Computer And Technologies Holdings Limited - Interim / Quarterly Report 2011

==> picture [420 x 378] intentionally omitted <==

==> picture [229 x 75] intentionally omitted <==

Interim Report 2011

==> picture [7 x 8] intentionally omitted <==

==> picture [7 x 12] intentionally omitted <==

==> picture [10 x 14] intentionally omitted <==

==> picture [7 x 21] intentionally omitted <==

==> picture [8 x 4] intentionally omitted <==

==> picture [31 x 26] intentionally omitted <==

==> picture [9 x 8] intentionally omitted <==

==> picture [10 x 10] intentionally omitted <==

==> picture [10 x 16] intentionally omitted <==

CORPORATE INFORMATION

BOARD OF DIRECTORS

Executive Directors

Mr Li Hongjun (President) Mr Jin Xuesheng

AUDITOR

Deloitte Touche Tohmatsu

SHARE REGISTRAR

Tricor Standard Limited

Non-Executive Directors

Mr Wu Yanhua ( Chairman) Mr Wu Zhuo (Vice Chairman) Mr Chow Chan Lum, Charles

(Independent)

Mr Luo Zhenbang (Independent) Mr Wang Junyan (Independent) Mr Chen Xuechuan

Mr Shi Weiguo

Dr Chan Ching Har, Eliza Mr Zhou Qingquan

AUDIT COMMITTEE

Mr Chow Chan Lum, Charles (Chairman) Mr Luo Zhenbang Mr Zhou Qingquan

REMUNERATION COMMITTEE

Dr Chan Ching Har, Eliza (Chairman) Mr Chen Xuechuan

Mr Chow Chan Lum, Charles Mr Luo Zhenbang Mr Wang Junyan

LEGAL COUNSEL

Reed Smith Richards Butler

PRINCIPAL BANKS & FINANCIAL INSTITUTIONS

Bank of China (Hong Kong) Limited Aerospace Science & Technology Finance Company Limited* （航天科技財務有限責任公司） Industrial and Commercial Bank of China Limited Bank of China Limited

REGISTERED OFFICE

Room 1103–1107A, One Harbourfront 18 Tak Fung Street, Hung Hom Kowloon, Hong Kong

Tel: (852) 2193 8888 Fax: (852) 2193 8899 E-mail: [email protected] Website: http://www.casil-group.com

COMPANY SECRETARY

Mr Chan Ka Kin, Ken

This PRC entity does not have an English name, the English name sets out in this Interim Report is for identification purpose only.

China Aerospace International Holdings Limited

==> picture [14 x 21] intentionally omitted <==

==> picture [8 x 16] intentionally omitted <==

==> picture [6 x 10] intentionally omitted <==

==> picture [15 x 11] intentionally omitted <==

==> picture [10 x 11] intentionally omitted <==

==> picture [10 x 17] intentionally omitted <==

BUSINESS REVIEW

RESULTS OVERVIEW

For the six months ended 30 June 2011, the Company and its subsidiaries reported an unaudited turnover of HK$1,007,786,000, representing an increase of 15.95% as compared with that of HK$869,172,000 for the same period of 2010. Profit for the period was HK$282,507,000, representing an increase of 3.10% as compared with that of HK$274,017,000 for the same period of 2010. Profit attributable to owners of the Company was HK$214,715,000, representing an increase of 2.30% as compared with that of HK$209,881,000 for the same period of 2010. Basic earnings per share attributable to owners of the Company was HK$0.0696, representing a decrease of 2.25% as compared with that of HK$0.0712 per share for the same period of 2010.

In general, the Company recorded an ideal growth in revenue. Despite of being under the pressure of substantial increase in costs, having been benefited from the investment property under construction, the project of Shenzhen Aerospace Science & Technology Plaza, continuing to state at fair value, the overall profit of the Company was nearly the same as the same period of last year. Taking into account of the Company’s funding requirement for its development projects, the Board decided not to distribute an interim dividend.

BUSINESS REVIEW

According to the medium-term development plan established by the Company, the Company will strive to become an overseas capital operations platform with leading edges for China Aerospace Science & Technology Corporation (“CASC”). The Company is actively carrying out each key business according to the plan, such as to ensure a steady growth of the hi-tech manufacturing business, and the construction works for both hi-tech property projects, namely Shenzhen Aerospace Science & Technology Plaza and the Complex Zone of the Launching Site in Hainan Province, are progressing in an orderly manner. In addition, corresponding to the direction of developing aerospace technology application industry, the Company had made a significant move through the acquisition of a polyimide business and the establishment of a company engaging in the business of internet of things.

Interim Report 2011

==> picture [7 x 8] intentionally omitted <==

==> picture [7 x 12] intentionally omitted <==

==> picture [10 x 14] intentionally omitted <==

==> picture [7 x 21] intentionally omitted <==

==> picture [8 x 4] intentionally omitted <==

==> picture [31 x 26] intentionally omitted <==

==> picture [9 x 8] intentionally omitted <==

==> picture [10 x 10] intentionally omitted <==

==> picture [10 x 16] intentionally omitted <==

Hi-tech manufacturing

Dampened by multiple factors including the monetary tightening and the rise in labour and material costs in the PRC, the appreciation of RMB and the implementation of power supply control measures by the local governments, the manufacturing sector was exposed to another severe challenge after the financial tsunami in 2008. Nevertheless, pivoting on the sales efforts of the experienced management team, the hi-tech manufacturing business of the Company maintained a stable growth in revenue in the first half of the year. However, the operating profit decreased.

For the six months ended 30 June 2011, the hi-tech manufacturing business recorded a turnover of HK$1,006,745,000, representing an increase of 15.83% as compared with the same period of last year. Operating profit amounted to HK$97,240,000, representing a decrease of 14.60% as compared with the same period of last year. Both segments of printed circuit boards and plastic products attained prominent performance by contributing a turnover of HK$213,731,000 and HK$389,242,000 respectively, representing an increase of 19.38% and 19.07% as compared with the same period of last year respectively.

The profit before tax of each hi-tech manufacturing business segment dropped at varying degrees. The operating profit of the intelligent chargers segment was HK$16,732,000, representing a decrease of 0.32% as compared with the same period of last year. The operating profit of the printed circuit boards segment was HK$42,083,000, representing a decrease of 5.44% as compared with the same period of last year. The operating profit of the plastic products segment was HK$29,293,000, representing a decrease of 25.30% as compared with the same period of last year. The operating profit of the liquid crystal display segment was HK$5,816,000, representing a decrease of 18.12% as compared with the same period of last year.

Shenzhen Aerospace Science & Technology Plaza

In early 2011, Aerospace Science & Technology Finance Company Limited* (“航天科技財務有限責任公司”), a subsidiary of CASC, formed a syndicate with the Bank of China and the Industrial and Commercial Bank of China in respect of the provision of a syndicate loan in the amount of RMB1,500,000,000 to finance the construction of Shenzhen Aerospace Science & Technology Plaza. The syndicate

China Aerospace International Holdings Limited

==> picture [14 x 21] intentionally omitted <==

==> picture [8 x 16] intentionally omitted <==

==> picture [6 x 10] intentionally omitted <==

==> picture [15 x 11] intentionally omitted <==

==> picture [10 x 11] intentionally omitted <==

==> picture [10 x 17] intentionally omitted <==

loan and the related mortgage on the land use right, which constituted connected transactions of the Company, were approved by the independent shareholders of the Company at the Extraordinary General Meeting held on 25 March 2011, details of which please refer to the announcements of the Company dated 14 January 2011, 23 January 2011 and 25 March 2011, and the circular dated 25 January 2011. Amid the economic tightening in the macro-market conditions, the syndicate loan has timely provided a satisfactory financing for the project of Shenzhen Aerospace Science & Technology Plaza.

The foundation excavation and earthwork of the project of Shenzhen Aerospace Science & Technology Plaza have been basically completed. At present, the foundation works of the project are in progress and are expected to be completed in early 2012. To step up the marketing efforts on the project upon completion, a team of professional consultants has been engaged to fully gear up for the in-depth research of market positioning and preliminary market development of the project. As at 30 June 2011, the construction-in-progress together with the land use rights of Shenzhen Aerospace Science & Technology Plaza was valued at RMB1,422,000,000.

The Complex Zone of the Launching Site in Hainan Province

In 2011, the project of the Complex Zone of the Launching Site in Hainan Province was mainly focused on expropriation of lands and establishment of resettlement zones. Currently, agreements have been reached with most of the local residents in respect of the terms of demolishment compensation. The detailed site planning and design of the resettlement zones have been basically completed and will be proceeded to the review and approval process. In relation to the Hainan Space Park, the detailed project planning and design will be commenced immediately after the optimization of the design plan. On the other hand, according to an agreement entered into, upon negotiation, with the host organization of the “Space Home Pavilion” of the Shanghai World Expo, a permanent home for the “Space Home Pavilion” will be located in the Complex Zone of the Launching Site in Hainan Province.

New materials business

New materials sector is one of the seven strategic and emerging industries that is emphasized to develop according to China’s “12th Five-year Plan”, and is also a major industry that is keenly developed by CASC at the forefront of aerospace technology applications. To capture the prevailing opportunities, the Company,

Interim Report 2011

==> picture [7 x 8] intentionally omitted <==

==> picture [7 x 12] intentionally omitted <==

==> picture [10 x 14] intentionally omitted <==

==> picture [7 x 21] intentionally omitted <==

==> picture [8 x 4] intentionally omitted <==

==> picture [31 x 26] intentionally omitted <==

==> picture [9 x 8] intentionally omitted <==

==> picture [10 x 10] intentionally omitted <==

==> picture [10 x 16] intentionally omitted <==

after careful research, decided to step into the new organic polymer materials business with immense potentials through the acquisition of a 55% equity interest in Shenzhen Rayitek Hi-tech Film Company Limited* (深圳瑞華泰薄膜科技有限公司) (“Shenzhen Rayitek”).

Shenzhen Rayitek has been committed to the development of polyimide as the new polymer materials since its inception in 2004. It is a high-tech company engaging in the research and development, manufacturing and marketing of polyimide films and related composite materials. Polyimide is a special kind of new polymer materials. With its excellent properties of high temperature resistance and high insulation, polyimide has become an indispensable key material for the development of microelectronics technology. The polyimide materials, as a kind of special engineering materials, are actually in widespread use in a wide variety of aspects including aviation, aerospace, microelectronics, nanotechnology, liquid crystals, membranes and lasers.

The polyimide film products produced by Shenzhen Rayitek, such as insulation materials of wire, cable and electrical machinery, substrates of flexible printed circuit (FPC), tape automated bonding (TAB) and pressure-sensitive tape (PST), are mainly used in fields stretching from aviation, aerospace, microelectronic devices, electrical equipment to information industry. In early 2011, the polyimide film production line of Shenzhen Rayitek was officially put into operation, and was identified as a demonstration project of national high-tech industrialization by the National Development and Reform Commission.

Others

To optimize the Company’s assets, improve asset structure and the overall financial position, and promote the development of the Company’s main business operations, the Company entered into an agreement to dispose its entire interest in CASIL Satellite Holdings Limited in March 2011. The transaction is expected to be completed in the second half of the year and to generate a gain of approximately HK$100,000,000 for the Company, subject to final audit.

6 China Aerospace International Holdings Limited

==> picture [14 x 21] intentionally omitted <==

==> picture [8 x 16] intentionally omitted <==

==> picture [6 x 10] intentionally omitted <==

==> picture [15 x 11] intentionally omitted <==

==> picture [10 x 11] intentionally omitted <==

==> picture [10 x 17] intentionally omitted <==

In May 2011, the Company set up Aerospace Digitnexus Information Technology (Shenzhen) Limited* (航天數聯信息技術（深圳）有限公司) by establishing a strategic partnership with international experts of internet of things, thereby laying a solid foundation for tapping into the business of internet of things.

