( ) 2018 InterimReport China Saite Group Company Limited (incorporated in the Cayman Islands with limited liability) China Saite

Transcription

1 () 2018 InterimReport China Saite Group Company Limited (incorporated in the Cayman Islands with limited liability) China Saite

2 Contents Corporate Information Management Discussion and Analysis Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income Condensed Consolidated Statement of Financial Position Condensed Consolidated Statement of Changes in Equity Condensed Consolidated Statement of Cash Flows Notes to the Condensed Consolidated Financial Statements Other Information

3 Corporate Information DIRECTORS Executive Directors Mr. Jiang Jianqiang (Chairman) Mr. Shao Xiaoqiang (Chief Executive Officer) Mr. Xu Fanghua Independent Non-Executive Directors Mr. Xu Jiaming Mr. Luk Chi Shing Mr. Wu Zhongxian (appointed on 8 August 2018) Mr. Eddie Hurip (resigned on 8 August 2018) CHIEF FINANCIAL OFFICER Mr. Lin Jiahui COMPANY SECRETARY Ms. Foo Man Yee Carina AUTHORISED REPRESENTATIVES Mr. Jiang Jianqiang Ms. Foo Man Yee Carina AUDIT COMMITTEE Mr. Luk Chi Shing (Chairman) Mr. Xu Jiaming Mr. Wu Zhongxian REMUNERATION COMMITTEE Mr. Wu Zhongxian (Chairman) Mr. Luk Chi Shing Mr. Shao Xiaoqiang NOMINATION COMMITTEE Mr. Jiang Jianqiang (Chairman) Mr. Xu Jiaming Mr. Wu Zhongxian REGISTERED OFFICE Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY Cayman Islands HEADQUARTER AND PRINCIPAL PLACE OF BUSINESS IN THE PRC No. 88 Saite Road Gaocheng Industrial Park Yixing Jiangsu Province The PRC PRINCIPAL PLACE OF BUSINESS IN HONG KONG Unit /F, The Center 99 Queen s Road Central Hong Kong Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY Cayman Islands 中國 賽特 88 中 99 中 中 China Saite Group Company Limited 中國賽特集團有限公司

4 Corporate Information AUDITOR Deloitte Touche Tohmatsu LEGAL ADVISER AS TO HONG KONG LAW Chiu & Partners PRINCIPAL BANKERS China Construction Bank Corporation (Yixing Gaocheng Branch) Agricultural Bank of China Limited (Yixing Chengzhong Branch) Jiangsu Yixing Rural Commercial Bank Co., Ltd. (Gaocheng Branch) DBS Bank (Hong Kong) Limited HONG KONG BRANCH SHARE REGISTRAR AND TRANSFER OFFICE Tricor Investor Services Limited Level 22, Hopewell Centre 183 Queen s Road East Hong Kong CAYMAN ISLANDS SHARE REGISTRAR AND TRANSFER OFFICE Royal Bank of Canada Trust Company (Cayman) Limited 4th Fl., Royal Bank House 24 Shedden Road, PO Box 1586 Grand Cayman KY Cayman Islands STOCK CODE 153 COMPANY WEBSITE 中 中 中 183 中 22 Royal Bank of Canada Trust Company (Cayman) Limited 4th Fl., Royal Bank House 24 Shedden Road, PO Box 1586 Grand Cayman KY Cayman Islands Interim Report 2018 二零一八年中期報告 03

5 Management Discussion and Analysis INTRODUCTION As a service provider of integrated construction solutions using steel structures and prefabricated components, the Group delivers customised integrated construction solutions based on the technical specifications and requirements of different projects as well as the needs of customers. Its service cover the design, secondary detailed design, production, installation, and after-sales services for customers. 集團 The Group s steel structure solutions mainly focus on the construction of large-scale public structures (such as sports stadiums, convention and exhibition centres, airports, and railway stations), bridges (such as railway bridges, highway bridges, landscape bridges, river- 集團 中 公 中 04 China Saite Group Company Limited 中國賽特集團有限公司

6 Management Discussion and Analysis crossing bridges and sea-crossing bridges), large-scale factory premises, industrial park zones, logistics park zones, etc.. The Group s prefabricated construction solutions meet the requirements for energy conservation and environmental protection. These products are mainly used in the construction of low-income housing and public utilities during the process of urbanisation initiated by the PRC government. BUSINESS REVIEW 中 中 The Group recorded an increase in revenue, gross profit and net profit for the six-month period ended 30 June 2018 over the corresponding period of last year. During the period under review, the Group recorded a revenue of approximately RMB675.4 million (corresponding period of 2017: approximately RMB532.0 million). Gross profit amounted to approximately RMB168.8 million (corresponding period of 2017: approximately RMB141.8 million). The average gross profit margin was approximately 25.0% (corresponding period of 2017: approximately 26.6%). Profit attributable to the owners of the Company amounted to approximately RMB102.6 million (corresponding period of 2017: approximately RMB91.8 million). Basic earnings per share amounted to approximately RMB4.40 cents (corresponding period of 2017: approximately RMB3.95 cents) 年 6 30 期 年 期 期 年 期 年 期 % 2017 年 期 26.6% 年 期 年 期 3.95 For the period ended 30 June 2018, the Group adopted an effective strategy which further enhanced its performance, scale and sustainability by allowing benefited customers to acquire more long-term quality customers and quality projects 年 6 30 期 期 一 Other than those discussed above, there were no material changes in respect of such matters discussed under the section headed Business Review in the Management Discussion and Analysis of 2017 Annual Report of the Company 年年報 中 一 Interim Report 2018 二零一八年中期報告 05

7 Management Discussion and Analysis Steel Structure During the first half of 2018, revenue generated from Jiangsu Province represented approximately 50.1% of the total revenue generated from steel structure business segment in the first half of 2018, which was primarily attributable to the Group s factory construction projects. Besides, one of the major construction projects of the Group outside Jiangsu Province was the construction of a Shanghai Hyundai Automobile Service Industry Zone ( Shanghai Hyundai ) located in Shanghai with a contract revenue of approximately RMB43.1 million. During the period under review, the Shanghai Hyundai construction project represented 10.7% of the total revenue generated from steel structure business segment in the first half of For the six-month period ended 30 June 2018, revenue from the Group s steel structure business amounted to approximately RMB402.1 million, representing an increase of approximately 27.4% YOY. Gross profit margin was approximately 16.9%, representing a decrease of approximately 3.1% YOY. During the first half of 2018, the type and number of steel structure projects completed by the Group were as follows: % 集團 集團 % 集團 %16.9%3.1% 2018 集團 Number of projects For the six-month period ended 30 June 6 30 Type of project Factories 3 5 Public structures 公 4 0 Export orders of steel structure 3 0 Total China Saite Group Company Limited 中國賽特集團有限公司

