Challenges foster strengths Progress allied with prudence 2009 2009 2008 CORPORATE PROFILE EPI is a high growth company that focuses on the non- ferrous metals and resource sector, with a business scope covering mining and resource investment, scrap metals sourcing and trading and copper anode production. Through strategic mergers and acquisitions, the Group is accelerating its growth by providing Chinese state-owned enterprises with high quality services that add value to their operations and enterprise value. The Group also operates an OEM/ODM consumer electronics business supplying customers in the USA, Europe and Latin America. EPI’s mission is to achieve sustainable and high returns for its shareholders and to become a leading player in non- ferrous metals and resources in Asia. EPI (Holdings) Limited Interim Report 2009 Financial Summary 1 FINANCIAL SUMMARY The Board (the “Board”) of Directors (the “Directors”) of EPI (Holdings) Limited is pleased to present the unaudited consolidated results of the Company and its subsidiary (the “Group”) for the six months ended 30 June 2009 (the “Period”). HK$’000 Turnover Gross profit Profit attributable to equity holders of the Company Gross profit margin Net profit margin Earnings per share attributable to equity holders of the Company – Basic HK cents – Diluted HK cents FINANCIAL POSITIONS HK$’000 Cash and bank balances Total assets Borrowings Long term debts Total equity 2009 1H 2008 1H Change 466,403 15,838 78,685 3.40% 16.87% 1.905 1.905 -65.91% -82.52% +283.51% 1,368,217 90,621 20,517 6.62% 1.50% 0.50 0.49 +281% +288.78% 2009 1H 2008 Change 104,340 1,221,438 166,438 nil 850,629 99,388 1,286,483 307,338 nil 814,367 +4.98% -5.06% -45.85% +4.45% Contents Financial Summary Corporate Information Chairman’s Statement Management Discussion and Analysis Condensed Consolidated Statement of Comprehensive Income Condensed Consolidated Statement of Financial Position 1 2 4 5 7 8 Condensed Consolidated Statement of Changes in Equity 9 Condensed Consolidated Statement of Cash Flows 10 Notes to the Condensed Consolidated Interim Financial Statements Other Information Defi nitions and Conversions of Weights and Measures 11 21 26 EPI (Holdings) Limited Interim Report 2009 Corporate Information 2 EPI (HOLDINGS) LIMITED (Incorporated in Bermuda with limited liability) EXECUTIVE DIRECTORS Mr. Wong Chi Wing Joseph (Chairman & CEO) Mr. Cheng Hairong (Deputy Chairman) Mr. Chu Kwok Chi Robert NON-EXECUTIVE DIRECTOR Mr. Leung Hon Chuen INDEPENDENT NON-EXECUTIVE DIRECTORS Mr. Poon Kwok Shin Edmond Mr. Qian Zhi Hui Mr. Xu Mingshe QUALIFIED ACCOUNTANT AND COMPANY SECRETARY Mr. Hong Kin Choy PRINCIPAL BANKER (HONG KONG) Bank of Communication Company Limited, Hong Kong Branch Citic Ka Wah Bank Limited DBS Bank (Hong Kong) Limited Standard Chartered Bank (Hong Kong) Limited PRINCIPAL BANKER (PRC) Bank of China Limited China Minsheng Banking Corporation Limited Shenzhen Development Bank Company Limited PRINCIPAL SHARE REGISTRAR Butterfield Fulcrum Group (Bermuda) Limited Rosebank Centre 11 Bermudiana Road Pembroke HM 08 Bermuda BRANCH SHARE REGISTRAR Tricor Tengis Limited 26/F., Tesbury Centre 28 Queen’s Road East Hong Kong AUDIT COMMITTEE Mr. Poon Kwok Shin Edmond (Chairman of the Audit Committee) Mr. Leung Hon Chuen Mr. Xu Mingshe REMUNERATION COMMITTEE Mr. Leung Hon Chuen (Chairman of the Remuneration Committee) Mr. Poon Kwok Shin Edmond Mr. Xu Mingshe NOMINATION COMMITTEE Mr. Wong Chi Wing Joseph (Chairman of the Nomination Committee) Mr. Leung Hon Chuen Mr. Poon Kwok Shin Edmond Mr. Xu Mingshe REGISTERED OFFICE Clarendon House 2 Church Street Hamilton HM 11 Bermuda EPI (Holdings) Limited Interim Report 2009 Corporate Information 3 INVESTORS CONTACT Miss Cheung Siu Yuen, Rose PRINCIPAL PLACE OF BUSINESS IN HONG KONG Suite 6303, 63/F., Central Plaza 18 Harbour Road Wanchai Hong Kong Telephone: (852) 2616 3689 Fax: (852) 2481 2902 SOLICITORS Vincent T. K. Cheung, Yap & Co. AUDITORS Deloitte Touche Tohmatsu SHARE INFORMATION Place of listing: Main Board of The Stock Exchange of Hong Kong Limited Stock Code: 0689 Board lot: 20,000 shares Financial year end: 31 December Share price at 30 June 2009: HK$0.177 Market capitalization at 30 June 2009: HK$731 million WEBSITE ADDRESS www.epiholdings.com EPI (Holdings) Limited Interim Report 2009 Chairman’s Statement 4 To the Shareholders, Financial Results and Dividends I am pleased to announce the interim results of the The turnover for the first half of the year 30 June 2009 company on behalf of the board and EPI (Holdings) was HK$466 million represented a decrease of 66% as Limited. compared to the corresponding period in last year. The Group recorded a net profit for the period of HK$60.9 The first half of the Year 2009 began to see the driving million. The profit attributable to owners of the company force of our investments contribution in terms of the was HK$78.7 million, representing a 283% increase in group’s earnings attributable to the shareholders. Our comparison to the corresponding period in last year. investment and sales of Vision Tech International Holdings Limited has provided our shareholders with a favorable The Board of Directors does not recommend payment of a return. The total net proceeds of approximately HK$164 dividend. million will be a good source of funding for our future investment acquisition. To remain as a fast growing company, our direction is to invest in resource sector with focus on mature