In line with the Company’s future development plans, the Company had retained a professional manpower consulting company to conduct a research and analysis of the Company’s organizational structure, as well as the continued development and configuration of human resources, and to put forward optimization recommendations thereon. With reference to the relevant opinion, the Company had formed several new departments such as Corporate Development Department, Asset Management Department and Corporate Finance Department. The Company is of the view that the change of the organizational structure will effectively enhance the Company’s strengths in planning formulation, asset management, investment monitoring, financial management and investor relations.

PROSPECT

Recently, certain European countries had suffered from national debt crises sequentially, as well as the US credit rating was being downgraded, the global markets for equity, forex and commodity fluctuated violently. This further weakens the already sluggish aggregate demand. Looking ahead towards the second half of the year, the business environment will not be optimistic. It is expected that the hi-tech manufacturing business will continue to be affected by a couple of adverse factors including the rise in costs, the appreciation of RMB and the fluctuation in domestic and foreign markets. The hi-tech manufacturing business will continue to strengthen its management, control costs and risks, intensify technical enhancement, and reinforce efforts on market exploration of domestic and foreign markets in order to endeavour to maintain a stable business.

The construction of both hi-tech property projects, the Shenzhen Aerospace Science & Technology Plaza and the Complex Zone of the Launching Site in Hainan Province, will be proceeded as scheduled. Hainan Aerospace Investment Management Company Limited* (海南航天投資管理有限公司) will strengthen its communications with the local government and enhance the business model. Meanwhile, the Company will put more efforts to introduce strategic partners for the cooperation of project development. Under the impacts of factors such as

Interim Report 2011

==> picture [7 x 8] intentionally omitted <==

==> picture [7 x 12] intentionally omitted <==

==> picture [10 x 14] intentionally omitted <==

==> picture [7 x 21] intentionally omitted <==

==> picture [8 x 4] intentionally omitted <==

==> picture [31 x 26] intentionally omitted <==

==> picture [9 x 8] intentionally omitted <==

==> picture [10 x 10] intentionally omitted <==

==> picture [10 x 16] intentionally omitted <==

inflation and policy measures in the PRC, the hi-tech property business may encounter increased pressures on cost control and financing in the short run. The Company will keep itself highly alert of cost and price fluctuations in order to strictly mitigate the short-term risks brought by the relevant policies. However, it is believed that both projects of the hi-tech property in Shenzhen and Hainan, principally providing accommodation services to the industrial bases, will develop healthily in the long run.

In connection with the new materials business, the annual production capacity of the high-performance polyimide films of Shenzhen Rayitek is about 300 tonnes, subject to change in accordance with different product specifications. In the second half of the year, Shenzhen Rayitek will gradually increase its sales and production volume and begin to consider its expansion plan for the next stage. With the support from CASC, the Company has made an initial step, through the acquisition of Shenzhen Rayitek, towards the development of new organic polymer materials industry. At the same time, the Company expects the relevant acquisition will have synergy effect to the hi-tech manufacturing business of the Company.

APPRECIATION

In June 2011, Mr Rui Xiaowu, due to a change of work arrangement, resigned as a Non-Executive Director and the Chairman of the Company. The Board would like to extend wholehearted gratitude to Mr Rui Xiaowu for his dedicated efforts and valuable contribution for the Company’s development over the years. The Company would also like to express heartfelt thanks to all staff, and our shareholders, banks, business partners and the community for their patronage for the development of the Company.

By order of the Board Wu Yanhua Chairman

Hong Kong, 26 August 2011

China Aerospace International Holdings Limited

==> picture [14 x 21] intentionally omitted <==

==> picture [8 x 16] intentionally omitted <==

==> picture [6 x 10] intentionally omitted <==

==> picture [15 x 11] intentionally omitted <==

==> picture [10 x 11] intentionally omitted <==

==> picture [10 x 17] intentionally omitted <==

MANAGEMENT DISCUSSION AND ANALYSIS

RESULTS PERFORMANCE

The unaudited turnover for the six months ended 30 June 2011 of the Company and its subsidiaries was HK$1,007,786,000, representing an increase of 15.95% as compared with that of HK$869,172,000 for the same period of 2010. Profit for the period was HK$282,507,000, representing an increase of 3.10% as compared with that of HK$274,017,000 for the same period of 2010.

PROFIT ATTRIBUTABLE TO OWNERS OF THE COMPANY AND OPERATING PROFIT

Profit attributable to owners of the Company was HK$214,715,000, representing an increase of 2.30% as compared with that of HK$209,881,000 for the same period of 2010. The increase in profit was mainly due to the increase in fair value gain of investment properties.

Based on the issued share capital of 3,085,022,000 shares in the period, the basic earnings per share was HK$0.0696, representing a decrease of 2.25% as compared with that of HK$0.0712 for the same period of 2010, based on the weighted average issued share capital of 2,948,681,000 shares after being adjusted for the effect of placing of 514,118,000 shares in February 2010.

RESULTS OF EACH CORE BUSINESS

Core businesses of the Company and its subsidiaries are hi-tech manufacturing and aerospace service.

Hi-tech Manufacturing

Relying on highly efficient management and proficient marketing, the hi-tech manufacturing business recorded a turnover of HK$1,006,745,000 for the six months ended 30 June 2011, representing an increase of 15.83% as compared with the same period of last year; the operating profit, mainly affected by the increase in rigid costs, was HK$97,240,000, representing a decrease of 14.60% as compared with the same period of last year.

Interim Report 2011

==> picture [7 x 8] intentionally omitted <==

==> picture [7 x 12] intentionally omitted <==

==> picture [10 x 14] intentionally omitted <==

==> picture [7 x 21] intentionally omitted <==

==> picture [8 x 4] intentionally omitted <==

==> picture [31 x 26] intentionally omitted <==

==> picture [9 x 8] intentionally omitted <==

==> picture [10 x 10] intentionally omitted <==

==> picture [10 x 16] intentionally omitted <==

The results of the hi-tech manufacturing segments are shown below:

	Turnover (HK$’000)	Operating Profit (HK$’000)
	First Half of 2011 First Half of 2010 Change %	First Half of 2011 First Half of 2010 Change %
Plastic Products Printed Circuit Boards Intelligent Chargers Liquid Crystal Display Industrial Property Investment	389,242 326,908 19.07 213,731 179,039 19.38 253,982 222,369 14.22 143,659 135,208 6.25 6,131 5,625 9.00 1,006,745 869,149 15.83	29,293 39,213 (25.30) 42,083 44,503 (5.44) 16,732 16,785 (0.32) 5,816 7,103 (18.12) 3,316 6,257 (47.00) 97,240 113,861 (14.60)
Total

Aerospace Service Business

The Complex Zone of the Launching Site in Hainan Province

The comprehensive development of the Complex Zone of the Launching Site in Hainan Province is still in a preparatory stage. Hainan Aerospace Investment Management Company Limited* (海南航天投資管理有限公司) (“Hainan Aerospace”) recorded a loss of HK$5,215,000 in the first half of 2011, which was mainly due to the payment of cost of preparatory works, administrative expenses and professional fees etc.

Shenzhen Aerospace Science & Technology Plaza

The investment property under construction, the Shenzhen Aerospace Science & Technology Plaza, measured at fair value in accordance with the Hong Kong Accounting Standards, recorded a fair value gain of HK$228,423,000.

In addition, Shenzhen Aerospace Technology Investment Management Company Limited* (深圳市航天高科投資管理有限公司) (“Shenzhen Aerospace”) had entered into a main contractor contract and a syndicate loan agreement of RMB1,500,000,000 for a period of 5 years in January 2011. The construction works of Shenzhen Aerospace Science & Technology Plaza have been commenced comprehensively in 2011.

China Aerospace International Holdings Limited

==> picture [14 x 21] intentionally omitted <==

==> picture [8 x 16] intentionally omitted <==

==> picture [6 x 10] intentionally omitted <==

==> picture [15 x 11] intentionally omitted <==

==> picture [10 x 11] intentionally omitted <==

==> picture [10 x 17] intentionally omitted <==

ESTABLISHMENT OF NEW BUSINESSES

To consolidate diversification of the Company’s business, the Company has established two new businesses since the beginning of 2011 respectively, namely Internet of Things and New Materials.

Internet of Things

The Company has set up a company focusing on internet of things, namely Aerospace Digitnexus Information Technology (Shenzhen) Limited* (航天數聯信息技術（深圳）有限公司) (“Aerospace Digitnexus”) in Shenzhen in the first half of 2011, mainly engaging in business of research and development of radio frequency identification (RFID), sensor technology, embedded software supporting platform technology, intelligent terminal technology for computer network and short data link satellite technology, system integration of internet of things comprising sensor, RFID, computer software and hardware, satellite systems and other electronic products etc., and sales of self-developed software and products. Aerospace Digitnexus will concentrate on the field of system integration of internet of things and provide comprehensive and systematic solutions to meet customers’ demands.

New Materials

The Company, through its subsidiary CASIL New Century Technology Development (Shenzhen) Company Limited (航科新世紀科技發展（深圳）有限公司) (“New Century”), acquired a 55% equity interest in Shenzhen Rayitek Hi-tech Film Company Limited (深圳瑞華泰薄膜科技有限公司) (“Shenzhen Rayitek”) in July 2011, which allows the Company to develop polyimide films as a starting point to enter into polyimide related businesses and as a stepping stone to enter into the platform of new materials business. Shenzhen Rayitek has been committed to the development of new materials in polyimide and is a research and development, manufacturing and marketing high-tech company focusing on polyimide films and related composite materials. The polyimide film products of Shenzhen Rayitek include the insulation materials of wire, cable and electrical machinery, substrates of flexible printed circuit (FPC), tape automated bonding (TAB) and pressuresensitive tape (PST), and are widely used in aviation, aerospace, microelectronic devices, electrical equipment and information industry and other fields.

Interim Report 2011

==> picture [7 x 8] intentionally omitted <==

==> picture [7 x 12] intentionally omitted <==

==> picture [10 x 14] intentionally omitted <==

==> picture [7 x 21] intentionally omitted <==

==> picture [8 x 4] intentionally omitted <==

==> picture [31 x 26] intentionally omitted <==

==> picture [9 x 8] intentionally omitted <==

==> picture [10 x 10] intentionally omitted <==

==> picture [10 x 16] intentionally omitted <==

It is expected that Shenzhen Rayitek will become an important foundation for the Company to develop new materials business with great competitiveness and profitability. Simultaneously, the Company expects Shenzhen Rayitek will create synergy effect to the Company’s hi-tech manufacturing business.

ASSETS

As at 30 June 2011, the unaudited total assets of the Company and the subsidiaries were HK$5,550,428,000, of which the non-current assets were HK$3,449,269,000, representing an increase of 20.19% as compared with that of HK$2,869,896,000 as at the end of 2010, and the current assets were HK$2,101,159,000, representing a decrease of 4.69% as compared with that of HK$2,204,647,000 as at the end of 2010. The huge increase in non-current assets was mainly due to an increase in fair value of investment properties and the increase in land development costs of the Hainan project. The equity attributable to owners of the Company was HK$3,765,612,000, representing a significant increase of 6.06% as compared with that of HK$3,550,532,000 as at the end of 2010. Based on the issued share capital of 3,085,022,000 shares in the period, the net assets per share attributable to owners of the Company was HK$1.22.

As at 30 June 2011, the Company and the subsidiaries’ cash deposit of about HK$33,012,000 had been pledged to banks to secure trade financings and Shenzhen Aerospace had pledged a land use right at value of RMB1,422,000,000 to a syndicate of banks and a financial institution for a syndicate loan.

