P.B. Group Limited — Interim / Quarterly Report 2016

May 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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Feishang Non-metal Materials Technology Limited 飛尚非金屬材料科技有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8331)

FIRST QUARTERLY RESULTS ANNOUNCEMENT FOR THE THREE MONTHS ENDED 31 MARCH 2016

CHARACTERISTICS OF THE GROWTH ENTERPRISE MARKET (“GEM”) OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE “STOCK EXCHANGE”)

GEM has been positioned as a market designed to accommodate companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors.

Given the emerging nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board of the Stock Exchange and no assurance is given that there will be a liquid market in the securities traded on GEM.

This announcement, for which the directors (the “Directors”) of Feishang Non-metal Materials Technology Limited (the “Company”) collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on GEM of the Stock Exchange (the “GEM Listing Rules”) for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this announcement is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this announcement misleading.

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The board of Directors (the “Board”) of the Company is pleased to announce the unaudited condensed consolidated results of the Company and its subsidiaries (collectively the “Group”) for the three months ended 31 March 2016, together with the comparative unaudited figures for the corresponding period in 2015 as follows:

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the three months ended 31 March 2016

Notes Revenue 3 Cost of sales Gross profit Other income Selling and distribution expenses Administrative and other expenses Finance costs Profit before tax Income tax expense 4 Profit (loss) and total comprehensive income (expense) for the period attributable to the owners of the Company Earnings (loss) per share (CNY): Basic and diluted 6	Three months ended 31 March 2016 2015 CNY’000 CNY’000 7,046 7,334 (4,345) (3,995) 2,701 3,339 2,020 317 (395) (340) (1,728) (2,495) (176) (82) 2,422 739 (469) (905) 1,953 (166) 0.39 cents (0.04)cents

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UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the three months ended 31 March 2016

At 1 January 2015 Loss and total comprehensive expenses for the period Appropriation to statutory reserve Appropriation and utilisation of safety fund and production maintenance fund, net At 31 March 2015 At 1 January 2016 Profit and total comprehensive income for the period Appropriation to statutory reserve Appropriation and utilisation of safety fund and production maintenance fund, net At 31 March 2016	Share capital CNY’000 – – – – – 4,188 – – – 4,188	Share premium CNY’000 – – – – – 25,954 – – – 25,954	Other reserve CNY’000 (Note i) 26,492 – – – 26,492 23,351 – – – 23,351	Statutory reserve Safety fund and production maintenance fund CNY’000 CNY’000 (Note ii) (Note iii) 2,148 490 – – 178 – – 32 2,326 522 2,830 652 – – 213 – – 32 3,043 684	Retained earnings CNY’000 14,679 (166) (178) (32) 14,303 2,961 1,953 (213) (32) 4,669	Total CNY’000 43,809 (166) – – 43,643 59,936 1,953 – – 61,889

Notes:

(i) Other reserve

It represents (i) the capital contribution from the controlling shareholder of Feishang International Holdings Limited (“Feishang International”) during the fiscal year of 2002 to 2003; and (ii) the difference between the nominal value of the issued share capital of the Company and share capital of the then holding company, Feishang International, upon the group reorganisation.

(ii) Statutory reserve

As required by applicable law and regulations, entities established and operated in the People’s Republic of China (the “PRC”) shall set aside/appropriate a portion of its after tax profits of each period to fund statutory reserve. The statutory reserve is not distributable as cash dividends and must be made before distribution of dividend to equity owners.

(iii) Safety fund and production maintenance fund

As stipulated by the State Administration of Work Safety of the PRC, Wuhu Feishang Non-metallic Material Company Limited (“Feishang Material”) is required to accrue the safety production fund and the production maintenance fund which is based on the production volume for the utilisation of future safety production expense.

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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL RESULTS

For the three months ended 31 March 2016

1. GENERAL INFORMATION AND BASIS OF PREPARATION

The Company was incorporated in the Cayman Islands under the Companies Law, Chapter 22 (Law 3 of 1961, as consolidated and revised) of the Cayman Islands as an exempted company with limited liability on 15 July 2015 and its shares were listed on GEM of the Stock Exchange on 29 December 2015. The address of the registered office of the Company is Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands. The address of the principal place of business of the Company is Xiao Keshan, Xingang Town, Fanchang County, Wuhu, Anhui Province, the PRC.

The immediate holding company and ultimate holding company of the Company are Feishang Group Limited and Laitan Investments Limited respectively, both of which were incorporated in the British Virgin Islands (the “BVI”).

