CHINA AEROSPACE INTERNATIONAL HOLDINGS LIMITED 0202 | Report |
Interim |
2020 Interim Report China Aerospace International Holdings Limited | 1 |
CORPORATE INFORMATION
BOARD OF DIRECTORS
Executive Directors
Mr Liu Meixuan (Chairman)
Mr Jin Xuesheng (President)
Non-Executive Directors
Mr Luo Zhenbang (Independent) Ms Leung Sau Fan, Sylvia
(Independent)
Mr Wang Xiaojun (Independent) Mr Liu Xudong
Mr Hua Chongzhi
(appointed on 16 April 2020)
Mr Mao Yijin
Mr Xu Liangwei
(retired on 16 April 2020)
AUDIT COMMITTEE
Mr Luo Zhenbang (Chairman)
Ms Leung Sau Fan, Sylvia
Mr Mao Yijin
REMUNERATION COMMITTEE
Ms Leung Sau Fan, Sylvia (Chairman) Mr Wang Xiaojun
Mr Hua Chongzhi
(appointed on 16 April 2020)
Mr Xu Liangwei
(retired on 16 April 2020)
NOMINATION COMMITTEE
Mr Liu Meixuan (Chairman)
Mr Luo Zhenbang
Ms Leung Sau Fan, Sylvia
Mr Wang Xiaojun
Mr Liu Xudong
(appointed on 16 April 2020) Mr Xu Liangwei
(retired on 16 April 2020)
COMPANY SECRETARY
Mr Chan Ka Kin, Ken
AUDITOR
Deloitte Touche Tohmatsu
Certified Public Accountants
Registered Public Interest Entity
Auditor
SHARE REGISTRAR
Tricor Standard Limited
LEGAL COUNSEL
Reed Smith Richards Butler
PRINCIPAL BANK & FINANCIAL INSTITUTION
Bank of China (Hong Kong) Limited
Aerospace Science & Technology
Finance Company Limited*
(航天科技財務有限責任公司)
REGISTERED OFFICE
Room 1103-1107A, One Harbourfront 18 Tak Fung Street, Hung Hom Kowloon, Hong Kong
Tel: (852) 2193 8888
Fax: (852) 2193 8899
E-mail:public@casil-group.com
Website: http://www.casil-group.com
- This PRC entity does not have an English name, the English name sets out in this Interim Report is for identification purpose only.
2 China Aerospace International Holdings Limited 2020 Interim Report
BUSINESS REVIEW
OVERVIEW
For the six months ended 30 June 2020, the Company and its subsidiaries reported an unaudited revenue of HK$1,506,717,000, representing a decrease of 8.62% as compared with that of HK$1,648,820,000 for the same period of 2019. Profit for the period was HK$147,194,000, representing a decrease of 18.64% as compared with that of HK$180,912,000 for the same period of 2019. Profit attributable to the shareholders was HK$116,472,000, representing a decrease of 7.34% as compared with that of HK$125,697,000 for the same period of 2019. Basic earnings per share attributable to shareholders was HK3.78 cents (first half of 2019: HK4.07 cents).
In the first half of 2020, under the impact of novel coronavirus pandemic, the Company's revenue dropped as compared to the same period last year. Measures had been taken by the Company to actively explore market and strictly control costs, and the overall profit performance was not ideal under such a tough and difficult operating environment, as well as the factors such as the impairment of investment properties, provisions and so on. The Board of Directors decided not to distribute any interim dividend after taking into account the capital needs for the Company's future development.
In response to the novel coronavirus pandemic, the Company adopted various anti-epidemic measures in a timely manner to protect employees at work from infection. The hi-tech manufacturing business resumed work and production in an orderly manner shortly after the Chinese New Year, and operations for production resumed to normal position in the second quarter. In addition, besides factors such as the enhancement of environmental protection standard, the increase in production costs, and the drastic fluctuation of exchange rates, the pandemic also affected the marketing and logistics as well as the rent and price of investment properties, which made the hi-tech manufacturing business exposed to various difficulties and challenges, the fair values of its investment properties were also affected. For the six months ended 30 June 2020, the hi- tech manufacturing business recorded a revenue of HK$1,297,507,000, representing a decrease of 8.57% as compared with that of HK$1,419,146,000 for the same period of 2019, and, as a result of the change in fair value of industrial properties, the operating profit decreased to HK$63,815,000, representing a decrease of 27.69% as compared with that of HK$88,256,000 for the same period of 2019.
2020 Interim Report China Aerospace International Holdings Limited | 3 |
Business Review
In the first half of 2020, business sectors such as the plastic injection moulding, intelligent chargers and liquid crystal display were affected by factors such as the novel coronavirus pandemic, Sino-US trade disputes and the slowdown of global economy, which impacted the business operations in varying degrees. As such, both revenue and operating profit were decreased. The printed circuit board business, driven by the active development of domestic market, has gradually achieved results in recent years, which made the results relatively outstanding. Its operating profit grew more than 3.5 times as compared to the same period of last year, and offset the decline in performance of other business sectors.
In order to expedite the adjustment of production capacity layout, and cope with the influence of factors such as the business relocation of major customers and the Sino-US trade friction, the plastic product business, based on development needs, develops a new production base in Vietnam with an aim to lay a foundation for the exploration of overseas markets in future. In January 2020, Chee Yuen Electronic Technology (Vietnam) Co., Ltd. ("CY Vietnam") has been incorporated in Vietnam and becomes an indirect wholly-owned subsidiary of the Company, which mainly engages in the production and processing of various electronic products and plastic products. In April 2020, CY Vietnam entered into the rental agreement for land and main contractor contract in relation to the construction project, pursuant to which CY Vietnam rented a piece of land with a site area of approximately 52,000 sq.m. in Haiphong, Vietnam, on which the construction of plant is expected to complete before the end of 2020.
In the first half of 2020, Shenzhen Aerospace Hi-Tech Investment Management Company Limited* (深圳市航天高科投資管理有限公司) ("Shenzhen Aerospace") and its wholly-owned subsidiary, responsible for the management of Shenzhen Aerospace Science & Technology Plaza, contributed stable incomes and profit to the Company and recorded a total revenue of HK$204,443,000 (first half of 2019: HK$213,987,000) and a segment profit of HK$117,289,000 (first half of
2019: HK$233,012,000). The pandemic also affected the rents and property prices in Nanshan District which, in return, affect to the fair value of investment properties in Shenzhen Aerospace Science & Technology Plaza. The operating profit would have been HK$176,005,000 (first half of 2019: HK$184,591,000) if
the | effect | of | the fair value of the investment property | was excluded. As at |
30 | June | 2020, the valuation of Shenzhen Aerospace | Science & Technology | |
P l a z a w a s | a p p r o x i m a t e l y R M B 7 , 7 1 8 , 7 0 0 , 0 0 0 ( 3 0 J u n e 2 0 1 9 : | |||
RMB7,734,000,000). |
4 China Aerospace International Holdings Limited 2020 Interim Report
Business Review
Following the return of all project investment fund and related expenses to the Company's joint venture Hainan Aerospace Investment Management Company Limited* (海南航天投資管理有限公司) ("Hainan Aerospace") by the Municipal Government of Wenchang in December 2019, Hainan Aerospace completed the withdrawal of the land development project in the Complex Zone of the Launching Site in Hainan. For the first half of 2020, profit of Hainan Aerospace attributable to the Company was approximately HK$8,186,000, representing a turning of profit from a loss as compared with the loss of HK$2,338,000 for the same period of 2019. As at 30 June 2020, the carrying amount of Company's interest in Hainan Aerospace was approximately HK$626,608,000 (30 June 2019: HK$643,713,000).
Taking into account the needs of business development, Aerospace Digitnexus Information Technology (Shenzhen) Limited* (航天數聯信息技術（深圳）有限公司) ("Aerospace Digitnexus") strengthened the equity base and assisted the company's further development by introducing new investors. On 20 April 2020, Aerospace Digitnexus entered into the capital increase agreement with two new investors, pursuant to which the two new investors shall acquire approximately 28.157% and 27.304% of the enlarged equity interest at the consideration of RMB33,000,000 and RMB32,000,000 in cash, respectively. Upon the completion of capital increase, the Company's interest in Aerospace Digitnexus decreased to 32.125% from 72.128% and Aerospace Digitnexus ceased to be an indirect subsidiary of the Company and the financial results of Aerospace Digitnexus will not be consolidated into the Company and its subsidiaries' financial statements. The Company recorded a gain from a deemed disposal of Aerospace Digitnexus of approximately HK$54,075,000.
2020 Interim Report China Aerospace International Holdings Limited | 5 |
Business Review
PROSPECTS
Looking into the second half of the year, the global economic outlook is not optimistic. Factors such as repeated outbreaks of the novel coronavirus, US cancellation of preferential treatment status for Hong Kong, continued geopolitical disputes, and US presidential election will bring uncertainty and further impact on economic development. The industrial enterprises of the Company, which are mainly export oriented and have production bases in the mainland, will inevitably suffer a major economic shock. The industrial enterprises will make every effort to explore new markets, expand the scale of production automation, devote further efforts in the research and development of core technologies, improve technological skills, and strengthen market competitiveness. On the other hand, Shenzhen Aerospace will commit itself to improve the property management standard of Shenzhen Aerospace Science & Technology Plaza and provide tenants with quality services.
