Heng Xin China Holdings Limited * 8046 *

Transcription

1 Heng Xin China Holdings Limited * 8046 *

2 com

3 2015 First Quarterly Report 第一季業績報告

4 IMPORTANT NOTICE CHARACTERISTICS OF THE GROWTH ENTERPRISE MARKET ( GEM ) OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE STOCK EXCHANGE ) GEM has been positioned as a market designed to accommodate companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors. Given the emerging nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board and no assurance is given that there will be a liquid market in the securities traded on GEM. Hong Kong Exchanges and Clearing Limited and the Stock Exchange take no responsibility for the contents of this report, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this report. This report, for which the directors (the Directors ) of Heng Xin China Holdings Limited (the Company ) collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on GEM of the Stock Exchange (the GEM Listing Rules ) for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this report is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this report misleading. 重要事項 香港聯合交易所有限公司 ( 聯交所 ) 創業板 ( 創業板 ) 的特色 創業板的定位, 乃為相比起其他在聯交所上市的公司帶有較高投資風險的公司提供一個上市的市場 有意投資的人士應了解投資於該等公司的潛在風險, 並應經過審慎周詳的考慮後方作出投資決定 創業板的較高風險及其他特色表示創業板較適合專業及其他老練投資者 由於創業板上市公司新興的性質使然, 在創業板買賣的證券可能會較於聯交所主板買賣之證券承受較大的市場波動風險, 同時無法保證在創業板買賣的證券會有高流通量的市場 香港交易及結算所有限公司及聯交所對本報告之內容概不負責, 對其準確性或完整性亦不發表任何聲明, 並明確表示概不就因本報告全部或任何部份內容而產生或因倚賴該等內容而引致之任何損失承擔任何責任 本報告乃遵照聯交所創業板證券上市規則 ( 創業板上市規則 ) 而刊載, 旨在提供有關恒芯中國控股有限公司 ( 本公司 ) 的資料 本公司各董事 ( 董事 ) 願就本報告所載的資料共同及個別地承擔全部責任 各董事在作出一切合理查詢後, 確認就其所知及所信, 本報告所載資料在各重要方面均為準確及完備, 沒有誤導或欺詐成份, 且並無遺漏任何事項, 足以令致本報告或其所載任何陳述產生誤導

5 RESULTS The board of Directors (the Board ) of Heng Xin China Holdings Limited announces the unaudited condensed consolidated results of the Company and its subsidiaries (collectively referred to as the Group ) for the three months ended 31 March 2015 together with the comparative unaudited figures for the corresponding period in CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS For the three months ended 31 March 2015 Three months ended 31 March Note HK$ 000 HK$ 000 (Unaudited) (Unaudited) Revenue 3 4,259 21,980 Cost of sales (3,449) (15,371) Gross profit 810 6,609 Other income Selling and marketing expenses (328) (54) Other operating expenses (19,446) (18,846) Finance costs 4 (1,263) (3,110) Share of loss of associate (42) (95) Loss before taxation (20,193) (15,165) Taxation 5 (9) (14) Loss for the period 6 (20,202) (15,179) Loss attributable to Owners of the Company (19,579) (14,516) Non-controlling interests (623) (663) (20,202) (15,179) HK cent HK cent Loss per share 7 Basic (0.47) (0.43) Diluted N/A N/A Dividends

6 CONDENSED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME For the three months ended 31 March 2015 Three months ended 31 March Note HK$ 000 HK$ 000 (Unaudited) (Unaudited) Loss for the period 6 (20,202) (15,179) Other comprehensive loss: Items that may be reclassified subsequently to profit or loss: Exchange differences on translating foreign operations (5,880) (13,300) TOTAL COMPREHENSIVE LOSS FOR THE PERIOD (26,082) (28,479) Total comprehensive loss attributable to: Owners of the Company (25,459) (27,816) Non-controlling interests (623) (663) (26,082) (28,479) 2 Heng Xin China Holdings Limited First Quarterly Report 2015

