E-Commodities Holdings Limited — Interim / Quarterly Report 2015

Mar 13, 2016

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

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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)

INTERIM RESULTS ANNOUNCEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2015

The board of directors (the “ Board ”) of Winsway Enterprises Holdings Limited (the “ Company ”) hereby announces the unaudited condensed consolidated results of the Company and its subsidiaries (including Grande Cache Coal LP (“ GCC LP ”), collectively referred to the “ Group ”) for the six months ended 30 June 2015 together with comparative figures for the corresponding period ended 30 June 2014.

FINANCIAL HIGHLIGHTS

• Revenue of the Group from continuing operations in the first half of 2015 was HK$3,396 million.

• Loss for the six months ended 30 June 2015 was HK$1,783 million, out of which, HK$1,581 million was from the continuing operations and HK$202 million from discontinued operation.

• Loss attributable to equity shareholders of the Company amounted to HK$1,490 million, out of which, HK$1,360 million was from continuing operations, and HK$130 million was from discontinued operation.

• Basic and diluted loss per share was HK$0.395. Loss per share from continuing operations was HK$0.361.

• No dividend was declared for the six months ended 30 June 2015.

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CONSOLIDATED STATEMENT OF PROFIT OR LOSS for the six months ended 30 June 2015 — unaudited

(Expressed in Hong Kong dollars)

Note Continuing operations: Revenue 4 Cost of sales Gross profit Other revenue 6 Distribution costs Administrative expenses Other operating income/(expenses), net Impairment of non-current assets 7(c) Loss from operating activities Finance income 7(a) Finance costs 7(a) Net finance costs Share of (loss)/profit of an associate Loss before taxation from continuing operations Income tax 8 Loss from continuing operations

Six months ended 30 June 2015 2014 $’000 $’000 3,396,322 3,246,481 (3,281,656) (3,246,065) 114,666 416 1,552 76,272 (17,392) (86,314) (322,147) (191,200) 4,595 (1,278) (1,214,785) (58,764) (1,433,511) (260,868) 36,808 52,796 (185,391) (207,267) (148,583) (154,471) (163) 916 (1,582,257) (414,423) 834 (6,163) (1,581,423) (420,586)

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CONSOLIDATED STATEMENT OF PROFIT OR LOSS (CONTINUED) for the six months ended 30 June 2015 — unaudited

(Expressed in Hong Kong dollars)

Note Discontinued operation: Loss from discontinued operation, net of tax 5 Loss for the period Attributable to: Equity shareholders of the Company: Loss for the period from continuing operations Loss for the period from discontinued operation 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 operation Loss for the period attributable to non-controlling interests Loss for the period Loss per share — Basic and diluted_(HK$) _9 Loss per share — continuing operations — Basic and diluted_(HK$) _9

Six months ended 30 June 2015 2014 $’000 $’000 (201,467) (4,307,275) (1,782,890) (4,727,861) (1,359,984) (413,257) (129,756) (2,327,218) (1,489,740) (2,740,475) (221,439) (7,329) (71,711) (1,980,057) (293,150) (1,987,386) (1,782,890) (4,727,861) (0.395) (0.727) (0.361) (0.110)

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CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME for the six months ended 30 June 2015 — unaudited

(Expressed in Hong Kong dollars)

Loss for the period Other comprehensive income for the period (after tax adjustments): Item that may be reclassified subsequently to profit or loss: Exchange differences arising on translation Total comprehensive income for the period Attributable to: Equity shareholders of the Company Non-controlling interests Total comprehensive income for the period	Six months ended 30 June 2015 2014 $’000 $’000 (1,782,890) (4,727,861) (6,875) (30,745) (1,789,765) (4,758,606) (1,494,752) (2,770,027) (295,013) (1,988,579) (1,789,765) (4,758,606)

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION at 30 June 2015 — unaudited

(Expressed in Hong Kong dollars)

Note Non-current assets Property, plant and equipment, net 10 Construction in progress 11 Lease prepayments Intangible assets Interest in an associate Other investments in equity securities 12 Other non-current assets 13 Total non-current assets Current assets Inventories 14 Trade and other receivables 15 Restricted bank deposits Cash and cash equivalents Assets held for sale 5 Total current assets Current liabilities Secured bank loans Trade and other payables Senior notes 16 Income tax payable Liabilities held for sale 5 Total current liabilities Net current (liabilities)/assets Total assets less current liabilities	At 30 June At 31 December 2015 2014 $’000 $’000 259,387 908,562 – 160,590 545,496 551,103 5,219 4,870 16,864 17,021 132,871 399,015 – 150,813 959,837 2,191,974 124,116 335,114 1,122,888 2,060,940 894,197 956,077 193,755 438,552 4,099,143 4,304,164 6,434,099 8,094,847 1,687,160 1,191,889 444,124 2,054,615 2,375,939 – 36,831 39,580 4,099,143 4,097,937 8,643,197 7,384,021 (2,209,098) 710,826 (1,249,261) 2,902,800	At 30 June At 31 December 2015 2014 $’000 $’000 259,387 908,562 – 160,590 545,496 551,103 5,219 4,870 16,864 17,021 132,871 399,015 – 150,813 959,837 2,191,974 124,116 335,114 1,122,888 2,060,940 894,197 956,077 193,755 438,552 4,099,143 4,304,164 6,434,099 8,094,847 1,687,160 1,191,889 444,124 2,054,615 2,375,939 – 36,831 39,580 4,099,143 4,097,937 8,643,197 7,384,021 (2,209,098) 710,826 (1,249,261) 2,902,800
		2,191,974
		335,114 2,060,940 956,077 438,552 4,304,164
		8,094,847
		1,191,889 2,054,615 – 39,580 4,097,937
		7,384,021
		710,826
		2,902,800

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED) at 30 June 2015 — unaudited

(Expressed in Hong Kong dollars)

Note Non-current liabilities Senior notes 16 Deferred income Total non-current liabilities NET (LIABILITIES)/ASSETS CAPITAL AND RESERVES Share capital Reserves Total equity attributable to equity shareholders of the Company Non-controlling interests TOTAL EQUITY	At 30 June At 31 December 2015 2014 $’000 $’000 – 2,364,347 154,456 155,865 154,456 2,520,212 (1,403,717) 382,588 4,992,337 4,992,337 (6,183,252) (4,691,960) (1,190,915) 300,377 (212,802) 82,211 (1,403,717) 382,588

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CONDENSED CONSOLIDATED CASH FLOW STATEMENT for the six months ended 30 June 2015 — unaudited

(Expressed in Hong Kong dollars)

Note Operating activities Loss before taxation Net change in inventories, trade and other receivables and trade and other payables Impairment of non-current assets Write-down to adjust the carrying value of GCC LP’s net assets to fair value less costs to sell Provision of impairment losses on trade and other receivables Other adjustments Income tax paid Net cash used in operating activities Investing activities Payment for purchase of property, plant and equipment, construction in progress and intangible assets Decrease in restricted bank deposits Other cash flows arising from investing activities Net cash generated from investing activities Financing activities Proceeds from bank loans Repayment of bank loans Interests paid Other cash flows arising from financing activities Net cash generated from financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at 1 January Effect of foreign exchange rate changes Cash and cash equivalents reclassified as assets held for sale 5 Cash and cash equivalents at 30 June

Six months ended 30 June 2015 2014 $’000 $’000 (1,873,763) (5,364,564) (710,023) (2,793,434) 1,214,785 58,764 81,872 4,698,604 163,287 – 280,324 565,569 (1,925) (21,069) (845,443) (2,856,130) (11,522) (191,124) 76,109 366,660 28,117 42,254 92,704 217,790 3,080,600 4,630,580 (2,592,779) (3,318,204) (118,308) (314,540) 140,059 217,185 509,572 1,215,021 (243,167) (1,423,319) 438,552 2,018,000 (1,232) (6,979) (398) (33,550) 193,755 554,152

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NOTES TO THE FINANCIAL INFORMATION (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 and rendering of logistics services. In addition, the Group is engaged in the development of coal mills and production of coking coal, which has been classified as a discontinued operation since the board of directors committed a plan to dispose of the relevant business on 27 June 2014. The disposal has been completed on 2 September 2015 (see note 5).

2 BASIS OF PREPARATION

The 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 13 March 2016.

The interim financial report has been prepared in accordance with the same accounting policies adopted in the 2014 annual financial statements, except for the accounting policy changes that are expected to be reflected in the 2015 annual financial statements. Details of any changes in accounting policies are set out in note 3.

The Group experienced a challenging trading period over the past few years as a result of the continuing depression of the coking coal market. For the six months ended 30 June 2015, the Group sustained a further loss from continuing operations before taxation and impairment losses for non-current assets, of $367,472,000 and incurred a net cash outflow from operating activities of $812,331,000 from continuing operations. As at 30 June 2015, the Group had net current liabilities of $2,209,098,000 and net liabilities of $1,403,717,000.

In addition, the Group did not make the scheduled interest payments of US$13.15 million in relation to the Senior Notes (see note 16) which fell due on each of 8 April 2015 and 8 October 2015, respectively (“Interest Payment”). The Group’s outstanding Senior Notes amounting to $2,375,939,000 as at 30 June 2015 went into default after the 30-day grace period expired on 8 May 2015 for making the Interest Payment under the terms of the indenture dated 8 April 2011, as amended and supplemented, in relation to the Senior Notes. A committee of the holders of the Senior Notes (“Bondholders”) (“Bondholder Group”) was formed for the purposes of facilitating discussions between the Bondholders and the Group about restructuring of the Senior Notes and an independent financial advisor, Houlihan Lokey (China) Limited (“Houlihan Lokey”), has been appointed to act as the financial advisor to the Bondholder Group and Akin Gump Strauss Hauer & Feld LLP (“Akin Gump”) was appointed as legal adviser to the Bondholder Group.

