Hengxin Technology Ltd. — Interim / Quarterly Report 2017

Aug 30, 2017

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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)

INTERIM REPORT FOR THE SIX MONTHS ENDED 30 JUNE 2017

FINANCIAL HIGHLIGHTS

1. Revenue for the six months ended 30 June 2017 increased by approximately RMB124.8 million or 17.1% to approximately RMB852.8 million

2. Gross profit increased by approximately RMB37.9 million or 26.1% to approximately RMB183.4 million

3. Net profit attributable to owners of the Company increased by approximately RMB18.1 million or 35.8% to approximately RMB68.6 million

4. Basic earnings per share was RMB0.177

5. No payment of interim dividend for the six months ended 30 June 2017 has been recommended

6. for identification purpose only

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The board (the “ Board ”) of directors (the “ Director(s) ”) 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 2017 together with the comparative figures for the corresponding period in 2016 as follows:

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND COMPREHENSIVE INCOME For the six months ended 30 June (“ 1H ”)

Notes Revenue 5 Cost of sales Gross profit Other operating income 6 Selling and distribution expenses Administrative expenses Other operating expenses Share of (losses)/profits of an associate Finance costs 7 Profit before tax 8 Income tax expense 9 Net profit attributable to owners of the Company Other comprehensive income Items that may be classified subsequently classified to profit or loss: Foreign operations — foreign currency translation differences Total comprehensive income attributable to owners of the Company Earnings per share attributable to owners of the Company Basic and diluted(RMB) 12 Dividends per share(RMB) 10

1H2017 1H2016 RMB’000 RMB’000 (unaudited) (unaudited) 852,820 728,015 (669,449) (582,571) 183,371 145,444 11,394 9,158 (51,639) (50,230) (30,269) (17,911) (30,774) (25,223) (1,485) 261 (62) (879) 80,536 60,620 (11,978) (10,129) 68,558 50,491 324 35 68,882 50,526 0.177 0.130 N/A N/A

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

Reversal of allowance for doubtful trade receivables Write-down of inventory Depreciation of property, plant and equipment Gains on disposal of property, plant and equipment Amortisation of lease prepayment Net foreign exchange losses/(gains) Interest expense Interest income Research and development expenses	Group 6 months ended 30 June 2017 2016 Change RMB’000 RMB’000 % (unaudited) (unaudited) (1,045) (5,212) –80.0 1,415 31 4,464.5 11,199 9,722 15.2 (54) (7) 671.4 677 677 — 2,009 (460) N/A 62 879 –92.9 (2,035) (4,599) –55.8 28,203 24,620 14.6

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Notes ASSETS Current assets Lease prepayment Inventories Other investments Trade receivables 14 Other receivables and prepayments Pledged cash deposits Cash and bank balances Total current assets Non-current assets Property, plant and equipment 13 Lease prepayment Other receivables Associate Other investments 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 June 2017 RMB’000 (unaudited) 1,355 205,140 50,000 774,426 75,839 5,856 289,040 1,401,656 143,762 50,017 20,372 19,107 32,947 731 266,936 1,668,592 — 137,013 59,636 6,303 202,952 1,198,704	at 31 December 2016 RMB’000 (audited) 1,355 170,296 29,000 515,022 78,634 6,019 554,209 1,354,535 146,112 50,695 22,872 20,592 32,947 77 273,295 1,627,830 27,000 118,170 70,466 5,527 221,163 1,133,372

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Continued)

Note Non-current liabilities Deferred income Deferred tax liabilities Total non-current liabilities TOTAL LIABILITIES NET ASSETS Equity attributable to owners of the Company Share capital 11 General reserves Special reserve Fair value reserve Translation reserves Accumulated profits TOTAL EQUITY TOTAL EQUITY AND LIABILITIES	As at 30 June 2017 31 December 2016 RMB’000 RMB’000 (unaudited) (audited) 4,689 5,203 6,082 5,505 10,771 10,708 213,723 231,871 1,454,869 1,395,959 295,000 295,000 211,225 200,601 (6,017) (6,017) 18,955 18,955 (479) (803) 936,185 888,223 1,454,869 1,395,959 1,668,592 1,627,830

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STATEMENT OF FINANCIAL POSITION[—] COMPANY LEVEL

ASSETS Current assets Other receivables and prepayments Cash and bank balances Total current assets Non-current assets Property, plant and equipment Other receivables and prepayments Subsidiaries 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 owners of the Company Share capital Accumulated profits TOTAL EQUITY TOTAL EQUITY AND LIABILITIES	As 30 June 2017 RMB’000 (unaudited) 40,290 10,452 50,742 22 — 392,544 392,566 443,308 1,024 1,024 49,718 1,024 442,284 295,000 147,284 442,284 443,308	at 31 December 2016 RMB’000 (audited) 15,153 5,607 20,760 8 42,675 396,385 439,068 459,828 1,461 1,461 19,299 1,461 458,367 295,000 163,367 458,367 459,828

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For the six months ended 30 June

CONSOLIDATED STATEMENT OF CASH FLOWS

Operating activities Profit before tax Adjustments for: Depreciation of property, plant and equipment Amortisation of lease prepayment Reversal of allowance for doubtful trade receivables Write-down of inventory Gains on disposal of property, plant and equipment Finance costs Interest income Share of losses/(profits) of an associate Investment income Unrealised foreign exchange losses/(gains) Changes in: Trade receivables Other receivables and prepayments Inventories Trade payables Other payables Cash used in operating activities Interest paid Interest income received Income tax paid Net cash used in operating activities Investing activities Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of other investments Proceeds from disposal of other investments Acquisition of equity interest in an associate Net cash used in investing activities Financing activities Repayment of short-term bank loans Proceeds from short-term bank loans Decrease in pledged bank deposits Dividends paid Net cash used in financing activities Net decrease in cash and cash equivalents Effects of movements in exchange rates on cash held Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period

