Persistence Gold Group Ltd — Annual Report 2015

Sep 22, 2015

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.

APAC RESOURCES LIMITED

亞 太 資 源 有 限 公 司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 1104)

ANNOUNCEMENT OF THE RESULTS FOR THE YEAR ENDED 30 JUNE 2015

The board of directors (the ‘‘Board’’) of APAC Resources Limited (the ‘‘Company’’ or ‘‘APAC’’) announces the audited consolidated final results of the Company and its subsidiaries (collectively, the ‘‘Group’’) for the year ended 30 June 2015.

RESULTS HIGHLIGHTS

The majority of our net loss came from our Primary Strategic Investments and is a result of the flooding of a mine at one of the invested companies. Our Resource Investments were impacted by the ongoing weakness in commodity prices, though partially offset by a modest profit in the Commodity Business despite the drop in iron ore price over the last twelve months.

For the year ended 30 June 2015

(compared to the year ended 30 June 2014)

• . Attributable loss from Primary Strategic Investment at HK$1,491 million (2014: Profit of HK$245 million)

• . Resource Investment posted a loss of HK$133 million (2014: Loss of HK$8 million)

• . Commodity Business reported revenue of HK$256 million (2014: HK$775 million), with a profit of HK$7 million (2014: Profit of HK$51 million)

• . Partial reversal of HK$735 million of the impairment loss on interests in listed associates (2014: Partial reversal of impairment loss of HK$674 million)

• . Loss attributable to owners at HK$848 million (2014: Profit of HK$907 million) with loss per share of HK13.84 cents (2014: Earnings per share of HK13.53 cents)

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MANAGEMENT DISCUSSION AND ANALYSIS

Financial Results

Against a challenging economic environment, for the year ended 30 June 2015 (‘‘FY 2015’’), the Group reported a net loss attributable to owners of HK$847,926,000 for FY 2015 compared with a net profit of HK$907,260,000 reported for the year ended 30 June 2014 (‘‘FY 2014’’). The loss includes principally the share of net loss of associates of HK$1,491,185,000 (FY 2014: profit of HK$244,622,000), which is partially offset by the reversal of impairment loss of HK$735,326,000 (FY 2014: HK$673,647,000) against the carrying value of one of the Group’s two principal listed associates which is marked to its share price as of 30 June 2015.

FY 2015 VS FY 2014

Primary Strategic Investment

Our two Primary Strategic Investments are Mount Gibson Iron Limited (‘‘Mount Gibson’’) and Metals X Limited (‘‘Metals X’’), both located in Australia. The net attributable loss from our Primary Strategic Investments for the FY 2015 was HK$1,491,185,000 (FY 2014: Net profit of HK$244,622,000).

Mount Gibson

Mount Gibson is an Australian listed iron ore producer. Annual production capacity is 3.5 million tonnes to 4.0 million tonnes of Direct Shipping Ore (DSO) from its Extension Hill mine, which provides it with a substantial cost advantage over mines that require beneficiation prior to sale. Mount Gibson has undergone significant changes in the last six months following the unfortunate incident at the Koolan Island mine.

In November 2014, the Main Pit at Koolan Island was flooded after a failure of the seawall. As a result, all mining operations have been suspended at the Main Pit, while Mount Gibson completes a detailed evaluation of restart options. As part of the evaluation, Mount Gibson is in discussions with its insurers about its existing property damage and business interruption policies. After adjusting guidance to account for the Koolan Island pit wall failure, Mount Gibson delivered total ore sales of 5.8 million tonnes in FY 2015, comfortably exceeding company guidance of between 4.8 million tonnes and 5.2 million tonnes.

Mount Gibson sales guidance for the year ending 30 June 2016 (‘‘FY 2016’’) is 4.0 million tonnes to 4.5 million tonnes, at an average all-in cash cost of A$50 to A$54/wet metric tonne (‘‘wmt’’) Free On Board (‘‘FOB’’).

The iron ore price remains under pressure, and has trended downward over the last 12 months. At time of writing, the Platts 62% Fe price is trading around US$58/dry metric tonne (‘‘dmt’’) Cost and Freight (‘‘CFR’’) and has recently reached lows of US$45/dmt CFR. The low price has been driven by ongoing supply growth and a weaker outlook for steel demand in China. We remain cautious on the outlook for iron ore in FY 2016.

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Mount Gibson continues to focus on cost reduction both at the operating and head office level. Corporate costs fell by more than 50% in FY 2015 and further cost savings are expected in FY2016. The company’s average cash operating expenditure fell from A$68/wmt FOB in FY 2014 to A$62/wmt FOB in FY 2015.

Mount Gibson delivered a FY 2015 net loss after tax of A$911 million which includes a pre-tax impairment of A$916 million related to the Koolan Island seawall failure and the fall in the iron ore price. The impairment is a non-cash item and Mount Gibson retains a strong cash balance of A$334 million or A$0.306 per share at the end of FY 2015, compared to its share price at the date of this announcement of A$0.175 per share.

Mount Gibson is working to secure the necessary regulatory government approvals for the Extension Hill South project, which the company aims to bring online at the end of calendar year 2016 to extend the Extension Hill mine life.

Metals X

Metals X is an Australian based and listed emerging diversified resource group with exposure to gold with the Higginsville, South Kalgoorlie and Central Murchison projects, tin via its 50% interest in the producing Renison mine in Tasmania, and nickel through its world scale Wingellina nickel development project.

The Higginsville and South Kalgoorlie Project produced 150,902 ounces in FY 2015 and generated A$81 million of EBITDA despite the closure of the Chalice mine, which was replaced by the Lake Cowan open pits, leading to significantly higher throughput and gold production and lower grades. Metals X has started ore development at the HBJ underground mine which is expected to deliver higher grade tonnes to the South Kalgoorlie Project in FY 2016.