The Company is an investment holding company while the principal subsidiary is mainly engaged in bentonite mining, production and sales of drilling mud and pelletising clay.

The unaudited condensed consolidated financial statements of the Group are presented in Chinese Yuan (“CNY”), which is the same as the functional currency of the Company. CNY is the currency of the primary economic environment in which the principal subsidiary of the Company operates (the functional currency of the principal subsidiary).

Feishang International, which is a holding company of Feishang Material and Shenzhen Zhuorui Business Management Consultant Company Limited*（深圳市卓瑞企業管理咨詢有限公司）, is ultimately owned by Mr. LI Feilie, Laitan Investments Limited and Feishang Group Limited (the “Controlling Shareholders”) since August 2002.

Pursuant to the reorganisation as set out in the section headed “History, Reorganisation and Group structure” in the prospectus of the Company dated 18 December 2015 (the “Reorganisation”), the Company became the holding company of the companies now comprising the Group on 17 September 2015.

The Reorganisation above involves interspersing a shell company, the Company, between Feishang International and the Controlling Shareholders, which does not represent combination of businesses. Therefore, the Group comprising the Company and its subsidiaries resulting from the Reorganisation is regarded as a continuing entity. Accordingly, the unaudited condensed consolidated financial statements of the Group have been prepared and presented on the basis as if the Company had always been the holding company of the companies now comprising the Group throughout the three months ended 31 March 2015.

2. SIGNIFICANT ACCOUNTING POLICIES

The unaudited condensed consolidated financial statements have been prepared in accordance with the applicable International Financial Reporting Standards (“IFRSs”) issued by the International Accounting Standard Board (the “IASB”) and the applicable disclosure requirements of the GEM Listing Rules.

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The accounting policies and methods of computation used in the preparation of the unaudited condensed consolidated financial statements are consistent with those used in the annual accounts for the year ended 31 December 2015. The Group has adopted new or revised standards, amendments to standards and interpretations of IFRSs which are effective for accounting periods commencing on or after 1 January 2015. The adoption of such new or revised standards, amendments to standards and interpretations does not have material impact on the consolidated accounts and does not result in substantial changes to the Group’s accounting policies.

3. REVENUE AND SEGMENT INFORMATION

Revenue represents the amounts received and receivable from sales of goods in the normal course of business, net of sales related tax.

Drilling mud Pelletising clay Unprocessed clay	Three months ended 31 March 2016 2015 CNY’000 CNY’000 4,118 5,167 2,928 1,880 – 287 7,046 7,334	Three months ended 31 March 2016 2015 CNY’000 CNY’000 4,118 5,167 2,928 1,880 – 287 7,046 7,334
		7,334

The Group operates in one business unit based on its products, and has one reportable and operating segment: bentonite mining, production and sales of drilling mud and pelletising clay. The Directors monitor the revenue of its business unit as a whole based on the monthly sales and delivery reports for the purpose of making decisions about resource allocation and performance assessment.

Information about geographical areas

As all of the Group’s revenue is derived from the customers based in the PRC (country of domicile) and all of the Group’s non-current assets are located in the PRC, no geographical information is presented.

4. INCOME TAX EXPENSE

Current tax: PRC Enterprise Income Tax (“EIT”) Deferred taxation: Current year Attributable to change in tax rate	Three months ended 31 March 2016 2015 CNY’000 CNY’000 320 267 149 121 – 517 469 905	Three months ended 31 March 2016 2015 CNY’000 CNY’000 320 267 149 121 – 517 469 905
		905

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Notes:

• (i) Pursuant to the rules and regulations of the Cayman Islands and the BVI, the Group is not subject to any income tax in the Cayman Islands and the BVI.

• (ii) No provision for Hong Kong Profits Tax has been made as the Group did not have any assessable profits subject to Hong Kong Profits Tax for both periods.

• (iii) On 2 July 2014, Feishang Material was recognised as a High Technology Enterprise and subject to PRC income tax at 15% in accordance with the EIT Law effective from 1 January 2015.

5. DIVIDEND

No dividend was paid or declared by the Group during the three months ended 31 March 2016, nor has any dividend been proposed since the end of 31 March 2016 (for the three months ended 31 March 2015: nil).