7 Notes: 1. General information The Company was incorporated as an exempted company with limited liability in Bermuda on 9 September 2002 under the Companies Act 1981 of Bermuda (as amended). The address of the registered office of the Company is Clarendon House, 2 Church Street, Hamilton HM11, Bermuda and its principal place of business is Unit 2, 24/F, Harcourt House, 39 Gloucester Road, Wanchai, Hong Kong. The Company is an investment holding company. The shares of the Company have been listed on the GEM since 16 April The principal activities of the Group are engaged in digital cable television business, wireless digital television value-added services, wireless digital terrestrial television network equipment integrated business, research, design, development on and manufacturing of electronic message security products, integrated circuits, and the integrated circuit solutions and the related services. 2. Basis of preparation and accounting policies The unaudited condensed consolidated financial statements for the three months ended 31 March 2015 have been prepared in accordance with Hong Kong Financial Reporting Standards ( HKFRS ) issued by the Hong Kong Institute of Certified Public Accountants and the applicable disclosure requirements of the GEM Listing Rules. The unaudited condensed consolidated financial statements have been prepared on the historical cost basis except for certain financial instruments, which are measured at fair values. The accounting policies and methods of computation used in the preparation of the unaudited condensed consolidated financial statements are consistent with those used in the financial statements for the year ended 31 December These unaudited condensed consolidated financial statements should be read in conjunction with the Company s annual report for the year ended 31 December Those new accounting standards, amendments to accounting standards and interpretations which are mandatory for financial year ending 31 December 2015 have no material impact on the Group. The unaudited condensed consolidated financial statements have not been audited by the auditors of the Company, but have been reviewed by the Company s audit committee and were approved for issue by the Board. 1. Clarendon House, 2 Church Street, Hamilton HM11, Bermuda

8 3. revenue Revenue recognised by category during the three months ended 31 March 2015 are as follows: 3. Three months ended 31 March HK$ 000 HK$ 000 (Unaudited) (Unaudited) () () Revenue Digital cable television business 1,193 18,987 Wireless digital television value added services 2,948 2,980 Encrypted integrated circuits 118 Wireless digital audio integrated circuits 13 Wireless digital terrestrial television network equipment integrated business 4,259 21,980 Other income Bank interest income 1 5 Gain on disposal of property, plant and equipment Sundry income Heng Xin China Holdings Limited First Quarterly Report 2015

9 4. Finance costs 4. Three months ended 31 March HK$ 000 HK$ 000 (Unaudited) (Unaudited) () () Interest on bank and other loans Interest on redeemable bonds 993 2,868 1,263 3, Taxation 5. Three months ended 31 March HK$ 000 HK$ 000 (Unaudited) (Unaudited) () () Current tax: Hong Kong charge for the period PRC charge for the period The provision for Hong Kong Profits Tax is calculated at 16.5%, no provision for Hong Kong Profits Tax has been made as the Group has no assessable profits (2014: 16.5%). The PRC Enterprise Income Tax has been provided at a rate of 25% (2014: 25%) on the taxable income as reported in the statutory accounts of the companies comprising the Group, which are prepared in accordance with the relevant PRC accounting standards, as adjusted for income and expense items which are not assessable or deductible for income tax purposes. 16.5% 16.5% 25%25%

10 6. LOSS For the period Loss for the period has been arrived at after charging: 6. Three months ended 31 March HK$ 000 HK$ 000 (Unaudited) (Unaudited) () () Depreciation 3,555 4,143 Operating lease charges on office premises 587 2,071 Research and development costs 3,930 3,833 Staff costs (including Directors emoluments) salaries and allowances 4,161 4,337 pension scheme contributions LOSS per share 7. (a) Basic (a) Basic loss per share for the three months ended 31 March 2015 is calculated by dividing the consolidated loss attributable to the owners of the Company for the three months ended 31 March 2015 of HK$19,579,000 (2014: HK$14,516,000) by the weighted average number of 4,192,412,000 (2014: 3,408,590,000) ordinary shares in issue during the period. 19,579,000 14,516,000 4,192,412,000 3,408,590,000 (b) Diluted (b) No diluted loss per share has been presented for the three months ended 31 March 2015 and 2014 as the exercise price of the Company s outstanding share options and warrants were higher than the average market price of the Company s shares for the period. 8. dividends The Board has resolved not to declare any interim dividend for the three months ended 31 March 2015 (2014: Nil) Heng Xin China Holdings Limited First Quarterly Report 2015

