 1.9% to 7.8% per annum (31 March 2014: 1.9% to 7.4% 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 Later than 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 Later than 5 years	Unaudited 30 September 2014 HK$’000 2,724 3,994 102 6,820 (336) 6,484 Unaudited 30 September 2014 HK$’000 2,595 3,791 98 6,484	Audited 31 March 2014 HK$’000 2,274 3,528 103
		5,905 (270)
		5,635
		Audited 31 March 2014 HK$’000 2,156 3,379 100
		5,635

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

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14. SHARE CAPITAL

Authorised: Ordinary shares At beginning and end of the period/year Convertible non-voting preference shares At beginning and end of the period/year Total Issued and fully paid: Ordinary shares At beginning and end of the period/year Convertible non-voting preference shares At beginning and end of the period/year Total	Number of shares Unaudited 30 September 2014 1,456,913,987 143,086,013 1,600,000,000 1,141,075,827 132,064,935 1,273,140,762	of HK$0.10 each Audited 31 March 2014 1,456,913,987 143,086,013 1,600,000,000 1,141,075,827 132,064,935 1,273,140,762	Share capital Unaudited Audited 30 September 2014 31 March 2014 HK$’000 HK$’000 145,691 145,691 14,309 14,309 160,000 160,000 114,108 114,108 13,207 13,207 127,315 127,315	Share capital Unaudited Audited 30 September 2014 31 March 2014 HK$’000 HK$’000 145,691 145,691 14,309 14,309 160,000 160,000 114,108 114,108 13,207 13,207 127,315 127,315
				14,309
				160,000
				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 2014 and 31 March 2014, no share option was granted or outstanding.

15. BANK GUARANTEES

As at 30 September 2014, the Company continued to provide 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 2014 amounted to HK$2,025,530,000 (31 March 2014: HK$2,040,822,000).

16. COMMITMENTS

(a) Capital commitments

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

Property, plant and equipment Contracted but not provided for	Unaudited 30 September 2014 HK$’000 168,520	Audited 31 March 2014 HK$’000 158,080

20 Samson Paper Holdings Limited

16. COMMITMENTS (CONTINUED)

(b) Operating lease commitments

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

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

Not later than one year Later than one year and not later than five years Later than five years	Unaudited 30 September 2014 HK$’000 26,906 13,656 1,820 42,382	Audited 31 March 2014 HK$’000 27,197 17,204 1,920
		46,321

(c) Operating lease receivable

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

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

Not later than one year Later than one year and not later than five years	Unaudited 30 September 2014 HK$’000 14,002 20,534 34,536	Audited 31 March 2014 HK$’000 15,245 26,681
		41,926

17. CHARGE OF ASSETS

As at 30 September 2014, trust receipt loans of HK$74,087,000 (31 March 2014: HK$77,750,000) and bank loans of HK$75,561,000 (31 March 2014: HK$90,520,000) were secured by legal charges on the Group’s land and building and investment properties with aggregate net book amount of approximately HK$277,287,000 (31 March 2014: HK$277,908,000) and non-current asset held for sale with aggregate net book amount of HK$122,773,000 (31 March 2014: HK$122,773,000).

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18. 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 2014 HK$’000 164,778	dited d 30 September 2013 HK$’000 115,055

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

(b) Payables to a related company	Unau Six months ende 2014 HK$’000 125,965	dited d 30 September 2013 HK$’000 79,888

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

(c) Key management compensation Key management compensation	Unau Six months ende 2014 HK$’000 6,928	dited d 30 September 2013 HK$’000 6,928

19. COMPARATIVE FIGURES

Certain comparative figures have been reclassified to conform to the current period’s presentation, of which rental income HK$5,698,000 has been reclassified from “Other gains and income, net” to “Revenue” and corresponding expenses HK$1,082,000 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 30 September 2014 and 31 March 2014, or on the Group’s profit for the period ended 30 September 2014 and 2013.

22 Samson Paper Holdings Limited

MANAGEMENT DISCUSSION AND ANALYSIS

The Economy

During the review period, the global economy slackened amid the slowdown in economic growth in countries including the Eurozone, China and Japan despite the gradual economic recovery in the United States. China’s economy grew at its slowest pace, reporting a gross domestic product (“GDP”) growth of 7.3% in the third quarter of 2014, the weakest growth rate since the first quarter of 2009 and slower than the growth of 7.5% in the second quarter of 2014.

The Hong Kong economy experienced a modest growth, with the real GDP in the third quarter of 2014 up by 2.7% over the preceding year, up from 1.8% in the previous quarter. Exports remained weak in the face of the same sluggish global economic conditions that affected the mainland China.

