Synagistics Limited - Interim / Quarterly Report 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.

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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 2013

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 2013 with comparative figures for the corresponding period in 2012 and selected explanatory notes as follows.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2013

		Six months ended	Six months ended	Six months ended
		30 September
		2013		2012
		(Unaudited)	(Unaudited)
	Note	*HK$’000*	HK$’000
Revenue	3	11,053		15,623
Other income	4	899		–
Net change in unrealized gain/(loss) on financial
assets at fair value through profit or loss
– Classified as held for trading		11,871		(10,171)
– Designated as such upon initial recognition		11,510		(16,617)
		23,381		(26,788)
Realized gain on deemed disposal of an investment		–		105,153
Realized gain on partial disposal of a subsidiary		21		–
Realized loss on deemed disposal of an associate		(1,426)		–
Realized loss on partial early redemption of
convertible bond		–		(48,589)
Impairment loss on available-for-sale financial assets		(2,510)		(7,927)
Equity-settled share-based payments		(670)		(670)
Administrative expenses		(20,220)		(25,205)

For identification purposes only

– 1 –

Note
Profit from operations
Share of results of associates
Profit before tax
Income tax
6
Profit 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
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 per share
Basic
8(a)
Diluted
8(b)
Proposed interim dividend
11

Six months ended
30 September
2013
2012
(Unaudited)
(Unaudited)
HK$’000
HK$’000
10,528
11,597
16,013
3,542
26,541
15,139
(70)
–
26,471
15,139
705
–
(4,208)
(79,994)
2,510
7,927
–
(39,432)
–
1,893
925
(1,037)
(83)
(53)
(151)
(110,696)
26,320
(95,557)
2.81 cents
1.61 cents
2.81 cents
1.61 cents
Six months ended
30 September
2013
2012
HK$’000
HK$’000
–
94,140

– 2 –

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 30 SEPTEMBER 2013

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 Loan receivable 9 Current assets Financial assets at fair value through profit or loss Accounts and loans receivable 9 Interest receivable Prepayments and other receivables Bank and cash balances TOTAL ASSETS Capital and reserves Share capital Reserves TOTAL EQUITY Current liabilities Other payables Tax payable TOTAL LIABILITIES TOTAL EQUITY AND LIABILITIES NET ASSETS Net asset value per share 10	30 September 2013 (Unaudited) *HK$’000* 14 120,095 306,483 153,553 – 580,145 299,725 18,063 1,008 79,022 327,596 725,414 1,305,559 94,140 1,206,511 1,300,651 4,838 70 4,908 1,305,559 1,300,651 HK$1.38	31 March 2013 (Audited) HK$’000 22 104,666 295,163 116,972 4,500 521,323 229,774 3,908 921 1,134 520,953 756,690 1,278,013 94,140 1,179,521 1,273,661 4,352 – 4,352 1,278,013 1,273,661 HK$1.35

– 3 –

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2013

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 2013 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 2013, 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 2013, 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 2013, 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.

The following standards or interpretations are effective for the first time for this interim period and adopted by the Company and its subsidiaries (together, “the Group”).

i) HKAS 1 (amendment) “Presentation of Financial Statements” requires entities to group items presented in ‘other comprehensive income’ (OCI) on the basis of whether they are potentially reclassifiable to profit or loss subsequently (reclassification adjustments). The adoption of the amended HKAS 1 only affects the presentation of the consolidated statement of comprehensive income.
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.
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.
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.

– 4 –

The following standards and amendments to standards have been issued but are not effective for the financial period beginning 1 April 2013 and have not been early adopted:

i) HKFRS 9 “Financial Instruments” addresses the classification, measurement and recognition of financial assets and financial liabilities. HKFRS 9 was issued in November 2009 and October 2010. It 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 amortized 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 instrument. For financial liabilities, the standard retains most of the HKAS 39 requirements. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a 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 upon its effective date, which is for the accounting period beginning on 1 April 2015.

