E-Commodities Holdings Limited - Interim / Quarterly Report 2014

INTERIM REPORT 2014

WINSWAY ENTERPRISES HOLDINGS LIMITED 永暉實業控股股份有限公司

(Incorporated in the British Virgin Islands with limited liability) Stock Code:1733

	Contents
I.	Chairman’s Statement	2
II.	Management Discussion and Analysis of
	Financial Conditions and Operating Results	4
III.	Other Information	19
IV.	Consolidated Statement of Profit or Loss	27
V.	Consolidated Statement of Profit or Loss and
	Other Comprehensive Income	29
VI.	Consolidated Statement of
	Financial Position	30
VII.	Consolidated Statement of
	Changes in Equity	32
VIII.	Condensed Consolidated
	Cash Flow Statement	34
IX.	Notes to the Unaudited
	Interim Financial Report	35
X	Review Report to the Board of Directors of
	Winsway Enterprises Holdings Limited	76

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Chairman’s Statement

On behalf of the board of directors (the “ Board ”) of Winsway Enterprises Holdings Limited (the “ Company ”), I hereby present the interim results of the Company and its subsidiaries (the “ Group ”) for the first half of 2014.

The coal industry remained weak in the first half of 2014 due to ongoing sluggish demand caused by a slowing economy and policies of the Chinese government to reduce overcapacity in the steel sector and to restructure the country’s energy mix away from coal. As what happened since 2012, the plethora of supply has pushed coal prices further down the chart and the “winter” stays across the sector for all companies involved.

To survive this winter, Winsway continued to manage its risks carefully and successfully retained it’s market share, although at the cost of lower margins. As a reaction to the above described relatively gloomy outlook of the coal market, Winsway has conducted research and started preparations to reduce its dependence on coal and to diversify into services for other bulk commodities. Although these efforts have not yet resulted in significant earnings, we are confident that they will enable us to better utilize our logistics resources and contribute to our earnings in the near future.

It should be noted that although the recorded loss of HK$4.73 billion is very significant, it will have a relatively muted effect on our operations because it is mainly attributed to book losses of HK$3.99 billion net of income tax for the write-down in carrying value of GCC and HK$189 million for provision for inventory and impairment of property, plant and equipment.

To reflect this planned change in business strategy and to facilitate our attempt to establish Winsway as an integrated solution provider of the supply chain, the Company changed its full name from Winsway Coking Coal Holdings Limited to Winsway Enteprises Holdings Limited. We have up to now been evaluating this new business model and the risks attached to it and have started to work on a detailed plan to establish a platform to provide these services. To better implement this new business model, Mr. Andreas Werner, a senior professional with profound understanding in both financing and commodity business, was appointed as the CEO Designate and Executive Director of the Company.

As Winsway explored new business opportunities, it also sought to further streamline its current operations and thus become more efficient and effective. The Company managed to further lower its operating costs in logistics sector as well as mining sector by a host of measures, including a reduction of staff.

2014 Interim Report

Chairman’s Statement (Continued)

The operation in the Company’s subsidiary, Grande Cache Coal LP, has improved in the first half of 2014. After concerted effort from the management, clean coal FOB cash cost decreased from HK$1,064/tonne in the first half of 2013 to an average of HK$730/tonne during the first half of 2014. Although this is a significant improvement, it is still insufficient to enable GCC to fulfill its commitments to GCC’s financing bank and to avoid further operating losses. As a result of a gloomy medium and long term market outlook, continuing deterioration in prices for metallurgical coal and the Company’s limited financial ability to maintain its support of GCC, the Board has come to the conclusion that divestment from GCC is inevitable to ensure the Company’s long term business. Accordingly, the Company has retained BNP Paribas as its financial advisor to assist in this process.

Finally, on behalf of the Board, I would like to express my gratitude to all our shareholders for their long-term support to the Group. I would also like to extend my appreciation to all our employees for their strong efforts under these challenging conditions. I would like to particularly express my thankfulness to Mr. Yamamoto Yasuhisa, who has stepped down from the Board because of personal reasons, for his long term support and contribution to the Company. Also, due to health reasons, I will need to take a leave of absence from the Company’s daily operations for an extended period of time. During my absence Mr. James Downing will take over my responsibilities as chairman to organize and manage the Board. The Board has resolved to appoint Mr. Andreas Werner as the CEO Designate during my absence and he is also appointed to be an Executive Director. He will work towards strengthening the overall management of the Company, besides exploring new business opportunities. I strongly believe that Mr. Andreas Werner’s professional and managerial experience, together with the management team and all employees will lead Winsway into a better future.

Wang Xingchun

Chairman Winsway Enterprises Holdings Limited

Winsway Enterprises Holdings Limited

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Management Discussion and Analysis of Financial Conditions and Operating Results

I. FInancIal HIgHlIgHts

Turnover of the Group from continuing operations in the first half of 2014 was HK$3,246 million.
Loss for the six months ended 30 June 2014 was HK$4,728 million, out of which, HK$421 million is generated from the continuing operations. During the first half of 2014, the pretax impairment losses without cash flow impact were HK$130 million and HK$59 million for inventory and property, plant and equipment respectively under continuing operations.
The major subsidiary GCC LP was classified as disposal group held for sale as of 27 June 2014. Loss for the six months ended 30 June 2014 from discontinued operation (GCC LP) was HK$4,307 million, including HK$3,994 million impairment (net of income tax) on the carrying value.
Loss attributable to equity shareholders of the Company amounted to HK$2,740 million, out of which, HK$413 million is from continuing operations, and HK$2,327 million is from discontinued operations.
Basic and diluted loss per share was HK$0.727. Loss per share from continuing operations was HK$0.110.
The Board does not recommend the payment of an interim dividend for the six months ended 30 June 2014.

Turnover from continuing operations (in HK$ million)

Gross profit/loss from continuing operations (in HK$ million)

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6,000
5,381
5,000
4,000
3,246
3,000
2,000
1,000
0
1H 2013 1H 2014
(Restated)
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50
25
0.4
0
-25
-50
-75
-100 -95.5
1H 2013 1H 2014
(Restated)
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Net loss (in HK$ million)

Cash and cash equivalents balance (in HK$ million)

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0
-1,000 -933
-2,000
-3,000
-4,000
-5,000 -4,728
1H 2013 1H 2014
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2,500
2,018
2,000
1,500
1,000
554
500
0
2013/12/31 2014/06/30
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2014 Interim Report

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Management Discussion and Analysis of Financial Conditions and Operating Results (Continued)

In the first half of 2014, the Group recorded consolidated revenue from continuing operations of HK$3,246 million on 3.81 million tonnes of sales, out of which 1.16 million tonnes were Mongolian coking coal, 2.38 million tonnes were seaborne coal, 0.22 million tonnes were Mongolian thermal coal, and 0.05 million tonnes were self-produced coal. This is to be compared with a consolidated revenue from continuing operations (restated) of HK$5,381 million on 5.28 million tonnes of sales, out of which, 2.52 million tonnes were Mongolian coal, 2.03 million tonnes were seaborne coal, 0.5 million tonnes were self-produced coal, and 0.23 million tonnes were iron ore during the first half of 2013.

For the first half of 2014, the Group achieved a gross profit from continuing operations of HK$0.42 million compared to a gross loss of HK$95.52 million (restated) during the same period of last year. Careful risk management and rendering of logistics and storage services helped to turn last year’s gross loss into a small gross profit this year.

Following the change in business of the Group from coal focused to supply chain services business, the Group rendered logistics and storage services during the first half of 2014 and recorded a profit margin of approximately HK$12 million.

Overall, the Group incurred a consolidated net loss of HK$4,728 million during the first half of 2014 compared to a net loss of HK$933 million during the first half of 2013. The loss attributable to equity shareholders of the Company was HK$2,740 million. Continuing operations loss incurred from Winsway operation was HK$421 million for the first half of 2014, and discontinued operation loss for GCC was HK$4,307 million, mainly consisting of impairments on the carrying value of assets without cash flow impact in the first half of 2014.

Out of the HK$421 million continuing operations loss, the Group recognised HK$59 million and HK$130 million impairment of property, plant and equipment and provision for inventory respectively.

To cope with the current weak market, the Group continued its effort to reduce inventory to a minimal but sustainable level. The Group’s inventory shrank from 2.52 million tonnes to 1.29 million tonnes as of 30 June 2014.

Winsway Enterprises Holdings Limited

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Management Discussion and Analysis of Financial Conditions and Operating Results (Continued)

II. MongolIan coal ProcureMent

In the first half of 2014, the Group procured a total of 0.62 million tonnes of Mongolian coal, an 69.6% decrease from the volume procured during the same period of last year. The decrease was mainly a result of change in the demand for Mongolian coal and the Company’s marketing strategy. Domestic market prices did not support importing of Mongolian coal since the seaborne coal price was at such a low level that Mongolian coal had no price advantage. Since the long-term strategic alliance with several Mongolian coal suppliers came to end in the first half of 2014, the Company was more cautious when purchasing Mongolian coal.

Our top Mongolian coal suppliers during the first half of 2014 were Southgobi Sands LLC and Energy Resources LLC with procurement amount of HK$82 million and HK$29.6 million respectively.

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Mongolian Coal Procurement Amount (in HK$ million) Mongolian Coal Procurement Volume (MT)
2,500 4.00
2,000
3.00
1,500 1,465 2.22 2.04
1,168 2.00
1,000
1.00 0.62
500
162
0 0.00
1H 2012 1H 2013 1H 2014 1H 2012 1H 2013 1H 2014
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III. seaborne coal ProcureMent

In the first half of 2014, our seaborne procurement volume was approximately 2.46 million tonnes, a 15% increase over 2.13 million tonnes procured during the first half of 2013. Seaborne coal only has a competitive advantage in a weak market because of the lower shipping costs. Moreover, seaborne coal procurement requires much fewer turnover days in comparison with Mongolian coal. In order to maintain market share in China, the Company’s strategy is to purchase more seaborne coal on strict back to back basis although only at a thin margin. The top 5 seaborne coal suppliers supplied coal worth of HK$1,700 million, which accounted for 69.39% of the total seaborne coal procurement whereas 58.26% was attributable to the top 5 suppliers during the same period of last year.

Seaborne Coal Procurement Amount (in HK$ million)

Seaborne Coal Procurement Volume (MT)

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2,500 2,422 2,247 2.50 2.46
2,015 2.13
2,000 2.00
1,500 1.50 1.48
1,000 1.00
500 0.50
0 0.00
1H 2012 1H 2013 1H 2014 1H 2012 1H 2013 1H 2014
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2014 Interim Report

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Management Discussion and Analysis of Financial Conditions and Operating Results (Continued)

IV. gcc oPeratIons

Grande Cache Coal is engaged in the production and sales of premium hard coking coal. It was acquired by the Company and Marubeni on a 60% and 40% basis respectively in March 2012. The local management in GCC has spent tremendous efforts to better control their costs, including but not limited to cutting headcounts, streamlining the work process reducing contract works and contract prices, implementing incentive schemes, revising mining plans etc. The team has successfully brought the FOB cash cost from HK$1,064 in the first half of 2013 to HK$730 in the first half of 2014 which now leaves no significant further room for improvement. Unfortunately, this is still by far not sufficient to operate profitably.

In light of current market conditions and the Company’s strategy going forward, the Board resolved to a plan to reduce its stake in GCC. The Company has engaged BNP Paribas as its financial advisor to facilitate the GCC divestment exercise. The bidding process has begun and the Company is under negotiation with several potential buyers for either a partial or full divestment. Hence, GCC was categorized as a discontinued operation in the consolidated statement of profit or loss and the assets and liabilities of GCC were classified as a disposal group held for sale.

Operation details of GCC in the first half of 2014 is as follow:

GCC Production Volume

In the first half of 2014, the total production volume of GCC ROM (run-of-mine) coal was 1.25 million tonnes, which is about the same as the 1.22 million tonnes for the same period of last year.

GCC Cost of Sales

In the first half of 2014, COGS of GCC was HK$728 million, or HK$1,014 on a per tonne basis. Cost of self-employed labour, third party contracting services, and materials are among the top cost components.

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Six months ended
30 June 2014 30 June 2013
(HK$) (HK$)
Average cost of sales (HK$/tonne)
Cost of product sold 486 836
Distribution costs 244 228
Depreciation and depletion 284 195
1,014 1,259
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Winsway Enterprises Holdings Limited

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Management Discussion and Analysis of Financial Conditions and Operating Results (Continued)

V. our custoMers

Despite overall softening in coking coal demand, the Group still managed to compete in the market thanks to its extensive reach of logistic infrastructure in northern and coastal regions of China as well as its strong sales/marketing team performance. Our top 5 customers accounted for 33.33% of the total sales for the first half of 2014 as compared to 32.75% (restated) attributable to the top 5 customers for the same period last year.

The Group’s Top 5 Customers

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Name Location Amount
(HK$’Million)
Ji Dong Development Hebei 286
Bao Steel Resources Int’l Hong Kong 217
Da Feng Hebei 206
Top Seed Hong Kong 194
Jiu Jiang Qian’an Hebei 178
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VI. FInancIal reVIew

a. Sales

In the first half of 2014, our sales revenue from continuing operations was HK$3,246 million, a 39.68% decrease from the same period of last year. Both decreasing volume and declining price of coking coal and coal related products have led to this revenue decrease.

Continuing Operations

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Six months ended
30 June 2014 30 June 2013
$’000 $’000
(Restated)
Coking coal 3,036,118 4,741,936
Thermal coal 151,312 —
Coal related products 22,973 396,002
Iron ore — 215,698
Rendering of logistics services 32,875 23,953
Others 3,203 2,987
3,246,481 5,380,576
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2014 Interim Report

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Management Discussion and Analysis of Financial Conditions and Operating Results (Continued)

In terms of volume, we sold 3.81 million tonnes of coal and coal related products, compared to 5.05 million tonnes during the same period last year. In terms of price, our realised average selling price decreased from HK$1,017 per tonne during the first half of 2013 to HK$842 per tonne during the first half of 2014.

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Six months ended
30 June 2014 30 June 2013
Total sales Average Total sales Average
volume selling price volume selling price
(per tonne) (per tonne)
(tonnes) (HK$) (tonnes) (HK$)
Mongolian coal 1,377,730 693 2,519,457 843
Seaborne coal 2,383,787 923 2,031,232 1,196
Self-produced coal 52,701 1,043 502,681 1,161
Total 3,814,218 842 5,053,370 1,017
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b. Cost of Goods Sold (“COGS”)

The Group incurred COGS from continuing operations of HK$3,246 million during the first half of 2014 compared to HK$5,476 million (restated) in the first half of 2013. Both lower sales volume and lower procurement price contributed to the overall decrease of the Group’s COGS.

Specifically, our average procurement price has decreased from HK$573 per tonne to HK$260 per tonne for Mongolian coal and from HK$1,140 per tonne to HK$913 per tonne for seaborne coal. The major reason for the sharp decrease of Mongolian coal purchase price is because the Company procured a greater percentage of thermal coal compared to the same period of last year.