6. EARNINGS (LOSS) PER SHARE

The calculation of the basic (diluted) earnings (loss) per share attributable to the owners of the Company is based on the following:

Earnings (loss) Earnings (loss) for the purpose of basic earnings per share Number of shares Weighted average number of ordinary shares for the purpose of basic earnings per share (’000 shares) Basic and diluted earnings (loss) per share (CNY) Note:	Three months ended 31 March 2016 2015 CNY’000 CNY’000 1,953 (166) 2016 2015 500,000 375,000 (note) 0.39 cents (0.04) cents

The weighted average number of ordinary shares in issue during the three months ended 31 March 2015 assuming 375,000,000 ordinary shares were in issue during the three months ended 31 March 2015 after taking into account the ordinary shares issue pursuant to the Reorganisation as stated in note 1.

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MANAGEMENT DISCUSSION AND ANALYSIS

BUSINESS REVIEW

China’s overall economic slowdown and the gloomy outlook of the iron and steel industries have adversely impacted the selling price of pelletising clay. In addition, the slump in price of energy including oil and natural gas has resulted in a sharp decrease in energy industry investment, which has in turn led to a decline in sales of drilling mud products of the Group. Given the difficult business environment, the Group modified its marketing strategy for pelletising clay, which included, among others, adopting the “selling more with lower margin” strategy by lowering the selling price of pelletising clay with the aim to increase sales volume and market share. In the first quarter of 2016, the Group achieved an increase sales volume of pelletising clay despite the challenging environment. As a result, the gross profits of pelletising clay achieved a year-on-year increase of 16.6%.

FINANCIAL REVIEW

Revenue

The revenue decreased by approximately 3.9% from approximately CNY7.3 million for the three months ended 31 March 2015 to approximately CNY7.0 million for the three months ended 31 March 2016. Such decrease in revenue was mainly due to (i) the decrease in sales volume of drilling mud and unprocessed clay; and (ii) the decrease in average selling price of pelletising clay, which was partially offset by the increase in sales volume of pelletising clay. The drop in sales volume of drilling mud was mainly caused by the general economic downturn in the PRC. The general economic slowdown in China’s iron and steel industry also exerted pressure on the average selling price of pelletising clay. Despite the adverse environment, the Group managed to increase the sales volume of pelletising clay by strengthening its marketing and sales effort.

Gross Profit

The gross profit decreased by approximately 19.1% from approximately CNY3.3 million for the three months ended 31 March 2015 to approximately CNY2.7 million for the three months ended 31 March 2016. The decrease in the gross profit was mainly caused by (i) the decrease in sales volume of drilling mud, which had higher gross profit than that of pelletising clay; and (ii) the decrease in average selling price of pelletising clay.

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Other Income

The rise in other income from approximately CNY0.3 million for the three months ended 31 March 2015 to CNY2.0 million for the three months ended 31 March 2016 was mainly due to the Group’s receipt of a monetary award in the sum of CNY2.0 million from Fanchang County People’s Government*（繁昌縣人 民政府）in the first quarter of 2016 for the successful listing of the Company’s shares (the “Shares”) on GEM on 29 December 2015 (the “Listing Date”). The other income for the three months ended 31 March 2015 mainly comprised net gain on financial assets.

Selling and Distribution Expenses

The selling and distribution expenses increased by approximately 16.2% from approximately CNY0.3 million for the three months ended 31 March 2015 to approximately CNY0.4 million for the three months ended 31 March 2016. The increase was primarily due to the rise in transportation cost incurred in the increased pelletising clay sales to customers and the fact that the Group was responsible for the product delivery cost that was included in the selling price.

Administrative and Other Expenses

The administrative and other expenses decreased by approximately 30.7% from approximately CNY2.5 million for the three months ended 31 March 2015 to approximately CNY1.7 million for the three months ended 31 March 2016. The decrease was mainly due to the one-off listing expenses amounting to approximately CNY1.9 million recognised for the three months ended 31 March 2015, which was partially offset by (i) the professional fees and expenses amounting to approximately CNY0.5 million incurred in respect of ongoing compliance with, among others, the relevant regulatory requirements for listed companies for the three months ended 31 March 2016; (ii) the increase in research and development expense of approximately CNY0.2 million; and (iii) the increase in staff cost amounting to approximately CNY0.2 million resulting from an increase in the headcount of administrative and management staff.

Finance Costs

The finance costs increased by approximately 114.6% from approximately CNY0.1 million for the three months ended 31 March 2015 to approximately CNY0.2 million for the three months ended 31 March 2016, primarily due to the increase in accrual of bank loan interest expense drawn down in December 2015.