To optimize the Company’s assets, improve asset structure and overall financial position, facilitate the development of each core business, the Company disposed its entire interests in a subsidiary, CASIL Satellite Holdings Limited (“CASIL Satellite”), to its connected party China Great Wall Industry (Hong Kong) Corp. Limited at a consideration of HK$132,300,000 in March 2011. The main assets of CASIL Satellite are its interests in APT Satellite Holdings Limited (stock code: 1045). As at the date of publication of this Interim Report, the purchaser has already obtained a waiver from general offer from the Securities and Futures Commission, Hong Kong and is in the process of obtaining regulatory approvals in China. Upon completion of the disposal, CASIL Satellite will cease to be the Company’s subsidiary. Details of which please refer to the Company’s announcements dated 28 and 29 March 2011 respectively.

12 China Aerospace International Holdings Limited

==> picture [14 x 21] intentionally omitted <==

==> picture [8 x 16] intentionally omitted <==

==> picture [6 x 10] intentionally omitted <==

==> picture [15 x 11] intentionally omitted <==

==> picture [10 x 11] intentionally omitted <==

==> picture [10 x 17] intentionally omitted <==

LIABILITIES

As at 30 June 2011, the total liabilities of the Company and the subsidiaries were HK$1,133,968,000, of which the non-current liabilities were HK$251,882,000, representing an increase of 34.10% as compared with that of HK$187,837,000 as at the end of 2010. This was mainly due to the increase in deferred tax. The current liabilities were HK$882,086,000, representing an increase of 15.47% as compared with that of HK$763,942,000 as at the end of 2010. As at 30 June 2011, the Company and the subsidiaries had an outstanding bank debt of RMB100,000,000.

Shenzhen Aerospace entered into a syndicate loan agreement for a syndicate loan of RMB1,500,000,000 in January 2011 for the construction costs of the Shenzhen Aerospace Science & Technology Plaza. With the comprehensive commencement of the construction works, construction costs will be significantly increased and Shenzhen Aerospace will then draw down the facility by stages for the construction cost payment. Hence, relevant bank debt will be gradually increased from the second half of 2011. As at 30 June 2011, Shenzhen Aerospace had not drawn down the syndicate loan yet.

OPERATING ExPENSES

The administrative expenses of the Company and the subsidiaries in the first half of 2011 were HK$124,112,000, representing an increase of 26.07% as compared with the same period of last year. This was mainly due to the increase in human resources expenses, and research and development cost. The total finance costs were HK$1,156,000, of which HK$1,139,000 has been capitalised to land development expenditure of Hainan project.

CONTINGENT LIABILITIES

As at 30 June 2011, the Company and the subsidiaries did not have any material contingent liabilities.

Interim Report 2011

==> picture [7 x 8] intentionally omitted <==

==> picture [7 x 12] intentionally omitted <==

==> picture [10 x 14] intentionally omitted <==

==> picture [7 x 21] intentionally omitted <==

==> picture [8 x 4] intentionally omitted <==

==> picture [31 x 26] intentionally omitted <==

==> picture [9 x 8] intentionally omitted <==

==> picture [10 x 10] intentionally omitted <==

==> picture [10 x 16] intentionally omitted <==

FINANCIAL RATIOS

For the six months ended 30 June 2011, the consolidated gross profit margin of the Company was 19.99%, representing a decrease of 2.33% as compared with that of 22.32% for the same period of 2010. The return on net assets ratio was 6.40%, representing a slight decrease as compared with that of 6.80% for the same period of 2010. The liabilities/assets ratio was 20.43%, recording a slight increase as compared with that of 18.76% for the end of 2010. It was mainly because the Company and the subsidiaries had an increase in both deferred tax and short term debt. The current ratio and the quick ratio were 2.38 and 2.11 respectively, being decreased as compared with that of 2.89 and 2.63 respectively for the end of 2010. In general, each of the financial ratios of the Company and the subsidiaries still maintained at a satisfactory level.

LIqUIDITY

The source of funds of the Company and the subsidiaries mainly relies on internal resources and banking facilities. The Company and the subsidiaries’ cash and bank balances as at 30 June 2011 was HK$1,190,066,000, most of which were in Hong Kong Dollars and Renminbi.

The Company placed a total of 514,118,000 shares in February 2010 and the net proceed was about HK$560,000,000, of which HK$540,000,000 had already been used in the purpose specified. As at the date of publication of this Interim Report, the balance of approximately HK$20,000,000 was being deposited in bank accounts.

CAPITAL ExPENDITURE AND INVESTMENT COMMITMENT

As at 30 June 2011, the capital commitments of the Company and the related subsidiaries contracted for but not provided in the condensed consolidated financial statements were HK$1,163,251,000, mainly representing the capital expenditure of the construction of the Shenzhen Aerospace Science & Technology Plaza. Following the comprehensive commencement of the construction of the Shenzhen Aerospace Science & Technology Plaza in 2011, the capital commitments of those approved but not yet contracted for were RMB423,000,000. Shenzhen Aerospace will draw down the syndicate loan by stages to settle the relevant construction costs, where required.

14 China Aerospace International Holdings Limited

==> picture [14 x 21] intentionally omitted <==

==> picture [8 x 16] intentionally omitted <==

==> picture [6 x 10] intentionally omitted <==

==> picture [15 x 11] intentionally omitted <==

==> picture [10 x 11] intentionally omitted <==

==> picture [10 x 17] intentionally omitted <==

The Company and its relevant subsidiaries have participated in the land development of the Complex Zone of the Launching Site in Hainan Province with investment commitments of RMB1,200,000,000. The Company will undertake the investment in Hainan Aerospace by stages and Hainan Aerospace will be responsible for implementing the land development project.

Pursuant to the auction terms of the acquisition of Shenzhen Rayitek, New Century entered into a guarantee agreement with Hangzhou Bank, Shenzhen Branch to guarantee the repayment of outstanding loan of Shenzhen Rayitek. As at the date of the publication of this Interim Report, Shenzhen Rayitek had an outstanding loan of RMB60,000,000. In addition, New Century will lend a sum of RMB100,000,000 to Shenzhen Rayitek before the end of this year according to the auction terms. Details of which please refer to the Company’s announcements dated 11 and 14 July 2011 respectively.

DIVIDEND

The Board of the Company had proposed the distribution of 2010 final dividend of HK$0.01 per share in March 2011 and that was approved by shareholders at the annual general meeting held in May 2011, warrants of which were dispatched to all shareholders on 13 June 2011.

The Board decided not to distribute an interim dividend for the year of 2011.

FINANCIAL RISKS

The Company and the subsidiaries review its cash flow and financial position periodically and do not presently engage in any financial instruments or derivatives to hedge the exchange and the interest rate risks.

HUMAN RESOURCES AND REMUNERATION POLICIES

The Company and the subsidiaries’ remuneration policy is based on the employee’s qualifications, experience and performance as well as by reference to market trends. The Company and the subsidiaries will continue to strengthen the level of human resources management, strictly implement the performance-based appraisal system to encourage employees to have continuous improvement in their performance and contributions to the Company.

Interim Report 2011

==> picture [7 x 8] intentionally omitted <==

==> picture [7 x 12] intentionally omitted <==

==> picture [10 x 14] intentionally omitted <==

==> picture [7 x 21] intentionally omitted <==

==> picture [8 x 4] intentionally omitted <==

==> picture [31 x 26] intentionally omitted <==

==> picture [9 x 8] intentionally omitted <==

==> picture [10 x 10] intentionally omitted <==

==> picture [10 x 16] intentionally omitted <==

The emoluments of the Directors are reviewed by the Remuneration Committee, having regard to the Company’s operating results, individual performance and comparable market statistics.

As at 30 June 2011, the Company and the subsidiaries have a total staff of about 6,800 based in the Mainland and Hong Kong.

China Aerospace International Holdings Limited

==> picture [14 x 21] intentionally omitted <==

==> picture [8 x 16] intentionally omitted <==

==> picture [6 x 10] intentionally omitted <==

==> picture [15 x 11] intentionally omitted <==

==> picture [10 x 11] intentionally omitted <==

==> picture [10 x 17] intentionally omitted <==

SUBSTANTIAL SHAREHOLDERS

At 30 June 2011, the following declarations of interests by shareholders holding 5% or more of the issued capital of the Company have been recorded in the Register of Interests pursuant to Part XV of the Securities & Futures Ordinance:

==> picture [336 x 47] intentionally omitted <==

----- Start of picture text -----

Number of
Direct shares held Percentage of
interest for long issued share
Name of shareholder Capacity (Yes/No) positions capital
----- End of picture text -----

Name of shareholder Capacity Direct interest (Yes/No)	Number of shares held for long positions Percentage of issued share capital
China Aerospace Science & Technology Corporation Interested in controlled corporations_(note 1) No Jetcote Investments Limited Beneficial owner Yes Interested in controlled corporations(note 2) No Burhill Company Limited Beneficial owner (note 2) Yes Sin King Enterprises Company Limited Beneficial owner (note 2)_ Yes	1,143,330,636 37.06% 131,837,011 4.27% 1,011,493,625 32.79%
	1,143,330,636 37.06%
	539,566,136 17.49% 471,927,489 15.30%

Notes:

(1) These 1,143,330,636 shares are duplicated in the interests held by Jetcote Investments Limited, a wholly-owned subsidiary of China Aerospace Science & Technology Corporation, and its subsidiaries.
(2) Both Burhill Company Limited and Sin King Enterprises Company Limited are wholly-owned subsidiaries of Jetcote Investments Limited. The shares held by them form part of the total number of shares held by Jetcote Investments Limited.

Save as disclosed above, the Company had not been notified of any other relevant interests or short positions in the issued share capital or underlying shares of the Company as at 30 June 2011.

Interim Report 2011

==> picture [7 x 8] intentionally omitted <==

==> picture [7 x 12] intentionally omitted <==

==> picture [10 x 14] intentionally omitted <==

==> picture [7 x 21] intentionally omitted <==

==> picture [8 x 4] intentionally omitted <==

==> picture [31 x 26] intentionally omitted <==

==> picture [9 x 8] intentionally omitted <==

==> picture [10 x 10] intentionally omitted <==

==> picture [10 x 16] intentionally omitted <==

PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SECURITIES

There had been no purchase, sale or redemption of the Company’s listed securities by the Company and its subsidiaries during the period.

CORPORATE GOVERNANCE

For the six months ended 30 June 2011, the Company had complied throughout the period with the provisions of the Code on Corporate Governance Practice as set out in Appendix 14 of the Listing Rules.

Save as disclosed below, as of the date of this Interim Report, neither the Company nor any of its subsidiaries was engaged in any litigation or arbitration or claim of material importance and, so far as the Directors were aware of, no litigation or arbitration or claim of material importance was pending or threatened by or against any member of the Company.

CASIL Clearing Limited (“CASIL Clearing”), a wholly-owned subsidiary of the Company, had made an advance in the past to Chinluck Properties Limited (“Chinluck”), an independent third party. The loan was secured by a piece of land and guaranteed personally by Mr Cheng Zhen Shu, the substantial shareholder and chairman of Chinluck. CASIL Clearing was alleged a breach of the loan agreement in failing to advance the full amount of HK$330,000,000 to Chinluck. CASIL Clearing resisted the claim and counterclaimed against Chinluck and sued against Mr Cheng Zhen Shu upon default on, including but not limited to, interest and payment of the loan amount advanced under the loan agreement and the mortgage. A Court hearing in respect of the loan was conducted in June 2004, and the judgement in respect of the action was received in July 2004. The judgement was merely a fact finding and confined to issues of liability only. For the issues of damages, it was held by the Court in December 2006 that, inter alia , CASIL Clearing is required to pay a nominal damage of HK$100 to Chinluck for its breach of agreement to advance the remaining portion of the loan and Chinluck is required to pay the outstanding principal and the accrued interest under the loan agreement and the mortgage for its breach of the repayment obligations.