projects Joseph Wong Chi Wing that is close to production and can generate immediate Chairman and CEO contribution to the group’s earnings in the near future. During the period, we have accelerated the progress in our mining and resources investment in oil and gas and the company resources will be focus in this sector. The sourcing and smelting of scrap copper remains difficult as the supply remains tight in the recycle metal industry. And we have experienced a drastic decrease year on year in the sourcing and smelting business sales turnover due to the decrease in scrap metal sourcing volume. We foresee the major key revenue contributor for the next few years will be from our mining and oil and gas business. Management Discussion and Analysis 5 EPI (Holdings) Limited Interim Report 2009 GROUP FINANCIAL REVIEW The sourcing of scrap copper remained difficult during the In the first six months of 2009, the Group’s turnover was HK$466 million represented a decrease of 66% as compared to the same period of last year. Gross profit was HK$15.8 million, decreased by 82% from that of the period. The gross profit margin dropped from 10.85% to 5.35% during the review periods. To maintain a profitable business margin, our sourcing team had increased its sourcing product from scrap copper to copper cathodes and scrap aluminum, where the market offered a higher corresponding period of last year. The profit for the period margin from our cost plus approach. attributable to the owners of the company was HK$78.7 million, recorded a growth of 283% as compared to that of the corresponding period of last year. The substantial increase in profit attributable to the owners of the company was mainly due to the HK$16.6 million gain on disposal We have continued to increase our sourcing product mix and subsequently added zinc and nickel to improve the overall profit margin of the Group. Due to the order and shipment lead time, the business volume did not reflect in of Vision Tech International Holdings Limited, a subsidiary the first half of this year. company listed on The Stock Exchange of Hong Kong Limited, and the gain on fair value changes on listed securities of HK$63.9 million taken to the profit and loss during the period. BUSINESS AND OPERATIONS REVIEW While the market needs time to recover from the financial meltdown in 2008, the Group had been forced to reduce its business activities and the sales volume in the first half of 2009. Comparison of business results for the first six months of 2009 and 2008 Metals sourcing and trading Six months ended 2009 2008 Change HK$’000 HK$’000 Turnover 331,737 611,898 -45.79% Segment (loss)/profit (2,532) 43,266 -105.85% Joint venture smelting business Copper anode production Six months ended 2009 2008 Change HK$’000 HK$’000 Turnover 125,195 528,280 -76.30% Segment profit 411 11,716 -96.49% The joint venture company have streamlined its operations and applied stringent cost measure policies with cost reductions in all management and operational levels. The joint venture company have sold scrap copper directly to Jiangxi Copper and cut the production of copper anode for the period. They have also hedged against the copper price fluctuation and mitigated any copper price fluctuation risk. All of the above measures taken had proved to be successful during the difficult period. We will remain the present strategy for the year, as we foresee the business margin in the production of copper anode remain slim. EPI (Holdings) Limited Interim Report 2009 Management Discussion and Analysis 6 Consumer electronics business Six months ended 2009 2008 Change HK$’000 HK$’000 Turnover 45,563 228,039 -80.02% Segment profit/(loss) 314 (7,972) +103.94% The group sold DVD Combos and home theatres to USA and Latin America. The financial and economic shrinkage from the USA and Latin America countries had affected a substantial decrease in the turnover. Despite the decrease in business volume, the team had successfully improved its gross profit margin from 3.04% to 4.4% during the review periods by cautious servicing to its customers needs. EPI (Holdings) Limited Interim Report 2009 Condensed Consolidated Statement of Comprehensive Income 7 For the six months period ended 30 June 2009 The Board of Directors (the “Board”) of EPI (Holdings) Limited (the “Company”) is pleased to announce the unaudited condensed consolidated interim results of the Company and its subsidiaries (collectively “EPI” or the “Group”) for the six months ended 30 June 2009 (the “Interim Period”), together with the comparative figures for the corresponding period ended 30 June 2008 as follows: Continuing operations Revenue Cost of sales Gross profit Other income Distribution and selling expenses Administrative expenses Other expenses Finance costs Profit before tax Income tax charge Profit for the period from continuing operations Discontinued operation Profit for the period from discontinued operation Profit for the period Other comprehensive income Exchange differences arising on translation of foreign operations Other comprehensive income for the period Total comprehensive income for the period Profit for the period attributable to: Owners of the Company Non-controlling interests Total comprehensive income attributable to: Owners of the Company Non-controlling interests Earnings per share (Hong Kong cents) From continuing and discontinued operations – Basic – Diluted From continuing operations – Basic – Diluted Dividend