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Six months ended
30 June 2014 30 June 2013
Total purchase Average Total purchase Average
volume purchase price volume purchase price
(per tonne) (per tonne)
(tonnes) (HK$) (tonnes) (HK$)
Mongolian coal 621,958 260 2,039,391 573
Seaborne coal 2,461,019 913 2,125,331 1,140
Total 3,082,977 781 4,164,722 862
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Winsway Enterprises Holdings Limited

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Management Discussion and Analysis of Financial Conditions and Operating Results (Continued)

c. Gross Profit/Loss

For the first half of 2014, the Group achieved a gross profit from continuing operations of HK$0.42 million compared to a gross loss of HK$95.52 million (restated) during the same period of last year. The gross profit was contributed to strict risk management controls following a switch to back to back strategy in an extremely difficult market environment.

For the first half of 2014, the Company recorded a gross loss of HK$17million in coking coal sales, compared to gross loss of HK$159 million in the same period of 2013. Although the coal market further declined in the first half of 2014, the Company managed to focus strictly its sales margin and realized a better performance than the same period of last year. Starting its new business development, the Company recorded a gross profit of HK$12 million by providing railway logistics and storage services in the first half of 2014, compared to a HK$0.9 million gross loss in the same period of last year. Although the gross profit was relatively small, it shows that new business development is beginning to generate revenues.

d. GCC Impairment

An after tax impairment loss of HK$3,994 million was recorded for write-downs of GCC to the lower of its carrying amount and its fair value less costs to sell. The Board of Directors of the Company has resolved to commit to a plan to dispose part or all of its interest in GCC and the Company has hired BNP Paribas as its financial advisor to facilitate the sales process. The fair value of the disposal group is determined with reference to coal price and other information provided by BNP Paribas.

2014 Interim Report

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Management Discussion and Analysis of Financial Conditions and Operating Results (Continued)

e. Net Finance Costs

In the first half of 2014, our net finance costs from continuing operations totaled HK$154 million compared to HK$109 million during the same period of 2013. The increase was caused by less exchange gain due to less appreciation of RMB against USD. The Group’s finance costs consist primarily of its interest expenses of HK$115 million on its senior notes during the first half of 2014.

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Six months ended
30 June 2014 30 June 2013
$’000 $’000
(Restated)
Interest income (32,931) (64,518)
—
Gains on repurchase of senior notes (3,022)
Foreign exchange gain, net (19,865) (159,254)
Finance income (52,796) (226,794)
Interest on secured bank
loans wholly repayable within five years 44,453 78,696
Interest on discounted bills receivable 23,137 67,632
Interest on senior notes 115,162 160,721
Total interest expense 182,752 307,049
Bank charges 17,801 18,335
Fair value of derivative financial instruments 6,714 10,103
Finance costs 207,267 335,487
Net finance costs 154,471 108,693
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Winsway Enterprises Holdings Limited

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Management Discussion and Analysis of Financial Conditions and Operating Results (Continued)

f. Net Loss and Loss per Share

The Group incurred a net loss of HK$4,728 million in the first half of 2014 compared to HK$933 million in the first half of 2013. Out of the HK$4,728 million loss, HK$421 million was from continuing operations, and out of the HK$421 million loss, HK$189 million was impairment loss without cash flow impact in the first half of 2014 associated with property, plant and equipment and inventory. Net loss per share is HK$0.727 for the first half of 2014 compared to HK$0.202 for the first half of 2013, and loss per share for continuing operations is HK$0.110 for the first half of 2014, less than a restated net loss per share for continuing operations of HK$0.124 for the first half of 2013.

g. Working Capital

Our accounts receivable turnover days, accounts payable turnover days and inventory turnover days for the first half of 2014 were 136 days, 108 days, and 51 days respectively. The cash conversion days is 83 days, which is 27 days longer than the same period of last year.

Working Capital

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200
180
160
136
140
120 108
100
8060 63 70 59 51
40
20
0
1H 2013 (restated) 1H 2014
AR Turnover AP Turnover Inventory Turnover
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h. Property, Plant and Equipment (“PP&E”)

The aggregate amount of property, plant and equipment and construction in progress totaled HK$1,445 million at the end of June 2014, representing a 67.24% decrease over the amount at the end of December 2013 (HK$4,411 million). The decrease was mainly because of the assets of GCC having been classified as held for sale.

2014 Interim Report

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Management Discussion and Analysis of Financial Conditions and Operating Results (Continued)

i. Indebtedness and Liquidity

As of 30 June 2014, our secured bank loans totaled HK$2,310 million (excluding loans of GCC), a decrease of 44.46% from the amount at the end of 2013 (HK$4,159 million). The decrease is mainly resulted from the held for sale classification of GCC’s assets and liabilities. The range of interest rates per annum for bank loans for the first half of 2014 varied from 0.94% to 7.68%, this is to be compared with a range from 1.78% to 7.68% during the year of 2013. The Group’s gearing ratio as of 30 June 2014 was 88.84% compared to 72.91% as of 31 December 2013. (Gearing ratio calculated on the basis of the Group’s total liabilities divided by its total assets)

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Indebtedness and Liquidity
150% (%) 100
88.84%
75% 50
0 0
-32.51
-75% -50
-78.42%
-150% -100
Liability/Asset EBITDA/Interest Debt/EBITDA
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j. Contingent Liability

The Company’s existing subsidiaries, other than those established/incorporated under the laws of the PRC, subsidiaries deemed immaterial and those falling under the definition of Unrestricted Subsidiaries under the Senior Notes (Winsway Coking Coal Holdings S.à.r.l., 0925165 B.C. Ltd., GCC and Grande Cache Coal LP (“GCC LP”)), have provided guarantees for the Senior Notes issued in April 2011. The guarantees will be released upon the full and final payment and performance of all obligations of the Company under the Senior Notes.

Winsway Enterprises Holdings Limited

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Management Discussion and Analysis of Financial Conditions and Operating Results (Continued)

k. Pledge of Assets

At 30 June 2014, bank loans amounting to HK$758,691,000 (31 December 2013: HK$450,710,000) have been secured by bank deposits placed in banks with an aggregate carrying value of HK$758,751,000 (31 December 2013: HK$420,156,000).

At 30 June 2014, bank loans amounting to HK$1,163,440,000 (31 December 2013: HK$485,160,000) have been secured by trade and bills receivables with an aggregate carrying value of HK$1,226,801,000 (31 December 2013: HK$489,542,000).

At 30 June 2014, bank loans amounting to HK$66,770,000 (31 December 2013: HK$67,411,000) have been secured by land use rights with an aggregate carrying value of HK$26,753,000 (31 December 2013: HK$27,010,000).

At 30 June 2014, bank loans amounting to HK$320,878,000 (31 December 2013: HK$Nil) were secured by both bank deposits and trade receivables with an aggregate carrying value of HK$316,698,000 (31 December 2013: HK$Nil) and HK$12,598,000 (31 December 2013: HK$Nil) respectively.

l. Cash Flow

In the first half of 2014, our operating cash outflow was HK$2,856 million compared with HK$689 million cash inflow during the same period of last year. The decrease in our operating cash flow was primarily due to the settlement of trade and other payables in the first half of 2014.

In the first half of 2014, the Group enjoyed a cash inflow from investing activities of HK$218 million compared to HK$315 million cash outflow during the first half of 2013. The cash inflow from investing activities was due to the decrease in restricted bank deposits during the first half of 2014.

The Group had a cash inflow of financing activities of HK$1,215 million during the first half of 2014 compared to HK$719 million cash outflow during the first half of 2013. The cash inflow of financing activities was mainly generated from net proceeds from bank loans on trade financing.

VII. exPosure to excHange rate FluctuatIons

Over 48% of the Group’s turnover in the first half of 2014 were denominated in RMB and the remaining 52% in United States Dollars (“US dollars”). The Group’s cost of coal purchased, accounting for over 96% of the total cost of sales in the first half of 2014, and some of our operating expenses were denominated in US dollars. Fluctuations in exchange rates may adversely affect the value of the Group’s net assets, earnings or any declared dividends as RMB is translated or converted into US dollars or Hong Kong Dollars. Any unfavorable movement in exchange rates may lead to an increase in the costs of the Group or a decline in sales, which could materially affect the Group’s results of operations.

2014 Interim Report

Management Discussion and Analysis of Financial Conditions and Operating Results (Continued)

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VIII. HuMan resources

a. Human Resources excluding GCC

Employee Overview

The Group aims to set up a performance-oriented compensation and benefit system while balancing the internal and external market in each different job position. Strictly following the PRC Labor Law and Labor Contract Law, the Group signs formal employment contracts with all employees and pays all mandatory social insurances schemes to the full amount. In Hong Kong, the Group participated in a mandatory provident fund scheme for our employees in Hong Kong in accordance with the applicable Hong Kong laws and regulations.

As at 30 June 2014, there were 431 full-time employees in the Group (excluding 238 dispatch staff in domestic companies), reduced from 608 full-time employees by the end of 2013. Detailed category of employees of the Group (excluding GCC) is as follows:

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Functions No. of employees Percentage
Management, Administration & Finance 248 58%
Front-line Production &
Production Support & Maintenance 113 26%
Sales & Marketing 25 6%
Others (incl. Projects, CP, Transportation) 45 10%
Total 431 100%
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Employee Education Overview

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Qualifications No. of employees Percentage
Master & above 49 11%
Bachelor 125 29%
Diploma 120 28%
Middle-School (Secondary School) & below 137 32%
Total 431 100%
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Winsway Enterprises Holdings Limited

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Management Discussion and Analysis of Financial Conditions and Operating Results (Continued)

Training Overview

Training is key to the Group to help improve employees’ working capabilities and management skills. For the six months ended June 30, 2014, the Group (excluding GCC) held various internal and external training programs, and accumulatively 311 participants are covered by these training programs with 2,839 training hours in total.

Some management staff have completed EMBA program sponsored by the Group.

Training Overview

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Training Courses No. of hours No. of participants
Safety 1,847 227
Management and leadership 438 38
Operation Excellence 554 46
Total 2,839 311
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b. GCC Human Resources

As at 30 June 2014, GCC had 452 employees in total, reduced from 572 employees by the end of 2013. Detailed category of employees of GCC is as follows:

Breakdown of Mining related personnel

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Functions No. of Employees Percentage
Head Office (Calgary) (Note 1) 24 5%
Mine Site Management, Supervision,
Technical and Administrative 101 22%
Underground Mining Operations (Union) 109 24%
Contract Underground Mining Operations 2 1%
Surface Mining Operations (Union) 103 23%
Maintenance (Union) 48 11%
Coal Process Plant Operations &
Maintenance and Site Care (Union) 65 14%
Total 452 100%
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Note 1 The Head Office head count includes 8 Superintendents at the Mine Site.

Note 2 The total number of union employees is 331.

2014 Interim Report

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Management Discussion and Analysis of Financial Conditions and Operating Results (Continued)

Employee Education Overview

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Qualifications No. of employee Percentage
Master & above 5 1%
Bachelor 25 6%
Diploma 141 31%
Middle-School (Secondary School) & below 281 62%
Total 452 100%
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Training Overview

For the six months ended 30 June 2014, GCC held various internal and external training programs, and accumulatively 358 participants were covered by these programs training programs with 1,122 training hours in total.

New staff orientation program is provided, which covers company introduction, rules and discipline, safety and operation guidelines.

Training Overview

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Training Courses No.of hours No. of participants
Safety 710 300
New staff Orientation 144 18
Operation Excellence 268 40
Total 1,122 358
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Winsway Enterprises Holdings Limited

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Management Discussion and Analysis of Financial Conditions and Operating Results (Continued)

Ix. HealtH, saFety and enVIronMent

We value the health and safety of our employees and the importance of protecting the environment. The LTIFR, a ratio of the number of lost-time injuries per million hours work, was 0 for the Group (excluding GCC) and 2.21 for GCC in the first half of 2014. No serious safety and environmental accidents were reported in the first half of 2014.

In the first half of 2014, the Group (excluding GCC) still focused on (1) safety standardization system establishment; (2) employees safety training; (3) systemization of safety responsibility; (4) establishment of red alert system; and (5) special equipment management. Under systematic management, HSE performance of the Company has maintained good record. In the second half of 2014, achieving zero accident ratio is still the objective of the Group.

In the first half of 2014, GCC saw significant improvement on safety performance over the first half of 2013, as measured in 33% reductions in Lost Time Injury (LTI) frequency and 70% reduction in Injury Severity. GCC will further strengthen its safety management in the second half of 2014 to realize the same trend in LTI frequency.

x. PurcHase, sale or redeMPtIon oF tHe coMPany’s lIsted securItIes

Neither the Company nor any of its subsidiaries had purchased, sold or redeemed any of the Company’s listed securities during the six months ended 30 June 2014.

xI. InterIM dIVIdend

The board (“the Board”) of directors (“Directors”) of the Company does not recommend the payment of an interim dividend for the six months ended 30 June 2014.

2014 Interim Report

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Other Information

dIrectors’ and cHIeF executIVe’s Interests and sHort PosItIons In sHares, underlyIng sHares and debentures

As at 30 June 2014, the interests and short positions of the Directors and chief executive of the Company in the shares of the Company (“ Shares ”) and underlying Shares and debentures of the Company or its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (“ SFO ”)) which (a) were required to be notified to the Company and The Stock Exchange of Hong Kong Limited (the “ Hong Kong Stock Exchange ”) pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO) or (b) were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein or (c) were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (“ Model Code ”) set out in Appendix 10 to the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange (the “ Listing Rules ”), to be notified to the Company and the Hong Kong Stock Exchange, were as follows:

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Approximate
Aggregate number percentage of
of Shares or interest in the
Name of Directors Name of corporation Nature of interest underlying Shares corporation
Wang Xingchun [(1)] The Company Personal interest 1,852,484,109 49.10%
and interest of
controlled corporation
Winsway Mongolian Beneficial owner 1 10%
Transportation
Pte. Ltd.
Zhu Hongchan [(2)] The Company Personal interest 10,345,000 0.27%
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Winsway Enterprises Holdings Limited

Other Information (Continued)

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----- Start of picture text -----

Approximate
Aggregate number percentage of
of Shares or interest in the
Name of Directors Name of corporation Nature of interest underlying Shares corporation
Yasuhisa Yamamoto [(3)] The Company Personal Interest 8,469,000 0.22%
Liu Qingchun The Company Personal interest and 179,000 0.005%
interest of spouse
James Downing The Company Personal Interest 329,000 0.01%
George Jay Hambro The Company Personal Interest 573,000 0.02%
Ma Li [(2)] The Company Personal Interest 8,276,000 0.22%
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Notes:

(1) Mr. Wang indirectly holds the entire issued share capital of Winsway International Petroleum & Chemicals Limited and Winsway Resources Holdings Limited and is deemed to be interested in the 208,106,421 Shares and 1,627,043,688 Shares held by Winsway International Petroleum & Chemicals Limited and Winsway Resources Holdings Limited, respectively. In addition, Mr. Wang holds an option to subscribe for 17,334,000 Shares under the Pre-IPO Option Scheme. On 15 July 2014, Mr. Wang pledged 208,106,421 Shares and 920,079,989 Shares respectively (the “ Pledged Shares ”) through his indirectly wholly owned companies Winsway International Petroleum & Chemicals Limited and Winsway Resources Holdings Limited in favour of an independent third party which is a state-owned enterprise in the PRC as security for the performance of certain contractual obligation of a company indirectly owned by Mr. Wang. The Pledged Shares represent approximately 29.90% of the issued shares of the Company. For further details, please refer to the announcement of the Company dated 15 July 2014.
(2) Options to subscribe for 10,345,000 Shares and 8,276,000 Shares were held by Ms. Zhu Hongchan and Ms. Ma Li respectively under the Pre-IPO Option Scheme.
(3) Mr. Yasuhisa Yamamoto holds 400,000 Shares and an option to subscribe for 8,069,000 Shares under the Pre-IPO Option Scheme.

