CM Energy Tech Co., Ltd. — Annual Report 2015

Mar 30, 2016

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 2015

HIGHLIGHTS

• Revenue amounted to approximately US$194.9 million for the year ended 31 December 2015, representing a decrease of 28.0% as compared with 2014;

• Gross profit amounted to approximately US$54.4 million for the year ended 31 December 2015, representing a decrease of 27.8% as compared with 2014;

• Gross profit margin increased slightly from 27.8% for 2014 to 27.9% for 2015;

• Profit attributable to equity shareholders of the Company amounted to approximately US$2.1 million for the year ended 31 December 2015, representing a decrease of 89.8% as compared with 2014; and

• The Directors do not recommend the payment of a dividend for 2015.

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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 2015 (the “Year”) together with the comparative figures for the year ended 31 December 2014 as follows using United States dollars as presentation currency:

Consolidated Statement of Profit or Loss

For the year ended 31 December 2015

Note Revenue 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 associate 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	2015 $’000 194,899 (140,543) 54,356 3,842 (12,554) (33,089) (5,975) 6,580 (4,545) – 2,035 (738) 1,297 2,097 (800) 1,297 0.30 cent 0.30 cent	2014 $’000 270,586 (195,339) 75,247 883 (9,849) (33,292) (5,461) 27,528 (3,221) – 24,307 (3,365) 20,942 20,502 440 20,942 2.95 cents 2.87 cents

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Consolidated Statement of Profit or Loss and Other Comprehensive Income

For the year ended 31 December 2015

Profit for the year Other comprehensive income for the year: Items that may be reclassified subsequently to profit or loss: – Exchange differences on translation of financial statements of subsidiaries and associate (with nil tax effect) Total comprehensive income for the year Attributable to: Equity shareholders of the Company Non-controlling interests Total comprehensive income for the year	2015 $’000 1,297 (6,771) (5,474) (4,544) (930) (5,474)	2014 $’000 20,942 (554) 20,388 20,075 313 20,388

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Consolidated Statement of Financial Position

At 31 December 2015

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 associate Other financial asset 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 Tax recoverable Pledged bank deposits Cash at bank and in hand Non-current assets classified as held for sale Current liabilities Trade and other payables 10 Bank loans and other borrowings Tax payable	2015 $’000 42,400 18,732 8,063 22,996 6,464 193 4,661 46 12,036 115,591 58,523 107,293 236,539 101 132 5,045 46,505 454,138 – 454,138 278,230 28,725 5,326 312,281	2014 $’000 34,490 10,644 8,726 24,089 9,169 – 4,561 56 11,355
		103,090
		50,466 97,658 182,489 101 – 4,382 52,337
		387,433 3,470
		390,903
		195,226 27,310 7,930
		230,466

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Note Net current assets Total assets less current liabilities Non-current liabilities Bank loans and other borrowings 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	2015 $’000 141,857 257,448 38,185 268 38,453 218,995 9,094 207,530 216,624 2,371 218,995	2014 $’000 160,437
		263,527
		37,893 467
		38,360
		225,167
		9,066 212,821
		221,887 3,280
		225,167

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Consolidated Statement of Changes in Equity

For the year ended 31 December 2015

Balance at 1 January 2014 Changes in equity for 2014: 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 Acquisition of non-controlling interest without a change in control Dividends paid to non-controlling shareholder Balance at 31 December 2014 and 1 January 2015				Attributable to equity shareholders of the Company	Attributable to equity shareholders of the Company	Attributable to equity shareholders of the Company			Total $’000 196,398 20,502 (427) 20,075 1,193 409 – 3,812 – 221,887	Non- controlling interests $’000 7,846 440 (127) 313 – – – (3,812) (1,067) 3,280	Total equity $’000 204,244 20,942 (554) 20,388
	Share capital $’000 8,884 – – – 74 – – 108 – 9,066	Share premium $’000 121,611 – – – 1,650 – – 4,224 – 127,485	Merger reserve $’000 2,161 – – – – – – – – 2,161	Exchange reserve Employee share-based compensation reserve $’000 $’000 4,053 6,061 – – (427) – (427) – – (531) – 409 – – – – – – 3,626 5,939	Shares held for share award scheme reserve $’000 – – – – – – – – – –	Capital reserve Revaluation reserve $’000 $’000 512 627 – – – – – – – – – – – – – – – – 512 627	Reserve funds $’000 5,724 – – – – – 1,565 – – 7,289	Retained profits $’000 46,765 20,502 – 20,502 – – (1,565) (520) – 65,182
											1,193 409 – – (1,067)
											225,167

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Attributable to equity shareholders of the Company

