Jujiang Construction Group Co., Ltd. - Interim / Quarterly Report 2020

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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)

ANNOUNCEMENT OF INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2020

FINANCIAL HIGHLIGHTS

FINANCIAL HIGHLIGHTS
	For the six months ended 30 June
	2020	2019	Change
	RMB’000	RMB’000	%
Revenue	3,737,667	3,401,893	9.9
Gross profit	191,845	183,351	4.6
Gross profit margin	*5.13%*	5.39%	*(0.26)*
Profit for the period	57,429	68,320	(15.9)
Net profit margin	*1.54%*	2.01%	*(0.47)*
Basic and diluted earnings per share (RMB)	0.11	0.12
The Board does not recommend the payment of	an interim dividend for the six months ended 30
June 2020 (30 June 2019: Nil).

INTERIM RESULTS

The board (the “ Board ”) of directors (the “ Directors ”) of Jujiang Construction Group Co., Ltd. (the “ Company ”) is pleased to announce the unaudited condensed consolidated interim results of the Company and its subsidiaries (collectively the “ Group ”) for the six months ended 30 June 2020, together with the comparative figures for the six months ended 30 June 2019. The interim results have been reviewed by the audit committee of the Company (the “ Audit Committee ”).

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

For the six months ended 30 June 2020

Notes Revenue 4 Cost of sales Gross profit Other income and gains 5 Administrative expenses Impairment losses on financial and contract assets, net Other expenses Finance costs 6 PROFIT BEFORE TAX 7 Income tax expense 8 PROFIT FOR THE PERIOD OTHER COMPREHENSIVE INCOME FOR THE PERIOD, NET OF TAX TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 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) 10	2020 RMB’000 (Unaudited) 3,737,667 (3,545,822) 191,845 3,734 (56,737) (13,631) (6,705) (45,490) 73,016 (15,587) 57,429 - 57,429 56,809 620 57,429 56,809 620 57,429 0.11	2019 RMB’000 (Unaudited) 3,401,893 (3,218,542)
		183,351 546 (45,297) (8,744) (448) (38,181)
		91,227 (22,907)
		68,320 -
		68,320
		65,333 2,987
		68,320
		65,333 2,987
		68,320
		0.12

INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2020

Notes NON-CURRENT ASSETS Property, plant and equipment Investment properties Right-of-use assets Goodwill Other intangible assets Deferred tax assets Prepayments, other receivables and other assets Total non-current assets CURRENT ASSETS Inventories Trade and bills receivables 12 Contract assets 11 Prepayments, other receivables and other assets Pledged deposits Cash and cash equivalents Total current assets CURRENT LIABILITIES Trade and bills payables 13 Other payables and accruals Interest-bearing bank and other borrowings Lease liabilities Tax payable Total current liabilities NET CURRENT ASSETS TOTAL ASSETS LESS CURRENT LIABILITIES	As at 30 June 2020 RMB’000 (Unaudited) 131,669 16,479 20,036 1,162 78,127 27,209 - 274,682 23,897 1,592,399 2,746,425 559,475 60,359 129,918 5,112,473 2,604,494 527,286 420,887 989 213,548 3,767,204 1,345,269 1,619,951	As at 31 December 2019 RMB’000 (Audited) 135,201 - 8,705 1,162 66,207 24,277 11,685 247,237 37,515 1,774,881 2,564,120 506,964 110,126 273,991 5,267,597 2,836,562 486,314 407,300 - 207,456 3,937,632 1,329,965 1,577,202

Notes NON-CURRENT LIABILITIES Interest-bearing bank and other borrowings Lease liabilities Total non-current liabilities Net assets EQUITY Equity attributable to owners of the parent Share capital Reserves Non-controlling interests Total equity	As at 30 June 2020 RMB’000 (Unaudited) 136,810 9,830 146,640 1,473,311 533,360 914,064 1,447,424 25,887 1,473,311	As at 31 December 2019 RMB’000 (Audited) 140,938 - 140,938 1,436,264 533,360 876,726 1,410,086 26,178 1,436,264

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION

1. BASIS OF PREPARATION

The interim condensed consolidated financial information for the six months ended 30 June 2020 has been prepared in accordance with International Accounting Standard (“ IAS ”) 34 Interim Financial Reporting issued by the International Accounting Standards Board. The interim condensed consolidated financial information does not include all the information and disclosures required in the annual consolidated financial information, and should be read in conjunction with the Group’s annual financial statements for the year ended 31 December 2019. The interim condensed consolidated financial information is presented in Renminbi (“ RMB ”) and all values are rounded to the nearest thousands, except when otherwise indicated.

This interim condensed consolidated financial information has not been audited.

2. CHANGES IN THE GROUP’S ACCOUNTING POLICIES AND DISCLOSURES

The accounting policies adopted in the preparation of the interim condensed consolidated financial information are consistent with those applied in the preparation of the Group’s annual consolidated financial statements for the year ended 31 December 2019, except for the adoption of the following revised International Financial Reporting Standards (“ IFRSs ”) for the first time for the current period’s financial information.