paid For the six months ended 30 June 2009 HK$’000 (unaudited) 2008 HK$’000 (unaudited) Notes 3 4 5 6 7 15 8 466,403 (450,565) 1,368,217 (1,277,596) 15,838 66,155 (5,752) (23,754) (4,152) (3,964) 44,371 (86) 44,285 16,611 60,896 (509) (509) 60,387 78,685 (17,789) 60,896 78,176 (17,789) 60,387 1.905 1.905 1.503 1.503 90,621 4,497 (15,234) (36,931) (18,948) (3,883) 20,122 (3,085) 17,037 – 17,037 4,322 4,322 21,359 20,517 (3,480) 17,037 24,839 (3,480) 21,359 0.50 0.49 0.50 0.49 9 – 10,328 EPI (Holdings) Limited Interim Report 2009 Condensed Consolidated Statement of Financial Position 8 As at 30 June 2009 Non-current assets Property, plant and equipment Goodwill Prepaid lease payments Financial asset at fair value through profit and loss Current assets Inventories Loan receivables Trade and other receivables Held-for-trading investments Derivative financial instruments Trade receivable from a joint venture partner Prepaid lease payments Pledged bank deposits Bank balances and cash Current liabilities Trade and other payables Derivative financial instruments Borrowings Current tax liabilities Net current assets Total assets less current liabilities Capital and reserves Issued capital Reserves Equity attributable to owners of the Company Share options reserve of a subsidiary Non-controlling interests Total equity As at As at 30 June 31 December 2009 HK$’000 (Unaudited) 2008 HK$’000 (Audited) Notes 10 11 12 13 14 36,852 – 22,467 2,684 62,003 214,098 15,962 662,677 117,586 11,996 9,648 532 22,596 104,340 43,334 14,996 22,729 2,684 83,743 47,785 30,000 930,253 24,836 25,205 1,024 538 43,711 99,388 1,159,435 1,202,740 190,458 140,940 – 166,438 13,913 22 307,338 23,816 370,809 472,116 788,626 730,624 850,629 814,367 41,313 809,316 850,629 – – 41,313 731,062 772,375 2,238 39,754 850,629 814,367 EPI (Holdings) Limited Interim Report 2009 Condensed Consolidated Statement of Changes in Equity 9 For the six months ended 30 June 2009 Attributable to equity holders of the Company Contributed Share surplus Translation Share options Warrants Share capital premium reserve (Note) HK$’000 HK$’000 HK$’000 reserve HK$’000 reserve HK$’000 reserve HK$’000 Share options reserve of a Non-controlling Sub-total HK$’000 subsidiary HK$’000 interest HK$’000 Retained profits HK$’000 At 1 January 2008 (audited) 41,350 591,793 60,322 3,552 12,293 10,832 61,710 781,852 Exchange differences arising on translation of foreign operations, representing total income recognised directly in equity Profit for the year Total comprehensive income for the period Shares repurchased and cancelled Recognition of share-based payment expense Exercise of share options Lapse of warrants Dividend paid Acquired on acquisition of subsidiaries – – – (77) – 40 – – – – – – (2,361) – 875 – – – – – – – – – – – – 4,322 – 4,322 – – – – – – – – – – 1,600 – – – – Balance at 30 June 2008 (unaudited) 41,313 590,307 60,322 7,874 13,893 Balance at 1 January 2009 41,313 590,547 60,322 6,563 15,409 Exchange differences arising on translation of foreign operations, representing total income recognised directly in equity Profit for the period Total comprehensive income for the period Disposal of subsidiary Recognition of share-based payment expense – – – – – – – – – – – – – – – (509) – (509) – – – – – – 78 – – – – – – (10,832) – – – – – – – – – At 30 June 2009 (unaudited) 41,313 590,547 60,322 6,054 15,487 – 136,906 850,629 Notes: The contributed surplus reserve represents the credit arising from capital reduction. Total HK$’000 781,852 4,322 17,037 21,359 (2,438) 1,600 915 – (10,328) 45,608 – – (3,480) (3,480) – – – – – 45,608 – – – – – – – – – – – – 20,517 4,322 20,517 20,517 24,839 – – – 10,832 (10,328) – (2,438) 1,600 915 – (10,328) – 82,731 796,440 42,128 838,568 58,221 772,375 2,238 39,754 814,367 – 78,685 (509) 78,685 78,685 78,176 – – – 78 – – – – (17,789) (17,789) (2,238) (21,965) – – – – (509) 60,896 60,387 (24,203) 78 850,629 EPI (Holdings) Limited Interim Report 2009 Condensed Consolidated Statement of Cash Flows 10 For the six months ended 30 June 2009 OPERATING ACTIVITIES Cash from operations Hong Kong profits tax paid NET CASH FROM OPERATING ACTIVITIES INVESTING ACTIVITIES Interest received Additions of prepaid lease payments Decrease in loan receivables Decrease (Increase) in pledged bank deposits Disposal / Acquisition of a subsidiary Increase in held-for-trading investments Net disposal / (Purchase) of property, plant and equipment For the Six months ended 30 June 2009 HK$’000 2008 HK$’000 (Unaudited) (Unaudited) 60,032 (7,618) 99,288 (1,967) 52,414 97,321 331 10 14,038 17,115 73,075 (6,900) 242 617 (1,058) 1,500 (2,917) 53,358 – (2,302) NET CASH FROM INVESTING ACTIVITIES 97,911 49,198 FINANCING ACTIVITIES Dividend paid Net payment of bank borrowings Net payment on repurchase of shares Proceeds from issue of shares upon exercise of share options Interest paid NET CASH (USED IN) FINANCING ACTIVITIES NET INCREASE IN CASH AND CASH EQUIVALENTS EFFECT OF FOREIGN EXCHANGE RATE CHANGES CASH AND CASH EQUIVALENTS AT 1 JANUARY CASH AND CASH EQUIVALENTS AT 30 JUNE – (140,900) – – (3,964) (10,328) (30,504) (2,438) 915 (3,883) (144,864) (46,238) 5,461 (509) 99,388 100,281 4,322 145,047 104,340 249,650 ANALYSIS OF THE BALANCES OF CASH AND CASH EQUIVALENTS Bank balances and cash 104,340 249,650 EPI (Holdings) Limited Interim Report 2009 Notes to the Condensed Consolidated Interim Financial Statements 11 For the six months period ended 30 June 2009 1. BASIS OF PREPARATION AND ACCOUNTING POLICIES The unaudited condensed consolidated financial statements of the Group for the six months ended 30 June 2009 have been prepared in accordance with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) and with Hong Kong Accounting Standard 34, Interim Financial Reporting. 