Save as disclosed above, as at 30 June 2014, so far as is known to any Directors or chief executive of the Company, none of the Directors or chief executive of the Company had any interests or short positions in the Shares or underlying Shares or debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO) which (a) were required to be notified to the Company and the Hong Kong Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO) or (b) were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein or (c) were required, pursuant to the Model Code, to be notified to the Company and the Hong Kong Stock Exchange.

2014 Interim Report

Other Information (Continued)

sHare-based IncentIVe Plans

Pre-IPO Option Scheme

The Company adopted the Pre-IPO Option Scheme before its listing on the Hong Kong Stock Exchange, on 30 June 2010, to recognise the contribution of certain of the Directors and employees of the Company and of its parent company group whom the Board considers to have contributed to the growth of the Group and/or to the listing of the Shares of the Company on the Hong Kong Stock Exchange.

According to the rules of the Pre-IPO Option Scheme, the Pre-IPO Scheme shall be valid and effective for a period of 5 years from 30 June 2010. Pursuant to the Pre-IPO Option Scheme, options to subscribe for 107,945,000 Shares were granted. No further options to subscribe for Shares may be granted under the Pre-IPO Option Scheme after 30 June 2010. A summary of the movements of the outstanding share options granted under the Pre-IPO Option Scheme during the six months ended 30 June 2014 were as follows:

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Options lapsed/
Options held as Options exercised cancelled during Options held as
Grantee at 1 January 2014 during the period the period at 30 June 2014
Directors
— —
Wang Xingchun 17,334,000 17,334,000
— —
Zhu Hongchan 10,345,000 10,345,000
Yasuhisa Yamamoto 8,069,000 — — 8,069,000
Ma Li 8,276,000 — — 8,276,000
— —
Cui Yong 8,230,000 8,230,000
(Resigned on
30 December 2013)
— —
Apolonius Struijk 4,869,000 4,869,000
(Resigned on
1 April 2013)
Others
—
Employees 41,088,913 7,170,913 33,918,000
Total 98,211,913 — 20,269,913 77,942,000
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Winsway Enterprises Holdings Limited

Other Information (Continued)

Restricted Share Unit Scheme

Under the restricted share unit scheme (“ RSU Scheme ”) adopted by the Company on 11 June 2012, the Company may grant restricted share unit awards (“ RSU Awards ”) to directors (including executive directors, non-executive directors and independent non-executive directors), officers and full-time employees of the Company or any of its subsidiaries. An RSU Award gives a participant in the RSU Scheme a conditional right when the RSU Award vests to obtain either Shares (existing Shares in issue or new Shares to be issued by the Company) or an equivalent value in cash with reference to the value of the Shares on or about the date of vesting, as determined by the Board in its absolute discretion. The Board may determine the vesting criteria, conditions and the time when the RSU Awards will vest.

The purposes of the RSU Scheme are to retain and motivate its participants to make contributions to the long term growth and profits of the Company with a view to achieving the objective of increasing the value of the Group and to promote a greater alignment of interests between the participants and the shareholders of the Company. The Board will select participants to receive RSU Awards under the RSU scheme at its discretion.

During the six months ended 30 June 2014, no RSU Awards were granted by the Company under the RSU Scheme.

2014 Share Option Scheme

The Company adopted a new share option scheme (the “ 2014 Share Option Scheme ”) in the annual general meeting of the Company held on 6 June 2014. The purpose of the 2014 Share Option Scheme is to reward persons who have contributed to the Group and to encourage such persons to work towards enhancing the value of the Company. The eligible participants of the 2014 Share Option Scheme include Directors (including executive Directors, non-executive Directors and independent non-executive Directors) and employees of the Group. The 2014 Share Option Scheme, unless otherwise terminated or amended, will remain in force for a period of 5 years from 6 June 2014.

As of 30 June 2014, no share option had been granted by the Company or outstanding under the 2014 Share Option Scheme.

Save as disclosed above, at no time during the six months ended 30 June 2014 was the Company or any of its subsidiaries, a party to any arrangements to enable the Directors to acquire benefits by means of the acquisition of Shares in, or debentures of, the Company or any other body corporate.

2014 Interim Report

Other Information (Continued)

substantIal sHareHolders

So far as the Directors are aware, as at 30 June 2014, shareholders of the Company who had interests or short positions in the Shares or underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the register required to be kept by the Company under Section 336 of the SFO were as follows:

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Approximate
percentage of
Name of Name of Nature of Aggregate number interest in the
Shareholder Corporation interest of Shares corporation
Wang Xingchun [(1)(4)] The Company Personal interest and 1,852,484,109 49.10%
interest of controlled
corporation
Winsway Group The Company Interest of controlled 1,835,150,109 48.64%
Holdings Limited [(2)] corporation
Winsway Petroleum The Company Interest of controlled 208,106,421 5.52%
Holdings Limited [(3)] corporation
Winsway International The Company Beneficial owner 208,106,421 5.52%
Petroleum & Chemicals
Limited
Winsway Resources The Company Beneficial owner 1,627,043,688 43.12%
Holdings Limited
Peabody Energy The Company Beneficial owner 193,363,378 5.12%
Corporation
----- End of picture text -----

Notes:

(1) Mr. Wang indirectly holds the entire issued share capital of Winsway International Petroleum & Chemicals Limited and Winsway Resources Holdings Limited and is deemed to be interested in the 208,106,421 Shares and 1,627,043,688 Shares held by Winsway International Petroleum & Chemicals Limited and Winsway Resources Holdings Limited, respectively. In addition, Mr. Wang holds an option to subscribe for 17,334,000 Shares under the Pre-IPO Option Scheme.
(2) Winsway Group Holdings Limited indirectly holds the entire issued share capital of Winsway International Petroleum & Chemicals Limited and directly holds the entire issued share capital of Winsway Resources Holdings Limited and is deemed to be interested in the 208,106,421 Shares and 1,627,043,688 Shares held by Winsway International Petroleum & Chemicals Limited and Winsway Resources Holdings Limited, respectively.
(3) Winsway Petroleum Holdings Limited holds the entire issued share capital of Winsway International Petroleum & Chemicals Limited and is deemed to be interested in the 208,106,421 Shares held by Winsway International Petroleum & Chemicals Limited.
(4) On 15 July 2014, Mr. Wang pledged 208,106,421 Shares and 920,079,989 Shares respectively (the “ Pledged Shares ”) through his indirectly wholly owned companies Winsway International Petroleum & Chemicals Limited and Winsway Resources Holdings Limited in favour of an independent third party which is a state-owned enterprise in the PRC as security for the performance of certain contractual obligation of a company indirectly owned by Mr. Wang. The Pledged Shares represent approximately 29.90% of the issued shares of the Company. For further details, please refer to the announcement of the Company dated 15 July 2014.

Winsway Enterprises Holdings Limited

Other Information (Continued)

Save as disclosed above, as of 30 June 2014, the Company had not been notified by any persons (other than the Directors or chief executives of the Company) who had interests or short positions representing 5% or more of the issued share capital of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the register required to be kept by the Company under Section 336 of the SFO.

PurcHase, sale or redeMPtIon oF tHe coMPany’s lIsted securItIes

Throughout the six months ended 30 June 2014, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company’s listed securities.

audIt coMMIttee

The Company has established an audit committee in accordance with the requirements of the Listing Rules and the Corporate Governance Code (“CG Code”) set out in Appendix 14 to the Listing Rules. The primary duties of the audit committee are to assist the Board in providing an independent view of the effectiveness of the Company’s financial reporting process, internal control and risk management system, to oversee the audit process and to perform other duties and responsibilities as assigned by the Board.

From the six months ended 30 June 2014, the audit committee has held 2 meetings. The members of audit committee have reviewed and discussed with the external auditors the Group’s financial statements for the six months ended 30 June 2014, and are of the opinion that such statements have complied with the applicable accounting standards, the Hong Kong Stock Exchange and legal requirements, and that adequate disclosure has been made. The above meetings were attended by all four members of the audit committee.

reMuneratIon coMMIttee

The Company established a remuneration committee in accordance with the requirements of the CG Code. The primary duties of the remuneration committee are to review and formulate remuneration policies for the Directors and senior management, to make recommendations on the remuneration package of the Directors and senior management and to evaluate and make recommendations on employee benefit arrangement.

The remuneration committee held 2 meetings during the six months ended 30 June 2014, at which the members of the committee reviewed the remuneration of the Directors and senior management with reference to their duties, responsibilities, experience, qualifications and performance. No Director took part in any discussion about his own remuneration. The meeting was attended by all three members of the remuneration committee.

2014 Interim Report

Other Information (Continued)

corPorate goVernance code

The Company is strongly committed to maintaining high standards of corporate governance, which it regards as a vital element in ensuring its continued success. This commitment is best illustrated by its compliance with the Code Provisions and many of the Recommended Best Practices set out in the CG Code.

Code Provisions

Throughout the first half of 2014, except for the requirement that the roles of chairman and chief executive officer should not be performed by the same individual under Code Provision A.2.1 of the CG Code, the Company has complied with the Code Provisions set out in the CG Code.

Mr. Wang Xingchun is the Chairman and Chief Executive Officer of the Company. The Board is responsible for the Group’s overall strategic planning and the management of the Company’s business. The Board considers that vesting the roles of chairman and chief executive officer in the same person is beneficial to the business prospects and management of the Group.

On 26 August 2014, Mr. Andreas Werner was appointed as an executive Director of the Company and the chief executive officer designate (the “ CEO Designate ”) to handle the day-to-day operation of the Company during Mr. Wang Xingchun’s period of absence from his management duties. The Board believes that the appointment of Mr. Andreas Werner as the CEO Designate could enhance the Company’s corporate governance by separating the roles and duties of the chairman and the chief executive.

The balance of power and authority is ensured by the operation of the Board, which comprises experienced and high-calibre individuals. The Board currently comprises five executive Directors (including Mr. Wang Xingchun), three non-executive Directors and four independent non-executive Directors and therefore has a strong element of independence in its composition.

Model code For securItIes transactIons by dIrectors oF tHe coMPany

The Company has adopted the Model Code as its own code of conduct for dealing in securities of the Company by the Directors. Having made specific enquiry of all the Directors, each Director confirmed that he/ she has complied with the required standard set out in the Model Code throughout the first half of 2014.

PublIc Float

Based on the information that is publicly available to the Company and as is known to the Directors, during the six months ended 30 June 2014 and up to the latest practicable date prior to the printing of this report, the Company has maintained the amount of public float of not less than 25% of the Company’s issued shares as required under the Listing Rules.

Winsway Enterprises Holdings Limited

Other Information (Continued)

board oF dIrectors

The Directors during the period were:

Executive Directors:

Mr. Wang Xingchun (Chairman and Chief Executive Officer)
Ms. Zhu Hongchan
Mr. Yasuhisa Yamamoto (Resigned on 26 August 2014)
Mr. Andreas Werner (Appointed on 26 August 2014)
Ms. Ma Li
Mr. Wang Chang Qing

Non-executive Directors:

Mr. Daniel J. Miller

Mr. Liu Qingchun
Mr. Lu Chuan

Independent Non-executive Directors:

Mr. James Downing
Mr. Ng Yuk Keung
Mr. Wang Wenfu
Mr. George Jay Hambro

uPdate on dIrectors’ InForMatIon

Mr. Ng Yuk Keung, an independent non-executive Director, became a director of Cheetah Mobile Inc. with effect from 15 July 2012. Cheetah Mobile Inc. is a subsidiary of Kingsoft Corporation Limited, a company listed on the Hong Kong Stock Exchange (stock code: 03888). The American depositary shares of Cheetah Mobile Inc. have been listed on the New York Stock Exchange (NYSE) since 8 May 2014. Mr. Ng is currently an executive director and the chief financial officer of Kingsoft Corporation Limited.

2014 Interim Report

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Consolidated Statement of Profit or Loss

for the six months ended 30 June 2014 - unaudited

(Expressed in Hong Kong dollars)

	Note	Six months ended 30 June 2014 2013 *$’000* $’000 (Restated – note 2)	Six months ended 30 June 2014 2013 *$’000* $’000 (Restated – note 2)
Continuing operations: Turnover Cost of sales	4	3,246,481 (3,246,065)	5,380,576 (5,476,096)
Gross profit/(loss) Other revenue Distribution costs Administrative expenses Other operating expenses, net Impairment of non-current assets	6 7(c)	416 76,272 (86,314) (191,200) (1,278) (58,764)	(95,520) 38,592 (56,945) (191,759) (491) —
Loss from operating activities Finance income Finance costs		(260,868)	(306,123) 226,794 (335,487)
	7(a) 7(a)	52,796 (207,267)
Net finance costs Share of profit of an associate		(154,471)	(108,693) —
		916
Loss before taxation from continuing operations Income tax	8	(414,423) (6,163)	(414,816) (58,354)
Loss from continuing operations Discontinued operation: Loss from discontinued operation, net of tax	5	(420,586) (4,307,275)	(473,170) (459,643)
Loss for the period		(4,727,861)	(932,813)

The notes on pages 35 to 75 form part of this interim financial report. Details of dividends payable to equity shareholders of the Company are set out in note 23(a).

Winsway Enterprises Holdings Limited

Consolidated Statement of Profit or Loss (Continued)

for the six months ended 30 June 2014 - unaudited (Expressed in Hong Kong dollars)

for the six months ended 30 June 2014 - unaudited (Expressed in Hong Kong dollars)
	Note	Six months ended 30 June 2014 2013 *$’000* $’000 (Restated – note 2)
Attributable to: Equity shareholders of the Company: Loss for the period from continuing operations Loss for the period from discontinued operations		(413,257) (2,327,218)	(469,700) (292,996)
Loss for the period attributable to equity shareholders of the Company Non-controlling interests: Loss for the period from continuing operations Loss for the period from discontinued operations		(2,740,475)	(762,696) (3,470) (166,647)
		(7,329) (1,980,057)
Loss for the period attributable to non-controlling interests		(1,987,386)	(170,117)
Loss for the period		(4,727,861)	(932,813)

Loss per share — Basic and diluted_(HK$)_	9	(0.727)	(0.202)

Loss per share – continuing operations — Basic and diluted_(HK$)_	9	(0.110)	(0.124)

The notes on pages 35 to 75 form part of this interim financial report. Details of dividends payable to equity shareholders of the Company are set out in note 23(a).

2014 Interim Report

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Consolidated Statement of Profit or Loss and Other Comprehensive Income

for the six months ended 30 June 2014 - unaudited

(Expressed in Hong Kong dollars)

	Six months ended 30 June	Six months ended 30 June
	2014	2013
	*$’000*	$’000
Loss for the period	(4,727,861)	(932,813)
Other comprehensive income for the period
(after tax adjustments):
Item that may be reclassified subsequently
to profit or loss:
Exchange differences arising on translation	(30,745)	35,976
Total comprehensive income for the period	(4,758,606)	(896,837)
Attributable to:
Equity shareholders of the Company	(2,770,027)	(729,113)
Non-controlling interests	(1,988,579)	(167,724)
Total comprehensive income for the period	(4,758,606)	(896,837)

The notes on pages 35 to 75 form part of this interim financial report.