Amendments to IFRS 3 Definition of a Business Amendments to IFRS 9, IAS 39 and IFRS 7 Interest Rate Benchmark Reform Amendment to IFRS 16 COVID-19-Related Rent Concessions (early adopted) Amendments to IAS 1 and IAS 8 Definition of Material

The nature and impact of the revised IFRSs are described below:

(a) Amendments to IFRS 3 clarify and provide additional guidance on the definition of a business. The amendments clarify that for an integrated set of activities and assets to be considered a business, it must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output. A business can exist without including all of the inputs and processes needed to create outputs . The amendments remove the assessment of whether market participants are capable of acquiring the business and continue to produce outputs. Instead, the focus is on whether acquired inputs and acquired substantive processes together significantly contribute to the ability to create outputs. The amendments have also narrowed the definition of outputs to focus on goods or services provided to customers, investment income or other income from ordinary activities. Furthermore, the amendments provide guidance to assess whether an acquired process is substantive and introduce an optional fair value concentration test to permit a simplified assessment of whether an acquired set of activities and assets is not a business. The Group has applied the amendments prospectively to transactions or other events that occurred on or after 1 January 2020. The amendments did not have any impact on the financial position and performance of the Group.
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(b) Amendments to IFRS 9, IAS 39 and IFRS 7 address the effects of interbank offered rate reform on financial reporting. The amendments provide temporary reliefs which enable hedge accounting to continue during the period of uncertainty before the replacement of an existing interest rate benchmark. In addition, the amendments require companies to provide additional information to investors about their hedging relationships which are directly affected by these uncertainties. The amendments did not have any impact on the financial position and performance of the Group as the Group does not have any interest rate hedge relationships.
(c) Amendment to IFRS 16 provides a practical expedient for lessees to elect not to apply lease modification accounting for rent concessions arising as a direct consequence of the COVID-19 pandemic. The practical expedient applies only to rent concessions occurring as a direct consequence of the COVID-19 pandemic and only if (i) the change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change; (ii) any reduction in lease payments affects only payments originally due on or before 30 June 2021; and (iii) there is no substantive change to other terms and conditions of the lease. The amendments did not have any impact on the Group’s interim condensed consolidated financial information.
(d) Amendments to IAS 1 and IAS 8 provide a new definition of material. The new definition states that information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements. The amendments clarify that materiality will depend on the nature or magnitude of information. The amendments did not have any impact on the Group’s interim condensed consolidated financial information.

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 defence products and provision of services relating to construction contracting in architecture .

The Group’s revenue from external customers from each operating segment is set out in note 4 to the interim condensed consolidated financial information.

Management monitors the results of the Group’s operating segments separately for the purpose of making decisions about resource 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.

Construction contracting RMB’000 (Unaudited) 3,709,370 -	Others RMB’000 (Unaudited) 28,297 8,073	Eliminations RMB’000 (Unaudited) - (8,073)	Total RMB’000 (Unaudited) 3,737,667 -
3,709,370	36,370	(8,073)	3,737,667
89,099 325 42,799 5,606 353 13,791 3,078	(3,438) 13 2,691 896 82 (160) 12,330	(12,645) - - - - - -	73,016 338 45,490 6,502 435 13,631 15,408
Construction contracting RMB’000 (Unaudited) 5,227,358	Others RMB’000 (Unaudited) 319,930	Eliminations RMB’000 (Unaudited) (160,133)	Total RMB’000 (Unaudited) 5,387,155
3,773,712	224,471	(84,339)	3,913,844

Construction contracting RMB’000 (Unaudited) 3,357,689 736	Others RMB’000 (Unaudited) 44,204 5,639	Eliminations RMB’000 (Unaudited) - (6,375)	Total RMB’000 (Unaudited) 3,401,893 -
3,358,425	49,843	(6,375)	3,401,893
85,486 232 36,618 5,269 315 8,655 6,702	8,396 18 1,563 334 57 89 285	(2,655) - - - - - -	91,227 250 38,181 5,603 372 8,744 6,987
Construction contracting RMB’000 (Audited) 5,314,807	Others RMB’000 (Audited) 323,980	Eliminations RMB’000 (Audited) (123,953)	Total RMB’000 (Audited) 5,514,834
3,915,432	217,682	(54,544)	4,078,570

Note:

1 Capital expenditure mainly consists of additions to property, plant and equipment and intangible assets.
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4. REVENUE

Disaggregated revenue information for revenue from contracts with customers

For the six months ended 30 June 2020

Segments Construction contracting RMB’000 (Unaudited) Type of goods or service Residential 2,155,180 Commercial 343,169 Industrial 859,264 Public works 351,757 Construction contracting 3,709,370 Design, survey and consultancy - Sale of construction materials and civil defence products - Others - Total revenue from contracts with customers 3,709,370 Geographical markets Mainland China 3,709,370 Total revenue from contracts with customers 3,709,370 Timing of revenue recognition Services transferred over time 3,709,370 Goods transferred at a point in time - Total revenue from contracts with customers 3,709,370 For the six months ended 30 June 2019 Segments Construction contracting RMB’000 (Unaudited) Type of goods or service Residential 1,736,784 Commercial 472,319 Industrial 888,141 Public works 260,445 Construction contracting 3,357,689 Design, survey and consultancy - Sale of construction materials and civil defence products - Others - Total revenue from contracts with customers 3,357,689 Geographical markets Mainland China 3,357,689 Total revenue from contracts with customers 3,357,689 Timing of revenue recognition Services transferred over time 3,357,689 Goods transferred at a point in time - Total revenue from contracts with customers 3,357,689	Construction contracting RMB’000 (Unaudited) 2,155,180 343,169 859,264 351,757	Others RMB’000 (Unaudited) - - - -	Total RMB’000 (Unaudited) 2,155,180 343,169 859,264 351,757 3,709,370 11,329 16,968 28,297 3,737,667 3,737,667 3,737,667 3,720,699 16,968 3,737,667 Total RMB’000 (Unaudited) 1,736,784 472,319 888,141 260,445 3,357,689 12,505 31,699 44,204 3,401,893 3,401,893 3,401,893 3,370,194 31,699 3,401,893
	3,709,370 - -	- 11,329 16,968
	-	28,297
	3,709,370	28,297
	3,709,370	28,297
	3,709,370	28,297
	3,709,370 -	11,329 16,968
	3,709,370	28,297
		Others RMB’000 (Unaudited) - - - -
	3,357,689 - -	- 12,505 31,699
	-	44,204
	3,357,689	44,204
	3,357,689	44,204
	3,357,689	44,204
	3,357,689 -	12,505 31,699
	3,357,689	44,204