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In view of such circumstances, the directors have given careful consideration to future liquidity and performance of the Group and its available sources of financing in assessing whether the Group will be able to repay the outstanding Senior Notes and be able to finance its future working capital and financial requirements. Certain measures have been taken to manage its liquidity needs and to improve its financial position which include, but are not limited to, the following:

• (1) On 25 November 2015, the Company, certain of its subsidiaries and certain of the Bondholders entered into a restructuring support agreement (“Restructuring Support Agreement”), pursuant to which such Bondholders have agreed to support the proposed restructuring of the outstanding Senior Notes (“Debt Restructuring”) to be implemented through schemes of arrangement under section 179A of the Business Companies Act of the British Virgin Islands (2004) (“BVI Scheme”) and sections 673 and 674 of the Companies Ordinance (Cap. 622) (as amended) as applicable in Hong Kong (“Hong Kong Scheme”) (collectively “Schemes”).

The proposed Debt Restructuring will consist of a redemption of the outstanding Senior Notes and Interest Payments and all accrued, scheduled interest payments up to the date of the settlement at a discount, with Bondholders accepting a combination of (i) cash consideration of US$50 million minus a consent fee in a total amount equal to 2% of the outstanding principal and accrued but unpaid interest in respect of the Senior Notes as at the date of the Restructuring Support Agreement (“Consent Fee”), and a success fee payable to Houlihan Lokey (“Cash Consideration”); (ii) new ordinary shares of the Company proposed to be provisionally allotted and issued to the Bondholders which shall represent not less than 18.75% of the total issued shares on a fully diluted basis upon completion of the Debt Restructuring (“Scheme Shares”); and (iii) certain contingent value rights (“CVRs”) which would give rise to an one-off payment of US$10 million to the Bondholders upon the occurrence of a triggering event that is the Company’s adjusted profit before taxation in any of the 5 years from the issue date of the CVRs exceeding US$100 million.

The Schemes are subject to the approval of a majority in number representing at least 75% in value of the Bondholders present and voting (either in person or by proxy) at the meetings of the Bondholders in relation to the Hong Kong Scheme, as convened by order of the High Court of Hong Kong (“Hong Kong Court”) for the purpose of considering and, if thought fit, approving the Hong Kong Scheme or in relation to the BVI Scheme, as convened by order of the Commercial Court of the BVI (“BVI Court”) for the purpose of considering and, if thought fit, approving the BVI Scheme (“Scheme Meetings”).

In addition, the Schemes are subject to the sanction by the BVI Court and the Hong Kong Court.

The Cash Consideration as well as the Consent Fee and the success fee of Houlihan Lokey are expected to be funded by the proceeds of a possible rights issue to raise proceeds of US$50 million (“Rights Issue”).

Completion of the Debt Restructuring will be conditional on, amongst other things, completion of the Rights Issue and the receipt by the Company of the US$50 million from the Rights Issue.

On 11 March 2016, Famous Speech Limited, a company incorporated in the BVI with limited liability (“Famous Speech”), Mr. Wang, being the controlling shareholder, and his directly or indirectly wholly owned companies, which together own approximately 40.24% of the existing issued shares of the Company (“Controlling Shareholder Group”), and the Company entered into an underwriting agreement, pursuant to which Famous Speech has conditionally agreed to subscribe for all new shares proposed to be provisionally allotted and issued to the qualifying shareholders for subscription pursuant to the Rights Issue at the subscription price of the Rights Issue (“Underwriting Agreement”).

Mr. Wang is beneficially interested in an aggregate of 1,518,250,109 ordinary shares of the Company (“Shares”), representing approximately 40.24% of the total issued Shares of the Company. Famous Speech is wholly owned by Amy Wang, the daughter of Mr. Wang, and upon completion of share subscription agreement between, among others, Amy Wang and Magnificent Gardenia Limited, a company ultimately owned by China Minmetals Corporation, a state-owned enterprises incorporated in

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the PRC (Magnificent Gardenia”), Famous Speech will be owned as to 73.3% and 26.7% by Amy Wang and Magnificent Gardenia, respectively. Assuming no take up of new shares by other qualifying shareholders, the fulfillment by Famous Speech of its underwriting commitment would result in an obligation to make a mandatory general offer by Famous Speech and parties acting in concert with it for all the issued Shares (other than those already owned or agreed to be acquired by them) under Rule 26.1 of the Hong Kong Code on Takeovers and Mergers and Share Buy-backs (“Takeovers Code”), unless a waiver (“Whitewash Waiver”) from strict compliance with Rule 26.1 of the Takeovers Code is granted by the Executive Director of the Corporate Finance Division of the Securities and Futures Commission of Hong Kong, or any delegate of the Executive Director (“SFC Executive”). Mr. Wang, the Controlling Shareholder Group, Amy Wang are acting in concert with Famous Speech and Magnificent Gardenia Limited is not, but is deemed to be acting in concert with Famous Speech under the Takeovers Code. An application will be made by Famous Speech to the SFC Executive for the granting of the Whitewash Waiver.

To the best knowledge of the Company, certain Bondholders holding an aggregate principal amount of US$1,280,000 (representing approximately 0.41% of the outstanding Senior Notes) that such Bondholders also hold 28,802,000 Shares in total (representing approximately 0.76% of the total issued Shares) as of the date hereof. The payment of the Consent Fee and the distribution of the Scheme Consideration to Bondholders are not capable of being extended to all Shareholders and will constitute a special deal (“Special Deal”) under note 5 to Rule 25 of the Takeovers Code so far as those Bondholders who are also shareholders of the Company are concerned. This will require the consent of the SFC Executive to proceed.

The Whitewash Waiver and consent for the Special Deal, if granted by the SFC Executive, would be subject to, among other things, the approval of the shareholders other than (i) Mr. Wang and his concert parties; (ii) those who are involved or interested in the Rights Issue, the Underwriting Agreement, the Special Deal and/or the Whitewash Waiver; and (iii) Bondholders who are also shareholders of the Company (“Independent Shareholders”) at an extraordinary general meeting of the Company (“EGM”) by way of poll.

Completion of the Rights Issue will be conditional on, amongst other things, the Schemes being sanctioned and all conditions precedent to the Schemes having been satisfied or as applicable, waived, other than the completion of the Rights Issue.

• (2) The Group is also negotiating with various financial institutions for renewal of the existing borrowings upon their maturity and/or obtaining additional financing.

• (3) The Group is also maximising its sales efforts, including speeding up sales of its existing inventories, seeking new orders from overseas markets, and implementing more stringent cost control measures with a view to improving operating cash flows.

Whilst the Group is taking measures to preserve cash and secure additional finance, the following material uncertainties exist:

• (a) The Schemes may not be approved by a majority in number representing at least 75% in value of the Bondholders present and voting (either in person or by proxy) at the Scheme Meetings.

• (b) The Group may not be able to obtain from the shareholders of the Company all necessary shareholders’ approvals and consents in respect of the Debt Restructuring.

• (c) The Hong Kong Court or the BVI Court may decline to sanction the Schemes.

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• (d) The Whitewash Waiver and consent for the Special Deal may not be granted by the SFC Executive or approved by the Independent Shareholders at the EGM.

• (e) The Group may not be able to obtain from the shareholders of the Company all necessary shareholders’ approvals and consents in respect of the Rights Issue.

If any of the matters mentioned in (a), (b), (c), (d) or (e) is the case, the Rights Issue and Debt Restructuring will not proceed.

• (f) The Group may not be able to obtain support from its lenders. The Group’s ability to successfully negotiate with its lenders to renew existing borrowings and/or obtain additional financing is dependent upon the completion of the proposed Debt Restructuring and the future trading results of the Group.

• (g) The operation plans may not be successfully implemented and future trading results and cash flows in respect of operating activities may not be in line with the assumptions. The achievability of the plans is dependent upon the market environment, which is expected to remain challenging in the coming years.

These facts and circumstances indicate the existence of multiple material uncertainties which may cast significant doubt on the Group’s ability to continue as a going concern and therefore it may be unable to realise its assets and discharge its liabilities in the normal course of business.

The directors have reviewed the Group’s cash flow projections prepared by management. The cash flow projections cover a period of not less than twelve months from the end of the reporting period. They are of the opinion that, taking into account the above-mentioned plans and measures, the Group will have sufficient working capital to finance its operations and to meet its financial obligations as and when they fall due within the next twelve months from the end of the reporting period. Accordingly, the directors are of the opinion that it is appropriate to prepare the financial information for the six months ended 30 June 2015 on a going concern basis.

Should the Group be unable to continue to operate as a going concern, adjustments would have to be made to write down the value of assets to their recoverable amounts, to provide for further liabilities which might arise and to reclassify non-current assets and non-current liabilities as current assets and current liabilities respectively. The effect of these adjustments has not been reflected in the financial information.

3 CHANGES IN ACCOUNTING POLICIES

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

• Annual Improvement to IFRSs 2010–2012 Cycle

• Annual Improvement to IFRSs 2011–2013 Cycle

None of these developments have had a material effect on how the Group’s results and financial position for the current or prior periods have been prepared or presented. The Group has not applied any new standard or interpretation that is not yet effective for the current accounting period.

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4 REVENUE AND SEGMENT REPORTING

(i) Revenue

The Group is principally engaged in the processing and trading of coking coal and other products and the rendering of logistics services. Revenue 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 during the period is as follows:

Continuing operations

	Six months ended	30 June
	2015	2014
	$’000	$’000
Coking coal	3,040,528	3,036,118
Thermal coal	49,302	151,312
Coke	95,314	–
Coal related products	16,382	22,973
Petrochemical products	146,391	–
Rendering of logistics services	45,952	32,875
Others	2,453	3,203
	3,396,322	3,246,481

(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 14 November 2014, the Group, Up Energy Resources Company Limited (the “Purchaser”) and Up Energy Development Group Limited (the “Purchaser Guarantor”) entered into a sale and purchase agreement pursuant to which the Purchaser conditionally agreed to acquire and the Group has conditionally agreed to sell 42.74% equity interest in GCC and GCC LP for cash consideration of US$1 (see note 5).

