Basic Information Chairman's Statement
Management Discussion and Analysis Corporate Governance Report
Notices (Replacement of Lost Certificates)

First six months of 2015 Year 2014 First six months of 2014 Year 2013

RESULTS

For the first half of 2015, the unaudited consolidated profit attributable to shareholders was HK$54,015,000, representing a decrease of 18.9% from HK$66,563,000 for the corresponding period last year. Basic earnings per share was HK6.0 cents, a decrease of 17.8% from HK7.3 cents for the corresponding period last year.

INTERIM DIVIDEND

The Board of Directors of the Company (the "Board") declares the payment of an interim dividend for 2015 of HK2.0 cents per share (2014: HK2.0 cents per share).

BUSINESS REVIEW

In the first half of 2015, the tinplating and property leasing businesses recorded a decrease in both revenue and profit, while there was growth in the fresh and live foodstuffs business. The Group's consolidated revenue was HK$1,371,697,000, representing a decrease of HK$372,960,000 or 21.4% from HK$1,744,657,000 for the corresponding period last year. Profit from operations was HK$70,011,000, representing a decrease of HK$8,036,000 or 10.3% from HK$78,047,000 for the corresponding period last year.

In respect of our tinplating business, with more new tinplating production lines operated by other companies in Mainland China commencing production in recent years, the excess of supply over demand in the iron and steel industry and intense competition placed significant pressure on the sales of tinplate products. As the selling price and sales volume of tinplate products of the Group decreased during the current period, gross profit for the period decreased as compared to that for the corresponding period last year. However, an exchange gain was recorded during the period, as opposed to an exchange loss recorded for the corresponding period last year. This partly offset the impact of the decrease in gross profit mentioned above.

As to the fresh and live foodstuffs business, avian flu still had impact on our distribution and sales of live poultry business, resulting in the suspension of import of live poultry into Hong Kong during the current period. Given the devoted efforts of our operation team and premium quality sources of goods from major suppliers, the Group actively maintained the market supply and the overall market share in the live pigs supply into Hong Kong remained at about 46%. This provided a relatively steady contribution to the earnings of the Group.

In respect of the property leasing business, the increase in the valuation of office units in Hong Kong slowed down in the first half of 2015 and net valuation gains on investment properties of HK$500,000 (30 June 2014: HK$22,930,000) were recorded by the Group.

For the associates, as a result of the increase in subsidy income from the government for the temporary storage and related processing of corn by Yellow Dragon Food Industry Co., Ltd., the profit for the period increased as compared to that for the corresponding period last year. On the other hand, after the price of live pigs decreased in the first quarter, it rebounded in the second quarter. This led to a decrease in the loss for the period of the two associates which are engaged in pig farming and sales of pigs, as compared to that for the corresponding period last year.

Tinplating

Zhongshan Zhongyue Tinplate Industrial Co., Ltd. ("Zhongyue Tinplate") is a wholly-owned subsidiary of the Company. The Company holds a 66% interest in a subsidiary, Zhongyue Posco (Qinhuangdao) Tinplate Industrial Co., Ltd. ("Zhongyue Posco"), while the remaining 34% is held by POSCO Co., Ltd., an internationally renowned iron and steel enterprise. Currently, the annual production capacity of tinplate products and blackplates of the Group is 470,000 tonnes and 150,000 tonnes respectively, of which 220,000 tonnes of tinplate products and 150,000 tonnes of blackplates are from Zhongyue Tinplate's capacity, whereas 250,000 tonnes of tinplate products are from Zhongyue Posco's capacity.

In the first half of 2015, the Group produced 170,853 tonnes of tinplate products, which represented a decrease of 13.0% as compared to that for the corresponding period last year. Among which, Zhongyue Tinplate and Zhongyue Posco produced 105,193 tonnes and 65,660 tonnes respectively. In addition, the blackplate manufacturing plant of Zhongyue Tinplate produced 64,829 tonnes of blackplates, a decrease of 2.7% as compared to that for the corresponding period last year, providing a steady supply of raw materials (i.e. blackplates) for its production of tinplate products. The Group's tinplating plants in northern and southern China sold 166,646 tonnes of tinplate products, a decrease of 15.4% as compared to that for the corresponding period last year, of which, Zhongyue Tinplate and Zhongyue Posco sold 99,314 tonnes and 67,332 tonnes respectively, a decrease of 10.7% and 21.6% respectively as compared to that for the corresponding period last year. The revenue for the period was HK$1,206,792,000, a decrease of 23.7% as compared to the corresponding period last year and the segment profit was HK$26,012,000, a decrease of HK$7,702,000 or 22.8% as compared to that for the corresponding period last year. The revenue and segment profit of the tinplating business accounted for 88.0% and 37.2% of the Group's revenue and profit from operations respectively.