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Income Tax Expense

The Group had income tax expense of approximately CNY0.5 million for the three months ended 31 March 2016 as compared to approximately CNY0.9 million for the three months ended 31 March 2015. The decrease was mainly due to a decline in the opening deferred tax assets for the three months ended 31 March 2015 resulting from a reduction of enterprise income tax rate applicable to Feishang Material, the indirect wholly-owned subsidiary of the Company, from 25% to 15% as it was categorised as a High Technology Enterprise.

Profit (Loss) and Total Comprehensive Income (Expense) for the Period

The profit and total comprehensive income attributable to the owners of the Company for the three months ended 31 March 2016 was approximately CNY2.0 million, an increase of approximately CNY2.2 million from the loss of approximately CNY0.2 million for the three months ended 31 March 2015. This was mainly contributed by (i) the CNY2.0 million monetary award from Fanchang County People’s Government *（繁昌縣人民政府）in the first quarter of 2016; and (ii) the decrease in one-off listing expenses amounting to approximately CNY1.9 million. The effect was partially offset by the (i) approximately CNY0.6 million decrease in gross profit; (ii) the increase in research and development expense amounting to approximately CNY0.2 million; (iii) the increase in staff cost amounting to approximately CNY0.2 million; and (iv) the increase in professional fees and expenses amounting to approximately CNY0.5 million in respect of ongoing compliance with, among others, the relevant regulatory requirements for listed companies.

OUTLOOK

The iron, steel and energy industries are expected to remain weak and exert further downward pressure on pelletising clay and drilling mud sales in the short term. In order to cope with the challenging business environment, the Group intends to further expand its customer base and market share, increase product recognition of its principal products, enhance production technologies, and develop new products in order to increase its competitiveness. The Group will also continue with the strategy of “selling more with lower margin” and continue to increase the marketing effort of pelletising clay in order to minimise the impact of the industry downturn on the Group. As to drilling mud, the Group is actively developing products with different specifications. Since the second quarter of 2016, the Group has proactively assisted its drilling mud customers to explore and develop new markets by providing them with customised technical support, facilities and manpower support in an aim to achieve sales growth.

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CONTINGENT LIABILITIES

As of 31 March 2016, the Group did not have any loan capital or debt securities issued or agreed to be issued, outstanding bank overdrafts and liabilities under acceptances or other similar indebtedness, debentures, mortgages, charges or loans or acceptance credits, finance leases or hire purchase commitments or guarantees or material contingent liabilities.

DIVIDEND

The Board does not recommend the payment of a dividend for the three months ended 31 March 2016 (2015: Nil).

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

As at 31 March 2016, the interests and short positions of the Directors and chief executives of the Company in the Shares, underlying Shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the Securities and Future Ordinance (Chapter 571 of the Laws of Hong Kong) (the “SFO”)), which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which any such Director or chief executive is taken or deemed to have under such provisions of the SFO) or which were required to be entered into the register required to be kept by the Company under section 352 of the SFO or which were otherwise required to be notified to the Company and the Stock Exchange pursuant to the Rules 5.48 to 5.67 of the GEM Listing Rules (the “Required Standard of Dealings”), are set out below:

(I) The Company

N/A

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(II) Associated Corporations (within the meaning of the SFO)

(i) China Natural Resources, Inc.

					Percentage
			Number of		of the
Name of Director	Long/short position	Capacity	shares	Note	issued shares
					(%)
Mr. CHEN Gongbao	Long position	Interest of his spouse	14,603	1	0.06

Note:

1. The 14,603 common shares were held by Mrs. QIAN Dongmei, the spouse of Mr. CHEN Gongbao.

(ii) Feishang Anthracite Resources Limited

					Percentage
			Number of		of the
Name of Director	Long/short position	Capacity	shares	Note	issued shares
					(%)
Mr. CHEN Gongbao	Long position	Interest of his spouse	12,500	1	0.0009

Note:

1. The 12,500 ordinary shares were held by Mrs. QIAN Dongmei, the spouse of Mr. CHEN Gongbao.

Save as disclosed above, as at 31 March 2016, none of the Directors or chief executives of the Company had any interests or short positions in the Shares, underlying Shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO), or which were required to be entered into the register required to be kept by the Company under section 352 of the SFO, or which were otherwise required to be notified to the Company and the Stock Exchange pursuant to the Required Standard of Dealings.

