Jujiang Construction Group Co., Ltd. — Interim / Quarterly Report 2017

Sep 25, 2017

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Jujiang Construction Group Co., Ltd. 巨匠建設集團股份有限公司

(A joint stock limited liability company established in the People’s Republic of China)

Stock Code: 1459

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2017 Interim Report

CONTENTS

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|Page|
|Corporate Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .|2|
|Financial Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .|4|
|Management Discussion and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .|5|
|Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .|14|
|Report on Review of Interim Condensed Consolidated Financial Statements. . . . . . . . . . . . . . .|19|
|Interim Condensed Consolidated Statement of Profit or Loss and|
|Other Comprehensive Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .|21|
|Interim Condensed Consolidated Statement of Financial Position . . . . . . . . . . . . . . . . . . . . . . . . .|22|
|Interim Condensed Consolidated Statement of Changes in Equity . . . . . . . . . . . . . . . . . . . . . . . .|24|
|Interim Condensed Consolidated Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .|25|
|Notes to Interim Condensed Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . .|27|

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Interim Report 2017 1

CORPORATE INFORMATION

DIRECTORS

Executive Directors

Mr. Lv Yaoneng (Chairman) Mr. Lv Dazhong Mr. Li Jinyan Mr. Lu Zhicheng Mr. Shen Haiquan Mr. Zheng Gang

Independent Non-Executive Directors

Mr. Yu Jingxuan Mr. Lin Tao Mr. Wong Ka Wai

SUPERVISORS

Mr. Zou Jiangtao Mr. Chen Xiangjiang Mr. Lv Xingliang Mr. Zhu Jialian

JOINT COMPANY SECRETARIES

Mr. Hong Kam Le Mr. Jin Shuigan

AUTHORISED REPRESENTATIVES

Mr. Lv Yaoneng Mr. Jin Shuigan

LEGAL ADVISER

As to Hong Kong Law Li & Partners

As to PRC Law AILBright Law Office

AUDITOR

Ernst & Young

COMPLIANCE ADVISOR

AUDIT COMMITTEE

Mr. Yu Jiagxuan (Chairman) Mr. Wang Ka Wai Mr. Lin Tao

NOMINATION COMMITTEE

Mr. Lin Tao (Chairman) Mr. Lv Yaoneng Mr. Yu Jingxuan

REMUNERATION AND APPRAISAL COMMITTEE

Mr. Wong Ka Wai (Chairman) Mr. Lv Yaoneng Mr. Lin Tao

STRATEGIC COMMITTEE

Mr. Lv Yaoneng (Chairman) Mr. Lin Tao Mr. Zheng Gang

Guotai Junan Capital Limited

H SHARE REGISTRAR

Tricor Investor Services Limited Level 22, Hopewell Centre 183 Queen’s Road East Hong Kong

PRINCIPAL BANKERS

• China Construction Bank Corporation Tongxiang Branch

• China Construction Bank Corporation Qingbei Branch

• China Construction Bank Corporation Xingfu Branch

• Industrial and Commercial Bank of China Limited Tongxiang Branch

• Industrial Bank Co., Ltd Jiaxing Branch

• Bank of Communications Co., Ltd Tongxiang Branch

• China Merchants Bank Co., Ltd Jiaxing Tongxiang Branch

• Tongxiang Rural Commercial Bank Gaoqiao Branch

2 Jujiang Construction Group Co., Ltd.

CORPORATE INFORMATION

REGISTERED ADDRESS

Gaoqiao Town Jiaxing City Zhejiang Province PRC

HEAD OFFICE AND PRINCIPAL PLACE OF BUSINESS IN PRC

No. 669 Qingfeng South Road (South) Tongxiang City Zhejiang Province PRC

PRINCIPAL PLACE OF BUSINESS IN HONG KONG

22/F, World-Wide House 19 Des Voeux Road Central Hong Kong

STOCK CODE

1459

WEBSITE

www.jujiang.cn

Interim Report 2017 3

FINANCIAL SUMMARY

	For the six 2017 Unaudited RMB’000	For the six 2017 Unaudited RMB’000	months ended 30 June 2016 Unaudited Change RMB’000 %	months ended 30 June 2016 Unaudited Change RMB’000 %	months ended 30 June 2016 Unaudited Change RMB’000 %
Revenue Gross profit Gross profit margin Profit for the period Net profit margin Basic and diluted earnings per share (RMB)	2,080,395 114,435 5.50% 51,936 2.50% 0.10		1,999,078 118,180 5.91% 47,958 2.40% 0.09		4.07 (3.17) (0.41) 8.29 0.10

4 Jujiang Construction Group Co., Ltd.

MANAGEMENT DISCUSSION AND ANALYSIS

OVERVIEW

The Group was established in 1965 as one of the earliest construction companies in Jiaxing, a city currently with a population of more than 4.5 million and strong commercial and light industrial activities. With 50 years’ experience in the construction industry, the Group has built a successful track record in the industry in which the Group operates.

The Group successfully obtained the Premium Class Certificate for General Building Construction Contracting Work (“Premium Class Certificate”) and the Grade A Engineering Design (Construction Industry) Certificate (“Engineering Design Certificate”) on 28 January 2015 after undergoing a stringent review process. As of 30 June 2017, the Group was one of few numbers construction company in Zhejiang Province holding both certificates. The Premium Class Certificate is the highest qualification awarded to building construction general contractors satisfying the high standards in relation to project management experience, technological innovation and scale of operations. The Engineering Design Certificate is awarded to those that meet high standards in relation to personnel qualifications, management capabilities and internal control. Holding these two key certificates as well as other certificates, the Group is able to provide fullyintegrated construction solutions, which consist of construction contracting and design, survey and consultancy services for building construction projects of all types and scales nationwide. The Group believes holding these certificates will also allow us to charge a premium rate for our services, resulting in higher profit margins in our construction projects.

MARKET REVIEW

China’s rapid economic growth over the years has spurred the development of its construction industry. Given China’s continuous urbanization in relation to improving community functions and facilities in urban areas, the demand for construction industry is expected to maintain its momentum. It is expected that the urbanization rate of China for 2017 will be 59.2%. The urbanization rate represents the rate of change in the size of the urban population over a certain period. By 2020, it is expected that approximately 100 million of the rural population will settle in urban areas, which will bring significant demand for new urban residential construction. In line with the historical trend of increases in the average fee for construction projects, the total output value of China’s construction industry in China increased from approximately RMB8,587.1 billion for the six months ended 30 June 2017, increased by 10.9% as compared with the same period in 2016.

BUSINESS REVIEW

In the first half of 2017, the Company made significant achievements in business expansion. While maintaining and furthering cooperation relationships with major customers, including Country Garden Holdings Company Limited (“Country Garden”), China Vanke Co., Ltd. (“Vanke”), Greentown China Holdings Limited (“Greentown”), Jiayuan Chuangsheng Holding Group Co., Ltd. (“Jiayuan”), Sunac China Holdings Limited (“Sunac”), Zhenshi Holding Group Co., Ltd. (“Zhenshi”) and Tongkun Group Co., Ltd. (“Tongkun”), the Company successfully expanded its business footprint to surrounding cities and other provinces, including undertaking two projects with a total cost of RMB408 million in Zhengzhou City, the provincial capital of Henan Province. Meanwhile, the Company also actively pushed forward the development of quality business by striving to undertake quality business with economy of scale and market influence to boost brand awareness. The improvement in business quality was significant in the first half of the year, and among the contracted business projects newly undertaken, ten were worth over RMB50 million, and six over RMB100 million.

Interim Report 2017 5

MANAGEMENT DISCUSSION AND ANALYSIS

In addition, the Company has been placing a great deal of emphasis on innovation in production technologies. In the first half of 2017, the Company leveraged on the “Academician Workstations” and “Industry-Academic Research” platforms to expand the scale of technological cooperation with external parties, aiming to offer technical support to its on-going projects, and in the first half of the year, one application for national patents filed by the Company was accepted, two patents were approved, and four excellent QC accomplishment awards at the municipal-level were granted.

In the first half of 2017, the Company won many important awards at the provincial, municipal and county levels, including sixteen for overall performance, eleven for quality works, and dozens for construction safety and attainment of standards. In particular, the Zhenshi Headquarters Building （振石總部大樓） project, a pioneer project in applying the Building Information Modeling Technology (“BIM Technology”) with achievements in adopting a standard construction process, was among the 17th batch of New Construction Technology Application Demonstration Projects, which enhanced our status as an influential brand.

For the six months ended 30 June 2017, approximately 99.0% of the revenue was contributed by the construction contracting business. The Group recorded a revenue of approximately RMB2,080.4 million for the six months ended 30 June 2017, increased by 4.1% as compared with the same period in 2016. Profit for the period rose by 8.3% to approximately RMB51.9 million. The Group’s performance maintained a steady growth.

	For the six months ended 30 June 2017 2016 RMB’million % RMB’million %
Construction contracting business Residential Commercial Industrial Public works Other business Total revenue	999.6 48.1 728.0 36.4 821.1 39.5 940.9 47.1 118.7 5.7 140.9 7.0 119.3 5.7 179.8 9.0
	2,058.7 99.0 1,989.6 99.5 21.7 1.0 9.5 0.5
	2,080.4 100.0 1,999.1 100.0

6 Jujiang Construction Group Co., Ltd.

MANAGEMENT DISCUSSION AND ANALYSIS

During the first half of the year, the Group pushed forward high-end projects and cooperated with high-value customers, including securing quality new customers such as Country Garden, Vanke and Greentown. Compared with the value of backlog of about RMB4,902.1 million as at 30 June 2016, the value of backlog increased by 6.46% to approximately RMB5,219.0 million as at 30 June 2017.

