CM Energy Tech Co., Ltd. — Annual Report 2011

Mar 28, 2012

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

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TSC Group Holdings Limited

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 206)

ANNUAL RESULTS ANNOUNCEMENT FOR THE YEAR ENDED 31 DECEMBER 2011

HIGHLIGHTS

• Turnover amounted to approximately US$138.4 million for the year ended 31 December 2011, representing a decrease of 3.5% as compared with 2010;

• Gross profit amounted to approximately US$52.3 million for the year ended 31 December 2011;

• Gross profit margin increased from 36.4% for 2010 to 37.8% for 2011;

• Profit attributable to equity holders of the Company amounted to approximately US$3.5 million for the year ended 31 December 2011; and

• The Directors do not recommend the payment of a dividend for 2011.

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ANNUAL RESULTS

The board of the Directors (the “Board”) is pleased to announce the results of TSC Group Holdings Limited (the “Company” or “TSC”) and its subsidiaries (collectively the “Group”) for the year ended 31 December 2011 (the “Year”) together with the comparative figures for the year ended 31 December 2010 as follows using United States dollars as presentation currency:

Consolidated Income Statement

For the year ended 31 December 2011

Note Turnover 3 Cost of sales Gross profit Other revenue and net income 4 Selling and distribution expenses General and administrative expenses Other operating expenses Profit from operations Finance costs 5(a) Share of results of associates Profit before taxation 5 Income tax 6(a) Profit for the year Attributable to: Equity shareholders of the Company Non-controlling interests Profit for the year Earnings per share 8 Basic Diluted	2011 US$’000 138,416 (86,116) 52,300 3,051 (6,654) (35,610) (5,125) 7,962 (1,722) (113) 6,127 (2,096) 4,031 3,472 559 4,031 US0.51 cent US0.50 cent	2010 US$’000 143,455 (91,189) 52,266 2,143 (5,539) (28,035) (4,409) 16,426 (1,406) 38 15,058 (1,467) 13,591 13,571 20 13,591 US2.05 cents US2.01 cents

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Consolidated Statement of Comprehensive Income

For the year ended 31 December 2011

Profit for the year Other comprehensive income for the year: Exchange differences on translation of financial statements of subsidiaries and associates Total comprehensive income for the year Attributable to: Equity shareholders of the Company Non-controlling interests Total comprehensive income for the year	2011 US$’000 4,031 2,371 6,402 5,738 664 6,402	2010 US$’000 13,591 1,972
		15,563
		15,507 56
		15,563

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Consolidated Statement of Financial Position At 31 December 2011

Note Non-current assets Property, plant and equipment Property under development Interest in leasehold land held for own use under operating leases Goodwill Other intangible assets Interest in associates Prepayments Deferred tax assets Current assets Inventories Trade and other receivables 9 Gross amount due from customers for contract work Amount due from a related company Pledged bank deposits Cash at bank and in hand Current liabilities Trade and other payables 10 Bank loans Current taxation Provisions Net current assets Total assets less current liabilities Non-current liabilities Bank loans Deferred tax liabilities NET ASSETS CAPITAL AND RESERVES Share capital Reserves Total equity attributable to equity shareholders of the Company Non-controlling interests TOTAL EQUITY	2011 US$’000 36,660 – 4,401 23,854 16,013 2,159 70 10,897 94,054 39,596 79,455 16,517 101 1,348 34,140 171,157 58,734 20,538 4,179 1,769 85,220 85,937 179,991 4,921 1,349 6,270 173,721 8,770 158,183 166,953 6,768 173,721	2010 US$’000 27,911 429 4,377 23,776 18,884 4,132 2,082 13,124
		94,715
		33,339 64,926 42,932 101 3,657 17,147
		162,102
		62,179 14,653 4,394 2,306
		83,532
		78,570
		173,285
		3,330 3,224
		6,554
		166,731
		8,727 151,550
		160,277 6,454
		166,731

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Consolidated Statement of Changes in Equity

For the year ended 31 December 2011

Balance at 1 January 2010 Changes in equity for 2010: Profit for the year Other comprehensive income Total comprehensive income Issues of ordinary shares Shares issued under share option schemes Equity-settled share-based transactions Acquisition of non-wholly owned subsidiary Transferred to reserve funds Balance at 31 December 2010 and 1 January 2011 Changes in equity for 2011: Profit for the year Other comprehensive income Total comprehensive income Shares issued under share option schemes Equity-settled share-based transactions Transferred to reserve funds Dividends paid to non-controlling interests Balance at 31 December 2011				Attributable to equityshareholders of the Company	Attributable to equityshareholders of the Company	Attributable to equityshareholders of the Company	Attributable to equityshareholders of the Company			Total US$’000 140,043 13,571 1,936 15,507 2,623 361 1,743 – – 160,277 3,472 2,266 5,738 211 727 – – 166,953	Non- controlling interests US$’000 – 20 36 56 – – – 6,398 – 6,454 559 105 664 – – – (350) 6,768	Total equity US$’000 140,043 13,591 1,972
	Share capital US$’000 8,393 – – – 219 115 – – – 8,727 – – – 43 – – – 8,770	Share premium US$’000 116,515 – – – 2,404 825 – – – 119,744 – – – 299 – – – 120,043	Merger reserve US$’000 2,161 – – – – – – – – 2,161 – – – – – – – 2,161	Exchange reserve US$’000 (5,658) – 1,936 1,936 – – – – – (3,722) – 2,266 2,266 – – – – (1,456)	Employee share-based compen- sation reserve US$’000 4,068 – – – – (579) 1,743 – – 5,232 – – – (131) 727 – – 5,828	Capital reserve US$’000 512 – – – – – – – – 512 – – – – – – – 512	Revaluation reserve US$’000 627 – – – – – – – – 627 – – – – – – – 627	Reserve funds US$’000 2,306 – – – – – – – 975 3,281 – – – – – 103 – 3,384	Retained profits US$’000 11,119 13,571 – 13,571 – – – – (975) 23,715 3,472 – 3,472 – – (103) – 27,084
												15,563
												2,623 361 1,743 6,398 –
												166,731 4,031 2,371
												6,402
												211 727 – (350)
												173,721

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Note:

1 BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

The consolidated financial statements for the year ended 31 December 2011 comprise the Company and its subsidiaries and the Group’s interest in associates.

