Sinopec Engineering Group Co Ltd. — Interim / Quarterly Report 2014

Feb 28, 2014

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.

UNIVERSE INTERNATIONAL HOLDINGS LIMITED 寰宇國際控股有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 1046)

INTERIM RESULTS ANNOUNCEMENT FOR THE SIX MONTHS ENDED 31ST DECEMBER 2013

The board of directors (the “Directors”) (the “Board”) of Universe International Holdings Limited (the “Company”) announces the unaudited interim results of the Company and its subsidiaries (collectively, the “Group”) for the six months ended 31st December 2013 as follows:

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Note Revenue 4 Cost of revenue 5 Selling expenses 5 Administrative expenses 5 Other income Other (losses)/gains – net Gain on disposal of non-current assets held for sale Increase in fair value of investment properties Unrealised fair value gain on investment securities Fair value loss in issuance of unlisted warrants 6 Other operating income/(expenses) 5 Finance income Share of loss of a jointly controlled entity Profit/(Loss) before income tax Income tax (expense)/credit 7 Profit/(Loss) and total comprehensive income/(loss) for the period attributable to the equity holders of the Company Earnings/(Loss) per share attributable to the equity holders of the Company during the period (expressed in HK cent) – basic 8 – diluted 8

For the six months ended 31st December 2013 2012 HK$’000 HK$’000 152,729 35,126 (146,813) (22,248) (2,002) (1,319) (18,190) (13,563) 4,149 213 (51) 64 126 – 2,180 – 111,435 – (81,206) – 1,549 (566) 274 308 (106) – 24,074 (1,985) (18,130) 267 5,944 (1,718) 0.35 (0.10) 0.34 (0.10)

• for identification purposes only

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UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET

Note ASSETS Non-current assets Leasehold land Property, plant and equipment Investment properties Other intangible assets Film rights and films in progress Interest in a jointly controlled entity Loans and receivables Film deposits Deferred income tax assets Available-for-sale financial assets Current assets Inventories Accounts receivable 9 Deposits paid, prepayments and other receivables Financial assets at fair value through profit or loss Loans receivable 10 Cash and cash equivalents Non-current assets held for sale Total assets EQUITY Capital and reserves attributable to the equity holders of the Company Share capital Share premium Other reserves Retained earnings Total equity	Unaudited As at 31st December 2013 HK$’000 – 1,816 24,896 1,858 50,459 1,039 7,816 37,293 528 309 126,014 3,103 39,600 18,622 117,980 10,000 87,810 277,115 43,569 320,684 446,698 34,321 135,680 96,004 63,340 329,345	Audited As at 30th June 2013 HK$’000 3,113 14,677 49,896 1,858 171,268 1,145 7,710 37,650 741 – 288,058 3,284 24,758 28,273 – – 50,430 106,745 1,654 108,399 396,457 34,235 135,293 14,229 57,396 241,153

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Note LIABILITIES Non-current liabilities Obligations under finance leases Deferred income tax liabilities Current liabilities Accounts payable 11 Other payables and accrued charges Deposits received Amount due to the ultimate holding company Obligations under finance leases Taxation payable Non-current liabilities held for sale Total liabilities Total equity and liabilities Net current assets/(liabilities) Total assets less current liabilities	Unaudited As at 31st December 2013 HK$’000 62 18,470 18,532 5,324 67,444 24,064 1 17 1,083 97,933 888 98,821 117,353 446,698 221,863 347,877	Audited As at 30th June 2013 HK$’000 – 246 246 4,164 15,981 133,825 1 4 1,083 155,058 – 155,058 155,304 396,457 (46,659) 241,399

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NOTES:

1. GENERAL INFORMATION

The Group is principally engaged in the business of production of films and television series, distribution of films in various videogram formats, film exhibition, licensing and sub-licensing of film rights, leasing of investment properties, securities investment and money lending.

The Company is a limited liability company incorporated in Bermuda. The address of its registered office is Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda.

The Company is listed on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).

This unaudited condensed consolidated interim financial information is presented in thousands of units of Hong Kong dollars (“HK$’000”), unless otherwise stated. This unaudited condensed consolidated interim financial information was approved for issue by the board of directors of the Company (the “Board”) on 28th February 2014.

2. BASIS OF PREPARATION

These unaudited condensed consolidated interim financial information for the six months ended 31st December 2013 have been prepared in accordance with the Hong Kong Accounting Standard (“HKAS”) 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”).

The unaudited condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 30th June 2013, which have been prepared in accordance with the Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the HKICPA.

The preparation of the unaudited condensed consolidated interim financial information in conformity with HKAS 34 requires management to make judgments, 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.

In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 30th June 2013.

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3. ACCOUNTING POLICIES

Except as described below, the accounting policies applied are consistent with those of the annual financial statements for the year ended 30th June 2013 as described in those annual financial statements.

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.

The following new standards, amendments to standards and interpretations are mandatory and relevant to the Group for the financial year beginning on 1st July 2013.

		Effective for
		accounting periods
		beginning on or after
HKAS 1 (Amendment)	Financial statement presentation	1st July 2013
HKAS 19 (Amendment)	Employee benefits	1st July 2013
HKFRS 7 (Amendment)	Financial instruments: Disclosures	1st July 2013
HKFRS 10	Consolidated financial statements	1st July 2013
HKFRS 11	Joint arrangements	1st July 2013
HKFRS 12	Disclosures of interests in other entities	1st July 2013
HKFRS 13	Fair value measurement	1st July 2013

The adoption of above new standards, amendments to standards and interpretations have no significant impact on the unaudited condensed consolidated interim financial information.

The following new standards, amendments to standards and interpretations to existing standards have been issued but are not yet effective for the financial year beginning 1 July 2013 and have not been early adopted.

