(Incorporated in Bermuda with limited liability) (Stock Code: 1215) Interim Report

Transcription

1 (Incorporated in Bermuda with limited liability) (Stock Code: 1215) Interim Report 2015

2 CONTENTS Page Corporate information 2 Report on review of interim condensed consolidated financial statements 3 Interim condensed consolidated statement of profit or loss 4 Interim condensed consolidated statement of comprehensive income 5 Interim condensed consolidated statement of financial position 6-7 Interim condensed consolidated statement of changes in equity 8 Interim condensed consolidated statement of cash flows 9-10 Notes to the interim condensed consolidated financial statements Interim dividends 38 Management discussion and analysis Directors and chief executive s interests and short positions in shares, underlying shares and debentures 43 Persons holding 5% or more interests in shares and underlying shares 44 Share option scheme 45 Purchase, sale or redemption of listed securities of the Company 45 Corporate governance 45 Model code for securities transactions by Directors 46 01

3 CORPORATE INFORMATION BOARD OF DIRECTORS (THE BOARD ) Executive Directors Mr. Xue Jian Mr. Law Wing Chi, Stephen Non-executive Director Mr. Hu Yishi (Chairman) Independent non-executive Directors Mr. Tam Sun Wing Mr. Ng Ge Bun Mr. He Yi AUDIT COMMITTEE Mr. Tam Sun Wing (Chairman) Mr. Ng Ge Bun Mr. He Yi REMUNERATION COMMITTEE Mr. Tam Sun Wing (Chairman) Mr. Law Wing Chi, Stephen Mr. He Yi Mr. Ng Ge Bun NOMINATION COMMITTEE Mr. Ng Ge Bun (Chairman) Mr. Law Wing Chi, Stephen Mr. He Yi Mr. Tam Sun Wing COMPANY SECRETARY Mr. Law Wing Chi, Stephen STOCK CODE 1215 WEBSITE PRINCIPAL REGISTRAR MUFG Fund Services (Bermuda) Limited The Belvedere Building 69 Pitts Bay Road Pembroke HM08, Bermuda SHARE REGISTRAR Tricor Tengis Limited 22nd Floor, Hopewell Centre 183 Quees s Road East Hong Kong REGISTERED OFFICE Canon s Court 22 Victoria Street Hamilton HM 12 Bermuda PRINCIPAL OFFICE IN HONG KONG 28th Floor, Chinachem Century Tower 178 Gloucester Road, Wanchai Hong Kong AUDITORS Ernst & Young Certified Public Accountants 22nd Floor, CITIC Tower 1 Tim Mei Avenue, Central Hong Kong SOLICITORS K&L Gates Solicitors 44th Floor, Edinburgh Tower The Landmark 15 Queen s Road, Central Hong Kong PRINCIPAL BANKERS The Hong Kong & Shanghai Banking Corporation Limited China Merchants Bank Company Limited 02

4 REPORT ON REVIEW OF INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS TO THE BOARD OF DIRECTORS OF KAI YUAN HOLDINGS LIMITED (Incorporated in Bermuda with limited liability) Introduction We have reviewed the accompanying interim condensed consolidated financial statements set out on pages 4 to 37 which comprise the interim condensed consolidated statement of financial position of Kai Yuan Holdings Limited (the Company ) and its subsidiaries (collectively referred to as the Group ) as at 30 June 2015 and the related interim condensed consolidated statement of profit or loss, the interim condensed consolidated statement of comprehensive income, changes in equity and cash flows for the six-month period then ended, and explanatory notes. The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited require the preparation of a report on interim condensed consolidated financial statements to be in compliance with the relevant provisions thereof and Hong Kong Accounting Standard 34 Interim Financial Reporting ( HKAS 34 ) issued by the Hong Kong Institute of Certified Public Accountants. The directors are responsible for the preparation and presentation of these interim condensed consolidated financial statements in accordance with HKAS 34. Our responsibility is to express a conclusion on these interim condensed consolidated financial statements based on our review. Our report is made solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. Scope of Review We conducted our review 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. A review of interim condensed consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the interim condensed consolidated financial statements are not prepared, in all material respects, in accordance with HKAS 34. Ernst & Young Certified Public Accountants 22nd Floor, CITIC Tower 1 Tim Mei Avenue Central, Hong Kong 24 August

