Synagistics Limited — Annual Report 2015

Jun 26, 2015

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

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OP FINANCIAL INVESTMENTS LIMITED 東英金融投資有限公司[*]

(Incorporated in the Cayman Islands with limited liability) (Stock Code: 1140)

ANNUAL RESULTS ANNOUNCEMENT FOR THE YEAR ENDED 31 MARCH 2015

RESULTS

The board of directors (the “Board” or the “Directors”) of OP Financial Investments Limited (the “Company” or “OP Financial” or “OPFI”) and its subsidiaries (the “Group”) is pleased to present to the shareholders the audited consolidated results of the Group for the financial year ended 31 March 2015 (the “Year”) together with comparative figures for the last financial year as follows:

C O N S O L I D A T E D S T A T E M E N T O F P R O F I T O R L O S S A N D O T H E R COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2015

		2015	2014
	Note	HK$’000	HK$’000
Revenue	3	31,805	30,488
Other income		637	1,820
Net change in unrealized gain/(loss) on financial assets
at fair value through profit or loss
– Classified as held for trading		13,236	25,897
– Designated as such upon initial recognition		(1,652)	(9,805)
		11,584	16,092
Net realized gain on redemption of investment funds		4,242	–
Realized gain on disposal of subsidiaries		–	25,248
Realized gain on partial disposal of subsidiaries		–	21
Realized loss on deemed disposal of an associate		–	(1,426)
Impairment loss on available-for-sale financial assets		(90,309)	(3,831)
Equity-settled share-based payments		(1,142)	1,958
Administrative expenses		(44,574)	(43,053)

• For identification purposes only

– 1 –

C O N S O L I D A T E D S T A T E M E N T O F P R O F I T O R L O S S A N D O T H E R COMPREHENSIVE INCOME (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2015

Note (Loss)/profit from operations Share of results of investments accounted for using equity method Profit before tax Taxation 5 (Loss)/profit for the Year 6 Other comprehensive income Items that may be reclassified to profits or loss Exchange differences Available-for-sale financial assets: Fair value changes Impairment losses Share of other comprehensive income of investments accounted for using equity method Fair value changes of available-for-sale financial assets Exchange differences Other comprehensive income for the Year, net of tax Total comprehensive income for the Year Proposed final dividend (Loss)/earnings per share Basic 7(a) Diluted 7(b)	2015 HK$’000 (87,757) 89,520 1,763 (4,714) (2,951) (55) (99,172) 90,309 (2,071) 91 (10,898) (13,849) – HK$(0.003) HK$(0.003)	2014 HK$’000 27,317 34,651 61,968 (14,748) 47,220 (1,088) 133 3,831 3,642 (78) 6,440 53,660 47,070 HK$0.050 HK$0.050

– 2 –

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AT 31 MARCH 2015

Note Non-current assets Property, plant and equipment Investments accounted for using equity method Available-for-sale financial assets Financial assets at fair value through profit or loss Current assets Financial assets at fair value through profit or loss Accounts and loans receivable 8 Interest receivables Prepayments and other receivables Bank and cash balances TOTAL ASSETS Capital and reserves Share capital Reserves Final dividend TOTAL EQUITY Current liabilities Other payables Tax payables TOTAL LIABILITIES TOTAL EQUITY AND LIABILITIES NET ASSETS Net asset value per share 9	2015 HK$’000 26 400,749 213,204 11,823 625,802 143,862 8,399 770 369 513,375 666,775 1,292,577 94,140 1,172,716 – 1,266,856 6,329 19,392 25,721 1,292,577 1,266,856 HK$1.35	2014 HK$’000 21 142,710 312,376 16,545
		471,652
		367,548 10,264 731 2,895 500,132
		881,570
		1,353,222
		94,140 1,185,409 47,070
		1,326,619
		11,925 14,678
		26,603
		1,353,222
		1,326,619
		HK$1.41

– 3 –

NOTES

1 BASIS OF PREPARATION

The consolidated financial statements of the Group have been prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”), accounting principles generally accepted in Hong Kong and the applicable disclosures required by the Rules Governing the Listing of Securities (the “Listing Rules”) on the Stock Exchange of Hong Kong Limited (“Stock Exchange”) and by the Hong Kong Companies Ordinance.

The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of certain investments and derivatives which are carried at their fair values.

2. ADOPTION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS

(a) New standards, amendments and interpretations adopted by the Group

In the Year, the Company and its subsidiaries have adopted all the relevant new and revised HKFRSs issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA“) that are currently in issue and effective for its accounting year beginning on 1 April 2014. HKFRSs comprise all applicable individual Hong Kong Financial Reporting Standards (“HKFRS“), Hong Kong Accounting Standards (“HKAS“), and interpretations. The following new and revised HKFRSs are relevant to the Group’s operations. The adoption of these new and revised HKFRSs had no material impact on the Group’s results and financial position for the current or prior years, and did not result in any significant changes in the accounting policies of the Group.