• 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”).

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• (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 interest in an associate. Segment liabilities include trade and other payables, obligations under finance lease, provisions, deferred income and bank and other loans 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.

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 and provision for impairment losses on trade and other receivables.

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 2015 is set out below.

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For the six months ended 30 June

Revenue from external customers Inter-segment revenue Reportable segment revenue Reportable segment (loss)/profit (adjusted EBITDA) Interest income Interest expense Depreciation and amortisation for the period Provision for impairment losses on trade and other receivables Impairment of non-current assets Shares of (loss)/profit of an associate Additions to non-current segment assets during the period Reportable segment assets Reportable segment liabilities	Processing and trading of coking coal and other products 2015 2014 $’000 $’000 3,350,370 3,213,606 – – 3,350,370 3,213,606 (15,380) (160,447) 30,202 32,696 (144,668) (173,367) (30,667) (44,912) (153,521) – (734,448) (58,764) – – 14,020 32,120 3,653,962 5,840,771 4,667,684 5,771,915	Development of coal mills and production of coking coal and related products (Discontinued operation) 2015 2014 $’000 $’000 203,391 536,698 52,641 85,095 256,032 621,793 (61,989) 109,413 – 159 (147,645) (115,204) – (245,905) – – (81,872) (4,698,604) – – 460 132,963 4,099,143 4,304,164 4,099,143 4,007,898	Logistics services 2015 2014 $’000 $’000 45,952 32,875 750 7,449 46,702 40,324 1,250 17,142 2 235 (3) (9,385) (10,642) (13,887) (9,766) – (480,337) – (163) 916 1,232 28,898 112,344 614,224 482,372 484,160	Total 2015 2014 $’000 $’000 3,599,713 3,783,179 53,391 92,544 3,653,104 3,875,723 (76,119) (33,892) 30,204 33,090 (292,316) (297,956) (41,309) (304,704) (163,287) – (1,296,657) (4,757,368) (163) 916 15,712 193,981 7,865,449 10,759,159 9,249,199 10,263,973	Total 2015 2014 $’000 $’000 3,599,713 3,783,179 53,391 92,544 3,653,104 3,875,723 (76,119) (33,892) 30,204 33,090 (292,316) (297,956) (41,309) (304,704) (163,287) – (1,296,657) (4,757,368) (163) 916 15,712 193,981 7,865,449 10,759,159 9,249,199 10,263,973
					3,875,723
					(33,892)
					33,090 (297,956) (304,704) – (4,757,368) 916 193,981 10,759,159 10,263,973

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

For the six months ended 30 June

Revenue Reportable segment revenue Elimination of inter-segment transactions Elimination of discontinued operation Consolidated revenue from continuing operations Loss Reportable segment loss Depreciation and amortisation Impairment of non-current assets Provision for impairment losses on trade and other receivables Share of (loss)/profit of an associate Net finance costs Elimination of discontinued operation Consolidated loss before taxation from continuing operations Assets Reportable segment assets Interest in an associate Elimination of inter-segment receivables Consolidated total assets Liabilities Reportable segment liabilities Current income tax liabilities Deferred tax liabilities Elimination of inter-segment payables Consolidated total liabilities	2015 $’000 3,653,104 (53,391) (203,391) 3,396,322 (76,119) (41,309) (1,214,785) (163,287) (163) (148,583) 61,989 (1,582,257) At 30 June 2015 $’000 7,865,449 16,864 (488,377) 7,393,936 9,249,199 36,831 – (488,377) 8,797,653	2014 $’000 3,875,723 (92,544) (536,698) 3,246,481 (33,892) (58,799) (58,764) (–) 916 (154,471) (109,413) (414,423) At 31 December 2014 $’000 10,759,159 17,021 (489,359) 10,286,821 10,263,973 39,580 90,039 (489,359) 9,904,233

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

Note Development of coal mills and production of coking coal and related products segment (loss)/profit (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 5(d) Income tax in respect of write-down of GCC LP’s net assets 5(d) Loss from discontinued operation, net of tax

Six months ended 30 June 2015 2014 $’000 $’000 (61,989) 109,413 (147,645) (115,045) – (245,905) (81,872) (4,698,604) (291,506) (4,950,141) 77,758 (61,925) 12,281 704,791 (201,467) (4,307,275)

• (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 interest in an associate.

For the six months ended 30 June

The PRC (including Hong Kong and Macau) Canada Elimination of discontinued operation Korea Japan	Revenues from external customers 2015 2014 $’000 $’000 2,925,899 3,246,481 203,391 536,698 (203,391) (536,698) – – 347,525 – 122,898 – 3,396,322 3,246,481

– 16 –

The PRC (including Hong Kong and Macau) Other countries	Specified non-current assets At At 30 June 31 December 2015 2014 $’000 $’000 959,780 2,064,229 57 127,745 959,837 2,191,974	Specified non-current assets At At 30 June 31 December 2015 2014 $’000 $’000 959,780 2,064,229 57 127,745 959,837 2,191,974
		2,191,974

5 DISPOSAL GROUP HELD FOR SALE AND DISCONTINUED OPERATION

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. 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 since 27 June 2014.

On 14 November 2014, the Group entered into a sale and purchase agreement with Up Energy Resources Company Limited (the “Purchaser”) and Up Energy Development Group Limited (the “Purchaser Guarantor”), pursuant to which the Purchaser has conditionally agreed to acquire and the Group has conditionally agreed to sell 42.74% equity interest in Grande Cache Coal Corporation (“GCC”, a subsidiary of the Group without material businesses except for as the general partner holding 0.01% interest in GCC LP) and GCC LP at cash consideration of US$1 (the “Disposal”).

On 2 September 2015, all the conditions precedent to the completion of the Disposal were either satisfied or waived pursuant to the aforementioned sale and purchase agreement. Following the completion of the Disposal, GCC and GCC LP ceased to be subsidiaries of the Company.

(a) Impairment loss relating to the disposal group

An impairment loss of $81,872,000 (six months ended 30 June 2014: $4,698,604,000) for write-down 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.

– 17 –

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

As at 30 June 2015, the disposal group has been stated at fair value less costs to sell and comprised the following assets and liabilities.

Property, plant and equipment Construction in progress Intangible assets Inventories Trade and other receivables Restricted bank deposits Cash and cash equivalents Assets held for sale Bank and other loans Trade and other payables Obligations under finance lease Provisions Liabilities held for sale*	$’000 2,858,377 30,103 855,186 142,925 24,500 187,654 398
	4,099,143
	3,442,995 280,678 159,643 215,827
	4,099,143

• On 6 September 2014, GCC LP and the Purchaser entered into a bridge loan agreement pursuant to which the Purchaser provided a loan facility of US$50 million (equivalent to approximately $388 million) to GCC LP. As at 30 June 2015, GCC LP has drawn down US$36,211,000 (equivalent to approximately $280,726,000) (31 December 2014: US$14,000,000 (equivalent to approximately $108,608,000)) under the bridge loan agreement.

Bank loans amounting to $12,737,000 (31 December 2014: $13,977,000) are secured by property, plant and equipment with an aggregate carrying amount of $18,387,000 (31 December 2014: $18,399,000). Bank loans amounting to $3,149,532,000 (31 December 2014: $3,149,248,000) are secured by GCC LP’s total assets.

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

As at 30 June 2015, there is a foreign currency translation gain of $34,126,000 (31 December 2014: $37,913,000) included in other comprehensive income relating to the disposal group.

– 18 –

(d) Results of discontinued operation

Results of discontinued operation Revenue Expenses Results from operating activities Income tax Results from operating activities, net of tax Write-down to adjust the carrying value of GCC LP’s net assets to fair value less costs to sell Income tax in respect of write-down of GCC LP’s net assets Loss for the period Attributable to: Equity shareholders of the Company Non-controlling interests Loss per share* Basic and diluted (HK$)

Six months ended 30 June 2015 2014 $’000 $’000 203,391 536,698 (413,025) (788,235) (209,634) (251,537) 77,758 (61,925) (131,876) (313,462) (81,872) (4,698,604) 12,281 704,791 (201,467) (4,307,275) (129,756) (2,327,218) (71,711) (1,980,057) (201,467) (4,307,275) (0.034) (0.617)

• After taking into account the US$1 as the total consideration to complete the Disposal on 2 September 2015, a further write-down amounting to $81,872,000 to adjust the carrying value of GCC LP’s net assets has been provided as at 30 June 2015.

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

Net cash (used in)/generated from operating activities Net cash generated from/(used in) investing activities Net cash generated from financing activities Net cash inflow for the period	Six months ended 30 June 2015 2014 $’000 $’000 (33,112) 120,965 4,209 (136,226) 29,301 20,158 398 4,897

– 19 –

6 OTHER REVENUE

Note Penalty income from an iron ore customer (i) Government grants Others	Six months ended 30 June 2015 2014 $’000 $’000 – 70,977 1,552 4,608 – 687 1,552 76,272	Six months ended 30 June 2015 2014 $’000 $’000 – 70,977 1,552 4,608 – 687 1,552 76,272
		76,272

• (i) During the six months ended 30 June 2014, the Group recognised 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.