5 INTERIM CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS FOR THE SIX MONTHS ENDED 30 JUNE 2015 For the six months ended 30 June (Unaudited) (Unaudited) (Restated) Notes CONTINUING OPERATIONS REVENUE 3 160,847 16,682 Cost of sales (117,842) (11,985) Gross profit 43,005 4,697 Other income and gains 3, Other expenses (74) Administrative expenses (23,813) (35,347) Finance costs 4 (59,949) (1,094) Share of (losses)/profits of associates (25,690) 62,322 (LOSS)/PROFIT BEFORE TAX FROM CONTINUING OPERATIONS 5 (63,411) 31,121 Income tax expense 6 (1,266) (2,718) (LOSS)/PROFIT FOR THE PERIOD FROM CONTINUING OPERATIONS (64,677) 28,403 DISCONTINUED OPERATIONS Loss for the period from discontinued operations 7 (9,292) (13,868) (LOSS)/PROFIT FOR THE PERIOD (73,969) 14,535 Attributable to: Owners of the Company (69,554) 21,767 Non-controlling interests (4,415) (7,232) (73,969) 14,535 (LOSS)/EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE COMPANY 9 Basic and diluted For (loss)/profit for the period HK$(0.5) cent HK$ 0.2 cent For (loss)/profit from continuing operations HK$(0.5) cent HK$ 0.2 cent 04

6 INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 30 JUNE 2015 For the six months ended 30 June (Unaudited) (Unaudited) (Restated) (LOSS)/PROFIT FOR THE PERIOD (73,969) 14,535 OTHER COMPREHENSIVE INCOME Other comprehensive loss to be reclassified to statement of profit or loss in subsequent periods: Cash flow hedges: Effective portion of changes in fair value of hedging instruments arising during the period 4,366 Reclassification adjustments for loss included in the consolidated statement of profit or loss 3,626 Income tax effect (2,664) 5,328 Exchange differences on translation of foreign operations (133,263) (20,745) Net other comprehensive loss to be reclassified to statement of profit or loss in subsequent periods (127,935) (20,475) OTHER COMPREHENSIVE LOSS FOR THE PERIOD, NET OF TAX (127,935) (20,745) TOTAL COMPREHENSIVE LOSS FOR THE PERIOD (201,904) (6,210) Attributable to: Owners of the Company (197,577) 3,928 Non-controlling interests (4,327) (10,138) (201,904) (6,210) 05

7 INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE June 2015 (Unaudited) 31 December 2014 (Audited) Notes NON-CURRENT ASSETS Property, plant and equipment 10 3,520,190 4,489,893 Prepaid land lease payments 35,686 Goodwill 304, ,917 Intangible assets ,603 Investments in associates 12 2,332,633 2,357,666 Available-for-sale investments 5,895 Deferred tax assets 18 37,028 53,292 Other long-term assets 3,046 Total non-current assets 6,194,295 7,360,998 CURRENT ASSETS Inventories 1,232 9,402 Trade receivables 13 30,554 22,512 Other receivables and prepayments 9,839 27,147 Prepaid land lease payments 3,370 Other long-term assets current portion 812 Amounts due from related companies ,518 Pledged deposits 14 20,907 3,169 Cash and cash equivalents 257, , , ,827 Assets of a disposal group classified as held for sale 7 1,045,540 Total current assets 1,365, ,827 Total assets 7,559,510 7,961,825 CURRENT LIABILITIES Trade and bills payables 15 14,619 46,183 Other payables and accruals 16 46, ,367 Receipt in advance ,239 Derivative financial instruments 8,444 6,224 Interest-bearing bank borrowings 17 12,000 12,000 Amounts due to related companies 23 57,278 96,478 Loans from a related company ,365 Tax payable 56 46, , ,905 Liabilities of a disposal group classified as held for sale 7 663,877 Total current liabilities 802, ,905 NET CURRENT ASSETS/(LIABILITIES) 562,610 (84,078) TOTAL ASSETS LESS CURRENT LIABILITIES 6,756,905 7,276,920 06