Development of the Central Murchison Gold Project (‘‘CMGP’’) is underway, with open pit mining started in late June 2015. Plant refurbishment has commenced and is expected to start up in October 2015. CMGP is expected to ramp up gradually over the next five years, and reach full capacity of greater than 200,000 ounces per annum.

In the past few months, Metals X has made several low cost acquisitions which are expected to underpin the next leg of growth for the company. Acquisitions include the Mt Henry Project (located 70km from Higginsville), Georges Reward Project, and Grosvenor Gold Project.

The gold price has fallen gradually over the last 12 months from US$1,325/oz in July 2014 to US$1,135/oz now. While the volatility in the gold price was somewhat unexpected, the general direction of the gold price is not a surprise given the market’s ongoing expectation that the US will deliver its first interest rate hike later in 2015.

During FY 2015, Renison mine produced 7,073 tonnes of tin in concentrate (100% basis), up 14% from FY 2014, driven by higher processed tonnes (up 16%) and higher grade (up 8%). Metals X received an average realised tin price of A$22,559 per tonne in FY 2015, down 8% compared to FY 2014

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(A$24,471 per tonne). The tin price fell steadily throughout FY 2015 and hit a low of US$13,365 per tonne in July 2015 before rebounding to the current price of circa US$15,400 per tonne. In the short term, the market remains well supplied and Myanmar’s exports to China continued to rise in FY 2015 even as the tin price dropped. We remain bullish on the medium to long-term outlook for tin due to the limited supply growth as most development projects require a minimum tin price of US$30,000 to US$40,000 per tonne to be economically viable.

At the date of this announcement, closing share prices for Mount Gibson and Metals X were A$0.175 and A$1.20 respectively.

Resource Investment

The investments in this division comprise mostly minor holdings in various natural resource companies listed on major stock exchanges including Australia, Canada, Hong Kong, and the United Kingdom. A portion of our positions are exploration or development stage companies and this section of the market is particularly sensitive to risk aversion, lower commodity prices, and the difficult financing markets.

Commodity prices remained weak throughout FY 2015 with the ASX Small Resources Index down 26%; the FTSE AIM Basic Resources Index dropping 18%, and the TSX Venture Composite Index falling 35%.

Resource Investment posted a loss of HK$133,286,000 in FY 2015 (FY 2014: Loss of HK$7,596,000). While a loss is always a disappointing result, we feel that our defensive strategy with a focus on producing companies with strong balance sheets and cash flows, and generally avoiding earlier stage explorers has minimised the quantum of the loss in an otherwise difficult market. We remain confident that our high quality core positions, many of which are well capitalised, will weather the challenging market conditions and deliver superior returns in the long run.

ABM

ABM Resources NL (‘‘ABM’’) is an Australian listed gold company with assets located in the Northern Territory. It has a large acreage footprint in the Tanami-Arunta region, and is currently focused on the Old Pirate project. Old Pirate is Australia’s highest grade open-pittable mine development, with a resource of 640,000 ounces of gold at 11.7g/t.

ABM has commenced ore mining at the Old Pirate Gold Mine after upgrading infrastructure, recommissioning the Coyote Plant, and processing 10,000 tonnes of commissioning ore. The company has started to access high grade gold in three of its four pits and expects the fourth to be ready to be mined during the September quarter of 2015.

In July 2014, Pacific Road Capital Management Pty Limited became a strategic investor after subscribing to A$20 million of new equity. ABM launched a rights issue and share placement to raise a total of A$15 million in February 2015. The proceeds will be used to cover working capital requirements until the mine reaches steady state. At the end of 30 June 2015, ABM had A$14 million cash and no debt.

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Commodity Business

The Commodity Business mainly comprises two offtake agreements with Mount Gibson, and the shipments are sold on the spot market to steel mills and traders in China. We continue to look for new offtake opportunities across a range of commodities. For FY 2015, Commodity Business generated a modest profit of HK$7,176,000 (FY 2014: HK$51,353,000), amid a steadily declining iron ore price and lower shipments as a result of the failure of the seawall at the Koolan Island mine.

Money Lending

As part of our on-going treasury management arrangements, we have recently subscribed to loan notes and engaged in the provision of loans. This has provided us with a substantial interest income, and the Group has now developed this into a new business segment of financial services — money lending. This business segment alongside our existing businesses will provide good opportunities for us to diversify and enhance our existing revenue stream. In August 2015, we have been granted a money lenders license issued under the Money Lenders Ordinance of Hong Kong.

Liquidity, Financial Resources and Capital Structure

As at 30 June 2015, our non-current assets amounted to HK$1,393,662,000 (2014: HK$2,531,023,000) and net current assets amounted to HK$534,051,000 (2014: HK$598,178,000) with a current ratio of 7.8 times (2014: 3.9 times) calculated on the basis of its current assets over current liabilities. Included in non-current assets and current assets are loan notes of HK$313,976,000 (2014: HK$235,934,000) and loans receivable of HK$223,062,000 (2014: HK$218,320,000) respectively which form part of the on-going treasury management arrangements of the Group.

As at 30 June 2015, we had borrowings of HK$56,688,000 (2014: HK$126,217,000) and had undrawn banking and loan facilities amounting to HK$651,276,000 secured against certain of our interests in listed associates and term deposits and corporate guarantee of the Company. As at 30 June 2015, we had a gearing ratio of 0.03 (2014: 0.04), calculated on the basis of total borrowings over equity attributable to owners of the Company.

Through the successful completion of the open offer to issue not more than 3,063,883,995 shares of the Company to existing shareholders of the Company on the basis of one (1) offer share for every two (2) shares of the Company held, the issued share capital of the Group increased from 6,127,767,990 shares to 9,191,651,985 shares on 13 July 2015. Further details of the open offer are set out in the section headed ‘‘Subsequent Event’’ on page 7 of this announcement.

