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)

Company Overview [Company Profile and Strategy](index=2&type=section&id=Company%20Profile%20and%20Strategy) China State Construction Development Holdings Limited upholds core values of integrity, innovation, pragmatism, and excellence, providing high-end curtain wall and building facade solutions as a global leader in specialized engineering - The company's core values are "integrity, innovation, pragmatism, and excellence," with a business philosophy of "quality assurance, value creation"[4](index=4&type=chunk) - The company is committed to sustainable development, aiming to become a "modern international group driven by traditional and new businesses"[4](index=4&type=chunk) - The company provides one-stop curtain wall and building facade solutions for high-end property development projects, operating globally across North America, Greater China, Australia, and the UK[20](index=20&type=chunk) [2019 Annual Milestones](index=8&type=section&id=2019%20Annual%20Milestones) In 2019, China State Construction Development Holdings Limited underwent a name change, completed several infrastructure and thermal power operations acquisitions, secured significant construction projects, deepened internal synergy, and actively fulfilled social responsibilities - On January 7, the company announced a proposed acquisition of all issued shares and related shareholder loans of VALUE IDEA INVESTMENTS LIMITED and Futian Enterprise Limited (Nanchang Two Bridges Infrastructure), and a proposed change of company name[33](index=33&type=chunk) - On April 11, the company's English name changed from "FAR EAST GLOBAL GROUP LIMITED" to "CHINA STATE CONSTRUCTION DEVELOPMENT HOLDINGS LIMITED," and its Chinese name changed from "远东环球集团有限公司" to "中国建筑兴业集团有限公司"[33](index=33&type=chunk) - On October 14, the company announced a proposed acquisition of all issued shares and remaining domestic interests of China Overseas Public Utilities Investment Co., Ltd. for a total consideration of HKD 673.58 million[41](index=41&type=chunk) - On December 30, the acquisition of all registered capital of Shenyang Huanggu Thermal Power Co., Ltd. was completed[42](index=42&type=chunk) [Overview of Major Ongoing Projects](index=15&type=section&id=Overview%20of%20Major%20Ongoing%20Projects) The company has numerous significant ongoing engineering projects globally, including mainland China, Hong Kong, Macau and other regions, the UK, and North America, covering residential, commercial, hospital, and public buildings, with contract values ranging from tens to hundreds of millions of HKD, and estimated completion years primarily between 2020 and 2023 Major Ongoing Facade Engineering Projects (Partial) | Project Name | Project Type | Estimated Total Contract Value (HKD millions) | Estimated Completion Year | | :------- | :------- | :------------------------ | :----------- | | Shenzhen Huawei Production Center G1 Building Renovation Project | Commercial | 108.8 | 2021 | | 2 Murray Road, Central, Hong Kong | Commercial | 636.0 | 2023 | | City Road, London, UK | Residential | 486.2 | 2021 | | The One, Toronto, Canada | Residential | 533.2 | 2021 | Financial Performance [Financial Summary](index=6&type=section&id=Financial%20Summary) In fiscal year 2019, the company achieved steady growth in turnover, but profit attributable to owners of the company slightly decreased due to a one-off factory relocation expense, with basic earnings per share also declining and total annual dividends at HKD 1.2 cents per share, while total assets and equity attributable to owners of the company both increased Key Financial Data for Fiscal Years 2015-2019 (HKD thousands) | Indicator | 2015 | 2016 | 2017 | 2018 (Restated) | 2019 | | :--- | :----- | :----- | :----- | :------------ | :----- | | Turnover | 3,151,779 | 3,451,152 | 3,755,581 | 4,243,167 | 4,619,412 | | Profit attributable to owners of the company | 265,483 | 118,900 | 161,714 | 182,780 | 175,560 | | Total assets | 5,492,964 | 5,810,264 | 6,437,557 | 6,739,198 | 7,053,994 | | Equity attributable to owners of the company | 2,341,823 | 1,511,538 | 1,605,457 | 968,556 | 1,058,513 | | Basic earnings per share (HK cents) | 12.32 | 5.52 | 7.50 | 8.48 | 8.14 | | Dividends (HK cents) | 1.2 | 1.6 | 2.0 | 2.2 | 1.2 | - In 2019, construction engineering business accounted for **81% of segment revenue**, while operation management business accounted for **19%**[30](index=30&type=chunk) [Overall Performance](index=28&type=section&id=Overall%20Performance) In fiscal year 2019, the Group's total revenue increased by 8.9% to HKD 4.619 billion, but profit attributable to shareholders decreased by 4.0% to HKD 176 million due to a one-off factory relocation expense; excluding this expense, core