Dragon Mining Limited — Interim / Quarterly Report 2018

Dec 15, 2017

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Interim Report
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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 2017 together with comparative figures for the corresponding period in 2016, and the unaudited condensed consolidated balance sheet of the Group as at 30 September 2017 with audited comparative figures as at 31 March 2017. The unaudited condensed consolidated interim financial statements have been reviewed by the Company’s audit committee.

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS

For the six months ended 30 September 2017

Note Revenue 5 Cost of sales Gross profit Other gains and income, net Selling expenses Administrative expenses Other operating (expenses)/income Operating profit 6 Finance costs Profit before taxation Taxation 7 Profit for the period Attributable to: Owners of the Company Non-controlling interests Earnings per share — Basic 8 — Diluted 8 Interim dividend per share Interim dividends 9	Unaudited Six months ended 30 September 2017 2016 HK$’000 HK$’000 2,932,492 2,506,068 (2,646,033) (2,252,069) 286,459 253,999 27,522 13,464 (100,775) (102,778) (117,822) (99,299) (5,697) 13,751 89,687 79,137 (39,296) (38,709) 50,391 40,428 (11,669) (9,240) 38,722 31,188 33,714 27,705 5,008 3,483 38,722 31,188 HK2.9 cents HK2.4 cents HK2.6 cents HK2.2 cents HK0.4 cent HK0.4 cent 5,092 5,092

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1

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 September 2017

Profit for the period Other comprehensive income/(loss) Item that may be reclassified subsequently to profit or loss: — Currency translation differences Other comprehensive income/(loss) for the period, net of tax Total comprehensive income/(loss) for the period Total comprehensive income/(loss) attributable to: — Owners of the Company — Non-controlling interests Total comprehensive income/(loss) for the period

Unaudited Six months ended 30 September 2017 2016 HK$’000 HK$’000 38,722 31,188 125,211 (93,896) 125,211 (93,896) 163,933 (62,708) 151,489 (57,585) 12,444 (5,123) 163,933 (62,708)

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Samson Paper Holdings Limited

CONDENSED CONSOLIDATED BALANCE SHEET

As at 30 September 2017

Note Non-current assets Property, plant and equipment 10 Land use rights 10 Investment properties Intangible assets 11 Available-for-sale financial assets Non-current deposits and prepayments Deferred tax assets Current assets Properties under development Inventories Accounts and other receivables 12 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 and other payables 13 Trust receipt loans 14 Taxation payable Borrowings 14 Net current assets Total assets less current liabilities	Unaudited 30 September 2017 HK$’000 1,796,284 122,120 389,300 40,127 5,866 87,254 6,822 2,447,773 106,980 702,319 1,988,229 1,110 3,423 82,806 454,241 3,339,108 161,000 3,500,108 1,500,484 644,354 76,965 459,500 2,681,303 818,805 3,266,578	Audited 31 March 2017 HK$’000 1,687,638 119,289 550,300 39,361 5,866 52,242 6,822
		2,461,518
		99,821 773,544 1,705,844 913 3,575 139,348 457,951
		3,180,996 —
		3,180,996 1,324,572 809,689 72,196 528,109
		2,734,566
		446,430
		2,907,948

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Interim Report 17/18

CONDENSED CONSOLIDATED BALANCE SHEET (CONTINUED)

As at 30 September 2017

Note Equity Equity attributable to owners of the Company Share capital 15 Reserves Non-controlling interests Total equity Non-current liabilities Accounts and other payables 13 Borrowings 14 Deferred tax liabilities	Unaudited 30 September 2017 HK$’000 127,315 1,671,523 1,798,838 217,023 2,015,861 189,325 964,203 97,189 1,250,717 3,266,578	Audited 31 March 2017 HK$’000 127,315 1,544,224
		1,671,539 204,579
		1,876,118
		198,348 738,656 94,826
		1,031,830
		2,907,948

4 Samson Paper Holdings Limited

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 September 2017

Operating activities Cash generated from operations Interest paid Overseas taxation paid Net cash generated from operating activities Investing activities Purchase of property, plant and equipment Purchase of intangible assets Proceeds from disposal of property, plant and equipment Increase in non-current deposits and prepayments Interest received Net cash used in investing activities Financing activities Increase in bank loans Increase in finance lease liabilities Repayment of bank loans Repayment of finance lease liabilities Decrease in restricted bank deposits Decrease in trust receipt loans Net cash generated from financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at 1 April Effect of changes in exchange rates 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 2017 2016 HK$’000 HK$’000 95,610 147,774 (39,296) (38,709) (6,748) (4,338) 49,566 104,727 (84,548) (11,079) (172) (50) 1,138 530 (35,012) — 2,382 2,200 (116,212) (8,399) 839,960 86,576 — 1,872 (683,473) (142,905) (820) (953) 56,542 71,628 (165,335) (9,928) 46,874 6,290 (19,772) 102,618 455,270 356,814 16,250 (8,275) 451,748 451,157 454,241 453,148 (2,493) (1,991) 451,748 451,157