1H 2017 1H 2016 RMB’000 RMB’000 (unaudited) (unaudited) 80,536 60,620 11,199 9,722 677 677 (1,045) (5,212) 1,415 31 (54) (7) 62 879 (2,035) (4,599) 1,485 (261) (272) — 2,303 (2,964) 94,271 58,886 (258,359) (109,395) 5,295 (172) (36,259) 20,747 18,843 3,584 (11,344) (3,225) (187,553) (29,575) (62) (879) 2,035 4,599 (11,279) (7,834) (196,859) (33,689) (9,107) (10,223) 359 3,428 (50,000) — 29,272 — — (36,000) (29,476) (42,795) (27,000) (118,274) — 27,870 163 14,458 (9,972) (11,524) (36,809) (87,470) (263,144) (163,954) (2,025) 2,999 554,209 605,907 289,040 444,952

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STATEMENT OF CHANGES IN EQUITY

Consolidated Statement of Changes in Equity for the six months ended 30 June 2017

GROUP —RMB’000 Balance at 1 January 2017 Total comprehensive income for the period Dividends paid Transfer to reserves Balance at 30 June 2017	Share capital 295,000 — — — 295,000	General reserves 200,601 — — 10,624 211,225	Special reserve (6,017) — — — (6,017)	Fair value reserve 18,955 — — —	Translation reserves (803) 324 — — (479)	Accumulated profits 888,223 68,558 (9,972) (10,624) 936,185	Total 1,395,959 68,882 (9,972) — 1,454,869
				18,955

Consolidated Statement of Changes in Equity for the six months ended 30 June 2016

GROUP— RMB’000 Balance at 1 January 2016 Total comprehensive income for the period Dividends paid Transfer to reserves Balance at 30 June 2016	Share capital 295,000 — — — 295,000	General reserve 182,898 — — 7,803 190,701	Special reserve (6,017) — — — (6,017)	Translation reserve (1,314) 35 — — (1,279)	Accumulated profits 817,608 50,491 (11,524) (7,803) 848,772	Total 1,288,175 50,526 (11,524) — 1,327,177

Statement of Changes in Equity of the Company for the six months ended 30 June 2017

COMPANY —RMB’000 Balance at 1 January 2017 Total comprehensive income for the period Dividends paid Balance at 30 June 2017	Share capital 295,000 — — 295,000	Accumulated profits Total 161,851 456,851 (4,595) — (9,972) (9,972) 147,284 442,284

Statement of Changes in Equity of the Company for the six months ended 30 June 2016

COMPANY— RMB’000 Balance at 1 January 2016 Total comprehensive income for the period Dividends paid Balance at 30 June 2016	Share capital 295,000 — — 295,000	Accumulated profits Total 181,390 476,390 (2,676) (2,676) (11,524) (11,524) 167,190 462,190

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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 primary-listed on Main Board of The Stock Exchange of Hong Kong Limited (the “ SEHK ”) and secondary-listed on the Main Board of the Singapore Exchange Securities Trading Limited (the “ SGX-ST ”). The registered office of the Company is located at 55 Market Street, #08-01, Singapore 048941. 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 subsidiaries 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 Company and the presentation currency of the Group.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

These financial statements have been prepared in accordance with the measurement and recognition criteria of the International Financial Reporting Standards (“ IFRSs ”), amendments (hereinafter referred to as the “ IFRS ”) issued by the International Accounting Standards Board (“ IASB ”) that are effective for annual reporting periods beginning on or after 1 January 2017.

These financial statements have been prepared on a historical cost basis. These financial statements are 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 2016.

3. APPLICATION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS

The Group adopted the new and revised IFRS that are mandatory for the financial periods beginning on or after 1 January 2017.

The adoption of new and revised IFRS did not have any impact on the results of the Group for the financial period ended 30 June 2017.

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4. SEGMENT INFORMATION

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

• Manufacturing and sale of radio frequency coaxial cable for mobile communications (“ RF Coaxial Cables ”)

• Telecommunication equipment and accessories (“ Accessories ”)

• Manufacturing and sale of antennas (“ Antennas ”)

• Others (includes leaky cables, high temperature resistant cables (“ HTRC ”) and antenna testing services)

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

Segment revenues and results

The Group determines its operating segments based on internal reports about components of the Group that are regularly reviewed by the Executive Directors (the chief operating decision makers) in order to allocate resources to the segments and to assess their performance.

Based on the segment information reported to the Executive Directors, the Group is organised into five product lines — radio frequency coaxial cables, telecommunication equipment and accessories, high temperature resistant cables, antennas and antenna testing services.

The Group has presented the three main products, radio frequency coaxial cables, telecommunication equipment and accessories and antennas, as reportable segments for the six months ended 30 June 2017. As for the six months ended 30 June 2016, the Group has presented the two main products, radio frequency coaxial cables and telecommunication equipment and accessories, as reportable segments. The other products do not meet any of the quantitative thresholds for determining reportable segments for the six months ended 30 June 2017 and 2016 and have therefore been combined.