Balance at 31 December 2014 and 1 January 2015 Changes in equity for 2015: Profit for the year Other comprehensive income Total comprehensive income Shares issued under share option schemes Equity-settled share-based transactions Purchase of shares for share award scheme Transferred to reserve funds Capital contribution received from non-wholly owned subsidiaries from non-controlling shareholders Balance at 31 December 2015	Share capital $’000 9,066 – – – 28 – – – – 9,094	Share premium $’000 127,485 – – – 320 – – – – 127,805	Merger reserve $’000 2,161 – – – – – – – – 2,161	Exchange reserve Employee share-based compensation reserve Shares held for share award scheme reserve $’000 $’000 $’000 3,626 5,939 – – – – (6,641) – – (6,641) – – – (105) – – 323 – – – (1,285) – – – – – – (3,015) 6,157 (1,285)	Capital reserve Revaluation reserve $’000 $’000 512 627 – – – – – – – – – – – – – – – – 512 627	Reserve funds $’000 7,289 – – – – – – 1,526 – 8,815	Retained profits $’000 65,182 2,097 – 2,097 – – – (1,526) – 65,753	Total $’000 221,887 2,097 (6,641) (4,544) 243 323 (1,285) – – 216,624	Non- controlling interests $’000 3,280 (800) (130) (930) – – – – 21 2,371	Total equity $’000 225,167 1,297 (6,771)
										(5,474)
										243 323 (1,285) – 21
										218,995

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Note:

1 BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

The consolidated financial statements for the year ended 31 December 2015 comprise the Company and its subsidiaries and the Group’s interest in associate.

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.

Non-current assets held for sale are stated at the lower of carrying amount and fair value less costs to sell.

The preparation of financial statements in conformity with 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 Hong Kong Financial Reporting Standards (“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 the following amendments to HKFRSs that are first effective for the current accounting period of the Group:

• Annual Improvements to HKFRSs 2010-2012 Cycle

• Annual Improvements to HKFRSs 2011-2013 Cycle

The Group has not applied any new standard or interpretation that is not yet effective for the current accounting period. Impacts of the adoption of the amended HKFRSs are discussed below:

Annual Improvements to HKFRSs 2010-2012 Cycle and 2011-2013 Cycle

These two cycles of annual improvements contain amendments to nine standards with consequential amendments to other standards. Among them, HKAS 24, Related party disclosures has been amended to expand the definition of a “related party” to include a management entity that provides key management personnel services to the reporting entity, and to require the disclosure of the amounts incurred for obtaining the key management personnel services provided by the management entity. These amendments do not have an impact on the Group’s related party disclosures as the Group does not obtain key management personnel services from management entities.

3 REVENUE AND SEGMENT REPORTING

(a) Revenue

The principal activities of the Group are the design, manufacture, installation and commissioning of capital equipment and packages on land and offshore rigs and oilfield expendables and supplies and the provision of engineering services.

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Revenue 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 during the year is as follows:

Capital equipment and packages – Sales of capital 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	2015 $’000 15,260 49,451 57,359 122,070 58,500 14,329 194,899	2014 $’000 24,926 45,691 133,792
		204,409 52,148 14,029
		270,586

The Group’s customer base is diversified and includes two customers (2014: two customers) with whom transactions have exceeded 10% of the Group’s revenues. In 2015, revenues from sales of capital equipment and packages to these customers, including sales to entities which are known to the Group to be under common control with these customers, amounted to approximately $53 million and $23 million respectively (2014: $107 million and $30 million respectively).

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, installation and commissioning of capital equipment and packages on land and offshore rigs

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

• Engineering services:

the provision of engineering services

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• (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 associate, other financial asset, cash at bank and in hand, pledged bank deposits, tax balances and other unallocated head office and corporate assets. Segment liabilities include trade and other payables and provisions attributable to the activities of the individual segment, with the exception of bank loans and other borrowings, 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 associate, 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. Inter-segment revenue is priced with reference to prices charged to external parties for similar orders.

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 2015 and 2014 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 2015 2014 $’000 $’000 122,070 204,409 15,654 1,969 137,724 206,378 4,532 29,592 4,926 4,851 426,101 354,874 6,438 10,804 (258,255) (177,568)	Oilfield expendables and supplies 2015 2014 $’000 $’000 58,500 52,148 6,205 7,821 64,705 59,969 1,266 5,295 957 825 55,905 42,275 17,407 4,185 (16,182) (11,975)	Engineering services 2015 2014 $’000 $’000 14,329 14,029 1,291 131 15,620 14,160 2,423 403 1,485 1,648 17,657 22,733 7 33 (3,295) (4,831)	Total 2015 2014 $’000 $’000 194,899 270,586 23,150 9,921 218,049 280,507 8,221 35,290 7,368 7,324 499,663 419,882 23,852 15,022 (277,732) (194,374)	Total 2015 2014 $’000 $’000 194,899 270,586 23,150 9,921 218,049 280,507 8,221 35,290 7,368 7,324 499,663 419,882 23,852 15,022 (277,732) (194,374)
					280,507
					35,290
					7,324 419,882 15,022 (194,374)

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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 revenue_(note 3(a))_ Profit Segment results Finance costs Unallocated head office and corporate income and expenses Consolidated profit before taxation Assets Reportable segment assets Interest in associate Other financial asset Cash at bank and in hand Pledged bank deposits Deferred tax assets Tax recoverable Unallocated head office and corporate assets Consolidated total assets Liabilities Reportable segment liabilities Bank loans and other borrowings Current taxation Deferred tax liabilities Unallocated head office and corporate liabilities Consolidated total liabilities	2015 $’000 218,049 (23,150) 194,899 8,221 (4,545) (1,641) 2,035 499,663 193 4,661 46,505 5,045 12,036 132 1,494 569,729 (277,732) (66,910) (5,326) (268) (498) (350,734)	2014 $’000 280,507 (9,921) 270,586 35,290 (3,221) (7,762) 24,307 419,882 – 4,561 52,337 4,382 11,355 – 1,476 493,993 (194,374) (65,203) (7,930) (467) (852) (268,826)

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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 associate, other financial asset and noncurrent 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 asset, 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 associate, other financial asset and non-current portion of prepayments.