Set out below is the reconciliation of the revenue from contracts with customers with the amounts disclosed in the segment information:

For the six months ended 30 June 2020 Segments Construction contracting RMB’000 (Unaudited) Revenue External customers 3,709,370 Intersegment sales - 3,709,370 Intersegment adjustments and eliminations - Total revenue from contracts with customers 3,709,370 For the six months ended 30 June 2019 Segments Construction contracting RMB’000 (Unaudited) Revenue External customers 3,357,689 Intersegment sales - 3,357,689 Intersegment adjustments and eliminations - Total revenue from contracts with customers 3,357,689	For the six months ended 30 June 2020 Segments Construction contracting RMB’000 (Unaudited) Revenue External customers 3,709,370 Intersegment sales - 3,709,370 Intersegment adjustments and eliminations - Total revenue from contracts with customers 3,709,370 For the six months ended 30 June 2019 Segments Construction contracting RMB’000 (Unaudited) Revenue External customers 3,357,689 Intersegment sales - 3,357,689 Intersegment adjustments and eliminations - Total revenue from contracts with customers 3,357,689	Others RMB’000 (Unaudited) 28,297 8,073	Total RMB’000 (Unaudited) 3,737,667 8,073 3,745,740 (8,073) 3,737,667 Total RMB’000 (Unaudited) 3,401,893 6,375 3,408,268 (6,375) 3,401,893
	3,709,370 -	36,370 (8,073)
	3,709,370	28,297
		Others RMB’000 (Unaudited) 44,204 6,375
	3,357,689 -	50,579 (6,375)
	3,357,689	44,204

5. OTHER INCOME AND GAINS

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

Interest income Government grant Others	For the six months ended 30 June 2020 2019 RMB’000 RMB’000 (Unaudited) (Unaudited) 338 250 2,936 99 460 197 3,734 546	For the six months ended 30 June 2020 2019 RMB’000 RMB’000 (Unaudited) (Unaudited) 338 250 2,936 99 460 197 3,734 546
		546

6. FINANCE COSTS

Factoring expense Interest on bank loans Interest on discounted bills receivable Interest on lease liabilities Letter of guarantee	For the six months ended 30 June 2020 2019 RMB’000 RMB’000 (Unaudited) (Unaudited) 24,553 24,790 12,591 11,877 8,049 1,404 297 - - 110 45,490 38,181	For the six months ended 30 June 2020 2019 RMB’000 RMB’000 (Unaudited) (Unaudited) 24,553 24,790 12,591 11,877 8,049 1,404 297 - - 110 45,490 38,181
		38,181

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7. PROFIT BEFORE TAX

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

Cost of construction contracting (including depreciation) Cost of others Total cost of sales Depreciation of items of property, plant and equipment Depreciation of right-of-use assets Amortisation of intangible assets Total depreciation and amortisation Research and development costs: Current period expenditure Impairment of trade receivables Impairment/(reversal of impairment) of contract assets Impairment of financial assets included in prepayments, other receivables and other assets Total impairment losses, net Auditor’s remuneration Employee benefit expenses (including Directors’ and Supervisors’ remuneration): - Wages, salaries and allowances - Social insurance - Welfare and other expenses Interest income	For the six months ended 30 June 2020 2019 RMB’000 RMB’000 (Unaudited) (Unaudited) 3,526,986 3,188,473 18,836 30,069 3,545,822 3,218,542 5,754 5,457 748 146 435 372 6,937 5,975 1,255 790 9,898 6,967 597 (177) 3,136 1,954 13,631 8,744 800 880 37,147 28,555 31,304 23,087 5,230 4,659 613 809 (338) (250)	For the six months ended 30 June 2020 2019 RMB’000 RMB’000 (Unaudited) (Unaudited) 3,526,986 3,188,473 18,836 30,069 3,545,822 3,218,542 5,754 5,457 748 146 435 372 6,937 5,975 1,255 790 9,898 6,967 597 (177) 3,136 1,954 13,631 8,744 800 880 37,147 28,555 31,304 23,087 5,230 4,659 613 809 (338) (250)
		3,218,542
		5,457 146 372
		5,975
		790 6,967 (177) 1,954 8,744 880 28,555 23,087 4,659 809 (250)

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8. INCOME TAX EXPENSE

All of the Group’s subsidiaries 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% (201 9: 25%) on the taxable income.

Pursuant to relevant laws and regulations in the PRC and with approval from tax authorities in charge, one of the Group’s subsidiaries, Jiaxing Jujiang Defence Equipment Co., Ltd., qualified as a High and New Technology Enterprise, is entitled to the preferential tax rate of 15% for the three years from November 2018 to November 2021, which will be renewable after November 2021 subject to fulfilment of certain conditions imposed by relevant laws and regulations.

There was no provision for India profits tax as there was no taxable profit earned or derived from India by the Group during the period.

The breakdown of income tax expense is as follow:

Current income tax – Mainland China Charge for the period Over-provision in prior years Deferred income tax Tax charge for the period	For the six months ended 30 June 2020 2019 RMB’000 RMB’000 (Unaudited) (Unaudited) 23,219 24,818 (4,275) - (3,357) (1,911) 15,587 22,907	For the six months ended 30 June 2020 2019 RMB’000 RMB’000 (Unaudited) (Unaudited) 23,219 24,818 (4,275) - (3,357) (1,911) 15,587 22,907
		22,907

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 is as follows:

Profit before tax Income tax charge at the statutory income tax rate (25%) Lower tax rate enacted by local authority Rate change for deferred tax assets Additional deductible allowance for research and development expenses Expenses not deductible for tax purposes Adjustments in respect of current tax of previous periods Tax losses not recognised Tax charge for the period at the effective rate	For the six months ended 30 June 2020 2019 RMB’000 RMB’000 (Unaudited) (Unaudited) 73,016 91,227 18,254 22,807 (10) (803) - 41 (141) - 364 335 (4,275) - 1,395 527 15,587 22,907

