REG - Asian Citrus Hldgs - Final Results <Origin Href="QuoteRef">0073.HK</Origin> - Part 2
29/10/2014 14:47
- Part 2: For the preceding part double click ID:nRSZ7100Sa
(603,857)
4) Changes in the assumed cost of sales can also result in significant fluctuations in the changes in fair value of
orange trees less costs to sell. The following table illustrates the sensitivity of the Group's net change in fair value of
orange trees less costs to sell to a 5.0% increase or decrease in the Group's assumed cost of sales used to calculate the
changes in fair value of orange trees less costs to sell for the year ended 30 June 2014:
5.0% Decrease Base Case 5.0% Increase
Net change in fair value of biological assets (RMB'000) (723,857) (923,857) (1,113,857)
The above sensitivity analyses are intended for illustrative purposes only, and any variation could exceed the amounts
shown above.
Valuation
According to the valuation report of the independent valuer, the aggregate value of the orange trees in Hepu Plantation and
Xinfeng Plantation as at 30 June 2014 was estimated to be approximately RMB1,080 million (2013: RMB1,983 million).
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
For the year ended 30 June 2014
2014 2013
Note RMB'000 RMB'000
Turnover 4 1,271,171 1,485,912
Cost of sales (1,137,241) (988,313)
Gross profit 133,930 497,599
Other income 37,604 53,438
Net loss on change in fair value of biological assets (923,857) (260,468)
Selling and distribution expenses (45,339) (45,640)
General and administrative expenses (143,481) (120,141)
Other operating expenses 5 (895,159) -
(Loss)/profit from operations (1,836,302) 124,788
Finance costs (144) (126)
(Loss)/profit before income tax 7 (1,836,446) 124,662
Income tax expense 8 - -
(Loss)/profit for the year (1,836,446) 124,662
Attributable to
Equity shareholders of the Company (1,839,179) 114,395
Non-controlling interests 2,733 10,267
(1,836,446) 124,662
RMB RMB
(Loss)/earnings per share 9
- Basic (1.483) 0.094
- Diluted (1.483) 0.093
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the year ended 30 June 2014
2014 2013
RMB'000 RMB'000
(Loss)/profit for the year (1,836,446) 124,662
Other comprehensive expense for the year
Item that may be reclassified subsequently to profit or loss:
- Exchange differences on translation of financial statements of
foreign operations, net of nil tax (7) (352)
Total comprehensive (loss)/income for the year (1,836,453) 124,310
Attributable to
Equity shareholders of the Company (1,839,186) 114,043
Non-controlling interests 2,733 10,267
(1,836,453) 124,310
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 30 June 2014
2014 2013
Note RMB'000 RMB'000
ASSETS
Non-current assets
Property, plant and equipment 2,305,246 1,989,625
Land use rights 76,178 72,701
Construction-in-progress 76,039 304,196
Biological assets 1,406,801 2,168,501
Intangible assets 53,715 64,463
Deposits 1,443 84,303
Goodwill 303,883 1,157,261
4,223,305 5,841,050
Current assets
Biological assets 214,971 212,098
Properties for sale - 5,830
Inventories 57,387 40,277
Trade and other receivables 11 155,172 68,315
Cash and cash equivalents 1,804,742 2,141,224
2,232,272 2,467,744
Total assets 6,455,577 8,308,794
EQUITY AND LIABILITIES
Equity
Share capital 12,340 12,159
Reserves 6,225,165 8,078,888
Total equity attributable to equity shareholders of the Company 6,237,505 8,091,047
Non-controlling interests 115,153 112,420
6,352,658 8,203,467
2014 2013
Note RMB'000 RMB'000
Non-current liabilities
Obligations under finance leases 719 832
Current liabilities
Trade and other payables 12 102,087 104,390
Obligations under finance leases 113 105
102,200 104,495
Total liabilities 102,919 105,327
Total equity and liabilities 6,455,577 8,308,794
Net current assets 2,130,072 2,363,249
Total assets less current liabilities 6,353,377 8,204,299
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2014
2014 2013
RMB'000 RMB'000
Cash flows from operating activities
(Loss)/profit before income tax (1,836,446) 124,662
Adjustments for:
Interest income (35,855) (50,509)
Impairment of goodwill 853,378 -
Impairment of property, plant and equipment 15,690 -
Impairment of biological assets 11,802 -
Impairment of properties for sale 5,830 -
Finance costs 144 126
Share-based payments 10,131 24,698
Amortisation of land use rights 1,521 1,360