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SHARE OPTION SCHEME

A share option scheme was adopted by the Company on 12 December 2015 (the “Share Option Scheme”), under which the Board may, at its discretion, offer any Eligible Participant (as hereinafter defined) options to subscribe for the Shares subject to the terms and conditions stipulated therein. The Share Option Scheme is valid and effective for a period of 10 years from the Listing Date (the “Scheme Period”). The purpose of the Share Option Scheme is to recognise and acknowledge the contributions of Eligible Participants to the Group by granting options to them as incentives or rewards. An Eligible Participant may include any (a) executive, employee, director, consultant, adviser and/or agent of any member of the Group; and (b) any other person who has contributed to the success of the listing of the Company on GEM, in each case, as determined by the Board. The eligibility of an Eligible Participant will be determined by the Board with reference to his or her past and expected commitment and contribution to the Group.

The Board may, during the Scheme Period, at its absolute discretion, offer to an Eligible Participant an option to subscribe, at the subscription price prescribed under the Share Option Scheme, such number of Shares as the Board may determine. No further options may be granted after the expiry of the Scheme Period. The options may be exercised by an Eligible Participant, in whole or in part, at any time during the period commencing from the date on which an option certificate is issued to an Eligible Participant upon the grant of any option to him (“Date of Grant”) and ending on such date as the Board may determine, but in any event not exceeding 10 years from the Date of Grant. The minimum period for which a share option must be held before it can be exercised would be determined by the Board.

The total number of Shares in respect of which options may be granted under the Share Option Scheme and under any other schemes of the Group (if any) must not in aggregate exceed 10% of the total number of Shares in issue on the Listing Date (“Scheme Mandate Limit”), unless approved by the Company’s shareholders. The Company may seek the approval of its shareholders in general meeting to renew the Scheme Mandate Limit, and such total number of Shares in respect of which options may be granted under the Share Option Scheme and any other share option schemes of the Company must not exceed 10% of the Shares in issue as at the date of approval of the refreshed Scheme Mandate Limit. The number of Shares in respect of which options may be granted to any Eligible Participant in any 12-month period is not permitted to exceed 1% of the Shares in issue as at the date of grant of the options, unless approved by the Company’s shareholders. In addition, the number of Shares in respect of which options may be granted to any Eligible Participant (who is a substantial shareholder or an independent non-executive Director of the Company, or any of their respective associates (within the meaning as ascribed under the GEM Listing Rules)) in any 12-month period is not permitted to exceed 0.1% of the total number of Shares in issue and an aggregate of HK$5,000,000, based on the closing price of the Shares at the date of each grant, unless approved by the Company’s shareholders.

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The subscription price for the Shares to be issued pursuant to the Share Option Scheme shall be a price determined by the Board at its sole discretion and notified to the Eligible Participants (subject to any adjustments made pursuant to the terms and conditions of the Share Option Scheme) and shall be the higher of (i) the closing price of the Shares as stated in the Stock Exchange’s daily quotations sheet on the offer date; (ii) the average closing prices of the Shares as stated in the Stock Exchange’s daily quotations sheets for the five trading days immediately preceding the offer date; and (iii) the nominal value of a Share.

Each Eligible Participant is required to pay HK$1 as consideration for the grant of option.

As at 31 March 2016, no options had been granted pursuant to the Share Option Scheme. As at the date of this announcement, the Company had 50,000,000 Shares available for issue under the Share Option Scheme (representing 10% of the existing issued share capital of the Company).

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

As at 31 March 2016, so far as the Directors are aware, the following persons/entities (other than the Directors or chief executives of the Company) had, or were deemed to have, interests or short positions in the Shares or underlying Shares which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the register required to be kept by the Company under Section 336 of the SFO:

					Percentage
Name of substantial			Number of		of the
shareholder	Long/short position	Capacity	Shares	Note	issued Shares
					(%)
Mr. LI Feilie	Long position	Interest held by his	375,000,000	1	75.00
		controlled corporation
Laitan Investments Limited	Long position	Interest held by its	375,000,000	1	75.00
		controlled corporation
Feishang Group Limited	Long position	Beneficial Owner	375,000,000	1	75.00

Note:

1. The 375,000,000 Shares were held by Feishang Group Limited, which is wholly owned by Laitan Investments Limited, which is in turn wholly owned by Mr. LI Feilie. According to the SFO, both Mr. LI Feilie and Laitan Investments Limited are deemed to have interests in the 375,000,000 Shares held by Feishang Group Limited.

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Save as disclosed above, as at 31 March 2016, the Directors were not aware of any other persons/entities (other than the Directors and chief executives of the Company) who had interests or short positions in the Shares or underlying Shares of the Company which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO or which were recorded in the register required to be kept by the Company under Section 336 of the SFO.

