目錄 CONTENTS 2 公司資 料 Corporate Information 4 財務 摘要 Financial Highlights 5 管理 層討 論與 分析 Management Discussion and Analysis 中期 簡明 綜 合收 益表 Interim

Transcription

1

2 目錄 CONTENTS 2 公司資 料 Corporate Information 4 財務 摘要 Financial Highlights 5 管理 層討 論與 分析 Management Discussion and Analysis 中期 簡明 綜 合收 益表 Interim Condensed Consolidated Income Statement 中期 簡明 綜 合 全面收 益表 Interim Condensed Consolidated Statement of Comprehensive Income 中期 簡明 綜 合資 產 負債表 Interim Condensed Consolidated Balance Sheet 21 中期 簡明 綜 合權 益 變 動 表 Interim Condensed Consolidated Statement of Changes in Equity 22 中期 簡明 綜 合現金流 量表 Interim Condensed Consolidated Statement of Cash Flows 23 中期 簡明 綜 合財務資 料 附 註 Notes to the Interim Condensed Consolidated Financial Information 62 企 業 管 治及 其他資 料 Corporate Governance and Other Information 67 詞彙 Glossary

3 Corporate Information ACIS, ACS(PE) ACIS, ACS(PE) BOARD OF DIRECTORS Executive Directors Mr. Zhang Degang (Chairman) Mr. Zhang Deqiang Non-executive Directors Ms. Zhang Jinghua Mr. Gao Feng Independent non-executive Directors Mr. Liu Chaojian Mr. Gao Fuping Mr. Ho Yuk Ming, Hugo SUPERVISORS Mr. Peng Jiashan (Chairman) Ms. Wei Yi Ms. Yang Jinghua AUDIT COMMITTEE Mr. Ho Yuk Ming, Hugo (Chairman) Mr. Liu Chaojian Mr. Gao Feng REMUNERATION AND APPRAISAL COMMITTEE Mr. Liu Chaojian (Chairman) Mr. Gao Fuping Mr. Zhang Deqiang NOMINATION COMMITTEE Mr. Zhang Degang (Chairman) Mr. Ho Yuk Ming, Hugo Mr. Gao Fuping STRATEGIC COMMITTEE Mr. Zhang Degang (Chairman) Mr. Zhang Deqiang Mr. Liu Chaojian COMPANY SECRETARY Ms. Ho Wing Yan (ACIS, ACS(PE)) AUTHORISED REPRESENTATIVES Mr. Zhang Degang Ms. Ho Wing Yan (ACIS, ACS(PE)) 2 WUXI SUNLIT SCIENCE AND TECHNOLOGY COMPANY LIMITED

4 Corporate Information H REGISTERED OFFICE 1 Yanxin Road East Huishan Economic Development Zone Wuxi Jiangsu Province PRC HEADQUARTERS AND PRINCIPAL PLACE OF BUSINESS IN PRC 1 Yanxin Road East Huishan Economic Development Zone Wuxi Jiangsu Province PRC PRINCIPAL PLACE OF BUSINESS IN HONG KONG 33rd Floor, Shui On Centre 6 8 Harbour Road Wanchai Hong Kong AUDITOR PricewaterhouseCoopers LEGAL ADVISERS TO THE COMPANY ONC Lawyers (as to Hong Kong law) Dacheng Law Offices (as to PRC law) H SHARE REGISTRAR Union Registrars Limited Suites , 33/F., Two Chinachem Exchange Square 338 King s Road North Point Hong Kong PRINCIPAL BANKER China Merchants Bank Wuxi branch No. 9, Xueqian Street Wuxi City Jiangsu Province PRC COMPANY S WEBSITE INTERIM REPORT

5 Financial Highlights Results 6 30 Six months ended 30 June Change RMB 000 RMB 000 Revenue 104,700 45, % Gross profit 50,082 17, % Profit before income tax 54,111 15, % Profit for the period 45,714 12, % Profit for the period attributable to shareholders of the Company 45,714 12, % Earnings per share attributable to shareholders of the Company for the period (expressed in RMB per share) Basic and diluted % Financial Position June 2018 RMB June 2017 Change RMB 000 Total assets 740, , % Net current assets 468, , % Total assets less current liabilities 627, , % Total liabilities 113, ,216 (24.7%) Total equity 627, , % Financial statistics June December Current ratio Inventory turnover days (days) Trade receivables turnover days (days) Trade payables turnover days (days) Current ratio = current assets/current liabilities 2. Inventory turnover days = inventories balance/revenue for the period/year x number of days for the period/year 3. Trade receivables turnover days = gross trade receivables balance/revenue for the period/year x number of days for the period/year 4. Trade payables turnover days = trade payables balance/revenue for the period/ year x number of days for the period/year 4 WUXI SUNLIT SCIENCE AND TECHNOLOGY COMPANY LIMITED