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 premium from co-investment partner Interest income	Six months ended 30 September 2013 2012 (Unaudited) (Unaudited) *HK$’000* HK$’000 1,062 592 7,777 7,777 2,214 7,254 11,053 15,623	Six months ended 30 September 2013 2012 (Unaudited) (Unaudited) *HK$’000* HK$’000 1,062 592 7,777 7,777 2,214 7,254 11,053 15,623
		15,623

4 OTHER INCOME

Exchange gains Sundry income	Six months ended 30 September 2013 2012 (Unaudited) (Unaudited) *HK$’000* HK$’000 769 – 130 – 899 –	Six months ended 30 September 2013 2012 (Unaudited) (Unaudited) *HK$’000* HK$’000 769 – 130 – 899 –
		–

– 5 –

5 SEGMENT INFORMATION

The chief operating decision maker has been identified as the board of directors (the “Board”). 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	Six months ended 30 September 2013 2012 (Unaudited) (Unaudited) *HK$’000* HK$’000 2,531 7,740 8,522 7,883 11,053 15,623	Six months ended 30 September 2013 2012 (Unaudited) (Unaudited) *HK$’000* HK$’000 2,531 7,740 8,522 7,883 11,053 15,623
		15,623

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 Hong Kong	30 September 2013 (Unaudited) *HK$’000* 120,109	31 March 2013 (Audited) HK$’000 104,688

Information about major investments and co-investment partners

During the current period, performance premiums derived from one (2012: one) of the Group’s coinvestment partners, which accounted for 10% (2012: 10%) or more of the Group’s revenue amounted to approximately HK$7,777,000 (2012: HK$7,777,000).

During last 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.

– 6 –

6 INCOME TAX

Hong Kong Profits Tax is provided at a rate of 16.5% (2012: 16.5%) on estimated assessable profit for the period.

Current tax Under-provision of tax for previous year	Six months ended 30 September 2013 2012 (Unaudited) (Unaudited) *HK$’000* HK$’000 – – 70 – 70 –	Six months ended 30 September 2013 2012 (Unaudited) (Unaudited) *HK$’000* HK$’000 – – 70 – 70 –
		–

As at 30 September 2013, the Company has unused tax losses of approximately HK$42,417,000 (31 March 2013: HK$33,652,000) available to offset against future profits.

No deferred tax asset has been recognized in the condensed consolidated interim financial information due to the unpredictability of future profit streams.

7 PROFIT FOR THE PERIOD

The Group’s profit for the period is stated after charging the followings:

	Six months ended	Six months ended
	30 September
	2013		2012
	(Unaudited)	(Unaudited)
	*HK$’000*	HK$’000
Depreciation	8		11
Investment management fee	9,830	11,304
Exchange loss	–		1,287
Operating lease payments in respect of office premises	1,132		1,132
Staff costs (including directors’ emoluments)
Salaries and other benefits	7,309		8,185
Retirement benefits scheme contributions	99		92
Equity-settled share based compensation	670		670
	8,078		8,947

– 7 –

8 EARNINGS PER SHARE

(a) Basic earnings per share

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

Profit for the period Weighted average number of ordinary shares in issue (in thousand) Basic earnings per share	Six months ended 30 September 2013 2012 (Unaudited) (Unaudited) *HK$’000* HK$’000 26,471 15,139 941,400 941,400 2.81 cents 1.61 cents	Six months ended 30 September 2013 2012 (Unaudited) (Unaudited) *HK$’000* HK$’000 26,471 15,139 941,400 941,400 2.81 cents 1.61 cents
		941,400
		1.61 cents

(b) Diluted earnings per share

Diluted earnings per share for both six months ended 30 September 2013 and 30 September 2012 were the same as the basic earnings per share as the Company’s outstanding share options had no dilutive effect for both periods.

9 ACCOUNTS AND LOANS RECEIVABLE

Accounts receivable Amounts due from associates Loan to an associate, not repayable within one year Loan to an associate, repayable within one year Other loan, not repayable within one year Other loan, repayable within one year Loan to an investee, repayable on demand	30 September 2013 (Unaudited) *HK$’000* 11,642 – – 1,500 – 3,000 1,921 18,063	31 March 2013 (Audited) HK$’000 3,871 37 1,500 – 3,000 – –
		8,408

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 2013 of approximately HK$1,300,651,000 (31 March 2013: approximately HK$1,273,661,000) by the number of ordinary shares in issue at that date, being 941,400,000 (31 March 2013: 941,400,000).

11. INTERIM DIVIDEND

The Board has resolved not to pay any interim dividend in respect of the six months ended 30 September 2013.

On 27 November 2012, the Board resolved to pay an interim dividend of HK10 cents per ordinary share. The total interim dividend of HK$94,140,000 was paid on 17 January 2013.

