Launch Tech Company Limited - Annual Report 2019

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

深圳市元征科技股份有限公司

LAUNCH TECH COMPANY LIMITED *

(a joint stock limited company incorporated in the People’s Republic of China with limited liability) (Stock Code: 2488)

UNAUDITED 2019 ANNUAL RESULT ANNOUNCEMENT

The board of directors (the “Board”) of Launch Tech Company Limited (the “Company”) hereby announces the unaudited consolidated result of the Company and its subsidiaries (the “Group”) for the year ended 31 December 2019 prepared in accordance with China Accounting Standards for Business Enterprises:

I. FINANCIAL INFORMATION

(All amounts in RMB’000 unless otherwise stated)

CONSOLIDATED BALANCE SHEET

		31 December	31 December
	Notes	2019	2018
			(Audited)
Current assets:
Bank balances and cash		479,435	319,388
Trading financial assets		20,000	–
Bills receivable and accounts receivable	4	225,512	320,274
Prepayments		61,879	58,074
Other receivables		29,027	25,600
Inventories	5	167,851	149,179
Other current assets		21,476	18,092
Total current assets		985,200	890,607

CONSOLIDATED BALANCE SHEET (continued)

		31 December	31 December
	Notes	2019	2018
			(Audited)
Non-current assets:
Investment in other equity instruments		47,980	15,000
Investment properties		68,727	73,701
Fixed assets		230,878	244,650
Construction in progress		154,815	57,364
Right-of-use assets		7,766	–
Intangible assets		149,288	179,603
Development expenditure		–	23,116
Goodwill		1,139	1,139
Deferred income tax assets		5,997	5,613
Other non-current assets		5,000	52,000
Total non-current assets		671,590	652,186
Total assets		1,656,790	1,542,793
Current liabilities:
Short-term borrowings		485,397	285,455
Bills payable and accounts payable	6	229,401	162,375
Contracts payable		66,965	52,834
Wage payables		2,453	3,452
Tax payables		5,389	23,696
Other payables		21,206	19,508
Non-current liabilities due within one year		2,802	139
Other current liabilities		7,588	5,790
Total current liabilities		821,201	553,249
Non-current liabilities:
Deferred income		16,253	20,269
Lease liabilities		5,280	–
Total non-current liabilities		21,533	20,269
Total liabilities		842,734	573,518
Shareholders’ equity:
Share capital		432,217	375,460
Capital reserve		409,993	562,482
Less: Treasury share		–	80,357
Other comprehensive income		33,481	1,582
Surplus reserve		41,037	41,037
Undistributed profit	7	-102,672	69,071
Total owners’ equity attributable to parent company		814,056	969,275
Total liabilities and shareholders’ equity		1,656,790	1,542,793

CONSOLIDATED INCOME STATEMENT

		For the year	For the year
	Notes	ended 2019	ended 2018
Operating income	3	941,709	1,048,538
Less: Operating costs		532,405	617,316
Tax and surcharge		8,110	12,070
Selling expenses		129,839	119,251
Administrative expenses		84,551	89,190
R&D expenses		260,538	158,167
Finance costs		24,949	16,316
Gain in investment		5	1,730
Other revenue		39,020	48,775
Impairment loss on credit		51,265	10,254
Impairment loss on assets		22,491	13,896
Gain on disposal of assets		-737	26
Operating profit (-loss)		-134,150	62,610
Add: Non-operating income		1,330	2,731
Less: Non-operating expenses		1,543	2,491
Total profit (-loss)		-134,363	62,850
Less: Income tax expenses	8	1,362	3,764
Net profit (-loss)		-135,725	59,086
Net profit (-loss) attributable to owners of parent company		-135,725	58,907
Profit or loss attributable to minority shareholders		–	179
Earnings (-loss) per share:
Basic earnings (-loss) per share (RMB)	9	-0.3113	0.1573

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENT

1. BASIS OF PREPARATION OF FINANCIAL STATEMENT

Financial information in this announcement was extracted from the internally prepared unaudited financial statements (the “Financial Statements”) in 2019.

The financial statements of the Company were prepared according to the transactions and matters actually occurred, and recognitions and measurements were made in accordance with the Accounting Standards for Enterprises – Basic Standards published by the Ministry of Finance and specific accounting standards, guidance on application of accounting standards for enterprises, interpretations to accounting standards for enterprises and other relevant requirements (hereinafter collectively referred to as the “Accounting Standards for Enterprises”).