6 Management Discussion and Analysis BUSINESS REVIEW In the first half of 2018, the economy of the PRC deepened the supply-side structural reform with remarkable results. The economic structure continued to improve with new and old kinetic energy speeding up conversion. As a result, the national economy remained stable and is moving in a positive direction. Although the tire industry still has problems such as overcapacity and insufficient innovation, the economy of the PRC will place focus on the supply-side structural reform in order to promote structural adjustment and optimization of the tire industry in the second half of the year % 5.57% % % According to the data from China Association of Automobile Manufacturers ( CAAM ), the growth rate of China s automobile production and sale from January 2018 to June 2018, experienced a downward and upward trend respectively, as compared with the same period of last year, amounted to 14,057,700 vehicles and 14,066,500 vehicles, representing a year-on-year ( YoY ) increase of 4.15% and 5.57%, respectively. Among which the growth rate of passenger cars increased while the growth rate of commercial vehicles declined slightly. In June 2018, production and sale of automobile in China amounted to 2,290,000 vehicles and 2,270,000 vehicles with an increase of 5.77% and 4.79%, respectively, compared to the same period in % 111.6% 50 The new energy vehicles showed strong development momentum. The production and sale of new energy vehicles for the first half of the year 2018 amounted to 413,000 and 412,000 respectively, representing a YoY increase of 94.6% and 111.6%, respectively. Although China is in transition to implement new subsidy policy on new energy automobile and the aggregated sale of new energy vehicles for the first half of 2018 was less than 500,000 vehicles, the sales still performed exceptionally well as compared with the past few years. The CAAM indicated that the production and sale of new energy vehicles for the first half of the year 2018 are far better than last year, and this favorable development trend is expected to continue in the next second half year. Driven by the favorable market environment, the demand for automobile tires will increase YoY with the growth of automobiles production and sale. The Group, as a radial tire steel cord equipment supplier, has actively optimized and adjusted its management concepts and strengthened its risk prevention and control, which enabled the Group s business to achieve steady growth. INTERIM REPORT

7 Management Discussion and Analysis 132.1% 281.0% 45,714,000 As a result, the overall performance of the Group for the six months ended 30 June 2018 has increased significantly as compared to the six months ended 30 June Total revenue of the Group increased by 132.1% YoY while net profit increased by 281.0% to RMB45,714,000 in the first half of Revenue 6 30 For the six months ended 30 June % % Unit(s) sold RMB 000 % Unit(s) sold RMB 000 % Brass electroplating wire production lines 3 49, , Other production lines 4 15, , Standalone machinery , , Mould repairing equipment, component parts and accessories N/A 14, N/A 11, Rental income N/A 1, N/A 1, , , ,700, ,100,000 59,600, % Our revenue increased by approximately RMB59.6 million, or approximately 132.1%, to approximately RMB104.7 million for the six months ended 30 June 2018 from approximately RMB45.1 million in the corresponding period of The increase in revenue is mainly due to the expansion in downstream industry and growth in market demand ,900, ,300, %6 30 Brass electroplating wire production lines. Revenue from the sale of brass electroplating wire production lines increased by approximately 134.6% to approximately RMB49.9 million for the six months ended 30 June 2018 from approximately RMB21.3 million in the corresponding period of Three sets of brass electroplating wire production lines were accepted by the customers during the six months ended 30 June 2018 while two sets were accepted by the customers in the corresponding period of WUXI SUNLIT SCIENCE AND TECHNOLOGY COMPANY LIMITED

8 Management Discussion and Analysis ,400,000 5,800, % Other production lines. Revenue from the sale of other production lines increased by approximately 164.6% to approximately RMB15.4 million for the six months ended 30 June 2018 from approximately RMB5.8 million in the corresponding period of During the six months ended 30 June 2018, our customers accepted four sets of other production line with a relatively lower price due to different model with different complicated structure, while one set was accepted by the customers in the corresponding period of ,700,000 5,000, % Standalone machinery. Revenue from the sale of standalone machinery increased by approximately 372.6% to approximately RMB23.7 million for the six months ended 30 June 2018 from approximately RMB5.0 million in corresponding period of The increase was due to the expansion in downstream industry, which led to a growth in market demand. 187 sets of standalone machinery were accepted by our customers during the six months ended 30 June 2018, while 27 sets were accepted by the customers in the corresponding period of ,300,000 11,900, % Mould repairing equipment, component parts and accessories. Revenue from the sale of mould repairing equipment, component parts and accessories increased by approximately 20.7% to approximately RMB14.3 million for the six months ended 30 June 2018 from approximately RMB11.9 million in the corresponding period of The increase was primarily due to the increased equipment modification services provided to customers and sales of other component parts and accessories to customers Rental income. Revenue from rental income was derived from its investment properties, which were rented to third parties during the six months ended 30 June 2018 and the corresponding period of As the rental price per month had increased during the six months ended 30 June 2018, the rental income increased. INTERIM REPORT

9 Management Discussion and Analysis ,900, % 50,100, % % Gross profit and gross profit margin Gross profit increased by approximately 179.3% to approximately RMB50.1 million for the six months ended 30 June 2018 from approximately RMB17.9 million in the corresponding period of The overall gross profit margin increased to approximately 47.8% for the six months ended 30 June 2018 from approximately 39.7% in the corresponding period of 2017 due to the sale of three sets of brass electroplating wire production lines and four sets of other production lines with higher gross profit margin during the six months ended 30 June 2018, as compared to that of corresponding period of , % , ,200, % 2,000,000 Other income Other income mainly represented the VAT refunds and government subsidies received by the Group. Our other income increased by approximately 181.0% to approximately RMB871,000 for the six months ended 30 June 2018 from approximately RMB310,000 in the corresponding period of 2017, primarily due to the net impact of more VAT refunds received and less governments subsidies refunds received. Selling expenses Our selling expenses decreased by approximately 8.6% to approximately RMB2.0 million for the six months ended 30 June 2018 from approximately RMB2.2 million in the corresponding period of 2017, primarily due to the decrease in transportation expenses ,800, % , ,200, ,300,000 Administrative expenses Our administrative expenses decreased by approximately 86.3% from approximately RMB4.8 million for the six months ended 30 June 2017 to approximately RMB0.7 million for the six months ended 30 June This is primarily because there was a net reversal of allowance for impairment of receivables of approximately RMB13.2 million for the six months ended 30 June 2018, while the amount of net reversal of allowance was approximately RMB8.3 million in corresponding period of WUXI SUNLIT SCIENCE AND TECHNOLOGY COMPANY LIMITED