18 China Aerospace International Holdings Limited

==> picture [14 x 21] intentionally omitted <==

==> picture [8 x 16] intentionally omitted <==

==> picture [6 x 10] intentionally omitted <==

==> picture [15 x 11] intentionally omitted <==

==> picture [10 x 11] intentionally omitted <==

==> picture [10 x 17] intentionally omitted <==

In September 2007, CASIL Clearing entered into a settlement deed with Chinluck and Mr Cheng Zhen Shu so as to solve the litigation completely. Pursuant to the settlement deed, both Chinluck and Mr Cheng Zhen Shu agreed to repay a sum of HK$280,000,000 to CASIL Clearing by instalments.

During the first half of 2011, both Chinluck and Mr Cheng Zhen Shu had repaid in full pursuant to the settlement deed. All parties had executed and filed a consent order to the Court to provide for a permanent stay of execution of judgement.

DIRECTORS’ AND CHIEF ExECUTIVE’S INTERESTS IN SHARES

The Company had adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 of the Listing Rules as the required standard for the Directors of the Company to trade the securities of the Company. Having made specific enquiry of all the Directors of the Company and in accordance with information provided, all the Directors have complied with the provisions under the Model Code.

As at 30 June 2011, none of the Directors, chief executive or their associates have any beneficial or non-beneficial interests in the share capital, warrants and options of the Company or its subsidiaries or any of its associated corporations which is required to be recorded in the Register of Directors’ Interests pursuant to Part XV of the Securities & Futures Ordinance or as otherwise notified to the Company and The Stock Exchange of Hong Kong Limited pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers .

AUDIT COMMITTEE

The Audit Committee of the Company currently has a membership comprising two Independent Non-Executive Directors, Mr Chow Chan Lum, Charles (Chairman) and Mr Luo Zhenbang, and a Non-Executive Director, Mr Zhou Qingquan. The major responsibilities of the Audit Committee include serving as a focal point for communication between the Directors and external auditors in reviewing the Company’s financial information as well as overseeing the Company’s financial reporting system and internal control procedures.

Interim Report 2011

==> picture [7 x 8] intentionally omitted <==

==> picture [7 x 12] intentionally omitted <==

==> picture [10 x 14] intentionally omitted <==

==> picture [7 x 21] intentionally omitted <==

==> picture [8 x 4] intentionally omitted <==

==> picture [31 x 26] intentionally omitted <==

==> picture [9 x 8] intentionally omitted <==

==> picture [10 x 10] intentionally omitted <==

==> picture [10 x 16] intentionally omitted <==

The Audit Committee of the Company reviewed, discussed and approved this 2011 unaudited Interim Report that had been reviewed by the auditor, Deloitte Touche Tohmatsu.

REMUNERATION COMMITTEE

The Remuneration Committee of the Company currently has a membership comprising three Independent Non-Executive Directors, Mr Chow Chan Lum, Charles, Mr Luo Zhenbang and Mr Wang Junyan, and two Non-Executive Directors, Dr Chan Ching Har, Eliza (Chairman) and Mr Chen Xuechuan. The responsibilities of the Remuneration Committee are to study and suggest the remuneration policy and to determine the remuneration of the Directors and senior management of the Company.

CONNECTED TRANSACTIONS

On 14 January 2011, Shenzhen Aerospace Hi-tech Investment Management Company Limited* (深圳市航天高科投資管理有限公司), a subsidiary of the Company, entered into a syndicate loan agreement and a supplemental agreement in respect of a 5-year term loan in the amount of RMB1,500,000,000 with the Finance Syndicate for the construction cost of the Shenzhen Aerospace Science & Technology Plaza. Pursuant to the terms of the syndicate loan agreement, Shenzhen Aerospace is required to pledge the land use right of a parcel of land in Shenzhen to the Finance Syndicate as security. As one of the members of the Finance Syndicate is a connected person of the Company, the provision of security to the connected person by Shenzhen Aerospace constituted a connected transaction of the Company and was approved by the independent shareholders at the Extraordinary General Meeting held on 25 March 2011. CASC and its associates abstained from voting on the resolution related to the connected transaction. Details of which please refer to the Company’s announcements made on 14 January 2011, 23 January 2011 and 25 March 2011, and the circular dated 25 January 2011, respectively.

Independent Non-Executive Directors of the Company had reviewed the above connected transaction and confirmed that the connected transaction had been entered into on normal commercial terms and are fair and reasonable and in the interests of the shareholders of the Company as a whole.

20 China Aerospace International Holdings Limited

==> picture [14 x 21] intentionally omitted <==

==> picture [8 x 16] intentionally omitted <==

==> picture [6 x 10] intentionally omitted <==

==> picture [15 x 11] intentionally omitted <==

==> picture [10 x 11] intentionally omitted <==

==> picture [10 x 17] intentionally omitted <==

On 28 March 2011, the Company disposed the entire interest in CASIL Satellite Holdings Limited (“CASIL Satellite”) to a connected party China Great Wall Industry (Hong Kong) Corp. Limited in a consideration of HK$132,300,000. The disposal constituted a connected transaction of the Company exempt from the independent shareholders’ approval requirements, The Directors (including the Independent Non-Executive Directors) believe that the terms of the transaction are on normal commercial terms and are fair and reasonable, the entering into the sale and purchase agreement is in the interests of the Company and the shareholders of the Company as a whole. Upon completion of the disposal, CASIL Satellite will cease to be a subsidiary of the Company. Details of which please refer to the Company’s announcements made on 28 and 29 of March 2011 respectively.

As at the date of publication of this Interim Report, the purchaser has already obtained a waiver from general offer from the Securities and Futures Commission, Hong Kong and is in the process of obtaining regulatory approvals in China.

EVENT AFTER THE END OF INTERIM PERIOD

On 11 July 2011, CASIL New Century Technology Development (Shenzhen) Company Limited (航科新世紀科技發展（深圳）有限公司) (“New Century”), a wholly-owned subsidiary of the Company, won an open tender and entered into a share transfer agreement with Guangdong Huamei Group Company Limited (廣東華美集團有限公司) in respect of a proposed acquisition of 39% shareholding in Shenzhen Rayitek Hi-tech Film Company Limited (深圳瑞華泰薄膜科技有限公司) (“Shenzhen Rayitek”). On the same day, New Century also entered into share transfer agreements with Shenzhen Huamei Jiye Investment Company Limited (深圳市華美基業投資有限公司) and Hangzhou Taida Industrial Company Limited* (杭州泰達實業有限公司) in respect of the acquisitions from each of them a 10% and 6% of shareholding in Shenzhen Rayitek, respectively. The aggregated consideration of acquiring a 55% shareholding in Shenzhen Rayitek was RMB 63,040,000. The acquisition constituted a discloseable transaction of the Company and details of which please refer to the Company’s announcements dated 11 and 14 July 2011.

Interim Report 2011

==> picture [7 x 8] intentionally omitted <==

==> picture [7 x 12] intentionally omitted <==

==> picture [10 x 14] intentionally omitted <==

==> picture [7 x 21] intentionally omitted <==

==> picture [8 x 4] intentionally omitted <==

==> picture [31 x 26] intentionally omitted <==

==> picture [9 x 8] intentionally omitted <==

==> picture [10 x 10] intentionally omitted <==

==> picture [10 x 16] intentionally omitted <==

APPRECIATION

The Company hereby expresses its sincere gratitude to its shareholders, banks, business partners, people from various social communities, as well as all staff for their long-time support.

By order of the Board Li Hongjun Executive Director & President

Hong Kong, 26 August 2011

China Aerospace International Holdings Limited

==> picture [14 x 21] intentionally omitted <==

==> picture [8 x 16] intentionally omitted <==

==> picture [6 x 10] intentionally omitted <==

==> picture [15 x 11] intentionally omitted <==

==> picture [10 x 11] intentionally omitted <==

==> picture [10 x 17] intentionally omitted <==

REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION

==> picture [124 x 56] intentionally omitted <==

TO THE BOARD OF DIRECTORS OF CHINA AEROSPACE INTERNATIONAL HOLDINGS LIMITED (incorporated in Hong Kong with limited liability)

INTRODUCTION

We have reviewed the interim financial information set out on pages 24 to 48, which comprises the condensed consolidated statement of financial position of China Aerospace International Holdings Limited (the “Company”) and its subsidiaries (collectively referred to as the “Group”) as of 30 June 2011 and the related condensed consolidated income statement, statement of comprehensive income, statement of changes in equity and statement of cash flows for the six-month period then ended and certain explanatory notes. The Main Board Listing Rules governing the Listing of Securities on The Stock Exchange of Hong Kong Limited require the preparation of a report on interim financial information to be in compliance with the relevant provisions thereof and Hong Kong Accounting Standard (“HKAS”) 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants. The directors of the Company are responsible for the preparation and presentation of this interim financial information in accordance with HKAS 34. Our responsibility is to express a conclusion on this interim financial information based on our review, and to report our conclusion solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

Interim Report 2011

==> picture [7 x 8] intentionally omitted <==

==> picture [7 x 12] intentionally omitted <==

==> picture [10 x 14] intentionally omitted <==

==> picture [7 x 21] intentionally omitted <==

==> picture [8 x 4] intentionally omitted <==

==> picture [31 x 26] intentionally omitted <==

==> picture [9 x 8] intentionally omitted <==

==> picture [10 x 10] intentionally omitted <==

==> picture [10 x 16] intentionally omitted <==

SCOPE OF REVIEW

We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the Hong Kong Institute of Certified Public Accountants. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly we do not express an audit opinion.

CONCLUSION

Based on our review, nothing has come to our attention that causes us to believe that the interim financial information is not prepared, in all material respects, in accordance with HKAS 34.

Deloitte Touche Tohmatsu

Certified Public Accountants

Hong Kong 26 August 2011

China Aerospace International Holdings Limited

==> picture [14 x 21] intentionally omitted <==

==> picture [8 x 16] intentionally omitted <==

==> picture [6 x 10] intentionally omitted <==

==> picture [15 x 11] intentionally omitted <==

==> picture [10 x 11] intentionally omitted <==

==> picture [10 x 17] intentionally omitted <==

CONDENSED CONSOLIDATED INCOME STATEMENT

For the six months ended 30 June 2011

==> picture [337 x 52] intentionally omitted <==

----- Start of picture text -----

Six months ended
30.6.2011 30.6.2010
(Unaudited) (Unaudited)
NOTES HK$’000 HK$’000
----- End of picture text -----

Turnover	3	1,007,786	869,172
Cost of sales		(806,303)	(675,194)
Gross profit		201,483	193,978
Other gains and losses	4	48,899	5,092
Other income	4	16,421	43,697
Selling and distribution expenses		(25,792)	(19,996)
Administrative expenses		(124,112)	(98,448)
Fair value changes of investment
properties		243,697	223,373
Finance costs	5	(17)	(529)
Share of results of jointly
controlled entities		(1,763)	(74)
Profit before taxation	6	358,816	347,093
Taxation	7	(76,309)	(73,076)
Profit for the period		282,507	274,017
Attributable to:
Owners of the Company		214,715	209,881
Non-controllinginterests		67,792	64,136
		282,507	274,017
Earnings per share — basic	8	HK6.96 cents	HK7.12 cents

Interim Report 2011

==> picture [7 x 8] intentionally omitted <==

==> picture [7 x 12] intentionally omitted <==

==> picture [10 x 14] intentionally omitted <==

==> picture [7 x 21] intentionally omitted <==

==> picture [8 x 4] intentionally omitted <==

==> picture [31 x 26] intentionally omitted <==

==> picture [9 x 8] intentionally omitted <==

==> picture [10 x 10] intentionally omitted <==

==> picture [10 x 16] intentionally omitted <==

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the six months ended 30 June 2011