Hong Kong Mainland China North America South America Europe Singapore Indonesia Others (other part of Asia, India, Russia etc.)	Revenue from external customers 2015 2014 $’000 $’000 – – 61,373 65,823 27,483 131,803 26,832 16,133 4,535 13,145 17,446 32,519 56,129 – 1,101 11,163 194,899 270,586	Specified non-current assets 2015 2014 $’000 $’000 195 68 58,803 55,256 17,937 6,494 389 407 24,435 27,185 8 5 – – 1,788 2,320 103,555 91,735	Specified non-current assets 2015 2014 $’000 $’000 195 68 58,803 55,256 17,937 6,494 389 407 24,435 27,185 8 5 – – 1,788 2,320 103,555 91,735
			91,735

4 OTHER REVENUE AND NET INCOME

Interest income Net foreign exchange gain Others	2015 $’000 186 2,279 1,377 3,842	2014 $’000 134 – 749
		883

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5 PROFIT BEFORE TAXATION

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

		2015	2014
		$’000	$’000
(a)	Finance costs
	Interest on bank loans and other borrowings	5,425	3,338
	Less: Interest expense capitalised into property under
	development*	(880)	(117)
		4,545	3,221
*	The borrowing costs have been capitalised at a rate of 6.87% – 7.09% per annum (2014: 6.71% – 7.21%
	per annum).
(b)	Staff costs#
	Contributions to defined contribution retirement plans	4,536	4,431
	Equity-settled share-based payment expenses	323	409
	Salaries, wages and other benefits	38,870	38,705
		43,729	43,545
(c)	Other items
	Amortisation of interest in leasehold land held for own use
	under operating leases#	226	254
	Amortisation of intangible assets	2,632	2,691
	Depreciation#	5,161	4,741
	Impairment losses on doubtful debts	1,941	1,696
	Write-off of trade debtors	44	363
	Research and development costs	4,328	1,282
	Net foreign exchange (gain)/loss	(2,279)	341
	Loss on disposal of property, plant and equipment	476	247
	Auditors’ remuneration	436	513
	Minimum lease payments under operating leases in respect of
	land and buildings	4,071	3,615
	Cost of inventories#	137,663	192,147

Cost of inventories includes $26,253,000 (2014: $24,339,000) 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 STATEMENT OF PROFIT OR LOSS

• (a) Income tax in the consolidated statement of profit or loss represents:

Current tax Provision for the year – Hong Kong Profits Tax – PRC enterprise income tax – Overseas corporation income tax Over-provision in respect of prior years – PRC enterprise income tax Deferred tax Origination of temporary differences	2015 $’000 727 243 1,301 2,271 (527) 1,744 (1,006) 738	2014 $’000 – 2,783 1,428 4,211 (781) 3,430 (65) 3,365

The provision for Hong Kong Profits Tax for 2015 is calculated at 16.5% of the estimated assessable profits for the year. No provision for Hong Kong Profits Tax was made in the financial statements as the Group did not have assessable profits subject to Hong Kong Profits Tax in 2014. Taxation for subsidiaries in other jurisdictions is charged at the appropriate current rates of taxation ruling in relevant jurisdictions. During the year, certain PRC subsidiaries are subject to tax at a reduced rate of 15% (2014: 15%) under the relevant PRC tax rules and regulations.

(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 unused tax losses not recognised Over-provision in prior years Actual tax expense	2015 $’000 2,035 509 733 (1,066) (1,119) 2,208 (527) 738	2014 $’000 24,307 5,729 1,062 (3,474) (1,938) 2,767 (781) 3,365

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7 DIVIDEND

The directors do not recommend the payment of a dividend for the year ended 31 December 2015 (2014: $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 $2,097,000 (2014: $20,502,000) and the weighted average number of 702,888,000 (2014: 695,582,000) ordinary shares in issue during the year after adjusting the shares held for share award scheme, calculated as follows:

Weighted average number of ordinary shares

Issued ordinary shares at 1 January Effect of share issue for acquisition of non-controlling interest Effect of share options exercised Effect of purchase of shares held for share award scheme Weighted average number of ordinary shares at 31 December	2015 ’000 704,915 – 2,072 (4,099) 702,888	2014 ’000 690,754 460 4,368 –
		695,582

(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 $2,097,000 (2014: $20,502,000) and the weighted average number of 708,594,000 (2014: 713,790,000) 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 for nil consideration Weighted average number of ordinary shares (diluted) at 31 December	2015 ’000 702,888 5,706 708,594	2014 ’000 695,582 18,208
		713,790

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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	2015 $’000 99,176 (7,590) 91,586 15,753 107,339 (46) 107,293	2014 $’000 90,334 (5,767)
		84,567 13,147
		97,714 (56)
		97,658

(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	2015 $’000 28,780 15,779 7,365 21,660 18,002 62,806 91,586	2014 $’000 31,222
		9,436 16,529 13,130 14,250
		53,345
		84,567

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 capital equipment and packages 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.