2020 is the last year of the "13th Five-Year Plan". The Company will complete various tasks unswervingly and firmly to ensure the successful conclusion of the "13th Five-Year Plan". At the same time, the Company will formulate the "14th Five-Year Plan", consolidate the foundation comprehensively, respond to various challenges with firm confidence, and strive to seek breakthroughs in developing new businesses, so as to write a new chapter for the next five years and longer-term development of the Company.
6 China Aerospace International Holdings Limited 2020 Interim Report
Business Review
APPRECIATION
The Board would like to extend its praised gratitude to Mr Xu Liangwei for his contributions to the Company during his tenure of services and extend a warm welcome to Mr Hua Chongzhi in joining the Board.
On behalf of the Board, I express my profound gratitude to all the staff for their dedication, loyal services and invaluable contributions, especially those who stuck to their posts with unremitting efforts during the difficult time under the ongoing novel coronavirus pandemic. Grateful thanks are also due to shareholders, bankers, business partners and members of the community who have supported the Company's development all along.
By order of the Board,
Liu Meixuan
Chairman & Executive Director
Hong Kong, 27 August 2020
2020 Interim Report China Aerospace International Holdings Limited | 7 |
MANAGEMENT DISCUSSION AND ANALYSIS
RESULTS PERFORMANCE
The unaudited revenue of the Company and its subsidiaries for the six months ended 30 June 2020 was HK$1,506,717,000, representing a decrease of 8.62% as compared with that of HK$1,648,820,000 for the same period of 2019. Profit for the period was HK$147,194,000, representing a decrease of 18.64% as compared with that of HK$180,912,000 for the same period of 2019.
PROFIT ATTRIBUTABLE TO SHAREHOLDERS OF THE COMPANY
Profit attributable to shareholders of the Company for the current period was HK$116,472,000, representing a decrease of 7.34% as compared with that of HK$125,697,000 for the same period of 2019.
The decrease in revenue was mainly due to the novel coronavirus pandemic that postponed the resumption of work and production, leading to a decrease in revenue, whereas the decrease in profits attributable to shareholders was mainly due to a decrease in the change in fair value of investment properties during the period, which offset the gain on deemed disposal of subsidiaries.
Based on the issued share of 3,085,022,000 shares during the period, the basic earnings per share was HK3.78 cents, representing a decrease of 7.13% as compared with that of HK4.07 cents for the same period of 2019.
DIVIDENDS
The Board decided not to distribute an interim dividend for 2020.
The distribution of 2019 final dividend of HK2 cents per share was approved by shareholders at the Annual General Meeting in June 2020 and warrants of which were dispatched to all shareholders on 21 July 2020.
8 China Aerospace International Holdings Limited 2020 Interim Report
Management Discussion and Analysis
RESULTS OF CORE BUSINESSES
The core businesses of the Company and its subsidiaries are hi-tech manufacturing, and the operations of Shenzhen Aerospace Science & Technology Plaza.
The revenue of the hi-tech manufacturing is the main source of the Company's revenue that contributes a significant profit and cash flow. In recent years, the Company has gradually developed other new businesses. With the completion of Shenzhen Aerospace Science & Technology Plaza and that being turned into asset management, it brings in constant rental revenue, achieves new development goal of the Company and relatively minimizes the Company's individual business risk.
Hi-tech manufacturing
The revenue of the hi-tech manufacturing business for the six months ended 30 June 2020 was HK$1,297,507,000, representing a decrease of 8.57% as compared with the same period of 2019 and operating profit was HK$63,815,000, representing a decrease of 27.69% as compared with the same period of 2019. The results of the hi-tech manufacturing business are shown below:
Turnover (HK$'000) | Operating Profit (HK$'000) | |||||
First half | First half | Changes | First half | First half | Changes | |
of 2020 | of 2019 | (%) | of 2020 | of 2019 | (%) | |
Plastic Products | 420,358 | 523,271 | (19.67) | 8,283 | 18,697 | (55.70) |
Printed Circuit Boards | 435,830 | 370,628 | 17.59 | 34,371 | 7,617 | 351.24 |
Intelligent Chargers | 131,847 | 185,621 | (28.97) | 3,128 | 4,989 | (37.30) |
Liquid Crystal Display | 302,949 | 332,764 | (8.96) | 22,317 | 28,010 | (20.32) |
Industrial Property | ||||||
Investment | 6,523 | 6,862 | (4.94) | (4,284) | 28,943 | (114.80) |
Total | 1,297,507 | 1,419,146 | (8.57) | 63,815 | 88,256 | (27.69) |
2020 Interim Report China Aerospace International Holdings Limited | 9 |
Management Discussion and Analysis
In the first half of 2020, in response to the outbreak of novel coronavirus, the rapid decline in aggregate demand greatly reduced consumption activities. Governments around the world successively implemented measures to lockdown, which further brought consumer activities into a standstill. On the other hand, many industries' supply chains were affected by labour, logistics and the supply of raw materials and that prevented many products from being launched in the market, cross-border tradings decreased substantially, and the global economy was greatly affected. At the same time, the hi-tech manufacturing business, having been facing fierce market competition, was further hit by the pandemic, the overall business in the first quarter was greatly affected as well. Most of the businesses still rose fortunately albeit difficulties in the second quarter, of which the sales orders of the Printed Circuit Boards business increased and hence the turnover and profit increased accordingly as compared with the same period of 2019, whereas the other businesses delayed the resumption of their productions as a result of the outbreak, and hence the turnover and profit decreased as compared with the same period of 2019.
In order to strengthen market competitiveness, enlarge business scale and expand overseas markets, the Company's subsidiary whose main business is injection molding products, Chee Yuen Industrial Company Limited, established a wholly-owned subsidiary in Vietnam in January 2020. In April 2020, the subsidiary leased a piece of land with an area of approximately 52,000 square meters in Haiphong, Vietnam. It is currently under construction a four-storey factory building and plans to install multiple production lines to manufacture plastics, molds, hardware, electronic products, etc. and strive to be in full operation before the end of 2020. Details of which please refer to the Company's announcement dated 16 April 2020.
In the first half of 2020, the Company established a research and development academy, which is to focus on new infrastructure and develop high tech industries as well as the outline of long-term development plans. The Company also requires all industrial enterprises to strengthen their research and development team, introduce industry experts and academics to carry out project's research and development, and provide support for the development of advanced manufacturing.
10 China Aerospace International Holdings Limited 2020 Interim Report
Management Discussion and Analysis
Looking forward to the second half of 2020, the novel coronavirus pandemic will remain severe. There exist a lot of uncertain factors, and the aggregate demand will be difficult to recover in a short period of time. The global economy and the electronic information technology industry are also not optimistic. Cut-throat marketing strategies will be adopted fiercely and corporate profits will be negatively affected significantly. At this difficult time, the hi-tech manufacturing business still needs to work hard to open up the mainland China and other overseas markets, tries its best to reduce inventory and accounts receivable, maintains business stability and continuous development; at the same time it will continue to develop high-end products and research and development of new technologies, improve production automation, maintain production scale and capacity to reverse the downward trend of business.
Shenzhen Aerospace Science & Technology Plaza
In the first half of 2020, the rental income of Shenzhen Aerospace Science & Technology Plaza under Shenzhen Aerospace Technology Investment Company Limited* (深圳市航天高科投資管理有限公司) ("Shenzhen Aerospace") brought a consistent and constant revenue to the Company. However, the receipts of rent and management fees and the fair value of investment properties were affected under the impact of the pandemic. Shenzhen Aerospace and Shenzhen Aerospace Technology Property Management Company Limited* (深圳市航天高 科物業管理有限公司) ("Shenzhen Property Management"), a wholly owned subsidiary of Shenzhen Aerospace responsible for the management of Shenzhen Aerospace Science & Technology Plaza, recorded a total revenue of HK$204,443,000 (first half of 2019: HK$213,987,000) and a segment profit of HK$117,289,000 (first half of 2019: HK$233,012,000).
As at 30 June 2020, Shenzhen Aerospace Science & Technology Plaza was valued at approximately RMB7,718,700,000 (30 June 2019: RMB7,734,000,000).
In the second half of 2020, Shenzhen Property Management will continue to do better in property management, paying special attention to the continued anti- epidemic measures and safety management and take effective measures so as to improve the quality of property services, enhance the satisfaction and praise of tenants, as well as attract more new tenants.
2020 Interim Report China Aerospace International Holdings Limited | 11 |
Management Discussion and Analysis
Internet of things application and cross-bordere-commerce logistics
The performance of Aerospace Digitnexus Information Technology (Shenzhen) Limited* (航天數聯信息技術（深圳）有限公司) ("Aerospace Digitnexus") was not ideal for the time being, it did not form a unique competitive advantage. In April 2020, two investors, through a public bidding, subscribed the registered capital of Aerospace Digitnexus in a total of RMB65,000,000. Upon the completion of the subscription, the indirect shareholding of the Company in Aerospace Digitnexus was reduced from 72.128% to 32.125%, Aerospace Digitnexus is no longer an indirect subsidiary of the Company. The Company recorded a gain from a deemed disposal of Aerospace Digitnexus of approximately HK$54,075,000. Details of which please refer to the Company's announcements dated 20 April 2020 and 24 April 2020.
From 1 January 2020 to the signing of capital increase agreement on 20 April 2020, a revenue of HK$149,000 was recorded by Aerospace Digitnexus and its subsidiary (first half of 2019: HK$4,016,000), whereas an operating loss of HK$541,000 was made (first half of 2019: loss of HK$10,346,000).