==> picture [337 x 52] intentionally omitted <==

----- Start of picture text -----

Six months ended
30.6.2011 30.6.2010
(Unaudited) (Unaudited)
HK$’000 HK$’000
----- End of picture text -----

Profit for the period	282,507	274,017
Other comprehensive income
Exchange differences arising on translating
foreign operations	48,730	36,803
Share of exchange reserve of jointly
controlled entities	2,270	—
Fair value loss on available-for-sale
investments	(8,961)	(16,065)
Increase in fair value of land and buildings
transferred to investment properties	—	7,169
Deferred tax liability arising on revaluation
of properties	—	(1,434)
Other comprehensive income for the period	42,039	26,473
Total comprehensive income for the period	324,546	300,490
Total comprehensive income attributable to:
Owners of the Company	245,930	228,046
Non-controllinginterests	78,616	72,444
	324,546	300,490

China Aerospace International Holdings Limited

==> picture [14 x 21] intentionally omitted <==

==> picture [8 x 16] intentionally omitted <==

==> picture [6 x 10] intentionally omitted <==

==> picture [15 x 11] intentionally omitted <==

==> picture [10 x 11] intentionally omitted <==

==> picture [10 x 17] intentionally omitted <==

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION At 30 June 2011

==> picture [336 x 37] intentionally omitted <==

----- Start of picture text -----

30.6.2011 31.12.2010
(Unaudited) (Audited)
NOTES HK$’000 HK$’000
----- End of picture text -----

Non-current assets
Property, plant and equipment	10	666,945	649,696
Prepaid lease payments		46,599	45,746
Investment properties	10	2,017,950	1,713,848
Interests in jointly controlled
entities		62,253	61,746
Available-for-sale investments		53,604	173,040
Prepayment for land
development	11	9,398	148,053
Land development expenditure	11	592,520	77,767
		3,449,269	2,869,896
Current assets
Inventories		239,024	191,985
Trade and other receivables	12	428,374	403,025
Prepaid lease payments		1,762	1,733
Loans receivable		—	70,269
Financial assets at fair value
through profit or loss		85,878	2,864
Taxation recoverable		3,568	1,514
Pledged bank deposits		33,012	43,529
Bank balances and cash		1,190,052	1,489,728
		1,981,670	2,204,647
Assets classified as held for sale	13	119,489	—
		2,101,159	2,204,647

Interim Report 2011

==> picture [7 x 8] intentionally omitted <==

==> picture [7 x 12] intentionally omitted <==

==> picture [10 x 14] intentionally omitted <==

==> picture [7 x 21] intentionally omitted <==

==> picture [8 x 4] intentionally omitted <==

==> picture [31 x 26] intentionally omitted <==

==> picture [9 x 8] intentionally omitted <==

==> picture [10 x 10] intentionally omitted <==

==> picture [10 x 16] intentionally omitted <==

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued) At 30 June 2011

==> picture [337 x 37] intentionally omitted <==

----- Start of picture text -----

30.6.2011 31.12.2010
(Unaudited) (Audited)
NOTES HK$’000 HK$’000
----- End of picture text -----

Current liabilities
Trade and other payables	14	674,474	691,727
Amount due to an associate		1,050	1,050
Taxation payable		77,125	61,916
Obligations under a finance
lease		454	767
Unsecured bank loan	15	120,337	—
Other loan		8,625	8,482
		882,065	763,942
Liabilities associated with assets
classified as held for sale	13	21	—
		882,086	763,942
Net current assets		1,219,073	1,440,705
Total assets less current liabilities		4,668,342	4,310,601
Non-current liabilities
Deferred taxation		251,882	187,772
Obligations under a finance
lease		—	65
		251,882	187,837
		4,416,460	4,122,764
Capital and reserves
Share capital	16	308,502	308,502
Reserves		3,457,110	3,242,030
Equity attributable to owners
of the Company		3,765,612	3,550,532
Non-controllinginterests		650,848	572,232
		4,416,460	4,122,764

China Aerospace International Holdings Limited

==> picture [14 x 21] intentionally omitted <==

==> picture [8 x 16] intentionally omitted <==

==> picture [6 x 10] intentionally omitted <==

==> picture [15 x 11] intentionally omitted <==

==> picture [10 x 11] intentionally omitted <==

==> picture [10 x 17] intentionally omitted <==

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the six months ended 30 June 2011

==> picture [338 x 48] intentionally omitted <==

----- Start of picture text -----

Attributable to owners of the Company
Special Investment Property Capital Attributable to
Share Share capital General Translation revaluation revaluation Capital redemption Retained non-controlling
capital premium reserve reserve reserve reserve reserve reserve reserve profits Sub total interests Total
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
----- End of picture text -----

Balance at 1 January 2010
(audited)	257,090	336,286	14,044	23,916	96,377	154,468	3,899	21,570	1,080	1,781,700	2,690,430	541,454	3,231,884
Profit for the period	—	—	—	—	—	—	—	—	—	209,881	209,881	64,136	274,017
Exchange gain arising on
translating foreign operations	—	—	—	—	28,495	—	—	—	—	—	28,495	8,308	36,803
Fair value loss on
available-for-sale investments	—	—	—	—	—	(16,065)	—	—	—	—	(16,065)	—	(16,065)
Increase in fair value of land and
buildings transferred to
investment properties	—	—	—	—	—	—	7,169	—	—	—	7,169	—	7,169
Deferred tax liability arising on
revaluation of properties	—	—	—	—	—	—	(1,434)	—	—	—	(1,434)	—	(1,434)
Total comprehensive income
(expense) for the period	—	—	—	—	28,495	(16,065)	5,735	—	—	209,881	228,046	72,444	300,490
Dividend recognised as distribution	—	—	—	—	—	—	—	—	—	(61,700)	(61,700)	—	(61,700)
Issue of shares in placing and
subscription arrangement	51,412	529,541	—	—	—	—	—	—	—	—	580,953	—	580,953
Expenses incurred in connection
with issue of shares	—	(20,898)	—	—	—	—	—	—	—	—	(20,898)	—	(20,898)
Balance at 30 June 2010
(unaudited)	308,502	844,929	14,044	23,916	124,872	138,403	9,634	21,570	1,080	1,929,881	3,416,831	613,898	4,030,729
Balance at 1 January 2011
(audited)	308,502	844,929	14,044	23,916	186,768	133,496	11,010	14,309	1,080	2,012,478	3,550,532	572,232	4,122,764
Profit for the period	—	—	—	—	—	—	—	—	—	214,715	214,715	67,792	282,507
Exchange gain arising on
translating foreign operations	—	—	—	—	37,906	—	—	—	—	—	37,906	10,824	48,730
Share of exchange reserve of
jointly controlled entities	—	—	—	—	2,270	—	—	—	—	—	2,270	—	2,270
Fair value loss on
available-for-sale investments	—	—	—	—	—	(8,961)	—	—	—	—	(8,961)	—	(8,961)
Total comprehensive income
(expense) for the period	—	—	—	—	40,176	(8,961)	—	—	—	214,715	245,930	78,616	324,546
Dividend recognised as distribution	—	—	—	—	—	—	—	—	—	(30,850)	(30,850)	—	(30,850)
Balance at 30 June 2011
(unaudited)	308,502	844,929	14,044	23,916	226,944	124,535	11,010	14,309	1,080	2,196,343	3,765,612	650,848	4,416,460

Interim Report 2011

==> picture [7 x 8] intentionally omitted <==

==> picture [7 x 12] intentionally omitted <==

==> picture [10 x 14] intentionally omitted <==

==> picture [7 x 21] intentionally omitted <==

==> picture [8 x 4] intentionally omitted <==

==> picture [31 x 26] intentionally omitted <==

==> picture [9 x 8] intentionally omitted <==

==> picture [10 x 10] intentionally omitted <==

==> picture [10 x 16] intentionally omitted <==

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 June 2011

==> picture [337 x 49] intentionally omitted <==

----- Start of picture text -----

Six months ended
30.6.2011 30.6.2010
(Unaudited) (Unaudited)
HK$’000 HK$’000
----- End of picture text -----

Net cash used in operatingactivities	(100,995)	(11,724)
Net cash used in investing activities
Payment for land development	(366,050)	(181,076)
Net decrease in pledged bank deposits	11,064	71,057
Additions of investment properties	(27,198)	(22,133)
Purchase of property, plant and equipment	(37,155)	(9,283)
Settlement of loans receivable	117,657	1,705
Purchase of available-for-sale investment	(9,000)	—
Other investingcash flows	10,448	5,105
	(300,234)	(134,625)
Net cash from financing activities
New bank loan raised	118,343	—
Dividend paid	(30,769)	(61,611)
Proceeds from issue of shares	—	580,953
Repayment of bank loans	—	(131,401)
Issue share expenses	—	(20,898)
Other financingcash flows	(395)	(889)
	87,179	366,154
Net (decrease) increase in cash and cash
equivalents	(314,050)	219,805
Cash and cash equivalents at 1 January	1,489,728	1,208,827
Effect of foreign exchange rate changes	14,388	11,340
Cash and cash equivalents at 30 June	1,190,066	1,439,972
Analysis of balances of cash and cash
equivalents
Bank balances and cash	1,190,052	1,439,972
Bank balances and cash included under total
assets classified as held for sale(Note 13)	14	—
	1,190,066	1,439,972

China Aerospace International Holdings Limited

==> picture [14 x 21] intentionally omitted <==

==> picture [8 x 16] intentionally omitted <==

==> picture [6 x 10] intentionally omitted <==

==> picture [15 x 11] intentionally omitted <==

==> picture [10 x 11] intentionally omitted <==

==> picture [10 x 17] intentionally omitted <==

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2011

1. BASIS OF PREPARATION

The condensed consolidated financial statements have been prepared in accordance with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and with the Hong Kong Accounting Standard 34 “Interim financial reporting” issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”).

2. SIGNIFICANT ACCOUNTING POLICIES

The condensed consolidated financial statements have been prepared under the historical cost basis except for certain properties and financial instruments which are measured at fair values, as appropriate.

The accounting policies used in the condensed consolidated financial statements are the same as those followed in the preparation of the Group’s annual financial statements for the year ended 31 December 2010. In addition, the Group applied the following accounting policy during the current interim period.

Non-current assets held for sale

Non-current assets or disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its present condition.

When the Group is committed to a sale plan involving loss of control of a subsidiary, all of the assets and liabilities of that subsidiary are classified as held for sale when the criteria described above are met, regardless of whether the Group will retain a non-controlling interest in its former subsidiary after the sale.

Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their previous carrying amount and fair value less costs to sell other than financial assets within the scope of HKAS 39 “Financial instruments: Recognition and measurement”.

Interim Report 2011

==> picture [7 x 8] intentionally omitted <==

==> picture [7 x 12] intentionally omitted <==

==> picture [10 x 14] intentionally omitted <==

==> picture [7 x 21] intentionally omitted <==

==> picture [8 x 4] intentionally omitted <==

==> picture [31 x 26] intentionally omitted <==

==> picture [9 x 8] intentionally omitted <==

==> picture [10 x 10] intentionally omitted <==

==> picture [10 x 16] intentionally omitted <==

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

In the current interim period, the Group has applied, for the first time, the following new and revised standards and interpretations (“new and revised HKFRSs”) issued by the HKICPA.

HKFRSs (Amendments)	Improvements to HKFRSs issued in 2010
HKAS 24 (Revised)	Related party disclosures (except for the
	partial exemption in paragraphs 25 to 27
	for government-related entities which has
	been early applied in the Group’s 2010
	annual financial statements)
HKAS 32 (Amendments)	Classification of rights issues
HK(IFRIC) — INT 14	Prepayments of a minimum funding
(Amendments)	requirement
HK(IFRIC) — INT 19	Extinguishing financial liabilities with equity
	instruments

The application of the above new and revised HKFRSs in the current interim period has had no material effect on the amounts reported in these condensed consolidated financial statements.