business profit grew by 46.6%, and the company further expanded its operation management business through acquisitions of Nanchang Two Bridges Infrastructure and Shenyang Huanggu Thermal Power businesses - The Group's total revenue reached **HKD 4.619 billion**, an **8.9% increase** compared to the previous year (restated)[79](index=79&type=chunk) - Profit attributable to shareholders was **HKD 176 million**, a **4.0% decrease** compared to the previous year (restated)[79](index=79&type=chunk) - Excluding the one-off factory relocation expense of **HKD 42 million**, core business profit was **HKD 218 million**, a **46.6% increase** compared to the previous year's un-restated profit attributable to owners of the Group[79](index=79&type=chunk) - Basic earnings per share were **HKD 8.14 cents**, a **4.0% decrease** compared to the previous year's basic earnings per share[79](index=79&type=chunk) - During the year, the acquisition of Nanchang Bridge, Nanchang China Overseas New Bayi Bridge operation management businesses, and Shenyang Huanggu Thermal Power operation business was completed, with total considerations of **HKD 295 million** and **HKD 674 million**, respectively[79](index=79&type=chunk) [Segment Analysis](index=29&type=section&id=Segment%20Analysis) In fiscal year 2019, facade engineering business revenue grew steadily, but operating profit decreased due to a one-off factory relocation expense; general contracting business revenue also saw robust growth, yet increased construction costs led to reduced profit, while operation management business significantly increased both revenue and operating profit, benefiting from newly acquired projects Segment Revenue and Operating Profit for Fiscal Years 2018-2019 (HKD thousands) | Segment Business | 2019 Revenue | 2018 Revenue (Restated) | 2019 Operating Profit | 2018 Operating Profit (Restated) | | :------- | :--------- | :---------------- | :------------- | :-------------------- | | Facade Engineering | 2,786,000 | 2,518,000 | 123,000 | 144,000 | | General Contracting Business | 941,000 | 851,000 | 47,000 | 64,000 | | Operation Management Business | 893,000 | 874,000 | 199,000 | 123,000 | - Operating profit for facade engineering business decreased primarily due to a one-off factory relocation expense of **HKD 42 million** from the closure of factories in Shenzhen, China, and Miami, USA, and new projects awarded in 2019 being in early construction stages[80](index=80&type=chunk) - Profit for general contracting business declined mainly due to increased construction costs for certain projects[81](index=81&type=chunk) - Operation management business revenue and operating profit grew, benefiting from contributions from newly acquired Shenyang Huanggu, Nanchang China Overseas New Bayi Bridge, and Nanchang Bridge[82](index=82&type=chunk) - Administrative expenses increased by **15.9% to HKD 248 million**, mainly due to the acquisition of Shenyang Huanggu and the restructuring of North American business units[82](index=82&type=chunk) - Finance costs rose to **HKD 39 million** (2018 restated: HKD 29 million) due to increased bank borrowings[83](index=83&type=chunk) [New Contracts and Projects in Progress](index=30&type=section&id=New%20Contracts%20and%20Projects%20in%20Progress) In 2019, the Group secured 31 new contracts with a total contract value of HKD 5.054 billion, with Asia Pacific and Greater China regions accounting for 90%; as of year-end, the total contract value of projects in progress was HKD 15.279 billion, with outstanding contract value of HKD 8.196 billion - In 2019, a total of **31 projects** were secured, with a total contract value of **HKD 5.054 billion**, achieving the annual target[65](index=65&type=chunk)[84](index=84&type=chunk) - As of December 31, 2019, the total contract value of projects in progress was **HKD 15.279 billion**, with outstanding contract value of **HKD 8.196 billion**[66](index=66&type=chunk)[84](index=84&type=chunk) New and Outstanding Contract Values in 2019 (HKD billions) | Segment Business | New Contract Value | Outstanding Contract Value (Total Contract Value) | Outstanding Contract Value (Uncompleted Contract Value) | | :------- | :--------- | :-------------------- | :-------------------- | | Glass Curtain Wall | 4.538 | 12.051 | 6.956 | | Building Construction Engineering | 0.016 | 2.362 | 0.724 | | Operation Management | 0.500 | 0.866 | 0.516 | | **Total** | **5.054** | **15.279** | **8.196** | [Liquidity and Financial Resources](index=30&type=section&id=Liquidity%20and%20Financial%20Resources) As of December 31, 2019, the Group's cash and cash equivalents totaled HKD 827 million, with total borrowings of HKD 868 million, resulting in a net gearing ratio of approximately 3.9%, indicating a sound financial