2. PRINCIPAL ACCOUNTING POLICIES The condensed consolidated financial statements have been prepared on the historical cost basis except for certain financial instruments, which are measured at fair values. The accounting policies used in the condensed consolidated financial statements are consistent with those followed in the preparation of the Group’s annual financial statements for the year ended 31 December 2008. In the current interim period, the Group has applied, for the first time, a number of new and revised standards, amendments and interpretations (“new and revised HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”), which are effective for the Group’s financial year beginning on 1 January 2009. Presentation of financial statements HKAS 1 (Revised 2007) has introduced a number of terminology changes, including revised titles for the condensed consolidated financial statements, and has resulted in a number of changes in presentation and disclosure. HKFRS 8 is a disclosure Standard that requires the identification of operating segments to be performed on the same basis as financial information that is reported internally for the purpose of allocating resources between segments and assessing their performance. The predecessor Standard, HKAS 14 Segment Reporting, required the identification of two sets of segments (business and geographical) using a risks and returns approach. In the past, geographical segments by location of the Group’s assets that is also the location of the Group’s operations, are the basis on which the Group reports its primary segment information. The application of HKFRS 8 has not resulted in a redesignation of the Group’s reportable segments as compared with the primary reportable segments determined in accordance with HKAS 14 (see note 3). The adoption of the new and revised HKFRSs has had no material effect on the reported results and financial position of the Group for the current or prior accounting periods. Accordingly, no prior period adjustment has been recognised. The Group has not early applied the following new or revised standards, amendments or interpretations that have been issued but are not yet effective: HKFRSs (Amendments) HKFRSs (Amendments) Amendment to HKFRS 5 as part of improvements to HKFRSs issued in 2008 1 Improvements to HKFRSs issued in 2009 2 HKAS 27 (Revised in 2008) Consolidated and separate financial statements 1 HKAS 39 (Amendment) HKFRS 2 (Amendment) Eligible hedged items 1 Group cash-settled share based payments transactions 3 HKFRS 3 (Revised in 2008) Business combinations 1 HK (IFRIC) - Int 17 HK (IFRIC) - Int 18 Distributions of non-cash assets to owners 1 Transfers of assets from customers 4 EPI (Holdings) Limited Interim Report 2009 Notes to the Condensed Consolidated Interim Financial Statements 12 2. PRINCIPAL ACCOUNTING POLICIES – CONTINUED 1 Effective for annual periods beginning on or after 1 July 2009. 2 Amendments that are effective for annual periods beginning on or after 1 July 2009 or 1 January 2010, as appropriate. 3 Effective for annual periods beginning on or after 1 January 2010. 4 Effective for transfers on or after 1 July 2009. The adoption of HKFRS 3 (Revised 2008) may affect the Group’s accounting for business combinations for which the acquisition dates are on or after the beginning of the first annual reporting period beginning on or after 1 July 2009. HKAS 27 (Revised 2008) will affect the accounting treatment for changes in the Group’s ownership interest in a subsidiary that do not result in loss of control of the subsidiary. Changes in the Group’s ownership interest that do not result in loss of control of the subsidiary will be accounted for as equity transactions. The directors of the Company anticipate that the application of other new and revised standards, amendments or interpretations will have no material impact on the results and the financial position of the Group. EPI (Holdings) Limited Interim Report 2009 Notes to the Condensed Consolidated Interim Financial Statements 13 3. REVENUE AND SEGMENT INFORMATION The Group has adopted HKFRS 8 “Operating segments” with effect from 1 January 2009, resulted in changes as set out in note 2. HKFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Group’s chief operating decision maker in order to allocate resources to the segment and to assess its performance. The chief operating decision maker of the Group has been identified as the Chief Executive Officer. The following is an analysis of the Group’s revenue and results by operating segments for the periods under review: Six months ended 30 June 2009 (unaudited) Metals sourcing Production of Consumer and trading copper anode electronics Elimination Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Continuing operations Revenue External sales Inter-segment sales Segment profit/(loss) Interest income Other income Unallocated corporate expenses Finance cost Profit before taxation Income tax charge Profit for the period Discontinued operation Revenue External sales Inter-segment sales Segment loss Other income Unallocated corporate expenses Finance cost Gain on disposal Profit before taxation