8 Management Discussion and Analysis As at 30 June 2018, the type and number of the Group s steel structure projects in progress were as follows: 2018 年 6 30 Number of projects For the six-month period ended 30 June 6 30 Type of project 年 Factories 3 2 Public structures 1 0 Total 4 2 The above-mentioned steel structure projects in progress are expected to be completed in the second half of 2018 or in Prefabricated construction During the period under review, the Group continued to focus on the development of low-income housing projects. For the six-month period ended 30 June 2018, revenue from the Group s prefabricated construction business amounted to approximately RMB273.3 million, representing an increase of approximately 26.3% YOY. Gross profit margin was approximately 36.9%, representing an increase of approximately 0.6% YOY, as a result of improved cost control. For the six months ended 30 June 2018, the Group completed five residential projects and had three residential projects under construction, while for the corresponding period in 2017, the Group completed two residential projects and had three residential projects under construction. Future Prospects An analysis of the economic trend from 2018 to 2019 indicated that the Group was facing greater challenges over the past two years as the PRC economic growth was slowing down. Despite these challenges and pressures the Group was encountering, the management is confident to explore more opportunities in both the steel structure business and prefabricated construction business. 期 2018 年 年 2019 年 期 中 2018 年 6 30 期 %36.9% 0.6% 2018 年 年 期 2018 年 2019 年 中 年 Interim Report 2018 二零一八年中期報告 07

9 Management Discussion and Analysis For steel structure business, the Group will continue its market expansion from the Yangtze River Delta region to the central and western regions of the PRC. According to the 13th Five-Year Plan of the PRC, the central government of the PRC will speed up the pace of development in the central and western regions, which will give us a great opportunity for the expansion of the steel structure business geographically. The Group will also step up its expansion in other overseas markets, including Australia, Turkey and African countries, through the cooperation with multi-national corporations. With both the opportunities brought about by the government s development direction and the Group s close business relationship with multi-national partners, the Group will race to seize the market share of this segment. For the prefabricated construction business, according to the National Plan for New Urbanisation ( ) published by the State Council of the PRC, certain measures will be carried out by the Group in the future to increase the level and the quality of urbanization in the PRC, striving to reach an urbanisation rate of 60% by Under the effect of increased domestic demand for low-incoming housing, the management believes that the Group will be able to achieve steady growth in its prefabricated construction business segment. Amid the complex economic situations in both domestic and overseas markets, the management of the Group will continue to cope with these situations proactively and to improve its own operation and management efficiency to capture any opportunities arising from closer connection between the domestic macro-economic situation and the international markets. While taking the full advantage of the solid foundations for its steel structure business and prefabricated construction business, the Group will step up collaboration with state-owned enterprises, central enterprises and multi-national corporations to diversify its business portfolio and broaden its income stream with a view to boosting the Group s business to a higher level and creating a long-term value for the shareholders. Apart from the steel structure and prefabricated construction businesses, the Directors have recently discussed business planning for the Group and formulated a business strategy for the coming several years. The Group considers that it is beneficial for it to look for suitable opportunities from time to time to invest in businesses with growth potential so as to diversify and broaden its sources of income. 集團 中 中國 中 中 集團 國公司 國 集團 國 集團 中國國 國 ( ) 集團 中國 % 國 集團 國 集團 國 國 集團 國 國公司 集團 集團 集團 集團有 08 China Saite Group Company Limited 中國賽特集團有限公司

10 Management Discussion and Analysis FINANCIAL REVIEW Revenue For the six-month period ended 30 June 2018, the Group s revenue amounted to approximately RMB675.4 million, representing an increase of approximately RMB143.4 million or 27.0% as compared with that for the period ended 30 June The following table sets out a breakdown of the Group s revenue from the steel structure projects and prefabricated construction projects for each of the periods indicated: 2018 年 6 30 期 年 6 30 期 % 期 Six months ended 30 June 年 (%) (%) (%) (%) Construction of Steel structure projects 402, , Prefabricated construction projects 273, , Total 675, , For the six months ended 30 June 2018, revenue from the steel structure projects represented approximately 59.5% of the Group s total revenue, while revenue from the prefabricated construction projects represented approximately 40.5% of the Group s total revenue. The revenue generated from each of these two principal businesses in proportion to the Group s total revenue was basically similar to that for the corresponding period of last year. Revenue from the steel structure projects increased by approximately 27.4% from approximately RMB315.5 million for the six-month period ended 30 June 2017 to approximately RMB402.1 million for the six-month period ended 30 June On the other hand, revenue from the prefabricated construction projects increased by approximately 26.3% from approximately RMB216.5 million for the six-month period ended 30 June 2017 to approximately RMB273.3 million for the six-month period ended 30 June 年 % 40.5% 年 期 2017 年 6 30 期 % 2018 年 6 30 期 一 2017 年 6 30 期 % 2018 年 6 30 期 Interim Report 2018 二零一八年中期報告 09

11 Management Discussion and Analysis Gross profit and gross profit margin The following table sets out a breakdown of the Group s gross profit and gross profit margin ( GP margin ) in respect of the steel structure projects and prefabricated construction projects for the six months ended 30 June 2018: 集團 Six months ended 30 June GP margin (%) GP margin (%) (%) (%) Construction of Steel structure projects 68, , Prefabricated construction projects 100, , Total 168, , For the six months ended 30 June 2018, overall GP margin of the Group was approximately 25.0%, representing a decrease of 1.6% from the GP margin of approximately 26.6% for six months ended 30 June 集團 25.0% %1.6% GP margin for the steel structure projects dropped approximately 3.1% from approximately 20.0% for the six months ended 30 June 2017 to 16.9% for the six months ended 30 June The drop was mainly due to the pressure from the decelerated economic growth in the PRC and the corresponding adjustment to industry profits, which in turn resulted in the fall of GP margin for the Group s steel structure business % 3.1% % 國 集團 有 GP margin for the prefabricated construction projects rose by approximately 0.6% from approximately 36.3% for the six months ended 30 June 2017 to 36.9% for the six months ended 30 June The rise was mainly due to better cost control imposed on the production of prefabricated components % % 0.6% 10 China Saite Group Company Limited 中國賽特集團有限公司

12 Management Discussion and Analysis Capital structure, liquidity and financial resources The Group s cash and cash equivalents were approximately RMB730.9 million as at 30 June 2018 (as at 31 December 2017: RMB757.3 million) 年 年 As at 30 June 2018, the Group s current assets were approximately RMB2,889.8 million (31 December 2017: RMB2,572.7 million) and current liabilities were approximately RMB437.6 million (31 December 2017: RMB269.6 million). The current ratio (which is calculated on the basis of current assets over current liabilities) was approximately 6.6 (31 December 2017: 9.5) as at 30 June 年 , 年 , 年 年 年 The Group s total equity was approximately RMB2,700.8 million as at 30 June 2018 (31 December 2017: RMB2,608.6 million). The Company s issued share capital was approximately HK$233.1 million as at 30 June 2018 (31 December 2017: HK$233.1 million), with 2,330,747,935 shares (31 December 2017: 2,330,747,935 shares) in issue 年 , 年 , 年 年 ,330,747, 年 ,330,747,935 Administrative expenses For the six months ended 30 June 2018, the Group s administrative expenses were RMB25.1 million, representing an increase of approximately RMB10.8 million as compared to the administrative expenses of RMB14.3 million for the six months ended 30 June 2017, which was mainly attributable to exchange losses, increased emoluments of executives and professional fees. Pledge of assets 2018 年 年 As at 30 June 2018, certain machineries of Jiangsu Saite Steel Structure Co., Ltd., a subsidiary of the Group, with a fair value of approximately RMB18.0 million were pledged against a banking facility of RMB3.5 million granted to the subsidiary 年 Interim Report 2018 二零一八年中期報告 11