HKAS 32 (Amendment) Financial Instruments: Presentation – Offsetting Financial Assets and Financial Liabilities[1] HKAS 36 (Amendment) Recoverable Amount Disclosures for Non-Financial Assets[1] HKAS 39 (Amendment) Financial Instruments: Recognition and Measurement – Novation of Derivatives[1] HKFRS 9 Financial Instruments[2] HKFRS 7 and HKFRS 9 (Amendments) Mandatory Effective Date and Transition Disclosures[2] HKFRS 10, HKFRS 12 and Consolidation for Investment Entities[1] HKAS 27 (Amendments) HK (IFRIC) – Int 21 Levies[1]

1 Effective for annual periods beginning on or after 1st July 2014.

2 Effective for annual periods beginning on or after 1st July 2015.

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4. SEGMENT INFORMATION

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker (the “CODM”). The CODM, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Chairman of the Group that makes strategic decisions. The CODM has determined the operating segments based on these reports, as below:

• Distribution of films in various videogram formats

• Film exhibition, licensing and sub-licensing of film rights

• Leasing of investment properties

• Securities investments

• Money lending

The CODM assesses the performance of the operating segments based on a measure of segment results. This measurement basis excludes the effects of non-recurring expenditure from the operating segments, such as gain on disposal of non-current assets held for sale, increase in fair value of investment properties, fair value loss in issuance of unlisted warrants and unrealised fair value gain on investment securities. Finance income and income tax expense are not included in the result for each operating segment that is reviewed by the CODM. Other information provided, except as noted below, to the CODM is measured in a manner consistent with that in the consolidated financial statements.

Total assets, excluding investment properties, financial assets at fair value through profit or loss, loans receivable and other unallocated assets (including leasehold land, property, plant and equipment, film rights and films in progress, film deposits, inventories, accounts receivable, deposits paid, prepayments and non-current assets held for sale), are managed on a central basis. These are part of the reconciliation to total balance sheet assets.

The Group’s inter-segment transactions mainly consist of licensing of film rights, which are transferred at cost. The revenue from external parties reported to the CODM is measured in a manner consistent with that in the unaudited condensed consolidated statement of comprehensive income.

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There are no sales between geographical segments.

Unaudited

For the six months ended 31st December 2013

Revenue External sales Inter-segment sales Results Segment results Gain on disposal of non-current assets held for sale Increase in fair value of investment properties Unrealised fair value gain on investment securities Fair value loss in issuance of unlisted warrants Finance income Share of loss of a jointly controlled entity Profit before income tax Income tax expense Profit attributable to the equity holders of the Company Other information Capital expenditures Unallocated capital expenditures Total capital expenditures Depreciation and amortization of leasehold land Unallocated depreciation and amortization of leasehold land Total depreciation and amortization of leasehold land Amortization of film rights	Sales of goods HK$’000 4,232 – 4,232 (959) 147 115 2,125	Film exhibition, licensing and sub-licensing of film rights HK$’000 144,381 1,247 145,628 (4,520) 1,056 46 122,082	Leasing of investment properties HK$’000 830 – 830 390 5 – –	Securities investments HK$’000 – – – (948) – – –	Money lending HK$’000 51 – 51 (708) 38 2 –	Others HK$’000 3,235 12 3,247 (1,884) 6 29 –	Elimination HK$’000 – (1,259) (1,259) – – – –	Group HK$’000 152,729 – 152,729 (8,629) 126 2,180 111,435 (81,206) 274 (106) 24,074 (18,130) 5,944 1,252 2,312 3,564 192 399 591 124,207

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Unaudited

For the six months ended 31st December 2012

Revenue External sales Inter-segment sales Results Segment results Finance income Loss before income tax Income tax credit Loss attributable to the equity holders of the Company Other information Capital expenditures Unallocated capital expenditures Total capital expenditures Depreciation and amortization of leasehold land Unallocated depreciation and amortization of leasehold land Total depreciation and amortization of leasehold land Amortization of film rights	Sale of goods HK$’000 3,474 – 3,474 (2,859) 1,802 122 2,092	Film exhibition, licensing and sub-licensing of film rights HK$’000 27,258 2,030 29,288 (8) 26 36 13,153	Leasing of investment properties HK$’000 280 – 280 211 25,527 – –	Securities investments HK$’000 – – – – – – –	Money lending HK$’000 – – – – – – –	Others HK$’000 4,114 45 4,159 363 2 18 –	Elimination HK$’000 – (2,075) (2,075) – – – –	Group HK$’000 35,126 – 35,126 (2,293) 308 (1,985) 267 (1,718) 27,357 49,938 77,295 176 290 466 15,245

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Unaudited

As at 31st December 2013

Unaudited As at 31st December 2013
Sale of goods Film exhibition, licensing and sub-licensing of film rights Leasing of investment properties Securities investments Money lending Others Elimination HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Assets Segment assets 8,316 93,145 52,095 117,980 10,000 13,473 – Other intangible assets Deferred income tax assets Cash and cash equivalents Other unallocated assets Total assets Audited As at 30th June 2013 Sale of goods Film exhibition, licensing and sub-licensing of film rights Leasing of investment properties Securities investments Money lending Others Elimination HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Assets Segment assets 11,215 94,564 49,910 – – 17,918 – Other intangible assets Deferred income tax assets Cash and cash equivalents Other unallocated assets Total assets	Group HK$’000 295,009 1,858 528 87,810 61,493
	446,698
	Group HK$’000 173,607 1,858 741 50,430 169,821
	396,457

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5. EXPENSES BY NATURE

Expenses included in cost of revenue, selling expenses, administrative expenses and other operating (income)/ expenses are analyzed as follows:

	Unaudited
	For the six months	ended
	31st December
	2013	2012
	HK$’000	HK$’000
Amortization of film rights	124,207	15,245
Amortization of leasehold land	41	41
Depreciation of owned assets	427	419
Depreciation of leased assets	123	6
Write-off of inventories	–	566
Written back of film deposits previously written off	(1,549)	–
Employee benefits expenses	12,539	9,255
Cost of inventories sold	1,664	1,418

