Futong Technology Development : Interim Report 2020

Contents

	Pages
Financial Summary	2
Management Discussion and Analysis	3
Corporate Governance and Other Information	8
Report on Review of Condensed Consolidated Interim Financial Statements	13
Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income	14
Condensed Consolidated Statement of Financial Position	15
Condensed Consolidated Statement of Changes in Equity	16
Condensed Consolidated Statement of Cash Flows	17
Notes to the Condensed Consolidated Interim Financial Statements	18
Corporate Information	32

Interim Report 2020

1

Financial Summary

Results

	Six-month period ended 30 June
	2020	2019
	RMB'000	RMB'000
	Unaudited	Unaudited
Revenue	394,307	548,684
Profit from operations	8,167	15,744
Finance costs	(66)	(1,179)
Profit before income tax expense	8,101	14,565
Income tax expense	(4,941)	(5,630)
Profit for the period	3,160	8,935
Earnings per share
- Basic and diluted (RMB)	0.01	0.03

Assets and liabilities

	At 30 June	At 31 December
	2020	2019
	RMB'000	RMB'000
	Unaudited	Audited
Total assets	750,256	727,498
Total liabilities	(201,385)	(182,045)
NET ASSETS	548,871	545,453

2	Futong Technology Development Holdings Limited

MANAGEMENT DISCUSSION AND ANALYSIS

Business Review

During the first half of 2020, Mainland China and many other countries implemented lockdowns and social distancing measures for protecting the society in response to the outbreak of COVID-19 pandemic, leading to a plenitude of challenges and uncertainties in the overall economic environment. Adhering to its approach of business development despite the severe market conditions, the Group strengthened online training for its employees and enhanced research and development ("R&D") of its own brand products to further develop its business during the pandemic period. As a result of its effort in adjusting the business structure and integrating internal resources that helped lower operating costs in recent year, even though the overall revenue for the six-month period ended 30 June 2020 (the "Period") decreased, the Group was able to maintain its profit in such a difficult environment.

As a leading enterprise of digitalised transformation services provider in China, the Group mainly specialises in providing enterprise IT infrastructure products, services and solutions, cloud computing management products and intelligent digitalised application products. Driven by the growing efforts of enterprise clients in China's market to transform their operations through digitalisation, the Group embraced the opportunity to reposition and adjust its businesses, consolidating the core business into three segments, namely the systems integration services, the development and sales marketing of own-brand cloud computing management products, and the development and sales marketing of intelligent digitalised products.

Systems integration services

The Group's systems integration services business has maintained its strong growth. This segment mainly provides customer- specific systems structure business solutions, as well as operation and maintenance support to customers' informationalised value-added services. By working with leading domestic and foreign-established IT companies and service providers as close collaborative partners, the Group strives to explore cooperation and business opportunities in advanced technology sectors. Its objective is to maintain its position and strength as a technology pioneer in the industry while growing the Group's businesses. For the Period, the systems integration services business was facing intensified competition, though it continued to be one of the Group's key income sources. The Group will further optimise its existing product portfolio to increase services income and gross profit margin so as to ensure good cash flow and enhance profitability.

Development and sale of own-brand cloud computing management products

After investing in resources and R&D for several years, the cloud computing management products segment has become one of the Group's key businesses. To enhance the reliability, functionality and market recognition of its products, the Group continues to improve associated technologies and step up marketing efforts for its own-brand cloud computing products. At the same time, it has commenced cooperation with the top providers of cloud resources in Mainland China and overseas such as AWS, Tencent Cloud and Alibaba Cloud, and actively offered its leading enterprise customers in China's market with highly efficient applications and solutions through its cloud products and cloud management services. During the Period, the Group not only launched the latest edition of multi-cloud management platform CMP2020, but also other products such as ITGo virtualised operation maintenance and management platform as well as enterprise cloud drive, in order to facilitate customer's enterprise digitalised transformation with better hybrid cloud management services. In addition, the Group has won the bids for several major projects and signed cooperation agreements with various top providers of cloud resources, thus laying a good foundation for future income.

Interim Report 2020

3

MANAGEMENT DISCUSSION AND ANALYSIS

Development and sale of intelligent digitalised products

Driven by the overwhelming trend of new technologies such as artificial intelligence and big data, the Group has continued to develop intelligent digitalised application products for specific industries including the medical and transportation sectors. The adoption of new and advanced AI technologies and tools has enabled the Group to more precisely serve customers in specific industries. The Group also allocated more resources in intelligent digitalised products, formed AI laboratories managed by professionals holding doctoral and master's degrees from renowned universities in Mainland China, cooperated with renowned "Project 985" educational institutions in Mainland China and enlisted experts and business organisations in the industry to form strategic partnerships. During the Period, the AI Lab in Chengdu officially commenced operation, and together with the AI Lab in Beijing, the Group currently has two R&D centres in the South and North respectively, which are set to speed up product development, enabling the Group to further optimise AI algorithm models and compile knowledge graphs. While the Group continues to provide professional services to different customers, it is also actively accumulating industry reserves to lay a solid foundation for future business development.

FINANCIAL REVIEW

Revenue

For the Period, revenue of the Group decreased by approximately RMB154.4 million or 28.1% as compared with the corresponding period of 2019, to approximately RMB394.3 million (2019: approximately RMB548.7 million). The decline was mainly due to the outbreak of COVID-19 pandemic as well as the macroeconomic uncertainty which led to some of the Group's customers delaying their purchase plan and having remained cautious with their spending. Besides, the sales of IBM products and services were affected due to the termination of the various business partner agreements entered into between IBM and certain members of the Group.

Gross profit

Gross profit of the Group decreased by approximately RMB23.9 million or 35.0% to approximately RMB44.4 million for the Period (2019: approximately RMB68.3 million), while the gross profit ratio decreased from 12.4% to 11.3%. The decrease in gross profit ratio was mainly due to the decline in sales of certain products that led to a reduction of rebate received by the Group.

Other income and other gains, net

Other income and other gains, net consisted mainly of interest income from bank deposits, foreign exchange gain or loss, government grants and reversal of impairment loss on trade receivables and contract assets. During the Period, net gains from other income and other gains, net amounted to approximately RMB8.4 million (2019: approximately RMB4.1 million), representing an increase of approximately RMB4.3 million. This increase was mainly due to the Group's effort in monitoring the recoverability of receivables causing a reversal of impairment loss amounted to approximately RMB3.7 million, and the increase in foreign exchange gain of approximately RMB1.1 million for the Period.

Selling expenses

For the Period, selling expenses of the Group amounted to approximately RMB31.5 million (2019: approximately RMB39.2 million), representing a decrease of approximately RMB7.7 million or 19.6% when compared with the corresponding period of 2019. The decrease was mainly due to the amount of approximately RMB8.4 million was capitalized as intangible assets for the Period.