The functional currency of the Company is Hong Kong dollars. Subsidiaries of the Company have their functional currencies in Renminbi (“RMB”), United States dollars and Pound Sterling. In view of expanded foreign operations, the directors of the Company consider United States dollars, being an internationally well-recognised currency, can provide more meaningful information to the Company’s investors and meet the needs of the Group’s global customers. Therefore, the directors choose United States dollars as the presentation currency of the financial statements.

The measurement basis used in the preparation of the financial statements is the historical cost basis except that derivative financial instruments are stated at their fair value.

The preparation of financial statements in conformity with all applicable Hong Kong Financial Reporting Standards (“HKFRSs”) requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

2 STATEMENT OF COMPLIANCE AND CHANGES IN ACCOUNTING POLICIES

Statement of compliance

These financial statements have been prepared in accordance with all applicable HKFRSs, which collective term includes all applicable individual Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards (“HKASs”) and Interpretations issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”), accounting principles generally accepted in Hong Kong and the disclosure requirements of the Hong Kong Companies Ordinance. These financial statements also comply with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (“the Listing Rules”).

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Changes in accounting policies

The HKICPA has issued a number of amendments to HKFRSs and one new Interpretation that are first effective for the current accounting period of the Group and the Company. Of these, the following developments are relevant to the Group’s financial statements:

• HKAS 24 (revised 2009), Related party disclosures

• Improvements to HKFRSs (2010)

• HK(IFRIC) 19, Extinguishing financial liabilities with equity instruments

The Group has not applied any new standard or interpretation that is not yet effective for the current accounting period.

HK(IFRIC) 19 has not yet had a material impact on the Group’s financial statements as these changes will first be effective as and when the Group enters a relevant transaction (for example, a debt for equity swap).

The impact of other developments are discussed below:

• HKAS 24 (revised 2009) revises the definition of a related party. As a result, the Group has re-assessed the identification of related parties and concluded that the revised definition does not have any material impact on the Group’s related party disclosures in the current and previous periods. HKAS 24 (revised 2009) also introduces modified disclosure requirements for government-related entities. This does not impact the Group because the Group is not a government-related entity.

• Improvements to HKFRSs (2010) omnibus standard introduces a number of amendments to the disclosure requirements in HKFRS 7, Financial instruments: Disclosures . The disclosures on the Group’s financial instruments conforms to the amended disclosure requirements. These amendments do not have any material impact on the classification, recognition and measurements of the amounts recognised in the financial statements in the current and previous periods.

3 TURNOVER AND SEGMENT REPORTING

• (a) Turnover

The principal activities of the Group are the design, manufacture, install and commission capital equipment (including rig electrical control system and other rig equipment) and packages on land and offshore rigs and oilfield expendables and supplies, and the provision of engineering services.

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Turnover represents the invoiced value of goods supplied to customers, revenue from construction contracts and revenue from engineering services. The amount of each significant category of revenue recognised in turnover during the year is as follows:

Capital equipment and packages − Sales of rig electrical control system − Sales of other rig equipment − Construction contracts revenue − Rig products and technology − Rig turnkey solutions Oilfield expendables and supplies − Sales of expendables and supplies Engineering services − Service fee income	2011 US$’000 11,281 9,081 39,677 29,123 89,162 25,953 23,301 138,416	2010 US$’000 8,748 8,162 41,412 52,274
		110,596 22,011 10,848
		143,455

The Group’s customer base is diversified and includes only one customer with whom transactions have exceeded 10% of the Group’s revenues. In 2011, revenues from sales of capital equipment and packages to this customer, including sales to entities which are known to the Group to be under common control with this customer, amounted to approximately $29 million (2010: $58 million).

Further details regarding the Group’s principal activities are described below:

(b) Segment reporting

The Group manages its business by divisions, which are organised by a mixture of both business lines (products and services) and geography. In a manner consistent with the way in which information is reported internally to the Group’s most senior executive management for the purposes of resource allocation and performance assessment, the Group has presented the following three reportable segments. No operating segments have been aggregated to form the following reportable segments.

• Capital equipment and packages:

the design, manufacturing, install and commission of capital equipment and packages on land and offshore rigs

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− Oilfield expendables and supplies: the manufacturing and trading of oilfield expendables and supplies

• Engineering services:

the provision of engineering services

In 2011, the financial results of capital equipment and packages, which were separately reported as rig products and technology and rig turnkey solutions segments in previous year’s financial statements, are reported to the Group’s most senior executive management as one single operating segment for the purpose of resources allocation and performance assessment. Following the change in the composition of the Group’s operating segments that in turn has resulted in a change in the reportable segments, the segment information for the year ended 31 December 2010 has been restated.

(i) Segment results, assets and liabilities

For the purposes of assessing segment performance and allocating resources between segments, the Group’s senior executive management monitors the results, assets and liabilities attributable to each reportable segment on the following bases:

Segment assets include all tangible assets, goodwill, intangible assets and current assets with the exception of interest in associates, cash at bank and in hand, pledged bank deposits, tax balances and other unallocated head office corporate assets. Segment liabilities include trade and other payables and provisions attributable to the activities of the individual segment, with the exception of loans, tax balances and other unallocated head office and corporate liabilities.

Revenue and expenses are allocated to the reportable segments with reference to revenue generated by those segments and the expenses incurred by those segments or which otherwise arise from the depreciation or amortisation of assets attributable to those segments.

The measure used for reporting segment profit is “segment results” i.e. “adjusted earnings before finance costs and taxes” of individual segment. To arrive at segment results, the Group’s earnings are further adjusted for share of results of associates, finance costs and items not specifically attributed to individual segment, such as directors’ and auditors’ remuneration and other head office or corporate income and expenses.

In addition to receiving segment information concerning segment results, management is provided with segment information concerning revenue (including inter-segment revenue), depreciation and amortisation and additions to non-current segment assets used by the segments in their operations.

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Information regarding the Group’s reportable segments as provided to the Group’s most senior executive management for the purposes of resource allocation and assessment of segment performance for the years ended 31 December 2011 and 2010 is set out below.

