Corporate Information Executive Directors He Xiangming (Chairman) Lin Pingwu (Managing Director) You Guang Wu (Director) Huang Zhihe (Deputy Managing

Transcription

1 2018 Interim Report China Investments Holdings Limited

2 Corporate Information Executive Directors He Xiangming (Chairman) Lin Pingwu (Managing Director) You Guang Wu (Director) Huang Zhihe (Deputy Managing Director) Wang Xin (Deputy Managing Director) Independent Non-executive Directors Chan Kwok Wai Chen Da Cheng Deng Hong Ping Audit Committee Chan Kwok Wai (Chairman) Chen Da Cheng Deng Hong Ping Remuneration Committee Chen Da Cheng (Chairman) Chan Kwok Wai Deng Hong Ping He Xiangming Lin Pingwu Nomination Committee He Xiangming (Chairman) Lin Pingwu Chan Kwok Wai Chen Da Cheng Deng Hong Ping Registered Office Clarendon House 2 Church Street Hamilton HM 11 Bermuda Clarendon House 2 Church Street Hamilton HM 11 Bermuda Principal Place of Business Unit 501, Wing On Plaza 62 Mody Road Tsimshatsui Kowloon Hong Kong Interim Report 2018 China Investments Holdings Limited 1

3 Corporate Information Registrar MUFG Fund Services (Bermuda) Limited The Belvedere Building 69 Pitts Bay Road Pembroke HM08 Bermuda MUFG Fund Services (Bermuda) Limited The Belvedere Building 69 Pitts Bay Road Pembroke HM08 Bermuda Branch Registrar Tricor Progressive Limited Level 22, Hopewell Centre 183 Queen s Road East Hong Kong Principal Bankers Bank of China Bank of Communications Bank of East Asia Limited Hang Seng Bank Industrial and Commercial Bank of China (Macau) Limited OCBC Wing Hang Bank Limited Solicitors Woo, Kwan, Lee & Lo Auditor HLM CPA Limited Certified Public Accountants Company Secretary Lo Tai On Stock Code Website oceanwir.com 2

4 Management Discussion and Analysis RESULTS BUSINESS REVIEW (the Period ), the Group recorded a total revenue of HK$22,576,000, representing an increase of 223.2% as compared to the same period of last year. This is mainly attributable to: (i) an increase of approximately HK$8,975,000 in the revenue from property investments business; (ii) an increase of approximately HK$3,155,000 in the operating income from Guilin Plaza which had its business operation gradually resumed normal after reopening in November 2017; and (iii) an increase of approximately HK$3,271,000 in the operating income from the newly developed financial leasing and wellness businesses. However, the financing for the Danzao industrial parks and for the investment in Guangdong Tiannuo Civil Explosives Co., Ltd.* ( Tiannuo Explosives ) substantially increased interest expenses and bank handling fees. In combination with other factors, the Group therefore recorded a loss of HK$7,824,000 in the first half of the year, making a loss when compared with the profit recorded in the same period last year. HOTEL BUSINESS Coffetel Guilin Plaza ( Guilin Plaza ) was under renovation from March to October in 2017, and resumed normal operation gradually after reopening in November 2017, thus increasing the operating income by 149.2% as compared to the same period last year to HK$5,269,000 in the first half of the year. In addition, due to the business reorganization of Guilin Plaza, the number of hotel rooms was reduced while the rental area increased, thereby decreasing the demand for labor and the cost expenses. However, severance payment of HK$3,151,000 was incurred in the same period last year. The combined effect of the above resulted in a decrease of 72.2% in the operating loss of Guilin Plaza to HK$2,903,000 in the first half of the year as compared to the same period last year. 22,576, % 8,975,000 3,155,000 3,271,000 7,824, %5,269,000 3,151, % 2,903,000 Interim Report 2018 China Investments Holdings Limited 3

5 Management Discussion and Analysis In order to expand the diversified business related to the hotel industry, the Group formed China Select Small Hotel Union Limited (a 51%-owned subsidiary of the Group) with T-Box Union (China) Financial Holdings Investments Limited and T-Box Union Investments Limited on 29 September 2017, in an effort to provide integrated service in the homestay inn and small hotel industry, including the provision of quickly-constructed T-BOX mobile homes with zero-sewage discharge environmental-friendly systems, direct sales management software and financing solutions. The Group has actively organised teams in the first half of the year for the establishment of Unions and the promotion of Wechat direct sales tools. Meanwhile, negotiation for intended projects for T-BOX mobile homes in Beijing, Guizhou and Guangxi Weizhou Island etc. is currently underway. Since the business is still at the initial promotion stage, it has yet to generate any profit or gain for the Group. PROPERTY INVESTMENTS The Group s total rental income in the first half of 2018 was HK$3,234,000, representing an increase of 6.2% as compared to the same period last year. With the completion of enhancement work of ancillary facilities at Zhongkong Tower in Foshan, the overall occupancy rate of Zhongkong Tower increased to 63.97% and the full-year rental income amounted to HK$2,141,000, representing a significant increase of 59.06% as compared to the same period last year. The rental income of Shantou Commercial Plaza for the period amounted to HK$771,000, which was similar to the same period of last year. As most of the properties of Huizhou International Commerce Building and unit A on the ground floor in Kai Yip Factory Building, San Po Kong, Hong Kong were sold in 2017, the rental income for the period decreased 93.2% to HK$14,000 and 56.98% to HK$308,000 as compared to the same period of last year respectively. 51% T-BOX T-BOX 3,234, % 63.97% 2,141, % 771,000 A 14,000308, % 56.98% 4

6 Management Discussion and Analysis In respect of property sales, the Group completed the disposal of 7 units of Huizhou International Commerce Building and 16 units of Shantou Commercial Plaza, cashing out a total of HK$10,802,000 and generating a total gain of HK$5,533,000 during the period. As disclosed in the Company s announcement dated on 16 November 2017, Guangdong Sino Rock Tyco Construction Co., Ltd.* ( Sino Rock Tyco ), and a 80%-owned subsidiary of the Group, would invest in the development and construction of the high-end industrial parks project for the production of electric vehicles and hydrogen powered fuel cell vehicles in Danzao Town, Nanhai District, Foshan City. The planning and construction of the industrial parks are currently underway, and it is expected to complete in phases in WELLNESS BUSINESS Guangdong Yibaijian Comprehensive Health Technology Ltd.* ( Guangdong Yibaijian ), a 70%-owned subsidiary company of the Group, has completed all the construction works, passed the comprehensive system test and commenced the operation of smart platform for the management of integrated elderly care services in Nanhai District ( Smart Elderly Care Services Platform ). On December 4, 2017, Guangdong Yibaijian was awarded the tender of the second phase construction of the Smart Elderly Care Services Platform for further optimization of the Platform and development of various value-added services in health management so as to increase channels of operating income. There are also plans to gradually expand the coverage of the Smart Elderly Care Services Platform to other towns in Nanhai District. The Smart Elderly Care Services Platform is a point for the Group to enter into the elderly care industry, and is currently being promoted comprehensively through media for the sake of gaining market recognition. The revenue from wellness business in the first half of the year amounted to HK$1,481,000. As the elderly care project is still at the initial investment construction and promotion stage, it has yet to generate a net profit for the Group and recorded a loss of HK$884, ,802,000 5,533,000 80% 70% 1,481, ,000 Interim Report 2018 China Investments Holdings Limited 5

7 Management Discussion and Analysis FINANCIAL LEASING BUSINESS The Group has engaged in the operation and management of financial leasing business and gradually accumulated related experience through Guangdong Financial Leasing Co., Ltd.*, a 25%-owned associate of the Group. The Group holds an optimistic view on the prospects of the development of financial leasing business in China, and has established a wholly-owned subsidiary Canton Risen Financial Leasing Co., Ltd.* to further develop the financial leasing business which recorded an operating income of HK$1,790,000 and a profit margin of HK$546,000 for the first half of the year. Since it is still at the initial stage, a slight loss of HK$508,000 is recorded but it is expected to contribute to the Group in the second half of the year. PROFIT FROM INVESTMENTS IN ASSOCIATES Nanhai Changhai Power Company Limited*, a %-owned joint venture of the Group, recorded a cost increase due to the higher coal prices in the period, but it was offset by the substantial increase in sales volume of steam as compared to the same period last year. Accordingly, the operating performance in the first half of 2018 still improved with an operating profit of HK$89,958,000, thus contributing earnings of HK$29,359,000 to the Group, representing an increase of 4.58% as compared to the same period last year. Guangdong Financial Leasing Co., Ltd.*, a 25%-owned associate of the Group, recorded an increase in its operating results in the first half of the year, posting net operating profit of HK$43,773,000, contributing a profit of HK$10,943,000 to the Group, representing an increase of 22.82% as compared to the same period last year. 25% 1,790, , , % 89,958,000 29,359, % 25% 43,773,000 10,943, % 6