In the second half of 2020, the Company will prudently discuss with other shareholders of Aerospace Digitnexus in relation to the direction of future development, whereas Aerospace Digitnexus should strive to improve its business model, elevate efficiency and reduce losses as soon as possible.
ASSETS
30 June | 31 December | Changes | |
(HK$'000) | 2020 | 2019 | (%) |
Non-Current Assets | 11,458,098 | 11,656,155 | (1.70) |
Current Assets | 2,934,780 | 3,049,116 | (3.75) |
Total Assets | 14,392,878 | 14,705,271 | (2.12) |
12 China Aerospace International Holdings Limited 2020 Interim Report
Management Discussion and Analysis
The decrease in non-current assets was mainly due to a decrease in the valuation of the investment properties, while the decrease in current assets was mainly due to a decrease in trade and other receivables. The equity attributable to shareholders of the Company was HK$7,185,813,000, representing a decrease of 0.83% as compared with that of HK$7,245,792,000 at the end of 2019. The equity attributable to shareholders decreased in the current period as compared with the end of last year, which was mainly due to the increase in exchange differences arising from the conversion of assets and liabilities denominated in RMB during the period, and hence increased the translation reserve debit and thereby reduced the equity attributable to shareholders. Based on the issued share capital of 3,085,022,000 shares during the period, the net assets per share attributable to shareholders was HK$2.33.
As at 30 June 2020, a cash deposit of HK$43,298,000 and bills receivable of HK$121,994,000 of the Company and the subsidiaries had been pledged to banks to obtain credit facilities. Property right certificates at an approximate value of RMB1,900,000,000 of Shenzhen Aerospace Science & Technology Plaza were mortgaged by Shenzhen Aerospace to Aerospace Science & Technology Finance Company Limited* (航天科技財務有限責任公司) as a guarantee of repayment of a 12-year term loan in the amount of RMB1,300,000,000. Details of which please refer to the Company's announcement published on 30 August 2016.
LIABILITIES
30 June | 31 December | Changes | |
(HK$'000) | 2020 | 2019 | (%) |
Non-Current Liabilities | 3,853,200 | 3,954,619 | (2.56) |
Current Liabilities | 1,213,750 | 1,369,666 | (11.38) |
Total Liabilities | 5,066,950 | 5,324,285 | (4.83) |
2020 Interim Report China Aerospace International Holdings Limited | 13 |
Management Discussion and Analysis
The decrease in non-current liabilities was mainly due to a decrease in deferred tax liabilities whereas the decrease in current liabilities were mainly due to a decrease in trade and other payables. As at 30 June 2020, the Company and its subsidiaries had other borrowings of HK$1,411,939,000.
OPERATING EXPENSES
The administrative expenses of the Company and its subsidiaries in the first half of 2020 were HK$161,315,000, which is more or less the same to the same period of 2019. The finance costs amounted to HK$35,742,000.
CONTINGENT LIABILITIES
As at 30 June 2020, the Company and its subsidiaries did not have any material contingent liabilities.
FINANCIAL RATIOS
First half | First half | |
of 2020 | of 2019 | |
Gross Profit Margin | 29.22% | 26.69% |
Return on Net Assets | 1.58% | 1.94% |
30 June | 31 December | |
2020 | 2019 | |
Assets-Liabilities Ratio | 35.20% | 36.21% |
Current Ratio | 2.42 | 2.23 |
Quick Ratio | 2.09 | 1.96 |
14 China Aerospace International Holdings Limited 2020 Interim Report
Management Discussion and Analysis
LIQUIDITY
The source of funds of the Company and its subsidiaries mainly relies on internal resources and facilities from bank and financial institution. As at 30 June 2020, the free cash and bank balance amounted to HK$1,409,818,000, the majority of which were in Hong Kong Dollars and Renminbi.
CAPITAL EXPENDITURE
As at 30 June 2020, the capital commitments of the Company and its subsidiaries contracted for but not provided in the condensed consolidated financial statements was approximately HK$156,221,000, mainly for the capital expenditure of acquiring fixed assets.
FINANCIAL RISKS
The Company and its subsidiaries review the cash flow and financial position periodically and do not presently engage into any financial instruments or derivatives to hedge the exchange and the interest rate risks.
HUMAN RESOURCES AND REMUNERATION POLICIES
In the first half of 2020, under the premise of attaching great importance to the health of employees, the Company and its subsidiaries had taken certain anti- epidemic measures, including requiring employees to actively declare travel records, allowing flexible commuting and lunch time, free distribution of masks and disinfecting alcohol, arranging employees to participate in anti-epidemic training seminars, reducing physical meetings by means of video conferences, work from home etc., which let employees gaining a deep understanding of the transmission routes and anti-epidemic measures of the novel coronavirus. These help to protect the health of employees and their family members from infection and avoid infecting other colleagues which in turn affect the daily operation of the companies. In the second half of 2020, the novel coronavirus infections persist, the Company and its subsidiaries will continue to take appropriate and strict anti-epidemic measures to stop its spreading.
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Management Discussion and Analysis
The remuneration policy of the Company and its subsidiaries is based on the employee's qualifications, experience and performance on the job, with reference to the current market situation. The Company and its subsidiaries will continue to upgrade the level of human resources management and strictly implement the performance-based appraisal system, in order to motivate employees to make continuous improvement in their individual performance and contributions to the Company.
As at 30 June 2020, the Company and its subsidiaries had a total of approximately 6,840 employees based in the mainland and Hong Kong respectively.
APPRECIATION
The Company hereby expresses its sincere gratitude to its shareholders, banks, business partners, members from various social communities, as well as all staff for their long-time support.
By order of the Board,
Jin Xuesheng
Executive Director & President
Hong Kong, 27 August 2020
16 China Aerospace International Holdings Limited 2020 Interim Report
OTHER DISCLOSURES
THE INTERESTS OF SUBSTANTIAL SHAREHOLDERS
As at 30 June 2020, the register of substantial shareholders maintained pursuant to Part XV of the Securities & Futures Ordinance recorded that the following shareholders had declared their interests as having 5% or more of the issued share capital of the Company:
Direct | Number of | Percentage of | ||
interest | shares interested | issued share | ||
Name | Capacity | (Yes/No) | (Long Position) | capital |
China Aerospace Science & | Interests in | No | 1,183,598,636 | 38.37% |
Technology Corporation | controlled | |||
corporation | ||||
Burhill Company Limited | Beneficial owner | Yes | 1,183,598,636 | 38.37% |
Note: Burhill Company Limited is a wholly-owned subsidiary of China Aerospace Science & Technology Corporation, the shares held by it form the total number of shares in which China Aerospace Science & Technology Corporation was deemed interested.
Save as disclosed above, the Company had not been notified of any other relevant interests or short positions in the issued share capital of the Company as at 30 June 2020.
PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES
There had been no purchase, sale or redemption of the Company's listed securities by the Company and any of its subsidiaries during the first half of 2020.
CORPORATE GOVERNANCE
For the six months ended 30 June 2020, the Company complied throughout the period with the code provisions of the Corporate Governance Code and Corporate Governance Report as set out in Appendix 14 of the Listing Rules.
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Other Disclosures
LITIGATION
As at 30 June 2020, neither the Company nor any of its subsidiaries was engaged in any litigation or arbitration or claim of material importance and, so far as the Directors were aware of, no litigation or arbitration or claim of material importance was pending or threatened by or against the Company and any of its subsidiaries.
DIRECTORS' AND EXECUTIVE'S INTERESTS IN SHARES
The Company had adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 of the Listing Rules as the required standard for the Directors to trade the securities of the Company. Having made specific enquiry to the Directors and in accordance with information provided, all the Directors have complied with the provisions under the Model Code in the first half of 2020.
As at 30 June 2020, save for Mr Liu Xudong, Mr Hua Chongzhi and Mr Mao Yijin, the Directors of the Company, are the officers of the substantial shareholder China Aerospace Science & Technology Corporation's academy and subsidiaries, none of the directors, chief executives or their associates have any beneficial or non-beneficial interests or short positions in the share capital, warrants and options of the Company or its subsidiaries or any of its associated corporations which is required to be recorded in the Register of Directors' Interests pursuant to Part XV of the Securities & Futures Ordinance or as otherwise notified to the Company and The Stock Exchange of Hong Kong Limited pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers .
AUDIT COMMITTEE
The Audit Committee of the Company has a membership comprising two Independent Non-Executive Directors, Mr Luo Zhenbang (Chairman) and Ms Leung Sau Fan, Sylvia, and a Non-Executive Director, Mr Mao Yijin. The major responsibilities of the Audit Committee include serving as a focal point for communication between the Directors and external auditors in reviewing the Company's financial information as well as overseeing the Company's financial reporting system, risk management and internal control procedures.
18 China Aerospace International Holdings Limited 2020 Interim Report
Other Disclosures
The Audit Committee of the Company reviewed, discussed and approved the unaudited condensed consolidated financial statements for the six months ended 30 June 2020 that had been reviewed by the auditor, Deloitte Touche Tohmatsu.
REMUNERATION COMMITTEE
The Remuneration Committee of the Company has a membership comprising two Independent Non-Executive Directors, Ms Leung Sau Fan, Sylvia (Chairman) and Mr Wang Xiaojun, and Non-Executive Directors, Mr Hua Chongzhi (appointed on 16 April 2020) and Mr Xu Liangwei (retired on 16 April 2020). The Remuneration Committee takes the role of advisory and proposes to the Board on the emoluments of the Directors and senior management with regard to the results of the Company, the individual performance and the comparable market information.