8 INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Continued) AS AT 30 JUNE June 2015 (Unaudited) 31 December 2014 (Audited) Notes TOTAL ASSETS LESS CURRENT LIABILITIES 6,756,905 7,276,920 NON-CURRENT LIABILITIES Interest-bearing bank borrowings 17 1,646,738 1,779,245 Loans from a related company 23 1,854,308 1,854,308 Deferred tax liabilities , ,710 Derivative financial instruments 5,836 18,016 Total non-current liabilities 3,900,168 4,218,279 Net assets 2,856,737 3,058,641 EQUITY Equity attributable to owners of the Company Issued capital 19 1,277,888 1,277,888 Reserves 1,278,088 1,475,665 2,555,976 2,753,553 Non-controlling interests 300, ,088 Total equity 2,856,737 3,058,641 07

9 INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30 JUNE 2015 At 1 January 2015 (Audited) 1,277,888 1,027,637 (16,160) 333, ,636 13,050 2,753, ,088 3,058,641 Loss for the period (69,554) (69,554) (4,415) (73,969) Other comprehensive loss for the period: Cash flow hedges, net of tax 5,328 5,328 5,328 Exchange difference on translation of foreign operations (133,351) (133,351) 88 (133,263) Total comprehensive loss for the period 5,328 (133,351) (69,554) (197,577) (4,327) (201,904) At 30 June 2015 (Unaudited) 1,277,888 1,027,637 (10,832) 200,151 48,082 13,050 2,555, ,761 2,856,737 Attributable to owners of the Company Issued capital Share premium* Hedging reserve* Translation reserve* Retained profits* Other reserve* Total Noncontrolling interests Total equity Attributable to owners of the Company Issued capital Share premium* Translation reserve* Retained profits* Other reserve* Total Noncontrolling interests Total equity At 1 January 2014 (Audited) 1,277,888 1,027, ,341 11,219 13,050 2,710, ,968 3,017,103 Profit/(loss) for the period 21,767 21,767 (7,232) 14,535 Other comprehensive loss for the period: Exchange difference on translation of foreign operations (17,839) (17,839) (2,906) (20,745) Total comprehensive loss for the period (17,839) 21,767 3,928 (10,138) (6,210) At 30 June 2014 (Unaudited) 1,277,888 1,027, ,502 32,986 13,050 2,714, ,830 3,010,893 * These reserve accounts comprise the consolidated reserves of HK$1,278,088,000 (30 June 2014: HK$1,436,175,000) in the interim condensed consolidated statement of financial position. 08

10 INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED 30 JUNE 2015 For the six months ended 30 June (Unaudited) (Unaudited) Note CASH FLOWS FROM OPERATING ACTIVITIES (Loss)/profit before tax From continuing operations (63,411) 31,121 From discontinued operations 7 (9,744) (11,736) Adjustments for: Finance costs 59,949 1,205 Share of losses/(profits) of associates 25,694 (62,324) Loss on disposal of items of property, plant and equipment 96 3 Depreciation of property, plant and equipment 51,274 31,288 Recognition of prepaid land lease payments 1,681 1,678 Recognition of other long-term assets Amortization of intangible assets 3,730 3,689 Interest income (1,802) (1,007) 67,872 (5,679) Decrease in inventories 6,713 2,957 Increase in trade receivables (8,800) (1,642) Decrease in other receivables and prepayments 5,270 1,589 Increase in pledged deposits (6,342) (16,343) Increase in trade and bills payable 16,454 31,996 Increase in other payables and accruals 6,745 1,082 Decrease in receipt in advance (118,823) (49,728) Cash used in operations (30,911) (35,768) Hong Kong profit tax paid (241) Interest received 1,802 1,007 Net cash flows used in operating activities (29,109) (35,002) 09