Foreign Exchange Exposure

For the year under review, the Group’s assets were mainly denominated in Australian Dollars while the liabilities were mainly denominated in Hong Kong Dollars. As a substantial portion of the assets is held as long-term investments, there would be no material immediate effect on the cash flows of the Group from adverse movements in foreign exchange. In light of this, the Group did not actively hedge for the risk arising from the Australian Dollars denominated assets.

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Pledge of Assets

As at 30 June 2015, certain of the Group’s interests in listed associates of HK$606,106,000 (2014: HK$1,253,610,000) comprised the Group’s interests in listed associates were pledged to a stockbroking firm to secure against securities margin loan facilities made available to the Group. The Group’s bank deposits of HK$79,659,000 (2014: HK$80,010,000) were pledged to a bank to secure various trade and banking facilities granted to the Group.

Employees and Remuneration Policy

The Group ensured that its employees are remunerated according to the prevailing manpower market conditions and individual performance with its remuneration policies reviewed on a regular basis. All employees are entitled to participate in the Company’s benefit plans including medical insurance and Mandatory Provident Fund Scheme (subject to the applicable laws and regulations of the People’s Republic of China (the ‘‘PRC’’) for its employees in the PRC).

As at 30 June 2015, the Group, including its subsidiaries but excluding associates, had 19 (2014: 18) employees. Total remuneration together with pension contributions incurred for the year ended 30 June 2015 amounted to HK$10,496,000 (2014: HK$17,100,000).

Significant Investments, Material Acquisitions and Disposals of Subsidiaries and Associated Companies, and Future Plans for Material Investments or Capital Assets

Save as disclosed in this announcement, during the year ended 30 June 2015, the Group had not held any other significant investments nor made any material acquisitions or disposals of subsidiaries or associated companies. Save as disclosed in this announcement, as at 30 June 2015, the Group does not have plan for any other material investments or acquisition of material capital assets.

Capital Commitments

As at 30 June 2015 and 30 June 2014, the Group had no material capital commitments contracted but not provided for.

Contingent Liabilities

As at the date of this announcement and as at 30 June 2015, the Board is not aware of any material contingent liabilities.

Company Strategy

APAC leverages its in-house natural resources expertise to identify and manage both Primary Strategic Investments and Resource Investments which drives growth in the business. We aim to profit from the value curve of resources projects from exploration to production, though currently see good risk-reward in select mid-tier producers. Value and cash flow can be generated through capital appreciation, direct project ownership and securing offtake agreements.

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Subsequent Event

At its meeting held on 15 May 2015, the Board approved an open offer (the ‘‘Open Offer’’) to raise approximately HK$306.4 million (before expenses) through the issuance of not more than 3,063,883,995 shares of the Company (the ‘‘Offer Shares’’) to existing shareholders of the Company on the basis of one (1) Offer Share for every two (2) shares of the Company held at a subscription price of HK$0.10 per Offer Share. The Open Offer, which was over-subscribed by 65,837,695,192 Offer Shares, representing approximately 21.49 times of the total number of Offer Shares on offer, became unconditional on 6 July 2015. Trading of the Offer Shares commenced on 14 July 2015. The Open Offer allowed the Group to raise net cash proceeds of approximately HK$300 million. Such proceeds are intended to be applied as to HK$270 million for the Group’s investment business with a focus on the natural resources sector to be invested as and when such investing opportunities arise, with the remaining balance of HK$30 million as working capital of the Group. Details of the Open Offer are principally set out in the Company’s announcements dated 27 May 2015 and 10 July 2015 and prospectus dated 18 June 2015.

Forward Looking Observations

Concerns over the Chinese economy have come to the forefront in recent months. Economic data such as slower fixed-asset investment, factory output, and housing starts suggests that Chinese GDP growth will be relatively weak this year. Further, China’s share market fell sharply from June 2015 which impacted consumer confidence and is likely to result in lower consumption. China’s share market remains volatile despite Beijing’s attempt to prop up the market and the People’s Bank of China recently devalued the Chinese Yuan by 2% which has been interpreted as an attempt to bolster exports. Europe is not out of the woods, even if a deal with Greece has allayed fears of a Greek exit. Growth slowed in June quarter 2015 and Eurozone unemployment remains high at 11%. US economic data is the rare bright spot in the global economy which underpins market expectations that there will be an interest rate rise later in 2015.

The commodity complex continues to be weak, partly because of the increase in the US dollar, and more recently, over concerns that a lower Chinese Yuan and weak Chinese economy would result in lower demand for commodities.

We still see an opportunity for margin expansion for select companies given lower commodity currencies, a halving in oil prices and general industry cost deflation. Our Primary Strategic Investments remain focused on sensible low risk acquisitions and cost cutting, leaving them well positioned for strong margin expansion when prices turn. Mount Gibson is focused on reducing costs, extending Extension Hill beyond the current mine life, and putting its A$334 million cash balance to good use via careful acquisition. Metals X is currently investing in gold mine near-term restarts at South Kalgoorlie and the Central Murchison Gold projects, while ABM is progressing to a full production scenario at Old Pirate and will start mining ore during the September quarter of 2015.

As usual, our investments and commodity trading operation are subject to risk and uncertainty in regards to commodity price volatility, particularly in gold and iron ore. However, we remain defensive and selective with our investments in the near term, and continue to look for deep value opportunities which will generate attractive returns over the long run.