7 LOSS BEFORE TAXATION FROM CONTINUING OPERATIONS

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

(a) Net finance costs

Interest income Fair value change of derivative financial instruments Foreign exchange gain, net Finance income Interest on secured bank loans wholly repayable within five years Interest on discounted bills receivable Interest on senior notes (see note 16) Total interest expense Bank charges Foreign exchange loss, net Fair value change of derivative financial instruments Finance costs Net finance costs	Six months ended 30 June 2015 2014 $’000 $’000 (30,204) (32,931) (6,604) – – (19,865) (36,808) (52,796) 26,254 44,453 3,298 23,137 115,119 115,162 144,671 182,752 4,061 17,801 36,659 – – 6,714 185,391 207,267 148,583 154,471	Six months ended 30 June 2015 2014 $’000 $’000 (30,204) (32,931) (6,604) – – (19,865) (36,808) (52,796) 26,254 44,453 3,298 23,137 115,119 115,162 144,671 182,752 4,061 17,801 36,659 – – 6,714 185,391 207,267 148,583 154,471
		(52,796)
		44,453 23,137 115,162
		182,752 17,801 – 6,714
		207,267
		154,471

– 20 –

(b) Staff costs

Salaries, wages, bonus and other benefits Contributions to defined contribution retirement plan Equity settled share-based payment expenses Other items Government grants Amortisation# — leased assets — intangible assets Depreciation# (Reversal)/provision of impairment losses on — trade receivables_(note 15(b)) —other receivables(note 15(d)) Impairment of non-current assets — property, plant and equipment(note 10(c)) — construction in progress(note 11) — other investments in equity securities(note 12) — prepayment related to property, plant and equipment(note 13) — loan to a third party(note 13)_ Operating lease charges, mainly relating to buildings Cost of inventories

Six months ended 30 June 2015 2014 $’000 $’000 69,615 86,094 4,006 4,804 3,460 2,318 77,081 93,216 Six months ended 30 June 2015 2014 $’000 $’000 (1,552) (4,608) 5,847 5,497 347 387 35,115 52,915 (4,590) – 167,877 – 633,314 58,764 171,392 – 266,302 – 23,561 – 120,216 – 5,655 10,453 3,248,796 3,209,786

(c) Other items

Cost of inventories includes $2,864,000 (six months ended 30 June 2014: $3,508,000) and $2,919,000 (six months ended 30 June 2014: $5,153,000) for the six months ended 30 June 2015 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.

– 21 –

8 INCOME TAX IN THE CONSOLIDATED STATEMENT OF PROFIT OR LOSS

	Six months ended 30 June	Six months ended 30 June
	2015	2014
	$’000	$’000
Continuing operations:
Current tax — Hong Kong Profits Tax
Provision for the period	–	4,213
Current tax — Outside of Hong Kong
Provision for the period	1,236	2
Over-provision in respect of prior years	(2,070)	(3,800)
Deferred tax
Origination and reversal of temporary differences	–	5,748
	(834)	6,163

The provision for Hong Kong Profits Tax is calculated at 16.5% (2014: 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% (2014: 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.

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 2015 is based on the loss attributable to equity shareholders of the Company of $1,489,740,000 (six months ended 30 June 2014: $2,740,475,000) and the weighted average number of ordinary shares of 3,767,018,000 (six months ended 30 June 2014: 3,767,018,000 shares) in issue during the six months ended 30 June 2015, calculated as follows:

Weighted average number of ordinary shares (basic):

	Six months ended	30 June
	2015	2014
	’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)	(6,181)
Weighted average number of ordinary shares (basic)
as at 30 June	3,767,018	3,767,018

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

– 22 –

• (b) Diluted loss per share

For the six months ended 30 June 2015 and 2014, 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 2015 is based on the loss from continuing operations attributable to equity shareholders of the Company of $1,359,984,000 (six months ended 30 June 2014: $413,257,000) and the weighted average number of ordinary shares of 3,767,018,000 (six months ended 30 June 2014: 3,767,018,000 shares) in issue during the six months ended 30 June 2015.

• (b) Diluted loss per share

For the six months ended 30 June 2015 and 2014, 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 2015, the Group has acquired items of property, plant and equipment of $199,000 (six months ended 30 June 2014: $7,577,000). Items of property, plant and equipment with a net book value of $3,635,000 have been disposed of during the six months ended 30 June 2015 (six months ended 30 June 2014: $1,999,000), resulting in a gain on disposal of $1,424,000 (six months ended 30 June 2014: loss on disposal of $164,000).

(b) Transfer from construction in progress

During the six months ended 30 June 2015, construction in progress with a cost of $22,147,000 (six months ended 30 June 2014: $11,746,000) has been transferred into property, plant and equipment.

(c) Impairment loss

An impairment loss of $633,314,000 (six months ended 30 June 2014: $58,764,000) for buildings, plant, machinery and railway special assets in respect of the Group’s coal processing factories and logistics facilities in the PRC has been charged to the consolidated statement of profit or loss for the current period due to the unfavourable future prospects of the coking coal business and production suspension or low utilisation of the coal processing factories and logistics facilities. 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 12.36% (six months ended 30 June 2014: 11.27%). The discount rate used reflects specific risks relating to the relevant segment.

• (d) As at 30 June 2015, property ownership certificates of certain properties of the Group with an aggregate net book value of $361,000 (31 December 2014: $114,062,000) are yet to be obtained.

• (e) As at 30 June 2015, property, plant and equipment of the Group of $193,814,000 (31 December 2014: $82,032,000) have been pledged as collateral for the Group’s borrowings.

– 23 –

11 CONSTRUCTION IN PROGRESS

An impairment loss of $171,392,000 (six months ended 30 June 2014: $nil) for construction in progress in respect of certain logistics and coal processing projects under construction in the PRC has been charged to the consolidated statement of profit or loss for the current period since the directors determined to abandon these projects given unfavourable future prospects of the coking coal business in 2015.

12 OTHER INVESTMENTS IN EQUITY SECURITIES

Other investments in equity securities Less: impairment losses	Six months ended 30 June 2015 2014 $’000 $’000 399,173 399,015 (266,302) – 132,871 399,015	Six months ended 30 June 2015 2014 $’000 $’000 399,173 399,015 (266,302) – 132,871 399,015
		399,015

Other investments in equity securities represent the Group’s equity interests in third-party companies engaged in railway logistics, ports management and coal storage business. As at 30 June 2015, the Group holds equity interests in a range of 1-9% in these companies.

An impairment loss of $266,302,000 to write down the carrying amount of the Group’s investments in equity securities of certain of these companies has been charged to the consolidated statement of profit or loss for the current period due to the unsatisfactory operating performance of these companies. The impairment has been provided based on a fair value evaluation on the respective investments in the equity securities performed by an independent appraiser using the discounted cash flow method based on cash flow projections taking into account transportation price assumptions and estimated transportation volumes provided by the management of the investees. The expected net cash flows are discounted using a risk adjusted pre-tax discount rate of 12.36%.

13 OTHER NON-CURRENT ASSETS

Loan to a third party_(note (i)) Advance payments for equipment purchase and construction in progress(note (ii))_	At 30 June 2015 $’000 – – –	At 31 December 2014 $’000 127,187 23,626
		150,813

• (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 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 a 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 does 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).

– 24 –

In 2013, the Group 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 was repayable on 31 December of years 2013 to 2015 in an amount of US$4 million plus a floating repayment amount. The floating repayment amount was calculated based on the volume of coal transported (up to a maximum of 12 million tonnes) by Moveday for the Group and up to US$6 million during each year. Apart from the repayment terms, all the other terms of the loan were not changed and Moveday was obliged to repay the entire outstanding principal on or before 31 December 2016.

During the six months ended 30 June 2015, Moveday has repaid interest of US$345,000 (six months ended 30 June 2014: US$282,000) to the Group and the outstanding loan balance as at 30 June 2015 is US$20.4 million (31 December 2014: US$20.4 million). In addition to the above, the Group incurred liabilities of $20 million (30 June 2014: $36.8 million) for coking coal transportation services provided by Moveday during the six months ended 30 June 2015.

In October 2015, Moveday informed the Group that it could not repay the outstanding principal and interest as scheduled in the above-mentioned supplemental agreement due to financial difficulties encountered. On 22 January 2016, the Group and Moveday mutually agreed that the outstanding loan principal of US$4,888,000 (equivalent to approximately $37,896,000) and interest of US$359,000 (equivalent to approximately $2,787,000) due on 31 December 2015 should be offset against the Group’s payables in connection with coking coal transportation services provided by Moveday. Apart from the offsetting arrangement, all the other terms of the loan were not changed and Moveday is still obliged to repay the entire outstanding principal on or before 31 December 2016.

For the six months ended 30 June 2015, the Group has made an impairment provision of $120,216,000 against the loan to Moveday based on the communication with management of Moveday about the adverse financial and operating circumstances of Moveday in 2015.

• (ii) The Group has provided full impairment for all advance payments for equipment purchase and construction in progress in relation to the coal processing plants and logistic park facilities which have ceased construction during the current period. During the six months ended 30 June 2015, $23,561,000 was written off against advance payments for equipment purchase and construction in progress (31 December 2014: $nil).

14 INVENTORIES

Coking coal Thermal coal Coal related products Petrochemical products Coke Others Less: write-down of inventories	At 30 June 2015 $’000 101,949 9,077 1,300 – – 20,899 133,225 (9,109) 124,116	At 31 December 2014 $’000 109,005 48,162 13,199 140,528 61,411 21,487 393,792 (58,678) 335,114

– 25 –

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

Carrying amount of inventories sold Write-down of inventories	Six months ended 30 June 2015 2014 $’000 $’000 3,239,687 3,080,090 9,109 129,696 3,248,796 3,209,786	Six months ended 30 June 2015 2014 $’000 $’000 3,239,687 3,080,090 9,109 129,696 3,248,796 3,209,786
		3,209,786

15 TRADE AND OTHER RECEIVABLES

Trade receivables Bills receivable Receivables from import agents Less: allowance for doubtful debts Amounts due from related parties Loan to a third party company 13(i) Prepayments to suppliers (i) Derivative financial instruments (ii) Deposits and other receivables Less: allowance for doubtful debts	At 30 June 2015 $’000 277,048 359,770 34,120 (51,936) 619,002 761 37,896 51,411 4,556 588,349 (179,087) 1,122,888	At 31 December 2014 $’000 818,387 507,481 291,192 (56,526)
		1,560,534 761 31,031 64,626 31,480 383,718 (11,210)
		2,060,940

• (i) At 30 June 2015, as included in prepayments to suppliers, the Group made a prepayment of $5,729,000 (31 December 2014: $21,078,000) to Moveday in respect of its coking coal transportation services.