Revenue from external customers Inter-segment revenue Reportable segment revenue Reportable segment results Depreciation and amortisation for the year Reportable segment assets Additions to non-current segment assets during the year Reportable segment liabilities	Capital equipment and packages 2011 2010 (restated) US$’000 US$’000 89,162 110,596 – 176 89,162 110,772 2,537 11,976 4,583 4,340 168,517 183,262 5,068 3,766 (44,163) (52,206)	Oilfield expendables and supplies 2011 2010 US$’000 US$’000 25,953 22,011 6,723 2,208 32,676 24,219 4,414 4,852 464 476 22,111 22,704 736 2,044 (10,249) (11,049)	Engineering services 2011 2010 US$’000 US$’000 23,301 10,848 1,392 – 24,693 10,848 6,193 4,052 1,371 552 25,722 12,598 3,033 9,616 (4,081) (625)	Total 2011 2010 US$’000 US$’000 138,416 143,455 8,115 2,384 146,531 145,839 13,144 20,880 6,418 5,368 216,350 218,564 8,837 15,426 (58,493) (63,880)	Total 2011 2010 US$’000 US$’000 138,416 143,455 8,115 2,384 146,531 145,839 13,144 20,880 6,418 5,368 216,350 218,564 8,837 15,426 (58,493) (63,880)
					145,839
					20,880
					5,368 218,564 15,426 (63,880)

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(ii) Reconciliation of reportable segment revenue, profit or loss, assets and liabilities

Revenue Reportable segment revenue Elimination of inter-segment revenue Consolidated turnover (note 3(a)) Profit Segment results Share of results of associates Finance costs Unallocated head office and corporate income and expenses Consolidated profit before taxation Assets Reportable segment assets Cash at bank and in hand Pledged bank deposits Interest in associates Deferred tax assets Unallocated head office and corporate assets Consolidated total assets Liabilities Reportable segment liabilities Bank loans Current taxation Deferred tax liabilities Unallocated head office and corporate liabilities Consolidated total liabilities	2011 US$’000 146,531 (8,115) 138,416 13,144 (113) (1,722) (5,182) 6,127 216,350 34,140 1,348 2,159 10,897 317 265,211 (58,493) (25,459) (4,179) (1,349) (2,010) (91,490)	2010 US$’000 145,839 (2,384) 143,455 20,880 38 (1,406) (4,454) 15,058 218,564 17,147 3,657 4,132 13,124 193 256,817 (63,880) (17,983) (4,394) (3,224) (605) (90,086)

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(iii) Geographic information

The following table sets out information about the geographical locations of (i) the Group’s revenue from external customers and (ii) the Group’s property, plant and equipment, property under development, interest in leasehold land held for own use under operating leases, goodwill, other intangible assets, interest in associates and non-current portion of prepayments (“specified non-current assets”). The geographical location of customers is based on the location of the customers. The geographical location of the specified non-current assets is based on the physical location of the assets, in the case of property, plant and equipment, property under development and interest in leasehold land held for own use under operating leases, the location of the operation to which they are allocated, in the case of goodwill and intangible assets, and the location of operations, in the case of interest in associates and non-current portion of prepayments.

Revenue from external customers 2011 2010 US$’000 US$’000 Hong Kong – – Mainland China 47,356 40,952 North America 31,736 24,551 South America 12,984 4,372 Europe 16,028 22,014 Singapore 23,341 46,241 Others (other part of Asia, India, Russia, Middle East, etc.) 6,971 5,325 138,416 143,455	Specified non-current assets 2011 2010 US$’000 US$’000 14 28 41,519 38,537 6,129 7,655 756 401 31,128 32,582 11 29 3,600 2,359 83,157 81,591	Specified non-current assets 2011 2010 US$’000 US$’000 14 28 41,519 38,537 6,129 7,655 756 401 31,128 32,582 11 29 3,600 2,359 83,157 81,591
		81,591

4 OTHER REVENUE AND NET INCOME

Gain on sales of accessories Interest income Reversal of impairment losses on doubtful debts Bad debts recovered Gain on disposal of associate Gain on bargain purchase of subsidiaries Others	2011 US$’000 775 131 1,029 760 65 – 291 3,051	2010 US$’000 535 72 – – – 1,272 264
		2,143

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5 PROFIT BEFORE TAXATION

Profit before taxation is arrived at after charging/(crediting):

(a) Finance costs Interest on bank loans wholly repayable within five years Interest on other loans (b) Staff costs# Contributions to defined contribution retirement plans Equity-settled share-based payment expenses Salaries, wages and other benefits (c) Other items Amortisation of interest in leasehold land held for own use under operating leases# Amortisation of intangible assets Depreciation# Impairment losses on doubtful debts Research and development costs Net foreign exchange loss Net loss on foreign exchange instrument Gain on disposal of property, plant and equipment and intangible assets Auditors’ remuneration Minimum lease payments under operating leases in respect of land and buildings Increase in provisions Cost of inventories#	2011 US$’000 1,612 110 1,722 2,815 727 28,218 31,760 130 3,106 3,198 – 5,247 1,401 795 (18) 508 2,713 292 83,221	2010 US$’000 1,261 145 1,406 2,010 1,743 23,164 26,917 94 2,643 2,658 608 2,920 798 – (34) 463 2,364 23 90,237

Cost of inventories includes US$12,332,000 (2010: US$10,752,000) relating to staff costs, depreciation and amortisation expenses which amount is also included in the respective total amounts disclosed separately above or in note 5(b) for each of these types of expenses.

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6 INCOME TAX IN THE CONSOLIDATED INCOME STATEMENT

(a) Income tax in the consolidated income statement represents:

Current tax Provision for the year − PRC enterprise income tax − Overseas corporation income tax (Over)/under-provision in respect of prior years − PRC enterprise income tax Deferred tax Origination and reversal of temporary differences	2011 US$’000 1,144 794 1,938 (76) 1,862 234 2,096	2010 US$’000 2,155 481 2,636 35 2,671 (1,204) 1,467

No provision for Hong Kong Profits Tax has been made in the financial statements as the Group had no assessable profit subject to Hong Kong Profits Tax for the year. Taxation for subsidiaries in other jurisdictions is charged at the appropriate current rates of taxation ruling in relevant jurisdictions respectively. During the year, certain PRC subsidiaries are subject to tax at reduced rates of 12.5% to 15% (2010: 12.5% to 15%) under the relevant PRC tax rules and regulations.

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(b) Reconciliation between tax expense and accounting profit at applicable tax rates:

Profit before taxation Notional tax on profit before taxation, calculated at the rates applicable to profits in the jurisdictions concerned Tax effect of non-deductible expenses Tax effect of non-taxable income Tax effect of profits entitled to tax reductions in the PRC Tax effect of recognition of temporary differences not recognised in prior year Tax effect of recognition of unused tax losses not recognised in prior years (Over)/under-provision in prior years Others Actual tax expense	2011 US$’000 6,127 1,745 182 (531) (720) 1,318 – (76) 178 2,096	2010 US$’000 15,058
		4,393 646 (215) (1,402) – (1,892) 35 (98)
		1,467

7 DIVIDEND

The director do not recommend the payment of a dividend for the year ended 31 December 2011 (2010: Nil).