With more new tinplating production lines operated by other companies in Mainland China commencing production in recent years and capturing market share by using selling prices lower than market rates, the excess of supply over demand in the iron and steel industry and intense competition placed significant pressure on the sales of tinplate products. As the selling price and sales volume of tinplate products of the Group decreased during the current period, gross profit for the period decreased as compared to that for the corresponding period last year. However, an exchange gain was recorded for the period, as opposed to an exchange loss recorded for the corresponding period last year. This partly offset the impact of the decrease in gross profit mentioned above. During the period, the Group negotiated with its suppliers more beneficial purchase prices for raw materials in order to mitigate the pressure on the Group regarding the decrease in the selling price of tinplate products. Through the pursuit of more flexible payment methods with its suppliers, the Group successfully increased liquidity of its working capital and bank deposits. Interest income significantly increased accordingly. Sales volume was also stabilised by capitalising on the favourable position in capital management, adopting selling prices more comparable to the market rate and adopting effective control in trade receivables' management. The Group continued the implementation of the various measures of its human resources refining project by streamlining human resources, elevating efficiency and optimising performance management. It also established interdepartmental sales and marketing teams and promoted service transformation so as to enhance customer service. In addition, Zhongyue Tinplate upgraded its safety production standardisation level, which effectively protects the work safety of staff and improves production efficiency.

As the tinplating factory in Zhongshan is operating at full capacity, in order to accelerate the transformation and upgrade of our business, the Group is constructing a new tinplating production line with an annual production capacity of 150,000 tonnes, together with expansion of the relevant coating and printing production lines. Besides, Zhongyue Posco also acquired coating and printing production lines. It is estimated that the total investment cost of these production lines will be approximately RMB265 million (equivalent to approximately HK$336 million). These new production lines will enable the Group to improve the standard of production equipment and product quality and refine the product mix. It will also facilitate the development of new products and strengthen our core competitiveness. These coating and printing production lines commenced operation consecutively by the end of 2014, while it is expected that the new tinplating production line will commence operation in the second half of 2015. By that time, the annual production capacity of tinplate products, blackplates, and coated and printed tinplates of the Group's factories in northern and southern China is expected to be 620,000 tonnes, 150,000 tonnes and 100,000 tonnes respectively.

Fresh and Live Foodstuffs

Guangnan Hong Company Limited ("Guangnan Hong") is a wholly-owned subsidiary of the Company. Guangnan Hong holds a 51% interest in a subsidiary, Guangnan Live Pigs Trading Limited, a 15.45% (31 December 2014: 16.12%) interest in an associate, Hubei Jinxu Agriculture Development Co., Ltd. ("Hubei Jinxu") and a 34% interest in an associate, Guangdong Zijin Baojin Livestock Co., Ltd. ("Guangdong Baojin"). In February 2015, Hubei Jinxu issued new shares to a new investor. After the issuance, the Group's equity interest in Hubei Jinxu was diluted from 16.12% to 15.45%.

In the first half of 2015, the revenue of the fresh and live foodstuffs business amounted to HK$154,285,000, representing an increase of 2.3% as compared to that for the corresponding period last year. Together with the share of losses of two associates, Hubei Jinxu and Guangdong Baojin, of HK$5,331,000, the segment profit was HK$39,289,000, representing an increase of HK$4,794,000 or 13.9% as compared to that for the corresponding period last year. Avian flu still had impact on our distribution and sales of live poultry business, resulting in the suspension of import of live poultry into Hong Kong during the current period. On the other hand, after the price of live pigs decreased in the first quarter, it rebounded in the second quarter. This led to a decrease in the loss for the period of the two associates which are engaged in pig farming and sales of pigs, as compared to that for the corresponding period last year. Through continuous optimisation of the business workflow, the Group proactively strengthened its communication with governmental authorities, suppliers, industry participants and customers. Service standards were enhanced as a result. The Group also actively maintained the market supply. The overall market share in the live pigs supply into Hong Kong was about 46%. This provided a relatively steady contribution to the earnings of the Group.

Property Leasing

The Group's leasing properties mainly include the plant and staff dormitories of Zhongyue Tinplate and the office units in Hong Kong.