4	Futong Technology Development Holdings Limited

MANAGEMENT DISCUSSION AND ANALYSIS

Administrative expenses

Administrative expenses of the Group for the Period amounted to approximately RMB13.1 million (2019: approximately RMB17.3 million), representing a decrease of approximately RMB4.2 million or 24.6% when compared with the corresponding period of 2019. The decrease was mainly due to the Group's implementation of tight cost control measures and the reduction in number of administrative staff following consolidation of its internal resources, causing the staff costs and other related expenses to fall accordingly.

Finance costs

Finance costs of the Group decreased by approximately RMB1.1 million or 94.4%, from approximately RMB1.2 million for the six- month period ended 30 June 2019 to approximately RMB0.1 million for the Period. The decrease was mainly due to the significant reduction in borrowings as the Group maintained sufficient working capital and cash flow during the Period.

Income tax expense

Income tax expense of the Group for the Period amounted to approximately RMB4.9 million (2019: approximately RMB5.6 million), representing a decrease of approximately RMB0.7 million, or 12.2%, when compared with the corresponding period of 2019. The decrease was mainly due to the decline in one-off PRC withholding tax on the dividends declared in respect of profits earned by a PRC subsidiary during the corresponding period of 2019 and a decline in deferred tax assets in respect of the decrease in impairment loss on trade receivables.

Profit and comprehensive income for the period attributable to owners of the Company

For the Period, the profit and comprehensive income attributable to owners of the Company amounted to approximately RMB3.2 million (2019: approximately RMB9.0 million), representing a decrease of approximately RMB5.8 million, or 64.8%, as compared with the corresponding period of 2019. Due to the outbreak of COVID-19 pandemic as well as the macroeconomic uncertainty, the decrease in revenue outweighed the effect of implementation of stringent cost controls over its operating expenses during the Period, causing profit attributable to owners of the Company to decline.

LIQUIDITY AND FINANCIAL RESOURCES

The Group generally finances its daily operations with internally generated cash flows and banking facilities. As at 30 June 2020, the Group had total assets of approximately RMB750.3 million and net assets of approximately RMB548.9 million (31 December 2019: approximately RMB727.5 million and approximately RMB545.5 million, respectively). In respect of the trade receivables and contract assets of the Group amounted to approximately RMB177.8 million (31 December 2019: approximately RMB165.1 million), net of allowance for doubtful debts of approximately RMB78.7 million (31 December 2019: approximately RMB88.1 million). The management will perform a regular review and implement stringent control measures on trade receivables and contract assets with a view to ensuring the recovery of trade receivables on the due dates and closely monitoring the Group's liquidity. The Group's bank balances and cash amounted to approximately RMB385.0 million as at 30 June 2020 (31 December 2019: approximately RMB375.0 million). Bank borrowings amounted to approximately RMB0.1 million (31 December 2019: approximately RMB10.6 million). Taking into account the cash on hand and recurring cash flow from its business, the Group's financial position remained healthy and was sufficient to achieve its business objectives.

Interim Report 2020

5

MANAGEMENT DISCUSSION AND ANALYSIS

As at 30 June 2020, all (31 December 2019: 0.9%) bank borrowings were at variable interest rates.

As at 30 June 2020, the borrowings of the Group were advanced in RMB while cash and cash equivalents were held at RMB, USD and Hong Kong dollars.

PLEDGE OF ASSETS

As at 30 June 2020, certain assets of the Group with carrying value of approximately RMB39.3 million (31 December 2019: approximately RMB50.9 million) were pledged to banks for banking facilities and bank guarantees granted to the Group.

NET DEBT-TO-CAPITAL RATIO

The Group's net debt-to-capital ratios as at 30 June 2020 and 31 December 2019 were zero. This ratio was calculated as total borrowings less bank balances and cash, and relevant pledged deposits divided by total equity.

FOREIGN EXCHANGE EXPOSURE

The Group is exposed to currency risk primarily through sales and purchases which give rise to receivables, payables and cash balances that are denominated in foreign currencies, i.e. currencies other than the functional currency of the operations to which the transactions relate. The currencies giving rise to this risk are primarily USD and Hong Kong dollars.

During the Period, the Group entered into certain RMB/USD foreign exchange forward contracts to hedge against the volatile RMB/USD exchange rate. The foreign exchange forward contracts were fully settled as at the end of the Period. The management will continue to monitor closely the Group's foreign currency exposure and requirements and arrange for hedging facilities when necessary.

Significant investments

During the Period, the Group did not hold any material investments.

INTERIM DIVIDEND

The Board resolved not to declare any interim dividend for the six-month period ended 30 June 2020 (2019: nil).

EMPLOYEES AND REMUNERATION POLICY

As at 30 June 2020, the Group had in total 335 (31 December 2019: 337) employees in the PRC and Hong Kong. Total staff costs

amounted to approximately RMB43.6 million (six-month period ended 30 June 2019: approximately RMB44.0 million).

The Group's employees are remunerated by reference to industry practices and performance and the experience of individual employees. Our main focus is to ensure that the Group remains competitive within the market it operates in, to ensure we attract and retain the right talent necessary to grow the business and maximise shareholders' value. We place great emphasis on the development of our people as we firmly believe they are the core of the Group. Through our ongoing training programme, we encourage them to develop their talents and to move up the organisation. We believe these efforts are mutually beneficial to the Group and its employees.

6	Futong Technology Development Holdings Limited

MANAGEMENT DISCUSSION AND ANALYSIS

Emoluments of the Directors of the Company are decided by the Remuneration Committee, having regard to the Company's operating results, individual performance and/or comparable market statistics.

The Company has share option schemes in place as an incentive to Directors and eligible employees.

IMPORTANT EVENTS SUBSEQUENT TO THE FINANCIAL PERIOD

The Directors are not aware of any important events affecting the Company that have occurred since the end of the Period.

Outlook

Looking ahead to the second half of 2020, the development of COVID-19 pandemic remains unpredictable and the complicated market environment also presents many uncertainties. The Group will continue to adjust its strategies to enhance its own competitiveness and persistently achieve its strategic goals. While ensuring the stable development of its system integration services business for enterprise customers, the Group will also proceed in two directions, namely multi-cloud management services in cloud computing and medical intelligence. It will continuously invest in the building of platforms for technical capabilities and intellectual property rights so as to develop a series of intelligent technology-driven products.

In view of the rapid development of emerging technologies such as internet+, cloud computing and artificial intelligence, the Group will strive to strengthen the maintenance and service capabilities of its products in the new IT environment and improve the reliability and functionality of its self-developed software. Furthermore, by capitalising on the professional advantages of its subsidiaries in their corresponding professional areas, and with Futong Cloud Technology Co., Ltd. as the core platform, the Group will further enhance and optimise its cloud computing products, multi-cloud management solutions and the operational and maintenance functions of cloud intelligent technologies. Together with Beijing Futong Dongfang Technology Co., Ltd. at the helm, the Group will focus on intelligent applications for digitalisation, system integration and professional maintenance of system operation, with the aim of providing highly efficient A.I. technology and knowledge graphs to customers who are undergoing digital transformation in their respective industry such as the medical and transportation sectors, and also offering applications, services and solutions for the use in their professional areas.