– 8 –

MANAGEMENT DISCUSSION AND ANALYSIS

Investment holdings by source (HK$ millions, as a percentage of total assets)

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Receivables
and Others Kaisun Energy
$103.3 $18
Nobel Oil
7.9% 1.4%
$214.5
Cash 16.4%
$327.6
Meichen
25.1%
$134.3
10.3%
Glory Wing
$4.7
0.4%
New
Investments Jin Dou
$36.6 $6.8
2.8% 0.5%
JV Investment
Incubated Funds Companies
$288 $171.8
22.1% 13.1%
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INVESTMENT REVIEW

Meichen

In 2009, we invested in Meichen Group, an insurance brokerage business based in Guangzhou. We allocated a total of HK$106 million through a combination of HK$45.5 million in equity plus HK$60.5 million in loan. Since 2011, the investment returned over HK$101.4 million in loan repayments and capital. As at 30 September 2013, our remaining 22.3% share of the company is valued at HK$134.3 million, a 15% increase over six months and over 122% increase since 2009.

Meichen registered a strong performance in the first nine months of 2013, with 60% increased YTD revenues and 38% improved net profit to RMB61 million compared to the same period last year.

As part of a broader theme in China’s growing consumer market, we expect this investment to improve through the end of the year.

– 9 –

Nobel Oil Group

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. Net of performance premiums of over US$15 million received, our investment position in Nobel remains positive with the equity portion valued at HK$214.5 million. Recent weakness in oil prices combined with increasing mineral extraction taxes in Russia led to conservative industry projections, although this was offset by a 9.1% improvement in proved and probable reserves (2P).

Average production also slowed during the period albeit temporarily. Total production yearto-date through July 2013 was 489,528 tons, falling short of the targeted 505,736 tons. The difference is primarily due to delays in the new Western Siberian wells. Nobel reported a shortage of staff amongst the drilling contractors.

Production recommenced in September and average production is expected to recover substantially towards the remainder of the year.

Nobel’s management continues to explore potential partnerships with industry players in Asia.

Jin Dou

In 2009, OPFI invested in a Kazahkstan agriculture project mandated to diversify the country’s crops and commercialize regional production for export. OP Financial committed a total of US$15 million, of which only US$1.5 million was drawn. Since the project is still in pre-commercial phase, our position fell marginally from HK$6.9 million to HK$6.8 million during the period due to ongoing trial and infrastructure costs. While performance premiums received since inception have helped maintain an overall positive investment, we expect Jin Dou’s valuation to strengthen once it moves into commercialization stage.

In the first half of 2013, the plantation increased to around 7,500 hectares across three farming units locating in Kazakhstan. With the help of local joint venture partners, Jin Dou diversified the crop cycle to include soybean, corn, oat, wheat, safflower and vegetables.

The project team recently commissioned a survey institute to study approximately 88,000 hectares farmland in Kazakhstan – along the eastern and southern regions of the country, bordering Xinjiang, Western China and other Central Asian countries. Upon completion, the survey will outline a plan to integrate crop and livestock production cycles to maximise land yield throughout the year. As the management continues to strengthen its relationship with the local business community and the government, it is also exploring ancillary joint investment opportunities in trade, infrastructure and distribution specifically into China.

JV Investment Companies

We have non-controlling positions with three major asset management companies. Aggregate results attributable to the Group were approximately HK$16 million for the period. The value of our positions in this segment has grown from HK$129.7 million to HK$171.8 million. Our two most significant positions include CSOP Asset Management Limited (“CSOP”) and OP Investment Management (“OPIM”).

– 10 –

Company Name CSOP ASSET MANAGEMENT LTD OP INVESTMENT MANAGEMENT (Includes: OP Investment Management Cayman & HK Group) GUOTAI JUNAN FUND MANAGEMENT LTD Total	30 September 2013 *HK$’000* 115,369 52,171 4,220 171,760	31 March 2013 HK$’000 100,340 25,529 3,836 129,705	Change Change % HK$’000 15,029 15% 26,642 104% 384 10% 42,055

CSOP

CSOP gained 15% during the period due to increased net profitability, and our share of results totalled HK$15.6 million. Compared to a full year result of HK$16 million as at 31 March 2013, this performance indicates CSOP is on track to double its year-on-year performance. In the last 6 months, CSOP increased its AUM from HK$27.7 billion to close to over HK$28.7 billion after launching its China A80 ETF in September.

Though during the year CSOP issued additional shares to employees, diluting our shares to 23.7% of the management company, our position has almost doubled since 2009. We believe this does not accurately reflect CSOP’s true market value, having only began its inflection growth in 2012.

OP Investment Management

OP Investment Management, asset management group that also provides services to third party funds. These services include infrastructure and middle office services.