8 Management Discussion and Analysis On 28 March 2018, Foshan City Nanhai Canmanage Investments Holdings Limited* ( Nanhai Canmanage ), a wholly-owned subsidiary of the Company, entered into the Capital Contribution Agreement with Foshan City Nanhai District Lianhua Asset Operation & Management Co., Ltd.*, Guangdong Nanhai Chemical Factory Co., Ltd.* and Tiannuo Explosives. Nanhai Canmanage has agreed to contribute an amount of RMB130,333, (equivalent to HK$154,423,107.16) to the capital of Tiannuo Explosives, for 49% of the enlarged equity interests of Tiannuo Explosives and the acquisition of the Guangdong Nanhong Chemical Co., Ltd.* by Tiannuo Explosives thereafter. The aforesaid capital contribution agreement and the relevant transactions as contemplated thereunder had been approved at the special general meeting of the Company held on 25 May Completion of the transaction is subject to satisfactory fulfilment of all the conditions precedent as set out in Capital Contribution Agreement. On 26 June 2018, the first instalment of capital contribution amounting to RMB65,166, (equivalent to HK$77,211,553.58) had been paid. On 17 August 2018, industrial and commercial registration for change of particulars had been completed. Moreover, on 20 August 2018, the balance had been paid according to the agreement and the capital contribution to Tiannuo Explosives had been completed. Therefore, it will help improve the profitability of the Group, enabling the Group to explore the potential of the domestic civil explosive business. 49% 130,333, ,423, ,166, ,211, Interim Report 2018 China Investments Holdings Limited 7

9 Management Discussion and Analysis FINANCIAL POSITION AND ANALYSIS As at 30 June 2018, the Group had total assets of HK$2,466,465,000 (31 December 2017: HK$2,277,412,000), bank loans and other long-term liabilities of HK$1,112,064,000 (31 December 2017: HK$945,849,000), total equity of HK$1,215,248,000 (31 December 2017: HK$1,177,859,000), a gearing ratio (being bank loans and long-term borrowings divided by total assets) of 45.1% (31 December 2017: 41.5%) and equity attributable to owners of the Company of HK58.26 cents (31 December 2017: HK59.58 cents) per share. The Group had net current assets of HK$415,619,000 (31 December 2017: HK$244,777,000), a current ratio (being current assets divided by current liabilities) of approximately 1.56 times (31 December 2017: 1.32 times) and bank savings and cash of HK$874,323,000 (31 December 2017: HK$886,861,000), which are sufficient for the capital requirements for future operation and new projects or business development of the Group. PLEDGE OF ASSETS As at 30 June 2018, properties of the Group for own use and investment with a carrying value of approximately HK$318,863,000 were pledged to banks as the security for the bank borrowings granted to the Group (31 December 2017: properties of the Group for own use and investment with a carrying value of approximately HK$323,697,000 were pledged to banks). Pledged bank deposit represents deposits pledged to banks to secure banking facilities granted to the Group. Deposits amounting to approximately HK$68,878,000 (31 December 2017: HK$63,963,000) have been pledged to secure a bank borrowing. 2,466,465,000 2,277,412,000 1,112,064, ,849,000 1,215,248,000 1,177,859, % 41.5%) ,619, ,777, ,323, ,861, ,863, ,697,000 68,878,000 63,963,000 8

10 Management Discussion and Analysis FOREIGN EXCHANGE EXPOSURE The Group s operating income and costs are mainly denominated in RMB. In the business operation of the Group, foreign exchange fluctuation of income and costs would be mutually offset. However, the Group is based in Hong Kong, and has injected a substantial amount of current borrowings into its wholly-owned subsidiaries in China on one hand and held a huge amount of monetary assets denominated in RMB on the other hand. However, the Group invested registered capital of US$70,000,000 into Sino Rock Tyco at the end of last year for the construction of the industrial parks project. As Sino Rock Tyco has not exchanged the US$70,000,000 into RMB, exchange loss or gain would be generated from appreciation or depreciation of RMB before exchange. It is expected that a decrease or an increase of about HK$14,617,000 in the profit of the year would be resulted if the exchange rate of RMB against HK dollars appreciates or depreciates by 5%. To the contrary, after exchanging the US$70,000,000 into RMB, it is expected that an increase or a decrease of about HK$12,837,000 in the profit of the year would be resulted if the exchange rate of RMB against HK dollars appreciates or depreciates by 5%. Over the past few years, RMB constantly showed an upward trend and gradually became stable in the second half of Nevertheless, RMB started to fluctuate upward and downward repeatedly in recent years. With the Sino-US trade war during this year, the exchange rate of RMB against USD dropped sharply. As the Group had invested registered capital of US$70,000,000 into Sino Rock Tyco and the amount has not been exchanged into RMB, the Group recorded an exchange gain of HK$3,442,000 in the first half of this year. However, the Board believes that RMB will be immensely affected by any change in the Sino-US trade war in the short term. A turnaround in the Sino-US trade war can possibly reverse RMB s downward trend or even cause a rapid rebound, therefore the trend of RMB is unforeseeable in the short term. Though in the long run, it is expected that RMB will become stable and will not expose the Group under significant and long term adverse foreign exchange risk. Accordingly, it is not necessary for the Group to hedge against foreign exchange risk at the moment. 70,000,000 70,000,000 5% 14,617,000 70,000,000 5% 12,837,000 70,000,000 3,442,000 Interim Report 2018 China Investments Holdings Limited 9

11 Management Discussion and Analysis OUTLOOK During the course of transformation and upgrade in the past few years, with industry experience accumulated therefrom, the Group has basically confirmed its development focus and direction through continuous exploration and survey and steady investment. Looking ahead into the second-half of the year, the Group will seize opportunities for market development and continue efforts to adjust and optimize its business. The Group will develop the business towards finance, technology and wellness elderly care sectors in coming years. In respect of the finance sector, the Group will further develop the financial leasing business, and initially intends to focus on business areas including public utilities projects, environmental protection and energy-saving projects, new energy projects and tele-communication projects. In respect of the technology sector, taking advantages of the opportunity arising from the new smart city construction plan in Nanhai District, the Group actively research on and develop the Big Data industry projects. Regarding the wellness elderly care sector, the Group will continue to develop towards the goal of establishing a 3-tier elderly care system comprising institutes, communities and households in Nanhai District based on the foundation of the Smart Elderly Care Services Platform. The Group will be able to expand its business coverage with the above development plans, thereby gradually achieving the goal of increasing returns for shareholders. By Order of the Board of China Investments Holdings Limited He Xiangming Chairman Hong Kong, 21 August 2018 * For identification purpose only 10

12 Disclosure of Interests and Other Information DIRECTORS INTEREST IN SHARES, UNDERLYING SHARES AND DEBENTURES As at 30 June 2018, the interest of the Company s directors and chief executive 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 (the SFO )), as recorded in the register required to be kept by the Company 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 Issuers (the Model Code ) set out in Appendix 10 to the Listing Rules were as follows: Long positions in the shares of the Company 352 XV Name of director Capacity Nature of Interest Number of ordinary shares held Approximate percentage of total issued shares as at 30 June 2018 He Xiangming Beneficial owner Personal 1,441, % Save as disclosed above, as at 30 June 2018, none of the directors or chief executive of the Company had any interest or short positions in any shares or underlying shares or interest in debentures of the Company or any of its associated corporations (within the meaning of Part XV of the 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 interest or short positions which they were taken or deemed to have under such provisions of the SFO), or which were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein, or which were required, pursuant to the Model Code, to be notified to the Company and the Stock Exchange. XV7 8 XV 352 Interim Report 2018 China Investments Holdings Limited 11

13 Disclosure of Interests and Other Information SUBSTANTIAL SHAREHOLDERS As at 30 June 2018, according to the register of substantial shareholders maintained by the Company pursuant to Section 336 of the SFO, the persons who were interested in 5% or more in the shares and underlying shares of the Company are as follows: 336 5% Names Number of shares/ underlying shares Notes Capacity Approximate percentage of total issued shares as at 30 June 2018 (Guangdong Nanhai Holding Investment Co., Ltd.*) 1,426,439,842 1 Corporate interest 83.30% Nam Keng Van Investment Company Limited 121,864,487 2 Beneficial owner 7.12% Cui Guo Jian 121,864,487 2 Corporate interest 7.12% Pu Jian Qing 121,864,487 2 Corporate interest 7.12% 12

14 Disclosure of Interests and Other Information Notes: 1. These 1,426,439,842 shares comprises: (i) 1,207,713,527 shares held by Prize Rich Inc. which was wholly-owned by (Guangdong Nanhai Holding Investment Co., Ltd.*); and (ii) 218,726,315 new shares to be allotted and issued by the Company to Prize Rich Inc. upon the exercise of conversion rights attaching to the convertible bonds issued by the Company to Prize Rich Inc. pursuant to an acquisition agreement as part of the consideration. 1. 1,426,439,842(i) 1,207,713,527Prize Rich Inc. Prize Rich Inc.(ii) Prize Rich Inc. Prize Rich Inc. 218,726, These 121,864,487 shares were held by Nam Keng Van Investment Company Limited which was wholly-owned by Mr. Cui Guo Jian and Mr. Pu Jian Qing equally ,864,487 Save as disclosed above, no other parties were recorded in the register as having an interest in 5% or more of the issued share capital of the Company. SHARE OPTION SCHEME A share option scheme was adopted by shareholders of the Company at the annual general meeting held on 26 April 2013 (the Share Option Scheme ). The Share Option Scheme is for a term of 10 years from the date of adoption. No option has been granted since the adoption of the Share Option Scheme. ARRANGEMENTS TO ACQUIRE SHARES OR DEBENTURES Save for the Share Option Scheme, at no time during the period was the Company or any of its subsidiaries a party to any arrangements, to enable the directors of the Company to acquire benefits by means of acquisition of shares in, or debentures of, the Company or any other body corporate. EMPLOYEES The total number of employees of the Group is approximately 168 (31 December 2017: 113). The remuneration of the employees of the Group is determined on the basis of performance and responsibility of the employees. The Group provides education allowances to the employees. 5% Interim Report 2018 China Investments Holdings Limited 13