• (ii) Derivative financial instruments represent fair value of foreign exchange forward contracts as at 30 June 2015 and 31 December 2014 and a derivative embedded in a purchase contract of petrochemical products as at 31 December 2014.

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. The credit terms for receivables from import agents can be as long as one year, which are comparable to the credit terms for payables to import agents as granted to the Group. Bills receivable are normally due within 90 days to 360 days from the date of issuing.

At 30 June 2015, trade and bills receivables of the Group of $320,361,000 (31 December 2014: $586,953,000) have been pledged as collateral for the Group’s borrowings.

– 26 –

At 30 June 2015, bills receivable of the Group of $25,362,000 (31 December 2014: $483,472,000) 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 and net of allowance for bad debt, as follows:

Less than 3 months More than 3 months but less than 6 months More than 6 months but less than 1 year More than 1 year	At 30 June 2015 $’000 228,658 148,756 186,581 55,007 619,002	At 31 December 2014 $’000 837,833 351,249 165,389 206,063
		1,560,534

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

Impairment losses in respect of trade receivables, bills receivable and receivables from import agents are recorded using an allowance account unless the Group is satisfied that recovery of the amount is remote, in which case the impairment loss is written off against trade receivables, bills receivable and receivables from import agents.

The movement in the allowance for doubtful debts during the period is as follows:

At 1 January Reversal of impairment loss At 30 June	2015 $’000 56,526 (4,590) 51,936	2014 $’000 – –
		–

At 30 June 2015, the Group’s trade receivables, bills receivable and receivables from import agents of $126,710,000 (31 December 2014: $108,562,000) were individually determined to be impaired. The individually impaired receivables related to customers that were in financial difficulties and management assessed that only a portion of the receivables is expected to be recovered. Consequently, specific allowances for doubtful debts of $51,936,000 (31 December 2014: $56,526,000) were recognised.

– 27 –

(c) Trade debtors and bills receivable that are not impaired

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:

Neither past due nor impaired Less than 3 months past due More than 3 months but less than 12 months past due	At 30 June 2015 $’000 421,196 31,288 91,744 544,228	At 31 December 2014 $’000 1,343,549 40,965 123,984
		1,508,498

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.

(d) Impairment of other receivables

The movement in the allowance for doubtful debts during the period is as follows:

At 1 January Impairment loss recognised At 30 June	2015 $’000 11,210 167,877 179,087	2014 $’000 – –
		–

Included in the impairment loss are impaired value added tax (“VAT”) recoverable of $160,611,000 that has accumulated to date in certain subsidiaries of the Group which can be deductible from VAT on future sales. The directors of the Company are of the opinion that the recoverability of such amount after commercial production is remote due to the unfavourable future prospects of the coking coal business.

16 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 Guarantors”). 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.

– 28 –

During the year ended 31 December 2013, the Group repurchased Senior Notes in an aggregate principal amount of US$153,190,000 for 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 the 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 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 2015, the Group did not make the scheduled Interest Payment. The Group has defaulted on outstanding Senior Notes amounting to $2,375,939,000 as at 30 June 2015 after the 30-day grace period expired on 8 May 2015 for making the Interest Payment under the terms of the Indenture, as amended and supplemented. On 25 November 2015, the Company, the Subsidiary Guarantors and certain of the Bondholders entered into a Restructuring Support Agreement, pursuant to which such Bondholders agreed to support the Debt Restructuring. Further details of the Debt Restructuring are disclosed in note 2.

17 CAPITAL, RESERVES AND DIVIDENDS

(a) Equity settled share-based transactions

(i) The 2010 Scheme

The Company has a share option scheme (the “2010 Scheme”) which was adopted on 30 June 2010 (the “2010 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 (the “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 2010 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.

– 29 –

• (1) The number of options granted to directors and management in 2010 was 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:

Outstanding at 1 January Exercised during the period Expired during the period Forfeited during the period Outstanding at 30 June Exercisable at 30 June	2015 Weighted average Number exercise price of options $1.677 74,351,000 $1.677 – $1.677 (66,685,450) $1.677 (7,665,550) $1.677 – $1.677 –

• (ii) The 2014 Scheme

The Company has a share option scheme (the “2014 Scheme”) which was adopted on 22 July 2014 (the “2014 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 six months over a period of four years commencing from 1 October 2014 (the “2014 Initial Vesting Date”) in equal portions (12.5% each) on the first day of each six-month period after the 2014 Initial Vesting Date and are exercisable during the relevant period to the extent the share options have vested until 5 years commencing from the date of grant 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 2014 are 46,000,000 and 65,400,000 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:

Outstanding at 1 January Exercised during the period Expired during the period Forfeited during the period Outstanding at 30 June Exercisable at 30 June	2015 Weighted average Number exercise price of options $0.420 111,400,000 $0.420 – $0.420 (1,250,000) $0.420 (8,750,000) $0.420 101,400,000 $0.420 25,350,000

As at the date of this announcement, all outstanding options under the 2014 Scheme have been cancelled in accordance with the terms of the 2014 Scheme.

– 30 –

EXTRACT OF REVIEW REPORT

The below sections set out an extract of the report by KPMG, the auditor of the Company, regarding the interim financial report of the Group for the six months ended 30 June 2015.

Basis for disclaimer of conclusion

• (a) Impairment of other investments in equity securities

As disclosed in note 12 to the interim financial report, in the six months ended 30 June 2015 the directors of the Company have recognised an impairment loss of $266,302,000 to fully write down the carrying amount of the Group’s investments in certain of these companies, having taken into account the investees’ poor performance during the six months ended 30 June 2015 and other indicators of impairment. Given the inherent limitations in the scope of our review, which is by definition substantially less than an audit, we were unable to reach a conclusion as to whether the directors’ judgement in this matter is appropriate and therefore whether the amount of this impairment provision is, or is not, in accordance with the applicable accounting framework. Any decrease in the impairment losses recognised against other investments in equity securities would affect the net assets of the Group as at 30 June 2015 and the Group’s net loss for the six months ended 30 June 2015, and the related disclosures in the interim financial report.

• (b) Impairment of loan due from a third party

As disclosed in note 13 to the interim financial report, the Group had an outstanding loan due from Moveday Enterprises Limited (“Moveday”) of US$20.4 million (equivalent to approximately $158,112,000) as at 30 June 2015. In the six months ended 30 June 2015 the directors of the Company have made an impairment provision of $120,216,000 against this balance, having taken into account information about the adverse financial and operating circumstances of Moveday in the six months ended 2015 but not the possibility of any recovery that may be achieved in future through re-negotiation of the terms of the loan or alternative forms of settlement in kind. Given the inherent limitations in the scope of our review, which is by definition substantially less than an audit, we were unable to reach a conclusion as to whether the directors’ judgement in this matter is appropriate and therefore whether the amount of this impairment provision is, or is not, in accordance with the applicable accounting framework. Any decrease in the impairment losses recognised against this loan balance due from Moveday would affect the net assets of the Group as at 30 June 2015 and the Group’s net loss for the six months ended 30 June 2015, and the related disclosures in the interim financial report.

• (c) Multiple uncertainties related to going concern

As explained in note 2 to the interim financial report, the Group sustained a further loss from continuing operations before taxation and impairment losses for non-current assets, of $367,472,000 and incurred a net cash outflow from operating activities of $812,331,000 from continuing operations for the six months ended 30 June 2015. As at 30 June 2015, the Group had net current liabilities of $2,209,098,000 and net liabilities of $1,403,717,000. In addition, the Group did not make the scheduled interest payment of

– 31 –

US$13.15 million in relation to the Senior Notes which fell due on 8 April 2015 and 8 October 2015 respectively and consequently the Group’s outstanding Senior Notes amounting to $2,375,939,000 as at 30 June 2015 were in default as at 30 June 2015 and continue to be in default.

The directors of the Company have been undertaking certain measures to improve the Group’s liquidity and financial position, which are set out in note 2 to the interim financial report. The interim financial report has been prepared on a going concern basis, the validity of which is dependent on the outcome of these measures, which are subject to the following uncertainties, including (i) whether the Group is able to complete the proposed debt restructuring of the outstanding Senior Notes with cash raised from a possible rights issue, with equity or other form of consideration offered at a discount to the principal amount of the Senior Notes, the achievability of which depends on a number of factors, including the restructuring of the outstanding Senior Notes being sanctioned and all conditions precedent to the debt restructuring schemes and the rights issue having been satisfied; (ii) whether the Group is able to successfully negotiate with the lenders for the renewal of all the existing borrowings upon their maturity and/or obtaining additional financing as and when required, the achievability of which depends on the completion of the proposed debt restructuring and the future trading results of the Group and (iii) whether the Group is able to implement its operation plans to control costs and to generate adequate cash flows from operations, the achievability of which depends on the market environment which is expected to remain challenging.

In our auditor’s report on the Group’s financial statements for the year ended 31 December 2014 we highlighted that multiple material uncertainties that may cast significant doubt on the Group’s ability to continue as a going concern, existed. The facts and circumstances described above, along with other matters as described in note 2 to the interim financial report, indicate that those multiple material uncertainties continue to exist as of the date of this report.