13 Management Discussion and Analysis Gearing ratio Gearing ratio is calculated based on the interest-bearing liabilities at the end of a period divided by the equity attributable to owners of the Company at the end of that period. As at 30 June 2018, the gearing ratio of the Group was approximately 14.3% (31 December 2017: 5.9%). 有 公司 有 集團 14.3% % Bank and other borrowings The Group s outstanding bank and other borrowings were RMB386.2 million as at 30 June 2018 (31 December 2017: RMB152.8 million) 集團 Foreign exchange exposure Since the Group operates businesses principally in the PRC, substantially all of its transactions are conducted in RMB and most of its assets and liabilities are denominated in RMB as well. The Group is subject to exchange rate risks arising from future commercial transactions and recognised assets and liabilities denominated in a currency other than RMB. During the period under review, the Group did not commit to any financial instruments to hedge its exposure to foreign currency risks, nor did it adopt any foreign currency hedging policy. However, the management of the Group monitors foreign exchange exposure and will consider hedging significant foreign currency exposure if necessary. 集團 中國 集團 集團 集團 集團 有 12 China Saite Group Company Limited 中國賽特集團有限公司

14 Management Discussion and Analysis Employees As at 30 June 2018, the Group had approximately 544 employees. The related staff cost (including remuneration of Directors in the form of salaries and other benefits) for the six months ended 30 June 2018 was approximately RMB31.7 million (for six months ended 30 June 2017: RMB24.8 million) 年 年 年 The Group remunerates its employees based on their performance, experience and prevailing industry practice. Competitive remuneration package is offered to retain elite employees. Our package includes salaries, medical insurance, discretionary bonuses, on-the-job training, other benefits as well as MPF Scheme for the employees in Hong Kong and state-managed retirement benefit scheme for the employees in the PRC. 中 Interim Report 2018 二零一八年中期報告 13

15 Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended 30 June 2018 截至 2018 年 6 月 30 日止六個月 Six months ended 30 June 年 NOTES (Unaudited) (Unaudited) Revenue 3 675, ,013 Cost of sales (506,542) (390,235) Gross profit 168, ,778 Other income 4,916 2,699 Selling and marketing expenses (1,657) (1,207) Administrative expenses (25,073) (14,287) Finance costs 4 (5,280) (3,991) Share of profit of a joint venture Profit before tax 142, ,167 Income tax expense 5 (39,656) (33,417) Profit and total comprehensive income for the period attributable to owners of the Company 公司 有 6 102,551 91,750 Earnings per share 8 Basic (RMB cents) China Saite Group Company Limited 中國賽特集團有限公司

16 Condensed Consolidated Statement of Financial Position At 30 June 2018 於 2018 年 6 月 30 日 As at 30 June As at 31 December 2017 於 2017 年 12 月 31 日 NOTES (Unaudited) (Audited) Non-current assets Property, plant and equipment 9 213, ,127 Prepaid lease payments 56,370 57,032 Investment in a joint venture 於 154, ,911 Financial assets at fair value through profit or loss 10 53,928 Available-for-sale financial assets 10 53, , ,998 Current assets Contract assets 11 11,351 Amounts due from customers for contract work 11 4,466 Prepaid lease payments 1,312 1,312 Trade receivables 12 2,046,584 1,705,437 Other receivables, deposits and prepayments 99, ,156 Bank balances and cash 730, ,321 2,889,787 2,572,692 Current liabilities Contract liabilities Amounts due to customers for contract work 11 4,424 Trade payables 13 82,223 68,753 Deposits received, other payables and accruals 86,623 97,252 Provisions 14 1,200 1,200 Short-term borrowings 期 15 4,500 46,150 Corporate bonds due within one year 於一年 期 ,832 19,199 Tax liabilities 17,323 32, , ,566 Net current assets 2,452,150 2,303,126 Total assets less current liabilities 2,929,839 2,788,124 Interim Report 2018 二零一八年中期報告 15

17 Condensed Consolidated Statement of Financial Position At 30 June 2018 於 2018 年 6 月 30 日 As at 30 June As at 31 December 2017 於 2017 年 12 月 31 日 NOTES (Unaudited) (Audited) Non-current liabilities Deferred tax liabilities 92,116 92,116 Corporate bonds due after one year 公司 於 年 ,891 87, , ,551 2,700,832 2,608,573 Capital and reserves Share capital , ,410 Share premium and reserves 2,513,422 2,421,163 2,700,832 2,608, China Saite Group Company Limited 中國賽特集團有限公司

18 Condensed Consolidated Statement of Changes in Equity For the six months ended 30 June 2018 截至 2018 年 6 月 30 日止六個月 Share capital Share premium Capital reserve Statutory reserves Retained profits Total (Note a) (Note b) a b At 1 January 年 1 月 1 日 179, ,674 66, ,684 1,445,177 2,335,649 Profit and total comprehensive 年 income for the year 91,750 91,750 Issue of new shares 7,883 36,027 43,910 At 30 June 2017 (unaudited) 2017 年 6 月 30 日 187, ,701 66, ,684 1,536,927 2,471,309 At 1 January 年 1 月 1 日 187, ,515 66, ,684 1,662,085 2,598,281 Profit and total comprehensive income 年 for the year 102, ,551 At 30 June 2018 (unaudited) 2018 年 6 月 30 日 187, ,515 66, ,684 1,764,636 2,700,832 Notes: (a) Capital reserve represents (a) (i) waiver of amount due to former immediate holding company; (i) (ii) the difference between the nominal value of shares of the Company issued as consideration in exchange for the aggregate of the share capital of the subsidiary of the Company arising upon the corporate reorganisation (the Corporate Reorganisation ) to rationalise the Group s structure prior to listing of the Company s shares on The Stock Exchange of Hong Kong Limited (the Stock Exchange ); and (ii) (iii) capital contribution from shareholders under the Corporate Reorganisation. (iii) (b) The statutory reserves represent the amount transferred from net profit for the year of a subsidiary established in the People s Republic of China (the PRC ) (based on the PRC statutory financial statements of that PRC subsidiary) in accordance with the relevant PRC laws until the statutory reserves reach 50% of the registered capital of that subsidiary. The statutory reserves cannot be reduced except either in setting off the accumulated losses or increasing capital. (b) 中 中 中 年 中 中 報 至 50% 止 Interim Report 2018 二零一八年中期報告 17