11 INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Continued) FOR THE SIX MONTHS ENDED 30 JUNE 2015 For the six months ended 30 June (Unaudited) (Unaudited) Note Net cash flows used in operating activities (29,109) (35,002) CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property, plant and equipment (31,039) (33,590) Disposal of items of property, plant and equipment (4) Deposits for proposed acquisition (36,469) Provisional proceeds for proposed disposal 13,100 Decrease in amounts due from related companies 4,952 11,939 Net cash flows used in from investing activities (12,991) (58,120) CASH FLOWS FROM FINANCING ACTIVITIES Increase/(decrease) in amounts due to related companies 668 (3,687) New bank loans 170,000 Repayment of bank borrowings (8,530) (9,360) Increase in pledged deposits (20,907) Interest paid (23,385) (1,205) Net cash flows (used in)/generated from financing activities (52,154) 155,748 NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (94,254) 62,626 Cash and cash equivalents at beginning of period 400, ,774 Effect of foreign exchange rate changes, net (18,652) (1,054) CASH AND CASH EQUIVALENTS AT END OF THE PERIOD 287, ,346 ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS Cash and bank balances 257, ,201 Cash and short term deposits attributable to discontinued operations 7 30,848 54,145 Cash and cash equivalents as stated in the statement of cash flows 287, ,346 10

12 NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE CORPORATE INFORMATION The Company is incorporated in Bermuda as an exempted company with limited liability and its shares are listed on The Stock Exchange of Hong Kong Limited (the Stock Exchange ). The address of the registered office of the Company is Canon s Court, 22 Victoria Street, Hamilton HM 12, Bermuda, and the principal place of business is 28th Floor, Chinachem Century Tower, 178 Gloucester Road, Wanchai, Hong Kong. The principal activity of the Company is investment holding, including significant investments in associates engaged in steel and steel product manufacturing and trading in the People s Republic of China ( PRC ), as detailed in note 12. Its subsidiaries are principally engaged in the supply of heat and hotel operation during the six months ended 30 June 2015 (the Period ). 2. BASIS OF PRESENTATION AND CHANGES TO THE GROUP S ACCOUNTING POLICIES 2.1 Basis of presentation The unaudited interim condensed consolidated financial statements, which comprise the interim condensed consolidated statement of financial position of the Group as at 30 June 2015 and the related interim condensed consolidated statement of profit or loss, the interim condensed consolidated statements of comprehensive income, changes in equity and cash flows for the Period, have been prepared in accordance with HKAS 34 Interim Financial Reporting issued by the Hong Kong Institute of Certified Public Accountants and the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited. The unaudited interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group s annual financial statements for the year ended 31 December

13 2. BASIS OF PRESENTATION AND CHANGES TO THE GROUP S ACCOUNTING POLICIES (Continued) 2.2 Changes in accounting policy and disclosures The accounting policies and basis of preparation adopted in the preparation of the interim condensed consolidated financial statements are the same as those used in the annual financial statements for the year ended 31 December 2014, except for the adoption of new standards, interpretations and amendments effective as of 1 January 2015 below: The Group has adopted the following revised HKFRSs for the first time in these interim condensed consolidated financial statements. Amendments to HKAS 19 Amendments under Annual Improvements to HKFRSs Cycle Amendments under Annual Improvements to HKFRSs Cycle Defined Benefit Plans: Employee Contributions Amendments to a number of HKFRSs Amendments to a number of HKFRSs The adoption of these new and revised HKFRSs has had no significant financial effect on the Group s interim condensed consolidated financial statements. 3. OPERATING SEGMENT INFORMATION For management purposes, the Group is organised into business units based on their products and services and has two (for the six months ended 30 June 2014: three) reportable operating segments as follows: (a) the steel manufacturing and trading segment holds significant interests in three associates, located in Shandong Province, engaged in steel and steel product manufacturing and trading; and (b) the hotel operation segment is engaged in operation of hotel businesses in Hong Kong and France. The heat energy supply segment has been reclassified as discontinued operations as at 30 June 2015, details of which are given in note 7 to the interim condensed consolidated financial statements. 12