15 Disclosure of Interests and Other Information INTERIM DIVIDEND The Directors resolved not to declare payment of an interim dividend for the six months ended 30 June 2018 (six months ended 30 June 2017: Nil). PURCHASE, SALE OR REDEMPTION OF THE COMPANY S LISTED SHARES During the six months ended 30 June 2018, neither the Company nor any of its subsidiaries have purchased, sold or redeemed any of the Company s listed shares. CORPORATE GOVERNANCE The Company puts great emphasis on corporate governance which is reviewed and strengthened on a continued basis. The Company has adopted all the code provisions under the Corporate Governance Code ( the Code ) as set out in Appendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the Listing Rules ) as its own code on corporate governance practice. For the six months ended 30 June 2018, the Company has complied with all the code provisions under the Code. CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuer ( the Model Code ) set out in Appendix 10 to the Listing Rules as the code of conduct regarding securities transactions by Directors. On specific enquiry made, all Directors have confirmed that, in respect of the six months ended 30 June 2018, they have complied with the required standard as set out in the Model Code. AUDIT COMMITTEE The audit committee comprising the three independent non-executive Directors of the Company has reviewed with management the accounting principles and practices adopted by the Group and discussed auditing, internal control and financial reporting matters including a general review of the unaudited interim results for the six months ended 30 June

16 Disclosure of Interests and Other Information CHANGES OF DIRECTOR S INFORMATION UNDER RULE 13.51B(1) OF THE LISTING RULES Pursuant to Rule 13.51B(1) of the Listing Rules, change of directors information of the Company since the date of the 2017 annual report is as follows: 1. Mr. He Xiangming resigned as the chairman and legal representative of Guangdong Sino Rock Tyco Construction Co., Ltd.* ( Sino Rock Tyco ), a 80%-owned subsidiary of the Company, on 21 May 2018 and was appointed as the chairman and legal representative of Guangdong Taoyuan Comprehensive Health Management Co., Ltd.* ( Taoyuan Comprehensive Health ), a whollyowned subsidiary of the Company, since 31 May 2018, and the term of his employment with the Company has been extended for three years until 31 August Mr. Lin Pingwu was appointed as the chairman of Guangdong Sinsing Technology Limited* ( Sinsing Technology ), a wholly-owned subsidiary of the Company, since 23 February 2018, and the term of his employment with the Company has been extended for three years until 20 April Mr. Huang Zhihe was appointed as the managing director and legal representative of Sinsing Technology since 23 February Ms. Wang Xin was appointed as the chairman and legal representative of Sino Rock Tyco since 21 May 2018 and as the managing director of Taoyuan Comprehensive Health since 31 May The term of appointment of Mr. Deng Hong Ping as an independent non-executive director of the Company has been renewed for further two years until 5 April B(1) 13.51B(1) 1. 80% * For identification purpose only Interim Report 2018 China Investments Holdings Limited 15

17 Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income Six months ended 30 June Notes HK$ 000 HK$ 000 (unaudited) (unaudited) Revenue 5 22,576 6,985 Cost of sales and services (11,549) (3,412) Gross profit 11,027 3,573 Other operating income 7 11,394 8,647 Selling and distribution costs (21) (125) Administrative expenses (26,422) (23,789) Share of profit of associates 40,302 36,983 Finance costs 8 (39,853) (11,640) (Loss)/profit before taxation (3,573) 13,649 Income tax expenses 9 (4,251) (2,029) (Loss)/profit for the period 10 (7,824) 11,620 Other comprehensive (expense)/income, net of income tax Items that may be reclassified subsequently to profit or loss: Exchange differences arising on translation of foreign operations Share of exchange differences of associates Other comprehensive (expense)/ income for the period, net of income tax Total comprehensive (expense)/ income for the period (5,137) (91) (9,887) 19,795 (15,024) 19,704 (22,848) 31,324 16

18 Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income Six months ended 30 June Notes HK$ 000 HK$ 000 (unaudited) (unaudited) (Loss)/profit for the period attributable to: Owners of the Company (7,469) 12,272 Non-controlling interests 22 (355) (652) Total comprehensive (expense)/income for the period attributable to: (7,824) 11,620 Owners of the Company (22,634) 31,988 Non-controlling interests 22 (214) (664) (Loss)/earnings per share 12 (22,848) 31,324 Basic (HK0.44 cent) HK0.72 cent (0.44 ) 0.72 Diluted (HK0.44 cent) HK0.72 cent (0.44 ) 0.72 Interim Report 2018 China Investments Holdings Limited 17

19 Condensed Consolidated Statement of Financial Position At 30 June June December 2017 Notes HK$ 000 HK$ 000 (unaudited) (audited) Non-current assets Investment properties , ,525 Property, plant and equipment , ,080 Interests in associates , ,571 Financial assets at fair value through profit or loss 15 9,052 9,172 Finance lease receivables ,495 1,313,519 1,270,348 Current assets Properties held for sale 42,558 47,820 Inventories Finance lease receivables 16 30,048 Trade and other receivables 17 12,103 7,926 Financial assets at fair value through profit or loss 15 47,393 Deposit for capital contribution to a potential associate 77,212 Pledged bank deposit 23 68,878 63,963 Cash and cash equivalents 874, ,861 Current liabilities Trade and other payables 1,152,946 1,007, , ,852 Tax payables 9,041 7,137 Borrowings , , , ,287 Net current assets 415, ,777 Total assets less current liabilities 1,729,138 1,515,125 18

20 Condensed Consolidated Statement of Financial Position At 30 June June December 2017 Notes HK$ 000 HK$ 000 (unaudited) (audited) Capital and reserves Share capital , ,233 Reserves 826, ,001 Equity attributable to owners of the Company 997,600 1,020,234 Non-controlling interests , ,625 Total equity 1,215,248 1,177,859 Non-current liabilities Borrowings , ,965 Convertible notes , ,586 Deferred tax liabilities 7,999 15, , ,266 1,729,138 1,515,125 Interim Report 2018 China Investments Holdings Limited 19

21 Condensed Consolidated Statement of Changes in Equity Attributable to owners of the Company Hotel properties Convertible Non- Share Share Statutory revaluation Exchange note equity Retained controlling Total capital premium reserve reserve* reserve reserve earnings Total interest equity * (note) HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) THE GROUP At 1 January , ,199 97,139 47,186 (74,422) 34,700 19,199 1,020, ,625 1,177,859 Loss for the period (7,469) (7,469) (355) (7,824) Other comprehensive (expense)/ income for the period Release of revaluation reserve of hotel properties (925) 925 Exchange differences arising on translation of foreign operations (5,278) (5,278) 141 (5,137) Share of exchange difference of associates Other comprehensive (expense)/ income for the period Total comprehensive (expense)/ income for the period (9,887) (9,887) (9,887) (925) (15,165) 925 (15,165) 141 (15,024) (925) (15,165) (6,544) (22,634) (214) (22,848) Capital injection from non-controlling interests 60,237 60,237 Transfer to statutory reserve 8,808 (8,808) At 30 June , , ,947 46,261 (89,587) 34,700 3, , ,648 1,215,248 20

22 Condensed Consolidated Statement of Changes in Equity Attributable to owners of the Company Hotel properties Convertible Non- Share Share Statutory revaluation Exchange note equity Retained controlling Total capital premium reserve reserve* reserve reserve earnings Total interest equity * (note) HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) THE GROUP At 1 January , ,199 79,481 46,108 (129,285) 34,700 3, , ,287 Profit/(loss) for the period 12,272 12,272 (652) 11,620 Other comprehensive (expense)/ income for the period Release of revaluation reserve of hotel properties (870) 870 Exchange differences arising on translation of foreign operations (79) (79) (12) (91) Share of exchange difference of associates Other comprehensive (expense)/ income for the period Total comprehensive (expense)/ income for the period 19,795 19,795 19,795 (870) 19, ,716 (12) 19,704 (870) 19,716 13,142 31,988 (664) 31,324 Capital injection from non-controlling interests 2,140 2,140 Transfer to statutory reserve 8,422 (8,422) At 30 June , ,199 87,903 45,238 (109,569) 34,700 8, ,275 1, ,751 * Item that will not be reclassified to profit or loss * Note: Statutory reserve represents general reserve and enterprise expansion fund which are set up by subsidiaries and associates established and operating in the People s Republic of China (the PRC ) by way of appropriation from the profit after taxation in accordance with relevant laws and regulations in the PRC. The rate of appropriation of the general reserve and enterprise expansion fund is subject to the decision of the board of Directors of the PRC subsidiaries and associates, but the minimum appropriation rate for the general reserve is 10% of the profit after taxation for each period, until when the accumulated balance reaches 50% of the total registered capital of the subsidiaries and associates. Pursuant to the relevant laws and regulations of the PRC, if approvals are obtained from the relevant government authorities, the general reserve can be used to set off accumulated losses or increase the capital, and the enterprise expansion fund can be used to increase the capital. 10% 50% Interim Report 2018 China Investments Holdings Limited 21

23 Condensed Consolidated Statement of Cash Flows Six months ended 30 June HK$ 000 HK$ 000 (unaudited) (unaudited) Operating activities (Loss)/profit for the period (7,824) 11,620 Adjustments for: Bank interest income (4,516) (1,905) Interest expense 39,853 11,640 Income tax expenses 4,251 2,029 Interest income from financial assets at fair value through profit or loss (586) Share of profit of associates (40,302) (36,983) (Gain)/loss on disposal of property, plant and equipment (139) 1,305 Depreciation of property, plant and equipment 5,722 5,260 Impairment written-back on trade and other receivables (255) Net exchange gain (3,442) (6,652) Operating cash flow before movements in working capital (7,238) (13,686) Increase in finance lease receivables (143,543) Decrease in inventories Decrease in properties held for sale 5, Increase in trade and other receivables (3,890) (12,194) Decrease in trade and other payables (8,377) (3,381) Cash used in operations (157,723) (28,207) Tax paid (9,479) Net cash used in operating activities (167,202) (28,207) 22

