Synagistics Limited — Interim / Quarterly Report 2013

Nov 27, 2012

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)

ANNOUNCEMENT OF UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2012

The Board of Directors (the “Board” or the “Directors”) of OP Financial Investments Limited (the “Company” or “OP Financial”) is pleased to announce the unaudited condensed results of the Company and its subsidiaries (the “Group”) for the six months ended 30 September 2012 with comparative figures for the corresponding period in 2011 and selected explanatory notes as follows.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2012

Note Revenue 3 Other income 4 Net change in unrealised loss on financial assets at fair value through profit or loss Realised gain on financial assets at fair value through profit or loss Realised gain on deemed disposal of an investment Realised loss on partial early redemption of convertible bond Loss on disposal of an associate Impairment loss on available-for-sale financial assets Equity-settled share-based payments Administrative expenses Profit/(loss) from operations Share of results of associates

Six months ended 30 September 2012 (Unaudited) 2011 (Unaudited) HK$’000 HK$’000 15,623 28,105 – 2,413 (26,788) (76,946) – 359 105,153 – (48,589) – – (1) (7,927) (25,200) (670) (672) (25,205) (22,134) 11,597 (94,076) 3,542 105

• For identification purposes only

– 1 –

Note Profit/(loss) before tax Income tax 6 Profit/(loss) for the period 7 Other comprehensive income Exchange differences Available-for-sale financial assets: Fair value changes during the period Impairment loss on available-for-sale financial assets Deemed disposal of an investment Partial early redemption of convertible bond Share of other comprehensive income of associates Fair value changes of available-for-sale financial assets Exchange differences Net other comprehensive income for the period Total comprehensive income for the period Earnings/(loss) per share Basic 8(a) Diluted 8(b) Dividend 11

Six months ended 30 September 2012 (Unaudited) 2011 (Unaudited) HK$’000 HK$’000 15,139 (93,971) – 418 15,139 (93,553) – 31 (79,994) (116,636) 7,927 25,200 (39,432) – 1,893 – (1,037) – (53) – (110,696) (91,405) (95,557) (184,958) 1.61 cents (9.94) cents 1.61 cents (9.94) cents Six months ended 30 September 2012 2011 HK$’000 HK$’000 94,140 –

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CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 30 SEPTEMBER 2012

Note Non-current assets Property, plant and equipment Investments in associates Available-for-sale financial assets Financial assets at fair value through profit or loss Loans receivable 9 Interest receivable Current assets Available-for-sale financial assets Financial assets at fair value through profit or loss Accounts and loans receivable 9 Interest receivable Prepayments and other receivables Tax recoverable Bank deposits Bank and cash balances TOTAL ASSETS Capital and reserves Share capital Reserves Proposed dividend 11 TOTAL EQUITY Current liabilities Other payables TOTAL LIABILITIES TOTAL EQUITY AND LIABILITIES NET ASSETS Net asset value per share 10	30 September 2012 (Unaudited) HK$’000 30 92,668 369,603 113,604 4,500 76 580,481 63,611 289,022 11,679 15,137 508 – 42,000 443,836 865,793 1,446,274 94,140 1,255,056 94,140 1,443,336 2,938 2,938 1,446,274 1,443,336 HK$1.53	31 March 2012 (Audited) HK$’000 41 90,216 629,260 13,373 – 24,100 756,990 – 383,453 80,164 965 237 4,762 30,051 284,273 783,905 1,540,895 94,140 1,444,083 – 1,538,223 2,672 2,672 1,540,895 1,538,223 HK$1.63

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NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2012

1 BASIS OF PREPARATION OF THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

The unaudited condensed consolidated interim financial information for the six months ended 30 September 2012 have been prepared in accordance with Hong Kong Accounting Standard 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”).

The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 31 March 2012, which have been prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”) issued by HKICPA. The accounting policies and methods of computation used in the preparation of these condensed consolidated interim financial information are consistent with those used in the annual financial statements for the year ended 31 March 2012, except as stated in note 2 below.

