Fraser : ANNOUNCEMENT OF ANNUAL RESULTS FOR THE YEAR ENDED 30 APRIL 2017

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FRASER HOLDINGS LIMITED

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8366) ANNOUNCEMENT OF ANNUAL RESULTS FOR THE YEAR ENDED 30 APRIL 2017 CHARACTERISTICS OF THE GROWTH ENTERPRISE MARKET ("GEM") OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE "STOCK EXCHANGE") GEM has been positioned as a market designed to accommodate companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors. Given the emerging nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board of the Stock Exchange and no assurance is given that there will be a liquid market in the securities traded on GEM.

This announcement, for which the directors (the "Director(s)") of Fraser Holdings Limited (the "Company", together with its subsidiaries, the "Group") collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on the GEM of the Stock Exchange (the "GEM Listing Rules") for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this announcement is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this announcement misleading.

FINANCIAL HIGHLIGHTS

• Revenue amounted to approximately HK$148.6 million for the year ended 30 April 2017 (2016: approximately HK$180.6 million), representing a decrease of approximately 17.7% as compared with last year.

• Profit attributable to the owners of the Company for year ended 30 April 2017 amounted to approximately HK$4.6 million (2016: approximately HK$7.2 million).

• Basic earnings per share amounted to approximately HK0.32 cents for the year ended 30 April 2017 (2016: approximately HK0.54 cents).

• The Board does not recommend the payment of final dividend for the year ended 30 April 2017 (2016: nil).

ANNUAL RESULTS FOR THE YEAR ENDED 30 APRIL 2017

The board (the "Board") of Directors of the Company is pleased to present the audited consolidated financial results of the Group for the year ended 30 April 2017 together with the audited comparative figures for the prior year as follows:

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 APRIL 2017

2017	2016
Notes	HK$'000	HK$'000
Revenue	4	148,571	180,602
Direct costs	(139,278)	(162,549)
Gross profit	9,293	18,053
Other income	5	3,074	331
Administrative expenses	(6,538)	(8,824)
Finance costs	6	(12)	(87)
Profit before income tax	7	5,817	9,473
Income tax expense	8	(1,250)	(2,283)
Profit and total comprehensive income for the year	4,567	7,190
Earnings per share (HK cents)
- Basic and diluted	10	HK0.32 cent	HK0.54 cent

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 APRIL 2017

2017	2016
Notes	HK$'000	HK$'000
Non-current assets
Property, plant and equipment	362	417
Current assets
Trade and other receivables	11	31,037	31,392
Amounts due from customers on construction contracts	12	7,979	7,747
Tax recoverable	2,313	-
Pledged time deposits	-	25,038
Cash and bank balances	67,025	49,838
108,354	114,015
Current liabilities
Trade and other payables	13	17,021	25,946
Amounts due to customers on construction contracts	12	7,291	3,022
Obligation under finance lease	23	23
Tax payable	635	6,239
24,970	35,230
Net current assets	83,384	78,785
Total assets less current liabilities	83,746	79,202
Non-current liabilities
Obligation under finance lease	50	73
Net assets	83,696	79,129
Equity
Share capital	14,400	14,400
Reserves	69,296	64,729
Total equity	83,696	79,129

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 APRIL 2017

1. CORPORATE INFORMATION

   Fraser Holdings Limited was incorporated in the Cayman Islands on 20 May 2015 as an exempted company with limited liability. Its parent and ultimate holding company was National Honour Investments Limited ("National Honour"), a company incorporated in the British Virgin Islands (the "BVI") and wholly owned by Mr. Yu Shek Man, Ringo ("Mr. Yu") and Ms. Wong So Wah ("Ms. Wong") (hereinafter collectively referred to as the "Controlling Shareholders").

   On 5 May 2017, National Honour entered into a sale and purchase agreement, and National Honour is no longer the parent and ultimate holding company. For details, please refer to Events after Reporting Period of this announcement.