14 3. OPERATING SEGMENT INFORMATION (Continued) Management monitors the results of the Group s operating segments separately for the purpose of making decisions about resources allocation and performance assessment. Segment performance is evaluated based on reportable segment profit/(loss), which is a measure of adjusted profit/(loss) before tax. The adjusted profit/ (loss) before tax is measured consistently with the Group s profit/(loss) before tax except that interest income, finance costs, fair value gains/(losses) from the Group s financial instruments as well as head office and corporate expenses are excluded from this measurement. Intersegment sales and transfers are transacted with reference to the selling prices used for sales made to third parties at the then prevailing market prices. For the six months ended 30 June 2015 (Unaudited) Steel manufacturing and trading Hotel operation Total Segment revenue Sales to external customers 160, ,847 Revenue from continuing operations 160,847 Segment results (25,426) (29,496) (54,922) Reconciliation: Interest income 792 Corporate and other unallocated expenses (9,281) Profit before tax from continuing operations (63,411) For the six months ended 30 June 2015 (Unaudited) Steel manufacturing and trading Hotel operation Corporate and unallocated Total Other segment information Share of profits of associates (25,690) (25,690) Depreciation and amortisation 24,510 1,692 26,202 Investments in associates 2,332,633 2,332,633 Capital expenditure (i) 2,470 2,470 (i) Capital expenditure consists of additions to property, plant and equipment. 13

15 3. OPERATING SEGMENT INFORMATION (Continued) For the six months ended 30 June 2014 (Unaudited) Steel manufacturing and trading Hotel operation Total (Restated) (Restated) Segment revenue Sales to external customers 16,682 16,682 Revenue from continuing operations 16,682 Segment results 62,037 (19,028) 43,009 Reconciliation: Interest income 617 Corporate and other unallocated expenses (12,505) Profit before tax from continuing operations 31,121 For the six months ended 30 June 2014 (Unaudited) Steel manufacturing and trading Hotel operation Corporate and unallocated Total Other segment information Share of profits of associates 62,322 62,322 Depreciation and amortisation 5,791 1,994 7,785 Investments in associates 2,357,666 2,357,666 Capital expenditure (i) (i) Capital expenditure consists of additions to property, plant and equipment. 14

16 4. FINANCE COSTS For the six months ended 30 June (Restated) Interest on bank borrowings Wholly repayable within five years 22,657 1,094 Interest on a loan from a related company (note 23) 37,292 59,949 1, (LOSS)/PROFIT BEFORE TAX FROM CONTINUING OPERATIONS The Group s (loss)/profit before tax from continuing operations is arrived at after charging/(crediting): For the six months ended 30 June (Unaudited) (Unaudited) (Restated) Cost of hotel service 111,086 11,808 Depreciation of property, plant and equipment 26,168 7,785 Amortisation of intangible assets 34 Minimum lease payments under operating leases: Land and buildings Foreign exchange (gain)/loss, net (2,100) 74 Bank interest income (792) (617) Reclassified from other comprehensive income and recognised in the statement of profit or loss 3,626 Employee benefit expense (excluding directors remuneration) 1,857 1,282 15

17 6. INCOME TAX EXPENSE The major components of income tax expense for the six months ended 30 June 2015 and 2014 are as follows: For the six months ended 30 June (Unaudited) (Unaudited) (Restated) Current income tax: Europe 28 Deferred income tax 1,238 2,718 Income tax expense for the Period 1,266 2,718 Hong Kong profits tax should be provided at the rate of 16.5% (for the six months ended 30 June 2014: 16.5%) of the estimated assessable profits arising in Hong Kong during the Period. No provision for Hong Kong profits tax has been made in the interim condensed consolidated financial statements, as the Group does not have any assessable profit arising in Hong Kong. The provision for Mainland China current income tax should be based on the statutory rate of 25% (for the six months ended 30 June 2014: 25%) of the assessable profits of the Group s subsidiaries in Mainland China as determined in accordance with the relevant income tax rules and regulations of the PRC Corporate Income Tax Law, which came into effect on 1 January No provision for Mainland China current income tax has been made in the interim condensed consolidated financial statements, as the Group does not have any assessable profit arising in Mainland China. The provision of French current income tax is based on the rate of 33.33% of the estimated assessable profits arising during the Period. The provision of Luxembourg s current income tax is based on the rate of 29.22% of the estimated assessable profits arising during the Period. 16