NOMINATION COMMITTEE
The Nomination Committee of the Company has a membership comprising an Executive Director, Mr Liu Meixuan (Chairman), Non-Executive Directors, Mr Liu Xudong (appointed on 16 April 2020) and Mr Xu Liangwei (retired on 16 April 2020), and three Independent Non-Executive Directors, Mr Luo Zhenbang, Ms Leung Sau Fan, Sylvia and Mr Wang Xiaojun. The responsibilities of the Nomination Committee are to review the structure, the number of members and the Board's composition for the execution of the Company's policy.
STATEMENT OF COMPLIANCE
The financial information relating to the year ended 31 December 2019 that is included in the Interim Report 2020 as comparative information does not constitute the Company's statutory annual consolidated financial statements for that year but is derived from those financial statements. Further information relating to these statutory financial statements required to be disclosed in accordance with section 436 of the Companies Ordinance (Cap. 622) is as follows:
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Other Disclosures
The Company has delivered the financial statements for the year ended 31 December 2019 to the Registrar of Companies as required by section 662(3) of, and Part 3 of Schedule 6 to, the Companies Ordinance.
The Company's auditor has reported on those financial statements. The auditor's report was unqualified; did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying its report; and did not contain a statement under sections 406(2), 407(2) or (3) of the Companies Ordinance.
CONNECTED TRANSACTION AND EVENT AFTER THE REPORTING PERIOD
On 30 July 2020, CASIL New Century Technology Development (Shenzhen) Company Limited* (航科新世紀科技發展（深圳）有限公司) ("New Century"), a wholly-owned subsidiary of the Company, entered into a capital increase agreement with connected parties, pursuant to which New Century will subscribe for the registered share capital of RMB10,000,000 of Aerospace New Business Information Technology Co., Ltd.* (航天新商務信息科技有限公司) ("New Business") at a consideration of RMB10,820,000. Upon completion of the subscription, New Century's interest in New Business will be slightly diluted from 16.13% to 15.15%. Details of which please refer to the Company's announcements dated 30 July 2020 and 31 July 2020.
20 China Aerospace International Holdings Limited 2020 Interim Report
REPORT ON REVIEW OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
TO THE BOARD OF DIRECTORS OF
CHINA AEROSPACE INTERNATIONAL HOLDINGS LIMITED (incorporated in Hong Kong with limited liability)
INTRODUCTION
We have reviewed the condensed consolidated financial statements of China Aerospace International Holdings Limited (the "Company") and its subsidiaries (collectively referred to as the "Group") set out on pages 22 to 54, which comprise the condensed consolidated statement of financial position as of 30 June 2020 and the related condensed consolidated statement of profit or loss, statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the six-month period then ended and certain explanatory notes. The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited require the preparation of a report on interim financial information to be in compliance with the relevant provisions thereof and Hong Kong Accounting Standard ("HKAS") 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants. The directors of the Company are responsible for the preparation and presentation of these condensed consolidated financial statements in accordance with HKAS 34. Our responsibility is to express a conclusion on these condensed consolidated financial statements based on our review, and to report our conclusion solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.
2020 Interim Report China Aerospace International Holdings Limited | 21 |
Report on Review of Condensed Consolidated Financial Statements
SCOPE OF REVIEW
We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Hong Kong Institute of Certified Public Accountants. A review of these condensed consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly we do not express an audit opinion.
CONCLUSION
Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated financial statements are not prepared, in all material respects, in accordance with HKAS 34.
Deloitte Touche Tohmatsu
Certified Public Accountants
Hong Kong
27 August 2020
22 China Aerospace International Holdings Limited 2020 Interim Report
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS
For the six months ended 30 June 2020
Six months ended | |||
30.6.2020 | 30.6.2019 | ||
NOTES | HK$'000 | HK$'000 | |
(Unaudited) | (Unaudited) | ||
Revenue | 3 | 1,506,717 | 1,648,820 |
Cost of sales | (1,066,508) | (1,208,788) | |
Gross profit | 440,209 | 440,032 | |
Other income | 4 | 25,134 | 20,640 |
Other gains and losses | 4 | (4,995) | (26,749) |
Gain on deemed disposal of | - | ||
subsidiaries | 16 | 54,075 | |
Selling and distribution expenses | (20,422) | (24,233) | |
Administrative expenses | (161,315) | (161,157) | |
Research and development | |||
expenses | (48,509) | (43,226) | |
Fair value changes of investment | |||
properties | (68,417) | 74,215 | |
Impairment losses under expected | |||
credit loss model, net of reversal | (30,756) | (3,923) | |
Finance costs | 5 | (35,742) | (37,829) |
Share of results of associates | 6,081 | 1,185 | |
Share of results of joint ventures | 6,519 | (1,970) | |
Profit before taxation | 6 | 161,862 | 236,985 |
Taxation | 7 | (14,668) | (56,073) |
Profit for the period | 147,194 | 180,912 | |
Profit for the period attributable to: | |||
Owners of the Company | 116,472 | 125,697 | |
Non-controlling interests | 30,722 | 55,215 | |
147,194 | 180,912 | ||
Basic earnings per share | 8 | HK3.78 cents | HK4.07 cents |
2020 Interim Report China Aerospace International Holdings Limited | 23 |
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the six months ended 30 June 2020
Six months ended | ||
30.6.2020 | 30.6.2019 | |
HK$'000 | HK$'000 | |
(Unaudited) | (Unaudited) | |
Profit for the period | 147,194 | 180,912 |
Other comprehensive expense: | ||
Items that may be reclassified | ||
subsequently to profit or loss | ||
Exchange differences arising on | ||
translating foreign operations | ||
- subsidiaries | (131,506) | (10,396) |
- associates | (3,537) | (235) |
- joint ventures | (11,187) | (772) |
Other comprehensive expense for | ||
the period | (146,230) | (11,403) |
Total comprehensive income for | ||
the period | 964 | 169,509 |
Total comprehensive income (expenses) | ||
for the period attributable to: | ||
Owners of the Company | 7,781 | 117,152 |
Non-controlling interests | (6,817) | 52,357 |
964 | 169,509 | |
24 China Aerospace International Holdings Limited 2020 Interim Report
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 30 June 2020
30.6.2020 | 31.12.2019 | ||
NOTES | HK$'000 | HK$'000 | |
(Unaudited) | (Audited) | ||
Non-current assets | |||
Property, plant and equipment | 10 | 1,033,743 | 1,066,677 |
Right-of-use assets | 170,333 | 190,910 | |
Investment properties | 10 | 8,885,337 | 9,110,037 |
Interests in associates | 208,851 | 199,546 | |
Interests in joint ventures | 693,255 | 697,923 | |
Deposits paid for property, plant | |||
and equipment | 18,035 | 6,387 | |
Long-term assets | 11 | 448,544 | 384,675 |
11,458,098 | 11,656,155 | ||
Current assets | |||
Inventories | 403,801 | 361,391 | |
Trade and other receivables | 11 | 1,070,815 | 1,245,705 |
Amount due from a related | |||
party | 149 | 16 | |
Financial assets at fair value | |||
through profit or loss | 6,899 | 5,787 | |
Pledged bank deposits | 43,298 | 41,272 | |
Short-term bank deposits | 13 | 199,333 | 123,389 |
Bank balances and cash | 1,210,485 | 1,271,556 | |
2,934,780 | 3,049,116 | ||
2020 Interim Report China Aerospace International Holdings Limited | 25 |
Condensed Consolidated Statement of Financial Position
At 30 June 2020
30.6.2020 | 31.12.2019 | ||
NOTES | HK$'000 | HK$'000 | |
(Unaudited) | (Audited) | ||
Current liabilities | |||
Trade and other payables | 14 | 1,083,083 | 1,248,333 |
Contract liabilities | 40,946 | 38,569 | |
Lease liabilities | 30,143 | 29,330 | |
Taxation payable | 51,728 | 45,444 | |
Other loan | 7,850 | 7,990 | |
1,213,750 | 1,369,666 | ||
Net current assets | 1,721,030 | 1,679,450 | |
Total assets less current liabilities | 13,179,128 | 13,335,605 | |
Non-current liabilities | |||
Lease liabilities | 62,758 | 79,895 | |
Loan from a controlling | |||
shareholder | 19(a)(i) | 547,645 | 557,414 |
Loan from a related party | 19(a)(ii) | 864,294 | 879,710 |
Deferred taxation | 2,378,503 | 2,437,600 | |
3,853,200 | 3,954,619 | ||
9,325,928 | 9,380,986 | ||
Capital and reserves | |||
Share capital | 15 | 1,154,511 | 1,154,511 |
Reserves | 6,031,302 | 6,091,281 | |
Equity attributable to owners of the | |||
Company | 7,185,813 | 7,245,792 | |
Non-controlling interests | 2,140,115 | 2,135,194 | |
9,325,928 | 9,380,986 | ||
26 China Aerospace International Holdings Limited 2020 Interim Report
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2020
Attributable to owners of the Company | ||||||||||
Special | Property | Non- | ||||||||
Share | capital | General | Translation | revaluation | Other | Retained | controlling | |||
capital | reserve | reserve | reserve | reserve | reserves | profits | Sub-total | interests | Total | |
HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | |
At 1 January 2020 (audited) | ||||||||||
1,154,511 | 14,044 | 76,647 | (299,936) | 30,523 | 44,926 | 6,225,077 | 7,245,792 | 2,135,194 | 9,380,986 | |
Profit for the period | - | - | - | - | - | - | 116,472 | 116,472 | 30,722 | 147,194 |
Exchange difference arising on | ||||||||||
translating foreign operations | ||||||||||
- subsidiaries | - | - | - | (93,967) | - | - | - | (93,967) | (37,539) | (131,506) |
- associates | - | - | - | (3,537) | - | - | - | (3,537) | - | (3,537) |
- joint ventures | - | - | - | (11,187) | - | - | - | (11,187) | - | (11,187) |
Total comprehensive (expense) | ||||||||||
income for the period | - | - | - | (108,691) | - | - | 116,472 | 7,781 | (6,817) | 964 |
Deemed disposal of existing | ||||||||||
subsidiaries (note 16) | - | - | - | (6,060) | - | - | - | (6,060) | 11,738 | 5,678 |
Dividend recognised as distribution | ||||||||||
(note 9) | - | - | - | - | - | - | (61,700) | (61,700) | - | (61,700) |
At 30 June 2020 (unaudited) | 1,154,511 | 14,044 | 76,647 | (414,687) | 30,523 | 44,926 | 6,279,849 | 7,185,813 | 2,140,115 | 9,325,928 |
At 1 January 2019 (audited) | 1,154,511 | 14,044 | 57,235 | (152,970) | 30,523 | 43,925 | 5,936,989 | 7,084,257 | 2,096,110 | 9,180,367 |
Profit for the period | - | - | - | - | - | - | 125,697 | 125,697 | 55,215 | 180,912 |
Exchange difference arising on | ||||||||||
translating foreign operations | ||||||||||
- subsidiaries | - | - | - | (7,538) | - | - | - | (7,538) | (2,858) | (10,396) |
- associates | - | - | - | (235) | - | - | - | (235) | - | (235) |
- joint ventures | - | - | - | (772) | - | - | - | (772) | - | (772) |
Total comprehensive (expense) | ||||||||||
income for the period | - | - | - | (8,545) | - | - | 125,697 | 117,152 | 52,357 | 169,509 |
Partial disposal of an existing | ||||||||||
subsidiary | - | - | - | - | - | 1,001 | - | 1,001 | 5,098 | 6,099 |
Dividend recognised as distribution | ||||||||||
(note 9) | - | - | - | - | - | - | (30,850) | (30,850) | - | (30,850) |
Dividend paid to non-controlling | ||||||||||
interests of a subsidiary | - | - | - | - | - | - | - | - | (18,446) | (18,446) |
At 30 June 2019 (unaudited) | 1,154,511 | 14,044 | 57,235 | (161,515) | 30,523 | 44,926 | 6,031,836 | 7,171,560 | 2,135,119 | 9,306,679 |
2020 Interim Report China Aerospace International Holdings Limited | 27 |
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 30 June 2020
Six months ended | |||
30.6.2020 | 30.6.2019 | ||
NOTE | HK$'000 | HK$'000 | |
(Unaudited) | (Unaudited) | ||
Net cash from operating activities | 200,294 | 394,956 | |
Net cash used in investing | |||
activities | |||
Placement of short-term bank | - | ||
deposits | (200,652) | ||
Purchase of property, plant and | |||
equipment | (95,275) | (89,088) | |
Cash outflow on deemed | - | ||
disposal of subsidiaries | 16 | (31,645) | |
Deposits paid for acquisition of | |||
property, plant and equipment | (14,288) | (143) | |
Payment for development costs | |||
incurred in respect of | |||
investment properties | (6,589) | (13,208) | |
Placement of pledged bank | |||
deposits | (2,767) | (33,854) | |
Withdrawal of short-term bank | - | ||
deposits | 122,029 | ||
Proceeds from disposal of | |||
property, plant and equipment | 741 | 37 | |
Withdrawal of pledged bank | - | ||
deposits | 6,133 | ||
Other investing cash flows | 7,700 | 10,822 | |
(220,746) | (119,301) | ||
28 China Aerospace International Holdings Limited 2020 Interim Report
Condensed Consolidated Statement of Cash Flows For the six months ended 30 June 2020
Six months ended | ||
30.6.2020 | 30.6.2019 | |
NOTE | HK$'000 | HK$'000 |
(Unaudited) | (Unaudited) | |
Net cash used in financing | ||
activities | ||
Repayments of lease liabilities | (14,204) | (12,751) |
Dividend paid | - | (30,762) |
Dividend paid to non-controlling | - | |
interests of a subsidiary | (18,446) | |
Other financing cash flows | (35,742) | (52,671) |
(49,946) | (114,630) | |
Net (decrease) increase in cash | ||
and cash equivalents | (70,398) | 161,025 |
Cash and cash equivalents at | ||
1 January | 1,271,556 | 958,628 |
Effect of foreign exchange rate | ||
changes | 9,327 | 2,464 |
Cash and cash equivalents at | ||
30 June, represented by bank | ||
balances and cash | 1,210,485 | 1,122,117 |
2020 Interim Report China Aerospace International Holdings Limited | 29 |
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2020
1. BASIS OF PREPARATION
The condensed consolidated financial statements have been prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" ("HKAS") issued by the Hong Kong Institute of Certified Public Accountants (the "HKICPA") as well as with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.
The financial information relating to the year ended 31 December 2019 that is included in these condensed consolidated financial statements as comparative information does not constitute the Company's statutory annual consolidated financial statements for that year but is derived from those financial statements. Further information relating to these statutory financial statements is as follows:
The Company has delivered the financial statements for the year ended 31 December 2019 to the Registrar of Companies as required by section 662(3) of, and Part 3 of Schedule 6 to, the Hong Kong Companies Ordinance.
The Company's auditor has reported on those financial statements. The auditor's report was unqualified; did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying its report; and did not contain a statement under sections 406(2), 407(2) or (3) of the Hong Kong Companies Ordinance.
30 China Aerospace International Holdings Limited 2020 Interim Report
Notes to the Condensed Consolidated Financial Statements For the six months ended 30 June 2020
2. PRINCIPAL ACCOUNTING POLICIES
The condensed consolidated financial statements have been prepared under the historical cost basis except for certain properties and financial instruments, which are measured at fair values, as appropriate.
Other than additional accounting policies resulting from application of amendments to Hong Kong Financial Reporting Standards ("HKFRSs"), the accounting policies and methods of computation used in the condensed consolidated financial statements for the six months ended 30 June 2020 are the same as those presented in the preparation of the Group's annual financial statements for the year ended 31 December 2019.
Application of amendments to HKFRSs
In the current interim period, the Group has applied the Amendments to References to the Conceptual Framework in HKFRS Standards and the following amendments to HKFRSs issued by the HKICPA, for the first time, which are mandatorily effective for the annual period beginning on or after 1 January 2020 for the preparation of the Group's condensed consolidated financial statements:
Amendments to HKAS 1 | Definition of Material |
and HKAS 8 | |
Amendments to HKFRS 3 | Definition of a Business |
Amendments to HKFRS 9, | Interest Rate Benchmark Reform |
HKAS 39 and HKFRS 7 |
Except as described below, the application of the Amendments to References to the Conceptual Framework in HKFRS Standards and the amendments to HKFRSs in the current period has had no material impact on the Group's financial positions and performance for the current and prior periods and/or on the disclosures set out in these condensed consolidated financial statements.
2020 Interim Report China Aerospace International Holdings Limited | 31 |
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
-
PRINCIPAL ACCOUNTING POLICIES (continued)
2.1 Impacts of application on Amendments to HKAS 1 and HKAS 8 "Definition of Material"
The amendments provide a new definition of material that states "information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity." The amendments also clarify that materiality depends on the nature or magnitude of information, either individually or in combination with other information, in the context of the financial statements taken as a whole.
The application of the amendments in the current period had no impact on the condensed consolidated financial statements. Changes in presentation and disclosures on the application of the amendments, if any, will be reflected on the consolidated financial statements for the year ending 31 December 2020. - REVENUE AND SEGMENT INFORMATION
The Group determines its operating and reportable segments based on the internal reports reviewed by the President, the chief operating decision maker ("CODM") of the Group, that are used to make strategic decisions. There are 8 operating and reportable segments, namely Hi-Tech Manufacturing Business (including plastic products, liquid crystal display, printed circuit boards, intelligent chargers and industrial property investment) and Aerospace Service (including property investment in Shenzhen Aerospace Science & Technology Plaza, Internet of Things and Cross-bordere-commerce) which represent the major industries in which the Group is engaged.
Other business mainly represents income and expenses relating to certain investment properties and other services. None of these segments met the quantitative thresholds for the reportable segments in both current and prior period. Accordingly, these were grouped in "Others Business".