24 Condensed Consolidated Statement of Cash Flows Six months ended 30 June HK$ 000 HK$ 000 (unaudited) (unaudited) Investing activities Purchases of property, plant and equipment (5,215) (13,310) Purchases of financial assets at fair value through profit or loss (47,393) Deposits paid for capital contribution to a potential associate (77,212) (Increase)/decrease in time deposits with more than three months to maturity when placed Dividend received from an associate Placement of pledged bank deposit (54,909) 16,741 96,038 (4,915) Bank interest received 4,472 1,864 Interest income from financial assets 586 Net proceeds from disposal of property, plant and equipment Net cash (used in)/generated from investing activities (88,250) 5,396 Financing activities Capital injection from noncontrolling interests 60,237 2,140 Interest paid (30,691) (3,015) Repayment of borrowings (47,417) (5,155) Proceeds from borrowings 209,163 37,975 Net cash generated from financing activities 191,292 31,945 Interim Report 2018 China Investments Holdings Limited 23

25 Condensed Consolidated Statement of Cash Flows Six months ended 30 June HK$ 000 HK$ 000 (unaudited) (unaudited) Net (decrease)/increase in cash and cash equivalents (64,160) 9,134 Cash and cash equivalents at 1 January 886, ,356 Effect of foreign exchange (3,287) 2,696 Cash and cash equivalents at 30 June 819, ,186 Analysis of the balances of cash and cash equivalents, being: Bank balances and cash 874, ,186 Less: time deposits with maturity dates over three months (54,909) 819, ,186 24

26 1. BASIS OF PREPARATION The interim condensed consolidated financial statements have been prepared in accordance with 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 ) and with Hong Kong Accounting Standard 34 ( HKAS 34 ) Interim Financial Reporting issued by the Hong Kong Institute of Certified Public Accountants ( HKICPA ) The interim condensed consolidated financial statements have not been audited by the Company s auditor but have been reviewed by the Company s audit committee. The interim condensed consolidated financial statements have been prepared on the historical costs basis except for certain properties and financial instruments, which are measured at fair value or revalued amounts, as appropriate. The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group s annual financial statements for the year ended 31 December Preparation of interim financial statements in conformity with HKAS 34 requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses on a year to date basis. Actual results may differ from these estimates. The interim financial statements and selected explanatory notes thereon do not include all of the information required for a full set of financial statements prepared in accordance with Hong Kong Financial Reporting Standards. 34 Interim Report 2018 China Investments Holdings Limited 25

27 2. PRINCIPAL ACCOUNTING POLICIES AND APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS ( HKFRSs ) Except for the adoption of the new and revised HKFRSs stated 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 2 (Amendments) HKFRS 4 (Amendments) HKFRS 9 HKFRS 15 HKAS 28 (Amendments) HKAS 40 (Amendments) HK(IFRIC) Int 22 Classification and Measurement of Share-based Payment Transactions Applying HKFRS 9 Financial Instruments with HKFRS 4 Insurance Contracts Financial Instruments Revenue from Contracts with Customers and the Related Amendments As part of the Annual Improvements to HKFRSs Cycle Transfers of Investment Property Foreign Currency Transactions and Advance Consideration The adoption of the new and revised HKFRSs has had no material effect on the condensed consolidated financial statements of the Group for the current or prior accounting period. Accordingly, no prior period adjustment has been required. 26

28 2. PRINCIPAL ACCOUNTING POLICIES AND APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS ( HKFRSs ) (continued) The Group has not early applied the following new or revised HKFRSs that have been issued but are not yet effective: 2. HKFRS 9 Prepayment Features with (Amendments) Negative Compensation 1 HKFRS 10 and Sale or Contribution of Assets HKAS 28 between an Investor and its (Amendments) Associate or Joint Venture 3 HKFRS 16 Leases 1 HKFRS 17 Insurance Contracts 2 HKFRSs Annual Improvements to (Amendments) HKFRSs Cycle 1 HKAS 19 Employee Benefits 1 (Amendments) HKAS 28 Long-term Interest in (Amendments) Associates and Joint Ventures 1 HK(IFRIC) Int 23 Uncertainty over Income Tax Treatments 1 Notes: 1 Effective for annual periods beginning on or after 1 January Effective for annual periods beginning on or after 1 January Effective date to be determined Interim Report 2018 China Investments Holdings Limited 27

29 3. SUMMARY OF EFFECTS OF THE CHANGES IN ACCOUNTING POLICIES The nature and the impact of the changes are described below: 3. HKFRS 9 Financial Instruments HKFRS 9 Financial Instruments replaces HKAS 39 Financial Instruments: Recognition and Measurement for annual periods beginning on or after 1 January 2018, bringing together all three aspects of the accounting for financial instruments: classification and measurement, impairment and hedge accounting. The Group has applied HKFRS 9 retrospectively to items that existed at 1 January 2018 in accordance with the transition requirements. The impacts relating to the classification and measurement and the impairment requirements are summarised as follows: (i) Classification and measurement Except for trade and other receivables and cash and cash equivalents, under HKFRS 9, the Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial assets. (i) 9 (FVPL) Under HKFRS 9, debt instruments are subsequently measured at fair value through profit or loss or amortised cost. The classification is based on two criteria: the Group s business model for managing the assets; and whether the instruments contractual cash flows represent solely payments of principal and interest on the principal amount outstanding (the SPPI criterion ). 9 SPPI 28

30 3. SUMMARY OF EFFECTS OF THE CHANGES IN ACCOUNTING POLICIES (continued) HKFRS 9 Financial Instruments (continued) (i) Classification and measurement (continued) The new classification and measurement of the Group s financial assets are as follows: 3. 9 (i) Debt instruments at amortised cost that are held within a business model with the objective to hold the financial assets in order to collect contractual cash flows that meet the SPPI criterion. Financial assets at fair value through profit or loss include debt instruments whose cash flow characteristics fail the SPPI criterion or are not held within a business model whose objective is either to collect contractual cash flows, or to both collect contractual cash flows and sell. SPPI SPPI The assessment of the Group s business models was made as of the date of initial application on 1 January 2018, and then applied retrospectively to those financial assets that were not derecognised before 1 January The assessment of whether contractual cash flows on debt instruments are solely comprised of principal and interest was made based on the facts and circumstances as at the initial recognition of the assets. Interim Report 2018 China Investments Holdings Limited 29

31 3. SUMMARY OF EFFECTS OF THE CHANGES IN ACCOUNTING POLICIES (continued) HKFRS 9 Financial Instruments (continued) (i) Classification and measurement (continued) The accounting for the Group s financial liabilities remains largely the same as it was under HKAS 39. Similar to the requirements of HKAS 39, HKFRS 9 requires contingent consideration liabilities to be treated as financial instruments measured at fair value, with the changes in fair value recognised in profit or loss (i) Under HKFRS 9, embedded derivatives are no longer separated from a host financial asset. Instead, financial assets are classified based on their contractual terms and the Group s business models. The accounting for derivatives embedded in financial liabilities and in non-financial host contracts has not changed from that required by HKAS 39. The following table illustrates the classification of financial assets under HKFRS 9 and HKAS 39 at the date of initial application on 1 January

32 3. SUMMARY OF EFFECTS OF THE CHANGES IN ACCOUNTING POLICIES (continued) HKFRS 9 Financial Instruments (continued) (i) Classification and measurement (continued) Analysis of financial assets items 3. 9 (i) Original classification under Original carrying amount under New classification under New carrying amount under HK$ 000 HKAS 39 HKAS 39 HKFRS 9 HKFRS Financial assets Financial assets at fair value through profit or loss Availablefor-sale finance assets at cost 9,172 Fair value through profit or loss 9,172 Cash and cash equivalents Loans and receivables 886,861 At amortised cost 886,861 Pledged bank deposit Loans and receivables 63,963 At amortised cost 63,963 Trade and other receivables Loans and receivables 1,302 At amortised cost 1,302 Total financial assets 961, ,298 Interim Report 2018 China Investments Holdings Limited 31

33 3. SUMMARY OF EFFECTS OF THE CHANGES IN ACCOUNTING POLICIES (continued) HKFRS 9 Financial Instruments (continued) (ii) Impairment HKFRS 9 requires an impairment on trade receivables, contract assets, other receivables and amounts due from joint ventures and associates that are not accounted for at fair value through profit or loss under HKFRS 9, to be recorded based on an expected credit loss model either on a twelve-month basis or a lifetime basis. The Group applied the simplified approach and recorded lifetime expected losses on its trade receivables and contract assets. The Group applied general approach and recorded twelve-month expected losses on its other receivables and amounts due from joint ventures and associates. The adoption of HKFRS 9 has had no significant impact on the impairment of the financial assets of the Group (ii)

34 3. SUMMARY OF EFFECTS OF THE CHANGES IN ACCOUNTING POLICIES (continued) HKFRS 15 Revenue from Contracts with Customers HKFRS 15 supersedes HKAS 11 Construction Contracts, HKAS 18 Revenue and related Interpretations and it applies to all revenue arising from contracts with customers, unless those contracts are in the scope of other standards. The new standard establishes a five-step model to account for revenue arising from contracts with customers. Under HKFRS 15, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer The standard requires entities to exercise judgement, taking into consideration all of the relevant facts and circumstances when applying each step of the model to contracts with their customers. The standard also specifies the accounting for the incremental costs of obtaining a contract and the costs directly related to fulfilling a contract. The Group adopted HKFRS 15 using the modified retrospective method, which allows the Group to recognise the cumulative effects of initially applying HKFRS 15 as an adjustment to the opening balance of retained earnings at 1 January The Group elected to apply the practical expedient for completed contracts and did not restate the contracts completed before 1 January 2018, thus the comparative figures have not been restated Interim Report 2018 China Investments Holdings Limited 33