Should the Group be unable to continue to operate as a going concern, adjustments would have to be made to write down the value of assets to their recoverable amounts, to provide for further liabilities which might arise and to reclassify non-current assets and noncurrent liabilities as current assets and current liabilities respectively. The effect of these adjustments has not been reflected in the interim financial report.

Disclaimer of conclusion

Because of the potential interaction of the continuing uncertainties related to going concern and their possible cumulative effect on the interim financial report described in part (c) of the basis for disclaimer of conclusion paragraphs, we do not express a conclusion on the interim financial report. In all other respects, except for the adjustments to the interim financial report that we might have become aware of had we completed our review as described in parts (a) and (b) of the basis for disclaimer of conclusion paragraphs above, based on our review, nothing has come to our attention that causes us to believe that the interim financial report as at 30 June 2015 is not prepared, in all material respects, in accordance with International Accounting Standards 34, Interim financial reporting.

– 32 –

MANAGEMENT DISCUSSION AND ANALYSIS

I. FINANCIAL HIGHLIGHT

In the first half of 2015, the Group recorded consolidated revenue from continuing operations of HK$3,396 million, mainly derived from 4.31 million tonnes of coal sales, 1.03 million tonnes of logistics services rendered, and 0.02 million tonnes of petrochemical products sales. Amongst coal sales, 3.83 million tonnes were seaborne coal, 0.24 million tonnes were Mongolian coking coal, 0.17 million tonnes were Mongolian thermal coal and 0.07 million tonnes were self-produced coal. While in the same period of 2014, consolidated revenue from continuing operations of HK$3,246 million, mainly derived from 3.81 million tonnes of coal sales, of which 2.38 million tonnes were seaborne coal, 1.16 million tonnes were Mongolian coking coal, 0.22 million tonnes were Mongolian thermal coal and 0.05 million tonnes were self-produced coal.

In the first half of 2015, the Group established a new team specializing in petrochemical products trading. 0.02 million tonnes of petrochemical products sales were realized by the team with total revenue of HK$146 million during the period. The Group will continue to seek new profit-generating businesses to tackle the continuing depressed coal trading business. Petrochemical products are a new type of trading commodities added to the Group’s business scope.

For the first half of 2015, the Group achieved a gross profit from continuing operations of HK$115 million compared to a gross profit from continuing operations of HK$0.42 million during the same period of last year. The profit was mainly generated by trading of seaborne coal and petrochemical products as well as rendering warehousing services.

Overall, the Group incurred a consolidated net loss of HK$1,783 million during the first half of 2015 compared to a net loss of HK$4,728 million during the first half of 2014. The loss attributable to equity shareholders of the Company was HK$1,490 million. The continuing operations loss incurred from the Company’s operations was HK$1,581 million for the first half of 2015, and the discontinued operation loss for GCC was HK$202 million.

To cope with the current weak market, the Group continued making efforts to reduce its inventory to a minimal level. The Group’s coal inventory declined from 0.37 million tonnes as of 31 December 2014 to 0.25 million tonnes as of 30 June 2015.

– 33 –

II. MONGOLIAN COAL PROCUREMENT

In the first half of 2015, the Group procured a total of 0.33 million tonnes of Mongolian coal, a 46.77% decrease from the volume procured during the same period last year. The decrease was mainly a result of a change in the price advantage of Mongolian coal to seaborne coal. Domestic market prices did not support the import of Mongolian coal since the seaborne coal price was at such a low level. Therefore, the Company adjusted its marketing strategy by voluntarily reducing Mongolian coal procurement and increasing seaborne coal procurement.

The Group’s top 3 Mongolian coal suppliers during the first half of 2015 were Energy Resources LLC, Edernes Tavan Tolgoi JSC, and Inner Mongolia Wanli Coal Trading Co., Ltd with a procurement amount of HK$35 million, HK$14 million, and HK$13 million, respectively.

==> picture [428 x 116] intentionally omitted <==

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

Mongolian Coal Procurement Amount (in HK$ million) Mongolian Coal Procurement Volume (MT)
1,500 3.00
1,168
2.04
1,000 2.00
500 1.00
0.62
162 137 0.33
0 0
1H 2013 1H 2014 1H 2015 1H 2013 1H 2014 1H 2015
----- End of picture text -----

III. SEABORNE COAL PROCUREMENT

In the first half of 2015, the Group’s seaborne procurement volume was approximately 3.81 million tonnes, a 54.88% increase over the 2.46 million tonnes procured during the first half of 2014. Seaborne coal has a competitive advantage in a weak market because of the lower shipping costs. Moreover, seaborne coal business requires less working capital in comparison with Mongolian coal business. In order to maintain our market share in China, the Company’s strategy is to purchase more seaborne coal on a strict back-to-back basis although only at a thin profit margin.

In the first half of 2015, the amount of coal procured from the top 5 seaborne coal suppliers was worth HK$1,943 million, which accounted for 70.55% of the total seaborne coal procurement, whereas 69.39% of the total seaborne coal was attributable to the top 5 suppliers during the same period of 2014.

– 34 –

The Group’s Top 5 Seaborne Coal Suppliers

Name BHP Billiton Rio Tinto Group Anglo American Peabody Energy Pacific Minerals Coal Limited Total	Amount (HK$’ Million) 889 376 333 221 124
	1,943

Seaborne Coal Procurement Amount (in HK$ million)

Seaborne Coal Procurement Volume (MT)

==> picture [128 x 89] intentionally omitted <==

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

3,000 2,754
2,500 2,422 2,247
2,000
1,500
1,000
500
0
1H 2013 1H 2014 1H 2015
----- End of picture text -----

==> picture [121 x 89] intentionally omitted <==

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

4.0 3.81
3.0
2.46
2.13
2.0
1.0
0
1H 2013 1H 2014 1H 2015
----- End of picture text -----

IV. GCC OPERATIONS

Grande Cache Coal Corporation (“ GCC ”) is engaged in the production and sale of premium hard coking coal. It was acquired by the Company and Marubeni on a 60% and 40% basis, respectively, in March 2012. Owing to the depressing coal market, continuous operating losses of GCC, and limited financial ability of the Group to maintain its financial support to GCC, the board of directors of the Company resolved to divest itself of GCC, and since 27 June 2014, GCC had been classified as a disposal group held for sale.

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. 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 since 27 June 2014.

On 14 November 2014, the Group entered into a sale and purchase agreement with Up Energy Resources Company Limited (the “ Purchaser ”) and Up Energy Development Group Limited, pursuant to which the Purchaser has conditionally agreed to acquire and the Group has conditionally agreed to sell 42.74% equity interest in Grande Cache Coal Corporation (“ GCC ”, a subsidiary of the Group without material businesses except for as the general partner holding 0.01% interest in GCC LP) and GCC LP for cash consideration of US$1 (the “ Disposal ”).

– 35 –

On 2 September 2015, all the conditions precedent to the completion of the Disposal have either been satisfied or waived pursuant to the aforementioned sale and purchase agreement. Following the completion of the Disposal, the Company remains interested in 14.69% in GCC and 14.685% in GCC LP and they have ceased to be subsidiaries of the Company.

Operation details of GCC in the first half of 2015 were as follows:

GCC’s Production Volume

In the first half of 2015, the total production volume of GCC ROM (run-of-mine) coal was 0.32 million tonnes, which sharply decreased from 1.25 million tonnes for the same period last year. The sharp decrease was due to the limitation of tight cash flow position of GCC and poor market performance.

GCC’s Cost of Sales

In the first half of 2015, GCC’s cost of sales was HK$413 million, or HK$1,184 on a per tonne basis, an increase from HK$728 million, or HK$1,014 on a per tonne basis for the same period last year. Cost of self-employed labour, third party contracting services, and materials are among the top cost components.

Average cost of sales_(HK$/tonne)_ Cost of product sold Distribution costs Depreciation and depletion	Six months Ended 30 June 2015 (HK$/tonne) 750 220 214 1,184	Six months Ended 30 June 2014 (HK$/tonne) 486 244 284
		1,014

V. OUR CUSTOMERS

Despite the overall softening in coking coal demand, the Group still managed to compete in the market, benefiting from the Group’s extensive reach of logistics infrastructure in northern and coastal regions of China as well as its strong sales and marketing teams’ performance. Our top 5 customers accounted for 59.81% of the total sales for the first half of 2015 as compared to 33.30% attributable to the top 5 customers for the same period last year.

– 36 –

The Group’s Top 5 Customers

Name Location Liu Steel Group Guangxi Xin Da An Singapore Posco South Korea Jiujiang Group Hebei Bright Ruby Resources Singapore Total	Amount (HK$’ Million) 755 413 348 340 175
	2,031

VI. FINANCIAL REVIEW

a. Sales

In the first half of 2015, our sales revenue from continuing operations was HK$3,396 million, a 4.62% increase from the same period last year.

Continuing Operations

Coking coal Thermal coal Coke Coal related products Petrochemical products Rendering of logistics services Others	Six months ended 30 June 2015 2014 HK$’000 HK$’000 3,040,528 3,036,118 49,302 151,312 95,314 – 16,382 22,973 146,391 – 45,952 32,875 2,453 3,203 3,396,322 3,246,481	Six months ended 30 June 2015 2014 HK$’000 HK$’000 3,040,528 3,036,118 49,302 151,312 95,314 – 16,382 22,973 146,391 – 45,952 32,875 2,453 3,203 3,396,322 3,246,481
		3,246,481

In terms of volume, the Company sold 4.31 million tonnes of coal, compared to 3.81 million tonnes during the same period last year. In terms of price, the Company’s realised average selling price decreased from HK$842 per tonne during the first half of 2014 to HK$716 per tonne during the first half of 2015.