• Amendments to HKFRS 10 “Consolidated Financial Statements” is effective for annual periods beginning on or after 1 January 2014. The amendments to HKFRS 10 define an investment entity and introduce an exception from the consolidation requirements for investment entities. The adoption of these amendments did not have a material impact on the Group’s financial position or performance.

• Amendments to HKAS 32 “Offsetting Financial Assets and Financial Liabilities” is effective for annual periods beginning on or after 1 January 2014. These amendments clarify the offsetting criteria in HKAS 32 and address inconsistencies in their application. This includes clarifying the meaning of “currently has a legally enforceable right of set-off” and that some gross settlement systems may be considered equivalent to net settlement. The amendments did not have a material impact on the Group’s financial position or performance.

Other standards, amendments and interpretations which are effective for the Year are not material to the Group.

(b) New standards, amendments and interpretations have been issued but not yet effective for the Year and have not been early adopted

• HKFRS 9 “Financial instruments” addresses the classification, measurement and recognition of financial assets and financial liabilities. The complete version of HKFRS 9 was issued in July 2014. It replaces the guidance in HKAS 39 that relates to the classification and measurement of financial instruments. HKFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortised cost, fair value through other comprehensive income and fair value through profit or loss. The basis of classification depends on the entity’s business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are required to be measured at fair value through profit or loss with the irrevocable option at inception to

– 4 –

present changes in fair value in other comprehensive income. There is now a new expected credit losses model that replaces the incurred loss impairment model used in HKAS 39. For financial liabilities there were no changes to classification and measurement except for the recognition of changes in own credit risk in other comprehensive income, for liabilities designated at fair value through profit or loss. HKFRS 9 relaxes the requirements for hedge effectiveness by replacing the bright line hedge effectiveness tests. It requires an economic relationship between the hedged item and hedging instrument and for the ‘hedged ratio’ to be the same as the one management actually use for risk management purposes.

Contemporaneous documentation is still required but is different to that currently prepared under HKAS 39. The standard is effective for accounting periods beginning on or after 1 January 2018. Early adoption is permitted. The Group is assessing the impact of HKFRS 9.

• HKFRS 15 “Revenue from contracts with customers” deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. Revenue is recognized when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The standard replaces HKAS 18 “Revenue” and HKAS 11 “Construction contracts” and related interpretations. The standard is effective for annual periods beginning on or after 1 January 2017 and earlier application is permitted. The Group is assessing the impact of HKFRS 15.

• Amendments to HKFRS 10, HKFRS 12 and HKAS 28 on investment entities: applying the consolidation exception clarifies the application of the consolidation exception for investment entities and their subsidiaries. The amendments to HKFRS 10 clarifies that the exception from preparing consolidated financial statements is available to intermediate parent entities which are subsidiaries of investment entities. The exception is available when the investment entity parent measures its subsidiaries at fair value. The intermediate parent would also need to meet the other criteria for exception listed in HKFRS 10. The amendments also clarifies that an investment entity should consolidate a subsidiary which is not an investment entity and which provides services in support of the investment entity’s investment activities, such that it acts as an extension of the investment entity. However, the amendments also confirms that if the subsidiary is itself an investment entity, the investment entity parent should measure its investment in the subsidiary at fair value through profit or loss. This approach is required regardless of whether the subsidiary provides investment-related services to the parent or to third parties. The amendments to HKAS 28 allows an entity which is not an investment entity, but has an interest in an associate or a joint venture which is an investment entity, a relief to retain the fair value measurement applied by the investment entity associate or joint venture, or to unwind the fair value measurement and instead perform a consolidation at the level of the investment entity associate or joint venture for their subsidiaries when applying the equity method.

The standard is effective for annual periods beginning on or after 1 January 2016 and earlier application is permitted. The Group is assessing the impact of amendments to HKFRS 10, HKFRS 12 and HKAS 28.

• Amendments to HKAS 27 on equity method in separate financial statements allows entities to use equity method to account for investments in subsidiaries, joint ventures and associates in their separate financial statements. The standard is effective for annual periods beginning on or after 1 January 2016 and earlier application is permitted. The Group is assessing the impact of amendments to HKAS 27.

There are no other HKFRS or HKFRIC Interpretations that are not yet effective that would be expected to have a material impact on the Group.