35 3. SUMMARY OF EFFECTS OF THE CHANGES IN ACCOUNTING POLICIES (continued) HKFRS 15 Revenue from Contracts with Customers (continued) Revenue recognition Revenue is recognised when or as the control of the asset is transferred to the customer. Depending on the terms of the contract and the laws that apply to the contract, control of the asset may be transferred over time or at a point in time. Control of the asset is transferred over time if the Group s performance: provides all of the benefits received and consumed simultaneously by the customer; creates and enhances an asset that the customer controls as the Group performs; or does not create an asset with an alternative use to the Group and the Group has an enforceable right to payment for performance completed to date. If control of the asset transfers over time, revenue is recognised over the period of the contract by reference to the progress towards complete satisfaction of that performance obligation. Otherwise, revenue is recognised at a point in time when the customer obtains control of the asset. 34

36 3. SUMMARY OF EFFECTS OF THE CHANGES IN ACCOUNTING POLICIES (continued) HKFRS 15 Revenue from Contracts with Customers (continued) Revenue recognition (continued) The progress towards complete satisfaction of the performance obligation is measured based on the Group s efforts or inputs to the satisfaction of the performance obligation, by reference to the contract costs incurred up to the end of reporting period as a percentage of total estimated costs for each contract FINANCIAL RISK MANAGEMENT All aspects of the Group s financial risk management objectives and policies are consistent with those disclosed in the annual financial statements for the year ended 31 December In 2018, there were no significant changes in the business or economic circumstances that affect the fair value of the group s financial assets and financial liabilities. There were no reclassifications of financial assets. 5. REVENUE Revenue represents the gross amounts received and receivable for revenue arising on hotel operation and wellness elderly care business, sale of properties, goods sold by the Group to outside customers, less return and allowances and gross rental income, interest income generated from financial leasing and consultancy fee income for services rendered to outsiders during the period Interim Report 2018 China Investments Holdings Limited 35

37 5. REVENUE (continued) The amount of each significant category of revenue recognised during the period is as follows: 5. Six months ended 30 June HK$ 000 HK$ 000 (unaudited) (unaudited) Food and beverage Service income from hotel operation 2, Rental income from hotel property 2,363 1,030 3,234 3,044 1,483 Rental income from investment properties and properties held for sale Consultancy service income from financial leasing Interest income from financial leasing 307 Sales of properties 10,802 1,827 Service income from wellness elderly care business 1,481 22,576 6,985 36

38 6. SEGMENT INFORMATION For management purposes, the Group is currently organized into four operating divisions financial leasing, hotel operation, property investments and wellness elderly care business. These divisions are the basis on which the Group reports its primary segment information. 6. Principal activities are as follows: Financial leasing Hotel operation Property investments Wellness elderly care business provision of finance lease consulting services and financing services in the PRC hotel ownership and management holding investment properties and properties held for sale comprehensive elderly care services For the property investment operations, the management reviews the financial information of each property investment, hence each property investment constitutes a separate operating segment. However, the properties investment possess similar economic characteristics with similar development and selling activities as well as similar customer bases. Therefore, all properties investment are aggregated into one reportable segment for segment reporting purposes. Interim Report 2018 China Investments Holdings Limited 37

39 6. SEGMENT INFORMATION (continued) Segment information about these operations is presented below: 6. Segment Revenue Six months ended 30 June Segment Result Six months ended 30 June HK$ 000 HK$ 000 HK$ 000 HK$ 000 (unaudited) (unaudited) (unaudited) (unaudited) Financial leasing 1,790 (508) Hotel operation 5,269 2,114 (2,903) (10,428) Property investments 14,036 4,871 4, Wellness elderly care business 1,481 (884) Total 22,576 6, (10,338) Bank interest income 4,516 1,905 Interest income from financial assets at fair value through profit or loss 586 Professional fees (2,606) (359) Net central administration costs (10,251) (9,554) Net exchange gain 3,442 6,652 Share of profit of associates 40,302 36,983 Finance costs (39,853) (11,640) (Loss)/profit before taxation (3,573) 13,649 Income tax expenses (4,251) (2,029) (Loss)/profit for the period (7,824) 11,620 38

40 6. SEGMENT INFORMATION (continued) Segment revenue reported above represents revenue generated from external customers. There were no inter-segment sales in the current period (six months ended 30 June 2017: Nil). 6. Segment result represents the profit/(loss) generated by each segment without allocation of bank interest income, interest income from financial assets at fair value through profit or loss, professional fees, net central administration costs, net exchange gain, share of profit of associates and finance costs. This is the measure reported to the Group s management for the purposes of resource allocation and performance assessment. Interim Report 2018 China Investments Holdings Limited 39

41 6. SEGMENT INFORMATION (continued) Segment assets and liabilities June 31 December HK$ 000 HK$ 000 (unaudited) (audited) Segment assets Financial leasing 144,553 Hotel operation 157, ,802 Property investments 283, ,463 Wellness elderly care business Total segment assets 586, ,815 Pledged bank deposit 68,878 63,963 Deposit for capital contribution to a potential associate 77,212 Cash and cash equivalents 874, ,861 Interests in associates 679, ,571 Financial assets at fair value through profit or loss 56,445 9,172 Other unallocated assets 122, ,030 Consolidated assets 2,466,465 2,277,412 Segment liabilities Financial leasing 108,663 Hotel operation 9,127 14,837 Property investments 189, ,475 Wellness elderly care business 571 2,380 Total segment liabilities 308, ,692 Convertible notes 223, ,407 Borrowings 684, ,293 Other unallocated liabilities 34,868 57,161 Consolidated liabilities 1,251,217 1,099,553 40

42 6. SEGMENT INFORMATION (continued) Other segment information 6. Financial leasing Hotel operation Property investments Wellness elderly care business Total HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Depreciation 4 3,031 2, ,138 Additions to property, plant and equipment ,924 4,832 Gain on disposal of property, plant and equipment (30) (30) For the six months ended 30 June 2017 Financial leasing Hotel operation Property investments Wellness elderly care business Total HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Depreciation 2, ,642 Additions to property, plant and equipment 12, ,258 Loss on disposal of property, plant and equipment 1,406 1,406 Interim Report 2018 China Investments Holdings Limited 41

43 6. SEGMENT INFORMATION (continued) Geographic segments The Group s financial leasing, hotel operation and wellness elderly care business are located in the People s Republic of China (the PRC ), other than Hong Kong. 6. Property investments are located in both the PRC and Hong Kong. The Group s revenue from external customers by location of operation and information about its noncurrent assets by location of assets are detailed below: Revenue from external customers Six months ended 30 June Non-current assets* * 30 June December HK$ 000 HK$ 000 HK$ 000 HK$ 000 (unaudited) (unaudited) (unaudited) (audited) The PRC 22,268 6, , ,902 Hong Kong ,512 19,512 22,576 6, , ,414 * Non-current assets exclude interest in associates, financial assets at fair value through profit or loss, finance lease receivables and other unallocated noncurrent assets. * 42

44 7. OTHER OPERATING INCOME Other operating income included the following items: 7. Six months ended 30 June HK$ 000 HK$ 000 (unaudited) (unaudited) Bank interest income 4,516 1,905 Interest income from financial assets at fair value through profit or loss 586 Net exchange gain 3,442 6, FINANCE COSTS 8. Six months ended 30 June HK$ 000 HK$ 000 (unaudited) (unaudited) Loan arrangement fee 14,345 Interest on: Convertible notes 9,524 8,506 Bank loans 12,787 3,015 Loan from immediate holding company 1,326 Loan from an associate Other loans 1,111 39,853 11,640 Interim Report 2018 China Investments Holdings Limited 43

45 9. INCOME TAX EXPENSES 9. Six months ended 30 June HK$ 000 HK$ 000 (unaudited) (unaudited) Tax charges comprise: Current tax: Provision for PRC Enterprise Income Tax Deferred tax: Temporary differences (reversed) arising in current period 11,680 (7,429) 2,029 4,251 2,029 No provision for Hong Kong Profits Tax has been made as the Group has no assessable profits in Hong Kong for the six months ended 30 June 2018 (six months ended 30 June 2017: Nil). PRC subsidiaries are subject to PRC Enterprise Income Tax at 25% for both periods. 25% 44

46 9. INCOME TAX EXPENSES (continued) The tax charge for the period can be reconciled to the (loss)/profit before taxation per the condensed consolidated statement of profit or loss and other comprehensive income as follows: 9. Six months ended 30 June HK$ 000 HK$ 000 (unaudited) (unaudited) (Loss)/profit before taxation Tax at the rates applicable to (loss)/profit in the countries concerned Tax effect of share of profit of associates Tax effect of non-deductible expenses Tax effect of non-taxable revenue Tax effect of tax losses not recognised (3,573) 13,649 (1,436) 850 (4,475) (4,074) 10,597 4,950 (4,786) (3,852) 4,351 4,155 Tax effect for the period 4,251 2,029 Interim Report 2018 China Investments Holdings Limited 45