In the first half of 2013, OP Investment Management executed initiatives to increase its funds under management whilst reinforcing its infrastructure. Overall, the restructuring helped return the company to profitability, and our position as at 30 September 2013 recovered by over 104% to HK$52.2 million.

With an AUM of US$240 million across 13 funds, OPIM improved its cashflow through cost cutting measures, launching new funds, and performance fee income from existing funds. OPIM recently moved premises resulting in significant rental savings. To accommodate a growing AUM, management strengthened electronic trade automation and staff.

OPIM has also developed marketing capabilities through leading prime brokers, having satisfied their due diligence process.

– 11 –

Incubated Funds

The Group invests in a portfolio of unlisted investment funds as part of a larger incubation strategy to strengthen new funds developed through our partnerships.

Including our investments managed by CSOP and OPIM, our total funds increased by approximately HK$76.3 million or 36% from HK$211.7 million to HK$288 million during the period due to HK$63.2 million new subscriptions and HK$13 million investment gains.

An analysis of changes in our incubated funds’ positions during the current period have been outlined below:

Name of Fund Strategy GREATER CHINA SELECT FUND Equities (Long only), China GREATER CHINA SPECIAL VALUE FUND Equities (Long), Private Equity, Emerging Markets PHOENIXINVEST PACIFIC FUND Equities (Long/Short), Asia Pacific MIRAN MULTI STRATEGY FUND Multistrategy, Global CSOP SHEN ZHOU RMB FUND Bonds (RMB), China	30 September 2013 *HK$’000* 78,416 83,314 8,242 66,753 51,239 287,964	31 March 2013 HK$’000 15,917 83,029 8,629 52,533 51,556 211,664	Change HK$’000 62,4991 285 (387) 14,2202 (317) 76,300

1 Includes HK$50 million new subscriptions during the period

2 Includes HK$13.2 million new subscriptions during the period

New Investments

Given the change in high level themes from China’s new leadership, OPFI has been actively delving into new sectors. Central government policies are shifting away from an economic expansion towards social welfare and commercial stability. OPFI has since made introductory investments into two new industries: pharmaceuticals and green energy, deploying HK$36.6 million in total for minority positions. These projects are structured to include rights to greater participation as the investees mature.

The first project is a US$2 million US-based investment, Dance Biopharm Inc., a biotech company with promising new technologies that would allow diabetics to inhale insulin as an alternative to self-injection. In addition to equity in the US Company, the deal structure grants OPFI shares in a separate joint venture company with exclusive distribution rights to Asia. Meanwhile, the joint venture company is looking to secure PRC regulatory approvals for distribution in China.

– 12 –

The second project is a HK$21.1 million investment to finance the management buyout of minority stakes in PRC companies. One of these companies is an energy efficiency services company poised to benefit from China’s new focus on reducing pollution and energy conservation. It is seeking an offshore platform to raise capital for expansion. The equity portion constitutes HK$1.9 million, and like our first investment into Dance Biopharm, we intend to learn more about this company and its industry before deciding on larger allocations.

FINANCIAL REVIEW

Financial position

Net asset value: The Group’s net assets as at 30 September 2013 is HK$1.38 per share or HK$1.3 billion.

Gearing: The gearing ratio, which is calculated on the basis of total liabilities over total equity as at 30 September 2013, was 0.004 (31 March 2013: 0.003). 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 12.8% to HK$120.1 million as at 30 September 2013 (31 March 2013: HK$104.7 million) reflecting strong performance of our investees specifically CSOP.

Available-for-sale financial assets: A 3.8% increase from HK$295.2 million to HK$306.5 million during the period was mainly the net result of declines in our position with Nobel of HK$28.1 million, offset by gains in OPIM preference shares of HK$26.6 million, and new investments in Dance Biopharm of HK$15.5 million.

Financial assets at fair value through profit or loss: The HK$106.5 million or 30.7% increase from HK$346.8 million to HK$453.3 million during the period was primarily due to new investments: HK$63 million in new subscriptions to investment funds and HK$19 million new investment in a senior note. Apart from that, HK$17.3 million unrealized gain in Meichen and HK$12.4 million unrealized gain in incubated funds contributed to the increase.

Loan receivables: The addition of HK$1.9 million loan is part of a larger strategy related to our new investment in the energy efficiency services company.

Bank and cash balances: As at 30 September 2013, bank and cash balances plus deposits decreased significantly from HK$521 million to HK$327.6 million primarily due to new investments worth HK$178 million.

