Company Business Structure [Company Business Structure](index=3&type=section&id=%E5%85%AC%E5%8F%B8%E4%B8%9A%E5%8A%A1%E6%9E%B6%E6%9E%84) The Group's business structure primarily comprises construction engineering and operation management, centrally managed by China State Construction International Holdings Limited - The company's main businesses include construction engineering and operation management[5](index=5&type=chunk) Board of Directors and Committees [Board of Directors and Committees](index=4&type=section&id=%E8%91%A3%E4%BA%8B%E5%B1%80%E5%8F%8A%E5%A7%94%E5%91%98%E4%BC%9A) The Board consists of Chairman Zhang Haipeng, Executive Directors Wu Mingqing (Vice Chairman & CEO) and Wang Hai, Non-executive Director Huang Jiang, and three Independent Non-executive Directors, with audit, remuneration, and nomination committees ensuring robust governance - The Board Chairman is Zhang Haipeng (Non-executive Director), and the Vice Chairman and CEO is Wu Mingqing (Executive Director)[7](index=7&type=chunk) - Audit, Remuneration, and Nomination Committees are established, with independent non-executive directors participating and chairing each[7](index=7&type=chunk) Company Information [Company Information](index=5&type=section&id=%E5%85%AC%E5%8F%B8%E8%B5%84%E6%96%99) The company is registered in the Cayman Islands, with its principal office in Hong Kong, stock code 00830, and financial calendar details including interim results and dividend distribution - The company's stock code is **00830**, and its website is www.cscd.com.hk[8](index=8&type=chunk) 2021 Financial Calendar | Event | Date | | :--- | :--- | | Interim Results Announcement | August 16, 2021 | | Ex-dividend Date | September 7, 2021 | | Closure of Register of Members | September 9 to 10, 2021 | | Record Date | September 10, 2021 | | Interim Dividend Payment | November 12, 2021 | Chairman's Report [Performance](index=6&type=section&id=%E4%B8%9A%E7%BB%A9) For the six months ended June 30, 2021, the Group's main business revenue increased by 37.8% to HKD 2.703 billion, and profit attributable to shareholders increased by 45.8% to HKD 226 million H1 2021 Key Financial Performance | Metric | H1 2021 (HKD billion) | H1 2020 (HKD billion) | YoY Growth | | :--- | :--- | :--- | :--- | | Main Business Revenue | 2.703 | 1.961 | 37.8% | | Profit Attributable to Shareholders | 0.226 | 0.155 | 45.8% | | Earnings Per Share (HK cents) | 10.48 | 7.19 | 45.8% | [Dividend Distribution](index=6&type=section&id=%E6%B4%BE%E5%8F%91%E8%82%A1%E6%81%AF) The Board declared an interim dividend of HKD 3 cents per share for the period ended June 30, 2021, considering profitability and future development - The Board declared an interim dividend of **HKD 3 cents per share**[12](index=12&type=chunk) [Business Review](index=6&type=section&id=%E4%B8%9A%E5%8A%A1%E5%9B%9E%E9%A1%BE) The Group achieved steady progress in construction engineering and operation management in H1 2021, maintaining a leading position in Hong Kong and Macau curtain wall business and expanding in mainland China [Market Conditions](index=6&type=section&id=%E5%B8%82%E5%9C%BA%E5%BD%A2%E5%8A%BF) Global economic recovery in H1 2021 faced challenges from recurring epidemics and rising raw material prices, while China's economy showed strong growth - Global economic recovery faced challenges from recurring epidemics and rising raw material prices[13](index=13&type=chunk) - China's economy showed strong growth, supporting domestic consumption recovery[13](index=13&type=chunk) - The Group implemented a "Hong Kong and Macau-based, Mainland-reliant, overseas-radiating, internal-external联动" strategy, preparing for cautious bidding[13](index=13&type=chunk) [Construction Engineering Business](index=7&type=section&id=%E5%BB%BA%E7%AD%91%E5%B7%A5%E7%A8%8B%E4%B8%9A%E5%8A%A1) Construction engineering, including curtain wall and general contracting, saw steady development, with the curtain wall business maintaining its leading position in Hong Kong and Macau and expanding in mainland China [Curtain Wall Engineering](index=7&type=section&id=%E5%B9%95%E5%A2%99%E5%B7%A5%E7%A8%8B) Curtain wall business maintained its leading position in Hong Kong and Macau with new major project wins, accelerated expansion in mainland China, and improved efficiency at the Zhuhai production base - Hong Kong and Macau curtain wall business maintained its leading position, securing new major projects including West Mid-Levels Seymour Road residential, Cheung Sha Wan Hing Wah Street residential, Cheung Kong Center II, and Kai Tak Sports Park[15](index=15&type=chunk) - China mainland curtain wall market accelerated expansion, winning quality projects such as Zhongzhou International Great Wall Logistics and China State Construction Industrial Base commercial projects[16](index=16&type=chunk) - Zhuhai production base's intelligent and automated upgrade significantly improved production capacity and technical levels[16](index=16&type=chunk) - North American curtain wall projects slowed due to epidemic and trade friction risks, focusing on existing projects and strengthening cost and contract management[16](index=16&type=chunk) [General Contracting Engineering](index=8&type=section&id=%E6%80%BB%E6%89%BF%E5%8C%85%E5%B7%A5%E7%A8%8B) General contracting business developed steadily, actively participating in bidding for small and medium-sized housing projects in Hong Kong and exploring internal collaboration opportunities - General contracting business developed steadily, actively participating in bidding for small and medium-sized housing projects in Hong Kong[18](index=18&type=chunk) - Stanley Wong Ma Kok Road No. 128 residential project and Henderson Ma Tau Wai project in Hong Kong progressed smoothly[18](index=18&type=chunk) [Operation Management Business](index=8&type=section&id=%E8%BF%90%E8%90%A5%E7%AE%A1%E7%90%86%E4%B8%9A%E5%8A%A1) Operation management business, including China Overseas Supervision and Huanggu Thermal Power, progressed steadily, with successful project wins and advancement in Canadian eldercare investment - China Overseas Supervision secured traditional supervision projects and transitioned to full-process consulting, winning the Harbin Institute of Technology (Shenzhen) renovation project[19](index=19&type=chunk) - Huanggu Thermal Power strengthened safe operations and energy saving, successfully completing the heating season's production in the first half of the year[19](index=19&type=chunk) - Canadian eldercare industry investment and operation business progressed, entering the interior decoration completion and marketing phase[19](index=19&type=chunk) [Human Resources Management](index=8&type=section&id=%E4%BA%BA%E5%8A%9B%E8%B5%84%E6%BA%90%E7%AE%A1%E7%90%86) The Group prioritizes talent acquisition, retention, and development through comprehensive HR systems to enhance employee satisfaction and efficiency - The Group adheres to a people-oriented approach, improving recruitment, training, assessment, and incentive systems to enhance employee satisfaction and efficiency[20](index=20&type=chunk) - As of June 30, 2021, the Group's total number of employees reached **3,849**[21](index=21&type=chunk) [Social Responsibility](index=9&type=section&id=%E7%A4%BE%E4%BC%9A%E8%B4%A3%E4%BB%BB) The Group actively participates in public welfare activities, earning multiple social responsibility honors, including the "Caring Company" logo for eight consecutive years - The Group actively participated in public welfare activities, receiving multiple social responsibility honors, including the "Caring Company" logo from the Hong Kong Council of Social Service for eight consecutive years[22](index=22&type=chunk) [Future Outlook](index=9&type=section&id=%E6%9C%AA%E6%9D%A5%E5%B1%95%E6%9C%9B) The H2 2021 global economic outlook remains uncertain due to the pandemic and inflation, while Hong Kong and Macau economies are expected to recover, and the Greater Bay Area offers significant opportunities - The H2 global economic outlook is highly uncertain, with Hong Kong and Macau economies expected to recover, and the Greater Bay Area construction presenting opportunities[23](index=23&type=chunk) - Mainland China's economy has strong growth potential, while the North American construction market may slow down[23](index=23&type=chunk) [Operating and Development Strategies](index=9&type=section&id=%E7%BB%8F%E8%90%A5%E5%8F%8A%E5%8F%91%E5%B1%95%E7%AD%96%E7%95%A5) The Group focuses on curtain wall business as its core, deepening its presence in Hong Kong and Macau, steadily expanding in mainland China, and cautiously developing overseas markets - Curtain wall business is the core, adhering to a "large market, large client, large project" strategy, deeply cultivating Hong Kong and Macau, steadily expanding in mainland China, and cautiously developing overseas markets[24](index=24&type=chunk) - Strengthen R&D and innovation capabilities, improve multi-link coordination mechanisms for design, production, and installation, and enhance the comprehensive competitiveness of the curtain wall business[24](index=24&type=chunk) - Emphasize design team building, expand the mainland China design team, and strengthen support for overseas personnel[26](index=26&type=chunk) [Acknowledgements](index=10&type=section&id=%E8%87%B4%E8%B0%A2) The Chairman extends sincere gratitude to shareholders, clients, suppliers, and all employees for their strong support and hard work - The Chairman expressed gratitude to all stakeholders and employees[27](index=27&type=chunk) Management Discussion and Analysis [Overall Performance](index=11&type=section&id=%E6%95%B4%E4%BD%93%E8%A1%A8%E7%8E%B0) In H1 2021, the Group's total revenue increased by 37.8% to HKD 2.703 billion, with profit attributable to owners rising by 45.8% to HKD 226 million H1 2021 Overall Financial Performance | Metric | H1 2021 (HKD billion) | H1 2020 (HKD billion) | YoY Growth | | :--- | :--- | :--- | :--- | | Total Revenue | 2.703 | 1.961 | 37.8% | | Profit Attributable to Owners of the Company | 0.226 | 0.155 | 45.8% | | Basic Earnings Per Share (HK cents) | 10.48 | 7.19 | 45.8% | [Segment Analysis](index=11&type=section&id=%E5%88%86%E9%83%A8%E5%88%86%E6%9E%90) All three core business segments—curtain wall, general contracting, and operation management—showed growth in revenue and operating profit in H1 2021 [Curtain Wall Business](index=11&type=section&id=%E5%B9%95%E5%A2%99%E4%B8%9A%E5%8A%A1) Curtain wall business revenue increased to HKD 1.852 billion, with operating profit rising to HKD 150 million, driven by accelerated project progress in Greater China Curtain Wall Business Performance | Metric | H1 2021 (HKD billion) | H1 2020 (HKD billion) | | :--- | :--- | :--- | | Revenue | 1.852 | 1.312 | | Operating Profit | 0.150 | 0.066 | [General Contracting Business](index=11&type=section&id=%E6%80%BB%E6%89%BF%E5%8C%85%E4%B8%9A%E5%8A%A1) General contracting business revenue increased to HKD 290 million, with operating profit rising to HKD 25 million, benefiting from new projects commenced in 2020 General Contracting Business Performance | Metric | H1 2021 (HKD billion) | H1 2020 (HKD billion) | | :--- | :--- | :--- | | Revenue | 0.290 | 0.174 | | Operating Profit | 0.025 | 0.006 | [Operation Management Business](index=11&type=section&id=%E8%BF%90%E8%90%A5%E7%AE%A1%E7%90%86%E4%B8%9A%E5%8A%A1) Operation management business revenue steadily increased to HKD 561 million, with operating profit rising to HKD 160 million, supported by contributions from Shenyang Huanggu Thermal Power Plant and Nanchang Bridge Operation Management Business Performance | Metric | H1 2021 (HKD billion) | H1 2020 (HKD billion) | | :--- | :--- | :--- | | Revenue | 0.561 | 0.475 | | Operating Profit | 0.160 | 0.142 | [Administrative, Selling and Other Operating Expenses](index=11&type=section&id=%E8%A1%8C%E6%94%BF%E3%80%81%E9%94%80%E5%94%AE%E5%8F%8A%E5%85%B6%E4%BB%96%E7%BB%8F%E8%90%A5%E8%B4%B9%E7%94%A8) Administrative, selling, and other operating expenses increased proportionally to HKD 92 million in H1 2021, reflecting the expansion of the three core businesses Administrative, Selling and Other Operating Expenses | Metric | H1 2021 (HKD billion) | H1 2020 (HKD billion) | | :--- | :--- | :--- | | Expenses | 0.092 | 0.084 | [Finance Costs](index=12&type=section&id=%E8%B4%A2%E5%8A%A1%E8%B4%B9%E7%94%A8) The Group's finance costs decreased to HKD 13 million in H1 2021, primarily due to lower borrowing interest rates Finance Costs | Metric | H1 2021 (HKD billion) | H1 2020 (HKD billion) | | :--- | :--- | :--- | | Finance Costs | 0.013 | 0.017 | [New Contracts and Projects in Progress](index=12&type=section&id=%E6%96%B0%E6%89%BF%E6%8E%A5%E5%B7%A5%E7%A8%8B%E5%8F%8A%E5%9C%A8%E5%BB%BA%E9%A1%B9%E7%9B%AE) As of June 30, 2021, the Group secured new contracts worth HKD 4.55 billion, achieving 56.9% of its annual target, with total outstanding contracts of HKD 21.068 billion - As of June 30, 2021, cumulative new contract value was **HKD 4.55 billion**, completing **56.9%** of the annual target[34](index=34&type=chunk) New Contract Value and Projects in Progress (As of June 30, 2021) | Segment Business | New Contract Value (HKD billion) | Total Contract Value (HKD billion) | Uncompleted Contract Value (HKD billion) | | :--- | :--- | :--- | :--- | | Curtain Wall Engineering | 3.474 | 14.463 | 7.824 | | General Contracting Engineering | 0.464 | 5.453 | 2.132 | | Operation Management | 0.612 | 1.152 | 0.619 | | **Total** | **4.550** | **21.068** | **10.575** | [Financial Management](index=12&type=section&id=%E8%B4%A2%E5%8A%A1%E7%AE%A1%E7%90%86) As of June 30, 2021, the Group had HKD 577 million in cash and bank balances, HKD 1.178 billion in total bank borrowings, and a net gearing ratio of 38.7% Key Financial Management Indicators (As of June 30, 2021) | Metric | June 30, 2021 (HKD billion) | December 31, 2020 (HKD billion) | | :--- | :--- | :--- | | Bank Balances and Cash | 0.577 | 0.858 | | Total Bank Borrowings | 1.178 | 1.062 | | Net Gearing Ratio | 38.7% | 15.4% | - The Group has approximately **HKD 2.543 billion** in unutilized bank facilities, ensuring sufficient financial resources[36](index=36&type=chunk) Bank Borrowings Maturity Profile (HKD thousand) | Maturity | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Repayable on demand or within one year | 566,546 | 650,710 | | Repayable in the second year | 400,551 | 400,524 | | Repayable in the third to fifth year | 210,977 | 10,932 | | **Total Bank Borrowings** | **1,178,074** | **1,062,166** | Currency Composition of Bank Deposits (%) | Currency | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | RMB | 36 | 69 | | HKD | 50 | 24 | | USD | 1 | 1 | | MOP | 1 | 1 | | Others | 12 | 5 | [Employees and Remuneration Policy](index=14&type=section&id=%E9%9B%87%E5%91%98%E5%8F%8A%E8%96%AA%E9%85%AC%E6%94%BF%E7%AD%96) As of June 30, 2021, the Group employed 3,849 staff, with an effective management incentive policy and competitive remuneration packages - As of June 30, 2021, the Group had **3,849** employees (December 31, 2020: 3,344 employees)[39](index=39&type=chunk) - The Group has an effective management incentive policy and competitive remuneration, including basic salary, allowances, benefits, and discretionary bonuses[39](index=39&type=chunk) [Foreign Exchange Risk](index=14&type=section&id=%E5%A4%96%E6%B1%87%E9%A3%8E%E9%99%A9) The Group's foreign currency risk primarily arises from operations denominated in USD, RMB, CAD, GBP, and MOP, with management monitoring and considering hedging as needed - Foreign currency risk primarily arises from operating activities denominated in USD, RMB, CAD, GBP, and MOP[40](index=40&type=chunk) - The Group currently has no foreign currency hedging policy, but management will monitor and consider hedging major foreign currencies when necessary[40](index=40&type=chunk) Unaudited Condensed Consolidated Statement of Profit or Loss [Unaudited Condensed Consolidated Statement of Profit or Loss](index=15&type=section&id=%E6%9C%AA%E7%BB%8F%E5%AE%A1%E6%A0%B8%E4%B9%8B%E7%AE%80%E6%98%8E%E7%BB%BC%E5%90%88%E6%94%B6%E7%9B%8A%E8%A1%A8) For the six months ended June 30, 2021, the Group reported revenue of HKD 2.703 billion, gross profit of HKD 381 million, and profit attributable to shareholders of HKD 226 million Condensed Consolidated Statement of Profit or Loss Summary (For the six months ended June 30) | Metric | 2021 (HKD thousand) | 2020 (HKD thousand) | | :--- | :--- | :--- | | Revenue | 2,703,455 | 1,960,725 | | Cost of Sales | (2,322,367) | (1,693,878) | | Gross Profit | 381,088 | 266,847 | | Other income and gains, net | 9,122 | 15,591 | | Administrative, selling and other operating expenses | (92,300) | (83,917) | | Finance costs | (12,872) | (17,487) | | Profit before tax | 285,038 | 181,034 | | Income tax expense | (63,450) | (28,774) | | **Profit for the period** | **221,588** | **152,260** | | Profit attributable to owners of the Company | 225,803 | 154,930 | | Non-controlling interests | (4,215) | (2,670) | | **Basic and diluted earnings per share** | **HKD 10.48 cents** | **HKD 7.19 cents** | Unaudited Condensed Consolidated Statement of Comprehensive Income [Unaudited Condensed Consolidated Statement of Comprehensive Income](index=16&type=section&id=%E6%9C%AA%E7%BB%8F%E5%AE%A1%E6%A0%B8%E4%B9%8B%E7%AE%80%E6%98%8E%E7%BB%BC%E5%90%88%E5%85%A8%E9%9D%A2%E6%94%B6%E7%9B%8A%E8%A1%A8) For the six months ended June 30, 2021, profit for the period was HKD 222 million, with total comprehensive income of HKD 292 million, primarily due to exchange differences on translating foreign operations Condensed Consolidated Statement of Comprehensive Income Summary (For the six months ended June 30) | Metric | 2021 (HKD thousand) | 2020 (HKD thousand) | | :--- | :--- | :--- | | Profit for the period | 221,588 | 152,260 | | Exchange differences on translating foreign operations | 70,764 | (42,470) | | **Total comprehensive income for the period, net of tax** | **292,352** | **109,790** | | Total comprehensive income attributable to owners of the Company | 295,538 | 112,222 | | Non-controlling interests | (3,186) | (2,432) | Unaudited Condensed Consolidated Statement of Financial Position [Unaudited Condensed Consolidated Statement of Financial Position](index=17&type=section&id=%E6%9C%AA%E7%BB%8F%E5%AE%A1%E6%A0%B8%E4%B9%8B%E7%AE%80%E6%98%8E%E7%BB%BC%E5%90%88%E8%B4%A2%E5%8A%A1%E7%8A%B6%E5%86%B5%E8%A1%A8) As of June 30, 2021, total assets were HKD 7.742 billion, total liabilities HKD 6.190 billion, and equity attributable to owners of the Company HKD 1.634 billion Condensed Consolidated Statement of Financial Position Summary (As of June 30) | Metric | June 30, 2021 (HKD thousand) | December 31, 2020 (HKD thousand) | | :--- | :--- | :--- | | **Non-current assets** | | | | Property, plant and equipment | 2,199,859 | 2,107,754 | | Interests in infrastructure projects | 98,711 | 132,892 | | Goodwill | 129,649 | 129,649 | | **Current assets** | | | | Contract assets | 2,070,387 | 1,451,792 | | Trade and other receivables | 1,268,217 | 1,321,016 | | Cash and cash equivalents | 577,271 | 858,154 | | **Total assets** | **7,742,134** | **7,388,898** | | **Current liabilities** | | | | Bank borrowings | 566,546 | 650,710 | | Contract liabilities | 539,315 | 778,041 | | Trade and other payables and accrued expenses | 1,558,780 | 1,464,870 | | **Non-current liabilities** | | | | Contract liabilities | 750,602 | 755,970 | | Bank borrowings | 611,528 | 411,456 | | **Equity attributable to owners of the Company** | **1,634,209** | **1,403,019** | Unaudited Condensed Consolidated Statement of Changes in Equity [Unaudited Condensed Consolidated Statement of Changes in Equity](index=19&type=section&id=%E6%9C%AA%E7%BB%8F%E5%AE%A1%E6%A0%B8%E4%B9%8B%E7%AE%80%E6%98%8E%E7%BB%BC%E5%90%88%E6%9D%83%E7%9B%8A%E5%8F%98%E5%8A%A8%E8%A1%A8) As of June 30, 2021, equity attributable to owners increased from HKD 1.403 billion to HKD 1.634 billion, driven by profit for the period and foreign currency translation reserves Condensed Consolidated Statement of Changes in Equity Summary (For the six months ended June 30) | Metric | 2021 (HKD thousand) | 2020 (HKD thousand) | | :--- | :--- | :--- | | At January 1 (Attributable to owners of the Company) | 1,403,019 | 1,125,325 | | Profit for the period | 225,803 | 154,930 | | Exchange differences on translating foreign operations | 69,735 | (42,708) | | 2020 Final dividend | (64,666) | — | | **At June 30 (Attributable to owners of the Company)** | **1,634,209** | **1,237,842** | Unaudited Condensed Consolidated Statement of Cash Flows [Unaudited Condensed Consolidated Statement of Cash Flows](index=20&type=section&id=%E6%9C%AA%E7%BB%8F%E5%AE%A1%E6%A0%B8%E4%B9%8B%E7%AE%80%E6%98%8E%E7%BB%BC%E5%90%88%E7%8E%B0%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) For the six months ended June 30, 2021, net cash used in operating activities was HKD 356 million, with net cash from financing activities of HKD 167 million Condensed Consolidated Statement of Cash Flows Summary (For the six months ended June 30) | Metric | 2021 (HKD thousand) | 2020 (HKD thousand) | | :--- | :--- | :--- | | Net cash used in operating activities | (355,904) | (374,243) | | Net cash used in investing activities | (133,098) | (70,927) | | Net cash from financing activities | 167,041 | 75,267 | | Decrease in cash and cash equivalents | (321,961) | (369,903) | | Cash and cash equivalents at beginning of period | 858,154 | 826,576 | | Effect of foreign exchange rate changes | 41,078 | (19,863) | | **Cash and cash equivalents at end of period** | **577,271** | **436,810** | Notes to the Unaudited Condensed Consolidated Financial Statements [1 Basis of Preparation](index=21&type=section&id=1%20%E7%BC%96%E8%A3%BD%E5%9F%BA%E5%87%86) The condensed consolidated financial statements are prepared in accordance with HKFRS 34 and Appendix 16 of the HKEX Listing Rules, presented at historical cost in HKD - Financial statements are prepared in accordance with Appendix 16 of the HKEX Listing Rules and HKAS 34 "Interim Financial Reporting"[51](index=51&type=chunk) - Statements are presented on a historical cost basis and in HKD[52](index=52&type=chunk) [2 Changes in Accounting Policies and Disclosures](index=21&type=section&id=2%20%E4%BC%9A%E8%AE%A1%E6%94%BF%E7%AD%96%E5%92%8C%E6%8A%AB%E9%9C%B2%E4%B9%8B%E6%94%B9%E5%8F%98) The Group adopted amendments related to interest rate benchmark reform and COVID-19-related rent concessions, which had no significant impact on its performance or financial position - The Group adopted amendments related to interest rate benchmark reform (HKFRS 9) and COVID-19-related rent concessions (HKFRS 16) for the first time this period[53](index=53&type=chunk)[54](index=54&type=chunk) - These amendments had no significant impact on the Group's performance or financial position[54](index=54&type=chunk) [3 Estimates](index=22&type=section&id=3%20%E4%BC%B0%E8%AE%A1) Financial statement preparation involves management judgments and assumptions, with significant sources of estimation uncertainty remaining consistent with the prior year - Financial statement preparation involves management judgments, estimates, and assumptions, and actual results may differ from estimates[56](index=56&type=chunk) - Significant sources of estimation uncertainty for this period are consistent with the prior year's financial