Income tax charge Profit for the period Consolidated profit for the period 295,645 36,092 125,195 45,563 – 466,403 – – (36,092) – 331,737 125,195 45,563 (36,092) 466,403 (2,532) 411 314 – – – – – – – – – 1,773 – 1,773 (2,845) – – – – (1,807) 1,794 64,361 (16,013) (3,964) 44,371 (86) 44,285 1,773 – 1,773 (2,845) 350 (39,626) (155) 58,887 16,611 – 16,611 60,896 EPI (Holdings) Limited Interim Report 2009 Notes to the Condensed Consolidated Interim Financial Statements 14 3. REVENUE AND SEGMENT INFORMATION – CONTINUED Six months ended 30 June 2008 (Unaudited) Continuing operations Revenue External sales Segment profit/(loss) Interest income Other income Unallocated corporate expenses Finance cost Profit before taxation Income tax charge Consolidated profit for the period Metals sourcing Production of Consumer and trading copper anode electronics HK$’000 HK$’000 HK$’000 Total HK$’000 611,898 528,280 228,039 1,368,217 43,266 11,716 (7,972) 47,010 617 3,880 (27,502) (3,883) 20,122 (3,085) 17,037 All the Group’s segments assets and capital expenditure incurred during the period are located in the PRC (including Hong Kong), which is considered as one geographical location in an economic environment with similar risks and returns. In addition, over 90% of the Group’s revenue by geographical market based on location of customer are also located in the PRC. Accordingly, no geographical segment revenue analysis is presented. 4. OTHER EXPENSES Expenses incurred in exploring potential investment opportunities Restructuring expenses Change in fair value of financial assets classified as – held-for-trading – derivative financial instruments For the six months ended 2009 HK$’000 2008 HK$’000 (Unaudited) (Unaudited) 1,000 – – 3,152 4,152 – 4,718 8,321 5,909 18,948 EPI (Holdings) Limited Interim Report 2009 Notes to the Condensed Consolidated Interim Financial Statements 15 5. FINANCE COSTS For the six months ended 2009 HK$’000 2008 HK$’000 (Unaudited) (Unaudited) Interest on bank borrowings wholly repayable within five years 3,964 3,883 6. PROFIT BEFORE TAX The following items have been charged/(credited) to the profit before tax during the period: Depreciation of property, plant and equipment Operating leases on land and building Staff costs, including directors’ emoluments Share based payment under options scheme Bank interest income 7. INCOME TAX CHARGE For the six months ended 2009 HK$’000 2008 HK$’000 (Unaudited) (Unaudited) 1,512 2,520 10,495 78 (331) 600 3,907 13,410 1,600 (617) Hong Kong profits tax has been provided at the rate of 16.5% (2008: 16.5%) on the estimated assessable profits for the six months ended 30 June 2009 and the six months ended 30 June 2008. EPI (Holdings) Limited Interim Report 2009 Notes to the Condensed Consolidated Interim Financial Statements 16 8. EARNINGS PER SHARE From continuing and discontinued operations The calculation of the basic and diluted earnings per share attributable to the ordinary equity holders of the Company is based on the following data: Earnings Earnings for the purpose of basic earnings per share (Profit for the period attributable to owners of the Company) Number of shares For the six months ended 2009 HK$’000 2008 HK$’000 (Unaudited) (Unaudited) 78,685 20,517 Weight average number of ordinary shares for the purpose of basic earnings per share 4,131,348 Effect of dilutive potential ordinary shares: Options – 4,128,995 79,342 Weight average number of ordinary shares for the purpose of diluted earnings per share From continuing operations Profit for the period attributable to owners of the Company Less: profit for the period from discontinued operation Earnings for the purposes of basic and diluted earnings per share from continuing operations 9. DIVIDENDS 4,131,348 4,208,337 78,685 (16,611) 20,517 – 62,074 20,517 The directors do not recommend the payment of an interim dividend for the six months ended 30 June 2009 (2008: Nil). 10. GOODWILL At the beginning of the period Derecognised on the disposal of Vision Tech International Holdings Limited At the end of the period As at As at 30 June 2009 31 December 2008 HK$’000 (Unaudited) HK$’000 (Audited) 14,996 (14,996) – 14,996 – 14,996 EPI (Holdings) Limited Interim Report 2009 Notes to the Condensed Consolidated Interim Financial Statements 17 11. TRADE AND OTHER RECEIVABLES Trade receivables Bills receivables Other tax recoverable Prepayments to an associated company of a joint venture partner Prepayments to other suppliers Margin deposits to financial institutions Other receivable and deposits As at As at 30 June 2009 31 December 2008 HK$’000 (Unaudited) HK$’000 (Audited) 490,854 2,645 493,499 16,159 – – – 153,019 662,677 738,299 30,912 769,211 9,185 67,129 35,140 34,468 15,120 930,253 The Group allows an average credit period of 90 days to its trade customers. The following is an aged analysis of trade and bills receivables at the balance sheet date: 0-30 days 31-60 days 61-90 days 91-120 days As at As at 30 June 2009 31 December 2008 HK$’000 (Unaudited) 212,888 57,618 222,993 – 493,499 HK$’000 (Audited) 204,854 105,298 165,497 293,562 769,211 EPI (Holdings) Limited Interim Report 2009 Notes to the Condensed Consolidated Interim Financial Statements 18 12. TRADE AND OTHER PAYABLES Trade payables Bills payables Deposits received from a jointly controlled entity Other payables and accruals The following is an aged analysis of trade and bills payables at the balance sheet date: 0-30 days 31-60 days 61-90 