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CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 September 2017

Unaudited

At 1 April 2016 Comprehensive income Profit for the period Other comprehensive loss Currency translation differences Total comprehensive (loss)/income, net of tax Transactions with owners in their capacity as owners 2015–2016 final dividend payable At 30 September 2016 At 1 April 2017 Comprehensive income Profit for the period Other comprehensive income Currency translation differences Total comprehensive income, net of tax Transactions with owners in their capacity as owners 2016–2017 final dividend payable At 30 September 2017		Attributable to owne	Attributable to owne	rs of the Company Retained earnings Subtotal HK$’000 HK$’000 881,073 1,704,287 27,705 27,705 — (85,290) 27,705 (57,585) (8,275) (8,275) 900,503 1,638,427 946,486 1,671,539 33,714 33,714 — 117,775 33,714 151,489 (24,190) (24,190) 956,010 1,798,838	Non- controlling interests HK$’000 183,834 3,483 (8,606) (5,123) — 178,711 204,579 5,008 7,436 12,444 — 217,023	Total HK$’000 1,888,121 31,188 (93,896) (62,708) (8,275) 1,817,138 1,876,118 38,722 125,211 163,933 (24,190) 2,015,861
		Share capital HK$’000 127,315 — — — — 127,315 127,315 — — — — 127,315	Other reserves HK$’000 695,899 — (85,290) (85,290) — 610,609 597,738 — 117,775 117,775 — 715,513	Retained earnings HK$’000 881,073 27,705 — 27,705 (8,275) 900,503 946,486 33,714 — 33,714 (24,190) 956,010

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

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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, property development as well as leasing of investment properties. The Group is also engaged in the trading of consumable aeronautic parts, marine services and wholesaling of fast-moving consumer goods (“FMCG”) business. Detailed analysis of these business segments are set out in note 5 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 28 November 2017.

2. BASIS OF PREPARATION AND ACCOUNTING POLICIES

These unaudited condensed consolidated interim financial statements for the six months ended 30 September 2017 have been prepared in accordance with Hong Kong Accounting Standard (“HKAS”) 34 “Interim financial reporting”.

These unaudited condensed consolidated interim financial statements should be read in conjunction with the annual consolidated financial statements for the year ended 31 March 2017, which have been prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”).

The accounting policies applied are consistent with those of the annual consolidated financial statements for the year ended 31 March 2017, 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 standards and annual improvements are mandatory for the first time for the financial year beginning on 1 April 2017 and currently relevant to the Group:

Amendments to HKAS 7 Disclosure initiative Amendments to HKAS 12 Recognition of deferred tax assets for unrealised losses Amendments to Annual Annual improvements 2014 –2016 cycle Improvements Project HKFRS 12

The Group has adopted these standards and the adoption of these standards do not have significant impacts on the Group’s condensed consolidated interim financial information.

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7

2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONTINUED)

The following new standards, amendments to standards, new interpretation and annual improvement have been issued but are not effective for the financial year beginning on 1 April 2017 and have not been early adopted by the Group:

		Effective for
		accounting
		periods
		beginning
		on or after
Amendments to Annual	Annual improvements 2014–2016 cycle	1 January 2018
Improvements Project
HKFRS 1 and HKAS 28
Amendments to HKFRS 2	Classification and measurement of share-based payment transactions	1 January 2018
Amendments to HKFRS 4	Applying HKFRS 9 financial instruments
	with HKFRS 4 insurance contracts
HKFRS 9	Financial instruments	1 January 2018
HKFRS 15	Revenue from contracts with customers	1 January 2018
Amendments to HKFRS 15	Clarifications to HKFRS 15	1 January 2018
Amendments to HKAS 40	Transfers of investment property	1 January 2018
HK(IFRIC)-Int 22	Foreign currency transactions and advance consideration	1 January 2018
HKFRS 16	Leases	1 January 2019
Amendments to HKFRS 10	Sale or contribution of assets between an	To be determined
and HKAS 28	investor and its associate or joint venture

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

3. ESTIMATES

The preparation of unaudited condensed consolidated interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing this unaudited condensed consolidated interim financial statements, the significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 March 2017.