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CONSOLIDATED STATEMENT OF PROFIT OR LOSS

For the year ended 30 June 2015

Notes Revenue from sales of goods 2 Cost of sales Other gains and losses 4 Other income Administrative expenses Finance costs 5 Share of results of associates (Loss) profit before taxation 6 Income tax credit (expense) 7 (Loss) profit for the year attributable to owners of the Company (Loss) earnings per share (expressed in HK cents) — basic 9	2015 HK$’000 256,372 (248,471) 7,901 585,591 84,756 (30,540) (6,915) (1,491,185) (850,392) 2,466 (847,926) (13.84)	2014 HK$’000 774,512 (721,416) 53,096 629,752 48,222 (55,647) (7,392) 244,622 912,653 (5,393) 907,260 13.53

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CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the year ended 30 June 2015

(Loss) profit for the year Other comprehensive (expense) income, net of tax Items that may be subsequently reclassified to profit or loss: Exchange difference arising from translation of associates Exchange difference arising from translation of other foreign operations Fair value change of available-for-sale investments Reclassification adjustment for the cumulative gain included in profit or loss upon disposal of available-for-sale investments Reclassification adjustment upon deemed disposal of partial interests in associates Share of investment revaluation reserve of associates Total comprehensive (expense) income for the year attributable to owners of the Company	2015 HK$’000 (847,926) (354,808) 44 — — (30) 1,977 (352,817) (1,200,743)	2014 HK$’000 907,260 78,923 (3,418) 584 (617) (23) 10,259 85,708 992,968

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 30 June 2015

Notes ASSETS Non-current assets Property, plant and equipment Interests in associates 10 Available-for-sale investments Financial assets designated at fair value through profit or loss Loans receivable 11 Loan notes 12 Deposits 13 Current assets Inventories Trade receivables, other receivables and deposits 13 Financial assets designated at fair value through profit or loss Investments held for trading 14 Loans receivable 11 Tax recoverable Pledged bank deposits Bank balances and cash Total assets	2015 HK$’000 907 1,035,383 42,475 — — 313,976 921 1,393,662 — 13,587 — 194,760 223,062 725 79,659 101,308 613,101 2,006,763	2014 HK$’000 2,395 2,241,023 26,794 3,522 20,434 235,934 921
		2,531,023
		39,798 77,017 70,200 225,199 218,320 693 80,010 94,776
		806,013
		3,337,036

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Notes EQUITY AND LIABILITIES Capital and reserves Share capital 16 Reserves Accumulated profits (losses) Current liabilities Trade and other payables 15 Derivative financial instruments Borrowings Tax payable Total equity and liabilities Net current assets Total assets less current liabilities	2015 HK$’000 612,777 300,765 1,014,171 1,927,713 15,964 3,627 56,688 2,771 79,050 2,006,763 534,051 1,927,713	2014 HK$’000 613,193 3,153,495 (637,487) 3,129,201 74,984 873 126,217 5,761 207,835 3,337,036 598,178 3,129,201

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 30 June 2015

1. BASIS OF PREPARATION AND ACCOUNTING POLICIES

The consolidated financial statements are presented in Hong Kong dollars (‘‘HK$’’), which is also the functional and presentation currency of the Company. All values are rounded to the nearest thousand except when otherwise indicated.

In the current year, the Group has applied the following amendments and interpretations (‘‘new and revised HKFRSs’’) issued by the Hong Kong Institute of Certified Public Accountants (‘‘HKICPA’’).

Amendments to HKFRS 10, HKFRS 12 Investment entities and HKAS 27 Amendments to HKAS 19 Defined benefit plans: Employees contributions Amendments to HKAS 32 Offsetting financial assets and financial liabilities Amendments to HKAS 36 Recoverable amount disclosures for non-financial assets Amendments to HKAS 39 Novation of derivatives and continuation of hedge accounting Amendments to HKFRSs Annual improvement to HKFRSs 2010–2013 cycle Amendments to HKFRSs Annual improvement to HKFRSs 2011–2014 cycle HK(IFRIC)-Int 21 Levies

The application of these new and revised amendments to HKFRSs in the current year has had no material effect on the Group’s financial performance and positions for the current year and prior years and/or on the disclosures set out in these consolidated financial statements.

The Group has not early applied the following new and revised HKFRSs that have been issued but are not yet effective.

HKFRS 9 Financial instruments[1] HKFRS 15 Revenue from contracts with customers[1] Amendments to HKFRS 10 and HKAS 28 Sale or contribution of assets between an investor and its associate or joint venture[3] Amendments to HKFRS 10, HKFRS 12 Investment entities: Applying the consolidation exception[3] and HKAS 28 Amendments to HKFRS 11 Accounting for acquisitions of interests in joint operations[3] Amendments to HKAS 1 Disclosure initiative[3] Amendments to HKAS 16 and HKAS 38 Clarification of acceptable methods of depreciation and amortisation[3] Amendments to HKAS 16 and HKAS 41 Agriculture: Bearer plants[3] Amendments to HKAS 27 Equity method in separate financial statements[3] Amendments to HKFRSs Annual improvements to HKFRSs 2012–2014 cycle[3]

1 Effective for annual periods beginning on or after 1 January 2018

2 Effective for annual periods beginning on or after 1 January 2017

3 Effective for annual periods beginning on or after 1 January 2016

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HKFRS 9 Financial instruments

HKFRS 9 issued in 2009 introduces new requirements for the classification and measurement of financial assets. HKFRS 9 amended in 2011 includes the requirements for the classification and measurement of financial liabilities and for derecognition, and further amended in 2013 to include the new requirements for hedge accounting. Another revised version of HKFRS 9 was issued in September 2014 mainly to include (a) impairment requirements for financial assets; (b) limited amendments to the classification and measurement requirements by introducing a ’fair value through other comprehensive income’ measurement category for certain simple debt instruments.