Winsway Enterprises Holdings Limited

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Consolidated Statement of Financial Position

at 30 June 2014 - unaudited

(Expressed in Hong Kong dollars)

	Note	At 30 June 2014 *$’000*	At 31 December 2013 $’000
Non-current assets Property, plant and equipment, net Construction in progress Lease prepayments Intangible assets Interest in an associate Other investments in equity securities Other non-current assets Deferred tax assets	10 11 12 13 14	1,080,852 363,916 546,106 4,484 15,579 396,560 207,803 77,247	3,852,235 558,486 541,474 6,124,798 14,843 400,369 206,969 286,845
Total non-current assets		2,692,547	11,986,019
Current assets Inventories Trade and other receivables Restricted bank deposits Cash and cash equivalents Assets held for sale	15 16 17 18 5	721,394 3,554,774 1,566,763 554,152 4,778,338	1,362,734 4,616,224 2,150,026 2,018,000 —
Total current assets		11,175,421	10,146,984
Current liabilities Secured bank loans Trade and other payables Obligations under finance lease Income tax payable Liabilities held for sale	19 20 5	1,814,477 3,283,030 — 45,748 4,175,794	1,093,111 7,815,506 130,315 66,525 —
Total current liabilities		9,319,049	9,105,457
Net current assets		1,856,372	1,041,527
Total assets less current liabilities		4,548,919	13,027,546

The notes on pages 35 to 75 form part of this interim financial report.

2014 Interim Report


Non-current liabilities Secured bank loans Senior notes Deferred income Obligations under finance lease Deferred tax liabilities Provisions	19 21 22 14	495,302 2,349,243 156,240 — — —
Total non-current liabilities		3,000,785
Net assets		1,548,134

Capital and reserves Share capital Reserves	23(b)	4,992,337 (3,750,822)
Total equity attributable to equity shareholders of the Company Non-controlling interests		1,241,515 306,619
Total equity		1,548,134

The notes on pages 35 to 75 form part of this interim financial report.

Winsway Enterprises Holdings Limited

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Consolidated Statement of Changes in Equity for the six months ended 30 June 2014 - unaudited

(Expressed in Hong Kong dollars)

		Attributable	to equity shareholders of the Company	to equity shareholders of the Company	to equity shareholders of the Company
							Retained
			Employee				earnings/		Non-
	Share	Statutory	share	Other	Exchange	(accumulated			controlling	Total
	capital	reserve	trusts	reserve	reserve		loss)	Total	interests	equity
	$’000	$’000	$’000	$’000	$’000		$’000	$’000	$’000	$’000
	(note 23(b))			(note 23(c))
Balance at 1 January 2013	4,992,337	319,310	—	111,217	200,786		101,813	5,725,463	2,529,815	8,255,278
Equity settled share-based transactions	—	—	—	2,835	—		—	2,835	—	2,835
Total comprehensive income for the period	—	—	—	—	33,583		(762,696)	(729,113)	(167,724)	(896,837)
Balance at 30 June 2013	4,992,337	319,310	—	114,052	234,369		(660,883)	4,999,185	2,362,091	7,361,276
Balance at 1 July 2013	4,992,337	319,310	—	114,052	234,369		(660,883)	4,999,185	2,362,091	7,361,276
Equity settled share-based transactions	—	—	—	(592)	—		—	(592)	—	(592)
Total comprehensive income for the period	—	—	—	—	40,331		(1,026,689)	(986,358)	(366,459)	(1,352,817)
Appropriation to statutory reserve	—	5,667	—	—	—		(5,667)	—	—	—
Contribution to employee share trusts	—	—	(3,000)	—	—		—	(3,000)	—	(3,000)
Disposal of subsidiaries	—	—	—	—	—		—	—	(8,142)	(8,142)
Balance at 31 December 2013	4,992,337	324,977	(3,000)	113,460	274,700		(1,693,239)	4,009,235	1,987,490	5,996,725

The notes on pages 35 to 75 form part of this interim financial report.

2014 Interim Report

Consolidated Statement of Changes in Equity (Continued)

for the six months ended 30 June 2014 - unaudited (Expressed in Hong Kong dollars)

		Attributable	to equity shareholders of the Company	to equity shareholders of the Company	to equity shareholders of the Company
			Employee					Non-
	Share	Statutory	share	Other	Exchange	Accumulated		controlling	Total
	capital	reserve	trusts	reserve	reserve	loss	Total	interests	equity
	*$’000*	*$’000*	*$’000*	*$’000*	*$’000*	*$’000*	*$’000*	*$’000*	*$’000*
	*(note 23(b))*			*(note 23(c))*
Balance at 1 January 2014	4,992,337	324,977	(3,000)	113,460	274,700	(1,693,239)	4,009,235	1,987,490	5,996,725
Equity settled share-based transactions	—	—	—	2,318	—	—	2,318	—	2,318
Expiry of share options granted under
share option scheme	—	—	—	(28,222)	—	28,222	—	—	—
Contribution from non-controlling interests	—	—	—	—	—	—	—	310,184	310,184
Total comprehensive income for the period	—	—	—	—	(29,552)	(2,740,475)	(2,770,027)	(1,988,579)	(4,758,606)
Disposal of subsidiaries	—	(11)	—	—	—	—	(11)	(2,476)	(2,487)
Balance at 30 June 2014	4,992,337	324,966	(3,000)	87,556	245,148	(4,405,492)	1,241,515	306,619	1,548,134

The notes on pages 35 to 75 form part of this interim financial report.

Winsway Enterprises Holdings Limited

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Condensed Consolidated Cash Flow Statement

for the six months ended 30 June 2014 - unaudited

(Expressed in Hong Kong dollars)

		Six months ended	30 June
		2014	2013
	Note	*$’000*	$’000
Operating activities
Loss before taxation		(5,364,564)	(937,223)
Net change in inventories, trade and other
receivables and trade and other payables		(2,793,434)	1,109,547
Impairment of non-current assets		4,757,368	105,791
Other adjustments		565,569	443,930
Income tax paid		(21,069)	(33,343)
Net cash (used in)/generated from
operating activities		(2,856,130)	688,702
Investing activities
Payment for purchase of property,
plant and equipment, construction in progress,
lease prepayments and intangible assets		(191,124)	(553,910)
Government grants received		—	140,520
Decrease in restricted bank deposits		366,660	17,709
Other cash flows arising from investing activities		42,254	80,595
Net cash generated from/(used in)
investing activities		217,790	(315,086)
Financing activities
Proceeds from bank loans		4,630,580	2,883,338
Repayment of bank loans		(3,318,204)	(3,131,870)
Interests paid		(314,540)	(406,198)
Other cash flows arising from financing activities		217,185	(64,631)
Net cash generated from/(used in)
financing activities		1,215,021	(719,361)
Net decrease in cash and cash equivalents		(1,423,319)	(345,745)
Cash and cash equivalents at 1 January		2,018,000	2,110,823
Effect of foreign exchange rate changes		(6,979)	23,953
Cash and cash equivalents reclassified
as assets held for sale	5	(33,550)	—
Cash and cash equivalents at 30 June	18	554,152	1,789,031

The notes on pages 35 to 75 form part of this interim financial report.

2014 Interim Report

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Notes to the Unaudited Interim Financial Report (Expressed in Hong Kong dollars unless otherwise indicated)

1 corPorate InForMatIon

Winsway Enterprises Holdings Limited (formerly known as “Winsway Coking Coal Holdings Limited”) (the “Company”) was incorporated in the British Virgin Islands (“BVI”) on 17 September 2007 with limited liability under the Business Companies Act of the British Virgin Islands (2004). The Company and its subsidiaries (together referred to as the “Group”) are principally engaged in the processing and trading of coking coal and other products, development of coal mills and production of coking coal (classified as a discontinued operation) and rendering of logistics services.

2 basIs oF PreParatIon

This interim financial report has been prepared in accordance with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, including compliance with International Accounting Standard (“IAS”) 34, Interim financial reporting , issued by the International Accounting Standards Board (“IASB”). It was authorised for issue on 26 August 2014.

The interim financial report has been prepared in accordance with the same accounting policies adopted in the 2013 annual financial statements, except for the accounting policy changes that are expected to be reflected in the 2014 annual financial statements. Details of these changes in accounting policies are set out in note 3.

One of the Group’s subsidiaries, namely Grande Cache Coal LP (“GCC LP”) sustained a net loss from operations activities before impairment losses for non-current assets of $825 million for the year ended 31 December 2013. As a result of the continuing depression of the coking coal market, GCC LP incurred significant losses before taxation of $252 million, before impairment losses, and net cash outflow of $15 million from operating activities and investing activities in the six months ended 30 June 2014. As at 30 June 2014, GCC LP had total loans of $3,150 million (among which $965 million is repayable in the next 12 months from 30 June 2014) and cash and cash equivalents balance of $34 million, taking into account the fact that the Group finds itself difficult to continue providing financial support to GCC LP, the operation of GCC LP as a going concern is dependent on whether GCC LP can extend the repayment of those bank loans when they fall due and whether GCC LP can obtain new external financing. In addition, GCC LP has loans of $194 million due on 2 September 2014 and as of the date of approval of these financial statements is with insufficient liquidity to discharge the obligation in accordance with the terms of the loans. Without immediate financial support, GCC LP will be in default of its obligations under the terms of the loans and may be unable to realise its assets and discharge its liabilities in the normal course of business. However, GCC LP is actively negotiating with relevant banks for the loan restructuring and seeking new external financing. All these indicate the existence of a material uncertainty which may cast significant doubt about the ability of GCC LP to operate as a going concern in the foreseeable future.

Winsway Enterprises Holdings Limited

Notes to the Unaudited Interim Financial Report (Continued)

(Expressed in Hong Kong dollars unless otherwise indicated)

2 basIs oF PreParatIon (Continued)

On 27 June 2014, the board of directors of the Company resolved to commit to a plan to sell part or all of the Company’s interest in GCC LP to a level at which the Company would cease to hold a majority or controlling interest. Efforts to sell the disposal group have started and a sale is expected to be completed within one year. As at the date of approval of this financial report, the Company has communicated with several purchasers for the disposal of GCC LP. However, the Company has not yet entered into any agreement.

GCC LP and its coal mining operation as a whole represent the Group’s development of coal mills and production of coking coal and related products segment that is separated from the Group’s other business segments. Accordingly, GCC LP has been presented as a discontinued operation in the consolidated statement of profit or loss and the assets and liabilities of GCC LP have been classified as a disposal group held for sale. The comparative consolidated statement of profit or loss has been restated to show the discontinued operation separately from continuing operation. An impairment loss of $4,698,604,000 for write-downs of the disposal group to the lower of its carrying amount and its fair value less costs to sell has been recorded in the consolidated statement of profit or loss for the current period (see note 5). The directors of the Company are of the view that the Group is able to dispose of GCC LP without any material further losses after the above-mentioned impairment loss under the current market conditions.

In light of the measures of the Group described above, the directors of the Company are of the view that the Group is able to meet with its liabilities as and when they fall due in the foreseeable future. In addition, the above plan to dispose of GCC LP as a whole shall not have any material adverse impact to the results, cash flows and financial position of the remaining part of the Group. After such disposal, the remaining part of the Group is a viable group with processing and trading of coking coal, logistics services and other businesses. Accordingly, the directors of the Company consider that it is appropriate to prepare these financial statements on a going concern basis. These financial statements do not include any adjustments that might be necessary should the Group not be able to continue as a going concern in the foreseeable future.

The preparation of an interim financial report in conformity with IAS 34 requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses on a year to date basis. Actual results may differ from these estimates.

This interim financial report contains condensed consolidated financial statements and selected explanatory notes. The notes include an explanation of events and transactions that are significant to an understanding of the changes in financial position and performance of the Group since the 2013 annual financial statements. The condensed consolidated interim financial statements and notes thereon do not include all of the information required for a full set of financial statements prepared in accordance with International Financial Reporting Standards (“IFRSs”).

2014 Interim Report

Notes to the Unaudited Interim Financial Report (Continued)

(Expressed in Hong Kong dollars unless otherwise indicated)

2 basIs oF PreParatIon (Continued)

The interim financial report is unaudited, but has been reviewed by KPMG in accordance with Hong Kong Standard on Review Engagements 2410, Review of interim financial information preformed by the independent auditor of the entity , issued by the Hong Kong Institute of Certified Public Accountants. KPMG’s independent review report to the Board of Directors is included on page 76.

The financial information relating to the financial year ended 31 December 2013 that is included in the interim financial report as being previously reported information does not constitute the Company’s annual financial statements for that financial year but is derived from those financial statements. The annual financial statements for the year ended 31 December 2013 are available from the Company’s registered office. The auditors have expressed an unqualified opinion on those financial statements in their report dated 26 March 2014.

3 cHanges In accountIng PolIcIes

The IASB has issued the following amendments to IFRSs and one new Interpretation that are first effective for the current accounting period of the Group and the Company:

Amendments to IFRS 10, IFRS 12 and IAS 27, Investment entities
Amendments to IAS 32, Offsetting financial assets and financial liabilities
Amendments to IAS 36, Recoverable amount disclosures for non-financial assets
Amendments to IAS 39, Novation of derivatives and continuation of hedge accounting
IFRIC 21, Levies

The Group has not applied any new standard or interpretation that is not yet effective for the current accounting period. Impacts of the adoption of new or amended IFRSs are discussed below:

Amendments to IFRS 10, IFRS 12 and IAS 27, Investment entities

The amendments provide consolidation relief to those parents which qualify to be an investment entity as defined in the amended IFRS 10. Investment entities are required to measure their subsidiaries at fair value through profit or loss. These amendments do not have an impact on the Group’s interim financial report as the Company does not qualify to be an investment entity.

Amendments to IAS 32, Offsetting financial assets and financial liabilities

The amendments to IAS 32 clarify the offsetting criteria in IAS 32. The amendments do not have an impact on the Group’s interim financial report as they are consistent with the policies already adopted by the Group.

Winsway Enterprises Holdings Limited

Notes to the Unaudited Interim Financial Report (Continued)

(Expressed in Hong Kong dollars unless otherwise indicated)

3 cHanges In accountIng PolIcIes (Continued)

Amendments to IAS 36, Recoverable amount disclosures for non-financial assets

The amendments to IAS 36 modify the disclosure requirements for impaired non-financial assets. Among them, the amendments expand the disclosures required for an impaired asset or cashgenerating units (“CGU”) whose recoverable amount is based on fair value less costs of disposal. Disclosures in respect of impaired assets relating to the disposal group held for sale of GCC LP have been disclosed in note 5.

Amendments to IAS 39, Novation of derivatives and continuation of hedge accounting

The amendments to IAS 39 provide relief from discontinuing hedge accounting when novation of a derivative designated as a hedging instrument meets certain criteria. The amendments do not have an impact on the Group’s interim financial report as the Group has not novated any of its derivatives.

IFRIC 21, Levies

The Interpretation provides guidance on when a liability to pay a levy imposed by a government should be recognised. The amendments do not have an impact on the Group’s interim financial report as the guidance is consistent with the Group’s existing accounting policies.