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Information related to each reportable segment is set out below. Segment profit (loss) before tax is used to measure performance because management believes that this information is the most relevant in evaluating the results of the respective segments relative to other entities that operate in the same industries.

Reportable segments

Group Six months ended 30 June 2017 Revenue Segment profit before tax (Note 1) Interest income Finance costs Amortisation of lease prepayment Write-down of inventory Depreciation expenses Segment assets as at 30 June 2017 (Note 2) Capital expenditure (Note 3) Segment liabilities as at 30 June 2017 (Note 2)	Radio frequency coxial cables RMB’000 416,568 25,247 994 (30) 331 83 5,468 809,668 4,448 103,895	Telecom- munication equipment and accessories RMB’000 227,885 44,395 544 (17) 181 3 2,991 442,931 2,434 56,836	Antennas RMB’000 154,111 2,966 368 (11) 122 1,320 2,023 299,539 1,646 38,436	Total reportable segments RMB’000 798,564 72,608 1,906 (58) 634 1,405 10,482 1,552,138 8,528 199,167	All other segments RMB’000 54,256 6,997 129 (4) 43 9 712 105,456 579 13,532	Total RMB’000 852,820 79,605 2,035 (62) 677 1,415 11,194 1,657,594 9,107 212,699

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Reportable segments

Group Six months ended 30 June 2016 Revenue Segment profit before tax (Note 1) Interest income Finance costs Amortisation of lease prepayment Write-down of inventory Depreciation expenses Segment assets as at 31 December 2016(Note 2) Capital expenditure (Note 3) Segment liabilities as at 31 December 2016(Note 2)	Radio frequency coxial cables RMB’000 496,205 29,746 3,137 (599) 462 — 6,623 1,112,099 6,967 157,985	Telecom- munication equipment and accessories RMB’000 186,962 29,603 1,182 (226) 174 — 2,496 398,348 2,625 56,589	Total reportable segments RMB’000 683,167 59,349 4,319 (825) 636 — 9,119 1,510,447 9,592 214,574	All other segments RMB’000 44,848 898 280 (54) 41 31 599 111,472 630 15,836	Total RMB’000 728,015 60,247 4,599 (879) 677 31 9,718 1,621,919 10,222 230,410

Note 1:

Segment profit before tax represent the profits earned by each segment without allocation of central administration costs, independent directors’ fees, interest income, foreign exchange gains and losses and finance costs at corporate level.

Note 2:

Segment assets represent property, plant and equipment, lease prepayment, associate, other investments, deferred tax assets, inventories, trade and other receivables and prepayment, cash and cash equivalents which are attributable to each operating segments. Segment liabilities represent deferred income, deferred tax liabilities, short-term loans, trade and other payables, and income tax payable, which are attributable to each operating segments.

Note 3:

Segment capital expenditure is the total cost incurred during the reporting period to acquire property, plant and equipment, and intangible assets other than goodwill.

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Reconciliation of information on reportable segments to IFRS measures

Profit before tax Total profit before tax for reportable segments Profit before tax for other segments Unallocated amounts : — Other income — Other expenses (Note 4) — Share of (losses)/profits of an associate — Other unallocated amounts Assets Total assets for reportable segments Assets for other segments Other unallocated amounts (Note 5) Consolidated total assets Liabilities Total liabilities for reportable segments liabilities for other segments Other unallocated amounts (Note 5) Consolidated total liabilities Note 4:

Group For the six months ended 30 June 2017 2016 RMB’000 RMB’000 72,608 59,349 6,997 898 9,359 4,559 (2,572) (602) (1,485) 261 (4,371) (3,845) 80,536 60,620 Group As at 30 June 2017 31 December 2016 RMB’000 RMB’000 1,552,139 1,510,447 105,456 111,472 10,997 5,911 1,668,592 1,627,830 199,167 214,574 13,532 15,836 1,024 1,461 213,723 231,871

Excluding research and development expenses.

Note 5:

Unallocated assets mainly represent cash and cash equivalents, other receivables and prepayments and property, plant and equipment at Company level. Unallocated liabilities represent deferred tax liabilities and other payables at Company level.

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Other material items

For the six months ended 30 June 2017 Depreciation expense For the six months ended 30 June 2016 Depreciation expense	Reportable and all other segment totals RMB’000 11,194 9,718	Adjustments RMB’000 5 4	Consolidated totals RMB’000 11,199
			9,722

Geographical segment

The segment 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 People’s Republic of China, India and others.

	Revenue from external	customer	Non-current	assets*
	For the six months	ended	As at
	30 June		30 June	31 December
	2017	2016	2017	2016
	RMB’000	RMB’000	RMB’000	RMB’000
People’s Republic of China	731,760	640,621	231,989	241,260
India	42,807	38,928	1,247	3
Others	78,253	48,466	22	8
Total	852,820	728,015	233,258	241,271

• excludes other investments and deferred tax assets

5. REVENUE

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

Sale of goods Service income	For the six months ended 30 June 2017 2016 RMB’000 RMB’000 (unaudited) (unaudited) 852,811 727,998 9 17 852,820 728,015	For the six months ended 30 June 2017 2016 RMB’000 RMB’000 (unaudited) (unaudited) 852,811 727,998 9 17 852,820 728,015
		728,015