   The addresses of the registered office and the principal place of business of the Company are Room 1122, Pacific Link Tower, South Mark, 11 Yip Hing Street, Wong Chuk Hang, Hong Kong. The Company is an investment holding company and its subsidiaries (collectively, the "Group") are principally engaged in undertaking slope works, foundation works and other general building works in Hong Kong.

   The consolidated financial statements are presented in Hong Kong dollars ("HK$"), which is the same as the functional currency of the Company and its subsidiaries. The Company's shares are listed on the Growth Enterprise Market of the Stock Exchange on 2 November 2015 (the "Listing").

2. GROUP REORGANISATION AND BASIC OF PRESENTATION

   Pursuant to the Group reorganisation (the "Reorganisation") in connection with the Listing, the Company became the holding company of the companies now comprising the Group on 17 June 2015.

   Details of the Reorganisation are set out in the paragraph headed "Reorganisation" in the section headed "History and Development" in the Company's prospectus (the "Prospectus") dated 23 October 2015. The Group was under the common control of the Controlling Shareholders prior to and after the Reorganisation. The Group comprising the Company and its subsidiaries resulting from the Reorganisation is regarded as a continuing entity.

   The consolidated financial statements of the Group have been prepared using the principles of merger accounting in accordance with Accounting Guideline 5 "Merger Accounting for Common Control Combinations" issued by the Hong Kong Institute of Certified Public Accountants (the "HKICPA") as if the Company had always been the holding company of the Group and the current group structure had been in existence throughout the year ended 30 April 2016, or since their respective dates of incorporation/ establishment, where it is a shorter period.

   The consolidated financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards ("HKFRSs"), which collective term includes all applicable individual Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards ("HKASs") and Interpretations issued by HKICPA and the accounting principles generally accepted in Hong Kong.

   The consolidated financial statements also comply with the applicable disclosure requirements of the Hong Kong Companies Ordinance and the applicable disclosure requirements of the GEM Listing Rules.

3. ADOPTION OF NEW AND AMENDED HKFRSs Amended HKFRSs that are effective for annual periods beginning or after 1 May 2016

   In the current year, the Group has applied for the first time the following amended HKFRSs issued by the HKICPA, which are effective for the Group's consolidated financial statements for the annual period beginning on 1 May 2016:

   Amendments to HKAS 1	Disclosure Initiative
   Amendments to HKAS 16 and HKAS 38	Clarification of Acceptable Methods of Depreciation and Amortisation
   Amendments to HKFRS 10, HKFRS 12 and HKAS 28	Investment Entities: Applying the Consolidation Exception
   Amendments to HKFRSs	Annual Improvements to HKFRSs 2012-2014 Cycle

   The application of the amendments to HKFRSs in the current year has no materials impact on the Group's financial performance and positions for the current and prior years and/or on the disclosures set out in these consolidated financial statements.

   Issued but not yet effective HKFRSs

   At the date of authorisation of these consolidated financial statements, the following new and amended HKFRSs that are relevant to the Group have been issued but are not yet effective for the financial year beginning on 1 May 2016, and have not been early adopted by the Group:

   HKFRS 9	Financial Instruments2
   HKFRS 15	Revenue from Contracts with Customers2
   HKFRS 16	Leases3
   Amendments to HKAS 7	Disclosure Initiative1
   Amendments to HKAS 12	Recognition of Deferred Tax Assets for Unrealised Losses1
   Amendments to HKAS 40	Transfer of Investment Properties2

   1 Effective for annual periods beginning on or after 1 January 2017

   2 Effective for annual periods beginning on or after 1 January 2018

   3 Effective for annual periods beginning on or after 1 January 2019

   The Group is in the process of making an assessment of the impact of these new and revised HKFRSs upon initial application and not yet in a position to state whether they would have a significant impact on the Group's results of operations and financial position.

4. REVENUE AND SEGMENT INFORMATION

   The Group is principally engaged in undertaking slope works, foundation works and other general building works in Hong Kong.