Amortisation of intangible assets 10,748 12,723
Depreciation of property, plant and equipment 181,378 144,603
Written off of inventories 22,577 -
Loss on disposals of property, plant and equipment 12,192 2,172
Loss on disposal of land use right - 4,902
Loss on deregistration of subsidiaries - 192
Net loss on change in fair value of biological assets 923,857 260,468
Operating profit before working capital changes 176,947 525,397
Movements in working capital elements:
Biological assets (14,675) (53,462)
Inventories (39,687) 22,817
Trade and other receivables (86,857) 18,342
Trade and other payables (2,310) 47,232
Net cash generated from operating activities 33,418 560,326
Cash flows from investing activities
Proceeds from disposals of property, plant and equipment 7,434 1,853
Proceed from disposal of land use right - 3,565
Purchases of property, plant and equipment (18,967) (32,823)
Purchase of land use right (4,998) (14,001)
Additions to construction-in-progress (200,888) (391,561)
Deposits paid for acquisition of property, plant and equipment (1,443) (84,297)
Net additions to biological assets (162,157) (123,745)
Additions to intangible assets - (18,680)
Decrease in time deposits with terms over three months - 62,960
Interest received 35,855 50,509
Net cash used in investing activities (345,164) (546,220)
2014 2013
RMB'000 RMB'000
Cash flows from financing activities
Proceeds from issue of new shares upon exercises of share options 14,362 2,746
Repurchase of shares - (34,548)
Repayments of obligations under finance leases (105) (97)
Dividends paid (38,849) (166,011)
Finance costs paid (144) (126)
Net cash used in financing activities (24,736) (198,036)
Net decrease in cash and cash equivalents (336,482) (183,930)
Cash and cash equivalents at beginning of year 2,141,224 2,325,154
Cash and cash equivalents at end of year 1,804,742 2,141,224
Major non-cash transactions
During the year, purchases of property, plant and equipment included an amount of RMB84,303,000 (2013: RMB4,245,000)
transferred from non-current deposits.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1 GENERAL INFORMATION
The Company was incorporated in Bermuda on 4 June 2003 as an exempted company with limited liability under the Companies
Act of Bermuda and its shares are listed on the Main Board of The Stock Exchange of Hong Kong Limited (the "HKEx") and AIM
of the London Stock Exchange.
The address of the Company's registered office is Clarendon House, 2 Church Street, Hamilton, HM11, Bermuda. The principal
place of business of the Company is located at Rooms 1109-1111, Wayson Commercial Building, 28 Connaught Road West, Hong
Kong.
The principal activities of the Group are planting, cultivation and sale of agricultural produce and manufacture and sale
of fruit juice concentrates, fruit purees, frozen fruits and vegetables.
2 SIGNIFICANT ACCOUNTING POLICIES
(a) Statement of compliance
These consolidated financial statements have been prepared in accordance with all applicable International Financial
Reporting Standards ("IFRSs"), which comprise International Financial Reporting Standards, International Accounting
Standards ("IASs") and Interpretations, issued by the International Accounting Standards Board ("IASB") and the
International Financial Reporting Interpretations Committee, and the disclosure requirements of the Hong Kong Companies
Ordinance. The consolidated financial statements also comply with the applicable disclosure provisions of the Rules
Governing the Listing of Securities on the HKEx and the AIM Rules.
The IASB has issued certain new and revised IFRSs that are first effective or available for early adoption for the current
accounting period of the Group. Note 3 provides information on any changes in accounting policies resulting from initial
application of these developments to the extent that they are relevant to the Group for the current and prior accounting
periods reflected in these consolidated financial statements.
(b) Basis of preparation of the consolidated financial statements
These consolidated financial statements are presented in Renminbi ("RMB"), the functional currency of the Group, rounded to
the nearest thousand, unless otherwise stated. They have been prepared under the historical cost convention, except that
certain biological assets are carried at their fair values.