8 Samson Paper Holdings Limited

4. FINANCIAL RISK MANAGEMENT

4.1 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 2017. There have been no significant changes in the risk management policies since year end.

4.2 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).

The following table presents the Group’s assets/(liabilities) that are measured at fair value at 30 September 2017.

Financial assets at fair value through profit or loss — Trading securities Available-for-sale financial assets — Insurance policy — Other investment	Level 1 HK$’000 1,110	Level 2 HK$’000 —	Level 3 HK$’000 —	Total HK$’000 1,110
	— —	— —	4,697 1,169	4,697 1,169
	—	—	5,866	5,866
	1,110	—	5,866	6,976

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Interim Report 17/18

4. FINANCIAL RISK MANAGEMENT (CONTINUED)

4.2 Fair value estimation (continued)

The following table presents the Group’s assets/(liabilities) that were measured at fair value at 31 March 2017.

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$’000 913	Level 2 HK$’000 —	Level 3 HK$’000 —	Total HK$’000 913
	— —	— —	4,697 1,169	4,697 1,169
	—	—	5,866	5,866
	—	—	—	—
	913	—	5,866	6,779

There has been no transfer of financial assets and liabilities between levels 1, 2 and 3 during the period. There were no other change in valuation techniques 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.

4.3 Valuation technique used to derive level 2 fair values

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.

10 Samson Paper Holdings Limited

4. FINANCIAL RISK MANAGEMENT (CONTINUED)

4.4 Fair value measurements using significant observable input (level 3)

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:

The following table presents the changes in level 3 instruments:
Opening Net changes in fair value transferred to equity Closing	Unaudited 30 September 2017 HK$’000 5,866 — 5,866	Audited 31 March 2017 HK$’000 5,732 134
		5,866

4.5 Fair values of financial assets and liabilities measured at amortised cost

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.

4.6 Liquidity risk

Compared to year end, there have been no material changes to the policies and practices for the Group’s liquidity and funding risk management as described in the annual financial statements for the year ended 31 March 2017.

5. 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 2017, the Group is organised on a worldwide basis into four main business segments:

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

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

• (3) Property development and investment: developing properties for sale and leasing of investment properties; and

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

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

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5. SEGMENT INFORMATION (CONTINUED)

The segment information for the six months ended and as at 30 September 2017 is 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$’000 2,368,027 (98,104) 2,269,923 46,535 4,436 504 Paper trading HK$’000 2,327,241	Unaudited Six months ended 30 September 2017 Paper manufacturing Property development and investment Others HK$’000 HK$’000 HK$’000 600,446 10,179 62,010 (6,801) — (3,265) 593,645 10,179 58,745 43,555 9,250 (2,970) 23,013 116 4,734 2,035 — 67 Unaudited As at 30 September 2017 Paper manufacturing Property development and investment Others HK$’000 HK$’000 HK$’000 2,755,144 681,919 173,196	Total HK$’000 3,040,662 (108,170) 2,932,492 96,370 (6,683) 89,687 (39,296) 50,391 (11,669) 38,722 32,299 2,606 Total HK$’000 5,937,500 3,423 6,822 136 5,947,881

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Samson Paper Holdings Limited

5. SEGMENT INFORMATION (CONTINUED)

The segment information for the six months ended 30 September 2016 and as at 31 March 2017 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$’000 1,999,714 (140,105) 1,859,609 46,921 4,148 525 Paper trading HK$’000 2,168,290	Unaudited Six months ended 30 September 2016 Paper manufacturing Property development and investment Others HK$’000 HK$’000 HK$’000 570,004 11,052 86,619 (16,840) (874) (3,502) 553,164 10,178 83,117 37,397 10,711 (12,486) 23,230 — 5,881 2,059 — 70 Audited As at 31 March 2017 Paper manufacturing Property development and investment Others HK$’000 HK$’000 HK$’000 2,547,712 729,571 186,405	Total HK$’000 2,667,389 (161,321)
			2,506,068
			82,543 (3,406)
			79,137 (38,709)
			40,428 (9,240)
			31,188
			33,259
			2,654
			Total HK$’000 5,631,978 3,575 6,822 139
			5,642,514

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

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Interim Report 17/18

5. SEGMENT INFORMATION (CONTINUED)

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

Hong Kong The PRC_(note)_ Singapore Korea Malaysia	Unaudited Six months ended 30 September 2017 2016 HK$’000 HK$’000 465,469 380,918 2,203,806 1,897,941 30,446 44,176 213,296 170,193 19,475 12,840 2,932,492 2,506,068	Unaudited Six months ended 30 September 2017 2016 HK$’000 HK$’000 465,469 380,918 2,203,806 1,897,941 30,446 44,176 213,296 170,193 19,475 12,840 2,932,492 2,506,068
		2,506,068

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.