The Company carried out assessment on the going concern for the 12 months’ period after the report date, and did not recognize any matters or situation which leading to material doubt on the continuity of operation. Therefore this financial report is based on recognition and measurement on a going concern basis.

In addition, the Financial Statements have also complied with the disclosure requirements of the Hong Kong Companies Ordinance and the applicable disclosure provisions of the Rules Governing the Listing of Securities issued by The Stock Exchange of Hong Kong Limited.

2. SIGNIFICANT ACCOUNTING POLICIES, ACCOUNTING ESTIMATES AND COMPILATION METHOD OF CONSOLIDATED FINANCIAL STATEMENTS

(1) Accounting period

The accounting period is from 1 January to 31 December.

(2) Reporting currency

Renminbi was adopted as the reporting currency. The Company’s foreign subsidiaries choose their reporting currencies the basing on the primary economic environment in which they operate and converted into when preparing financial statements.

(3) Method of preparing consolidated financial statements

The scope of consolidation of the consolidated financial statements of the Company is determined on the basis of control. All subsidiaries are included in the consolidated financial statements.

Based on the financial statements of the Company and its subsidiaries, the consolidated financial statements are prepared by the Company according to other relevant information.

All subsidiaries within the scope of consolidation of the consolidated financial statements shall adopt accounting policies and financial period consistent with the Company. When there is any inconsistency on the accounting policies or financial period adopted by the subsidiaries and the Company, the financial statements of subsidiaries are adjusted according to the accounting policies or financial period adopted by the Company as necessary.

When consolidating the financial statements, the effects of intra-transactions between the Company and its subsidiaries, and among subsidiaries on the consolidated balance sheet, the consolidated income statement, the consolidated cash flow statement and the consolidated statement of changes in equity shall be offset.

3. REVENUE

Revenue from main operations includes the net value of the received and receivable for the sales of different types of vehicle maintenance equipment, and provision of internet upgrade service as follows:

Revenue from main operations Revenue from other operations: rent	Current year 902,370 39,339 942,709	Previous year 1,007,494 41,044
		1,048,538

4. BILLS RECEIVABLE AND ACCOUNTS RECEIVABLE

At the period end Bills receivable 33,626 Accounts receivable 191,886 225,512	At the beginning of the period 41,180 279,094
	320,274

Accounts receivable

The Company basically used credit terms when dealing with customers and normally offered credit period from 30 days to 210 days. Should a customer possessed long and good records or in case of being a major customer, or under the circumstances that the Company would like to maintain prolong operational relationship, and then a different credit period might be considered.

At the period end Accounts receivables 226,680 Less: provision for bad debts 34,794 Net amount 191,886 Aging Witnin 1 year 106,953 Over 1 year 84,933 191,886	At the beginning of the period 349,590 70,496
	279,094

	203,879 75,215
	279,094

5. INVENTORIES

At the period end Raw materials 16,025 Work in progress 4,080 Finished goods 147,746 167,851 BILLS PAYABLE AND ACCOUNTS PAYABLE At the period end Bills payable 108,000 Accounts payable 121,401 229,401 Accounts payable At the period end Within 1 year 117,964 Over 1 year 3,437 121,401 UNDISTRIBUTED PROFITS Current year As at the beginning of the period 69,071 Add: net (loss) profit attributable to shareholders of the parent company in the current year -135,725 Less: transfer to surplus reserves – Less: distribution to shareholders 36,018 As at the end of the period -102,672	At the beginning of the year 21,219 6,045 121,915
	149,179

	At the beginning of the period 50,000 112,375
	162,375

	At the beginning of the year 108,369 4,006
	112,375

	Previous year 114,981 58,907 10,952 93,865
	69,071

6. BILLS PAYABLE AND ACCOUNTS PAYABLE

7. UNDISTRIBUTED PROFITS

8. INCOME TAX EXPENSE

Income tax for the current period Adjustment of deferred tax Total The Company Launch Software Shanghai Launch Launch Europe Gmbh Golo IOV Xi’an Launch PJS Launch International Nanjing Launch SLH	Current year 1,747 -385 1,362	Previous year 4,983 -1,219
		3,764

		Applicable tax rate for current year and previous year 15% 15% 25% 19% 15% 25% 25% 16.5% 25% 25%

9. EARNINGS PER SHARE (-LOSS)

(1) Basic earnings (-loss) per share

Basic earnings (-loss) per share is calculated by dividing the consolidated net profit (-loss) for holder of ordinary share of the parent company by average weighted number of outstanding ordinary share of the parent company.