11 9. Share Capital AND Reserves 9. Unaudited Attributable to the owners of the Company Retained Exchange Share profits/ Non Share Share Capital fluctuation Other option (Accumulated controlling Total capital premium reserve reserve reserve reserve losses) Sub total interests Equity HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 Balance at 1 January ,086 1,466,350 2, ,274 (79,992) 3,396 (415,328) 1,111,111 25,692 1,136,803 Recognition of share based payments Total comprehensive loss for the three months ended 31 March 2014 (13,300) (14,516) (27,816) (663) (28,479) Balance at 31 March ,086 1,466,350 2,325 86,974 (79,992) 3,813 (429,844) 1,083,712 25,029 1,108,741 Balance at 1 January ,586 1,478,350 2,325 80,847 (79,992) 4,236 (1,183,650) 336,702 21, ,741 Issue of new shares 8,416 92, , ,992 Total comprehensive loss for the three months ended 31 March 2015 (5,880) (19,579) (25,459) (623) (26,082) Balance at 31 March ,002 1,570,926 2,325 74,967 (79,992) 4,236 (1,203,229) 412,235 20, ,

12 MANAGEMENT DISCUSSION AND ANALYSIS Financial review For the three months ended 31 March 2015, the Group recorded a consolidated revenue of approximately HK$4.3 million, representing a decrease of approximately 81% when compared to approximately HK$22 million for the corresponding period in Gross profit margin of the Group for the current three-month period decreased by approximately 11% from that recorded in the corresponding period of the last financial year to approximately 19%, resulting from the change of business mix. Other income amounted to approximately HK$76,000 for the three months ended 31 March 2015, representing a decrease of about 77% when compared to approximately HK$0.3 million for the corresponding period of the last financial year. For the three months ended 31 March 2015, other income mainly arised from the gain on disposal of fixed assets. Other operating expenses amounted to approximately HK$19.4 million for the three months ended 31 March 2015, representing an increase of approximately 3% when compared to approximately HK$18.8 million for the corresponding period of the last financial year. The increase was mainly attributable to increase in legal and professional fees both incurred in Hong Kong and China. 4,300,000 22,000,000 81% 11%19% 76, ,000 77% 19,400,000 18,800,000 3% The loss attributable to owners of the Company amounted to approximately HK$19.6 million for the three months ended 31 March 2015, while loss attributable to the owners of the Company amounted to approximately HK$14.5 million over the corresponding period of the last financial year. Basic loss per share was approximately HK0.47 cent for the three months ended 31 March 2015, while basic loss per share was approximately HK0.43 cent for the three months ended 31 March As at 31 March 2015, the cash and bank balances of the Group (including the restricted bank deposits) amounted to approximately HK$7.6 million, representing an increase of approximately 6.3% when compared to that of approximately HK$7.1 million as at 31 December As at 31 March 2015, the gearing ratio of the Group, calculated as total notes payable and short term loans over shareholders funds, was approximately 0.15 (31 December 2014: 0.31). 19,600,000 14,500, ,600,000 7,100, % Heng Xin China Holdings Limited First Quarterly Report 2015