Included in “Trade and other receivables” of the Group are trade debtors and bills receivable of $99,176,000 (2014: $90,334,000) of which $3,582,000 (2014: $14,550,000) are due from subsidiaries of a substantial shareholder of the Group.

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(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.

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 recognised Uncollectible amounts written-off At 31 December	2015 $’000 5,767 (108) 1,941 (10) 7,590	2014 $’000 4,208 (4) 1,696 (133)
		5,767

At 31 December 2015, the Group’s trade debtors of $8,161,000 (2014: $6,020,000) were individually determined to be impaired. The individually impaired receivables related to customers that were in financial difficulties and management assessed that only a portion of the receivables is expected to be recovered. Consequently, specific allowances for doubtful debts of $7,590,000 (2014: $5,767,000) 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	2015 $’000 28,737 15,759 7,341 21,505 17,673 62,278 91,015	2014 $’000 31,222
		9,436 16,529 13,130 13,997
		53,092
		84,314

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 good track record 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 creditors and bills payable Other payables and accrued charges	2015 $’000 217,978 60,252 278,230	2014 $’000 156,747 38,479
		195,226

As of the end of the reporting period, the ageing analysis of trade creditors and bills payable (which are included in trade and other payables), based on invoice date, is as follows:

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	2015 $’000 194,669 6,094 13,956 2,414 845 217,978	2014 $’000 132,411 9,597 10,642 1,340 2,757
		156,747

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REVIEW OF FINANCIAL INFORMATION

The Audit Committee has reviewed the Group’s annual results for the year ended 31 December 2015. The Audit Committee comprises three independent non-executive Directors, namely Mr. Chan Ngai Sang, Kenny, Mr. Bian Junjiang and Mr. Guan Zhichuan.

The financial figures in respect of the preliminary announcement of the Group’s results for the year ended 31 December 2015 have been compared by the Company’s auditors, KPMG, Certified Public Accountants, to the amounts set out in the Group’s consolidated financial statements for the Year and the amounts were found to be in agreement. The work performed by KPMG in this respect did not constitute an audit, review or other assurance engagement in accordance with Hong Kong Standards on Auditing, Hong Kong Standards on Review Engagements or Hong Kong Standards on Assurance Engagements issued by Hong Kong Institute of Certified Public Accountants and consequently no assurance has been expressed by the auditors.

MANAGEMENT DISCUSSION AND ANALYSIS OVERVIEW

TSC is a global product and service provider serving the worldwide onshore and offshore oil and gas E&P industries. These principal activities remained unchanged for 2015.

Our Capital Equipment and Packages segment comprises design, manufacture, installation and commissioning of capital equipment and packages for land and offshore rigs. Our equipment is highly engineered and automated for drilling, mechanical handling, jacking systems, 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.

Our rig Maintenance, Repair and Operations (“MRO”) segments comprise two business units; the MRO Supplies business unit which comprises the manufacture and sales of oilfield expendables and spares, and the MRO Services business unit which provides a comprehensive range of engineering and maintenance services for our products as well as equipment manufactured by other suppliers.

Alliance Offshore Drilling Pte. Ltd. (“AOD”), incorporated and based in Singapore, is a wholly-owned subsidiary of the Group. Its primary business is to implement the alliance strategy with our partners, Zentech Incorporated and CSSC Huangpu Wenchong Shipbuilding Company Ltd. to build, sell and lease certain type of jack-up rigs. Our first 400 ft jack-up rig, R-550D, is under construction with estimated delivery at the second quarter of 2016. Leverage resources and partnership to create “All-Win” relationship will continue to be one of the primary strategies for us to grow the Company.

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FINANCIAL REVIEW

Revenue Gross Profit Gross Profit Margin Profit before Interest and Taxation Net Profit attributable to Equity Shareholders Net Profit Margin Earnings per Share (Basic) Earnings per Share (Diluted)	2015 US$’000 194,899 54,356 27.9% 6,580 2,097 1.1% US0.30 cent US0.30 cent	2014 US$’000 270,586 75,247 27.8% 27,528 20,502 7.6% US2.95 cents US2.87 cents	Change US$’000 % (75,687) (28.0) (20,891) (27.8) (20,948) (76.1) (18,405) (89.8) (US2.65 cents) (89.8) (US2.57 cents) (89.5)

Revenue

Consolidated revenue decreased 28.0% to US$194.9 million from US$270.6 million in 2014. The decrease mainly came from a 40.3% decrease in Capital Equipment and Packages recognised revenue and partly offset by 12.2% increase in Oilfield Expendables and Supplies sales. Engineering Services revenue remained stable compared to the previous year.

The 89.8% decrease in net profit attributable to equity shareholders was mainly due to the decreased revenue from Capital Equipment and Packages business segment.