6. OPERATING PROFIT

Operating profit is stated after crediting and charging the following:

Crediting Interest income Write-back of provision for inventories Write-back of provision for receivables Charging Depreciation of property, plant and equipment Amortisation of land use rights Amortisation of intangible assets Provision for impairment on inventories Provision for impairment on receivables	Unaudited Six months ended 30 September 2017 2016 HK$’000 HK$’000 2,382 2,200 — 3,283 1,616 13,627 32,299 33,259 2,117 2,175 489 479 473 — 6,137 3,917	Unaudited Six months ended 30 September 2017 2016 HK$’000 HK$’000 2,382 2,200 — 3,283 1,616 13,627 32,299 33,259 2,117 2,175 489 479 473 — 6,137 3,917
		33,259 2,175 479 — 3,917

14 Samson Paper Holdings Limited

7. TAXATION

Hong Kong profits tax has been provided for at the rate of 16.5% (2016: 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	Unaudited Six months ended 30 September 2017 2016 HK$’000 HK$’000 4,932 5,203 6,737 4,037 11,669 9,240	Unaudited Six months ended 30 September 2017 2016 HK$’000 HK$’000 4,932 5,203 6,737 4,037 11,669 9,240
		9,240

8. EARNINGS PER SHARE

(a) Basic

Basic earnings per share is calculated by dividing the profit attributable to the owners of the Company less preference share dividends of HK$33,186,000 (2016: HK$27,177,000) by the weighted average number of 1,141,076,000 (2016: 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 (2016: 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 2017 2016 33,714 27,705 1,141,076 1,141,076 132,065 132,065 1,273,141 1,273,141 HK2.6 cents HK2.2 cents	Unaudited Six months ended 30 September 2017 2016 33,714 27,705 1,141,076 1,141,076 132,065 132,065 1,273,141 1,273,141 HK2.6 cents HK2.2 cents
		1,141,076 132,065
		1,273,141
		HK2.2 cents

Interim Report 17/18 15

9. INTERIM DIVIDENDS

Proposed — HK$0.004 (2016: HK$0.004) per ordinary share Proposed — HK$0.004 (2016: HK$0.004) per preference share	Unaudited Six months ended 30 September 2017 2016 HK$’000 HK$’000 4,564 4,564 528 528 5,092 5,092	Unaudited Six months ended 30 September 2017 2016 HK$’000 HK$’000 4,564 4,564 528 528 5,092 5,092
		5,092

At a meeting held on 28 November 2017, 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 2018.

10. PROPERTY PLANT AND EQUIPMENT AND LAND USE RIGHTS

Six months ended 30 September 2016 Opening net book amount at 1 April 2016 Currency translation differences Additions Disposals Depreciation and amortisation Closing net book amount at 30 September 2016 Six months ended 30 September 2017 Opening net book amount at 1 April 2017 Currency translation differences Additions Disposals Depreciation and amortisation Closing net book amount at 30 September 2017	Property, plant and equipment HK$’000 1,447,517 (42,061) 8,609 (310) (37,830) 1,375,925 1,353,149 53,358 4,952 (1,121) (36,626) 1,373,712	Unaudited Land use rights HK$’000 143,266 (4,118) — — (2,175) 136,973 119,289 4,948 — — (2,117) 122,120	Construction in progress HK$’000 307,708 (20,306) 2,470 — —
			289,872
			334,489 8,487 79,596 — —
			422,572

16 Samson Paper Holdings Limited

11. INTANGIBLE ASSETS

Six months ended 30 September 2016 Opening net book amount at 1 April 2016 Currency translation differences Addition Amortisation Closing net book amount at 30 September 2016 Six months ended 30 September 2017 Opening net book amount at 1 April 2017 Currency translation differences Addition Amortisation Closing net book amount at 30 September 2017	Unaudited HK$’000 41,618 (543 50 (485
	40,640
	39,361 1,083 172 (489
	40,127

12. ACCOUNTS AND OTHER RECEIVABLES

Accounts and bills receivables — net of provision Other receivables, deposits and prepayments	Unaudited 30 September 2017 HK$’000 1,406,435 581,794 1,988,229	Audited 31 March 2017 HK$’000 1,255,015 450,829
		1,705,844

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 and bills receivables based on invoice date, is as follows:

Current to 60 days 61 to 90 days Over 90 days	Unaudited 30 September 2017 HK$’000 1,236,194 92,287 77,954 1,406,435	Audited 31 March 2017 HK$’000 1,066,100 90,253 98,662
		1,255,015

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.