In addition, the Group will continue to apply resources management solutions to ensure that resources are being utilised efficiently and maintain a high operational efficiency. At the same time, it will continue to prudently monitor and implement stringent cost control measures and focus on risk management of all its business cycles, thereby maintaining a sound and healthy financial position.

While R&D requires considerable investment in both time and resources, the Group believes that embracing the core product technologies is the only way to gain competitive advantages in the complex market environment nowadays. The Company has engaged an external consultant to realign the development, strategies and branding of the Group. Consequently, aside from increasing investment in its proprietary innovative products, intelligent applications and services, the Group will step up its R&D efforts, refine technologies that have been amassed and also strengthen cost controls. It will make good use of its technological advantages to enhance its leading capabilities in technology and services.

Interim Report 2020

7

Corporate Governance and Other Information

CORPORATE GOVERNANCE

During the Period, the Board considered that the Company had applied the principles of and had complied with the code provisions set out in the Corporate Governance Code and Corporate Governance Report as stipulated in Appendix 14 to the Rules Governing the Listing of Securities (the "Listing Rules") on the Stock Exchange of Hong Kong Limited (the "Stock Exchange").

CODE OF CONDUCT REGARDING DIRECTORS' SECURITIES TRANSACTIONS

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code") set out in Appendix 10 to the Listing Rules as its own code of conduct regarding Director's securities transactions. Having made specific enquiry by the Company, all Directors have confirmed their compliance with the required standard set out in the Model Code during the Period.

REVIEW OF ACCOUNTS

The unaudited condensed consolidated interim financial statements of the Group for the Period have been reviewed by the Company's auditor, BDO Limited, in accordance with International Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" ("ISRE 2410") issued by the International Auditing and Assurance Standards Board. The unaudited condensed consolidated interim financial statements of the Group for the Period have also been reviewed by the audit committee of the Company.

PURCHASE, SALE AND REDEMPTION OF THE SHARES

Neither the Company nor any of its subsidiaries had purchased, sold or redeemed any of the Company's listed securities during the Period.

SHARE OPTION SCHEME

On 16 May 2019, the shareholders of the Company approved and adopted a new share option scheme (the "New Share Option Scheme") and terminated the share option scheme adopted on 11 November 2009 (the "Old Share Option Scheme") (together, the "Share Option Schemes"). The Share Option Schemes were adopted for the purpose of providing incentives and rewards to eligible participants who contribute to the success of the Group's operations. The basis of eligibility of any of the eligible persons to the grant of share options shall be determined by the Board from time to time on the basis of their contribution or potential contribution to the development and growth of the Group. The New Share Option Scheme, unless otherwise cancelled or amended, will remain in force for 10 years from 16 May 2019.

An option may be accepted by a participant within 21 days from the date of the offer of grant of the option. A nominal consideration of HK$1 is payable on acceptance of the grant of an option. An option may be exercised in accordance with the terms of the Share Option Scheme at any time during a period as determined by the Board, which must not be more than 10 years from the date of the grant. Unless otherwise determined by the Directors and stated in the offer for the grant of options to a grantee, there is no minimum period required under the Share Option Schemes for the holding of an option before it can be exercised.

The subscription price for the shares under the Share Option Schemes shall be a price determined by the Directors, but shall not be less than the highest of (i) the closing price of the shares as stated in the Stock Exchange's daily quotations sheet for trade in one or more board lots of the shares on the date of the offer for the grant, which must be a business day; (ii) the average closing price of shares as stated in the Stock Exchange's daily quotations for the five business days immediately preceding the date of the offer for the grant; and (iii) the nominal value of a share.

8	Futong Technology Development Holdings Limited

Corporate Governance and Other Information

The details of the principal terms and conditions of the New Share Option Scheme were summarised in the circular of the Company dated 11 April 2019. The details of the principal terms and conditions of the Old Share Option Scheme were summarised in the section headed "Share Option Scheme" in Appendix VI to the prospectus of the Company dated 24 November 2009.

Details of the movement in outstanding share options, which have been granted under the Old Share Option Scheme, during the Period were as below:

Name or category			exercise
of participants	Date of grant	Exercise period	price
			HK$
Directors
Ms. Chen Jing	18 January 2016	18 January 2016-	1.004
	(Note 5)	17 January 2026	(Notes 1)
	28 March 2019	28 March 2019-	0.81
		27 March 2029	(Note 3)
Sub-total
Chief executive
Mr. Zhao Wei	18 January 2016	18 January 2016-	1.004
	(Note 6)	17 January 2026	(Note 1)
	28 March 2019	28 March 2019-	0.81
		27 March 2029	(Note 3)
Employees	18 January 2016	18 January 2016-	1.004
		17 January 2026	(Note 1)
	14 October 2016	14 October 2016-	1.250
		13 October 2026	(Note 2)
	28 March 2019	28 March 2019-	0.81
		27 March 2029	(Note 3)
Sub-total
Total

number of share options

			Cancelled/
	Granted	Exercised	lapsed
As at	during	during	during	As at
1 January 2020	the Period	the Period	the Period	30 June 2020
400,000	-	-	-	400,000
1,000,000	-	-	-	1,000,000
1,400,000	-	-	-	1,400,000
400,000	-	-	-	400,000
1,000,000	-	-	-	1,000,000
1,400,000	-	-	-	1,400,000
400,000	-	-	-	400,000
900,000	-	-	(300,000)	600,000
4,900,000	-	-	(500,000)	4,400,000
6,200,000	-	-	(800,000)	5,400,000
9,000,000	-	-	(800,000)	8,200,000

Details of movement in outstanding share options, which have been granted under the New Share Option Scheme, during the Period were as below:

						number of share options
							Cancelled/
					Granted	Exercised	lapsed
Name or category			exercise	As at	during	during	during	As at
of participants	Date of grant	Exercise period	price	1 January 2020	the Period	the Period	the Period	30 June 2020
			HK$
Employees	1 April 2020	1 April 2021 -	0.57	-	3,000,000	-	-	3,000,000
		31 March 2030	(Note 4)

Interim Report 2020

9

Corporate Governance and Other Information

Notes:

1. The options are exercisable from 18 January 2016 to 17 January 2026 (both days inclusive) subject to the following vesting periods.

1. up to 30% of the options commencing on 18 January 2016;
2. up to 60% of the options commencing on 18 January 2017; and
3. up to 100% of the options commencing on 18 January 2018.

The closing price of the shares of the Company immediate before the date of grant was HK$0.990.

2. The options are exercisable from 14 October 2016 to 13 October 2026 (both days inclusive) subject to the following vesting periods.

1. up to 30% of the options commencing on 14 October 2016;
2. up to 60% of the options commencing on 14 October 2017; and
3. up to 100% of the options commencing on 14 October 2018.

The closing price of the shares of the Company immediate before the date of grant was HK$1.25.

3. The options are exercisable from 28 March 2019 to 27 March 2029 (both days inclusive) subject to the following vesting periods.

1. up to 30% of the options commencing on 28 March 2019;
2. up to 60% of the options commencing on 28 March 2020; and
3. up to 100% of the options commencing on 28 March 2021.