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6. OTHER OPERATING INCOME

Government grants Interest income Compensation claims received Investment income Net foreign exchange gains Gains on disposal of property, plant and equipment Others Total	For the six months ended 30 June 2017 2016 RMB’000 RMB’000 (unaudited) (unaudited) 8,320 2,667 2,035 4,599 288 783 272 — — 460 54 7 425 642 11,394 9,158	For the six months ended 30 June 2017 2016 RMB’000 RMB’000 (unaudited) (unaudited) 8,320 2,667 2,035 4,599 288 783 272 — — 460 54 7 425 642 11,394 9,158
		9,158

7. FINANCE COSTS

	For the six months	ended 30 June
	2017	2016
	RMB’000	RMB’000
	(unaudited)	(unaudited)
Interest on short term bank borrowings	62	879

8. PROFIT BEFORE TAX

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

	For the six months	ended 30 June
	2017	2016
	RMB’000	RMB’000
	(unaudited)	(unaudited)
Cost of inventories sold (including write-down of inventory)	668,034	582,540
Depreciation of property, plant and equipment	11,199	9,722
Amortisation of lease prepayment	677	677
Reversal of allowance for doubtful trade receivables	(1,045)	(5,212)
Employee benefits expense	88,422	69,539
Total staff costs
Cost of defined contribution plans	2,904	3,632
Directors’ fees — directors of the Company	822	782
Directors’ remuneration:
Directors of the Company	1,112	931
Directors of the subsidiaries	—	3
Net foreign exchange gains, included in other operating income	—	(460)
Net foreign exchange losses, included in other operating expenses	2,009	—
Gains on disposal of property, plant and equipment	(54)	(7)

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9. INCOME TAX EXPENSE

Current Deferred	For the six months ended 30 June 2017 2016 RMB’000 RMB’000 (unaudited) (unaudited) 13,061 9,087 (1,083) 1,042 11,978 10,129	For the six months ended 30 June 2017 2016 RMB’000 RMB’000 (unaudited) (unaudited) 13,061 9,087 (1,083) 1,042 11,978 10,129
		10,129

The Company is incorporated in Singapore and is subject to income tax rate of 17% for the six months ended 30 June 2017 (2016: 17%).

Under the law of the PRC on Enterprise Income Tax, applicable income tax rate of Jiangsu Hengxin Technology Co. Ltd. (“ Hengxin (Jiangsu) ”), the Group’s PRC incorporated wholly-owned subsidiary, in 2017 is 15% (2016: 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 2017 and 30 June 2016.

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 2016 and 30 June 2017	388,000	295,000	58,342

In accordance with the Constitution 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 owners of the Company 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 6 months ended 30 June 2017 30 June 2016 (unaudited) (unaudited) 0.177 0.130 0.177 0.130 388,000 388,000 388,000 388,000	Group 6 months ended 30 June 2017 30 June 2016 (unaudited) (unaudited) 0.177 0.130 0.177 0.130 388,000 388,000 388,000 388,000
		0.130
		388,000 388,000

There were no potential dilutive ordinary shares in existence during the six months ended 30 June 2016 and 2017.

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13. PROPERTY, PLANT AND EQUIPMENT

During the six months ended 30 June 2017, the Group’s capital expenditure was approximately RMB9.1 million (six months ended 30 June 2016: approximately RMB10.2 million).

14. TRADE RECEIVABLES

Trade receivables Allowance for doubtful debts Net trade receivables Bills receivable Total	30 June 2017 RMB’000 (unaudited) 719,912 (13,393) 706,519 67,907 774,426	31 December 2016 RMB’000 (audited) 463,781 (14,438) 449,343 65,679 515,022

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

Not past due Past due 1–90 days Past due 91–180 days Past due over 180 days	30 June 2017 RMB’000 (unaudited) 658,707 83,645 28,229 3,845 774,426	31 December 2016 RMB’000 (audited) 469,455 28,109 13,819 3,639 515,022

The movement in allowance for doubtful trade receivables is as follows:

At 1 January Reversal to profit and loss At 30 June	2017 RMB’000 (unaudited) 14,438 (1,045) 13,393	2016 RMB’000 (unaudited) 14,113 (5,212) 8,901

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15. TRADE PAYABLES

Trade payables	30 June 2017 RMB’000 (unaudited) 137,013	31 December 2016 RMB’000 (audited) 118,170

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 payables are as follows:

0 to 90 days 91 to 180 days 181 to 360 days Over 360 days	30 June 2017 RMB’000 (unaudited) 136,489 99 16 409 137,013	31 December 2016 RMB’000 (audited) 117,519 9 — 642
		118,170

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 June 2017 31 December 2016 (unaudited) (audited) 1,454,869 1,395,959 388,000 388,000 3.75 3.60	Company 30 June 2017 31 December 2016 (unaudited) (audited) 442,284 458,367 388,000 388,000 1.14 1.18	Company 30 June 2017 31 December 2016 (unaudited) (audited) 442,284 458,367 388,000 388,000 1.14 1.18
			1.18

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
	2017	2016
	RMB’000	RMB’000
	(unaudited)	(unaudited)
Sale of finished goods	4,918	—
Purchase of raw materials	20,650	13,598

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Suzhou Hengli Telecommunication Materials Co., Ltd. is a subsidiary of Hengtong Group Co., Ltd., a company in which the father of Cui Wei, the non-executive chairman of the Company, is a substantial shareholder of. Cui Wei is a substantial shareholder with shareholding of 23.27% of the total issued shares in the Company and has significant influence over the Company.