The Group has not early applied the following new or revised standards that have been issued but are not yet effective.

HKFRS 7 (Amendments)	Disclosures — Transfers of financial assets1
HKFRS 9	Financial instruments2
HKFRS 10	Consolidated financial statements2
HKFRS 11	Joint arrangements2
HKFRS 12	Disclosure of interests in other entities2
HKFRS 13	Fair value measurement2
HKAS 1 (Amendments)	Presentation of items of other comprehensive
	income3
HKAS 12 (Amendments)	Deferred tax: Recovery of underlying assets4
HKAS 19	Employee benefits2
(As Revised in 2011)
HKAS 27	Separate financial statements2
(As Revised in 2011)
HKAS 28	Investments in associates and joint ventures2
(As Revised in 2011)

32 China Aerospace International Holdings Limited

==> picture [14 x 21] intentionally omitted <==

==> picture [8 x 16] intentionally omitted <==

==> picture [6 x 10] intentionally omitted <==

==> picture [15 x 11] intentionally omitted <==

==> picture [10 x 11] intentionally omitted <==

==> picture [10 x 17] intentionally omitted <==

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

1 Effective for annual periods beginning on or after 1 July 2011.

2 Effective for annual periods beginning on or after 1 January 2013.

3 Effective for annual periods beginning on or after 1 July 2012.

4 Effective for annual periods beginning on or after 1 January 2012.

HKFRS 9 “Financial instruments” (as issued in November 2009) introduces new requirements for the classification and measurement of financial assets. HKFRS 9 “Financial instruments” (as revised in November 2010) adds requirements for financial liabilities and for derecognition. Specifically under HKFRS 9, all recognised financial assets that are within the scope of HKAS 39 “Financial instruments: Recognition and measurement” are subsequently measured at either amortised cost or fair value. Specifically, debt investments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortised cost at the end of subsequent accounting periods. All other debt investments and equity investments are measured at their fair values at the end of subsequent accounting periods.

HKFRS 9 is effective for annual periods beginning on or after 1 January 2013, with earlier application permitted. The directors anticipate that the application of HKFRS 9 will affect the classification and measurement of the Group’s available-for-sale investment and may affect the classification and measurement of other financial assets.

The five new or revised standards on consolidation, joint arrangements and disclosures including HKFRS 10, HKFRS 11, HKFRS 12, HKAS 27 (As Revised in 2011) and HKAS 28 (As Revised in 2011) were issued by the HKICPA in June 2011 and are effective for annual periods beginning on or after 1 January 2013. Earlier application is permitted provided that all of these five new or revised standards are applied early at the same time.

Interim Report 2011

==> picture [7 x 8] intentionally omitted <==

==> picture [7 x 12] intentionally omitted <==

==> picture [10 x 14] intentionally omitted <==

==> picture [7 x 21] intentionally omitted <==

==> picture [8 x 4] intentionally omitted <==

==> picture [31 x 26] intentionally omitted <==

==> picture [9 x 8] intentionally omitted <==

==> picture [10 x 10] intentionally omitted <==

==> picture [10 x 16] intentionally omitted <==

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

HKFRS 10 replaces the parts of HKAS 27 “Consolidated and separate financial statements” that deal with consolidated financial statements. HKFRS 10 includes a new definition of control that contains three elements: (a) power over an investee, (b) exposure, or rights, to variable returns from its involvement with the investee, and (c) ability to use its power over the investee to affect the amount of the investor’s returns. Extensive guidance has been added in HKFRS 10 to deal with complex scenarios.

HKFRS 11 replaces HKAS 31 “Interests in joint ventures”. HKFRS 11 deals with how a joint arrangement of which two or more parties have joint control should be classified. Under HKFRS 11, there are two types of joint arrangements: joint ventures and joint operations. The classification in HKFRS 11 is based on parties’ rights and obligations under the arrangements. In contrast, under HKAS 31, there are three different types of joint arrangements: jointly controlled entities, jointly controlled assets and jointly controlled operations.

In addition, joint ventures under HKFRS 11 are required to be accounted for using the equity method of accounting, whereas jointly controlled entities under HKAS 31 can be accounted for using the equity method of accounting or proportionate accounting. The Group’s jointly controlled entities are currently accounted for using the equity method of accounting and the Group’s jointly controlled operations where the assets and liabilities arising from those jointly controlled operations are recognised in the condensed consolidated statement of financial position of the relevant company on an accrual basis and classified according to the nature of the item. The Group’s share of the income from jointly controlled operations, together with the expenses that it incurs are included in the condensed consolidated income statement when it is probable that the economic benefits associated with the transactions will flow to/from the Group.

34 China Aerospace International Holdings Limited

==> picture [14 x 21] intentionally omitted <==

==> picture [8 x 16] intentionally omitted <==

==> picture [6 x 10] intentionally omitted <==

==> picture [15 x 11] intentionally omitted <==

==> picture [10 x 11] intentionally omitted <==

==> picture [10 x 17] intentionally omitted <==

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

The directors of the Company anticipate that these new or revised standards will be applied in the Group’s consolidated financial statements for financial year beginning on 1 January 2013 and are in the process of assessing the impact.

The amendments to HKAS 12 “Deferred tax: Recovery of underlying assets” mainly deal with the measurement of deferred tax for investment properties that are measured using the fair value model in accordance with HKAS 40 “Investment property”. Based on the amendments, for the purposes of measuring deferred tax liabilities and deferred tax assets for investment properties measured using the fair value model, the carrying amounts of the investment properties are presumed to be recovered through sale, unless the presumption is rebutted in certain circumstances. The directors anticipate that the application of the amendments to HKAS 12 may have a significant impact on deferred tax recognised for investment properties located in the People’s Republic of China other than Hong Kong (the “PRC”) that are measured using the fair value model. If the presumption under the amendments is not rebutted, the deferred tax liability relating to the revaluation of investment properties may increase as the land appreciation tax rate of the PRC is higher than the tax rate currently used by the Group to calculate the deferred tax recognised for investment properties.

Other than those disclosed above, the directors of the Company anticipate that the application of the other new and revised standards will have no material impact on the results and financial position of the Group.

3. SEGMENT INFORMATION

The Group determines its operating segments based on the internal reports reviewed by the President, the chief operating decision maker of the Group, that are used to make strategic decisions. The management has identified the following operating segments: Hi-Tech Manufacturing Business (including plastic products, liquid crystal display, printed circuit boards, intelligent chargers and the related industrial property investment), Aerospace and Aerospace Service (including the Shenzhen Aerospace Science & Technology Plaza of property investment project and the Hainan Launching Site Complex Zone of land development project) which represents the major industries the Group engaged.

Interim Report 2011

==> picture [7 x 8] intentionally omitted <==

==> picture [7 x 12] intentionally omitted <==

==> picture [10 x 14] intentionally omitted <==

==> picture [7 x 21] intentionally omitted <==

==> picture [8 x 4] intentionally omitted <==

==> picture [31 x 26] intentionally omitted <==

==> picture [9 x 8] intentionally omitted <==

==> picture [10 x 10] intentionally omitted <==

==> picture [10 x 16] intentionally omitted <==

3. SEGMENT INFORMATION (continued)

(a) An analysis of the Group’s turnover and results by operating and reportable segments is as follows:

For the six months ended 30 June 2011

==> picture [289 x 57] intentionally omitted <==

----- Start of picture text -----

Turnover
Inter-
External segment Segment
sales sales Total results
HK$’000 HK$’000 HK$’000 HK$’000
----- End of picture text -----

Hi-Tech Manufacturing Business Plastic products 389,242 38,288 427,530 Liquid crystal display 143,659 — 143,659 Printed circuit boards 213,731 — 213,731 Intelligent chargers 253,982 — 253,982 Industrial property investment 6,131 6,948 13,079	29,293 5,816 42,083 16,732 3,316
1,006,745 45,236 1,051,981	97,240
Aerospace and Aerospace Service Property investment in Shenzhen Aerospace Science & Technology Plaza — — — Land development in Hainan Launching Site Complex Zone — — —	225,244 (5,215)
— — —	220,029
Reportable segment total 1,006,745 45,236 1,051,981 Elimination — (45,236) (45,236) Other business 1,041 — 1,041	317,269 — 11,180
1,007,786 — 1,007,786	328,449 68,551 (38,022)
Unallocated corporate income Unallocated corporate expenses Reversal of impairment loss recognised in respect of loans receivable Share of results of jointly controlled entities Finance costs Profit before taxation
	358,978 1,618 (1,763) (17)
	358,816

36 China Aerospace International Holdings Limited

==> picture [14 x 21] intentionally omitted <==

==> picture [8 x 16] intentionally omitted <==

==> picture [6 x 10] intentionally omitted <==

==> picture [15 x 11] intentionally omitted <==

==> picture [10 x 11] intentionally omitted <==

==> picture [10 x 17] intentionally omitted <==

3. SEGMENT INFORMATION (continued)

For the six months ended 30 June 2010

==> picture [288 x 55] intentionally omitted <==

----- Start of picture text -----

Turnover
Inter-
External segment Segment
sales sales Total results
HK$’000 HK$’000 HK$’000 HK$’000
----- End of picture text -----

Hi-Tech Manufacturing Business Plastic products 326,908 35,525 362,433 Liquid crystal display 135,208 — 135,208 Printed circuit boards 179,039 — 179,039 Intelligent chargers 222,369 — 222,369 Industrial property investment 5,625 6,465 12,090	39,213 7,103 44,503 16,785 6,257
869,149 41,990 911,139	113,861
Aerospace and Aerospace Service Property investment in Shenzhen Aerospace Science & Technology Plaza — — — Land development in Hainan Launching Site Complex Zone — — —	218,100 (2,975)
— — —	215,125
Reportable segment total 869,149 41,990 911,139 Elimination — (41,990) (41,990) Other business 23 — 23	328,986 — (1,872)
869,172 — 869,172	327,114 47,547 (28,670)
Unallocated corporate income Unallocated corporate expenses Reversal of impairment loss recognised in respect of loans receivable Share of results of jointly controlled entities Finance costs Profit before taxation
	345,991 1,705 (74) (529)
	347,093

Inter-segment sales are charged at cost-plus basis.

Interim Report 2011

==> picture [7 x 8] intentionally omitted <==

==> picture [7 x 12] intentionally omitted <==

==> picture [10 x 14] intentionally omitted <==

==> picture [7 x 21] intentionally omitted <==

==> picture [8 x 4] intentionally omitted <==

==> picture [31 x 26] intentionally omitted <==

==> picture [9 x 8] intentionally omitted <==

==> picture [10 x 10] intentionally omitted <==

==> picture [10 x 16] intentionally omitted <==

3. SEGMENT INFORMATION (continued)

Segment results represent the profit/loss earned/incurred by each segment without allocations of interest income, changes in fair value of financial assets at fair value through profit or loss, reversal of impairment loss recognised on loans receivable, share of results of jointly controlled entities, interest expenses and other corporate income and corporate expenses. This is the measure reported to the President for the purposes of resource allocation and performance assessment.