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9. DIVIDENDS

Declared and paid final dividend - RMB3.65 cents (2019: RMB3.5 cents) per ordinary share*	For the six months ended 30 June 2020 2019 RMB’000 RMB’000 (Unaudited) (Unaudited) 19,471 18,743 19,471 18,743	For the six months ended 30 June 2020 2019 RMB’000 RMB’000 (Unaudited) (Unaudited) 19,471 18,743 19,471 18,743
		18,743

The Company proposed to distribute a final dividend of 4.0 Hong Kong cents in cash (before tax) per share for the year ended 31 December 2019 to the shareholders whose names appear on the register of members of the Company on Wednesday, 24 June 2020. The exchange rate for the dividend calculation in RMB is based on the average benchmark exchange rate of Hong Kong Dollar against RMB as published by the People’s Bank of China one week preceding the date of the approval of such dividend, being HK$1.0000: RMB0.9132. Based on the above exchange rate, a final dividend of RMB3.65 cents (before tax) was paid per domestic share.

10. 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 the six months ended 30 June 2020 and 2019 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:

Earnings: Profit for the period attributable to ordinary equity holders of the parent, used in the basic earnings per share calculation Number of shares: Weighted average number of ordinary shares in issue during the period, used in the basic earnings per share calculation	For the six months ended 30 June 2020 2019 RMB’000 RMB’000 (Unaudited) (Unaudited) 56,809 65,333 For the six months ended 30 June 2020 2019 ’000 ’000 (Unaudited) (Unaudited) 533,360 533,360

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11. CONTRACT ASSETS

Contract assets arising from: Construction services Design, survey and consultancy Impairment	As at 30 June 2020 RMB’000 (Unaudited) 2,748,834 2,398 2,751,232 (4,807) 2,746,425	As at 31 December 2019 RMB’000 (Audited) 2,555,463 12,902 2,568,365 (4,245) 2,564,120

12. TRADE AND BILLS RECEIVABLES

Trade receivables at amortised cost Provision for impairment Trade receivables, net Bills receivable	As at 30 June 2020 RMB’000 (Unaudited) 1,174,700 (61,920) 1,112,780 479,619 1,592,399	As at 31 December 2019 RMB’000 (Audited) 1,346,529 (52,371) 1,294,158 480,723 1,774,881

Trade receivables represented receivables for contract works. The payment terms of contract work receivables are stipulated in relevant contracts. 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 has not pledged any trade receivables during the period ended 30 June 2020 (2019: RMB30,000,000) for the Group’s bank loans. Except for the pledged balance, the Group does not hold any other collateral or credit enhancements over its trade receivable balances. Trade and bills receivables are non-interest-bearing.

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An ageing analysis of the trade receivables as at the end of each of the reporting period, based on the invoice date and net of loss allowance, is as follows:

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	As at 30 June 2020 RMB’000 (Unaudited) 613,223 231,699 148,578 57,266 42,039 5,990 13,985 1,112,780	As at 31 December 2019 RMB’000 (Audited) 828,577 140,195 145,632 110,558 32,581 34,210 2,405
		1,294,158

The movements in the loss allowance for impairment of trade receivables are as follows:

At beginning of the period/year Impairment losses, net Disposal of a subsidiary At end of the period/year	As at 30 June 2020 RMB’000 (Unaudited) 52,371 9,898 (349) 61,920	As at 31 December 2019 RMB’000 (Audited) 35,581 16,790 -
		52,371

13. TRADE AND BILLS PAYABLES

An ageing analysis of the trade and bills payables as at the end of each of the reporting period, based on the invoice date and net of loss allowance, is as follows:

Within 6 months 6 months to 1 year 1 to 2 years 2 to 3 years Over 3 years	As at 30 June 2020 RMB’000 (Unaudited) 1,863,038 328,402 175,555 99,124 138,375 2,604,494	As at 31 December 2019 RMB’000 (Audited) 2,329,209 164,292 168,791 62,171 112,099
		2,836,562

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

14. COMMITMENTS

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

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MANAGEMENT DISCUSSION AND ANALYSIS

MARKET REVIEW

Under ever-mounting downward pressure on the economy since 2019, the Gross Domestic Product (“ GDP ”) posted a year-on-year increase of 6.1% for the year. Entering into 2020, against the backdrop of the COVID-19 pandemic and the downward pressure on the economy, GDP fell by 6.8% and increased by 3.2% respectively in the first and second quarter. The construction industry was also partly affected by the COVID-19 pandemic, the State and the local governments, however, have introduced policies of safeguard measures with respect to finance, fiscal taxation and other areas after the COVID-19 pandemic subsided. The development of the Chinese economy is in dire need of a boost in domestic demand and an increase in investment, from which the construction industry will remain benefitted.

In the first half of 2020, the real estate market in general showed a steadily declining trend. According to the statistics of the National Bureau of Statistics, for the six months ended 30 June 2020, i) total housing construction area in China was approximately 11,205.65 million square meters (“ sq.m. ”) (30 June 2019: approximately 10,749.59 million sq.m.), representing an increase of approximately 4.2% from the corresponding period of 2019; ii) total newly commenced construction area in China was approximately 2,226.16 million sq.m. (30 June 2019: approximately 2,351.89 million sq.m.), representing a decrease of approximately 5.3% from the corresponding period of 2019; and iii) total contract amount of PRC construction enterprises was approximately RMB39,087.5 billion (30 June 2019: approximately RMB36,397.8 billion), representing an increase of approximately 7.4% from the corresponding period of 2019. Moreover, the total value of the PRC construction industry was approximately RMB10,084.0 billion for the six months ended 30 June 2020, (30 June 2019: approximately RMB10,161.6 billion), which remained stable as compared with the corresponding period of 2019.