The Paper Industry

For the reporting period, paper and board demand remained weak due to China’s economic slowdown. Producers were cautious to adjust paper and board prices upwards and mainly focused on boosting sales. Paper and board prices stayed flat at low levels. Bank credit tightened under the tight monetary policy. This coupled with the cautious market sentiment have caused fierce competition, with some of competitors sacrificing margin to alleviate their tight liquidity position. Margin and profitability of the industry were under pressure.

Overview of Operations

Financial Performance

Against this challenging operating environment, the Group has timely adjusted its sales and procurement strategies to ensure a balance between growth in turnover and profitability. At the same time, the Group watched closely the customer credit risk in the situation of tight money supplies. During the review period, the Group’s turnover recorded a growth of 6.8% reaching HK$2,751,969,000. In terms of sales volume, the growth was even as high as 18.4%.

To tackle the adverse market conditions, the Group pursued flexible sales and procurement strategies in various sales locations with a low level of inventories. At the same time, the management continued to take further measures to optimize the logistics and warehousing arrangement with customers and suppliers to enhance the profitability. Gross profit for the period increased 5.3% to HK$249,783,000. Profit attributable to the owners of the Company was recorded at HK$24,706,000 (2013/2014: HK$26,525,000). Basic earnings per share were HK2.1 cents (2013/2014: HK2.2 cents).

While the Group has made every effort 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 30 September, 2014 the Group had cash and bank balance (including restricted bank deposit) of HK$580,590,000 with a gearing ratio at a healthy level of 42.7%. This enables the Group to lower interest costs by 11.5% to HK$45,265,000. During the period, the Group continued to exercise a stringent credit policy as well as to compress the level of inventory even with the Group attaining a growth in revenue. Despite the worsening operating environment, the working capital cycle is shortened by 3 days. In terms of provisions for doubtful debt, it currently represents 0.21% of the Group’s total revenue before taking into account of the write back of the provision of HK$1,968,000. This further indicates that the Group’s financial policy is able to fend off unstable market sentiment.

By business segment, paper trading, paper manufacturing and other businesses accounted for 81.6%, 15.5% and 2.9% of the Group’s total turnover respectively.

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Interim Report 14/15

Paper Business

With the well established sales network across the PRC region, coupled with a significant growth in the revenue of paper manufacturing segment, the Group’s paper product business registered an increase of 6.8% in turnover from HK$2,501,829,000 to HK$2,671,425,000. In volume terms, the sales tonnage rose by 18.4% from 466,400 metric tonnes to 552,300 metric tonnes. Operating profit rose by 2.96% to HK$85,828,000.

For paper trading business, the Group reported a slight decrease of 0.3% in turnover of HK$2,244,241,000, resulting from a contraction of export sales to overseas in the Group’s other Asian countries due to aggressive Chinese mills sales out of China, but a 5.3% rise in sales tonnage, which is ascribed to expanding the sales of packaging boards in various cities in the PRC region.

The PRC market continued to be the main growth of the segment. Turnover from paper trading business in the market rose significantly by 11.9% to HK$1,600,151,000 with a growth of 21% in volume even under an adverse market condition. The Hong Kong market, the Group’s second key market, represented approximately 22.1% of its total paper trading sales, attained a turnover of HK$496,677,000, a slight increase of 0.4% compared to the corresponding last period. As for other Asian countries, the business dropped 55% in sales to HK$147,408,000 as compared to the corresponding last period. Less orders were secured by the Korea office for export markets resulting from the fierce competition from the Chinese mills which tried to absorb their excess tonnage in their domestic market.

For paper manufacturing business, the segment recorded a significant rise of 30.8% in turnover, including inter-segment revenue, to HK$492,253,000 with a growth of 44.1% in the sales tonnage. The achieved result reflected the success of sales strategies that put intensive emphasis on product customerization as well as focus on developing customers at the mill’s proximity. Operating profit increased 73.3% to HK$36,803,000 compared to the corresponding last period with operating profit margin stood at 8.9%.

Other Businesses

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

The aeronautic parts and services business and marine services business recorded turnover of HK$24,917,000 and HK$35,455,000 respectively during the period under review.

As a result of implementing business optimization measures via warehousing consolidation, since the FY03/2008, various owned warehouses located in Hong Kong are released year by year and leased out to third parties with higher yields. These investment properties amounted to HK$344,000,000 as at 30 September 2014. During the review period, the rental income amounted to HK$6,605,000 compared to HK$5,698,000 in previous period.

During the review period, the Group was entering into the local food retail market, through its chain of food stores under the brand of “FoodWise”, which is a Hong Kong-based food store that inspires health and well-being, and is principally engaged in the sale of a selection of wholesome, affordable and convenient food. As at 30 September 2014, the Group is operating four shop locations in Hong Kong. Such retail business segment contributed HK$10,946,000 to the Group’s turnover for the period.

