Hengxin Technology Ltd. — Interim / Quarterly Report 2012

Aug 13, 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 INTERIM RESULTS FOR THE SECOND QUARTER AND SIX MONTHS ENDED 30 JUNE 2012

FINANCIAL HIGHLIGHTS

1. Revenue for the six months ended 30 June 2012 decreased by approximately 5.9% to approximately RMB635.8 million

2. Gross profit decreased by approximately 6.1% to approximately RMB113.7 million

3. Net profit attributable to equity holders of the parent decreased by approximately 5.5% to approximately RMB46.3 million

4. Basic earnings per share was RMB0.118

5. No payment of interim dividend for the six months ended 30 June 2012 is recommended

6. for identification purpose only

– 1 –

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 six months ended 30 June 2012 and for the three months ended 30 June 2012 together with the comparative figures for the corresponding periods in 2011 as follow:

CONSOLIDATED INCOME STATEMENT

For the six months ended 30 June (“1H”)

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)

1H2012 1H2011 RMB’000 RMB’000 (unaudited) (unaudited) 635,816 675,436 (522,157) (554,423) 113,659 121,013 7,048 2,772 (27,582) (29,632) (17,994) (22,447) (7,312) (7,453) (11,572) (5,164) 56,247 59,089 (9,907) (10,103) 46,340 48,986 (369) (34) 45,971 48,952 11.8 12.6 N.A. N.A.

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CONSOLIDATED INCOME STATEMENT

For the three months ended 30 June (“2Q”)

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)

2Q2012 2Q2011 RMB’000 RMB’000 (unaudited) (unaudited) 376,215 396,910 (307,255) (327,045) 68,960 69,865 1,793 393 (15,518) (14,392) (8,641) (12,475) (6,106) (4,968) (6,097) (3,769) 34,391 34,654 (6,632) (6,273) 27,759 28,381 (165) (28) 27,594 28,353 7.1 7.3

– 3 –

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

		Group			Group
	3 mths ended 30		Jun	6 mths ended 30		Jun
	2012	2011		2012	2011
	RMB’000	RMB’000	Change %	RMB’000	RMB’000	Change %
	(unaudited) (unaudited)			(unaudited) (unaudited)
(Reversal of) Allowance for inventory
obsolescence	(63)	251	-125.1%	(63)	251	-125.1%
Depreciation of property, plant and
equipment	4,367	4,148	5.3%	8,714	8,251	5.6%
Gain on disposal of available-for-sale
investment	(68)	—	N.M.	(68)	(690)	-90.1%
Loss on disposal of property, plant and
equipment	3	725	-99.6%	10	726	-98.6%
Amortisation of prepaid lease payments	140	140	0.0%	280	280	0.0%
Foreign exchange losses (gains)	2,105	465	N.M.	(643)	(358)	79.6%
Interest expense	6,097	3,769	61.8%	11,572	5,164	124.1%
Interest income	(1,020)	(689)	48.0%	(2,229)	(1,312)	69.9%
Research and development expenses	3,964	4,244	-6.6%	6,768	6,227	8.7%

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 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 June 31 December 2012 2011 RMB’000 RMB’000 (unaudited) (audited) 206,738 323,710 37,475 52,883 862,787 734,596 43,432 28,256 121,814 135,911 560 560 1,272,806 1,275,916 19,182 19,461 152,787 157,889 5,760 5,760 10,000 10,000 2,512 2,523 190,241 195,633 1,463,047 1,471,549 220,000 230,000 233,778 258,489 15,338 28,719 6,128 12,771 475,244 529,979 797,562 745,937 2,858 2,596 478,102 532,575 984,945 938,974 295,000 295,000 125,676 122,889 (6,017) (6,017) (663) (294) 570,949 527,396 984,945 938,974 1,463,047 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 Non-current liability Deferred tax liabilities Total non-current liability TOTAL LIABILITIES NET ASSETS Equity attributable to equity holders of the parent Share capital Accumulated profits TOTAL EQUITY TOTAL EQUITY AND LIABILITIES	As 30 June 2012 RMB’000 (unaudited) 57,624 5,579 63,203 361,081 1 361,082 424,285 2,423 2,423 60,780 — — 2,423 421,862 295,000 126,862 421,862 424,285	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 June