– 5 –

3. REVENUE

Revenue, which is also the Group’s turnover, represents the income received and receivable on investments during the Year as follows:

Dividend income from unlisted investments Performance premium from co-investment partner Interest income	2015 HK$’000 9,099 15,525 7,181 31,805	2014 HK$’000 8,698 15,504 6,286
		30,488

4. SEGMENT INFORMATION

The chief operating decision maker has been identified as the Board. The Board assesses the operating segments using a measure of operating profit. The Group’s measurement policies for segment reporting under HKFRS 8 are the same as those used in its HKFRS financial statements.

On adopting of HKFRS 8, based on the internal financial information reported to the Board for decisions about resources allocation to the Group’s business components and review of these components’ performance, the Group has identified only one operating segment, being investment holding. Accordingly, segment disclosures are not presented.

Geographical information:

Revenue Hong Kong Mainland China Other countries	2015 HK$’000 15,204 15,675 926 31,805	2014 HK$’000 6,149 23,559 780
		30,488

In presenting the geographical information, revenue is based on the location of the investments or the coinvestment partners.

Non-current assets other than financial instruments

	2015	2014
	HK$’000	HK$’000
Hong Kong	178,617	142,731

– 6 –

Information about major investments and co-investment partners:

During the Year, performance premium received from one of the Group’s unlisted investments and dividend income received from one of the Group’s unlisted investments which individually accounted for 10% or more of the Group’s total revenue amounted to approximately HK$15,525,000 and HK$7,674,000 respectively (2014: performance premium received from one of the Group’s unlisted investments and dividend income received from one of the Group’s unlisted investments which individually accounted for 10% or more of the Group’s total revenue amounted to approximately HK$15,504,000 and HK$6,605,000 respectively).

During the Year, performance premium received from one of the Group’s co-investment partners (2014: performance premium and dividend income received from one of the Group’s co-investment partners) which accounted for 10% or more of the Group’s total revenue amounted to approximately HK$15,525,000 (2014: HK$22,110,000).

5. TAXATION

Hong Kong

• (a) Hong Kong Profits Tax has been provided at a rate of 16.5% (2014: 16.5%) on the estimated assessable profit for the Year. Taxation on overseas profit has been calculated on the estimated assessable profit for the year at the rates of taxation prevailing in that overseas country.

Hong Kong Profits Tax Overseas tax Under-provision of Hong Kong Profits Tax for previous year	2015 HK$’000 4,714 – – 4,714	2014 HK$’000 – 14,678 70
		14,748

The overseas tax amount represents applicable PRC tax provided at rates prevailing jurisdiction.

• (b) The reconciliation between the income tax and the product of profit before tax multiplied by the domestic tax rates applicable to profits of the consolidated entities is as follows:

Profit before tax Tax calculated at domestic tax rates applicable to profits in the respective countries Tax effect of income that is not taxable Tax effect of expenses that are not deductible Tax effect of deemed taxable profits Tax effect of temporary differences not recognized Tax effect of tax losses not recognized Tax effect of utilisation of tax losses not previously recognized Under-provision of tax in previous year Income tax	2015 HK$’000 1,763 291 (20,042) 18,876 4,994 (2) 727 (130) – 4,714	2014 HK$’000 61,968
		15,728 (5,357) 4,930 – (1) 572 (1,194) 70
		14,748

– 7 –

6. LOSS/PROFIT FOR THE YEAR

• (a) The Group’s loss/profit for the Year is stated after charging the following:

	2015	2014
	HK$’000	HK$’000
Auditor’s remuneration
– Audit	861	1,040
– Others	285	281
	1,146	1,321
Depreciation	11	16
Investment management fee	19,557	19,800
Operating lease payments in respect of office premises	2,893	2,539
Staff costs (including directors’ emoluments)
Salaries and other benefits	17,719	16,623
Retirement benefits scheme contributions	227	206
Equity-settled share-based compensation	1,142	1,510
	19,088	18,339

(b) The loss for the Year dealt with in the financial statements of the Company was approximately HK$23,567,000 (2014: profit of HK$162,466,000).

7. LOSS/EARNINGS PER SHARE

(a) Basic loss/earnings per share

Basic earnings or loss per share is calculated by dividing the profits or loss for the Year by the weighted average number of ordinary shares in issue during the Year.

(Loss)/profit for the Year (HK$’000) Weighted average number of ordinary shares in issue (in thousand) Basic (loss)/earnings per share	2015 (2,951) 941,397 HK$(0.003)	2014 47,220
		941,400
		HK$0.050

(b) Diluted loss/earnings per share

Diluted loss/earnings per share for both years were the same as the basic loss/earnings per share as the Company’s outstanding share options had no dilutive effect for both years.