In the first half of 2015, the revenue from the property leasing business of the Group was HK$10,620,000, a decrease of 6.1% as compared to that for the corresponding period last year. The segment profit amounted to HK$7,259,000, a decrease of 5.0% as compared to that for the corresponding period last year. In addition, the increase in the valuation of office units in Hong Kong slowed down in the first half of 2015 and net valuation gains on investment properties of HK$500,000 (30 June 2014: HK$22,930,000) were recorded by the Group.

Yellow Dragon

The Group holds a 40% interest in an associate, Yellow Dragon Food Industry Co., Ltd. ("Yellow Dragon").

In the first half of 2015, Yellow Dragon recorded a sales volume of 185,519 tonnes in its major product, corn starch, representing an increase of 2.2% as compared to that for the corresponding period last year. The revenue was HK$963,263,000, an increase of 6.5% as compared to that for the corresponding period last year. As a result of the increase in subsidy income from the government for the temporary storage and related processing of corn, the profit for the period increased as compared to that for the corresponding period last year. Profit attributable to the shareholders was HK$9,409,000 (30 June 2014: HK$1,284,000).

FINANCIAL POSITION

As at 30 June 2015, the Group's total assets and total liabilities amounted to HK$3,659,497,000 and HK$1,020,918,000, representing a decrease of HK$19,307,000 and HK$50,446,000 respectively when compared with the positions at the end of 2014. Net current assets decreased from HK$1,460,331,000 at the end of 2014 to HK$1,090,582,000. The current ratio (current assets divided by current liabilities) also decreased from 3.3 at the end of 2014 to 2.1.

Liquidity and Financial Resources

As at 30 June 2015, the Group's cash and cash equivalents balance was HK$1,232,492,000, representing an increase of 15.1% when compared with the position at the end of 2014, of which 88.7% was denominated in Renminbi, 3.1% was denominated in United States Dollars while the remaining balance was denominated in Hong Kong Dollars. Interest income also increased from HK$13,370,000 for the corresponding period last year by 61.0% to HK$21,521,000 for the current period.

As at 30 June 2015, the Group's borrowings comprised 1) unsecured bank borrowings of HK$498,075,000 (31 December 2014: HK$549,344,000); and 2) loans from a related company of HK$79,560,000 (31 December 2014: HK$79,560,000), of which 71.3% was denominated in United States Dollars while the remaining balance was denominated in Hong Kong Dollars. 69.2%(31 December 2014: 63.6%) of the Group's borrowings was guaranteed by the Company. As at 30 June 2015, all of the Group's borrowings were repayable within 1 year, while as at 31 December 2014, 36.4% of the Group's borrowings was repayable within 1 year and the remaining balance was repayable within 2 years. All borrowings were subject to annual interest rates ranging from 0.83% to 1.69% (31 December 2014: 1.25% to 1.67%) per annum. 83.0% (31 December 2014: 76.3%) of the Group's borrowings bear interest at floating rates.

As at 30 June 2015, the Group's gearing ratio, calculated by dividing the net borrowings (being borrowings less cash and cash equivalents) of the Group by total equity attributable to equity shareholders of the Company, was -26.8% (31 December 2014: -18.3%).

As at 30 June 2015, the Group's available banking facilities amounted to HK$739,923,000, of which HK$527,912,000 was utilised and HK$212,011,000 was unutilised. 54.1% of the Group's banking facilities was guaranteed by the Company. Currently, the Group's cash reserves and available banking facilities, as well as its steady cash flow from operations, are sufficient to meet its debt obligations and business operations.

Capital Expenditure and Capital Commitments

The Group's capital expenditure in the first half of 2015 amounted to HK$34,792,000 (30 June 2014: HK$42,366,000). Capital commitments outstanding at 30 June 2015 not provided for in the financial statements amounted to HK$122,244,000 (31 December 2014: HK$183,540,000), mainly for the construction of a new tinplating production line in Zhongshan. It is expected that the capital expenditure for the year 2015 will be approximately HK$110 million.

Acquisitions and Disposals of Investments

In February 2015, Hubei Jinxu issued new shares to a new investor. After the issuance, the Group's equity interest in Hubei Jinxu was diluted from 16.12% to 15.45%, which resulted in a gain on deemed disposal of interest in an associate of HK$1,314,000.

Except for the abovementioned matter, the Group had no material acquisitions and disposals of investments during the first half of 2015.

Pledge of Assets

As at 30 June 2015, the Group's interest in Guangdong Baojin was pledged to the major shareholder of Guangdong Baojin as a security for a loan and the related interest due to this shareholder by Guangdong Baojin which amounted to HK$12,122,000 (31 December 2014: HK$11,800,000). In addition, the Group's cash and cash equivalents included a total amount of HK$6,244,000 which was restricted for use and pledged to a bank as a security for a banking facility. Other than the above, none of the assets of the Group was pledged.