Segment Information by Business Segments

Capital Equipment and Packages Oilfield Expendables and Supplies Engineering Services Total revenue	2015 US$’000 % 122,070 62.6 58,500 30.0 14,329 7.4 194,899 100.0	2014 US$’000 % 204,409 75.5 52,148 19.3 14,029 5.2 270,586 100.0	Increase/ (decrease) US$’000 % (82,339) (40.3) 6,352 12.2 300 2.1 (75,687) (28.0)

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Capital Equipment and Packages

Revenue recognised based on progress achieved on Capital Equipment and Packages projects decreased by 40.3% in 2015 compared to 2014. The decrease of US$82.3 million came mainly from the downturn in oil market which resulted in less drilling activities as well as the shrinking demand on rig-turnkey package in 2015. The remaining Capital Equipment and Packages revenue was fairly consistent with the previous year coming from the various capital equipment business units.

Oilfield Expendables and Supplies

The increase of 12.2% from US$52.1 million in 2014 to US$58.5 million in 2015 in Oilfield Expendables and Supplies was mainly arisen from the expansion of the Group’s distribution network to Venezuela market and revenue of approximately US$24.0 million was recognised in 2015.

Engineering Services

Engineering Services revenue remained stable in 2014 and 2015 at US$14.0 million and US$14.3 million respectively.

Segment Information by Geographical Regions

Mainland China North America South America Europe Singapore Indonesia Others Total revenue	2015 US$’000 % 61,373 31.5 27,483 14.1 26,832 13.8 4,535 2.3 17,446 9.0 56,129 28.8 1,101 0.5 194,899 100.0	2014 US$’000 % 65,823 24.3 131,803 48.7 16,133 6.0 13,145 4.9 32,519 12.0 – – 11,163 4.1 270,586 100.0	Increase/ (decrease) US$’000 % (4,450) (6.8) (104,320) (79.1) 10,699 66.3 (8,610) (65.5) (15,073) (46.4) 56,129 n/a (10,062) (90.1) (75,687) (28.0)

Due to the change of ultimate customer of R-550D jack-up drilling rig from a customer in North America to a customer in Indonesia, the revenue in Indonesia in 2015 increased significantly.

Gross Profit and Gross Profit Margin

The Group’s Gross Profit of US$54.4 million for the Year decreased 27.8% from US$75.2 million in the previous year. Gross Profit Margin increased slightly from 27.8% in 2014 to 27.9% in 2015.

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Other Revenue

The increase in Other Revenue from US$0.9 million to US$3.8 million was mainly due to the depreciation of Renminbi, which resulted in net foreign exchange gain in 2015, while there was no such income in 2014.

Operating Expense and Profit Attributable to Equity Shareholders of the Company General and Administrative Expenses

General and Administrative Expenses remained stable in 2014 and 2015 at US$33.3 million and US$33.1 million respectively. Cost control, higher efficiency and productivity continue to be the focus at all levels of management in the Group.

Selling and Distribution Expenses

Selling and Distribution Expenses increased by US$2.8 million from US$9.8 million in 2014 to US$12.6 million in 2015. Selling and Distribution Expenses mainly comprised of sales staff salaries, commissions, marketing expenses including participation in trade shows, travel costs and other sales promotional expenditure. The increase in Selling and Distribution Expenses was due to the expansion of the distribution network and sales forces in North America and Middle East.

Other Operating Expenses

The increase in Other Operating Expenses from US$5.5 million in 2014 to US$6.0 million in 2015 was mainly due to the increase in provision for impairment of trade receivable during the year.

Finance Costs

Finance Costs, primarily interest on bank loans and other borrowings, amounted to approximately US$4.5 million in 2015 compared to US$3.2 million in the previous year. The increase was due to the interest-bearing bond issued near the end of 2014.

Group’s Liquidity and Capital Resources

As at 31 December 2015, the Group had intangible assets of approximately US$29.5 million (2014: US$33.3 million). As at 31 December 2015, the Group carried tangible assets of approximately US$69.2 million (2014: US$53.9 million) being property, plant and equipment, property under development and interest in leasehold land held for own use under operating leases. The increase in the Group’s tangible assets was due to the addition of construction of a new facility in Qingdao, PRC.

As at 31 December 2015, the Group’s interest in associate was approximately US$0.2 million (2014: nil) and deferred tax assets was approximately US$12.0 million (2014: US$11.4 million). Non-current portion of prepayments was approximately US$0.1 million (2014: US$0.1 million).

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As at 31 December 2015, the Group had current assets of approximately US$454.1 million (2014: US$390.9 million). Current assets mainly comprised cash and bank balances of approximately US$46.5 million (2014: US$52.3 million), pledged bank deposits of approximately US$5.0 million (2014: US$4.4 million), non-current assets classified as held for sales of nil (2014: US$3.5 million), inventories of approximately US$58.5 million (2014: US$50.5 million), trade and other receivables of approximately US$107.3 million (2014: US$97.7 million), amount due from a related company of approximately US$0.1 million (2014: US$0.1 million), and gross amount due from customers for contract work of approximately US$236.5 million (2014: US$182.5 million). The increase in the gross amount due from customers for contract work was due mainly to work performed on the R-550D jack-up drilling rig towards the end of the year which had not yet reached invoicing milestones.