The preparation of consolidated financial statements in conformity with IFRSs requires management to make judgements,
estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and
expenses. The estimates and associated assumptions are based on historical experience and various other factors that are
believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about
carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from
these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised
in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision
and future periods if the revision affects both current and future periods.
3 APPLICATIONS OF NEW AND REVISED IFRSs
Up to the date of issue of the consolidated financial statements, the IASB has issued a number of amendments, new standards
and interpretations which are not yet effective for the year ended 30 June 2014 and which have not been adopted in the
consolidated financial statements. Of these developments, the following relates to matters that may be relevant to the
Group's operations and consolidated financial statements:
Improvements to IFRSs Annual improvements to IFRSs 2010-2012 cycles2
Improvements to IFRSs Annual improvements to IFRSs 2011-2013 cycle2
Amendments to IFRS 9 and IFRS 7 Mandatory effective date of IFRS 9 and transition disclosures5
Amendments to IFRS 10, IFRS 12 and IFRS 27 Investing entities1
Amendments to IAS 16 and IAS 38 The Classification of acceptable methods of depreciation and amortisation3
Amendments to IAS 16 and IAS 41 Bringing bearer plants into the scope of IAS 163
Amendments to IAS 32 Offsetting financial assets and financial liabilities1
Amendments to IAS 36 Recoverable amount disclosures for non-financial assets1
IFRS 9 Financial instruments5
IFRS 15 Revenue from contracts with customers4
1 Effective for annual periods beginning on or after 1 January 2014.
2 Effective for annual periods beginning on or after 1 July 2014.
3 Effective for annual periods beginning on or after 1 January 2016.
4 Effective for annual periods beginning on or after 1 January 2017.
5 Effective for annual periods beginning on or after 1 January 2018.
The Group is in the process of making an assessment of what the impact of these amendments and new standards is expected to
be in the period of initial application, but is not yet in a position to state whether these amendments and new standards
would have a significant impact on the Group's financial statements.
4 TURNOVER
Turnover represented the total invoiced value of goods supplied to customers. The amount of each significant category of
revenue recognised in turnover is as follows:
2014 2013
RMB'000 RMB'000
Sales of oranges 732,807 919,983
Sales of self-bred saplings 892 1,840
Sales of processed fruits 537,472 564,089
1,271,171 1,485,912
5 OTHER OPERATING EXPENSES
2014 2013
RMB'000 RMB'000
Impairment of goodwill 853,378 -
Written off of inventories# 8,459 -
Impairment of property, plant and equipment# 15,690 -
Impairment of biological assets# 11,802 -
Impairment of properties for sale 5,830 -
895,159 -
# These expenses were resulted from the widespread damage caused by Typhoon Rammasun in July 2014, accounted for as
adjusting events after the reporting period.
6 SEGMENT INFORMATION
The Group manages its business by lines of business. In a manner consistent with the way in which information is reported
internally to the Group's most senior executive management for the purposes of resources allocation and performance
assessment, the Group has two (2013: two) reportable segments. The segments are managed separately as each business offers
different products and requires different business strategies. The following summary describes the operations in each of
the Group's reportable segments in the year ended 30 June 2014:
· Agricultural produce - planting, cultivation and sale of agricultural produce
· Processed fruits - manufacture and sale of fruit juice concentrates, fruit purees, frozen fruits and vegetables
No inter-segment transactions incurred between the companies in the Group.
No customer accounted for 10% or more of the total revenue for both years.
As majority of the Group's non-current assets and revenue are located in/derived from the PRC, geographical information is
not presented.
The directors assess the performance of the operating segments based on a measure of reportable segment results. This
measurement basis excludes the central other income, expenses and finance costs.
Segment assets mainly exclude goodwill, certain property, plant and equipment, land use rights and other assets that are
managed on a central basis. Segment liabilities mainly exclude liabilities that are managed on a central basis.