Items	Current year	Previous year
Consolidated net profit (-loss) for holder of ordinary share
of the parent company	-135,725,249.83	58,907,063.16
Average weighted number of outstanding ordinary share
of the parent company	436,036,475	374,419,500
Basic earnings (-loss) per share (RMB/share)	-0.3113	0.1573

(2) Diluted earnings (-loss) per share

As there was no ordinary shares with dilutive potential for the year 2019 and 2018, thus no diluted earnings (-loss) per share was presented.

10. DIVIDEND

The Board recommended that not to distribute final dividend. 2018 final dividend was cash dividend of 36,018,000 (tax inclusive) and additional shares of 2 capitalisation shares for each 10 shares to all shareholders.

Interim dividend amounted to 93,865,000 was paid in 2018.

11. SUBSIDIARIES

Name of the corporation	Shareholding	Business nature	Registered capital
Shanghai Launch Mechanical Equipment Co., Ltd.	100%	Manufacturing of equipment and machines	USD18,000,000
(“Shanghai Launch”)		for maintenance of automobiles
Launch Software Development Co., Ltd. (“Launch Software”)	100%	Software development	RMB40,000,000
Launch Europe GmbH	100%	Sales of LAUNCH products	EURO25,564.59
Xi’an Launch Software Technology Co., Ltd. (“Xi’an Launch”)	100%	Software development	RMB100,000,000
Shenzhen Golo Internet of Vehicle Data Technology Co., Ltd.	100%	Automotive warranty equipment industry	RMB10,000,000
(“Golo Internet”)
Shenzhen PengJuShu Information Technology Co., Ltd. (“PJS”)	100%	Technology development	RMB2,000,000
Launch Tech International Co., Ltd. (“Launch International”)	100%	Automotive warranty equipment industry	HKD50,000
Nanjing Launch Intelligent Technology Co., Ltd.	100%	Technology development	RMB50,000,000
(“Nanjing Launch”)
Shenzhen Shunlihang Auto Techonology Sharing Co., Ltd.	100%	Technology research and development	RMB1,000,000
(“SLH”)

12. CONTINGENT LIABILITY

At the end of the reporting period, the Company did not have any significant contingent liability.

13. PLEDGE OF ASSETS

As at 31 December 2019, the Company pledged properties and buildings and land use rights with original value approximately amounted to 285,000,000 (2018: 303,000,000) for certain bank borrowings.

14. CAPITAL COMMITMENTS

As at 31 December 2019, the Company there is no material unsettled capital commitments.

15. LEASE COMMITMENTS

As at 31 December 2019, commitments for the Group in the future which brought by non-cancellable lease contracts are as follows:

Within 1 year 2 to 5 years	Current year 3,725 5,596 9,321	Unit: ’000 Previous Year 4,842 7,576
		12,418

16. POST-BALANCE SHEET EVENTS

The Group does not have other material matters that should be disclosed under the Post-balance sheet events.

II. MANAGEMENT DISCUSSION AND ANALYSIS

BUSINESS REVIEW

In 2019, global economic growth has slowed down with the continuous escalation of US-China trade disputes and geopolitical frictions, leading to pessimistic domestic and foreign demand conditions. According to the latest data released by the National Bureau of Statistics, China's gross domestic product (GDP) in 2019 increased by 6.1% year-on-year; the growth rate dropped by 0.5 percentage point from 2018, a new low in 29 years. The increasing political and economic uncertainties have led to a decline in consumer confidence and have affected the demand for passenger cars during the year. In the domestic market, according to the latest data released by the China Association of Automobile Manufacturers, the sales volume of passenger cars in 2019 were 21.444 million units, representing a year-on-year decrease of 9.6%. Despite a rebound in infrastructure investment, the elimination of National III cars, the rapid development of new energy logistics vehicles, and the tightening of regulations, the sales volume of commercial cars were slightly higher than that of passenger cars; the sales volume of commercial cars were approximately 4.324 million units, which decreased by 1.1% year-on-year nevertheless. In the global market, according to Global Auto Database, the global sales volume of cars in 2019 were approximately 90.32 million units, representing a year-on-year decrease of 3%. It shows that the overall new car sales market is weak.