As the economy undergoes a smooth transition to a medium-to-low growth stage, the growth of the construction industry may slow down in the long term. The industry itself, however, will continue to play a crucial role in the national economy. Whenever there is a huge downward pressure on the economy, the State will generally increase investments in the construction industry in order for it to sustain economic growth. This was especially the case after the pandemic, as more “Growth Stabilizing” policies( 「穩增長」政策 ) were implemented. In January 2020, No.1 Document entitled “Opinions of the CPC Central Committee and the State Council on Making the Key Work in Agriculture, Rural Areas and Farmers a Success to Ensure the Realization of Moderate Prosperity in All Respects” （《中共中央國務院關於抓好「三農」領域重點工作確保如期實現全面小康的意見》）of the central government further proposed to enhance the construction of modern agricultural infrastructure facilities, seize opportunities to initiate and commence construction of a series of major water conservancy and auxiliary facilities. In February and March 2020, the Standing Committee of the Central Political Bureau of the CPC Central Committee, the Standing Committee of the State Council and others convened four meetings to stress the importance of accelerating the progress of constructing 5G base stations, the Industrial Internet and other new types of infrastructural facilities, the introduction of which will push the construction industry to upgrade to a more efficient mode of development and create new momentum for the growth of the economy. On 5 May 2020, addressing the Third Session of the Thirteenth National People’s Congress, Li Keqiang, Premier of the State Council, proposed on behalf of the State Council in his 2020 Government Work Report to give priority to the construction of “new infrastructure, new urbanisation initiatives and major projects”. “New infrastructure, new urbanisation initiatives” refers to the construction of new types of infrastructure facilities and urbanisation facilities, while “major projects” refers to transportation, water conservancy and other major projects. If enterprises can take the advantage of the construction of “new infrastructure, new urbanization initiatives and major projects”, actively transform and upgrade, and grasp the opportunities to undertake new infrastructure construction and new urbanisation projects, we shall then expect promising development in the country.

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BUSINESS REVIEW

Looking back into the first half of 2020, the Group has also encountered challenges as the industry was severely affected by the COVID-19 pandemic. In such exceptional times, the Group has forged ahead united, surmounted the unprecedented difficulties and demonstrated great capabilities to counteract risks. The Group’s revenue and net profit for the six months ended 30 June 2020 were approximately RMB3,737.7 million and approximately RMB57.4 million respectively, representing an increase of approximately 9.9% and a decrease of approximately 15.9% respectively from the corresponding period of the previous year. The value of backlog increased by approximately 22.8% to approximately RMB15,354.4 million as at 30 June 2020 as compared to that of approximately RMB12,506.4 million as at 30 June 2019. The following table sets forth a breakdown of the movement in the value of backlog:

Opening value of backlog Net value of new projects(1) Revenue recognized(2) Closing value of backlog(3)	For the six months ended 30 June 2020 2019 RMB’million RMB’million (Unaudited) (Unaudited) 14,432.8 11,239.2 4,631.0 4,632.3 (3,709.4) (3,365.1) 15,354.4 12,506.4	For the six months ended 30 June 2020 2019 RMB’million RMB’million (Unaudited) (Unaudited) 14,432.8 11,239.2 4,631.0 4,632.3 (3,709.4) (3,365.1) 15,354.4 12,506.4
		12,506.4

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.
(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 reach ed 100% as at the end of the relevant period indicated.

Making the principal business prominent

In the first half of 2020, in response to the challenges brought by the COVID-19 pandemic, the Group maintained steady development of its businesses through market expansions and the undertaking of large-scale projects by leveraging the strength of its brand, management and talents. A net contract value of the newly signed-up projects of approximately RMB4.63 billion was achieved. As travelling to other regions was banned in the face of the COVID-19 pandemic. The Group therefore, focused mainly on the consolidation of its market share in Jiaxing in the first half of the year, thus the contract value of the newly signed-up projects in Jiaxing reached RMB2.37 billion, which accounted for approximately 51.1% of the total contract value and represented a significant increase of approximately 140.9% over the corresponding period.

Affected by the COVID-19 pandemic, operations of all industries became increasingly difficult amidst downward pressure on the economy. Upon undertaking large-scale projects, the Group adopted the quality-over-quantity approach to ensure development in a difficult environment. For the six months ended 30 June 2020, the Group has entered into quality project businesses with contract value over RMB100 million mainly with a number of top real estate companies and quality customers, which amounted to nearly RMB3.39 billion in contract value and accounted for approximately 73.2% of the total contract value Newly signed-up residential and commercial housing projects amounted to approximately RMB3.47 billion for the period, accounting for approximately 74.9% of the total contract value; industrial projects amounted to approximately RMB0.88 billion, accounting for approximately 19.0% of the total contract value; and public facility construction projects amounted to approximately RMB0.28 billion, accounting for approximately 6.1% of the total contract value.

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Excelling in professionalism

In addition to making the principal business prominent in the first half of 2020, the Group also stepped up the resources committed to the development of its professional capabilities, expanded its businesses in various specialized sectors such as decorative foundations, municipal services and fire safety. Meanwhile, the Group was further extending to the upstream and downstream of the industrial chain to enhance complementary advantages between various specialized sectors and the principal business so as to promote diversity across projects and income to each business segment. During the first half of 2020, business growth in various specialized sectors was boosted by the contracting of engineering, procurement and construction. In particular, the business of decorative foundation companies amounted to approximately RMB210 million, new contracts signed up with municipal companies amounted to approximately RMB185 million, and the fire safety sector amounted to approximately RMB109 million.