(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	For the six months ended 30 June 2017 2016 RMB’000 RMB’000 (unaudited) (unaudited) 3,571 2,899 80 72 3,651 2,971 As at 30 June 2017 31 December 2016 RMB’000 RMB’000 2,207 8,451

18. CAPITAL COMMITMENTS

19. OPERATING LEASE ARRANGEMENTS

As at 30 June 2017, the Group had total future minimum lease payments under non-cancellable operating leases, which are payable as follows:

Less than one year Between one and five years	As 30 June 2017 RMB’000 (unaudited) 1,027 710 1,737	at 31 December 2016 RMB’000 (audited) 943 759 1,702

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[—] for the six months ended 30 June 2017

Material changes are explained below:

Revenue

Group revenue increased by approximately RMB124.8 million, or approximately 17.1% from approximately RMB728.0 million for the six months ended 30 June 2016 (“ 1H2016 ”) to approximately RMB852.8 million for the six months ended 30 June 2017 (“ 1H2017 ” or the “ Reporting Period ”).

RF coaxial cable

Revenue generated from RF coaxial cable decreased by approximately RMB79.6 million or approximately 16.0% from approximately RMB496.2 million during 1H2016 to approximately RMB416.6 million during 1H2017.

Telecommunication equipment and accessories

Revenue generated from telecommunication equipment and accessories increased by approximately RMB40.9 million or approximately 21.9% from approximately RMB187.0 million during 1H2016 to approximately RMB227.9 million during 1H2017.

Antennas

As the antennas has met the quantitative threshold for determining reportable segments during 1H2017, therefore antennas has been separately classified as a reportable segment for 1H2017. Revenue generated from antennas during 1H2017 was approximately RMB154.1 million and the revenue of antennas during 1H2016 included in the other segment was approximately RMB29.4 million.

Others (Leaky cables, HTRC and antennas testing services)

Revenue generated in this segment increased by approximately RMB9.5 million or approximately 21.2% from approximately RMB44.8 million during 1H2016 to approximately RMB54.3 million during 1H2017, of which the increase was mainly attributable to the substantial increase in sales of leaky cables of approximately RMB40.0 million during 1H2017 (there was no revenue from such item during 1H2016) as offset by the reclassification of antennas as a reportable segment in 1H2017, the sales of leaky cables was approximately RMB29.4 million in 1H2016.

Gross profit margin

The Group achieved an overall gross profit margin of approximately 21.5% during 1H2017 compared to approximately 20.0% during 1H2016, representing an increase of 1.5 percentage points year-on-year. The higher gross profit margin for accessories in 1H2017 of 32.6% as compared with that of 28.2% for 1H2016 has lifted the overall gross profit margin of the Group. The moderate decrease in copper prices and the Group’s process efficiencies during 1H2017 had generally brought gross profit margin higher. The Group will continue to monitor production efficiencies to ensure optimal raw materials and labour 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 pressure resulting from keen competition.

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Other operating income

Other operating income increased by approximately RMB2.2 million or approximately 23.9% from approximately RMB9.2 million during 1H2016 to approximately RMB11.4 million during 1H2017 due to the combined effects of (i) higher government grants awarded; (ii) decrease in interest income earned; and (iii) a net foreign exchange losses recorded as compared with a net foreign exchange gains in 1H2016 during the Reporting Period.

Selling and distribution expenses

Selling and distribution expenses increased slightly by approximately RMB1.4 million or approximately 2.8% from approximately RMB50.2 million during 1H2016 to approximately RMB51.6 million during 1H2017. The increase was mainly due to the increase in salary expenses for marketing personnel and activities undertaken during the Reporting Period as a result of the Group’s increased effort to push the products of antenna and leaky cables during the Reporting Period.

Administrative expenses

Administrative expenses increased by approximately RMB12.4 million or approximately 69.3% from approximately RMB17.9 million during 1H2016 to approximately RMB30.3 million during 1H2017. The increase was mainly attributable to (i) the increase in staff costs of approximately RMB7.0 million year-on-year; (ii) decrease in the reversal of allowance for doubtful trade receivables of approximately RMB4.2 million; and (iii) increase in the allowance for inventory obsolescence of approximately RMB1.4 million.

Other operating expenses

Other operating expenses increased by approximately RMB5.6 million or approximately 22.2% from approximately RMB25.2 million during 1H2016 to approximately RMB30.8 million during 1H2017. The increase was due to higher research and development expenses incurred from continued customer requests for new and current product specifications during the Reporting Period.

Share of losses of an associate

During 1H2016, the Group acquired a 24% equity interest in Mianyang Xintong Industrial Co., Ltd. (formerly known as Mianyang City Siemax Industrial Co., Ltd.) (“ Mianyang Xintong ”), a limited liability company established in the People’s Republic of China (the “ PRC ”). Due to poor operating results of Mianyang Xintong, the Group’s proportionate share of losses recognised during 1H2017 was approximately RMB1,485,000.

Finance costs

Finance costs decreased by approximately RMB0.8 million or approximately 88.9% from approximately RMB0.9 million during 1H2016 to approximately RMB0.1 million during 1H2017. The decrease was due to the full settlement of short term loans during the Reporting Period.

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Profit before tax

Profit before tax increased by approximately RMB19.9 million or approximately 32.8% from approximately RMB60.6 million during 1H2016 to approximately RMB80.5 million during 1H2017. The increase was due to an increase in the level of sales and gross profit margin during the Reporting Period.

Income tax expense

The Group’s wholly-owned subsidiary, Hengxin (Jiangsu), has been subject to an incentive tax rate of 15% as it has been awarded as a high-tech enterprise in the PRC since 2014 for a period of three years.