Agricultural produce Processed fruits Total
2014 2013 2014 2013 2014 2013
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
RESULTS
Reportable segment revenue and
revenue from external customers 733,699 921,823 537,472 564,089 1,271,171 1,485,912
Reportable segment results (960,043) 31,912 12,900 138,711 (947,143) 170,623
Unallocated corporate expenses (892,115) (50,557)
Unallocated corporate other income 2,812 4,596
(Loss)/profit before income tax (1,836,446) 124,662
Income tax expense - -
(Loss)/profit for the year (1,836,446) 124,662
ASSETS
Segment assets 4,294,283 5,253,592 1,700,650 1,689,669 5,994,933 6,943,261
Unallocated corporate assets 460,644 1,365,533
Total assets 6,455,577 8,308,794
LIABILITIES
Segment liabilities (75,748) (76,016) (22,566) (24,483) (98,314) (100,499)
Unallocated corporate liabilities (4,605) (4,828)
Total liabilities (102,919) (105,327)
OTHER INFORMATION
Additions to segment non-current assets 159,390 225,539 149,493 321,737 308,883 547,276
Amortisation of land use rights - - 466 306 466 306
Amortisation of intangible assets 5,360 7,360 5,388 5,363 10,748 12,723
Depreciation 78,229 71,225 72,560 50,764 150,789 121,989
Loss on disposals of property, plant and equipment 1,010 - 10,814 2,168 11,824 2,168
Construction-in-progress written off - 1,480 - 189 - 1,669
Interest income 20,258 32,799 12,786 13,114 33,044 45,913
Finance charges on obligations under finance leases 75 83 - - 75 83
Net loss on change in fair value of biological assets 923,857 260,468 - - 923,857 260,468
Impairment of biological assets 11,802 - - - 11,802 -
Impairment of property, plant and equipment 13,079 - 2,611 - 15,690 -
Written off of inventories - - 22,577 - 22,577 -
Share-based payments 246 4,980 9,750 16,086 9,996 21,066
7 (LOSS)/PROFIT BEFORE INCOME TAX
(Loss)/profit before income tax is stated after charging/(crediting) the following:
2014 2013
RMB'000 RMB'000
(a) Finance costs
Bank charges 69 43
Finance charges on obligations under finance leases 75 83
144 126
(b) Staff costs (including directors' emoluments)
- salaries, wages and other benefits 135,369 114,510
- share-based payments 10,131 24,698
- contribution to defined contribution retirement plans 3,322 2,775
148,822 141,983
(c) Other items
Amortisation of land use rights 1,521 1,360
Amortisation of intangible assets 10,748 12,723
Auditor's remuneration 2,522 2,432
Cost of agricultural produce sold# 678,839 571,147
Cost of inventories of processed fruits
recognised as expenses## 458,402 417,166
Depreciation of property, plant and equipment 181,378 144,603
Add: Realisation of depreciation previously
capitalised as biological assets 25,346 23,423
Less: Amount capitalised as biological assets (54,974) (45,059)
151,750 122,967
Construction-in-progress written off - 1,669
Exchange gains, net 14 989
Operating lease expenses
- plantation bases 9,163 9,470
- properties 1,184 1,020
Research and development costs 13,556 4,963
Written off of inventories### 22,577 -
Loss on disposals of property, plant and equipment 12,192 2,172
Loss on disposal of land use right - 4,902
Loss on deregistration of subsidiaries - 192
# Cost of agricultural produce sold includes RMB151,422,000 (2013: RMB133,321,000) relating to staff costs,
depreciation and operating lease expenses, which amount is also included in the respective total amount disclosed
separately above for each of these types of expenses.
## Cost of inventories of processed fruits recognised as expenses includes RMB94,190,000 (2013: RMB82,422,000)
relating to staff costs, amortisation of land use rights, amortisation of intangible assets and depreciation, which amount
is also included in the respective total amount disclosed separately above for each of these types of expenses.
### The written off of inventories for the year of RMB14,118,000 (2013: RMBNil) and RMB8,459,000 (2013: RMBNil) is
included in general and administrative expenses and other operating expenses, respectively, in the consolidated statement
of profit or loss.
8 INCOME TAX EXPENSE
On the basis stated below, no income tax has been provided by the Group:
(i) Pursuant to the rules and regulations of Bermuda, Cayman Islands and the British Virgin Islands ("BVI"), the
Group is not subject to any income tax in the respective tax jurisdictions.