position, further supported by sufficient unutilized bank credit facilities of HKD 2.051 billion for future business development - As of December 31, 2019, cash and cash equivalents totaled **HKD 827 million** (2018 restated: HKD 697 million)[69](index=69&type=chunk)[86](index=86&type=chunk) - Total borrowings were **HKD 868 million** (2018 restated: HKD 750 million), with approximately **44% denominated in HKD**, **6% in CAD**, and **50% in USD**[69](index=69&type=chunk)[86](index=86&type=chunk) - The net gearing ratio decreased from **5.5%** in 2018 (restated) to **3.9%** in 2019, indicating a sound financial position[69](index=69&type=chunk)[86](index=86&type=chunk)[326](index=326&type=chunk) - The Group had committed but unutilized credit facilities and performance bonds totaling **HKD 2.051 billion**[69](index=69&type=chunk)[86](index=86&type=chunk) Total Borrowings Maturity Profile in 2019 (HKD thousands) | Maturity | December 31, 2019 | | :------- | :------------- | | Repayable on demand or within one year | 655,780 | | More than one year but not exceeding two years | 200,494 | | More than two years but not exceeding five years | 11,264 | | Over five years | — | | **Total Borrowings** | **867,538** | [Dividend Policy](index=19&type=section&id=Dividend%20Policy) Considering the future development needs of the operation management business, the Board of Directors recommended not to declare a final dividend, with the total annual dividend amounting to HKD 1.2 cents per share, in line with the company's policy to distribute approximately 30% of distributable profit annually, paid semi-annually - The Board of Directors recommended not to declare a final dividend, with the total annual dividend amounting to **HKD 1.2 cents per share**[59](index=59&type=chunk) - The company's dividend policy is to distribute approximately **30% of distributable profit** semi-annually[125](index=125&type=chunk) Corporate Governance and Risk Management [Board of Directors and Committees](index=12&type=section&id=Board%20of%20Directors%20and%20Committees) The company's Board of Directors, led by Chairman and Non-executive Director Mr. Zhang Haipeng, has established an Audit Committee, Remuneration Committee, and Nomination Committee to ensure a robust corporate governance structure, with reasonable committee compositions and independent non-executive directors playing a crucial role Board of Directors Members | Position | Name | | :--- | :--- | | Chairman and Non-executive Director | Zhang Haipeng | | Executive Directors | Wu Mingqing (Vice Chairman and CEO), Wang Hai, Chen Shanhong (resigned on March 18, 2020) | | Non-executive Director | Huang Jiang | | Independent Non-executive Directors | Zhou Jinsong, HONG Winn, Kwong Sum Yee | Committee Composition | Committee | Chairman | Members | | :--- | :--- | :--- | | Audit Committee | Zhou Jinsong | HONG Winn, Kwong Sum Yee | | Remuneration Committee | Zhou Jinsong | Zhang Haipeng, Wu Mingqing, HONG Winn, Kwong Sum Yee | | Nomination Committee | Zhang Haipeng | Wu Mingqing, Zhou Jinsong, HONG Winn, Kwong Sum Yee | [Company Information](index=13&type=section&id=Company%20Information) The company is incorporated in the Cayman Islands with its principal place of business in Hong Kong, audited by PricewaterhouseCoopers, with legal counsel provided by Mayer Brown, and its shares are listed under stock code 00830 with an official website - The company's registered office is in the Cayman Islands, and its head office and principal place of business in Hong Kong are located at 16/F, Eight Commercial Tower, 8 Sun Yip Street, Chai Wan, Hong Kong[46](index=46&type=chunk) - The auditor is PricewaterhouseCoopers, and the legal counsel is Mayer Brown[46](index=46&type=chunk) - The company's stock code is **00830**, and its website is www.cscd.com.hk[46](index=46&type=chunk) [Corporate Governance Framework](index=22&type=section&id=Corporate%20Governance%20Framework) The Group adheres to corporate governance principles of integrity, honesty, transparency, and efficiency, strictly complying with laws, regulations, and listing rules, continuously improving its governance structure, policy system, internal control mechanisms, and management systems to ensure good corporate governance, with the Board committed to maintaining high standards of business ethics and a healthy corporate culture while proactively adjusting business strategies to respond to market changes - The Group adheres to corporate governance principles of "integrity, honesty, transparency, and efficiency," strictly complying with laws, regulations, and listing rules[66](index=66&type=chunk) - The Board of Directors is committed to maintaining high standards of business ethics, a healthy corporate culture, and good corporate governance