RemeGen Co., Ltd. — Interim / Quarterly Report 2012

Aug 14, 2012

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Stock Code: 03366

Overseas Chinese Town (Asia) Holdings Limited 華僑城（亞洲）控股有限公司

(Incorporated in the Cayman Islands with limited liability)

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INTERIM REPORT 2012

Overseas Chinese Town (Asia) Holdings Limited

CONTENTS
Corporate Information	2
Management Discussion and Analysis	3
Directors’ Interests	13
Interests and Short Positions of Substantial
Shareholders and Other Persons	14
Share Option Scheme	15
Corporate Governance	19
Interim Financial Report	20

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INTERIM REPORT 2012 1

Overseas Chinese Town (Asia) Holdings Limited

CORPORATE INFORMATION

Registered Office

Clifton House, PO Box 1350 GT, 75 Fort Street Grand Cayman, Cayman Islands

Head Office and Principal Place of

Auditors

KPMG Certified Public Accountants 8/F Prince’s Building 10 Chater Road Central, Hong Kong

Business

Suite 3203–3204, Tower 6 The Gateway, Harbour City Canton Road, Tsim Sha Tsui Kowloon, Hong Kong

Hong Kong Legal Adviser

Loong & Yeung Suites 2001-2005 20/F, Jardine House, 1 Connaught Place Central, Hong Kong

Board of Directors

Executive Directors

Ms. Wang Xiaowen (Chairman) Ms. Xie Mei (CEO) Mr. Yang Jie

Non-Executive Director

Mr. He Haibin

Independent Non-executive Directors

Ms. Wong Wai Ling Mr. Xu Jian Mr. Lam Sing Kwong Simon

Audit Committee/Remuneration

Principal Share Registrar and

Transfer Office

Appleby Corporate Services (Cayman) Limited Clifton House PO Box 1350 GT, 75 Fort Street Grand Cayman, Cayman Islands

Hong Kong Branch Share Registrar and Transfer Office

Computershare Hong Kong Investor Services Limited Shops 1712-16, 17/F, Hopewell Centre 183 Queen’s Road East, Hong Kong

Committee

Ms. Wong Wai Ling (Chairman) Mr. Xu Jian Mr. Lam Sing Kwong Simon

Nomination Committee

Ms. Wang Xiaowen (Chairman) Ms. Wong Wai Ling Mr. Lam Sing Kwong Simon

Qualified Accountant and

Company Secretary

Mr. Fong Fuk Wai (FCPA, FCCA, ACA)

Principal Bankers

Nanyang Commercial Bank Hang Seng Bank Limited Standard Chartered Bank (HK) Ltd. China Merchants Bank Hong Kong Branch

Stock Information

Listing Date: 2 November 2005 Stock Code: 03366 Stock Short Name: OCT (ASIA) Company’s Website: http://www.oct-asia.com

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INTERIM REPORT 2012

Overseas Chinese Town (Asia) Holdings Limited

MANAGEMENT DISCUSSION AND ANALYSIS

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In early 2012, Overseas Chinese Town (Asia) Holdings Limited (the “Company”) made a clear strategic position. The Company strives to become an outstanding developer and operator of commercial complex by gradually increasing its investment in commercial comprehensive development business and maintaining stable growth in its paper packaging business.

Operating Results And Business Review

During the period under review, the Company together with its subsidiaries (the “Group”), leveraging on its extensive experience and quality products, achieved the best operating results since the financial crisis in 2008 despite the macro economic control in the PRC and the faltering European and US economies. For the six months ended 30 June 2012, the Company recorded a turnover of approximately RMB914 million, representing an increase of approximately 41.7% from the same period last year; gross profit margin was approximately 27.5%, representing an increase of 7.9 percentage points from the same period of 2011; and profits attributable to shareholders were approximately RMB20.98 million, representing an increase of approximately 50.8% from the same period of 2011.

Comprehensive Development Business

During the period under review, our comprehensive development business recorded a turnover of approximately RMB564 million, representing an increase of approximately 126.5% from the same period last year; and profits attributable to shareholders were approximately RMB6.13 million, representing an increase of approximately 309.2% from the same period of 2011.

INTERIM REPORT 2012 3

Overseas Chinese Town (Asia) Holdings Limited

Chengdu OCT

The equity interest of Chengdu Tianfu OCT Industry Development Company Limited (“Chengdu OCT”) was held as to 51% by the Company. Chengdu OCT, located in Jinniu District, Chengdu City, Sichuan Province, the PRC, is a unique composite project comprising residential and commercial properties and a theme park, occupying a gross floor area of approximately 2,250,000 sq.m.. The residential property projects of Chengdu OCT with a gross saleable floor area of approximately 1,260,000 sq.m., focused on the sale of Phase III and Phase IV for the first half of 2012. Despite the market conditions characterised by economic slowdown and stringent real estate policies, Chengdu OCT achieved satisfactory results in property sales during the first half of 2012, of which its sales of low-density and high-rise residential properties ranked the 1st and the 4th[Note 1] among the sales of similar products in Chengdu City for the first half of 2012 in terms of the sales area respectively. As of 30 June 2012, the property projects of Chengdu OCT recorded a turnover of approximately RMB464 million; the contracted sales area and revenue reached approximately 68,000 sq.m. and approximately RMB880 million respectively; and the settled area and revenue were approximately 32,000 sq.m. and approximately RMB480 million respectively. In addition, the rentable area of the commercial properties of Chengdu OCT is approximately 47,000 sq.m. at present, of which 99% have been occupied. Chengdu Happy Valley, one of the most influential theme parks in western China operated by Chengdu OCT, ranked top 20 among the theme parks in Asia[Note 2] in terms of its number of visitors in 2011 and is the only theme park in western China awarded with the rank. It attracted approximately 980,000 visitors throughout the period under review, which was substantially the same compared with the same period of 2011; and recorded a turnover of approximately RMB100 million, representing an increase of approximately 14% from the same period of 2011.

Notes:

• 1 According to the statistics from Chengdu Urban-Rural Real Estate Bureau for the first half of the year.

• 2 According to the “Global Attraction Attendance Report 2011” jointly released by the Themed Entertainment Association (TEA), a world theme park authority, and the Economics Research Associates, US (ERA).

4 INTERIM REPORT 2012

Overseas Chinese Town (Asia) Holdings Limited

OCT Shanghai Land

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The Group entered into an agreement in relation to the capital contribution of RMB2,232 million (the “Capital Contribution”) to Overseas Chinese Town (Shanghai) Land Company Limited (“OCT Shanghai Land”) on 5 January 2012 (the “Capital Investment Agreement”).

Following the Capital Investment Agreement becoming binding and unconditional on 20 June 2012, OCT Shanghai Land has become an indirect non-wholly owned subsidiary of the Company. As a result, an existing arrangement between OCT Shanghai Land and a connected person of the Company entered into prior to the Capital Investment Agreement becoming binding and unconditional has become a continuing connected transaction of the Company.

OCT Shanghai Land is currently engaged in the Suhewan project, which is advantageously situated at the cross of Suzhou River and Huangpu River shores in Zhabei District, Shanghai and possesses the scarce landscape resources. The project comprises 1 Jiefang, 41 Jiefang and 42 Jiefang with a total site area of approximately 71,000 sq.m., a gross floor area (above ground) of approximately 280,000 sq.m. and a total gross floor area of approximately 430,000 sq.m.. It will be developed in phases based on the respective planning of each Jiefang. Upon completion, the project will include multi-storied riverside residential buildings, high-rise residential properties, apartment-style offices, luxury hotels, boutique business premises and studios of artists. The first pre-sale of the project is expected to be launched during the second half of 2012.

Xi’an OCT

The Company currently holds 25% of the equity interest in Overseas Chinese Town (Xi’an) Industry Company Limited (“Xi’an OCT”). Xi’an OCT is located in Qujiang New District, Xi’an City, Shaanxi Province with a total site area of approximately 137,000 sq.m.. Its major products are low-density residential properties such as duplex, compound and detached buildings. During the period under review, Xi’an OCT launched 44 compound buildings with a gross floor area of approximately 37,700 sq.m. available for sale. As of 30 June 2012, the settled area and revenue were approximately 1,861 sq.m. and approximately RMB52 million respectively.

INTERIM REPORT 2012 5

Overseas Chinese Town (Asia) Holdings Limited

Paper Packaging Business

During the period under review, our paper packaging business recorded a turnover of approximately RMB350 million, representing a decrease of approximately 11.6% from the same period last year; and profits attributable to shareholders were approximately RMB14.85 million, representing a decrease of approximately 11.8% from the same period of 2011.