days 91-180 days Over 180 days As at As at 30 June 2009 31 December 2008 HK$’000 (Unaudited) HK$’000 (Audited) 58,520 114,354 172,874 10,296 7,288 190,458 41,972 44,916 86,888 40,561 13,491 140,940 As at As at 30 June 2009 31 December 2008 HK$’000 (Unaudited) 172,874 – – – – 172,874 HK$’000 (Audited) 35,280 – 4,439 44,916 2,253 86,888 EPI (Holdings) Limited Interim Report 2009 Notes to the Condensed Consolidated Interim Financial Statements 19 13. BORROWINGS Borrowing which are repayable within one year comprise the following: Bank loans Trust receipts loans Analysed as: Secured Unsecured As at As at 30 June 2009 31 December 2008 HK$’000 (Unaudited) HK$’000 (Audited) 44,754 121,684 166,438 121,684 44,754 166,438 213,753 93,585 307,338 93,585 213,753 307,338 The ranges of effective interest rate (which are also equal to contracted interest rate) on Group’s borrowings are as follow: Effective interest rate: Fixed-rate borrowings Variable-rate borrowings 14. ISSUED CAPITAL As at As at 30 June 2009 31 December 2008 (Unaudited) (Audited) 4.86% 6.12% to 10.48% 3.05% to 5.00% 2.50% to 10.48% Number of shares Amount HK$’000 Authorised: Ordinary shares of HK$0.01 each at 1 January 2008, 31 December 2008 and 30 June 2009 25,000,000,000 250,000 Issued and fully paid: At 31 December 2008 and 30 June 2009 4,131,348,570 41,313 EPI (Holdings) Limited Interim Report 2009 Notes to the Condensed Consolidated Interim Financial Statements 20 15. DISPOSAL OF A SUBSIDIARY On 21 May 2009, the Group disposed of Vision Tech International Holdings Limited (VT), a subsidiary listed on the Stock of Exchange of Hong Kong Limited. The proceeds on disposal of HK$84.2 million were received in cash. The results of the VT for the relevant periods were as follows: Loss of operation Profit on disposal Turnover Operating costs Loss for the period The net assets of VT at the date of disposal were as follows: Net assets disposal of Attributable goodwill Profit on disposal Total consideration Satisfied by cash, and net cash inflow arising on disposal Period from 1/1/09-21/5/09 HK$’000 (Unaudited) (42,276) 58,887 16,611 1,773 (44,049) (42,276) 40,309 (14,996) 25,313 58,887 84,200 84,200 EPI (Holdings) Limited Interim Report 2009 Other Information 21 DIRECTORS’ AND CHIEF EXECUTIVE’S INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES At 30 June 2009, the interests and short positions of the directors and chief executives in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of Securities and Futures Ordinance (“SFO”)), as recorded in the register required to be kept by the Company pursuant to Section 352 of the SFO, or as otherwise notified to the Company and The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) set out in Appendix 10 to the Rules Save as disclosed above, no Directors or Chief Executive have any interests or short position in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which would have to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which were taken or deemed to be have under such provisions) or which were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein or which were required in the Listing Rules pursuant to the Model Code for Securities Transactions by Directors of Listed Companies to be notified to the Company and the Stock Exchange. Governing the Listing of Securities on the Stock Exchange SUBSTANTIAL SHAREHOLDERS As at 30 June 2009, according to the register of interests maintained by the Company pursuant to section 336 of the Securities and Futures Ordinance (“SFO”) and so far as is known to, or can be ascertained after reasonable enquiry by the Directors or chief executive of the Company, the following persons, other than the Directors and the chief executive of the Company, who had an interest or a short position in the shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who were, directly or indirectly, deemed to be interested in 5% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group (the “Listing Rules”), were as follows: Long positions in Shares and underlying Shares Number of Shares Beneficial Controlled Equity Approximate percentage of the issued share capital of the Director owner corporation derivatives Total interests company (note 1) (note 2) Wong Chi Wing, Joseph 9,000,000 1,708,146,000 24,380,000 1,741,526,000 42.15% Cheng Hairong Chu Kwok Chi Robert Leung Hon Chuen Xu Mingshe – 2,000,000 – – Poon Kwok Shin, Edmond 1,200,000 – – – – – 24,380,000 24,380,000 2,000,000 4,000,000 2,380,000 2,380,000 2,000,000 2,000,000 2,380,000 3,580,000 0.59% 0.10% 0.06% 0.05% 0.09% Notes 1. 2. 3. These Shares are held by Climax Associates Limited which is 51% owned by Rich Concept Worldwide Limited, a company wholly owned by Mr. Wong Chi Wing Joseph, a Director, 29% owned by Mr. Cheng Hairong, a Director and 20% by Mr. Chu Kwok Chi Robert, a Director. These represent the interests in share options granted to the Directors as beneficial owner under a share option scheme of the Company adopted on 6 November 2006. The calculation of percentages is based on 4,131,348,570 Shares of the Company in issue as at 30 June 2009. EPI (Holdings) Limited Interim Report 2009 Other Information 22 and the amount of each of such person’s interests in Under the Scheme, the Company may grant options to such securities, together with particulars of any options in selected employees and directors of the Company and respect of such capital were as follows: its subsidiaries, to subscribe for