As at 31 December 2015, current liabilities amounted to approximately US$312.3 million (2014: US$230.5 million), mainly comprising trade and other payables of approximately US$278.2 million (2014: US$195.2 million), bank loans and other borrowings of approximately US$28.7 million (2014: US$27.3 million), and current tax payables of approximately US$5.3 million (2014: US$7.9 million). The increase in trade and other payables was mainly due to the increase in project advances received for capital equipment and packages contracts signed towards the end of the year.

As at 31 December 2015, the Group had non-current liabilities of approximately US$38.5 million (2014: US$38.4 million), comprising bank loans and other borrowings of approximately US$38.2 million (2014: US$37.9 million) and deferred tax liabilities of approximately US$0.3 million (2014: US$0.5 million). The Group monitors capital with reference to its debt position. The Group’s strategy is to maintain the gearing ratio, being the Group’s total liabilities to total assets, under 100%. The gearing ratio as at 31 December 2015 was 62% (2014: 54%).

Details of movements in the statement of financial position balances are further provided in the Consolidated Cash Flow Statement and accompanying notes to the financial statements.

Significant Investments and Disposals

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

Capital Structure

At 1 January 2015, there were 704,915,204 shares in issue and the Company carried a share capital of approximately US$9,066,000.

During the Year, the Company issued 2,205,000 shares to option holders who exercised their options under the Company’s employee share option schemes. At 31 December 2015, the Company had 707,120,204 Shares in issue, and a paid up capital of approximately US$9,094,000.

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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, inventories, trade receivables and plant and machinery with aggregate net book value of US$38.2 million (2014: US$43.6 million).

• (ii) Corporate guarantees given by Qingdao TSC Offshore Equipment Co. Ltd, TSC-HHCT (Xian) Control Technologies Limited, Zhengzhou TSC Offshore Equipment Co. Ltd., TSC Offshore China Limited and TSC Oil and Gas Services Ltd. to the extent of banking facilities outstanding of US$16.3 million (2014: US$12.2 million) as at 31 December 2015.

• (iii) Corporate guarantee given by the Company to the extent of banking facilities outstanding of US$2 million (2014: US$2 million) as at 31 December 2015.

• (iv) Guarantees given by the directors of the Company (the “Director“) to the extent of banking facilities outstanding of US$0.4 million (2014: US$0.4 million) as at 31 December 2015. No guarantee fee was received by the director during the Year.

Certain bank loans of the Group are subject to the fulfilment of covenants relating to certain aspects of the subsidiaries’ statement of financial position ratios, as are commonly found in lending arrangements with financial institutions. The drawn down loan balances would become payable on demand if the covenants were breached.

The Group regularly monitors its compliance with these covenants. As at 31 December 2015, none of the covenants relating to the Group’s bank loans had been breached.

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 carrying out production locally with Renminbi while approximately 50% of the Group’s revenue was denominated in United States dollars. As at 31 December 2015, no related hedges were made by the Group.

In order to mitigate that foreign exchange exposure, we may utilise foreign currency forward contracts to better match the currency of our revenues and associated costs in the future. However, we do not use foreign currency forward contracts for trading or speculative purposes. The Group will actively explore ways to hedge or reduce currency exchange risk in future.

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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”):

On 10 April 2015, the Company and CIMC Raffles entered into a new master agreement (the “New Master Agreement”) to renew certain continuing connected transactions. Pursuant to the New Master Agreement, the Group shall provide certain equipment under a number of turnkey projects to CIMC Raffles. The New Master Agreement is valid for a period starting from 5 June 2015 and ending on 31 December 2017.

The Company’s independent non-executive directors have reviewed the continuing connected transactions and have confirmed that the continuing connected transactions have been entered into (1) in the ordinary and usual course of business of the Group; (2) on normal commercial terms or better; and (3) according to the agreement governing them on terms that are fair and reasonable and in the interests of the Company’s shareholders as a whole.

Details of the continuing connected transactions under the New Master Agreement are as follows:

The Supply of Drilling Packages and Electrical Power Packages

Category of transaction Continuing Connected Transactions

Transaction Date 10 April 2015

Transaction with

CIMC Raffles

Purpose of Transaction

• The New Master Agreement with CIMC Raffles by which the Group can provide the Equipment and the Turnkey Project(s) to CIMC Raffles for three years ending 31 December 2017.

• Contract Values and Other Details

• The annual caps under the New Master Agreement for three years ending 31 December 2017 are approximately US$100 million (equivalent to approximately HK$780 million) each year.

• Detailed announcement and shareholder approval

• Details of the transaction were announced on 10 April 2015 which was published on the websites of the Stock Exchange and the Company. The New Master Agreement was approved by independent shareholders at extraordinary general meeting on 5 June 2015.

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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 5 June 2015. The abovementioned contracts cover the supply of drilling packages, electrical power packages and a jacking system with a total contract value of approximately US$14.0 million, which is within the cap of US$100 million for the year ended 31 December 2015 approved by the independent shareholders of the Company. The actual sales amount of the continuing connected transactions between the Group and CIMC Raffles was approximately US$14.0 million for the year ended 31 December 2015 (2014: US$29.2 million).

Employees and Remuneration Policy

As at 31 December 2015, the Group had approximately 1,353 full-time staff in the U.S.A., 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 employees and the market conditions. The Group also provides other benefits to its employees, including medical schemes, pension contributions and share option schemes.