19 Condensed Consolidated Statement of Cash Flows For the six months ended 30 June 2018 截至 2018 年 6 月 30 日止六個月 Six months ended 30 June 年 (Unaudited) (Unaudited) Net cash used in operating activities (256,198) (18,965) Net cash (used in) from investing activities Interest received 1,807 1,622 Purchase of property, plant and equipment (185) (86) Acquisition of available-for-sale investments (6,204) 1,622 (4,668) Net cash from (used in) financing activities Interest paid (5,280) (3,611) Repayments of a borrowing (91,598) (8,959) Advance from a director 23,554 New other borrowings raised 325, ,159 10,984 Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of the period (26,417) (12,649) 757, ,260 Cash and cash equivalents at end of the period, represented by bank balances and cash 730, , China Saite Group Company Limited 中國賽特集團有限公司

20 Notes to the Condensed Consolidated Financial Statements For the six months ended 30 June 2018 截至 2018 年 6 月 30 日止六個月 1. BASIS OF PREPARATION The condensed consolidated financial statements have been prepared in accordance with Hong Kong Accounting Standard 34 ( HKAS 34 ) Interim Financial Reporting issued by the Hong Kong Institute of Certified Public Accountants (the HKICPA ) as well as 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 Listing Rules ). 1. 報 中期 報告 六 2. PRINCIPAL ACCOUNTING POLICIES The condensed consolidated financial statements have been prepared on the historical cost basis except certain financial instruments which are measured at fair value. Except as described below, the accounting policies and methods of computation used in the condensed consolidated financial statements for the six months ended 30 June 2018 are the same as those followed in the preparation of the Group s annual financial statements for the year ended 31 December HKFRS 15 Revenue from Contracts with Customers HKFRS 15 and the related clarification to HKFRS 15 (hereinafter referred to as HKFRS 15 ) presents new requirements for the recognition of revenue, replacing HKAS 18 Revenue, HKAS 11 Construction Contracts, and several revenuerelated Interpretations. HKFRS 15 establishes a single comprehensive model that applies to contracts with customers and two approaches to recognising revenue: at a point in time or overtime. The model features a contract-based five-step analysis of transactions to determine whether, how much and when revenue is recognised. HKFRS 15 has been applied retrospectively without restatement, with the cumulative effect of initial application recognised as an adjustment to the opening balance of retained profits at 1 January In accordance with the transition guidance, HKFRS 15 has only been applied to contracts that are incomplete as at 1 January 報 截至 2018 年 6 月 30 日止六個月 報 截至 2017 年 12 月 31 日止年 年 報 15 報告 15 報告 15 報告 報告 15 一 一個 一 個 報告 年 1 月 1 日 期 報告 年 1 月 1 日 Interim Report 2018 二零一八年中期報告 19

21 Notes to the Condensed Consolidated Financial Statements For the six months ended 30 June 2018 截至 2018 年 6 月 30 日止六個月 2. PRINCIPAL ACCOUNTING POLICIES (Continued) HKFRS 15 Revenue from Contracts with Customers (Continued) In summary, the following reclassification was made to the amounts recognised in the condensed consolidated statement of financial position at the date of initial application (i.e. 1 January 2018): 日 2018 年 1 月 1 日 Carrying amount as at 31 December 2017 under HKAS Reclassification Carrying amount as at 1 January 2018 under HKFRS HK$ 000 HK$ 000 HK$ 000 Current assets Amounts due from customers for contract work 11,351 (11,351) Contract assets 11,351 11,351 Current liabilities Amounts due to customers for contract work 936 (936) Contract liabilities Contract assets are rights to consideration in exchange for goods or services that the Group has transferred to a customer when that right is conditional on something other than the passage of time. Contract liabilities are obligations to transfer goods or services to a customer for which the Group has received consideration, or for which an amount of consideration is due from the customer. The adoption of HKFRS 15 has no material impact on the Group s condensed consolidated statement of profit or loss. 集團 集團 15 集團 20 China Saite Group Company Limited 中國賽特集團有限公司

22 Notes to the Condensed Consolidated Financial Statements For the six months ended 30 June 2018 截至 2018 年 6 月 30 日止六個月 2. PRINCIPAL ACCOUNTING POLICIES (Continued) HKFRS 9 Financial instruments HKFRS 9 replaces HKAS 39 Financial Instruments: Recognition and Measurement. It makes major changes to the previous guidance on the classification and measurement of financial assets and introduces an expected credit loss model for the impairment of financial assets. When adopting HKFRS 9, the Group has applied transitional relief and opted not to restate prior periods. Differences arising from the adoption of HKFRS 9 in relation to classification, measurement and impairment are recognised in retained profits. The adoption of HKFRS 9 has impacted the following areas: for trade receivables, retention receivables and contract assets, the Group applies a simplified model of recognising lifetime expected credit losses as these items do not have a significant financing cost; and for available-for-sale financial asset under HKAS 39 has been reclassified as financial asset at fair value through profit or loss under HKFRS 9. Fair value changes previously accounted for in other comprehensive income has transferred to the opening balance of retained profits as at 1 January 報告 9 39 期 報告 9 期 報告 9 報告 9 期 39 報告 年 1 月 1 日 至 期 Interim Report 2018 二零一八年中期報告 21

23 Notes to the Condensed Consolidated Financial Statements For the six months ended 30 June 2018 截至 2018 年 6 月 30 日止六個月 2. PRINCIPAL ACCOUNTING POLICIES (Continued) HKFRS 9 Financial instruments (Continued) In summary, the following reclassification was made to the amounts recognised in the condensed consolidated statement of financial position at the date of initial application (i.e. 1 January 2018): 2. 9 日 2018 年 1 月 1 日 Carrying amount as at 31 December 2017 under HKAS Reclassification Carrying amount as at 1 January 2018 under HKFRS HK$ 000 HK$ 000 HK$ 000 Non-current assets Available-for-sale financial asset 53,928 (53,928) Financial asset at fair value 公 through profit or loss 53,928 53, China Saite Group Company Limited 中國賽特集團有限公司

24 Notes to the Condensed Consolidated Financial Statements For the six months ended 30 June 2018 截至 2018 年 6 月 30 日止六個月 3. REVENUE AND SEGMENT INFORMATION The Group s operating activities are attributable to the operating segments focusing on the construction of steel structure and prefabricated construction projects. These operating segments have been identified on the basis of internal management reports that are regularly reviewed by the executive Directors who are the chief operating decision makers of the Group (the CODM ). The executive Directors review revenue and gross margin analysis by each construction contract for the purpose of resource allocation and performance assessment. For segment reporting under HKFRS 8, the revenue and gross margin of each construction contract with similar economic characteristics has been aggregated into a single reportable and operating segment. The accounting policies of the operating segments are the same as the Group s accounting policies. The segment revenue and segment result (i.e. gross margin) reviewed by the CODM is the same as the Group s revenue and gross profit. Entity-wide information An analysis of the Group s revenue by major types of construction contract is as follows: 3. 報告 報告 期 報告 8 報 一 報 Six months ended 30 June 年 (Unaudited) (Unaudited) Construction of Steel structure projects 402, ,543 Prefabricated construction projects 273, , , ,013 Geographical information No geographical segment information is presented as all the Group s revenue is derived from operations in the People s Republic of China (the PRC ) and most of the Group s non-current assets are located in the PRC. 中 中 中 Interim Report 2018 二零一八年中期報告 23