13 Subscription of New Shares On 18 December 2014, the Company entered into two separate conditional subscription agreements with Lincy Global Limited and Mr. Zhu Yan Biao ( ) as subscriber respectively. On the same day, the Company also entered into a conditional subscription agreement (as amended and supplemented by a supplemental letter dated 19 January 2015 and a supplemental agreement dated 28 January 2015) with Elite Fortune Global Limited as subscriber (together with Lincy Global Limited and Mr. Zhu Yan Biao ( ), collectively the Subscribers ). Pursuant to the aforesaid subscription agreements, the Subscribers have conditionally agreed to subscribe for and the Company has conditionally agreed to allot and issue an aggregate of 541,600,000 new shares of the Company (the Shares ) at the price of HK$0.12 per subscription share, representing a discount of approximately 17.24% to the closing price of HK$0.145 per Share as quoted on the Stock Exchange on 18 December The subscription of an aggregate of 416,600,000 new Shares by Lincy Global Limited and Mr. Zhu Yan Biao ( ) was completed on 9 January 2015 and the subscription of 125,000,000 new Shares by Elite Fortune Global Limited was completed on 30 January 2015 respectively. The net proceeds amounted to approximately HK$65 million was used by the Company (i) as to approximately HK$53 million (81%) for reduction of the Group s level of debt; and (ii) as to approximately HK$12 million for general working capital of the Group as to approximately 7% for operating expenses in China, approximately 1% for staff cost and the remaining 11% was for other operating expenses. Relevant disclosure was made in the announcements of the Company dated 18 December 2014, 9 January 2015, 19 January 2015 and 28 January On 12 March 2015, the Company entered into four separate conditional subscription agreements with China Wish Limited, Ms. Zhang Wan Qiu ( ), Mr. Ma Jia Tao ( ) and Mr. Chen Wen Cai ( ) as subscriber respectively. Pursuant to the subscription agreements, the subscribers have conditionally agreed to subscribe for and the Company has conditionally agreed to allot and issue an aggregate of 300,000,000 new Shares at the price of HK$0.12 per subscription share, representing a discount of approximately 13.67% to the closing price of HK$0.139 per Share as quoted on the Stock Exchange on 12 March Completion of the aforesaid subscription has taken place on 25 March 2015 and the net proceeds amounted to approximately HK$36 million was used by the Company (i) as to approximately HK$10 million (28%) for the repayment of trade creditor, and approximately HK$10 million (28%) for the reduction of the Group s level of debt; and (ii) as to approximately HK$16 million for general working capital of the Group as to approximately HK$6 million (17%) for the purchase of trading materials, and HK$2.5 million (7%) for the finance cost, and approximately HK$2 million (6%) for staff cost, and the remaining 14% of net proceeds was for operating expenses. Relevant disclosure was made in the announcements of the Company dated 12 March 2015 and 25 March Lincy Global Limited Elite Fortune Global Limited Lincy Global Limited ,600, % Lincy Global Limited 416,600,000 Elite Fortune Global Limited 125,000,000 65,000,000 (i) 53,000,000 81% (ii) 12,000,000 7% 1% 11% 300,000, % 36,000,000 (i) 10,000,000(28%) 10,000,000 (28%) (ii) 16,000,000 6,000,000 (17%) 2,500,000 (7%) 2,000,000(6%) 14%

14 Capital Injection On 26 January 2015, (Beijing Kaiqiao Lisheng Technology Company Limited*) ( Beijing Kaiqiao ), a wholly-owned subsidiary of the Company, entered into a capital injection agreement with the original shareholders of (Shanxi Zhongze Heng Yuan Biological Technology Company Limited*) ( Shanxi Zhongze ) namely (Zhong Xiang Heng Yuan Investment Management Company Limited*) ( Zhong Xiang ) and (Hu Guosheng), whereby Beijing Kaiqiao agreed to inject a sum of RMB52 million into Shanxi Zhongze, of which RMB31.23 million and RMB20.77 million will be recognized as the registered capital and capital reserve of Shanxi Zhongze respectively. Shanxi Zhongze is a company incorporated in the PRC and is principally engaged in research and development, manufacturing and selling of castor seeds, manufacturing and selling of castor beans, research and development of technology of biological products, research and development of technology of new technology of castor industry, promotion of technology, application of technology and selling of castor oil. Upon completion of the capital injection, the equity holding of Beijing Kaiqiao in Shanxi Zhongze will be 51% and Shanxi Zhongze will become a non-wholly owned subsidiary of the Company. 52,000,000 31,230,000 20,770,000 51% As at the date of this report, the transaction is subject to fulfilment of certain conditions precedent and has not been completed. Further details of this transaction are set out in the Company s announcement dated on 26 January Business review The Group still recorded a net loss for the three months ended 31 March 2015 as compared to the net loss recorded in the corresponding period in Affected by the overall weak domestic economy, the results of the business of the Group in the first quarter still facing difficulties. (i) Digital cable television business (i) Revenue for the three months ended 31 March 2015 amounted to approximately HK$1.2 million (2014: HK$19.0 million) or 28% (2014: 86%) of the total revenue. The drop of revenue in this segment was mainly due to the record of revenue RMB15 million from (Beijing Huashi Xinyuan Technology Limited*) in the first quarter of 2014 while no such revenue was recorded in the first quarter of In the first quarter of 2015, (Beijing Yaao Boshi Technology Limited*), which is a company cooperated with local television stations of Xinji, Dongguang and Qing County in Hebei province to develop a cable television network that cover the three counties, has generated revenue of approximately HK$1 million. 1,200,000 19,000,000 28% 86% 15,000,000 1,000,000 * For identification purposes only 10 Heng Xin China Holdings Limited First Quarterly Report 2015