statements[56](index=56&type=chunk) [4 Revenue and Segment Information](index=22&type=section&id=4%20%E8%90%A5%E4%B8%9A%E9%A2%9D%E5%8F%8A%E5%88%86%E9%83%A8%E8%B5%84%E6%96%99) The Group's revenue primarily derives from curtain wall, general contracting, and operation management businesses, with Greater China being the main source of income - The Group primarily engages in curtain wall engineering, general contracting, and operation management, with revenue representing income from engineering and management contracts[57](index=57&type=chunk) Segment Results Summary (For the six months ended June 30) | Segment | 2021 Revenue (HKD thousand) | 2020 Revenue (HKD thousand) | 2021 Gross Profit (HKD thousand) | 2020 Gross Profit (HKD thousand) | 2021 Segment Results (HKD thousand) | 2020 Segment Results (HKD thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Curtain Wall Engineering | 1,851,965 | 1,312,453 | 180,182 | 103,836 | 149,891 | 65,805 | | General Contracting Engineering | 290,281 | 173,602 | 25,420 | 7,344 | 24,876 | 5,965 | | Operation Management | 561,209 | 474,670 | 175,486 | 155,667 | 160,387 | 142,091 | | **Total** | **2,703,455** | **1,960,725** | **381,088** | **266,847** | **335,154** | **213,861** | - Curtain wall engineering revenue primarily originated from Greater China, Asia, and other regions (**HKD 1.602 billion**) and North America (**HKD 250 million**)[60](index=60&type=chunk) [5 Other Income and Gains, Net](index=24&type=section&id=5%20%E5%85%B6%E4%BB%96%E6%94%B6%E5%85%A5%E5%8F%8A%E6%94%B6%E7%9B%8A%EF%BC%8C%E5%87%80%E9%A2%9D) In H1 2021, other income and gains, net, totaled HKD 9.122 million, mainly from bank interest and sundry income, a decrease from the prior year due to lower exchange gains Other Income and Gains, Net (For the six months ended June 30) | Item | 2021 (HKD thousand) | 2020 (HKD thousand) | | :--- | :--- | :--- | | Bank interest income | 2,918 | 1,447 | | Exchange gains, net | — | 6,526 | | Sundry income | 6,204 | 7,618 | | **Total** | **9,122** | **15,591** | [6 Finance Costs](index=24&type=section&id=6%20%E8%B4%A2%E5%8A%A1%E8%B4%B9%E7%94%A8) Net finance costs for H1 2021 decreased to HKD 12.872 million, primarily due to reduced interest on bank borrowings and overdrafts Finance Costs (For the six months ended June 30) | Item | 2021 (HKD thousand) | 2020 (HKD thousand) | | :--- | :--- | :--- | | Interest on bank borrowings and overdrafts | 12,464 | 17,271 | | Interest on lease liabilities | 508 | 695 | | Interest on borrowings from intermediate holding company | 2,112 | 352 | | **Total** | **15,084** | **18,318** | | Less: Capitalized in property, plant and equipment | (2,212) | (831) | | **Net finance costs** | **12,872** | **17,487** | [7 Profit Before Tax](index=25&type=section&id=7%20%E7%A8%8E%E5%89%8D%E6%BA%A2%E5%88%A9) Profit before tax for H1 2021 was HKD 285 million, after deducting total depreciation expenses of HKD 7.406 million Profit Before Tax Deductions (For the six months ended June 30) | Item | 2021 (HKD thousand) | 2020 (HKD thousand) | | :--- | :--- | :--- | | Depreciation of property, plant and equipment (excluding right-of-use assets) | 3,678 | 3,072 | | Depreciation of right-of-use assets | 3,728 | 6,458 | | **Total depreciation expenses** | **7,406** | **9,530** | [8 Income Tax Expense](index=26&type=section&id=8%20%E6%89%80%E5%BE%97%E7%A8%8E%E8%B4%B9%E7%94%A8) Net income tax expense for H1 2021 was HKD 63.45 million, comprising Hong Kong, mainland China, and overseas tax provisions, and deferred tax Income Tax Expense (For the six months ended June 30) | Item | 2021 (HKD thousand) | 2020 (HKD thousand) | | :--- | :--- | :--- | | Current tax — Hong Kong | 11,724 | 5,586 | | Current tax — Mainland China and overseas | 20,466 | 30,333 | | Deferred tax, net | 31,260 | (7,145) | | **Net income tax expense for the period** | **63,450** | **28,774** | - Hong Kong profits tax is calculated at **16.5%**, while other regions are based on local laws, interpretations, and practices[68](index=68&type=chunk) [9 Dividends](index=27&type=section&id=9%20%E8%82%A1%E6%81%AF) The company distributed a 2020 final dividend of HKD 3 cents per share in July 2021 and declared an interim dividend of HKD 3 cents per share for November 2021 - A 2020 final dividend of **HKD 3 cents per share**, totaling approximately **HKD 64.666 million**, was distributed in July 2021[70](index=70&type=chunk) - The Board declared an interim dividend of **HKD 3 cents per share**, totaling approximately **HKD 64.666 million**, to be paid on November 12, 2021[70](index=70&type=chunk) [10 Earnings Per Share](index=27&type=section&id=10%20%E6%AF%8F%E8%82%A1%E7%9B%88%E5%88%A9) For the six months ended June 30, 2021, basic and diluted earnings per share were HKD 10.48 cents, based on profit attributable to shareholders of HKD 226 million and 2,155,545 thousand weighted average ordinary shares Earnings Per Share Calculation (For the six months ended June 30) | Metric | 2021 (HKD thousand/thousand shares) | 2020 (HKD thousand/thousand shares) | | :--- | :--- | :--- | | Profit attributable to owners of the Company | 225,803 | 154,930 | | Weighted average number of ordinary shares | 2,155,545 | 2,155,545 | | **Basic and diluted earnings per share** | **HKD 10.48 cents** | **HKD 7.19 cents** | - There were no potential dilutive ordinary shares at the end of the period[72](index=72&type=chunk) [11 Property, Plant and Equipment](index=28&type=section&id=11%20%E7%89%A9%E4%B8%9A%E3%80%81%E5%8E%82%E6%88%BF%E5%8F%8A%E8%AE%BE%E5%A4%87) During the period, the Group acquired property, plant, and equipment totaling approximately HKD 117 million Property, Plant and Equipment Acquisitions (For the six months ended June 30) | Item | 2021 (HKD thousand) | 2020 (HKD thousand) | | :--- | :--- | :--- | | Acquisition amount | 117,056 | 72,541 | [12 Interests in Infrastructure Projects](index=28&type=section&id=12%20%E5%9F%BA%E5%BB%BA%E9%A1%B9%E7%9B%AE%E6%8A%95%E8%B5%84%E6%9D%83%E7%9B%8A) As of June 30, 2021, total interests in infrastructure projects amounted to HKD 163 million, with an annual yield of 10.2% to 10.7% Interests in Infrastructure Projects (HKD thousand) | Item | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total interests in infrastructure projects | 163,451 | 193,972 | | Less: Current portion due within one year | (64,740) | (61,080) | | **Non-current portion due after one year** | **98,711** | **132,892** | - Interests in infrastructure projects yield an annual return of **10.2% to 10.7%**[76](index=76&type=chunk) [13 Goodwill](index=29&type=section&id=13%20%E5%95%86%E8%AA%89) As of June 30, 2021, the net carrying amount of goodwill was HKD 130 million, primarily allocated to Gamma Group and its North American subsidiaries Goodwill Carrying Amount (HKD thousand) | Item | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Cost | 159,707 | 159,707 | | Accumulated impairment | 30,058 | 30,058 | | **Net carrying amount** | **129,649** | **129,649** | - Goodwill is primarily allocated to Gamma Group and its North American segment subsidiaries, with recoverable amounts calculated based on value in use[79](index=79&type=chunk) [14 Trade and Other Receivables](index=30&type=section&id=14%20%E8%B4%B8%E6%98%93%E5%8F%8A%E5%85%B6%E4%BB%96%E5%BA%94%E6%94%B6%E6%AC%BE) As of June 30, 2021, total trade and other receivables were HKD 1.268 billion, with an average credit period of no more than 90 days for customers Ageing Analysis of Trade and Other Receivables (HKD thousand) | Item | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Trade receivables** | | | | 0–30 days | 230,985 | 500,862 | | 31–60 days | 40,179 | 28,305 | | 61–90 days | 10,691 | 30,393 | | Over 90 days | 270,570 | 135,070 | | **Subtotal** | **552,425** | **694,630** | | Retention receivables | 598,571 | 570,131 | | Other receivables | 117,221 | 56,255 | | **Total** | **1,268,217** | **1,321,016** | - The Group generally grants customers an average credit period of no more than **90 days**, with retention receivables repaid approximately one year after the project warranty period expires[81](index=81&type=chunk) [15 Bank Borrowings](index=31&type=section&id=15%20%E9%93%B6%E8%A1%8C%E5%80%9F%E6%AC%BE) As of June 30, 2021, total bank borrowings were HKD 1.178 billion, with an average annual interest rate of 2.51% Total Bank Borrowings (HKD thousand) | Item | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Bank loans, secured | 12,056 | 11,958 | | Bank loans, unsecured | 1,166,018 | 1,050,208 | | **Total** | **1,178,074** | **1,062,166** | Bank Borrowings Repayment Period (HKD thousand) | Repayment Period | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Repayable on demand or within one year | 566,546 | 650,710 | | Repayable in the second year | 400,551 | 400,524 | | Repayable in the third to fifth year | 210,977 | 10,932 | | **Total** | **1,178,074** | **1,062,166** | - As of June 30, 2021, the average annual interest rate for bank loans was **2.51%** (December 31, 2020: 2.62%)[84](index=84&type=chunk) [16 Trade and Other Payables and Accrued Expenses](index=32&type=section&id=16%20%E8%B4%B8%E6%98%93%E5%BA%94%E4%BB%98%E6%AC%BE%E3%80%81%E5%85%B6%E4%BB%96%E5%BA%94%E4%BB%98%E6%AC%BE%E5%8F%8A%E5%BA%94%E8%AE%A1%E8%B4%B9%E7%94%A8) As of June 30, 2021, total trade and other payables and accrued expenses were HKD 1.559 billion, including trade payables, retention payables, and other accrued expenses Ageing Analysis of Trade and Other Payables and Accrued Expenses (HKD thousand) | Item | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Trade payables** | | | | 0–30 days | 879,789 | 827,777 | | 31–60 days | 42,978 | 26,273 | | Over 60 days | 174,392 | 139,579 | | **Subtotal** | **1,097,159** | **993,629** | | Retention payables | 320,133 | 276,518 | | Other payables and accrued expenses | 141,488 | 194,723 | | **Total** | **1,558,780** | **1,464,870** | - As of June 30, 2021, retention payables expected to be due after twelve months amounted to approximately **HKD 175 million**[85](index=85&type=chunk) [17 Share Capital](index=33&type=section&id=17%20%E8%82%A1%E6%9C%AC) As of June 30, 2021, the company's issued and fully paid share capital consisted of 2,155,545 thousand ordinary shares at HKD 0.01 par value each Share Capital (As of June 30, 2021) | Item | Number of Shares (thousand shares) | Share Capital Amount (HKD thousand) | | :--- | :--- | :--- | | Ordinary shares of HKD 0.01 par value each | 2,155,545 | 21,555 | [18 Commitments](index=33&type=section&id=18%20%E6%89%BF%E6%8B%85) As of June 30, 2021, the Group's contracted but unrecognised commitments included capital expenditure for property, plant, and equipment and investments in joint ventures Contracted but Unrecognized Commitments (HKD thousand) | Item | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Capital expenditure for property, plant and equipment in progress | 65,441 | 163,526 | | Investments in joint ventures | 3,611 | 8,886 | [19 Related Party Transactions](index=33&type=section&id=19%20%E5%85%B3%E8%BF%9E%E4%BA%BA%E5%A3%AB%E4%BA%A4%E6%98%93) In H1 2021, the Group engaged in various related party transactions, including receiving engineering and service fees from and paying for insurance, materials, and machinery rentals to group companies Summary of Related Party Transactions (For the six months ended June 30) | Transaction Type | 2021 (HKD thousand) | 2020 (HKD thousand) | | :--- | :--- | :--- | | Engineering fees received from group companies | 766,154 | 545,397 | | Service income received from group companies | 52,825 | 31,925 | | Insurance service fees paid to group companies | 10,447 | 7,198 | | Material costs paid to group companies | 1,853 | 3,164 | | Machinery rental