18 7. DISCONTINUED OPERATIONS On 27 May 2015, the Company entered into an agreement to dispose of the entire issued capital of Spread International Group Limited (the Spread International ) and its subsidiaries (collectively as the Disposal Group ) and a shareholder s loan owing by the Group due from the Disposal Group ( Shareholder s Loan ) to a third party (the Disposal ). Spread International holds 100% equity interests in Achieve (China) Limited ( Achieve ). Spread International and Achieve acted solely as an investment holding company. Achieve holds 49% equity interests in Tianjin Heating Development Company Limited ( Tianjin Heating ). Upon completion of the Disposal, the Group will cease to hold any interest in the Disposal Group and Spread International will cease to be a subsidiary of the Company. Tianjin Heating and its subsidiaries are engaged in the production and supply of heat energy, installation, engineering and maintenance of heating systems and management of heating pipes, covering a vast area of heat energy supply within the municipality of Tianjin. Particulars of the Disposal Group as at 30 June 2015 are as follows: Name of subsidiary Legal form of business Place of incorporation or registration/ place of operations Nominal value of issued and fully paid-up share/ registered capital Percentage of issued share/ registered capital attributable to the Company Direct % Indirect % Principal activities Spread International Group Limited Corporation British Virgin Islands US$ Investment holding Achieve (China) Limited Corporation Hong Kong HK$1 100 Investment holding Tianjin Heating Development Company Limited ( ) (I) Sino-foreign owned enterprise The PRC/ Mainland China RMB50,000, Heat energy supply in Tianjin, the PRC Tianjin Baosheng Heating Investment Company Limited ( ) (II) Limited enterprisethe PRC/ Mainland China RMB20,000, Heat energy supply in Tianjin, the PRC Tianjin Meijiang Heating Company Limited ( ) (II) Limited enterprisethe PRC/ Mainland China RMB66,000, Heat energy supply in Tianjin, the PRC 17

19 7. DISCONTINUED OPERATIONS (Continued) (i) Tianjin Heating is accounted for as a subsidiary of the Group because the Group has the power to control the board of directors and to govern the financial and operating policies of Tianjin Heating. Through an entrustment agreement dated 30 June 2008 entered into between one wholly-owned subsidiary of the Group and a shareholder of Tianjin Heating who holds a 5% equity interests in Tianjin Heating, the Group has the right to exercise all the power as a shareholder of a 5% equity interests, and the Group is entitled to an extra right to appoint one director to the board of directors of Tianjin Heating. Together with the Group s original right to appoint directors to the board of directors of Tianjin Heating as the shareholder holding a 49% equity interests, the Group is entitled to appoint up to six directors out of nine directors to the board of directors of Tianjin Heating. Tianjin Heating applies the principle of simple majority to pass a board resolution. It is the current intention of the Group that subject to having obtained all necessary consents and approvals, the entrustment agreement will be terminated upon completion of the Disposal. (ii) Tianjin Baosheng Heating Investment Company Ltd and Tianjin Meijiang Heating Company Ltd. ( Meijiang Heating ) are subsidiaries of Tianjin Heating, a non-wholly-owned subsidiary of the Group, and accordingly are accounted for as subsidiaries by virtue of the Group s control over them. The results of the Disposal Group for the Period are presented below: For the six months ended 30 June (Unaudited) (Unaudited) Revenue 174, ,994 Cost of sales and expenses (183,810) (182,619) Share of (loss)/profit of an associate (4) 2 Operating loss Finance costs (9,744) (11,625) (111) Loss before tax from the discontinued operations (9,744) (11,736) Income tax credit/(expense) 452 (2,132) Loss from the discontinued operations (9,292) (13,868) Attributable to: Owners of the Company (4,877) (6,636) Non-controlling interests (4,415) (7,232) (9,292) (13,868) 18