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 Loss on disposal of property, plant and equipment Interest expense Interest income Gain on disposal of available-for-sale investments 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 operations Interest paid Interest income received Income tax paid Net cash generated from (used in) operating activities

1 Apr 12 to 30 Jun 12 1 Apr 11 to 30 Jun 11 1 Jan 12 to 30 Jun 12 1 Jan 11 to 30 Jun 11 (unaudited) (unaudited) (unaudited) (unaudited) 34,391 34,654 56,247 59,089 4,367 4,148 8,714 8,251 140 140 280 280 (63) 251 (63) 251 3 725 10 726 6,097 3,769 11,572 5,164 (1,020) (689) (2,229) (1,312) (68) — (68) (690) 1,219 (932) (1,496) (204) 45,066 42,066 72,967 71,555 (120,855) (104,848) (128,191) (145,946) (1,177) 3,742 (15,176) (10,240) 2,540 6,210 14,161 (11,478) 95,727 125,229 (24,711) 96,355 (1,033) 7,687 (13,381) (4,026) 20,268 80,086 (94,331) (3,780) (6,097) (3,769) (11,572) (5,164) 1,020 689 2,229 1,312 (3,982) (5,133) (16,299) (10,386) 11,209 71,873 (119,973) (18,018)

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CONSOLIDATED STATEMENT OF CASH FLOWS (CONT’D)

For the period ended 30 June

Group RMB’000 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 financial period Cash and cash equivalents at the end of the financial period

1 Apr 12 to 30 Jun 12 1 Apr 11 to 30 Jun 11 1 Jan 12 to 30 Jun 12 1 Jan 11 to 30 Jun 11 (unaudited) (unaudited) (unaudited) (unaudited) (929) (7,439) (3,622) (10,466) — 380 — 380 (15,000) — (15,000) — 15,068 — 15,068 2,690 (861) (7,059) (3,554) (7,396) — (15,694) — (15,694) (60,000) (40,000) (80,000) (40,000) 30,000 80,000 70,000 100,000 (19,071) (32,751) 15,408 (15,747) (49,071) (8,445) 5,408 28,559 (38,723) 56,369 (118,119) 3,145 (892) 403 1,147 (334) 246,353 193,117 323,710 247,078 206,738 249,889 206,738 249,889

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STATEMENT OF CHANGES IN EQUITY

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

	Share	General	Special	Translation	Accumulated
GROUP	capital	reserve	reserve	reserve	profits	Total
RMB’000
Balance at 1 January 2012	295,000	122,889	(6,017)	(294)	527,396	938,974
Total comprehensive income for
the period	—	—	—	(369)	46,340	45,971
Transfer to reserves	—	2,787	—	—	(2,787)	—
Balance at 30 June 2012	295,000	125,676	(6,017)	(663)	570,949	984,945
Consolidated Statement of Changes in Equity		for the period ended		30 June 2011
	Share	General	Special	Translation	Accumulated
GROUP	capital	reserve	reserve	reserve	profits	Total
RMB’000
Balance at 1 January 2011	295,000	104,839	(6,017)	(4)	458,891	852,709
Total comprehensive income for
the period	—	—	—	(34)	48,986	48,952
Transfer to reserves	—	7,348	—	—	(7,348)	—
Dividends	—	—	—	—	(15,694)	(15,694)
Balance at 30 June 2011	295,000	112,187	(6,017)	(38)	484,835	885,967

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STATEMENT OF CHANGES IN EQUITY