The paper packaging industry is faced by challenges including the diminishing domestic and overseas market demand and the hiking labour cost under the dual pressures from the mixed international economy and the structural transformation of domestic economy, leading to increasingly intensified competition across the industry. Meanwhile, the declined gross margin of downstream business resulted in an accelerating drop in profitability of the supplementary paper packaging sectors as a whole. As such, the overall sales from the Company’s paper packaging business during the first half of 2012 were lower than expected, yet the Company currently maintains generally stable average selling prices for its products despite of the price fluctuations in raw materials.

OUTLOOK

Looking into the second half of 2012, our comprehensive development business and paper packaging business are expected to generate more profit from the gradually stabilised domestic economy with a slower soft-landing pace in the second half year, in view of the fine-tuned domestic macro economic policy, the Company will continue to create quality products in the future, seeking to enhance the market competitiveness of the Group through aggressive innovations.

In the second half of 2012, Chengdu OCT intends to sell 31 townhouses of Phase IV in August 2012 and 2 high-rise towers of Phase V in October 2012, comprising residential properties with floor area of approximately 12,000 sq.m. and 58,500 sq.m. respectively. New commercial premise with a gross floor area of approximately 12,500 sq.m. will be also launched for leasing. Chengdu Happy Valley Phase II is expected to complete main structure work by the end of the year and set to debut on 1 May 2013. Chengdu OCT is confident to maintain the momentum from its desirable results in the first half year.

The Suhewan project in Shanghai is scheduled to launch the first presale of apartment-style offices on 41 Jiefang in the second half of 2012, with a gross floor area of approximately 37,000 sq.m.. The Suhewan project, as a riverside city comprehensive project featuring a fusion of cultural heritage, art, fashion, commercial and residential properties as well as urban recreational facilities, will be built into a brand new landmark in Shanghai.

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INTERIM REPORT 2012

Overseas Chinese Town (Asia) Holdings Limited

For the paper packaging business which is in steady operation, the Group is confident to achieve sound profit in the second half of 2012. In the future, we will press ahead with the marketing to new customers in order to expand our market share. Workflow reforms will also be pushed forward, aiming at continuous improvements in internal management for cost efficiency and higher profitability. In view of the economic uncertainty, stricter control will be exercised over trade receivables and credit risks. Furthermore, the Group expects to break through the traditional sales model, taking a chance to offer creative paper packaging products through online marketing channel in the second half of 2012 to expand the market.

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The Company remains cautiously optimistic for the sales from its comprehensive development business in the second half year, despite envisaging an absence of material lessening in the macro control policy and the even intensified market competition, the result for the whole year is expected to maintain a better growth compared with last year. The launch of the Suhewan project in Shanghai will provide the Company with a strong profit driver which will lead the Company through its gradual evolution into a developer and operator of commercial complex while securing sustainable stable business growths in the coming years. By virtue of its unique overall planning and advantageous accurate market positioning, the Company is confident to capitalise on the “OCT” brand and resources to adjust its sales policy timely with market changes and project operations and speed up its capital turnover. The Company is positioned to aggressively secure project reserve by developing at least one project in the economically developed cities each year to expand its business scale and growth potential.

The year 2012 marks the first year for the Company to commence its implementation of a clear and new strategic position. The investment in the Suhewan project in Shanghai not only marks the first move by the Company to implement its new strategic goal, but also a milestone for its goal to become a medium scale listed company in Hong Kong in five years.

INTERIM REPORT 2012 7

Overseas Chinese Town (Asia) Holdings Limited

Employees and Remuneration Policy

As at 30 June 2012, the Group employed approximately 2,700 full-time staff members. The basic remunerations of the employees are determined with reference to the industry’s remuneration benchmark, the employees’ experience and their performance, and equal opportunities will be offered to all staff. Salaries of employees are maintained at a competitive level and are reviewed annually, with reference to the relevant labour market and economic situation. Apart from the basic remuneration and statutory benefits required by laws, the Group also provides discretionary bonuses to the staff based upon the Group’s results and their individual performance.

The Group has not experienced any significant problems with its employees or disruption to its operations due to labour disputes nor has it experienced any difficulty in the recruitment and retention of experienced staff. The Group maintains a good relationship with its employees. Most members of senior management have been working for the Group for many years.

FINANCIAL REvIEw

As at 30 June 2012, the Group’s total assets were approximately RMB17.78 billion. Total equity amounted to approximately RMB4.50 billion. The Group’s turnover was approximately RMB914 million for the six months ended 30 June 2012, representing an increase of approximately 41.7% over the same period of 2011, among which the revenue from comprehensive development business was approximately RMB564 million, representing an increase of approximately 126.5% over the same period of 2011; the revenue from paper packaging business was approximately RMB350 million, representing a decrease of approximately 11.6% over the same period of 2011. Profits attributable to shareholders were approximately RMB20.98 million, representing an increase of approximately 50.8% over the same period of 2011, among which profits attributable to shareholders arising from comprehensive development business were approximately RMB6.13 million, representing an increase of approximately 309.2% over the same period of 2011, which is mainly owing to that profits attributable to shareholders arising from Chengdu OCT and Xi’an OCT for the period were approximately RMB20.93 million, representing an increase over the same period of last year, meanwhile the Group recorded a corresponding expense of approximately RMB11.87 million allocated from OCT Shanghai Land arising from the capital increase for the acquisition of OCT Shanghai Land during the period under review; profits attributable to shareholders arising from paper packaging business were approximately RMB14.85 million, representing a decrease of approximately 11.8% over the same period of 2011.

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INTERIM REPORT 2012

Overseas Chinese Town (Asia) Holdings Limited

During the period under review, gross profit margin was approximately 27.5% (same period in 2011: approximately 19.6%), representing an increase of 7.9 percentage points over the same period of 2011, among which the gross profit margin of comprehensive development business was approximately 35.4%, representing an increase of 3.9 percentage points over the same period of 2011, which was mainly due to the revenue recognized during the period was mainly generated from units with high gross profit; the gross profit margin of paper packaging business was approximately 14.6%, representing an increase of 2.6 percentage points over the same period of 2011, which was mainly due to a decrease in the cost of sales as a result of the drop in the price of raw materials over the same period last year.

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Distribution Costs and Administrative Expenses

Distribution costs of the Group for the six months ended 30 June 2012 were approximately RMB65.71 million (same period in 2011: approximately RMB39.56 million), representing an increase of approximately 66.1% over the corresponding period in 2011, of which distribution costs of comprehensive development business were approximately RMB43.21 million, representing an increase of approximately 123.9% over the corresponding period of 2011, which was mainly due to our increased efforts in market development because of the intensified market regulation; distribution costs from paper packaging business were approximately RMB22.50 million, representing an increase of approximately 11.1% over the corresponding period of 2011, which was mainly due to an increase in transportation cost as a result of delivery in batches upon request by clients during the period.

The Group’s administrative expenses for the six months ended 30 June 2012 were approximately RMB51.83 million (same period in 2011: approximately RMB41.62 million), representing an increase of approximately 24.5% over the corresponding period in 2011, of which administrative expenses of comprehensive development business were approximately RMB39.31 million, representing an increase of approximately 30.9%, which was mainly due to the share option expenses recognized during the period and the agent fee arising from the Capital Contribution in OCT Shanghai Land; administrative expenses of paper packaging business was approximately RMB12.52 million, representing an increase of approximately 8.1% over the corresponding period of 2011, which was mainly due to the share option expenses recognized during the period.

INTERIM REPORT 2012 9

Overseas Chinese Town (Asia) Holdings Limited

Interest Expenses

The interest expenses of the Group were approximately RMB32.48 million for the six months ended 30 June 2012 (same period in 2011: approximately RMB26.03 million), representing an increase of approximately 24.8% over the same period of 2011, of which interest expense of comprehensive development business was approximately RMB29.04 million, representing an increase of approximately 13.4% over the same period of 2011, which was mainly due to the rising interest expenses of the Capital Contribution in OCT Shanghai Land; interest expense of paper packaging business was approximately RMB3.44 million, representing an increase of approximately 719.0% over the same period of 2011, which was mainly due to the increase in outstanding loan during the period.

Dividends

The Board does not recommend the payment of an interim dividend for the six months ended 30 June 2012, taking into account the long-term development of the Company and its active participation into potential investment opportunities.

Inventories, Debtors’ and Creditors’ Turnover

The inventory turnover days of the Group’s paper packaging business was 70 days for the six months ended 30 June 2012, longer than 49 days for the year ended 31 December 2011. The increase in inventory turnover days was mainly attributable to the decrease in sales volume during the period. The debtors’ turnover days of the Group’s paper packaging business was 109 days for the six months ended 30 June 2012, longer than 100 days for the year ended 31 December 2011. The increase in the debtors’ turnover days was mainly attributable to a more relaxed credit period granted to the customers in order to increase the sales volume for the period. The creditors’ turnover days of the Group’s paper packaging business was 61 days for the six months ended 30 June 2012, shorter than 71 days for the year ended 31 December 2011. The decrease in creditors’ turnover days was mainly attributable to the advance payment to goods in order to obtain discount for cash payments.