32 China Aerospace International Holdings Limited 2020 Interim Report
Notes to the Condensed Consolidated Financial Statements For the six months ended 30 June 2020
3. REVENUE AND SEGMENT INFORMATION (continued)
(a)(i) An analysis of the Group's revenue and results by operating and reportable segments is as follows:
For the six months ended 30 June 2020
Revenue | ||||
Inter- | ||||
External | segment | Segment | ||
sales | sales | Total | results | |
HK$'000 | HK$'000 | HK$'000 | HK$'000 | |
Hi-Tech Manufacturing Business | ||||
Plastic products | 420,358 | 18,168 | 438,526 | 8,283 |
Liquid crystal display | 302,949 | 803 | 303,752 | 22,317 |
Printed circuit boards | 435,830 | - | 435,830 | 34,371 |
Intelligent chargers | 131,847 | 977 | 132,824 | 3,128 |
Industrial property investment | 6,523 | 11,095 | 17,618 | (4,284) |
1,297,507 | 31,043 | 1,328,550 | 63,815 | |
Aerospace Service | ||||
Property investment in Shenzhen | ||||
Aerospace Science & | ||||
Technology Plaza | 204,443 | 2,318 | 206,761 | 117,289 |
Internet of Things (Note) | 149 | - | 149 | (109) |
Cross-bordere-commerce (Note) | - | - | - | (432) |
204,592 | 2,318 | 206,910 | 116,748 | |
Operating and reportable segment | ||||
total | 1,502,099 | 33,361 | 1,535,460 | 180,563 |
Elimination | - | (33,361) | (33,361) | - |
Other Business | 4,618 | - | 4,618 | 1,887 |
1,506,717 | - | 1,506,717 | 182,450 | |
Unallocated corporate income | 11,339 | |||
Unallocated corporate expenses | (62,860) | |||
Share of results of associates | 130,929 | |||
6,081 | ||||
Share of results of joint ventures | 6,519 | |||
Finance costs | (35,742) | |||
Gain on deemed disposal of | ||||
subsidiaries | 54,075 | |||
Profit before taxation | 161,862 | |||
2020 Interim Report China Aerospace International Holdings Limited | 33 |
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
3. REVENUE AND SEGMENT INFORMATION (continued)
(a)(i) An analysis of the Group's revenue and results by operating and reportable segments is as follows: (continued)
For the six months ended 30 June 2019
Revenue | ||||
Inter- | ||||
External | segment | Segment | ||
sales | sales | Total | results | |
HK$'000 | HK$'000 | HK$'000 | HK$'000 | |
Hi-Tech Manufacturing Business | ||||
Plastic products | 523,271 | 23,222 | 546,493 | 18,697 |
Liquid crystal display | 332,764 | - | 332,764 | 28,010 |
Printed circuit boards | 370,628 | - | 370,628 | 7,617 |
Intelligent chargers | 185,621 | 838 | 186,459 | 4,989 |
Industrial property investment | 6,862 | 10,633 | 17,495 | 28,943 |
1,419,146 | 34,693 | 1,453,839 | 88,256 | |
Aerospace Service | ||||
Property investment in Shenzhen | ||||
Aerospace Science & | ||||
Technology Plaza | 213,987 | 2,918 | 216,905 | 233,012 |
Internet of Things (Note) | 2 | - | 2 | (4,293) |
Cross-bordere-commerce (Note) | 4,014 | - | 4,014 | (6,053) |
218,003 | 2,918 | 220,921 | 222,666 | |
Operating and reportable segment | ||||
total | 1,637,149 | 37,611 | 1,674,760 | 310,922 |
Elimination | - | (37,611) | (37,611) | - |
Other Business | 11,671 | - | 11,671 | 12,019 |
1,648,820 | - | 1,648,820 | 322,941 | |
Unallocated corporate income | 13,704 | |||
Unallocated corporate expenses | (61,046) | |||
275,599 | ||||
Share of results of associates | 1,185 | |||
Share of results of joint ventures | (1,970) | |||
Finance costs | (37,829) | |||
Profit before taxation | 236,985 | |||
34 China Aerospace International Holdings Limited 2020 Interim Report
Notes to the Condensed Consolidated Financial Statements For the six months ended 30 June 2020
3. REVENUE AND SEGMENT INFORMATION (continued)
(a)(i) An analysis of the Group's revenue and results by operating and reportable segments is as follows: (continued)
Note: The Internet of Things service and Cross-bordere-commerce are held by Aerospace Digitnexus Information Technology (Shenzhen) Limited ("Digitnexus"), which became an associate of the Group as a result of deemed disposal during the current period as detailed in note 16. The CODM continuously reviews these segments information for the purpose of resource allocation and performance assessment. The result of operation upon the deemed disposal is included in share of results of associates.
Segment results represent the profit earned/loss incurred by each segment without allocations of interest income, changes in fair value of financial assets at fair value through profit or loss, gain on deemed disposal of subsidiaries, share of results of joint ventures and associates, interest expenses and other corporate income and corporate expenses.
Inter-segment sales are charged at cost-plus basis.
2020 Interim Report China Aerospace International Holdings Limited | 35 |
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
3. REVENUE AND SEGMENT INFORMATION (continued)
(a)(ii) Disaggregation of revenue
For the six months ended 30 June 2020
Timing of revenue recognition | ||||
A point in | ||||
time | Over time | Total | ||
HK$'000 | HK$'000 | HK$'000 | ||
Manufacturing of goods (Note) | 1,290,985 | - | 1,290,985 | |
Property management fee | - | 40,872 | 40,872 | |
Logistic services | - | 149 | 149 | |
Others | 2,550 | - | 2,550 | |
Revenue from contracts with | ||||
customers | 1,293,535 | 41,021 | 1,334,556 | |
Leases | 172,161 | |||
Total revenue | 1,506,717 | |||
36 China Aerospace International Holdings Limited 2020 Interim Report
Notes to the Condensed Consolidated Financial Statements For the six months ended 30 June 2020
3. REVENUE AND SEGMENT INFORMATION (continued)
(a)(ii) Disaggregation of revenue (continued)
For the six months ended 30 June 2019
Timing of revenue recognition | |||
A point in | |||
time | Over time | Total | |
HK$'000 | HK$'000 | HK$'000 | |
Manufacturing of goods (Note) | 1,412,284 | - | 1,412,284 |
Property management fee | - | 43,913 | 43,913 |
Logistic services | - | 4,014 | 4,014 |
Others | 10,018 | - | 10,018 |
Revenue from contracts with | |||
customers | 1,422,302 | 47,927 | 1,470,229 |
Leases | 178,591 | ||
Total revenue | 1,648,820 | ||
Note: Manufacturing of goods represents external sales of plastic products, liquid crystal display, printed circuit boards and intelligent chargers as detailed in above segment information.
Geographical information
Revenue from
external customers
based on the location of
operation for the six months
ended
30.6.2020 30.6.2019
HK$'000 HK$'000
Hong Kong | 730,696 | 852,352 |
People's Republic of China (The "PRC") | 603,860 | 617,877 |
Revenue from contracts with customers | 1,334,556 | 1,470,229 |
Leases | 172,161 | 178,591 |
Total revenue | 1,506,717 | 1,648,820 |
2020 Interim Report China Aerospace International Holdings Limited | 37 |
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
3. REVENUE AND SEGMENT INFORMATION (continued)
- The following is an analysis of the Group's assets and liabilities by operating and reportable segments:
30.6.2020 | 31.12.2019 | |
HK$'000 | HK$'000 | |
Segment assets | ||
Hi-Tech Manufacturing Business | ||
Plastic products | 841,659 | 926,490 |
Liquid crystal display | 421,375 | 439,071 |
Printed circuit boards | 984,110 | 999,648 |
Intelligent chargers | 196,198 | 208,414 |
Industrial property investment | 363,533 | 349,320 |
2,806,875 | 2,922,943 | |
Aerospace Service | ||
Property investment in | ||
Shenzhen Aerospace Science & | ||
Technology Plaza | 9,099,802 | 9,250,024 |
Internet of Things | - | 311 |
Cross-bordere-commerce | - | 295 |
9,099,802 | 9,250,630 | |
Total assets for reportable segments | 11,906,677 | 12,173,573 |
Other Business | 94,633 | 98,328 |
Interests in associates | 208,851 | 199,546 |
Interests in joint ventures | 693,255 | 697,923 |
Unallocated assets | 1,489,462 | 1,535,901 |
Consolidated assets | 14,392,878 | 14,705,271 |
38 China Aerospace International Holdings Limited 2020 Interim Report
Notes to the Condensed Consolidated Financial Statements For the six months ended 30 June 2020
3. REVENUE AND SEGMENT INFORMATION (continued)
- The following is an analysis of the Group's assets and liabilities by operating and reportable segments: (continued)
30.6.2020 | 31.12.2019 | |
HK$'000 | HK$'000 | |
Segment liabilities | ||
Hi-Tech Manufacturing Business | ||
Plastic products | 290,092 | 343,544 |
Liquid crystal display | 115,811 | 113,094 |
Printed circuit boards | 297,647 | 294,083 |
Intelligent chargers | 82,155 | 90,753 |
Industrial property investment | 6,256 | 6,001 |
791,961 | 847,475 | |
Aerospace Service | ||
Property investment in | ||
Shenzhen Aerospace Science & | ||
Technology Plaza | 86,175 | 105,271 |
Internet of Things | - | 1,209 |
Cross-bordere-commerce | - | 23,246 |
86,175 | 129,726 | |
Total liabilities for reportable segments | 878,136 | 977,201 |
Unallocated liabilities | 4,188,814 | 4,347,084 |
Consolidated liabilities | 5,066,950 | 5,324,285 |
2020 Interim Report China Aerospace International Holdings Limited | 39 |
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
3. REVENUE AND SEGMENT INFORMATION (continued)
- The following is an analysis of the Group's assets and liabilities by operating and reportable segments: (continued)
For the purposes of monitoring segment performances and allocating resources between segments: - all assets are allocated to operating and reportable segments other than bank balances and cash, pledged bank deposits, short-term bank deposits, amount due from a related party, financial assets at fair value through profit or loss, interests in joint ventures, interests in associates and the other unallocated assets; and
- all liabilities are allocated to operating and reportable segments other than taxation payable, deferred taxation, other loan, loan from a controlling shareholder, loan from a related party and the other unallocated liabilities.