The closing price of the shares of the Company immediate before the date of grant was HK$0.81.

4. The options are exercisable from 1 April 2021 to 31 March 2030 (both days inclusive) subject to the following resting periods.

1. up to 20% of the options commencing on 1 April 2021;
2. up to 40% of the options commencing on 1 April 2022;
3. up to 70% of the options commencing on 1 April 2023; and
4. up to 100% of the options commencing on 1 April 2024;

The closing price of the shares of the Company immediate before the date of grant was HK$0.58.

1. These share options were granted to Ms. Chen Jing before she became a Director.
2. These share options were granted to Mr. Zhao Wei before he became the chief executive officer of the Company.

Details of the value of share options granted are set out in note 20 to the condensed consolidated interim financial statements.

10	Futong Technology Development Holdings Limited

Corporate Governance and Other Information

DISCLOSURE OF INTERESTS

Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures

As at 30 June 2020, the interests and short positions of the Directors and chief executive of the Company in shares, underlying shares and debentures of the Company or its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance ("SFO")) as recorded in the register maintained by the Company pursuant to Section 352 of the SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code were as follows:

1. Long positions in the shares of the Company:

			Approximate
		number of	percentage of the
Name of Director/		Ordinary	Company's issued
Chief Executive	Capacity/nature of interest	shares held	share capital (%)
Chen Jian	Beneficial owner/interest in	215,708,000	69.30
	controlled corporations	(Notes 1, 2, 3, 4 and 5)
Chen Jing	Beneficial owner	1,238,000	0.40
Zhao Wei	Beneficial owner	1,592,000	0.51

1. Long positions in the underlying shares of the Company:

			Approximate
		number of	percentage of the
Name of Director/		underlying	Company's issued
Chief Executive	Capacity/nature of interest	shares held	share capital (%)
Chen Jing	Beneficial owner	1,400,000	0.45
		(Note 6)
Zhao Wei	Beneficial owner	1,400,000	0.45
		(Note 6)

Notes:

1. 153,947,250 of these shares are held by China Group Associates Limited, the entire issued share capital of which is wholly and beneficially owned by Mr. Chen Jian. By virtue of the SFO, Mr. Chen Jian is deemed to be interested in the shares held by China Group Associates Limited.
2. 28,421,100 of these shares are held by Rich China Investments And Trading Ltd., the entire issued share capital of which is wholly and beneficially owned by Mr. Chen Jian. By virtue of the SFO, Mr. Chen Jian is deemed to be interested in the shares held by Rich China Investments And Trading Ltd..
3. 21,435,100 of these shares are held by Rich World Development Ltd., the entire issued share capital of which is wholly and beneficially owned by Mr. Chen Jian. By virtue of the SFO, Mr. Chen Jian is deemed to be interested in the shares held by Rich World Development Ltd..
4. 10,710,550 of these shares are held by Long Joy Group Limited, the entire issued share capital of which is wholly and beneficially owned by Mr. Chen Jian. By virtue of the SFO, Mr. Chen Jian is deemed to be interested in the shares held by Long Joy Group Limited.
5. 1,194,000 shares of the Company are held by Mr. Chen Jian as beneficial owner.
6. These shares are derived from the interest in share options granted by the Company, details of which are set out in the section headed "Share Option Scheme".

Interim Report 2020 11

Corporate Governance and Other Information

Save as disclosed above and those as disclosed under the heading "Discloseable Interests and Short Positions of Substantial Shareholders and Other Persons under the SFO" below, none of the Directors and chief executive of the Company had any interests or short positions in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of 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 as at 30 June 2020.

Discloseable Interests and Short Positions of Substantial Shareholders and Other Persons Under the SFO

As at 30 June 2020, the following persons or corporations (other than a Director or chief executive of the Company) had interests or short positions in the shares and underlying shares of the Company as recorded in the register required to be kept by the Company under Section 336 of the SFO and so far as is known to any Director or chief executive of the Company:

Long positions in the shares of the Company:

					Approximate
				number of	percentage of the
				ordinary	Company's issued
Name	Capacity/nature of interest	shares held	share capital (%)
China Group Associates	Beneficial	owner	153,947,250	49.46
	Limited (Note 1)
Rich China Investments	Beneficial	owner	28,421,100	9.13
And Trading Ltd. (Note 2)
Ms. Zhang Xin (Note 3)	Interest of spouse	215,708,000	69.30
Mr. Li Xiaoyong	Beneficial	owner	26,440,000	8.49
Rich World Development Ltd.	Beneficial	owner	21,435,100	6.89
	(Note 4)

Notes:

1. China Group Associates Limited is a company incorporated in the British Virgin Islands ("BVI") with limited liability which is wholly and beneficially owned by Mr. Chen Jian. Mr. Chen Jian is the sole director of China Group Associates Limited.
2. Rich China Investments And Trading Ltd. is a company incorporated in the BVI with limited liability which is wholly and beneficially owned by Mr. Chen Jian. Mr. Chen Jian is the sole director of Rich China Investments and Trading Ltd..
3. Ms. Zhang Xin is the spouse of Mr. Chen Jian. Under the SFO, Ms. Zhang Xin is taken to be interested in the same number of shares in which Mr. Chen Jian is interested.
4. Rich World Development Ltd. is a company incorporated in the BVI with limited liability which is wholly and beneficially owned by Mr. Chen Jian. Mr. Chen Jian is the sole director of Rich World Development Ltd..

Save as disclosed above, there was no person or corporation, other than a Director or chief executive of the Company, who had an interest or a short position in the shares or underlying shares of the Company as recorded in the register of the Company required to be kept by the Company under Section 336 of the SFO as at 30 June 2020.

12	Futong Technology Development Holdings Limited

Report on Review of Condensed Consolidated Interim Financial Statements

To the Board of Directors of Futong Technology Development Holdings Limited

富通科技發展控股有限公司

(incorporated in the Cayman Islands with limited liability)

Introduction

We have reviewed the condensed consolidated interim financial statements set out on pages 14 to 31 which comprise the condensed consolidated statement of financial position of Futong Technology Development Holdings Limited (the "Company") and its subsidiaries (collectively referred to as the "Group") as of 30 June 2020 and the related condensed consolidated statement of profit or loss and other comprehensive income, the condensed consolidated statement of changes in equity and the condensed consolidated statement of cash flows for the six-month period then ended, and a summary of significant accounting policies and other 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 International Accounting Standard 34 "Interim Financial Reporting" ("IAS 34"). The directors are responsible for the preparation and presentation of the condensed consolidated interim financial statements in accordance with IAS 34. Our responsibility is to express a conclusion on the condensed consolidated interim financial statements based on our review. This report is made 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.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" ("ISRE 2410"). A review of interim financial information 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 International 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 interim financial statements are not prepared, in all material respects, in accordance with IAS 34.

