Hengxin Technology Ltd. — Interim / Quarterly Report 2012

Nov 2, 2012

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

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HENGXIN TECHNOLOGY LTD. 亨鑫科技有限公司 *

(carrying on business in Hong Kong as HX Singapore Ltd.)

(incorporated in Singapore with limited liability)

(Singapore Company Registration Number 200414927H)

(Hong Kong Stock Code: 1085) (Singapore Stock Code: I85)

ANNOUNCEMENT OF RESULTS FOR THE THIRD QUARTER AND NINE MONTHS ENDED 30 SEPTEMBER 2012

FINANCIAL HIGHLIGHTS

1. Revenue for the nine months ended 30 September 2012 decreased by approximately 19.3% to approximately RMB891.0 million

2. Gross profit for the nine months ended 30 September 2012 decreased by approximately 20.3% to approximately RMB161.3 million

3. Net profit attributable to equity holders of the parent for the nine months ended 30 September 2012 decreased by approximately 22.3% to approximately RMB63.1 million

4. Basic earnings per share was RMB0.16

5. No payment of dividend for the nine months ended 30 September 2012 is recommended

6. for identification purpose only

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The board of directors (the “ Board ”) of Hengxin Technology Ltd. (the “ Company ”) is pleased to announce the unaudited consolidated results of the Company and its subsidiaries (collectively hereinafter referred as the “ Group ”) for the nine months ended 30 September 2012 and for the three months ended 30 September 2012 together with the comparative figures for the corresponding periods in 2011 as follow:

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the nine months ended 30 September (“9M”)

Notes Revenue 5 Cost of sales Gross profit Other income 6 Selling and distribution expenses Administrative expenses Other operating expenses Finance costs 7 Profit before income tax 8 Income tax expense 9 Net profit attributable to equity holders of parent Other comprehensive income: Exchange difference arising from consolidation of foreign operations Total comprehensive income attributable to equity holders of the parent Earnings per share attributable to equity holders of the parent Basic and diluted(RMB cents) 12 Dividends per share(RMB cents)

9M2012 9M2011 RMB’000 RMB’000 (unaudited) (unaudited) 891,028 1,104,785 (729,692) (902,339) 161,336 202,446 11,172 3,788 (41,542) (46,457) (27,107) (31,428) (12,028) (19,587) (15,842) (9,917) 75,989 98,845 (12,936) (17,682) 63,053 81,163 (555) (174) 62,498 80,989 16.1 20.9 N.A. N.A.

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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the three months ended 30 September (“3Q”)

Revenue Cost of sales Gross profit Other income Selling and distribution expenses Administrative expenses Other operating expenses Finance costs Profit before income tax Income tax expense Net profit attributable to equity holders of parent Other comprehensive income: Exchange difference arising from consolidation of foreign operations Total comprehensive income attributable to equity holders of the parent Earnings per share attributable to equity holders of the parent Basic and diluted(RMB cents)

3Q2012 3Q2011 RMB’000 RMB’000 (unaudited) (unaudited) 255,212 429,349 (207,535) (347,916) 47,677 81,433 4,124 1,374 (13,960) (16,825) (9,113) (8,981) (4,716) (12,492) (4,270) (4,753) 19,742 39,756 (3,029) (7,579) 16,713 32,177 (186) (204) 16,527 31,973 4.3 8.2

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Profit before income tax is determined after charging (crediting) the following:

	Group			Group
	3 mths ended 30	September		9 mths ended 30	September
	2012	2011	Change	2012	2011	Change
	RMB’000	RMB’000	%	RMB’000	RMB’000	%
	(unaudited) (unaudited)			(unaudited) (unaudited)
(Reversal of) Allowance for inventory
obsolescence	—	—	—	(63)	251	N.M.
Depreciation of property, plant and
equipment	4,860	4,152	17.1%	13,574	12,403	9.4%
Gain on disposal of available-for-sale
investment	(49)	—	N.M.	(117)	(690)	-83.0%
(Gain) loss on disposal of property,
plant and equipment	1	(29)	N.M.	11	697	-98.4%
Amortisation of prepaid lease payments	140	140	0.0%	420	420	0.0%
Foreign exchange losses (gains)	(2,756)	8,638	N.M.	(3,399)	8,280	-99.9%
Interest expense	4,270	4,753	-10.2%	15,842	9,917	59.7%
Interest income	(989)	(735)	34.6%	(3,218)	(2,047)	57.2%
Research and development expenses	5,165	3,850	34.2%	11,392	10,077	13.0%

N.M.: Not meaningful

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Notes ASSETS Current assets Cash and bank balances Pledged cash deposits Trade receivables 14 Other receivables and prepayments Inventories Prepaid lease payment Total current assets Non-current assets Prepaid lease payment Property, plant and equipment 13 Other receivables and prepayments Available-for-sale investment Deferred tax assets Total non-current assets Total assets LIABILITIES AND EQUITY Current liabilities Short term loans Trade payables 15 Other payables Income tax payable Total current liabilities NET CURRENT ASSETS	As 30 September 2012 RMB’000 (unaudited) 352,398 54,663 737,296 54,241 107,682 560 1,306,840 19,041 153,014 5,760 10,000 2,513 190,328 1,497,168 222,194 254,050 13,226 3,285 492,755 814,085	at 31 December 2011 RMB’000 (audited) 323,710 52,883 734,596 28,256 135,911 560 1,275,916 19,461 157,889 5,760 10,000 2,523 195,633 1,471,549 230,000 258,489 28,719 12,771 529,979 745,937

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Notes Non-current liability Deferred tax liabilities TOTAL LIABILITIES NET ASSETS Equity attributable to equity holders of the parent Share capital 11 General reserves Special reserve Translation reserve Accumulated profits TOTAL EQUITY TOTAL EQUITY AND LIABILITIES	As at 30 September 2012 31 December 2011 RMB’000 RMB’000 (unaudited) (audited) 2,941 2,596 495,696 532,575 1,001,472 938,974 295,000 295,000 125,676 122,889 (6,017) (6,017) (849) (294) 587,662 527,396 1,001,472 938,974 1,497,168 1,471,549