– 37 –

Mongolian coal Seaborne coal Self-produced coal Total	Six months Ended 2015 2014 Total sales volume Average selling price Total sales volume Average selling price (per tonne) (per tonne) (tonnes) (HK$) (tonnes) (HK$) 409,051 475 1,377,730 693 3,829,169 740 2,383,787 923 76,752 814 52,701 1,043 4,314,972 716 3,814,218 842

b. Cost of Goods Sold (“COGS”)

The Group incurred COGS from continuing operations of HK$3,282 million during the first half of 2015 compared to HK$3,246 million in the first half of 2014.

Mongolian coal Seaborne coal Total	Six months Ended 2015 2014 Total purchase volume Average purchase price Total purchase volume Average purchase price (per tonne) (per tonne) (tonnes) (HK$) (tonnes) (HK$) 334,244 410 621,958 260 3,808,386 723 2,461,019 913 4,142,630 698 3,082,977 781

c. Gross Profit

For the first half of 2015, the Group achieved a gross profit from continuing operations of HK$115 million compared to a gross profit from continuing operations of HK$0.42 million during the same period last year. The increase in the profit margin was achieved because the Group has strictly adopted a back-to-back strategy in seaborne coal trading and applied risk management measures in the difficult market environment.

d. Net Finance Costs

In the first half of 2015, our net finance costs from continuing operations totaled HK$149 million compared to HK$154 million during the same period of 2014.

– 38 –

Interest income Fair value change of derivative financial instruments Foreign exchange gain, net Finance income Interest on secured bank loans wholly repayable within five years Interest on discounted bills receivable Interest on senior notes Total interest expense Bank charges Foreign exchange loss, net Fair value change of derivative financial instruments Finance costs Net finance costs	Six months ended 30 June 2015 2014 $’000 $’000 (30,204) (32,931) (6,604) – – (19,865) (36,808) (52,796) 26,254 44,453 3,298 23,137 115,119 115,162 144,671 182,752 4,061 17,801 36,659 – – 6,714 185,391 207,267 148,583 154,471

e. Net Loss and Loss per Share

The Group incurred a net loss of HK$1,783 million in the first half of 2015, a lower amount compared to HK$4,728 million in the first half of 2014. Of the HK$1,783 million loss, HK$1,581 million was from continuing operations.

Net loss per share is HK$0.395 for the first half of 2015 compared to HK$0.727 for the first half of 2014, and loss per share for continuing operations is HK$0.361 for the first half of 2015 compared to HK$0.110 for the first half of 2014.

– 39 –

f. Working Capital

Our accounts receivable turnover days, accounts payable turnover days and inventory turnover days for the first half of 2015 were 52 days, 38 days, and 12 days respectively. The cash conversion days were 26 days, which was 53 days shorter than the same period of last year.

Working Capital

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

200
180
160
140 136
120 108
100
80
60 51 52
40 38
20 12
0
1H 2014 1H 2015
AR Turnover AP Turnover Inventory Turnover
----- End of picture text -----

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

The amount of property, plant and equipment was HK$259 million at the end of June 2015, representing a 71.51% sharp decrease over the amount at the end of December 2014 (HK$909 million). This was due to an impairment loss of HK$633 million for buildings, plant, machinery and railway special assets in respect of the Company’s coal processing factories and logistics facilities in the PRC due to the unfavourable future prospects of the coking coal business and low utilization of the coal processing factories and logistic facilities.

h. Construction in Progress

The Group has provided an impairment loss of HK$171 million for the construction in progress in the respect of certain logistics and coal processing projects under construction in PRC. The amount of construction in progress was written down to zero at the end of June 2015, which was due to the unfavourable future prospects of the coking coal business in 2015.

i. Other Investment in Equity Securities

The Group has recognized impairment losses of HK$266 million to fully write down the Group’s investments in the equity securities of certain companies engaged in railway logistics, ports management and coal storage business. The impairment has been provided based on a fair value evaluation on the respective investments in the equity securities performed by an independent appraiser using discounted cash flows based on cash flow projections taking into account transportation price assumptions and estimated transportation volumes provided by the management of the investees. The expected net cash flows are discounted using a risk adjusted pre-tax discount rate of 12.36%.

– 40 –

j. Other Non-current Assets

On 10 April 2010, the Group and Moveday, a Mongolian trucking company, entered into a loan agreement (as subsequently amended by a supplemental deed on 15 September 2010) and a strategic alliance agreement and 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 was drawn down in 2010. Because of the softening coal market, such agreement was amended several times and remaining unpaid amount as at 30 June 2015 is US$20.4 million. On 22 January 2016, the Group and Moveday mutually agreed to off set the outstanding loan principal of US$4,888,000 and interest of US$359,000 on due as at 31 December 2015 against the Company’s payables in connection with coking coal transportation services provided by Moveday. Apart from the offsetting agreement, all the other terms of the loan were not changed and Moveday is obliged to repay the entire outstanding principal on or before 31 December 2016.

For the six months ended 30 June 2015, the Group has made impairment provision of HK$120,216,000 against the loan to Moveday balance based on the communication with management of Moveday about information about the adverse financial and operating circumstances of Moveday in 2015.

k. Senior Notes

On 8 April 2011, the Company issued senior notes in the aggregate principal amount of US$500,000,000 (“ Senior Notes ”) and which were 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 (the “ Subsidiary Guarantors ”) as an application of the principle stated in the Company’s offering memorandum on 1 April 2011. 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.

During the year ended 31 December 2013, the Group repurchased Senior Notes in aggregate principal amount of US$153,190,000 for a cash consideration of US$73,595,000 in the open market. The Senior Notes repurchased were redeemed subsequently. The outstanding Senior Notes of a principal amount of US$309,310,000 will mature 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 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.

– 41 –

During the six months ended 30 June 2015, the Group did not make the scheduled Interest Payments. The Group has defaulted on outstanding Senior Notes amounting to HK$2,375,939,000 as at 30 June 2015 after the 30-day grace period expired on 8 May 2015 for making the Interest Payment under the terms of the Indenture, as amended and supplemented. On 25 November 2015, the Company, certain of the Bondholders and the Subsidiary Guarantors entered into a restructuring support agreement (“ Restructuring Support Agreement ”), pursuant to which such Bondholders agreed to support the Debt Restructuring. For further information on the Restructuring Support Agreement, please refer to the Company’s announcement dated 26 November 2015.

l. Indebtedness and Liquidity

As of 30 June 2015, our secured bank loans totaled HK$1,687 million (excluding loans of GCC), an increase of 41.53% from the amount at the end of 2014 (HK$1,192 million). The range of interest rates per annum for bank loans for the first half of 2015 varied from 0.68% to 7.15%, compared with a range from 1.53% to 7.20% during 2014. The Group’s gearing ratio calculated on the basis of the Group’s total liabilities divided by its total assets as of 30 June 2015 was 118.98% compared to 96.28% as of 31 December 2014.

==> picture [214 x 211] intentionally omitted <==

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

Indebtedness and Liquidity
118.98%
100% 10.00
50% 5.00
0% 0
-2.92
-962%
-1,000% -5.00
Liability/Asset EBITDA/Interest Debt/EBITDA
----- End of picture text -----

m. 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 GCCLP), 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.

– 42 –

n. Pledge of Assets

At 30 June 2015, bank loans amounting to HK$679,696,000 (31 December 2014: HK$523,935,000) have been secured by bank deposits placed in banks with an aggregate carrying value of HK$671,192,000 (31 December 2014: HK$521,473,000).

At 30 June 2015, bank loans amounting to HK$127,040,000 (31 December 2014: HK$584,418,000) have been secured by trade and bills receivables with an aggregate carrying value of HK$127,041,000 (31 December 2014: HK$584,418,000).

At 30 June 2015, bank loans amounting to HK$479,928,000 (31 December 2014: HK$67,183,000) have been secured by bank deposits placed in banks, land use rights and property, plant and equipment with an aggregate carrying value of HK$256,885,000 (31 December 2014: HK$108,365,000).

At 30 June 2015, bank loans amounting to HK$400,496,000 (31 December 2014: $nil) were secured by trade and bills receivable land use rights and property, plant and equipment with an aggregate carrying value of HK$558,275,000 (31 December 2014: HK$nil).

o. Cash Flow

In the first half of 2015, our operating cash outflow was HK$845 million compared to HK$2,856 million cash outflow during the same period last year. The significant decrease in cash outflow resulted mainly from the amount of in payables, which could not be compensated by receivables and inventory level.

In the first half of 2015, the Group received a cash inflow from investing activities of HK$93 million compared to HK$218 million cash outflow during the first half of 2014. The cash inflow from investing activities was generated mainly from a decrease in restricted bank deposits during the first half of 2015.

The Group had a cash inflow from financing activities of HK$510 million during the first half of 2015 compared to a HK$1,215 million cash inflow from financing activities during the first half of 2014. The cash inflow from financing activities was mainly generated from the net proceeds of bank loans related to trade financing.

VII. EXPOSURE TO EXCHANGE RATE FLUCTUATIONS

Approximately 86% of the Group’s turnover in the first half of 2015 were denominated in United States Dollars (“US dollars”) and the remaining 14% in RMB. The Group’s cost of coal purchased, accounting for over 88.09% of the total cost of sales in the first half of 2015, 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 unfavourable 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.

– 43 –

VIII. HUMAN RESOURCES

i. Winsway Standalone (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 signed 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.

Due to unfavourable operating performance, the Group reduced headcount by about 25% in the first half of 2015. As at 30 June 2015, the Group had 260 full-time employees (excluding 106 dispatch staff in the PRC subsidiaries). Detailed figures by category of employees are as follows:

Functions No. of Employee Management, Administration & Finance 96 Front-line Production & Production Support & Maintenance 111 Sales & Marketing 40 Others (incl. Projects, CP, Transportation) 13 Total 260 Employee Education Overview Qualifications No. of employee Master & above 19 Bachelor 110 Diploma 65 Middle-School (Secondary School) & below 66 Total 260	Percentage 37% 43% 15% 5%
	100%
	Percentage 7% 43% 25% 25%
	100%

– 44 –

Training Overview

Training is key to the Company to improve the employees’ working capabilities and management skills. For the six months ended 30 June 2015, the Company held various internal and external training programs amounting to 457 training hours in total, and 152 employees participated in these programs.