(ii) No Hong Kong profits tax has been provided as the Group did not have assessable profits arising in or derived
from Hong Kong.
(iii) No PRC enterprise income tax has been provided as the Group did not have assessable profit in the PRC during
the year. The provision for PRC enterprise income tax for is based on the respective applicable rates on the estimated
assessable income of the Group's subsidiaries in the PRC as determined in accordance with the relevant income tax laws,
rules and regulations of the PRC.
According to the PRC tax law, its rules and regulations, enterprises that engage in certain qualifying agricultural
business are eligible for certain tax benefits, including full enterprise income tax exemption on profits derived from such
business. Certain operating subsidiaries of the Group in the PRC engaged in qualifying agricultural business are entitled
to full exemption of enterprise income tax.
The applicable enterprise income tax rate of the Group's other operating subsidiaries in the PRC is 25%.
(iv) PRC withholding income tax
Under the PRC tax law, profits of the Group's subsidiaries in the PRC derived since 1 January 2008 is subject to
withholding income tax at rates of 5% or 10% upon the distribution of such profits to foreign investors or companies
incorporated in Hong Kong, or for other foreign investors, respectively. Pursuant to the grandfathering arrangements of the
PRC tax law, dividends receivable by the Group from its PRC subsidiaries in respect of the undistributed profits derived
prior to 31 December 2007 are exempt from the withholding income tax. At 30 June 2014, no deferred tax liabilities have
been recognised in respect of the tax that would be payable on the unremitted profits of the PRC subsidiaries derived since
1 January 2008 as the Company is in a position to control the dividend policies of the PRC subsidiaries and no distribution
of such profits is expected to be declared from the PRC subsidiaries in the foreseeable future.
9 (LOSS)/EARNINGS PER SHARE
The calculation of the basic and diluted (loss)/earnings per share is based on the following:
2014 2013
RMB'000 RMB'000
(Loss)/earnings
(Loss)/profit attributable to equity shareholders of the Company used in basic and diluted (loss)/earnings per share calculation (1,839,179) 114,395
Weighted average number of shares '000 '000
Issued ordinary shares at beginning of year 1,229,559 1,221,097
Effect of shares issued to shareholders participating in the scrip dividend 5,238 8,811
Effect of shares issued upon exercises of share options 5,371 55
Effect of shares repurchased and cancelled - (7,236)
Weighted average number of ordinary shares 1,240,168 1,222,727
used in basic (loss)/earnings per share calculation
Effect of dilutive potential shares in respect of
share options (Note) - 10,035
Weighted average number of ordinary shares 1,240,168 1,232,762
used in diluted (loss)/earnings per share calculation
Note:
The potential ordinary shares arising from the conversion of share options had an anti-dilutive effect on the basic loss
per share for the year ended 30 June 2014, hence they were ignored in the calculation of diluted loss per share.
10 DIVIDENDS
(i) Dividends payable to equity shareholders of the Company attributable to the year:
2014 2013
RMB'000 RMB'000
Interim dividend declared and paid during the year: RMBNil per ordinary share (2013: interim dividend of RMB0.03and special dividend of RMB0.02 per ordinary share) - 61,386
Final dividend proposed after the end of the reporting period:
RMBNil per ordinary share (2013: RMB0.05 per
ordinary share) - 61,478
- 122,864
The final dividend proposed after the end of the reporting period has not been recognised as a liability at the end of the
reporting period.
(ii) Dividends payable to equity shareholders of the Company attributable to the previous financial year, approved and
paid during the year:
2014 2013
RMB'000 RMB'000
Interim dividend for the year, approved and paid during theyear: RMBNil per ordinary share (2013: interim dividend of RMB0.03 and special dividend of RMB0.02 per ordinaryshare) - 61,386
Final dividend of RMB0.05 per ordinary share in respect of the previous financial year, approved and paid during the year (2013: final dividend of RMB0.13 per ordinary share) 61,478 158,531
61,478 219,917
11 TRADE AND OTHER RECEIVABLES
2014 2013
RMB'000 RMB'000
Trade receivables 53,717 42,736
Other receivables, deposits and prepayments 101,455 25,579
155,172 68,315
Trade receivables from sales of goods are normally due for settlement within 30 to 90 days from the date of billing, while
that from the sale of property units are due for settlement in accordance with the terms of the related sale and purchase
agreements.