25 Notes to the Condensed Consolidated Financial Statements For the six months ended 30 June 2018 截至 2018 年 6 月 30 日止六個月 4. FINANCE COSTS 4. Six months ended 30 June 年 (Unaudited) (Unaudited) Interests on borrowings and corporate bonds 公司 5,280 3, INCOME TAX EXPENSE 5. Six months ended 30 June 年 (Unaudited) (Unaudited) Current tax: PRC Enterprise Income Tax ( EIT ) 中國 39,656 33,417 Provision for the PRC EIT was made based on the estimated taxable profits calculated in accordance with the relevant income tax laws and regulations applicable to the Company s PRC subsidiaries. Under the Law of the PRC on EIT (the EIT Law ) and Implementation Regulations of the EIT Law, the tax rate of the Company s PRC subsidiaries is 25%. No provision for Hong Kong Profits Tax has been made as the Group had no assessable profits arising in Hong Kong for both periods. 中國 公司 中國 公司 有 中 國 公司中國 公司 25% 集團 個 24 China Saite Group Company Limited 中國賽特集團有限公司

26 Notes to the Condensed Consolidated Financial Statements For the six months ended 30 June 2018 截至 2018 年 6 月 30 日止六個月 6. PROFIT FOR THE PERIOD 6. Six months ended 30 June 年 (Unaudited) (Unaudited) Profit for the period has been arrived at after charging (crediting): Depreciation of property, plant and equipment Less: amounts capitalised in contract work in progress 期 7,288 8,293 中 (6,128) (6,890) 1,160 1,403 Amortisation of prepaid lease payments Less: amounts capitalised in contract work in progress 中 (169) (169) Staff salaries (including Directors emoluments) 27,857 22,178 Retirement benefit scheme contribution 3,816 2,642 Total staff costs 31,673 24,820 Less: amounts capitalised in contract 中 work in progress (26,046) (18,486) 5,627 6,334 Operating lease rentals in respect of: Premises 2,595 2,376 Less: amounts capitalised in contract work in progress 中 (1,568) (1,557) 1, Contract work in progress recognised as expense 501, ,372 Net exchange (gain) loss 4,346 (2,553) Impairment loss recognised 3,969 Provision for financial guarantees (included in administrative expenses) 1,824 Interest income on bank deposits (1,168) (1,622) Interim Report 2018 二零一八年中期報告 25

27 Notes to the Condensed Consolidated Financial Statements For the six months ended 30 June 2018 截至 2018 年 6 月 30 日止六個月 7. DIVIDENDS During the current interim period, no final dividend per share was declared in respect of the year ended 31 December 中 截至 2017 年 12 月 31 日止年 年 (Unaudited) (Unaudited) Dividend recognised as distribution during the period The Directors do not recommend the payment of an interim dividend for the six months ended 30 June 截至 2018 年 6 月 30 日止六個月 中 8. EARNINGS PER SHARE The calculation of basic and diluted earnings per share attributable to owners of the Company is based on the following data: 8. 公司 有 Six months ended 30 June 年 (Unaudited) (Unaudited) Earnings Earnings for the purpose of basic and diluted earnings per share Profit for the period attributable to owners of Company 公司 有 102,551 91, China Saite Group Company Limited 中國賽特集團有限公司

28 Notes to the Condensed Consolidated Financial Statements For the six months ended 30 June 2018 截至 2018 年 6 月 30 日止六個月 8. EARNINGS PER SHARE (Continued) Number of shares Weighted average number of ordinary shares for the purpose of basic and diluted earning per share 2,330,748 2,321,411 No diluted earnings per share were presented for both periods as there was no potential ordinary share in issue. 個期 9. PROPERTY, PLANT AND EQUIPMENT During the six months ended 30 June 2018, the Group acquired property, plant and equipment of approximately RMB185,000 (six month ended 30 June 2017: RMB86,000). The Group did not dispose of or write off any property, plant and equipment for both periods. 9. 截至 2018 年 6 月 30 日止六個月 185,000 截至 2017 年 6 月 30 日止六個月 86,000 個期 Interim Report 2018 二零一八年中期報告 27

29 Notes to the Condensed Consolidated Financial Statements For the six months ended 30 June 2018 截至 2018 年 6 月 30 日止六個月 10. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS June (Unaudited) 31 December 年 12 月 31 日 (Audited) Financial assets at fair value through profit or loss unlisted equity securities Available-for-sale financial asset unlisted equity securities 公 53,928 53,928 (i) In 2017, the Group acquired 11.17% equity interest in an unlisted entity incorporated in Hong Kong at the fair value of consideration of RMB51,928,000 which consists of cash amounting to HK$7,000,000 (equivalent to RMB6,204,000) and 88,947,935 new shares at the completion date share price of HK$0.58 per share, amounting to HK$51,589,000 (equivalent to RMB45,724,000). (i) 2017 年 集團 11.17% 公 51,928,000 中 7,000,000 6,204, 日 88,947,93551,589,000 45,724,000 (ii) In 2017, the Group invested in 10% equity interest in an unlisted entity incorporated in the PRC at a consideration with fair value of RMB2,000,000. (ii) 2017 年 集團 中國 10% 公 2,000, China Saite Group Company Limited 中國賽特集團有限公司

30 Notes to the Condensed Consolidated Financial Statements For the six months ended 30 June 2018 截至 2018 年 6 月 30 日止六個月 11. CONTRACT ASSETS/CONTRACT LIABILITIES June (Unaudited) 31 December 年 12 月 31 日 (Audited) Contracts in progress at the end of 期 年 中 the period/year: Contract costs incurred 746,213 1,579,822 Recognised profits less recognised losses 390, ,476 1,136,946 2,163,298 Less: progress billings (1,126,531) (2,163,256) 10, Analysed for reporting purposes as: 報 Amounts due from contract customers 4,466 Amounts due to contract customers (4,424) Contract assets 11,351 Contract liabilities (936) 10, Interim Report 2018 二零一八年中期報告 29

31 Notes to the Condensed Consolidated Financial Statements For the six months ended 30 June 2018 截至 2018 年 6 月 30 日止六個月 12. TRADE RECEIVABLES The trade receivables arising from construction contracts are billed and receivable in accordance with terms of the relevant agreements. Payments are typically made based on either the milestone events stipulated in the construction contracts or the actual progress of the work performed. The following is an aged analysis of trade receivables, net of allowance for doubtful debts, presented based on the date of progress billing at the end of the reporting period. 12. 有 日 As at 30 June (Unaudited) As at 31 December 年 12 月 31 日 (Audited) 0 30 days , , days , , days , , year 年 237, ,622 Over 1 year 1 年 509, ,773 1,545,623 1,306,060 Retention receivables 519, ,355 2,065,531 1,720,415 Less: impairment loss recognised (18,947) (14,978) 2,046,584 1,705,437 Retention receivables Due within 1 year 1 年 225, ,016 Due after 1 year 1 年 279, , , ,377 Included in the Group s trade receivables are debtors with aggregate carrying amount of RMB2,065,531,000 as at 30 June 2018 (31 December 2017: RMB1,720,415,000), and the Group has made provision amounting to RMB18,947,000 (31 December 2017: RMB14,978,000) for expected credit loss 年 6 月 30 日 集團 2,065,531, 年 12 月 31 日 1,720,415,000 集團 18,947, 年 12 月 31 日 14,978, China Saite Group Company Limited 中國賽特集團有限公司