20 7. DISCONTINUED OPERATIONS (Continued) The major classes of assets and liabilities of the Disposal Group classified as held for sale as at 30 June 2015 are as follows: 30 June 2015 (Unaudited) 31 December 2014 (Audited) Assets Property, plant and equipment 680,219 Prepaid lease payments 37,384 Other intangible assets 81,515 Investment in an associate 279 Available-for-sale investment 5,897 Other long-term assets 3,453 Inventories 1,457 Trade receivables 758 Other receivables and prepayments 12,038 Amount due from related companies 128,566 Pledged deposits 9,511 Cash and cash equivalents 30,848 Assets of the Disposal Group 991,925 Liabilities Accounts payable and bills payable 48,018 Other payables and accruals 168,025 Receipt in advance 19,378 Amount due to related companies 77,161 Amount due to the Group 53,615 Loan from related company due within one year 115,868 Tax payable 46,216 Deferred tax liabilities 135,596 Liabilities of the Disposal Group classified as held for sale on balance sheet 663,877 Net assets directly associated with the Disposal Group 328,048 19

21 7. DISCONTINUED OPERATIONS (Continued) In addition, according to the agreement, the Company will also dispose of the Shareholder s Loan, being all amount owing by the Group due from the Disposal Group. As at 30 June 2015, the carrying amount of the Shareholder s Loan is HK$53,615, June 2015 (Unaudited) 31 December 2014 (Audited) Shareholder s loan 53,615 Assets of the Disposal Group 991,925 Assets classified as held for sale on balance sheet 1,045,540 The net cash flows incurred by the Disposal Group are as follows: For the six months ended 30 June (Unaudited) (Unaudited) Operating activities (78,790) (9,490) Investing activities (23,238) (25,792) Financing activities (631) (11,459) Net cash outflow (102,659) (46,741) 20

22 7. DISCONTINUED OPERATIONS (Continued) Loss per share for the above mentioned discontinued operations is stated below: For the six months ended 30 June (Unaudited) (Unaudited) Basic and diluted From the discontinued operations HK$(0.04) cent HK$(0.05) cent The calculation of basic and diluted loss per share from the discontinued operations is based on: For the six months ended 30 June (Unaudited) (Unaudited) Loss () Loss attributable to ordinary equity holders of the Company, used in the basic and diluted loss per share calculation From discontinued operations (4,877) (6,636) Number of shares ( 000) Weighted average number of ordinary shares in issue during the Period used in the basic and diluted loss per share calculation 12,778,880 12,778, DIVIDENDS The directors of the Company do not recommend the payment of any dividend in respect of the Period (for the six months ended 30 June 2014: Nil). 21

23 9. (LOSS)/EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE COMPANY The calculation of the basic (loss)/earnings per share amount is based on the (loss)/earnings for the period attributable to ordinary equity holders of the Company, and the weighted average number of ordinary shares of 12,778,880,000 (for the six months ended 30 June 2014: 12,778,880,000) in issue during the Period. The Group had no potentially dilutive ordinary shares in issue during those periods. The calculations of basic and diluted (loss)/earnings per share amounts are based on: For the six months ended 30 June (Unaudited) (Unaudited) (Restated) (Loss)/profit (HK$ 000) (Loss)/profit attributable to ordinary equity holders of the Company, used in the basic and diluted (loss)/earnings per share calculation From continuing operations (64,677) 28,403 From discontinued operations (4,877) (6,636) (69,554) 21,767 Number of shares ( 000) Weighted average number of ordinary shares in issue during the period used in the basic and diluted (loss)/earnings per share calculation 12,778,880 12,778,880 22