shares in the Company. The Company Additionally, the Company may, from time to time, grant share options to eligible vendors, customers, advisors and consultants to the Company and its subsidiaries at the Approximate discretion of the Board of Directors. percentage of the issued share The total number of shares in respect of which options Number of capital of may be granted under the Scheme is not permitted to Name of Shareholders Position Capacity Shares held the Company exceed 10% of the shares of the Company in issue at any Climax Associates Limited (Note 1) Long Beneficial owner 1,708,146,000 41.35% shareholders. The number of shares issued and to be Rich Concept Worldwide Limited (Note 2) Long Interest of a controlled corporation 1,708,146,000 41.35% granted to any individual in any one year is not permitted issued in respect of which options granted and may be point of time, without prior approval from the Company’s Notes 1. 2. to exceed 1% of the shares of the Company in issue at any point in time, without prior approval from the Climax Associates Limited is 51% owned by Rich Concept Worldwide Limited. Rich Concept Worldwide Limited is wholly owned by Mr. Wong Chi Wing, Joseph, a Director and Chairman of the Company. Company’s shareholders. Options granted to substantial shareholders, Independent non-executive directors, or any of their respective associates (including a discretionary Saved as disclosed above, as at 30 June 2009, so far trust whose discretionary objects include a substantial as is known to, or can be ascertained after reasonable shareholders, Independent non-executive directors, or enquiry by the Directors or chief executive of the Company, any of their respective associates) in excess of 0.1% of no persons had interests or short positions in the shares the Company’s share capital or with a value in excess of or underlying shares of the Company which would fall HK$5,000,000 must be also approved by the Company’s to be disclosed to the Company under the provisions of shareholders. Divisions 2 and 3 of Part XV of the SFO, or who are, directly or indirectly, deemed to be interested in 5% or more of the The exercise price of the share options is determinable by nominal value of any class of share capital carrying rights the directors, but may not be less than the higher of (i) the to vote in all circumstances at general meetings of any Stock Exchange closing price of the Company’s shares member of the Group or has any options in respect of such on the date of the offer of the share options which must capital. SHARE OPTION SCHEME be a business day; (ii) the average Stock Exchange closing price of the Company’s shares for the five trading days immediately preceding the date of the offer; and (iii) the nominal value of the Company’s shares. The Company’s share option scheme (the “Scheme”) was adopted for a period of 10 years commencing 6 November As at 30 June 2009, the total number of shares 2006 pursuant to an Ordinary Resolution passed at the Special General Meeting of the Shareholders held on 6 available for issue under the Scheme was 210,060,000, representing 5.08% of the issued share capital of the November 2006 for the purpose of providing incentives Company on that date. or rewards to selected employees and directors for their contribution to the Group. Details of the share options outstanding as at 30 June Number of share options 2009 under the Scheme were as follows: Grantee January Grant during the period 2009 At 1 Exercised Cancelled/ Outstanding as at 30 June 2009 during Lapsed during the period the period Number of share options At 1 Exercised Cancelled/ Outstanding as at 30 June 2009 during Lapsed during the period the period January Grant during the period 2009 Grantee Directors Exercisable period (both dates inclusive) Closing price immediately before the price date of grant Exercise Date of Grant Mr. Poon Kwok Shin, Edmond 800,000 EPI (Holdings) Limited Interim Report 2009 Other Information 23 Exercisable period (both dates inclusive) Closing price immediately before the price date of grant Exercise 0.205 0.205 0.30 0.27 0.30 0.27 0.30 0.27 0.30 0.27 0.30 0.27 0.205 0.205 0.205 0.205 0.205 0.205 0.30 0.27 0.30 0.27 0.642 0.64 0.642 0.64 0.642 0.64 1 January 2008 to 31 December 2009 1 January 2008 to 31 December 2009 1 January 2009 to 31 December 2009 28 February 2007 to 31 December 2009 1 January 2008 to 31 December 2009 1 January 2009 to 31 December 2009 21 February 2007 to 31 December 2009 1 January 2008 to 31 December 2009 1 January 2009 to 31 December 2009 1 January 2008 to 31 December 2009 1 January 2009 to 31 December 2009 15 August 2008 to 15 August 2011 15 August 2009 to 15 August 2011 15 August 2010 to 15 August 2011 Date of Grant 31 January 2007 – 800,000 – 400,000 21 February 2007 – 1,180,000 21 February 2007 – 680,000 21 February 2007 – 660,000 21 February 2007 – 660,000 21 February 2007 – 44,440,000 31 January 2007 – 47,440,000 31 January 2007 – 45,260,000 31 January 2007 – 4,700,000 21 February 2007 – 7,700,000 21 February 2007 – 1,000,000 15 August 2007 – 1,000,000 15 August 2007 – 1,000,000 15 August 2007 – 210,060,000 – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 400,000 1,180,000 Mr. Xu Mingshe 680,000 660,000 660,000 Employees 44,440,000 47,440,000 45,260,000 4,700,000 7,700,000 1,000,000 1,000,000 1,000,000 Total 210,060,000 Mr. Wong Chi Wing Joseph 8,380,000 8,000,000 8,000,000 Mr. Cheng Hairong 8,380,000 8,000,000 8,000,000 