– 13 –

Results

The Group was profitable during the period, gaining HK$26.5 million compared to a profit of HK$15.1 million in last period. Taking into account those investment value changes through reserves, OP Financial’s total comprehensive income records a gain of HK$26.3 million compared to a loss of HK$95.6 million in the same period last financial year. These are primarily due to increases in unrealized gains in our incubated funds, our shares in CSOP and OPIM, and improved valuation of Meichen.

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	2013 (Unaudited) *HK$’000* 1,062 7,777 2,214 11,053	2012 (Unaudited) HK$’000 592 7,777 7,254
		15,623

(1) Represents dividends received from CSOP Shen Zhou RMB Fund during the period.

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

(3) Interest income of approximately HK$2.2 million is mainly generated from our time deposits in banks during the period. The drop from previous period was due to the settlement of Kaisun convertible bond in last financial year.

Net change in unrealised gain on financial assets at fair value through profit or loss: The net change in unrealised gain of HK$23.4 million mainly represents the net of (i) HK$17.4 million unrealized gain on fair value of our equity investment in Meichen; (ii) HK$12.4 million unrealized gain on incubated funds; and (iii) unrealized loss of HK$5.9 million on the convertible note issued by Glory Wing.

Realized loss on deemed disposal of an associate: It represents the realized loss arising from the dilution of our equity interest in CSOP from 25% to 23.68%.

Impairment loss on available-for-sale financial assets: The HK$2.5 million loss represents the further impairment on 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.

Administrative expenses: The total amount of HK$20 million is mainly the result of investment management fee, professional fees and staff costs.

– 14 –

Share of results of associates: A net amount of HK$16 million (2012: HK$3.5 million) accounts 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$0.2 million is mainly net of: (i) unrealized losses from equity interest in Nobel by HK$28.1 million and (ii) unrealized gains from preference shares of OPIM companies by HK$26.6 million.

Fair value changes of available-for-sale financial assets recorded in Other Comprehensive Income:

Nobel Kaisun – Ordinary Shares Kaisun – Convertible Bond Borrowing Portion OP Investment Management Group Jin Dou Dance Biopharm Fair value decrease	2013 (Unaudited) *HK$’000* (28,079) (2,642) – 26,625 (87) (25) (4,208)	2012 (Unaudited) HK$’000 (42,420) (9,248) (5,330) (22,719) (277) – (79,994)

NAV Per Share in HK$

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1.8
1.6
1.4
1.2
1.0
2012
0.8
2013
0.6
0.4
0.2
0.0
April May June July August September
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– 15 –

INTERIM DIVIDEND

The Board has resolved not to pay any interim dividend for the period (2012: HK10 cents 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 interim period, the Group continued to maintain a significant balance of cash and cash equivalents. As at 30 September 2013, the Group had cash and bank balances, including bank deposits, of HK$327.6 million (31 March 2013: HK$521 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 148 times (31 March 2013: 174 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 30 September 2013, the Group’s shareholders’ equity and total number of shares in issue for the Company stood at HK$1.3 billion (31 March 2013: HK$1.27 billion) and 941.40 million (31 March 2013: 941.40 million), respectively.

MATERIAL ACQUISITIONS AND DISPOSALS OF INVESTMENTS

Details of the following events can be found in the Investment Review section.

Investment in Dance Biopharm of HK$15.5 million
Investment in senior note of HK$19.1 million
New subscription of HK$50 million to Greater China Select Fund
New subscription of HK$13.2 million to Miran Multi Strategy Fund

SEGMENT INFORMATION

Segment information of the Group is set out in note 5 on page 6 of this announcement.

– 16 –

EMPLOYEES

As at 30 September 2013, the Group had 21 (2012: 18) employees, including directors. Total staff costs for the six months ended 30 September 2013 amounted to HK$8.08 million (2012: HK$8.95 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 19 to the condensed consolidated interim financial information.

CHARGES ON GROUP’S ASSETS

As at 30 September 2013, there were no charges on the Group’s assets.

EXPOSURE TO FLUCTUATIONS IN EXCHANGE RATES AND RELATED HEDGES

At 30 September 2013, 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$238,457,000, equivalent to RMB188,199,000 (at 31 March 2013: HK$218,769,000, equivalent to RMB175,162,000).

At 30 September 2013, 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 2013, 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.

CORPORATE GOVERNANCE CODE

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 Corporate Governance Code set out in Appendix 14 of the Listing Rules.

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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 period.

DIRECTORS’ RIGHTS TO ACQUIRE SHARES AND DEBENTURES

At no time during the period was the Company or its associated corporation(s) 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 corporation(s).

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 2013/14 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.

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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, 28 November 2013

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