(SEHK Stock Code: 0030.HK)

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Business Area

The Group’s continued operations involve in four identifiable business segments namely the mining operations segment, the money lending segment and the trading segment.

The mining operations segment refers to the exploration and exploitation of mineral resources in China conducted by Jun Qiao Limited and its subsidiaries (the “Jun Qiao Group”). The money lending segment refers to the money lending business engaged in Hong Kong by Ban Loong Finance Company Limited (“Ban Loong Finance”), a wholly-owned subsidiary of the Company which obtained the money lender license during the year. The trading segment refers to the trading of goods and commodities in China by Wan Long Xing Ye Commercial Trading (Shenzhen) Limited (萬隆興業商貿(深圳)有限公司) (“Wan Long Xing Ye”), a wholly-owned subsidiary of the Company.

THE MINING OPERATIONS SEGMENT

The Jun Qiao Group holds 1 mining license in Henan and 1 exploration license in Xinjiang. Mining properties of the Group includes the following:

Yin Di Mining Area (銀地礦區) in Henan

The Yin Di Mining Area is the only operating mine of the Group. It is located at Tongbai County in Henan Province and covers a mining area of approximately 1.81 km2. The mining area is 15 km away from Xining railways and connected to China National Highway 312, the traffic is considerably convenient. The mining license will be expired in January 2017.

Hu Lei Si De Mining Area (呼勒斯德地區) in Xinjiang

The mine is located at Jai Tai County (奇台縣) of Xinjiang Uygur Autonomous Region with a total exploration mining area of 29.12 km2. The mining area is connected to gravel and asphalt roads, traffic is considered convenient. Detailed geological survey and mineral resources exploration were undertaking. At the moment, several gold mineralization zones and substantial coal reserves have been identified.

The Group used to hold another exploration license in Henan, namely Li Zi Yuan Mining Area. During the year, the Group had written-off this exploration license as the renewal of it was not granted by the local authority, despite the management’s efforts and endeavors to renew the exploration license. The management believed that the loss of Li Zi Yuan Mining Area exploration license would not cause any material impact to the Group’s mining operation segment and to the Group’s financial performance and financial position as a whole. The carrying value of the exploration right amounted to HK$1.3 million, and the relevant prepayments for exploration and evaluation activities of HK$4.6 million had been fully written-off in the current year.

As stated in the Company’s announcement dated 30 March 2015, the Group has entered into a operating lease contract with Henan Heng Yi Mining Company Limited (the “Lessee”), being an independent third party, pursuant to which assets of the mining operations segment, including mining structures and plant and machinery included in property, plant and equipment; prepaid lease payments; mining right and reserves and exploration rights included in intangible assets; and prepayments for exploration and evaluation activities (the “Mining Assets”), was leased to the Lessee. Under the terms of the lease contract, the Lessee shall be responsible for all operating expenses in relation to the Mining Assets, any costs of exploration, survey and preparation of technical reports of the Group’s mining properties during the tenure of the lease. In addition, the Lessee shall refrain from over-exploitation and ensure that there are adequate residual resources in the mining properties.

The management considered that the operating lease arrangement provides an opportunity for the Group to generate a stable operating lease income from the Mining Assets and minimize the Group’s exposure to extra capital expenditure and operating costs associated with the mining operations.

During the year ended 31 March 2016, the revenue generated from the operating lease arrangement amounted to approximately HK$6.4 million, which representing the segment revenue of the mining operation segment.

On 30 March 2016, the Group has extended the operating lease contract with the Lessee for one year.

MONEY LENDING SEGMENT

Ban Loong Finance has obtained the money lender license in June 2015 to carry out money lending business in Hong Kong. Its business primarily focuses in the area of short-term personal loans.

As restricting by the available financial resources of the Group, Ban Loong Finance does not conduct business in retail level. Potential borrowers were sought from the social and business networks of the management. To safeguard assets of the Group, the management will review and assess the credit risk of each loan application carefully to ensure recoverability of each lending. The management would conduct full-scale background check on borrowers, including reviewing the credit reports issued by independent credit rating agent and examining borrowers’ assets backing. Ban Loong Finance would request loan applicants to provide adequate security and/or guarantee before approving a loan application. Generally speaking, borrowers would be requested to pay interest monthly, in order to let the management monitors continuously the financial stability of borrowers.

TRADING SEGMENT

Wan Long Xing Ye carried out trading of goods and commodities business in China. During the year ended 31 March 2016, Wan Long Xing Ye mainly engaged in the trading of stainless steel coil and refined edible oil. During the year ended 31 March 2016, trading revenue amounted to approximately HK$100.5 million, whereas trading of 1,088.69 tonnages of stainless steel coil and 15,301.61 tonnages of refined edible oil were completed.