Income tax expense increased by approximately RMB1.9 million or approximately 18.8% from approximately RMB10.1 million during 1H2016 to approximately RMB12.0 million in 1H2017. The increase is in line with the increase in profit before tax during the Reporting Period.

Net profit

In view of the above, net profit attributable to owners of the Company increased by approximately RMB18.1 million or approximately 35.8% from approximately RMB50.5 million in 1H2016, compared to approximately RMB68.6 million in 1H2017.

Statement of Financial Position

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

Inventories

Inventories (comprising raw materials, work-in-progress and finished goods) increased by approximately RMB34.8 million or approximately 20.4% from approximately RMB170.3 million as at 31 December 2016 to approximately RMB205.1 million as at 30 June 2017. The increase was mainly due to the increase in finished goods in transit, most of which were antennas line of products.

Other investments (current assets)

Other investments (current assets) increased by approximately RMB21.0 million or approximately 72.4% from approximately RMB29.0 million as at 31 December 2016 to approximately RMB50.0 million as at 30 June 2017. Other investments (current assets) as at 30 June 2017 represented the subscription of short term investment in a wealth management product with a duration of three months and annual yield of 4.23% commencing from 10 April 2017. Other investments (current assets) as at 31 December 2016, represented another wealth management product subscribed by the Group, was matured and redeemed in full during the Reporting Period. Please refer to the paragraph headed “(II) Discloseable Transaction during the Reporting Period” below.

Trade receivables

Trade receivables increased by approximately RMB259.4 million or approximately 50.4% from approximately RMB515.0 million as at 31 December 2016 to approximately RMB774.4 million as at 30 June 2017.

– 22 –

Average trade receivables turnover days were 141 days as at 30 June 2017, compared to 128 days as at 31 December 2016.

Nonetheless, most trade receivables balances were recent sales which were well within the average credit period given to our customers. As at 30 June 2017, approximately 83.6% of the trade receivables and bills receivable were within the credit period given as compared with that of approximately 88.7% as at 31 December 2016.

For amounts due more than six months and longer, these mainly pertain to final payment (upon project completion) owed by a number of PRC telecom operators. These outstanding balances relate to projects undertaken by these operators which have longer project completion dates than as initially anticipated. These operators have been the Group’s long-term customers and the Group has been receiving regular payments from them. In view of the Group’s long-standing dealings with them and the regular receipts it had obtained from these customers, the Group does not foresee any significant issue in the collection of these receivables.

The Group will continue to endeavour in its collection efforts on the outstanding balances.

Other receivables and prepayments (current assets)

Other receivables and prepayments (current assets) slightly decreased by approximately RMB2.8 million or approximately 3.6% from approximately RMB78.6 million as at 31 December 2016 to approximately RMB75.8 million as at 30 June 2017. The decrease was mainly due to the decrease in advance payment to suppliers for the purchase of raw materials.

Cash and bank balances

Cash and bank balances decreased by approximately RMB265.2 million or approximately 47.9% from approximately RMB554.2 million as at 31 December 2016 to approximately RMB289.0 million as at 30 June 2017, mainly due to the increase in trade receivables and inventories and the repayment of short term loans and net increase in other investments during the Reporting Period.

Other receivables (non-current assets)

Other receivables (non-current assets) amounting to approximately RMB20.4 million as at 30 June 2017 pertains to the non-current portion of the loan to the Group’s associate, Mianyang Xintong. During the Reporting Period, RMB2.5 million had been reclassified as other receivables (current assets).

Short term loans

Short-term loans decreased to nil from approximately RMB27.0 million as at 31 December 2016 mainly due to the full repayment of borrowings during the Reporting Period.

Trade payables and other payables

Trade payables increased by approximately RMB18.8 million or approximately 16.0% from approximately RMB118.2 million as at 31 December 2016 to approximately RMB137.0 million as at 30 June 2017.

– 23 –

Other payables decreased by approximately RMB10.9 million or approximately 15.4% from approximately RMB70.5 million as at 31 December 2016 to approximately RMB59.6 million as at 30 June 2017. The decrease was mainly due to the decrease in receipts in advance from customers and payments for accruals of bonus during the Reporting Period.

Income tax payable

Income tax payable increased by approximately RMB0.8 million or approximately 14.1% from approximately RMB5.5 million as at 31 December 2016 to approximately RMB6.3 million as at 30 June 2017, mainly due to time differences in the payment of taxes in these periods.

Deferred income

Deferred income decreased by approximately RMB0.5 million or approximately 9.9% from approximately RMB5.2 million as at 31 December 2016 to approximately RMB4.7 million as at 30 June 2017. This relates to grants with conditions attached requiring certain milestones to be met. As some of these conditions had been met, some of the deferred income had been recognised as other operating income.

(II) DISCLOSEABLE TRANSACTION DURING THE REPORTING PERIOD

On 10 April 2017, the Company announced the subscriptions of two wealth management products on 20 December 2016 and 10 April 2017, respectively, by Hengxin (Jiangsu), a wholly-owned subsidiary of the Company with GF Securities Co., Ltd. at the subscription amounts of RMB29 million and RMB50 million, respectively. For details of the two subscriptions of the wealth management products, please refer to the announcement of the Company dated 10 April 2017.

(III) LIQUIDITY, FINANCIAL RESOURCES

In addition to its short-term interesting-bearing facilities, the Group generally finances its operations from cash flows generated internally.

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 gearing ratio. The Group’s gearing ratio is calculated as total liabilities divided by total equity.