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STATEMENT OF FINANCIAL POSITION — COMPANY LEVEL

ASSETS Current assets Cash and bank balances Other receivables and prepayments Total current assets Non-current assets Subsidiaries Property, plant and equipment Total non-current assets Total assets LIABILITIES AND EQUITY Current liabilities Other payables Total current liabilities NET CURRENT ASSETS TOTAL LIABILITIES NET ASSETS Equity attributable to equity holders of the parent Share capital Accumulated profits TOTAL EQUITY TOTAL EQUITY AND LIABILITIES	As 30 September 2012 RMB’000 (unaudited) 56,894 5,570 62,464 361,081 — 361,081 423,545 3,170 3,170 59,294 3,170 420,375 295,000 125,375 420,375 423,545	at 31 December 2011 RMB’000 (audited) 63,085 10,083
		73,168
		354,793 5
		354,798
		427,966
		2,126
		2,126
		71,042
		2,126
		425,840
		295,000 130,840
		425,840
		427,966

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CONSOLIDATED STATEMENT OF CASH FLOWS

For the period ended 30 September

Group RMB’000 Cash flows from operating activities Profit before income tax Adjustments for: Depreciation of property, plant and equipment Amortisation of prepaid lease payments (Reversal of) Allowance for inventory obsolescence (Gain) loss on disposal of property, plant and equipment Interest expense Interest income Gain on disposal of available-for-sale investment Exchange differences arising on foreign currency translation Operating profit before working capital changes Trade receivables Other receivables and prepayments Inventories Trade and bill payables Other payables and accruals Cash generated from (used in) operations Interest paid Interest income received Income tax paid Net cash generated from (used in) operating activities Cash flows from investing activities Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of available-for-sale investment Proceeds from disposal of available-for-sale investment Net cash used in investing activities Cash flows from financing activities Dividend paid Repayment of short-term bank loans Proceeds from short-term bank loans Decrease (increase) in pledged bank deposits Net cash used in financing activities Net (decrease) increase in cash and cash equivalents Effects of foreign exchange translation Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period	1 Jul 12 to 30 Sep 12 (unaudited) 19,742 4,860 140 — 1 4,270 (989) (49) (1,781) 26,194 125,491 (10,809) 14,132 20,272 (2,112) 173,168 (4,270) 989 (5,790) 164,097 (5,088) — (15,000) 15,049 (5,039) — (60,013) 62,207 (17,188) (14,994) 144,064 1,596 206,738 352,398	1 Jul 11 to 30 Sep 11 (unaudited) 39,756 4,152 140 — (29) 4,753 (735) — 5,426 53,463 (67,967) (704) 11,667 (4,476) 2,319 (5,698) (4,753) 735 (5,585) (15,301) (9,374) 63 (10,000) — (19,311) — (17,079) 20,000 (20,000) (17,079) (51,691) (5,560) 249,889 192,638	1 Jan 12 to 30 Sep 12 (unaudited) 63,053 13,574 420 (63) 11 15,842 (3,218) (117) 9,867 99,369 (2,700) (25,985) 28,292 (4,439) (15,493) 79,044 (15,842) 3,218 (22,067) 44,353 (8,710) — (30,000) 30,117 (8,593) — (140,014) 132,208 (1,780) (9,586) 26,174 2,514 323,710 352,398	1 Jan 11 to 30 Sep 11 (unaudited) 98,845 12,403 420 251 697 9,917 (2,047) (690) 4,211 124,007 (213,913) (10,944) 189 91,879 (1,707) (10,489) (9,917) 2,047 (15,971) (34,330) (19,840) 443 (10,000) 2,690 (26,707) (15,694) (32,826) 120,000 (60,000) 11,480 (49,557) (4,883) 247,078 192,638

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STATEMENT OF CHANGES IN EQUITY

Consolidated Statement of Changes in Equity for the period ended 30 September 2012

GROUP Share capital General reserve Special reserve Translation reserve Accumulated profits RMB’000 Balance at 1 January 2012 295,000 122,889 (6,017) (294) 527,396 Total comprehensive income for the period — — — (555) 63,053 Transfer to reserves — 2,787 — — (2,787) Balance at 30 September 2012 295,000 125,676 (6,017) (849) 587,662 Consolidated Statement of Changes in Equity for the period ended 30 September 2011 GROUP Share capital General reserve Special reserve Translation reserve Accumulated profits RMB’000 Balance at 1 January 2011 295,000 104,839 (6,017) (4) 458,891 Total comprehensive income for the period — — — (174) 81,163 Transfer to reserves — 7,348 — — (7,348) Dividends — — — — (15,694) Balance at 30 September 2011 295,000 112,187 (6,017) (178) 517,012

Total 938,974 62,498 — 1,001,472 Total 852,709 80,989 — (15,694) 918,004

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STATEMENT OF CHANGES IN EQUITY

Statement of Changes in Equity of the Company for the period ended 30 September 2012

COMPANY Share capital RMB’000 Balance at 1 January 2012 295,000 Total comprehensive income for the period — Balance at 30 September 2012 295,000 Statement of Changes in Equity of the Company for the period ended 30 COMPANY Share capital RMB’000 Balance at 1 January 2011 295,000 Total comprehensive income for the period — Dividends — Balance at 30 September 2011 295,000	Accumulated profits Total 130,840 425,840 (5,465) (5,465) 125,375 420,375 September 2011 Accumulated profits Total 131,648 426,648 18,657 18,657 (15,694) (15,694) 134,611 429,611

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. CORPORATE INFORMATION

The Company is a limited liability company incorporated in Singapore on 18 November 2004 under the Singapore Companies Act and its shares are dual primarily listed on the Singapore Exchange Securities Trading Limited (the “ SGX-ST ”) and The Stock Exchange of Hong Kong Limited (the “ SEHK ”) since 11 May 2006 and 23 December 2010 respectively. The registered office of the Company is located at 10 Anson Road #15-07, International Plaza, Singapore 079903. The principal place of business of the Group is located at No. 138 Taodu Road, Dingshu Town, Yixing City, Jiangsu Province, the People’s Republic of China (the “ PRC ”).