	For the six months ended 30 June 2017 2016 RMB’million RMB’million
Opening value of backlog Net value of new projects(1) Revenue recognized(2) Closing value of backlog(3)	5,422.6 4,999.4 1,860.1 1,921.0 (2,063.7) (2,018.3)
	5,219.0 4,902.1

Notes:

• (1) Net value of new contracts means the total contract value of new construction contracting contracts which were awarded to us during the relevant period indicated.

• (2) Revenue recognized means the revenue that has been recognized during the relevant period indicated, such amounts are before deducting business tax/value added tax.

• (3) Closing value of backlog means the total contract value for the remaining work of construction projects before the percentage of completion of such projects reached 100% as of the end of the relevant period indicated.

FINANCIAL REVIEW

Revenue and gross profit margin

Revenue increased by 4.07% from approximately RMB1,999.1 million for the six months ended 30 June 2016 to approximately RMB2,080.4 million for the six months ended 30 June 2017 primarily because of increase of construction constructing business amounting to approximately RMB69.1 million and increase of other amounting to approximately RMB12.2 million for the six months ended 30 June 2017. Increase in construction constructing business was the results of increase in revenue from residential construction projects amounting to approximately RMB271.6 million, which was offsetting by decrease in revenue from other construction projects amounting to RMB202.5 million. Since 2016, the Group focused to develop a good relationship with 2 new high value customers, the strategies have been well achieved. During the period, revenue contributed by 2 new high value customers in residential properties business were RMB97.1 million as there was nil for the six months ended 30 June 2016. Decrease in other construction constructing business is the results of some of major projects were nearly completed in 2016 and the Group focused on high value customers and high value projects in order to have a healthy development.

Interim Report 2017 7

MANAGEMENT DISCUSSION AND ANALYSIS

Gross profit decreased by 3.17% from approximately RMB118.2 million for the six months ended 30 June 2016 to approximately RMB114.4 million for the six months ended 30 June 2017, and gross profit margin decreased from 5.91% to 5.50% during the same period. The decrease in gross profit was a result of decrease in gross profit margin. The decrease in gross profit margin was primarily due to decrease in overall profit margin of each of business sector, especially for public projects. During the six months ended 30 June 2017, decrease in profits margin of public projects was a results of overrun of a project and finalized revenue of a project was lower than the budgeted revenue. The Group devoted much attention to selecting prestigious and highmargin projects to tender for.

Other income and gains

Other income and gains decreased significantly by approximately RMB7.8 million from approximately RMB16.4 million for the six months ended 30 June 2016 to approximately RMB8.6 million for the six months ended 30 June 2017 primarily because we received one-off government grants of approximately RMB11.0 million for the six months ended 30 June 2016 in relation to the Listing as no such government grant was incurred for the six months ended 30 June 2017.

Administrative expenses

Administrative expenses decreased by 11.7% from approximately RMB37.2 million for the six months ended 30 June 2016 to approximately RMB32.9 million for the six months ended 30 June 2017. Such decrease was primarily due to decrease in professional fee in relation to the Listing amounting to approximately RMB3.3 million.

Other expenses

Other expenses decreased by 44.4% from approximately RMB7.9 million for the six months ended 30 June 2016 to approximately RMB4.4 million for the six months ended 30 June 2017. Such decreased represented a reversal of impairment of other receivables amounting to approximately RMB3.6 million for the six months ended 30 June 2017 as there was an impairment loss of other receivables amounting to RMB0.8 million for the six months ended 30 June 2016.

Finance costs

Finance costs decreased by 22.6% from approximately RMB22.4 million for the six months ended 30 June 2016 to approximately RMB17.4 million for the six months ended 30 June 2017 due to decrease in average of the loan balance during the period as compared with that average balance in last period.

Income tax expense

Income tax expenses decreased by 13.0% from approximately RMB19.0 million for the six months ended 30 June 2016 to approximately RMB16.5 million for the six months ended 30 June 2017. Such decrease was primarily due to over-provision for income tax in prior year and an income not subject to tax in relation to dividend income contributed from available-for-sales investment for the six months ended 30 June 2017. Our effective tax rate therefore decreased from approximately 28.3% for the six months ended 30 June 2016 to approximately 24.1% for the six months ended 30 June 2017.

8 Jujiang Construction Group Co., Ltd.

MANAGEMENT DISCUSSION AND ANALYSIS

Profit for the period

Profit for the period increased by 8.3% from approximately RMB48.0 million for the six months ended 30 June 2016 to approximately RMB51.9 million for the six months ended 30 June 2017. Net profit margin increased from approximately 2.40% for the six months ended 30 June 2016 to approximately 2.50% for the six months ended 30 June 2017, primarily due to the decrease in finance costs and administrative expenses.

LIQUIDITY, FINANCIAL RESOURCES AND CAPITAL STRUCTURE

The Group’s operations are funded through cash generated from operating activities and bank borrowings. As of 30 June 2017 and 31 December 2016, the Group had cash and cash equivalents of approximately RMB57.5 million and approximately RMB65.0 million, respectively.

Treasury Policies

The Group monitors the cash flows and cash balance on a regular basis and seeks to maintain an optimal level of liquidity that can meet the working capital needs while supporting a healthy level of business and its various growth strategies throughout the period under review. In the future, the Group intends to finance its operations through cash generated from operating activities, interest-bearing bank borrowings. Other than normal bank borrowings that the Group obtained from commercial banks and potential debt financing plans, and save for the non-public issuance of corporate bonds as approved at the annual general meeting of the Company on 19 May 2017, the Group does not expect to have any material external debt financing plan in the near future.

Amounts due from contract customers

The amounts due from contract customers decreased from approximately RMB2,998.3 million as of 31 December 2016 to approximately RMB2,794.9 million as of 30 June 2017, representing 71.0% and 69.7% of the total current assets as of the same dates. The decrease in the proportion of the amounts due from contract customers to the total current assets was primarily because of the Group actively to issue billings to the customers.

Trade and bill payables

Trade and bills payables decreased from approximately RMB2,330.5 million as of 31 December 2016 to approximately RMB2,035.0 million as of 30 June 2017. Such decrease was a result of improvement of operating cash flow.

Borrowings and charge on assets

As of 30 June 2017, the Group relied on interest-bearing borrowings in the amount of approximately RMB570.9 million (31 December 2016: approximately RMB644.5 million) which are repayable within 1 year and carried effective interest rate with a range from 4.4% to 20.4% per annum (31 December 2016: 4.4% to 21.6% per annum).

As at 30 June 2017, certain general banking facilities of the Group were secured by the Group’s land use rights and buildings of approximately RMB97.4 million (31 December 2016: approximately RMB98.2 million). Save as disclosed in this report, there was no charge on the Group’s assets as at 30 June 2017.

Interim Report 2017 9

MANAGEMENT DISCUSSION AND ANALYSIS

On 19 May 2017, the resolutions in relation to issuance of the non-public issuance of the corporate bonds with an aggregate principal of not exceeding RMB500 million (the “RMB Bonds”) and the non-public issuance of the corporate bonds with an aggregate principal of not exceeding USD100 million (the “USD Bonds”) were considered and approved at the annual general meeting of the Company (“AGM”). For details of terms of the RMB Bonds and the USD Bonds, please refer to the circular of the Company dated 3 April 2017. The relevant resolutions for the issuance of the RMB Bonds and the USD Bonds shall be effective for 24 months from the date of approval at the AGM. As at 30 June 2017, the Company has not yet issued any RMB Bonds and USD Bonds.

Gearing ratio

The gearing ratio decreased from approximately 55.8% as at 31 December 2016 to approximately 46.8% as at 30 June 2017, such decrease was mainly attributing to repayments of interest-bearing bank and other borrowings during the period.

Gearing ratio represents net debt divided by total equity as of the end of a year/period. Net debt is defined as all borrowings deducted by cash and bank balances and pledged deposits.

Capital Expenditure

Capital expenditures decreased from approximately RMB13.6 million for the year ended 31 December 2016 to approximately RMB2.5 million for the six months ended 30 June 2017 primarily because the Group has made sufficient investments in the previous years to satisfy the needs of the business operations during the period.

Capital Commitments

As at 30 June 2017, the Group did not have any significant commitments.

Contingent liabilities

As at 30 June 2017, the Group had no material contingent liabilities.

Fluctuation of RMB Exchange Rate and Foreign Exchange Risks

The majority of the Group’s business and all bank borrowings are denominated and accounted for in RMB. Therefore, the Group does not have significant exposure to foreign exchange fluctuation. The Board does not expect the fluctuation of RMB exchange rate and other foreign exchange fluctuations will have material impact on the business operations or financial results of the Group. The Group currently has no hedging policy with respect to the foreign exchange risks, therefore, the Group has not entered into any hedging transactions to manage the potential fluctuation in foreign currencies.