The automotive diagnostic equipment market was affected by the downturn in the traditional automotive market; the demand of which slowed down in 2019. The main products of the Group's automotive diagnostic equipment are mostly applicable to passenger cars. Due to the negative growth of passenger cars in 2019, the sales volume has decreased. For the new energy vehicle sector where the sales performance was relatively better in 2019, as the Group just began to enter the market in the second half of the year, no revenue was generated during the year. In overseas markets, due to the escalation of the US-China trade war, the Group's products sold in the United States have been included in the scope of tariff increases in the second half of 2019; the procurement costs of the US dealers and uncertainty in decision making have increased. Affected by the above factors, the Group's operating income and gross profit in 2019 decreased by 10% and 5%, respectively. Other overseas markets except the US market are steadily rising, with operating income for the year increased by 10% year-on-year. Benefiting from the initial effectiveness of the Group’s strategy of striving to optimize its product portfolio and increase the proportion of high-end products, the overall gross profit margin for the year increased by 2.3 percentage points to 43.5%. As the Company is in the transformation phase in terms of product structure, business model and competitive strategy, there are various new research and development projects in the research stage, which led to a significant increase in research and development expenses, and increases in one-off impairment losses on credit and assets, thereby resulting in substantial losses.

In the face of severe market challenges in 2019, the Company actively implemented a series of reform measures. For instance, the Company accelerated the development for new products and further enriched the product portfolio; we continuously upgraded products and optimized products to fulfill different market demand; we also continued to accumulate diagnostic reports with the use of the big data and blockchain technology, and gradually consolidated the transformation of the Internet of Vehicles and the blockchain vehicle business based on the automobile electronics and 5G communication technologies. The details are set out below:

(i) Automotive diagnostic equipment segment: the Group launched a revolutionary, strategic, new product SmartLink this year; SmartLink is compatible with multi-brand and multi-mode diagnostic equipment and integrates high-quality technician resources to implement remote online diagnosis, creating a service-oriented platform and ecosystem. Pad V, a new generation of comprehensive automotive diagnostic device, was fully launched in overseas and domestic high-end markets. The market penetration of the portable devices HTT and AIT in vehicle management institutes, environmental inspection departments, used car trading platforms and auto insurance companies continued to increase. ADAS Pro, a new product for the automotive ADAS (advanced driver assistance system) market, has gradually established its popularity and a good reputation in overseas markets.
(ii) Automotive maintenance equipment segment: X931, a high-end non-contact laser 4 wheel aligner, continued to sell well in overseas markets and is actively expanding into the US market. The CAT series, automatic transmission cleaners and petrol filters, and the CNC series, cleaning and inspection devices for fuel jet pump, have further been improved in terms of the specifications, and recorded a new record in terms of sales in overseas market, establishing the Company's position as the supplier of high-end products.
(iii) The Internet of Vehicles equipment segment: the segment covers the customer needs of the pre-market and aftermarket in the automobile industry. In the automotive pre-market, the Group used the leading diagnostic technology to provide the domestic original equipment manufacturers with the TBOX-based solutions of the Internet of Vehicles; during the year, the Group conducted cooperation projects with some domestic original equipment manufacturers. In the automotive aftermarket, with the use of the OBD data acquisition solutions, we provided equipment and data for the enterprises using the Internet of Vehicles to meet the needs of the enterprises using the Internet of Vehicles in terms of fleet management, UBI, environmental monitoring, maintenance and repair, and vehicle monitoring. During the year, the Group has established cooperative relationships with some of the domestic governmental authorities, environmental protection organisations and e-hailing companies; the prospect of this segment is promising.
(iv) Data and service segment: a complete solution has been formulated for the automotive diagnostic equipment and the terminal equipment and the Big Data platform of the Internet of Vehicles, providing data services for insurance, second-hand vehicle transactions and the enterprises using the Internet of Vehicles. A total of approximately 192 million vehicle diagnostic reports were collected this year, representing a year-on-year increase of 74.5%. As of 31 December 2019, a total of 470 million maintenance diagnostic reports were accumulated, representing an increase of 70% over the end of the previous year.

(v) Blockchain business segment: the Group started to operate the blockchain business in 2017. The Group has been committed to the technological development for the infrastructure of blockchain, data processing, application for vehicles, etc.; in this regard, the Group successfully established a super vehicle chain, the Launch Chain, and set up a new ecosystem for the blockchain vehicle business. As of 31 December 2019, the Group has applied for a total of 325 blockchain-related patents, ranking sixth in the world. Among them, 59 are for infrastructure, 75 for data processing and 191 for vehicles and its related application.
(vi) Patent progress of core technologies: as of 31 December 2019, the Group has received 408 granted by the State, including 272 invention patents; 2,038 out of 2,243 patents under the current application are invention patents; 175 certified software copyrights obtained and 328 PCT patents has been applied.