6. FAIR VALUE LOSS IN ISSUANCE OF UNLISTED WARRANTS

On 16th September 2013, the Company entered into a conditional placing agreement to issue 342,000,000 unlisted warrants (the “Warrant(s)”) at an issue price of HK$0.0025 per Warrant. The Warrants will entitle the holders thereof to subscribe in cash up to an aggregate amount of HK$85.5 million for new shares of the Company at an initial subscription price of HK$0.25 per Warrant, subject to adjustment, for a period of 2 years commencing from the date of issue of the Warrants. Such agreement constituted a derivative. The condition precedent of the placing agreement had been fulfilled, and accordingly the Company issued the Warrants on 25th October 2013, resulting in a fair value loss of approximately HK$81,206,000 being recognised in the unaudited condensed consolidated statement of comprehensive income for the period ended 31st December 2013. The Warrants are recognised as equity instruments and have not been exercised as at 31st December 2013.

The Group has applied the binomial option pricing model to measure the fair value of the Warrants.

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7. INCOME TAX (EXPENSE)/CREDIT

Hong Kong profits tax has been provided at the rate of 16.5% on the estimated assessable profit for the period (2012: 16.5%).

The amount of income tax (expense)/credit (charged)/credited to the unaudited condensed consolidated statement of comprehensive income represents:

Hong Kong profits tax – current Deferred income tax relating to the origination and reversal of temporary differences Deferred income tax relating to unrealised fair value gain on investment securities	Unaudited For the six months ended 31st December 2013 2012 HK$’000 HK$’000 – 239 257 28 (18,387) – (18,130) 267	Unaudited For the six months ended 31st December 2013 2012 HK$’000 HK$’000 – 239 257 28 (18,387) – (18,130) 267
		267

8. EARNINGS/(LOSS) PER SHARE

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

Earnings/(Loss) for the purpose of basic and diluted earnings/(loss) per share Weighted average number of ordinary shares for the purpose of basic earnings/(loss) per share Effect of dilutive potential shares from the share options Effect of dilutive potential shares from the unlisted warrants Weighted average number of ordinary shares for the purpose of diluted earnings/(loss) per share	Unaudited For the six months ended 31 December 2013 2012 HK$’000 HK$’000 5,944 (1,718) Number of shares (in thousand) 2013 2012 1,713,601 1,711,770 24,558 – 12,121 – 1,750,280 1,711,770	Unaudited For the six months ended 31 December 2013 2012 HK$’000 HK$’000 5,944 (1,718) Number of shares (in thousand) 2013 2012 1,713,601 1,711,770 24,558 – 12,121 – 1,750,280 1,711,770
		1,711,770

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9. ACCOUNTS RECEIVABLE

Accounts receivable Less: Provision for impairment of accounts receivable Accounts receivable – net	Unaudited As at 31st December 2013 HK$’000 39,600 – 39,600	Audited As at 30th June 2013 HK$’000 24,900 (142) 24,758

The carrying amount of accounts receivable approximates to their fair values.

As at 31st December 2013, the ageing analysis of the accounts receivable based on invoice date was as follows:

Current to 90 days 91 days to 180 days Over 180 days	Unaudited As at 31st December 2013 HK$’000 39,130 14 456 39,600	Audited As at 30th June 2013 HK$’000 10,175 4,761 9,822 24,758

Sales of videogram products are with credit terms vary from 7 days to 60 days. Sales from film exhibition, licensing and sub-licensing of film rights are on open account terms.

There is no concentration of credit risk with respect to accounts receivable, as the Group has a large number of customers, and are internationally dispersed.

The Group does not hold any collateral as security (As at 30th June 2013: a bank’s guarantee of HK$60,000 was provided to the Group by a customer).

No provision was recognized by the Group for the impairment of its accounts receivable during the period ended 31st December 2013 (2012: Nil). During the period ended 31st December 2013, no provision was written off from the allowance account (2012: Nil).

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10. LOANS RECEIVABLE

As at 31st December 2013, the Group granted a loan to a borrower with principal terms as follows:

Loan amount: HK$10,000,000 Tenor: Six months Interest rate: 8.5% per annum Guarantor: Holding company of the borrower

The loans receivable were neither impaired nor overdue as at 31st December 2013.

11. ACCOUNTS PAYABLE

As at 31st December 2013, the ageing analysis of the accounts payable based on invoice date was as follows:

Current to 90 days 91 days to 180 days Over 180 days	Unaudited As at 31st December 2013 HK$’000 2,599 246 2,479 5,324	Audited As at 30th June 2013 HK$’000 1,511 167 2,486 4,164

12. PENDING LITIGATIONS

• (a) A court action was commenced in the Court of First Instance of the Hong Kong Special Administrative Region on 17th April 2002 by The Star Overseas Limited (“Star”), an independent third party, against Universe Entertainment Limited (“UEL”), an indirect wholly-owned subsidiary of the Company.

By the above action, Star alleges that a sum of US$935,872 (equivalent to HK$7,299,799) was payable by UEL to Star as its share of the revenue of the movie entitled “Shaolin Soccer” (the “Movie”).

Pursuant to an Order (the “Order”) made by the High Court on 21st February 2003, UEL was ordered and had paid to Star a sum of HK$5,495,700, being part of the licence fee of the Movie received by UEL from Miramax Films (being the licencee of the Movie) and which was also part of the sum claimed by Star. Pursuant to the Order, UEL is also liable to pay Star interest in the sum of HK$350,905 and some of the costs of the application leading to the making of the Order, all of which have been settled. As the Order has not disposed of all the claims of US$935,872 (equivalent to HK$7,299,799) by Star, UEL is entitled to continue to defend the claim by Star for recovering the remaining balance in the sum of approximately HK$1,804,099 (HK$7,299,799 less HK$5,495,700).

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On 30th April 2002, UEL issued a Writ of Summons against Star for the latter’s wrongful exploitation of certain rights in the Movie co-owned by both parties. UEL claimed to recover all losses and damages suffered by UEL as a result of the wrongful exploitation.