– 8 –

8. ACCOUNTS AND LOANS RECEIVABLE

Group

Note Accounts receivable (a) Amount due from an associate (b) Amount due from a related company (b) Loan to an investee (c) Loan to an associate (d) Other loan (e) Represented by: Current assets Company Note Amount due from a related company (b) Loan to an associate (d) Other loan (e) Represented by: Current assets	2015 HK$’000 3,877 20 2 – 1,500 3,000 8,399 8,399 2015 HK$’000 2 1,500 3,000 4,502 4,502	2014 HK$’000 3,868 – – 1,896 1,500 3,000
		10,264
		10,264
		2014 HK$’000 – 1,500 3,000
		4,500
		4,500

– 9 –

• (a) At 31 March 2015, the Group’s accounts receivable represented performance premium receivable from a co-investment partner. The Group does not hold any collateral or other credit enhancements over the accounts receivable. The aging analysis of accounts receivable based on the invoice date is as follows:

	2015	2014
	HK$’000	HK$’000
Unbilled	3,877	3,868

Unbilled accounts receivable represents performance premium recognized throughout the Year. It will be billed in arrear at the end of each calendar year.

At 31 March 2015 and 2014, the accounts receivable was neither past due nor impaired.

• (b) Amounts due from an associate and a related company arise mainly from administrative expenses paid by the Group on behalf of the associate and the related company. The amounts are unsecured, interest-free and repayable on demand.

• (c) Loan to an investee is interest-free, unsecured, and have no fixed repayment term. It was fully settled on 2 September 2014 by receiving the equivalent value of Technovator listed shares.

• (d) On 1 July 2014, a shareholders’ loan supplementary agreement was signed by all shareholders of the associate. Pursuant to this agreement, the loan to the associate is unsecured, interest-free and not repayable until 31 December 2015.

• (e) Other loan represents loan to the major shareholder of one of the Group’s associates. On 1 July 2014, a supplementary loan agreement was signed by this major shareholder and the Group. Pursuant to this agreement, other loan is unsecured, interest bearing at 5% per annum and not repayable until 31 December 2015.

9. NET ASSET VALUE PER SHARE

The net asset value per share is calculated by dividing the net asset value of the Group at 31 March 2015 of approximately HK$1,266,856,000 (2014: HK$1,326,619,000) by the number of ordinary shares in issue at that date, being 941,396,000 (2014: 941,400,000).

– 10 –

MANAGEMENT DISCUSSION AND ANALYSIS

Investment Holdings by Source

(HK$ millions, as a percentage of total assets)

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Receivables
and Others
$18.6 Nobel
1.4% $162.1
12.5%
Jin Dou
$6.3
Cash and Cash 0.5%
Equivalents JV Investment
$513.4
Companies
39.7%
$184.4
14.3%
Incubated Funds
$135.5
10.5%
Dance Biopharm and
Asia JV Structure
$27.8
Technovator
Zhonghui Kaisun Energy $11.1 2.1%
$222.2 $11.2 0.9%
17.2% 0.9%
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INVESTMENT REVIEW

The Group’s portfolio saw mixed results during the Year on the back of volatile capital and commodity markets. CSOP performed well through expansionary efforts, offsetting fair value loss in Nobel. OPIM was impacted by AUM decline and operational restructuring. On the public equity side, the Group achieved positive returns from redemption of incubated funds and an investment in Technovator.

Nobel

In 2008, OPFI invested alongside China Investment Corporation in Nobel Holdings Investments Ltd. (“Nobel”), an independent upstream oil producer in Russia. Nobel’s principal assets include nine subsoil licenses covering seven oil fields and two exploration areas.

Our position in Nobel fell from 202.1 million to HK$162.1 million over the past year, due to falling oil prices coupled with a depreciated Ruble trigged by sanctions against Russia as a response to its military activities in Ukraine. Inherently thin operating margins in the oil industry subject Nobel’s profitability to even incremental changes in global oil prices.

– 11 –

In response, Nobel’s oil output in 2014 was reduced 15.6% from 772,265 tons to 652,147 tons to preserve current oil reserves until prices recover, whilst continued exploration is expected to improve reserve quality.

It has been reported that analysts’ consensus expects Brent crude oil price to average US$61 per barrel in 2015. Nobel’s oil production rates will eventually return to normal in line with the recovery of oil price.

Nobel’s management remains optimistic about opportunities for a trade sale to regional players. Nobel’s flexibility in light of global events is a great example of the resilience of hard asset classes especially those in the energy resources sector with strong underlying value.

Jin Dou

In 2009, OPFI invested in a Kazakhstan agriculture project with the mandate to diversify the country’s crops and commercialize regional production for export. OPFI committed a total of US$15 million, of which only US$1.5 million was drawn.