Interim Report 17/18 17

13. ACCOUNTS AND OTHER PAYABLES

Unaudited 30 September 2017 HK$’000 Accounts and bills payables 1,432,505 Accruals and other payables 233,114 Dividend payable 24,190 1,689,809 Less: non-current portions: Accounts and other payables (189,325) 1,500,484 The carrying values of the accounts and other payables approximate their fair values. The aging analysis of accounts and bills payables based on invoice date is as follows: Unaudited 30 September 2017 HK$’000 Current to 60 days 657,394 61 to 90 days 207,696 Over 90 days 567,415 1,432,505

Audited 31 March 2017 HK$’000 1,325,959 196,961 — 1,522,920 (198,348) 1,324,572 Audited 31 March 2017 HK$’000 646,261 127,377 552,321 1,325,959

18 Samson Paper Holdings Limited

14. BORROWINGS

Non-current Bank loans — unsecured Bank loans — secured_(note 18) Finance lease liabilities Total non-current borrowings Current Trust receipt loans — unsecured Trust receipt loans — secured(note 18) Bank loans — unsecured Bank loans — secured(note 18)_ Bank overdrafts Finance lease liabilities Total current borrowings Total borrowings	Unaudited 30 September 2017 HK$’000 955,099 5,836 3,268 964,203 539,643 104,711 644,354 414,596 40,405 2,493 2,006 459,500 1,103,854 2,068,057	Audited 31 March 2017 HK$’000 728,909 5,736 4,011
		738,656
		687,718 121,971
		809,689
		494,486 28,859 2,681 2,083
		528,109
		1,337,798
		2,076,454

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Interim Report 17/18

14. 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 overdrafts Unaudited Audited 30 September 31 March 2017 2017 HK$’000 HK$’000 2,493 2,681 — — — — — — 2,493 2,681	Bank overdrafts Unaudited Audited 30 September 31 March 2017 2017 HK$’000 HK$’000 2,493 2,681 — — — — — — 2,493 2,681	Bank loans Unaudited Audited 30 September 31 March 2017 2017 HK$’000 HK$’000 455,001 523,345 185,614 479,394 771,104 251,054 4,217 4,197 1,415,936 1,257,990	Trust receipt loans Unaudited Audited 30 September 31 March 2017 2017 HK$’000 HK$’000 644,354 809,689 — — — — — — 644,354 809,689	Trust receipt loans Unaudited Audited 30 September 31 March 2017 2017 HK$’000 HK$’000 644,354 809,689 — — — — — — 644,354 809,689
	2,493	2,681	1,415,936	644,354	809,689

The effective interest rates at the balance sheet date on bank loans, bank overdrafts and trust receipt loans ranged from 2.0% to 5.2% per annum (31 March 2017: 2.3% to 5.2% 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 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 2017 HK$’000 2,208 3,630 5,838 (564) 5,274 Unaudited 30 September 2017 HK$’000 2,006 3,268 — 5,274	Audited 31 March 2017 HK$’000 2,206 4,201
		6,407 (313)
		6,094
		Audited 31 March 2017 HK$’000 2,083 1,791 2,220
		6,094

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

20 Samson Paper Holdings Limited

15. SHARE CAPITAL

	Number of shares of HK$0.10 each	Number of shares of HK$0.10 each	Number of shares of HK$0.10 each	Share	capital
		Unaudited	Audited	Unaudited	Audited
	30 September		31 March	30 September	31 March
		2017	2017	2017	2017
				HK$’000	HK$’000
Authorised:
Ordinary shares
At beginning and end of the period/year	1,456,913,987		1,456,913,987	145,691	145,691
Convertible non-voting preference shares
At beginning and end of the period/year		143,086,013	143,086,013	14,309	14,309
Total	1,600,000,000		1,600,000,000	160,000	160,000
Issued and fully paid:
Ordinary shares
At beginning and end of the period/year	1,141,075,827		1,141,075,827	114,108	114,108
Convertible non-voting preference shares
At beginning and end of the period/year		132,064,935	132,064,935	13,207	13,207
Total	1,273,140,762		1,273,140,762	127,315	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 2017 and 31 March 2017, no share option was granted or outstanding.