10 INTERIM REPORT 2012

Overseas Chinese Town (Asia) Holdings Limited

Liquidity, Financial Resources and Capital Structure

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The total equity of the Group as at 30 June 2012 was approximately RMB4.50 billion (31 December 2011: approximately RMB2.29 billion). As at 30 June 2012, the Group had current assets of approximately RMB14.67 billion (31 December 2011: approximately RMB3.06 billion) and current liabilities of approximately RMB7.60 billion (31 December 2011: approximately RMB2.74 billion). The current ratio was 1.93 as at 30 June 2012, representing a significant increase as compared with 1.12 as at 31 December 2011.

As at 30 June 2012, the Group had outstanding bank loans of approximately RMB163 million, without any fixed rate loans (31 December 2011: outstanding bank loans of approximately RMB173 million, without any fixed rate loans). The interest rates of bank loans of the Group ranged from 1.5% to 2.46% per annum for the six months ended 30 June 2012 (from 0.99% to 2.33% per annum for the year ended 31 December 2011). Some of these bank loans were secured by guarantees provided by certain subsidiaries of the Company. The Group’s gearing ratio (being the total borrowings including bills payable and loans divided by total assets) was approximately 56% as at 30 June 2012, which was increased by approximately 36 percentage points as compared with approximately 20% as at 31 December 2011.

As at 30 June 2012, 100% of the total amount of outstanding bank loans of the Group was denominated in Hong Kong Dollars (31 December 2011: 100% in Hong Kong Dollars). As at 30 June 2012, approximately 95% of the total amount of cash and cash equivalents of the Group was denominated in Renminbi (31 December 2011: 91%), approximately 5% of its cash and cash equivalents was denominated in Hong Kong Dollars (31 December 2011: 8%) and approximately 0% of its cash and cash equivalents was denominated in US Dollars (31 December 2011: 1%).

The Group’s liquidity position remains stable and the Group possesses sufficient cash and available banking facilities to meet its commitments, working capital requirements and future investments for expansion. The Group’s transactions and monetary assets are principally denominated in Renminbi, Hong Kong Dollars or US Dollars. The Group has not experienced any material difficulties or effects on its operations or liquidity as a result of fluctuations in currency exchange rates for the period ended 30 June 2012. As at 30 June 2012, the Group did not employ any financial instrument for hedging purposes.

INTERIM REPORT 2012 11

Overseas Chinese Town (Asia) Holdings Limited

Contingent Liabilities

The Group has no contingent liabilities as at 30 June 2012.

IMPORTANT EvENTS

Establishment of a nomination committee and appointments to the nomination committee

On 28 February 2012, the Board established a nomination committee (the “Nomination Committee”). The members of the Nomination Committee shall comprise such directors of the Company appointed by the Board. The Board has appointed Ms. Wang Xiaowen, Ms. Wong Wai Ling and Mr. Lam Sing Kwong Simon, as members of the Nomination Committee and Ms. Wang Xiaowen has been appointed and shall act as the Chairman of the Nomination Committee.

Resignation of executive director

Mr. Zhou Guangneng resigned as an executive director of the Company with effect from 28 March 2012 due to his attainment of the age of retirement according to the Group’s policy.

Appointment of executive director

Mr. Yang Jie has been appointed as the executive director of the Company with effect from 11 April 2012. Mr. Yang has entered into a director’s service agreement with the Company as the executive director for a term commencing from 11 April 2012 until the conclusion of the 2012 annual general meeting of the Company to be held in 2013.

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Overseas Chinese Town (Asia) Holdings Limited

DIRECTORS’ INTERESTS

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As at 30 June 2012, interests and short positions in the shares, underlying shares and debentures of the Company and any of its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (“SFO”)) held by the Directors and chief executives of the Company which have been notified to the Company and The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which were taken or deemed to have under such provisions of the SFO) or have been entered in the register maintained by the Company pursuant to section 352 of the SFO, or otherwise have been notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies set out in Appendix 10 of the Listing Rules (the “Model Code”) are as follows:

Long Positions in Underlying Shares of the Company

				Approximate %
	Number of			of issued share
Name of	underlying		Nature of	capital of the
Directors	shares held	Capacity	interest	Company
He Haibin (Note 1)	400,000	Beneficial owner	Personal	0.08%

Notes:

(1) He Haibin is taken to be interested as a grantee of options to subscribe for 400,000 shares under the share option scheme of the Company.

Save as disclosed above, as at 30 June 2012, 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 or any of its associated corporations (within the meaning of Part XV of the SFO) as recorded in the register required to be kept by the Company under section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code.

INTERIM REPORT 2012 13

Overseas Chinese Town (Asia) Holdings Limited

INTERESTS AND SHORT POSITIONS OF SUBSTANTIAL SHAREHOLDERS AND OTHER PERSONS

As at 30 June 2012, as far as is known to the Directors, the following persons (not being a Director or chief executive of the Company) had interests or short positions in the shares or underlying shares which fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO as recorded in the register required to be kept by the Company pursuant to section 336 of the SFO:

Long Positions in the Ordinary Shares of the Company (the “Shares”)

			Approximate
	Capacity/	No. of	shareholding
Name	Nature	shares held	percentage
Substantial Shareholders
Pacific Climax Limited	Beneficial owner	293,470,000	57.57%
(“Pacific Climax”)
(Note 1)
Overseas Chinese	Interest of a	293,470,000	57.57%
Town (HK) Company	controlled
Limited (“OCT (HK)”)	corporation
	(Note 2)
Shenzhen Overseas	Interest of a	293,470,000	57.57%
Chinese Town Co. Ltd.	controlled
(formerly known as	corporation
Shenzhen Overseas	(Note 3)
Chinese Town Holding
Company) (“OCT Ltd.”)
Overseas Chinese	Interest of a	293,470,000	57.57%
Town Enterprises	controlled
Company	corporation
(“OCT Group”)	(Note 4)
Others
UBS AG	Interest of a	45,906,000	9.00%
	controlled
	corporation
	(Note 5)

14 INTERIM REPORT 2012

Overseas Chinese Town (Asia) Holdings Limited

Notes:

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• (1) Ms. Xie Mei, being an executive Director, is also a director of Pacific Climax.

• (2) OCT (HK) is the beneficial owner of all the issued share capital in Pacific Climax. Therefore OCT (HK) is deemed or taken to be interested in those shares for the purpose of the SFO. Ms. Wang Xiaowen and Ms. Xie Mei, both being executive Directors, are also directors of OCT (HK).

• (3) OCT Ltd. is the beneficial owner of all the issued share capital in OCT (HK). For the purpose of the SFO, OCT Ltd. is deemed or taken to be interested in all the Shares which are beneficially owned by Pacific Climax. OCT Ltd. is a company incorporated in the PRC, the shares of which are listed on the Shenzhen Stock Exchange. OCT Ltd. is a subsidiary of OCT Group.

• (4) OCT Group is the beneficial owner of 56.58% of the issued shares in OCT Ltd., which is the beneficial owner of all the issued shares in OCT (HK), and which is in turn the beneficial owner of all the issued share capital in Pacific Climax and therefore OCT Group is deemed or taken to be interested in all the Shares which are beneficially owned by Pacific Climax for the purpose of the SFO.

• (5) The interest of UBS AG is derived from the interests in 31,716,000 Shares, 10,602,000 Shares and 3,534,000 Shares (total: 45,906,000 Shares) held by UBS Fund Services (Luxembourg) SA, UBS Global Asset Management (Hong Kong) Ltd and UBS Global Asset Management (Singapore) Ltd respectively, which are directly wholly owned by UBS AG. Therefore, UBS AG is deemed or taken to be interested in the total of 45,906,000 Shares for the purpose of the SFO.

Save as disclosed above, as at 30 June 2012, no other interests required to be recorded in the register kept under section 336 of the SFO have been notified to the Company.

SHARE OPTION SCHEME

Under the ordinary resolution passed at the extraordinary general meeting on 15 February 2011, the Board adopted a new share option scheme (the “New Scheme”) and simultaneously terminated the share option scheme adopted on 12 October 2005 (the “Old Scheme”). The purpose of New Scheme is to attract and retain the best available personnel, to provide additional incentive to employees (full-time and part-time), directors, consultants and advisers of the Group and to promote the business development of the Group. The New Scheme shall be valid and effective for a period of ten years ending on 14 February 2021, unless terminated earlier by shareholders of the Company in general meetings.