CORPORATE GOVERNANCE

The Company has complied with the code provisions set out in the Corporate Governance Code and Corporate Governance Report (the “CG Code”) contained in Appendix 15 to the GEM Listing Rules throughout the three months ended 31 March 2016, save and except for code provision A.2.1, as set out below.

Chairman and Chief Executive

Mr. XU Chengyin is the chairman and chief executive officer of the Company. He is mainly responsible for formulating corporate strategies and supervising the business and marketing operations of the Group. Code provision A.2.1 of the CG Code stipulates that the roles of the chairman and chief executive should be separate and should not be performed by the same individual. The Company deviates from this code provision of the CG Code with Mr. XU Chengyin being the chairman and chief executive officer of the Company concurrently. The Board considers this arrangement is appropriate as it allows for efficient discharge of the executive functions of the chief executive officer. The Board believes that the balance of power and authority is adequately ensured by the operations of the Board which comprises experienced and high-calibre individuals including three independent non-executive Directors offering independent advice from different perspectives. In addition, major decisions are made after consultation with the Board and appropriate Board committees, as well as senior management. The Board is therefore of the view that there are adequate balance and safeguards in place.

FOREIGN EXCHANGE EXPOSURE

Since the majority of the Group’s business activities are transacted in CNY, the Directors consider that the Group’s risk in foreign exchange is insignificant.

DIRECTORS’ INTEREST IN COMPETING BUSINESS

Throughout the three months ended 31 March 2016, none of the Directors and controlling shareholders of the Company or their respective close associates (as defined in the GEM Listing Rules) had any interest in a business that competes or may compete with the business of the Group and any other conflicts of interests which such person had or may have with the Group.

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PRE-EMPTIVE RIGHTS

There are no provisions for pre-emptive rights under the Articles of Association of the Company although there are no restrictions against such rights under the laws of Cayman Islands.

PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SHARES

There was no purchase, sale or redemption of the Shares by the Company or any of its subsidiaries throughout the three months ended 31 March 2016.

AUDIT COMMITTEE

The Company has an audit committee (“Audit Committee”) which was established in accordance with the requirements of the GEM Listing Rules for the purposes of reviewing and providing supervision over the Group’s financial reporting process and internal controls. The Audit Committee comprises three independent non-executive Directors, namely, Mr. CHAN Chiu Hung Alex (chairman of the Audit Committee), Mr. ZHENG Shuilin and Mr. DUAN Xuechen. The Audit Committee meets regularly with the Company’s senior management and the Company’s auditors to consider the Company’s financial reporting process, the effectiveness of internal controls, the audit process and risk management. The unaudited condensed consolidated financial statements of the Company for the three months ended 31 March 2016 have been reviewed by the Audit Committee, which was of the opinion that the preparation of such statements complied with applicable IFRSs and that adequate disclosure has been made in respect thereof.

MATERIAL ACQUISITION AND DISPOSAL

No material acquisitions or disposals of subsidiaries and associated companies have been made by the Company during the three months ended 31 March 2016.

PUBLIC FLOAT

As at the date of this announcement, based on the information that is publicly available to the Company and within the knowledge of the Directors, there was sufficient public float of not less than 25% of the Company’s issued Shares as required under the GEM Listing Rules.

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INTEREST OF COMPLIANCE ADVISER

The Company has received confirmation from its compliance adviser, Celestial Capital Limited (the “Compliance Adviser”), that as at 31 March 2016, except for the compliance adviser’s agreement entered into between the Company and the Compliance Adviser dated 19 September 2015 in connection with the listing of the Shares, neither the Compliance Adviser nor its directors, employees or close associates had any interests in relation to the Company or any member of the Group which is required to be notified to the Company pursuant to Rule 6A.32 of the GEM Listing Rules.

By order of the Board Feishang Non-metal Materials Technology Limited XU Chengyin Chairman

Hong Kong, 13 May 2016

As at the date of this announcement, the executive Directors are Mr. XU Chengyin, Mr. ZHANG Pingwu and Mr. CHEN Gongbao; and the independent non-executive Directors are Mr. CHAN Chiu Hung Alex, Mr. ZHENG Shuilin and Mr. DUAN Xuechen.

This announcement will remain on the “Latest Company Announcements” page of the GEM website at www.hkgem.com for at least seven days from the day of its publication. This announcement will also be published on the Company’s website at www.fsnmmaterials.com.

• The English name is for identification purpose only

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