practices, while proactively adjusting business strategies to respond to market changes[67](index=67&type=chunk) [Internal Control and Risk Management](index=23&type=section&id=Internal%20Control%20and%20Risk%20Management) The Group continuously improves its internal control management system to enhance risk prediction and control effectiveness, strengthening supervision over key areas and critical matters to prevent operational risks, while also monitoring overseas market policies and exchange rate trends, concentrating resources on core cities to mitigate political and exchange rate risks - The Group continuously improves its internal control management system to enhance risk prediction capabilities and control effectiveness, strengthening supervision over key areas and critical matters[68](index=68&type=chunk) - The Group monitors overseas market policies and exchange rate trends, concentrating resources on core cities in Europe and America to mitigate political and exchange rate risks[68](index=68&type=chunk) [Financial Management](index=23&type=section&id=Financial%20Management) In 2019, the Group strengthened financial management, improved capital utilization efficiency, actively explored financing channels, and accelerated project receivables collection to enhance capital turnover, with cash and cash equivalents of HKD 827 million, total borrowings of HKD 868 million, and a net gearing ratio of 3.9% at year-end, indicating a sound financial position - In 2019, financial management was strengthened to improve capital utilization efficiency, actively explore financing channels, and accelerate project receivables collection to enhance capital turnover[69](index=69&type=chunk) - As of December 31, 2019, cash and cash equivalents totaled **HKD 827 million**, total borrowings were **HKD 868 million**, and the net gearing ratio was **3.9%**[69](index=69&type=chunk) - The Group had committed but unutilized credit facilities and performance bonds totaling **HKD 2.051 billion**, indicating a sound financial position[69](index=69&type=chunk) [Human Resources Management](index=23&type=section&id=Human%20Resources%20Management) The Group adheres to a people-oriented management philosophy, prioritizing talent acquisition, retention, and development through comprehensive systems for recruitment, training, performance appraisal, and compensation incentives to enhance employee satisfaction and work efficiency, implementing a lecturer system, refining KPI assessments, and continuously promoting various incentive programs, with a total workforce of 3,197 employees at year-end - The Group adheres to a people-oriented approach, prioritizing talent acquisition, retention, and development through comprehensive systems for recruitment, training, performance appraisal, and compensation incentives to enhance employee satisfaction and work efficiency[70](index=70&type=chunk) - During the year, a lecturer system was implemented to enrich training and communication methods, and the KPI assessment system continued to be refined[70](index=70&type=chunk) - In Hong Kong, Macau, and mainland China, initiatives such as the "Site Target Management Responsibility System" and "Design-Build Incentive System" were continuously promoted to enhance employee motivation and work efficiency[70](index=70&type=chunk) - As of December 31, 2019, the Group had a total of **3,197 employees**[70](index=70&type=chunk) Environmental, Social and Governance (ESG) Report [About This Report](index=46&type=section&id=About%20This%20Report) This report is prepared in accordance with Appendix 27 "Environmental, Social and Governance Reporting Guide" of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, covering the Group's curtain wall, general contracting, and supervision businesses from January 1 to December 31, 2019, with operations in Hong Kong, the Pearl River Delta, Shanghai, the United States, and Canada, and the Group values stakeholder communication, establishing multiple channels to listen to needs and opinions - The report covers the Group's curtain wall, general contracting, and supervision businesses from **January 1 to December 31, 2019**[131](index=131&type=chunk) - Operations are located in Hong Kong, the Pearl River Delta, Shanghai, the United States, and Canada, among other regions[131](index=131&type=chunk) - The Group values stakeholder communication, establishing multiple channels including company newsletters, employee training, customer satisfaction surveys, and shareholder meetings to listen to needs and opinions[133](index=133&type=chunk) [Sustainable Development Governance](index=47&type=section&id=Sustainable%20Development%20Governance) The Group established a Sustainable Development Management Committee in 2017 and formulated