Major Financial Data for the profit changes

In 2019, the gross profit decreased as a result of fall in sales, the selling expenses increased, which was mainly due to a substantial increase in subsidies for advertising expense to U.S. distributors, the research and development expenses also increased significantly, which was mainly due to the addition of a large number of R & D projects at research stage arising from the adjustment of R & D strategy, Interest expense increased due to the increase of borrowings, government subsidy for VAT refunds decreased, with relatively large impairment on assets and credit, the loss after tax for the year was approximately 136,000,000, with a change of approximately 195,000,000 compared with last year.

Decrease in gross profit Increase in Selling expenses Increase in R&D expenses Increase in Interest expense Other income – Decrease in Government subsidies and miscellaneous Impairment on assets and credit Others Change in profit after tax	RMB million (22) (11) (102) (9) (10) (50) 9 (195)

Principal Sources and Usage of Fund

Inflow from Operations Acquisition of fixed assets and investment in R&D Increase in Loans Repurchase of shares Dividend paid Interest paid Others Decrease in cash	RMB million 126 (94) 200 (15) (36) (23) (7) 151

Total net cash inflow for the year was of 151,000,000 and the year ended balances of cash and cash equivalents was 470,000,000.

Capital Structure

The Company’s capital structure consists of interests and liabilities attributable to shareholders during the reporting period. Total liabilities amounted to 843,000,000, interests attributable to shareholders amounted to 814,000,000. Total assets amounted to 1,657,000,000. As at the end of the year, the Company’s gearing ratio calculated by total liabilities divided by interests attributable to shareholders was 1.03 (2018: 0.5). Resulting from the increased borrwing level and share repurchase, the gearing ratio reveals a raise, still reach our satisfactory gearing ratio level.

Customers and suppliers

During the Reporting Period, total revenue from the top five customers of the Company was approximately 209,000,000 (2018: 224,000,000), accounting for approximately 23% (2018: 21%) of total revenue for the year. The largest customer accounted for approximately 7% (2018: 7%) of the total revenue for the year.

During the Reporting Period, total purchases from top five suppliers of the Company amounted to approximately 200,000,000 (2018: 225,000,000), accounting for approximately 37% (2018: 39%) of the total purchases for the year. The largest supplier accounted for approximately 17% (2018: 24%) of the total purchases for the year.

None of the directors, their respective associates, or any shareholders (which to the knowledge of the directors own more than 5% of the share capital of listed issuer) had any interest in any of the customers or the suppliers disclosed above.

PROSPECTS AND FUTURE STRATEGIES

Despite the passing of the trying times in 2019, the Company believes that the macroeconomy in 2020 will remain challenging. In particular, the novel coronavirus pneumonia outbreak all over the world at the beginning of the year will bring myriads of uncertainties to global economic growth. However, the Company still firmly believes that the 5G, big data and blockchain technologies are one of the major directions for global technology and economic development. As the 5G technology significantly improves the data transmission speed, online real-time remote diagnosis, online operations and other services in the Internet of Vehicles are expected to develop rapidly, which facilitates the upgrade of the Company’s business model from the traditional equipment sales model to the composite function services model. With more and more data sample, the Internet of Vehicles is getting richer, the value of big data will become prominent. As China promotes blockchain technology as a national strategy, the application based on blockchain technology will be widely used in the Internet of Vehicles industry. The Group will closely monitor the development of the industry, explore innovative service models, and focus on business transformation, so as to grasp the major opportunities brought by technological innovation and industrial reform.

(i) By surrounding the core strategy of “Two entrances, one platform”, the automotive diagnosis and Internet of Vehicles will be used as the entrances to establish an open and unified automobile Big Data platform. With the application of new technologies such as big data, artificial intelligence, blockchain and 5G, the Company will explore innovative business models, coorperate with partners in creating an automobile service ecology and developing automotive data business and develop automotive data business;
(ii) Continuous invest in research and development to improve core competitiveness.
adhere to the innovative-driven development, invest in research and development continuously and conduct functional upgrade in accordance with the industry policies and market demands in a timely manner to maintain the advantage of core products’ leading position in the market.
achieve Five-zations, namely “internetization, intellectualization, ecologization, platformization and blockchainization”, by installing the new generation of vehicle diagnostic and Internet of Vehicles devices which equipped with online cloud service and cloud processing capability so as to upload massive car operating data continuously and carry out comprehensive vehicle market services, including environmental protection, energy conservation and emission reduction, operation and management of vehicles, vehicle repair with high-end cloud enablement service, condition analysis on second-hand vehicle and precise matching of vehicle insurance claims.