All recognised financial assets that are within the scope of HKAS 39 ‘‘Financial instruments: Recognition and measurement’’ are subsequently measured at amortised cost or fair value. Specifically, debt investments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortised cost at the end of subsequent accounting periods. Debt instruments that are held within a business model whose objective is achieved both by collecting contractual cash flows and selling financial assets, and that have contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding, are measured at FVTOCI. All other debt investments and equity investments are measured at their fair values at the end of subsequent reporting periods. In addition, under HKFRS 9, entities may make an irrevocable election to present subsequent changes in the fair value of an equity investment (that is not held for trading) in other comprehensive income, with only dividend income generally recognised in profit or loss.

In relation to the impairment of financial assets, HKFRS 9 requires an expected credit loss model, as opposed to an incurred credit loss model under HKAS 39. The expected credit loss model requires an entity to account for expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in credit risk since initial recognition. In other words, it is no longer necessary for a credit event to have occurred before credit losses are recognised.

The directors of the Company anticipate that the adoption of HKFRS 9 in the future may have significant impact on amounts reported in respect of the Group’s financial assets (e.g. the Group’s unlisted investment in equity securities that are currently classified as available-for-sale investments may have to be measured at fair value through profit or loss upon the adoption of HKFRS 9). Regarding the Group’s financial assets, it is not practicable to provide a reasonable estimate of that effect until a detailed review has been completed.

HKFRS 15 Revenue from contracts with customers

In July 2014, HKFRS 15 was issued which establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. HKFRS 15 will supersede the current revenue recognition guidance including HKAS 18 ‘‘Revenue’’, HKAS 11 ‘‘Construction contracts’’ and the related Interpretations when it becomes effective.

The core principle of HKFRS 15 is that an entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Specifically, HKFRS 15 introduces a 5-step approach to revenue recognition:

• . Step 1: Identify the contract(s) with a customer

• . Step 2: Identify the performance obligations in the contract

• . Step 3: Determine the transaction price

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• . Step 4: Allocate the transaction price to the performance obligations in the contract

• . Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation

Under HKFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when ’control’ of the goods or services underlying the particular performance obligation is transferred to the customer. Far more prescriptive guidance has been added in HKFRS 15 to deal with specific scenarios. Furthermore, extensive disclosures are required by HKFRS 15.

The directors of the Company will assess the impact on the application of HKFRS 15. For the moment, it is not practicable to provide a reasonable estimate of the effect of HKFRS 15 until the Group performs a detailed review.

Except for above, the directors of the Company anticipate that the application of the other new and revised HKFRSs will have no material impact on the consolidated financial statements.

2. REVENUE

Revenue from trading of commodities	2015 HK$’000 256,372	2014 HK$’000 774,512

3. SEGMENT INFORMATION

Information regularly reviewed by the chief operating decision maker, represented by the executive directors of the Company, for the purpose of allocating resources to segments and assessing their performance focuses on nature of the Group’s businesses and operations. The Group’s reportable and operating segments under HKFRS 8 are therefore as follows:

• (i) Commodity business (trading of commodities); and

• (ii) Resource investment (trading of and investment in listed and unlisted securities).

The accounting policies of the reportable and operating segments are the same as the Group’s accounting policies. Segment results represent the profit (loss) by each segment without allocation of central administration costs, directors’ salaries, share of results of associates, reversal of impairment losses on interests in associates, impairment loss on interest in an associate, loss on deemed disposal of partial interests in associates and finance costs. This is the measure reported to the chief operating decision maker for the purposes of resource allocation and performance assessment.

Information regarding the Group’s reportable and operating segments is presented below.

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Segment revenue and result

The following is an analysis of the Group’s revenue and results by reportable and operating segment.

For year ended 30 June 2015

Revenue Gross sales proceeds from resource investment Segment profit (loss) Share of results of associates Reversal of impairment loss on interest in an associate Impairment loss on interest in an associate Loss on deemed disposal of partial interests in associates Unallocated corporate income Unallocated corporate expenses Finance costs Loss before taxation Income tax credit Loss for the year For year ended 30 June 2014 Revenue Gross sales proceeds from resource investment Segment profit (loss) Share of results of associates Reversal of impairment losses on interests in associates Impairment loss on interest in an associate Loss on deemed disposal of partial interest in an associate Unallocated corporate income Unallocated corporate expenses Finance costs Profit before taxation Income tax expense Profit for the year	Commodity business HK$’000 256,372 — 7,176 Commodity business HK$’000 774,512 — 51,353	Resource investment HK$’000 — 88,480 (133,286) Resource investment HK$’000 — 106,749 (7,596)	Total HK$’000 256,372 88,480 (126,110) (1,491,185) 735,326 (4,048) (763) 76,631 (33,328) (6,915) (850,392) 2,466 (847,926) Total HK$’000 774,512 106,749 43,757 244,622 673,647 (26,190) (305) 42,324 (57,810) (7,392) 912,653 (5,393) 907,260

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Revenue reported above represents revenue generated from external customers. There were no inter-segment sales during both years.

Other segment information

Other segment information included in the consolidated statement of profit or loss for the year ended 30 June 2015 are as follows:

Amounts included in the measure of segment profit or loss or segment assets:

Interest income Fair value change of investments held for trading Fair value change of financial assets designated at fair value through profit or loss Impairment loss on an available-for-sale investment Impairment loss on financial assets designated at fair value through profit or loss	Commodity business HK$’000 988 — — — —	Resource investment HK$’000 4,082 (61,956) (3,504) (24,000) (44,467)	Unallocated HK$’000 76,267 — — — —	Total HK$’000 81,337 (61,956) (3,504) (24,000) (44,467)

Amounts regularly provided to the chief operating decision maker but not included in the measure of segment profit or loss or segment assets:

Interests in associates Loan notes Loans receivable Share of results of associates Reversal of impairment loss on interest in an associate Impairment loss on interest in an associate Interest income from loan notes Interest income from loans receivable	— — — — — — — —	— — — — — — — —	1,035,383 313,976 223,062 (1,491,185) 735,326 (4,048) 24,940 51,287	1,035,383 313,976 223,062 (1,491,185) 735,326 (4,048) 24,940 51,287