   Breakdown of the Group's revenue is set out as follows:

   2017	2016
   HK$'000	HK$'000
   Contracting revenue	148,271	180,458
   Consultancy fee	300	144
   Revenue	148,571	180,602

   The chief operating decision-maker has been identified as the Board of Directors of the Company. The Board of Directors of the Company regards the Group's business of construction as a single operating segment and reviews the overall results of the Group as a whole to make decision about resources allocation. Accordingly, no segment analysis information is presented. No separate analysis of segment information by geographical segment is presented as the Group's revenue and non-current assets are principally attributable to a single geographical region, which is Hong Kong.

   An analysis of the Group's revenue and contribution to profit from operating activities from undertaking slope works, foundation works and other general building works in Hong Kong in the ordinary course of business for the year ended 30 April 2017 and 2016 are as follows:

   2017	2016
   HK$'000	HK$'000
   Slope works	125,060	155,102
   Foundation works	20,986	20,109
   General building works	2,225	5,247
   Others (note)	300	144
   148,571	180,602

   Note: Others represent consultancy fee income derived from the provision of consultancy services in relation to the management of projects involving slope works and/or other general building works.

5. OTHER INCOME

   An analysis of other income is as follows:

   2017	2016
   HK$'000	HK$'000
   Gain on disposal of property, plant and equipment	1,734	-
   Insurance claim	-	1
   Interest income from available for sale financial assets	1,085	-
   Interest income	110	101
   Rental income from lease of machinery	11	164
   Sundry income	134	65
   3,074	331

6. FINANCE COSTS

   An analysis of finance costs is as follows:

   2017	2016
   HK$'000	HK$'000
   Interest on:
   - Bank loans and overdrafts wholly repayable within 5 years	-	77
   - Finance leases	12	10
   12	87

7. PROFIT BEFORE INCOME TAX

   Profit before income tax is arrived at after charging/(crediting):

   2017	2016
   HK$'000	HK$'000
   Profit before tax is stated after charging/(crediting):
   (a) Staff costs (including directors' emoluments)
   Salaries, wages and other benefits	4,568	8,334
   Contributions to defined contribution retirement plans	143	337
   Staff costs (including directors' emoluments)	4,711	8,671
   (b) Other items
   Depreciation, included in:
   - Direct costs	115	352
   - Administrative expenses:
   - Assets held under finance lease	33	17
   - Owned assets	23	23
   171	392
   Operating lease charges:
   - Land and buildings	384	384
   Subcontracting charges (included in direct costs)	135,269	148,683
   Listing expenses	-	3,282
   Auditor's remuneration	600	600
   Loss on disposal of available for sale financial assets	231	-
   Gain on disposal of property, plant and equipment	(1,734)	-

8. INCOME TAX EXPENSE

   Hong Kong Profits Tax has been provided at the rate of 16.5% (2016: 16.5%) on the estimated assessable profit for the year.

   2017	2016
   HK$'000	HK$'000
   Provision for Hong Kong Profits Tax
   Current year	1,352	2,283
   Over provision in respect of prior years	(102)	-
   1,250	2,283

   The income tax expense for the year can be reconciled to the profit before income tax per the consolidated statement of profit or loss and other comprehensive income as follows:

   2017	2016
   HK$'000	HK$'000
   Profit before income tax	5,817	9,473
   Tax on profit before income tax at 16.5% (2016: 16.5%)	960	1,563
   Tax effect of expense not deductible for tax purpose	489	761
   Tax effect of income not taxable	(119)	-
   Temporary differences not recognised	(20)	(41)
   Over provision in prior years	(102)	-
   Other	42	-
   Income tax expense for the year	1,250	2,283

   As at 30 April 2017, no deferred taxation has been provided as there are no significant unrecognised temporary differences (2016: nil).

9. DIVIDEND

   The directors do not recommend the payment of any dividend in respect of the year.

   For the year ended 30 April 2016, interim dividends of HK$10,000,800 were appropriated to the then shareholders of Fraser Construction Company Limited.