Litigation

In 2013, a third party in Mainland China filed a claim against a subsidiary of the Group in the Court of Zhongshan City to recover an outstanding trade debt of approximately RMB2,060,000 (equivalent to HK$2,607,000) and a penalty of approximately RMB4,962,000 (equivalent to HK$6,278,000) for non-payment (collectively referred to as the "Claim"). According to the judgement made by the Court of Zhongshan City in May 2014, the subsidiary is required to repay the Claim. The subsidiary submitted an appeal in June 2014 to the High Court of Guangdong Province. According to the judgement of the High Court of Guangdong Province issued in April 2015, the appeal was repudiated and the subsidiary was ordered to repay the Claim and respective court charges of approximately RMB61,000 (equivalent to HK$77,000). Accordingly, a full provision was made during the current period, and the Claim and the respective court charges were fully paid in July 2015.

Contingent Liability

As at 30 June 2015, the Group had no material contingent liability.

Exchange Rate and Interest Rate Exposures

The majority of the Group's business operations are in Hong Kong and Mainland China. The Group is exposed to foreign currency risk primarily from import purchases from overseas suppliers and export sales to overseas customers that are denominated in a currency other than the functional currency of the operations to which they relate. The currency giving rise to this risk is mainly the United States Dollar against Renminbi. In respect of trade receivables and payables denominated in currencies other than the functional currency of the operations to which they relate, the Group ensures that the net exposure is kept to an acceptable level, by buying or selling foreign currencies at spot rates where necessary to address short-term imbalances.

In respect of unforeseen fluctuations in exchange rates, the Group will hedge the exposure as and when necessary. As at 30 June 2015, forward foreign exchange contracts of RMB37,475,000 (equivalent to HK$47,522,000) against the United States Dollar were entered into by the Group to hedge against currency risks in respect of export sales. As at 31 December 2014, forward foreign exchange contracts equivalent to HK$196,591,000 in total were entered into by the Group.

The Group's interest rate risk arises primarily from interest-bearing borrowings, cash and cash equivalents and loans to an associate. Borrowings, deposits and lendings calculated at variable rates and at fixed rates expose the Group to cash flow interest rate risk and fair value interest rate risk respectively. As the Group considered the interest rate risk faced was not material, thus no hedging was made. Management closely monitors the changes in market interest rates.

EMPLOYEES AND REMUNERATION POLICIES

As at 30 June 2015, the Group had a total of 1,149 full-time employees, a decrease of 48 from the end of 2014. 192 of the employees were based in Hong Kong and 957 were in Mainland China. Staff remuneration is determined in accordance with the duties, workload, skill requirements, hardship, working conditions and individual performance with reference to the prevailing industry practices. In 2015, the Group continued to implement control on the headcount, organisation structure and total salaries of each subsidiary. The performance bonus incentive scheme for management remained effective. Through performance assessment of each subsidiary, a performance bonus was accrued according to various profit rankings and with reference to net cash inflow from operations and profit after taxation. In addition, bonuses will be rewarded to management, key personnel and outstanding staff through assessment of individual performance. These incentive schemes have effectively improved the morale of our staff members. The Company has also adopted share option schemes to encourage excellent participants to continue their contribution to the Group.

PROSPECTS

Currently, the recovery of the European and US economies is slow, while the economy in Mainland China is facing downward pressure. Besides, capital markets are volatile. All these uncertainties will have pressure on the sales of tinplate products and there will be certain challenges in the operating environment in future. On the other hand, the exchange rate of Renminbi against the United States Dollars fluctuated widely in recent months and it is expected to continue to be volatile in the coming months, which may have a significant impact on the Group's earnings. In respect of the tinplating business, the Group will strive to increase production and sales volume and achieve economies of scale. Meanwhile, we will also actively transform and upgrade our business and start a new round of development. The Group is constructing a new tinplating production line with an annual production capacity of 150,000 tonnes, which is expected to commence operation in the second half of 2015, in order to improve the standard of production equipment and product quality and to strengthen our core competitiveness. Moreover, the new coating and printing production lines commenced operation consecutively at the end of 2014, so as to enrich varieties in product categories and enhance value-added. As to the fresh and live foodstuffs business, in order to further improve our quality services, we will consolidate and develop our business chain operation. Through enhancing our supply chain management, we will continue to explore new and stable sources of supply for live pigs, ensure market supply and increase revenue. By leveraging on our sound financial position and abundant capital resources, we will continue to explore and capture various opportunities for development and strategic cooperation so as to promote the business of the Group to a new level.