The ageing analysis of trade receivables that are neither individually nor collectively considered to be impaired is as
follows:
2014 2013
RMB'000 RMB'000
Neither past due nor impaired 53,253 41,492
Less than 1 month past due - 1,174
1 to 3 months past due 438 -
3 to 6 months past due - -
6 to 12 months past due - -
Over 1 year past due 26 70
Amounts past due but not impaired 464 1,244
53,717 42,736
Receivables that were neither past due nor impaired relate to a wide range of customers for whom there was no recent
history of default.
Receivables that were past due but not impaired relate to a number of independent customers that have a good track record
with the Group. Based on past experience, management believes that no impairment allowance is necessary in respect of these
balances as there has not been a significant change in credit quality and the balances are considered fully recoverable.
12 TRADE AND OTHER PAYABLES
Included in trade and other payables are trade payables with the ageing analysis of trade payables by invoice date is as
follows:
2014 2013
RMB'000 RMB'000
Less than 3 months 62,783 62,881
3 to 6 months 46 68
6 to 12 months 516 304
Over 1 year 3 299
63,348 63,552
13 Financial Information
The results announcement was approved by the Board on 26 September 2014. The financial information has been prepared on a
going concern basis in accordance with International Financial Reporting Standards. The accounting policies applied in
preparing the financial information are consistent with those adopted and disclosed in the Group's consolidated financial
statements for the year ended 30 June 2013, except for the accounting policies changes as detailed in Note 3.
The consolidated financial statements for the year ended 30 June 2014 will be delivered to the Registrar of Companies
following the Company's annual general meeting. The auditors have reported on the consolidated financial statements for the
year ended 30 June 2014 and their report was unqualified and did not contain a statement under section 237 (2) or (3) of
the Companies Act 1985.
OTHER INFORMATION
DIVIDENDS
The Board does not recommend the payment of any dividend for the year ended 30 June 2014 (2013: RMB0.10 per ordinary share,
including the final dividend of RMB0.05, interim dividend of RMB0.03 and special dividend of RMB0.02).
PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES
On 6 December 2013, 1,715,000 and 7,802,000 new ordinary shares of HK$0.01 each were issued at the exercise prices of
GBP0.112 and GBP0.139 respectively upon the exercise of a total of 9,517,000 share options under the share option scheme.
On 19 December 2013, 10,562,329 new ordinary shares of HK$0.01 each were issued at the price of HK$2.74 per share to
shareholders participating in the scrip dividend.
The Company did not redeem any of its listed securities nor did the Company or any of its subsidiaries purchase or sell any
of such securities during the year ended 30 June 2014.
CODE ON CORPORATE GOVERNACE PRACTICES
The Company is committed to the principles of corporate governance and corporate responsibility consistent with prudent
management. It is the belief of the Board that such commitment will in the long term serve to enhance shareholders' value.
The Directors, where practicable, for an organisation of the Group's size and nature sought to adopt two corporate
governance codes set out below:
1. The UK Corporate Governance Code which is the key source of corporate governance recommendations for listed companies in
the United Kingdom and consists of principles of good governance. It consists of principles of good governance covering the
following areas: (i) Leadership; (ii) Effectiveness; (iii) Accountability; (iv) Remuneration; and (v) Relations with
shareholders.
2. On 23 February 2012, the Company also adopted the Corporate Governance Code (the "Code") contained in the amended
Appendix 14 to the Rules Governing the Listing of Securities on the HKEx (the "Hong Kong Listing Rules"), which took effect
on 1 April 2012 as its code on corporate governance practices.
The Company has complied with all the code provisions as set out in the Code for the year ended 30 June 2014 except the
deviations set out below:
Code Provision A.2.1
Chairman and Chief Executive
During the period from 1 July 2013 to 2 March 2014, the roles of Chairman and Chief Executive Officer were performed by the
same individual, Mr. Tong Wang Chow, and were not separated. The Board meets regularly to consider issues related to
corporate matters affecting the operations of the Group. The Board considers that the structure will not impair the balance
of power and authority of the Board and the Company's management and, thus, believes that this structure will enable
effective planning and implementation of corporate strategies and decisions.