The Company is an investment holding company, and the principal activities of the Group are research, design, development and manufacture of telecommunications and technological products, production of radio frequency coaxial cables for mobile communications and mobile communications systems exchange equipment. The Group’s operations are principally conducted in the PRC.

The consolidated financial statements are presented in Renminbi (‘ ‘RMB ’’), being the functional currency of the Group.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The report has been prepared in accordance with the measurement and recognition criteria of the Singapore Financial Reporting Standards (‘ ‘SFRS ’’). The report also include the applicable disclosure requirements of the Hong Kong Companies Ordinance (Chapter 32 of the Laws of Hong Kong) and the Rules Governing the Listing of Securities on the SEHK (the “ Listing Rules ”).

The report is presented in RMB and all values are rounded to the nearest thousand (‘ ‘RMB’000 ’’) except when otherwise indicated.

Accounting policies

The Group has applied the same accounting policies and methods of computation in the financial statements for the current period reported on, as in the recently audited consolidated financial statements for the financial year ended 31 December 2011.

3. APPLICATION OF SFRS

The Group adopted the new and revised SFRS that are mandatory for the periods beginning on or after 1 January 2012.

The adoption of new and revised SFRS did not have any impact on the results of the Group for the period ended 30 September 2012.

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4. SEGMENT INFORMATION

For management purposes, the Group is organized into business units based on their products, and currently has three reportable operating segments as follows:

• Manufacturing and sale of RF Coaxial Cable Series for mobile communications (“ RF Coaxial Cables ”)

• Coaxial Cables for telecommunications equipment and accessories (“ Accessories ”)

• Others (includes Antennas and High Temperature Resistant Cables)

• An analysis by principal activity of contribution to the results is as follows:

Segment revenues and results

For management purpose, the Group is currently organised into two distinct core product lines — radio frequency coaxial cables, and other telecommunication equipment. These product lines are the basis on which the Group reports its primary segment information.

Segment revenue and expense include the operating revenue and expenses which are directly attributable to a segment and the relevant portion of such revenue and expense that can be allocated on a reasonable basis to a segment.

GROUP

Nine months ended 30 September 2012 Revenue Segment Results Segment profit Interest income Finance costs Other income Other expenses Profit before income tax Income tax Net profit for the period 2011 Revenue Segment Results Segment profit Interest income Finance costs Other income Other expenses Profit before income tax Income tax Net profit for the period	Radio frequency coaxial cables RMB’000 694,654 67,637 2,176 (12,390) 936,102 100,548 1,680 (8,403)	Telecommunication equipment and accessories RMB’000 193,519 18,844 606 (3,452) 168,683 18,119 303 (1,514)	Others RMB’000 2,855 715 — — — — — —	Unallocated RMB’000 — (5,901) 436 — — (11,278) 64 —	Total RMB’000 891,028 81,295 3,218 (15,842) 7,954 (636) 75,989 (12,936) 63,053 1,104,785 107,389 2,047 (9,917) 1,741 (2,415) 98,845 (17,682) 81,163

• exclude research and development expenses

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Other segment information

GROUP

Nine months ended 30 September 2012 Capital expenditure Depreciation expense Amortisation of leasehold land Reversal of inventory obsolescence 2011 Capital expenditure Depreciation expense Amortisation of leasehold land Allowance for inventory obsolescence Statement of net assets As at 30 September 2012 Assets: Segment assets Unallocated assets Total assets Liabilities: Segment liabilities Unallocated liabilities Total liabilities As at 31 December 2011 Assets: Segment assets Unallocated assets Total assets Liabilities: Segment liabilities Unallocated liabilities Total liabilities	Radio frequency coaxial cables RMB’000 3,029 10,110 328 (49) 15,889 10,460 356 213 Radio frequency coaxial cables RMB’000 1,116,940 385,205 1,174,067 447,043	Telecommunication equipment and accessories RMB’000 844 2,817 92 (14) 2,863 1,885 64 38 Telecommunication equipment and accessories RMB’000 311,190 107,321 220,327 83,406	Others RMB’000 7,296 642 — — 1,088 51 — — Others RMB’000 11,963 — 3,982 —	Unallocated RMB’000 — 5 — — — 7 — — Unallocated RMB’000 — 57,075 — 3,170 — 73,173 — 2,126	Total RMB’000 11,169 13,574 420 (63) 19,840 12,403 420 251 Total RMB’000 1,440,093 57,075 1,497,168 492,526 3,170 495,696 1,398,376 73,173 1,471,549 530,449 2,126 532,575

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Geographical segment

The segmented information for geographical regions is based on the locations of customers and the location of the assets. In line with the group’s business strategy, the market is currently grouped into three geographical regions, namely Central Asia, South Asia and others.

	Revenue from external	customers	Non-current	assets
	For the nine months	ended	As at
	30 September		30 September	31 December
	2012	2011	2012	2011
	RMB’000	RMB’000	RMB’000	RMB’000
Central Asia	823,587	995,751	190,302	195,588
South Asia	52,604	100,151	26	45
Others	14,837	8,883	—	—
Total	891,028	1,104,785	190,328	195,633

5. REVENUE

Revenue, which is also the Group’s turnover, represents the net invoiced value of goods sold, after deduction of relevant taxes and allowances for returns and trade discounts. An analysis of the Group’s revenue, other income and gains is as follows:

Sale of goods 6. OTHER INCOME Government grants Interest income Foreign exchange gains Gain on disposal of available-for-sale investment Others Total 7. FINANCE COSTS Interest on short term bank borrowings	For the nine months ended 30 September 2012 2011 RMB’000 RMB’000 (unaudited) (unaudited) 891,028 1,104,785 For the nine months ended 30 September 2012 2011 RMB’000 RMB’000 (unaudited) (unaudited) 4,139 470 3,218 2,047 3,399 — 117 690 299 581 11,172 3,788 For the nine months ended 30 September 2012 2011 RMB’000 RMB’000 (unaudited) (unaudited) 15,842 9,917