2 ACCOUNTING POLICIES

The accounting policies applied are consistent with those of the annual financial statements for the year ended 31 March 2012, as described in those annual financial statements, except:

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

There are no amended standards or interpretations that are effective for the first time for this interim period that could be expected to have a material impact on the Company and its subsidiaries (together, “the Group”). The following new standards and amendments to standards have been issued but are not effective for the financial period beginning 1 April 2012 and have not been early adopted:

• i) HKFRS 9 “Financial Instruments” addresses the classification, measurement and recognition of financial assets and liabilities. HKFRS 9 replaces the parts of HKAS 39 that relate to the classification and measurement of financial instruments. HKFRS 9 requires financial assets to be classified into two measurement categories: those measured at fair value and those measured at amortised cost. The determination is made at initial recognition. The classification depends on the entity’s business model for managing its financial instruments and the contractual cash flow characteristics of the instruments. For financial liabilities, the standard retains most of the HKAS 39 requirements. The main change is that, in case where the fair value option is taken for financial liabilities, the fair value change due to an entity’s own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch. The Group is yet to assess HKFRS 9’s full impact and intends to adopt HKFRS 9 no later than the accounting period beginning on or after 1 January 2015.

• ii) HKFRS 10 “Consolidated Financial Statements” builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company. The standard provides additional guidance to assist in the determination of control where this is difficult to assess. The Group is yet to assess HKFRS 10’s full impact and intends to adopt HKFRS 10 no later than the accounting period beginning on or after 1 April 2013.

• iii) HKFRS 12 “Disclosures of Interests in Other Entities” includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles. The Group is yet to assess HKFRS 12’s full impact and intends to adopt HKFRS 12 no later than the accounting period beginning on or after 1 April 2013.

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• iv) HKFRS 13 “Fair Value Measurement” aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across HKFRSs. The requirements do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards within HKFRSs. The Group is yet to assess HKFRS 13’s full impact and intends to adopt HKFRS 13 no later than the accounting period beginning on or after 1 April 2013.

There are no other HKFRSs or HK(IFRIC) interpretations that are not yet effective that would be expected to have a material impact on the Group.

3 REVENUE

Revenue represents the income received and receivable on investments during the period as follows:

Dividend income from unlisted investments Performance premiums Interest income	Six months ended 30 September 2012 (Unaudited) 2011 (Unaudited) HK$’000 HK$’000 592 5,000 7,777 15,098 7,254 8,007 15,623 28,105	Six months ended 30 September 2012 (Unaudited) 2011 (Unaudited) HK$’000 HK$’000 592 5,000 7,777 15,098 7,254 8,007 15,623 28,105
		28,105

4 OTHER INCOME

	Six months	ended
	30 September
	2012		2011
	(Unaudited)	(Unaudited)
	HK$’000	HK$’000
Exchange gains	–		2,413

5 SEGMENT INFORMATION

The chief operating decision maker has been identified as the board of directors (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.

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Geographical information

Revenue Hong Kong Mainland China	Six months ended 30 September 2012 (Unaudited) 2011 (Unaudited) HK$’000 HK$’000 7,740 11,736 7,883 16,369 15,623 28,105	Six months ended 30 September 2012 (Unaudited) 2011 (Unaudited) HK$’000 HK$’000 7,740 11,736 7,883 16,369 15,623 28,105
		28,105

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

	30 September	31 March
	2012	2012
	(Unaudited)	(Audited)
	HK$’000	HK$’000
Non-current assets other than financial instruments
Hong Kong	92,698	90,257

Information about major investments and co-investment partners

During the period, loan interest income derived from one of the Group’s investments which accounted for 10% or more of the Group’s revenue amounted to approximately HK$4,768,000 (2011: dividend income and loan interest income from two of the Group’s investments totally amounted to approximately HK$9,789,000).

During the period, performance premiums derived from one (2011: one) of the Group’s co-investment partners which accounted for 10% or more of the Group’s revenue amounted to approximately HK$7,777,000 (2011: HK$15,098,000)

6 INCOME TAX

	Six months	ended
	30 September
	2012	2011
	(Unaudited)	(Unaudited)
	HK$’000	HK$’000
Current tax credit	–	418

The current tax credit for the six months ended 30 September 2011 represents a write-back of Hong Kong Profits Tax previously overprovided. The tax credit is provided at a rate of 16.5%.