The Group strengthened the evaluation and maintenance of technology centers of provincial enterprises, deepened the application of “production, study, research and utilization” platforms and post-doctoral workstations, reinforced research on new technologies, new craftsmanship, new materials and new equipment technologies, and strengthened the technical support for the construction of key projects and landmark projects. The Group obtained 1 provincial construction method, 10 accepted national patents, 2 licenses, 3 provincial QC achievements and 6 municipal QC achievements for the first half of the year. By way of the QC achievements, construction methods and patent applications, the Group has stepped up the summarization, upgrade, promotion and application of the existing technological achievements.

In the first half of 2020, the Group expanded its application of BIM technology in project construction management and made a step towards the goal of full coverage of new construction projects. Relying on its synchronized participation in new projects, the Group accelerated the extensive integration of BIM technology with project technology, production and business management. The Group planned to establish Zhejiang Yunjiang Digital Construction Technology Research Institute Co., Ltd. (浙江雲匠數字建造技術研究院有限公司) to formulate long-term development plans for sustainable and healthy development, actively cooperate with external training institutions and develop external training businesses so as to enhance the core competitiveness and industry influence of the Company’s application of BIM technology. The Group promoted the construction of the I8 Integrated Management Informatization System Platform, improved its existing modules, and perfected the project management system. A decision-making center platform was developed, and preliminary segment demand survey and blueprint design for the second phase of production were completed. Various financial statements and modules were developed and uploaded online. The construction of the Company’s digitalized and intelligent industrial site was accelerated, face recognition and data synchronization for the labor service real-name system were developed based on the I8 platform, and the development of a data synchronization interface for Pinghu, Haiyan and other county-level platforms was also completed.

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Expanding into new areas

The engineering, procurement and construction (“ EPC ”) projects and public-private partnership (“ PPP ”) projects have been progressing in a solid way. By carrying out the operation and construction of the two EPC projects, the Group has built a direct project management team, toughened the design management team and raised the operation level of the general contracting of projects. In the first half of the year, the Group has undertaken the EPC project of Gaoqiao Scenic Village and commenced the construction of the research center. The PPP project for the practice base for quality youth education in Tongxiang City (the “ Educational Complex ”) has practically been completed, from which valuable experience for the expansion into new areas was accumulated.

For the six months ended 30 June 2020, approximately 99.2% of the revenue was contributed by the construction contracting business (six months ended 30 June 2019: 98.7%).

Construction contracting business Residential Commercial Industrial Public works Other business Design, survey and consultancy Sale of construction materials and civil defence products Total revenue	For the six months ended 30 June 2020 2019 RMB’million % RMB’million % (Unaudited) (Unaudited) 2,155.2 57.6 1,736.9 51.1 343.2 9.2 472.3 13.9 859.3 23.0 888.1 26.1 351.7 9.4 260.4 7.6 3,709.4 99.2 3,357.7 98.7 11.3 0.3 12.5 0.4 17.0 0.5 31.7 0.9 28.3 0.8 44.2 1.3 3,737.7 100.0 3,401.9 100.0	For the six months ended 30 June 2020 2019 RMB’million % RMB’million % (Unaudited) (Unaudited) 2,155.2 57.6 1,736.9 51.1 343.2 9.2 472.3 13.9 859.3 23.0 888.1 26.1 351.7 9.4 260.4 7.6 3,709.4 99.2 3,357.7 98.7 11.3 0.3 12.5 0.4 17.0 0.5 31.7 0.9 28.3 0.8 44.2 1.3 3,737.7 100.0 3,401.9 100.0
		98.7 0.4 0.9
		1.3 100.0

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FINANCIAL REVIEW

Revenue and gross profit margin

Revenue increased by approximately 9.9% from approximately RMB3,401.9 million for the six months ended 30 June 2019 to approximately RMB3,737.7 million for the six months ended 30 June 2020, primarily because of an increase in the construction contracting business amounting to approximately RMB351.7 million, which was offset by a decrease of other business amounting to approximately RMB15.9 million for the six months ended 30 June 2020. Increase in construction contracting business was primarily due to an increase in revenue from residential construction contracting business amounting to approximately RMB418.4 million, which was partially offset by a decrease in revenue from commercial construction contracting business of approximately RMB129.2 million. Increase in revenue from residential construction contracting business for the six months ended 30 June 2020 was a result of benefits of the development of property market in the PRC, the Group co-operated with mega property developers and developers outside Jiaxing City which stimulated our revenue. However, the economy is uncertain in the PRC, the commercial activities were cooled down. As a result, the revenue from commercial construction contracting business for the six months ended 30 June 2020 was decreased.

Gross profit increased by approximately 4.6% from approximately RMB183.4 million for the six months ended 30 June 2019 to approximately RMB191.8 million for the six months ended 30 June 2020, which was in line with increase in revenue. However, the gross profit margin decreased from approximately 5.39% for the six months ended 30 June 2019 to approximately 5.13% for the six months ended 30 June 2020, such decrease was mainly due to the decrease in gross profits margins of the other business. The gross profit margin of the construction contracting business was at 5.04% and 5.08% for the six months ended 30 June 2020 and 2019, respectively. The gross profit margins of the other business decreased from approximately 28.9% for the six months ended 30 June 2019 to 16.7% for the six months ended 30 June 2020, such decrease was primarily attributable to the service business was affected by the COVID-19 pandemic.

Other income and gains

Other income and gains increased by approximately RMB3.2 million from approximately RMB0.5 million for the six months ended 30 June 2019 to approximately RMB3.7 million for the six months ended 30 June 2020 primarily because of an increase in government grant income of approximately RMB2.8 million for the six months ended 30 June 2020.

Administrative expenses

The administrative expenses increased by approximately 25.2% from approximately RMB45.3 million for the six months ended 30 June 2019 to approximately RMB56.7 million for the six months ended 30 June 2020 which was primarily due to an increase in salaries and employee benefits of approximately RMB9.5 million as the Group has recruited a total of 112 new employees, including senior technology professionals, first class constructors and second class constructors, to meet its fast growing business and an incremental in salaries.