8 EARNINGS PER SHARE

(a) Basic earnings per share

The calculation of basic earnings per share is based on the profit attributable to ordinary equity shareholders of the Company of US$3,472,000 (2010: US$13,571,000) and the weighted average number of 680,606,000 (2010: 663,542,000) ordinary shares in issue during the year, calculated as follows:

Weighted average number of ordinary shares

Issued ordinary shares at 1 January Effect of ordinary shares issued Effect of share options exercised Weighted average number of ordinary shares at 31 December	2011 ’000 678,564 – 2,042 680,606	2010 ’000 652,611 5,030 5,901
		663,542

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(b) Diluted earnings per share

The calculation of diluted earnings per share is based on the profit attributable to ordinary equity shareholders of the Company of US$3,472,000 (2010: US$13,571,000) and the weighted average number of 689,162,000 (2010: 675,211,000) ordinary shares, calculated as follows:

Weighted average number of ordinary shares (diluted)

Weighted average number of ordinary shares at 31 December Effect of deemed issue of shares under the Company’s share option schemes Weighted average number of ordinary shares (diluted) at 31 December 9 TRADE AND OTHER RECEIVABLES Trade debtors and bills receivable Less: allowance for doubtful debts Other receivables, prepayments and deposits Less: Non-current portion of prepayments	2011 ’000 680,606 8,556 689,162 2011 US$’000 76,919 (4,126) 72,793 6,732 79,525 (70) 79,455	2010 ’000 663,542 11,669 675,211 2010 US$’000 61,826 (6,758) 55,068 11,940 67,008 (2,082) 64,926

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(a) Ageing analysis

Included in trade and other receivables are trade debtors and bills receivable (net of allowance for doubtful debts) with the following ageing analysis as of the end of the reporting period:

Current Less than 1 month past due 1 to 3 months past due More than 3 months but within 12 months past due More than 12 months past due Amounts past due	2011 US$’000 24,933 14,996 5,650 21,604 5,610 47,860 72,793	2010 US$’000 31,408
		7,711 3,458 10,743 1,748
		23,660
		55,068

The credit terms offered by the Group to its customers differ with each product/service. The credit terms offered to customers of oilfield expendables and supplies and engineering services are normally 30 to 90 days. The credit terms offered to customers of rig electrical control system and other rig equipment are negotiated on a case-by-case basis. Deposits ranging from 10% to 30% of the contract sum are usually required. The balance of 60% to 85% would be payable in 1 to 2 months after delivery and acceptance of products. The remaining 5% to 10% of the contract sum represents the retention money and is payable within up to 18 months after delivery of the products or 1 year after completion of the onsite testing, whichever is earlier. The amount of those retentions expected to be recovered after more than one year is US$Nil (2010: US$292,000).

(b) Impairment of trade debtors and bills receivable

Impairment losses in respect of trade debtors and bills receivable are recorded using an allowance account unless the Group is satisfied that recovery of the amount is remote, in which case the impairment loss is written off against trade debtors and bills receivable directly.

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The movement in the allowance for doubtful debts during the year, including both specific and collective loss components, is as follows:

At 1 January Exchange adjustments Impairment losses (reversed)/recognised Uncollectible amounts written-off At 31 December	2011 US$’000 6,758 49 (1,029) (1,652) 4,126	2010 US$’000 7,126 63 608 (1,039)
		6,758

At 31 December 2011, the Group’s trade debtors and bills receivable of US$9,894,000 (2010: US$16,543,000) were individually determined to be impaired. The individually impaired receivables related to customers which management assessed that only a portion of the receivables is expected to be recovered. Consequently, specific allowances for doubtful debts of US$4,126,000 (2010: US$6,758,000) were recognised. The Group does not hold any collateral over these balances.

(c) Trade debtors and bills receivable that are not impaired

The ageing analysis of trade debtors and bills receivable that are neither individually nor collectively considered to be impaired are as follows:

Neither past due nor impaired Less than 1 month past due 1 to 3 months past due More than 3 months but within 12 months past due More than 12 months past due	2011 US$’000 24,913 14,783 5,415 18,777 3,137 42,112 67,025	2010 US$’000 30,664
		7,711 2,113 3,932 863
		14,619
		45,283

Receivables that were neither past due nor impaired relate to a wide range of customers for whom there was no recent history of default.

Receivables that were past due but not impaired relate to a number of independent customers that have a past payment history with the Group. Based on past experience, management believes that no impairment allowance is necessary in respect of these balances as there has not been a significant change in credit quality and the balances are still considered fully recoverable. The Group does not hold any collateral over these balances.

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10 TRADE AND OTHER PAYABLES

TRADE AND OTHER PAYABLES
Trade creditors and bills payable Other payables and accrued charges Gross amount due to customers for contract work Advances received in relation to construction contracts Derivative financial instruments – Foreign exchange instrument	2011 US$’000 32,094 15,163 10,432 250 795 58,734	2010 US$’000 43,417 11,447 6,330 985 –
		62,179

Included in trade and other payables are trade creditors and bills payable with the following ageing analysis as of the end of the reporting period:

Within 1 month More than 1 month but within 3 months More than 3 months but within 12 months More than 12 months but within 24 months More than 24 months	2011 US$’000 13,820 8,942 5,618 1,641 2,073 32,094	2010 US$’000 9,239 9,529 16,830 3,911 3,908
		43,417

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REVIEW OF FINANCIAL INFORMATION

The Audit Committee has reviewed the Group’s annual results for the year ended 31 December 2011. The Audit Committee comprises three independent non-executive Directors, namely Mr. Chan Ngai Sang, Kenny, Mr. Bian Junjiang and Mr. Guan Zhichuan.

The figures in respect of the preliminary announcement of the Group’s results for the year ended 31 December 2011 have been compared by the Company’s auditors, KPMG, Certified Public Accountants, to the amounts set out in the Group’s draft consolidated financial statements for the Year and the amounts were found to be in agreement. The work performed by KPMG in this respect was limited and did not constitute an audit, review or other assurance engagement and consequently no assurance has been expressed by the auditors on the this announcement.

MANAGEMENT DISCUSSION AND ANALYSIS

1. OVERVIEW

TSC is a global product and service provider serving both the offshore and land drilling rig industry worldwide. These principal activities remained unchanged for 2011.