15 (ii) Wireless digital television value-added services (ii) Revenue for the three months ended 31 March 2015 amounted to approximately HK$2.9 million (2014: HK$3 million) or around 69% (2014: 14%) of the total revenue. The Group had signed contracts on wireless mobile digital television operation in Hebei province, which includes 6,000 advertising display panels in public areas. 2,900,000 3,000,00069% 14% 6,000 (iii) Encrypted integrated circuits business (iii) Revenue for the three months ended 31 March 2015 generated from the encrypted integrated circuits business amounted to HK$118,000 (2014: Nil) or around 3% (2014: Nil) of the total revenue. The revenue from software sales and technical solution provision of this segment was still adversely affected due to less market demand and development cycles issues. 118,000 3% (iv) Wireless digital audio integrated circuits business (iv) There was no revenue generated from this segment for the three months ended 31 March Approximately HK$13,000 or around 0.1% of the total revenue generated from this segment for the three months ended 31 March , % (v) Wireless digital terrestrial television network equipment integrated business (v) There was no revenue generated from this sector in the first quarter of 2015 and The domestic market for this sector was not optimistic, but the Group will find ways to explore the market for it. Prospects In year 2015, the Group will further consolidate and serve its contracted broadcasting television subscribers, and build a foundation for achieving the overall objectives of development of the Group. More importantly, the Group will seek cooperation opportunities in new provinces while expand its business in the provinces in which cooperation has been established, so as to create more promising profit growth and the longterm value for the Group. Whilst the Group remains focused on developing its existing businesses, the Board considered that it was beneficial for the Group to seek suitable investment opportunities from time to time to develop its existing business portfolio and engage in a new line of business with growth potential and broaden its source of income

16 Subsequent event Issue of Bond On 12 January 2015, the Company and National United Resources Holdings Limited ( NUR ) entered into a conditional subscription agreement, pursuant to which NUR has conditionally agreed to subscribe for and the Company has conditionally agreed to issue to NUR the 11% coupon bond in an aggregate principal amount of HK$80,000,000 (the Bond ). The Bond will mature for redemption on the date immediately following twelve (12) months after the date of its issuance. On 3 March 2015, the Company and NUR, after arm s length negotiation, entered into a supplemental agreement to extend the date for the fulfilment of the conditions precedent to the subscription to 27 April Completion of the subscription of the Bond in an aggregate principal amount of HK$70 million has taken place on 2 April Details are set out in the announcements of the Company dated 12 January 2015 and 3 March DIRECTORS AND CHIEF EXECUTIVES INTERESTS AND SHORT POSITIONS IN THE SHARES, UNDERLYING SHARES AND DEBENTURES OF THE COMPANY OR ANY ASSOCIATED CORPORATION As at 31 March 2015, the interests and short positions of the Directors and the chief executives of the Company in the Shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance ( SFO )) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or pursuant to Section 352 of the SFO, to be entered in the register referred to therein; or pursuant to Rule 5.46 of the GEM Listing Rules relating to securities transactions by Directors, to be notified to the Company and the Stock Exchange were as follows: 80,000,000 11% (12) 70,000,000 XV XV Heng Xin China Holdings Limited First Quarterly Report 2015

17 Interests and short positions in Shares, underlying shares and debentures of the Company Approximate percentage of interests in the Long position/ Number of issued share capital Name of Directors Capacity short position Shares held of the Company Mr. Xiao Yan Beneficial owner Long position 2,273, % Mr. Qiu Bin Beneficial owner Long position 2,408, % Save as disclosed above, none of the Directors and chief executives of the Company had any interests and short positions in the Shares, underlying shares and debentures of the Company and its associated corporations, as recorded in the register maintained by the Company pursuant to Section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the required standard of dealings by Directors as referred to in Rule 5.46 of the GEM Listing Rules as at 31 March 2015, and at no time during the three months ended 31 March 2015 was the Company or any of its subsidiaries a party to any arrangement to enable the Directors and chief executives of the Company to acquire benefits by means of the acquisition of Shares or underlying shares in, or debentures of, the Company or its associated corporation SUBSTANTIAL SHAREHOLDERS/OTHER PERSONS INTERESTS AND SHORT POSITIONS IN THE SHARES AND UNDERLYING SHARES OF THE COMPANY As at 31 March 2015, the register of substantial shareholders/other persons maintained by the Company under Section 336 of the SFO showed that the following shareholders had notified the Company of relevant interests in the Company s issued share capital:

18 Long positions in the Shares and underlying shares of the Company Approximate percentage Number or attributable of the issued share capital Name of shareholders number of Shares held Type of interests of the Company Choi Chung Lam ( Mr. Choi ) 623,542,451 Interest in controlled 14.50% (Note 1) corporation 1 Team Effort Investments Limited 623,542,451 Beneficial owner 14.50% ( Team Effort ) (Note 1) Team Effort 1 Bao Yu ( Mr. Bao ) 333,300,000 Interest in controlled 7.75% (Note 2) corporation 2 Long Joy Holdings Limited 333,300,000 Interest in controlled 7.75% ( Long Joy ) (Note 2) corporation Long Joy 2 Lincy Global Limited 333,300,000 Beneficial owner 7.75% ( Lincy Global ) (Note 2) Lincy Global 2 Notes: 1. Mr. Choi is the legal and beneficial owner of the entire issued share capital of Team Effort. Hence, Mr. Choi is deemed to be interested in 623,542,451 Shares through the shareholding interest of Team Effort in the Company. 2. These 333,300,000 Shares are held by Lincy Global, which is wholly owned by Long Joy, which in turn is wholly owned by Mr. Bao. Hence, each of Long Joy and Mr. Bao is deemed to be interested in these Shares in which Lincy Global is interested. Save as disclosed above, as at 31 March 2015, the Directors were not aware that there was any person (not being a Director or chief executive of the Company) who had, or was deemed to have, interests or short positions in the Shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO and was recorded in the register kept by the Company pursuant to section 336 of the SFO. 1. Team Effort Team Effort 623,542, ,300,000 Lincy Global Lincy Global Long Joy Long Joy Lincy Global XV Heng Xin China Holdings Limited First Quarterly Report 2015

19 DIRECTORS INTEREST IN COMPETING BUSINESS None of the Directors, the management shareholders of the Company nor any of their close associates (as defined in the GEM Listing Rules) had an interest in a business, which competes or may compete with the business of the Group, or has any other conflict of interests with the Group. AUDIT COMMITTEE The Company has established an audit committee (the Audit Committee ) with written terms of reference in compliance with the GEM Listing Rules. As at the date of this report, the Audit Committee comprises three independent non-executive Directors, namely Mr. Leung Wo Ping JP (Chairman), Mr. Dong Shi and Mr. Hu Dingdong. The Audit Committee has reviewed the unaudited condensed consolidated results of the Group for the three months ended 31 March The duties of the Audit Committee include reviewing the Group s annual reports and accounts, half-yearly reports and quarterly reports, and providing advice and comments thereon to the Board. The Audit Committee is also responsible for reviewing and supervising the financial reporting process and internal control procedures of the Company, and to review the appointment of external auditor on an annual basis as well as to ensure independence of the continuing auditor. CODE OF CONDUCT REGARDING SECURITIES TRANSACTIONS BY DIRECTORS The Company has adopted the required standard of dealings set out in Rules 5.48 to 5.67 of the GEM Listing Rules as its code of conduct for securities transactions by Directors throughout the three months ended 31 March Having made specific enquiry of all Directors, the Company was not aware of any non-compliance with the required standard of dealings regarding securities transactions by Directors during the three months ended 31 March

20 PURCHASE, SALE OR REDEMPTION OF THE COMPANY S LISTED SECURITIES Neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company s listed securities during the three months ended 31 March Hong Kong, 14 May 2015 By Order of the Board Heng Xin China Holdings Limited Xiao Yan Chief Executive Officer As at the date of this report, the Board comprises Mr. Xiao Yan (Chief Executive Officer), Mr. Qiu Bin, Mr. Li Tao and Mr. Wang Kun as executive Directors; Mr. Xu Lei as non-executive Director; and Mr. Leung Wo Ping JP, Mr. Dong Shi, Mr. Hu Dingdong and Mr. Lei Yong as independent nonexecutive Directors. 16 Heng Xin China Holdings Limited First Quarterly Report 2015

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