Our position fell slightly from HK6.8 million to HK$6.3 million, while performance premiums received since inception helped maintain an overall positive investment.

The Jin Dou project moved steadily forward during the Year. Studies on developing 88,000 hectares of integrated farming and husbandry were approved by Jin Dou’s limited partner, China Investment Corporation. These include 58,000 hectares of livestock production and 30,000 hectares for planting proper crops. It is scheduled to start small-scale cattle and sheep breeding followed by commercial scale production. Jin Dou also expanded its distribution channels in 2014, successfully completing its first commercial export sales to Russia.

As its management strengthens the relationship with local government and business communities, Jin Dou is also exploring ancillary joint investment opportunities in trade and distribution specifically into China.

JV Investment Companies

We have non-controlling positions in five (2013/2014: four) asset management companies. The two major positions are CSOP Asset Management Ltd. (“CSOP”) and OP Investment Management.

CSOP

The overall performance of our CSOP position grew from HK$136.8 million to HK$166.3 million. Taking into account the dividend of HK$33.0 million received in November 2014, it represents a 46% year-on-year increase. CSOP holds the world’s largest Renminbi RQFII quota of at RMB46.1 billion (equivalent to approximately US$7.37 billion).

– 12 –

The Renminbi (RMB) internationalization, monetary easing and the People’s Bank of China’s interest rate cuts boosted Chinese A-share performance topping 30% in 2014 alone. With the historic launch of the Shanghai-Hong Kong Stock Connect programme, markets in both jurisdictions benefited. This year, global investors increase their allocations to Chinese assets.

CSOP accelerated its efforts to extend business beyond Hong Kong and beyond its highly successful Hong Kong listed CSOP FTSE China A50 ETF. CSOP launched ETFs in Europe in cooperation with local partners and the U.S. on its own to attract investors beyond Asian time zones. Four new products targeting Chinese onshore short-term government bonds, the largest 50 Internet giants in China and US market, and Shenzhen’s ChiNext board were released successively in the first half year of 2015 alone. Its successful strategy to leverage its expert product development and unique leadership in China investment, places the company amongst a small list of innovative peers in the financial industry.

We believe CSOP’s carrying book value based on a proportional share of the company’s net assets does not reflect its true market value. Certainly not compared to global asset managers of its caliber which are trading at more than 20x Price-Earnings ratio. Therefore, we plan to hold the position as the investee continues its international expansion. We believe CSOP’s positioning promises high returns.

OP Investment Management (“OPIM” or “OPIM Group”)

OP Investment Management, including OP Investment Management (Cayman) Limited and OP Investment Management Limited, provides platform services including infrastructure and middle to back office services for emerging third party funds. OPIM’s AUM decreased from US$314 million to US$165 million, largely due to graduating manager leaving the platform and our redemptions from incubated funds.

Our investment position via ordinary shares and preferences shares as at 31 March 2015 fell to HK$9.0 million from HK$47.5 million on account of AUM decline and platform restructuring.

Despite the challenges, OPIM platform helps numerous funds established in Hong Kong, reducing their performance drag and improving operational efficiency. OPIM saw several managers graduate from the platform having successfully built their track records. New funds have been launched on the platform since November 2014. OPIM is currently developing a product line to accommodate fund managers from China looking to capitalize on fund flows leaving the country.

Incubated Funds

The Group invested in a portfolio of unlisted investment funds as part of a larger incubation strategy to strengthen new funds developed through our partnerships. Fund strategies range from long-only equity funds to multi-strategy hedge. Including our investments managed by OPIM, our total funds investment decreased from HK$377.3 million to HK$135.5 million during the Year. This was primarily due to HK$253.8 million in redemption of incubated funds, partly offsetting by investment return of HK$12.0 million.

We will gradually redeem our seed capital from incubated funds previously launched as they have became more established.

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Incubated Investment Funds

(HK$ millions)

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2015
Real Estate
Opportunity
Capital Fund,
$11.8 Greater China
Select Fund,
$22.2
Greater China Special
Value Fund,
$13
Miran Multi-Strategy
Fund,
$88.5
----- End of picture text -----

Figure 1: Total HK$135.5 million

Zhonghui

OPFI made a special situation investment of HK$197 million in January 2015, by providing interim financing to the developer of a commercial property project in Beijing known as the Zhonghui Plaza, which is located in the prime district of East Second Ring Road, Beijing. The asset has an estimated market value exceeding RMB6.5 billion. The investment attached with call/put options arrangements with the controlling shareholder of Zhonghui Plaza’s property developer. Under the terms of the option arrangements, it is expected the investment to yield more than 30% in absolute return.