47 10. (LOSS)/PROFIT FOR THE PERIOD 10. Six months ended 30 June HK$ 000 HK$ 000 (unaudited) (unaudited) (Loss)/profit for the period has been arrived at after crediting/(charging): Depreciation of property, plant and equipment (5,722) (5,260) Auditor s remuneration (600) (500) Gain/(loss) on disposal of property, plant and equipment 139 (1,305) Cost of properties held for sale disposed of during the period (5,262) (666) Net exchange gain 3,442 6,652 Finance cost (39,853) (11,640) Total staff costs Directors emoluments (1,906) (1,862) Other staff costs (6,173) (5,392) Retirement benefit schemes contributions for other staffs (442) (98) Termination benefits (183) (2,789) (8,704) (10,141) Gross rental income from investment properties 3,234 3,044 Less: Direct operating expenses from investment properties that generated rental income during the period (12) Direct operating expenses from investment properties that did not generated rental income during the period (212) (190) 3,022 2,842 46

48 11. DIVIDEND The Board does not declare an interim dividend for the six months ended 30 June 2018 (six months ended 30 June 2017: Nil) (LOSS)/EARNINGS PER SHARE The calculation of the basic and diluted (loss)/ earnings per share is based on the loss attributable to the owners of the Company of approximately HK$7,469,000 (six months ended 30 June 2017: profit of HK$12,272,000) and on the number of 1,712,329,142 ordinary shares (six month ended 30 June 2017: 1,712,329,142 ordinary shares) in issue during the period. Number of shares 12. 7,469,000 12,272,000 1,712,329,142 1,712,329,142 Six months ended 30 June (unaudited) (unaudited) Number of ordinary shares for the purpose of basic and diluted (loss)/earnings per share 1,712,329 1,712,329 The denominators used are the same as those detailed above for both the basic and diluted (loss)/ earnings per share. and 2017, there was no diluting event as the exercise of the convertible bonds would have an anti-dilutive effect on the basic (loss)/earnings per share. Therefore the basic and diluted (loss)/earnings per share are the same. Interim Report 2018 China Investments Holdings Limited 47

49 13. MOVEMENTS IN INVESTMENT PROPERTIES AND PROPERTY, PLANT AND EQUIPMENT During the period, the group entered into contracts with constructors for refurbishment of the office in the PRC. The addition to construction work in progress amounted HK$4,146, ,146,000 The Group disposed of a batch of furniture, plant and machinery. Furniture and fixtures, and plant and machinery with a carrying amount of HK$159,000 were disposed for sales proceeds of HK$298,000. The Group s hotel property and investment properties as at 30 June 2018 were valued by the Directors and the valuation was arrived by reference to market evidence of transaction prices for similar properties. The Directors considered that the carrying amounts of the Group s hotel property and investment properties approximate to their respective fair value as at 30 June , ,000 48

50 14. INTERESTS IN ASSOCIATES Details of the Group s interests in associates are as follows: 14. Guangdong Financial Leasing Co. Ltd Nanhai Changhai Power Company Limited Total Total 30 June 30 June 30 June 31 December HK$ 000 HK$ 000 HK$ 000 HK$ 000 (unaudited) (unaudited) (unaudited) (audited) Initial cost of investments in associates Unlisted 191, , , ,019 Less: Distribution from pre-acquisition profit (143,562) (143,562) (143,562) 191, , , ,457 Share of post-acquisition profits 65, , , ,917 Distribution from post-acquisition profit (96,038) (96,038) Share of exchange differences (9,171) (25,519) (34,690) (24,803) 248, , , ,571 Interim Report 2018 China Investments Holdings Limited 49

51 14. INTERESTS IN ASSOCIATES (continued) Details of each of the Group s material associates at the end of the reporting period are as follows: 14. Entity name Form of the entity Place of incorporation Principal place of operation Class of shares held Proportion of ownership interest held by the Group Proportion of voting rights held by the Group Principal activities Guangdong Financial Leasing Co., Ltd Incorporated the PRC the PRC Ordinary 25% 25% Finance leasing business and related advisory and guarantee services Nanhai Changhai Power Company Limited Incorporated the PRC the PRC Ordinary % % Generation and sale of electricity and heated steam Summarised financial information in respect of each of the Group s material associates is set out below. The summarised financial information below represents amounts shown in the associate s financial statements prepared in accordance with HKFRSs. All of these associates are accounted for using the equity method in the condensed consolidated financial statements. 50

52 14. INTERESTS IN ASSOCIATES (continued) Guangdong Financial Leasing Co., Ltd June 31 December HK$ 000 HK$ 000 (unaudited) (audited) Current assets 2,731,556 2,078,057 Non-current assets 2,988,254 2,739,712 Current liabilities (1,951,267) (1,201,146) Non-current liabilities (2,591,545) (2,478,007) Net assets 1,176,998 1,138,616 Six months ended 30 June HK$ 000 HK$ 000 (unaudited) (unaudited) Revenue 193, ,126 Profit for the period 43,773 35,640 Exchange differences for the period (13,814) 25,937 Total comprehensive income for the period 29,959 61,577 Interim Report 2018 China Investments Holdings Limited 51

53 14. INTERESTS IN ASSOCIATES (continued) Guangdong Financial Leasing Co., Ltd (continued) Reconciliation of the above summarised financial information to the carrying amount of the interest in the associate recognised in the condensed consolidated financial statements: June 31 December HK$ 000 HK$ 000 (unaudited) (audited) Net assets of the associate Non-controlling interest of the associate s subsidiary Proportion of the Group s ownership interest in Guangdong Financial Leasing Co., Ltd Carrying amount of the Group s interest in Guangdong Financial Leasing Co., Ltd 1,176,998 1,138,616 (181,827) (173,404) 995, ,212 25% 25% 248, ,303 52

54 14. INTERESTS IN ASSOCIATES (continued) Nanhai Changhai Power Company Limited June 31 December HK$ 000 HK$ 000 (unaudited) (audited) Current assets 999, ,943 Non-current assets 816, ,475 Current liabilities (494,832) (313,290) Net assets 1,321,101 1,545,128 Six months ended 30 June HK$ 000 HK$ 000 (unaudited) (unaudited) Revenue 697, ,312 Profit for the period 89,958 86,018 Exchange difference for the period (19,713) 40,786 Total comprehensive income for the period 70, ,804 Interim Report 2018 China Investments Holdings Limited 53

55 14. INTERESTS IN ASSOCIATES (continued) Nanhai Changhai Power Company Limited (continued) Reconciliation of the above summarised financial information to the carrying amount of the interest in the associate recognised in the condensed consolidated financial statements: June 31 December HK$ 000 HK$ 000 (unaudited) (audited) Net assets of the associate Proportion of the Group s ownership interest in Nanhai Changhai Power Company Limited Carrying amount of the Group s interest in Nanhai Changhai Power Company Limited 1,321,101 1,545, % % 431, ,268 54

56 15. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS June 31 December HK$ 000 HK$ 000 (unaudited) (audited) Equity investment in the PRC non-current (Note a) Other unlisted investments current (Note b) a 9,052 9,172 b 47,393 56,445 9,172 Notes: (a) As at 30 June 2018, the fair value of the equity investments representing investments in equity securities issued by private entity in the PRC was approximately HK$9,052,000 as valued by the Directors. As at 31 December 2017, the investment was classified as available for sale financial asset at cost less impairment of approximately HK$9,172,000. The Directors considered that the carrying amounts approximate their fair value. The Group s financial assets at fair value through profit or loss were classified under level 3 of the fair value hierarchy as at 30 June 2018 with significant unobservable inputs. The key input was based on the net asset values of the private entity. (a) 9,052,000 9,172,000 (b) The unlisted investments represent wealth management products launched by a financial institution in the PRC acquired during the period ended 30 June 2018 and were redeemed before the date of the financial statements were authorised to issue. The fair value was approximately HK$47,393,000 as valued by the Directors. The Directors considered that the carrying amounts approximate their fair value. The Group s financial assets at fair value through profit or loss were classified under level 3 of the fair value hierarchy as at 30 June 2018 with significant unobservable inputs. (b) 47,393,000 Interim Report 2018 China Investments Holdings Limited 55

57 16. FINANCE LEASE RECEIVABLES June 31 December HK$ 000 HK$ 000 (unaudited) (audited) Analysed as: : Current 30,048 Non-current 113, ,543 Minimum lease payments HK$ 000 (unaudited) Present value of lease payments HK$ 000 (unaudited) Finance lease receivables comprise: Within one year 37,142 30,048 More than one year but not more than two years 69,932 64,206 More than two years but not more than five years 53,008 49, , ,543 Less: unearned finance lease interest income Present value of minimum lease payment receivables (16,539) N/A 143, ,543 56

58 16. FINANCE LEASE RECEIVABLES (continued) All leases are denominated in RMB. The terms of the finance leases range from 2 to 5 years. The effective interest rate of the finance leases as at 30 June 2018 range from 5.3% to 7.3% per annum % 7.3% There was no unguaranteed residual value in connection with finance lease arrangements or contingent lease arrangements that needed to be recorded as at the end of the reporting period. Finance lease receivables are secured by the leased assets, mainly plant and machinery, as at 30 June The Group is not permitted to sell, or repledge the collateral of the finance lease receivables without consent from the lessees in the absence of default by the lessees. Estimates of fair value of collateral are made during the credit approval process. The valuations are made at the inception of a finance lease and generally not updated except when the receivable is individually impaired. When a finance lease receivable is identified as impaired, the corresponding fair value of the collateral of that receivable is updated by reference to market value such as recent transaction price of similar assets. Security deposits received from customers as at 30 June 2018 represent finance lease deposits received from customers which are repayable by end of the lease period of the respective finance leases. Deposits of HK$4,727,000 have been received by the Group to secure certain finance lease receivables and are classified into current liabilities based on the final lease instalment due date stipulated in the finance lease agreements. The deposits are non-interest bearing. 4,727,000 The finance lease receivables at the end of the reporting period are neither past due nor impaired. Interim Report 2018 China Investments Holdings Limited 57