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Other segment information included in the consolidated statement of profit or loss for the year ended 30 June 2014 are as follows:

Amounts included in the measure of segment profit or loss or segment assets:

Interest income Fair value change of investments held for trading Fair value change of financial assets designated at fair value through profit or loss Impairment loss on an available-for-sale investment Impairment loss on financial assets designated at fair value through profit or loss	Commodity business HK$’000 5,647 — — — —	Resource investment HK$’000 6,088 13,363 (2,046) (11,214) (9,032)	Unallocated HK$’000 33,309 — — — —	Total HK$’000 45,044 13,363 (2,046) (11,214) (9,032)

Amounts regularly provided to the chief operating decision maker but not included in the measure of segment profit or loss or segment assets:

Interests in associates Loan notes Loans receivable Share of results of associates Reversal of impairment losses on interests in associates Impairment loss on interest in an associate Interest income from loan notes Interest income from loans receivable	— — — — — — — —	— — — — — — — —	2,241,023 235,934 238,754 244,622 673,647 (26,190) 11,879 21,357	2,241,023 235,934 238,754 244,622 673,647 (26,190) 11,879 21,357

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Segment assets and liabilities

An analysis of the Group’s assets and liabilities by reportable and operating segment is set out below:

Commodity business Resource investment Total segment assets Interests in associates Loan notes Loans receivable Unallocated Consolidated assets Commodity business Resource investment Total segment liabilities Unallocated Consolidated liabilities	2015 HK$’000 153,055 261,855 414,910 1,035,383 313,976 223,062 19,432 2,006,763 2,837 66,088 68,925 10,125 79,050	2014 HK$’000 262,064 342,687
		604,751 2,241,023 235,934 238,754 16,574
		3,337,036
		128,425 73,764
		202,189 5,646
		207,835

For the purposes of monitoring segment performance and allocating resources between segments:

• . all assets are allocated to reportable segments other than interests in associates, property, plant and equipment, loan notes, loans receivable, other receivables and certain bank balances and cash.

• . all liabilities are allocated to reportable segments other than certain other payables and tax payable.

• . borrowings are allocated while the finance costs are not allocated to respective reportable segments.

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Geographical information

The Group’s revenue from external customers and information about non-current assets (excluding financial instruments) by geographical location of the customers and assets (where the property, plant and equipment are located and where the associates are incorporated/listed) respectively are detailed below.

Australia Hong Kong The PRC United Kingdom	Revenue from external customers 2015 2014 HK$’000 HK$’000 — — 210,947 701,725 45,425 72,787 — — 256,372 774,512	Non-current assets 2015 2014 HK$’000 HK$’000 998,252 2,204,046 1,442 2,000 37,517 37,369 — 924 1,037,211 2,244,339	Non-current assets 2015 2014 HK$’000 HK$’000 998,252 2,204,046 1,442 2,000 37,517 37,369 — 924 1,037,211 2,244,339
			2,244,339

Information about major customers

Revenue from customers of the corresponding year contributing over 10% of the total sales of the Group are under segment of commodity business and as follows:

Customer A Customer B Customer C Customer D Customer E Customer F Customer G	2015 HK$’000 62,409 N/A1 N/A1 74,301 45,425 45,937 28,300	2014 HK$’000 241,965 278,736 90,801 90,223 N/A1 N/A1 N/A1

1 The transactions with the customer did not contribute over 10% of the total sales of the Group during the relevant year.

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4. OTHER GAINS AND LOSSES

Fair value change of investments held for trading (Note) Fair value change of derivative financial instruments Fair value change of financial assets designated at fair value through profit or loss Impairment loss on an available-for-sale investment Reversal of impairment losses on interests in associates Impairment loss on interest in an associate Impairment loss on loan receivable Impairment loss on financial assets designated at fair value through profit or loss Net loss on deemed disposal of partial interests in associates Net foreign exchange (loss) gain Gain on disposal of an available-for-sale investment Loss on written-off of property, plant and equipment Impairment loss on interest receivable	2015 HK$’000 (61,956) (2,754) (3,504) (24,000) 735,326 (4,048) (1,610) (44,467) (763) (5,521) — (924) (188) 585,591	2014 HK$’000 13,363 (873) (2,046) (11,214) 673,647 (26,190) (9,129) (9,032) (305) 914 617 — — 629,752

Note: Net realised loss of HK$16,019,000 (2014: net realised gain of HK$25,631,000) on disposal of investments held for trading are included in fair value change of investments held for trading.

5. FINANCE COSTS

Interest on borrowings wholly repayable within five years: Bank borrowings Securities margin financing Other borrowing	2015 HK$’000 235 6,680 — 6,915	2014 HK$’000 4,571 1,628 1,193
		7,392

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6. (LOSS) PROFIT BEFORE TAXATION

(Loss) profit before taxation has been arrived at after charging (crediting): Staff costs, including directors’ emoluments — salaries and allowances — staff quarters — retirement benefits schemes contributions Total staff costs Auditor’s remuneration Cost of goods recognised as an expense Depreciation of property, plant and equipment INCOME TAX CREDIT (EXPENSE) Current tax Hong Kong Profits Tax PRC Enterprise Income Tax Over (under) provision in prior periods Total income tax credit (expense)	2015 HK$’000 16,003 1,006 235 17,244 895 214,512 564 2015 HK$’000 — (140) (140) 2,606 2,466	2014 HK$’000 21,985 882 891 23,758 850 599,381 949 2014 HK$’000 (5,213) — (5,213) (180) (5,393)

7. INCOME TAX CREDIT (EXPENSE)

Hong Kong Profits Tax is calculated at 16.5% on the estimated assessable profit. No provision for Hong Kong Profits Tax was made for the year ended 30 June 2015 as the companies of the Group operated in Hong Kong incurred a tax losses for the year.