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8. PROFIT BEFORE INCOME TAX

Profit before tax is arrived at after charging/(crediting) the following during the period:

Cost of inventories recognised as expense (including allowance of (reversal of) inventory obsolescence) Depreciation of property, plant and equipment Amortisation of leasehold land Employee benefits expense Cost of defined contribution plans Directors’ fees — directors of the Company Directors’ remuneration: Directors of the Company Directors of the subsidiaries Total staff costs Net foreign exchange (gains) losses Loss on disposal of property, plant and equipment Gain on disposal of available-for-sale investments	For the nine months ended 30 September 2012 2011 RMB’000 RMB’000 (unaudited) (unaudited) 729,755 902,088 13,574 12,403 420 420 30,386 38,392 4,486 3,750 1,207 1,271 1,368 1,493 371 388 37,818 45,294 (3,399) 8,280 11 697 (117) (690)	For the nine months ended 30 September 2012 2011 RMB’000 RMB’000 (unaudited) (unaudited) 729,755 902,088 13,574 12,403 420 420 30,386 38,392 4,486 3,750 1,207 1,271 1,368 1,493 371 388 37,818 45,294 (3,399) 8,280 11 697 (117) (690)
		45,294
		8,280 697 (690)

9. INCOME TAX EXPENSE

Current Deferred	For the nine months ended 30 September 2012 2011 RMB’000 RMB’000 (unaudited) (unaudited) 12,581 17,220 355 462 12,936 17,682	For the nine months ended 30 September 2012 2011 RMB’000 RMB’000 (unaudited) (unaudited) 12,581 17,220 355 462 12,936 17,682
		17,682

The Company is incorporated in Singapore and is subject to income tax rate of 17% for the nine months ended 30 September 2012 (2011: 17%).

Under the law of the People’s Republic of China on Enterprise Income Tax (the “ EIT Law ”), applicable income tax rate of Jiangsu Hengxin Technology Co. Ltd, the Group’s PRC incorporated key subsidiary, in 2012 is 15% (2011: 15%).

Taxes on profits elsewhere have been calculated at the rates of tax prevailing in the country in which the Group operates.

10. DIVIDENDS

The Company did not recommend or declare any dividend for the nine months ended 30 September 2012. No dividend was also declared nor paid for the previous financial period ended 30 September 2011.

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11. SHARE CAPITAL

Details of the changes in the Company’s share capital are as follows:

Details of the changes in the Company’s share capital are as	follows:
Share capital — Ordinary Shares	No. of shares	RMB’000	S$’000
	’000
Balance as at 31 December 2011 and 30 September 2012	388,000	295,000	58,342

In accordance with the memorandum of association and articles of association of the Company, treasury shares are not allowed in the Company.

12. EARNINGS PER SHARE

Earnings per share is calculated by dividing the Group’s net profit attributable to shareholders for the period by the weighted average number of ordinary shares outstanding during the period.

Earnings per share_(RMB) — Basic — Diluted Weighted average no. of shares applicable to basic EPS(’000) Weighted average no. of shares based on fully diluted basis(’000)_	Group 3 months ended 30–Sep–12 30–Sep–11 (unaudited) (unaudited) 0.04 0.08 0.04 0.08 388,000 388,000 388,000 388,000	Group 9 months ended 30–Sep–12 30–Sep–11 (unaudited) (unaudited) 0.16 0.21 0.16 0.21 388,000 388,000 388,000 388,000	Group 9 months ended 30–Sep–12 30–Sep–11 (unaudited) (unaudited) 0.16 0.21 0.16 0.21 388,000 388,000 388,000 388,000
			0.21
			388,000 388,000

There were no potential dilutive ordinary shares in existence during the period ended 30 September 2011 and 2012.

13. PROPERTY, PLANT AND EQUIPMENT

During the nine months ended 30 September 2012, the Group’s capital expenditure was approximately RMB11.2 million (2011: RMB19.8 million).

14. TRADE RECEIVABLES

Trade receivables Allowance for doubt debts Net Notes receivable Total	30 September 2012 RMB’000 (unaudited) 686,319 (15,762) 670,557 66,739 737,296	31 December 2011 RMB’000 (audited) 666,807 (15,762
		651,045 83,551
		734,596

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The Group allows credit period of 180 days to its trade customers. The aging of trade receivables, net of allowance for doubtful debts presented based on the invoice date at the end of the reporting period is as follows:

0 to 180 days 181 to 360 days 1 to 2 years TRADE PAYABLES Trade payables Bill payables	30 September 2012 RMB’000 (unaudited) 553,194 132,121 51,981 737,296 30 September 2012 RMB’000 (unaudited) 75,944 178,106 254,050	31 December 2011 RMB’000 (audited) 590,053 131,544 12,999
		734,596
		31 December 2011 RMB’000 (audited) 82,819 175,670
		258,489

15. TRADE PAYABLES

Trade payables comprise amounts outstanding for trade purchases. Payment terms with suppliers are mainly on credit within 90 days from the invoice date. The aging of trade payables and notes payables are as follows:

0 to 90 days 91 to 180 days 181 to 360 days Over 360 days to 2 years >2 years	30 September 2012 RMB’000 (unaudited) 131,980 120,096 679 1,194 101 254,050	31 December 2011 RMB’000 (audited) 126,475 111,687 19,953 374 —
		258,489

16. NET ASSET VALUE

The net asset value per ordinary share of the Group and Company is shown below:

Net Assets_(RMB’000) Number of ordinary shares(’000) Net Asset Value per ordinary share(RMB)_	Group 30–Sep–12 31–Dec–11 (unaudited) (audited) 1,001,472 938,974 388,000 388,000 2.58 2.42	Company 30–Sep–12 31–Dec–11 (unaudited) (audited) 420,375 425,840 388,000 388,000 1.08 1.10	Company 30–Sep–12 31–Dec–11 (unaudited) (audited) 420,375 425,840 388,000 388,000 1.08 1.10
			1.10