On 9th September 2002, Universe Laser & Video Co. Limited (“ULV”), an indirect wholly-owned subsidiary of the Company issued a Writ of Summons against Star for the latter’s infringement of the licensed rights in the Movie held by ULV. ULV claimed to recover all loss and damages suffered by ULV as a result of the said infringement.

In the opinion of legal counsel, it is premature to predict the outcome of the claim against UEL. The Board is of the opinion that the outcome of the said claim against UEL will have no material financial impact to the Group for the six months ended 31st December 2013.

• (b) On 1st September 2008, Koninklijke Philips Electronics N.V. (“KPE”) issued a Writ of Summons against among other persons, the Company, ULV and Mr. Lam Shiu Ming, Daneil (one of the Directors), being three of the defendants named therein, in respect of damages arising from alleged infringement of the patents regarding Video Compact Disc owned by KPE.

In the opinion of legal counsel, it is premature to predict the outcome of the said claim made against the Company, ULV and Mr. Lam Shiu Ming, Daneil. The Board is of the opinion that the outflow of economic benefits cannot be reliably estimated and accordingly no provision for any liability that may result has been made in the unaudited condensed consolidated interim financial information.

• (c) On 8th January 2010, KPE issued a Writ of Summons against among other persons, the Company, ULV and Mr. Lam Shiu Ming, Daneil (one of the Directors), being three of the defendants named therein, in respect of damages arising from alleged infringement of the patents regarding Digital Video Disc owned by KPE.

In June 2012, the action was discontinued against the Company and Mr. Lam Shiu Ming, Daneil. The claim made against ULV has been agreed with KPE and appropriate provision was recognized accordingly in the consolidated financial statements for the year ended 30th June 2012.

No additional provision has been made in the unaudited condensed consolidated interim financial information for the six months ended 31st December 2013. Based on the consultation with legal counsel, no further material outflow of economic benefits will be incurred for ULV.

Save as disclosed above, as at 31st December 2013, no litigation or claim of material importance is known to the Directors to be pending against either the Company or any of its subsidiaries.

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13. EVENTS AFTER THE BALANCE SHEET DATE

• (a) A conditional agreement dated 10 December 2013 entered into between Universe Films (Holdings) Limited (“UFH”), an indirect wholly-owned subsidiary of the Company, as vendor and Mr. Lam Shiu Ming, Daneil as purchaser in relation to the sale and purchase of the entire issued share capital in Joy Talent Investment Limited (“JT”), an indirect wholly-owned subsidiary of the Company; and a conditional agreement dated 10 December 2013 entered into between UFH and ULV as vendors and Mr. Lam Shiu Ming, Daneil as purchaser in relation to the sale and purchase of the entire issued share capital in Universe Property Investment Limited (“UPI”), an indirect wholly-owned subsidiary of the Company (the “UPI Agreement”) were completed on 25th February 2014. The assets and liabilities related to JT and UPI have been classified as held for sale at the carrying value of approximately HK$43,569,000 and approximately HK$888,000 respectively as at 31st December 2013.

Prior to the UPI Agreement, the Group had been using the Unit 1 on 18/F, Wyler Centre Phase II, 192200 Tai Lin Pai Road, Kwai Chung, New Territories, Hong Kong (“Wyler Centre Properties”) and five carpark spaces on the 2nd floor of Wyler Centre Phase II, 192-200 Tai Lin Pai Road, Kwai Chung, New Territories, Hong Kong (“Wyler Centre Carpark”), which are owned by UPI, for warehouse, ancillary office and carparking uses. Upon the completion of UPI Agreement, the Group will continue to use the Wyler Centre Properties and Wyler Centre Carpark for the same purposes and has through Universe Digital Entertainment Limited, a wholly-owned subsidiary of the Company, entered into tenancy agreement with UPI on 25th February 2014 for 3 years commenced on 25th February 2014 with a monthly rental of HK$244,000.

• (b) Pursuant to the Company’s announcement dated 7th January 2014, Weluck Development Limited, a company incorporated in British Virgin Islands with limited liability and an indirect wholly-owned subsidiary of the Company contracted to purchase and the Rich Place Investment Limited, a company incorporated in the British Virgin Islands with limited liability contracted to sell the 171,500,000 shares (the “Sale Share(s)”) of China Railsmedia Corporation Limited (the “China Railsmedia”), a company incorporated in the Cayman Islands with limited liability whose issued shares are listed on the Main Board of the Stock Exchange (Stock code: 745), representing approximately 4.17% of the issued share capital of the China Railsmedia at the cash consideration of HK$60,025,000 on 7th January 2014. The purchase price is HK$0.35 per Sale Share. This transaction was completed on 10th January 2014.

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INTERIM DIVIDEND

The Board does not recommend the payment of an interim dividend in respect of the six months ended 31st December 2013 (2012: Nil).

MANAGEMENT DISCUSSION AND ANALYSIS

Overall Group results

The Group’s unaudited consolidated revenue for the six months ended 31st December 2013 (the “Period”) increased by approximately 334.7% over the same period last year to approximately HK$152.7 million which was mainly due to the income from the two new large scale films “Out of Inferno 3D” （「逃出生天 3D 」）and “The White Storm” （「掃毒」）released during the Period under review. The Group recorded a net profit of approximately HK$5.9 million for the six months period ended 31st December 2013 against a net loss of approximately HK$1.7 million for the six months period ended 31st December 2012, which was mainly due to the fair value gains of approximately HK$111.4 million arising from the investment securities, notwithstanding the Group also (i) recorded a decrease in gross profit contribution of approximately HK$7.1 million from licensing of newly released films due to the increase in advertising expenses and production costs as higher gross profit was recorded for the same period last year from licensing of more non-newly released films and television series which their cost had been fully amortized in the previous years and (ii) incurred the fair value loss of approximately HK$81.2 million in issuance of the unlisted warrants by the Group during the six months period ended 31st December 2013.