As at 30 September 2012, the Company has unused tax losses of approximately HK$37,037,000 (31 March 2012: HK$27,171,000) available for offset against future profits. No deferred tax asset has been recognised in the condensed consolidated interim financial information due to the unpredictability of future profit streams (2011: nil).

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7 PROFIT/(LOSS) FOR THE PERIOD

The Group’s profit/(loss) for the period is stated after charging/(crediting) the followings:

	Six months ended	Six months ended	Six months ended
	30 September
	2012			2011
	(Unaudited)		(Unaudited)
	HK$’000		HK$’000
Depreciation	11			107
Investment management fee	11,304		11,773
Exchange differences	1,287		(2,413)
Operating lease payments in respect of office premises	1,132			1,283
Staff costs (including directors’ emoluments)
Salaries and other benefits	8,185			7,558
Contributions to retirement benefits scheme	92			77
Equity-settled share based compensation	670			672
	8,947			8,307

8 EARNINGS/(LOSS) PER SHARE

(a) Basic earnings/(loss) per share

Basic earnings/(loss) per share is calculated by dividing the profit/(loss) for the period by the weighted average number of ordinary shares in issue during the period.

Profit/(loss) for the period Weighted average number of ordinary shares in issue (in thousand) Basic earnings/(loss) per share	Six months ended 30 September 2012 (Unaudited) 2011 (Unaudited) HK$’000 HK$’000 15,139 (93,553) 941,400 941,400 1.61 cents (9.94) cents

(b) Diluted earnings/(loss) per share

Diluted earnings per share for the six months ended 30 September 2012 was the same as the basic earnings per share as the Company’s outstanding share options had no dilutive effect for the six months ended 30 September 2012.

Diluted loss per share for the six months ended 30 September 2011 was the same as the basic loss per share as the Company’s outstanding share options had no dilutive effect for the six months ended 30 September 2011.

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9 ACCOUNTS AND LOANS RECEIVABLE

Accounts receivable Amounts due from associates Loan to an associate, not repayable within one year Other loan, not repayable within one year Loan to an investee, repayable within one year Loan to an associate, repayable within one year Other loan, repayable within one year	30 September 2012 (Unaudited) HK$’000 11,642 37 1,500 3,000 – – – 16,179	31 March 2012 (Audited) HK$’000 18,569 37 – – 56,558 1,500 3,500
		80,164

10 NET ASSET VALUE PER SHARE

The net asset value per share is calculated by dividing the net asset value of the Group at 30 September 2012 of approximately HK$1,443,336,000 (31 March 2012: approximately HK$1,538,223,000) by the number of ordinary shares in issue at that date, being 941,400,000 (31 March 2012: 941,400,000).

11. INTERIM DIVIDEND

The Board has resolved to pay an interim dividend of HK10 cents per ordinary share for the period (2011: nil). The estimated total interim dividend, based on the number of shares outstanding as at 30 September 2012, is HK$94,140,000. This interim dividend has not been reflected as dividend payable in the condensed consolidated interim financial information.

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EXTRACT OF INDEPENDENT AUDITOR’S REVIEW REPORT

Basis for Qualified Conclusion

As explained in note 14 and 15 to the condensed consolidated interim financial information, during the six-month period ended 30 September 2011, the Company had investment in Crown Honor Holdings Ltd. (“Crown Honor”), an investee, comprising ordinary shares, non-voting preference shares and the profit guarantee of Crown Honor which were stated at fair value of HK$230,545, HK$95,529,850 and HK$6,860,388, respectively. We were unable to perform sufficient review procedures that we considered necessary to assess the fair value of the investment in Crown Honor as at 31 March 2011 and 30 September 2011 and we are unable to determine whether adjustments to the condensed consolidated statement of comprehensive income for the six-month period ended 30 September 2011 might be necessary. Our review conclusion on the condensed consolidated interim financial information for the six-month period ended 30 September 2012 was modified because of the possible effect of this matter on the comparability of the condensed consolidated statements of comprehensive income between the current period and corresponding period.

