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

First six months of 2016 Year 2015 First six months of 2015 Year 2014

RESULTS

For the first half of 2016, the unaudited consolidated profit attributable to shareholders was HK$36,061,000, representing a decrease of 33.2% compared with HK$54,015,000 for the corresponding period last year. Basic earnings per share was HK4.0 cents, a decrease of 33.3% from HK6.0 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 2016 of HK1.0 cent per share (2015: HK2.0 cents per share).

BUSINESS REVIEW

In the first half of 2016, mainly due to the impact of unfavourable tinplating business, the Group's consolidated revenue was HK$1,127,125,000, representing a decrease of HK$244,572,000 or 17.8% from HK$1,371,697,000 for the corresponding period last year. Profit from operations was HK$26,136,000, representing a decrease of HK$43,875,000 or 62.7% from HK$70,011,000 for the corresponding period last year.

In respect of our tinplating business, with the impact of slow recovery of the global economy and the downward pressure of the China economy, the overall imbalance between supply and demand in the iron and steel industry still existed, placing significant pressure on the sales of tinplate products. Leveraging on the strengths of its product mix marketing and team marketing, the Group enhanced customer service and maintained its market share. In the first half of 2016, sales volume of tinplate products increased by 6,949 tonnes, representing an increase of 4.2% as compared to that for the corresponding period last year. However, due to the decrease in selling price during the period, the revenue of the tinplating business decreased by HK$304,799,000 or 25.3% from HK$1,206,792,000 for the corresponding period last year to HK$901,993,000 for the period. The segment loss was HK$25,976,000, a decrease of HK$51,988,000 from the segment profit of HK$26,012,000 for the corresponding period last year.

As to the fresh and live foodstuffs business, avian flu still had an impact on our distribution and sales of live poultry business in the first half of 2016, only few live poultry were imported into Hong Kong. For the live pigs business, with the tightening supply of live pigs from the mainland China, the price of live pigs increased significantly as compared to that for the corresponding period last year. The Group's operation team seized the premium quality sources of goods and maintained the Group's overall market share in the live pigs supply into Hong Kong at about 45%. The commission revenue from the distribution of livestock business increased, resulting in an increase in the segment profit of the fresh and live foodstuffs business of HK$22,570,000 from that for the corresponding period last year.

In respect of the property leasing business, the rental income for the first half of 2016 decreased by HK$219,000 from that for the corresponding period last year. The decrease in operating expenses led to an increase of HK$467,000 in the segment profit from that for the corresponding period last year. The value of properties held by the Group remained stable and net valuation gains on investment properties of HK$100,000 (30 June 2015: HK$500,000) were recorded for the period.

For the associates, as a result of government grants income, Yellow Dragon Food Industry Co., Ltd. ("Yellow Dragon"), recorded net profit of HK$1,231,000 for the first half of 2016, the operation was still challenging. On the other hand, the continuous increase in the price of live pigs in the first half of 2016 resulted in profit for the period for the two associates, which are engaged in pig farming and sales of pigs, contributing the share of profits from these two associates of HK$10,925,000 to the Group.

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 550,000 tonnes and 140,000 tonnes respectively, of which 350,000 tonnes of tinplate products and 140,000 tonnes of blackplates are from Zhongyue Tinplate's capacity, whereas 200,000 tonnes of tinplate products are from Zhongyue Posco's capacity.

The revenue of the tinplating business accounted for 80.0% of the Group's revenue. Due to the impact of the imbalance between supply and demand in the iron and steel industry, the performance of the tinplating business of the Group in the first half of 2016 was unsatisfactory. In the first half of 2016, the Group produced 162,419 tonnes of tinplate products, which represented a decrease of 4.9% as compared to that for the corresponding period last year. Among which, Zhongyue Tinplate and Zhongyue Posco produced 98,054 tonnes and 64,365 tonnes respectively. In addition, the blackplate manufacturing plant of Zhongyue Tinplate produced 63,822 tonnes of blackplates, a decrease of 1.6% 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 173,595 tonnes of tinplate products, an increase of 4.2% as compared to that for the corresponding period last year, of which, Zhongyue Tinplate and Zhongyue Posco sold 103,496 tonnes and 70,099 tonnes respectively, an increase of 4.2% and 4.1% respectively as compared to that for the corresponding period last year. The revenue for the period was HK$901,993,000, a decrease of 25.3% as compared to that for the corresponding period last year. The segment loss was HK$25,976,000, a decrease of HK$51,988,000 from the segment profit of HK$26,012,000 for the corresponding period last year.