32 Notes to the Condensed Consolidated Financial Statements For the six months ended 30 June 2018 截至 2018 年 6 月 30 日止六個月 13. TRADE PAYABLES Trade payables are settled in accordance with the relevant agreements. An aged analysis of the Group s trade payables (by goods receipt date) at the end of the reporting period is as follows: 13. 報告期 日期 As at 30 June (Unaudited) As at 31 December 年 12 月 31 日 (Audited) 0 30 days ,396 55, days ,710 53,231 57,159 Retention payables 28,992 11,594 82,223 68,753 Retention payables Due within 1 year 1 年 期 28,992 11, PROVISIONS 14. As at 30 June (Unaudited) As at 31 December 年 12 月 31 日 (Audited) At the beginning of the period/year 期 年 1,200 6,200 Reversal of provisions (5,000) At the end of the period/year 期 年 1,200 1,200 Interim Report 2018 二零一八年中期報告 31

33 Notes to the Condensed Consolidated Financial Statements For the six months ended 30 June 2018 截至 2018 年 6 月 30 日止六個月 14. PROVISIONS (Continued) Jiangsu Saite Steel Structure Co., Ltd. ( Saite Steel (Jiangsu) ), a subsidiary of the Group, and Mr. Jiang Jianqiang, a director of the Company, provided jointly and severally financial guarantees to a micro credit entity 有限公司 in Jiangsu, the PRC, in respect of a loan with an amount of approximately RMB3,000,000 granted to an individual, namely,. Besides, Saite Steel (Jiangsu) and Mr. Jiang Jianqiang and two other individuals, namely, and, provided jointly and severally financial guarantees to the same micro credit entity in respect of a loan of approximately RMB2,000,000 granted to another individual, namely,. and have beneficial interest of an entity established in the PRC, namely, 有限公司 ( JSBN ).,, and JSBN are independent third parties. The loans were past due and no settlement was made as at 31 December The debtors and guarantors were then sued collectively by the creditor for the default of payment and requested to settle the outstanding balance with interest. A settlement agreement is subsequently agreed among, and the micro credit entity on the repayment schedule which would repay a total amount of RMB3,500,000, of which RMB2,100,000 by the end of December 2016, RMB700,000 by the end of December 2017 and RMB700,000 by the end of December 2018; and would repay a total amount of RMB1,300,000 by the end of 31 December 2016, RMB500,000 by the end of 31 December 2017 and RMB500,000 before 31 December As of the current period, RMB1,200,000 of the arrears remains outstanding and has been made provision in full. There is no increase/decrease in the current period. 14. 集團 公司 賽特 有限公司 賽特 公司 個 個 3,000,000 中國 公司 有限公司 賽特 個 個 個 2,000,000 公司 中國 有限公司 有 2015 年 12 月 31 日 公司 3,500,000 中 2016 年 12 月 2,100, 年 12 月 700, 年 12 月 700, 年 12 月 31 日 1,300, 年 12 月 31 日 500, 年 12 月 31 日 500,000 截至 有 1,200, China Saite Group Company Limited 中國賽特集團有限公司

34 Notes to the Condensed Consolidated Financial Statements For the six months ended 30 June 2018 截至 2018 年 6 月 30 日止六個月 15. SHORT-TERM BORROWINGS On 30 June 2018, the Group had one (31 December 2017: two) short-term borrowing of RMB4,500,000 in aggregate (31 December 2017: RMB46,150,000). (1) On 29 September 2015, the Company entered into a loan agreement amounting to HK$50,000,000 (equivalent to RMB44,795,000) with an individual which is an independent third party. The borrowing is secured by a director of the Company, interest bearing at 8% per annum and the borrowing was repaid in full during the year; (2) In November 2017, the Group entered into a loan agreement for a loan amounting to RMB4,500,000 with a bank. The borrowing is guaranteed by two directors of the Company, four other individuals and entities, interest bearing at 4.35% per annum and repayable on 27 November Effective interest rate is 4.35% per annum 年 6 月 30 日 一 2017 年 12 月 31 日 期 4,500, 年 12 月 31 日 46,150,000 (1) 2015 年 9 月 29 日 一 個 50,000,000 44,795,000 一 年 8% 年 (2) 2017 年 11 月 一 4,500,000 個 年 4.35% 2018 年 11 月 27 日 年 4.35% 16. CORPORATE BOND 16. As at 30 June (Unaudited) As at 31 December 年 12 月 31 日 (Audited) Carrying amount as at 30 June 年 6 月 30 日 381, ,634 Less: amount due within one year 一年 期 shown under current liabilities (244,832) (19,199) Amount shown under non-current liabilities 136,891 87,435 Interim Report 2018 二零一八年中期報告 33

35 Notes to the Condensed Consolidated Financial Statements For the six months ended 30 June 2018 截至 2018 年 6 月 30 日止六個月 17. SHARE CAPITAL 17. Number of shares at HK$0.10 per share 0.10 Amount HK$ 000 Authorised: As at 31 December 2017 and 30 June 年 12 月 31 日 2018 年 6 月 30 日 50,000,000,000 5,000,000 Issued: As at 31 December 年 12 月 31 日 2,330,747, ,075 As at 30 June 年 6 月 30 日 2,330,747, ,075 Shown in the condensed consolidated statement of financial position: RMB 000 As at 31 December 年 12 月 31 日 187,410 As at 30 June 年 6 月 30 日 187, China Saite Group Company Limited 中國賽特集團有限公司

36 Notes to the Condensed Consolidated Financial Statements For the six months ended 30 June 2018 截至 2018 年 6 月 30 日止六個月 18. OPERATING LEASE COMMITMENTS The Group as lessee As at 30 June 2018, the Group had commitment for future minimum lease payment under noncancellable operating leases in respect of rented premises and machinery which fall due as follows: 年 6 月 30 日 期 期 As at 30 June (Unaudited) As at 31 December 年 12 月 31 日 (Audited) Premises and machinery Within one year 一年 3,456 3,009 In the second to third year inclusive 二至 年 年 864 2,314 4,320 5,323 The leases of the Group are negotiated for terms ranging from one to three years at fixed rental. 期 一至 年 Interim Report 2018 二零一八年中期報告 35

37 Notes to the Condensed Consolidated Financial Statements For the six months ended 30 June 2018 截至 2018 年 6 月 30 日止六個月 18. OPERATING LEASE COMMITMENTS (Continued) The Group as lessor Machinery rental income earned during the period was approximately RMB1,077,000 (30 June 2017: RMB1,077,000). The machinery held have committed tenants for the next one year. At the end of the reporting period, the Group has contracted with a tenant for the following future minimum lease payments: 18. 1,077, 年 6 月 30 日 1,077,000 有 年 集團 As at 30 June (Unaudited) As at 31 December 年 12 月 31 日 (Audited) Machinery Within one year 年 2,520 2,092 In the second to third year inclusive 至 年 年 2,100 3,660 4,620 5, China Saite Group Company Limited 中國賽特集團有限公司