Qualified Conclusion

Except for the adjustments to the condensed consolidated statement of comprehensive income for the six-month period ended 30 September 2011 that we might have become aware of had it not been for the situation described above, based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated interim financial information is not prepared, in all material respects, in accordance with Hong Kong Accounting Standard 34 “Interim Financial Reporting”.

MANAGEMENT DISCUSSION AND ANALYSIS

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Investment holdings by source
(HK$ millions)
Kaisun Energy Group
HK$98.5
Cash 6.9%
HK$485.8
33.9%
Nobel Oil Group
HK$315.9
22.1%
Meichen Finance
HK$113.6
CSOP RQFII 7.9%
HK$50.6
3.5% Glory Wing
HK$9.8
Incubated Funds
HK$220.4 JV Investment Jin Dou 0.7%
HK$18.9
15.4% Companies
HK$118.7 1.3%
8.3%
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• includes interest receivables

• ** includes performance premiums receivables

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Investment Review

The Group has made significant progress capitalizing on gains made over recent years especially in our private equity positions, where assets are normally less liquid than public equity. Although challenging public market conditions led to disappointing share performance in our listed equities and incubated funds, strong fundamentals in our direct investments minimized the impact to our NAV whilst shoring up a stronger cash position for new investment opportunities.

Meichen Finance

Our position in the Guangzhou based insurance brokerage has undergone capital restructuring in the first half. The Group transformed the investment in Meichen, from a VIE structure under “Crown Honor Holdings Ltd” (where we held a combination of 30% ordinary and 80% preference shares), into a 23.47% direct shareholding of Meichen at the PRC onshore level. This enabled us to monetize HK$91 million during the period. In addition to the HK$10 million in loan repayments received previously, in total the investee has returned over HK$101 million to date, thus converting almost 50% of our investment position into cash. This remaining equity portion is worth HK$113 million, less than 8% of our portfolio.

Meichen operations remain strong, and despite increased competition in the market and a softer economy, the company has maintained steady sales in 2012. While monthly sales grew from 62.7 thousand policies in January to over 97.7 thousand policies in September, the annualized commission income is comparable to that of 2011. Operating in 10 provinces, the company has not made new license acquisitions and turnover remains concentrated in Guangdong representing over 82% of its distribution. While it has registered strong sales in new markets like Beijing, where monthly sales have grown seven times since January, each of these represent less than 2% of sales. Meichen’s second and third largest markets in Guangxi and Chongqing, representing 6.6% and 4.8% of sales respectively, had very strong sales in the first half.

We believe the restructuring of Meichen allowed us to monetize unrealized gains safely whilst retaining a meaningful position as the company looks forward to its next phase of growth.

Kaisun Energy Group

During the period, Kaisun Energy Group Limited (“Kaisun”) agreed to an early redemption of our convertible bond previously worth HK$153.55 million as at 31 March 2012. A partial redemption of HK$79.86 million was received, and the remaining amount, currently worth HK$78.06 million (including interest receivable), is due 10 June 2013. Given the transitional state of the investee, we maintain a conservative view that the stock price will unlikely reach the convertible bond’s strike price of HK$0.70 before expiration, and therefore we welcome the early redemption.

However, our portfolio holds a remaining 132.11 million shares in equity now worth HK$20.48 million as at 30 September 2012. We believe its current share price of approximately HK$0.16 per share is undervalued and expect it to strengthen as the market recovers.

– 10 –

In July this year, Kaisun announced the proposed sale of its Kaftar Hona anthracite mine in Tajikistan for approximately HK$394.6 million. Kaftar Hona is just one of three mines acquired in 2011, which were purchased for a total consideration of approximately HK$243 million. Accordingly, we believe this to be a profitable sale.

Kaisun’s disposals over the past two years have increased the company’s current assets to over HK$925 million, as of 30 June 2012. Kaisun’s management has expressed intentions to transform its business model leveraging its industry expertise and access to regional mining assets. In the meantime, the company continues to trade at a share price below its cash position, and we believe there is stronger upside opportunity over the next year if management announces new plans.