Participants under the New Scheme include any employees (full-time or parttime), directors, advisers and professional consultants of the Group or any of its members.

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Overseas Chinese Town (Asia) Holdings Limited

The Directors are authorized to, at their absolute discretion and on such terms as they may think fit, propose any eligible persons under the New Scheme to accept the options.

An offer for the grant of options must be accepted within 28 days inclusive of the day on which such offer was made. The amount payable by each grantee of options to the Company on acceptance of the offer for the grant of options is HK$1.00.

The subscription price of a share in respect of any particular option granted under the New Scheme shall be a price solely determined by the Board and notified to a participant and shall be at least the higher of: (i) the closing price of the shares as stated in the Stock Exchange’s daily quotations sheet on the date of grant of the options; (ii) the average of the closing prices of the shares as stated in the Stock Exchange’s daily quotations sheets for the 5 business days immediately preceding the date of grant of the options; and (iii) the nominal value of the shares on the date of grant of the options.

The Company shall be entitled to issue options, provided that the total number of shares which may be issued upon exercise of all options to be granted under all of the New Scheme and other share option schemes of the Company does not exceed 10% of the shares in issue at the date of approval of the New Scheme. The Company may at any time refresh such limit, subject to the shareholders’ approval and the issuance of a circular in compliance with the Listing Rules, provided that the total number of shares which may be issued upon exercise of all outstanding options granted and yet to be exercised under all of the New Scheme and other share option schemes of the Company does not exceed 30% of the shares in issue at the time.

As at 30 June 2012, the total number of outstanding options available for issue under the New Scheme was 20,436,000 options, which represented approximately 4.01% of the total issued share capital of the Company as at 30 June 2012. As at 30 June 2012, all options granted under the Old Scheme had been fully exercised, and the total number of shares available for issue under the options already granted under the New Scheme was 30,100,000 shares, which represented approximately 5.90% of the issued share capital of the Company as at 30 June 2012. The total number of shares issued and to be issued upon exercise of options granted to any grantee (including both exercised and outstanding options), in any 12-month period up to the date of grant shall not exceed 1% of the Company’s shares in issue.

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Overseas Chinese Town (Asia) Holdings Limited

An option may be exercised in accordance with the terms of the New Scheme at any time during a period as the Board may determine which shall not exceed ten years from the date of grant.

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Under the terms of the New Scheme, 30,100,000 options were granted to certain eligible participants (including some Directors and employees) on 3 March 2011 with the exercise price of HK$4.04, and the amount payable for the grant of an option was HK$1. Details of the options granted under the New Scheme mentioned above are disclosed in the Company’s announcement dated 3 March 2011.

The status of the share options granted up to 30 June 2012 is as follows:

Name and category of participants Directors He Haibin Other emplyees Total	As at 1 January 2012 400,000 720,000 29,700,000	Granted during the period – – –	Number Exercised during the period – 720,000 –	of unlisted Cancelled/ lapsed during the period – – –	share options (physically settled equity derivatives) Share Share price price of the of the Company Company as at the as at the Date of Exercise Exercise date of date of As at grant of period of price of grant of exercise of 30 June share share share share share 2012 options options options options options HK$ HK$ HK$ 400,000 3 March 2011 3 March 2011 to 4.04 4.04 – 2 March 2016 – 7 February 2006 7 February 2006 to 1.41 1.41 3.00 (Note) 6 February 2016 29,700,000 3 March 2011** 3 March 2011 to 4.04 4.04 – 2 March 2016 30,100,000
	30,820,000	–	720,000	–

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Overseas Chinese Town (Asia) Holdings Limited

• Under the Old Scheme, there is no vesting period of the share options.

• ** The exercise price of the share options was subject to adjustment in the case of rights or bonus issues, or other similar changes in the Company’s share capital.

• *** The share price of the Company disclosed as at the date of the grant of the share options was the closing price as quoted on the Stock Exchange of the trading day immediately prior to the date of the grant of the share options.

• **** The share price of the Company as at the date of the exercise of the share options was the weighted average closing price of the shares immediately before the dates on which the share options were exercised during the period.

• * The share options granted under the New Scheme shall be exercisable during the period from the date of acceptance of the offer of the grant (the “Date of Grant”) up to 5 years from the Date of Grant subject to the following vesting term:–

Maximum percentage of Share Options exercisable including the percentage of share options previously exercised 30% 60% 100%	Period for exercise of the relevant percentage of the share options
	at any time after the expiry of 2 years from the Date of Grant up to 3 years from the Date of Grant at any time after the expiry of 3 years from the Date of Grant up to 4 years from the Date of Grant at any time after the expiry of 4 years from the Date of Grant up to 5 years from the Date of Grant.

Note: The share options were exercised on 16 April 2012.

Apart from the foregoing, at no time during the period prior to the date of this interim report was the Company, any of its holding companies, subsidiaries or fellow subsidiaries a party to any arrangement to enable the Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

18 INTERIM REPORT 2012

Overseas Chinese Town (Asia) Holdings Limited

CORPORATE GOvERNANCE

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The Company had complied with all the code provisions as set out in the Code on Corporate Governance (the “Code”) contained in Appendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) during the period from 1 January 2012 to 31 March 2012. The Code had been amended which took effect from 1 April 2012 (the “Revised Code”). The Company had complied with all the code provisions as set out in the Revised Code during the period from 1 April 2012 to 30 June 2012.

Securities Trading by Directors

The Company has adopted the Model Code. The Board confirms that, having made specific enquiry of all Directors, the Directors have complied with the required standards set out in the Model Code and its own code of conduct regarding the Directors’ securities transactions.

Audit Committee

The Audit Committee of the Company and the management have reviewed the unaudited interim report of the Group for the six months ended 30 June 2012 and have discussed the internal control, accounting principles and practices adopted by the Group.

PURCHASE, SALE OR REDEMPTION OF SHARES

The Company or any of its subsidiaries has not redeemed any of its shares during the six months ended 30 June 2012. During the same period, neither the Company nor any of its subsidiaries has purchased or sold any of the shares of the Company.

By order of the Board

wang Xiaowen Chairman

Hong Kong, 6 August 2012

INTERIM REPORT 2012 19

Overseas Chinese Town (Asia) Holdings Limited

INTERIM FINANCIAL REPORT CONSOLIDATED INCOME STATEMENT

for the six months ended 30 June 2012 (unaudited) (Expressed in Renminbi)

Note Turnover 5 Cost of sales Gross profit Other revenue Other net (loss)/gain 6 Distribution costs Administrative expenses Other operating income/(expenses) Profit from operations Finance costs 7 Share of profit or loss from an associate Profit before taxation 7 Income tax 8 Profit for the period Attributable to: Equity shareholders of the company Non-controlling interests Profit for the period Earnings per share (RMB) 9 Basic Diluted

Six months ended 30 June 2012 2011 RMB’000 RMB’000 914,368 644,776 (663,197 ) (518,748 ) 251,171 126,028 7,027 5,871 (6,299 ) 12,827 (65,711 ) (39,560 ) (51,833 ) (41,621 ) 1,001 (854) 135,356 62,691 (32,483 ) (26,031 ) 1,604 (1,766 ) 104,477 34,894 (61,500 ) (19,524 ) 42,977 15,370 20,977 13,906 22,000 1,464 42,977 15,370 0.041 0.027 0.041 0.027

The notes on pages 27 to 46 form part of this interim financial report.

20

INTERIM REPORT 2012

Overseas Chinese Town (Asia) Holdings Limited

CONSOLIDATED STATEMENT OF COMPREHENSIvE INCOME

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for the six months ended 30 June 2012 (unaudited)

(Expressed in Renminbi)

Profit for the period Other comprehensive income for the period (after tax and reclassification adjustments): Exchange differences on translation of: – financial statements of overseas subsidiaries 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 2012 2011 RMB’000 RMB’000 42,977 15,370 5 (335 ) 42,982 15,035 20,982 13,571 22,000 1,464 42,982 15,035

The notes on pages 27 to 46 form part of this interim financial report.