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

STATEMENT OF CHANGES IN EQUITY Statement of Changes in Equity of the Company for the	period ended 30	June 2012	June 2012
	Share	Accumulated
COMPANY	capital		profits	Total
RMB’000
Balance at 1 January 2012	295,000		130,840	425,840
Total comprehensive income for the period	—		(3,978)	(3,978)
Balance at 30 June 2012	295,000		126,862	421,862
Statement of Changes in Equity of the Company for the	period ended 30	June 2011
	Share	Accumulated
COMPANY	capital		profits	Total
RMB’000
Balance at 1 January 2011	295,000		131,648	426,648
Total comprehensive income for the period	—		25,198	25,198
Dividends	—		(15,694)	(15,694)
Balance at 30 June 2011	295,000		141,152	436,152

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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 financial 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 financial 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 financial period ended 30 June 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 Antenna 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

Six months ended 30 June 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’000 515,397 54,675 1,629 (9,380) 577,980 57,804 1,087 (4,419)	Telecommunication equipment and accessories RMB’000 119,456 12,672 380 (2,192) 97,456 9,747 183 (745)	Others RMB’000 963 103 — — — — — —	Unallocated RMB’000 — (6,167) 220 — — (4,844) 42 —	Total RMB’000 635,816 61,283 2,229 (11,572) 4,819 (512) 56,247 (9,907) 46,340 675,436 62,707 1,312 (5,164) 1,460 (1,226) 59,089 (10,103) 48,986

• exclude research and development expenses

– 12 –

Other segment information

Group

Six months ended 30 June 2012 Capital expenditure Depreciation expense Amortisation of leasehold land Reversal of (Allowance for) inventory obsolescence 2011 Capital expenditure Depreciation expense Amortisation of leasehold land Allowance for inventory obsolescence Statement of net assets As at 30 June 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 1,442 6,746 227 111 8,550 7,055 240 232 Radio frequency coaxial cables RMB’000 1,135,107 385,590 1,174,067 447,043	Telecommunication equipment and accessories RMB’000 337 1,563 53 (21) 1,442 1,189 40 (20) Telecommunication equipment and accessories RMB’000 265,210 90,090 220,327 83,406	Others RMB’000 1,843 401 — — 474 2 — — Others RMB’000 4,910 — 3,982 —	Unallocated RMB’000 — 4 — (27) — 5 — 39 Unallocated RMB’000 — 57,820 — 2,422 — 73,173 — 2,126	Total RMB’000 3,622 8,714 280 63
					10,466 8,251 280 251
					Total RMB’000 1,405,227 57,820
					1,463,047
					475,680 2,422
					478,102
					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 customer	Revenue from external customer	Non-current	assets
			As at
	For the six months ended 30 June		30 June	31 December
	2012	2011	2012	2011
	RMB’000	RMB’000	RMB’000	RMB’000
Central Asia	589,773	592,707	190,209	195,588
South Asia	35,506	78,425	32	45
Others	10,537	4,304	—	—
Total	635,816	675,436	190,241	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 OTHER INCOME Government grants Interest income Foreign exchange gains Gain on disposal of available-for-sale investments Others Total	For the six months ended 30 June 2012 2011 RMB’000 RMB’000 (unaudited) (unaudited) 635,816 675,436 For the six months ended 30 June 2012 2011 RMB’000 RMB’000 (unaudited) (unaudited) 3,839 117 2,229 1,312 643 — 68 690 269 653 7,048 2,772	For the six months ended 30 June 2012 2011 RMB’000 RMB’000 (unaudited) (unaudited) 635,816 675,436 For the six months ended 30 June 2012 2011 RMB’000 RMB’000 (unaudited) (unaudited) 3,839 117 2,229 1,312 643 — 68 690 269 653 7,048 2,772
		2,772

6. OTHER INCOME

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7. FINANCE COSTS

FINANCE COSTS
	For the six months ended
	30 June
	2012	2011
	RMB’000	RMB’000
	(unaudited)	(unaudited)
Interest on short term bank borrowings	11,572	5,164