SIGNIFICANT INVESTMENTS HELD, MATERIAL ACQUISITIONS AND DISPOSALS

The Group had no significant investments held or material acquisitions and disposals during the six months ended 30 June 2017.

FUTURE PLANS FOR MATERIAL INVESTMENTS AND CAPITAL ASSETS

The Group did not have other plans for material investments and capital assets as at 30 June 2017.

10 Jujiang Construction Group Co., Ltd.

MANAGEMENT DISCUSSION AND ANALYSIS

EMPLOYEE AND REMUNERATION POLICIES

As of 30 June 2017, the Group had total of 704 employees, of which 583 were based in Jiaxing City, and 121 were based in other areas in Zhejiang Province and other provinces and regions in China. For the six months ended 30 June 2017, the Group incurred total staff costs of approximately RMB19.7 million, representing an increase of approximately 13.4% as compared with the same period in 2016, mainly attributable to increase in headcount and salary increments.

The Group believes that the long-term growth depends on the expertise, experience and development of the employees. The salaries and benefits of the employees depend primarily on their type of work, position, length of service with us and the local market conditions. In order to improve the employees’ skills and technical expertise, the Group provides regular training to the employees.

FUTURE PROSPECTS

The Group’s goal is to continue to capture greater market share in Zhejiang Province and in other provinces and regions in China to become a leading construction contracting and design company in selected regions. To achieve this goal, the Group intend to pursue the following strategies:

Leverage the Premium Class Certificate and Engineering Design Certificate for larger-scale and more complex initiatives

The Group plans to leverage the Premium Class Certificate and Engineering Design Certificate to provide fully-integrated construction solutions, which consist of general construction contracting and design, survey and consultancy services for building construction projects of all types and scales nationwide. As of 30 June 2017, the Group was one of the few holders of both the Premium Class Certificate and Engineering Design Certificate in Zhejiang Province. Leveraging the favorable position in the industry, the Group intends to undertake larger-scale and more complex construction projects. As profitability generally increases with the size and complexity of construction projects, undertaking such construction projects will enable us to enhance the profitability. Moreover, undertaking projects where the Group provides construction general contracting and design, survey and consultancy services allows us to vertically integrate the business. The Group will be able to take into account the costs and have better control over quality at the earlier design stage of the construction project. To facilitate the undertaking of larger-scale and more complex construction projects, the Group plans to apply to procure new equipment and machinery used in the construction projects, including jacks and lifting equipment.

The Group intends to leverage the Premium Class Certificate and Engineering Design Certificate to establish business relationships with new and well-recognized customers, build the track record of prominent construction projects and enhance the brand exposure. With increased exposure and more prominent construction projects in the portfolio, the Group intends to augment its reputation in Zhejiang Province and other provinces and regions in China. The Group expects that the augmented reputation will allow us to increasingly undertake more prominent construction projects where the Group will be able to charge a premium price for the services. The Group plans to leverage its position in Zhejiang Province holding both certificates to gain more bargaining power for favorable prices for raw materials and equipment and machinery, which will lower the costs and enhance the profitability.

Interim Report 2017 11

MANAGEMENT DISCUSSION AND ANALYSIS

Develop business opportunities to undertake Engineering Procurement and Construction (“EPC”) and Public-priciate partnership (“PPP”) projects

The Group plans to seize the opportunities emerging from the promotion of pilot projects for general contracting of construction works in Zhejiang Province, with an aim to strengthen resources integration for developing general contracting business and commit itself to nurturing integrated capabilities in design, procurement and construction. The Group will also proactively deploy more resources for EPC projects and focus on following up quality projects.

Moreover, according to Ipsos Limited, an increasing number of infrastructure projects in China are expected to be completed on a PPP basis in the coming years. As such, the Group intends to develop business opportunities to undertake more projects on a PPP basis in the future. Under the PPP model, the Group would generally be responsible for financing, investment, management and construction of the projects. The Group believes that PPP projects will enhance the profitability and brand recognition, and the Group intends to selectively undertake such projects in the future. PPP projects are awarded to qualified construction companies through a public bidding process held by relevant government authorities. The Group intends to leverage the strong relationship with the local Jiaxing government and the track record of high-quality public works construction projects to win such projects. By gaining expertise and developing the reputation as a premium PPP service provider, the Group plans to develop PPP operations in other regions of Zhejiang Province and other provinces and regions in China. Given the significant upfront investment required to undertake such projects, the Group also plans to finance future projects through a combination of the working capital and bank borrowings.

Push forward the strategy of major customers in full swing and expand market footprint

The Group plans to leverage the opportunity of cooperating with large real estate enterprises to push forward the strategy of major customers in full swing. By providing quality services and enhancing the quality of works projects, the Group will further enhance its partnership with major customers, including Country Garden, Vanke, Greentown, Sunac, Zhenshi and Tongkun. Meanwhile, the Group will proactively identify major potential customers in the future and fully leverage various communication and exchange channels for seeking opportunities for business cooperation, with a view to nature new major customers which can offer sustainable development and stable business.

In addition, the Groups plans to expand its market footprint on an ongoing basis, including (i) continually tapping into existing markets and boosting the operational results of regional branch companies in Jiangsu, Anhui and Jiangxi, which are outside Zhejiang Province; (ii) expediting its deployment in emerging markets, pushing forward initial development in provincial capitals outside Zhejiang Province and surrounding areas of Jiaxing and proactively expanding into regions without business presence to seek emerging cooperation opportunities; and (iii) proactively competing for high-end markets outside Zhejiang Province by keeping track of significant investment projects of major customers and Zhejiang merchants on the back of certificate resources and brand advantage to achieve market expansion.

12 Jujiang Construction Group Co., Ltd.

MANAGEMENT DISCUSSION AND ANALYSIS

Actively pushing forward the application of the BIM Technology

The Group believes that with the development of science and technology, advanced technology plays a major role in promoting the development of the industry. Currently, the construction industry is advocating application of information technology namely BIM Technology throughout the whole process of project design, construction, operation and maintenance to enhance overall benefits. As important technological measures of promoting innovative development of the building and construction industry, application and promotion of the BIM Technology will have an immense impact on the scientific and technological advancement as well as the transformation and upgrade of the building and construction industry. The Group has aligned itself with industry trends to fully leverage the advantages of the BIM Technology, fully pushing forward the progress of applying the BIM Technology to the Zhenshi Headquarters Building (振 石總部大樓) project. The Group will leverage the advantages of the platform offered by the BIM Technology Research Institute to strengthen the nurturing of technological teams and further enhance application capabilities, as well as to achieve data sharing on a real-time basis. Through conclusion of findings from applying BIM technology in pilot projects, the promotion of BIM technology applications can be expedited.

SHARE CAPITAL

The share capital structure of the Company as at 30 June 2017 is as follows:

Class of Shares	Number of shares Approximate percentage of the total issued share capital
Domestic shares H shares in issue Total	400,000,000 75.0% 133,360,000 25.0%
	533,360,000 100.0%

Interim Report 2017 13

OTHER INFORMATION

INTERIM DIVIDEND

The Board does not recommend the payment of an interim dividend for the six months ended 30 June 2017 (30 June 2016: Nil).

PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES

For the six months ended 30 June 2017, there was no purchase, sale or redemption by the Company or any of its subsidiaries of any listed securities of the Company.

INTERESTS AND SHORT POSITIONS OF DIRECTORS, SUPERVISORS AND THE CHIEF EXECUTIVE IN THE SHARES , UNDERLYING SHARES AND DEBENTURES OF THE COMPANY AND ITS ASSOCIATED CORPORATIONS

As at 30 June 2017, the interests or short positions of the Directors, Supervisors and the chief executive in the Shares, underlying Shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) (“SFO”)) which will be required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO) or which will be required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or which will be required, pursuant to the Model Code for Securities Transactions by Directors of the Listed Issuers as set out in Appendix 10 to the Listing Rules (the “Model Code”) to be notified to the Company and the Stock Exchange are as follows:

The Company

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|||||||
|---|---|---|---|---|---|
|Approximate|Approximate|
|Number of shares of|percentage of|percentage of|
|the relevant corporation|shareholdings in the|shareholdings in the|
|(including associated|total share capital|relevant class of Shares|
|Director/Supervisor|Nature of interest|corporation) held|[(1)]|of the Company|of the Company|
|Mr. Lv Yaoneng|[(2)]|Interest of controlled|204,000,000 Domestic|38.25%|51%|
|corporation|Shares (L)|

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Notes:

• (1) The letter “L” denotes a person’s long position (as defined under Part XV of the SFO) in the Domestic Shares.

• (2) Zhejiang Jujiang Holdings Group Co., Ltd (浙江巨匠控股集團有限公司) (“Jujiang Holdings”) is held as to approximately 51.33% by Mr. Lv Yaoneng. Mr. Lv Yaoneng controls more than one-third of the voting rights of Jujiang Holdings and are deemed to be interested in its interest in the Company by virtue of the SFO.