BDO Limited

Certified Public Accountants

Au Yiu Kwan

Practising Certificate Number P05018

Hong Kong, 21 August 2020

Interim Report 2020 13

Condensed Consolidated Statement of Profit	or Loss and
Other Comprehensive Income
For the six-month period ended 30 June 2020
			Six-month period ended 30 June
				2020	2019
	NOTE		RMB'000	RMB'000
			(Unaudited)	(Unaudited)
Revenue	6			394,307	548,684
Cost of sales and services				(349,925)	(480,421)
Gross profit				44,382	68,263
Other income	7			3,675	3,698
Other gains, net	7			4,724	355
Selling expenses				(31,529)	(39,223)
Administrative expenses				(13,085)	(17,349)
Profit from operations				8,167	15,744
Finance costs	8			(66)	(1,179)
Profit before income tax expense	9			8,101	14,565
Income tax expense	10			(4,941)	(5,630)
Profit and total comprehensive income
for the period				3,160	8,935
Profit and total comprehensive income
for the period attributable to:
Owners of the Company				3,166	8,992
Non-controlling interests				(6)	(57)
				3,160	8,935
Earnings per share
Basic and diluted (RMB)	12			0.01	0.03

14	Futong Technology Development Holdings Limited

Condensed Consolidated Statement of Financial Position

				At 30 June 2020
			30 June	31 December
			2020	2019
	NOTE	RMB'000	RMB'000
			(Unaudited)	(Audited)
ASSETS AND LIABILITIES
Non-current assets
Property, plant and equipment	13		3,062	3,496
Intangible assets	14		19,521	11,651
Right-of-use assets			22,065	19,171
Deferred tax assets	15		26,867	29,197
Total non-current assets			71,515	63,515
Current assets
Inventories			13,148	22,598
Trade, bills and other receivables	16		157,666	197,431
Contract assets			102,599	36,197
Pledged deposits			20,284	32,788
Bank balances and cash			385,044	374,969
Total current assets			678,741	663,983
Current liabilities
Trade and other payables	17		160,837	89,021
Contract liabilities			31,766	79,116
Bank borrowings	18		100	10,600
Lease liabilities			1,775	993
Tax payable			4,791	2,315
Total current liabilities			199,269	182,045
Net current assets			479,472	481,938
Total assets less current liabilities			550,987	545,453
Non-current liabilities
Lease liabilities			2,116	-
NET ASSETS			548,871	545,453
CAPITAL AND RESERVES
Share capital	19		27,415	27,415
Reserves			516,930	513,506
Equity attributable to owners of the Company			544,345	540,921
Non-controlling interests			4,526	4,532
TOTAL EQUITY			548,871	545,453

Interim Report 2020 15

Condensed Consolidated Statement of Changes in Equity

For the six-month period ended 30 June 2020

					Attributable to owners of the Company
											Non-
						Share
			Share	Share	Merger	options	Statutory	Retained			controlling	Total
			capital	premium	reserve	reserve	reserves	profit	Total	interests	equity
			RMB'000	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000
Balance at 1 January 2019
	(audited)	27,415	81,538	219	1,200	75,246	357,532	543,150		4,641	547,791
Profit and total
	comprehensive
	income for the period	-	-	-	-	-	8,992	8,992		(57)	8,935
Recognition of
	equity-settled
	share-based payments	-	-	-	593	-	-	593		-	593
Lapse of share-based
	payments	-	-	-	(368)	-	368	-	-	-
Dividends (note 11)	-	-	-	-	-	(5,999)	(5,999)	-	(5,999)
Balance at 30 June 2019
	(unaudited)	27,415	81,538	219	1,425	75,246	360,893	546,736		4,584	551,320
Balance at 1 January 2020
	(audited)	27,415	81,538	219	1,572	77,826	352,351	540,921		4,532	545,453
Profit and total
	comprehensive
	income for the period	-	-	-	-	-	3,166	3,166		(6)	3,160
Recognition of
	equity-settled
	share-based payments	-	-	-	258	-	-	258		-	258
Lapse of share-based
	payments	-	-	-	(155)	-	155	-	-	-
Balance at 30 June 2020
	(unaudited)	27,415	81,538	219	1,675	77,826	355,672	544,345		4,526	548,871

16	Futong Technology Development Holdings Limited

Condensed Consolidated Statement of Cash Flows

For the six-month period ended 30 June 2020

Six-month period ended 30 June

Net cash generated from/(used in) operating activities

Net cash generated from/(used in) investing activities

• Bank interest received
• Purchase of property, plant and equipment
• Development cost paid
• Placement of pledged bank deposits
• Withdrawal of pledged bank deposits

Net cash used in financing activities

• Proceeds from borrowings
• Repayment of borrowings
• Interest paid on bank borrowings
• Interest paid on lease liabilities
• Payments on principle portion of lease liabilities
• Dividend paid

Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at 1 January

Effect of foreign exchange rate changes

2020	2019
RMB'000	RMB'000
(Unaudited)	(Unaudited)
15,710	(84,057)
3,253	2,664
(916)	(68)
(8,877)	-
(2,727)	(4,681)
15,231	-
5,964	(2,085)
-	500
(10,500)	(20,725)
(9)	(1,080)
(57)	(99)
(1,254)	(758)
-	(5,999)
(11,820)	(28,161)
9,854	(114,303)
374,969	390,523
221	278

Cash and cash equivalents at 30 June	385,044	276,498

Interim Report 2020 17

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month period ended 30 June 2020

1. GENERAL INFORMATION

Futong Technology Development Holdings Limited (the "Company") is a limited liability company incorporated in the Cayman Islands as an exempted company. The address of the Company's registered office is located at Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands and its principal place of business is Rooms 2406- 2412, 24th Floor, Sun Hung Kai Centre, 30 Harbour Road, Wanchai, Hong Kong. The Company's shares are listed on the Main Board of The Stock Exchange of Hong Kong Limited (the "SEHK").

The directors of the Company consider that the immediate parent and ultimate holding company of the Company is China Group Associates Limited.

The principal activity of the Company is investment holding. The principal activities of its subsidiaries are mainly engaged in provision of enterprise IT infrastructure products, services and solutions, cloud computing products and intelligent digitalised application products.

2. BASIS OF PREPARATION

These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" ("IAS 34") and the applicable disclosure provisions of Main Board Listing Rules Governing the Listing of Securities on the SEHK. These condensed consolidated interim financial statements were authorised for issue on 21 August 2020.

These condensed consolidated interim financial statements have been prepared with the same accounting policies adopted in the 2019 annual financial statements, except for those that relate to new standards or interpretations effective for the first time for periods beginning on or after 1 January 2020. Details of any changes in International Financial Reporting Standards (the "IFRSs") are set out in note 3.

The preparation of these condensed consolidated interim financial statements in compliance with IAS 34 requires the use of certain judgements, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expenses on a year to date basis. Actual results may differ from these estimates. The areas where significant judgements and estimates have been made in preparing the financial statements and their effect are disclosed in note 4.