FINANCIAL REVIEW

Financial position

Net asset value: The Group’s net assets as at 31 March 2015 decreased 5% from HK$1.33 billion to HK$1.27 billion during the Year. The NAV per share decreased from HK$1.41 to HK$1.35.

Gearing: The gearing ratio, which is calculated on the basis of total liabilities over total equity as at 31 March 2015, was 0.02 (31 March 2014: 0.02). We managed to maintain our low leverage policy for our investments.

Investments accounted for using equity method: It represents mainly our share of net assets of asset management companies and new interest in Grand Central Tian Di L.P. (“Grand Central”), which holds the special situation asset of the commercial property known as Zhonghui Plaza. Assets increased by 180.8% to HK$400.7 million as at 31 March 2015 (31 March 2014: HK$142.7 million) reflecting our new investment position in Grand Central and CSOP’s strong financial performance for the Year.

– 14 –

Available-for-sale financial assets: A 31.8% decrease from HK$312.4 million to HK$213.2 million during the Year was mainly the result of (i) decline in our position with Nobel of HK$40.0 million and (ii) decline in our position with OPIM of HK$38.4 million.

Financial assets at fair value through profit or loss: The HK$228.4 million decrease from HK$384.1 million to HK$155.7 million during the Year was mainly the net results of (i) HK$253.8 million in redemption of investment funds; (ii) net unrealized gain on investment funds managed by OPIM of HK$11.8 million; and (iii) unrealized gain on listed shares of HK$3.8 million.

Bank and cash balances: During the year ended 31 March 2015, bank and cash balances increased from HK$500 million to HK$513 million, mainly attributable to the net results of disposal of incubated funds and HK$197 million investment in Zhonghui.

RESULTS

The Group has experienced a challenging year. Despite CSOP delivered HK$63.2 million in share of its results, weaknesses in Nobel and OPIM contributed to a change in net assets from HK$1.33 billion to HK$1.27 billion. The Group incurred a net loss of HK$3.0 million (2014: profit of HK$47.2 million). Total comprehensive income amounted to a loss of HK$13.8 million compared to a profit of HK$53.7 million last year.

Consolidated statement of profit or loss and other comprehensive income

Revenue, which is also the Group’s turnover, represents the income received and receivable on investments during the Year as follows:

Dividend income from unlisted investments1 Performance premium from a co-investment partner2 Interest income3	2015 HK$’000 9,099 15,525 7,181 31,805	2014 HK$’000 8,698 15,504 6,286
		30,488

• (1) Stock dividend of approximately HK$7.7 million was received from Valueworth Ventures Limited during the Year. Last year’s figure mainly represented dividend of HK$6.6 million received from Nobel.

• (2) CIC, co-investment partner in both the agriculture partnership and Nobel, awarded OPFI performance premiums totaling HK$15.5 million (2014: HK$15.5 million) to the Group in return for our resources allocate to the agriculture partnership – Jin Dou.

• (3) Interest income of approximately HK$7.2 million (2014: HK$6.3 million) is mainly derived from our term deposits in banks.

– 15 –

Net change in unrealized gain/loss on financial assets at fair value through profit or loss: The net change in unrealized gain of HK$11.6 million (2014 gain of HK$16.1 million) mainly represents the net result of (i) the unrealized gain on listed shares and investment funds of HK$15.8 million; and (ii) the transfer-out of net unrealized gain of HK$4.2 million due to disposal of investment funds.

Net realized gain on redemption of investment funds: This represents the result of net realized gain of HK$2.1 million on disposal of investment funds managed under OPIM; and (2) realized gain of HK$2.1 million on redemption of CSOP Shen Zhou RMB Fund.

Impairment loss on available-for-sale financial assets: Due to the prolonged decrease in the fair value of the Group’s investment in Nobel, OPIM and Kaisun from their investment cost, an impairment loss of HK$90.3 million was recognized during the Year.

Equity-settled share-based payments: This represents the value of share options vested during the Year. These share options were granted to certain directors and employees on 20 April 2010, which are vested over five years from the grant date.

Administrative expenses: The total administrative expenses remain approximately the same level and no material change is noted.

Share of results of investments accounted for using equity method: a net amount of approximately HK$89.5 million (2014: HK$34.7 million) accounted for our share of results of the investments, including a gain of HK$63.2 million attributable to CSOP and a gain of HK$4.3 million both Miran Capital Management Ltd. and Guotai Junan.

Other comprehensive income: Changes to the Group’s NAV, otherwise not accounted for in “loss for the year”, are found in “other comprehensive income”. The loss of HK$10.9 million is net of (i) decrease in fair value of available-for-sale financial assets by HK$99.2 million, mainly represents decrease in value of equity interest in Nobel and values of OPIM Group preferences shares; (ii) impairment loss on available-for-sale financial assets of HK$90.3 million; and (iii) decrease in share of other comprehensive income of investments accounted for using equity method by HK$2.0 million. Combining with the “loss for the year”, the total comprehensive income for the Year was a loss of HK$13.8 million.