(b) The following is an analysis of the Group’s assets by operating and reportable segment:

==> picture [290 x 25] intentionally omitted <==

----- Start of picture text -----

30.6.2011 31.12.2010
HK$’000 HK$’000
----- End of picture text -----

Segment assets
Hi-Tech Manufacturing Business
Plastic products	567,213	550,625
Liquid crystal display	298,777	293,625
Printed circuit boards	217,130	202,459
Intelligent chargers	281,928	233,696
Industrial property investment	202,692	198,224
	1,567,740	1,478,629
Aerospace and Aerospace Service
Property investment in Shenzhen Aerospace
Science & Technology Plaza	1,711,191	1,427,219
Land development in Hainan Launching Site
Complex Zone	601,918	227,222
	2,313,109	1,654,441
Total assets for reportable segments	3,880,849	3,133,070
Other business	104,067	90,703
Available-for-sale investments	173,079	173,040
Interests in jointly controlled entities	62,253	61,746
Loans receivable	—	70,269
Unallocated assets	1,330,180	1,545,715
Consolidated assets	5,550,428	5,074,543

China Aerospace International Holdings Limited

==> picture [14 x 21] intentionally omitted <==

==> picture [8 x 16] intentionally omitted <==

==> picture [6 x 10] intentionally omitted <==

==> picture [15 x 11] intentionally omitted <==

==> picture [10 x 11] intentionally omitted <==

==> picture [10 x 17] intentionally omitted <==

3. SEGMENT INFORMATION (continued)

For the purposes of monitoring segment performances and allocating resources between segments, all assets are allocated to operating segments other than bank balances and cash, pledged bank deposits, financial assets at fair value through profit or loss, taxation recoverable and other unallocated assets.

4. OTHER INCOME AND OTHER GAINS AND LOSSES

==> picture [311 x 42] intentionally omitted <==

----- Start of picture text -----

Six months ended
30.6.2011 30.6.2010
HK$’000 HK$’000
----- End of picture text -----

The Group’s other income mainly
comprises:
Bank interest income	9,026	5,105
Waiver of debts (Note a)	—	31,063
The Group’s other gains and losses
comprise:
Gain (loss) from change in fair value of
financial assets at fair value through
profit or loss (Note b)	15,711	(744)
Net exchange gain	4,240	4,131
Reversal of impairment loss recognised
in respect of loans receivable
(Note c)	1,618	1,705
Recovery of loans receivable (Note c)	27,330	—

Interim Report 2011

==> picture [7 x 8] intentionally omitted <==

==> picture [7 x 12] intentionally omitted <==

==> picture [10 x 14] intentionally omitted <==

==> picture [7 x 21] intentionally omitted <==

==> picture [8 x 4] intentionally omitted <==

==> picture [31 x 26] intentionally omitted <==

==> picture [9 x 8] intentionally omitted <==

==> picture [10 x 10] intentionally omitted <==

==> picture [10 x 16] intentionally omitted <==

4. OTHER INCOME AND OTHER GAINS AND LOSSES (continued)

Notes:
a. Being derecognition of financial liabilities upon the fulfilment of repayment terms specified in a debt restructuring deed entered into with a bank in prior years.
b. The gain (loss) of the financial assets at fair value through profit or loss arose from listed securities held for trading purpose and the fair value are determined based on the quoted market bid prices available on the relevant exchanges or disposal of the listed securities during the period.
c. During the current period, the Group recovered an amount of HK$117,657,000 from a borrower pursuant to a settlement deed entered into between a subsidiary of the Company and the borrower on 14 September 2007 in respect of the Group’s interest bearing loans receivables. The excess of HK$28,948,000, representing the amount recovered over the carrying amount of the loan receivable of HK$70,269,000 net of the transaction costs incurred relating to the debt collections, is recognised in profit and loss in the current period whereby amounts of HK$1,618,000 and HK$27,330,000 are recorded as reversal of impairment loss recognised in respect of loans receivable and recovery of loans receivable respectively.

5. FINANCE COSTS

==> picture [312 x 42] intentionally omitted <==

----- Start of picture text -----

Six months ended
30.6.2011 30.6.2010
HK$’000 HK$’000
----- End of picture text -----

Interest on:
— bank borrowings wholly repayable
within five years	1,139	494
— finance lease	17	35
	1,156	529
Less: Amount capitalised to land
development expenditure (Note 15)	(1,139)	—
	17	529

China Aerospace International Holdings Limited

==> picture [14 x 21] intentionally omitted <==

==> picture [8 x 16] intentionally omitted <==

==> picture [6 x 10] intentionally omitted <==

==> picture [15 x 11] intentionally omitted <==

==> picture [10 x 11] intentionally omitted <==

==> picture [10 x 17] intentionally omitted <==

6. PROFIT BEFORE TAxATION

Six months ended 30.6.2011 30.6.2010 HK$’000 HK$’000	Six months ended 30.6.2011 30.6.2010 HK$’000 HK$’000
Profit before taxation has been arrived
at after charging:
Amortisation of prepaid lease payments 659	631
Depreciation of property, plant and
equipment 29,790	32,031

7. TAxATION

==> picture [313 x 36] intentionally omitted <==

----- Start of picture text -----

Six months ended
30.6.2011 30.6.2010
HK$’000 HK$’000
----- End of picture text -----

Current tax
Hong Kong Profits Tax	7,067	8,032
PRC Enterprise Income Tax	9,310	10,100
	16,377	18,132
Deferred tax	59,932	54,944
Income tax charge	76,309	73,076

Hong Kong Profits Tax and PRC Enterprise Income Tax have been calculated at 16.5% and 25% respectively of the estimated assessable profit for the periods under review.

Taxation arising in other jurisdictions is calculated at the rates prevailing in the relevant jurisdictions.

8. EARNINGS PER SHARE — BASIC

The calculation of basic earnings per share attributable to the owners of the Company for the period is based on the profit for the period attributable to the owners of the Company of HK$214,715,000 (1.1.2010 to 30.6.2010: HK$209,881,000) and on 3,085,022,000 shares in issue (1.1.2010 to 30.6.2010: 2,948,681,000 weighted average number of shares) during the period.

Interim Report 2011

==> picture [7 x 8] intentionally omitted <==

==> picture [7 x 12] intentionally omitted <==

==> picture [10 x 14] intentionally omitted <==

==> picture [7 x 21] intentionally omitted <==

==> picture [8 x 4] intentionally omitted <==

==> picture [31 x 26] intentionally omitted <==

==> picture [9 x 8] intentionally omitted <==

==> picture [10 x 10] intentionally omitted <==

==> picture [10 x 16] intentionally omitted <==

9. DIVIDEND

2010 final dividend of HK1 cent (1.1.2010 to 30.6.2010: 2009 final dividend of HK2 cents) per share amounting to HK$30,850,000 (1.1.2010 to 30.6.2010: HK$61,700,000) was paid by the Company during the period. The directors do not recommend payment of an interim dividend for the year 2011.

10. MOVEMENTS IN PROPERTY, PLANT AND EqUIPMENT AND INVESTMENT PROPERTIES

During the period, the Group spent approximately HK$37,155,000 (1.1.2010 to 30.6.2010: HK$9,283,000) and HK$27,198,000 (1.1.2010 to 30.6.2010: HK$22,133,000) on acquisition of property, plant and equipment and additions of investment properties under construction respectively.

The fair values of the Group’s investment properties at 30 June 2011 and 31 December 2010 have been arrived at on the basis of valuations carried out on that date by Jones Lang LaSalle Sallmanns Limited (“Jones Lang”) for properties situated in Hong Kong, Knight Frank Petty Limited (“Knight Frank”) for properties situated in the PRC and Atkinson Appraisal Consultants Limited (“Atkinson”) for properties situated overseas. Jones Lang, Knight Frank and Atkinson are independent qualified professional valuers not connected with the Group and are members of the Institute of Valuers. The valuation of completed investment properties of HK$306,759,000 (31.12.2010: HK$286,629,000) was arrived at by reference to market evidence of transaction prices for similar properties. The valuation of investment properties under construction of HK$1,711,191,000 (31.12.2010: HK$1,427,219,000) was arrived at by reference to market evidence of transaction prices for similar completed properties and by capitalisation of income potential of the properties, on the basis that the properties will be developed and completed in accordance with the Group’s latest development proposals, after taking into account of the estimated construction costs to completion to reflect the quality of the completed development and the restrictions imposed on the proposed development properties to lease or to sell to the third parties. The resulting increase in fair value of investment properties of HK$243,697,000 (1.1.2010 to 30.6.2010: HK$223,373,000) has been recognised directly in the condensed consolidated income statement.

China Aerospace International Holdings Limited

==> picture [14 x 21] intentionally omitted <==

==> picture [8 x 16] intentionally omitted <==

==> picture [6 x 10] intentionally omitted <==

==> picture [15 x 11] intentionally omitted <==

==> picture [10 x 11] intentionally omitted <==

==> picture [10 x 17] intentionally omitted <==

11. PREPAYMENT FOR LAND DEVELOPMENT AND LAND DEVELOPMENT ExPENDITURE

Pursuant to a land development agreement entered into between the Group and the Wenchang Government on 20 August 2008 in relation to the land development in Hainan Launching Site Complex Zone (“Land Development Project”), the Group has advanced the total amount of approximately RMB473,000,000 (equivalent to approximately HK$559,763,000) (31.12.2010: RMB171,743,000, equivalent to approximately HK$203,246,000) at 30 June 2011 to the Wenchang Government for the demolition and resettlement works carried out by the Wenchang Government for the Land Development Project of which the amount of approximately RMB465,000,000 (equivalent to approximately HK$550,365,000) (31.12.2010: RMB47,000,000, equivalent to approximately HK$55,193,000) has been transferred to land development expenditure in accordance with expenditure requirements on the Land Development Project. Details of the Land Development Project are disclosed in the circular of the Company dated 10 September 2008.

The arrangement between the Wenchang Government and the Group for the above Land Development Project is considered as jointly controlled operations. The Wenchang Government provided the land for the Land Development Project and is responsible for the demolition and resettlement works while the expenses and costs incurred by the Wenchang Government on demolition and resettlement will be reimbursed by the Group. On the other hand, the Group will be responsible for the construction of basic infrastructure and arranging for or contribute all development costs required for the basic infrastructure for the Land Development Project. The net proceed (after deducting the expenditure incurred for demolition, resettlement and construction of basic infrastructure estimated to be approximately RMB1,200,000,000) from the sale of the land from the Land Development Project shall be shared between the Wenchang Government and CASIL Hainan Holdings Limited, an indirect wholly-owned subsidiary of the Company, in the ratio of 30%: 70%.

Land development expenditure represents the development cost incurred in relation to the Land Development Project less impairment. At 30 June 2011, the Group has incurred HK$592,520,000 (31.12.2010: HK$77,767,000) in the planning and design, demolition and resettlement works in the Land Development Project.

Interim Report 2011

==> picture [7 x 8] intentionally omitted <==

==> picture [7 x 12] intentionally omitted <==

==> picture [10 x 14] intentionally omitted <==

==> picture [7 x 21] intentionally omitted <==

==> picture [8 x 4] intentionally omitted <==

==> picture [31 x 26] intentionally omitted <==

==> picture [9 x 8] intentionally omitted <==

==> picture [10 x 10] intentionally omitted <==

==> picture [10 x 16] intentionally omitted <==

12. TRADE AND OTHER RECEIVABLES

At 30 June 2011, included in trade and other receivables are trade receivables of HK$370,884,000 (31.12.2010: HK$357,135,000). The Group allows an average credit period of 90 days to its trade customers.