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Impairment losses on financial and contract assets, net

Impairment losses on financial and contract assets, net, including trade receivables and other receivables, increased significantly by approximately 55.9% from approximately RMB8.7 million for the six months ended 30 June 2019 to approximately RMB13.6 million for the six months ended 30 June 2020, primarily due to the worsened economic environment. The impairments of trade receivables and other receivables increased from approximately RMB7.0 million and approximately RMB2.0 million, respectively, for the six months ended 30 June 2019 to approximately RMB9.9 million and approximately RMB3.1 million, respectively, for the six months ended 30 June 2020.

Other expenses

Other expenses increased by approximately RMB 6.3 million from approximately RMB0.4 million for the six months ended 30 June 2019 to approximately RMB6.7 million for the six months ended 30 June 2020, primarily due to the Group recognized a loss on disposal of a subsidiary amounting to approximately RMB6.4 million for the six months ended 30 June 2020 when no such loss was incurred for the six months ended 30 June 2019. In June 2020, the Company and an independent third party entered into the share transfer agreement, pursuant to which the Company agreed to sell 100% of the equity interest in the wholly-owned subsidiary, Zhejiang Jujiang Construction Surveying and Design Co., Ltd. (浙江巨匠建築勘察設計有限公司) to the vendor at a cash consideration of RMB3.0 million which is same as the paid -in share capital of the subsidiary.

Finance costs

Finance costs increased by approximately 19.1% from approximately RMB38.2 million for the six months ended 30 June 2019 to approximately RMB45.5 million for the six months ended 30 June 2020. Such increase was primarily due to customers of the Group increased to use the bills for the settlement, the Group increased its working capital by using factoring which generated the finance costs.

Income tax expense

Income tax expenses decreased by 32.0% from approximately RMB22.9 million for the six months ended 30 June 2019 to approximately RMB15.6 million for the six months ended 30 June 2020 primarily because of a decrease in profits from the operation. The effective tax rate decreased from approximately 25.1% for the six months ended 30 June 2019 to 21.3% for the six months ended 30 June 2020 primarily because the Group reversed a provision of income tax in relation to prior year of RMB4.3 million for the six months ended 30 June 2020.

Profit for the period

Profit for the period decreased by approximately 15.9% from approximately RMB68.3 million for the six months ended 30 June 2019 to approximately RMB57.4 million for the six months ended 30 June 2020. Net profit margin decreased from approximately 2.0% for the six months ended 30 June 2019 to approximately 1.5%for the six months ended 30 June 2020, primarily due to an increase in administrative expenses and a loss on disposal of a subsidiary for the six months ended 30 June 2020.

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LIQUIDITY, FINANCIAL RESOURCES AND CAPITAL STRUCTURE

The working capital for the Group’s operations primarily comes from cash generated from operating activities and interest-bearing bank and other borrowings. As at 30 June 2020 and 31 December 2019, the Group had cash and cash equivalents of approximately RMB129.9 million and approximately RMB274.0 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. In the future, the Group intends to finance its operations through cash generated from operating activities and interest-bearing bank and other borrowings. Other than normal bank borrowings that the Group obtains from commercial banks and potential debt financing plans, the Group does not expect to have any material external debt financing plan in the near future.

Contract assets

The contract assets increased from approximately RMB2,564.1 million as at 31 December 2019 to approximately RMB2,746.4 million as at 30 June 2020, representing 48.7% and 53.7% of the total current assets as at the end of the corresponding period. The proportion of the contract assets to the total current assets was increased due to an increase in the balance of the contract assets. The increase in contract assets was primarily due to the slowed-down billing process brought about by the COVID-19 pandemic.

Trade and bills receivables

Trade and bills receivables decreased by approximately 10.3% from approximately RMB1,774.9 million as at 31 December 2019 to approximately RMB1,592.4 million as at 30 June 2020. Such decrease was due to the slowed down billing process brought about by the COVID-19 pandemic. The trade and bills receivables turnover days decreased from approximately 84 days as at 31 December 2019 to approximately 81 days as at 30 June 2020, which was stable.

Trade and bills payables

Trade and bills payables decreased by approximately 8.2% from approximately RMB2,836.6 million as at 31 December 2019 to approximately RMB2,604.5 million as at 30 June 2020. Such decrease was due to the advanced payment made to secure the materials to be delivered on time after the suspension of the construction works under the COVID-19 pandemic. The trade and bills payables turnover days decreased from approximately 164 days as at 31 December 2019 to approximately 138 days as at 30 June 2020.

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Borrowings and charge on assets

As at 30 June 2020, the Group relied on short-term and long-term interest-bearing borrowings in the aggregated amount of approximately RMB557.7 million (31 December 2019: approximately RMB548.2 million). The short-term interest bearing borrowings amounting to approximately RMB420.9 million (31 December 2019: approximately RMB407.3 million) are repayable within 1 year and carried effective interest rate with a range from 4.05% to 15.0% per annum (31 December 2019: 2.88% to 15.0% per annum). A long-term interest-bearing borrowings amounting to approximately RMB136.8 million (31 December 2019: RMB140.9 million) are repayable from 2021 to 2028 and the interest rate is 10% lower than the base rate announced by the People’s Bank of China.

As at 30 June 2020, certain general banking facilities were secured by the land use rights and buildings and trade receivables of approximately RMB89.8 million and nil, respectively (31 December 2019: approximately RMB91.0 million and RMB30.0 million).

Gearing ratio

The gearing ratio increased from 11.4% as at 31 December 2019 to approximately 24.9% as at 30 June 2020. The increase was mainly attributable to a decrease in cash and cash equivalents and pledged deposits with aggregated amounts of approximately RMB193.8 million.