16. BANK GUARANTEES

As at 30 September 2017, 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 2017 amounted to HK$2,062,783,000 (31 March 2017: HK$2,070,360,000).

17. COMMITMENTS

(a) Capital commitments

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

		Unaudited	Audited
	30	September 2017	31 March 2017
		HK$’000	HK$’000
Property, plant and equipment Contracted but not provided for		126,399	117,575

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Interim Report 17/18

17. 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 2017 HK$’000 28,474 40,625 3,463 72,562	Audited 31 March 2017 HK$’000 28,550 12,370 2,641
		43,561

(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 2017 HK$’000 9,908 1,920 11,828	Audited 31 March 2017 HK$’000 17,136 791
		17,927

18. CHARGE OF ASSETS

As at 30 September 2017, trust receipt loans of HK$104,711,000 (31 March 2017: HK$121,971,000) and bank loans of HK$46,241,000 (31 March 2017: HK$34,595,000) were secured by legal charges on the Group’s land and building and investment properties with aggregate net book amount of approximately HK$475,210,000 (31 March 2017: HK$636,833,000) and non-current assets held for sale with aggregate net book amount of HK$161,000,000 (31 March 2017: Nil).

22 Samson Paper Holdings Limited

19. 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 Purchase of merchandise from an investee company	Unaudited Six months ended 30 September 2017 2016 HK$’000 HK$’000 489,752 269,613

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

(b) Payables to a related company Payables to an investee company	Unaudited Six months ended 30 September 2017 2016 HK$’000 HK$’000 395,543 185,974

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

(c) Sales to a related party Sale of merchandise to an investee company	Unaudited Six months ended 30 September 2017 2016 HK$’000 HK$’000 17,872 36,513

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

(d) Receivables from a related company Receivables from an investee company	Unaudited Six months ended 30 September 2017 2016 HK$’000 HK$’000 7,020 6,943

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

(e) Key management compensation Key management compensation	Unaudited Six months ended 30 September 2017 2016 HK$’000 HK$’000 6,928 6,928

23

Interim Report 17/18

MANAGEMENT DISCUSSION AND ANALYSIS

The Economy

During the financial period under review, China’s economy advanced 6.8% year-on-year in the third quarter of 2017, following a 6.9% growth in the previous two periods amid government’s effort to reduce overcapacity and debt risk. Industrial output and retail sales increased further while the gain in fixed investment eased. Exports and imports rose rapidly as boosted by stronger global demand. China’s manufacturing activities in September 2017 grew at its fastest pace in five years as factories cranked up output to take advantage of strong demand and high prices fueled by a building boom.

In Hong Kong, the territory’s economy experienced a strong growth, with real gross domestic product in the third quarter of 2017 increased by 3.6% over a year earlier, compared with the 3.9% increase in the second quarter. Such growth was mainly underpinned by the reviving regional trade flows.

The Paper Industry

For the reporting period, price for printing papers continued to stay at high levels with several rounds of price hikes achieved amid the rising pulp costs. For packaging boards with recycled grades, after a downward adjustments in March 2017, following the ban of import of recovered paper and suspension of import recovered paper quota as well as a serious environment-related scrutiny on plants, fibre costs soared up and supply dropped. This in turn boosted the price run for paper products of packaging grades. At the same time, banks in the Mainland were not easing liquidity for customers for their working capital uses. There were concerns about whether customers were able to withstand the soaring paper prices in their operation while they were facing the environmental scrutiny from the authority.

Overview of Operations

Financial Performance

Amid the surge of paper prices the Group took measures to mitigate the exposure to the price volatility of paper products by keeping less stock in the inventory and carrying out more indent sales while closely monitoring the working situation of customers. Those measures implemented for the period have taken effect and been reflected in the Group’s performance for the period. With the rise in selling price, the Group reported a 17.0% growth in overall turnover to HK$2,932,492,000 while there was a 5.7% decrease in sales volume to 540,719 metric tonnes. Gross profit increased from previous period’s by 12.8% to HK$286,459,000 with a 3.7% decrease in gross profit margin from 10.1% to 9.8%. Profit for the period rose significantly from previous period’s by 24.2% to HK$38,722,000. Profit attributable to the owners of the Company rose by 21.7% from the previous period’s HK$27,705,000 to HK$33,714,000 with a basic earnings per share of HK2.7 cents. As Renminbi currency appreciated during the period, a currency translation gain of HK$125,211,000 recorded as other comprehensive income, mainly arising from the translation of the PRC subsidiaries’ financial statements into the Group’s reporting currency on consolidation.