Under the Law of the PRC on Enterprise Income Tax (the ‘‘EIT Law’’) and Implementation Regulation of the EIT Law, the tax rate of the PRC subsidiaries is 25% for both years.

– 21 –

8. DIVIDENDS

No dividend was paid or proposed during the year ended 30 June 2015, nor has any dividend been proposed since the end of the reporting period (2014: nil).

9. (LOSS) EARNINGS PER SHARE

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

(Loss) earnings per share

The calculation of basic (loss) earnings per share is based on the loss for the year ended 30 June 2015 attributable to owners of the Company of HK$847,926,000 (2014: profit for the year of HK$907,260,000).

Number of shares

Weighted average number of ordinary shares used in the calculation of basic (loss) earnings per share	2015 6,128,258,072	2014 6,705,736,209

For the year ended 30 June 2015 and 2014, no separate diluted earnings per share information has been presented as there was no potential ordinary shares outstanding.

10. INTERESTS IN ASSOCIATES

Cost of investments in associates Listed in Australia Unlisted Share of post-acquisition (losses) profits and other comprehensive income, net of dividends received Impairment losses recognised Fair value of listed investments	2015 HK$’000 2,223,339 54,708 (436,737) (805,927) 1,035,383 1,161,014	2014 HK$’000 2,223,339 50,687 1,504,202 (1,537,205) 2,241,023 2,217,823

– 22 –

Details of the Group’s associates at 30 June 2015 and 2014 are as follows:

		Country of		Proportion	Proportion
		incorporation/	Class of	of ownership
	Listed/	establishment	shares	interest and voting
Name of entity	unlisted	and operation	held	power held		Principal activities
				2015	2014
平港(上海) 貿易	Unlisted	The PRC	N/A	40%	40%	Wholesales, import and export,
有限公司						agency service and relevant
						service for coal, coke, material
						for metallurgy, mineral
						products, chemical engineering
						products, mechanical and
						electrical equipment and spare
						parts, steel and steel products,
						construction material and
						related products and
						technology.
Mount Gibson	Listed	Australia	Ordinary	26.61%	26.61%	Mining of direct shipping
Iron Limited						hematite iron ore from two
						mines in Western Australia —
						Extension Hill and Koolan
						Island.
Metals X Limited	Listed	Australia	Ordinary	23.89%	24.02%	Mining of gold from the
						Higginsville and South
						Kalgoorlie gold projects and
						tin from the Renison tin mine;
						developing the Central
						Murchison Gold Project and
						Rover Gold Project; and
						exploration of the Wingellina
						Nickel Project.
Alufer Mining	Unlisted	Bailiwick of	Ordinary	25.83%	26.17%	Mineral exploration and
Limited		Guernsey				development of bauxite in the
						Republic of Guinea.

– 23 –

11. LOANS RECEIVABLE

Fixed-rate loan (Note a) Interest-free loan (Note b) The following is the analysis of loans receivable for financial reporting purpose: Non-current assets Current assets	2015 HK$’000 223,062 — 223,062 — 223,062 223,062	2014 HK$’000 218,320 20,434
		238,754
		20,434 218,320
		238,754

Notes:

• (a) The loan receivable amounting to HK$218,320,000 bears fixed-rate interests of 24% per annum and will mature on 28 January 2016 pursuant to the supplemental loan agreement dated 30 April 2015. The loan is secured by a floating charge on the assets of the borrower, mortgage of shares of the borrower and one of the borrower’s subsidiaries incorporated in the PRC (‘‘PRC CoA’’), mortgage of a parcel of land and properties held by the PRC CoA, assignment of loan due by a company incorporated in the PRC (‘‘PRC CoB’’), in which the PRC CoA has a non-controlling interest, to the PRC CoA and the pre-sale agreement in relation to certain properties signed between the Group and the PRC CoB which will be cancelled upon repayment of the loan.

The interest receivable on this loan from 28 May 2015 to 30 June 2015 has been overdue. The borrower has requested and the Company agreed that interest from 28 May 2015 to 27 October 2015 will be settled on 28 November 2015.

Having considered the values of the collaterals obtained, the directors of the Company are in the opinion that no impairment is required.

• (b) The loan receivable from an investee amounting to HK$20,434,000 was non-interest bearing as at 30 June 2014. As at 30 June 2014, taking into consideration of the financial information of the investee, impairment loss of HK$9,129,000 was recognised in profit or loss. During the year ended 30 June 2015, the investee only repaid HK$18,824,000 to the Group. The directors of the Company consider the remaining outstanding balance due of HK$1,610,000 from the investee is doubtful and thus an impairment loss of HK$1,610,000 was recognised in profit or loss.

12. LOAN NOTES

The Group subscribed loan notes with a nominal value of US$30,000,000 which bear 8.5% coupon interest per annum and will mature on 26 November 2016 from Mulpha SPV Limited (‘‘Mulpha’’), a limited liability company incorporated in Malaysia. The Group subscribed another loan notes from Mulpha in September 2014 with a nominal value of US$10,000,000 which bear 8.0% coupon interest per annum and it will mature on 5 September 2016.

– 24 –

These loan notes are guaranteed by Mulpha International Bhd., a company incorporated in Malaysia whose shares are listed on the Main Market of Bursa Malaysia Securities Berhad. These loan notes can be early redeemed by Mulpha before the maturity date at the nominal amount of the loan notes plus accrued unpaid interest up to the date of redemption. The early redemption option by Mulpha is closely related to the host debt and is therefore not separately accounted for.