fees paid to group companies | 3,299 | 1,597 | Other Information [Interim Dividend](index=34&type=section&id=%E4%B8%AD%E6%9C%9F%E8%82%A1%E6%81%AF) The Board declared an interim dividend of HKD 3 cents per share, payable on November 12, 2021, to shareholders registered on September 10, 2021 - The Board declared an interim dividend of **HKD 3 cents per share**, payable on November 12, 2021[87](index=87&type=chunk) [Closure of Register of Members](index=34&type=section&id=%E6%9A%82%E5%81%9C%E5%8A%9E%E7%90%86%E8%82%A1%E4%BB%BD%E8%BF%87%E6%88%B7%E7%99%BB%E8%AE%B0) To determine interim dividend entitlements, the company will suspend share transfer registration from September 9 to September 10, 2021 - To determine interim dividend entitlements, the company will suspend share transfer registration from **September 9 to September 10, 2021**[88](index=88&type=chunk) [Share Capital](index=34&type=section&id=%E8%82%A1%E6%9C%AC) As of June 30, 2021, the company's total issued share capital comprised 2,155,545,000 ordinary shares with a par value of HKD 0.01 each - As of June 30, 2021, the company's total issued share capital was **2,155,545,000 ordinary shares**, each with a par value of **HKD 0.01**[89](index=89&type=chunk) [Directors' Interests in Shares, Underlying Shares and Debentures](index=34&type=section&id=%E8%91%A3%E4%BA%8B%E4%BA%8E%E8%82%A1%E4%BB%BD%E3%80%81%E7%9B%B8%E5%85%B3%E8%82%A1%E4%BB%BD%E5%8F%8A%E5%80%BA%E5%88%B8%E7%9A%84%E6%9D%83%E7%9B%8A%E5%8F%8A%E6%B7%A1%E4%BB%93) As of June 30, 2021, Directors Zhang Haipeng, Wu Mingqing, and Huang Jiang held long positions in the company's shares, with some also holding interests in China State Construction Engineering Corporation Limited A shares Directors' Long Positions in the Company's Shares (As of June 30, 2021) | Director's Name | Capacity | Nature of Interest | Number of Ordinary Shares | Percentage of Issued Shares | | :--- | :--- | :--- | :--- | :--- | | Zhang Haipeng | Beneficial owner | Personal interest | 3,750,000 | 0.174 | | Wu Mingqing | Beneficial owner | Personal interest | 5,000,000 | 0.232 | | Huang Jiang | Beneficial owner | Personal interest | 3,000,000 | 0.139 | - Mr. Zhang Haipeng, Mr. Wang Hai, and Mr. Huang Jiang also held personal interests in A shares of China State Construction Engineering Corporation Limited[91](index=91&type=chunk) [Substantial Shareholders' Interests in Shares and Underlying Shares of the Company](index=36&type=section&id=%E4%B8%BB%E8%A6%81%E8%82%A1%E4%B8%9C%E4%BA%8E%E6%9C%AC%E5%85%AC%E5%8F%B8%E8%82%A1%E4%BB%BD%E5%8F%8A%E7%9B%B8%E5%85%B3%E8%82%A1%E4%BB%BD%E7%9A%84%E6%9D%83%E7%9B%8A%E5%8F%8A%E6%B7%A1%E4%BB%93) As of June 30, 2021, Capable Holdings Limited held 74.06% of the company's shares, with China State Construction International Holdings Limited and its parent companies deemed to hold the same interest Substantial Shareholders' Long Positions in the Company's Shares (As of June 30, 2021) | Shareholder Name | Capacity | Number of Ordinary Shares | Percentage of Issued Shares | | :--- | :--- | :--- | :--- | | Capable Holdings Limited | Beneficial owner | 1,596,403,279 | 74.06 | | China State Construction International Holdings Limited | Interest in controlled corporation | 1,596,403,279 | 74.06 | | China Overseas Holdings Limited | Interest in controlled corporation | 1,596,403,279 | 74.06 | | China State Construction Engineering Corporation Limited | Interest in controlled corporation | 1,596,403,279 | 74.06 | | China State Construction Group Co., Ltd. | Interest in controlled corporation | 1,596,403,279 | 74.06 | - Capable Holdings Limited is a wholly-owned subsidiary of China State Construction International, and due to control relationships, China State Construction International, China Overseas, China State Construction Engineering, and China State Construction Group are deemed to hold the same share interest[95](index=95&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=37&type=section&id=%E8%B4%AD%E4%B9%B0%E3%80%81%E5%87%BA%E5%94%AE%E6%88%96%E8%B5%8E%E5%9B%9E%E6%9C%AC%E5%85%AC%E5%8F%B8%E7%9A%84%E4%B8%8A%E5%B8%82%E8%AF%81%E5%88%B8) During the six months ended June 30, 2021, neither the company nor its subsidiaries purchased, sold, or redeemed any of its listed securities - During the period, neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities[97](index=97&type=chunk) [Corporate Governance](index=37&type=section&id=%E4%BC%81%E4%B8%9A%E7%AE%A1%E6%B2%BB) The company fully complied with all code provisions of the Corporate Governance Code set out in Appendix 14 of the HKEX Listing Rules throughout the reporting period - The company complied with all code provisions of the Corporate Governance Code in Appendix 14 of the HKEX Listing Rules throughout the reporting period[98](index=98&type=chunk) [Directors' Securities Transactions](index=37&type=section&id=%E8%91%A3%E4%BA%8B%E7%9A%84%E8%AF%81%E5%88%B8%E4%BA%A4%E6%98%93) The company adopted the Model Code for Securities Transactions by Directors of Listed Issuers, and all directors confirmed compliance during the reporting period - The company adopted the Model Code for Securities Transactions by Directors of Listed Issuers, and all directors confirmed compliance with the code[99](index=99&type=chunk) [Review of Accounts](index=37&type=section&id=%E8%B4%A6%E7%9B%AE%E5%AE%A1%E9%98%85) The Audit Committee, comprising three independent non-executive directors, reviewed the unaudited condensed consolidated financial statements for the six months ended June 30, 2021 - The Audit Committee, comprising three independent non-executive directors, reviewed the financial statements in this interim report[100](index=100&type=chunk)

Company Business Structure [Company Business Structure](index=2&type=section&id=Company%20Business%20Structure) Board of Directors and Committees [Board of Directors](index=4&type=section&id=Board%20of%20Directors) The Board comprises Chairman and Non-executive Director Zhang Haipeng, Executive Directors Wu Mingqing (Vice Chairman and CEO) and Wang Hai, Non-executive Director Huang Jiang, and Independent Non-executive Directors Zhou Jinsong, HONG Winn, and Kuang Xinyi - Board members include Chairman and Non-executive Director Zhang Haipeng, Executive Directors Wu Mingqing (Vice Chairman and CEO) and Wang Hai, Non-executive Director Huang Jiang, and Independent Non-executive Directors Zhou Jinsong, HONG Winn, and Kuang Xinyi[7](index=7&type=chunk) [Committees](index=4&type=section&id=Committees) The company has an Audit Committee, Remuneration Committee, and Nomination Committee, each composed of independent non-executive directors and some executive/non-executive directors to ensure independent and effective corporate governance - The Audit Committee is chaired by Zhou Jinsong, with members including HONG Winn and Kuang Xinyi[7](index=7&type=chunk) - The Remuneration Committee is chaired by Zhou Jinsong, with members including Zhang Haipeng, Wu Mingqing, HONG Winn, and Kuang Xinyi[7](index=7&type=chunk) - The Nomination Committee is chaired by Zhang Haipeng, with members including Wu Mingqing, Zhou Jinsong, HONG Winn, and Kuang Xinyi[7](index=7&type=chunk) Company Information [Basic Information](index=5&type=section&id=Basic%20Information) The company's authorized representatives are Zhang Haipeng and Wu Mingqing, with Liu Shuxian as company secretary, Ernst & Young as auditor, and Mayer Brown as legal counsel - Authorized Representatives: Zhang Haipeng, Wu Mingqing[8](index=8&type=chunk) - Company Secretary: Liu Shuxian[8](index=8&type=chunk) - Auditor: Ernst & Young; Legal Counsel: Mayer Brown[8](index=8&type=chunk) - Stock Code: **00830**; Company Website: **www.cscd.com.hk**[8](index=8&type=chunk) Chairman's Report [Overall Performance](index=6&type=section&id=Overall%20Performance) Despite the pandemic, the Group proactively overcame challenges, optimized resource allocation, and drove technological innovation in H1 2020, achieving quality and efficiency improvements - The Group actively responded to the pandemic, optimizing resource allocation, promoting technological innovation, effectively preventing operational risks, and steadily advancing various business operations, with notable achievements in quality and efficiency improvement[9](index=9&type=chunk) H1 2020 Key Financial Indicators | Indicator | H1 2020 | YoY Change | | :--- | :--- | :--- | | Main Business Revenue | HKD 1.961 billion | -16.8% | | Profit Attributable to Company Shareholders | HKD 155 million | +1.0% | | Earnings Per Share | 7.19 HK cents | +1.0% | [Dividend Distribution](index=6&type=section&id=Dividend%20Distribution) Considering future operational management business development needs and the economic uncertainty from the pandemic, the Board does not recommend an interim dividend for the six months ended June 30, 2020 - The Board does not recommend an interim dividend for the six months ended June 30, 2020, primarily due to future operational management business development needs and the economic uncertainty caused by the pandemic[11](index=11&type=chunk) [Business Review](index=7&type=section&id=Business%20Review) In H1 2020, the global economy faced severe pandemic impacts, while China's economy rapidly recovered, with the Group pursuing a strategic approach to expand quality projects - The global economy was severely impacted by the pandemic, while China's epidemic prevention and control made significant progress, leading to rapid economic recovery[12](index=12&type=chunk) - The Group adheres to the "based in Hong Kong and Macau, relying on the mainland, radiating overseas, and linking domestic and international markets" operating strategy[12](index=12&type=chunk) [Market Conditions](index=7&type=section&id=Market%20Conditions) In H1 2020, the global economy was severely impacted by the pandemic, with major economies halting and financial markets fluctuating, while China's economy rapidly recovered - The pandemic caused an unprecedented impact on the global economy, while China's epidemic prevention and control made significant progress, leading to rapid economic recovery[12](index=12&type=chunk) [Construction Engineering Business](index=7&type=section&id=Construction%20Engineering%20Business) The curtain wall engineering business solidified its leading position in Hong Kong and Macau, while the North American market focused on high-margin projects, and the mainland market expanded high-end projects - Curtain wall business in Hong Kong and Macau strengthened its competitive advantage, consolidating market leadership, and secured the contract for the Immigration Department Headquarters Building in Tseung Kwan O, Hong Kong, Area 67[13](index=13&type=chunk)[14](index=14&type=chunk) - The North American market focuses on high-margin and controllable-risk quality projects, strengthening cost control and contract management[14](index=14&type=chunk) - The mainland China curtain wall market actively developed high-end projects, securing contracts for Zhuhai-Macau Bay Century Center, China Construction Huafu Jincheng Phase II, and Qianhai Chow Tai Fook Financial Building, among others[14](index=14&type=chunk) - The Zhuhai production base underwent intelligent and automated upgrades, enhancing production capacity utilization and technical standards, and has successfully resumed work and production[15](index=15&type=chunk) - General contracting business developed steadily, securing the contract for the residential project at 128 Wong Ma Kok Road, Stanley, with ongoing projects progressing smoothly[16](index=16&type=chunk) [Operations Management Business](index=10&type=section&id=Operations%20Management%20Business) The operations management business progressed