Against the competitive market environment, 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 the liquidity of its working capital. Also, sales volume was stabilised and volume of finished goods were reduced by capitalising on the favourable position in capital management, adopting selling prices more comparable to the market rate and 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 to increase its competitiveness. To promote the syndicated operation of the tinplating business, the Group established its procurement centre, realised syndicated procurement and emphasised the functions of the marketing centre and the procurement centre. The Group optimised the system of positions and duties, strengthened the operation models (including the linkage mechanism) of these two centres and determined the scope of management. The Group established two cost centres in Zhongyue Tinplate and Zhongyue Posco, adjusted and organised their management functions, and strengthened management and control including production, cost, quality and delivery capabilities.

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% 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 the first half of 2016, the revenue of the fresh and live foodstuffs business amounted to HK$214,731,000, representing an increase of 39.2% as compared to that for the corresponding period last year. Together with the share of profits of two associates, Hubei Jinxu and Guangdong Baojin, of HK$10,925,000 (30 June 2015: share of losses of HK$5,331,000), the segment profit was HK$61,859,000, representing an increase of HK$22,570,000 or 57.4% as compared to that for the corresponding period last year. Avian flu still had an impact on our distribution and sales of live poultry business in the first half of 2016, only few live poultry were imported into Hong Kong. The continuous increase in the price of live pigs during the first half of the year resulted in profit for the period for the two associates, which are engaged in pig farming and sales of pigs. 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 45%. This provided a relatively steady contribution to the earnings of the Group.

Property Leasing

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

In the first half of 2016, the revenue from the property leasing business of the Group was HK$10,401,000, a decrease of 2.1% as compared to that for the corresponding period last year. The segment profit amounted to HK$7,726,000, an increase of 6.4% as compared to that for the corresponding period last year. In addition, the value of properties held by the Group remained stable and net valuation gains on investment properties of HK$100,000 (30 June 2015: HK$500,000) were recorded for the period.

Yellow Dragon

The Group holds a 40% interest in an associate, Yellow Dragon.

In the first half of 2016, Yellow Dragon recorded a sales volume of 163,645 tonnes of its major product, corn starch, a decrease of 11.8% as compared to that for the corresponding period last year. Revenue was HK$620,037,000, a decrease of 35.6% as compared to that for the corresponding period last year. Sales price and sales volume of its products decreased during the period, together with the purchase cost of raw materials remained at a high level, it recorded a loss from operation of HK$68,845,000 but a net profit of HK$1,231,000 mainly due to the income from government grants. Starting from July 2016, the government of Jilin Province will no longer provide processing subsidies for corn processing enterprises. However, the cost of corns is expected to decrease by RMB100 to RMB200 per tonne under the Chinese government's policy to eliminate its stockpiling scheme. Yellow Dragon's operation is expected to remain stable in the second half of the year and the commodity price is expected to rebound.

FINANCIAL POSITION

As at 30 June 2016, the Group's total assets and total liabilities amounted to HK$2,925,305,000 and HK$435,144,000, representing a decrease of HK$215,224,000 and HK$203,869,000 respectively when compared with the positions at the end of 2015. Net current assets increased from HK$1,034,574,000 at the end of 2015 to HK$1,079,500,000. The current ratio (current assets divided by current liabilities) increased from 2.7 at the end of 2015 to 3.7.

Liquidity and Financial Resources

In January 2016, the Group fully repaid unsecured bank borrowings of HK$271,300,000, as a result, the Group's cash and cash equivalents balance was HK$746,697,000 as at 30 June 2016, representing a decrease of 22.2% when compared with the position at the end of 2015, of which 45.7% was denominated in Renminbi, 34.1% was denominated in United States Dollars while the remaining balance was denominated in Hong Kong Dollars. Interest income decreased from HK$21,521,000 for the corresponding period last year to HK$6,489,000 for the period.