Video distribution

During the Period under review, the local video distribution business accounted for approximately 2.8% (2012: approximately 9.9%) of the Group’s consolidated revenue. Turnover from this business segment posted an increment of approximately 21.8% to approximately HK$4.2 million compared to the same period last year as more number of new titles being released during the Period under review.

As a result of the above, the performance of this business segment was improved. During the Period under review, the Group recorded a segmental gross profit of approximately HK$443,000 (2012: gross loss of approximately HK$36,000).

Film exhibition, licensing and sub-licensing of film rights

Revenue from this business segment during the Period was HK$144.4 million, representing an increase of approximately 429.7% as compared to approximately HK$27.3 million in the same period last year. It accounted for approximately 94.6% (2012: approximately 77.6%) of the Group’s total turnover during the Period.

The significant increase in revenue from this business segment was mainly due to the income from the two new large scale films “Out of Inferno 3D” （「逃出生天3D 」）and “The White Storm” （「掃毒」）released during the Period under review. There was no such new large scale film released in the same period last year.

However, the gross profit contribution from this segment decreased by approximately 83.5% to approximately HK$1.4 million during the Period as compared to approximately HK$8.5 million in the same period last year. The decrease in gross profit contribution was due to the increase in advertising expenses and production costs of the newly released films during the Period. Higher gross profit was recorded for the same period last year from licensing of more non-newly released films and television series which their cost had been fully amortized in the previous years.

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Leasing of investment properties

During the Period under review, this business segment recorded a growth of approximately 2.96 times in revenue to approximately HK$830,000 from approximately HK$280,000. The increase in rental income during the Period is due to the Group has transferred one property from land and buildings to investment property during the year ended 30th June 2013 and successfully leased it out to earn rental income during the Period.

Securities Investment

The Group has started investing in the stock market that mainly consists of Hong Kong listed companies since October 2013. With the management team possessing over 10 years of investment experience in Hong Kong listed companies, the Group will also consider to seek professional advice from third parties as and when required. There are no definitive criteria or factors behind the selection of securities for investment by the Group and the management of the Group will consider individual securities on a case by case basis by analyzing their risks and expected returns. As at 31st December 2013, the Group had invested approximately HK$6.6 million (cost of investment) in Hong Kong listed securities and reaped the fair value gains arising from investment securities of approximately HK$111.4 million during the six months period ended 31st December 2013.

Money lending business

Universe Asia Finance Limited (“UAF”), a wholly-owned subsidiary of the Company, obtained the money lending licence in Hong Kong on 26th November 2013 and started its money lending business in December 2013. With customers obtained mainly by personal referrals, UAF targets those high-net-worth individuals and companies each with a total assets value of at least HK$1 million. Due to fierce competition in the money lending business, UAF will grant secured or unsecured loans to borrowers in accordance with the situation of each borrower on a case by case basis and, if necessary, will take legal action against borrowers in the event of default. UAF will consider the income/profit and assets of the borrower as a whole in granting any unsecured loan to control the credit risk. As at 31st December 2013, UAF granted a sum of HK$10 million as unsecured loan to a subsidiary of a listed company (the “Listed Company”) whose shares are listed on the Growth Enterprise Market of the Stock Exchange (“GEM”). The Listed Company provided a corporate guarantee to UAF in respect of this loan and there was no default event happened as at the date of this announcement. Although the management of the Group does not have previous experience in managing a money lending business, the Group will engage professional lawyers and consultants to provide advice to the Group as and when required.

In terms of geographical contribution, overseas markets accounted for approximately 78.2% (2012: approximately 38%) of the Group’s total revenue during the Period under review. Revenue from the Mainland China increased by approximately HK$97.7 million to approximately HK$108 million, accounting for approximately 70.7% (2012: approximately 29.2%) of the Group’s total revenue. The increase in revenue from overseas markets was mainly due to the increase in the licensing income from the two new large scale films “Out of Inferno 3D”（「逃出生天3D 」）and “The White Storm”（「掃毒」）in Mainland China during the Period.

Other income

Other income for the Period increased by approximately 19.5 times to approximately HK$4.1 million as compared to approximately HK$0.2 million in the same period last year. The increase was mainly due to the receipt of sponsorship for the Company’s films of approximately HK$4.1 million (2012: Nil) during the Period.

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Selling expenses

Selling expenses for the Period increased by approximately 51.8% to approximately HK$2.0 million as compared to approximately HK$1.3 million in the same period last year. The increase in selling expenses was mainly due to the increase in the number of the newly released films during the Period.

Administrative expenses

Administrative expenses for the Period increased by approximately 34.1% to approximately HK$18.2 million as compared to approximately HK$13.6 million in the same period last year. The increase in administrative expenses was mainly due to the increase in the employee benefits expenses of approximately HK$3.3 million during the Period.

Income tax (expenses)/credit

The Group recorded income tax expenses of approximately HK$18.1 million during the Period, which was mainly attributable to the deferred income tax relating to the unrealized fair value gain on investment securities during the Period. For the six months period ended 31st December 2012, the Group recorded an income tax credit of approximately HK$0.3 million as the Group recorded a loss before tax of approximately HK$2.0 million.

NEW/POTENTIAL INVESTMENTS

Pursuant to the Company’s announcement dated 5th December 2013, the Group and Computech Holdings Limited (“Computech”), a company incorporated in the Cayman Islands with limited liability and the issued shares of which are listed on GEM (Stock Code: 8081) entered into a joint venture agreement (“JV Agreement”), in relation to the establishment of the joint venture Company (“JV Company”) on 5th December 2013. The JV Company shall be incorporated in Hong Kong or overseas as agreed by both parties and the shares of which will be owned as to 50% by Computech and 50% by the Group. It is proposed that upon the incorporation of the JV Company, the JV Company will be principally engaged in the development and sale of computer and mobile phone games.