The Group intends to keep an appropriate level of cash reserve to enhance its working capital position with a view to seek future investment opportunities. As at 30 September 2017, the Group had cash and bank balance (including restricted bank deposit) of HK$537,047,000 with a gearing ratio at a level of 43.2% compared to 46.6% last corresponding period which was attributable to appropriate measures taken in sales and procurement strategies. This enables the Group to maintain interest costs at HK$39,296,000. The stringent credit policy and procedures, close follow-ups with customers on liquidity and settlement situation have enabled the Group’s debtor turnover day to be shortened by 8 days. As a result, the provision for impairment loss of receivables was able to be kept at a low level of HK$6,137,000, representing 0.2% of the Group’s total revenue while the write back of the provision is HK$1,616,000.

24 Samson Paper Holdings Limited

Paper Business

Against the background of rising selling price, with the Group’s extensive sales network and strong procurement capability among suppliers, the Group achieved a significant growth of 18.7% in turnover from HK$2,412,773,000 to HK$2,863,568,000. In volume term, the sales tonnage decreased by 5.7% resulting from the adoption of sales and procurement strategies to lower the risk of volatility of paper prices. Operating profit was HK$90,090,000, a rise of 6.8% compared with last corresponding period.

For paper trading business, the Group reported a strong rise of 22.1% in turnover of HK$2,269,923,000 and a 2.4% increase in sales tonnage resulting from the upsurge of paper prices. Turnover from paper trading business in the PRC market rose significantly by 19.8% to HK$1,609,254,000 with a decrease of 5.8% in volume ascribing to putting more focus on the sustainability of customers against the price spiral of paper products. At the same time, Hong Kong market achieved a turnover of HK$427,876,000, grew significantly by 28.6% compared to the corresponding last period. As for other Asian countries, the Group has put efforts and resources on expansion of the business in the region and secured supports from mills to allocate tonnages. The business’s turnover rose significantly by 27.2% in sales to HK$232,793,000 as compared to the corresponding last period with a 36.5% growth in sales tonnage.

For paper manufacturing business, facing the volatility of raw materials costs prevailing in the market, the Group adopted its sales strategy focusing on profitability instead of sales tonnage to mitigate the exposure to the price run of recovered paper. The segment’s turnover increased by 5.3%, including inter-segment revenue, to HK$600,446,000 with a 23.0% drop in the sales tonnage. Operating profit increased by 16.5% to HK$43,555,000 with its operating profit margin at 7.6%.

Property Development and Investment

Property Development

For the Nantong business park project, the project entity has obtained the interim qualification certificate for real estate development enterprise in the PRC granting it permission to develop the subject land. Deposits of RMB2,000,000 have been received from two potential purchasers for two blocks of properties with an estimated sale price of RMB26,800,000 in total on the phase one site covering a total gross floor area of 6,530 sq.m.. The blocks of properties are under construction and, subject to the granting of relevant permits by the relevant PRC governmental authority, are expected to be completed and transferred to the potential purchasers within this financial year. As at 30 September 2017, the costs of properties under development amounted to HK$106,980,000.

Property Investment

For the period, the rental income from investment properties with a value of HK$551,300,000 was the same as the last period at HK$10,179,000. This provides a continual steady income and cash inflow to the Group, serves as a solid contributor to the Group’s operating income and enhances the financial position of the Group.

During the period under review, construction work has commenced for the Xiamen project and foundation work has been completed as at 30 September 2017. The marketing team is discussing with a number of potential tenants to lease out part of the property for factory and warehousing operation.

Other Businesses

These business segments include the aeronautic parts and service business, marine services business, consumable product business and logistic services.

25

Interim Report 17/18

The aeronautic parts and services business and marine services business recorded turnover of HK$8,387,000 and HK$22,037,000 respectively during the period.

With the strategy of concentrating on the wholesale business after franchising out the retail stores in November 2016, a series of profit- and market-oriented procurement strategies have been implemented to improve profit margin and enhance product mix. Talented sales team are in place to expand the diversified customer base. Supply chain infrastructure has been equipped to enable higher service standard. Customer base has been exploring from single channel to variety of sales channels for the period. The segment’s revenue decreased by 27.8% from HK$37,966,000 to HK$27,414,000. With the change of business strategy, the segment achieved an operating profit of HK$446,000 compared to the operating loss of HK$9,620,000 in the previous period.