Our Capital Equipment and Packages segment comprises design, manufacture, install and commission capital equipment on land and offshore rigs. Our equipment are highly engineered and automated for drilling, mechanical handling, solids control, power control and drives, tensioning and compensation systems for various offshore drilling rigs, completion, intervention and workover vessels for oil, gas wells as well as for land rigs.

The Oilfield Expendables and Supplies segment comprises the manufacture and sales of oilfield expendables and spares.

The Engineering Services segment provides a comprehensive range of engineering and maintenance services for our products as well as equipment manufactured by other suppliers.

The two factors that drive offshore rig activity are (i) new discoveries and (ii) oil prices. Both of which will influence the general level of business activity in the oil and gas industry worldwide and provide a positive impact on our business. In 2008, oil prices reached a high of US$147 per barrel in July 2008 but fell to US$36 per barrel at the end of 2008. Prices recovered to US$70 per barrel in 2009 and has since steadily risen to well above US$80 per barrel in 2010 and has remained steadily around US$100 throughout 2011. The financial and credit crisis which began in late 2007 was the second most important factor in 2009 and 2010 which reduced capital expenditure budgets of drilling contractors, construction companies, shipyards, oilfield services companies and oil companies is largely over. In 2011 the favourable oil price conductive to more drilling activities and the great demand from emerging countries stimulates an increase in capital equipment expenditures globally.

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Our strength lies in the comprehensive range of products, innovative technology and expertise which we integrate to offer our customers high value solutions, safe and high quality products and services at cost effective rates. These strengths are being applied on innovative strategies to leverage the company towards higher growth in the future as the price of oil recovers to a consistent sustainable price around US$100 per barrel. Demand is expected to continue to grow as discussed in the section below on outlook.

2. FINANCIAL REVIEW

FINANCIAL REVIEW
			Increase/
	2011	2010	(decrease)
	US$000	US$000	US$000	%
Turnover	138,416	143,455	(5,039)	(3.5)
Gross profit	52,300	52,266	34	0.1
Gross profit margin	37.8%	36.4%
Profit from operations	7,962	16,426	(8,464)	(51.5)
Net margin	5.8%	11.5%
Net profit for the year	4,031	13,591	(9,560)	(70.3)
Earnings per Share (Basic)	US 0.51 cent	US 2.05 cents
Earnings per Share (Diluted)	US 0.50 cent	US 2.01 cents

Turnover for the Group decreased by 3.5% to US$138.4 million. The net profit for 2011 was US$4.03 million, a drop of 70.3% from the previous year of US$13.59 million. The decrease in net profit was mainly due to the commencement of two major projects in the last quarter whilst having to maintain a high level of overhead to execute our long term strategies. Research and development initiatives were similarly continued to position the Group in availing ourselves to the potential opportunities in the market. We faced some delays the Astrakhan shipyard in completion of the H195 Dragon Oil Project which also resulted in increase in cost to complete. These costs have been factored into the reduction in profit this year.

Segment Information by Business Segments

Turnover

Capital Equipment and Packages Oilfield Expendables and Supplies Engineering Services	2011 US$’000 % 89,162 64.4 25,953 18.8 23,301 16.8 138,416 100.0	Increase/ 2010 (decrease) US$’000 % % 110,596 77.1 (19.4) 22,011 15.3 17.9 10,848 7.6 114.8 143,455 100.0 (3.5)

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Capital Equipment and Packages

The turnover of the Capital Equipment and Packages decreased from US$110.6 million in year 2010 to US$89.1 million in year 2011. This was mainly due to lower number of new projects starting in the year whilst ongoing projects progressed close to completion where the rate of completion would typically decrease. The company secured two drilling package contracts close to the end of the Year.

Oilfield Expendables and Supplies

The increase of 17.9% from US$22.0 million in 2010 to US$26.0 million in 2011 in Oilfield Expendables and Supplies turnover came from the expansion of the Group’s distribution network with established drilling contractors and the development of products for Original Equipment Manufacturers. The general improvement in drilling activity also provided the base for the good growth in this segment.

Engineering Services

The increase of 114.8% in Engineering Services turnover from US$10.8 million in 2010 to US$23.3 million in 2011 is in line with the Group’s continuing strategy to provide high quality service personnel to customers.

Segment Information by Geographical Regions

Turnover

Mainland China North America South America Europe Singapore Others (other part of Asia, India, Russia, Middle East, etc.) Total	2011 US$’000 % 47,356 34.2 31,736 22.9 12,984 9.4 16,028 11.6 23,341 16.9 6,971 5.0 138,416 100.0	Increase/ 2010 (decrease) US$’000 % % 40,952 28.5 15.6 24,551 17.1 29.3 4,372 3.0 196.9 22,014 15.4 (27.2) 46,241 32.2 (49.5) 5,325 3.8 30.9 143,455 100.0 (3.5)

Gross Profit and Gross Profit Margins

Gross Profit remained at US$52.3 million with the decrease of 3.5% in Group’s turnover. Gross profit margin improved slightly to 37.8% in year 2011 which remains fairly consistent with the previous year’s gross profit margin of 36.4%.

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Other Revenue and net income

The increase by 42.4% in Other Revenue and net income from US$2.1 million to US$3.1 million is mainly due to the reversal of impairment losses of doubtful debts in 2011.

Operating Expenses and Profit Attributable to Equity Shareholders of the Company

Selling & Distribution Expenses

Selling & Distribution expenses increased by US$1.2 million from US$5.5 million in 2010 to US$6.7 million in 2011 with implementation of marketing and sales strategies which involved extensive domestic and overseas travelling to emerging markets and development of sales strategies with our strategic alliance partners.

General & Administrative Expenses

General & Administration expenses increased by 27.0% from US$28.0 million in 2010 to US$35.6 million in 2011. The increase of US$7.6 million came mainly from increased staff cost and research & development expenses.

Other Operating Expenses

The increase in Other Operating Expenses from US$4.4 million in 2010 to US$5.1 million in 2011 is mainly due to foreign exchange currency losses and increase in amortisation of intangible assets resulting from a full year amortisation of Jurun Ltd.’s intangible assets compared to amortization of four months in the previous year when Jurun Ltd. was acquired in September 2010.

Finance Costs

Finance Costs, primarily interest on bank loans, amounted to approximately US$1.7 million compared to US$1.4 million in the previous year for the Group. The increase resulted from bank loans increasing from US$18.0 million at end of 2010 to US$25.5 million at end of 2011 and a slight increase in the average interest rate.