14 Jujiang Construction Group Co., Ltd.

OTHER INFORMATION

Associated Corporation

Director/Supervisor	Associated Corporation	Nature of interest		Approximate shareholding percentage in the relevant class of shares in the Associated Corporation
Mr. Lv Yaoneng Mr. Lv Dazhong Mr. Lu Zhicheng Mr. Li Jinyan Mr. Shen Haiquan Mr. Zheng Gang Mr. Zou Jiangtao	Jujiang Holdings Jujiang Industrial Jujiang Holdings Jujiang Holdings Jujiang Holdings Jujiang Equity Investment Jujiang Equity Investment Jujiang Equity Investment	Beneficial owner(1) Beneficial owner(3) Beneficial owner(1) Beneficial owner(1) Beneficial owner(1) Beneficial owner(2) Beneficial owner(2) Beneficial owner(2)		51.33% 10.00% 11.42% 6.58% 5.33% 2.41% 2.10% 0.45%

Notes:

• (1) The disclosed interest represents the interests in Jujiang Holdings, the associated corporation which is owned as to approximately 51.33% by Mr. Lv Yaoneng, 11.42% by Mr. Lv Dazhong, 6.58% by Mr. Lu Zhicheng, 7.46% by Mr. Shen Bingkun, 2.31% by Mr. Fan Zhiming, 8.52% by Mr. Wang Shaolin, 1.96% by Mr. Ma Shengliang, 5.33% by Mr. Li Jinyan and 5.09% by Mr. Gao Xingwu, respectively.

• (2) The disclosed interest represents the interests in Zhejiang Jujiang Equity Investment Management Co., Ltd (浙江巨匠股權投資管理有限公司) (“Jujang Equity Investment”), the associated corporation which is owned by 164 individual shareholders together as to 100%, of which two are Directors (Mr. Shen Haiquan and Mr. Zheng Gang who owned 2.4049% and 2.0964% of Jujiang Equity Investment respectively), one is a Supervisor (Mr. Zou Jiangtao who owned 0.4493% of Jujiang Equity Investment), 113 are current employees other than Directors and Supervisors, ten are former employees, one is Mr. Lv Yuntao, who is Mr. Lv Yaoneng’s son (who owned 13.5303% of Jujiang Equity Investment) and 37 are Independent Third Parties.

(3) The disclosed interest represents the interests in Tongxiang City Jujiang Industrial Investment Co., Ltd. (桐 鄉市巨匠實業投資有限公司) (“Jujiang Industrial”), the associated corporation which is owned as to 10% by Mr. Lv Yaoneng and 90% by Zhejiang Jujiang Technology Services Co., Ltd. (浙江巨匠科技服務有限公司), respectively.

Interim Report 2017 15

OTHER INFORMATION

INTERESTS AND SHORT POSITIONS OF THE SUBSTANTIAL SHAREHOLDERS AND OTHER PERSONS IN THE SHARES AND UNDERLYING SHARES OF THE COMPANY

As at to 30 June 2017, so far as the Directors, Supervisors and the chief executive of the Company are aware of, as indicated on the register of interests and/or short positions required to be maintained pursuant to Section 336 of Part XV of the SFO, the substantial Shareholders and other persons (other than Directors, Supervisors and the chief executive of the Company) had the following interests and/or short positions in the Shares or underlying Shares of the Company:

==> picture [350 x 136] intentionally omitted <==

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

|||||||||
|---|---|---|---|---|---|---|---|
|Approximate percentage|Approximate percentage|
|of shareholdings in|of shareholdings in the|
|the relevant|total share capital of the|
|Shareholders|Nature of interest|Number of Shares held|[(1)]|class of Shares|[(2)]|Company|[(3)]|
|Jujiang Holdings|[(4)]|Beneficial owner|204,000,000 Domestic|51%|38.25%|
|Shares (L)|
|Ms. Shen Hongfen|[(5)]|Interest of spouse|204,000,000 Domestic|51%|38.25%|
|Shares (L)|
|Jujang Equity Investment|[(6)]|Beneficial owner|196,000,000 Domestic|49%|36.75%|
|Shares (L)|
|Chan Ka Wo|Beneficial owner|9,480,000 H Shares (L)|7.11%|1.78%|
|Notes:|

----- End of picture text -----

(1) The letter “L” denotes a person’s long position (as defined under Part XV of the SFO) in the Domestic Shares.

(2) The calculation is based on the percentage of shareholding in the Domestic Shares/H Shares.

(3) The calculation is based on the total number of 533,360,000 Shares in issue after the Global Offering.

(4) Jujiang Holdings will be directly interested in approximately 38.25% in the Company.

(5) Ms. Shen Hongfen (沈洪芬), the spouse of Mr. Lv Yaoneng, is deemed to be interested in Mr. Lv Yaoneng’s interest in the Company by virtue of the SFO.

(6) Jujiang Equity Investment will be directly interested in approximately 36.75% in the Company.

Save as disclosed above, as at 30 June 2017, so far as the Directors, Supervisors and the chief executive of the Company are aware of, no other persons have interests and/or short positions in the Shares or underlying Shares which were required, pursuant to Section 336 of Part XV of the SFO, to be recorded in the register kept under such provisions.

DIRECTORS’ COMPETING INTERESTS

Save as disclosed in this report, none of the controlling shareholders, Directors and their respective close associates has any interests in any business which directly or indirectly competes or is likely to compete with the principal business and other businesses, which would require disclosure under Rule 8.10 of the Listing Rules.

16 Jujiang Construction Group Co., Ltd.

OTHER INFORMATION

COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE

The Board comprises six executive Directors and three independent non-executive Directors. The Board has adopted the code provisions (the “Code Provisions”) of the Corporate Governance Code (“CG Code”) set out in Appendix 14 to the Listing Rules. Throughout the six months ended 30 June 2017, the Company has fully complied with the Code Provisions, except for the following deviations.

Pursuant to Code Provision A.2.1 of the CG Code, the responsibilities between the chairman and the chief executive officer should be segregated and should not be performed by the same individual. However, the Group does not have a separate chairman and general manager (which is equivalent to chief executive officer) and Mr. Lv Yaoneng currently performs these two roles. Our Board believes that vesting the roles of both chairman and general manager in the same person has the benefit of ensuring consistent leadership within our Group and enables more effective and efficient overall strategic planning for our Group. Our Board considers that the balance of power and authority for the present arrangement will not be impaired and this structure will enable our Company to make and implement decisions promptly and effectively. Our Board will continue to review and consider splitting the roles of chairman of our Board and general manager of our Company at a time when it is appropriate and suitable by taking into account the circumstances of our Group as a whole.

According to Code Provision A.1.8 of the CG Code, the Company should arrange appropriate insurance cover in respect of legal action against its directors. The Company is negotiating with the relevant insurance agents about the liability insurance for the Directors and will arrange such insurance cover in due course.

Save as disclosed above, our Company is expected to comply with the CG Code set out in Appendix 14 to the Listing Rules. Our Directors will review our corporate governance policies and compliance with the CG Code each financial year.

MODEL CODE FOR SECURITIES TRANSACTIONS

The Company has adopted the Model Code as the Company’s code of conduct regarding Directors’ and Supervisors’ securities transactions on terms no less exacting than the requested standard set out in the Model Code. Upon specific enquiries, all Directors and Supervisors confirmed that they have complied with the relevant provisions of the Model Code throughout the six months ended 30 June 2017.

Senior management who, because of their office in the Company, are likely to be in possession of inside information, have also been requested to comply with the provisions of the Model Code.

EVENTS AFTER THE REPORTING PERIOD

As of the date of this report, the Group has no significant events after the reporting period required to be disclosed.

Interim Report 2017 17

OTHER INFORMATION

AUDIT COMMITTEE

The Audit Committee was established with written terms of reference in compliance with Rule 3.21 of the Listing Rules and the CG Code as set out in Appendix 14 to the Listing Rules on 23 December 2015. The Audit Committee consists of three members, namely Mr. Wong Ka Wai, Mr. Lin Tao and Mr. Yu Jingxuan, all being our independent non-executive Directors. Mr. Yu Jingxuan has been appointed as the chairman of the Audit Committee, and is our independent non-executive Director possessing the appropriate professional qualifications. The primary duties of the Audit Committee are to review and supervise the financial reporting process and internal control system of the Group, oversee the audit process and perform other duties and responsibilities as assigned by our Board.

The Audit Committee has discussed with the management and external auditor the accounting principles and policies adopted by the Group, and reviewed this report and the Group’s unaudited interim condensed consolidated financial statements for the six months ended 30 June 2017.

On behalf of the Board Jujiang Construction Group Co., Ltd. Mr. Lv Yaoneng Chairman

Zhejiang Province, the PRC, 25 August 2017

18 Jujiang Construction Group Co., Ltd.

REPORT ON REVIEW OF INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Ernst & Young

22/F CITIC Tower 1 Tim Mei Avenue Central, Hong Kong Tel: +852 2846 9888 Fax: +852 2868 4432 www.ey.com

To the board of directors of Jujiang Construction Group Co., Ltd.

(Established in the People’s Republic of China with limited liability)

INTRODUCTION

We have reviewed the accompanying interim condensed consolidated statements set out on pages 21 to 46, which comprise the interim condensed consolidated statement of financial position of Jujiang Construction Group Co., Ltd. (the “Company”) and its subsidiaries (together, the “Group”) as at 30 June 2017 and the interim condensed consolidated statements of profit or loss and other comprehensive income, changes in equity and cash flows for the six months period then ended and explanatory notes. The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited require the preparation of a report on interim condensed consolidated financial statements to be in compliance with the relevant provisions thereof and International Accounting Standard 34 “Interim Financial Reporting” (“IAS 34”) issued by the International Accounting Standards Board.