10 Management Discussion and Analysis ,800,000 2,500,000 Other gains net The Group recorded net other gains of approximately RMB3.8 million for the six months ended 30 June 2018, compared with the net other gains of approximately RMB2.5 million in the corresponding period of Other gains mainly included the gains on disposal of financial assets at fair value through profit or loss ,000,000 1,500,000 Finance income net The Group recorded net finance income of approximately RMB2.0 million for the six months ended 30 June 2018, compared with the net finance income of approximately RMB1.5 million in the corresponding period of The increase was primarily due to the increase in bank interest income ,400,000 3,300, % % ,700, % ,000, ,600,000 72,500, ,800, ,600, % ,100,000 Income tax expense The Group recorded an income tax expense of approximately RMB8.4 million for the six months ended 30 June 2018, compared with income tax expense of approximately RMB3.3 million in the corresponding period of The effective tax rate was 15.5% for the six months ended 30 June 2018, compared with the effective tax rate of 21.5% in the corresponding period of TRADE RECEIVABLES Our gross trade receivables decreased by approximately 17.4% from approximately RMB170.7 million at 31 December 2017 to approximately RMB141.0 million as at 30 June The decrease was primarily due to the adoption of more stringent collection policy over the customers and the increase of repayment ability of our customers resulting from the expansion in downstream industry. The Group collected approximately RMB13.6 million impaired trade receivables during the six months ended 30 June The allowance for trade receivables decreased from approximately RMB72.5 million at the end of 2017 to approximately RMB61.8 million as at 30 June INVENTORIES Our inventories decreased by approximately 12.4% from approximately RMB92.6 million as at 31 December 2017 to approximately RMB81.1 million as at 30 June 2018 as a result of a decrease in the balance of work in progress and finished goods along with sales. INTERIM REPORT

11 Management Discussion and Analysis ,100, % ,000, TRADE PAYABLES Our trade payables decreased by approximately 27.9% from approximately RMB29.1 million as at 31 December 2017 to approximately RMB21.0 million as at 30 June 2018, primarily due to a decrease in our purchase of raw materials during the six months ended 30 June LIQUIDITY AND FINANCIAL RESOURCES Cash position and fund available During the six months ended 30 June 2018, the Group maintained a healthy liquidity position, with working capital being financed by our operating cash flows ,100, ,500, ,100, ,900,000 33,300, ,800, ,700, ,800,000 As at 30 June 2018, the total cash and bank balances of the Group were approximately RMB278.1 million (31 December 2017: approximately RMB227.5 million), comprising cash and cash equivalents of approximately RMB133.1 million (31 December 2017: approximately RMB71.9 million), restricted cash of approximately RMB33.3 million (31 December 2017: approximately RMB49.8 million) and time deposits of approximately RMB111.7 million (31 December 2017: RMB105.8 million) As at 30 June 2018, the current ratio of the Group was 5.1 (31 December 2017: 3.8). The increase was primarily due to the decrease in trade and other payables and advances from customers As at 30 June 2018, as the Group had no borrowings, the gearing ratio of the Group (calculated as total borrowings divided by total equity) was zero (31 December 2017: Zero) SIGNIFICANT INVESTMENTS Save and except for the wealth management products subscribed on 3 July 2017 and 14 July 2017 and the acquisition of properties as disclosed under paragraph headed Major Transaction in relation to Acquisition of Properties of this report, the Group had no significant investments held during the six months ended 30 June WUXI SUNLIT SCIENCE AND TECHNOLOGY COMPANY LIMITED

12 Management Discussion and Analysis ,300, ,800, MATERIAL ACQUISITIONS AND DISPOSALS OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES During the six months ended 30 June 2018, the Group had no acquisition or disposal of subsidiaries, associates or joint ventures. CHARGE ON GROUP ASSETS As at 30 June 2018, the restricted cash deposits in the amount of approximately RMB33.3 million (31 December 2017: approximately RMB49.8 million) were pledged to banks as security for notes payable and letter of guarantee for export sale. Save for that, the Group did not have any charges on its assets as at 30 June 2018 or 31 December FUTURE PLANS FOR MATERIAL INVESTMENTS AND EXPECTED SOURCES OF FUNDING In the future, the Group will continue to implement its diversified development strategy and proactively search for potential investment opportunities , ,700, ,347,796 92,934,745 Save as disclosed in the Prospectus or in this report, the Group had no future plans for material investments and expected sources of funding as at 30 June CAPITAL EXPENDITURES During the six months ended 30 June 2018, the Group s capital expenditures amounted to RMB0.5 million (six months ended 30 June 2017: RMB1.7 million) which was mainly related to the purchase of machinery and equipment. MAJOR TRANSACTION IN RELATION TO ACQUISITION OF PROPERTIES On 19 April 2018, 20 April 2018, 21 April 2018 and 22 April 2018, the Company and an independent third party (Shandong Snton Real Estate Development Co., Ltd*) (the Vendor ) entered into sale and purchase agreements, pursuant to which the Company agreed to purchase and the Vendor agreed to sell 166 residential units of Tong Xing Garden, No. 269 Guanxing Road, Kenli District, Dongying City, Shandong Province, the PRC (the Properties ) at an aggregate consideration of RMB74,347,796 (equivalent to approximately HKD92,934,745) (the Acquisition ). INTERIM REPORT