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

Capital expenditure

For the six months ended 30 June 2020, the capital expenditures were approximately RMB15.4 million (six months ended 30 June 2019: approximately RMB6.4 million). The capital expenditure incurred for the six months ended 30 June 2020 was primarily related to the concession right of the Educational Complex and the procurement of construction machinery for the business expansion.

Capital commitments

As at 30 June 2020, the Group did not have any significant commitments (31 December 2019: nil).

Contingent liabilities

As at 30 June 2020, the Group had no material contingent liabilities (31 December 2019: nil).

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.

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SIGNIFICANT INVESTMENTS HELD, MATERIAL ACQUISITIONS AND DISPOSALS

Save as disclosed in this announcement, the Group had no significant investments held, material acquisitions and disposals during the six months ended 30 June 2020 (six months ended 30 June 2019: nil).

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 2020.

EMPLOYEE AND REMUNERATION POLICIES

As at 30 June 2020, the Group had a total of 974 employees, of which 615 were based in Jiaxing City, and 359 were based in other areas in Zhejiang Province and in other provinces and regions in China. For the six months ended 30 June 2020, the Group incurred total staff costs of approximately RMB37.1 million, representing an increase of approximately 30.1% as compared with the same period in 2019, mainly attributable to increase in headcount and salary incremental.

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 local market conditions. In order to improve the employees’ skills and technical expertise, the Group provides regular training to the employees.

FUTURE PROSPECTS

As economic activities in China resumes, the impact on the construction industry at the early stage of the COVID-19 pandemic has basically been fully reflected. The Group will take the initiative to respond to challenges, risks and difficulties, transform its development mindset, aim for comprehensive and high-quality development and build itself a solid foundation. At the same time, the Group will actively search for suitable markets and make every effort to promote quality services.

In terms of market development, the Group will expand the market of major customers, promote going out development and undertake business in new areas, as well as extend and expand new or nationwide projects for major customers with whom we have already secured project cooperation or entered into strategic cooperation agreements. The Group will also more frequently participate in the bidding of projects of private enterprises with good credentials, cultivate a number of new major customers with sustainable development and established businesses, so as to promote quality improvement and increment of their businesses. At the same time, the government has introduced a number of policies to increase infrastructure investment. The Group will pay more attention to government platform projects, comprehensively track the key projects in the Jiaxing region to increase its participation in tenders and bolster its market share of public construction projects in the region.

In terms of internal management, the Group will firmly establish the corporate brand philosophy of “winning by speed, quality and safety” as its focus of work. At the same time, the Group will optimize internal management by implementing more stringent risk control, strengthening internal cost management, upgrading production technology management and improving operations supervision and management, so as to achieve high-quality development on all fronts.

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OTHER INFORMATION

INTERIM DIVIDEND

The Board does not recommend the payment of an interim dividend for the six months ended 30 June 2020 (six months ended 30 June 2019: Nil).

PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES

For the six months ended 30 June 2020 and up to the date of this announcement, there was no purchase, sale or redemption by the Company or any of its subsidiaries of any listed securities of the Company.

DIRECTORS’ COMPETING INTERESTS

Save as disclosed in this announcement, 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 Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “ Listing Rules ”).

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 2020 and up to the date of this announcement, the Company has fully complied with the Code Provisions, except code provision A.2.1 of the CG Code as more particularly described below.

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 do not have a separate chairman and general manager (which is equivalent to chief executive officer) and Mr. Lyu Yaoneng currently performs these two roles. The 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. The Board considers that the balance of power and authority for the present arrangement will not be impaired and this structure will enable the Company to make and implement decisions promptly and effectively. The Board will continue to review and consider segregating the roles of chairman of the Board and general manager of the Company at a time when it is appropriate and suitable by taking into account the circumstances of the Group as a whole.

Save as disclosed above, the Company has complied with the CG Code for the period. The Directors will review our corporate governance policies and compliance with the CG Code each financial year.

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MODEL CODE FOR SECURITIES TRANSACTIONS

The Company has adopted the model code as set out in Appendix 10 to the Listing Rules (“ Model Code ”) as the Company’s code of conduct regarding Directors’ and supervisors’ securities transactions. Upon specific enquiries, all Directors and Supervisors confirmed that they have complied with the relevant provisions of the Model Code throughout the period from 1 January 2020 to 30 June 2020.

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

Save as disclosed in this announcement, there are no major events subsequent to 30 June 2020 which would materially affect the Group’s operating and financial performance as at the date of this announcement.

PUBLICATION OF THE CONDENSED CONSOLIDATED INTERIM RESULTS AND 2020 INTERIM REPORT ON THE WEBSITES OF THE STOCK EXCHANGE AND THE COMPANY

This interim results announcement is published on the websites of the Stock Exchange (http://www.hkexnews.hk) and the Company (http://www.jujiang.cn) and the 2020 Interim Report containing all the information required by the Listing Rules will be dispatched to the shareholders of the Company and published on the respective websites of the Stock Exchange and the Company in due course.

AUDIT COMMITTEE

The Audit Committee has discussed with the management and external auditor of the Company the accounting principles and policies adopted by the Group, and discussed the internal control and financial reporting matters of the Group. The Audit Committee has reviewed the Group’s unaudited interim condensed consolidated financial statements of the Group for the six months ended 30 June 2020, and is of the opinion that the financial statements comply with the applicable accounting standards.

By order of the Board Jujiang Construction Group Co., Ltd. Mr. Lyu Yaoneng Chairman

Zhejiang Province, the PRC, 28 August 2020

As at the date of this announcement, the Board comprises Mr. Lyu Yaoneng, Mr. Lyu Dazhong, Mr. Li Jinyan, Mr. Lu Zhicheng, Mr. Shen Haiquan and Mr. Zheng Gang, as executive Directors; and Mr. Yu Jingxuan, Mr. Lin Tao, and Mr. Wong Kai Wai, as independent nonexecutive Directors.

* for identification purposes only

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