The directors are responsible for the preparation and presentation of these interim condensed consolidated financial statements in accordance with IAS 34. Our responsibility is to express a conclusion on these interim condensed consolidated financial statements based on our review. Our report is made solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

SCOPE OF REVIEW

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

Interim Report 2017 19

REPORT ON REVIEW OF INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONCLUSION

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed consolidated financial statements are not prepared, in all material respects, in accordance with IAS 34.

Ernst & Young

Certified Public Accountants Hong Kong 25 August 2017

20 Jujiang Construction Group Co., Ltd.

INTERIM CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the six months ended 30 June

For the six months ended 30 June
Notes	2017 2016 RMB’000 RMB’000 (Unaudited) (Unaudited)
REVENUE 4 Cost of sales Gross profit Other income and gains 4 Administrative expenses Other expenses Finance costs 5 PROFIT BEFORE TAX 6 Income tax expense 7 PROFIT FOR THE PERIOD OTHER COMPREHENSIVE INCOME TOTAL COMPREHENSIVE INCOME FOR THE PERIOD, NET OF TAX Profit attributable to: Owners of the parent Non-controlling interests Total comprehensive income attributable to: Owners of the parent Non-controlling interests Earnings per share attributable to ordinary equity holders of the parent: Basic and diluted (expressed in RMB per share) 8	2,080,395 1,999,078 (1,965,960) (1,880,898)
	114,435 118,180 8,638 16,364 (32,875) (37,242) (4,414) (7,944) (17,354) (22,434)
	68,430 66,924 (16,494) (18,966)
	51,936 47,958
	– –
	51,936 47,958
	51,558 47,975 378 (17)
	51,936 47,958
	51,558 47,975 378 (17)
	51,936 47,958
	0.10 0.09

The Board did not recommend an interim dividend for the six months ended 30 June 2017 (six months ended 30 June 2016: Nil).

Interim Report 2017 21

INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Notes	As at 30 June 2017	As at 31 December 2016 RMB’000 (Audited)
	RMB’000
	(Unaudited)
NON-CURRENT ASSETS Property, plant and equipment 9 Prepaid land lease payments Intangible assets Available-for-sale investment Deferred tax assets Trade receivables 11 Prepayments, deposits and other receivables 12 Other non-current assets Total non-current assets CURRENT ASSETS Prepaid land lease payments Inventories Trade and bills receivables 11 Prepayments, deposits and other receivables 12 Amounts due from contract customers 10 Pledged deposits 13 Cash and cash equivalents 13 Total current assets CURRENT LIABILITIES Trade and bills payables 14 Other payables, advances from customers and accruals 15 Amounts due to contract customers 10 Interest-bearing bank and other borrowings 16 Tax payable Total current liabilities NET CURRENT ASSETS TOTAL ASSETS LESS CURRENT LIABILITIES		135,336 9,288 2,102 3,600 15,891 26,648 47,707 116
	133,431
	9,142
	2,441
	–
	15,478
	16,670
	62,906
	19
		240,688
	240,087
		291 7,612 647,359 488,918 2,998,346 18,110 65,013
	291
	9,251
	650,929
	477,264
	2,794,916
	18,379
	57,541
		4,225,649
	4,008,571
		2,330,523 216,549 113,970 644,491 130,544
	2,035,008
	219,234
	226,309
	570,858
	132,634
		3,436,077
	3,184,043
		789,572
	824,528
		1,030,260
	1,064,615

22 Jujiang Construction Group Co., Ltd.

INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Notes	As at 30 June 2017 As at 31 December 2016 RMB’000 RMB’000 (Unaudited) (Audited)
NON-CURRENT LIABILITIES Other payables and accruals 15 Total non-current liabilities Net assets EQUITY Equity attributable to owners of the parent Share capital 17 Reserves 18 Non-controlling interests Total equity	7,223 24,804
	7,223 24,804
	1,057,392 1,005,456
	533,360 533,360 518,240 466,682
	1,051,600 1,000,042 5,792 5,414
	1,057,392 1,005,456

Interim Report 2017 23

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Note	For the six months ended 30 June 2017 Attributable to owners of the parent Share capital Capital reserve Special reserve Statutory surplus reserve Retained profits Total Non– controlling interests Total equity RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2017 Profit for the period Total comprehensive income for the period Transfer to special reserve (i) Utilisation of special reserve (i) At 30 June 2017 (Unaudited)
	533,360 188,480 – 29,927 248,275 1,000,042 5,414 1,005,456
	– – – – 51,558 51,558 378 51,936
	– – – – 51,558 51,558 378 51,936
	– – 48,117 – (48,117) – – –
	– – (48,117) – 48,117 – – –
	533,360 188,480 – 29,927 299,833 1,051,600 5,792 1,057,392

Note	For the six months ended 30 June 2016 Attributable to owners of the parent Share capital Capital reserve Special reserve Statutory surplus reserve Retained profits Total Non– controlling interests Total equity RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2016 Profit for the period Total comprehensive income for the period Issue of shares (note 17(i)) Share issue expenses Transfer to special reserve (i) Utilisation of special reserve (i) At 30 June 2016 (Unaudited)	400,000 180,587 – 20,180 168,338 769,105 4,864 773,969 – – – – 47,975 47,975 (17) 47,958
	– – – – 47,975 47,975 (17) 47,958 133,360 19,046 – – – 152,406 – 152,406 – (11,153) – – – (11,153) – (11,153) – – 50,870 – (50,870) – – – – – (50,870) – 50,870 – – –
	533,360 188,480 – 20,180 216,313 958,333 4,847 963,180

Note:

(i) In preparation of the financial statements, the Group has appropriated a certain amount of retained profits to a special reserve fund for each of the six months ended 30 June 2017 and 2016, for safety production expense purposes as required by directives issued by relevant PRC government authorities. The Group charged the safety production expense to profit or loss when such expense was incurred, and at the same time an equal amount of such special reserve fund was utilised and transferred back to retained profits until such special reserve was fully utilised.

24 Jujiang Construction Group Co., Ltd.

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 June

For the six months ended 30 June
Notes	2017 2016 RMB’000 RMB’000 (Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax Adjustments for: Finance costs 5 Dividend income from Available-for-sale investments 4 Interest income 4 Exchange difference, net Gain on disposal of available-for-sale investments 4 Depreciation of items of property, plant and equipment Amortisation of intangible assets Amortisation of prepaid land lease payments Impairment of trade receivables 11 (Reversal of impairment)/impairment of deposits and other receivables 12 Gain on disposal of items of property, plant and equipment, net Increase in inventories Decrease in amounts due from/to contract customers Decrease/(increase) in trade and bills receivables Decrease in prepayments, deposits and other receivables Increase in pledged deposits Decrease in trade and bills payables Decrease in other payables, advances from customers and accruals Cash flows used in operations Interest received Income tax paid Net cash flows from/(used in) operating activities	68,430 66,924 17,354 22,434 (4,680) (3,600) (95) (108) 4 455 (164) – 3,788 3,759 202 138 146 145 5,456 3,922 (3,640) 793 (2,691) (110)
	84,110 94,752 (1,639) (2,234) 315,769 404,528 5,632 (373,148) 192 109,133 (269) (5,439) (295,515) (293,141) (14,896) (42,236)
	93,384 (107,785) 95 108 (13,991) (6,052)
	79,488 (113,729)

Interim Report 2017 25

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 June

Notes	2017 2016 RMB’000 RMB’000 (Unaudited) (Unaudited)
CASH FLOWS FROM INVESTING ACTIVITIES Payments for acquisition of items of property, plant and equipment Payments for acquisition of intangible assets Proceeds from disposal of items of property, plant and equipment Proceeds from disposal of available–for-sale investments Net cash flows from/(used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Interest paid New bank loans Repayment of bank loans Borrowings and repayments of loans to related parties Borrowings and repayments of loans from related parties Borrowings and repayments of loans to others Borrowings and repayments of loans from others Proceeds from issue of shares Share issue expenses Net cash flows (used in)/from financing activities NET DECREASE IN CASH AND CASH EQUIVALENTS Effect of foreign exchange rate changes Cash and cash equivalents at beginning of period CASH AND CASH EQUIVALENTS AT END OF PERIOD ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS Cash and bank balances 13 Less: Pledged deposits Cash and cash equivalents as stated in the statement of financial position and statement of cash flows	(1,930) (13,457) (540) (147) 2,737 163 3,764 –
	4,031 (13,441)
	(17,354) (22,434) 364,392 551,126 (438,025) (550,650) (6,621) (223,950) 6,621 223,950 – (1,500) – 800 – 141,702 – (3,306)
	(90,987) 115,738
	(7,468) (11,432) (4) (455) 65,013 49,218
	57,541 37,331
	75,920 53,410 18,379 16,079
	57,541 37,331

26 Jujiang Construction Group Co., Ltd.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. CORPORATE AND GROUP INFORMATION

The Company, formerly known as Qitang Commune Construction Agency, was established in the People’s Republic of China (the “PRC”) on 25 October 1965 as a collective economy agency (集體經濟社). In July 1996, the Company was converted into a company with limited liability. The Company became a joint stock company with limited liability on 29 December 2014 and changed its name to Jujiang Construction Group Co., Ltd. The registered office address of the Company is Gaoqiao Town, Jiaxing City, Zhejiang Province, the PRC. The Company’s H shares were listed (the “Listing”) on the Main Board of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) on 12 January 2016 (the “Listing Date”).