38 Notes to the Condensed Consolidated Financial Statements For the six months ended 30 June 2018 截至 2018 年 6 月 30 日止六個月 19. CAPITAL COMMITMENTS 19. As at 30 June (Unaudited) As at 31 December 年 12 月 31 日 (Audited) Capital expenditure authorised but contracted for in respect of: Acquisition or construction of factory premises and production facilities for expansion of production capacity 24,593 24, RELATED PARTY TRANSACTIONS Compensation of key management personnel The remuneration of executive Directors and other members of key management for both periods were as follows: 20. 個期 Six months ended 30 June 年 (Unaudited) (Unaudited) Short-term benefits 期 2,120 2,003 Contributions to retirement benefits scheme ,151 2, PLEDGE OF ASSETS As at 30 June 2018, certain machineries of Jiangsu Saite Steel Structure Co., Ltd., a wholly-owned subsidiary of the Group, with a fair value of approximately RMB18,040,000 are pledged against a banking facility of RMB3,500,000 granted to the subsidiary 年 6 月 30 日 18,040,000 3,500,000 Interim Report 2018 二零一八年中期報告 37

39 Other Information DIRECTORS AND CHIEF EXECUTIVE S INTEREST AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES As at 30 June 2018, the interests or short positions of the Directors or chief executive of the Company in the shares, underlying shares and debentures of the Company or any associated corporation (within the meaning of Part XV of the Securities and Futures Ordinance (the SFO )), as recorded in the register of the Company required to be kept under section 352 of the SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies ( Model Code ), are set out below: Long and short positions in the Shares and underlying Shares 公司 公司 團 XV 中 有 352 公司 公司 公司 Name of Director Nature of interest Number of Shares held Approximate percentage of shareholding as at 30 June Notes(s) Mr. Jiang Jianqiang Beneficial Owner 14,944,000 (L) 0.64% 有 Interest of controlled corporations 1,020,000,000 (L) 43.76% 2 & 3 團 Notes: 1. The letter L denotes the person s long position in our Shares. 2. These Shares were held by Keen Luck Group Limited ( Keen Luck ), which was wholly owned by Champ Origin Limited ( Champ Origin ). 3. Champ Origin was owned as to 51% by Mr. Jiang Jianqiang and 49% by Mr. Jiang Yixuan. 4. As at 30 June 2018, the total issued capital of the Company is 2,330,747,935 shares. Save as disclosed above, as at 30 June 2018, none of the Directors and chief executive of the Company had any interest or short positions in the shares, underlying shares and debentures of the Company or any associated corporation (within the meaning of Part XV of the SFO), as recorded in the register of the Company required to be kept under section 352 of the SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code. 1. L 2. 集團有限公司 有 有限公司 有 3. 有 51% 49% 公司 2,330,747, 公司 公司 團 XV 中 有 352 公司 公司 38 China Saite Group Company Limited 中國賽特集團有限公司

40 Other Information SUBSTANTIAL SHAREHOLDERS AND OTHER PERSONS INTERESTS AND SHORT POSITIONS IN SHARES AND UNDERLYING SHARES As at 30 June 2018, so far as was known to the Directors, the following persons, other than the Directors and chief executive of the Company, had an interest or short position in the shares and underlying shares of the Company, which were required to be recorded in the register maintained by the Company pursuant to Section 336 of the SFO were as follows: 2018 年 6 30 期 336 Approximate percentage of shareholding as at Name of Shareholders Nature of interest Number of Shares held 1 30 June Note(s) Keen Luck Group Limited ( Keen Luck ) Beneficial owner 1,020,000,000 (L) 43.76% Champ Origin Limited ( Champ Origin ) Interest of a controlled corporation 1,020,000,000 (L) 43.76% 2 Ms. Zhou Xiaoying Interest of spouse 1,026,878,000 (L) 44.06% 4 Mr. Jiang Yixuan Interest of a controlled corporation 1,020,000,000 (L) 43.76% 2 & 3 China Huarong International Holdings Limited Person having a security interest in 1,020,000,000 (L) 43.76% 7 ( China Huarong shares 中 中 Five Seasons XIV Limited ( Five Seasons XIV ) Beneficial owner 203,800,000 (L) 8.74% 5 & 6 Five Seasons XIV Limited Five Seasons XIV Five Seasons XVII Limited ( Five Seasons XVII ) Interest of a controlled corporation 203,800,000 (L) 8.74% 5 & 6 Five Seasons XVII Limited Five Seasons XVII Fullshare Holdings Limited ( Fullshare ) Interest of a controlled corporation 203,800,000 (L) 8.74% 5 & 6 Magnolia Wealth International Limited ( Magnolia ) Interest of a controlled corporation 203,800,000 (L) 8.74% 6 Magnolia Wealth International Limited Magnolia Mr. Ji Changqun Interest of a controlled corporation 203,800,000 (L) 8.74% 5 & 6 Interim Report 2018 二零一八年中期報告 39

41 Other Information Notes: 1. The letter L denotes a person s long position (as defined under Part XV of the SFO) in such Shares. 2. These Shares are held by Keen Luck, which is wholly owned by Champ Origin. 3. Champ Origin is owned as to 51% by Mr. Jiang Jianqiang and 49% by Mr. Jiang Yixuan. 4. Ms. Zhou Xiaoying is the spouse of Mr. Jiang Jianqiang. 5. Five Seasons XVII, Fullshare, Mr. Ji Changqun and Magnolia are deemed to be interested in the 203,800,000 Shares, as Mr. Ji Changqun holds the entire equity interest in Magnolia, which in turn holds 46.58% equity interest in Fullshare. 6. Fullshare holds entire issued share capital of Five Seasons XVII, and Five Seasons XVII holds entire issued share capital of Five Seasons XIV, the beneficial owner of the Company. 7. 1,020,000,000 Shares are legally and beneficially owned by Keen Luck. Keen Luck is 100% owned by Champ Origin. Champ Origin is owned by 51% by Mr. Jiang Jianqiang and 49% by Mr. Jiang Yixuan. On 26 January, 2017, Keen Luck executed the relevant documentation to create a charge over 1,020,000,000 Shares in favour of China Huarong as chargee to provide loan to Keen Luck. China Huarong was owned by Huarong Real Estate Co., Ltd as to 88.10%. Accordingly, China Huarong is deemed to be interested in 1,020,000,000 Shares. 8. Pursuant to Section 336 of the SFO, the shareholders of the Company are required to file disclosure of interests forms (the DI Forms ) when certain criteria are fulfilled and the full details of the requirements are available on the Stock Exchange s official website. When a shareholder s shareholdings in the Company changes, it is not necessary to notify the Company and the Stock Exchange unless certain criteria are fulfilled. Therefore, substantial shareholders latest shareholdings in the Company may be different to the shareholdings filed with the Company and the Stock Exchange. The above statements of substantial shareholders interests are prepared based on the information in the relevant DI Forms received by the Company as of 30 June The Company may not have sufficient information on the breakdown of the relevant interests and cannot verify the accuracy of information on the DI Forms. 9. As at 30 June 2018, the total issued capital of the Company is 2,330,747,935 Shares. Save as disclosed above, the Directors and the chief executive of the Company are not aware that there is any party who, as at 30 June 2018, had interests or short positions in the shares and underlying shares of the Company that was required to be recorded pursuant to section 336 of the SFO. 1. L 有 XV 2. 有 有 3. 有 51% 49% Five Seasons XVIIMagnolia 203,800,000 中 有 有 MagnoliaMagnolia 有 46.58% 6. 有 Five Seasons XVII Five Seasons XVII 有 公司 有 Five Seasons XIV 7. 1,020,000,000 有 有 有 51% 49% ,020,000,000 中國 中國 有限 公司 有 88.10% 中國 1,020,000,000 中 有 公司 有 公司 公司 公司 有 公司 公司 公司 有 公司 2,330,747,935 公司 公司 中 有 China Saite Group Company Limited 中國賽特集團有限公司