13 Management Discussion and Analysis 74,347,796 92,934,745 74,347,796 8,706,825 25% 100% ,221,504 29,983,104 4,027, % 23.42% 3.15% 77,232, % The Vendor is a limited liability company established in the PRC. Before the Acquisition, an aggregate amount of RMB74,347,796 (equivalent to approximately HKD92,934,745) for the purchase of equipment under the Company s trade receivables from Shandong Snton Steelcord Co., Ltd. ( ) ( Shandong Snton Steelcord ) remained outstanding. In order to recover the outstanding amount and to reduce the risk of bad debts, the Company agreed to purchase the Properties from the Vendor, a related company of Shandong Snton Steelcord, to set off the amount outstanding from Shandong Snton Steelcord. After the Acquisition, the outstanding amount of RMB74,347,796 (inclusive of the bad debt impairment amount of approximately RMB8,706,825) for the purchase of equipment by Shandong Snton Steelcord would fully be repaid. The Company believes that the Acquisition is more efficient and less time consuming than any other ways for the recovery of the outstanding amount. As one or more of the relevant percentage ratios (as defined under the Listing Rules) in respect of the Acquisition exceeds 25% but is less than 100%, the Acquisition constitutes a major transaction for the Company under Chapter 14 of the Listing Rules and is therefore subject to the notification, publication and shareholders approval requirements under Chapter 14 of the Listing Rules. To the best of the knowledge, information and belief of the Directors, having made all reasonable enquiries, no shareholder of the Company (the Shareholder ) or any of their respective associates have any material interest in the Acquisition. As such, no Shareholder would be required to abstain from voting if a general meeting were convened to approve the Acquisition. Pursuant to Rule of the Listing Rules, a written shareholders approval may be accepted in lieu of a general meeting. Written approval of the Acquisition has been obtained from a closely allied group of Shareholders, namely Mr. Zhang Degang, Mr. Zhang Deqiang and Ms. Zhang Jinghua, who respectively holds 43,221,504 shares, 29,983,104 shares and 4,027,392 shares, representing 33.77%, 23.42% and 3.15% of the issued share capital of the Company. Mr. Zhang Degang, Mr. Zhang Deqiang and Ms. Zhang Jinghua are family members and persons acting in concert, and they collectively hold 77,232,000 shares, representing approximately 60.34% of the issued share capital of the Company. Accordingly, no general meeting of the Company will be convened for the purpose of approving the Acquisition. 12 WUXI SUNLIT SCIENCE AND TECHNOLOGY COMPANY LIMITED

14 Management Discussion and Analysis 6 20 A circular containing information in relation to the Acquisition and a valuation report of the Properties was despatched to the Shareholders on 20 June Details of the Acquisition have been set out in the announcements of the Company dated 24 April 2018, 16 May 2018 and 18 May 2018 and the circular of the Company dated 20 June , ,000 CAPITAL COMMITMENTS As at 30 June 2018, the Group s capital expenditures contracted but not incurred amounted to approximately RMB275,000 (31 December 2017: approximately RMB492,000) CAPITAL STRUCTURE There was no change in the capital structure of the Group during the six months ended 30 June The capital of the Group only comprises ordinary shares. FOREIGN CURRENCY RISK Foreign exchange risk arises when business transaction or recognised assets or liabilities are denominated in a currency that is not the entity s functional currency. The Group operates in the PRC with most of the Group s transactions denominated and settled in RMB, except that certain trade receivables, cash and cash equivalents and time deposits are denominated in US dollar ( USD ) which are exposed to foreign currency translation risk. 5% ,261, ,010,000 If the USD had strengthened/weakened by 5% against the RMB while all other variables had been held constant, the Group s net result for the six months ended 30 June 2018 would have been approximately RMB3,261,000 better/worse (six months ended 30 June 2017: RMB1,010,000), for various financial assets denominated in USD During the six months ended 30 June 2018, the Group did not employ any financial instruments for hedging purposes. The management will continue to monitor foreign currency risk and adopt prudent measures as and when appropriate. INTERIM REPORT