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 Loss on disposal of property, plant and equipment Gain on disposal of available-for-sale investments	For the six months ended 30 June 2012 2011 RMB’000 RMB’000 (unaudited) (unaudited) 522,220 531,009 8,714 8,251 280 280 20,528 23,689 3,043 2,353 800 852 804 1,020 360 224 25,535 28,138 (643) (358) 10 726 (68) (690)	For the six months ended 30 June 2012 2011 RMB’000 RMB’000 (unaudited) (unaudited) 522,220 531,009 8,714 8,251 280 280 20,528 23,689 3,043 2,353 800 852 804 1,020 360 224 25,535 28,138 (643) (358) 10 726 (68) (690)
		28,138
		(358) 726 (690)

9. INCOME TAX EXPENSE

Current Deferred	For the six months ended 30 June 2012 2011 RMB’000 RMB’000 (unaudited) (unaudited) 9,656 9,868 251 235 9,907 10,103	For the six months ended 30 June 2012 2011 RMB’000 RMB’000 (unaudited) (unaudited) 9,656 9,868 251 235 9,907 10,103
		10,103

The Company is incorporated in Singapore and is subject to income tax rate of 17% for the six months ended 30 June 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%).

– 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 interim dividend for the six months ended 30 June 2012. No interim dividend was also declared nor paid for the previous financial period ended 30 June 2011.

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 June 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 Jun 12 30 Jun 11 (unaudited) (unaudited) 7.1 7.3 7.1 7.3 388,000 388,000 388,000 388,000	Group 6 months ended 30 Jun 12 30 Jun 11 (unaudited) (unaudited) 11.8 12.6 11.8 12.6 388,000 388,000 388,000 388,000	Group 6 months ended 30 Jun 12 30 Jun 11 (unaudited) (unaudited) 11.8 12.6 11.8 12.6 388,000 388,000 388,000 388,000
			12.6
			388,000 388,000

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

13. PROPERTY, PLANT AND EQUIPMENT

During the six months ended 30 June 2012, the Group’s capital expenditure was approximately RMB3.6 million (2011: RMB10.5 million).

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14. TRADE RECEIVABLES

Trade receivables Allowance for doubt debts Net Notes receivable Total	30 June 2012 RMB’000 (unaudited) 849,292 (15,762) 833,530 29,257 862,787	31 December 2011 RMB’000 (audited) 666,807 (15,762)
		651,045 83,551
		734,596

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 June 2012 RMB’000 (unaudited) 601,686 195,236 65,865 862,787 30 June 2012 RMB’000 (unaudited) 113,478 120,300 233,778	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 June 2012 RMB’000 (unaudited) 223,119 8,510 876 1,154 119 233,778	31 December 2011 RMB’000 (audited) 126,475 111,687 19,953 374 —
		258,489

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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 Jun 12 31 Dec 11 (unaudited) (audited) 984,945 938,974 388,000 388,000 2.54 2.42	Company 30 Jun 12 31 Dec 11 (unaudited) (audited) 421,862 425,840 388,000 388,000 1.09 1.10	Company 30 Jun 12 31 Dec 11 (unaudited) (audited) 421,862 425,840 388,000 388,000 1.09 1.10
			1.10

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 six months ended
	30 June
	2012	2011
	RMB’000	RMB’000
	(unaudited)	(unaudited)
Purchase of raw materials	3,294	4,999

(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	For the six months ended 30 June 2012 2011 RMB’000 RMB’000 (unaudited) (unaudited) 2,169 2,041 30 52 2,199 2,093	For the six months ended 30 June 2012 2011 RMB’000 RMB’000 (unaudited) (unaudited) 2,169 2,041 30 52 2,199 2,093
		2,093

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18. CAPITAL COMMITMENTS

CAPITAL COMMITMENTS
Contracted but not provided for: Property, plant and equipment Donation commitment Total	As 30 June 2012 RMB’000 (unaudited) 5,563 7,000 12,563	at 31 December 2011 RMB’000 (audited) 6,258 7,500
		13,758

19. COMMITMENT

As at 30 June 2012, certain constructions were built on a piece of land located in the PRC (the “ No. 5 Land ”) amounting to approximately RMB29.0 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.