Training Overview

Training Courses Safety Management and leadership Operation Excellence Total	No. of hours 205 220 32 457	No. of participants 113 31 8
		152

ii. GCC

Employee Overview

GCC has maintained a performance-oriented compensation system that balances each individual position’s internal and external value. GCC also signed formal employment contracts with all employees and participates in all required social security schemes following applicable regional and/or national laws and regulations.

As of 30 June 2015, GCC had 287 employees. A detailed breakdown by employee categories is as follows:

Functions No. of Employees Head Office (Calgary) 21 Mine Site Management, Supervision, Technical and Administrative (38 union employees) 62 Underground Mining Operations (Union) 114 Contract Underground Mining Operations 2 Coal Process Plant Operations & Maintenance and Site Care (Union) 37 Coal Haul Operations & Maintenance_(Note 1)_ 51 Total 287	Percentage 7% 22% 40% 0% 13% 18%
	100%

Note 1. The Coal Haul replaced Maple Leaf loading contractors with hourly paid employees.

Note 2. The total number of union employees is 203.

– 45 –

Employee Education Overview

Qualifications No. of Employee Master & above 5 Bachelor 25 Diploma 112 Middle-School (Secondary School) & below 145 Total 287 Training Overview	Percentage 2% 8% 39% 51%
	100%

GCC considers training an invaluable process to provide employees with information, new skills, and/or professional development opportunities. As of 30 June, 2015, GCC held various training programs totaling 7,533 hours, and 348 attendees participated in these programs.

GCC also holds an orientation program for newly admitted employees. The program covers modules such as, among other things, introduction to corporate culture, briefings in relation to of GCC’s regulations, understanding of safety and operational guidelines.

Training Courses Safety New staff Orientation Operation Excellence Total	No. of hours 5,654 1,704 175 7,533	No. of participants 224 66 58
		348

Note: Orientation includes new hire safety orientation and underground orientation

– 46 –

IX. HEALTH, SAFETY AND ENVIRONMENT

We place great importance on the health and safety of our employees, and clearly recognize the importance of environmental protection. LTIFR, FTIR and TRCF are the keys to measure how we deliver our promises.

i. Winsway Standalone HSE Performance

In the first half of 2015, the Company achieved “zero accident”, comparing to 1.14 LTIFR in 2014. No environmental accidents or occupational health accidents occurred in the first half of 2015. Some plants were temporarily idle or half shutdown due to the depressed market, but the Company paid close attention to enhancing the safety awareness of the employees by safety training and examinations.

ii. GCC HSE Performance

YTD Incident Summary of GCC from January 1 to June 30, 2015

	Site	Coal			Surface
	Services	Haul	UG	Admin	OP	Totals
Near Miss	415	399	738	330	49	1,931
First Aid	1	7	17	0	0	25
Medical Treatment1	0	2	5	0	2	9
Restricted Work Case2	0	4	11	0	0	15
Lost Time Injury	0	0	0	0	0	0
Total Recordable Injury3	0	6	16	0	2	24
WHS Notified	1	1	2	0	0	4
WHS Reported	0	0	0	0	0	0
AER	0	1	1	2	0	4
Property Damage	3	4	27	3	1	40
Environmental	0	0	0	0	1	1

• 1 Medical Treatment is the management and care of a patient for the purpose of managing an injury. The employee can perform most or all of the regular duties with the exception of periodically resting the injury.

• 2 Restricted Work Cases occur when, as a result of an injury an employee is kept from performing one or more of the routine functions of his/her job or from working the full work day that he/she would otherwise have been scheduled to work.

• 3 Total Recordable Injury is the sum of fatalities, lost time injury, restricted work cases, and medical treatment.

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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 2015.

XI. INTERIM DIVIDEND

No dividend was declared for the six months ended 30 June 2015.

XII. SIGNIFICANT EVENTS AFTER 30 JUNE 2015

i. GCC Disposal

In connection with GCC operation, on 14 November 2014, the Group entered into a sale and purchase agreement with Up Energy Resources Company Limited (the “ Purchaser ”) and Up Energy Development Group Limited, pursuant to which the Purchaser conditionally agreed to acquire and the Group conditionally agreed to sell 42.74% equity interest in Grande Cache Coal Corporation (“ GCC ”, a subsidiary of the Group without material businesses except for as the general partner holding 0.01% interest in GCC LP) and GCC LP for cash consideration of US$1 (the “ Disposal ”). On 2 September 2015, all the conditions precedent to the completion of the Disposal were either satisfied or waived pursuant to the aforementioned sale and purchase agreement. Following the completion of the Disposal, the Company remains interested in 14.69% in GCC and 14.685% GCC LP and they have ceased to be subsidiaries of the Company. For further information on the Disposal, please refer to the Company’s announcements dated 19 November 2014, 8 December 2014, 1 January 2015, 9 April 2015, 13 May 2015, 30 June 2015, 17 July 2015, 21 July 2015 and 2 September 2015 and circular dated 30 June 2015.

ii. Senior Notes

As at 30 June 2015, the Group has defaulted on outstanding Senior Notes amounting to HK$2,375,939,000 after the 30-day grace period expired on 8 May 2015 for making the Interest Payment under the terms of the Indenture, as amended and supplemented. On 25 November 2015, the Company, certain of the Bondholders and Subsidiary Guarantors entered into the Restructuring Support Agreement, pursuant to which these Bondholders agreed to support the Debt Restructuring. As of the date of this announcement, the Senior Notes restructuring is still in progress.

For further information on the Restructuring Support Agreement, please refer to the Company’s announcement dated 26 November 2015.

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XIII. COMPLIANCE WITH THE CODE ON CORPORATE GOVERNANCE PRACTICES

Throughout the six months ended 30 June 2015, the Company has complied with the code provisions (“ Code Provisions ”) under the Code on Corporate Governance Practices contained in Appendix 14 to the Listing Rules (the “ CG Code ”), except for the deviation from the Code Provision A.2.1 which requires that the roles of chairman and chief executive officer to be separate and not performed by the same individual. Key corporate governance principles and practices of the Company as well as details relating to the foregoing deviation are summarised below.

Code Provision A.2.1 stipulates that the roles of chairman and chief executive officer should be separate and should not be performed by the same individual. As of 30 June 2015, Mr. Wang Xingchun (“ Mr. Wang ”) was the Chairman of the Board and Chief Executive Officer of the Company. With extensive experience in the coking coal industry, Mr. Wang was responsible for the Group’s overall strategic planning and the management of the Company’s business. The Board considered that vesting the roles of chairman and chief executive officer in the same person was beneficial to the business prospects and management of the Group. The balance of power and authority was ensured by the operation of the senior management and the Board, which comprised experienced and high-calibre individuals. As at 30 June 2015, the Board comprised five executive Directors (including Mr. Wang), two non-executive Directors and four independent nonexecutive Directors and therefore had a strong element of independence in its composition.

On 16 November 2015, Mr. Wang resigned from the Board as an executive Director, chairman of the Board and the chief executive officer of the Company. Ms. Cao Xinyi who was appointed as an executive Director and CEO designate on 28 October 2015, and the Chief Executive Officer on 16 November 2015. The Board will elect a chairman at its future meetings on an ad hoc basis following Mr. Wang’s resignation until a new chairman of the Board is elected.

Code Provision E.1.2 stipulates that the chairman of the Board should attend the annual general meeting. The Chairman of the Board at the time was unable to attend the annual general meeting of the Company held on 18 June 2015 for health reasons. Ms. Ma Li, an executive Director, chaired the meeting on his behalf and was available to answer questions.

Except for the deviation from the CG Code as set out above, the Company fully complied with all the Code Provisions throughout the six months ended 30 June 2015.

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XIV. MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS OF THE COMPANY

The Company adopted the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix 10 to the Listing Rules (“ Model Code ”) as its own code of conduct for dealing in securities of the Company by the Directors. Having made specific enquiries of all the Directors, each Director has confirmed that he/she has complied with the required standard set out in the Model Code throughout the first half of 2015.

XV. REVIEW OF INTERIM RESULTS

The audit committee of the Company has reviewed the interim results of the Group for the six months ended 30 June 2015.

XVI. DISCLOSURE OF INFORMATION ON THE HONG KONG STOCK EXCHANGE’S WEBSITE

This interim results announcement is published on the websites of the Company (www.winsway.com) and The Stock Exchange of Hong Kong Limited (www.hkexnews.hk). The interim report of the Company for the six months ended 30 June 2015 will be dispatched to shareholders of the Company and will be available on the above websites in due course.

XVII. RESUMPTION OF TRADING

At the request of the Company, trading in the Shares was halted with effect from 9:00 a.m. on 31 August 2015, pending the release of the interim results of the Company for the six month ended 30 June 2015. An application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares with effect from 9:00 a.m. on 14 March 2016.

By Order of the Board Winsway Enterprises Holdings Limited CAO Xinyi Chief Executive Officer and Company Secretary

Hong Kong, 13 March 2016

As at the date of this announcement, the executive Directors of the Company are Ms. Cao Xinyi, Ms. Zhu Hongchan, Mr. Wang Yaxu, and Mr. Feng Yi, the non-executive Director of the Company is Mr. Lu Chuan and the independent non-executive Directors of the Company are Mr. James Downing, Mr. Ng Yuk Keung, Mr. Wang Wenfu and Mr. George Jay Hambro.

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