10. EARNINGS PER SHARE

    The calculation of basic earnings per share attributable to owners of the Company is based on the followings:

    2017	2016
    HK$'000	HK$'000
    Earnings
    Profit for the year attributable to equity holders of the Company for the purposes of basic earnings per share	4,567	7,190

    2017	2016
    '000	'000
    Number of shares
    Weighted average number of ordinary shares for the purpose of basic earnings per share	1,440,000	1,336,658

    There were no dilutive potential ordinary shares during both years and therefore, diluted earnings per share are not presented.

    The weighted average number of ordinary shares in issue during the year ended 30 April 2016 comprises 1,235,000,000 ordinary shares on assumption that the reorganisation and capitalisation had been effective on 1 May 2015, and the weighted average of 101,658,000 ordinary share in issue.

11. TRADE AND OTHER RECEIVABLES

    The following is an analysis of trade and other receivables at the end of the reporting year:

    2017	2016
    HK$'000	HK$'000
    Trade receivables	20,373	19,465
    Retention receivables	9,304	10,836
    Other receivables and prepayments	678	526
    Utility and other deposits	682	565
    31,037	31,392

    Trade receivables

    The Group usually provide customers with a credit term of 21-60 days (2016: 21-60 days). For the settlement of trade receivables from provision of construction services, the Group usually reaches an agreement on the term of each payment with the customer by taking into account of factors such as, among other things, the credit history of the customer, its liquidity position and the Group's working capital needs, which varies on a case-by-case basis that requires the judgment and experience of the management.

    Based on the invoice dates (or date of revenue recognition, if earlier), the ageing analysis of the trade receivables, net of provision for impairment, was as follows:

    2017	2016
    HK$'000	HK$'000
    0-30 days	20,311	16,753
    31-60 days	11	2,118
    61-90 days	16	139
    Over 90 days	35	455
    20,373	19,465

    At each reporting date, the Group reviewed trade receivables for evidence of impairment on both an individual and collective basis. Based on this assessment, no impairment has been recognised as at 30 April 2016 and 2017.

12. AMOUNTS DUE FROM/(TO) CUSTOMERS ON CONSTRUCTION CONTRACTS

    2017	2016
    HK$'000	HK$'000
    Contract costs incurred plus recognised profits less recognised losses	576,624	470,617
    Less: progress billings	(575,936)	(465,892)
    Contract work-in-progress	688	4,725
    Analysed for reporting purposes as:
    Amounts due from customers on construction contracts	7,979	7,747
    Amounts due to customers on construction contracts	(7,291)	(3,022)
    688	4,725

    The gross amounts due from/(to) customers on construction contracts are expected to be recovered/settled within one year.

13. TRADE AND OTHER PAYABLES

2017	2016
HK$'000	HK$'000
Trade payables	7,016	15,853
Retention payables	7,706	7,911
Accruals and other payables	2,299	2,182
17,021	25,946

Payment terms granted by suppliers are 42-60 days (2016: 42-60 days) from the invoice date of the relevant purchases.

The ageing analysis of trade payables based on the invoice date is as follows:

2017	2016
HK$'000	HK$'000
0-30 days	6,818	13,560
31-60 days	-	1,734
61-90 days	-	-
Over 90 days	198	559
7,016	15,853

Retention payables are interest-free and settled in accordance with the terms of the respective contracts.

MANAGEMENT DISCUSSION AND ANALYSIS Business Review and Outlook

The Group is a contractor principally engaged in undertaking slope works, foundation works and other general building works in Hong Kong. Slope works generally refer to landslip preventive and remedial works for improving or maintaining the stability of slopes and/or retaining walls. Foundation works are generally concerned with the construction of foundations. General building works mainly include the general construction of buildings. Fraser Construction Company Limited, our principal operating subsidiary, is an approved specialist contractor included in the List of Approved Specialist Contractors for Public Works maintained by the Development Bureau of the Government under the categories of "Landslip Preventive/Remedial Works to Slopes/Retaining Walls" with a confirmed status and "Land Piling (Group II)". Being on such list is a prerequisite for tendering for public sector projects in the relevant works categories. In addition, Fraser Construction Company Limited is registered under the Buildings Ordinance (Chapter 123 of the Laws of Hong Kong) as a (i) Registered Specialist Contractor under the sub-register of "Site Formation Works" and "Foundation Works" categories; and (ii) Registered General Building Contractor.