Total liabilities Total equity Total liabilities to equity (gearing) ratio (%)	As 30 June 2017 RMB’000 (unaudited) 213,723 1,454,869 14.69	at 31 December 2016 RMB’000 (audited) 231,870 1,395,959 16.61

As at 30 June 2017, there is no amount repayable in one year or less, or on demand (as at 31 December 2016: unsecured payables of approximately RMB27 million).

There is no amount repayable after one year.

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(IV) PROSPECTS (A COMMENTARY AT THE DATE OF THE REPORT 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)

During 1H2017, the global economy witnessed a slow recovery amidst a decelerating rate of growth in global trade, while the domestic economy in China continued to experience a slowdown. On the telecommunications front, China underwent an unprecedented structural divergence. Whilst the demand for fibre-related communication products far exceeded supply, the demand for coaxial cables continued to decline given the significant adoption of optic fibre in replacement of copper-made cables.

Despite such conditions, revenue increased by approximately 17.1% in 1H2017 compared with the corresponding period last year, which was mainly attributable to the escalating industry competition in the market in which the Group traditionally operates in China, resulting in a more significant reduction in the bulk purchase prices of operators. In addition, copper prices have been consistently low, adversely affecting the sales revenue of the Group. Despite facing the abovementioned adverse business environment, during 1H2017 the Group has managed to boost its revenue from antennas, accessories and leaky cable by more than RMB205.7 million as compared with 1H2016. On overseas fronts, sales performance started to pick up after years of development. Overseas sales of the Group increased from approximately RMB87.7 million in 1H2016 to RMB127.0 million in 1H2017.

Against the backdrop of the above-mentioned adverse effects, the Group has strengthened its efforts in the development and marketing of new product offerings. Through strong technological and capital capabilities, and with strict and effective management supported by employees at all levels, the Group accelerated the development of new products with higher gross profit during 1H2017 as compared with 1H2016. Number of the successful antennas tenders increased over the corresponding period last year and a tender was secured in a recent 800M8 terminal base station antenna bidding exercise of a PRC telecom operator as the fourth highest bidder, with a tender amount of approximately RMB162.25 million. Shipment of high temperature resistant cables in 1H2017 increased by more than 120% compared with 1H2016, while leaky cables and tools generated approximately RMB80.88 million in 1H2017, representing a year-on-year growth of approximately 36.78%. As a result of these positive changes, the product offerings of the Group had gone through continuous optimisation, and net profit for the first half of 2017 improved over 1H2016.

Looking forward to the second half of the year, both the three major PRC telecom operators and the Group will face different challenges. The introduction of a new series of tariff reduction requirements has led to a significant shrinkage of investments of these operators. Meanwhile, China Unicom has commenced the trial of mixed ownership operation; equipment manufacturers are further promoting the improvement of general solutions; and there is increasing adoption of optic fibre to replace copper-made cables. At the same time, as China Mobile announced the upcoming prices for bidding exercise, the market demand and prices of RF coaxial cables are expected to continue to be sluggish, which poses mounting challenges to the Group.

Nonetheless, the Group is confident of our new product lines of leaky cables, antennas, high temperature resistant cables and 4310 component products developed in earlier years which have entered positive territory, which the Group believes would replace the gradual decline of our

– 25 –

coaxial cable products. As antennas continues to evolve into much smaller, intelligent systems, and the pre-commercial trial of 5G antennas, the antenna demand is likely to grow, adding fresh impetus to the development of the Group.

Directors’ and chief executives’ interests and short positions in shares and underlying shares and debentures

As at 30 June 2017, the interests and short positions of 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 The Stock Exchange of Hong Kong Limited (the “ SEHK ”) pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests 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 to the Rules Governing the Listing of Securities on the SEHK (the “ Listing Rules ”), were as follows:

Long positions in the Company:

			Approximate
			percentage
			of the
		Number of	Company’s
		ordinary	issued share
Name of Directors	Capacity and nature of interests	shares held	capital
Mr. Cui Wei(1)	Deemed interest and interest in	90,294,662	23.27%
	controlled corporation
Ms. Zhang Zhong(2)	Deemed interest and interest in	28,082,525	7.24%
	controlled corporation
Mr. Du Xiping	Beneficial owner	11,468,000	2.96%

Notes:

• (1) Mr. Cui Wei 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 2017, none of the Directors and chief executives of the Company nor their associates had or deemed to have any interests or short positions 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.

– 26 –

Substantial shareholders’ and other persons’ interests in shares and underlying shares

As at 30 June 2017, 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 in the Company:

			Approximate
			percentage
			of the
		Number of	Company’s
Name of substantial		ordinary	issued share
shareholders	Capacity and nature of interests	shares held	capital
Kingever(1)	Beneficial owner	90,294,662	23.27%
Mr. Cui Wei(1)	Deemed interest and interest in	90,294,662	23.27%
	controlled corporation
Wellahead(2)	Beneficial owner	28,082,525	7.24%
Ms. Zhang Zhong(2)	Deemed interest and interest in	28,082,525	7.24%
	controlled corporation

Notes:

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

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

Saved as disclosed above, as at 30 June 2017, 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, had an interest or short position in the shares or underlying shares of the Company that was required to be recorded in the register required to be kept by the Company under Section 336 of the SFO.

Arrangements to enable Directors to acquire benefits by means of the acquisition of shares and debentures

Neither at the end of the Reporting Period nor at any time during the Reporting 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, except for the share option scheme (the “ Share Option Scheme ”) adopted by the Company at its extraordinary general meeting held on 27 October 2010.