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17. RELATED PARTY TRANSACTIONS

(a) Transactions

During the period, the Group had the following significant transactions with Suzhou Hengli Telecommunications Materials Co. Ltd:

Materials Co. Ltd:
	For the nine	months ended
	30 September
	2012	2011
	RMB’000	RMB’000
	(unaudited)	(unaudited)
Purchase of raw materials	3,366	7,623

(b) Compensation of key management personnel

The remuneration of directors and other members of key management during the period were as follows:

Short term benefits Retirement benefits scheme contribution Total CAPITAL COMMITMENTS Contracted but not provided for: Property, plant and equipment Donation commitment Total	For the nine months ended 30 September 2012 2011 RMB’000 RMB’000 (unaudited) (unaudited) 3,054 3,733 55 79 3,109 3,812 As at 30 September 2012 31 December 2011 RMB’000 RMB’000 1,120 6,258 7,000 7,500 8,120 13,758	For the nine months ended 30 September 2012 2011 RMB’000 RMB’000 (unaudited) (unaudited) 3,054 3,733 55 79 3,109 3,812 As at 30 September 2012 31 December 2011 RMB’000 RMB’000 1,120 6,258 7,000 7,500 8,120 13,758
		3,812
		at 31 December 2011 RMB’000 6,258 7,500
		13,758

18. CAPITAL COMMITMENTS

19. COMMITMENT

As at 30 September 2012, certain constructions were built on a piece of land located in the PRC (the “ No. 5 Land ”) amounting to approximately RMB28.6 million. In addition, the Group had prepaid RMB5.76 million as deposit for the acquisition of such land but the Group has yet to obtain the land certificate. At the end of the reporting period, the management remains committed to secure the No. 5 Land.

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20. OPERATING LEASE ARRANGEMENTS

As at 30 September 2012, the Group had total future minimum lease payments under non-cancellable operating leases, which are payable as follows:

leases, which are payable as follows:
Within one year In the second to fifth years inclusive	As 30 September 2012 RMB’000 815 1,406 2,221	at 31 December 2011 RMB’000 680 174
		854

Operating lease payments represent rentals payable by the Group and Company for certain of its office and workshop properties. Leases are negotiated for an average of 1 to 3 years.

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(I) MANAGEMENT DISCUSSION AND ANALYSIS

Material changes are explained below:

Nine months performance — Nine months ended 30 September

Revenue

Revenue decreased by approximately RMB213.8 million, or approximately 19.3% from approximately RMB1,104.8 million in the nine months ended 30 September 2011 (“ 9M2011 ”) to approximately RMB891.0 million in the nine months ended 30 September 2012 (“ 9M2012 ”). Lower spending by telecom operators on our products in the domestic and overseas markets resulted in a lower revenue earned during the period.

RF Coaxial Cable

Revenue generated from RF Coaxial Cables decreased by approximately RMB241.4 million or approximately 25.8% from approximately RMB936.1 million in 9M2011 to approximately RMB694.7 million in 9M2012.

Accessories

Revenue generated from Accessories increased by approximately RMB24.8 million or approximately 14.7% from approximately RMB168.7 million in 9M2011 to approximately RMB193.5 million in 9M2012.

Gross profit margin

The Group achieved an overall gross profit margin of approximately 18.1% in 9M2012, relatively unchanged compared to 9M2011 at 18.3%. The Group continues to monitor production efficiencies to ensure optimal raw materials utilisation, stringent selection of suppliers in tender biddings to keep costs to a minimum, coupled with efficient use of various resources to keep up with price pressures resulting from keen competition.

Other income

Other income increased by approximately RMB7.4 million or approximately 194.7% from approximately RMB3.8 million in 9M2011 to approximately RMB11.2 million in 9M2012. The increase is mainly due to gains from favourable exchange rate movements, government grants being awarded to the Group’s key subsidiary, Jiangsu Hengxin Technology Co., Ltd and a higher interest income earned in 9M2012.

Selling and distribution expenses

Selling and distribution expenses decreased by approximately RMB5.0 million or approximately 10.8% from approximately RMB46.5 million in 9M2011 to approximately RMB41.5 million in 9M2012. The decrease was in line with the Group’s lower sales generated during the financial period.

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Administrative expenses

Administrative expenses decreased by approximately RMB4.3 million or approximately 13.7% from approximately RMB31.4 million in 9M2011 to approximately RMB27.1 million in 9M2012 as the Group adopted various cost control measures during the financial period.

Other operating expenses

Other operating expenses decreased by approximately RMB7.6 million or approximately 38.8% from approximately RMB19.6 million in 9M2011 to approximately RMB12.0 million in 9M2012. The decrease is mainly due to an absence of foreign exchange losses in the current period as compared to 9M2011.

Finance costs

Finance costs increased by approximately RMB5.9 million or approximately 59.6% from approximately RMB9.9 million in 9M2011 to approximately RMB15.8 million in 9M2012. The Group secured a higher amount of borrowings to finance its working capital needs, resulting in an increase in finance costs in 9M2012 compared to that in 9M2011.

Profit before income tax

Profit before income tax decreased by approximately RMB22.8 million or approximately 23.0% from approximately RMB98.8 million in 9M2011 to approximately RMB76.0 million in 9M2012 due to lower revenue generated.

Income tax expense

The Group’s main subsidiary has been subject to an incentive tax rate of 15% as it has been awarded as a high-tech enterprise in the PRC since 2008. The decrease in income tax expenses is in line with the decrease in profit before tax for 9M2012. Accordingly, income tax expense decreased by approximately RMB4.8 million or approximately 27.1% from approximately RMB17.7 million in 9M2011 to approximately RMB12.9 million in 9M2012.

Net profit

In view of the above, net profit attributable to equity holders of the parent decreased by approximately RMB18.1 million or approximately 22.3% from approximately RMB81.2 million in 9M2011 compared to approximately RMB63.1 million in 9M2012.