15 Management Discussion and Analysis H ,500, ,300,000 USE OF NET PROCEEDS FROM THE IPO The Company s H shares have been listed on the Main Board of the Stock Exchange since 11 November The net proceeds from the Listing after deduction of underwriting commissions, fees and listing-related expenses payables amounted to approximately HKD209.5 million (equivalent to approximately RMB165.3 million) With a view to improving efficiency in the use of the Company s temporary idle raised proceeds, on the condition that the construction of the committed projects and planned usage of the proceeds for such construction will not be affected, the Board has proposed to utilise part of the temporary idle raised proceeds to purchase wealth management products in order to increase the capital revenue, improve the efficiency and effectiveness in the use of the Company s temporary idle raised proceeds, which in turn shall further enhance the overall revenue of the Company and pursue better investment return to the Company and the Shareholders as a whole. For more details regarding the change of use of net proceeds from the Listing, please refer to the announcement of the Company dated 29 March ,000, ,000, The proposed change of use of net proceeds was approved at the annual general meeting of the Company held on 9 June 2017 whereby the Board was authorised to purchase wealth management products within one year commencing from the approval at such general meeting, subject to a cap of RMB35 million. As such authority has expired, at the annual general meeting of the Company held on 8 June 2018, the Board was authorised, within one year commencing from the approval, to exercise the decision-making power regarding purchase of wealth management products by utilising temporary idle proceeds for not more than RMB35 million in aggregate at any time. For details of the grant of such authorities, please refer to the circulars of the Company dated 21 April 2017 and 23 April 2018, respectively. Together with the income to be generated from the wealth management products, the Company will continue apply the net proceeds from the Listing for the construction of the new manufacturing facility located in Wuxi, Jiangsu Province of the PRC (the New Wuxi Facility ) and the new research & development centre to be established in the New Wuxi Facility (the New Research & Development Centre ) as stated in the Prospectus. 14 WUXI SUNLIT SCIENCE AND TECHNOLOGY COMPANY LIMITED

16 Management Discussion and Analysis ,400,000 14,800,000 21,000,000(i) (ii) (iii) Up to 30 June 2018, out of the net proceeds from the Listing, the Group has used approximately HKD94.4 million, HKD14.8 million and HKD21.0 million for (i) funding the construction of the New Wuxi Facility and the New Research & Development Centre; (ii) developing certain targeted research and development projects; and (iii) general working capital and other general corporate purposes, respectively ,000, ,000,000 32,000,000 47,300,000 4,700,000 12,000, ,000, As at 30 June 2018, the unused proceeds amounted to approximately HKD84.0 million. Among the unused proceeds of approximately HKD84.0 million, the Group utilised a part of the proceeds for purchasing wealth management products, which amounted to approximately HKD32.0 million as at 30 June The remaining unused proceeds, including the net proceeds of HKD47.3 million and interest of net proceeds of HKD4.7 million, were deposited in licensed banks in the PRC. Approximately HKD12.0 million unused proceeds for the intended use of developing certain targeted research and development projects intended to be utilised by Approximately HKD72.0 million unused proceeds for the intended use of funding the construction of the New Wuxi Facility and the New Research & Development Centre intended to be utilised by PROSPECTS The supply-side reform will be pushed forward in Under this scenario, enterprises gradually adapt to market changes, and will place more emphasis on technology innovation, brand building, sophisticated production, existing technology upgrading and line stretching. Looking forward to the second half of 2018, the Chinese automobile sales market will continue to grow. For the past few years, China has implemented key development strategies and rolled out a number of infrastructure projects including railway and roads. This will encourage the development of automobile transportation and leading to the increase of automobile ownerships in China. In addition, the advancement of urbanization and rapid development of e-commerce will continue to stimulate the demand for road transportation logistics. The ever-increasing transportation frequency accelerates the loss of tires. Therefore, the replacement demand for tires will be greatly increased, driving the recovery of the domestic tire market and stimulating the growth of the domestic bead wire production industry. INTERIM REPORT

17 Management Discussion and Analysis ,400, ,300, % As the government s efforts in environmental protection continue to increase and the new energy vehicle market continues to prosper, the Board is of the view that the Group will face more opportunities and challenges in this environment and expects that the Group s business will grow steadily in the second half of 2018, the Group will review and focus on industry trends to take strategic guidance approach. The Group has also upgraded the existing production lines, improved the quality of the Group s products and production processes in order to improve the production capacity of radial tire cord. In addition, the Group will actively explore domestic and overseas markets, stabilize and expand existing market share, in order to strengthen the Group s long-term sustainable growth and profitability. EMPLOYEE AND REMUNERATION INFORMATION As at 30 June 2018, the Group employed a total of 146 fulltime employees (31 December 2017: 147 full-time employees), including administrative, finance, internal audit, research and development, technical application, quality control, manufacturing, procurement, sales and marketing staff. For the six months ended 30 June 2018, the Group s total employee remuneration was approximately RMB8.4 million (six months ended 30 June 2017: approximately RMB9.3 million), representing approximately 8.0% of the Group s total revenue. The Group places great emphasis on recruiting and training quality personnel by providing orientation programmes to the new employees and on-going internal training to the existing employees to enhance their industrial, technical and product knowledge, their work ethics as well as their knowledge of industry quality standards and work safety standards. Furthermore, the Group encourages its employees to take advanced courses and obtain professional certifications. The Group is confident that its employees will continue to provide a solid foundation for the success of the Group and will maintain a high standard of service to the customers. The Group has not experienced any disruption of its normal business operations due to labour disputes or significant turnover of staff. The Directors consider that the Group has maintained a very good relationship with its staff. CONTINGENT LIABILITIES As at 30 June 2018, the Group did not have any significant contingent liabilities (31 December 2017: nil). 16 WUXI SUNLIT SCIENCE AND TECHNOLOGY COMPANY LIMITED

18 中期簡明綜合收益表 Interim Condensed Consolidated Income Statement (All amounts in RMB thousands unless otherwise stated) 6 30 Six months ended 30 June Note Unaudited Unaudited Revenue 7 104,700 45,112 Cost of sales 8 (54,618) (27,180) Gross profit 50,082 17,932 Selling expenses 8 (1,988) (2,175) Administrative expenses 8 (658) (4,795) Other income Other gains net 10 3,782 2,504 Operating profit 52,089 13,776 Finance income net 12 2,022 1,501 Profit before income tax 54,111 15,277 Income tax expense 13 (8,397) (3,277) Profit for the period attributable to shareholders of the Company 45,714 12,000 Earnings per share attributable to shareholders of the Company for the period (expressed in RMB per share) Basic and diluted The notes on pages 23 to 61 are an integral part of this interim consolidated financial information. INTERIM REPORT