the "Sustainable Development Management Measures," actively introducing sustainable operating models, identifying material issues, and coordinating stakeholder communication, while complying with environmental laws and regulations, reducing office waste and carbon emissions through "Green Office Initiative" and "Green Office Guidelines," and implementing low-carbon energy-saving designs, centralized procurement, and factory prefabrication in production to minimize environmental impact - The Group established a Sustainable Development Management Committee in **2017** and formulated the "Sustainable Development Management Measures," committed to implementing sustainable development concepts[135](index=135&type=chunk) - The Group has "China State Construction Development Green Office Initiative" and "Green Office Guidelines," which are reviewed and updated annually to reduce office waste and carbon emissions[138](index=138&type=chunk) - Sustainable development measures are implemented in production, including curtain wall product design incorporating low-carbon energy-saving features (high light transmittance, low heat reflection glass), primarily sourced from recyclable materials[140](index=140&type=chunk) - Centralized procurement is practiced to reduce transportation carbon emissions, unitized curtain wall products are factory-processed to reduce on-site waste, and leftover engineering materials are reused[140](index=140&type=chunk) - Office waste is reduced through waste sorting and paper recycling, and production plant waste is entrusted to recycling organizations for reuse[143](index=143&type=chunk) [Employment and Labor Practices](index=49&type=section&id=Employment%20and%20Labor%20Practices) The Group regards employees as a vital asset, strictly adhering to employment laws and regulations, prohibiting child or forced labor, and maintaining standard recruitment processes and regular review mechanisms, emphasizing equal employment opportunities with an employee handbook safeguarding rights related to remuneration, working hours, holidays, and anti-discrimination; to ensure employee safety and health, the Group provides medical coverage, regular health check-ups, safety training, and safety inspections, and has established a Safety Committee, while also focusing on employee development through internal and external training subsidies and organizing employee activities to foster team spirit - Strict compliance with employment-related laws and regulations, absolute prohibition of child or forced labor, and established standard recruitment processes and regular review practices[145](index=145&type=chunk) - Emphasis on equal employment opportunities, with the employee handbook covering policies on remuneration, dismissal, recruitment, promotion, working hours, holidays, equal opportunities, diversity, and anti-discrimination[147](index=147&type=chunk) - To ensure employee safety and health, the company provides corporate medical insurance, organizes regular employee health check-ups, safety training, and safety inspections, and has established a Safety Committee[148](index=148&type=chunk) - Internal training, subsidies for external training courses, and examination leave are provided, along with subsidies for professional society membership fees and special bonuses for obtaining professional qualifications[149](index=149&type=chunk) - Regular employee recreation days, "Company Day" events, and participation in "Community Chest Walk for Millions" are organized to strengthen team spirit and alleviate work pressure[150](index=150&type=chunk) [Operational Practices and Product Responsibility](index=52&type=section&id=Operational%20Practices%20and%20Product%20Responsibility) The Group adheres to a business philosophy of "quality assurance, value creation," strictly complying with regulations and customer requirements, with its production facilities certified under ISO 9001:2015 Quality Management System, prioritizing customer satisfaction through annual surveys and a complaint handling mechanism, while in supply chain management, the Group regularly reviews supplier expenditure data and updates its supplier roster annually, using environmental, safety, quality, and reputation as selection criteria, and is committed to integrity, strictly prohibiting corruption and bribery, and providing anti-corruption training - Production facilities have obtained **ISO 9001:2015** quality management system certification, with design managers designing curtain walls in accordance with technical requirements from the Hong Kong Buildings Department and architects[154](index=154&type=chunk) - Emphasis on and protection of intellectual property rights, with the company's ventilated waterproof louvers having passed tests meeting US