Group’s Liquidity and Capital Resources

As at 31 December 2011, the Group had other intangible assets of approximately US$16.0 million (2010: US$18.9 million). As at 31 December 2011, the Group carried fixed assets of approximately US$41.1 million (2010: US$32.7 million) being property, plant and equipment, property under development and interest in leasehold land held for own use under operating leases.

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As at 31 December 2011, the Group had interest in associates and deferred tax assets of approximately US$2.2 million (2010: US$4.1 million) and approximately US$10.9 million (2010: US$13.1 million), respectively.

As at 31 December 2011, the Group had current assets of approximately US$171.2 million (2010: US$162.1 million). Current assets mainly comprised cash at bank and in hand of approximately US$34.1 million (2010: US$17.1 million), and pledged bank deposits of approximately US$1.3 million (2010: US$3.7 million), inventories of approximately US$39.6 million (2010: US$33.3 million), trade and other receivables of approximately US$79.5 million (2010: US$64.9 million), gross amount due from customers for contract work of approximately US$16.5 million (2010: US$42.9 million), and amount due from a related company of approximately US$0.1 million (2010: US$0.1 million).

As at 31 December 2011, the Group’s current liabilities amounted to approximately US$85.2 million (2010: US$83.5 million), mainly comprising trade and other payables of approximately US$58.7 million (2010: US$62.2 million), bank loans of approximately US$20.5 million (2010: US$14.7 million), current taxation of approximately US$4.2 million (2010: US$4.4 million) and provisions of contract loss of approximately US$1.8 million (2010: US$2.3 million).

As at 31 December 2011, the Group had non-current liabilities of approximately US$6.3 million (2010: US$6.6 million), comprising bank loans of approximately US$4.9 million (2010: US$3.3 million) and deferred tax liabilities of approximately US$1.3 million (2010: US$3.2 million). Gearing ratio, being the Group’s total liabilities to equity shareholders’ Fund as at 31 December 2011 was 55%, as compared to 56% as at 31 December 2010.

Significant Investments and Disposals

There were no other significant investments or disposals during the year.

Capital Structure

At the beginning of the year at 1 January 2011, there were 678,563,804 shares in issue (the “Shares”) and the Company carried a share capital of approximately US$8,727,000.

During the Year, the Company issued 3,328,400 shares to option holders who exercised their options under the Company’s employee share option schemes. At 31 December 2011, the Company had 681,892,204 shares in issue, and a paid up capital of approximately US$8,770,000.

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Charges on Assets

To secure the loans from banks, the Group agreed to charge certain assets to banks. Details are set out as follows:

• (i) Interest in leasehold land held for own use under operating leases, buildings, plant and machinery, inventories and trade receivables of six subsidiaries namely TSC (Qingdao) Manufacture Co., Limited (“TSCQD”), TSC-HHCT (Xian) Control Technologies Limited, TSC Manufacturing and Supply, LLC, Qingdao TSC Offshore Equipment Co., Ltd. (“TSCOE”), Tianjin Shengli Petroleum Equipment Co. Ltd. and 8655 Golden Spike, LLC, with aggregate net book value of assets pledged amounted to US$56,045,000 (2010: US$12,927,000).

• (ii) Corporate guarantees given by Zhengzhou Highlight Energy Technology Co., Ltd., TSCQD and TSCOE to the extent of banking facilities outstanding of US$8,387,000 (2010: US$7,433,000) as at 31 December 2011.

• (iii) Guarantees given by the directors of the Company to the extent of banking facilities outstanding of US$4,928,000 (2010: US$3,641,000) as at 31 December 2011.

Certain bank loans of the Group are subject to the fulfillment of covenants relating to certain of the Group’s statement of financial position ratios, as are commonly found in lending arrangements with financial institutions. If the Group were to breach the covenants the drawn down loan balances would become payable on demand. The Group regularly monitors its compliance with these covenants. As at 31 December 2011, none of the covenants relating to the Group’s bank loans had been breached, except that the Group did not fulfil the financial covenants of a short term bank loan of $2,199,400. Subsequent to 31 December 2011, the Group has obtained a letter from the bank to waive the strict compliance with the financial covenants for the year ended 31 December 2011.

Foreign Currency Exchange Exposures

The Group is exposed to currency risk primarily through sales and purchases that are denominated in a currency other than the functional currency of the operations to which they relate. The Group has foreign exchange exposure resulting from most of the Group’s subsidiaries in the PRC carried out production locally with RMB as funtional currency while approximately 45% of the Group’s turnover was denominated in United States dollars. As at 31 December 2011, no related hedges were made by the Group.

In order to mitigate that foreign exchange exposure, we have entered into a non deliverable foreign exchange instrument to better match the currency of our revenues and associated costs in the future. However, we do not use the foreign exchange instrument for trading or speculative purposes. The Group will actively explore ways to hedge or reduce currency exchange risk in future.

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Contingent Liabilities

As at 31 December 2011, the Company has outstanding guarantees issued to banks in respect of banking facilities granted to a subsidiary. The Directors do not consider it probable that a claim will be made against the Company under any of the guarantees. The maximum liability of the Company at the end of the reporting period under the guarantees issued is the facilities drawn down by a subsidiary of US$Nil (2010: US$Nil).

Non-Exempt Continuing Connected Transactions

The Group conducted the following continuing connected transactions with connected parties of the Company, namely CIMC Raffles Offshore (Singapore) Limited (“CIMC Raffles”):

In February 2010, the Group conducted the following continuing connected transactions with connected parties of the Company, namely CIMC Raffles. CIMC Raffles is a substantial shareholder of the Company, which through its wholly-owned subsidiary, CIMC Raffles Investments Limited (“CRIL”), owns approximately 6.51% of the issued share capital of the Company.

On 26 May 2011, the Company has been informed by China International Marine Containers (Hong Kong) Limited (“CIMC HK”), CIMC HK was already the beneficial owner of 50,000,000 shares of the Company and a wholly-owned subsidiary of China International Marine Containers (Group) Co., Limited (“CIMC Group”), that they acquired 42,800,000 Shares at HK$2.28 each in the Company from CRIL, a wholly-owned subsidiary of CIMC Raffles. CIMC Raffles is held as to 83.55% by CIMC Offshore Holdings Limited. Mr. Brian Chang, an nonexecutive director of the Company, through his wholly-owned companies hold 38.24% of the issued shares in CIMC Offshore Holdings Limited. Mr. Brian Chang is deemed to be interested in 42,800,000 shares held by CRIL as he holds 31.94% attributable interest in CRIL and he currently serves as deputy chairman of CIMC Raffles and serves as director of certain subsidiaries of CIMC Raffles group.