19 中期簡明綜合全面收益表 Interim Condensed Consolidated Statement of Comprehensive Income (All amounts in RMB thousands unless otherwise stated) 6 30 Six months ended 30 June Unaudited Unaudited Profit for the period 45,714 12,000 Other comprehensive income Total comprehensive income for the period attributable to shareholders of the Company 45,714 12, The notes on pages 23 to 61 are an integral part of this interim consolidated financial information. 18 WUXI SUNLIT SCIENCE AND TECHNOLOGY COMPANY LIMITED

20 中期簡明綜合資產負債表 Interim Condensed Consolidated Balance Sheet (All amounts in RMB thousands unless otherwise stated) Note June 2018 Unaudited December 2017 Audited ASSETS Non-current assets Land use rights 15 23,967 24,274 Property, plant and equipment 16 98, ,993 Investment properties 17 21,006 21,725 Intangible assets Deferred tax assets 19 14,829 17, , ,334 Current assets Inventories 20 81,081 92,608 Properties held for sale 21 72,969 Prepayments 22 4, Trade and other receivables , ,718 Financial assets at fair value through profit or loss 26,962 77,450 Restricted cash 24 33,285 49,787 Time deposits , ,763 Cash and cash equivalents ,110 71, , ,013 Total assets 740, ,347 EQUITY Share capital , ,000 Share premium , ,464 Reserves 26 60,255 57,339 Retained earnings 127,543 93,328 Total equity 627, ,131 INTERIM REPORT

21 Interim Condensed Consolidated Balance Sheet (All amounts in RMB thousands unless otherwise stated) Note June 2018 Unaudited December 2017 Audited LIABILITIES Current liabilities Trade and other payables 27 54,610 92,418 Advances from customers 28 57,606 Contract liabilities 28 46,723 Dividend payables 6,400 Current income tax liabilities 5, , ,216 Non-current liabilities Total liabilities 113, ,216 Total equity and liabilities 740, , The notes on pages 23 to 61 are an integral part of this interim consolidated financial information. 20 WUXI SUNLIT SCIENCE AND TECHNOLOGY COMPANY LIMITED

22 中期簡明綜合權益變動表 Interim Condensed Consolidated Statement of Changes in Equity (All amounts in RMB thousands unless otherwise stated) Share Share Retained Note capital premium Reserves earnings Total Unaudited Balance at 31 December , ,464 57,339 93, ,131 Change in accounting policy 4 (2,183) (2,183) 1 1 Restated total equity as at 1 January , ,464 57,339 91, ,948 Comprehensive income Profit for the period 45,714 45,714 Other comprehensive income Total comprehensive income 45,714 45,714 Transaction with owners Transfer to safety fund 26(a) 565 (565) Transfer to statutory reserves 2,351 (2,351) Dividend declared (6,400) (6,400) Total transactions with owners 2,916 (9,316) (6,400) 6 30 Balance at 30 June , ,464 60, , ,262 Unaudited 1 1 Balance at 1 January , ,464 56,245 67, ,076 Comprehensive income Profit for the period 12,000 12,000 Other comprehensive income Total comprehensive income 12,000 12,000 Transaction with owners Transfer to safety fund 26(a) 562 (562) Dividend declared (6,400) (6,400) Total transactions with owners 562 (6,962) (6,400) 6 30 Balance at 30 June , ,464 56,807 72, , The notes on pages 23 to 61 are an integral part of this interim consolidated financial information. INTERIM REPORT

23 中期簡明綜合現金流量表 Interim Condensed Consolidated Statement of Cash Flows (All amounts in RMB thousands unless otherwise stated) 6 30 Six months ended 30 June Note Unaudited Unaudited Cash flows from operating activities Cash generated from operations (2,088) 27,568 Interest paid Income tax paid (278) (354) Net cash flows from operating activities (2,366) 27,214 Cash flows from investing activities Purchase of property, plant and equipment and intangible assets (1,305) (2,735) Proceeds from disposal of property, plant and equipment and land use rights 14 Purchase of financial products (214,600) (284,630) Proceeds from disposal of financial products 267, ,520 Decrease/(increase) in restricted cash 16,502 (22,103) Increase in time deposits (5,893) (54,015) Net cash flows from investing activities 62,565 (45,949) Net cash flows from financing activities Net increase/(decrease) in cash and cash equivalents 60,199 (18,735) Effect of foreign exchange rate changes 999 Cash and cash equivalents at beginning of the period 71, ,562 Cash and cash equivalents at end of the period , , The notes on pages 23 to 61 are an integral part of this interim consolidated financial information. 22 WUXI SUNLIT SCIENCE AND TECHNOLOGY COMPANY LIMITED