During the six months ended 30 June 2017, the Group’s principal activities were as follows:

• Construction contracting

• Others – design, survey, consultancy, etc.

In the opinion of the directors, the holding company and the ultimate holding company of the Company is Zhejiang Jujiang Holdings Group Co., Ltd.

2. BASIS OF PREPARATION AND CHANGES TO THE GROUP’S ACCOUNTING POLICIES

2.1 Basis of preparation

The unaudited interim condensed consolidated financial statements for the six months ended 30 June 2017 have been prepared in accordance with International Accounting Standard (“IAS”) 34 Interim Financial Reporting and the disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on the Stock Exchange (the “Listing Rules”). It was approved and authorised for issue by the Board on 25 August 2017.

The unaudited interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group’s annual financial statements for the year ended 31 December 2016.

The unaudited interim condensed consolidated financial statements are presented in Renminbi (“RMB”) and all values are rounded to the nearest thousands, except when otherwise indicated.

These interim condensed consolidated financial statements have not been audited.

Interim Report 2017 27

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2. BASIS OF PREPARATION AND CHANGES TO THE GROUP’S ACCOUNTING POLICIES (Continued)

2.2 New standards, interpretations and amendments adopted by the Group

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group’s annual consolidated financial statements for the year ended 31 December 2016, except for the adoption of the new standards and interpretations effective as of 1 January 2017. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

==> picture [304 x 169] intentionally omitted <==

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

||||
|---|---|---|
|Amendments to IFRS 2|Classification and Measurement of Share-based|
|Payment Transactions|[1]|
|Amendments to IFRS 4|Applying IFRS 9 Financial Instruments with IFRS 4|
|Insurance Contracts|[1]|
|IFRS 9|Financial Instruments|[1]|
|Amendments to IFRS 10, and|Sale or Contribution of Assets between an Investor|
|IAS 28|and its Joint Venture|[3]|
|IFRS 15|Revenue from Contracts with Customers|[1]|
|Amendments to IFRS 15|Clarifications to IFRS 15 Revenue from Contracts with|
|Customers|[1]|
|IFRS 16|Leases|[2]|
|Amendments to IAS 40|Transfers of Investment Property|[1]|
|IFRIC Interpretation 22|Foreign Currency Transactions and Advance|
|Consideration|[1]|
|IFRIC 23|Uncertainty over Income Tax Treatments|[2]|
|Annual Improvements|Amendments to a number of IFRSs|
|2014-2016 cycle|

----- End of picture text -----

• 1 Effective for annual periods beginning on or after 1 January 2018

2 Effective for annual periods beginning on or after 1 January 2019

3 No mandatory effective date yet determined but available for adoption

The directors are in the process of assessing the possible impact on the future adoption of the new and revised IFRSs, but are not yet in a position to reasonably estimate their impact on the Group’s interim condensed consolidated financial statements.

28 Jujiang Construction Group Co., Ltd.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3. OPERATING SEGMENT INFORMATION

For management purposes, the Group is organised into business units based on their services and has two reportable operating segments as follows:

• (a) Construction contracting – this segment engages in the provision of services relating to construction contracting in architecture;

• (b) Others – provision of services on designing, surveying and mapping, monitoring and consulting services in the engineering of municipal management and construction, installation of lifting equipment, sale of construction materials and civil defense products and provision of services relating to construction contracting in architecture.

Management monitors the results of the Group’s operating segments separately for the purpose of making decisions about resources allocation and performance assessment. Segment performance is evaluated based on reportable segment profit or loss, which is a measure of adjusted profit or loss before tax. The adjusted profit or loss before tax is measured consistently with the Group’s profit before tax.

Intersegment sales and transfers are transacted with reference to the selling prices used for sales made to third parties at the then prevailing market prices.

	Six months ended 30 June 2017 Construction contracting Others Eliminations Total RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Segment revenue: Sales to external customers Intersegment sales Total revenue Segment results Income tax expense Profit for the period Other segment information: Interest income Finance costs Depreciation Amortisation Provision for – impairment of trade receivables, deposits and other receivables Capital expenditure*
	2,058,721 21,674 – 2,080,395
	– 2,551 (2,551) –
	2,058,721 24,225 (2,551) 2,080,395
	63,487 4,943 – 68,430
	(14,675) (1,819) – (16,494)
	48,812 3,124 – 51,936
	66 29 – 95
	15,493 1,861 – 17,354
	3,433 355 – 3,788
	330 18 – 348
	1,726 90 – 1,816
	2,304 166 – 2,470

Interim Report 2017 29

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3. OPERATING SEGMENT INFORMATION (Continued)

	30 June 2017 Construction contracting Others Eliminations Total RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Segment assets Segment liabilities
	4,327,404 111,306 (190,052) 4,248,658
	3,219,634 65,834 (94,202) 3,191,266
	Six months ended 30 June 2016 Construction contracting Others Eliminations Total RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited) 1,989,598 9,480 – 1,999,078 – 27 (27) – 1,989,598 9,507 (27) 1,999,078 74,285 (7,361) – 66,924 (19,039) 73 – (18,966) 55,246 (7,288) – 47,958 76 32 – 108 20,369 2,065 – 22,434 3,294 465 – 3,759 274 9 – 283 4,712 3 – 4,715 13,529 75 – 13,604 30 June 2016 Construction contracting Others Eliminations Total RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited) 4,183,799 104,833 (170,544) 4,118,088 3,164,315 65,285 (74,694) 3,154,906
Segment revenue: Sales to external customers Intersegment sales Total revenue Segment results Income tax expense Profit for the period Other segment information: Interest income Finance costs Depreciation Amortisation Provision for – impairment of trade receivables, deposits and other receivables Capital expenditure*
Segment assets Segment liabilities

Note:

• Capital expenditure mainly consists of additions of property, plant and equipment and intangible assets.

30 Jujiang Construction Group Co., Ltd.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

4. REVENUE, OTHER INCOME AND GAINS

Revenue, which is also the Group’s turnover, represents: (1) the values of services rendered; (2) an appropriate proportion of contract revenue from construction contracting; and (3) the net invoiced value of goods sold, after allowances for returns and trade discounts.

An analysis of the Group’s revenue, other income and gains is as follows:

5.

	Six months ended 30 June 2017 2016 RMB’000 RMB’000 (Unaudited) (Unaudited)
Revenue Construction contracting Others Other income and gains Interest income Government grant Dividend from available- for-sale investment Gain on disposal of available-for-sale investment Others FINANCE COSTS	2,058,721 1,989,598 21,674 9,480
	2,080,395 1,999,078
	95 108 262 11,505 4,680 3,600 164 – 3,437 1,151
	8,638 16,364
	Six months ended 30 June 2017 2016 RMB’000 RMB’000 (Unaudited) (Unaudited)
Interest on bank loans wholly repayable within one year	17,354 22,434

Interim Report 2017 31

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

6. PROFIT BEFORE TAX

The Group’s profit before tax is arrived at after charging/(crediting):

	Six months ended 30 June 2017 2016 RMB’000 RMB’000 (Unaudited) (Unaudited)
Cost of construction contracting (including depreciation) Cost of others Total cost of sales Depreciation of items of property, plant and equipment (note (a)) Amortisation of prepaid land lease payments Amortisation of intangible assets Total depreciation and amortisation Impairment of trade receivables (Reversal of impairment)/impairment of deposits and other receivables Total impairment losses, net Minimum lease payments under operating leases of land and buildings (note (b)) Auditors’ remuneration Employee benefit expenses (including Directors’ and Supervisors’ remuneration) (note (c)): – Wages, salaries and allowances – Social insurance – Welfare and other expenses Interest income	1,951,301 1,871,632 14,659 9,266
	1,965,960 1,880,898 3,788 3,759 146 145 202 138
	4,136 4,042
	5,456 3,922 (3,640) 793
	1,816 4,715
	351 206 1,047 1,119 19,743 17,415 15,643 13,122 3,373 3,370 727 923 (95) (108)

Notes:

(a) Depreciation of approximately RMB1,780,000 (unaudited) and approximately RMB2,336,000 (unaudited) is included in administrative expenses in the consolidated statement of profit or loss and other comprehensive income for the six months ended 30 June 2017 and 2016, respectively.

(b) Minimum lease payments of approximately RMB351,000 (unaudited) and approximately RMB206,000 (unaudited) are included in administrative expenses in the consolidated statement of profit or loss and other comprehensive income for the six months ended 30 June 2017 and 2016, respectively.

(c) Employee benefit expenses of approximately RMB19,743,000 (unaudited) and approximately RMB17,415,000 (unaudited) are included in administrative expenses in the consolidated statement of profit or loss and other comprehensive income for the six months ended 30 June 2017 and 2016, respectively.

32 Jujiang Construction Group Co., Ltd.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

7. INCOME TAX EXPENSE

All of the Group’s subsidiaries registered in the PRC and operating only in Mainland China are subject to PRC enterprise income tax on the taxable income as reported in their PRC statutory accounts adjusted in accordance with relevant PRC income tax laws. Except for those further explained below, PRC enterprise income tax has been provided at the rate of 25% (2016: 25%) on the taxable income.