Fair value changes recognized in “Other Comprehensive Income”

Nobel Kaisun – Ordinary Shares OPIM Group Jin Dou Dance Biopharm Technovator Fair value changes	2015 HK$’000 (40,027) (5,417) (38,430) (521) (7,170) (7,607) (99,172)	2014 HK$’000 (40,501) (3,963) 21,430 (109) 15,669 7,607 133

– 16 –

Net Asset Value Per Share (in HK$)

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1.89
2.0
1.69
1.63
1.41
1.5 1.35 1.35
1.13
1.0
0.5
0.0
2009 2010 2011 2012 2013 2014 2015
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DIVIDEND POLICY AND PROPOSED FINAL DIVIDEND

No interim dividend was paid during the Year. The Directors do not recommend the payment of a final dividend for the Year (2014: HK$0.05 per share).

LIQUIDITY AND FINANCIAL RESOURCES

Dividend income from investments held, performance premiums, and interest income from bank deposits and financial instruments held are currently the Group’s major source of revenue. During the Year, the Group continued to maintain a significant balance of cash and cash equivalents. As at 31 March 2015, the Group had cash and bank balances of HK$513 million (31 March 2014: HK$500 million). The Group had no bank borrowings and did not pledge any assets as collateral for overdrafts or other loan facilities during the Year under review. The debt-to-equity ratio (interest bearing external borrowings divided by shareholders’ equity) stood at zero while the current ratio (current assets divided by current liabilities) was 26 times (2014: 30 times). For further analysis of the Group’s cash position, current assets and gearing, please refer to paragraphs under sub-sections headed “Financial Position” above. The Board believes that the Group has sufficient financial resources to satisfy its immediate investments and working capital requirements.

CAPITAL STRUCTURE

As at 31 March 2015, the Group’s shareholders’ equity and total number of shares in issue for the Company stood at HK$1.27 billion (2014: HK$1.33 billion) and 941,396,000 (2014: 941,400,000), respectively.

MATERIAL ACQUISITIONS AND DISPOSALS OF INVESTMENTS

The Group had the following material acquisitions and disposals of investments during the Year.

• Redemption of HK$141.9 million from Greater China Select Fund

• Redemption of HK$47.9 million from Greater China Special Value Fund

• Redemption of HK$52.5 million from CSOP Shen Zhou RMB Fund

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• Redemption of HK$8.4 million from Phoenixinvest Pacific Fund

• Investment of HK$197 million in Grand Central Tian Di, L.P.

SEGMENT INFORMATION

Segment information of the Group is set out in note 4 on pages 6 and 7 of this announcement.

EMPLOYEES

During the Year, the Group had 27 (2014: 23) employees, inclusive of all directors of the Group and its subsidiaries. Total staff costs for the Year amounted to HK$19.1 million (2014: HK$18.3 million). The Group’s remuneration policies are in line with the market practice and are determined on the basis of the performance and experience of individual employee.

SHARE OPTION SCHEME

During the Year, the Group has recognized HK$1,142,000 (2014: HK$1,510,000) in the profit or loss as share-based compensation expenses regarding the share options granted in 2010 and 2011. No new share option was granted or offered during both years.

EXPOSURE TO FLUCTUATIONS IN EXCHANGE RATES AND RELATED HEDGES

At 31 March 2015, the Group had exposure to foreign exchange fluctuation from its bank balances. These investments were denominated in RMB and the maximum exposure to foreign currency risk was RMB691,000, equivalent to HK$864,000 (at 31 March 2014: RMB45,097,000, equivalent to HK$56,383,000).

At 31 March 2015, the Group held certain financial assets which were denominated in USD. The Board is of the opinion that the Group’ s exposure to USD foreign currency risk is minimal as HKD was pegged to USD by the Hong Kong’s Linked Exchange Rate System.

CHARGES ON THE GROUP’S ASSETS AND CONTINGENT LIABILITIES

As at 31 March 2015, there were no charges on the Group’s assets and the Group did not have any significant contingent liabilities.

FUTURE PLANS FOR MATERIAL INVESTMENTS OR CAPITAL ASSETS AND THEIR EXPECTED SOURCES OF FUNDING

As at 31 March 2015, there were no plans for material investments or capital assets, but the Company may, at any point, be negotiating potential investments. The Company considers new investments as part of its normal business, and therefore management may publically announce these plans as they become necessarily disclosable to shareholders during the course of the financial year.