21

INTERIM REPORT 2012

Overseas Chinese Town (Asia) Holdings Limited

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

at 30 June 2012 (unaudited)

(Expressed in Renminbi)

Note Non-current assets Fixed assets 10 – Investment properties – Other property, plant and equipment – Interests in leasehold land held for own use under operating lease Intangible assets Goodwill Interest in an associate 11 Other financial assets Deferred tax assets Current assets Inventories 12 Trade and other receivables 13 Cash and cash equivalents 14 Current liabilities Trade and other payables 15 Receipts in advance Bank loans Related party loans Current taxation Net current assets Total assets less current liabilities

At At 30 June31 December 2012 2011 RMB’000 RMB’000 554,713 565,953 1,396,889 1,400,463 715,892 726,263 441 221 267,193 266,625 82,538 80,934 4,320 4,320 83,169 95,761 3,105,155 3,140,540 13,400,519 2,015,536 301,835 300,055 969,982 748,393 14,672,336 3,063,984 2,100,432 1,918,981 1,014,120 601,037 102,114 92,068 4,358,000 – 20,792 124,160 7,595,458 2,736,246 7,076,878 327,738 10,182,033 3,468,278

The notes on pages 27 to 46 form part of this interim financial report.

22

INTERIM REPORT 2012

Overseas Chinese Town (Asia) Holdings Limited

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

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(COntinuEd)

at 30 June 2012 (unaudited) (Expressed in Renminbi)

Note Non-current liabilities Bank loans Related party loans Deferred tax liabilities NET ASSETS CAPITAL AND RESERvES Share capital 16 Reserves 16 Total equity attributable to equity shareholders of the company Non-controlling interests TOTAL EQUITY	At At 30 June31 December 2012 2011 RMB’000 RMB’000 61,140 81,070 5,325,676 1,044,548 298,761 52,522 5,685,577 1,178,140 4,496,456 2,290,138 48,332 48,274 1,526,644 1,529,627 1,574,976 1,577,901 2,921,480 712,237 4,496,456 2,290,138

The notes on pages 27 to 46 form part of this interim financial report.

23

INTERIM REPORT 2012

Overseas Chinese Town (Asia) Holdings Limited

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the six months ended 30 June 2012 (unaudited) (Expressed in Renminbi)

					Attributable to equity shareholders of	Attributable to equity shareholders of	Attributable to equity shareholders of	the company
								General Enterprise				Non-
		Issued	Share	Contributed	Merger	Capital	Exchange	reserve expansion		Retained		controlling	Total
		capital	premium	surplus	reserve	reserve	reserve	fund	fund	profits	Total	interests	equity
	Note	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
At 1 January 2011		47,964	983,439	147,711	24,757	22,007	(3,613 )	48,318	5,366	143,047	1,418,996	624,510	2,043,506
Changes in equity for the six
Months ended 30 June 2011:
Shares issued under share option
scheme	16(b)	310	4,941	–	–	(877 )	–	–	–	–	4,374	–	4,374
Equity settled share-based
transactions	16(d)	–	–	–	–	2,969	–	–	–	–	2,969	–	2,969
Dividend approved in respect
of previous year	16(a)	–	–	–	–	–	–	–	–	(13,190 )	(13,190 )	–	(13,190 )
Total comprehensive income
for the period		–	–	–	–	–	(335 )	–	–	13,906	13,571	1,464	15,035
Balance at 30 June 2011 and
1 July 2011		48,274	988,380	147,711	24,757	24,099	(3,948 )	48,318	5,366	143,763	1,426,720	625,974	2,052,694
Changes in equity for the six
months ended 31 December 2011:
Transfer between reserves		–	–	–	–	–	–	13,813	–	(13,813 )	–	–	–
Equity settled share-based
transactions	16(d)	–	–	–	–	6,272	–	–	–	–	6,272	–	6,272
Dividend paid to non-controlling
interests		–	–	–	–	–	–	–	–	–	–	(21,990 )	(21,990 )
Total comprehensive income
for the period		–	–	–	–	–	(421 )	–	–	145,330	144,909	108,253	253,162
At 31 December 2011		48,274	988,380	147,711	24,757	30,371	(4,369 )	62,131	5,366	275,280	1,577,901	712,237	2,290,138

The notes on pages 27 to 46 form part of this interim financial report. INTERIM REPORT 2012

24

Overseas Chinese Town (Asia) Holdings Limited

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (COntinuEd)

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for the six months ended 30 June 2012 (unaudited) (Expressed in Renminbi)

					Attributable to equity shareholders of	Attributable to equity shareholders of	Attributable to equity shareholders of	the company
								General Enterprise				Non-
		Issued	Share	Contributed	Merger	Capital	Exchange	reserve expansion		Retained		controlling	Total
		capital	premium	surplus	reserve	reserve	reserve	fund	fund	profits	Total	interests	equity
	Note	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
At 1 January 2012		48,274	988,380	147,711	24,757	30,371	(4,369 )	62,131	5,366	275,280	1,577,901	712,237	2,290,138
Changes in equity for the six
months ended 30 June 2012:
Shares issued under share option
scheme	16(b)	58	937	–	–	(170 )	–	–	–	–	825	–	825
Acquisition of a subsidiary		–	–	–	–	–	–	–	–	–	–	2,187,243	2,187,243
Equity settled share-based
transactions	16(d)	–	–	–	–	5,479	–	–	–	–	5,479	–	5,479
Dividend approved in respect
of previous year	16(a)	–	–	–	–	–	–	–	–	(30,211 )	(30,211 )	–	(30,211 )
Total comprehensive income
for the year		–	–	–	–	–	5	–	–	20,977	20,982	22,000	42,982
At 30 June 2012		48,332	989,317	147,711	24,757	35,680	(4,364 )	62,131	5,366	266,046	1,574,976	2,921,480	4,496,456

The notes on pages 27 to 46 form part of this interim financial report.

25

INTERIM REPORT 2012

Overseas Chinese Town (Asia) Holdings Limited

CONDENSED CONSOLIDATED CASH FLOw STATEMENT

for the six months ended 30 June 2012 (unaudited) (Expressed in Renminbi)

Note Cash generated from operations Tax paid Net cash used in operating activities Net cash used in investing activities Net cash generated from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at 1 January 14 Effect of foreign exchange rate changes Cash and cash equivalents at 30 June 14	Six months ended 30 June 2012 2011 RMB’000 RMB’000 44,349 3,382 (137,650 ) (135,215 ) (93,301 ) (131,833 ) (871,238 ) (24,370 ) 1,185,806 37,888 221,267 (118,315 ) 748,393 1,005,358 322 (579) 969,982 886,464

The notes on pages 27 to 46 form part of this interim financial report.

26

INTERIM REPORT 2012

Overseas Chinese Town (Asia) Holdings Limited

NOTES TO THE INTERIM FINANCIAL REPORT (UNAUDITED)

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(Expressed in Renminbi)

1 BASIS OF PREPARATION

This interim financial report has been prepared in accordance with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”), including compliance with Hong Kong Accounting Standard (“HKAS”) 34, “Interim financial reporting”, issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”). It was authorised for issue on 6 August 2012.

The interim financial report has been prepared in accordance with the same accounting policies adopted in the 2011 annual financial statements, except for the accounting policy changes that are expected to be reflected in the 2012 annual financial statements. Details of these changes in accounting policies are set out in note 2.

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

This interim financial report contains condensed consolidated financial statements and selected explanatory notes. The condensed consolidated financial statements for the period ended 30 June 2012 comprise Overseas Chinese Town (Asia) Holdings Limited (the “company”) and its subsidiaries (collectively referred to as the “group”) and the group’s interest in an associate. The notes include an explanation of events and transactions that are significant to an understanding of the changes in financial position and performance of the group since the 2011 annual financial statements. The condensed consolidated interim financial statements and notes thereon do not include all of the information required for full set of financial statements prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRS”).

The interim financial report is unaudited and not reviewed by the auditors, but has been reviewed by the Audit Committee of the company.

The financial information relating to the financial year ended 31 December 2011 that is included in the interim financial report does not constitute the company’s statutory financial statements for that financial year but is derived from those financial statements. Statutory financial statements for the year ended 31 December 2011 are available from the company’s registered office. The auditors have expressed an unqualified opinion on those financial statements in their report dated 28 February 2012.

INTERIM REPORT 2012 27

Overseas Chinese Town (Asia) Holdings Limited

2 CHANGES IN ACCOUNTING POLICIES

The HKICPA has issued a number of amendments to HKFRSs that are first effective for the current accounting period of the group and the company. Of these, the following development is relevant to the group’s financial statements:

• Amendments to HKAS 12, income taxes – deferred tax: Recovery of underlying assets

The group has not applied any new standard or interpretation that is not yet effective for the current accounting period.

Amendments to HKAS 12 Income taxes

Under HKAS 12 deferred tax is required to be measured with reference to the tax consequences that would follow from the manner in which the entity expects to recover the carrying amount of the asset(s) in question. In this regard, the amendments to HKAS 12 introduced a rebuttable presumption that the carrying amount of investment property carried at fair value under HKAS 40, investment property , will be recovered through sale. This presumption is rebutted on a property-by-property basis if the investment property in question is depreciable and is held within a business model whose objective is to consume substantially all of the economic benefits embodied in the investment property over time, rather than through sale.