Nobel Oil Group

Our position in Nobel fell approximately 12% from HK$358 million to HK$316 million during the period. This was primarily due to (i) a drop in projected oil prices and (ii) an increase in short-term borrowings and reduction in cash position. Considering Nobel’s investment thesis, the company’s first profitable year with US$35.9 million in 2011 was a positive milestone. Despite flat production from the first half of the year, we believe Nobel may exceed 2011 full year profit by the end of Q3 on the back of stronger than expected export prices and stable production.

Nobel’s management explained that poor winter weather conditions hindered effective expansion in the pump machinery infrastructure that should have otherwise yielded stronger performance in new Western Siberian wells. Consequently, production output year-to-date was mainly dependent on existing wells. Steps were taken to ensure these issues will not recur in the future. Management of Nobel offset lower production in new wells by increasing production in existing wells, and they also expect to maintain current production output into the second half of the year.

Nobel’s management also believes there are meaningful improvements in reserve quality. Eventually, a technical report, which we believe would be instrumental to generating interest with potential investors, can confirm these improvements, and we are encouraging management to produce one before the end of the financial year.

Jin Dou

China Investment Corporation (CIC) and OP Financial’s agriculture JV in Kazahkstan is progressing well. Since the project is not yet profitable, this may not yet be evident in the current valuation. The project has moved into commercialization phase this year, and successful trials for a variety of crops last year paved the way for total funding of US$315 million, of which OP Financial committed a total of US$15 million. CIC has committed the remaining US$300 million.

The first half of 2012 saw aggressive commercial pilot farming in controlled sub segments of a 100,000 hectare reserve. Initial soybean crops across 2,250 hectares yielded approximately 3,521 tons of soybeans. Current soybean sales price exceeded US$500 per ton. Comparatively, these are moderate results, but the non-GMO, high-protein quality in the crop exhibit export marketability.

– 11 –

Meanwhile, Jin Dou’s management continues to explore additional crop diversification and rotation measures into other vegetation such as safflower and dry oats to maximize seasonality and different suited topography. Furthermore, they have strategically invested in local farming companies also looking to broaden their portfolio. These plots are remote, approximately 3,500 hectares, but they will also produce soybean, wheat, barley, corn and safflower.

In 2013, the project advanced from trials to large-scale production; Jin Dou will focus on large irrigation technologies to overcome challenging commercial scalability and standardization to reduce overall operational costs.

JV Investment Companies (Previously “Partnerships with Major Players”)

We have non-controlling positions with four asset management companies with total assets under management and advisory of approximately HK$15.8 billion compared to HK$7.4 billion six months ago. Aggregate results of the four companies attributable to the Group were approximately HK$3.54 million for the period.

Fund managers began to recover during the period as the US and Hong Kong markets strengthened. However, redemptions from smaller equity funds who suffered protracted losses since 2010 exacerbated fee income.

Moving forward, OP Investment Management (“OPIM”) shall adjust its model to focus on platform services. Part of this process involves reallocating our capital from incubated Calypso Asia Fund, which shall continue to trade under a separate manager. Of the US$15.3 million in redemption proceeds, we shall invest approximately US$13.5 million into a new multi-strategy fund managed by a JV management company, of which OP Financial is expected to hold approximately 30%. The fund will seed with approximately US$50 million, and in the first year it shall trade across more than five different strategies with Asian focus. The fund and JV management company are scheduled to be launched in January 2013.

The fund will serve as part of a longer term strategy to incubate progressive managers through sub divisional silos before establishing them as stand-alone funds. A multi-strategy fund allows OPIM to provide third party capital introductory opportunities for new managers, an important feature that helps OPIM become full service provider. In the meantime, we expect fee income for OPIM to soften temporarily before the new funds launch. OP Financial also hold non-controlling preference shares in OPIM. Our position in OPIM fell to HK$26 million from HK$48.7 million during the period, due to reduction in AUMs resulting from redemptions and fee reductions for affiliated managers.