24 中期簡明綜合財務資料附註 Notes to the Interim Condensed Consolidated Financial Information (All amounts in RMB thousands unless otherwise stated) 1 1 GENERAL INFORMATION Wuxi Sunlit Science and Technology Company Limited (the Company ) and its subsidiaries (together, the Group ) are principally engaged in the manufacturing and sale of a range of equipment for manufacturing steel wire production lines The Company was incorporated in the People s Republic of China (the PRC ) as a limited liability company on 21 March The Company was converted into a joint stock company with limited liabilities under relevant PRC laws and regulations on 24 July The address of the Company s registered office is No.1 East Yanxin Road, Huishan Economic Development Zone, Wuxi, Jiangsu Province, the PRC The Company s shares were listed on the Main Board of The Stock Exchange of Hong Kong Limited (the Stock Exchange ) on 11 November 2014 (the Listing ). This interim condensed consolidated financial information is presented in Renminbi thousands (RMB 000), unless otherwise stated. This interim condensed consolidated financial information has not been audited. INTERIM REPORT

25 Notes to the Interim Condensed Consolidated Financial Information (All amounts in RMB thousands unless otherwise stated) BASIS OF PREPARATION This interim condensed consolidated financial information for the six months ended 30 June 2018 has been prepared in accordance with Hong Kong Accounting Standard ( HKAS ) 34, Interim financial reporting. The interim condensed consolidated financial information should be read in conjunction with the annual financial statements for the year ended 31 December 2017, which have been prepared in accordance with Hong Kong Financial Reporting Standards ( HKFRSs ). 3 ACCOUNTING POLICIES Except as described below, the accounting policies applied are consistent with those applied in the annual financial statements for the year ended 31 December 2017, as described in those annual financial statements. (a) 1 1 (a) New standards and amendments and interpretation to standards adopted by the Group The following new standards and amendments and interpretation to standards are mandatory for the Group s financial year beginning 1 January Standards/ Subject of standards/ Interpretation amendment 9 HKFRS 9 Financial Instruments 15 HKFRS 15 Revenue from Contracts with Customers HKFRS 1 (Amendment) First Time Adoption of HKFRS 1 HKFRS 2 (Amendment) Classification and Measurement of Sharebased Payment Transactions 4 9 HKFRS 4 (Amendment) Insurance Contracts Applying HKFRS 9 Financial Instruments with HKFRS 4 Insurance Contracts HKAS 28 (Amendment) Investments in Associates and Joint ventures HKAS 40 (Amendment) Transfers of Investment Property HK (IFRIC) Interpretation 22 Foreign Currency Transactions and Advance Consideration 24 WUXI SUNLIT SCIENCE AND TECHNOLOGY COMPANY LIMITED

26 Notes to the Interim Condensed Consolidated Financial Information (All amounts in RMB thousands unless otherwise stated) 3 (a) ACCOUNTING POLICIES (Continued) (a) New standards and amendments and interpretation to standards adopted by the Group (Continued) The adoption of the new standards, amendments and interpretation does not have significant impact on the condensed consolidated interim financial information except for HKFRS 9 and HKFRS 15. Please refer to note 4 for the details. (b) 1 1 (b) New standards and amendments and interpretation to standards that have been issued but are not effective The following new standards and amendments and interpretation to standards have been issued but are not effective for the financial year beginning 1 January 2018 and have not been early adopted by the Group: Standards/Interpretation Subject of standards/amendment Effective for annual years beginning on or after HKFRS 16 Leases 1 January HK (IFRIC) Interpretation 23 Uncertainty over Income Tax Treatment 1 January HKFRS 10 and HKAS 28 (Amendment) Sale or Contribution of Assets between an Investor and its Associate or Joint Venture To be determined The Group has already commenced an assessment of the impact of the above new standards, amendments and interpretations, certain of which are relevant to the Group s operations. According to the preliminary assessment made by the Directors, no significant impact on the Group s operating results or financial position when they become effective. INTERIM REPORT

27 Notes to the Interim Condensed Consolidated Financial Information (All amounts in RMB thousands unless otherwise stated) 3 (c) 3 ACCOUNTING POLICIES (Continued) (c) Taxes on income in the interim periods are accrued using the tax rate that would be applicable to the expected total annual earnings CHANGES IN ACCOUNTING POLICIES This note explains the impact of the adoption of HKFRS 9 Financial Instruments and HKFRS 15 Revenue from Contracts with Customers on the Group s financial statements and also discloses the new accounting policies that have been applied from 1 January 2018, where they are different to those applied in prior periods Impact on the Group s the financial statements As explained in notes 4.2 and 4.3 below, HKFRS 9 and HKFRS 15 were generally adopted by the Group without restating comparative information. As a result of the changes in the entity s accounting policies, certain adjustments are therefore not reflected in the restated balance sheet as at 31 December 2017, but are recognised in the opening balance sheet as at 1 January WUXI SUNLIT SCIENCE AND TECHNOLOGY COMPANY LIMITED

28 Notes to the Interim Condensed Consolidated Financial Information (All amounts in RMB thousands unless otherwise stated) CHANGES IN ACCOUNTING POLICIES (Continued) 4.1 Impact on the Group s the financial statements (Continued) The following tables show the adjustments recognised for each individual line item. Line items that were not affected by the changes have not been included. The adjustments are explained in more detail by standard below. Consolidated statement of financial position (extract) December 2017 As originally presented HKFRS 9 HKFRS January 2018 Restated Non-current assets Deferred tax assets 17, ,721 Current assets Trade and other receivables 176,718 (2,581) 174,137 Equity Retained earnings 93,328 (2,183) 91,145 Current liabilities Advances from customers 57,606 (57,606) Contract liabilities 57,606 57, Adoption of HKFRS 9 Financial Instruments 4.21 HKFRS 9 Financial Instruments Impact of adoption HKFRS 9 replaces the provisions of HKAS 39 that relate to the recognition, classification and measurement of financial assets and financial liabilities, derecognition of financial instruments, impairment of financial assets and hedge accounting The adoption of HKFRS 9 Financial Instruments from 1 January 2018 resulted in changes in accounting policies and adjustments to the amounts recognised in the financial statements. The new accounting policies are set out in note 4.22 below. INTERIM REPORT