Previously, where investment properties were held under leasehold interests, the group assumed that the property’s value would be recovered through use and measured deferred tax accordingly. As a result of adopting the amendments to HKAS 12, the group reviewed its investment property portfolio which are all located in Mainland China, the group determined that these properties are held within a business model whose objective is to consume substantially all of the economic benefits embodied in the investment property over time and consequently the presumption in the amended HKAS 12 is rebutted for these properties. As a result, the group continues to measure the deferred tax relating to these other properties using the tax rate that would apply as a result of recovering their value through use.

28

INTERIM REPORT 2012

Overseas Chinese Town (Asia) Holdings Limited

3 ACQUISITION OF A SUBSIDIARY

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On 5 January 2012, Great Tec Investment Limited (“Great Tec”), an indirect wholly-owned subsidiary of the company, entered into the Capital Investment Agreement with Overseas Chinese Town Real Estate Company Limited (“OCT Properties”), pursuant to which Great Tec conditionally agreed to make capital injection of RMB2,232,000,000 to Overseas Chinese Town (Shanghai) Land Company Limited (“OCT Shanghai Land”). Upon completion of the capital investment, the registered capital of OCT Shanghai Land would be RMB3,030,000,000 and the equity interest of OCT Shanghai Land would be owned as to 50.5% by Great Tec and as to 49.5% by OCT Properties. The capital injection shall be contributed by Great Tec by phases within 2 years from the date of the approval of the joint venture contract. Prior to Completion, dividend declared by OCT Shanghai Land shall be distributed between Great Tec and OCT Properties in the ratio of (i) actual amount contributed to OCT Shanghai Land by Great Tec and OCT Properties at the relevant balance sheet date at which the dividend is related to, to (ii) the mutually agreed net assets value of RMB2,188,000,000 as at 31 December 2011 of OCT Shanghai Land prior to the Capital Injection. By 30 June 2012, RMB901,300,000 had been injected in OCT Shanghai Land.

On 20 June 2012, the Capital Investment Agreement became binding and unconditional after the capital injection was approved by the independent shareholders of the company at the extraordinary general meeting held on 12 April 2012 and the group obtained all the necessary approvals from the PRC government authorities for the capital injection. Consequently, OCT Shanghai Land has become an indirect non-wholly owned subsidiary of the company.

Consideration RMB’000 Cash 2,232,000

INTERIM REPORT 2012 29

Overseas Chinese Town (Asia) Holdings Limited

3 ACQUISITION OF A SUBSIDIARY (COntinuEd)

Identifiable assets acquired and liabilities assumed

The acquisition has the following effect on the group’s assets and liabilities:

Pre-acquisition carrying amounts RMB’000 Fixed assets 4,098 Intangible assets 256 Deferred tax assets 17,593 Inventories 10,505,177 Trade receivables and other receivables 2,711 Cash and cash equivalents 79,454 Trade payables and other payables (856,933 ) Loans and borrowings (7,412,000 ) Deferred tax liabilities – Net identifiable assets and liabilities of OCT Shanghai Land 2,340,356 Goodwill Total consideration Net identifiable assets and liabilities attributable to the group Goodwill on the acquisition	Fair value adjustments RMB’000 – – – 996,823 – – – – (249,206 ) 747,617	Recognised values on acquisition RMB’000 4,098 256 17,593 11,502,000 2,711 79,454 (856,933 ) (7,412,000 ) (249,206 )
		3,087,973
		2,232,000 2,231,430
		570

Pre-acquisition carrying amounts were determined based on applicable HKFRS immediately before the acquisition. The value of assets and liabilities recognised on acquisition are their fair values measured as follows: for the identifiable assets with an active market, the fair value was measured according to its market price; for the identifiable assets without an active market, the fair value was measured based on the market price of the same or similar kind of assets; if no active market exists for the same or similar assets, the fair value was measured by appraisal technique.

Goodwill is generated as a result of difference between the fair value of the net assets acquired and consideration.

30

INTERIM REPORT 2012

Overseas Chinese Town (Asia) Holdings Limited

3 ACQUISITION OF A SUBSIDIARY (COntinuEd)

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Included in turnover and profit of the group for the period is nil turnover and loss of RMB1,219,000 attributable to the business generated by OCT Shanghai Land since it was acquired by the group in June 2012.

Had this business combination been effected at the beginning of the period, the turnover of the group would not have been affected and the profit for the period would have been decreased by RMB3,402,000.

4 SEGMENT REPORTING

(a) Information about reportable segments

For the six months ended Revenue from external customers Inter-segment revenue Reportable segment revenue Reportable segment net profit/(loss)	Comprehensive development business 2012 2011 RMB’000RMB’000 564,444 248,666 – – 564,444 248,666 6,131 (2,929 )	Manufacture and sale of paper carton and products 2012 2011 RMB’000RMB’000 349,924 396,110 – – 349,924 396,110 14,846 16,835	To 2012 RMB’000 914,368 – 914,368 20,977	tal 2011 RMB’000 644,776 –
		349,924		644,776
		14,846		13,906

INTERIM REPORT 2012 31

Overseas Chinese Town (Asia) Holdings Limited

4 SEGMENT REPORTING (COntinuEd)

(b) Reconciliations of reportable segment profit or loss

Profit Reportable segment profit Elimination of inter-segment profits Reportable segment profit derived from group’s external customers Consolidated net profit	Six mo ended 3 2012 RMB’000 20,977 – 20,977 20,977	nths 0 June 2011 RMB’000 13,906 –
		13,906
		13,906

5 TURNOvER

The principal activities of the group are comprehensive development and manufacture and sale of paper carton and products.

Turnover represents the sales value of goods or services supplied to customers (net of value-added tax or business tax), including the sales of properties, rental income from investment properties, theme park ticket sales and sales of paper carton and products.

Comprehensive development business Sales of paper cartons and products	Six mo ended 3 2012 RMB’000 564,444 349,924 914,368	nths 0 June 2011 RMB’000 248,666 396,110
		644,776

32 INTERIM REPORT 2012

Overseas Chinese Town (Asia) Holdings Limited

6 OTHER NET (LOSS)/GAIN

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Net (loss)/gain on disposal of fixed assets Exchange (loss)/gain Others	Six mo ended 3 2012 RMB’000 (562 ) (6,069 ) 332 (6,299 )	nths 0 June 2011 RMB’000 3,396 9,183 248
		12,827

7 PROFIT BEFORE TAXATION

Profit before taxation is arrived at after charging/(crediting):

(a) Finance costs: Interest on bank loans Interest on related party loans Interest on borrowings Less: interest expense capitalised into properties under development (b) Other items: Amortisation Depreciation Impairment losses made on trade and other receivables Inventory write-down Rentals receivable from investment properties less direct outgoings RMB11,069,000 (Six months ended 30 June 2011: RMB9,413,000)	Six mo ended 3 2012 RMB’000 3,181 44,848 48,029 (15,546 ) 32,483 43 84,930 (954 ) (48 ) 938	nths 0 June 2011 RMB’000 423 31,743
		32,166 (6,135 )
		26,031
		14 82,942 714 46 2,418

INTERIM REPORT 2012 33

Overseas Chinese Town (Asia) Holdings Limited

8 INCOME TAX

INCOME TAX
Current tax – PRC Corporate Income Tax – PRC Land Appreciation Tax Deferred tax Origination and reversal of temporary differences	Six mo ended 3 2012 RMB’000 (3,260 ) 45,252 41,992 19,508 61,500	nths 0 June 2011 RMB’000 12,496 14,985
		27,481
		(7,957 )
		19,524

(i) PRC Corporate Income Tax

Pursuant to the rules and regulations of the Cayman Islands and the British Virgin Islands, the group is not subject to any income tax in the Cayman Islands and the British Virgin Islands during the period (2011: Nil).

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 during the period (2011: Nil).

Pursuant to the income tax rules and regulations of the PRC, taxation for PRC subsidiaries is charged at the appropriate current rates of taxation ruling in the relevant cities in the PRC, which increased to 25% (2011: range between 24% – 25%). Certain subsidiaries are entitled to a tax concession period in which it is fully exempted from PRC income tax for 2 years starting from its first profit-making year, followed by a 50% reduction in the PRC income tax for the next 3 years (“two years free and three years half”). If a PRC subsidiary has not become profit-making and enjoyed the two years free and three years half tax concession period before 2008, the PRC subsidiary can enjoy the tax concession period from 2008 and onward.