In September 2012, OPIM also established a joint venture fund management company with Edmond de Rothschild from Luxembourg. This UCITs approved collaboration will focus on long-only equity in Hong Kong providing international investors with robust access to Greater China markets.

Meanwhile, CSOP, whose strong performance in the bond market combined with the launch of its CSOP A50 ETF tracker in August 2012, increased its assets under management and advisory from HK$6.53 billion to over HK$15 billion, an increase of over 131% in just six months. During the period, CSOP’s retail Shen Zhou RMB fund, grew 2.26% and a further 1.2% return from dividends. We own 30% of the management company currently valued at

– 12 –

approximately HK$88.7 million. The company continues to grow its AUM producing both strong organic performance and new financial products.

Incubated funds (Previously, “Integrated Fund Solutions”)

The Group has investments in three funds managed by the OP Investment Management Ltd. and OP Investment Management (Cayman) Ltd. (collectively “OPIM”). These funds fell by approximately $11.14 million from HK$231.56 million as at 31 March 2012 to HK$220.42 million as at 30 September 2012, a decline of 4.8%.

FINANCIAL REVIEW

Financial position

Net asset value: The Group’s net assets as at 30 September 2012 decreased 6% from HK$1.54 billion to HK$1.44 billion during the period. Meanwhile, the NAV per share decreased from HK$1.63 to HK$1.53 during the period mainly due to revaluations of investments.

Gearing: The gearing ratio, which is calculated on the basis of total liabilities over total equity as at 30 September 2012, was 0.002 (31 March 2012: 0.002). We are currently maintaining a low leverage policy for our investments. While some debt financing instruments may be used at the investment level, we still expect to maintain debt to a minimum at the Group level in the coming year.

Investments in associates: Representing mainly our share of the net assets of joint venture asset management companies, CSOP Asset Management Limited and Guotai Junan Fund Management Limited. Assets increased by 2.72% to HK$92.67 million as at 30 September 2012 (31 March 2012: HK$90.22 million) reflecting stable operating performance of our investees for the year.

Available-for-sale financial assets: A 31.16% decrease from HK$629.26 million to HK$433.21 million during the year was mainly the net result of declines in our positions with Nobel and OPIM totaling HK$65 million, the HK$79.86 million partial redemption of Kaisun CB and the decrease of HK$56 million due to Meichen’s restructuring.

Financial assets at fair value through profit or loss: The HK$5.8 million increase from HK$396.83 million to $402.63 million during the period was primarily due to the Meichen’s restructuring where a net increase of HK$19.4 million is recorded. Our two incubated funds Greater China Select and Greater China Special Value combined fell HK$8.4 million.

Loan receivables: Our outstanding loan balance of HK$56.56 million to Meichen as at 31 March 2012 was returned with interest, thus reducing the receivables significantly to only HK$4.5 million.

Interest receivable: Proceeds from Meichen’s restructuring and the early redemption of the Kaisun CB greatly reduced our interest receivables from HK$25.06 million as at 31 March 2012 to HK$15.2 million.

– 13 –

Bank and cash balances: As at 30 September 2012, bank and cash balances plus deposits increased significantly from HK$314.32 million to HK$485.84 million as we monetized our gains in Meichen and early redemption of our Kaisun CB.

Results

Although the Group was operationally profitable during the period, gaining HK$15.14 million compared to a loss of HK$93.55 million in last period, OP Financial incurred a loss in total comprehensive income of HK$95.56 million compared to a loss of HK$184.96 million in the first half of last financial year. Restructuring Meichen allowed us to convert over HK$100 million investment value into cash. Furthermore, we received an early redemption from our convertible bond position with Kaisun, receiving over HK$79 million in cash. Income from investment associates, primarily CSOP, also recovered to HK$3.5 million from only HK$0.1 million in the comparable period. However, weakness in Nobel and equity investment funds managed under OPIM led to a decline in our net assets to approximately HK$1.44 billion from HK$1.54 billion, or a net decrease of 6%.