steadily with parent company support, largely unaffected by the pandemic, contributing stable cash flow and profit, and enhancing the Group's risk resistance - Operations management business was largely unaffected by the pandemic, contributing stable cash flow and profit, enhancing the Group's risk resistance[17](index=17&type=chunk) - China Overseas Supervision secured multiple projects, including Shenzhen Longguang Qianhai Tianjing Garden and Shenzhen CR Land Guangming Xinhu Street project[17](index=17&type=chunk) - Shenyang Huanggu Thermal Power achieved safe and stable heating operations during the heating season in H1, and carried out equipment maintenance and coal reserves[17](index=17&type=chunk) - The Canadian Toronto elderly care apartment investment project is progressing normally, having entered the main construction phase[17](index=17&type=chunk) [New Contracts Awarded](index=11&type=section&id=New%20Contracts%20Awarded) For the six months ended June 30, 2020, the Group secured 7 new contracts with a total value of HKD 2.575 billion, including HKD 657 million for curtain wall, HKD 1.767 billion for general contracting, and HKD 151 million for operations management services H1 2020 Total Value of New Contracts Awarded | Business Type | Total Contract Value (HKD billion) | | :--- | :--- | | Glass Curtain Wall Engineering | 0.657 | | General Contracting Engineering | 1.767 | | Operations Management Services | 0.151 | | **Total** | **2.575** | [Projects Under Construction](index=11&type=section&id=Projects%20Under%20Construction) As of June 30, 2020, the Group's total contract value for projects under construction was HKD 17.602 billion, with an outstanding contract value of HKD 9.423 billion Projects Under Construction as of June 30, 2020 | Indicator | Amount (HKD billion) | | :--- | :--- | | Total Contract Value for Projects Under Construction | 17.602 | | Outstanding Contract Value | 9.423 | [Corporate Governance](index=11&type=section&id=Corporate%20Governance) The Group upholds integrity, honesty, transparency, and efficiency in corporate governance, strictly adhering to laws, regulations, and listing rules, continuously improving its governance structure and internal control systems - The Group adheres to corporate governance principles of integrity, honesty, transparency, and efficiency, strictly complying with laws, regulations, and listing rules[19](index=19&type=chunk) - Continuously improving corporate governance structure and measures, establishing and perfecting policy systems, internal control systems, and management mechanisms and processes[19](index=19&type=chunk) [Risk Management](index=11&type=section&id=Risk%20Management) The Group continuously improves its internal control system, enhances risk prediction and control, strengthens supervision of key areas, and monitors overseas market policies and exchange rate trends to mitigate political and exchange rate risks - Continuously improving the internal control management system, enhancing risk prediction capabilities and control effectiveness, and strengthening the integration of internal control management with business processes[20](index=20&type=chunk) - Strengthening supervision over key areas and critical matters to prevent operational risks and plug management loopholes[20](index=20&type=chunk) - Monitoring overseas market policies and exchange rate trends, concentrating resources on core cities in Europe and America, and mitigating political and exchange rate risks[21](index=21&type=chunk) [Financial Management](index=12&type=section&id=Financial%20Management) In H1, the Group strengthened financial management, optimized capital structure, improved capital utilization efficiency, and actively explored financing channels, maintaining a sound financial position - Strengthening financial management, optimizing capital structure, improving capital utilization efficiency, saving finance costs, and actively exploring financing channels[21](index=21&type=chunk) Financial Position as of June 30, 2020 | Indicator | Amount (HKD million) | | :--- | :--- | | Cash and Bank Balances | 437 | | Total Bank Borrowings | 959 | | Net Gearing Ratio | 44.7% | | Committed but Undrawn Credit and Performance Bond Facilities | 2,580 | [Human Resources Management](index=12&type=section&id=Human%20Resources%20Management) The Group prioritizes people, focusing on talent acquisition, retention, and development through improved recruitment, training, appraisal, and remuneration systems to enhance employee satisfaction and efficiency - Adhering to a people-oriented approach, emphasizing talent acquisition, retention, and development, and improving recruitment, training, appraisal, and remuneration incentive systems[22](index=22&type=chunk) - Implementing a lecturer system, enriching training and exchange methods, and improving the KPI appraisal system to enhance employee motivation and work efficiency[22](index=22&type=chunk) - As of June 30, 2020, the Group's total number of employees was **3,203**[23](index=23&type=chunk) [Social Responsibility](index=13&type=section&id=Social%20Responsibility) The Group has consistently participated in charitable activities for many years, earning various honors and certifications, and actively fulfilling its corporate social responsibilities - Participated in charitable activities such as "Walk for Millions" and "Children's Dreams" for many years, receiving honors such as "Green Office" and "Global Caring Company" certifications[24](index=24&type=chunk) - Received the "Caring Company" logo from the Hong Kong Council of Social Service for five consecutive years, contributing to promoting social harmony and stable development[24](index=24&type=chunk) [Outlook](index=13&type=section&id=Outlook) Looking ahead to H2, the global pandemic remains critical, with rising trade protectionism and geopolitical tensions, while Hong Kong's social situation stabilizes and Macau's economy rebounds - The global pandemic remains critical, with increasing trade protectionism and geopolitical tensions, but Hong Kong's social situation is stabilizing, and Macau's economy is bottoming out and recovering[25](index=25&type=chunk) - The in-depth development of the Guangdong-Hong Kong-Macao Greater Bay Area is expected to gradually warm up the construction market, and China's medium-to-long-term economic outlook remains optimistic[25](index=25&type=chunk) [Operating and Development Strategies](index=14&type=section&id=Operating%20and%20Development%20Strategies) The Group will focus on curtain wall business as its core, adhering to the "large market, large client, large project" strategy, optimizing its three major markets, and prudently expanding overseas - The curtain wall business will adhere to the "large market, large client, large project" strategy, optimizing the business layout in the three major markets of Hong Kong and Macau, North America, and mainland China[26](index=26&type=chunk) - Prudently expanding overseas markets such as Australia, the UK, and the Asia-Pacific region to enhance the comprehensive competitiveness of the curtain wall business[26](index=26&type=chunk) - The general contracting business will actively develop local high-quality small and medium-sized building construction projects[27](index=27&type=chunk) - The operations management business will deepen its operating model, explore innovative business directions in mainland China, actively seek opportunities for mergers and acquisitions of quality assets, promote industry-finance integration, and achieve the dual-core driven strategic goal[27](index=27&type=chunk) [Acknowledgements](index=15&type=section&id=Acknowledgements) Chairman Zhang Haipeng, on behalf of the Board, extends sincere gratitude to all shareholders, clients, suppliers, and employees - Chairman Zhang Haipeng expresses gratitude to shareholders, clients, suppliers, and all employees[28](index=28&type=chunk) Management Discussion and Analysis [Overall Performance](index=16&type=section&id=Overall%20Performance) In H1 2020, the COVID-19 pandemic negatively impacted the Greater China and North American economies and construction industries, leading to supply chain disruptions and work stoppages - The COVID-19 pandemic negatively impacted the Greater China and North American economies and construction industries, including supply chain disruptions and work stoppages[29](index=29&type=chunk) H1 2020 Overall Financial Performance | Indicator | H1 2020 (HKD billion) | H1 2019 (HKD billion, restated) | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | 1.961 | 2.356 | -16.8% | | Profit Attributable to Company Shareholders | 0.155 | 0.153 | +1.0% | | Basic Earnings Per Share | 7.19 HK cents | 7.12 HK cents | +1.0% | [Segmental Analysis](index=16&type=section&id=Segmental%20Analysis) Revenue and operating profit for both curtain wall engineering and general contracting businesses declined due to pandemic-induced construction delays and reduced project contributions, while operations management revenue and profit increased [Curtain Wall Engineering Business](index=16&type=section&id=Curtain%20Wall%20Engineering%20Business) Due to the COVID-19 pandemic, construction delays in Greater China and North America's curtain wall engineering projects led to a decrease in both segment revenue and operating profit Curtain Wall Engineering Business Performance | Indicator | H1 2020 (HKD billion) | H1 2019 (HKD billion) | YoY Change | | :--- | :--- | :--- | :--- | | Segment Revenue | 1.312 | 1.430 | Decrease | | Operating Profit | 0.066 | 0.089 | Decrease | [General Contracting Business](index=16&type=section&id=General%20Contracting%20Business) General contracting business revenue and operating profit decreased, primarily due to reduced contributions from projects nearing completion in 2019 and new projects being in early construction phases General Contracting Business Performance | Indicator | H1 2020 (HKD billion) | H1 2019 (HKD billion) | YoY Change | | :--- | :--- | :--- | :--- | | Segment Revenue | 0.174 | 0.459 | Decrease | | Operating Profit | 0.006 | 0.026 | Decrease | [Operations Management Business](index=17&type=section&id=Operations%20Management%20Business) Operations management business revenue and operating profit both increased, mainly benefiting from lower coal costs at Shenyang Huanggu Thermal Power Plant Operations Management Business Performance | Indicator | H1 2020 (HKD billion) | H1 2019 (HKD billion, restated) | YoY Change | | :--- | :--- | :--- | :--- | | Segment Revenue | 0.475 | 0.466 | Increase | | Operating Profit | 0.142 | 0.116 | Increase | [Administrative, Selling and Other Operating Expenses](index=17&type=section&id=Administrative%2C%20Selling%20and%20Other%20Operating%20Expenses) Administrative expenses decreased to HKD 84 million due to strict cost control measures implemented across the three core businesses Change in Administrative Expenses | Indicator | H1 2020 (HKD million) | H1 2019 (HKD million, restated) | YoY Change | | :--- | :--- | :--- | :--- | | Administrative Expenses | 84 | 102 | Decrease | [Finance Costs](index=17&type=section&id=Finance%20Costs) The Group's finance costs increased to HKD 17 million due to an increase in bank borrowings Change in Finance Costs | Indicator | H1 2020 (HKD million) | H1 2019 (HKD million, restated) | YoY Change | | :--- | :--- | :--- | :--- | | Finance Costs | 17 | 16 | Increase | [New Contracts Awarded and Projects Under Construction](index=17&type=section&id=New%20Contracts%20Awarded%20and%20Projects%20Under%20Construction) As of June 30, 2020, the Group's cumulative new contract value reached HKD 2.575 billion, achieving 46.8% of the