The movement of loan notes during the year is as follows:

At 1 July 2013 Investment in loan notes Interest income Exchange difference At 30 June 2014 Investment in loan notes Interest income Settlement of interest Exchange difference At 30 June 2015	HK$’000 — 232,599 1,934 1,401 235,934 77,509 24,940 (22,867) (1,540) 313,976

13. TRADE RECEIVABLES, OTHER RECEIVABLES AND DEPOSITS

Trade receivables Other deposits and prepayments Presented as non-current assets Presented as current assets	2015 HK$’000 — 14,508 14,508 921 13,587 14,508	2014 HK$’000 65,787 12,151
		77,938
		921 77,017
		77,938

The Group allows an average credit period of 90 days to its trade customers. The Group seeks to maintain strict control over its outstanding receivables. Overdue balances are reviewed regularly by senior management.

The following is an aged analysis of trade receivables presented based on the invoice date at the end of the reporting period, which approximated to the respective revenue recognition dates:

0 to 90 days	2015 HK$’000 —	2014 HK$’000 65,787

– 25 –

14. INVESTMENTS HELD FOR TRADING

Listed securities: — Equity securities listed in Hong Kong — Equity securities listed in the United Kingdom — Equity securities listed in Australia — Equity securities listed in Canada	2015 HK$’000 60,388 9,353 121,262 3,757 194,760	2014 HK$’000 504 16,840 184,674 23,181
		225,199

15. TRADE AND OTHER PAYABLES Trade payables Other payables	2015 HK$’000 — 15,964 15,964	2014 HK$’000 58,839 16,145
		74,984

The following is an aged analysis of trade payables presented based on the invoice date at the end of the reporting period:

0 to 90 days 16. SHARE CAPITAL Authorised and issued share capital Ordinary shares of HK$0.10 each Authorised Issued and fully paid: At beginning of the year Shares repurchased and cancelled At end of the year	2015 Number of shares Amount HK$’000 20,000,000,000 2,000,000 6,131,927,990 613,193 (4,160,000) (416) 6,127,767,990 612,777		2015 2014 HK$’000 HK$’000 — 58,839 2014 Number of shares Amount HK$’000 20,000,000,000 2,000,000 6,811,927,990 681,193 (680,000,000) (68,000) 6,131,927,990 613,193

– 26 –

DIVIDEND

The Board does not recommend the payment of a dividend for the year ended 30 June 2015 (2014: Nil).

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

During the year ended 30 June 2015, the Company repurchased its own shares on The Stock Exchange of Hong Kong Limited (the ‘‘Stock Exchange’’) as follows:

	Number of shares	Purchase	Price	Aggregate
Month	repurchased	Highest	Lowest	amount paid
		(HK$)	(HK$)	(HK$’000)
July 2014	4,160,000	0.180	0.173	745

All the repurchased shares were subsequently cancelled.

The repurchases were made for the benefit of the Company and its shareholders as a whole with a view to enhancing the earnings per share of the Company.

Save as disclosed above, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company’s listed securities during the year ended 30 June 2015.

CORPORATE GOVERNANCE

Corporate Governance Practices

The Company has adopted the Code on Corporate Governance Practices (the ‘‘CG Code’’) as contained in Appendix 14 to the Rules Governing the Listing of Securities on the Stock Exchange (the ‘‘Listing Rules’’) which sets out the principles of good corporate governance. During the year ended 30 June 2015, the Company has fully complied with the code provisions of the CG Code.

Investor Relations

For the year ended 30 June 2015, Ms. Chong Sok Un, Chairman of the Board and member of the Remuneration Committee chaired the annual general meeting of the Company on 5 December 2014 (the ‘‘2014 AGM’’). Ms. Chong together with other members of the Remuneration Committee, namely Dr. Wong Wing Kuen, Albert and Mr. Robert Moyse Willcocks who also attended the 2014 AGM were available to answer questions thereat.

– 27 –

COMPLIANCE WITH THE MODEL CODE

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the ‘‘Model Code’’) as set out in Appendix 10 to the Listing Rules as its code for securities transactions by the Directors. Having made specific enquiry of all Directors, the Company confirmed that all Directors had complied with the required standards set out in the Model Code during the year ended 30 June 2015.

REVIEW OF RESULTS BY AUDIT COMMITTEE

The Group’s final results for the year ended 30 June 2015 have been reviewed by the audit committee of the Company.

SCOPE OF WORK OF MESSRS. DELOITTE TOUCHE TOHMATSU

The figures in respect of the Group’s consolidated statement of financial position, consolidated statement of profit or loss, consolidated statement of profit or loss and other comprehensive income and the related notes thereto for the FY 2015 as set out in this announcement have been agreed by the Group’s auditor, Messrs. Deloitte Touche Tohmatsu, to the amounts set out in the Group’s audited consolidated financial statements for the FY 2015. The work performed by Messrs. Deloitte Touche Tohmatsu in this respect did not constitute an assurance engagement in accordance with Hong Kong Standards on Auditing, Hong Kong Standards on Review Engagements or Hong Kong Standards on Assurance Engagements issued by the Hong Kong Institute of Certified Public Accountants and consequently no assurance has been expressed by Messrs. Deloitte Touche Tohmatsu on this announcement.

By Order of the Board APAC RESOURCES LIMITED Chong Sok Un Chairman

Hong Kong, 22 September 2015

– 28 –

As at the date of this announcement, the directors of the Company are:

Executive Directors

Ms. Chong Sok Un (Chairman), Mr. Andrew Ferguson (Chief Executive Officer) and Mr. Kong Muk Yin

Non-Executive Directors

Mr. Lee Seng Hui (Mr. Peter Anthony Curry as his alternate) and Mr. So Kwok Hoo

Independent Non-Executive Directors

Dr. Wong Wing Kuen, Albert, Mr. Chang Chu Fai, Johnson Francis and Mr. Robert Moyse Willcocks

• For identification purpose only

– 29 –