Prospects

China’s manufacturing activity in October 2017 continued to grow with the purchasing managers’ index recorded at 51.6. With an aim to provide more liquidity support to small and medium sized enterprises, the People Bank of China announced a targeted easing of bank’s reserve requirement ratio starting from 2018. This expects to improve credit efficiency in the economy and rebalance growth.

Price for printing paper grades keeps in a continual uptrend in October 2017 amid climbing pulp costs while price for recycled board grades softened as demand eased off. Following the stringent environmental policy adopted by the authorities, paper price is expected to sustain at higher level once demand picks up. At the backdrop of steady economic growth in the domestic market in China, the Group continues to take appropriate and flexible approaches on sales and procurement to pursue profitability while mitigating the risk exposure on customers and stocks. For manufacturing segment, the Group put in more resources in upgrading the production facilities and power plant to attain cost savings in the production processes. For expanding oversea sales to countries other than Hong Kong and mainland China, the Group shall secure more tonnage allocations from our channels of suppliers. At the same time the Group continues to uphold and strengthen those measures taken since previous period in streamlining and centralizing internal processes to achieve effectiveness and efficiency.

For the property development and investment segment, the Group have placed considerable resources and emphasis on running the existing projects while seeking new opportunities on any new potential projects in order to further expand the business. For the Nantong business park project, the Group’s design and marketing team is discussing with a number of interested customers for the blocks of properties to be built. A further deposit of RMB3,060,000 has been received from a potential purchaser after the period end. It is expected that the Nantong project will generate a steady stream of revenue and cash inflow arising from the sales properties and service income in the coming year. The Group’s property development team will carry on the construction works to build an office with warehouse on the land in Xiamen which is expected to be completed by the financial year end.

For the FMCG business segment, with innovative strategic sourcing activities, supported by the new procurement strategy, the Group will continue to sourcing directly from overseas to ensure better margin and secure more suppliers with wide variety of products so as to improve the operating result of the segment.

INTERIM DIVIDEND

The Board has resolved to declare the payment of an interim dividend of HK0.4 cent (2016: HK0.4 cent) per share for the six months ended 30 September 2017. The interim dividend will be payable to all shareholders of the Company whose names appear on the register of members of the Company on 22 December 2017. The interim dividend will be paid around 10 January 2018.

26

Samson Paper Holdings Limited

CLOSURE OF REGISTER OF MEMBERS

The register of members of the Company will be closed from 20 December 2017 to 22 December 2017 (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 Room 2103B, 21/F, 148 Electric Road, North Point, Hong Kong for registration no later than 4:30 pm on 19 December 2017.

EMPLOYEES AND REMUNERATION POLICIES

As at 30 September 2017, the Group employed 1,727 staff members, 154 of whom are based in Hong Kong and 1,295 are based in the PRC and 278 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 2017, short term deposits plus bank balances amounted to HK$537 million (including restricted bank deposits of HK$83 million) and bank borrowings amounted to HK$2,068 million.

As at 30 September 2017, the Group’s gearing ratio was 43.2% (31 March 2017: 44.1%), calculated as net debt divided by total capital. Net debt of HK$1,531 million is calculated as total borrowings of HK$2,068 million (including trust receipt loans, short term and long term borrowings, finance lease obligations and bank overdraft) less cash on hand and restricted deposits of HK$537 million. Total capital is calculated as total equity of HK$2,016 million plus net debt. The current ratio (current assets divided by current liabilities) was 1.31 times (31 March 2017: 1.16 times).

With bank balances and other current assets of approximately HK$3,500 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 2017, bank borrowings in Renminbi amounted to HK$66 million (31 March 2017: HK$86 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.

Interim Report 17/18 27

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

As at 30 September 2017, 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	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	Number of CP shares	beneficially held	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 2017, 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.

28 Samson Paper Holdings Limited

(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 18 September 2015, 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 2017, 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.

Interim Report 17/18 29

• (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 17 September 2025.

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

SHARES OF THE COMPANY

As at 30 September 2017, 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 2017.

30

Samson Paper Holdings Limited

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 2017 amounted to HK$2,062,783,000 (31 March 2017: HK$2,070,360,000).

CHARGE OF ASSETS

As at 30 September 2017, trust receipt loans of HK$104,711,000 (31 March 2017: HK$121,971,000) and bank loans of HK$46,241,000 (31 March 2017: HK$34,595,000) 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 2017 before it was tabled for the Board’s approval.

PURCHASE, SALE OR REDEMPTION OF SHARES

During the six months ended 30 September 2017, 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 2017 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.

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Interim Report 17/18

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 2017

32 Samson Paper Holdings Limited