24 Samson Paper Holdings Limited

Prospects

China maintained its growth in GDP and expects to attain its growth of 7.5% for the year 2014, which will lead the corresponding natural growth in demand of paper products consumption, especially packaging products. The challenge in the imbalance of supply and demand in the paper industry would be relaxed by the continued elimination of the inefficient paper mills in China and the slowed down of paper production capacities expansion.

The Group will continue to facilitate prudent management, implement effective cost control measures and promote healthy policies in the Group to enhance staff morale and productivity. The Group will explore more potential markets in China and set up more domestic trading offices in the coming year. In order to fully utilize our extensive network offices and further penetrating the existing markets, we will aim to strengthen the management techniques, promote a higher service quality and increase efficiency of workforce usage.

To support our continuing business growth, the Group strategically enhances the efficiency and profitability of our warehousing facilities. Consolidation of existing warehouses in China and Hong Kong and more warehousing facilities will be explored to achieve the goal. Through warehousing consolidation in the China and Hong Kong offices, we are able to lease out the relevant properties and bring in additional rental income so as to generate an inflow of steady and recurring rental income.

The Group is in the process of expanding its arms into the local food retail business by tapping on our existing overseas purchasing network. In view of the high marketability of the Hong Kong retail food industry, the Group strategically invested in the local food retail business to market targeted varieties of food in its stores located in different areas in Hong Kong. In addition to the strategic broadening of our business scope, this will also generate positive cashflow. However, this business segment is at its preliminary stage which has yet to have a significant impact to the Group’s results. In coming years, we will develop this business segment progressively. We expect more resources will be allocated to this business segment in order to fully develop its potential.

Diversification on business segments has not only greatly enhanced the Group’s ability to better withstand market risks, but also enabled the Group to maintain a relatively high profitability and sustainability.

INTERIM DIVIDEND

The Board has resolved to declare the payment of an interim dividend of HK 0.4 cent (2013: HK 0.4 cent) per share for the six months ended 30 September 2014. The interim dividend will be payable to all shareholders of the Company whose names appear on the register of members of the Company on 19 December 2014. The interim dividend will be paid around 8 January 2015.

CLOSURE OF REGISTER OF MEMBERS

The register of members of the Company will be closed from 17 December 2014 to 19 December 2014 (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, Boardroom Share Registrars (HK) Limited, at 31/F, 148 Electric Road, North Point, Hong Kong for registration no later than 4:30 pm on 16 December 2014.

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Interim Report 14/15

EMPLOYEES AND REMUNERATION POLICIES

As at 30 September 2014, the Group employed 1,731 staff members, 139 of whom are based in Hong Kong and 1,271 are based in the PRC and 321 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 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 flow generated from operations, long term borrowings and shareholders’ equity for the financing of long-term assets and investments. As at 30 September 2014, short term deposits plus bank balances amounted to HK$581 million (including restricted bank deposits of HK$197 million) and bank borrowings amounted to HK$2,032 million.

As at 30 September 2014, the Group’s gearing ratio was 42.7% (31 March 2014: 44.8%), calculated as net debt divided by total capital. Net debt of HK$1,451 million is calculated as total borrowings of HK$2,032 million (including trust receipt loans, short term and long term borrowings, and finance lease obligations) less cash on hand and restricted deposits of HK$581 million. Total capital is calculated as total equity of HK$1,949 million plus net debt. The current ratio (current assets divided by current liabilities) was 1.11 times (31 March 2014: 1.11 times).

With bank balances and other current assets of approximately HK$3,601 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 2014, bank borrowings in Renminbi amounted to HK$369 million (31 March 2014: HK$496 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.

26 Samson Paper Holdings Limited

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

As at 30 September 2014, 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 of HK$0.10 each

			Number of ordinary shares beneficially held	Number of ordinary shares beneficially held	Number of ordinary shares 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	Number of CP shares beneficially held	Number of CP 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.

Save as disclosed above, as at 30 September 2014, 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.

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Interim Report 14/15

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

None of the Directors and the chief executive of the Company or their associates had any short positions in the shares, underlying shares and debentures of the Company or any of its associated corporation (within the meaning of Part XV of the SFO) as recorded in the register required to be kept under Section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code.

(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 2014, 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 nil as at the date of this report.

(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.

28 Samson Paper Holdings Limited

• (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 was expired on 26 February 2014.

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

As at 30 September 2014, 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 2014.

Interim Report 14/15 29

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 2014 amounted to HK$2,026,000,000 (31 March 2014: HK$2,041,000,000).

CHARGE OF ASSETS

As at 30 September 2014, trust receipt loans of HK$74,087,000 (31 March 2014: HK$77,750,000) and bank loans of HK$75,561,000 (31 March 2014: HK$90,520,000) 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 2014 before it was tabled for the Board’s approval.

PURCHASE, SALE OR REDEMPTION OF SHARES

During the six months ended 30 September 2014, 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 2014 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, 20 November 2014

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Samson Paper Holdings Limited