These condensed consolidated interim financial statements are presented in Renminbi ("RMB"), unless otherwise stated. These condensed consolidated interim financial statements contain condensed consolidated financial statements and selected explanatory notes. The notes include an explanation of events and transactions that are significant to an understanding of the changes in financial position and performance of the Group since the 2019 annual financial statements. These condensed consolidated interim financial statements and notes do not include all of the information required for a complete set of financial statements prepared in accordance with the IFRSs and should be read in conjunction with the 2019 consolidated financial statements.

18	Futong Technology Development Holdings Limited

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month period ended 30 June 2020

2. BASIS OF PREPARATION (Continued)

These condensed consolidated interim financial statements are unaudited, but has been reviewed by BDO Limited in accordance with International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" ("ISRE 2410"), issued by the International Accounting Standards Board ("IASB").

3. CHANGES IN IFRSs

The IASB has issued a number of new or amended IFRSs that are first effective for the current accounting period of the Group:

Amendments to IAS 1 and IAS 8	Definition	of		Material
Amendments to IFRS 3	Definition	of	a	Business
Amendments to IFRS 7, IFRS 9 and IAS 39	Interest Rate Benchmark Reform

The application of the above amendments to IFRSs in the current interim period has had no material effect on the amounts reported in these condensed consolidated interim financial statements and/or disclosures set out in these condensed consolidated interim financial statements.

4. USE OF JUDGEMENTS AND ESTIMATES

In preparing this condensed consolidated interim financial statements, the significant judgements made by the management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to 2019 annual financial statements.

5. SEGMENT INFORMATION

IFRS 8 "Operating Segments" requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the senior executive management of the Company, the chief operating decision maker, in order to allocate resources and to assess performance.

The chief operating decision maker considers that the operation of the Group constitutes a single operating segment as the revenue and profit are derived entirely from the provisions of enterprise IT products and services to customers in the People's Republic of China (the "PRC"). Accordingly, no segment analysis is presented. The majority of property, plant and equipment is located in the PRC. The information reported to senior executive management of the Company for the purpose of resources allocation and assessment of performance are same as the amounts reported under IFRSs.

Interim Report 2020 19

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month period ended 30 June 2020

6. REVENUE

All the Group's revenue is derived from contracts with customers.

Revenue is disaggregated by primary geographical markets, major products and service lines and timing of revenue recognition as following tables.

		Six-month period ended 30 June
		2020	2019
		RMB'000	RMB'000
		(Unaudited)	(Unaudited)
Primary geographical markets
The PRC	391,657	540,534
Hong Kong	2,650	8,150
		394,307	548,684
Major products/services lines
Enterprise IT products	232,820	339,361
Provision of services	161,487	209,323
		394,307	548,684
Timing of revenue recognition
At a point in time	232,820	339,361
Transferred over time	161,487	209,323
		394,307	548,684

20	Futong Technology Development Holdings Limited

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month period ended 30 June 2020

6. REVENUE (Continued)

The following table provides information about receivables, contract assets and contract liabilities from contracts with customers.

	30 June 2020	31 December 2019
	RMB'000	RMB'000
	(Unaudited)	(Audited)
Receivables (note 16)	75,164	129,423
Contract assets	102,599	36,197
Contract liabilities	31,766	79,116

Contract assets primarily relate to the Group's rights to consideration for work completed but not certified the receipt by customers at the reporting date on revenue related to the sales of enterprise IT products and provision of services. Contract assets are transferred to receivables when the rights become unconditional. This usually occurs when the delivery is certified and the Group provides the invoice to the customer.

Contract liabilities mainly relate to the advance consideration received from customers. Balance of RMB56,292,000 as of 1 January 2020 has been recognised as revenue for the six-month period ended 30 June 2020 from performance obligations satisfied due to the completion of services.

The Group has applied the practical expedient to its sales contracts for enterprise IT products and provision of services and therefore, the above information does not include information about revenue that the Group will be entitled to when it satisfies the remaining performance obligations under the contracts for enterprise IT products and provision of services that had an original expected duration of one year or less.

Interim Report 2020 21

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month period ended 30 June 2020

7. OTHER INCOME AND other gains, net

			Six-month period ended 30 June
			2020	2019
			RMB'000	RMB'000
			(Unaudited)	(Unaudited)
Other income:
	Interest income	3,253	2,664
	Government grants (note)	420	913
	Others	2	121
			3,675	3,698
			Six-month period ended 30 June
			2020	2019
			RMB'000	RMB'000
			(Unaudited)	(Unaudited)
Other gains, net:
Reversal of impairment loss on trade receivables and contract assets, net	3,650	371
Net foreign exchange gains/(losses)	1,074	(16)
			4,724	355

Note: These grants are unconditional and are received by the Group from relevant government bodies for the purpose of giving immediate financial support to the Group operation.

22	Futong Technology Development Holdings Limited

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month period ended 30 June 2020

8.	FINANCE COSTS
		Six-month period ended 30 June
		2020	2019
		RMB'000	RMB'000
		(Unaudited)	(Unaudited)
	Interest on bank borrowings	9	1,080
	Interest on lease liabilities	57	99
		66	1,179

For the six-month period ended 30 June 2020, interest on bank borrowings is wholly derived from loans which are repayable within one year (six-month period ended 30 June 2019: two years).

9. PROFIT BEFORE income TAX expense

Profit before income tax expense is arrived at after charging/(crediting):

Staff costs:

• Salaries and allowances
• Contributions to retirement benefit schemes
• Equity-settledshare-based payment
• Less: capitalised as intangible assets

Other items:

Carrying amount of inventories sold

Write-down and write-off of inventories, included in cost of sales

Amortisation of intangible assets (note)

Depreciation of right-of-use assets

Depreciation of property, plant and equipment

Short-term lease expenses

Six-month period ended 30 June

20202019

RMB'000 RMB'000

(Unaudited) (Unaudited)

42,86239,497

4763,921

258593

43,596	44,011
(8,395)	-
35,201	44,011
217,352	316,069
169	445
217,521	316,514
1,006	181
1,626	674
1,350	2,061
958	1,884

Note: Amortisation charges of RMB695,000 (six-month period ended 30 June 2019: RMB76,000) and RMB311,000 (six-month period ended 30 June 2019: RMB105,000) have included in cost of sales and services and administrative expenses respectively.

Interim Report 2020 23

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month period ended 30 June 2020

10. INCOME TAX EXPENSE

			Six-month period ended 30 June
			2020	2019
			RMB'000	RMB'000
			(Unaudited)	(Unaudited)
Current tax:
	PRC Enterprise Income Tax	2,538	2,520
	PRC Dividend Tax	-	1,056
			2,538	3,576
Deferred tax:
Charged for the period	2,403	2,054
			4,941	5,630

1. Pursuant to the rules and regulations of the Cayman Islands and the British Virgin Islands ("BVI"), the Group is not subject to any income tax in the Cayman Islands and the BVI.
2. Under the two-tiered profits tax rates regime in Hong Kong, the first HK$2 million of profits of qualifying corporations is taxed at 8.25%, and profits above HK$2 million is taxed at 16.5%. The profits of group entities in Hong Kong that are not qualifying for the two-tiered profits tax rates regime 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 and at 16.5% on those above HK$2 million.