(iii) Actively expand new business sector to create new growth points

with a series of measures including the newly established software mall, optimized software sales and intelligence pricing on software upgrade and software granulation, software income will be comprehensively improved worldwide, in particular in overseas market.
the comprehensively integration of diagnostic products and remote diagnostics platform creates an integrated super diagnostic high-end solution and innovate the user experience.
by accelerating the penetration in comprehensive functional industry customers such as government authorities, vehicle operating organization, automobile training and education institutions, second-hand car trading platform and insurance companies, constantly trying the realization of data and empowering the industry customers, the Company will promote the continued growth of revenue in industry diagnostics business.

III. NOTES TO OTHER MATERIAL EVENTS

1. Scope of consolidation

During the reporting period, there was no significant change in respect of the scope of consolidation.

2. Audit of financial statements for the reporting period by the audit committee

The 2019 unaudited financial statements is reviewed and confirmed by the audit committee of the Board of the Company.

3. Code on Corporate Governance Practices

During the reporting period, the Company was in compliance with the code provisions set out in the Code on Corporate Governance Practices as set out in Appendix 14 to the Rules Governing the Listing of Securities (the “Listing Rules”) on the Stock Exchange of Hong Kong Limited. Details of implementation of the Code on Corporate Governance Practices will be set out on the Corporate Governance Report in 2019 Annual Report.

4. Model Code for securities transactions by directors and supervisors

During the reporting period, the Company has adopted a set of code of practice regarding securities transactions by directors and supervisors on terms no less exacting than the standards set out in the Model Code in Appendix 10 to the Listing Rules. Having made specific enquiry to all directors and supervisors of the Company, the Company confirmed that, each of the Directors and supervisors has complied with the required standards regarding securities transactions by directors set out in the Model Code within the 12 months ended 31 December 2019.

5. Share capital

(1) During the reporting period, there is a change in the share capital as follow:

Beginning 375,460,000 Share repurchase and domestic cancellation procedures is completed (15,279,500) Issue of Capitalisation shares 72,036,100 Ending 432,216,600

At 21 June 2018 and 26 June 2019, a resolution about to consider and approve the authorisation to the directors of the Company to proceed the repurchase of H shares have been passed in the AGM, H shareholders meeting and domestic shareholders meeting; The total face value of the H share repurchase will not exceed 10% of the issued H share capital at the approval date of such resolution. Up to 31 December 2019, the Company has repurchased 15,279,000 issued H share.

A total of 72,036,100 shares were issued on 23 July 2019 in accordance with a resolution on issue of capitalisation shares by way of capitalisation of capital reserve passed at the annual general meeting on 29 June 2019.

(2) During the reporting period, other than mentioned above, neither the Company nor any of its subsidiaries had purchased, sold or redeemed any of the Company’s shares.
(3) During the reporting period, the Company had no share options granted under the share option scheme.

IV. ANNUAL REPORT AND FURTHER ANNOUNCEMENT(S)

Following the completion of the auditing process, the Company will issue further announcement(s) in relation to the audited results for the year ended 31 December 2019 as agreed by the Auditors and the material differences (if any) as compared with the unaudited annual results contained herein. In addition, the Company will issue further announcement(s) as and when necessary if there are other material developments in the completion of the auditing process

The financial information contained herein in respect of the annual results of the Group for the year ended 31 December 2019 have not been audited and have not been agreed with the Auditors, and are subject to possible adjustments. Shareholders and potential investors of the Company are advised to exercise caution when dealing in the securities of the Company.

This announcement is set out on the websites of the Company (www.cnlaunch.com) and the Stock Exchange (www.hkexnews.hk). Annual report will be dispatched to shareholders and will be published on the aforesaid websites in due course.

By Order of the Board Launch Tech Company Limited* Liu Xin Chairman

Shenzhen, the PRC 31 March 2020

As at the date of this announcement, the board of directors of the Company comprises Mr. Liu Xin (Chairman), Mr. Liu Jun, Ms. Huang Zhao Huan and Mr. Jiang Shiwen as executive Directors, Mr. Xia Hui as non-executive Director, and Ms. Zhang Yan, Mr. Liu Yuan and Mr. Ning Bo as independent nonexecutive Directors.

for identification only

AI assistant

Launch Tech Company Limited — Annual Report 2019

50622_rns_2020-03-31_5e2c3050-f722-4325-9c81-9ab4a157dfb1.pdf

深圳市元征科技股份有限公司