The breakdown of income tax expense are as follow:

	Six months ended 30 June 2017 2016 RMB’000 RMB’000 (Unaudited) (Unaudited)
Current income tax – Mainland China Charge for the period (Over provision)/under provision in prior year Deferred income tax Tax charge for the period	16,981 17,733 (900) 168 413 1,065
	16,494 18,966

A reconciliation of the income tax expense applicable to profit before tax at the statutory income tax rate to the income tax expense at the Group’s effective income tax rate for the reporting period is as follows:

	Six months ended 30 June 2017 2016 RMB’000 RMB’000 (Unaudited) (Unaudited)
Profit before tax Income tax charge at the statutory income tax rate (25%) Income not subject to tax Expenses not deductible for tax purposes Adjustments in respect of current tax of prior year Tax losses not recognised Tax charge for the year at the effective rate	68,430 66,924 17,107 16,731 (1,170) – 716 695 (900) 168 741 1,372
	16,494 18,966

Interim Report 2017 33

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

8. EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE PARENT

The calculation of the basic earnings per share amount is based on the profit for the period attributable to ordinary equity holders of the parent and the weighted average number of ordinary shares in issue during the period.

No adjustment has been made to the basic earnings per share amounts presented for six months ended 30 June 2017 and 2016 in respect of a dilution as the Group had no potentially dilutive ordinary shares in issue during those periods.

The following reflects the income and share data used in the basic earnings per share computation:

		Six months ended 30 June 2017 2016 RMB’000 RMB’000 (Unaudited) (Unaudited)	Six months ended 30 June 2017 2016 RMB’000 RMB’000 (Unaudited) (Unaudited)
	Earnings: Profit for the year attributable to ordinary equity holders of the parent, used in the basic earnings per share calculation	51,558	47,975
		Six months ended 30 June 2017 2016 ‘000 ‘000 (Unaudited) (Unaudited)
	Number of shares: Weighted average number of ordinary shares in issue during the period, used in the basic earnings per share calculation	533,360	524,567

34 Jujiang Construction Group Co., Ltd.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

9. PROPERTY, PLANT AND EQUIPMENT

During the six months ended 30 June 2017, the Group acquired property, plant and equipment with an aggregate cost amounting to approximately RMB1,930,000 (Unaudited) (six months ended 30 June 2016: RMB13,457,000 (Unaudited)).

In addition, during the same period, property, plant and equipment with an aggregate net carrying value of approximately RMB46,000 (Unaudited) (six months ended 30 June 2016: RMB53,000 (Unaudited)) were disposed of, which resulted in a net gain on disposal of approximately RMB2,691,000 (Unaudited) (six months ended 30 June 2016: RMB110,000 (Unaudited)).

10. AMOUNTS DUE FROM/TO CONTRACT CUSTOMERS Construction contracts

	As at As at 30 June 2017 31 December 2016 RMB’000 RMB’000 (Unaudited) (Audited)
Amount due from contract customers Amount due to contract customers	2,794,916 2,998,346 (226,309) (113,970)
	2,568,607 2,884,376
	As at As at 30 June 2017 31 December 2016 RMB’000 RMB’000 (Unaudited) (Audited)
Accumulated contract costs incurred plus recognised profits less recognised losses to date Less: Accumulated progress billing received and receivable	27,381,531 27,429,443 24,812,924 24,545,067
	2,568,607 2,884,376

Interim Report 2017 35

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

11. TRADE AND BILLS RECEIVABLES

Trade receivables represented receivables for contract works. The payment terms of contract work receivables are stipulated in relevant contracts. The Group’s trading terms with its customers are mainly on credit, except for new customers, where payment in advance is normally required. The credit period offered by the Group is one to three months. The Group seeks to maintain strict control over its outstanding receivables and has a credit control department to minimise credit risk. Overdue balances are reviewed regularly by senior management. The Group does not hold any collateral or other credit enhancements over its trade receivable balances. Trade and bills receivables are non-interest-bearing.

	As at As at 30 June 2017 31 December 2016 RMB’000 RMB’000 (Unaudited) (Audited)
Trade receivables Provision for impairment Trade receivables, net Bills receivable Portion classified as non-current assets(1) Current portion	590,889 662,703 (24,701) (19,245)
	566,188 643,458 101,411 30,549
	667,599 674,007 (16,670) (26,648)
	650,929 647,359

(1) The non-current portion of trade receivables mainly represents the amounts of retentions held by customers at the end of the reporting period, which will be paid at the end of the retention period.

At the end of the reporting period, the amounts of retentions held by customers for contract works included in trade receivables for the Group are approximately as follows:

	As at	As at 31 December 2016 RMB’000 (Audited)
	30 June 2017
	RMB’000
	(Unaudited)
Retentions in trade receivables Provision for impairment Retentions in trade receivables, net Portion classified as non-current assets Current portion		28,293 (74)
	39,724
	(124)
		28,219 (26,648)
	39,600
	(16,670)
		1,571
	22,930

36 Jujiang Construction Group Co., Ltd.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

11. TRADE AND BILLS RECEIVABLES (Continued)

An aged analysis of the Group’s trade receivables, based on the billing date and net of provision for impairment of trade receivables, as at the end of the reporting period is as follows:

provision for impairment of trade receivables, as at the follows:	end of the reporting period is as
	As at As at 30 June 2017 31 December 2016 RMB’000 RMB’000 (Unaudited) (Audited)
Within 3 months 3 months to 6 months 6 months to 1 year 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years Over 5 years	222,995 237,915 22,332 28,571 64,894 283,482 208,681 49,524 30,315 21,101 7,538 18,410 7,835 3,817 1,598 638
	566,188 643,458

The movements in provision for impairment of trade receivables are as follows:

	As at As at 30 June 2017 31 December 2016 RMB’000 RMB’000 (Unaudited) (Audited)
At beginning of the period Impairment losses recognised Impairment losses reversed At end of the period	19,245 19,316 5,667 830 (211) (901)
	24,701 19,245

Included in the above provision for impairment of trade receivables are provisions for individually impaired trade receivables of approximately RMB10,090,000 (unaudited) and approximately RMB10,090,000 with aggregate carrying amounts before provision of approximately RMB10,090,000 (unaudited) and approximately RMB10,090,000 as at 30 June 2017 and 31 December 2016, respectively.

The individually impaired trade receivables relate to customers that were in default in principal payments or were in financial difficulties and only a portion of the receivables is expected to be recovered.

Interim Report 2017 37

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

11. TRADE AND BILLS RECEIVABLES (Continued)

An aged analysis of the trade receivables, that are neither individually nor collectively considered to be impaired, is as follows:

considered to be impaired, is as follows:
	As at As at 30 June 2017 31 December 2016 RMB’000 RMB’000 (Unaudited) (Audited)
Neither past due nor impaired Past due within 1 year but not impaired	257,205 265,433 86,123 310,444
	343,328 575,877

Receivables that were neither past due nor impaired relate to a large number of diversified customers for whom there was no recent history of default.

Transferred financial assets that are not derecognised in their entirety

The Group endorsed certain bills receivable accepted by banks in Mainland China (the “Endorsed Bills”) with carrying amounts of approximately RMB91,854,000 (unaudited) and approximately RMB27,852,000 as at 30 June 2017 and 31 December 2016, respectively, to certain of its suppliers in order to settle the trade payables due to such suppliers (the “Endorsement”). In the opinion of the Directors, the Group has retained the substantial risks and rewards, which include default risks relating to such Endorsed Bills, and accordingly, it continued to recognise the full carrying amounts of the Endorsed Bills and the associated trade payables settled. Subsequent to the Endorsement, the Group did not retain any rights on the use of the Endorsed Bills, including the sale, transfer or pledge of the Endorsed Bills to any other third parties. The aggregate carrying amounts of the trade payables settled by the Endorsed Bills during the period to which the suppliers have recourse were approximately RMB91,854,000 (unaudited) and approximately RMB27,852,000 as at 30 June 2017 and 31 December 2016, respectively.

Transferred financial assets that are derecognised in their entirety

The Group endorsed certain bills receivable accepted by banks in the PRC (the “Derecognised Bills”) to certain of its suppliers in order to settle the trade payables due to such suppliers with a carrying amount in aggregate of approximately RMB192,549,000 (unaudited) and approximately RMB121,066,000 as at 30 June 2017 and 31 December 2016, respectively. The Derecognised Bills have a maturity from one to six months at the end of the reporting period. In accordance with the Law of Negotiable Instruments in the PRC, the holders of the Derecognised Bills have a right of recourse against the Group if the PRC banks default (the “Continuing Involvement”). In the opinion of the Directors, the Group has transferred substantially all risks and rewards relating to the derecognised bills. Accordingly, it has derecognised the full carrying amounts of the Derecognised Bills and the associated trade payables. The maximum exposure to loss from the Group’s Continuing Involvement in the Derecognised Bills and the undiscounted cash flows to repurchase these Derecognised Bills is equal to their carrying amounts. In the opinion of the Directors, the fair values of the Group’s Continuing Involvement in the Derecognised Bills are not significant.

38 Jujiang Construction Group Co., Ltd.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

11. TRADE AND BILLS RECEIVABLES (Continued)

During the reporting period, the Group has not recognised any gain or loss on the date of transfer of the Derecognised Bills. No gains or losses were recognised from the Continuing Involvement, both during the year or cumulatively.

12. PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES

	As at As at 30 June 2017 31 December 2016 RMB’000 RMB’000 (Unaudited) (Audited)
Deposits and other receivables Provision for impairment of deposits and other receivables Prepayment to suppliers Portion classified as non-current assets(1) Current portion	248,713 258,514 (29,799) (33,439)
	218,914 225,075 321,256 311,550
	540,170 536,625 (62,906) (47,707)
	477,264 488,918

(1) The non-current portion of deposits and other receivables mainly represents performance guarantee amounts held by customers at the end of the reporting period.

The movements in provision for impairment of deposits and other receivables are as follows:

	As at As at 30 June 2017 31 December 2016 RMB’000 RMB’000 (Unaudited) (Audited)
At beginning of the period Impairment losses recognised Impairment losses reversed At the end of the period	33,439 31,185 17,422 3,317 (21,062) (1,063)
	29,799 33,439

Interim Report 2017 39

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

12. PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES (Continued)

An aged analysis of the deposits and other receivables, that are neither individually nor collectively considered to be impaired, is as follows:

collectively considered to be impaired, is as follows:
	As at As at 30 June 2017 31 December 2016 RMB’000 RMB’000 (Unaudited) (Audited)
Neither past due nor impaired Past due within 1 year but not impaired	172,666 185,530 43,650 39,098
	216,316 224,628

None of the balances except for the deposits and other receivables disclosed above is either past due or impaired, as they relate to balances for which there was no recent history of default.

13. CASH AND CASH EQUIVALENTS AND PLEDGED DEPOSITS

	As at As at 30 June 2017 31 December 2016 RMB’000 RMB’000 (Unaudited) (Audited)
Cash and bank balances Time deposits Less: Pledged time deposits: Pledged bank balances for bank notes and letters of credit Cash and cash equivalents	61,815 41,640 14,105 41,483
	75,920 83,123 (18,379) (18,110)
	57,541 65,013

The RMB is not freely convertible into other currencies. However, under Mainland China’s prevailing rules and regulations over foreign exchange, the Group is permitted to exchange RMB for other currencies through banks authorised to conduct foreign exchange business.

Cash at banks earns interest at floating rates based on daily bank deposit rates. Short term time deposits are made for varying periods of between one day and three months depending on the immediate cash requirements of the Group, and earn interest at the respective short term time deposit rates. The bank balances and pledged deposits are deposited with creditworthy banks with no recent history of default.

40 Jujiang Construction Group Co., Ltd.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

14. TRADE AND BILLS PAYABLES

An aged analysis of the trade payables, as at the end of the reporting period, based on the invoice date, is as follows:

invoice date, is as follows:
	As at As at 30 June 2017 31 December 2016 RMB’000 RMB’000 (Unaudited) (Audited)
Within 6 months 6 months to 1 year 1 to 2 years 2 to 3 years Over 3 years	1,063,951 267,491 199,494 1,472,885 634,460 531,766 119,355 41,773 17,748 16,608
	2,035,008 2,330,523

The trade payables are non-interest-bearing and are normally settled within terms from three to six months.

15. OTHER PAYABLES, ADVANCES FROM CUSTOMERS AND ACCRUALS

	As at As at 30 June 2017 31 December 2016 RMB’000 RMB’000 (Unaudited) (Audited)
Advances from customers Accrued salaries, wages and benefits Other taxes payable Other payables Portion classified as non-current liabilities (1) Current portion	7,195 6,417 6,687 9,289 157,284 160,563 55,291 65,084
	226,457 241,353 (7,223) (24,804)
	219,234 216,549

The above amounts are unsecured, non-interest-bearing and have no fixed terms of settlement.

(1) The non-current portion mainly represents the performance guaranteed amounts from subcontractors and suppliers of the Group at the end of the reporting period.

Interim Report 2017 41

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

16. INTERESTBEARING BANK AND OTHER BORROWINGS

	As at 30 June 2017 As at 31 December 2016 Effective interest rate (%) Maturity RMB’000 Effective interest rate (%) Maturity RMB’000
Current Bank loans – secured Bank loans – unsecured Other borrowings – secured Other borrowings – unsecured	4.4-20.4 2017-2018 555,360 4.35-21.6 2017 644,491 6.5 2017-2018 4,372 – – – 4.7-9.2 2017-2018 5,984 – – – 8.0 2017-2018 5,142 – – –
	570,858 644,491

Notes:

• (a) Certain of the Group’s buildings with net carrying amounts of approximately RMB97,422,000 (unaudited) and approximately RMB98,215,000 as at 30 June 2017 and 31 December 2016, respectively, were pledged to secure general banking facilities granted to the Group.

• (b) As set out in note 21(c), as at 30 June 2017 and 31 December 2016, the Group’s interest-bearing bank loans and other borrowings of approximately RMB541,736,000 (unaudited) and approximately RMB621,941,000, respectively, were jointly guaranteed by the controlling shareholder and other related parties of the Group free of charge.

17. SHARE CAPITAL

	SHARE CAPITAL
		As at 30 June 2017 RMB’000 (Unaudited)	As at 31 December 2016 RMB’000 (Audited)
	Share capital	533,360	533,360

42 Jujiang Construction Group Co., Ltd.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

17. SHARE CAPITAL (Continued)

The movements in share capital are as follows:

Note	As at 30 June 2017 Number of shares Nominal value ‘000 RMB’000 (Unaudited) (Unaudited)
At beginning and end of the period	533,360 533,360
	As at 31 December 2016 Number of shares Nominal value ‘000 RMB’000 (Audited) (Audited)
At beginning of the year Public offer of H shares (i) At end of the year	400,000 400,000 133,360 133,360
	533,360 533,360

(i) On 12 January 2016, the Group’s H shares were listed on the Main Board of the Stock Exchange. The Group issued 133,360,000 shares with the par value of RMB 1 each.

18. RESERVES

The amounts of the Group’s reserves and the movements therein for the reporting period are presented in the consolidated statement of changes in equity.

19. OPERATING LEASE ARRANGEMENTS

As lessee

At the end of the reporting period, the Group had the following total future minimum lease payments under non-cancellable operating leases falling due as follows:

	As at As at 30 June 2017 31 December 2016 RMB’000 RMB’000 (Unaudited) (Audited)
Within one year In the second to fifth years, inclusive After five years	1,047 632 1,294 1,265 – –
	2,341 1,897

Interim Report 2017 43

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

20. COMMITMENTS

At the end of the reporting period, the Group did not have any significant commitments.

21. RELATED PARTY TRANSACTIONS

(a) The Group had the following material transactions with related parties during the reporting period:

	during the reporting period:
		Six months ended 30 June 2017 2016 RMB’000 RMB’000 (Unaudited) (Unaudited)
	Construction contracting services provided to: Fellow subsidiaries Associate of fellow subsidiaries Purchase of raw materials: A company of which the controlling shareholder of the Company is a director The borrowings and repayments of loans provided to: The holding company Fellow subsidiaries The borrowings and repayments of loans received from: The holding company Fellow subsidiaries	101,895 58,705 5,715 72,399 503 3,748 – 200,950 6,621 23,000 – 200,950 6,621 23,000

The above related party transactions were conducted in accordance with the terms mutually agreed between the parties.

• (b) The aggregate amounts of remuneration of the Directors and Supervisors of the Company during the Relevant Periods, disclosed pursuant to the Hong Kong Listing Rules, are as follows:

	Six months ended 30 June 2017 2016 RMB’000 RMB’000 (Unaudited) (Unaudited)
Fees Other emoluments: -Salaries, allowances and benefits in kind -Pension schemes	– – 728 502 25 25
	753 527

44 Jujiang Construction Group Co., Ltd.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

21. RELATED PARTY TRANSACTIONS (Continued)

(c) Other transactions with related parties:

The Group’s interest-bearing bank loans and other borrowings of RMB541,736,000 (unaudited) and RMB621,941,000 as at 30 June 2017 and 31 December 2016, respectively, were jointly guaranteed by the controlling shareholder and other related parties of the Group, as set out in note 16(b).

(d) Outstanding balances with related parties:

	Outstanding balances with related parties:
		As at 30 June 2017 RMB’000 (Unaudited)	As at 31 December 2016 RMB’000 (Audited)
	Accounts receivable: Fellow subsidiaries Associate of fellow subsidiaries Accounts payable: Fellow subsidiaries A company of which the controlling shareholder of the Company is a director Other receivables: Fellow subsidiaries Associate of fellow subsidiaries Key management person of the holding company Other payables: Fellow subsidiaries Amount due from contract customers: Fellow subsidiaries Associate of fellow subsidiaries Amount due to contract customers: Fellow subsidiaries Associate of fellow subsidiaries	33,159 1,938 – – 473 - 950 50 97,287 54,835 2,448 2,301	44,325 20,861 - 33,896 473 25,020 950 - 63,041 151,299 11,115 5,691

Interim Report 2017 45

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

22. EVENTS AFTER THE REPORTING PERIOD

As at the date of approval of these financial statements, no significant event occurred after the reporting period.

23. APPROVAL OF THE FINANCIAL STATEMENTS

The financial statements were approved and authorised for issue by the board of directors on 25 August 2017.

46 Jujiang Construction Group Co., Ltd.