42 Other Information SPECIFIC PERFORMANCE BY THE CONTROLLING SHAREHOLDERS Acting as guarantor for the Note Purchase Agreement with several institutional investors On 31 January, 2018, the Company entered into a note purchase agreement (the Note Purchase Agreement ). with several institutional investors pursuant to which such investors agreed to subscribe for the bond (the Bond ) in an aggregate principal amount of US$32,000,000 issued by the Company. The maturity date of the Bond is 30 January In order to provide security for the obligations of the Company under the Note Purchase Agreement and the Bond, certain subsidiaries of the Company, Mr. Jiang Jianqiang (being the chairman, executive director and a controlling shareholder of the Company) and several companies which Mr. Jiang Jianqiang was interested in entered into deeds of guarantee in favour of the investors, as guarantors. Under the Note Purchase Agreement and the Bond, Mr. Jiang Jianqiang has to beneficially hold, directly or indirectly, at least 35% of the total voting power of the Company throughout the term of the Bond. The Note Purchase Agreement and the Bond impose, among others, a specific performance obligation on a controlling shareholder of the Company, a breach of such obligation will cause a default therein. For further details regarding the Bond and the Note Purchase Agreement, please refer to the announcement of the Company dated 31 January SHARE OPTION SCHEME The Company conditionally adopted a share option scheme (the Scheme ) pursuant to a resolution passed by its then shareholders on 11 October 2013, for the primary purpose of providing incentives or rewards to selected participants as incentive or rewards for their contribution to the Group. The adoption of the Scheme became unconditional upon the listing of the Company on 1 November Pursuant to an ordinary resolution passed at the annual general meeting of the Company held on 20 May 2016, the general scheme limit under the Scheme is re-set at 203,800,000 shares and the Company will be allowed to grant further options under the Scheme and other share option schemes carrying the rights to subscribe for a maximum of 203,800,000 Shares. Apart from the Scheme, the Company has no other share option scheme. The Company has no share options outstanding as at 30 June 年 ,000,000 期 2019 年 1 30 期 35% 中 一 期 2018 年 1 31 告 2013 年 一 一 報 報 2013 年 年 5 20 年 一 203,800, ,800,000 一 2018 年 6 30 Interim Report 2018 二零一八年中期報告 41

43 Other Information AUDIT COMMITTEE AND REVIEW OF FINANCIAL STATEMENTS The Audit Committee consists of three independent nonexecutive directors, namely Mr. Luk Chi Shing (the Chairman), Mr. Xu Jiaming and Mr. Wu Zhongxian (appointed on 8 August 2018). The primary duties of the Audit Committee are to review and supervise the financial reporting system, risk management and internal control systems of our Group. The accounting information given in this interim report has not been audited. The Audit Committee has reviewed the unaudited condensed consolidated financial statements for the six months ended 30 June 2018 and this interim report, including the accounting principles and practices adopted by the Group. PURCHASE, SALE OR REDEMPTION OF THE COMPANY S LISTED SECURITIES During the six months ended 30 June 2018, neither the Company nor any of its subsidiaries purchased, redeemed or sold any of the Company s listed securities. CORPORATE GOVERNANCE The Company has complied with all the code provisions set out in the Corporate Governance Code as set out in the Appendix 14 to the Listing Rules during the six months ended 30 June 2018, except Code Provision C.1.2 as explained below. Code Provision C.1.2 which requires the management of the Company to provide all members of the Board with monthly updates giving a balanced and understandable assessment of the Company s performance, position and prospects in sufficient detail to enable the Board as a whole and each Director to discharge their duties. During the six months ended 30 June 2018, the management of the Company did not provide monthly updates to all members of the Board as required by Code Provision C.1.2, as all the executive Directors were involved in the daily operation of the Group and were fully aware of the performance, position and prospects of the Company, and the management has provided to all Directors (including non-executive Directors and independent nonexecutive Directors) half-yearly updates giving a balanced and understandable assessment of the Company s performance, position and prospects in sufficient detail prior to the regular board meetings of the Company 集團 中 中 集團 公司 公司 公司 公司 有 C.1.2 C.1.2 公司 有 公司 公 公司 C.1.2 有 有 集團 公司 有 公司 中 有 公司 公司 公 42 China Saite Group Company Limited 中國賽特集團有限公司

44 Other Information In addition, the management of the Company has provided all members of the Board, in a timely manner, updates on any material changes to the performance, position and prospects of the Company and sufficient background or explanatory information for matters brought before the Board. Therefore, the Company considers that all members of the Board have been given a balanced and understandable assessment of the Company s performance, position and prospects in sufficient detail. CHANGE OF DIRECTOR S INFORMATION Upon specific enquiry by the Company and following confirmations from Directors, save as disclosed hereunder, there is no change in the information of the Directors required to be disclosed pursuant to Rule 13.51B(1) of the Listing Rules since the Company s last published annual report. The change of Director s information are set out below: 年報 期 13.51B(1) Directors Eddie Hurip Wu Zhongxian Changes in Positions held with the Company Resigned as an independent non-executive Director and ceased to act as the chairman and a member of the remuneration committee (the Remuneration Committee ), a member of the audit committee (the Audit Committee ) and a member of the nomination committee (the Nomination Committee ) with effect from 8 August 年 8 8 Appointed as an independent non-executive Director, the chairman and a member of the Remuneration Committee, a member of the Audit Committee and a member of the Nomination Committee with effect from 8 August 年 8 8 Interim Report 2018 二零一八年中期報告 43

45 Other Information DIRECTORS SECURITIES TRANSACTIONS The Company has adopted a code of conduct for securities transactions and dealing (the Code of Conduct ) by Directors on terms no less exacting than the required standard set out in Appendix 10 to Listing Rules (the Model Code ). The Company has made specific enquiry of all Directors as to whether they have complied with the required standard set out in the Model Code and the Code of Conduct during the six months ended 30 June All the Directors have confirmed that they have complied with the required standards set out in the Model Code and the Code of Conduct throughout the six months ended 30 June By order of the Board China Saite Group Company Limited Jiang Jianqiang Chairman Hong Kong, 21 August 2018 公司 有 公司 China Saite Group Company Limited 中國賽特集團有限公司

46 2017