The JV Company shall be established within three months after the following conditions are being satisfied:

• (1) The Company and Computech having completed and been satisfied with the results of the due diligence review conducted against each other in relation to the JV Agreement, financial, organisational structure, laws, operation and other matters in accordance with the JV Agreement; and

• (2) Computech having completed the acquisition of certain equity interests in a company to be incorporated in the British Virgin Island, details of which are disclosed in the announcement of Computech dated 22nd November 2013.

If the conditions precedent shall not have been fulfilled in full on or before 31st August 2014, the JV Agreement shall be terminated. As at the date of this announcement, the above conditions have not been fulfilled yet.

The share capital of the JV Company shall be contributed by Computech and the Group in proportion to their respective shareholdings in the JV Company within three months after the fulfilment of the above conditions. All capital contributions shall be contributed in cash.

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Investment in the JV Company may be increased based on the development of the JV Company and the maximum investment in the JV Company shall be HK$40,000,000, which shall be contributed as to 50% by Computech and 50% by the Group.

Beside the aforesaid investment in the JV Company, the Group has also entered into two cooperation framework agreements in the second half of 2013 as follows:

• (i) pursuant to the Company’s announcement dated 30 October 2013, the Group entered into a cooperative framework agreement (“Framework Agreement”) with 貴州多彩貴州城建設經營有限公司 (“Guizhou Colorful”) (in English, for identification purpose only, Guizhou Colorful Guizhou Town Construction Management Co., Ltd.), a limited liability company established in the People’s Republic of China (the “PRC”) on 30th October 2013, in relation to the proposed cooperation in a development project (“Colorful Guizhou Town Project”) of Colorful Guizhou Town（多彩貴州城）, a commercial, leisure and tourism site to be constructed in Guiyang City, PRC. During the construction and operation phase of Colorful Guizhou Town, the Group will provide design, planning and management and personnel training services to Guizhou Colorful, and will consider investment in and construction of high-end theatres in Colorful Guizhou Town.

The Group does not have a timetable for entering into the formal cooperative agreement with Guizhou Colorful. However, it is provided in the Framework Agreement that if the parties to the Framework Agreement shall not have entered into a formal cooperative agreement regarding their proposed cooperation by 30th June 2014, the Framework Agreement shall lapse. There is no exclusivity period within which the parties to the Framework Agreement may engage in negotiations before the entering into such formal cooperative agreement.

• (ii) pursuant to the Company’s announcement dated 18th December 2013, Fragrant River Entertainment Investment Limited (“Fragrant River Entertainment”), a wholly-owned subsidiary of the Company entered into the cooperation framework agreement (the “FingerAd Framework Agreement”) with FingerAd Media Company Limited (“FingerAd”), a wholly-owned subsidiary of China Railsmedia Corporation Limited (“China Railsmedia”), a company incorporated in the Cayman Islands with limited liability whose issued shares are listed on the Main Board of the Stock Exchange (Stock Code: 745) on 18th December 2013.

The Group does not have a timetable for entering into the formal cooperative agreement with FingerAd. Fragrant River Entertainment and FingerAd will enter into a formal cooperative agreement to set out definitive terms of cooperation such as the rights and obligations, investment capital, cost allocation and profit distribution within 2 months after (aa) Fragrant River Entertainment and FingerAd are being satisfied with the preliminary due diligence results on the subject matters of the FingerAd Framework Agreement; and (bb) the execution of the formal agreement(s) between (A) FingerAd or China Railsmedia or its subsidiaries; and (B) i-Marker Culture & Media Investments Limited (“i-Marker”) pursuant to a memorandum of understanding entered into between i-Marker and FingerAd. If the above conditions are not satisfied prior to 30th May 2014, the FingerAd Framework Agreement will be terminated. There is no exclusivity period within which the parties to the FingerAd Framework Agreement may engage in negotiations before the entering into such formal cooperative agreement.

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Pursuant to the FingerAd Framework Agreement, Fragrant River Entertainment and FingerAd intend to cooperate in the following areas:

1. Fragrant River Entertainment shall recommend FingerAd to world class Hollywood and international film and television production companies as strategic partners;

2. Fragrant River Entertainment and FingerAd shall jointly formulate import film plans and strategies;

3. Fragrant River Entertainment shall procure distribution and sales channels for the foreign films and television contents imported by FingerAd; and

4. Fragrant River Entertainment and FingerAd shall jointly invest in the set up of cinema circuits in the PRC.

The above cooperation framework agreements only set out the preliminary cooperation intentions and are subject to the entering into formal cooperative agreements by the respective parties setting out definitive terms of cooperation, including but not limited to, the investment amounts, profit sharing arrangements, costs allocations and obligations of each of the respective parties.

Further announcement(s) in relation to the above JV agreement and the cooperation framework agreements will be made by the Company as and when appropriate in compliance with the Rules Governing the Listing of Securities on the Stock Exchange (“the Listing Rules”).

OUTLOOK

Film market in Mainland China shows a good progress in its development. According to the State Administration of Press, Publication, Radio, Film and Television of the PRC（中華人民共和國國家 新聞出版廣電總局）, the total accumulated box office in Mainland China hit record high and reached approximately RMB21.77 billion for the year ended 31st December 2013, representing an increase of approximately 27.5% as compared to the same period in 2012.

Not only film in Mainland China market continues to grow, but online game market in Mainland China also sees huge growth potential. Mainland China has the largest number of mobile phone users, coupled with the increasing use of smartphones, leading to the rapid growth in demand for mobile games. According to the latest report published on 8 January 2014 by iResearch Consulting Group (the “iResearch”), an internet research institution, the online game market in Mainland China is expected to reach approximately RMB89.16 billion in 2013, of which mobile game was the major growth driver and accounted for an estimate of approximately 16.7% of the total online game market. iResearch also forecasted that the scale of online game market in Mainland China will record approximately RMB224.57 billion by 2017 and approximately 31.4% will be coming from mobile game. Furthermore, in view of the U.S.’s six major film production enterprises setting up video game department to directly get involved in the video game development, the Group believes that the cooperation between film industry and video game industry has become the major trend. As a result, in order to tap into online game market in Mainland China, the Group and Computech entered into the JV Agreement, in relation to the establishment of the JV Company to develop and sell of computer and mobile phone games as disclosed in page 18 under the paragraph “New/Potential Investments” and the Company announcement dated 5th December 2013.