MARKET AND BUSINESS PROSPECTS

This was a challenging year for the whole industry as the price of oil fell from US$107 per barrel in July 2014 to the current level of around US$40 per barrel. In addition, OPEC lifting production targets to produce at maximum rates, combining with the slower than expected decline in shale production in North America, have resulted in an oversupply in market. Under the current market environment, most of the O&G companies reacted in a way by cutting capital expenditure budgets, which resulted in numerous projects or campaigns being cancelled or deferred, contracts being retendered to achieve lower pricing and renegotiation of rates on longer term projects. It was expected to continue throughout the industry for a period of time.

The market demands more competitive, cost-effective products and services under this new environment. The general concurrence on the oil price and market is that this down turn will last a while till the later part of 2017. During this period of time, new rig building activities will sharply decline for both land rigs and offshore rigs. To survive this down turn, oil companies are putting pressures on all the service companies to cut prices. Lower day rates for rigs became the new norm for the industry.

Our strength lies in the great values that we create for our customers through flexible solutions. With the oil prices staying at the current level, customers in our industries become more and more sensitive to their spending versus values they receive. The competitive prices with our comprehensive range of products, innovative technology and expertise provide the best combination to address the current market needs.

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Geographically, China has been our major market for many years. The slowdown of new offshore rig builds in the country will have certain impact to our growth. However, with our strong presence in China and growing market share, we feel that the revenue impact in the China market is minimal.

In 2015, we continue to build-up more presence in certain emerging markets such as Venezuela. During the year, the Group has signed contracts valued at US$60 million to supply MRO spare parts and top drives to two main O&G Companies in Venezuela.

FUTURE PLANS FOR MATERIAL INVESTMENTS, CAPITAL ASSETS AND CAPITAL COMMITMENT

To address the market changes, there will be less investment this year.

Our Qingdao facility with approximately 382,000 square feet (35,500 square meters) will be officially put into use in the first half of 2016. The facility was constructed as the first phase on 24.7 acres (10.08 hectares) of industrial land and will be used for manufacturing of various products. Total cost of land and building, and plant and equipment is approximately US$32.3 million and will be funded partly by our working capital and partly by long-term bank loans.

To improve the co-operation between the Group and CSSC Huangpu Wenchong shipyard, a joint venture, namely “廣州星際海洋有限公司” was established. The total investment amount is US$0.2 million. The investment was aimed at participating in drilling activities in China.

To provide better value to our clients and to grow the Company for our shareholders, the Group will continue to leverage our core competence and product offering to explore new avenues with innovative business models.

The Group is also in the process of implementing a cost reduction and reorganisation plan to improve operational and financial efficiency.

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POTENTIAL QUOTATION OF TSCQD ON THE NATIONAL EQUITIES EXCHANGE AND QUOTATIONS SYSTEM (THE “NEW THIRD BOARD”)

On 9 June 2015, the Board announced that the Group was in the process of selecting and appointing professional advisers to advise on the process of applying for a potential quotation and open transfer (the “Potential Quotation”) of the shares of TSC Oil and Gas Services Ltd. (“TSC Oil & Gas Services”) (formerly known as “TSC (Qingdao) Manufacture Co., Ltd” (“TSCQD”)) on the National Equities Exchange and Quotations System (the “NEEQ”) in Mainland China. The implementation of the Potential Quotation will be subject to, among other things, the approvals of National Equities Exchange and Quotations Co. Ltd. (“NEEQ Co. Ltd.”).

On 29 January 2016, TSC Oil & Gas Services successfully completed the quotation application documents submission to NEEQ. Such submission has been accepted by NEEQ after checking that the documents provided conformed to the requirements of the NEEQ’s quotation application requirements.

TSC Oil & Gas Services, a specific business spun-off by the Company, which is principally engaged in MRO supplies and oil & gas equipment services, is expected to be officially listed in Mainland China at the end of April or the beginning of May 2016. Over the next three months, further auditing will occur. The successfully listing of TSC Oil & Gas Services will not only provide a viable financing channel and broadened capital markets environment for TSC Group, but would also inject new power into China’s oil & gas equipment services industry.

SHARE AWARD PLAN

The Company adopted a share award plan on 16 January 2015 (the “Adoption Date”). The share award plan does not constitute a share option scheme pursuant to Chapter 17 of the Listing Rules and is at discretion of the Company. The purpose of the share award plan is to recognise the contributions of officers and employees of the Group (the “Eligible Persons”), excluding any Directors and any other connected persons of the Group, towards the development of the Group in the past or as incentives to selected grantees to achieve higher than target profits for the Group and to align the interests of the selected grantees with sustainable growth and development of the Group.

The total number of Shares purchased under the share award plan shall not exceed 3% of the issued Shares at the Adoption Date. A trust has been set up and Treasure Maker Investments Limited has been appointed as the trustee. Pursuant to the share award plan, the trustee may purchase Shares from the public market out of cash contributed by the Company from time to time. Shares purchased under the share award plan will be held in trust for the Eligible Persons until such Shares are vested in accordance with the provisions of the rules relating to the share award plan. The share award plan will be effective for a period until 15 January 2025 unless terminated at the discretion of the Board at an earlier date.