4 turnoVer and segMent rePortIng

(i) Turnover

The Group is principally engaged in the processing and trading of coking coal and other products and the rendering of logistics services. Turnover represents the sales value of goods sold, net of value added tax and other sales taxes and is after any trade discounts, and revenue from rendering of logistics services. The amount of each significant category of revenue recognised in turnover during the period is as follows:

Continuing operations

	Six months ended 30 June	Six months ended 30 June
	2014	2013
	*$’000*	$’000
		(Restated)
Coking coal	3,036,118	4,741,936
Thermal coal	151,312	—
Coal related products	22,973	396,002
Iron ore	—	215,698
Rendering of logistics services	32,875	23,953
Others	3,203	2,987
	3,246,481	5,380,576

2014 Interim Report

Notes to the Unaudited Interim Financial Report (Continued)

(Expressed in Hong Kong dollars unless otherwise indicated)

4 turnoVer and segMent rePortIng (Continued)

(ii) Segment reporting

The Group manages its businesses by divisions, which are organised by a mixture of both business lines and geography. In a manner consistent with the way in which information is reported internally to the Group’s most senior executive management for the purposes of resource allocation and performance assessment, the Group has presented the following three reportable segments. No operating segments have been aggregated to form the following reportable segments.

Processing and trading of coking coal and other products: this segment manages and operates coal processing plants and generates income from processing and trading of coking coal and other products to external customers.
Development of coal mills and production of coking coal and related products (classified as a discontinued operation (see note 5)): this segment acquires, explores and develops coal mills and produces coal from the mills. On 1 March 2012, the Group acquired Grande Cache Coal Corporation (“GCC”), a Canadian company developing coal mills and producing coking coal and related products from the mills. On 27 June 2014, the board of directors of the Company resolved to commit to a plan to sell part or all of the Company’s interest in Grande Cache Coal LP (“GCC LP”), the subsidiary that carries on all of the assets and liabilities of GCC after the acquisition, to a level at which the Company would cease to hold a majority or controlling interest.
Logistics services: this segment constructs, manages and operates logistics parks and generates income from rendering of logistics services to external customers within the People’s Republic of China (“PRC”).
(a) Segment results, assets and liabilities

For the purposes of assessing segment performance and allocating resources between segments, the Group’s senior executive management monitors the results, assets and liabilities attributable to each reportable segment on the following bases:

Segment assets include all tangible assets, intangible assets and current assets with the exception of interests in an associate and deferred tax assets. Segment liabilities include trade and other payables, obligations under finance lease, provisions, deferred income and bank and other borrowings managed directly by the segments.

Revenue and expenses are allocated to the reportable segments with reference to sales generated by those segments and the expenses incurred by those segments or which otherwise arise from the depreciation or amortisation of assets attributable to those segments. However, other than reporting inter-segment sales of coal products and logistics services, assistance provided by one segment to another, including sharing of assets and technical know-how, is not measured.

Winsway Enterprises Holdings Limited

Notes to the Unaudited Interim Financial Report (Continued)

(Expressed in Hong Kong dollars unless otherwise indicated)

4 turnoVer and segMent rePortIng (Continued)

(ii) Segment reporting (Continued)

(a) Segment results, assets and liabilities (Continued)

The measure used for reporting segment (loss)/profit is “adjusted EBITDA” i.e. “adjusted (loss)/earnings before interest, taxes, depreciation and amortisation”, where “interest” is regarded as including investment income and “depreciation and amortisation” is regarded as including impairment losses on non-current assets.

In addition to receiving segment information concerning adjusted EBITDA, management is provided with segment information concerning revenue (including inter-segment sales), interest income and expense from cash balances and borrowings managed directly by the segments, depreciation, amortisation and impairment losses and additions to non-current segment assets used by the segments in their operations. Inter-segment sales are priced with reference to prices charged to external parties for similar orders.

Information regarding the Group’s reportable segments as provided to the Group’s most senior executive management for the purposes of resource allocation and assessment of segment performance for the six months ended 30 June 2014 is set out below.

2014 Interim Report

Notes to the Unaudited Interim Financial Report (Continued)

(Expressed in Hong Kong dollars unless otherwise indicated)

4 turnoVer and segMent rePortIng (Continued)

(ii) Segment reporting (Continued)

(a) Segment results, assets and liabilities (Continued)

For the six months ended 30 June

			Development of coal	Development of coal
			mills and production of
	Processing	and trading	coking coal	and related
	of coking coal and		products (Discontinued
	other products		operation)		Logistics services		Total
	2014	2013	2014	2013	2014	2013	2014			2013
	*$’000*	$’000	*$’000*	$’000	*$’000*	$’000	*$’000*			$’000
Revenue from
external customers	3,213,606	5,356,623	536,698	434,639	32,875	23,953	3,783,179		5,815,215
Inter-segment revenue	—	—	85,095	518,943	7,449	9,641	92,544			528,584
Reportable
segment revenue	3,213,606	5,356,623	621,793	953,582	40,324	33,594	3,875,723		6,343,799
Reportable segment (loss)/
profit (adjusted EBITDA)	(160,447)	(242,204)	109,413	(96,798)	17,142	(8,781)	(33,892)			(347,783)
Interest income	32,696	64,094	159	236	235	424	33,090			64,754
Interest expense	(173,367)	(307,049)	(115,204)	(131,397)	(9,385)	—	(297,956)			(438,446)
Depreciation and
amortisation for the period	(44,912)	(55,813)	(245,905)	(173,497)	(13,887)	(10,763)	(304,704)			(240,073)
Impairment of
non-current assets	(58,764)	—	(4,698,604)	(105,791)	—	—	(4,757,368)			(105,791)
Shares of profit
of an associate	—	—	—	—	916	—	916			—
Additions to non-current
segment assets during
the period	32,120	179,638	132,963	267,704	28,898	69,841	193,981			517,183
	At	At	At	At	At	At	At			At
	30 June	31 December	30 June	31 December	30 June	31 December	30 June	31		December
	2014	2013	2014	2013	2014	2013	2014			2013
	*$’000*	$’000	*$’000*	$’000	*$’000*	$’000	*$’000*			$’000
Reportable
segment assets	8,738,229	12,499,597	4,778,338	9,546,800	751,474	626,354	14,268,041		22,672,751
Reportable
segment liabilities	8,005,804	10,714,993	4,051,842	4,642,874	473,104	470,777	12,530,750		15,828,644

Winsway Enterprises Holdings Limited

Notes to the Unaudited Interim Financial Report (Continued)

(Expressed in Hong Kong dollars unless otherwise indicated)

4 turnoVer and segMent rePortIng (Continued)

(ii) Segment reporting (Continued)

(b) Reconciliations of reportable segment revenues, profit or loss, assets and liabilities

	For the six months ended 30 June	For the six months ended 30 June
	2014	2013
	*$’000*	$’000
		(Restated)
Revenue
Reportable segment revenue	3,875,723	6,343,799
Elimination of inter-segment transactions	(92,544)	(528,584)
Elimination of discontinued operation	(536,698)	(434,639)
Consolidated turnover from
continuing operations	3,246,481	5,380,576
Loss
Reportable segment loss	(33,892)	(347,783)
Elimination of inter-segment losses	—	11,438
Depreciation and amortisation	(58,799)	(66,576)
Impairment of non-current assets	(58,764)	—
Share of profit of an associate	916	—
Net finance costs	(154,471)	(108,693)
Elimination of discontinued operation	(109,413)	96,798
Consolidated loss before taxation
from continuing operations	(414,423)	(414,816)

2014 Interim Report

Notes to the Unaudited Interim Financial Report (Continued)

(Expressed in Hong Kong dollars unless otherwise indicated)

4 turnoVer and segMent rePortIng (Continued)

(ii) Segment reporting (Continued)

(b) Reconciliations of reportable segment revenues, profit or loss, assets and liabilities (Continued)

	At 30 June	At 31 December
	2014	2013
	*$’000*	$’000
Assets
Reportable segment assets	14,268,041	22,672,751
Deferred tax assets	77,247	286,845
Interest in an associate	15,579	14,843
Elimination of inter-segment receivables	(492,899)	(841,436)
Consolidated total assets	13,867,968	22,133,003
Liabilities
Reportable segment liabilities	12,530,750	15,828,644
Current income tax liabilities	45,748	66,525
Deferred tax liabilities_(note5 (b))_	236,235	1,082,545
Elimination of inter-segment payables	(492,899)	(841,436)
Consolidated total liabilities	12,319,834	16,136,278

Winsway Enterprises Holdings Limited

Notes to the Unaudited Interim Financial Report (Continued)

(Expressed in Hong Kong dollars unless otherwise indicated)

4 turnoVer and segMent rePortIng (Continued)

(ii) Segment reporting (Continued)

(c) Reconciliation of development of coal mills and production of coking coal and related products segment (discontinued operation) results

	Note	Six months ended 30 June 2014 2013 *$’000* $’000	Six months ended 30 June 2014 2013 *$’000* $’000
Development of coal mills and production of coking coal and related products segment profit/ (loss) (adjusted EBITDA) Net finance costs for the segment Depreciation and amortisation for the segment Impairment of non-current assets for the segment Income tax in respect of operating activities of GCC LP Income tax in respect of write-down of GCC LP’s net assets		109,413 (115,045) (245,905) (4,698,604)	(96,798) (146,321) (173,497) (105,791) (522,407) 62,764 —
	5(e) 5(e)	(4,950,141) (61,925) 704,791
Loss from discontinued operation, net of tax		(4,307,275)	(459,643)

2014 Interim Report

Notes to the Unaudited Interim Financial Report (Continued)

(Expressed in Hong Kong dollars unless otherwise indicated)

4 turnoVer and segMent rePortIng (Continued)

(ii) Segment reporting (Continued)

(d) Geographic information

The following table sets out information about the geographical location of (i) the Group’s revenue from external customers and (ii) the Group’s non-current assets with the exception of deferred tax assets (“specified non-current assets”). The geographical location of customers is based on the location at which the services were provided or the goods delivered. The geographical location of the specified non-current assets is based on the physical location of the asset, in the case of property, plant and equipment, the location of the operation to which they are allocated, in the case of intangible assets, and the location of operations, in the case of interests in an associate.

For the six months ended 30 June

	Revenues from external customers 2014 2013 *$’000* $’000 (Restated)	Revenues from external customers 2014 2013 *$’000* $’000 (Restated)
The PRC (including Hong Kong and Macau)	3,246,481	5,332,616 434,639 (434,639)
Canada Elimination of discontinued operation	536,698 (536,698)
	—	— 47,960
Other countries	—
	3,246,481	5,380,576

Winsway Enterprises Holdings Limited

Notes to the Unaudited Interim Financial Report (Continued)

(Expressed in Hong Kong dollars unless otherwise indicated)

4 turnoVer and segMent rePortIng (Continued)

(ii) Segment reporting (Continued)

(d) Geographic information (Continued)

	Specified non-current assets	Specified non-current assets
	At 30 June	At 31 December
	2014	2013
	*$’000*	$’000
The PRC (including Hong Kong and Macau)	2,425,374	2,512,124
Canada	—	8,997,181
Other countries	189,926	189,869
	2,615,300	11,699,174

5 dIsPosal grouP Held For sale and dIscontInued oPeratIon

As mentioned in note 2, on 27 June 2014, the board of directors of the Company resolved to commit to a plan to sell part or all of the Company’s interest in GCC LP to a level at which the Company would cease to hold a majority or controlling interest. Efforts to sell the disposal group have started and a sale is expected to be completed within one year. Accordingly, GCC LP has been presented as a discontinued operation in the consolidated statement of profit or loss and the assets and liabilities of GCC LP have been classified as a disposal group held for sale. The comparative consolidated statement of profit or loss has been restated to show the discontinued operation separately from continuing operations.

As at the date of approval of these financial statements, the Company had communicated with several purchasers for the disposal of GCC LP. However, the Company has not yet entered into any agreement.

(a) Impairment loss relating to the disposal group

An impairment loss of $4,698,604,000 for write-downs of the disposal group to the lower of its carrying amount and its fair value less costs to sell has been charged to the consolidated statement of profit or loss for the current period. The impairment loss has been applied to reduce the carrying amount of intangible assets within the disposal group.

2014 Interim Report

Notes to the Unaudited Interim Financial Report (Continued)

(Expressed in Hong Kong dollars unless otherwise indicated)

5 dIsPosal grouP Held For sale and dIscontInued oPeratIon (Continued)

(b) Assets and liabilities of disposal group held for sale

As at 30 June 2014, the disposal group has been stated at fair value less costs to sell and comprised the following assets and liabilities.

		*$’000*
Property, plant and equipment		2,782,198
Construction in progress		20,686
Intangible assets		1,382,587
Inventories		324,399
Trade and other receivables		18,315
Restricted bank deposits		216,603
Cash and cash equivalents		33,550
Assets held for sale		4,778,338
Secured bank loans*		3,149,960
Trade and other payables		329,184
Obligations under finance lease		242,654
Provisions		217,761
Deferred tax liabilities**		236,235
Liabilities held for sale		4,175,794

Bank loans amounting to $15,506,000 are secured by property, plant and equipment with an aggregate carrying amount of $18,743,000. Bank loans amounting to $3,134,454,000 are secured by GCC LP’s total assets.
** During the period ended 30 June 2014, deferred tax liabilities in respect of GCC LP of $846,310,000 ($141,519,000 in respect of GCC LP’s operating activities and $704,791,000 in respect of writedown of GCC LP’s net assets (see note 5(e))) has been reversed. As at 30 June 2014, the remaining balance of $236,235,000 was classified as liabilities held for sale.
*** In accordance with the Group’s accounting policy, the Group has not recognised deferred tax assets in respect of cumulative tax losses of GCC LP of approximately $566,045,000 at 30 June 2014 as the management considers it is not probable that future taxable profits against which the losses can be utilised will be available in the relevant tax jurisdiction and entity.

(c) Cumulative income or expense included in other comprehensive income

There are foreign currency translation reserves of $54,451,000 included in other comprehensive income relating to the disposal group.

Winsway Enterprises Holdings Limited

Notes to the Unaudited Interim Financial Report (Continued)

(Expressed in Hong Kong dollars unless otherwise indicated)

5 dIsPosal grouP Held For sale and dIscontInued oPeratIon (Continued)

(d) Measurement of fair value

(i) Fair value hierarchy

The non-recurring fair value measurement for the disposal group of $618,047,000 (before costs to sell of $15,503,000) has been categorised as a Level 3 fair value based on the inputs to the valuation technique used. The fair value of the disposal group is determined by the directors with reference to coal prices and other information provided by the Company’s financial advisor engaged for the disposal of GCC LP. The directors of the Company expect that the disposal of GCC LP can be completed in one year.

(ii) Valuation technique and significant unobservable inputs

The following shows the valuation technique used in measuring the fair value of the disposal group, as well as the significant unobservable inputs used.

Valuation technique: Discounted cash flow

Discounted cash flows consider the present value of the net cash flows expected to be generated from the disposal group, taking into account the coal price assumptions and estimated production volume; the expected net cash flows are discounted using a riskadjusted discount rate.