20. OPERATING LEASE ARRANGEMENTS

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

Within one year In the second to fifth years inclusive	As 30 June 2012 RMB’000 (unaudited) 656 443 1,099	at 31 December 2011 RMB’000 (audited) 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

Half year performance

Material changes are explained below:

Revenue

Revenue decreased by approximately RMB39.6 million, or approximately 5.9% from approximately RMB675.4 million in the six months ended 30 June 2011 (“ 1H2011 ”) to approximately RMB635.8 million in the six months ended 30 June 2012 (“ 1H2012 ”). Lower spending by telecom operators on our products in the domestic and overseas markets resulted in a lower revenue during the period.

RF Coaxial Cable

Revenue generated from RF Coaxial Cables decreased by approximately RMB62.6 million or approximately 10.8% from approximately RMB578.0 million in 1H2011 to approximately RMB515.4 million in 1H2012.

Accessories

Revenue generated from Accessories increased by approximately RMB22.0 million or approximately 22.5% from approximately RMB97.5 million in 1H2011 to approximately RMB119.5 million in 1H2012.

Gross profit margin

The Group achieved an overall gross profit margin of approximately 17.9% in 1H2012, relatively unchanged compared to 1H2011. 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 RMB4.2 million or approximately 150.0% from approximately RMB2.8 million in 1H2011 to approximately RMB7.0 million in 1H2012. The increase is mainly due to government grants being awarded to the Group’s key subsidiary, Jiangsu Hengxin Technology Co., Ltd and a higher interest income earned in 1H2012.

Selling and distribution expenses

Selling and distribution expenses decreased by approximately RMB2.0 million or approximately 6.8% from approximately RMB29.6 million in 1H2012 to approximately RMB27.6 million in 1H2012. The decrease was in line with the Group’s lower sales achieved during the financial period.

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Administrative expenses

Administrative expenses decreased by approximately RMB4.4 million or approximately 19.6% from approximately RMB22.4 million in 1H2011 to approximately RMB18.0 million in 1H2012 as the Group adopted various cost control measures during the financial period.

Other operating expenses

Other operating expenses remained relatively unchanged, decreasing by approximately RMB0.2 million or approximately 2.7% from approximately RMB7.5 million in 1H2011 to approximately RMB7.3 million in 1H2012. The absence of the loss on disposal of property, plant and equipment in 1H2011 amounting RMB0.7 million was partially offset by an increase in R&D expenses of approximately RMB0.6 million in 1H2012.

Finance costs

Finance costs increased by approximately RMB6.4 million or approximately 123.1% from approximately RMB5.2 million in 1H2011 to approximately RMB11.6 million in 1H2012. The Group secured a higher amount of borrowings to finance its working capital needs, resulting in an increase in Finance costs in 1H2012 compared to that in 1H2011.

Profit before income tax

Profit before income tax decreased by approximately RMB2.9 million or approximately 4.9% from approximately RMB59.1 million in 1H2011 to approximately RMB56.2 million in 1H2012 due to lower revenue achieved.

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 1H2012. Accordingly, income tax expense decreased by approximately RMB0.2 million or approximately 2.0% from approximately RMB10.1 million in 1H2011 to approximately RMB9.9 million in 1H2012.

Net profit

In view of the above, net profit attributable to equity holders of the parent decreased by approximately RMB2.7 million or approximately 5.5% from approximately RMB49.0 million in 1H2011 compared to approximately RMB46.3 million in 1H2012.

Second quarter performance — Three months ended 30 June

Revenue

Group revenue decreased by approximately RMB20.7 million, or approximately 5.2% from approximately RMB396.9 million in the three months ended 30 June 2011 (“ 2Q2011 ”) to approximately RMB376.2 million in the three months ended 30 June 2012 (“ 2Q2012 ”). The decrease was due to lower spending by telecom operators in the PRC and overseas during the period.