59 17. TRADE AND OTHER RECEIVABLES The Group s trading terms with its customers are mainly on credit, except for new customers, where payment in advance is normally required. The Group allows an average credit period of 90 days to its customers The following is an ageing analysis of the Group s trade receivables after deducting the allowance for doubtful debts, presented based on invoice dates at the end of the reporting period: 30 June 31 December HK$ 000 HK$ 000 (unaudited) (audited) 0 60 days days days Over 120 days Trade receivables 1,217 1,092 Other receivables 10,886 6,834 12,103 7,926 The Group does not hold any collateral or other credit enhancements over these balances. 58

60 18. TRADE AND OTHER PAYABLES The credit periods granted by the Group s suppliers range from 30 days to 90 days The following is an ageing analysis of the Group s trade payables based on the invoice dates at the end of the reporting period: 30 June 31 December HK$ 000 HK$ 000 (unaudited) (audited) 0 60 days days days Over 120 days Trade payables 606 1,006 Other payables 121, , , ,852 Interim Report 2018 China Investments Holdings Limited 59

61 18. TRADE AND OTHER PAYABLES (continued) Other payables included the following items: June 31 December HK$ 000 HK$ 000 (unaudited) (audited) Other tax payable 10,921 11,412 Payable on convertible notes and interest payable (Note 1) 1 78,819 78,819 Others (Note 2) 2 31,767 39, , ,846 Notes: 1. On 9 May 2002, the Group issued HK$230,000,000 convertible notes (the 2002 CB ) which were due on 9 May 2007 (the Maturity Date ), bearing interest at 1% per annum and in units of HK$1,000,000 each. As at 30 June 2018 and 31 December 2017, a balance of HK$75,000, CB was due but not converted. Such principal monies, together with all interest accrued thereon up to Maturity Date, amounting to HK$3,819,000 (31 December 2017: HK$3,819,000), were reclassified as other payables and are repayable on demand. 2. Others include accrued staff salaries and welfare, interest payable, deposits received from hotel customers, finance lease and other temporary receipts. The Directors considered that the carrying amount of trade and other payables approximates their fair value. The Group has financial risk management policies in place to ensure that all payables are paid within the credit timeframe ,000, ,000,000 75,000, ,819,000 3,819,

62 19. BORROWINGS Notes to the Condensed Consolidated Financial Statements June 31 December HK$ 000 HK$ 000 (unaudited) (audited) Bank loans 794, ,647 Loan from an associate 39,616 Loan from immediate holding company 90,000 90,000 Other loans 82, , ,263 Secured 794, ,647 Unsecured 172, , , ,263 Interim Report 2018 China Investments Holdings Limited 61

63 19. BORROWINGS (continued) June 31 December HK$ 000 HK$ 000 (unaudited) (audited) Carrying amounts of the above borrowings are repayable: Within one year 606, ,298 More than one year, but not exceeding two years 109,597 24,010 More than two years, but not more than five years 224, ,014 More than five years 26,587 35,941 Less: Amounts shown under current liabilities 966, , , , , ,965 62

64 19. BORROWINGS (continued) During the period, the Group settled bank loans amounting to HK$47,417, ,417,000 On 12 April 2017, the Group obtained a shortterm loan amounting to RMB33,000,000 from the Group s associate, Nanhai Changhai Power Company Limited, which is unsecured with a fixed interest rate at 2.6% per annum and repayable on demand. The loan was fully settled during the current period. On 5 December 2017, the Group obtained a threeyear loan amounting to HK$90,000,000 from the Group s immediate holding company, Prize Rich Inc. which is unsecured with a fixed interest rate at 3% per annum. On 6 December 2017, the Group obtained a bank loan facility of approximately USD110,090,000, for which a controlling shareholder has provided the necessary corporate guarantee. As at 30 June 2018, the Group had drawn down an amount of USD70,00,000 (31 December 2017: USD70,000,000). In March 2018, the Group obtained a two-year unsecured loan amounting to HK$82,938,000 from an independent third party, at a floating interest rate plus a premium calculated at 10% above the prevailing RMB benchmark rate published by The People s Bank of China. 33,000, % Prize Rich Inc. 90,000,000 3% 110,090,000 70,000,000 70,000,000 82,938,000 10% Interim Report 2018 China Investments Holdings Limited 63

65 19. BORROWINGS (continued) According to HK Int 5, which requires the classification of whole instalment loans containing the repayment on demand clause as current liabilities, the aggregate carrying amounts of HK$594,325,000 (31 December 2017: HK$572,677,000) have been reclassified from noncurrent liabilities to current liabilities as at 30 June ,325, ,677,000 Bank loans of HK$794,016,000 (31 December 2017: HK$680,647,000) are secured by the Group s investment properties and property, plant and equipment of approximately HK$318,863,000 (31 December 2017: HK$323,697,000) which are situated at Phase 1 of Guangdong Hong Kong Finance & Technology Park, 6 Jinke Road, Guicheng Street, Nanhai District, Foshan City, Guangdong Province, the PRC and Unit 01, 14 and 15 on 5th Floor, Wing On Plaza, No. 62 Mody Road, Kowloon, Hong Kong and a pledged deposit amounting to HK$68,878,000 (31 December 2017: HK$63,963,000). The weighted average effective interest rates on the bank loans range from 1.95% to 4.9% (31 December 2017: from 2.03% to 6.15%) per annum and are repayable within ten years. The fair values of current borrowings equal their carrying amounts, as the impact of discounting is not significant. The fair values are based on cash flows discounted using a rate based on borrowing rates from 1.95% to 4.9% (31 December 2017: 2.03% to 6.15%) and are within Level 2 of the fair value hierarchy. 794,016, ,647, ,863, ,697,000 68,878,000 63,963,

66 19. BORROWINGS (continued) The Group s borrowings are denominated in the following currencies: June 31 December HK$ 000 HK$ 000 (unaudited) (audited) Hong Kong Dollars 135, ,851 Renminbi 282, ,586 United States Dollars 549, , , , CONVERTIBLE NOTES On 9 May 2002, the Group issued HK$230,000,000 convertible notes (the 2002 CB ) which were due on 9 May 2007 (the Maturity Date ), bearing interest at 1% per annum and in units of HK$1,000,000 each. As at 30 June 2018 and 31 December 2017, a balance of HK$75,000,000 notes were due but not converted. Such principal monies, together with all interest accrued thereon up to maturity, amounting to HK$3,819,000 (31 December 2017: HK$3,819,000), were reclassified as other payables and become repayable on demand ,000, ,000,000 75,000,000 3,819,000 3,819,000 Interim Report 2018 China Investments Holdings Limited 65

67 20. CONVERTIBLE NOTES (continued) On 13 October 2014, the Company issued convertible notes in the principal amount of HK$166,232,000 (the 2014 CB ) (of which its fair value at the issuance date was approximately HK$129,270,000) as part of the consideration for the acquisition of Southern Limited. The 2014 CB bear coupon rate at 2% per annum and are convertible into shares of the Company at a conversion price of HK$0.76 per share at any time following the third anniversary of the issue date up to the maturity date on 13 October At any time prior to the maturity date of the 2014 CB, the Company is entitled to redeem in whole or in part of the 2014 CB. Unless previously redeemed, converted or purchased and cancelled, the 2014 CB will be redeemed on the maturity date on 13 October The 2014 CB carry interest at a rate of 2% per annum, which is payable annually in arrears or upon the conversion or redemption of the notes ,232, ,270, % The convertible notes contain two components, liability, and equity components. The equity component is presented in equity under the heading convertible note equity reserve. The values of the liability component and the equity component were determined at the issuance of the notes. Liability component HK$ 000 At 1 January 2018 (audited) 135,586 Interest charge calculated at an effective interest rate of 14.16% ,524 At 30 June 2018 (unaudited) 145,110 66

68 21. SHARE CAPITAL 21. Number of shares Share capital 30 June December June December 2017 HK$ 000 HK$ 000 HK$ 000 HK$ 000 (unaudited) (audited) (unaudited) (audited) Authorised: Ordinary shares of HK$0.1 each 0.1 3,000,000,000 3,000,000, , ,000 Issued and fully paid: At the beginning and the end of period 1,712,329,142 1,712,329, , ,233 Interim Report 2018 China Investments Holdings Limited 67

69 22. NON-CONTROLLING INTERESTS 22. The table below shows details of the non-wholly owned subsidiary of the Company that has material non-controlling interests: Name of subsidiary Place of incorporation and principal place of business Proportion of ownership interests held by non-controlling interests Proportion of voting rights held by non-controlling interests Loss and other comprehensive expenses attributable to non-controlling interests Accumulated non-controlling interests HK$ 000 HK$ 000 HK$ 000 HK$ 000 (unaudited) (unaudited) (unaudited) (audited) Guangdong Yibaijian Comprehensive Health Technology Ltd* PRC 30% 30% 30% 30% (252) (185) (799) (547) Guangdong Sino Rock Tyco Construction Co., Ltd* PRC 20% 20% 20% 20% (16) 214, ,675 China Select Small Hotel Union Limited Hong Kong 49% 49% 49% 49% (204) 3,396 3,600 * For identification purposes only * Summarised financial information in respect of the Group s subsidiaries that have material non-controlling interests is set out below. The summarised financial information below represents amounts before intragroup eliminations. 68