In order to cope with the rapid expansion in the entertainment industry in Mainland China, the Group will continue to seek other new investment opportunities in entertainment, games, gaming and other culture-related businesses in the entertainment industry and other businesses which are related to the Group’s current core business to further diversify its business stream in the entertainment industry in Hong Kong and Mainland China.

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FINANCIAL RESOURCES/LIQUIDITY

As at 31st December 2013, the Group had cash balances of approximately HK$87.8 million (As at 30th June 2013: approximately HK$50.4 million). The increase in cash balances was mainly due to decreased spending on purchase of investment properties and purchase of film rights and investment in films in progress.

As at 31st December 2013, the Group had total assets of approximately HK$446.7 million, representing an increase of approximately HK$50.2 million over that of 30th June 2013.

The Group’s gearing ratio as at 31st December 2013 fell to almost zero (As at 30th June 2013: same), which was calculated on the basis of the Group’s long term borrowings including obligations under finance leases of approximately HK$79,000 (fully repayable in five years) and on the total equity of the Company of approximately HK$329.3 million.

There was no financial cost incurred for the Period (2012: Nil).

In light of the fact that most of the Group’s transactions were denominated in Hong Kong dollars, Renminbi and United States dollars, the management considered that the exposure to fluctuation of currency exchange rates is limited and no financial instruments for hedging purposes was used by the Group.

As at 31st December 2013, current ratio (defined as total current assets divided by total current liabilities) was approximately 3.25 (As at 30th June 2013: approximately 0.7).

CAPITAL STRUCTURE

As at 31st December 2013, the Group had shareholders’ capital of approximately HK$34,321,000 (30th June 2013: approximately HK$34,235,000). The shareholders’ capital of the Company is constituted of 1,716,049,795 ordinary shares of HK$0.02 each.

The Company issued and allotted 4,279,425 new shares of HK$0.02 each in the share capital of the Company (the “Share(s)”) during the Period pursuant to the exercise of the options granted under the share option scheme of the Company adopted on 26th November 2003.

As announced on 16th September 2013, the Company and Astrum Capital Management Limited (the “Placing Agent”) entered into a conditional placing agreement (the “Placing Agreement”), pursuant to which the Company appointed the Placing Agent as its agent to procure placees to subscribe for the warrants (the “Warrant(s)”), on a best efforts basis, at an issue price of HK$0.0025 per Warrant. The Warrants will entitle the holders thereof to subscribe in cash up to an aggregate amount of HK$85.5 million for the new shares of the Company at an initial subscription price of HK$0.25 per Warrant (the “Initial Subscription Price”), subject to adjustments, for a period of 2 years commencing from the date of issue of the Warrants. Based on the Initial Subscription Price of HK$0.25 per new Share to be allotted and issued upon exercise of the subscription right attaching to the Warrants, a maximum of 342,000,000 new Shares (the “Warrant Shares”) will be allotted and issued by the Company. The condition precedent of the Placing Agreement had been fulfilled and completion of the Placing Agreement took place on 25th October 2013 whereby Warrants entitling the holders thereof to subscribe in cash up to an aggregate amount of HK$85,500,000 for the Warrant Shares at an initial subscription price of HK$0.250 per Warrant Share (subject to adjustments) had been placed to not less than six placees at an issue price of HK$0.0025 per unit of Warrant. As at the date of this announcement, none of the Warrants were exercised to subscribe the new Shares.

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The Company incurred the fair value loss of approximately HK$81.2 million in issuance of the Warrants during the Period.

Apart from the ordinary Shares in issue and the Warrants, the capital instruments in issue of the Company include share options under the paragraph of “Share Option Scheme” below to subscribe for the Company’s shares, there was no movement in the issued share capital of the Company during the Period.

Pursuant to the Company’s announcement dated 17th November 2013, (i) the Company and (ii) the 貴州 豐瑞投資有限公司 (in English, for identification purpose only, Guizhou Fengrui Investment Co., Ltd., “Fengrui Investment”), a limited liability company established in the PRC and 貴州光大能源發展有限公 司 (in English, for identification purpose only, Guizhou Guangda Energy Development Co., Ltd., “Guangda Energy”), a limited liability company established in the PRC, (collectively the “Subscribers”) entered into a conditional subscription agreement dated 14th November 2013 (the “Subscription Agreement”) pursuant to which the Subscribers have agreed to subscribe for the convertible note (the “Convertible Note”) in the aggregate principal amount of HK$95,000,000 with the conversion rights attached to the Convertible Note at the initial conversion price of HK$0.50 per Share. The Convertible Note will bear interest on the principle amount outstanding from and including the issue date of the Convertible Note at the rate of 5% per annum. The maturity date of the Convertible Note is the second anniversary of its issue date.

The Subscribers, in aggregate, own 52% equity interest in Guizhou Colorful, in which, Guangda Energy and Fengrui Investment, own 15% and 37% equity interest respectively in Guizhou Colorful.

Assuming the conversion rights attached to the Convertible Note are exercised in full at the initial conversion price of HK$0.50 per share, a maximum of 190,000,000 new Shares will be allotted and issued.

The Subscription Agreement was not completed yet as at the date of this announcement.

THE PLEDGE OF GROUP ASSETS

As at 31st December 2013, the Group did not have any pledged assets (As at 30th June 2013: Nil).

EMPLOYEES AND REMUNERATION POLICIES

As at 31st December 2013, the Group had 46 staff (As at 30th June 2013: 46). Remuneration is reviewed annually and certain staffs are entitled to commission. In addition to basic salaries, staff benefits including discretionary bonus, medical insurance scheme and mandatory provident fund.