29 Notes to the Interim Condensed Consolidated Financial Information (All amounts in RMB thousands unless otherwise stated) CHANGES IN ACCOUNTING POLICIES (Continued) 4.2 Adoption of HKFRS 9 Financial Instruments (Continued) 4.21 HKFRS 9 Financial Instruments Impact of adoption (Continued) The total impact on the Group s retained earnings as at 1 January 2018 is as follows: Closing retained earnings at 31 December 2017 HKAS 39 93,328 Increase in provision for trade and other receivables (2,581) Increase in deferred tax assets relating to impairment provisions Adjustment to retained earnings from adoption 9 of HKFRS 9 on 1 January 2018 (2,183) Opening retained earnings at 1 January 2018 HKFRS 9 91, Classification and measurement On 1 January 2018 (the date of initial application of HKFRS 9), the Group s management has assessed which business models apply to the financial assets held by the Group and has classified its financial instruments into the appropriate HKFRS 9 measurement categories, which are those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss) and those to be measured at amortised cost. There were no changes to the classification and measurement of financial assets held by the Group due to the adoption of HKFRS 9. The Group s financial assets include cash and cash equivalents, restricted cash, time deposits, trade and other receivables and financial assets at fair value through profit or loss. 28 WUXI SUNLIT SCIENCE AND TECHNOLOGY COMPANY LIMITED

30 Notes to the Interim Condensed Consolidated Financial Information (All amounts in RMB thousands unless otherwise stated) CHANGES IN ACCOUNTING POLICIES (Continued) 4.2 Adoption of HKFRS 9 Financial Instruments (Continued) 4.21 HKFRS 9 Financial Instruments Impact of adoption (Continued) Impairment of financial assets The new impairment model requires the recognition of impairment provisions based on expected credit losses (ECL) rather than only incurred credit losses as is the case under HKAS 39. The Group s trade and other receivables are subject to HKFRS 9 s new expected credit loss model The Group was required to revise its impairment methodology under HKFRS 9 for trade and other receivables. The Group applies the HKFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables. Impairment on other receivables is measured as either 12-month expected credit losses or lifetime expected credit losses, depending on whether there has been a significant increase in credit risk since initial recognition The Group established expected credit loss model based on historical settlement records, past experience and available forward-looking information. The impact of the change in impairment methodology on the Group s retained earnings is disclosed in the table in note 4.21 above. While cash and cash equivalents, restricted cash and time deposit are also subject to the impairment requirements of HKFRS 9, the identified impairment losses were immaterial. INTERIM REPORT

31 Notes to the Interim Condensed Consolidated Financial Information (All amounts in RMB thousands unless otherwise stated) CHANGES IN ACCOUNTING POLICIES (Continued) 4.2 Adoption of HKFRS 9 Financial Instruments (Continued) 4.21 HKFRS 9 Financial Instruments Impact of adoption (Continued) Impairment of financial assets (Continued) The loss allowances for trade and other receivables as at 31 December 2017 reconcile to the opening loss allowances on 1 January 2018 as follows: Trade and other receivables At 31 December 2017 calculated under HKAS 39 72,866 Amounts restated through opening retained earnings 2, Opening loss allowance as at 1 January 2018 calculated under HKFRS 9 75,447 Trade and other receivables are written off when there is no reasonable expectation of recovery. 30 WUXI SUNLIT SCIENCE AND TECHNOLOGY COMPANY LIMITED

32 Notes to the Interim Condensed Consolidated Financial Information (All amounts in RMB thousands unless otherwise stated) CHANGES IN ACCOUNTING POLICIES (Continued) 4.2 Adoption of HKFRS 9 Financial Instruments (Continued) 4.22 HKFRS 9 Financial Instruments Accounting policies applied from 1 January 2018 The following describes the Group s updated financial instruments policy to reflect the adoption of HKFRS 9: 1 1 Classification From 1 January 2018, the Group classifies its financial assets in the following measurement categories: those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and those to be measured at amortised cost. The classification depends on the entity s business model for managing the financial assets and the contractual terms of the cash flows. For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For investments in equity instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income. Measurement At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss. INTERIM REPORT

33 Notes to the Interim Condensed Consolidated Financial Information (All amounts in RMB thousands unless otherwise stated) CHANGES IN ACCOUNTING POLICIES (Continued) 4.2 Adoption of HKFRS 9 Financial Instruments (Continued) 4.22 HKFRS 9 Financial Instruments Accounting policies applied from 1 January 2018 (Continued) Impairment From 1 January 2018, the Group assesses on a forward looking basis the expected credit losses ( ECL ) associated with its assets carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. 9 For trade receivables, the Group applies the simplified approach permitted by HKFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables. 12 Impairment on other receivables is measured as either 12-month expected credit losses or lifetime expected credit losses, depending on whether there has been a significant increase in credit risk since initial recognition. If a significant increase in credit risk of a receivable has occurred since initial recognition, then impairment is measured as lifetime expected credit losses. 32 WUXI SUNLIT SCIENCE AND TECHNOLOGY COMPANY LIMITED