Third quarter performance — Three months ended 30 September

Revenue

Group revenue decreased by approximately RMB174.1 million, or approximately 40.6% from approximately RMB429.3 million in the three months ended 30 September 2011 (“ 3Q2011 ”) to approximately RMB255.2 million in the three months ended 30 September 2012 (“ 3Q2012 ”). The decrease was due to lower spending by telecom operators in the PRC and overseas during the period.

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RF Coaxial Cable

Revenue generated from RF Coaxial Cables decreased by approximately RMB178.8 million or approximately 49.9% from approximately RMB358.1 million in 3Q2011 to approximately RMB179.3 million in 3Q2012.

Accessories

Revenue generated from Accessories increased by approximately RMB2.9 million or approximately 4.1% from approximately RMB71.2 million in 3Q2011 to approximately RMB74.1 million in 3Q2012.

Gross profit margin

Gross profit margin for 3Q2012 stood at approximately 18.7% compared to approximately 19.0% in 3Q2011. This is due to RF Coaxial Cables which traditionally generate lower margins arising from intense competition, which is partially buoyed by relatively higher margins generated from the sale of accessories. The mix of products sold during the period resulted in a comparatively lower margin. The Group continues to monitor production efficiencies to ensure optimal raw materials utilisation, stringent selection of suppliers in tender biddings to keep costs to a minimum, coupled with efficient use of various resources to keep up with price pressures resulting from keen competition.

Other income

Other income increased by approximately RMB2.7 million or approximately 192.9% from approximately RMB1.4 million in 3Q2011 to approximately RMB4.1 million in 3Q2012. The increase arose from favourable exchange rate movements during the period, which generally resulted in foreign exchange gains.

Selling and distribution expenses

Selling and distribution expenses decreased by approximately RMB2.8 million or approximately 16.7% from approximately RMB16.8 million in 3Q2011 to approximately RMB14.0 million in 3Q2012. The decrease was in line with the Group’s lower sales generated during the financial period.

Administrative expenses

Administrative expenses was relatively constant at RMB9.1 million in 3Q2012 compared to RMB9.0 million in 3Q2011.

Other operating expenses

Other operating expenses decreased by approximately RMB7.8 million or approximately 62.4% from approximately RMB12.5 million in 3Q2011 to approximately RMB4.7 million in 3Q2012. The decrease was mainly due to foreign exchange losses incurred in the previous period.

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Finance costs

Finance costs decreased by approximately RMB0.5 million or approximately 10.4% from approximately RMB4.8 million in 3Q2011 to approximately RMB4.3 million in 3Q2012. The Group had discounted a higher amount of bills to banks for cash in 3Q2011, resulting in a higher amount of finance costs compared to 3Q2012.

Profit before income tax

Profit before income tax decreased by approximately RMB20.1 million or approximately 50.5% from approximately RMB39.8 million in 3Q2011 to approximately RMB19.7 million in 3Q2012 as a result of lower revenue generated in 3Q2012.

Income tax expense

The Group’s main subsidiary has been subject to an incentive tax rate of 15% as it has been awarded as a high-tech enterprise in the PRC since 2008. The decrease in income tax expense is due to lower profits achieved by the Group’s main subsidiary, Jiangsu Hengxin Technology Co., Ltd in 3Q2012 compared to 3Q2011.

Net profit

In view of the above, net profit attributable to equity holders of the parent decreased by approximately RMB15.5 million or approximately 48.1% from approximately RMB32.2 million in 3Q2011 to approximately RMB16.7 million in 3Q2012.

STATEMENT OF FINANCIAL POSITION

Material fluctuations on the statement of financial position items are explained below:

Pledged bank deposits

Pledged bank deposits are used as a pledged against commercial bills used for payment to suppliers. Pledged bank deposits increased by approximately RMB1.8 million or approximately 3.4% from approximately RMB52.9 million as at 31 December 2011 to approximately RMB54.7 million as at 30 September 2012 due to a higher amount of commercial bills payable to suppliers, requiring a lower amount of bank balances required to be set aside as securities.

Trade receivables

Trade receivables increased by approximately RMB2.7 million or approximately 0.4% from approximately RMB734.6 million as at 31 December 2011 to approximately RMB737.3 million as at 30 September 2012.

Average trade receivables turnover days are 247 days as at 30 September 2012 compared to 179 days as at 31 December 2011 and 239 days as at 30 June 2012. Due to the macro-economic slowdown in the PRC, its major customers are taking a longer period in making payments. Coupled with the lower revenue generated during 3Q2012, this resulted in a higher turnover days. Nonetheless, most trade receivables balances are recent sales which are well within the average credit period given to our customers. The Group will endeavour to continue its collection efforts on the outstanding balances.

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Other receivables and prepayments

Other receivables and prepayments increased by approximately RMB25.9 million or approximately 91.5% from approximately RMB28.3 million as at 31 December 2011 to approximately RMB54.2 million as at 30 September 2012. Due to a major tender exercise held in 2012 requiring the Group to increase its manufacturing pace and adhere to strict delivery schedules, the Group made deposits to raw material suppliers amounting RMB41.9 million as at 30 September 2012 as compared to RMB16.6 million as at 31 December 2011 so as to ensure customer requirements can be met.

Inventories

Inventories (comprising raw materials, work-in-progress and finished goods) decreased by approximately RMB28.2 million or approximately 20.8% from approximately RMB135.9 million as at 31 December 2011 to approximately RMB107.7 million as at 30 September 2012. This is due to lower sales volume resulting in a lower amount of inventories being stocked up.

Property, plant and equipment

Property, plant and equipment decreased by approximately RMB4.9 million or approximately 3.1% from approximately RMB157.9 million as at 31 December 2011 to approximately RMB153.0 million as at 30 September 2012 arising from addition of property, plant and equipment, which is offset by depreciation expenses during the period.