As of the date of this announcement, Mr. Brian Chang continues to have deemed interested in aggregate 66,072,800 shares, representing approximately 9.69% of the Company by virtue of his interests in Asian Infrastructure Limited and Windmere International Limited. CIMC Group, through CIMC HK, is deemed to be interested in 92,800,000 shares, representing approximately 13.61% of the issued share capital of the Company.

The Supply of Drilling Package and Electrical Power Packages

Category of transaction Continuing Connected Transactions Transaction Date 10 February 2010

Transaction with CIMC Raffles

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Purpose of transaction

The master agreement with CIMC Raffles by which the Group can provide the Equipment under the Turnkey Project(s) to CIMC Raffles for two years ended 31 December 2011.

• Contract values and other details

The annual caps under the master agreement for two years ended 31 December 2011 are approximately US$200 million each year.

• Detailed announcement Details of the transaction were announced on 10 and shareholder February 2010 which was published on the websites approval of the Stock Exchange and the Company. The master agreement was approved by independent shareholders at extraordinary general meeting on 18 March 2010.

During the Year, the Group transacted contracts with CIMC Raffles under the continuing connected transactions mandate approved by the Company’s independent shareholders at extraordinary general meeting held on 18 March 2010. The above-mentioned contracts cover the supply of drilling packages, electrical power packages and a submersible pump with a total contract value of approximately US$66.5 million, which is within the cap of US$200 million for the year ended 31 December 2011 approved by the independent shareholders of the Company. The actual sales amount of these continuing connected transactions between the Group and CIMC Raffles was approximately US$7.8 million for the year ended 31 December 2011.

In addition, the actual sales amount of the supply contracts with CIMC Raffles signed during 2010 was approximately US$2.9 million for the year ended 31 December 2011 (2010: US$29.1 million).

Employees and Remuneration Policy

As at 31 December 2011, the Group had approximately 1,122 full-time staff in the USA, the United Kingdom (“UK”), Brazil, United Arab Emirates, Russia, Singapore, Hong Kong and the PRC. The Group’s remuneration policy is basically determined by the performance of individual employee and the market condition. The Group also provides other benefits to its employees, including medical schemes, pension contributions and share option schemes.

3. BUSINESS AND MARKET REVIEW

Although the recovery of the oil and gas industry in 2011 was not as strong as it was in 2010, oil prices averaged above US$100 per barrel which is a good level for supporting Capital Equipment investment decisions affecting TSC businesses. The combination of economic concerns in developed countries and lower growth in emerging countries dampened the pace of recovery in 2011. However, tight supply exacerbated by unrest in oil producing countries in the Middle East maintained

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sufficient pressure on oil prices to set new records. With high oil prices where they are today, mature basins are set to drive rig demand. The two factors that drive offshore rig activity are (i) new discoveries and (ii) oil prices. Both of which will provide a positive impact on our business. So far, attention in the offshore drilling markets has been focused on new discoveries in regions like Brazil and West Africa as well as in mature offshore drilling markets like the North Sea, midwater Gulf of Mexico, parts of Asia, the Middle East and the Caspian Sea region. In the US the market for pressure pumping and land drilling continues to develop even though faced with environmental and equipment supply constraints relating to pressure pumping equipment. Market conditions are favourable to TSC’s business strategies.

4. FUTURE PLANS FOR MATERIAL INVESTMENTS, CAPITAL ASSETS AND CAPITAL COMMITMENT

We will be opening further 2 branches in the Texas and Louisiana region in the United States and Colombia to meet with growing demand for our expendables and supplies in these regions. The facilities were rented and will be able to stock sufficient supplies to provide immediate response to customers in that region.

Our Brazil office recently secured a 15 year lease for 8,000 m[2] of land in Macaé which includes an option to purchase the land at the end of the lease period. This facility will enable us to expand operations in Brazil to expand our Engineering Services segment business and to some extent meet with requirements for a minimum level of local content for future supply of equipment in Brazil.

Future plans include developments of:

• Jacking systems for harsh environment deepwater jack up rigs

• Multi-service vessels (MSV) conceptualized based on operating parameters in several deepwater regions for well intervention, installation, repair and maintenance (IRM) and field development applications

• Fast Moving Land Rigs which are ultra-efficient and can bring about tremendous mobility and costs savings for the drilling contractors, based off the accumulated experience from TSC’s management

• Finalization of Workforce 2200/2400 series mud pumps.

• Trial and evaluation of the hi-pressure fracturing pumps, expect to come online in 3Q 2012.

TSC continues to explore plans to acquire expertise and expand capabilities by way of purchasing assets or acquisition of equity interest in companies with such expertise and or capability.

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Change of company name

Pursuant to a special resolution passed by the shareholders of the Company at its extraordinary general meeting held on 4 March 2011, the name of the Company was changed from “TSC Offshore Group Limited” to “TSC Group Holdings Limited” (with “TSC集團控股有限公司” being adopted as its new Chinese name for identification purpose only) under the laws of the Cayman Islands. The certificate of incorporation on change of name was issued by the Registrar of Companies in the Cayman Islands on 4 March 2011. The Company obtained the “Certificate of Registration of Change of Corporate Name of Non-Hong Kong Company” with the Registrar of Companies in Hong Kong and change the English and Chinese stock short name. The stock code of “206” of the Company remains unchanged.

Appointment of non-executive Director

In January 2011, Mr. Yu Yuqun was recommended by the Company’s nomination committee to be appointed as non-executive Director of the Company. Subsequently, the Company convened the meeting of the Board and resolved to appoint Mr. Yu Yuqun as non-executive Director of the Company with effect from 15 March 2011. As at the date of this announcement, the Board of the Company comprised of Mr. Jiang Bing Hua and Mr. Zhang Menggui as executive Directors; Mr. Jiang Longsheng, Mr. Brian Chang and Mr Yu Yuqun as non-executive Directors; Mr. Chan Ngai Sang, Kenny, Mr. Bian Junjiang, Mr. Guan Zhichuan and Mr. Robert William Fogal Jr. as independent non-executive Directors. Mr. Yu Yuqun (non-executive Director) was newly appointed.