– 21 –

RF Coaxial Cable

Revenue generated from RF Coaxial Cables decreased by approximately RMB33.7 million or approximately 10.1% from approximately RMB332.2 million in 2Q2011 to approximately RMB298.5 million in 2Q2012.

Accessories

Revenue generated from Accessories increased by approximately RMB12.4 million or approximately 19.2% from approximately RMB64.7 million in 2Q2011 to approximately RMB77.1 million in 2Q2012.

Gross profit margin

Gross profit margin for 2Q2012 stood at approximately 18.3% compared to approximately 17.6% in 2Q2011. Higher sales from Accessories segment contributed to a higher GP margin during the period. 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 RMB1.4 million or approximately 350.0% from approximately RMB0.4 million in 2Q2011 to approximately RMB1.8 million in 2Q2012. The increase arose from higher interest income earned and government grants during the period.

Selling and distribution expenses

Selling and distribution expenses increased by approximately RMB1.1 million or approximately 7.6% from approximately RMB14.4 million in 2Q2011 to approximately RMB15.5 million in 2Q2012. The increase is in line with the Group’s focus to market its products in new geographical markets and clientele, thus incurring a higher level of marketing costs.

Administrative expenses

Administrative expenses decreased by approximately RMB3.9 million or approximately 31.2% from approximately RMB12.5 million in 2Q2011 to approximately RMB8.6 million in 2Q2012. The decrease was mainly due to the Group’s cost control measures during the period.

Other operating expenses

Other operating expenses increased by approximately RMB1.1 million or approximately 22.0% from approximately RMB5.0 million in 2Q2011 to approximately RMB6.1 million in 2Q2012. The increase was due to foreign exchange losses incurred, which was partially offset by lower R&D expenses during the period.

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Finance costs

Finance costs increased by approximately RMB2.3 million or approximately 60.5% from approximately RMB3.8 million in 2Q2011 to approximately RMB6.1 million in 2Q2012. The Group secured a higher amount of borrowings to finance its working capital needs, resulting in an increase in Finance costs in 2Q2012 compared to that in 2Q2011.

Profit before income tax

Profit before income tax decreased by approximately RMB0.3 million or approximately 0.9% from approximately RMB34.7 million in 2Q2011 to approximately RMB34.4 million in 2Q2012 as a result of lower revenue generated and higher finance costs in 2Q2012.

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 increase in income tax expense is due to higher profits achieved by the Group’s main subsidiary, Jiangsu Hengxin Technology Co., Ltd in 1H2012 compared to 1H2011.

Net profit

In view of the above, net profit attributable to equity holders of the parent decreased by approximately RMB0.6 million or approximately 2.1% from approximately RMB28.4 million in 2Q2011 to approximately RMB27.8 million in 2Q2012.

Statement of Financial Position

Material fluctuations of balance sheet 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 decreased by approximately RMB15.4 million or approximately 29.1% from approximately RMB52.9 million as at 31 December 2011 to approximately RMB37.5 million as at 30 June 2012 due to a lower 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 RMB128.2 million or approximately 17.5% from approximately RMB734.6 million as at 31 December 2011 to approximately RMB862.8 million as at 30 June 2012.

Average trade receivables turnover days are 239 days as at 30 June 2012 compared to 179 days as at 31 December 2011 and 253 days as at 31 March 2012. Due to the macro-economic slowdown in the PRC, its major customers are taking a longer period in making payments. 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 RMB15.1 million or approximately 53.4% from approximately RMB28.3 million as at 31 December 2011 to approximately RMB43.4 million as at 30 June 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 RMB33.5 million as at 30 June 2012 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 RMB14.1 million or approximately 10.4% from approximately RMB135.9 million as at 31 December 2011 to approximately RMB121.8 million as at 30 June 2012. This is due to the Group’s forecast of slower sales expected in the coming months.

