Computer And Technologies Holdings Limited - Interim / Quarterly Report 2011

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

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CHINA AEROSPACE INTERNATIONAL HOLDINGS LIMITED 中國航天國際控股有限公司

(Incorporated in Hong Kong with limited liabiity)

(Stock code: 31)

ANNOUNCEMENT OF INTERIM RESULTS 2011

The Board of Directors (the “Board”) of China Aerospace International Holdings Limited (the “Company”) is pleased to announce the unaudited results and financial statements of the Company and its subsidiaries (collectively the “Group”) for the six months ended 30 June 2011 together with the comparative figures of the same period in 2010 as follows:

CONDENSED CONSOLIDATED INCOME STATEMENT

FOR THE SIX MONTHS ENDED 30 JUNE 2011

NOTES
Turnover
3
Cost of sales
Gross profit
Other gains and losses
4
Other income
4
Selling and distribution expenses
Administrative expenses
Fair value changes of investment properties
Finance costs
Share of results of jointly controlled entities
Profit before taxation
5
Taxation
6
Profit for the period
Attributable to:
Owners of the Company
Non-controlling interests
Earnings per share — basic
7

Six months ended
30.6.2011
30.6.2010
(Unaudited)
(Unaudited)
HK$’000
HK$’000
1,007,786
869,172
(806,303)
(675,194)
201,483
193,978
48,899
5,092
16,421
43,697
(25,792)
(19,996)
(124,112)
(98,448)
243,697
223,373
(17)
(529)
(1,763)
(74)
358,816
347,093
(76,309)
(73,076)
282,507
274,017
214,715
209,881
67,792
64,136
282,507
274,017
HK6.96 cents HK7.12 cents

Earnings per share — basic

– 1 –

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 30 JUNE 2011

Profit for the period
Other comprehensive income
Exchange differences arising on translating foreign operations
Share of exchange reserve of jointly controlled entities
Fair value loss on available-for-sale investments
Increase in fair value of land and buildings
transferred to investment properties
Deferred tax liability arising on revaluation of properties
Other comprehensive income for the period
Total comprehensive income for the period
Total comprehensive income attributable to:
Owners of the Company
Non-controlling interests

Six months ended
30.6.2011
30.6.2010
(Unaudited)
(Unaudited)
HK$’000
HK$’000
282,507
274,017
48,730
36,803
2,270
—
(8,961)
(16,065)
—
7,169
—
(1,434)
42,039
26,473
324,546
300,490
245,930
228,046
78,616
72,444
324,546
300,490

– 2 –

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 30 JUNE 2011

NOTES Non-current assets Property, plant and equipment Prepaid lease payments Investment properties Interests in jointly controlled entities Available-for-sale investments Prepayment for land development 9 Land development expenditure 9 Current assets Inventories Trade and other receivables 10 Prepaid lease payments Loans receivable Financial assets at fair value through profit or loss Taxation recoverable Pledged bank deposits Bank balances and cash Assets classified as held for sale Current liabilities Trade and other payables 11 Amount due to an associate Taxation payable Obligations under a finance lease Unsecured bank loan Other loan Liabilities associated with assets classified as held for sale Net current assets Total assets less current liabilities	30.6.2011 (Unaudited) *HK$’000* 666,945 46,599 2,017,950 62,253 53,604 9,398 592,520 3,449,269 239,024 428,374 1,762 — 85,878 3,568 33,012 1,190,052 1,981,670 119,489 2,101,159 674,474 1,050 77,125 454 120,337 8,625 882,065 21 882,086 1,219,073 4,668,342	31.12.2010 (Audited) HK$’000 649,696 45,746 1,713,848 61,746 173,040 148,053 77,767
		2,869,896
		191,985 403,025 1,733 70,269 2,864 1,514 43,529 1,489,728
		2,204,647 —
		2,204,647
		691,727 1,050 61,916 767 — 8,482
		763,942 —
		763,942
		1,440,705
		4,310,601

– 3 –

Non-current liabilities Deferred taxation Obligations under a finance lease Capital and reserves Share capital Reserves Equity attributable to owners of the Company Non-controlling interests	30.6.2011 (Unaudited) *HK$’000* 251,882 — 251,882 4,416,460 308,502 3,457,110 3,765,612 650,848 4,416,460	31.12.2010 (Audited) HK$’000 187,772 65
		187,837
		4,122,764
		308,502 3,242,030
		3,550,532 572,232
		4,122,764

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 (“HKAS”) 34 “Interim financial reporting” issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”).