40 China Aerospace International Holdings Limited 2020 Interim Report
Notes to the Condensed Consolidated Financial Statements For the six months ended 30 June 2020
4. OTHER INCOME AND OTHER GAINS AND LOSSES
Six months ended
30.6.2020 30.6.2019
HK$'000 HK$'000
The Group's other income comprises: | |||
Bank interest income | 9,721 | 5,355 | |
Sales of scrap materials | 8,631 | 4,554 | |
The Group's other gains and losses | |||
comprise: | |||
Net gain from change in fair value of | |||
financial assets at fair value through | |||
profit or loss | 1,112 | 2,559 | |
Net exchange (loss) gain | (6,284) | 366 | |
5. | FINANCE COSTS | ||
Six months ended | |||
30.6.2020 | 30.6.2019 | ||
HK$'000 | HK$'000 | ||
Interest on: | |||
Loans from related parties | |||
(Note 19(a)) | 33,332 | 34,775 | |
Lease liabilities | 2,410 | 3,054 | |
35,742 | 37,829 | ||
2020 Interim Report China Aerospace International Holdings Limited | 41 |
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
6. PROFIT BEFORE TAXATION
Six months ended
30.6.2020 30.6.2019
HK$'000 HK$'000
Profit before taxation has been arrived
at after charging: | |||
Depreciation of property, plant and | |||
equipment | 82,962 | 84,094 | |
Depreciation of right-of-use assets | 16,123 | 16,294 | |
7. TAXATION | |||
Six months ended | |||
30.6.2020 | 30.6.2019 | ||
HK$'000 | HK$'000 | ||
Current tax | |||
Hong Kong Profits Tax (Note (i)) | 3,941 | 5,248 | |
PRC Enterprise Income Tax | |||
(Note (ii)) | 27,642 | 6,520 | |
31,583 | 11,768 | ||
Deferred tax (credit) charge | (16,915) | 44,305 | |
14,668 | 56,073 | ||
42 China Aerospace International Holdings Limited 2020 Interim Report
Notes to the Condensed Consolidated Financial Statements For the six months ended 30 June 2020
7. TAXATION (continued)
Notes:
-
HONG KONG PROFIT TAX
On 21 March 2018, the Hong Kong Legislative Council passed The Inland Revenue (Amendment) (No. 7) Bill 2017 (the "Bill") which introduces the two-tiered profits tax rates regime. The Bill was signed into law on 28 March 2018 and was gazetted on the following day. Under the two-tiered profits tax rates regime, the first HK$2 million of profits of the qualifying group entity will be taxed at 8.25%, and profits above HK$2 million will be taxed at 16.5%. The profits of group entities in Hong Kong not qualifying for the two-tiered profits tax rates regime will continue to be taxed at a flat rate of 16.5%. Accordingly, the Hong Kong Profits Tax is calculated at 8.25% on the first HK$2 million of the estimated assessable profits for the qualifying group entity and at 16.5% on the estimated assessable profits above HK$2 million. - PRC ENTERPRISE INCOME TAX
Under the Law of the PRC on Enterprise Income Tax (the "EIT Law") and Implementation Regulation of the EIT Law, the tax rate of the PRC subsidiaries is 25%. During the six months ended 30 June 2020, certain subsidiaries of the Group operating in the PRC are eligible as High and New Technology Enterprise till the dates ranging from 9 November 2020 to 2 December 2022 and the income tax rate of these subsidiaries is 15%.
According to relevant laws and regulations promulgated by the State Tax Bureau of the PRC that was effective from 2008 onwards, enterprise engaging in research and development activities are entitled to claim 175% of their research and development expenses so incurred as tax deductible expenses when determining their assessable profits for that year.
2020 Interim Report China Aerospace International Holdings Limited | 43 |
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
8. EARNINGS PER SHARE
The calculation of the basic earnings per share attributable to the owners of the Company is based on the following data:
Six months ended | ||
30.6.2020 | 30.6.2019 | |
HK$'000 | HK$'000 | |
Earnings | ||
Profit for the period attributable to the | ||
owners of the Company for the | ||
purpose of basic earnings per | ||
share | 116,472 | 125,697 |
30.6.2020 | 30.6.2019 | |
'000 | '000 | |
Number of shares | ||
Number of ordinary shares for the | ||
purpose of basic earnings per | ||
share | 3,085,022 | 3,085,022 |
No diluted earnings per share is presented as there were no potential dilutive shares in issue for both periods.
9. DIVIDEND
2019 final dividend of HK2 cents (1.1.2019 to 30.6.2019: 2018 final dividend of HK1 cent) per share amounting to HK$61,700,000 (1.1.2019 to 30.6.2019: HK$30,850,000) was declared by the Company during the period. The directors of the Company do not recommend payment of an interim dividend for both interim period.
44 China Aerospace International Holdings Limited 2020 Interim Report
Notes to the Condensed Consolidated Financial Statements For the six months ended 30 June 2020
10. PROPERTY, PLANT AND EQUIPMENT AND INVESTMENT PROPERTIES
During the current interim period, the Group disposed of certain plant and machinery with an aggregate carrying amount of HK$544,000 (1.1.2019 to 30.6.2019: HK$108,000) for cash proceeds of HK$741,000 (1.1.2019 to 30.6.2019: HK$37,000), resulting in a gain on disposal of HK$187,000 (1.1.2019 to 30.6.2019: loss on disposal of HK$71,000).
In addition, during the period, the Group spent approximately HK$69,237,000 (1.1.2019 to 30.6.2019: HK$58,908,000) on acquisition of property, plant and equipment.
The fair values of the Group's investment properties at 30 June 2020 and 31 December 2019 have been arrived on the basis of valuations carried out on that date by Jones Lang LaSalle Limited ("Jones Lang") for properties situated in Hong Kong and Knight Frank Petty Limited ("Knight Frank") for properties situated in the PRC. Jones Lang and Knight Frank are independent qualified professional valuers not connected with the Group and are members of the Institute of Valuers. The valuation of i n v e s t m e n t p r o p e r t i e s o f H K $ 8 , 8 8 5 , 3 3 7 , 0 0 0 ( 3 1 . 1 2 . 2 0 1 9 : HK$9,110,037,000) was arrived at by reference to market evidence of transaction prices for similar properties and/or by capitalisation of income potential of similar properties. The resulting decrease in fair value of investment properties of HK$68,417,000 (1.1.2019 to 30.6.2019: increase of HK$74,215,000) has been recognised directly in the condensed consolidated statement of profit or loss.
2020 Interim Report China Aerospace International Holdings Limited | 45 |
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
11. TRADE AND OTHER RECEIVABLES AND LONG-TERM ASSETS
The Group allows an average credit period of 30-120 days to its trade receivables arising from contracts with customers.
The following is an aged analysis of trade receivables arising from contracts with customers, net of allowance for credit losses presented based on invoice date, at the end of the reporting period:
30.6.2020 | 31.12.2019 | |
HK$'000 | HK$'000 | |
Within 90 days | 749,980 | 851,223 |
Between 91-180 days | 25,396 | 113,296 |
Between 181-365 days | - | 4,204 |
775,376 | 968,723 | |
Included in the Group's trade receivables arising from contracts with customers is bills received amounting to HK$135,601,000 (31.12.2019: HK$166,131,000) which are held by the Group for future settlement of trade receivables. All bills received by the Group are with a maturity period of less than one year.
The Group's rental income is based on effective accrued rentals after taking into account of rent free period and progressive rentals which are recorded as unbilled rental receivables. Rental receivables are invoiced to tenants on a monthly basis after the rent free period and are due for settlement upon the issuance of invoices.
46 China Aerospace International Holdings Limited 2020 Interim Report
Notes to the Condensed Consolidated Financial Statements For the six months ended 30 June 2020
11. TRADE AND OTHER RECEIVABLES AND LONG-TERM ASSETS (continued)
Rental receivables of the Group HK$599,721,000 (31.12.2019: HK$547,660,000) include billed rental receivables of HK$69,322,000 (31.12.2019: HK$27,555,000) and unbilled rental receivables of HK$530,399,000 (31.12.2019: HK$520,105,000). The following is an aged analysis of billed rental receivables, net of allowance for credit losses, presented based on invoice date at the end of the reporting period:
30.6.2020 | 31.12.2019 | |
HK$'000 | HK$'000 | |
Within 90 days | 32,856 | 12,348 |
Between 91-180 days | 36,466 | 15,207 |
69,322 | 27,555 | |
Included in the Group's rental receivables as at 30 June 2020 are accrued rental income of HK$448,544,000 (31.12.2019: HK$384,675,000) that are expected to be realised after twelve months after the reporting period and are presented as non-current assets under long term assets.
Included in the Group's other receivables at 30 June 2020 is value-added tax recoverable of HK$49,451,000 (31.12.2019: HK$45,881,000).
2020 Interim Report China Aerospace International Holdings Limited | 47 |
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
-
IMPAIRMENT ASSESSMENT ON FINANCIAL ASSETS AND OTHER ITEMS SUBJECT TO EXPECTED CREDIT LOSS MODEL ("ECL")
The basis of determining the inputs and assumptions and the estimation techniques used in the condensed consolidated financial statements for the six months ended 30 June 2020 are the same as those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2019.