70 22. NON-CONTROLLING INTERESTS (continued) Guangdong Yibaijian Comprehensive Health Technology Ltd ( Yibaijian ) June 31 December HK$ 000 HK$ 000 (unaudited) (audited) Current assets 3,411 5,649 Non-current assets Current liabilities (571) (1,904) Equity attributable to owners of the Company 3,665 4,325 Non-controlling interests (799) (547) Interim Report 2018 China Investments Holdings Limited 69

71 22. NON-CONTROLLING INTERESTS (continued) Guangdong Yibaijian Comprehensive Health Technology Ltd ( Yibaijian ) (continued) 22. Six months ended 30 June HK$ 000 HK$ 000 (unaudited) (unaudited) Loss for the period (896) (606) Loss for the period attributable to: Owners of the Company (627) (424) Non-controlling interests of Yibaijian (269) (182) (896) (606) Other comprehensive income/ (expense), net of income tax: Exchange differences arising from translation of foreign operations: Owners of the Company (33) (8) Non-controlling interests of Yibaijian 17 (3) (16) (11) Loss and total comprehensive expense attributable to: Owners of the Company (660) (432) Non-controlling interests of Yibaijian (252) (185) Net cash outflow from operating activities Net cash inflow/(outflow) from investing activities Net cash inflow from financing activities Net cash (outflow)/inflow (912) (617) (2,883) (3,493) 7 (21) 5,524 (2,876) 2,010 70

72 22. NON-CONTROLLING INTERESTS (continued) Guangdong Sino Rock Tyco Construction Co., Ltd ( Sino Rock ) June 31 December HK$ 000 HK$ 000 (unaudited) (audited) Current assets 755, ,500 Non-current assets 353 Current liabilities (123) (78) Equity attributable to owners of the Company 541, ,747 Non-controlling interests 214, ,675 Interim Report 2018 China Investments Holdings Limited 71

73 22. NON-CONTROLLING INTERESTS (continued) Guangdong Sino Rock Tyco Construction Co., Ltd ( Sino Rock ) (continued) 22. Six months ended 30 June HK$ 000 HK$ 000 (unaudited) (unaudited) Loss for the period (165) Loss for the period attributable to: Owners of the Company (132) Non-controlling interests of Sino Rock (33) (165) Other comprehensive income/ (expense), net of income tax: Exchange differences arising from translation of foreign operations: Owners of the Company (6,946) Non-controlling interests of Sino Rock 17 (6,929) Loss and total comprehensive expense attributable to: Owners of the Company (7,078) Non-controlling interests of Sino Rock (16) Net cash outflow from operating activities Net cash inflow from investing activities Net cash inflow from financing activities (7,094) (15,788) 108,841 63,981 Net cash inflow 157,034 72

74 22. NON-CONTROLLING INTERESTS (continued) China Select Small Hotel Union Limited ( China Select Small ) June 31 December HK$ 000 HK$ 000 (unaudited) (audited) Current assets 9,424 9,720 Current liabilities (254) Equity attributable to owners of the Company 5,774 6,120 Non-controlling interests 3,396 3,600 Interim Report 2018 China Investments Holdings Limited 73

75 22. NON-CONTROLLING INTERESTS (continued) China Select Small Hotel Union Limited ( China Select Small ) (continued) 22. Six months ended 30 June HK$ 000 HK$ 000 (unaudited) (unaudited) Loss for the period (108) Loss for the period attributable to: Owners of the Company (68) Non-controlling interests of China Select Small (40) (108) Other comprehensive expense, net of income tax: Exchange differences arising from translation of foreign operations: Owners of the Company (279) Non-controlling interests of China Select Small (164) (443) Loss and total comprehensive expense attributable to: Owners of the Company (347) Non-controlling interests of China Select Small Net cash outflow from operating activities Net cash inflow from investing activities (204) (551) (263) 1 Net cash outflow (262) 74

76 23. PLEDGE OF ASSETS Assets with the following carrying amounts have been pledged to secure bank loans and general banking facilities to the Group or borrowings of the Group (see note 19): June 31 December HK$ 000 HK$ 000 (unaudited) (audited) Investment properties 210, ,025 Property, plant and equipment 108, ,672 Pledged bank deposit 68,878 63, , , OPERATING LEASE ARRANGEMENTS The Group as lessor The Group s property rental income earned during the reporting period was approximately HK$3,234,000 (six months ended 30 June 2017: HK$3,044,000). All of the properties held have committed tenants of 1 to 11 years (31 December 2017: 1 to 11 years) ,234,000 3,044,000 Interim Report 2018 China Investments Holdings Limited 75

77 24. OPERATING LEASE ARRANGEMENTS (continued) The Group as lessor (continued) At the end of the reporting period, the Group had contracted with tenants for the following future minimum lease payments: June 31 December HK$ 000 HK$ 000 (unaudited) (audited) Within one year 7,701 9,197 In the second to fifth year inclusive 15,939 19,952 Over fifth year 12,500 11,955 36,140 41, COMMITMENTS June 31 December HK$ 000 HK$ 000 (unaudited) (audited) Commitments for the acquisition of property, plant and equipment Commitments for the investment cost of establishment of subsidiaries Commitments for the capital contribution to a potential associate (note) 2,597 1, , ,462 77,212 76

78 25. COMMITMENTS (continued) Note: At the special general meeting held on 25 May 2018, shareholders passed the resolution in relation to the circular dated 9 May 2018 issued in connection with the contribution of RMB130,333,102 to the capital of (Guangdong Tiannuo Civil Explosives Co., Ltd*) by the Group. The transaction has not yet completed as at 30 June Details of the capital contribution are set out in the Group s circular dated 9 May ,333,102 * For identification purpose only. 26. RELATED PARTY TRANSACTIONS In addition to those disclosed in note 19, the Group had the following transactions with related parties during the period: A) On 1 May 2016, the Group entered into a rental agreement for a period of 72 months with the Group s associate, Guangdong Financial Leasing Co., Ltd. The leased property is situated at Flat 301 and 302 of Phase 1 Guangdong Hong Kong Finance & Technology Park, 6 Jinke Road, Guicheng Street, Nanhai District, Foshan City, Guangdong Province, the PRC. Starting from 1 May 2018, the monthly rent was revised from RMB19,000 (equivalent to approximately HK$21,900) to RMB31,000 (equivalent to approximately HK$36,000) in which the Group received rental income amounting to approximately HK$94,000 (six months ended 30 June 2017: approximately HK$129,000)*. * A) ,000 21,500 31,000 36,000 94, ,000* Interim Report 2018 China Investments Holdings Limited 77

79 26. RELATED PARTY TRANSACTIONS (continued) B) On 12 April 2017, the Group obtained a one year short-term loan amounting to RMB33,000,000 from the Group s associate, Nanhai Changhai Power Company Limited, with a fixed interest rate at 2.6% per annum. The loan was fully settled during the current period. 26. B) 33,000, % C) On 5 December 2017, the Group obtained a three-year loan amounting to HK$90,000,000 from the Group s immediate holding company, Prize Rich Inc., which is unsecured with a fixed interest rate at 3% per annum. D) On 16 April 2018, the Group s nonwholly owned subsidiary, (Guangdong Yibaijian Comprehensive Health Technology Ltd**), entered into a service agreement in a total amount of RMB1,060,000 (equivalent to approximately HK$1,305,000) with its noncontrolling interest, Shenzhen e-ling Info- Tech Co., Ltd ( Shenzhen e-ling ), in which Yibaijian paid Shenzhen e-ling for the management of its Comprehensive Elderly Care Service Platform in Nanhai district. During the period, the Group has paid RMB530,000 (equivalent to approximately HK$653,000) to Shenzhen e-ling*. C) Prize Rich Inc. 90,000,000 3% D) 1,060,000 1,305, , ,000* 78

80 26. RELATED PARTY TRANSACTIONS (continued) E) Compensation of key management personnel The remuneration of Directors and other members of key management during the period was as follows: 26. E) Six months ended 30 June HK$ 000 HK$ 000 (unaudited) (unaudited) Short term employee benefits Post-employment employee benefits 1,961 1, ,153 2,139 * The transaction constituted an exempt connected transaction under the Listing Rules. ** For identification purposes only. * ** Interim Report 2018 China Investments Holdings Limited 79

81 27. EVENT AFTER REPORTING PERIOD Reference is made to the circular of the Group dated 9 May 2018 in relation to the proposed disposal of 25% equity interest in (Guangdong Financial Leasing Co., Ltd*) held by the Group. The Board of Directors of the Company has resolved to resubmit for shareholders approval the disposal of 20% out of the 25% held by the Group, which will be carried out through the public tender process of the Guangdong United Assets and Equity Exchange ( GDUAEE ) in accordance with the laws in the PRC, subject to the requisite approval being obtained from the shareholders of the Company under the Listing Rules. The Group has been notified by GDUAEE that the tender process formally commenced on 16 July % 25% 20% On 8 August 2018, (Canton Risen Financial Leasing Co., Ltd.*), a wholly-owned subsidiary of the Group entered into a finance lease with a lessee to acquire the ownership of the assets from the lessee for RMB30,000,000 (equivalent to approximately HK$35,545,000) which would be leased back to the lessee for their use and possession for a term of 5 years. On 9 August 2018, the Group entered into a wealth management agreement with Industrial and Commercial Bank of China, pursuant to which the Group has purchased wealth management products of RMB140,000,000 (equivalent to approximately HK$160,860,000). 28. FAIR VALUE MEASUREMENT Trade, other receivables and finance lease receivables are carried at amortised cost and trade and other payables are carried at amortised cost which are not materially different from their fair values as at 30 June 2018 and 31 December ,000,000 35,545, ,000, ,860, * For identification purposes only. 80

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