2. PRINCIPAL ACCOUNTING POLICIES

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

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”.

– 4 –

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 (Amendments) Prepayments of a minimunm funding 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 assets [1] HKFRS 9 Financial instruments [2] HKFRS 10 Consolidated financial statements [2] HKFRS 11 Joint arrangements [2] HKFRS 12 Disclosure of interests in other entities [2] HKFRS 13 Fair value measurement [2] HKAS 1 (Amendments) Presentation of items of other comprehensive income [3] HKAS 12 (Amendments) Deferred tax: Recovery of underlying assets [4] HKAS 19 (As Revised in 2011) Employee benefits [2] HKAS 27 (As Revised in 2011) Separate financial statements [2] HKAS 28 (As Revised in 2011) Investments in associates and joint ventures [2]

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.

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.

– 5 –

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.

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.

– 6 –

(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

For the six months ended 30 June 2011
Hi-Tech Manufacturing Business Plastic products Liquid crystal display Printed circuit boards Intelligent chargers Industrial property investment Aerospace and Aerospace Service Property investment in Shenzhen Aerospace Science & Technology Plaza Land development in Hainan Launching Site Complex Zone Reportable segment total Elimination Other business 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		Turnover		Segment results *HK$’000* 29,293 5,816 42,083 16,732 3,316 97,240 225,244 (5,215) 220,029 317,269 — 11,180 328,449 68,551 (38,022) 358,978 1,618 (1,763) (17) 358,816
	External sales *HK$’000* 389,242 143,659 213,731 253,982 6,131 1,006,745 — — — 1,006,745 — 1,041 1,007,786	Inter-segment sales *HK$’000* 38,288 — — — 6,948 45,236 — — — 45,236 (45,236) — —	Total *HK$’000* 427,530 143,659 213,731 253,982 13,079 1,051,981 — — — 1,051,981 (45,236) 1,041 1,007,786

– 7 –

For the six months ended 30 June 2010

For the six months ended 30 June 2010
Hi-Tech Manufacturing Business Plastic products Liquid crystal display Printed circuit boards Intelligent chargers Industrial property investment Aerospace and Aerospace Service Property investment in Shenzhen Aerospace Science & Technology Plaza Land development in Hainan Launching Site Complex Zone Reportable segment total Elimination Other business 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		Turnover		Segment results HK$’000 39,213 7,103 44,503 16,785 6,257 113,861 218,100 (2,975) 215,125 328,986 — (1,872) 327,114 47,547 (28,670) 345,991 1,705 (74) (529) 347,093
	External sales HK$’000 326,908 135,208 179,039 222,369 5,625 869,149 — — — 869,149 — 23 869,172	Inter-segment sales HK$’000 35,525 — — — 6,465 41,990 — — — 41,990 (41,990) — —	Total HK$’000 362,433 135,208 179,039 222,369 12,090 911,139 — — — 911,139 (41,990) 23 869,172

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.

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

– 8 –

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

Segment assets Hi-Tech Manufacturing Business Plastic products Liquid crystal display Printed circuit boards Intelligent chargers Industrial property investment Aerospace and Aerospace Service Property investment in Shenzhen Aerospace Science & Technology Plaza Land development in Hainan Launching Site Complex Zone Total assets for reportable segments Other business Available-for-sale investments Interests in jointly controlled entities Loans receivable Unallocated assets Consolidated assets	30.6.2011 *HK$’000* 567,213 298,777 217,130 281,928 202,692 1,567,740 1,711,191 601,918 2,313,109 3,880,849 104,067 173,079 62,253 — 1,330,180 5,550,428	31.12.2010 HK$’000 550,625 293,625 202,459 233,696 198,224
		1,478,629
		1,427,219 227,222
		1,654,441
		3,133,070 90,703 173,040 61,746 70,269 1,545,715
		5,074,543

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

	Six months	ended
	30.6.2011	30.6.2010
	*HK$’000*	HK$’000
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	—

– 9 –

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. PROFIT BEFORE TAXATION

Profit before taxation has been arrived at after charging: Amortisation of prepaid lease payments Depreciation of property, plant and equipment TAXATION Current tax Hong Kong Profits Tax PRC Enterprise Income Tax Deferred tax Income tax charge	Six months ended 30.6.2011 30.6.2010 *HK$’000* HK$’000 659 631 29,790 32,031 Six months ended 30.6.2011 30.6.2010 *HK$’000* HK$’000 7,067 8,032 9,310 10,100 16,377 18,132 59,932 54,944 76,309 73,076

6. TAXATION

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.