1. Under the Law of the PRC on Enterprise Income Tax (the "EIT Law") and Implementation Regulation of the EIT Law, except for two subsidiaries have been granted continuously on a three years interval with a qualification of high-tech enterprise which entitles these subsidiaries a preferential income tax rate of 15%, the tax rate of the Company's subsidiaries is 25% in the PRC from 1 January 2008 onwards. The Group has not recognised deferred tax of approximately RMB1,617,000 (six-month period ended 30 June 2019: RMB1,467,000) in respect of losses incurred by certain PRC subsidiaries for the period.
2. According to the EIT Law, withholding income tax at a rate of 10% would be imposed on dividends relating to profits earned from year 2008 onwards to foreign investors for the companies established in the PRC. Such dividend tax rate may be further reduced by applicable tax treaties or arrangement. According to the arrangement between the PRC and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, the withholding tax rate on dividends paid by a PRC resident enterprise to a Hong Kong resident enterprise is reduced to 5% if the Hong Kong resident enterprise holds at least 25% equity interests in the PRC resident enterprise.
   As at 30 June 2020, the Group has not recognised deferred tax liabilities of RMB15,763,000 (six-month period ended 30 June 2019: RMB14,873,000) in respect of temporary differences relating to the unremitted profits of subsidiaries

	amounted to RMB314,803,000 (six-month period ended 30 June 2019: RMB297,468,000), that would be payable on
	the distribution of these retained profits as the Company controls the dividend policy of these subsidiaries and it is
	probable that these profits will not be distributed in the foreseeable future.
24	Futong Technology Development Holdings Limited

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month period ended 30 June 2020

11. DIVIDENDS

During the current interim period, no final dividend in respect of the year ended 31 December 2019 was declared and paid to the owners of the Company.

During the six-month period ended 30 June 2019, a final dividend of HK2.2 cents (approximately equivalent to RMB1.9 cents) per share in respect of the year ended 31 December 2018 was declared and paid to the owners of the Company and the aggregate amount of the final dividend declared and paid amounted to approximately HK$6,848,000 (approximately equivalent to RMB5,999,000).

The directors have determined that no dividend will be paid in respect of the current interim period (six-month period ended 30 June 2019: nil).

12. EARNINGS PER SHARE

The calculation of basic and diluted earnings per share for the six-month period ended 30 June 2020 is based on the profit for the period attributable to owners of the Company of RMB3,166,000 (six-month period ended 30 June 2019: RMB8,992,000) and the weighted average of 311,250,000 ordinary shares (six-month period ended 30 June 2019: 311,250,000 shares) in issue during the interim period.

The computation of diluted earnings per share does not assume the exercise of the Company's share options because the exercise prices of those share options were higher than the average market price of the Company's shares for the six- month period ended 30 June 2020.

13. PROPERTY, PLANT AND EQUIPMENT

During the six-month period ended 30 June 2020, the Group spent RMB916,000 (six-month period ended 30 June 2019: RMB68,000) to acquire furniture, fixtures and equipment.

14. INTANGIBLE ASSETS

During the six-month period ended 30 June 2020, the Group spent RMB8,877,000 (six-month period ended 30 June 2019: nil) to research and develop its cloud computing management systems and intelligent digitalised application systems.

Interim Report 2020 25

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month period ended 30 June 2020

15. DEFERRED TAX ASSETS

Movement in deferred tax assets is as follows:

			impairment
			losses on trade
	write-down of	receivables and	Tax losses
		inventories	contract assets	and others	total
		RMB'000	RMB'000	RMB'000	RMB'000
At 1 January 2019 (audited)	6,475	19,516	4,335	30,326
Charged for the year	(213)	(802)	(190)	(1,205)
Exchange alignment		-	-	76	76
At 31 December 2019 and
1 January 2020 (audited)	6,262	18,714	4,221	29,197
(Charged)/Credited for the period	57	(1,988)	(472)	(2,403)
Exchange alignment		-	-	73	73
At 30 June 2020 (unaudited)
6,319	16,726	3,822	26,867

16. TRADE, bills AND OTHER RECEIVABLES

		30 June	31 December
		2020	2019
		RMB'000	RMB'000
		(Unaudited)	(Audited)
Trade receivables	153,797	216,937
Less: impairment losses	(78,633)	(88,014)
		75,164	128,923
Bills receivables	-	500
Total trade and bills receivables	75,164	129,423
Prepayments	61,336	43,960
Deposits	4,344	4,562
VAT receivables	14,755	17,892
Other receivables	2,067	1,594
		157,666	197,431

The Group allows an average credit period of 30 to 90 days (31 December 2019: 30 to 90 days) to its trade customers.

26	Futong Technology Development Holdings Limited

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month period ended 30 June 2020

16. TRADE, bills AND OTHER RECEIVABLES (Continued)

Included in trade and bills receivables are trade debtors (net of impairment losses) with the following ageing analysis, based on invoice dates, as of the end of reporting period.

		30 June	31 December
		2020	2019
		RMB'000	RMB'000
		(Unaudited)	(Audited)
0 - 30 days	28,284	18,584
31 - 60 days	3,252	8,326
61 - 90 days	7,142	15
More than 90 days	36,486	102,498
		75,164	129,423

17. TRADE AND OTHER PAYABLES

		30 June	31 December
		2020	2019
		RMB'000	RMB'000
		(Unaudited)	(Audited)
Trade payables	143,673	76,599
Other payables and accruals	17,164	12,422
		160,837	89,021

Average credit period on purchases of goods was 30 to 90 days (31 December 2019: 30 to 90 days). The following is ageing analysis of trade payables based on the invoice date at the end of the reporting periods:

		30 June	31 December
		2020	2019
		RMB'000	RMB'000
		(Unaudited)	(Audited)
Less than 1 month	134,467	55,930
1 to 3 months	114	6,270
More than 3 months	9,092	14,399
		143,673	76,599

Interim Report 2020 27

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month period ended 30 June 2020

18. BANK BORROWINGS

During the current interim period, the Group has not obtained any new borrowings (six-month period ended 30 June 2019: RMB500,000) and repaid RMB10,500,000 (six-month period ended 30 June 2019: RMB20,725,000). The loans carry interest at the floating rate varied from 4.75% to 5.70% (31 December 2019: 4.35% to 5.22%) per annum.

19. SHARE CAPITAL

	Number of shares	Nominal value
		'000	HK$'000
Authorised:
At 1 January 2019, 31 December 2019 and 30 June 2020
Ordinary Shares of HK$0.1 each	2,000,000	200,000
Issued and fully paid:
At 1 January 2019, 31 December 2019 and 30 June 2020	311,250	31,125
			RMB'000
Presented as			27,415

20. SHARE-BASED PAYMENTS

On 16 May 2019, the shareholders of the Company approved and adopted a new share option scheme (the "New Share Option Scheme") and terminated the share option scheme adopted on 11 November 2009 (the "Old Share Option Scheme") (together, the "Share Option Schemes"). The Share Option Schemes were adopted for the purpose of providing incentives and rewards to eligible participants who contribute to the success of the Group's operations. The maximum number of shares that may be granted under the Share Option Scheme and other share option schemes shall not exceed 30% of the number of issued shares of the Company from time to time. Unless approved by the shareholders of the Company in general meeting in the manner prescribed in the Listing Rules, the board of directors shall not grant options to any grantee if the acceptance of those options would result in the total number of shares issued and to be issued to that grantee on exercise of his options during any 12-month period exceeding 1% of the total shares of the Company (or its subsidiary) then in issue.