Property, plant and equipment

Property, plant and equipment decreased by approximately RMB5.1 million or approximately 3.2% from approximately RMB157.9 million as at 31 December 2011 to approximately RMB152.8 million as at 30 June 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 RMB10.0 million or approximately 4.3% from approximately RMB230.0 million as at 31 December 2011 to approximately RMB220.0 million in 30 June 2012 due to repayments made during the period.

Trade payables and Other payables

Trade payables decreased by approximately RMB24.7 million or approximately 9.6% from approximately RMB258.5 million as at 31 December 2011 to approximately RMB233.8 million as at 30 June 2012 in line with lower sales during 1H2012.

Other payables decreased by approximately RMB13.4 million or approximately 46.7% from approximately RMB28.7 million as at 31 December 2011 to approximately RMB15.3 million as at 30 June 2012 as some of the expenses accrued for in 2011 were being paid during 2012.

Income tax payable

Income tax payable decreased by approximately RMB6.7 million as at 30 June 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 1H2012.

Cash and bank balances

Cash and bank balances decreased RMB117.0 million or approximately 36.1% from RMB323.7 million as at 31 December 2011 compared to RMB206.7 million as at 30 June 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 interesting-bearing facilities, the Group generally finances its operations from cash flows generated internally. For the six months ended 30 June 2012, the Group’s negative working capital resulted in additional loans being obtained to finance the Group’s operations.

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 net gearing ratio. The Group 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 debt to equity ratio_(%)_	As at 30 June 31 December 2012 2011 RMB’000 RMB’000 (unaudited) (audited) (13,262) 93,710 984,945 938,974 1.35 (9.98)

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

As	at	30	June	2012	As at 31 December 2011	As at 31 December 2011
Secured				Unsecured	Secured	Unsecured
RMB’000				RMB’000	RMB’000	RMB’000
(unaudited)				(unaudited)	(audited)	(audited)
		—		220,000		— 230,000

There is no amount repayable after one year.

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(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. The Group experienced a modest slowdown in its RF Coaxial Cables segment, while experiencing an increase in demand for its products from the Telecommunication equipment and accessories segment. These products from the Telecommunication equipment and accessories segment continue to be in demand within and outside the PRC.

In India, regulatory uncertainties coupled with slowing growth and high inflation have pushed the Indian rupee to new lows, affecting the Group’s ability to counter the effects of weak currency using hedges. To trim its costs for the long term, telecom operators have started to adopt aluminium-made RF Coaxial cables instead of copper ones. This is expected to result in lower sales quantum due to aluminium’s lower costs.

Following the recent completion of the antenna manufacturing facility and testing chamber, the Group have 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. The Group have not received any tenders for the sale of antennas to date, accordingly the commencement of sales for antenna may be delayed as a result.

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

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

As at 30 June 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 Company’s
	Personal	Corporate	Total	issued share
Name of Directors	interests	interests	interests	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 June 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 June 2012, insofar as in known to the Directors and chief executives of the Company, the following shareholders have 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
		Number of	percentage of the
	Capacity and nature	ordinary	Company’s issued
Name	of interests	shares held	share capital
Kingever_(Note (a))_	Registered owner and	90,294,662	23.27%
	beneficially owned
Mr Cui Genxiang_(Note (a))_	Deemed interest and interest	90,294,662	23.27%
	in controlled company
Wellahead_(Note (b))_	Registered owner and	28,082,525	7.24%
	beneficially owned
Ms Zhang Zhong_(Note (b))_	Deemed interest and interest	28,082,525	7.24%
	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 June 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 six months ended 30 June 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 six months ended 30 June 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 six months ended 30 June 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 auditors.

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

For the six months ended 30 June 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 2QFY2012 and 1HFY2012 financial results to be false or misleading in any material aspect.

– 29 –

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).

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

Singapore, 13 August 2012

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

– 30 –