7. 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 (2010: HK$209,881,000) and on 3,085,022,000 shares in issue (2010: 2,948,681,000 weighted average number of shares) during the period.

8. DIVIDEND

2010 final dividend of HK1 cent (2010: 2009 final dividend of HK2 cents) per share amounting to HK$30,850,000 (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 –

9. 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.

10. 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:

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

11. TRADE AND OTHER PAYABLES

TRADE AND OTHER PAYABLES
Trade payables Accrued charges Other payables	30.6.2011 *HK$’000* 272,327 93,784 308,363 674,474	31.12.2010 HK$’000 264,729 98,082 328,916
		691,727

– 11 –

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

Within 90 days Between 91–180 days Between 181–365 days Over 1 year	30.6.2011 *HK$’000* 258,416 3,546 465 9,900 272,327	31.12.2010 HK$’000 248,877 3,519 849 11,484
		264,729

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 shareholders 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 shareholders 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 significant 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 and Technology Corporation (“CASC”). The Company is actively carrying out each key business according to the plan, such as to ensure the steady growth of 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.

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.

– 12 –

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 board 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 performance of the intelligent chargers segment was moderately affected and recorded an operating profit of 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 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 comparatively 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 the 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.

– 13 –

New materials business

New materials sector, one of the seven strategic and emerging industries, is emphasized to develop by the PRC according to its “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, 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 indispensable key materials 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.

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 several 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 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.

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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 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.

MANAGEMENT DISCUSSION & 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 an investment property.

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.

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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.

The results of each hi-tech manufacturing segment is shown as below:

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

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 has been commenced comprehensively in 2011.

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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 companies 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 pressure-sensitive tape (PST), and are widely used in aerospace, microelectronic devices, electrical equipment and information industry and other fields.

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 total unaudited 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, the current assets were HK$2,101,159,000, representing an increase 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 an investment property 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.

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As at 30 June 2011, the Company and the subsidiaries’ cash deposit of about HK$33,012,000 have been pledged to banks to secure trade financings and Shenzhen Aerospace has 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.

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 have 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 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 fee. 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 other material contingent liabilities.

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 decrease as compared with that of 8.35% for the end 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

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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’s 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 was RMB423,000,000. Shenzhen Aerospace will draw down the syndicate loan by stages to settle the relevant construction costs, where required.

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 2001 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.

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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.

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 of about 6,800 staff, mainly based in the Mainland and Hong Kong.

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.

DIRECTORS’ AND EXECUTIVE’S INTERESTS IN SHARES

The Company had adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 of the Listing Rules as the required standard for the Directors 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 compiled with the provisions under the Model Code.

As at 30 June 2011, none of the directors, chief executives 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.

The Audit Committee of the Company reviewed, discussed and approved this 2011 unaudited interim report that had been reviewed by the auditors, Deloitte Touche Tohmatsu.

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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 the remuneration of the Directors and senior management of the Company.

EVENT AFTER THE REPORTING PERIOD

On 11 July 2011, the Company, through its wholly-owned 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”), has successfully 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 an 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”). 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) on the same date, in respect of the acquisitions from each of them a 10% and 6% of shareholding in Shenzhen Rayitek, respectively. The total consideration for the acquisition of 55% equity capital of Shenzhen Rayitek was RMB63,040,000. The acquisition constituted a discloseable transaction of the Company. Details of which please refer to the Company’s announcements dated 11 and 14 July 2011 respectively.

APPRECIATION

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

By order of the Board Wu Yanhua Chairman

Hong Kong, 26 August 2011

As of the date of this announcement, the Board of Directors of the Company comprises:

Executive Directors Non-Executive Directors Independent Non-Executive Directors Mr Li Hongjun (President) Mr Wu Yanhua (Chairman) Mr Chow Chan Lum, Charles Mr Jin Xuesheng Mr Wu Zhuo (Vice Chairman) Mr Luo Zhenbang Mr Chen Xuechuan Mr Wang Junyan Mr Shi Weiguo Dr Chan Ching Har, Eliza Mr Zhou Qingquan

These PRC entities do not have an English name. The English names are inserted herein for identification purpose only.

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