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PURCHASE, SALE OR REDEMPTION OF SECURITIES

During the Year, the Company repurchased a total of its 4,000 ordinary shares (“Repurchased Shares”) on the Stock Exchange of Hong Kong Limited. The Repurchased Shares were then cancelled and the issued share capital of the Company was accordingly reduced to 941,396,000 shares. Such repurchases were effected by the Directors pursuant to the general mandate to repurchase shares granted by the shareholders of the Company to the Board at the annual general meeting of the Company held on 14 August 2013, with a view to benefiting shareholders as a whole in enhancing the net asset value of the Company.

Except as disclosed above, neither the Company nor any of its subsidiaries has purchased, redeemed or sold any of the Company’s listed securities during the Year.

EVENTS AFTER THE REPORTING PERIOD

On 22 May 2015, the Company granted 56,000,000 share options to certain eligible grantees of the Company and its subsidiaries under the share option scheme of the Company adopted on 19 March 2003, subject to the acceptance of the offer by the grantees. The options shall entitle the grantees to subscribe for a total of 56,000,000 new ordinary shares of par value of HK$0.10 each in the share capital of the Company. The exercise price was set at HK$1.65 per share.

On 1 June 2015, the Company entered into a placing agreement with Oriental Patron Securities Limited (the “Placing Agent”), pursuant to which the Placing Agent has conditionally agreed to place up to 900,000,000 placing shares (“Placing Shares”) to not less than six placees at a placing price of HK$1.50 per Placing Share on a best effort basis.

CORPORATE GOVERNANCE CODE (“CG CODE”) COMPLIANCE

Except otherwise stated herein, none of the Directors is aware of any information that would reasonably indicate that the Company is not, or was not, at any time during the Year, in compliance with the CG Code.

As already mentioned in the Company’s interim report for the period from 1 April 2014 to 30 September 2014 and that Code provision A.6.7 provided that, the independent non-executive directors and other non-executive directors should attend the annual general meeting of the Company. During the Year, one of the independent non-executive Directors, namely, Mr. Wang Xiaojun, did not attend the annual general meeting of the Company which was held on 14 August 2014 (“AGM”) due to other business commitment on urgent basis. However, all executive Directors, namely Mr. Zhang Zhi Ping and Mr. Zhang Gaobo and all other independent non-executive Directors, namely, Mr. Kwong Che Keung, Gordon and Prof. He Jia did attend the AGM.

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AUDIT COMMITTEE

The Company established an audit committee in accordance with Rule 3.21 of the Listing Rules. Amongst other duties, the principal duties of the Audit Committee are to review the interim and annual results and internal control system of the Company.

The Audit Committee comprises three INEDs, namely, Mr. Kwong Che Keung, Gordon, Prof. He Jia and Mr. Wang Xiaojun. Mr. Kwong Che Keung, Gordon is the chairman of the Audit Committee.

The audited financial statements for the year have been reviewed by the Audit Committee.

MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS OF LISTED ISSUERS

The Company has adopted a “Policy for Director and Employee Dealings in the Company’s Securities” which supplements the Model Code for Securities Transactions by Directors of Listed Issuers (“Model Code”) set out in Appendix 10 of the Listing Rules and is available on the Company’s website. Following specific enquiry by the Company, all Directors have confirmed, that they have fully complied with the Model Code and the aforesaid internal policy regarding directors’ securities transactions throughout the Year.

REVIEW OF THE ANNUAL RESULTS ANNOUNCEMENT BY AUDITOR

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

FORWARD-LOOKING STATEMENTS

This announcement contains certain statements that are forward-looking or which use certain forward-looking terminologies. These forward-looking statements are based on the current beliefs, assumptions and expectations of the Board of directors of the Company regarding the industry and markets in which it invests. These forward-looking statements are subject to risks, uncertainties and other factors beyond the Company’s control which may cause actual results or performance to differ materially from those expressed or implied in such forwardlooking statements.

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PUBLICATION OF FINANCIAL INFORMATION

This results announcement is published on the websites of the Stock Exchange (www.hkex.com.hk) and the Company (www.opfin.com.hk). The Group’s annual report for the Year will be dispatched to the shareholders of the Company and available on the above websites in due course.

BOARD OF DIRECTORS

As at the date of this announcement, the Board comprises two executive Directors, namely, Mr Zhang Zhi Ping and Mr Zhang Gaobo; and three independent non-executive Directors, namely, Mr Kwong Che Keung, Gordon, Professor He Jia and Mr Wang Xiaojun.

By order of the Board OP Financial Investments Limited Zhang Gaobo Executive Director and CEO

Hong Kong SAR, 26 June 2015

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