28	Futong Technology Development Holdings Limited

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month period ended 30 June 2020

20. SHARE-BASED PAYMENTS (Continued)

On 18 January 2016, the Company announced that a total of 2,200,000 share options (the "Share Options A") to subscribe for the Shares were granted by the Company to the eligible employees of the Group (the "Share Options A Grantees"), subject to acceptance of the Share Options A Grantees, under the Old Share Option Scheme. Share Options A is summaries below:

Exercise price of Share Option A

Closing price of the Shares on the date of grant Validity period of Share Options A

Vesting date of Share Options A

HK$1.004 per Share HK$0.990

10 years, commencing on 18 January 2016 All Share Options A were vested on 2018

On 14 October 2016, the Company announced that a total of 1,200,000 share options (the "Share Options B") to subscribe for Shares were granted by the Company to the eligible employees of the Group (the "Share Option B Grantees"), subject to acceptance of the Share Options B Grantees, under the Old Share Option Scheme. Share Options B is summaries below:

Exercise price of Share Option B

Closing price of the Shares on the date of grant Validity period of Share Options B

Vesting date of Share Options B

HK$1.25 per Share HK$1.25

10 years, commencing on 14 October 2016 All Share Options B were vested on 2018

On 28 March 2019, the Company announced that a total of 7,700,000 share options (the "Share Options C") to subscribe for Shares were granted by the Company to a director and the eligible employees of the Group (the "Share Option C Grantees"), subject to acceptance of the Share Options C Grantees, under the Old Share Option Scheme. Share Options C is summaries below:

Exercise price of Share Option C	HK$0.81 per Share
Closing price of the Shares on the date of grant	HK$0.81
Validity period of Share Options C	10 years, commencing on 28 March 2019
Vesting date of Share Options C	30%, 30% and 40% of the Share Options C have been vested on 28
	March 2019, and will be vested on 28 March 2020 and 28 March
	2021, respectively

Interim Report 2020 29

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month period ended 30 June 2020

20. SHARE-BASED PAYMENTS (Continued)

On 1 April 2020, the Company announced that a total of 3,000,000 share options (the "Share Options D") to subscribe for Shares were granted by the Company to the eligible employees of the Group (the "Share Option D Grantees"), subject to acceptance of the Share Options D Grantees, under the New Share Option Scheme. Share Options D is summaries below:

Exercise price of Share Option D	HK$0.57 per Share
Closing price of the Shares on the date of grant	HK$0.57
Validity period of Share Options D	10 years, commencing on 1 April 2020
Vesting date of Share Options D	20%, 20%, 30% and 30% of the Share Options D will be vested on
	1 April 2021, 1 April 2022, 1 April 2023 and 1 April 2024, respectively

None of the share options were exercised during the current and prior interim period.

The fair values of Share Options A, Share Options B, Share Options C and Share Options D determined at the dates of grant were RMB712,000 (equivalent to HK$847,000), RMB518,000 (equivalent to HK$598,000), RMB1,227,000 (equivalent to HK$1,435,000) and RMB504,000 (equivalent to HK$551,000) respectively. These fair values were calculated using Binomial Model.

The Group recognised the total expense of RMB258,000 for the six-month period ended 30 June 2020 (the six-month period ended 30 June 2019: RMB593,000) in relation to the Share Options C and Share Options D granted by the Company.

21. RELATED PARTY TRANSACTIONS

1. Name and relationship with related parties:

Name of party	Relationships
數普金通數據技術有限公司	A company controlled by Mr Chen Jian, a director of the Company
Supool Jintong Data Technology Co., Ltd.
("Supool Jintong")*

1. • The English translation of the company names is for reference only. The official names of these entities are in Chinese.
2. Significant related party transactions

During the six-month periods ended 30 June 2020 and 2019, the Group has no significant transactions with the related party.

30	Futong Technology Development Holdings Limited

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month period ended 30 June 2020

21. RELATED PARTY TRANSACTIONS (Continued)

1. Amounts due from related parties

At the end of the reporting period, the Group had the following balances with related parties:

	30 June	31 December
	2020	2019
	RMB'000	RMB'000
	(Unaudited)	(Audited)
Prepayment (note):
Supool Jintong	134	-

Note: Amounts due from related parties are unsecured, interest free and expected to be recovered within one year.

(d) Key management personnel remuneration

The remuneration of directors of the Company and other members of key management during the six-month periods ended 30 June 2020 and 2019 were as follows:

	Six-month period ended 30 June
	2020	2019
	RMB'000	RMB'000
	(Unaudited)	(Unaudited)
Salaries and other benefits	6,517	5,545
Retirement benefits scheme contributions	349	578
	6,866	6,123

Total remuneration was included under staff costs as set out in note 9 to the condensed consolidated interim financial statements.

Interim Report 2020 31

Corporate Information

BOARD OF DIRECTORS

Executive Director

Mr. Chen Jian (Chairman)

Non-executive Director

Ms. Chen Jing

Independent Non-executive Directors

Mr. Chow Siu Lui

Mr. Lo Kwok Kwei David

Mr. Yao Yun

COMPANY SECRETARY

Mr. Leung Ka Lung

REGISTERED OFFICE

Cricket Square

Hutchins Drive

PO Box 2681

Grand Cayman KY1-1111

Cayman Islands

HEADQUARTER AND PRINCIPAL

PLACE OF BUSINESS IN THE PRC

Units B1901 on level 19 and B2001

• on level 20 of Tower B Chaowaimen Office Center No. 26 Chaowai Street Chaoyang District Beijing, the PRC

32	Futong Technology Development Holdings Limited

PRINCIPAL PLACE OF BUSINESS IN HONG KONG

Rooms 2406-2412, 24th Floor

Sun Hung Kai Centre

30 Harbour Road

Wanchai, Hong Kong

PRINCIPAL BANKERS

Standard Chartered Bank (Hong Kong) Limited Nanyang Commercial Bank, Ltd.

The Hong Kong and Shanghai Banking

• Corporation Limited Hang Seng Bank Limited
  China CITIC Bank International Limited HSBC Bank (China) Company Limited Standard Chartered Bank (China) Limited China Merchants Bank Co., Ltd.
  Bank of Beijing

LEGAL ADVISORS AS TO HONG KONG LAWS

Chiu & Partners

AUDITOR

BDO Limited

HONG KONG BRANCH SHARE REGISTRAR AND TRANSFER OFFICE

Tricor Investor Services Limited

Level 54, Hopewell Centre, 183 Queen's Road East,

Hong Kong

STOCK CODE

00465

WEBSITE

www.futong.com.hk