Short-term bank loans

Short-term bank loans decreased by approximately RMB7.8 million or approximately 3.4% from approximately RMB230.0 million as at 31 December 2011 to approximately RMB222.2 million in 30 September 2012 due to repayments made during the period.

Trade payables and Other payables

Trade payables decreased by approximately RMB4.4 million or approximately 1.7% from approximately RMB258.5 million as at 31 December 2011 to approximately RMB254.1 million as at 30 September 2012 in line with lower sales during 9M2012.

Other payables decreased by approximately RMB15.5 million or approximately 54.0% from approximately RMB28.7 million as at 31 December 2011 to approximately RMB13.2 million as at 30 September 2012 due to lower accruals for bonuses arising from the Group’s weak performance.

Income tax payable

Income tax payable decreased by approximately RMB9.5 million as at 30 September 2012 compared to that as at 31 December 2011. The higher balance as at 31 December 2011 related to taxes in the prior quarter which were not yet paid then, but were all paid off during the first half of the financial year 2012.

Cash and bank balances

Cash and bank balances increased RMB28.7 million or approximately 8.9% from RMB323.7 million as at 31 December 2011 compared to RMB352.4 million as at 30 September 2012 mainly due to slower payments from customers during the period.

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(II) LIQUIDITY, FINANCIAL RESOURCES

In addition to its short-term interest-bearing facilities, the Group generally finances its operations from both cash flows generated internally and bank loans.

The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximizing the return to shareholders through the optimization of debt and equity balance.

The management of the Group monitors capital based on the Group’s net gearing ratio. The Group’s net gearing ratio is calculated as net borrowings divided by total equity. Net borrowings are calculated as total short-term loans less cash and cash equivalents at the end of the reporting period.

Net cash borrowings Total equity Net cash to equity ratio_(%)_	As 30 September 2012 RMB’000 (unaudited) 130,204 1,001,472 13.00	at 31 December 2011 RMB’000 (audited) 93,710 938,974 9.98

Amount repayable in one year or less, or on demand:

As at 30 September 2012		As at 31 December 2011
Secured	Unsecured	Secured	Unsecured
RMB’000	RMB’000	RMB’000	RMB’000
(unaudited)	(unaudited)	(audited)	(audited)
—	222,194	—	230,000

There is no amount repayable after one year.

(III) PROSPECTS (A COMMENTARY AT THE DATE OF THE ANNOUNCEMENT OF THE COMPETITIVE CONDITIONS OF THE INDUSTRY IN WHICH THE GROUP OPERATES AND ANY KNOWN FACTORS OR EVENTS THAT MAY AFFECT THE GROUP IN THE NEXT REPORTING PERIOD AND THE NEXT 12 MONTHS)

The mobile communications industry remains challenging amidst intense competition. The Group continued to experience a slowdown in its RF Coaxial Cables segment, while witnessing a slight increase in demand from the Telecommunication equipment and accessories segment.

In India, the economic slowdown and intense competition have inevitably led to telecom operators looking for new ways to reduce its capital expenditure which led to the recent adoption of aluminium-made RF Coaxial cables instead of copper ones. On the foreign exchange front, the erratic fluctuations of the Indian rupee will continue to impact on our results of operations. The Group continues to keep close monitor on exchange rates and take advantage of any rate movements which will benefit the Group’s operations.

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Following the recent completion of the antenna manufacturing facility and testing chamber, the Group has started work on a few prototypes of mobile communication antennas. As announced previously, the commencement of manufacture for sale is solely conditional upon the Group being able to submit its tender in time and passing tests for various products put up for tender. Nonetheless, since the completion of the manufacturing facility, there have not been any tenders released by the PRC telecom operators for the purchase of antennas to date. In view of this, the commencement of sales for antenna may be delayed as a result.

The Group continues to seek new geographical markets and customers in countering the weak demand in the PRC market, and will continue its efforts to seek potential business opportunities.

DIRECTORS’ AND CHIEF EXECUTIVE’S INTERESTS AND SHORT POSITIONS IN SHARES AND UNDERLYING SHARES AND DEBENTURES

As at 30 September 2012, the interests and short positions of the directors (the “ Directors ”) and chief executives of the Company in shares and underlying shares and debentures of the Company or its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) (the “ SFO ”)), which are required to be notified to the Company and SEHK pursuant to Divisions 7 and 8 of Part XV of the SFO (including interest and short positions which they are deemed or taken to have under such provisions of the SFO) or which are required to be entered into, as recorded in the register required to be kept by the Company pursuant to Section 352 of Part XV of the SFO, or as otherwise notified to the Company and the SEHK pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the “ Model Code ”) as set out in Appendix 10 of the Listing Rules, were as follows:

Long positions in the Company:

Number of issued shares in the Company

				Approximate
				percentage of the
	Personal	Corporate	Total	Company’s issued
Name of Directors	interests	interests	interests	share capital
Mr. Cui Genxiang(1)	—	90,294,662	90,294,662	23.27%
Ms. Zhang Zhong(2)	—	28,082,525	28,082,525	7.24%

Notes:

• (1) Mr. Cui Genxiang beneficially owns the entire issued share capital of Kingever Enterprises Limited (“ Kingever ”), and Kingever in turn holds approximately 23.27% of the total issued shares in the Company.

• (2) Ms. Zhang Zhong beneficially owns the entire issued share capital of Wellahead Holdings Limited (“ Wellahead ”), and Wellahead in turn holds approximately 7.24% of the total issued shares in the Company.

Saved as disclosed above, as at 30 September 2012, none of the Directors and chief executives of the Company nor their associates had or deemed to have any interests or short position in the shares, underlying shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO), which has been recorded in the register maintained by the Company pursuant to Section 352 of Part XV of the SFO or which has been notified to the Company and the SEHK pursuant to the Model Code.