Significant unobservable inputs:

the coal price assumptions are based on the median of forecasted prices of coals in Canada sourced from a number of reputable investment banks as provided by Company’s financial advisor (31 December 2013: coal price assumptions are based on management’s best estimate with reference to past experience of the industry and consistent with external sources). These prices were adjusted to arrive at appropriate consistent price assumptions for the different qualities and type of coal. For short-term coal price assumptions for the next five years, US$122 to US$155 per tonne and US$63 per tonne for hard coking coal and thermal coal respectively (31 December 2013: US$120 to US$172 per tonne and US$66 per tonne respectively) have been used to estimate future revenues. For coal prices beyond the fifth year, US$149 and US$63 per tonne for hard coking coal and thermal coal respectively (31 December 2013: US$175 to US$202 per tonne and US$66 per tonne respectively) have been used to estimate future revenues.

2014 Interim Report

Notes to the Unaudited Interim Financial Report (Continued)

(Expressed in Hong Kong dollars unless otherwise indicated)

5 dIsPosal grouP Held For sale and dIscontInued oPeratIon (Continued)

(d) Measurement of fair value (Continued)

(ii) Valuation technique and significant unobservable inputs (Continued)
estimated production volumes are based on detailed life-of-mine plans derived from technical report prepared by competent persons. Production volumes are dependent on a number of variables, such as the recoverable quantities, the production profile, the cost of the development of the infrastructure necessary to extract the reserves, the production costs, the contractual duration of mining rights and the selling price of the coal extracted. These are then assessed to ensure they are consistent with what a market participant would estimate.
pre-tax discount rate of 11.25% (31 December 2013: 8.80%) was applied to the future cash flows. This discount rate is derived from the weighted average cost of capital (“WACC”) with reference to the required rate of return demanded by investors for similar companies as provided by the Company’s financial advisor (31 December 2013: derived from WACC of GCC LP). The WACC takes into account both debt and equity, weighted based on ratio of debt to equity of 100% (31 December 2013: 57%). The cost of equity is derived from the required return on similar coking coal companies of 13.00% (31 December 2013: 11.99%). The cost of debt is based on the market long-term lending rate of 9.50% (31 December 2013: 3.20%).

Winsway Enterprises Holdings Limited

Notes to the Unaudited Interim Financial Report (Continued)

(Expressed in Hong Kong dollars unless otherwise indicated)

5 dIsPosal grouP Held For sale and dIscontInued oPeratIon (Continued)

(e) Results of discontinued operation

	Six months ended 30 June	Six months ended 30 June
	2014	2013
	*$’000*	$’000
Results of discontinued operation
Revenue	536,698	434,639
Expenses	(788,235)	(957,046)
Results from operating activities	(251,537)	(522,407)
Income tax	(61,925)	62,764
Results from operating activities, net of tax	(313,462)	(459,643)
Write-down to adjust the carrying value of
GCC LP’s net assets to fair value less costs to sell	(4,698,604)	—
Income tax in respect of write-down of
GCC LP’s net assets	704,791	—
Loss for the period	(4,307,275)	(459,643)
Attributable to:
Equity shareholders of the Company	(2,327,218)	(292,996)
Non-controlling interests	(1,980,057)	(166,647)
	(4,307,275)	(459,643)
Loss per share
Basic and diluted	(0.617)	(0.078)

2014 Interim Report

Notes to the Unaudited Interim Financial Report (Continued)

(Expressed in Hong Kong dollars unless otherwise indicated)

5 dIsPosal grouP Held For sale and dIscontInued oPeratIon (Continued)

(f) Cash generated from / (used in) from discontinued operation

			Six months ended 30 June	Six months ended 30 June
			2014	2013
			*$’000*	$’000
	Net cash generated from operating activities		120,965	236,894
	Net cash used in investing activities		(136,226)	(298,697)
	Net cash generated from financing activities		20,158	90,495
	Net cash inflow for the period		4,897	28,692
otHer reVenue
			Six months ended 30 June
			2014	2013
		Note	*$’000*	$’000
Penalty income from an iron ore customer		(i)	70,977	—
Government grants			4,608	22,091
Others			687	16,501
			76,272	38,592

6 otHer reVenue

(i) During the six months ended 30 June 2014, the Group has recognised a penalty income of $70,977,000 from a third party iron ore customer in relation to its failure to settle the procurement from the Group within agreed period in accordance with relevant sales contract.

Winsway Enterprises Holdings Limited

Notes to the Unaudited Interim Financial Report (Continued)

(Expressed in Hong Kong dollars unless otherwise indicated)

7 loss beFore taxatIon FroM contInuIng oPeratIons

Loss before taxation from continuing operations is arrived at after (crediting)/charging:

(a) Net finance costs

	Six months ended 30 June 2014 2013 *$’000* $’000 (Restated)	Six months ended 30 June 2014 2013 *$’000* $’000 (Restated)
Interest income Gains on repurchase of senior notes_(see note 21)_ Foreign exchange gain, net	(32,931) — (19,865)	(64,518) (3,022) (159,254)
Finance income Interest on secured bank loans wholly repayable within five years Interest on discounted bills receivable Interest on senior notes_(see note 21)_	(52,796)	(226,794) 78,696 67,632 160,721
	44,453 23,137 115,162
Total interest expenses Bank charges Fair value change of derivative financial instruments	182,752 17,801 6,714	307,049 18,335 10,103
Finance costs	207,267	335,487
Net finance costs	154,471	108,693

(b) Staff costs

	Six months ended 30 June	Six months ended 30 June
	2014	2013
	*$’000*	$’000
		(Restated)
Salaries, wages, bonus and other benefits	86,094	90,189
Contributions to defined contribution retirement plan	4,804	5,112
Equity-settled share-based payment expenses	2,318	2,835
	93,216	98,136

2014 Interim Report

Notes to the Unaudited Interim Financial Report (Continued)

(Expressed in Hong Kong dollars unless otherwise indicated)

7 loss beFore taxatIon FroM contInuIng oPeratIons (Continued)

(c) Other items

	Six months ended 30 June	Six months ended 30 June
	2014	2013
	*$’000*	$’000
		(Restated)
Government grants	4,608	22,091
Amortisation_#_
— leased assets	5,497	5,136
— intangible assets	387	401
Depreciation_#_	52,915	61,039
Impairment losses
— plant and machinery_(note 10(c))_	58,764	—
Operating lease charges, mainly relating to buildings	10,453	18,479
Cost of inventories	3,209,786	5,402,547

Cost of inventories includes $3,508,000 (six months ended 30 June 2013 (restated): $6,752,000) and $5,153,000 (six months ended 30 June 2013 (restated): $24,131,000) for the six months ended 30 June 2014 relating to staff costs, depreciation and amortisation which amount is also included in the respective total amount disclosed separately above or in note 7(b) for each type of these expenses.

Winsway Enterprises Holdings Limited

Notes to the Unaudited Interim Financial Report (Continued)

(Expressed in Hong Kong dollars unless otherwise indicated)

8 IncoMe tax In tHe consolIdated stateMent oF ProFIt or loss

	Six months ended 30 June	Six months ended 30 June
	2014	2013
	*$’000*	$’000
		(Restated)
*Continuing operations:*
Current tax – Hong Kong Profits Tax
Provision for the period	4,213	2,017
Current tax – Outside of Hong Kong
Provision for the period	2	40,286
Over-provision in respect of prior years	(3,800)	—
Deferred tax
Origination and reversal of temporary differences	5,748	16,051
	6,163	58,354

The provision for Hong Kong Profits Tax is calculated at 16.5% (2013: 16.5%) of the estimated assessable profits for the period.

Pursuant to the rules and regulations of the BVI, the Group is not subject to any income tax in the BVI.

The provision for PRC current income tax is based on a statutory rate of 25% (2013: 25%) of the assessable profit as determined in accordance with the relevant income tax rules and regulations of the PRC.

Taxation for other overseas subsidiaries is charged at the appropriate current rates of taxation ruling in the relevant countries.

2014 Interim Report

Notes to the Unaudited Interim Financial Report (Continued)

(Expressed in Hong Kong dollars unless otherwise indicated)

9 loss Per sHare

(i) From continuing operations and discontinued operation

(a) Basic loss per share

The calculation of basic loss per share for the six months ended 30 June 2014 is based on the loss attributable to equity shareholders of the Company of $2,740,475,000 (six months ended 30 June 2013: $762,696,000) and the weighted average number of ordinary shares of 3,767,018,000 (six months ended 30 June 2013: 3,773,199,000 shares) in issue during the six months ended 30 June 2014, calculated as follows:

Weighted average number of ordinary shares (basic):

	Six months ended 30 June	Six months ended 30 June
	2014	2013
	*’000*	’000
Issued ordinary shares at 1 January	3,773,199	3,773,199
Effect of shares held by
the employee share trusts*	(6,181)	—
Weighted average number of ordinary
shares (basic) as at 30 June	3,767,018	3,773,199

The shares held by the employee share trusts are regarded as treasury shares.

(b) Diluted loss per share

For the six months ended 30 June 2014 and 2013, basic and diluted loss per share are the same as the effect of the potential ordinary shares outstanding is anti-dilutive.

(ii) From continuing operations

(a) Basic loss per share

The calculation of basic loss per share from continuing operations for the six months ended 30 June 2014 is based on the loss from continuing operations attributable to equity shareholders of the Company of $413,257,000 (six months ended 30 June 2013: $469,700,000) and the weighted average number of ordinary shares of 3,767,018,000 (six months ended 30 June 2013: 3,773,199,000 shares) in issue during the six months ended 30 June 2014.

Winsway Enterprises Holdings Limited

Notes to the Unaudited Interim Financial Report (Continued)

(Expressed in Hong Kong dollars unless otherwise indicated)

9 loss Per sHare (Continued)

(ii) From continuing operations (Continued)

(b) Diluted loss per share (Continued)

For the six months ended 30 June 2014 and 2013, basic and diluted loss per share from continuing operations are the same as the effect of the potential ordinary shares outstanding is anti-dilutive.

10 ProPerty, Plant and eQuIPMent, net

(a) Acquisitions and disposals

During the six months ended 30 June 2014, the Group has acquired items of property, plant and equipment of $7,577,000 (six months ended 30 June 2013: $4,295,000). Items of property, plant and equipment with a net book value of $1,999,000 have been disposed of during the six months ended 30 June 2014 (six months ended 30 June 2013: $5,437,000), resulting in a loss on disposal of $164,000 (six months ended 30 June 2013: gain on disposal of $1,694,000).

(b) Transfer from construction in progress

During the six months ended 30 June 2014, construction in progress with a cost of $11,746,000 (six months ended 30 June 2013: $48,453,000) has been transferred into property, plant and equipment.

(c) Impairment loss

An impairment loss of $58,764,000 for plant and machinery in respect of one of the Group’s coal processing factory in the PRC has been charged to the consolidated statement of profit or loss for the current period due to unfavourable future prospect of the coking coal business and low utilisation of the coal processing factory. The impairment loss has been provided based on value in use calculations. These calculations use cash flow projections based on financial forecasts prepared by management covering a five-year period. The cash flows are discounted using a pre-tax discount rate of 11.27%. The discount rate used reflects specific risks relating to the relevant segment.

(d) As at 30 June 2014, property ownership certificates of certain properties of the Group with an aggregate net book value of $114,062,000 (31 December 2013: $179,666,000) are yet to be obtained.
(e) As at 30 June 2014, property, plant and equipment of the Group of $nil (31 December 2013: $18,196,000) have been pledged as collateral for the Group’s borrowings.

2014 Interim Report

Notes to the Unaudited Interim Financial Report (Continued)

(Expressed in Hong Kong dollars unless otherwise indicated)

11 constructIon In Progress

Construction in progress mainly represents the construction of the ancillary facilities for coal processing plants and the construction of logistics facilities in Inner Mongolia as at 30 June 2014. During the six months ended 30 June 2014, construction in progress has an addition of $35,607,000 (six months ended 30 June 2013: $127,198,000).

12 IntantIble assets

As at 30 June 2014, intangible assets mainly represent the net book value of software purchased by the Group. The mining rights of GCC LP have been classified as assets held for sale and disclosed in note 5.

13 otHer non-current assets

Other non-current assets mainly represent the long-term portion of a loan to a third party company (also see note 16(i)) and advance payments for equipment purchase and construction in progress.

14 deFerred tax assets/lIabIlItIes

The Group has not recognised deferred tax assets in respect of deductible temporary differences and tax losses incurred by the subsidiaries of the Group of $520,400,000 and $1,706,331,000 respectively (31 December 2013: $555,800,000 and $1,466,739,000) as management of the Group considers that it is not possible as at 30 June 2014 to estimate, with any degree of certainty, the future taxable profits which may be earned by these subsidiaries. In particular, in accordance with the Group’s accounting policy, the Group has not recognised deferred tax assets in respect of cumulative tax losses at 30 June 2014 as the management considers it is not probable that future taxable profits against which the losses can be utilised will be available in the relevant tax jurisdiction and entity. The tax losses in the PRC established entities of approximately $925,631,000, and $537,005,000 and $221,961,000 will expire in five years after the tax losses generated under current tax legislation in 2017, 2018 and 2019 respectively. The tax losses in those Hong Kong incorporated companies of approximately $21,734,000 can be utilised to offset any future taxable profits under current tax legislation.

As at 30 June 2014, the deferred tax assets and liabilities related to GCC LP have been classified as assets and liabilities held for sale and disclosed in note 5.

Winsway Enterprises Holdings Limited

Notes to the Unaudited Interim Financial Report (Continued)

(Expressed in Hong Kong dollars unless otherwise indicated)

15 InVentorIes

	At 30 June	At 31 December
	2014	2013
	*$’000*	$’000
Coking coal	619,871	1,302,098
Thermal coal	118,479	178,391
Coal related products	30,414	19,696
Coke	60,899	—
Others	21,427	112,210
	851,090	1,612,395
Less: write-down of inventories	(129,696)	(249,661)
	721,394	1,362,734

An analysis of the amount of inventories recognised as an expense and included in the consolidated statement of profit or loss is as follows:

	Six months ended 30 June	Six months ended 30 June
	2014	2013
	*$’000*	$’000
		(Restated)
Carrying amount of inventories sold	3,080,090	5,111,088
Write-down of inventories	129,696	291,459
	3,209,786	5,402,547

2014 Interim Report

Notes to the Unaudited Interim Financial Report (Continued)

(Expressed in Hong Kong dollars unless otherwise indicated)

16 trade and otHer receIVables

		At 30 June	At 31 December
		2014	2013
		*$’000*	$’000
Trade receivables		951,759	1,760,369
Bills receivable		814,272	1,428,807
Receivables from import agents		1,308,725	941,750
Amounts due from related parties		777	7,144
Loan to a third party company	(i)	31,006	31,018
Prepayments to suppliers		50,767	81,459
Derivative financial instruments	(ii)	11,251	11,600
Others		386,217	354,077
		3,554,774	4,616,224

(i) In 2009, the Company agreed to provide a loan to Moveday Enterprises Limited (“Moveday”) to purchase additional vehicles to meet with the increasing volume of coal procured by the Group in Mongolia, and Moveday has agreed to use the trucks purchased through financing provided by the Company for the provision of transportation services to the Group during the term of the agreement. Pursuant to a loan agreement entered into on 10 April 2010 (as subsequently amended by a supplemental deed on 15 September 2010) and the strategic alliance agreement, the Company agreed to lend Moveday up to US$40 million solely for the purpose of purchasing vehicles for transporting coal purchased by the Group in Mongolia. The loan to Moveday was provided on an unsecured basis, at an interest rate of LIBOR plus 3% and repayable over five years in equal annual installments of US$8 million, commencing from 18 months after the receipt of the loan (being 31 December 2012) by Moveday, with interest payable semi-annually in arrears. The entire loan amount was fully drawn down in 2010. As Moveday is a third party and the loan to Moveday is an unsecured loan, the Group do not have an interest in or control over the cash flows or other assets of Moveday other than in accordance with the terms of the loan agreement (as amended).