The following is an aged analysis of trade receivables presented based on invoice date at the end of the reporting period:

	30.6.2011 31.12.2010 HK$’000 HK$’000	30.6.2011 31.12.2010 HK$’000 HK$’000
Within 90 days	351,339	339,791
Between 91–180 days	19,545	17,344
	370,884	357,135

13. DISPOSAL GROUP HELD FOR SALE

In March 2011, the Group entered into a sale and purchase agreement with China Great Wall Industry (Hong Kong) Corp. Limited (“Great Wall”), an indirect wholly-owned subsidiary of China Aerospace Science & Technology Corporation (“CASC”), for a conditional disposal of the entire issued share capital of an indirect wholly-owned subsidiary of the Company, CASIL Satellite Holdings Limited (“CASIL Satellite”), at a cash consideration of HK$132,300,000 (the “Transaction”). CASC is a substantial shareholder of the Company and has ability to exercise significant influence over the Group. The completion of the disposal is subject to the fulfillment the conditions, among others, waiver from general offer from the Securities and Futures Commission of Hong Kong which was obtained during the current interim period as well as further approvals from the relevant governmental authorities in the PRC which is yet to be obtained. Details of the Transaction and the conditions are set out in the announcements of the Company dated 28 March 2011 and 29 March 2011. CASIL Satellite is engaged in investment holding and its major assets are available-for-sale investments.

China Aerospace International Holdings Limited

==> picture [14 x 21] intentionally omitted <==

==> picture [8 x 16] intentionally omitted <==

==> picture [6 x 10] intentionally omitted <==

==> picture [15 x 11] intentionally omitted <==

==> picture [10 x 11] intentionally omitted <==

==> picture [10 x 17] intentionally omitted <==

13. DISPOSAL GROUP HELD FOR SALE (continued)

The assets and liabilities of CASIL Satellite classified as held for sale are as follows:

==> picture [313 x 30] intentionally omitted <==

----- Start of picture text -----

30.6.2011
HK$’000
----- End of picture text -----

Available-for-sale investments	119,475
Bank balances and cash	14
Assets classified as held for sale	119,489
Liabilities associated with assets classified as held for
sale comprisingother payables	21

The assets and liabilities attributable to CASIL Satellite are expected to be sold within twelve months and are presented separately in the condensed consolidated statement of financial position.

14. TRADE AND OTHER PAYABLES

==> picture [311 x 30] intentionally omitted <==

----- Start of picture text -----

30.6.2011 31.12.2010
HK$’000 HK$’000
----- End of picture text -----

Trade payables	272,327	264,729
Accrued charges	93,784	98,082
Other payables	308,363	328,916
	674,474	691,727

Interim Report 2011

==> picture [7 x 8] intentionally omitted <==

==> picture [7 x 12] intentionally omitted <==

==> picture [10 x 14] intentionally omitted <==

==> picture [7 x 21] intentionally omitted <==

==> picture [8 x 4] intentionally omitted <==

==> picture [31 x 26] intentionally omitted <==

==> picture [9 x 8] intentionally omitted <==

==> picture [10 x 10] intentionally omitted <==

==> picture [10 x 16] intentionally omitted <==

14. TRADE AND OTHER PAYABLES (continued)

The following is an aged analysis of trade payables based on invoice date at the end of the reporting period:

==> picture [312 x 30] intentionally omitted <==

----- Start of picture text -----

30.6.2011 31.12.2010
HK$’000 HK$’000
----- End of picture text -----

Within 90 days	258,416	248,877
Between 91–180 days	3,546	3,519
Between 181–365 days	465	849
Over 1 year	9,900	11,484
	272,327	264,729

15. UNSECURED BANK LOAN

During the period, the Group raised a new bank loan amounting to HK$118,343,000. The loan is unsecured, carries interest at variable market rate of 6.31% per annum and is repayable in instalments over a period of 12 months. The proceed was used to finance the development of the Hainan Launching Site Complex Zone and thus interest on the loan of HK$1,139,000 for the period was capitalised to land development expenditure.

16. SHARE CAPITAL

Authorised, issued and fully paid share capital

	Number of shares ’000	Nominal value HK$’000
Ordinary shares of HK$0.10 each
Authorised:
At 1 January 2011 and 30 June 2011	100,000,000	10,000,000
Issued and fully paid:
At 1 January 2011 and 30 June 2011	3,085,022	308,502

China Aerospace International Holdings Limited

==> picture [14 x 21] intentionally omitted <==

==> picture [8 x 16] intentionally omitted <==

==> picture [6 x 10] intentionally omitted <==

==> picture [15 x 11] intentionally omitted <==

==> picture [10 x 11] intentionally omitted <==

==> picture [10 x 17] intentionally omitted <==

17. COMMITMENTS

==> picture [313 x 29] intentionally omitted <==

----- Start of picture text -----

30.6.2011 31.12.2010
HK$’000 HK$’000
----- End of picture text -----

Capital expenditure contracted for but
not provided in the condensed
consolidated financial statements in
respect of:
— acquisition of property, plant and
equipment	1,268	14,281
— investment properties under
construction	1,161,983	48,556
	1,163,251	62,837
Capital expenditure authorised but not
contracted for:
— investment properties under
construction	508,687	1,727,669

In addition, as at 30 June 2011, the Group has committed investment of approximately HK$846,987,000 (31.12.2010: HK$1,189,000,000) not provided in the condensed consolidated financial statements in respect of the Hainan Launching Site Complex Zone project in Wenchang City, Hainan Province as detailed in note 11.

Interim Report 2011

==> picture [7 x 8] intentionally omitted <==

==> picture [7 x 12] intentionally omitted <==

==> picture [10 x 14] intentionally omitted <==

==> picture [7 x 21] intentionally omitted <==

==> picture [8 x 4] intentionally omitted <==

==> picture [31 x 26] intentionally omitted <==

==> picture [9 x 8] intentionally omitted <==

==> picture [10 x 10] intentionally omitted <==

==> picture [10 x 16] intentionally omitted <==

18. RELATED PARTY TRANSACTIONS

In addition to the transactions and balances disclosed in notes 13 and 20 and in the condensed consolidated statement of financial position, the Group entered into the following related party transactions:

(a) During the period, the Group entered into a facility (“Facility”) with a syndicate of financial institutions including Aerospace Science & Technology Finance Company Limited (“航天科技財務有限責任公司”), a subsidiary of CASC, and certain government-related banks (together “Finance Syndicate”) for a bank guarantee of up to RMB150,000,000 and advances of RMB1,350,000,000 for the construction of Shenzhen Aerospace Science & Technology Plaza (“Aerospace Plaza”) for a period of 5 years from the first drawdown date. The land use right of Aerospace Plaza has been mortgaged in favour of the Finance Syndicate as security.
(b) Transactions/balances with other government-related entities in the PRC

The Group has certain deposits placements, borrowings and other general banking facilities, with certain banks which are governmentrelated entities in its ordinary course of business. Other than the substantial amount of bank balances, unsecured bank loan (note 15) and the Facility (note (a)) with these banks, transactions with other government-related entities are individually insignificant.

(c) During the period, the emoluments of key management personnel were HK$7,621,000 (1.1.2010 to 30.6.2010: HK$7,660,000).

19. PLEDGE OF ASSETS

At 30 June 2011, bank deposits of HK$33,012,000 (31.12.2010: HK$43,529,000) were pledged to secure general banking facilities to the Group. In addition, the land use right of Aerospace Plaza included in investment properties with carrying amount of HK$1,711,191,000 (31.12.2010: nil) was mortgaged to the Finance Syndicate as security of the Facility.

48 China Aerospace International Holdings Limited

==> picture [14 x 21] intentionally omitted <==

==> picture [8 x 16] intentionally omitted <==

==> picture [6 x 10] intentionally omitted <==

==> picture [15 x 11] intentionally omitted <==

==> picture [10 x 11] intentionally omitted <==

==> picture [10 x 17] intentionally omitted <==

20. EVENTS AFTER THE END OF INTERIM PERIOD

On 11 July 2011, 航科新世紀科技發展（深圳）有限公司 (CASIL New Century Technology Development (Shenzhen) Company Limited) (“New Century”), a wholly-owned subsidiary of the Company, won an open tender and entered into a share transfer agreement with a government-related entity, 廣東華美集團有限公司 (Guangdong Huamei Group Company Limited) in respect of a proposed acquisition of 39% shareholding in 深圳瑞華泰薄膜科技有限公司 (Shenzhen Rayitek Hi-tech Film Company Limited) (“Shenzhen Rayitek”) which is principally engaged in manufacture of and trading of polyimide films and related composite materials. On the same date, New Century also entered into share transfer agreements with independent third parties, 深圳市華美基業投資有限公司 (Shenzhen Huamei Jiye Investment Company Limited) and 杭州泰達實業有限公司 (Hangzhou Taida Industrial Company Limited), in respect of the acquisitions from each of them a 10% and 6% of shareholding in Shenzhen Rayitek, respectively. The aggregate consideration of acquiring a 55% shareholding in Shenzhen Rayitek was cash consideration of RMB63,040,000 (equivalent to approximately HK$75,860,000). Details of the transactions were set out in the Company’s announcements dated 11 July 2011 and 14 July 2011 respectively. The transaction has not yet completed at the date of approval of these condensed consolidated financial statements.

AI assistant

Computer And Technologies Holdings Limited — Interim / Quarterly Report 2011

48900_rns_2011-09-21_dc8ea097-1998-41cf-90d2-57d03d9c1cfb.pdf

CORPORATE INFORMATION

BOARD OF DIRECTORS

Executive Directors

AUDITOR

SHARE REGISTRAR

Non-Executive Directors

AUDIT COMMITTEE

REMUNERATION COMMITTEE

LEGAL COUNSEL

PRINCIPAL BANKS & FINANCIAL INSTITUTIONS

REGISTERED OFFICE

COMPANY SECRETARY

BUSINESS REVIEW

RESULTS OVERVIEW

BUSINESS REVIEW

Hi-tech manufacturing

Shenzhen Aerospace Science & Technology Plaza

The Complex Zone of the Launching Site in Hainan Province

New materials business

Others

PROSPECT

APPRECIATION

MANAGEMENT DISCUSSION AND ANALYSIS

RESULTS PERFORMANCE

PROFIT ATTRIBUTABLE TO OWNERS OF THE COMPANY AND OPERATING PROFIT

RESULTS OF EACH CORE BUSINESS

Hi-tech Manufacturing

Aerospace Service Business

The Complex Zone of the Launching Site in Hainan Province

Shenzhen Aerospace Science & Technology Plaza

ESTABLISHMENT OF NEW BUSINESSES

Internet of Things

New Materials

ASSETS

LIABILITIES

OPERATING ExPENSES

CONTINGENT LIABILITIES

FINANCIAL RATIOS

LIqUIDITY

CAPITAL ExPENDITURE AND INVESTMENT COMMITMENT

DIVIDEND

FINANCIAL RISKS

HUMAN RESOURCES AND REMUNERATION POLICIES

SUBSTANTIAL SHAREHOLDERS

PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SECURITIES

CORPORATE GOVERNANCE

DIRECTORS’ AND CHIEF ExECUTIVE’S INTERESTS IN SHARES

AUDIT COMMITTEE

REMUNERATION COMMITTEE

CONNECTED TRANSACTIONS

EVENT AFTER THE END OF INTERIM PERIOD

APPRECIATION

REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION

TO THE BOARD OF DIRECTORS OF CHINA AEROSPACE INTERNATIONAL HOLDINGS LIMITED (incorporated in Hong Kong with limited liability)

INTRODUCTION

SCOPE OF REVIEW

CONCLUSION

Deloitte Touche Tohmatsu

CONDENSED CONSOLIDATED INCOME STATEMENT

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PREPARATION

2. SIGNIFICANT ACCOUNTING POLICIES

Non-current assets held for sale

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

3. SEGMENT INFORMATION

3. SEGMENT INFORMATION (continued)

For the six months ended 30 June 2011

3. SEGMENT INFORMATION (continued)

3. SEGMENT INFORMATION (continued)

3. SEGMENT INFORMATION (continued)

4. OTHER INCOME AND OTHER GAINS AND LOSSES

4. OTHER INCOME AND OTHER GAINS AND LOSSES (continued)

5. FINANCE COSTS

Computer And Technologies Holdings Limited Interim / Quarterly Report 2011