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No grant was made for the year ended 31 December 2015. As at 31 December 2015, the trustee held 5,095,000 Shares (representing 0.72% of the issued share capital of the Company) on trust under the share award plan

STRATEGY, PROSPECTS AND ORDER BOOK

Strategies

Our product offering will still be a 3-tier pyramid structure: MRO, Capital Equipment and Integrated Solution. MRO is the base comprises our cash cow business of MRO Supplies and Services (which include Repair and Offshore Services, Engineering, Training, Installation and Commissioning), Rack Cutting, Solids Control and other developed range of services and equipment. The mid-section of the pyramid comprises our individual sales of the wide range of capital equipment products such as Deck Cranes, Mechanical Handling, Mud Pumps, Jacking Systems, Electrical Controls and Drives. These are equipment which we design and supply individually. The top section of our strategy pyramid, our ‘growth engine’ is where we put together our range of products as an ‘Integrated Solution’, addressing customers’ needs by leveraging the Group’s product range, engineering capability, project execution and financial needs taken together as one product offering.

To transform the Group into a formidable player in the global oil and gas service and equipment industry, new business models and better ways of doing things to benefit our clients will become more and more important in today’s competitive world. The Group’s strategy is to offer customised solutions to certain focused markets and customers by teaming up with partners and by leveraging all partners’ resources.

We stress on a corporate culture represented by the acronym “4D TOP-E” core value which stands for the four drivers of behavior, to be Customer-Driven, Service-Driven, SolutionDriven and Results-Driven in everything we do with emphasis on Teamwork, Openness, Passion and Entrepreneurship to achieve our common goals.

Prospects

The landscape of the industry has significantly changed as a result of the recent steep decline in oil prices. Oil companies and drilling contractors are reducing activities and cutting back their capital expenditures. With the possibility of low oil price being the new norm in the near future, our clients are looking for value, for cost-effective solutions and for innovative business models of serving them. We believe that the Group’s strategy will serve the market well. We realise that the market prospects present many new challenges. There will be more obstacles to overcome this year than ever before in order to continue our growth in the depressed market. However, we feel that the adjustment of the Group’s strategy and our market positioning will help us to take advantage of some of the opportunities in this down-turn environment.

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Order Book

As at 31 December 2015, the Group as a whole carried an order backlog of approximately US$187.8 million for capital equipment and packages, expendables and services. Subsequent to 31 December 2015, the Group had secured further new orders amounting to US$12.3 million up to the date of this announcement.

Subsequent Events

Save as disclosed in the announcement, no subsequent event occurred after 31 December 2015 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 Code. To ensure on-going compliance with the Code, the audit committee’s terms of reference takes into account the Board’s responsibility for reviewing the adequacy of staffing of the financial reporting functions and the oversight role of the audit committee. The audit committee comprises a minimum of three members with a majority of independent nonexecutive Directors, namely Mr. Chan Ngai Sang, Kenny (being the chairman), Mr. Bian Junjiang and Mr. Guan Zhichuan, all of them are independent non-executive Directors; and at least one member has the appropriate professional qualifications or accounting or related financial management expertise which in compliance with Rule 3.10(2) of the Listing Rules. The Company considers these Directors to be independent under the guidelines set out in Rule 3.13 of the Listing Rules.

Throughout the Year, the audit committee held three meetings in considering and reviewing the interim and annual results of the Group, and discussing the audit plan and strategy complied with the applicable accounting standards and requirements and that adequate disclosure has been made. The audit committee also met the external auditor twice without the presence of the executive Directors to described the audit plan and scoping and identified the significant risks and other areas of focus to be addressed by external auditor.

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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 2015.

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 2015.

COMPLIANCE WITH THE CODE ON CORPORATE GOVERNANCE PRACTICES

The Company is committed to maintain a high standard of corporate governance practices to ensure transparency so that the interests of our shareholders and the cooperative development among customers, employees and the Group can be safeguarded. The Company has adopted the Code on Corporate Governance Practices of the Stock Exchange.

The Company has complied with the code provisions (“CG Code”) of the Code on Corporate Governance Practices for the year ended 31 December 2015 as set out in Appendix 14 to Listing Rules at that time except for the deviation from CG Code A.6.7 where three independent nonexecutive Directors and three non-executive Directors were absent from the last annual general meeting and extraordinary general meeting of the Company held on 5 June 2015, as they were away from Hong Kong due to other important engagements at the time of these meetings.

PURCHASE, REDEMPTION OR SALE OF LISTED SECURITIES OF THE COMPANY

During the year ended 31 December 2015, neither the Company nor any of its subsidiaries purchased, redeemed or sold any of the Company’s listed securities.

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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.t-s-c.com) in due course.

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

Hong Kong, 30 March 2016

As of the date of this announcement, the Board comprises 2 executive Directors, namely Mr. Jiang Bing Hua and Mr. Zhang Menggui; 3 non-executive Directors, namely Mr. Jiang Longsheng, Mr. Brian Chang and Mr. Yu Yuqun; and 4 independent non-executive Directors, namely Mr. Chan Ngai Sang, Kenny, Mr. Bian Junjiang, Mr. Guan Zhichuan and Mr. Robert William Fogal Jr.

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