As at 30 June 2016, the Group had outstanding loans from a related company denominated in United States Dollars equivalent to HK$71,760,000 (31 December 2015: HK$71,760,000), which were repayable within 1 year and subject to floating interest rate. The annual interest rate was 3-month London Interbank Offered Rate ("LIBOR") + 1.4% (31 December 2015: 3-month LIBOR + 1.4%).

As at 30 June 2016, 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 -29.1% (31 December 2015: -26.5%).

As at 30 June 2016, the Group's available banking facilities which are used for working capital and trade finance purposes, amounted to HK$314,906,000, of which HK$128,265,000 was utilised and HK$186,641,000 was unutilised. Currently, the cash reserves and available banking facilities, as well as the steady cash flow from operations, are sufficient to meet the Group's debt obligations and business operations.

Capital Expenditure and Capital Commitments

The Group's capital expenditure in the first half of 2016 amounted to HK$3,246,000 (30 June 2015: HK$34,792,000). Capital commitments outstanding at 30 June 2016 not provided for in the financial statements amounted to HK$3,529,000 (31 December 2015: HK$8,899,000). It is expected that the capital expenditure for 2016 will be approximately HK$12,000,000.

Acquisitions and Disposals of Investments

The Group had no material acquisitions and disposals of investments during the first half of 2016.

Pledge of Assets

As at 30 June 2016, 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$9,383,000 (31 December 2015: HK$11,711,000). In addition, deposits at bank of HK$13,082,000 were pledged as a security for a banking facility. Also, the Group was required to place at designated bank accounts amounting to HK$1,893,000 for potential default in payment of construction costs payables. Other than the above, none of the assets of the Group was pledged

Contingent Liability

As at 30 June 2016, the Group had no material contingent liabilities.

Exchange Rate and Interest Rate Exposures

The majority of the Group's business operations are in Mainland China and Hong Kong. The Group is exposed to foreign currency risk primarily from purchases from overseas suppliers and 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 the 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 view of the market expectation of the depreciation of the Renminbi against the United States Dollar in the short to medium term, the Group has enhanced research and monitoring of the foreign exchange market since the second half of 2015 in order to reasonably reduce the financial impact from the fluctuations of the exchange rate of the Renminbi. While balancing interest income and exchange rate risks, the Group has been gradually increasing foreign currency assets and reducing foreign currency liabilities in order to reduce the exposure to exchange rate risks. As the Group considers the exchange rate risk currently faced is not material, no hedging arrangements have been entered into. Management closely monitors the changes in the foreign exchange market and will take appropriate measures to hedge the risks when necessary.

The Group's interest rate risk arises primarily from interest-bearing borrowings and cash and cash equivalents. Borrowings and lendings issued 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 considers the interest rate risk currently faced is not material, no interest rate hedging has been carried out. Management closely monitors the changes in market interest rates.

EMPLOYEES AND REMUNERATION POLICIES

As at 30 June 2016, the Group had a total of 1,090 full-time employees, a decrease of 65 from 1,155 at the end of 2015. 176 employees were based in Hong Kong and 914 were based 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 2016, the Group continued to implement control over the headcount, organisation structure and total salaries of each subsidiary. The performance bonus incentive scheme for the 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 and key personnel through assessment of individual performance. These incentive schemes have effectively improved the morale of our staff members.

PROSPECTS

Currently, the recovery of the European and US economies is slow, while the economy in Mainland China is facing downward pressure. Besides, capital and money markets fluctuate significantly. As such, there will be certain challenges in the operating environment, and the Group's earnings will be subject to significant impact. In respect of the tinplating business, by leveraging on the new tinplating production line and the coating and printing production lines which commenced operation in recent years, the Group will actively transform and upgrade our business, improve the production quality, enrich varieties in product categories, enhance valueadded, strive to receive recognition from customers, expand customer base and increase production and sales volume. 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 improve the operating results of the Group.