Mr. Chu Kwok Chi Robert 680,000 1,320,000 Mr. Leung Hon Chuen 800,000 400,000 1,180,000 – – – – – – – – – – – – – – – – – – – – – – – 8,380,000 31 January 2007 – 8,000,000 31 January 2007 – 8,000,000 31 January 2007 – 8,380,000 31 January 2007 – 8,000,000 31 January 2007 – 8,000,000 31 January 2007 – 680,000 21 February 2007 – 1,320,000 21 February 2007 – 800,000 31 January 2007 – 400,000 21 February 2007 – 1,180,000 21 February 2007 21 February 2007 to 31 December 2009 1 January 2008 to 31 December 2009 1 January 2009 to 31 December 2009 21 February 2007 to 31 December 2009 1 January 2008 to 31 December 2009 1 January 2009 to 31 December 2009 1 January 2008 to 31 December 2009 1 January 2009 to 31 December 2009 1 January 2008 to 31 December 2009 1 January 2008 to 31 December 2009 1 January 2009 to 31 December 2009 0.205 0.205 0.205 0.205 0.205 0.205 0.205 0.205 0.205 0.205 0.205 0.205 0.30 0.27 0.30 0.27 0.205 0.205 0.30 0.27 0.30 0.27 EPI (Holdings) Limited Interim Report 2009 Other Information 24 INTERIM DIVIDEND The board of directors of the Company has resolved that no interim dividend be paid for the period (2008: NIL). PURCHASE, SALES OR REDEMPTION OF THE COMPANY’S LISTED SECURITIES During the six months ended 30 June 2009, the Company has not redeemed any of its listed securities. Neither the Company nor any of its subsidiaries has purchased or sold any of the listed securities during the said period. CODE ON CORPORATE GOVERNANCE PRACTICES The Company has compiled with the code provisions set out in the Code on Corporate Governance Practices (the “CG Code”) in Appendix 14 of the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited (the “Listing Rules”). For the period ended 30 June 2009, the Company has complied with the CG Code with deviations from the code provision A.2.1 and A.4.1 of the CG Code as summarized below. The code provision A.2.1 of the CG Code stipulates that the roles of chairman and chief executive officer should be separate and should not be performed by the same individual. Mr. Wong Chi Wing Joseph is the chairman and chief executive officer of the company. The Company recognizes the importance of segregating the duties of the chairman and the chief executive officer and has tried its best to identify a high caliber executive to take up either one of these roles. A suitable candidate has not yet been identified but the Company will continue to look for the right person for the post. The code provision A.4.1 of the CG Code stipulates that non-executive directors should be appointed for a specific term, subject to re-election. Currently the non-executive directors were not appointed for a specific term. However, all non-executive directors were subject to retirement and offer themselves for re-election at each Annual General Meeting in accordance with the Company’s Bye-laws. MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) as set out in Appendix 10 to the Listing Rules. Upon specific enquiry by the Company, all directors have confirmed that they have complied with the required standards set out in the Model Code and its code of conduct regarding directors’ securities transactions throughout the period. AUDIT COMMITTEE The Audit Committee has reviewed with management the accounting principles and practices adopted by the Group and discussed internal controls and financial reporting matters including a review of the unaudited consolidated accounts for the six months ended 30 June 2009 with the Directors. The Audit Committee comprises two Independent Non- executive Directors, namely Mr. Poon Kwok Shin Edmond (Chairman of the Audit Committee) and Mr. Xu Mingshe and one Non-executive Director, Mr. Leung Hon Chuen. Mr. Poon is a certified public accountant. EPI (Holdings) Limited Interim Report 2009 Other Information 25 BOARD OF DIRECTORS As at the date of this report the Board comprises three executive Directors, namely, Mr. Wong Chi Wing, Joseph, Mr. Cheng Hairong and Mr. Chu Kwok Chi, Robert, one non-executive Director, namely Mr. Leung Hon Chuen and three independent non-executive Directors, namely, Qian Zhi Hui, Mr. Xu Mingshe, and Mr. Poon Kwok Shin, Edmond. For and on behalf of EPI (Holdings) Limited Wong Chi Wing, Joseph Chairman Hong Kong, 15 August 2009 EPI (Holdings) Limited Interim Report 2009 Defi nitions and Conversions of Weights and Measures 26 COPPER Copper cathode Copper anode Copper ingot EPI (Holdings) Limited Interim Report 2009 Defi nitions and Conversions of Weights and Measures 27 SCRAP COPPER No. 1 Cu minimum 97% No. 2 Cu 94-96% Light Copper EPI (Holdings) Limited Interim Report 2009 Defi nitions and Conversions of Weights and Measures 28 CONVERSION OF WEIGHTS AND MEASURES 1 troy ounce = 31.1 grams 1 kilogram = 32.15 troy ounces 1 kilogram = 2.2046 pounds 1 metric tonne = 1,000 kilograms 1 metric tonne = 2,204.6 pounds 1 metric tonne = 1.1023 short tons 1 short ton = 2,000 pounds 1 long ton = 2,240 pounds 1 gram per metric tonne = 0.02917 troy ounces per short ton 1 gram per metric tonne = 0.03215 troy ounces per metric tonne 1 kilometre = 0.6214 miles Disclaimer All the information contained in this section is provided for general information and reference purposes only. EPI (Holdings) Limited does not warrant or represent that the information provided is complete and accurate. EPI (Holdings) Limited assumes no responsibility for the information contained in this section and disclaims any or all liability in respect of such information.