With effect from 3 March 2014, Mr. Tong Wang Chow resigned as an Executive Director of the Company and ceased all his other
offices of the Company (including the Executive Chairman). On the same date, Mr. Ng Hoi Yue was appointed as the
Non-executive Chairman. Also with effect from the same date, Mr. Ng Ong Nee was appointed as the Chief Executive Officer of
the Company. Since then, the roles of chairman and chief executive have been performed by separate individuals, in
compliance with provision A.2.1 of the Code.
Mr. Ng Hoi Yue, the Non-executive Chairman, is responsible for overseeing the functions of the Board, ensuring that the
Board works effectively and performs its responsibilities, and that all key and appropriate issues are discussed by it in a
timely manner. These are all in compliance with the provision set forward in paragraph A.2 of the Code.
Mr. Ng Ong Nee, the Chief Executive Officer, is responsible for leadership of the Group's business, the development and
implementation of strategies and managing the overall operations. Within the authorities delegated by the Board he is
responsible for developing strategy proposals, ensuring that the financial results, business strategies and, where
appropriate, targets and milestones are communicated to the investment community, shareholders and other relevant
stakeholders.
Code Provision A.5.1
The Company does not have a Nomination Committee. The Directors do not consider that, given the size of the Group and stage
of its development, it is necessary to have a Nomination Committee. However, this will be kept under regular review by the
Board. The Board as a whole regularly reviews the plans for orderly succession for appointments to the Board and its
structure, size and composition. If the Board considers that it is necessary to appoint new Director(s), it will set down
the relevant appointment criteria which may include, where applicable, the background, experience, professional skills,
personal qualities, availability to commit to the affairs of the Company and, in case of Independent Non-executive
Directors (the "INEDs"), the independence requirements set out in the Hong Kong Listing Rules from time to time. Nomination
of new Director(s) will normally be made by the Executive Directors and subject to the Board's approval. External
consultants may be engaged, if necessary, to access a wider range of potential candidate(s).
Code Provision E.1.2
The chairman of the Board should attend the annual general meeting. He should also invite the chairmen of the Audit
Committee and the Remuneration Committee to attend. However, Mr. Tong Wang Chow, the former Executive Chairman, was unable
to attend the annual general meeting of the Company held on 12 November 2013 (the "2013 AGM") due to other business
engagements. In the absence of the former Executive Chairman, Mr. Tong Hung Wai, Tommy, an Executive Director, took the
chair of the 2013 AGM pursuant to the provisions of the Company's Bye-Laws to ensure an effective communication with the
shareholders thereat.
DIRECTORS' SECURITIES TRANSACTIONS
The Company has adopted a code for Directors' dealings appropriate for a company whose shares are admitted to trading on
AIM of the London Stock Exchange and takes all reasonable steps to ensure compliance by the Directors and any relevant
employees. The Company also adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model
Code") as set out in Appendix 10 to the Hong Kong Listing Rules as its own code of conduct for dealings in the securities.
Following a specific enquiry of all Directors made by the Company, each of them has confirmed that he had fully complied
with the required standard as set out in the Model Code throughout the year ended 30 June 2014.
CHANGE IN THE INFORMATION OF DIRECTORS
Hon Peregrine Moncreiffe retired as an INED and ceased to be a member of the remuneration committee of the Board (the
"Remuneration Committee") with effect from the conclusion of the 2013 AGM.
Mr. Ma Chiu Cheung, Andrew retired as an INED and ceased to be the chairman of the audit committee of the Board (the "Audit
Committee") and a member of the Remuneration Committee with effect from the conclusion of the 2013 AGM.
Mr. Chung Koon Yan was appointed as an INED and a member of both the Audit Committee and the Remuneration Committee with
effect from 12 November 2013.
Mr. Ho Wai Leung was appointed as an INED and a member of the Remuneration Committee with effect
from 12 November 2013.
Mr. Tong Wang Chow resigned as an Executive Director and ceased all his other offices of the Company (including the
Executive Chairman and an authorised representative under the Hong Kong Listing Rules (the "Authorised Representative)) but
was
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