5. STRATEGY, PROSPECTS AND ORDER BOOK

Strategies

TSC adopts a 3-tier business strategy which can be visualized as a pyramid where the base comprises our ‘cash cow’ business of Oilfield Expendables and Supplies and Engineering Services (which incorporates maintenance, repair and perahons), Rack Cutting, Solids Control and other developed range of equipment. The mid section of the pyramid which we call ‘revenue boosters’ comprises our individual sales of the wide range of products such as Deck Cranes, Mechanical Handling, Mud Pumps, Jacking Systems, Jack-up Rack and Chord, Electrical Controls and Drives. These are equipment which we design and supply individually. The top section of our strategy pyramid, our ‘growth engine’, where we tailor our range of products as an ‘Integrated Solution’, addressing customers needs by leveraging TSC’s product range, engineering capability, project execution and financial needs taken together as one product offering.

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This 3-tier business strategy is complemented with marketing and operational strategies which as a whole serves to meet our vision to transform TSC into a formidable player in the global oil and gas service and equipment industry. We also adopt a “3D” approach where our teams are Customer-Driven, ServiceDriven and Solution-Driven in everything we do. This enables us to achieve the penetration into the markets that we want to win as well as to deliver our products and services on time, on quality and within budget.

Prospects

TSC strategies are also tied in with the strategies of our partners and alliances with synergistic and complementary capabilities to form the bigger picture that TSC needs in order to scale the growth path we have set. As execution of this long term strategy unfolds we are witnessing the successful transformation of TSC’s business profile to higher level of penetration and participation in the global demand for our products The feedback that we have received from prospective customers are encouraging. Our customers, in the emerging markets with whom we choose to establish our presence, highly appreciate our approach which is unique compared to what is available in the market. We are optimistic about our long term prospects.

Order Book

As at 31 December 2011, the Group as a whole carried an order backlog of approximately US$121.5 million for capital equipment and packages, expendables and engineering services. Subsequent to 31 December 2011, the Group has secured further new orders amounting to US$17.2 million up to the date of this announcement.

Subsequent Events

On 10 January 2012, EMER International Limited, a subsidiary of the Company, transacted a contract variation order (the “Contract Variation Order”) with Yantai CIMC Raffles Offshore Ltd, a subsidiary of CIMC Raffles Offshore (Singapore) Limited (“CIMC Raffles”). The Contract Variation Order is related to the supply of a submersible pump valued at US$125,000 (approximately HK$975,000) which was excluded from the initial purchase contract value in 2011. For the period between 19 March 2010 and 31 December 2011 (the “Period”), the Group transacted actual sales amount of US$38.5 million and US$66.5 million respectively with CIMC Raffles, which were within the cap of US$200 million for each of these two years ended 31 December 2011 under the continuing connected transactions mandate approved by the Company’s independent shareholders at extraordinary general meeting held on 19 March 2010. The Contract Variation Order is for 2012 so it is not covered in the Period. As of the date of this announcement, it was a de minimis connected transaction on normal commercial terms where each of the percentage ratios was less than 0.1% and the total consideration was less than HK$1,000,000. Therefore, this connected transaction would be exempt from all the reporting, announcement and independent shareholders’ approval requirements stated in the Listing Rule 14A.31(2).

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Save as disclosed in this announcement, no subsequent events occurred after 31 December 2011 which may have significant effects on the assets and liabilities of future operations of the Group.

CONFIRMATION OF INDEPENDENCE OF INDEPENDENT NON-EXECUTIVE DIRECTORS

The Company had received from each of the independent non-executive Directors an annual confirmation of his independence. The Company considered all the independent non-executive Directors are independent.

AUDIT COMMITTEE

The Company established an audit committee with written terms of reference in compliance with the Listing Rules. The primary duties of the audit committee are to review and supervise the financial reporting process and internal control systems of the Group. The audit committee comprises three members, namely Mr. Chan Ngai Sang, Kenny (being the Chairman), Mr. Bian Junjiang and Mr. Guan Zhichuan. All of them are independent non-executive Directors.

Throughout the Year, the audit committee held two meetings in considering and reviewing the interim and annual results of the Group and were of the opinion that the preparation of such results complied with the applicable accounting standards and requirements and that adequate disclosure have been made.

DIRECTORS’ SECURITIES TRANSACTIONS

The Company has adopted a code of conduct regarding Directors’ securities transactions on terms no less exacting than the required standard of dealings as set out in Appendix 10 of the Listing Rules. Having made specific enquiry of all Directors, the Directors have complied with such code of conduct and the required standard of dealings and its code of conduct regarding securities transactions by the Directors throughout the year ended 31 December 2011.

DIRECTORS’ INTERESTS IN CONTRACTS

No contract of significance to which the Company or any of its subsidiaries was a party, and in which a Director had a direct and indirect material interest, subsisted at the end of the year or at any time during the year ended 31 December 2011.

CODE ON CORPORATE GOVERNANCE PRACTICES

The Company has complied with the code provisions set out in the Code on Corporate Governance Practices Contained in Appendix 14 of the Listing Rules during the year ended 31 December 2011. The Company has committed itself to a high standard of corporate governance. The Directors strongly believe that reasonable and sound corporate governance practices are vital to the Group’s rapid growth and to safeguarding and enhancing shareholders’ interests.

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PURCHASE, REDEMPTION OR SALE OF LISTED SECURITIES OF THE COMPANY

During the year ended 31 December 2011, neither the Company nor any of its subsidiaries purchased, redeemed or sold any of the Company’s listed securities.

PUBLICATION OF ANNUAL RESULTS AND ANNUAL REPORT

A copy of annual report containing all information required by relevant paragraphs of Appendix 16 to the Listing Rules will be published on the Stock Exchange’s website (http://www.hkex.com.hk) and the Company’s website (http://www.tsc-holdings.com) in due course.

By Order of the Board TSC Group Holdings Limited Jiang Bing Hua Executive Chairman

Hong Kong, 28 March 2012

As at the date of this announcement, the Board comprises of Mr. Jiang Bing Hua (executive Director), Mr. Zhang Menggui (executive Director), Mr. Brian Chang (nonexecutive Director), Mr. Jiang Longsheng (non-executive Director), Mr. Yu Yuqun (non-executive Director), Mr. Bian Junjiang (independent non-executive Director), Mr. Chan Ngai Sang, Kenny (independent non-executive Director), Mr. Guan Zhichuan (independent non-executive Director) and Mr. Robert William Fogal Jr (independent non-executive Director).

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