specifications and possessing independent intellectual property rights[154](index=154&type=chunk) - An annual customer satisfaction survey is conducted at year-end, and a customer complaint handling mechanism is in place; no significant product or service complaints were received during the reporting period[155](index=155&type=chunk) - The Procurement Department updates the supplier roster annually, using environmental protection, safety, supply quality, past service performance, and reputation as selection criteria[156](index=156&type=chunk) - The Group is committed to integrity, absolutely not tolerating any corruption or bribery, and provides anti-corruption training[158](index=158&type=chunk) [Community Investment and Social Inclusion](index=53&type=section&id=Community%20Investment%20and%20Social%20Inclusion) The Group actively participates in community welfare activities, promoting the concept of equality and inclusion through corporate efforts, encouraging employees to engage in diverse community charity, cultural, and environmental promotion activities, collaborating annually with the registered charity "Sense" to organize inclusive events, and participating in social mutual aid activities such as the "Community Chest Walk for Millions," while receiving multiple awards and recognitions for its environmental protection and social responsibility efforts - Active participation in community welfare activities, promoting the concept of equality and inclusion through corporate efforts, and encouraging employees to engage in diverse community charity, cultural, and environmental promotion activities[158](index=158&type=chunk) - Annual collaboration with the registered charity "Sense" to organize inclusive activities, such as the "Inclusive Artists" charity workshop held at Tung Wah Group of Hospitals S.C. Gaw Memorial College on October 26, 2019[159](index=159&type=chunk) - Participation in the volunteer rice dumpling distribution event organized by China Overseas Group and annual participation in the "Community Chest Walk for Millions" event[160](index=160&type=chunk) Major Awards and Recognitions in 2019 | Category | Award or Recognition | Awarding Body | | :--- | :------- | :------- | | Environmental Protection | "Green Office 3+" and "Healthy Workplace" Labels | World Green Organisation | | Social Responsibility | "Caring Company 5+" Label | The Hong Kong Council of Social Service | | Social Responsibility | "Hong Kong Corporate Citizenship Program — Corporate Citizen Recognition 2020" Label | Hong Kong Productivity Council | [ESG Performance Indicators](index=56&type=section&id=ESG%20Performance%20Indicators) In 2019, the Group's environmental performance included a total of 0.005 tons of hazardous waste and 5,095 tons of non-hazardous waste, with nitrogen oxides emissions of 790 tons; total greenhouse gas emissions were 3,368 tons of CO2 equivalent, a 36.2% year-on-year decrease, total energy consumption was 6,449 thousand kWh, and total water consumption was 62,585 tons, while in social performance, the total number of employees was 3,197, with a turnover rate of 24.9%, and 952 lost workdays due to occupational injuries Waste Disposal Volume in 2019 | Waste Category | Total Volume (tons) | Density (tons/employee) | | :------- | :------- | :------------------ | | Hazardous Waste | 0.005 | 0.000002 | | Non-hazardous Waste | 5,095 | 1.59 | Exhaust Gas Emissions in 2019 (tons) | Type of Exhaust Gas Emission | Emission Volume | | :------- | :----- | | Sulfur Oxides | 4 | | Nitrogen Oxides | 790 | | Particulate Matter | 0.06 | Greenhouse Gas Emissions and Energy Consumption in 2019 | Indicator | Value | | :--- | :--- | | Total Greenhouse Gas Emissions (CO2 equivalent) | 3,368 tons | | Greenhouse Gas Density (CO2 equivalent/employee) | 1.05 | | Total Energy Consumption | 6,449 thousand kWh | | Energy Consumption Density (thousand kWh/employee) | 2.02 | | Total Water Consumption | 62,585 tons | | Water Consumption Density (tons/employee) | 19.6 | - Total greenhouse gas emissions in 2019 decreased from **5,279 tons** in the previous year to **3,368 tons**, a **36.2% reduction**, primarily due to the Group's various green policies to reduce energy consumption[168](index=168&type=chunk) Employee Count and Turnover Rate in 2019 | Category | Total Employees | Employees Turnover | Employee Turnover Rate | | :--- | :------- | :--------- | :----------- | | Total | 3,197 | 797 | 24.9% | - In 2019, there were **0 work-related fatalities**, and **952 lost workdays** due to occupational injuries[171](index=171&type=chunk) Directors' Report [Principal Activities and Performance Allocation](index=60&type=section&id=Principal%20Activities%20and%20Performance%20Allocation) The company's principal activities are investment