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SUBSTANTIAL SHAREHOLDERS’ AND OTHER PERSONS’ INTERESTS IN SHARES AND UNDERLYING SHARES

As at 30 September 2012, insofar as is known to the Directors and chief executives of the Company, the following shareholders having interests of 5% or more of the issued share capital of the Company were recorded in the register of interests required to be kept by the Company pursuant to Section 336 of Part XV of the SFO:

Long positions:

Long positions:
			Approximate
			percentage of
		Number	the Company’s
	Capacity and nature of	of ordinary	issued share
Name	interests	shares held	capital
Kingever_(Note (a))_	Registered owner and	90,294,662	23.27%
	beneficially owned
Mr. Cui Genxiang	Deemed interest and interest	90,294,662	23.27%
(Note (a))	in controlled company
Wellahead_(Note (b))_	Registered owner and	28,082,525	7.24%
	beneficially owned
Ms. Zhang Zhong	Deemed interest and interest	28,082,525	7.24%
(Note (b))	in controlled company

Notes:

• (a) Kingever is a company incorporated in the British Virgin Islands, and the entire issued share capital of which is beneficially owned by Mr. Cui Genxiang.

• (b) Wellahead is a company incorporated in the British Virgin Islands, and the entire issued share capital of which is beneficially owned by Ms. Zhang Zhong.

Saved as disclosed above, as at 30 September 2012, no person, other than the Directors, whose interests are set out in the paragraph headed “Directors’ and chief executives’ interests and short positions in shares and underlying shares and debentures” above, has an interest or short position in the shares or underlying shares of the Company that was required to be recorded.

ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE BENEFITS BY MEANS OF THE ACQUISITION OF SHARES AND DEBENTURES

Neither at the end of the financial period nor at any time during the financial period did there subsist any arrangement whose object is to enable the Directors of the Company to acquire benefits by means of the acquisition of shares or debentures in the Company or any other body corporate.

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(IV) SUPPLEMENTARY INFORMATION

1. Audit Committee

The Company’s audit committee members are Mr. Tay Ah Kong Bernard, Mr. Chee Teck Kwong Patrick, Mr. Tam Chi Kwan Michael and Ms. Zhang Zhong. The audit committee, which is chaired by Mr. Tay Ah Kong Bernard, has reviewed the unaudited interim results of the Group for the nine months ended 30 September 2012.

2. Compliance with Corporate Governance Code

The Company has complied with all the code provisions as set out in the Code on Corporate Governance Practices (formerly set out in Appendix 14 to the Listing Rules) and the new addition of the Corporate Governance Code which is applicable to financial reports covering periods after 1 April 2012 for the nine months ended 30 September 2012.

3. Compliance with the Model Code for Securities Transactions by Directors of Listed Issuer

The Board confirms, having made specific enquiries with all directors of the Company that during the nine months ended 30 September 2012, all the directors have complied with the required standards of the Model Code as set out in Appendix 10 of the Listing Rules.

4. Review of financial results

The results have not been audited or reviewed by the Company’s auditors.

5. Purchase, Sales or Redemption of the Company’s Securities

For the nine months ended 30 September 2012, neither the Company nor its subsidiaries had purchased, sold or redeemed any of the securities of the Company.

6. Audit or review in accordance with applicable accounting standards

The figures have not been audited or reviewed by the Company’s auditors.

7. Auditors’ report (including any qualifications or emphasis of matter)

Not applicable.

8. If the group has obtained a general mandate from shareholders for Interest Person Transactions (“IPTs”), the aggregate value of such transactions as required under SGX Listing Manual Rule 920(1)(a)(ii). If no IPT mandate has been obtained, a statement to that effect.

No mandate from shareholders has been obtained for IPTs.

9. Negative assurance pursuant to SGX Listing Manual Rule 705(5)

We, Cui Genxiang and Xu Guoqiang , being two directors of Hengxin Technology Ltd. (the “Company”), do hereby confirm on behalf of the Board of Directors of the Company (“Board”) that, to the best of the Board’s knowledge, nothing has come to the attention of the Board which may render the 3Q2012 and 9M2012 financial results to be false or misleading in any material aspect.

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10. Disclosure on the Website of the Exchanges

This announcement shall be published on the websites of SGX-ST (http://www.sgx.com), the SEHK (http://www.hkex.com.hk) and on the Company’s website (http://www.hengxin.com.sg).

11. Use of IPO proceeds

As at the date of the financial period reported on, the Company has utilised approximately RMB32.60 million of the net proceeds raised from the dual primary listing on the Stock Exchange of Hong Kong Limited (the “IPO Proceeds”).

The details of the use of the IPO Proceeds are tabulated below:

Intended Use Diversify product portfolio of High Temperature Resistant Cables Diversify product portfolio of Antennas Expansion of sales network into overseas market Enhance research and development General working capital Total	Revised Amount RMB’000 7,130(1) 35,370 7,382 7,382 23,859(1) 81,123	Used Balance RMB’000 RMB’000 (2,220) 4,910 (18,968) 16,402 (593) 6,789 (3,731) 3,651 (7,083)(2) 16,776 (32,595) 48,528	Used Balance RMB’000 RMB’000 (2,220) 4,910 (18,968) 16,402 (593) 6,789 (3,731) 3,651 (7,083)(2) 16,776 (32,595) 48,528
			48,528

(1) Please refer to the Company’s announcement dated 9 October 2012 on the change in use of proceeds.

• (2) The breakdown of the use of proceeds for general working capital is as follows:

The breakdown of the use of proceeds for general working capital is as follows:
Details Purchase of raw materials Purchase of equipment Total	Used RMB’000 (6,823) (260)
	(7,083)

12. Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and the actual results.

The Group’s 3Q2012 results is in line with the profit guidance which was announced on 25 October 2012.

By Order of the Board Hengxin Technology Ltd. Cui Genxiang Executive Chairman

Singapore, 2 November 2012

As at the date of this announcement, the executive directors of the Company are Mr. Cui Genxiang and Mr. Xu Guoqiang; the non-executive director of the Company is Ms. Zhang Zhong; and the nonexecutive independent directors of the Company are Mr. Tay Ah Kong Bernard, Mr. Chee Teck Kwong Patrick and Mr. Tam Chi Kwan Michael.

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