During the current interim period, the Group recognised additional impairment losses on financial assets and other items subject to ECL for the specific loss allowance due to the delay payment from these debtors. - SHORT-TERMBANK DEPOSITS
At 30 June 2020, short-term bank deposits with original maturity more than three months carry a fixed interest ranging from 0.13% to 2.30% per annum (31.12.2019: ranging from 2.05% to 3.37%).
48 China Aerospace International Holdings Limited 2020 Interim Report
Notes to the Condensed Consolidated Financial Statements For the six months ended 30 June 2020
14. TRADE AND OTHER PAYABLES
30.6.2020 | 31.12.2019 | |
HK$'000 | HK$'000 | |
Trade payables | 444,116 | 474,406 |
Accrued charges | 148,790 | 190,949 |
Security deposits from tenants | 26,319 | 29,475 |
Other payables | 463,858 | 553,503 |
1,083,083 | 1,248,333 | |
Other payables included an amount of HK$54,000,000 (31.12.2019: HK$54,000,000) received from a third party on behalf of China Aerospace Science & Technology Corporation ("CASC"), a controlling shareholder of the Company.
The following is an aged analysis of trade payables based on invoice date at the end of the reporting period:
30.6.2020 | 31.12.2019 | |
HK$'000 | HK$'000 | |
Within 90 days | 416,603 | 427,820 |
Between 91-180 days | 10,226 | 1,521 |
Between 181-365 days | 3,953 | 35,658 |
Over 1 year | 13,334 | 9,407 |
444,116 | 474,406 |
2020 Interim Report China Aerospace International Holdings Limited | 49 |
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
15. SHARE CAPITAL
30.6.2020 & | |
31.12.2019 | |
HK$'000 | |
Issued and fully paid: | |
- 3,085,022,000 ordinary shares with no par value | 1,154,511 |
16. DISPOSAL OF SUBSIDIARIES
During the current interim period, the Group entered into a capital increment agreement with several existing shareholders and strategic investors in which the registered capital of 航天數聯信息技術（深圳）有限 公司 ("Digitnexus") would be increased from approximately HK$57,216,000 to approximately HK$128,460,000. The strategic investors agreed to subscribe for registered capital of HK$71,244,000 while the existing shareholders of Digitnexus have not made additional contribution.
The transaction was completed on 20 April 2020, on which the Group lost control of Digitnexus. The equity interest held by the Group in Digitnexus decreased from 72.13% to 32.13%. Digitnexus ceased to be a subsidiary of the Company and since the operation of Digitnexus is insignificant to the Group, no discontinued operation for the period ended 30 June 2020 is presented. Digitnexus became an associate of the Company as the Group was regard as having significant influence over Digitnexus, and is accounted for in the condensed consolidated financial statements using equity-accounting method since the date of completion.
50 China Aerospace International Holdings Limited 2020 Interim Report
Notes to the Condensed Consolidated Financial Statements For the six months ended 30 June 2020
16. DISPOSAL OF SUBSIDIARIES (continued)
The major classes of assets and liabilities of Digitnexus as at the date of disposal are as follows:
HK$'000 | |
Bank balances and cash | 31,645 |
Trade and other payables | (14,034) |
Others | 641 |
Net assets disposed of | 18,252 |
Gain on disposal | |
Fair value of the equity interest retained in | |
Digitnexus | 6,761 |
Net assets disposed of | (18,252) |
Non-controlling interests | (11,738) |
Contribution from new investors | 71,244 |
Reclassification of cumulative translation reserve | |
upon deemed disposal of Digitnexus to | |
profit or loss | 6,060 |
54,075 | |
Cash outflow arising on disposal | |
Bank balances and cash disposed of | 31,645 |
The disposal of Digitnexus did not contribute significantly to the Group's cash flows or operating results.
2020 Interim Report China Aerospace International Holdings Limited | 51 |
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
17. COMMITMENTS
30.6.2020 | 31.12.2019 | |
HK$'000 | HK$'000 | |
Capital expenditure contracted for but | ||
not provided in the condensed | ||
consolidated financial statements in | ||
respect of: | ||
- acquisition of property, plant and | ||
equipment and right-of-use | ||
assets | 156,221 | 16,284 |
18. FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS
Fair value of the Group's financial assets that are measured at fair value on a recurring basis
Some of the Group's financial assets are measured at fair value at the end of each reporting period. The fair value of the financial assets with standard terms and conditions and traded in active liquid markets is determined with reference to quoted market bid prices.
At 30 June 2020, the Group's financial assets at fair value through profit or loss which are stated at fair value represent equity securities listed on The Stock Exchange of Hong Kong Limited amounting to HK$6,899,000 (31.12.2019: HK$5,787,000).
The classification of the Group's financial assets (i.e. financial assets at fair value through profit or loss) at 30 June 2020 using the fair value hierarchy is Level 1. Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active market for identical assets or liabilities.
The directors of the Company consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the condensed consolidated financial statements approximate their fair values.
52 China Aerospace International Holdings Limited 2020 Interim Report
Notes to the Condensed Consolidated Financial Statements For the six months ended 30 June 2020
19. RELATED PARTY TRANSACTIONS
In addition to the transactions and balances disclosed in note 14 and in the condensed consolidated statement of financial position, the Group entered into the following significant related party transactions:
The Group operates in an economic environment currently predominated by enterprises directly or indirectly owned or controlled or significantly influenced by the PRC government (hereinafter collectively referred to as "government-related entities"). The Company's substantial shareholder with significant influence over the Group, CASC, is a state-owned enterprise under the direct supervision of the State Council of the PRC. During the period, except as disclosed below, the Group did not have any individually significant transactions with government-related entities in its ordinary and usual course of business.
- Transactions with the CASC and its subsidiaries
- During the year ended 31 December 2013, the Group entered into a long-term loan agreement with CASC for an amount of
RMB500,000,000 for a period of five years from the first drawdown date. The loan has been renewed during the six months ended 30 June 2019 and is unsecured, bears a fixed interest at 5% per annum and is repayable in March 2023. As a t 30 J u n e 2020, t h e G r o u p h a s d r a w n d o w n R M B 5 0 0 , 0 0 0 , 0 0 0 ( e q u i v a l e n t t o a p p r o x i m a t e l y HK$547,645,000) (31.12.2019: RMB500,000,000 (equivalent to approximately HK$557,414,000)). The interest incurred to CASC during the six months ended 30 June 2020 amounted to RMB12,639,000 (equivalent to approximately HK$13,935,000) (1.1.2019 to 30.6.2019: RMB12,569,000 (equivalent to approximately HK$14,490,000)).
2020 Interim Report China Aerospace International Holdings Limited | 53 |
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
19. RELATED PARTY TRANSACTIONS (continued)
- Transactions with the CASC and its subsidiaries (continued)
- During the year ended 31 December 2016, the Group entered into a facility ("Facility") with Aerospace Science & Technology Finance Company Limited ("Aerospace Finance"), for advances up to RMB1,300,000,000 for a period of 12 years from the first drawdown date. The property ownership certificates of a portion of Shenzhen Aerospace Science & Technology Plaza with a valuation amount of approximately RMB1,900,000,000 are mortgaged in favour of Aerospace Finance by Shenzhen Aerospace Technology Investment Company Limited. As at 30 June 2020, the Group has drawn down RMB789,100,000
(equivalent to approximately HK$864,294,000) (31.12.2019: R M B 7 8 9 , 1 0 0 , 0 0 0 ( e q u i v a l e n t t o a p p r o x i m a t e l y HK$879,710,000)). Such loan carries a variable interest rate of 4.4% per annum and the interest paid to loans drawn from the Facility during the period ended 30 June 2020 amounted to RMB17,593,000 (equivalent to approximately HK$19,397,000 (1.1.2019 to 30.6.2019: RMB17,496,000 (equivalent to approximately HK$20,171,000)).
-
Transactions/balances with other government-related entities in the PRC
Apart from the transactions with CASC Group which have been disclosed above, the Group also conducts business with other government-related entities.
The Group has certain deposits placements, borrowings and other general banking facilities, with certain banks which are government-related entities in its ordinary course of business. Other than the substantial amount of bank balances, the facility with these banks and certain sales transactions, remaining transactions with other government-related entities are individually insignificant. - During the six months ended 30 June 2020, the emoluments of key management personnel were HK$1,594,000 (1.1.2019 to 30.6.2019: HK$1,655,000).
54 China Aerospace International Holdings Limited 2020 Interim Report
Notes to the Condensed Consolidated Financial Statements For the six months ended 30 June 2020
20. PLEDGE OF OR RESTRICTION ON ASSETS
As at 30 June 2020, bank deposits of HK$43,298,000 (31.12.2019: HK$41,272,000) and bills receivables of HK$121,994,000 (31.12.2019: HK$136,106,000) and investment properties of approximately HK$2,081,051,000 (31.12.2019: HK$2,120,963,000) were pledged to banks and Aerospace Finance to secure general banking facilities granted to the Group.
Restriction on assets
In addition, lease liabilities of HK $92,901,000 (31.12.2019: HK$109,225,000) are recognised with related right-of-use assets of HK$88,822,000 (31.12.2019: HK$106,139,000) as at 30 June 2020. The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor and the relevant leased assets may not be used as security for borrowing purposes.
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