holding and providing corporate management services, with its major subsidiaries engaged in general contracting, facade engineering, and operation management services; in 2019, the Group achieved a profit of HKD 176 million, and the Board of Directors recommended no final dividend, with a total annual dividend of HKD 1.2 cents per share - The company's principal activities are investment holding and providing corporate management services, with major subsidiaries engaged in general contracting, facade engineering, and operation management services[173](index=173&type=chunk) - Profit attributable to owners of the company for 2019 was **HKD 176 million**[174](index=174&type=chunk) - The Board of Directors did not recommend a final dividend for 2019, with a total annual dividend of **HKD 1.2 cents per share**, amounting to **HKD 25.867 million**[174](index=174&type=chunk) [Principal Risks and Uncertainties](index=60&type=section&id=Principal%20Risks%20and%20Uncertainties) The Group faces various risks including foreign exchange, interest rate, market, bidding, project implementation, supply chain, talent, business conduct, and legal risks, which are managed and mitigated through measures such as natural hedging, prudent bidding strategies, improved project management, establishing long-term partnerships, talent development, and a robust risk assessment system Principal Risks and Management Measures | Risk Category | Risk Description | Management Measures | | :------- | :------- | :------- | | Foreign Exchange | Operating units conduct sales or purchases in non-functional currencies, primarily involving USD, RMB, AUD, CAD, and GBP. | Closely monitor exchange rate movements and adopt natural hedging strategies, currently without a formal hedging policy. | | Interest Rate | Interest rate risk is primarily associated with borrowings bearing floating interest rates. | Develop policies and procedures to assess, record, and monitor interest rate risk, considering hedging when necessary. | | Market | Macroeconomic, political changes, or new infrastructure spending developments may affect projects. | Strategy focuses on more flexible and stable markets, broad global market involvement, and continuous business model improvement. | | Bidding | Ability to identify, price, and implement profitable orders. | Follow strict estimation and bidding procedures, with defined authorization levels, and conduct post-bid reviews. | | Project Implementation | Complex design, engineering, and construction risks of construction projects. | Clearly defined operating procedures, identification, quantification, and mitigation measures, and enforcement of minimum project standards. | | Supply Chain | High reliance on supply chain partners, facing financial, technical, quality, safety, and ethical compliance risks. | Establish long-term partnerships, develop contingency plans, select preferred suppliers, and avoid over-reliance. | | Talent | Failure to recruit and retain excellent management personnel and employees. | Recruit based on competence and leadership, regularly review succession plans, and provide appropriate remuneration and incentives. | | Business Conduct | Risks of fraud, bribery, or corruption, especially in the construction industry. | A series of risk assessments, due diligence, and procurement controls to detect and minimize risks. | | Legal | Compliance with complex, stringent, and evolving legal, tax, and regulatory requirements. | Supervision by qualified internal personnel and external legal advisors, development of comprehensive policies, guidelines, and manuals, and provision of training. | [Compliance with Relevant Laws and Regulations](index=62&type=section&id=Compliance%20with%20Relevant%20Laws%20and%20Regulations) The Group is committed to complying with all applicable laws and regulations, including industry-specific construction regulations, general environmental, employment, anti-competition, and anti-corruption laws, as well as the Listing Rules for public companies, ensuring compliance through internal controls, approval procedures, and training - The Group is committed to complying with all applicable laws and regulations, including industry-specific construction regulations, general environmental, employment, anti-competition, and anti-corruption laws[180](index=180&type=chunk) - As a listed company, it must comply with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, the Codes on Takeovers and Mergers and Share Buy-backs, and the Securities and Futures Ordinance[180](index=180&type=chunk) - Compliance with all applicable laws and regulations is ensured through internal controls and approval procedures, training, and supervision by designated personnel[180](index=180&type=chunk) [Directors and Senior