Consolidated Statement of Comprehensive Income

Revenue, for the six months ended 30 September was as follows:

Dividend income from unlisted investments(1) Performance premiums(2) Interest income(3) Total	2012 (Unaudited) HK$’000 592 7,777 7,254 15,623	2011 (Unaudited) HK$’000 5,000 15,098 8,007
		28,105

(1) CSOP Shen Zhou RMB Fund distributed total dividend of HK$0.59 million during the period.

(2) CIC, co-investment partner awarded performance premiums of HK$7.78 million to the Group in return of our resources devoted to the investment project.

(3) Interest income of approximately HK$7.25 million is mainly derived from convertible bond issued by Kaisun and our time deposits in banks.

Net change in unrealised loss on financial assets at fair value through profit or loss: The net change in unrealised loss of HK$26.8 million mainly represents (i) the loss in fair value of the conversion option embedded in the convertible bonds of Kaisun of approximately HK$0.8 million, (ii) the cumulative losses of HK$11.14 million in the Group’s investment funds managed by OPIM.

Impairment loss on available-for-sale financial assets: The HK$7.9 million loss represents the further impairment in our holdings of Kaisun ordinary shares.

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

– 14 –

Administrative expenses: HK$25.21 million is mainly the result of investment management fee, professional fees and staff costs.

Share of results of associates: A net amount of approximately HK$3.5 million (2011: HK$0.1 million) accounted for our share of results of associates such as CSOP and Guotai Junan. These companies generate revenue based on management and performance fees from assets under management.

Other comprehensive income: Changes to the Group’s NAV, otherwise not accounted for in “profit for the period”, are found in “other comprehensive income”. The loss of HK$110.70 million is mainly net of: (i) unrealised losses from equity interest in Nobel by HK$42 million, and (ii) unrealised losses from OPIM preference shares and Kaisun’s ordinary shares and outstanding convertible bonds by HK$37.3 million and (iii) Transfer-out of HK$39 million to income statement due to Meichen’s restructuring. Combined with the “profit for the period”, the total comprehensive income for the year was a loss of HK$95.56 million.

Nobel Kaisun – Ordinary Shares Kaisun – Convertible Bond Borrowing Portion OP Investment Management Group Jin Dou Fair value decrease Impairment loss on Kaisun – Ordinary Shares	2012 (Unaudited) HK$’000 (42,420) (9,248) (5,330) (22,719) (277) (79,994) 7,927 (72,067)	2011 (Unaudited) HK$’000 (66,969) (25,200) (6,531) (17,000) (936) (116,636) 25,200 (91,436)

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NAV Per Share in HK$

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1.70
1.65
1.60
1.55
2011
1.50
2012
1.45
1.40
1.35
April May June July August September
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INTERIM DIVIDEND

The Board has resolved to pay an interim dividend of HK10 cents per share for the period (2011: nil) to shareholders whose names appear on the Register of Members of the Company on Thursday, 10 January 2013. The dividend will be paid on Thursday, 17 January 2013.

CLOSURE OF REGISTER OF MEMBERS

In order to determine shareholders who qualify for the interim dividend, the Register of Members of the Company will be closed from Tuesday, 8 January 2013 to Thursday, 10 January 2013, both days inclusive, during which no transfer of shares will be effected. All properly completed transfers form(s) accompanied by relevant share certificate(s) must be lodged with the Company’s branch share registrar, Tricor Abacus Limited, at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong not later than 4:30 p.m. on Monday, 7 January 2013.

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 interim period, the Group continued to maintain a significant balance of cash and cash equivalents. As at 30 September 2012, the Group had cash and bank balances, including bank deposits, of HK$485.84 million (31 March 2012: HK$314.32 million).

The Group had no bank borrowings and did not pledge any assets as collateral for overdrafts or other loan facilities during the period 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 295 times (31 March 2012: 293 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.

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The Board believes that the Group has sufficient financial resources to satisfy its immediate investments and working capital requirements.

CAPITAL STRUCTURE

As at 30 September 2012, the Group’s shareholders’ equity and total number of shares in issue for the Company stood at HK$1.44 billion (31 March 2012: HK$1.54 billion) and 941.40 million (31 March 2012: 941.40 million), respectively.