During 2013, the Group has entered into another supplemental agreement with Moveday to modify the repayment terms of the remaining outstanding principal of US$32 million. Pursuant to the supplemental agreement, the remaining outstanding principal is repayable on 31 December from 2013 to 2015 with an amount of US$4 million plus a floating repayment amount up to US$6 million. The floating repayment amount is calculated based on the volume of coals transported (maximum of 12 million tonnes) by Moveday for the Group during each year. Apart from the repayment terms, all the other terms of the loan are not changed and Moveday is obliged to repay the entire outstanding principal on or before 31 December 2016. The outstanding loan balance as at 30 June 2014 is US$24.4 million (equivalent to $189 million) (31 December 2013: US$24.4 million (equivalent to $189 million)), among which US$20.4 million(equivalent to $158 million) (31 December 2013: US$20.4 million (equivalent to $158 million)) is classified as non-current assets.

The Group and Moveday have entered into agreements that Moveday purchases coking coal from Mongolian coking coal suppliers at mine mouth and sells such coking coal entirely to the Group at the PRC border at a price on a delivered at place (DAP) basis. Accordingly, during the six months ended 30 June 2014, the Group has purchased coking coal of $nil (six months ended 30 June 2013: $326 million) from Moveday. In addition to the above, the Group incurred transportation expenses of $36.8 million (six months ended 30 June 2013: $175 million) for coking coal transportation services provided by Moveday during the six months ended 30 June 2014.

Winsway Enterprises Holdings Limited

Notes to the Unaudited Interim Financial Report (Continued)

(Expressed in Hong Kong dollars unless otherwise indicated)

16 trade and otHer receIVables (Continued)

(ii) Derivative financial instruments represent fair value of foreign exchange forward contracts as at 30 June 2014 and 31 December 2013.

All of the trade and other receivables are expected to be recovered or recognised as expenses within one year.

The credit terms for trade debtors are generally within 90 days. Bills receivable are normally due within 90 days to 180 days from the date of issue.

At 30 June 2014, trade and bills receivables of the Group of $1,239,399,000 (31 December 2013: $489,542,000) have been pledged as collateral for the Group’s borrowings (see note 19).

At 30 June 2014, bills receivable of the Group of $1,328,206,000 (31 December 2013: $4,027,409,000) were derecognised from the consolidated statement of financial position as the relevant bills have been discounted to banks on a non-recourse basis.

(a) Ageing analysis

Included in trade receivables, bills receivable and receivables from import agents are trade debtors with the ageing analysis, based on the invoice date, as follows:

	At 30 June	At 31 December
	2014	2013
	*$’000*	$’000
Less than 3 months	2,040,265	3,376,394
More than 3 months but less than 6 months	405,020	748,695
More than 6 months but less than 1 year	626,954	4,407
More than 1 year	2,517	1,430
	3,074,756	4,130,926

2014 Interim Report

Notes to the Unaudited Interim Financial Report (Continued)

(Expressed in Hong Kong dollars unless otherwise indicated)

16 trade and otHer receIVables (Continued)

(b) Impairment of trade receivables, bills receivable and receivables from import agents

No allowance of impairment loss has been recorded in respect of trade receivables, bills receivable and receivables from import agents for the six months ended 30 June 2014.

The ageing analysis of trade receivables, bills receivable and receivables from import agents that are neither individually nor collectively considered to be impaired is as follows:

	At 30 June	At 31 December
	2014	2013
	*$’000*	$’000
Neither past due nor impaired	2,701,394	4,030,925
Less than 3 months past due	168,460	94,164
More than 3 months but less than 12 months past due	204,902	5,837
	3,074,756	4,130,926

Receivables that were neither past due nor impaired relate to customers for whom there was no recent history of default.

Receivables that were past due but not impaired relate to a number of independent customers that have a good track record with the Group. Based on past experience, management believes that no impairment allowance is necessary in respect of these balances as there has not been a significant change in credit quality and the balances are still considered fully recoverable.

17 restrIcted banK dePosIts

The Group has pledged bank deposits of $1,566,763,000 (31 December 2013: $2,150,026,000) as at 30 June 2014 as collateral for the Group’s borrowings (see note 19) and banking facilities in respect of issuance of bills and letters of credit by the Group (see note 20).

Winsway Enterprises Holdings Limited

Notes to the Unaudited Interim Financial Report (Continued)

(Expressed in Hong Kong dollars unless otherwise indicated)

18 casH and casH eQuIValents

	30 June	31 December
	2014	2013
	*$’000*	$’000
Cash at bank and in hand	554,152	2,018,000

At 30 June 2014, cash and cash equivalents of $211,126,000 (31 December 2013: $837,703,000) was held by the entities of the Group in Renminbi (“RMB”) in the PRC. RMB is not a freely convertible currency and the remittance of funds out of the PRC is subject to the exchange restriction imposed by the PRC government.

Included in cash and cash equivalents in the consolidated statement of financial position are the following amounts denominated in a currency other than the functional currency of the entity to which they relate:

	30 June	At 31 December
	2014	2013
	*$’000*	$’000
US$	4,443	38,360
RMB	190,468	373,232
Euro	—	8
HK$	3,002	3,729
SGD	4,860	7,354
CAD	729	754

2014 Interim Report

Notes to the Unaudited Interim Financial Report (Continued)

(Expressed in Hong Kong dollars unless otherwise indicated)

19 secured banK loans

(a) The secured bank loans comprise:

	At 30 June	At 31 December
	2014	2013
	*$’000*	$’000
Short-term loans and current portion
of long-term loans	1,814,477	1,093,111
Long-term loans	495,302	3,065,780
	2,309,779	4,158,891
The interest rates per annum of bank loans were:
	At 30 June	At 31 December
	2014	2013
Short-term loans and current portion
of long-term loans	0.94%-7.28%	1.78%-5.60%
Long-term loans	2.67%-7.68%	2.67%-7.68%

(b) The secured bank loans are repayable as follows:

	At 30 June	31 December
	2014	2013
	*$’000*	$’000
Within 1 year	1,814,477	1,093,111
After 1 year but within 2 years	190,908	993,474
After 2 years but within 5 years	304,394	2,072,306
	2,309,779	4,158,891

Winsway Enterprises Holdings Limited

Notes to the Unaudited Interim Financial Report (Continued)

(Expressed in Hong Kong dollars unless otherwise indicated)

19 secured banK loans (Continued)

(b) The secured bank loans are repayable as follows: (Continued)

At 30 June 2014, bank loans amounting to $758,691,000 (31 December 2013: $450,710,000) have been secured by bank deposits placed in banks with an aggregate carrying value of $758,751,000 (31 December 2013: $420,156,000).

At 30 June 2014, bank loans amounting to $1,163,440,000 (31 December 2013: $485,160,000) have been secured by trade and bills receivables with an aggregate carrying value of $1,226,801,000 (31 December 2013: $489,542,000).

At 30 June 2014, bank loans amounting to $66,770,000 (31 December 2013: $67,411,000) have been secured by land use rights with an aggregate carrying value of $26,753,000 (31 December 2013: $27,010,000).

At 30 June 2014, bank loans amounting to $320,878,000 (31 December 2013: $Nil) were secured by both bank deposits and trade receivables with an aggregate carrying value of $316,698,000 (31 December 2013: $Nil) and $12,598,000 (31 December 2013: $Nil) respectively.

20 trade and otHer Payables

		At 30 June	At 31 December
		2014	2013
		*$’000*	$’000
Trade and bills payables		958,279	3,074,274
Payables to import agents		1,892,246	3,835,263
Amounts due to related parties		1,933	344,292
Prepayments from customers		105,647	182,171
Payables in connection with
construction projects		98,249	90,792
Payables for purchase of equipment		57,046	59,199
Derivative financial instruments	(i)	7,531	45,405
Others		162,099	184,110
		3,283,030	7,815,506

(i) Derivative financial instruments represent fair value of foreign exchange forward contracts as at 30 June 2014.

2014 Interim Report

Notes to the Unaudited Interim Financial Report (Continued)

(Expressed in Hong Kong dollars unless otherwise indicated)

20 trade and otHer Payables (Continued)

As of the end of the reporting period, the ageing analysis of trade and bills payables and payables to import agents (which are included in trade and other payables), based on the invoice date, is as follows:

	At 30 June	At 31 December
	2014	2013
	*$’000*	$’000
Within 3 months	2,382,638	3,636,559
More than 3 months but less than 6 months	37,710	2,477,002
More than 6 months but less than 1 year	430,177	720,633
More than 1 year	—	75,343
	2,850,525	6,909,537

Trade and bills payables and payables to import agents are expected to be settled within one year or are repayable on demand. The maturity analysis of these payables is as follows:

	At 30 June	At 31 December
	2014	2013
	*$’000*	$’000
Due within 1 month or on demand	1,644,608	2,695,667
Due after 1 month but within 3 months	1,163,559	2,578,842
Due after 3 months but within 6 months	42,358	1,635,028
	2,850,525	6,909,537

At 30 June 2014, bills payable amounting to $823,616,000 (31 December 2013: $2,571,106,000) have been secured by deposits placed in banks with an aggregate carrying value of $431,432,000 (31 December 2013: $1,037,618,000).

Winsway Enterprises Holdings Limited

Notes to the Unaudited Interim Financial Report (Continued)

(Expressed in Hong Kong dollars unless otherwise indicated)

21 senIor notes

On 8 April 2011, the Company issued senior notes in the aggregate principal amount of US$500,000,000 (“Senior Notes”) and listed on the Singapore Exchange Securities Trading Limited. The Senior Notes bear interest at 8.50% per annum, payable semi-annually in arrears, and will be due in 2016.

The Senior Notes are guaranteed by the Group’s existing subsidiaries other than those established/ incorporated under the laws of the PRC, Winsway Coking Coal Holdings S.à.r.l., 0925165 B.C. Ltd., GCC and GCC LP as an application of the principle stated in the Company’s offering memorandum on 1 April 2011 (the “Subsidiary Guarantor”). In addition, the Company has agreed, for the benefit of the holders of the Senior Notes, to pledge the capital stock of each Subsidiary Guarantor in order to secure the obligations of the Company.

The Senior Notes are carried at amortised cost.

During the year ended 31 December 2013, the Group repurchased Senior Notes in aggregate principal amount of US$153,190,000 with a cash consideration of US$73,595,000 in the open market. The Senior Notes repurchased were redeemed subsequently. The difference between the carrying amount of the Senior Notes redeemed and the consideration paid, net off against the transaction costs incurred, was recognised as a gain of US$76,383,000 (equivalent to $592,495,000) on redemption of Senior Notes in the Group’s consolidated statement of profit or loss. The outstanding Senior Notes with principal amount of US$309,310,000 will be matured on 8 April 2016.

In addition, on 11 October 2013, the Company also received consents from holders of the Senior Notes with a consent payment of US$4,118,000 to certain amendments (“Amendments”) to the indenture, dated as of 8 April 2011 (“Indenture”), among the Company, the Subsidiary Guarantors (as defined in the Indenture) and Deutsche Bank Trust Company Americas, as trustee. The Amendments eliminated the limitations on indebtedness, restricted payments, dividend and other payment restrictions affecting Restricted Subsidiaries (as defined in the Indenture), sales and issuances of capital stock in Restricted Subsidiaries, issuances of guarantees by Restricted Subsidiaries, sale and leaseback transactions, transactions with shareholders and affiliates and business activities as contained in the Indenture. The consent payment is amortised over the remaining period of the outstanding Senior Notes.

During the six months ended 30 June 2013, the Group repurchased Senior Notes in aggregate principal amount of US$2,000,000 in the open market and recorded a profit of $3,022,000. No Senior Notes were repurchased during the six months ended 30 June 2014.

2014 Interim Report

Notes to the Unaudited Interim Financial Report (Continued)

(Expressed in Hong Kong dollars unless otherwise indicated)

22 deFerred IncoMe

Deferred income represents the unfulfilled conditional government grants received, which will be subsequently recognised as revenue in the statement of profit or loss to compensate the Group for expenses when incurred, and the unrecognised government grants relating to compensating the Group for the cost of assets.

23 caPItal, reserVes and dIVIdends

(a) Dividends

(i) Dividends payable to equity shareholders of the Company attributable to the interim period

There is no interim dividend declared attributable to the six months ended 30 June 2014 (six months ended 30 June 2013: nil).

(ii) There is no dividends payable to equity shareholders of the Company attributable to previous financial year, approved and paid during the six months ended 30 June 2014 (six months ended 30 June 2013: nil).

(b) Share capital

	At 30 June	At 31 December
	2014	2013
	No. of shares	No. of shares
	*’000*	’000
Authorised:
Ordinary shares	6,000,000	6,000,000
	At 30 June	At 31 December
	2014	2013
	No. of shares	No. of shares
	*’000*	’000
Issued and fully paid:
Ordinary shares	3,773,199	3,773,199

Winsway Enterprises Holdings Limited

Notes to the Unaudited Interim Financial Report (Continued)

(Expressed in Hong Kong dollars unless otherwise indicated)

23 caPItal, reserVes and dIVIdends (Continued)

(c) Equity settled share-based transactions

(i) Share option scheme adopted in 2010

The Company has a share option scheme (the “Pre-IPO Scheme”) which was adopted on 30 June 2010 (the “Adoption Date”) whereby the directors of the Company are authorised, at their direction, to invite employees of the Group including directors of any company of the Group, to take up options at $1 consideration to subscribe for shares of the Company. The options will vest every three months over a period of five years commencing from 1 April 2010 (“initial vesting date”) in equal portions (5% each) on the first day of each three-month period after the initial vesting date and are exercisable from 1 April 2011 (12 months after the initial vesting date of 1 April 2010) until 30 June 2015 (a period of five years from the Adoption Date of 30 June 2010) at a fixed subscription price. Each option gives the holder the right to subscribe for one ordinary share in the Company and is settled gross in shares.

(1) The number of options granted to directors and management in 2010 were 52,093,000 and 55,852,000 respectively, whereby all options are settled by physical delivery of shares.
(2) The number and weighted average exercise prices of share options are as follows:

	Six months ended 30 June 2014	Six months ended 30 June 2014
	Weighted
	average	Number
	exercise price	of options
Outstanding at 1 January	$1.677	98,211,913
Exercised during the period	$1.677	—
Expired during the period	$1.677	(18,549,763)
Forfeited during the period	$1.677	(1,720,150)
Outstanding at 30 June	$1.677	77,942,000
Exercisable at 30 June	$1.677	66,003,313

The options outstanding at 30 June 2014 have an exercise price of $1.677 per share and a weighted average remaining contractual life of 6 months.