annual target, with total outstanding contracts of HKD 17.602 billion New Contracts Awarded and Projects Under Construction Data | Indicator | Amount (HKD billion) | | :--- | :--- | | Cumulative New Contract Value (H1 2020) | 2.575 | | Annual Target Completion Rate | 46.8% | | Total Outstanding Contract Value (June 30, 2020) | 17.602 | | Uncompleted Contract Value (June 30, 2020) | 9.423 | New Contract Value, Total Contract Value, and Uncompleted Contract Value by Segment | Segment Business | New Contract Value (HKD billion) | Total Contract Value (HKD billion) | Uncompleted Contract Value (HKD billion) | | :--- | :--- | :--- | :--- | | Glass Curtain Wall | 0.657 | 12.764 | 6.657 | | Building Construction Engineering | 1.767 | 4.091 | 2.237 | | Operations Management | 0.151 | 0.747 | 0.529 | | **Total** | **2.575** | **17.602** | **9.423** | [Liquidity and Financial Resources](index=18&type=section&id=Liquidity%20and%20Financial%20Resources) The Group primarily finances its operations through internal cash flow and bank credit, maintaining sufficient financial resources with HKD 437 million in cash and bank balances and HKD 2.58 billion in unutilized bank facilities as of June 30, 2020 Liquidity and Financial Resources Overview | Indicator | June 30, 2020 (HKD million) | December 31, 2019 (HKD million) | | :--- | :--- | :--- | | Cash and Bank Balances | 437 | 827 | | Total Bank Borrowings | 959 | 868 | | Net Gearing Ratio | 44.7% | 3.9% | | Unutilized Bank Facilities | 2,580 | Not applicable | Bank Borrowings Maturity Profile | Maturity Profile | June 30, 2020 (HKD thousand) | December 31, 2019 (HKD thousand) | | :--- | :--- | :--- | | Repayable on demand or within one year | 348,478 | 655,780 | | Repayable after one year but within two years | 200,479 | 200,494 | | Repayable after two years but within five years | 410,455 | 11,264 | | **Total Bank Borrowings** | **959,412** | **867,538** | Currency Composition of Cash and Cash Equivalents (June 30, 2020) | Currency | Percentage (%) | | :--- | :--- | | RMB | 60 | | HKD | 29 | | USD | 3 | | MOP | 1 | | Others | 7 | [Treasury Policy](index=19&type=section&id=Treasury%20Policy) The Group adopts a prudent treasury policy for cash and financial management, centralizing treasury matters to manage risks and reduce funding costs, with most cash held in short-term HKD or RMB deposits - The Group adopts a prudent treasury policy, centralizing treasury matters to properly manage risks and reduce funding costs[40](index=40&type=chunk) - Most cash is held in short-term HKD or RMB deposits, with liquidity and financial requirements regularly reviewed[40](index=40&type=chunk) [Employees and Remuneration Policy](index=19&type=section&id=Employees%20and%20Remuneration%20Policy) As of June 30, 2020, the Group employed 3,203 staff, with an effective management incentive policy and competitive remuneration to align interests and regularly reviewed based on market conditions and performance Number of Employees | Indicator | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Total Number of Employees | 3,203 persons | 3,197 persons | - The Group has an effective management incentive policy and competitive remuneration to align the interests of management, employees, and shareholders[41](index=41&type=chunk) - Remuneration packages include basic salary, allowances, fringe benefits (including medical insurance and pension contributions), and discretionary bonuses[41](index=41&type=chunk) [Foreign Exchange Risk](index=19&type=section&id=Foreign%20Exchange%20Risk) The Group's foreign currency risk primarily arises from operating activities denominated in USD, RMB, CAD, GBP, and MOP, with management monitoring risks and considering hedging as needed - The Group's foreign currency risk primarily arises from operating activities denominated in USD, RMB, CAD, GBP, and MOP[42](index=42&type=chunk) - The Group currently has no foreign currency hedging policy but management monitors foreign exchange risk and considers hedging when necessary[42](index=42&type=chunk) Unaudited Condensed Consolidated Statement of Profit or Loss [Profit or Loss Statement Overview](index=20&type=section&id=Profit%20or%20Loss%20Statement%20Overview) For the six months ended June 30, 2020, the Group reported a turnover of HKD 1.961 billion, gross profit of HKD 267 million, and profit for the period of HKD 152 million Condensed Consolidated Statement of Profit or Loss Key Data | Indicator | H1 2020 (HKD thousand) | H1 2019 (HKD thousand, restated) | | :--- | :--- | :--- | | Turnover | 1,960,725 | 2,355,514 | | Gross Profit | 266,847 | 304,935 | | Administrative, Selling and Other Operating Expenses | (83,917) | (101,979) | | Finance Costs | (17,487) | (15,868) | | Profit Before Tax | 181,034 | 196,381 | | Income Tax Expense | (28,774) | (48,141) | | Profit for the Period | 152,260 | 148,240 | | Profit Attributable to Company Shareholders | 154,930 | 153,369 | | Earnings Per Share (HK cents) | 7.19 | 7.12 | Unaudited Condensed Consolidated Statement of Comprehensive Income [Comprehensive Income Statement Overview](index=21&type=section&id=Comprehensive%20Income%20Statement%20Overview) For the six months ended June 30, 2020, profit for the period was HKD 152 million, with other comprehensive income negatively impacted by exchange differences on translation of foreign operations, resulting in total comprehensive income of HKD 109 million Condensed Consolidated Statement of Comprehensive Income Key Data | Indicator | H1 2020 (HKD thousand) | H1 2019 (HKD thousand, restated) | | :--- | :--- | :--- | | Profit for the Period | 152,260 | 148,240 | | Exchange differences on translation of foreign operations | (42,470) | 4,353 | | Other comprehensive income for the period, net of tax | (42,470) | 4,353 | | Total comprehensive income for the period, net of tax | 109,790 | 152,593 | | Total comprehensive income attributable to company shareholders | 112,222 | 157,234 | | Total comprehensive income attributable to non-controlling interests | (2,432) | (4,641) | Unaudited Condensed Consolidated Statement of Financial Position [Assets Overview](index=22&type=section&id=Assets%20Overview) As of June 30, 2020, the Group's total non-current assets were HKD 2.398 billion, total current assets were HKD 4.549 billion, and total assets were HKD 6.947 billion Condensed Consolidated Statement of Financial Position - Assets | Indicator | June 30, 2020 (HKD thousand) | December 31, 2019 (HKD thousand) | | :--- | :--- | :--- | | Property, Plant and Equipment | 1,922,839 | 1,957,144 | | Interests in Infrastructure Project Investments (Non-current) | 156,196 | 193,890 | | Goodwill | 138,149 | 138,149 | | Deferred Tax Assets | 180,819 | 171,971 | | **Total Non-current Assets** | **2,398,003** | **2,461,154** | | Interests in Infrastructure Project Investments (Current) | 64,740 | 54,010 | | Inventories | 114,084 | 98,524 | | Contract Assets | 1,580,322 | 1,017,935 | | Trade and Other Receivables | 1,386,825 | 1,633,535 | | Cash and Cash Equivalents | 436,810 | 826,576 | | **Total Current Assets** | **4,549,432** | **4,592,840** | | **Total Assets** | **6,947,435** | **7,053,994** | [Liabilities and Equity Overview](index=22&type=section&id=Liabilities%20and%20Equity%20Overview) As of June 30, 2020, the Group's total current liabilities were HKD 4.399 billion, total non-current liabilities were HKD 1.38 billion, and total equity attributable to company shareholders was HKD 1.238 billion Condensed Consolidated Statement of Financial Position - Liabilities and Equity | Indicator | June 30, 2020 (HKD thousand) | December 31, 2019 (HKD thousand) | | :--- | :--- | :--- | | Bank Borrowings (Current) | 348,478 | 655,780 | | Contract Liabilities (Current) | 398,210 | 685,696 | | Trade and Other Payables and Accrued Expenses | 1,399,148 | 1,387,986 | | Amounts Due to Group Companies | 1,803,053 | 1,795,833 | | **Total Current Liabilities** | **4,399,184** | **4,748,706** | | Contract Liabilities (Non-current) | 741,797 | 770,912 | | Bank Borrowings (Non-current) | 610,934 | 211,758 | | **Total Non-current Liabilities** | **1,379,653** | **1,246,775** | | Share Capital | 21,555 | 21,555 | | Share Premium and Reserves | 1,216,287 | 1,103,770 | | **Equity Attributable to Company Shareholders** | **1,237,842** | **1,125,325** | | Non-controlling Interests | (69,244) | (66,812) | | **Total Equity** | **1,168,598** | **1,058,513** | Unaudited Condensed Consolidated Statement of Changes in Equity [Equity Changes Overview](index=24&type=section&id=Equity%20Changes%20Overview) For the six months ended June 30, 2020, profit attributable to company shareholders was HKD 155 million, but exchange differences on translation of foreign operations resulted in total comprehensive income of HKD 112 million Condensed Consolidated Statement of Changes in Equity Key Data | Indicator | June 30, 2020 (HKD thousand) | June 30, 2019 (HKD thousand, restated) | | :--- | :--- | :--- | | Equity Attributable to Company Shareholders at Beginning of Period | 1,125,325 | 1,027,564 | | Profit/(Loss) for the Period | 154,930 | 153,369 | | Exchange differences on translation of foreign operations | (42,470) | 3,865 | | Total Comprehensive Income for the Period | 112,222 | 157,234 | | Contributions from Owners | — | 310 | | Final Dividend Payable for 2018 | — | (25,867) | | Equity Attributable to Company Shareholders at End of Period | 1,237,842 | 1,159,241 | - Changes in special reserves primarily arose from the acquisition of Haiyue Construction Engineering Co Ltd under common control, the increase in equity interest in Gamma North America, Inc., and the acquisition of China Overseas Supervision Co Ltd[48](index=48&type=chunk) - The acquisition of Shenyang Huanggu Thermal Power Co Ltd under common control in 2019 impacted equity[49](index=49&type=chunk) Unaudited Condensed Consolidated Statement of Cash Flows [Cash Flow Overview](index=25&type=section&id=Cash%20Flow%20Overview) For the six months ended June 30, 2020, net cash used in operating activities was HKD 374 million, net cash used in investing activities was HKD 71 million, and net cash from financing activities was HKD 75 million Condensed Consolidated Statement of Cash Flows Key Data | Indicator | H1 2020 (HKD thousand) | H1 2019 (HKD thousand, restated) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (374,243) | (129,850) | | Net Cash Used in Investing Activities | (70,927) | (51,194) | | Net Cash From/(Used in) Financing Activities | 75,267 | (12,781) | | Decrease in Cash and Cash Equivalents | (369,903) | (193,825) | | Effect of Foreign Exchange Rate Changes | (19,863) | 28,081 | | Cash and Cash Equivalents at Beginning of Period | 826,576 | 696,736 | | Cash and Cash Equivalents at End of Period | 436,810 | 530,992 | Notes to the Unaudited Condensed Consolidated Financial Statements [1 Basis of Preparation](index=26&type=section&id=1%20Basis%20of%20Preparation) These condensed consolidated financial statements are prepared in accordance with the HKEX Listing Rules and HKAS 34, presented on a historical cost basis, with comparative figures restated for the 2019 acquisition of Shenyang Huanggu Thermal Power Co Ltd - These financial statements are prepared in accordance with Appendix 16 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and Hong Kong Accounting Standard 34 "Interim Financial Reporting"[51](index=51&type=chunk) - These financial statements are prepared on a historical cost basis and presented in Hong Kong dollars[51](index=51&type=chunk) - The acquisition of 100% equity interest in Shenyang Huanggu Thermal Power Co Ltd ("Shenyang Huanggu Company") in 2019 is accounted for as a business combination