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(V) SUPPLEMENTAL INFORMATION

1. Audit Committee and its Terms of Reference

The Company’s audit committee members are Mr. Tam Chi Kwan Michael, Mr. Cui Wei, Dr. Li Jun, Mr. Pu Hong and Ms. Zhang Zhong. The audit committee, which is chaired by Mr. Tam Chi Kwan Michael, has reviewed the unaudited interim results of the Group for the six months ended 30 June 2017.

2. Compliance with Corporate Governance Code

The Company has complied with all the code provisions of the Corporate Governance Code as set out in Appendix 14 to the Listing Rules for the six months ended 30 June 2017.

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

Having made specific enquiries with all the Directors, all the Directors have confirmed that they have complied with the required standards of the Model Code during the Reporting Period.

4. Dividends

No dividend has been recommended by the Company for the six months ended 30 June 2017.

5. Review of financial results

The consolidated interim results of the Group for the six months ended 30 June 2017 have not been audited or reviewed by the Company’s auditors.

6. Purchase, sales or redemption of the Company’s securities

During the Reporting Period, neither the Company nor its subsidiaries had purchased, sold or redeemed any of the securities of the Company.

7. Employees and remuneration practices

As at 30 June 2017, there were 951 (as at 31 December 2016: 966) employees in the Group. Staff remuneration packages are determined in consideration of market conditions and the performance of the individuals concerned, and are subject to review from time to time. The Group also provides other staff benefits including medical and life insurance, and grants discretionary incentive bonuses and share options to eligible staff based on their performance and contributions to the Group.

The Company adopted the Share Option Scheme for its employees at its extraordinary general meeting held on 27 October 2010. No option has been granted under the Share Option Scheme since its adoption and up to the date of this report.

8. Disclosure on the website of the Exchanges

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

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(VI) SHARE OPTION SCHEME

The Company adopted the Share Option Scheme on 27 October 2010, as approved by its shareholders at the extraordinary general meeting held on the same date. The Share Option Scheme is valid and effective for a period of 10 years from 27 October 2010. It is a share incentive scheme and is established to provide the people and the parties working for the interests of the Group with an opportunity to obtain an equity interest in the Company, thus linking their interests with the Group’s interest and providing them with an incentive to work better for the interest of the Group. Pursuant to the Share Option Scheme, the Board may, at its discretion, offer to grant an option to all Directors (whether executive or non-executive and whether independent or not), any employee (whether full time or part time) of the Group (whether on an employment or contractual or honorary basis and whether paid or unpaid), who in the absolute opinion of the remuneration committee of the Company (the “ Remuneration Committee ”), has contributed to the Group. An option granted under the Share Option Scheme entitles the option holder to subscribe for a specific number of new ordinary shares in the Company.

The Share Option Scheme is administered by the Remuneration Committee which comprises:

Dr. Li Jun (Chairman)

• Mr. Cui Wei

• Mr. Tam Chi Kwan Michael

Mr. Xu Guoqiang

Mr. Pu Hong

The total number of shares which may be issued upon exercise of all options to be granted under the Share Option Scheme and any other schemes must not in aggregate exceed 10% of the shares of the Company in issue on 27 October 2010 (i.e. 33,600,000 shares), representing approximately 8.66% of the total number of the issued shares of the Company as at 30 June 2017.

The total number of the shares issued and to be issued upon exercise of the options granted under the Share Option Scheme to any eligible participants (including exercised, cancelled and outstanding options) in any 12-month period must not exceed 1% of the shares of the Company in issue, unless approved by the shareholders of the Company in general meeting at which the relevant participant and his/her associates shall abstain from voting.

– 29 –

Pursuant to the Share Option Scheme, the option has an exercise price[#] per share determined with reference to the market price of the shares at the time of grant of the option. The consideration for the grant of an option is S$1.00, payable to the Company within 28 days from the offer date (or such other period as the Remuneration Committee may determine). Options granted with the exercise price set at the market price shall only be exercised after the first anniversary but before the tenth anniversary of the date of grant of that option. The shares under option may be exercised in whole or in part on the payment of the relevant exercise price (provided that an option may be exercised in part only in respect of a board lot or any integral multiple thereof). Options granted will lapse when the option holder ceases to be a full-time employee of the Company or any company of the Group subject to certain exceptions at the discretion of the Remuneration Committee.

• exercise price or subscription price shall be at least the highest of:

• (i) the closing price of the shares as stated in the daily quotation sheet issued by SEHK or SGX-ST (whichever is higher) on the offer date, which must be a business day; and

• (ii) the average closing price of the shares as stated in the daily quotation sheet issued by SEHK or SGX-ST for the five consecutive business days immediately preceding the offer date (whichever is higher).

There were no unissued shares of the Company under options granted pursuant to the Share Option Scheme.

During the Reporting Period, no options to take up unissued shares of any subsidiary were granted and there were no shares of any subsidiary issued by virtue of the exercise of an option to take up unissued shares.

As at the end of the Reporting Period, there were no unissued shares of the Company or of any corporation in the Group under option.

By Order of the Board Hengxin Technology Ltd. Cui Wei Chairman

17 August 2017

As at the date of this report, the executive Directors of the Company are Mr. Du Xiping and Mr. Xu Guoqiang; the non-executive Directors of the Company are Mr. Cui Wei and Ms. Zhang Zhong; and the independent non-executive Directors of the Company are Mr. Tam Chi Kwan Michael, Dr. Li Jun and Mr. Pu Hong.

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