MATERIAL ACQUISITIONS AND DISPOSALS OF SUBSIDIARIES AND ASSOCIATED COMPANIES

During the period, the Group transformed the investment in Meichen, from a VIE structure under “Crown Honor Holdings Ltd”, into a direct shareholding of Meichen at the PRC onshore level. Details of the transaction can be found on page 10 of this announcement.

SEGMENT INFORMATION

Segment information of the Group is set out in note 5 on page 5 of this announcement.

EMPLOYEES

As at 30 September 2012, the Group had 18 (2011: 19) employees, including directors. Total staff costs for the six months ended 30 September 2012 amounted to HK$8.95 million (2011: HK$8.31 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

The detailed disclosures relating to the Company’s share option scheme and valuation of options are set out in note 18 to the condensed consolidated interim financial information.

CHARGES ON GROUP ASSETS

As at 30 September 2012, there were no charges on the Group’s assets.

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

The Group entered into an investment agreement during the period including a commitment of RMB75 million (approximately HK$92.57 million) towards a new investment vehicle. The commitment was agreed upon though not provided for in the current financial report. Proceeds shall finance the acquisition of interests in consumer retail related assets. The Group has identified prospective investments but specific targets have not been confirmed.

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EXPOSURE TO FLUCTUATIONS IN EXCHANGE RATES AND RELATED HEDGES

At 30 September 2012, the Group had exposure to foreign exchange fluctuation through unlisted equity instruments and bank balances located in the People’s Republic of China, and one of the unlisted investment funds held. These investments were denominated in RMB and the maximum exposure to foreign currency risk was HK$212,754,000, equivalent to RMB172,375,000 (at 31 March 2012: HK$256,371,000, equivalent to RMB207,849,000).

At 30 September 2012, 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.

CONTINGENT LIABILITIES

As at 30 September 2012, the Group did not have any significant contingent liabilities.

PURCHASE, SALE OR REDEMPTION OF SECURITIES

The Company or any of its subsidiaries has not purchased, sold or redeemed any of the Company’s securities during the period.

CODE ON CORPORATE GOVERNANCE PRACTICES

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 period, in compliance with the Code on Corporate Governance Practices as set out in Appendix 14 to the Listing Rules.

Code provision E.1.2 provided that, the chairman of the board should attend the annual general meeting. He should also invite the chairmen of the audit, remuneration, nomination and any other committees (as appropriate) to attend. In their absence, he should invite another member of the committee or failing this his duly appointed delegate, to attend. These persons should be available to answer questions at the annual general meeting. During the period, due to other business commitment on urgent basis, the Chairman of the Board namely Mr. Zhang Zhi Ping and two independent non-executive Directors, namely, Prof. He Jia and Mr. Wang Xiaojun were not available to attend the annual general meeting of the Company held on 1 August 2012. However, another executive Director, namely Mr. Zhang Gaobo and another independent non-executive Director, namely, Mr. Kwong Che Keung, Gordon did attend the meeting.

MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS OF LISTED ISSUERS (“MODEL CODE”)

The Company has adopted a “Policy for Director and Employee Dealings in the Company’s Securities” which supplement the 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 throughout the period.

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DIRECTORS’ RIGHTS TO ACQUIRE SHARES OR DEBENTURES

At no time during the period was the Company or its associated corporations a party to any arrangements to enable the Directors or Chief Executive of the Company to acquire any interests or short positions in the shares, underlying shares or debentures of the Company or its associated corporations.

AUDIT COMMITTEE

The Company’s audit committee, comprising three independent non-executive Directors, has reviewed with management the accounting principles and practices adopted by the Group and discussed auditing and financial reporting matters including a review of the condensed consolidated financial statements for the period before recommending them to the Board for approval.

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 Interim Financial Report for 2012/13 will be dispatched to the shareholders of the Company and available on the above websites in due course.

REVIEW OF ACCOUNTS

The external auditor has reviewed the interim financial information for the period in accordance with Hong Kong Standard on Review Engagements 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the Hong Kong Institute of Certified Public Accountants.

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.

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 ZHANG Gaobo Executive Director and CEO

Hong Kong SAR, 27 November 2012

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