under common control, and comparative figures have been restated accordingly[51](index=51&type=chunk)[52](index=52&type=chunk) Impact of Merged Acquired Group on H1 2019 Results | Indicator | Originally Stated (HKD thousand) | Merged Acquired Group (HKD thousand) | Restated (HKD thousand) | | :--- | :--- | :--- | :--- | | Turnover | 2,031,435 | 324,079 | 2,355,514 | | Cost of Sales | (1,793,813) | (256,766) | (2,050,579) | | Gross Profit | 237,622 | 67,313 | 304,935 | | Profit for the Period | 104,180 | 44,060 | 148,240 | | Profit Attributable to Company Shareholders | 109,445 | 43,924 | 153,369 | [2.1 Changes in Accounting Policies and Disclosures](index=29&type=section&id=2.1%20Changes%20in%20Accounting%20Policies%20and%20Disclosures) The Group adopted new and revised HKFRSs effective January 1, 2020, including amendments to HKFRS 3, HKAS 39, HKAS 1, and HKAS 8, which had no significant impact on its results or financial position - New and revised Hong Kong Financial Reporting Standards effective January 1, 2020, including the definition of a business, interest rate benchmark reform, and the definition of materiality, have been adopted[54](index=54&type=chunk)[55](index=55&type=chunk) - The adoption of these new and revised HKFRSs had no significant impact on the Group's results or financial position[55](index=55&type=chunk) [2.2 New Hong Kong Financial Reporting Standards Issued But Not Yet Effective](index=29&type=section&id=2.2%20New%20Hong%20Kong%20Financial%20Reporting%20Standards%20Issued%20But%20Not%20Yet%20Effective) The Group has not yet adopted new and revised HKFRSs issued but not yet effective, including amendments to HKFRS 10, HKAS 28, HKFRS 16, and HKFRS 17, which are not expected to have a significant impact upon their effective dates - The Group has not yet adopted new and revised Hong Kong Financial Reporting Standards issued but not yet effective, including asset sales or contributions between investors and their associates or joint ventures, COVID-19-related rent concessions, and insurance contracts[56](index=56&type=chunk) - The new and revised HKFRSs are not expected to have a significant impact on the Group's results or financial position upon their effective dates[56](index=56&type=chunk) [3 Estimates](index=30&type=section&id=3%20Estimates) The preparation of financial statements requires management to make judgments, estimates, and assumptions, with actual results potentially differing from these estimates - The preparation of financial statements requires management to make judgments, estimates, and assumptions, and actual results may differ from these estimates[57](index=57&type=chunk) - The significant judgments made by management in applying accounting policies and the key sources of estimation uncertainty are the same as those applied in the consolidated financial statements for the year ended December 31, 2019[57](index=57&type=chunk) [4 Turnover and Segment Information](index=30&type=section&id=4%20Turnover%20and%20Segment%20Information) The Group primarily engages in curtain wall engineering, general contracting, and operations management businesses, with H1 2020 turnover of HKD 1.312 billion, HKD 174 million, and HKD 475 million, respectively - The Group primarily engages in curtain wall engineering, general contracting, and operations management businesses, with turnover representing revenue from construction and management contracts[58](index=58&type=chunk) - Curtain wall engineering turnover primarily originated from Greater China and North America, while general contracting and operations management business turnover mainly came from Greater China[59](index=59&type=chunk) Segment Performance Overview | Segment Business | H1 2020 Turnover (HKD thousand) | H1 2019 Turnover (HKD thousand, restated) | H1 2020 Gross Profit (HKD thousand) | H1 2019 Gross Profit (HKD thousand, restated) | H1 2020 Segment Results (HKD thousand) | H1 2019 Segment Results (HKD thousand, restated) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Curtain Wall Engineering | 1,312,453 | 1,430,001 | 103,836 | 137,251 | 65,805 | 88,642 | | General Contracting Engineering | 173,602 | 459,078 | 7,344 | 30,886 | 5,965 | 26,359 | | Operations Management | 474,670 | 466,435 | 155,667 | 136,798 | 142,091 | 116,453 | | **Total** | **1,960,725** | **2,355,514** | **266,847** | **304,935** | **213,861** | **231,454** | [5 Other Income and Other Gains, Net](index=32&type=section&id=5%20Other%20Income%20and%20Other%20Gains%2C%20Net) In H1 2020, the Group's other income and other gains, net, totaled HKD 15.591 million, primarily comprising bank interest income, net exchange gains, and sundry income Other Income and Other Gains, Net | Item | H1 2020 (HKD thousand) | H1 2019 (HKD thousand, restated) | | :--- | :--- | :--- | | Bank interest income | 1,447 | 1,276 | | Exchange gains, net | 6,526 | 5,119 | | Sundry income | 7,618 | 2,898 | | **Total** | **15,591** | **9,293** | [6 Finance Costs](index=32&type=section&id=6%20Finance%20Costs) In H1 2020, the Group's finance costs amounted to HKD 17.487 million, mainly consisting of interest on bank borrowings and overdrafts, interest on borrowings from an intermediate holding company, and interest on lease liabilities Finance Costs Composition | Item | H1 2020 (HKD thousand) | H1 2019 (HKD thousand, restated) | | :--- | :--- | :--- | | Interest on bank borrowings and overdrafts | 17,271 | 14,332 | | Interest on borrowings from an intermediate holding company | 352 | — | | Interest on borrowings from group companies | — | 931 | | Interest on lease liabilities | 695 | 605 | | Less: Capitalized in property, plant and equipment | (831) | — | | **Total** | **17,487** | **15,868** | [7 Profit Before Tax](index=33&type=section&id=7%20Profit%20Before%20Tax) In H1 2020, the Group's profit before tax was stated after deducting depreciation expenses, including HKD 3.072 million for property, plant, and equipment (excluding right-of-use assets) and HKD 6.458 million for right-of-use assets Profit Before Tax Deductions | Item | H1 2020 (HKD thousand) | H1 2019 (HKD thousand, restated) | | :--- | :--- | :--- | | Depreciation — Property, plant and equipment, excluding right-of-use assets | 3,072 | 2,923 | | Depreciation — Right-of-use assets | 6,458 | 3,560 | | **Total** | **9,530** | **6,483** | [8 Income Tax Expense](index=34&type=section&id=8%20Income%20Tax%20Expense) In H1 2020, the Group's total income tax expense was HKD 28.774 million, comprising HKD 5.586 million in Hong Kong tax, HKD 30.333 million in mainland China and overseas tax, and a net deferred tax credit of HKD 7.145 million Income Tax Expense Composition | Item | H1 2020 (HKD thousand) | H1 2019 (HKD thousand, restated) | | :--- | :--- | :--- | | Hong Kong tax (net) | 5,586 | 17,814 | | Mainland China and overseas tax (net) | 30,333 | 25,370 | | Deferred tax, net | (7,145) | 4,957 | | **Total Tax Expense for the Period** | **28,774** | **48,141** | - Hong Kong income tax is calculated at a rate of **16.5%**, while other regions are taxed at the current rates applicable in the countries where the businesses operate[64](index=64&type=chunk)[65](index=65&type=chunk) [9 Dividends](index=35&type=section&id=9%20Dividends) The Board does not recommend an interim dividend for the six months ended June 30, 2020, while a final dividend of 1.2 HK cents per share, totaling approximately HKD 25.867 million, was paid for 2018 in the prior period - The Board does not recommend an interim dividend for the six months ended June 30, 2020[66](index=66&type=chunk) Dividends Declared and Paid | Item | H1 2020 (HKD thousand) | H1 2019 (HKD thousand) | | :--- | :--- | :--- | | Final dividend paid for 2018 | — | 25,867 | [10 Earnings Per Share](index=36&type=section&id=10%20Earnings%20Per%20Share) For the six months ended June 30, 2020, profit attributable to company shareholders was HKD 155 million, resulting in basic and diluted earnings per share of 7.19 HK cents Earnings Per Share Calculation | Indicator | H1 2020 (HKD thousand/thousand shares) | H1 2019 (HKD thousand/thousand shares, restated) | | :--- | :--- | :--- | | Profit attributable to company shareholders for basic and diluted EPS calculation | 154,930 | 153,369 | | Weighted average number of ordinary shares outstanding for basic and diluted EPS calculation | 2,155,545 | 2,155,545 | | **Basic and Diluted Earnings Per Share (HK cents)** | **7.19** | **7.12** | - The Company had no potentially dilutive ordinary shares during the six months ended June 30, 2019 and 2020[67](index=67&type=chunk) [11 Property, Plant and Equipment](index=37&type=section&id=11%20Property%2C%20Plant%20and%20Equipment) In H1 2020, the Group's additions to property, plant, and equipment amounted to approximately HKD 72.541 million, an increase from HKD 52.497 million in the corresponding period of 2019 Additions to Property, Plant and Equipment | Item | H1 2020 (HKD thousand) | H1 2019 (HKD thousand, restated) | | :--- | :--- | :--- | | Additions to property, plant and equipment | 72,541 | 52,497 | [12 Interests in Infrastructure Project Investments](index=37&type=section&id=12%20Interests%20in%20Infrastructure%20Project%20Investments) As of June 30, 2020, the non-current portion of interests in infrastructure project investments was HKD 156 million, representing financing advances to joint ventures for PPP infrastructure projects in mainland China Interests in Infrastructure Project Investments | Item | June 30, 2020 (HKD thousand) | December 31, 2019 (HKD thousand) | | :--- | :--- | :--- | | Interests in infrastructure project investments | 220,936 | 247,900 | | Less: Current portion | (64,740) | (54,010) | | **Non-current portion** | **156,196** | **193,890** | - Interests in infrastructure project investments represent financing advances to joint ventures for PPP infrastructure projects in mainland China[70](index=70&type=chunk) - The effective interest rate for infrastructure project investments ranges from **10.2% to 10.7%** per annum[70](index=70&type=chunk) [13 Goodwill](index=38&type=section&id=13%20Goodwill) As of June 30, 2020, the net carrying amount of goodwill was HKD 138 million, primarily allocated to cash-generating units related to Gamma North America, Inc.'s curtain wall engineering business in North America Net Carrying Amount of Goodwill | Item | Amount (HKD thousand) | | :--- | :--- | | Cost | 159,707 | | Accumulated impairment | (21,558) | | **Net Carrying Amount** | **138,149** | - The carrying amount of goodwill is allocated to cash-generating units related to the curtain wall engineering business of Gamma North America, Inc. and its subsidiaries in North America[71](index=71&type=chunk) - The recoverable amount of the cash-generating units is determined based on the value-in-use method, with key assumptions consistent with those used in the 2019 annual financial statements[71](index=71&type=chunk) [14 Trade and Other Receivables](index=39&type=section&id=14%20Trade%20and%20Other%20Receivables) As of June 30, 2020, total trade and other receivables amounted to HKD 1.387 billion, with trade receivables over 90 days old accounting for HKD 169 million Ageing Analysis of Trade and Other Receivables | Item | June 30, 2020 (HKD thousand) | December 31, 2019 (HKD thousand) | | :--- | :--- | :--- | | Trade receivables: 0 – 30 days | 529,244 | 725,353 | | Trade receivables: 31 – 60 days | 13,330 | 24,506 | | Trade receivables: 61 – 90 days | 12,450 | 28,388 | | Trade receivables: Over 90 days | 169,805 | 151,990 | | Retention receivables | 566,080 | 630,996 | | Other receivables | 95,916 | 72,302 | | **Total Trade and Other Receivables** | **1,386,825** | **1,633,535** | - The Group