34 INTERIM REPORT 2012

Overseas Chinese Town (Asia) Holdings Limited

8 INCOME TAX (COntinuEd)

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• (i) PRC Corporate Income Tax (continued) Additionally, a 10% withholding tax is levied on dividends declared to foreign investors from the PRC effective from 1 January 2008. A lower withholding tax rate may be applied if there is a tax treaty arrangement between the PRC and jurisdiction of the foreign investors. According to the tax treaty between Hong Kong Special Administrative Region and the PRC for avoidance of double taxation and prevention of tax evasion, dividends from declared from PRC subsidiaries to Hong Kong holding companies are subject to 5% withholding income tax from 1 January 2008 and onwards.

(ii) PRC Land Appreciation Tax

• PRC Land Appreciation Tax (“LAT”) is levied at progressive rates ranging from 30% to 60% on the appreciation of land value, being the proceeds of sales of properties less deductible expenditures including lease charges of land use rights and all property development expenditures, which is included in the consolidated statements of comprehensive income as income tax. The group has estimated the tax provision for LAT according to the requirements set forth in the relevant PRC tax laws and regulations. The actual LAT liabilities are subject to the determination by the tax authorities upon completion of the property development projects and the tax authorities might disagree with the basis on which the provision for LAT is calculated.

9 EARNINGS PER SHARE

(a) Basic earnings per share

• The calculation of basic earnings per share is based on the profit attributable to ordinary equity shareholders of the company of RMB20,977,000 (six months ended 30 June 2011: RMB13,906,000) and the weighted average of 509,372,320 ordinary shares (2011: 506,692,320 shares) in issue during the interim period.

(b) Diluted earnings per share

• The calculation of diluted earnings per share is based on the profit attributable to ordinary equity shareholders of the company of RMB20,977,000 (six months ended 30 June 2011: RMB13,906,000) and the weighted average number of ordinary shares (diluted) of 509,579,876 (2011: 509,299,623 shares).

10 FIXED ASSETS

Acquisitions and disposals

During the six months ended 30 June 2012, the group acquired items of fixed assets with a cost of RMB55,667,000 (six months ended 30 June 2011: RMB26,427,000).

Fixed assets with RMB20,000 net book value were disposed of during the six months ended 30 June 2012 (six months ended 30 June 2011: RMB50,000), resulting in a loss on disposal of RMB562,000 (six months ended 30 June 2011: a gain on disposal of RMB3,396,000).

INTERIM REPORT 2012 35

Overseas Chinese Town (Asia) Holdings Limited

11 INTEREST IN AN ASSOCIATE

Xi’an OCT Investment Ltd.	At 30 June 2012 RMB’000 82,538	At 31 December 2011 RMB’000 80,934

12 INvENTORIES

During the six months ended 30 June 2012, there was a write-down of inventories of RMB514,000 and reversal of RMB562,000 in profit or loss (six months ended 30 June 2011: RMB512,000 was written down and RMB466,000 was reversed). The reversal arose due to changes in the estimated net realisable value of certain paper cartons as a result of changes in customer preference.

13 TRADE AND OTHER RECEIvABLES

Included in trade and other receivables are debtors and bills receivables (net of impairment losses for bad and doubtful debts) with the following ageing analysis as of the end of the reporting period:

Current Less than 3 months past due 3 to 12 months past due Trade debtors and bills receivable, net of impairment losses Prepayment, deposits and other receivables	At 30 June 2012 RMB’000 198,090 12,130 279 210,499 91,336 301,835	At 31 December 2011 RMB’000 207,954 16,437 230
		224,621 75,434
		300,055

The group normally allows a credit period ranging from 30 days to 90 days to its customers. Subject to negotiation, extended credit terms are available for certain customers with established trading records.

14 CASH AND CASH EQUIvALENTS

Cash at bank and in hand	At 30 June 2012 RMB’000 969,982	At 31 December 2011 RMB’000 748,393

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INTERIM REPORT 2012

Overseas Chinese Town (Asia) Holdings Limited

15 TRADE AND OTHER PAYABLES

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Included in trade and other payables are trade creditors and bills payable with the following ageing analysis as of the end of the reporting period:

Due within 3 months or on demand Due after 3 months but less than 1 year Total creditors and bills payable Other creditors and accrued charges	At 30 June 2012 RMB’000 551,229 – 551,229 1,549,203 2,100,432	At 31 December 2011 RMB’000 866,615 –
		866,615 1,052,366
		1,918,981

16 RESERvES AND DIvIDENDS

(a) Dividends

Dividends attributable to the previous financial year, approved and paid during the interim period:

Final dividend in respect of the financial year ended 31 December 2011, approved and paid during the interim period, of HK$7.30 cents per share (equivalent RMB5.93 cents per share) (year ended 31 December 2010: HK$3.00 cents per share (equivalent RMB2.61 cents per share))	Six mo ended 3 2012 RMB’000 30,211	nths 0 June 2011 RMB’000 13,190

The directors do not propose the payment of an interim dividend for the six months ended 30 June 2012 (2011: Nil).

INTERIM REPORT 2012 37

Overseas Chinese Town (Asia) Holdings Limited

16 RESERvES AND DIvIDENDS (COntinuEd)

(b) Issue of shares

On 28 April 2011 and 16 April 2012, 3,710,000 and 720,000 share options of the company at par value of HK$0.1 were exercised at exercise price of HK$1.41 per share, respectively. The excess of the exercise price over the par value of the shares issued has been credited to the share premium account of the company.

(c) Transfer to reserve

There was no transfer to reserve for the six months period ended 30 June 2012.

Transfers from retained earnings to general reserve fund were made in accordance with the relevant PRC rules and regulations and the articles of association of the company’s subsidiaries incorporated in the PRC and were approved by the respective boards of directors.

The subsidiaries in the PRC are required to transfer 10% of their net profits, as determined in accordance with the PRC accounting rules and regulations, to general reserve fund until the reserve balance reaches 50% of the registered capital. The transfer to this fund must be made before distribution of dividends to the equity holders.

General reserve fund can be used to make good previous years’ losses, if any, and may be converted into paid up capital provided that the balance of the general reserve fund after such conversion is not less than 25% of the registered capital.

(d) Equity settled share-based transactions

On 7 February 2006, 5,400,000 and 13,900,000 share options were granted to directors and employees of the company respectively under the company’s original share option scheme (“2006 Share Option Scheme”). Each option gives the holder the right to subscribe for one ordinary share of HK$0.1 each of the company with an exercise price of HK$1.41 which will be settled by physical delivery of shares. These share options vested immediately from the date of grant, and then be exercisable within a period of ten years. No option under the 2006 Share Option Scheme was forfeited or expired during the period.

The 2006 Share Option Scheme was terminated and a new share option scheme (“2011 Share Option Scheme”) was adopted on 3 March 2011. The remaining outstanding 720,000 options granted under the 2006 Share Option Scheme were exercised on 16 April 2012. The weighted average closing price of the securities on 13 April 2012 was HK$3.00.

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Overseas Chinese Town (Asia) Holdings Limited

16 RESERvES AND DIvIDENDS (COntinuEd)

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• (d) Equity settled share-based transactions (continued)

• On 3 March 2011, 2,700,000 and 27,400,000 share options were granted to directors and employees of the group respectively under the company’s 2011 Share Option Scheme. Each option gives the holder the right to subscribe for one ordinary share of HK$0.1 each of the company with an exercise price of HK$4.04 which will be settled by physical delivery of shares. The share options shall be exercisable during a period of 5 years from the date of acceptance of the offer of the grant up to 5 years from the date of grant subject to the certain term.

No option under the 2011 Share Option Scheme was exercised, forfeited or expired during the six-month period ended 30 June 2012.

The total expense recognised for the six-month period ended 30 June 2012 arising from the share option schemes was RMB5,479,000 (Six months ended 30 June 2011: RMB2,969,000).

17 CAPITAL COMMITMENTS OUTSTANDING NOT PROvIDED FOR IN THE INTERIM FINANCIAL REPORT

Contracted for Authorised but not contracted for	At 30 June 2012 RMB’000 890,025 3,705 893,730	At 31 December 2011 RMB’000 304,023 1,972,462
		2,276,485

The capital commitments in 2011 and 2012 mainly represented the commitments in connection with the planned development projects of Chengdu OCT and OCT Shanghai Land.

INTERIM REPORT 2012 39

Overseas Chinese Town (Asia) Holdings Limited

18 MATERIAL RELATED PARTY TRANSACTIONS

(a) Transactions with other state-controlled entities:

The company is a state-controlled entity and operates in an economic regime currently dominated by entities directly or indirectly controlled by the PRC government (“state-controlled entities”) through its government authorities, agencies, affiliations and other organisations, collectively referred to as governmentrelated entities.