2014 Interim Report

Notes to the Unaudited Interim Financial Report (Continued)

(Expressed in Hong Kong dollars unless otherwise indicated)

23 caPItal, reserVes and dIVIdends (Continued)

(c) Equity settled share-based transactions (Continued)

(ii) Share option scheme adopted in 2014

Pursuant to the resolution of the annual general meeting of the Company held on 6 June 2014, the Company adopts a new share option scheme (the “New Scheme”). The purpose of the New Scheme is to reward participants who have contributed to the Group and to encourage participants to work towards enhancing the value of the Company and its shares for the benefit of the Company and its shareholders as a whole. The participants of the New Scheme will be determined by the board of directors at its discretion. The maximum number of shares which may be issued upon exercise of all options to be granted under the New Scheme and any other share option schemes of the Company, but excluding the options already granted under the Pre-IPO Scheme, shall not, in the absence of shareholders’ approval, in aggregate exceed 10% of the total number of shares in issue. As at 30 June 2014, no option has been granted under the New Scheme.

24 FaIr Value MeasureMent oF FInancIal InstruMents

(a) Financial assets and liabilities measured at fair value

(i) Fair value hierarchy

The following table presents the fair value of the Group’s financial instruments measured at the end of the reporting period on a recurring basis, categorised into the three-level fair value hierarchy as defined in IFRS 13, Fair value measurement . The level into which a fair value measurement is classified is determined with reference to the observability and significance of the inputs used in the valuation technique as follows:

Level 1 valuations: Fair value measured using only Level 1 inputs i.e. unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date
Level 2 valuations: Fair value measured using Level 2 inputs i.e. observable inputs which fail to meet Level 1, and not using significant unobservable inputs. Unobservable inputs are inputs for which market data are not available
Level 3 valuations: Fair value measured using significant unobservable inputs

Winsway Enterprises Holdings Limited

Notes to the Unaudited Interim Financial Report (Continued)

(Expressed in Hong Kong dollars unless otherwise indicated)

24 FaIr Value MeasureMent oF FInancIal InstruMents (Continued)

(a) Financial assets and liabilities measured at fair value (Continued)

(i) Fair value hierarchy (Continued)

			Fair value	measurements as at 30 June 2014	measurements as at 30 June 2014
				categorised into
		Fair value at
		30 June 2014	Level 1	Level 2	Level 3
		*$’000*	*$’000*	*$’000*	*$’000*
Recurring fair value measurement
Financial assets:
Derivative financial instruments:
— Forward foreign exchange contracts		11,251	—	11,251	—
Financial liabilities:
Derivative financial instruments:
— Forward foreign exchange contracts		7,531	—	7,531	—
			Fair value measurements as at 31 December 2013
				categorised into
		Fair value at
	31 December 2013		Level 1	Level 2	Level 3
		$’000	$’000	$’000	$’000
Recurring fair value measurement
Financial assets:
Derivative financial instruments
— Forward foreign exchange contracts		11,600	—	11,600	—
Financial liabilities:
Derivative financial instruments
— Forward foreign exchange contracts		45,405	—	45,405	—

During the six months ended 30 June 2014, there have been no transfers between Level 1 and Level 2, or transfers into or out of Level 3 (2013: nil). The Group’s policy is to recognise transfers between levels of fair value hierarchy as at the end of the reporting period in which they occur.

(ii) Valuation techniques and inputs used in Level 2 fair value measurements

The fair value of forward foreign exchange contracts in Level 2 is determined by discounting the contractual forward price and deducting the current spot rate. The discount rate used is derived from the relevant government yield curve as at the end of the reporting period plus an adequate constant credit spread.

2014 Interim Report

Notes to the Unaudited Interim Financial Report (Continued)

(Expressed in Hong Kong dollars unless otherwise indicated)

24 FaIr Value MeasureMent oF FInancIal InstruMents (Continued)

(b) Fair values of financial assets and liabilities carried at other than fair value

The carrying amounts of the Group’s financial instruments carried at cost or amortised cost are not materially different from their fair values as at 30 June 2014 and 31 December 2013 except for the Senior Notes (see note 21), for which its carrying amount and fair value is disclosed below:

	30 June	2014	31 December 2013	31 December 2013
	Carrying	Fair	Carrying	Fair
	amount	value	amount	value
	*$’000*	*$’000*	$’000	$’000
Senior Notes	2,349,243	1,414,575	2,337,010	1,331,209

25 oFFsettIng FInancIal assets and FInancIal lIabIlItIes

The disclosures set out in the tables below include financial assets and financial liabilities that:

are offset in the Group’s consolidated statement of financial position; or
are subject to an enforceable master netting arrangement or similar agreement that covers similar financial instruments, irrespective of whether they are offset in the consolidated statement of financial position.

The Group entered into several Bank Notes Pool and offsetting agreements with commercial banks in domestic China. Under such agreements, the Group has a legally enforceable right to set off the bills receivables and restricted bank deposits generated from the collection of those bills receivable with the Group’s bank loans, and the Group and the commercial banks will settle the amount of the bills receivables and restricted bank deposits and the bank loans on a net basis.

In addition to the arrangements as mentioned above, the Group also entered into several loan and offsetting agreements with commercial banks in domestic China with an offset over the Group’s restricted bank deposits and bank loans. Under such agreements, the Group has a legally enforceable right to set off the restricted bank deposits with the bank loans, and the Group and the commercial banks will settle the difference between the amount of the restricted bank deposits and the bank loans on a net basis.

Winsway Enterprises Holdings Limited

Notes to the Unaudited Interim Financial Report (Continued)

(Expressed in Hong Kong dollars unless otherwise indicated)

25 oFFsettIng FInancIal assets and FInancIal lIabIlItIes (Continued)

(a) Financial assets subject to offsetting, enforceable master netting arrangements or similar agreements

		Gross amounts
		of recognised	Net amounts of
		financial liabilities	financial assets
	Gross amounts	offset in	presented in
	of recognised	the statement of	the statement of
	financial assets	financial position	financial position
	$’000	$’000	$’000
As at 30 June 2014
Trade and other receivables	246,352	(232,749)	13,603
Restricted bank deposits	3,772,959	(3,765,231)	7,728
	4,019,311	(3,997,980)	21,331
As at 31 December 2013
Trade and other receivables	194,303	(185,761)	8,542
Restricted bank deposits	4,355,101	(4,227,962)	127,139
	4,549,404	(4,413,723)	135,681

There are no financial instruments or financial collateral received in connection with the above offsetting arrangements.

(b) Financial liabilities subject to offsetting, enforceable master netting arrangements or similar agreements

		Gross amounts
		of recognised	Net amounts of
		financial assets	financial liabilities
	Gross amounts	offset in	presented in
	of recognised	the statement of	the statement of
	financial liabilities	financial position	financial position
	$’000	$’000	$’000
As at 30 June 2014
Secured bank loans	3,997,980	(3,997,980)	—
As at 31 December 2013
Secured bank loans	4,413,723	(4,413,723)	—

There are no financial instruments or financial collateral pledged in connection with the above offsetting arrangements.

2014 Interim Report

Notes to the Unaudited Interim Financial Report (Continued)

(Expressed in Hong Kong dollars unless otherwise indicated)

25 oFFsettIng FInancIal assets and FInancIal lIabIlItIes (Continued)

The tables below reconcile the “net amounts of financial assets and financial liabilities presented in the statement of financial position”, as set out above, to the “trade and other receivables”, “restricted bank deposits” and “secured bank loans” presented in the statement of financial position.

	At 30 June	At 31 December
	2014	2013
	*$’000*	$’000
Net amount of trade and other receivables
after offsetting as stated above	13,603	8,542
Trade and other receivables not
in scope of offsetting disclosure	3,541,171	4,607,682
Total trade and other receivables	3,554,774	4,616,224
	At 30 June	At 31 December
	2014	2013
	*$’000*	$’000
Net amount of restricted bank deposits
after offsetting as stated above	7,728	127,139
Restricted bank deposits not in
scope of offsetting disclosure	1,559,035	2,022,887
Total restricted bank deposits	1,566,763	2,150,026
	At 30 June	At 31 December
	2014	2013
	*$’000*	$’000
Net amount of secured bank loans
after offsetting as stated above	—	—
Secured bank loans not in scope of
offsetting disclosure	2,309,779	4,158,891
Total secured bank loans	2,309,779	4,158,891

Winsway Enterprises Holdings Limited

Notes to the Unaudited Interim Financial Report (Continued)

(Expressed in Hong Kong dollars unless otherwise indicated)

26 contIngencIes

Guarantee

The Company’s existing subsidiaries, other than those established/incorporated under the laws of the PRC, Winsway Coking Coal Holdings S.à.r.l., 0925165 B.C. Ltd., GCC and GCC LP, have provided guarantees for the Senior Notes issued in April 2011 (see note 21).

The guarantees will be released upon the full and final payment and performance of all obligations of the Company under the Senior Notes.

27 MaterIal related Party transactIons

In addition to the balances disclosed elsewhere in this interim financial report, the Group entered into the following material related party transactions during the six months ended 30 June 2014:

	Six months ended 30 June	Six months ended 30 June
	2014	2013
	*$’000*	$’000
Sales of products to a related party	385,384	128,056
Purchase of products from a related party	286,777	244,936
Rental expense for lease of properties from related parties	3,879	3,809

The directors of the Company is of the opinion that the above related party transactions were conducted on normal commercial terms and in accordance with the agreements governing such transactions.

2014 Interim Report

Notes to the Unaudited Interim Financial Report (Continued)

(Expressed in Hong Kong dollars unless otherwise indicated)

28 coMMItMents

(a) Capital commitments outstanding at 30 June 2014 not provided for in the interim financial report are as follows:

	30 June	At 31 December
	2014	2013
	*$’000*	$’000
Contracted for	508,553	586,873
Authorised but not contracted for	9,143	94,484
	517,696	681,357

Capital commitments of the Group are mainly for construction of property, plant and equipment including logistics parks (coal transportation and storage facilities) and coal processing ancillary facilities.

(b) At 30 June 2014, the total future minimum lease payments under non-cancellable operating leases are payable as follows:

	At 30 June	At 31 December
	2014	2013
	*$’000*	$’000
Within 1 year	19,833	27,465
After 1 year but within 5 years	6,272	21,646
After 5 years	—	1,526
	26,105	50,637

The Group leases buildings and others under operating leases. The leases typically run for an initial period of 1 to 4 years, with an option to renew when all terms are renegotiated. None of the leases includes contingent rentals.

29 non-adJustIng eVents aFter tHe rePortIng PerIod

On 22 July 2014, the Company granted a total of 111,400,000 share options to certain eligible persons including several directors of the Company to subscribe for ordinary shares of the Company at $0.420 per share under the New Scheme.

Winsway Enterprises Holdings Limited

==> picture [596 x 60] intentionally omitted <==

Review Report to the Board of Directors of Winsway Enterprises Holdings Limited

(formerly known as “Winsway Coking Coal Holdings Limited”)

(Incorporated in the British Virgin Islands with limited liability)

IntroductIon

We have reviewed the interim financial report set out on pages 27 to 75 which comprises the consolidated statement of financial position of Winsway Enterprises Holdings Limited (formerly known as “Winsway Coking Coal Holdings Limited”) as at 30 June 2014 and the related consolidated statement of profit or loss, the consolidated statement of profit or loss and other comprehensive income and the consolidated statement of changes in equity and the condensed consolidated cash flow statement for the six months then ended and explanatory notes.

The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited require the preparation of an interim financial report to be in compliance with the relevant provisions thereof and International Accounting Standard 34, Interim financial reporting , issued by the International Accounting Standards Board. The directors are responsible for the preparation and presentation of the interim financial report in accordance with International Accounting Standard 34.

Our responsibility is to form a conclusion, based on our review, on the interim financial report and to report our conclusion solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

scoPe oF reVIew

We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410, Review of interim financial information performed by the independent auditor of the entity , issued by the Hong Kong Institute of Certified Public Accountants. A review of the interim financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly we do not express an audit opinion.

conclusIon

Based on our review, nothing has come to our attention that causes us to believe that the interim financial report as at 30 June 2014 is not prepared, in all material respects, in accordance with International Accounting Standard 34, Interim financial reporting .

KPMG

Certified Public Accountants

8th Floor, Prince’s Building 10 Chater Road Central, Hong Kong

26 August 2014

2014 Interim Report

AI assistant

E-Commodities Holdings Limited — Interim / Quarterly Report 2014

50127_rns_2014-09-19_1a20dc43-63d2-4185-bc5b-ace4dbf3b147.pdf

INTERIM REPORT 2014

Chairman’s Statement

Wang Xingchun

Management Discussion and Analysis of Financial Conditions and Operating Results

I. FInancIal HIgHlIgHts

Management Discussion and Analysis of Financial Conditions and Operating Results (Continued)

II. MongolIan coal ProcureMent

III. seaborne coal ProcureMent

Seaborne Coal Procurement Amount (in HK$ million)

Seaborne Coal Procurement Volume (MT)

IV. gcc oPeratIons

GCC Production Volume

GCC Cost of Sales

V. our custoMers

The Group’s Top 5 Customers

VI. FInancIal reVIew

a. Sales

Continuing Operations

Management Discussion and Analysis of Financial Conditions and Operating Results (Continued)

b. Cost of Goods Sold (“COGS”)

Management Discussion and Analysis of Financial Conditions and Operating Results (Continued)

c. Gross Profit/Loss

d. GCC Impairment

Management Discussion and Analysis of Financial Conditions and Operating Results (Continued)

e. Net Finance Costs

Management Discussion and Analysis of Financial Conditions and Operating Results (Continued)

f. Net Loss and Loss per Share

g. Working Capital

Working Capital

h. Property, Plant and Equipment (“PP&E”)

Management Discussion and Analysis of Financial Conditions and Operating Results (Continued)

i. Indebtedness and Liquidity

j. Contingent Liability

k. Pledge of Assets

l. Cash Flow

VII. exPosure to excHange rate FluctuatIons

VIII. HuMan resources

a. Human Resources excluding GCC

Employee Overview

Employee Education Overview

Management Discussion and Analysis of Financial Conditions and Operating Results (Continued)

Training Overview

Training Overview

b. GCC Human Resources

Employee Education Overview

Training Overview

Training Overview

Ix. HealtH, saFety and enVIronMent

x. PurcHase, sale or redeMPtIon oF tHe coMPany’s lIsted securItIes

xI. InterIM dIVIdend

Other Information

dIrectors’ and cHIeF executIVe’s Interests and sHort PosItIons In sHares, underlyIng sHares and debentures

Notes:

sHare-based IncentIVe Plans

Pre-IPO Option Scheme

Other Information (Continued)

Restricted Share Unit Scheme

2014 Share Option Scheme

substantIal sHareHolders

Other Information (Continued)

PurcHase, sale or redeMPtIon oF tHe coMPany’s lIsted securItIes

audIt coMMIttee

reMuneratIon coMMIttee

corPorate goVernance code

Code Provisions

Model code For securItIes transactIons by dIrectors oF tHe coMPany

PublIc Float

Other Information (Continued)

board oF dIrectors

Executive Directors:

Non-executive Directors:

Independent Non-executive Directors:

uPdate on dIrectors’ InForMatIon

Consolidated Statement of Profit or Loss

Consolidated Statement of Profit or Loss (Continued)

Consolidated Statement of Profit or Loss and Other Comprehensive Income

Consolidated Statement of Financial Position

E-Commodities Holdings Limited Interim / Quarterly Report 2014