The Group experienced a decrease in revenue and net profit for the year ended 30 April 2017 compared to the same period last year. The Directors consider that the decrease was mainly due to a decrease in gross profit margin for the Group's business as a result of an increase in the overall construction costs in Hong Kong, coupled with a decrease in revenue derived from the slope works as a result of competition faced by the Group in obtaining new businesses and the completion of some government slope work projects.

The Directors are also cautiously monitoring the overall construction costs with respect to the works undertaken by the Group which are affected by factors including the overall market conditions and costs in the construction industry as well as overall economy in Hong Kong. The Group has been facing tougher competitive conditions and challenging operating environment resulting from increasing costs of operation including, in particular, costs of construction labours and thus subcontracting charges as well as the recent instability of the global economy.

Going forward, in developing the Group's business, the Directors will continue to carefully evaluate the potential costs and to control the Group's overall costs to an acceptable and satisfactory level.

All things considered, the Directors are still cautiously optimistic about the slope works industry in Hong Kong in general because the fact the slope works are directly related to public safety.

FINANCIAL REVIEW Revenue

The Group's overall revenue decreased by approximately HK$32.0 million or approximately 17.7% from approximately HK$180.6 million for the year ended 30 April 2016 to approximately HK$148.6 million for the year ended 30 April 2017. The decrease in revenue is mainly due to the decrease in revenue derived from undertaking slope works, as further discussed below.

The Board regards the Group's business of construction as a single operating segment and reviews the overall results of the Group as a whole to make decision about resources allocation. Accordingly, no segment analysis information is presented. No separate analysis of segment information by geographical segment is presented as the Group's revenue and non- current assets are principally attributable to a single geographical region, which is Hong Kong. The Group's principal operating activities for the year ended 30 April 2017 are as follows:

Slope works: Undertaking landslip preventive and remedial works for improving or maintaining the stability of slopes and/or retaining walls. Revenue from undertaking slope works decreased from approximately HK$155.1 million for the year ended 30 April 2016 to approximately HK$125.1 million for the year ended 30 April 2017, representing a decrease of approximately 19.3%. The decrease in revenue was primarily attributable to a lower amount of revenue from Civil Engineering and Development Department's slope works projects for the year ended 30 April 2017, which was due to certain delays in the work schedule under some of the Group's slope work projects and less work orders received from its slope work projects, as well as the completion of certain public sector slope work projects.

Foundation works: Undertaking works in relation to the construction of foundations for general building construction. Revenue from undertaking foundation works increased from approximately HK$20.1 million for the year ended 30 April 2016 to approximately HK$21.0 million for the year ended 30 April 2017, representing an increase of approximately 4.5%, which was due to an increase in number of foundation projects undertaken by our Group during the year ended 30 April 2017.

General building works: Undertaking general construction of buildings. Revenue from undertaking general building works decreased from approximately HK$5.2 million for the year ended 30 April 2016 to approximately HK$2.2 million for the year ended 30 April 2017, representing a decrease of approximately 57.7%, which was due to lower actual works progress under the contract as certified by its agents compared between the years ended 30 April 2017 and 2016.

Others: Provision of consultancy services in relation to the management of projects involving slope works and/or other general building works in Hong Kong. Revenue from the provision of consultancy services increased from approximately HK$0.1 million for the year ended 30 April 2016 to approximately HK$0.3 million for the year ended 30 April 2017, representing an increase of approximately 200.0%, as there is an increase of number of consultancy services for the year ended 30 April 2017 compared with the year ended 30 April 2016.