SHARE OPTION SCHEME

Pursuant to a resolution passed in the annual general meeting held on 26th November 2003, the Company adopted the share option scheme (the “2003 Share Option Scheme”) in compliance with the Listing Rules.

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The Company may grant share options to the participants, including Directors and employees, to subscribe for Shares as incentives and/or rewards for their contributions and support to the Group and any entity in which the Group holds any equity interests. On 27th June 2012, the Company granted 34,235,403 share options, which represented approximately 2% of the issued share capital of the Company as at 31st December 2013, to certain Directors and employees at the subscription price of HK$0.067 per share option which were vested immediately and exercisable for a three-year period commencing from 27th June 2012 to 26th June 2015 (both days inclusive). Each share option gives the holder the right to subscribe for one ordinary Share. Particulars of the share options under the 2003 Share Option Scheme outstanding during the Period and as at 31st December 2013 were as follows:

Participants Date of grant Period during which share options are exercisable Price per share on exercise of options HK$ Executive Directors Mr. Lam Shiu Ming, Daneil 27/6/2012 27/6/2012– 26/6/2015 0.067 Mr. Yeung Kim Piu 27/6/2012 27/6/2012– 26/6/2015 0.067 Chief Operation Officer Mr. Lam Siu Keung, Alvin 27/6/2012 27/6/2012– 26/6/2015 0.067 Eligible employee working under employment contracts 27/6/2012 27/6/2012– 26/6/2015 0.067	No of share options outstanding at the beginning of the period 17,117,703 4,279,425 8,558,850 4,279,425 34,235,403	No of share options granted during the period – – – – –	No of share options exercised during the period No of share options outstanding at the end of the period Market value per share on grant of share option HK$ – 17,117,703 0.064 – 4,279,425 0.064 – 8,558,850 0.064 (4,279,425) – 0.064 (4,279,425) 29,955,978

None of the share options has been granted, exercised or cancelled under the 2003 Share Option Scheme for the period from 1st July 2012 to 31st December 2012.

The 2003 Share Option Scheme expired on 26th November 2013. According to the provisions of the 2003 Share Option Scheme, Options granted during the term of the 2003 Share Option Scheme and remain unexercised immediately prior to the end thereof shall continue to be exercisable in accordance with their terms of grant notwithstanding the expiry of the 2003 Share Option Scheme.

In view of the expiration of the 2003 Share Option Scheme and in order to enable the Company to grant share options to selected participants as incentives or rewards for their contributions to the Group, the Company adopted a new share option scheme (the “2013 Share Option Scheme”) pursuant to a resolution passed in the annual general meeting of the Company held on 2nd December 2013 in compliance with the Listing Rules.

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The 2013 Share Option Scheme, which will be valid for 10 years from the date of its adoption. The purpose of the 2013 Share Option Scheme is to enable the Company to grant share options to the participants, as incentives and/or rewards for their contribution to the Group and/or any invested entity (if applicable). Under the 2013 Share Option Scheme, the total number of share options available for issue as at 31st December 2013 was 171,604,979, the full exercise of which in subscribing for Shares would represent 10% of the total number of the issued capital of the Company as at 31st December 2013. None of the share options has been granted, exercised or cancelled under the 2013 Share Option Scheme for the period from 2nd December 2013 (date of adoption of the 2013 Share Option Scheme) to 31st December 2013.

Please refer to the Company’s circular dated 31st October 2013 for the principal terms and details of the 2013 Share Option Scheme.

CORPORATE GOVERNANCE CODE

The Company has, throughout the six months ended 31st December 2013, complied with the code provisions contained in Corporate Governance Code (the “Code”) set out in Appendix 14 to the Listing Rules except for the code provision A.2.1 of the Code for the separation of the roles of Chairman and Chief Executive Officer (“CEO”) as described in the following.

Code provision A.2.1 of the Code sets out that the roles of the Chairman and CEO should be separate and should not be performed by the same individual. The Company does not at present have any officer holding the position of CEO. Mr. Lam Shiu Ming, Daneil is the founder and Chairman of the Company and has also carried out the responsibilities of CEO. Mr. Lam possesses the essential leadership skills to manage the Board and extensive knowledge in the business of the Group. The Board considers the present structure to be more suitable to the Company because it can promote the efficient formulation and implementation of the Group’s strategies.

AUDIT COMMITTEE

The Audit Committee was established on 11th October 1999. Its current members include three independent non-executive Directors, namely Mr. Lam Wing Tai (Chairman), Mr. Lam Chi Keung and Mr. Choi Wing Koon.

The Audit Committee has reviewed the accounting principles and practices adopted by the Group and discussed internal control and financial reporting matters including a review of the unaudited condensed consolidated interim financial information for the six months ended 31st December 2013 with the management.

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

The Company has not redeemed any of its shares during the six months ended 31st December 2013. Neither the Company nor any of its subsidiaries has purchased or sold any of the Company’s listed securities during the Period.

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MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS

During the six months ended 31st December 2013, the Company has adopted the Model Code as the code for dealing in securities of the Company by Directors. Having made specific enquiries, all Directors confirmed that they have complied with the Model Code throughout the Period.

PUBLICATION ON THE COMPANY AND STOCK EXCHANGE’S WEBSITES

This interim results announcement is published on the websites of the Company (www.uih.com.hk) and the Stock Exchange (www.hkexnews.hk). The interim report will also be available on the same websites on or before 31st March 2014.

By Order of the Board Lam Shiu Ming, Daneil Chairman

Hong Kong, 28th February 2014

As at the date of this announcement, the executive Directors are Mr. Lam Shiu Ming, Daneil, Mr. Hung Cho Sing, Mr. Yeung Kim Piu and Mr. Lam Kit Sun, and the independent non-executive Directors are Mr. Lam Wing Tai, Mr. Choi Wing Koon and Mr. Lam Chi Keung.

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