generally grants customers an average credit period of no more than **90 days**, with retention receivables repayable approximately one year after the expiry of the project maintenance liability period[72](index=72&type=chunk) [15 Bank Borrowings](index=40&type=section&id=15%20Bank%20Borrowings) As of June 30, 2020, the Group's total bank borrowings were HKD 959 million, with a current portion of HKD 348 million and a non-current portion of HKD 611 million, at an average interest rate of 3.55% Bank Borrowings Maturity Profile | Maturity Profile | June 30, 2020 (HKD thousand) | December 31, 2019 (HKD thousand) | | :--- | :--- | :--- | | Repayable on demand or within one year | 348,478 | 655,780 | | Repayable in the second year | 200,479 | 200,494 | | Repayable in the third to fifth year | 410,455 | 11,264 | | **Total Bank Borrowings** | **959,412** | **867,538** | | Less: Current portion | (348,478) | (655,780) | | **Non-current portion** | **610,934** | **211,758** | Bank Borrowings by Currency | Currency | June 30, 2020 (HKD thousand) | December 31, 2019 (HKD thousand) | | :--- | :--- | :--- | | HKD | 780,000 | 380,000 | | CAD | 176,867 | 55,900 | | USD | 2,545 | 431,638 | | **Total** | **959,412** | **867,538** | - As of June 30, 2020, the average bank loan interest rate was **3.55%** (December 31, 2019: 4.19%)[74](index=74&type=chunk) [16 Trade and Other Payables and Accrued Expenses](index=41&type=section&id=16%20Trade%20and%20Other%20Payables%20and%20Accrued%20Expenses) As of June 30, 2020, total trade and other payables and accrued expenses amounted to HKD 1.399 billion, with trade payables over 60 days old accounting for HKD 135 million and retention payables of HKD 248 million Ageing Analysis of Trade and Other Payables and Accrued Expenses | Item | June 30, 2020 (HKD thousand) | December 31, 2019 (HKD thousand) | | :--- | :--- | :--- | | Trade payables: 0 – 30 days | 875,868 | 800,389 | | Trade payables: 31 – 60 days | 26,570 | 21,618 | | Trade payables: Over 60 days | 135,386 | 138,011 | | Retention payables | 248,286 | 249,052 | | Other payables and accrued expenses | 113,038 | 178,916 | | **Total** | **1,399,148** | **1,387,986** | - As of June 30, 2020, retention payables expected to be due after twelve months amounted to approximately **HKD 120,578,000**[76](index=76&type=chunk) [17 Share Capital](index=41&type=section&id=17%20Share%20Capital) As of June 30, 2020, the company's issued and fully paid share capital consisted of 2,155,545,000 ordinary shares of HKD 0.01 each, totaling HKD 21.555 million Issued and Fully Paid Share Capital | Item | Number of Shares (thousand shares) | Amount (HKD thousand) | | :--- | :--- | :--- | | Ordinary shares of HKD 0.01 each | 2,155,545 | 21,555 | [18 Commitments](index=42&type=section&id=18%20Commitments) As of June 30, 2020, the Group's capital commitments for property, plant, and equipment under construction, contracted but not provided for in the condensed consolidated financial statements, amounted to HKD 19.306 million Contracted but Unrecognized Commitments | Item | June 30, 2020 (HKD thousand) | December 31, 2019 (HKD thousand) | | :--- | :--- | :--- | | Construction in progress for property, plant and equipment | 19,306 | 30,821 | [19 Related Party Transactions](index=42&type=section&id=19%20Related%20Party%20Transactions) In H1 2020, the Group engaged in various related party transactions with group companies, including receiving engineering fees of HKD 545 million and service income of HKD 31.925 million Overview of Related Party Transactions | Item | H1 2020 (HKD thousand) | H1 2019 (HKD thousand) | | :--- | :--- | :--- | | Engineering fees received from group companies | 545,397 | 730,796 | | Service income received from group companies | 31,925 | 18,592 | | Insurance service fees paid to group companies | 7,198 | 8,363 | | Material costs paid to group companies | 3,164 | 1,810 | | Machinery rental fees paid to group companies | 1,597 | 3,627 | Other Information [Interim Dividend](index=43&type=section&id=Interim%20Dividend) The Board does not recommend an interim dividend for the six months ended June 30, 2020 - The Board does not recommend an interim dividend for the six months ended June 30, 2020[80](index=80&type=chunk) [Share Capital](index=43&type=section&id=Share%20Capital) As of June 30, 2020, the company's total issued share capital comprised 2,155,545,000 ordinary shares of HKD 0.01 each - As of June 30, 2020, the company's total issued share capital was **2,155,545,000** ordinary shares of **HKD 0.01** each[80](index=80&type=chunk) [Share Options](index=43&type=section&id=Share%20Options) The company's share option scheme adopted in 2010 concluded on March 29, 2020, with no share options granted, exercised, cancelled, or lapsed during the six months ended June 30, 2020 - The company's share option scheme concluded on March 29, 2020[81](index=81&type=chunk) - During the six months ended June 30, 2020, no directors, chief executives, group employees, or other participants were granted or exercised share options, nor were any share options cancelled or lapsed[81](index=81&type=chunk) - As of January 1, 2020, and June 30, 2020, there were no outstanding share options under the scheme[81](index=81&type=chunk) [Directors' Interests and Short Positions in Shares, Underlying Shares and Debentures](index=44&type=section&id=Directors%27%20Interests%20and%20Short%20Positions%20in%20Shares%2C%20Underlying%20Shares%20and%20Debentures) As of June 30, 2020, certain directors held long positions in the company's shares, including Zhang Haipeng, Wu Mingqing, and Huang Jiang, and also held A-share interests in China State Construction Engineering Corporation Limited [Interests and Short Positions in Shares, Underlying Shares and Debentures of the Company](index=44&type=section&id=Interests%20and%20Short%20Positions%20in%20Shares%2C%20Underlying%20Shares%20and%20Debentures%20of%20the%20Company) As of June 30, 2020, Directors Zhang Haipeng, Wu Mingqing, and Huang Jiang held long positions in the company's shares, representing 0.143%, 0.232%, and 0.139% of the issued shares, respectively Directors' Long Positions in the Company's Shares | Director Name | Capacity | Nature of Interest | Number of Ordinary Shares Held | Percentage of Issued Shares | | :--- | :--- | :--- | :--- | :--- | | Zhang Haipeng | Beneficial owner | Personal interest | 3,078,000 | 0.143% | | Wu Mingqing | Beneficial owner | Personal interest | 5,000,000 | 0.232% | | Huang Jiang | Beneficial owner | Personal interest | 3,000,000 | 0.139% | [Interests and Short Positions in Shares, Underlying Shares and Debentures of Associated Corporations](index=45&type=section&id=Interests%20and%20Short%20Positions%20in%20Shares%2C%20Underlying%20Shares%20and%20Debentures%20of%20Associated%20Corporations) As of June 30, 2020, Zhang Haipeng, Wu Mingqing, Wang Hai, and Huang Jiang held A-share interests in China State Construction Engineering Corporation Limited as beneficial owners, granted under CSCEC's share incentive scheme - Mr Zhang Haipeng holds **774,000** A-shares of China State Construction Engineering Corporation Limited ("CSCEC")[84](index=84&type=chunk) - Mr Wu Mingqing holds **98,000** A-shares of CSCEC[84](index=84&type=chunk) - Mr Wang Hai holds **210,000** A-shares of CSCEC; Mr Huang Jiang holds **210,000** A-shares of CSCEC[84](index=84&type=chunk) - All interests in CSCEC A-shares were granted by CSCEC under its share incentive scheme[84](index=84&type=chunk) [Substantial Shareholders' Interests and Short Positions in Shares and Underlying Shares of the Company](index=46&type=section&id=Substantial%20Shareholders%27%20Interests%20and%20Short%20Positions%20in%20Shares%20and%20Underlying%20Shares%20of%20the%20Company) As of June 30, 2020, Glory Base Holdings Limited held 1,596,403,279 ordinary shares, representing 74.06% of the issued shares, with China State Construction International Holdings Limited, China Overseas Holdings Limited, China State Construction Engineering Corporation Limited, and China State Construction Group Co Ltd deemed to have interests in the same block of shares Substantial Shareholders' Long Positions in the Company's Shares | Shareholder Name | Capacity | Number of Ordinary Shares Held | Percentage of Issued Shares | | :--- | :--- | :--- | :--- | | Glory Base Holdings Limited | Beneficial owner | 1,596,403,279 | 74.06% | | China State Construction International Holdings Limited | Interest in controlled corporation | 1,596,403,279 | 74.06% | | China Overseas Holdings Limited | Interest in controlled corporation | 1,596,403,279 | 74.06% | | China State Construction Engineering Corporation Limited | Interest in controlled corporation | 1,596,403,279 | 74.06% | | China State Construction Group Co Ltd | Interest in controlled corporation | 1,596,403,279 | 74.06% | - Glory Base is a wholly-owned subsidiary of China State Construction International, which is approximately **64.66%** owned by China Overseas Holdings, a wholly-owned subsidiary of CSCEC, which is a subsidiary of China State Construction Group[87](index=87&type=chunk) - Pursuant to the Securities and Futures Ordinance, China State Construction International, China Overseas Holdings, CSCEC, and China State Construction Group are each deemed to have an interest in the same block of shares held by Glory Base[87](index=87&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=47&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company%27s%20Listed%20Securities) During the six months ended June 30, 2020, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities - During the six months ended June 30, 2020, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[89](index=89&type=chunk) [Corporate Governance](index=47&type=section&id=Corporate%20Governance) The company has complied with all code provisions of the Corporate Governance Code set out in Appendix 14 of the HKEX Listing Rules throughout the six months ended June 30, 2020 - The company has complied with all code provisions of the Corporate Governance Code set out in Appendix 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited throughout the six months ended June 30, 2020[89](index=89&type=chunk) [Directors' Securities Transactions](index=47&type=section&id=Directors%27%20Securities%20Transactions) The company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers, and all directors have confirmed compliance with the Model Code for all securities transactions during the reporting period - The company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers[90](index=90&type=chunk) - All directors have confirmed compliance with the Model Code for all securities transactions conducted during the accounting period covered by this interim report[90](index=90&type=chunk) [Review of Accounts](index=47&type=section&id=Review%20of%20Accounts) The Audit Committee, comprising three independent non-executive directors, has reviewed the unaudited condensed consolidated financial statements of the company and its subsidiaries for the six months ended June 30, 2020 - The Audit Committee, comprising three independent non-executive directors, has reviewed the unaudited condensed consolidated financial statements of the company and its subsidiaries for the six months ended June 30, 2020[91](index=91&type=chunk) [Changes in Directors' Information](index=47&type=section&id=Changes%20in%20Directors%27%20Information) Subsequent to the publication date of the 2019 Annual Report, Mr Zhang Haipeng was appointed as a director of China Overseas Holdings Limited - Mr Zhang Haipeng was appointed as a director of China Overseas Holdings Limited[91](index=91&type=chunk)