Other than those disclosed in note 18(b), transactions with other state-controlled entities include but are not limited to the following:

• Purchase of services;

• Utility supplies; and

• Financial services arrangement.

These transactions are conducted in the ordinary course of the group’s business on terms comparable to those with other entities that are not state-controlled. The group has established its buying, pricing strategy and approval process for purchases and sales of products and services. Such buying, pricing strategy and approval processes do not depend on whether the counterparties are statecontrolled entities or not.

Having considered the potential for transactions to be impacted by related party relationships, the group’s pricing strategy, buying and approval processes, and what information would be necessary for an understanding of the potential effect of the relationship on the financial statements, the directors are of the opinion that the following transactions with other state-controlled entities require disclosure:

40 INTERIM REPORT 2012

Overseas Chinese Town (Asia) Holdings Limited

18 MATERIAL RELATED PARTY TRANSACTIONS (COntinuEd)

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• (a) Transactions with other state-controlled entities: (continued)

• (i) Transactions and balances with other state-controlled banks in the PRC:

Interest income Interest expenses Cash at bank Bank loans	Six mo ended 3 2012 RMB’000 2,917 980 At 30 June 2012 RMB’000 956,345 81,520	nths 0 June 2011 RMB’000 5,454 168
		At 31 December 2011 RMB’000 657,983 81,070

• (ii) Transactions and balances with other state-controlled entities in the PRC:

Purchase of services Trade and other payables	Six mo ended 3 2012 RMB’000 410,170 At 30 June 2012 RMB’000 140,541	nths 0 June 2011 RMB’000 217,503
		At 31 December 2011 RMB’000 158,015

For the six months ended 30 June 2012, management estimates that the aggregate amount of the group’s significant transactions with other state-controlled entities are at least 60 percent of its purchase of service for the development of comprehensive development business.

INTERIM REPORT 2012 41

Overseas Chinese Town (Asia) Holdings Limited

18 MATERIAL RELATED PARTY TRANSACTIONS (COntinuEd)

(b)	The group has a related party relationship with the following parties:	The group has a related party relationship with the following parties:
	Name of party	Relationship with the group
	Overseas Chinese Town Enterprises	Ultimate holding company
	Corporation (“OCT Group”)
	Shenzhen Overseas Chinese Town	Intermediate holding company
	Company Limited
	Overseas Chinese Town (HK)	Intermediate holding company
	Company Limited
	Overseas Chinese Town Real	Fellow subsidiary
	Estate Company Limited
	Konka group company Limited,	Fellow subsidiary
	its subsidiaries
	and associates (“Konka Group”)
	Shenzhen Overseas Chinese Town	Fellow subsidiary
	Water and Electricity Co., Ltd.
	Overseas Chinese Town Culture	Fellow subsidiary
	Tourism and Technology co. Ltd
	Shenzhen Overseas Chinese	Fellow subsidiary
	Town Tourism Advisory Co., Ltd.
	Shenzhen Overseas Chinese Town	Fellow subsidiary
	Property Management Co., Ltd.
	Shenzhen Overseas Chinese Town	Fellow subsidiary
	City Inn Co., Ltd.
	Shenzhen OCT Hake Culture Co., Ltd.	Fellow subsidiary
	Shenzhen Splendid China	Fellow subsidiary
	Development Co., Ltd.

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Overseas Chinese Town (Asia) Holdings Limited

18 MATERIAL RELATED PARTY TRANSACTIONS (COntinuEd)

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• (b) The group has a related party relationship with the following parties:

(continued)

Recurring transactions

Sales of goods to: Konka Group OCT Group, its subsidiaries and associates Purchase of goods from: OCT Group, its subsidiaries and associates Konka Group Interest expense: OCT (HK) OCT Group Rental paid to: OCT Group, its subsidiaries and associates Utility expenses paid to: OCT Group, its subsidiaries and associates Purchase of service from: OCT Group, its subsidiaries and associates Sales of service OCT Group, its subsidiaries and associates	Six mo ended 3 2012 RMB’000 28,121 574 28,695 21,700 292 21,992 12,971 31,877 44,848 419 27 6,955 –	nths 0 June 2011 RMB’000 45,236 261
		45,497
		285 271
		556
		8,461 23,282
		31,743
		519
		4,845
		4,524
		240

The directors of the company are of the opinion that the above transactions with related parties were conducted in the ordinary course of business, on normal commercial terms and in accordance with the agreements governing such transactions.

INTERIM REPORT 2012 43

Overseas Chinese Town (Asia) Holdings Limited

18 MATERIAL RELATED PARTY TRANSACTIONS (COntinuEd)

(b) The group has a related party relationship with the following parties: (continued)

Balances with related parties

Amounts due from/(to) related parties are as follows:

Notes Trade receivable from fellow subsidiaries (i) Trade payable to fellow subsidiaries (ii) Other receivables from fellow subsidiaries (iii) Other receivables from intermediate holding company (iii) Other payables to other related companies (iii) Other payables to intermediate holding companies (iii) Other payables to ultimate holding company (iii) Loans from ultimate holding company (iv) Loans from a fellow subsidiary (v) Loans from intermediate holding companies (vi) Interest payables to a fellow subsidiary (vii) Interest payables to intermediate holding companies (vii)	At 30 June 2012 RMB’000 32,109 (2 ) 530 1,146 (184 ) (613 ) (57 ) – (7,672,000 ) (2,011,676 ) (59,682 ) (17,597 )	At 31 December 2011 RMB’000 49,780 (1,159 )
		894 – (9,636 ) – – (700,000 ) – (344,548 ) – (6,971 )

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Overseas Chinese Town (Asia) Holdings Limited

• 18 MATERIAL RELATED PARTY TRANSACTIONS (COntinuEd)

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• (b) The group has a related party relationship with the following parties: (continued)

• Balances with related parties (continued)

Notes:

• (i) The trade receivable balances are unsecured, non-interest bearing and are expected to be recovered within six months. These refer to receivables in respect of sales of paper cartons and paper boxes to related parties.

• (ii) The trade payable balances are unsecured, non-interest bearing and are expected to be settled within three months. These refer to payables in respect of purchases of raw materials from related parties.

• (iii) Other receivables and payables are unsecured, non-interest bearing and repayable on demand.

• (iv) Loans from ultimate holding company of RMB300,000,000 and RMB400,000,000 are bearing an interest at 3.92% and 4.44% respectively at 31 December 2011.

• (v) Loans from a fellow subsidiary of RMB358,000,000 and RMB7,314,000,000 are bearing an interest at 6.56% and 6.65%, respectively.

• (vi) Loans from intermediate holding companies of RMB300,000,000, RMB400,000,000 HK$425,000,000, HK$80,000,000, and RMB900,000,000 are bearing an interest at 5.65%, 4.44%, 4.00%, 3.303%, and 3.62%, respectively.

• (vii) Interest payables are the accrued interests to be paid to a fellow subsidiary and intermediate holding companies as mentioned in (v) and (vi).

INTERIM REPORT 2012 45

Overseas Chinese Town (Asia) Holdings Limited

18 MATERIAL RELATED PARTY TRANSACTIONS (COntinuEd)

(c) Key management personnel compensations

Key management personnel receive compensations in the form of fees, salaries, housing and other allowances, benefits in kind, discretionary bonuses, share options and retirement scheme contribution.

Total compensation of the group received by key management personnel, including amounts paid to the company’s directors and certain of the highest paid employees, is summarised as follows:

Short-term employee benefits Post employment benefits Equity-settled Share option payment expense	Six mo ended 3 2012 RMB’000 1,512 80 73 1,665	nths 0 June 2011 RMB’000 1,553 49 –
		1,602

(d) Contributions to post-employment benefit plans

Pursuant to the relevant labour rules and regulations in the PRC, the group participates in defined contribution retirement benefit schemes (the “Schemes”) organised by the relevant local government authorities in Shenzhen, Zhongshan, Shanghai, Anhui, Huizhou and Chengdu whereby the group is required to make contributions to the Schemes at a rate ranging from 10% to 22% of the eligible employees’ salaries. The local government authorities are responsible for the entire pension obligations payable to the retired employees.

The group also operates a Mandatory Provident Fund Scheme (the “MPF scheme”) under the Hong Kong Mandatory Provident Fund Schemes Ordinance for employees employed under the jurisdiction of the Hong Kong Employment Ordinance. The MPF scheme is a defined contribution retirement plan administered by independent trustees. Under the MPF scheme, the employer and its employees are each required to make contributions to the plan at 5% of the employees’ relevant income, subject to a cap of monthly relevant income of HK$20,000. Contributions to the plan vest immediately.

The group has no other material obligation for the payment of pension benefits associated with those schemes beyond the annual contributions described above.

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INTERIM REPORT 2012