Management Information](index=63&type=section&id=Directors%20and%20Senior%20Management%20Information) The report lists the directors for the current year and up to the report date, confirming the independence of all independent non-executive directors; the Board is independent of the controlling company, and directors' interests in competing businesses are disclosed, with directors holding interests in company shares and related shares, and a share option scheme in place to incentivize employees - The list of directors includes Mr. Zhang Haipeng (Chairman and Non-executive Director), Mr. Wu Mingqing (Vice Chairman and Chief Executive Officer), Mr. Wang Hai, Mr. Chen Shanhong (resigned), Mr. Huang Jiang (Non-executive Director), and independent non-executive directors Mr. Zhou Jinsong, Mr. Hong Winn, and Ms. Kwong Sum Yee[183](index=183&type=chunk)[184](index=184&type=chunk) - The company has received annual confirmations of independence from all independent non-executive directors and considers each of them to be independent[184](index=184&type=chunk) - Mr. Zhang Haipeng, Mr. Wu Mingqing, Mr. Chen Shanhong, and Mr. Huang Jiang hold directorships and/or senior management positions in the controlling company and/or its subsidiaries, which are engaged in construction, infrastructure investment, and related businesses[186](index=186&type=chunk) Directors' Long Positions in the Company's Shares (December 31, 2019) | 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 | | Chen Shanhong | Beneficial Owner | Personal Interest | 50,000 | 0.002 | | Huang Jiang | Beneficial Owner | Personal Interest | 3,000,000 | 0.139 | - The company has adopted a share option scheme aimed at rewarding or compensating eligible participants and recruiting and retaining outstanding talent; no directors or chief executives were granted or exercised share options during the year ended December 31, 2019[191](index=191&type=chunk)[192](index=192&type=chunk) [Major Shareholders and Connected Transactions](index=67&type=section&id=Major%20Shareholders%20and%20Connected%20Transactions) As of December 31, 2019, Gabo Holdings Limited and its upstream holding companies (China State Construction International, China Overseas Group, China State Construction Engineering Corporation Limited, China State Construction Engineering Corporation) were the company's major shareholders, holding 74.06% of the shares; the report disclosed multiple transactions with related parties, including acquisitions and continuing connected transactions, confirming compliance with listing rule disclosure requirements Major Shareholders' Long Positions in the Company's Shares (December 31, 2019) | Shareholder Name | Capacity | Number of Ordinary Shares Held | Percentage of Issued Shares | | :------- | :--- | :------------- | :----------------- | | Gabo 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 Group 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 Engineering Corporation | Interest in Controlled Corporation | 1,596,403,279 | 74.06 | - In 2019, the Group engaged in multiple connected transactions, including the acquisition of Value Idea Investments Limited and Futian Enterprise Limited, and the acquisition of Shenyang Huanggu Thermal Power Co., Ltd.[204](index=204&type=chunk)[206](index=206&type=chunk) - Continuing connected transactions included subcontracting agreements and operation service agreements with China State Construction Engineering Corporation Limited and China State Construction International Holdings Limited, as well as engineering framework agreements with China Overseas Land & Investment Limited and China Overseas Property Holdings Limited, among others[209](index=209&type=chunk)[211](index=211&type=chunk)[213](index=213&type=chunk)[219](index=219&type=chunk)[222](index=222&type=chunk)[223](index=223&type=chunk)[225](index=225&type=chunk) - The independent non-executive directors have conducted an annual review of all continuing connected transactions and confirmed that they were entered into in the ordinary course of business, on normal commercial terms or better, and were fair and reasonable and in the overall interests of the company's shareholders[226](index=226&type=chunk) [Major Customers and Suppliers](index=68&type=section&id=Major%20Customers%20and%20Suppliers) In 2019, the Group's top five customers accounted for approximately 44.7% of turnover, with the largest customer, a subsidiary of the controlling shareholder, contributing approximately 16.9% of turnover, while the top five suppliers accounted for less than 30% of total purchases - In 2019, the Group's top five customers accounted for approximately **44.7% of the Group's turnover**, with the largest customer, a subsidiary of the company's controlling shareholder, accounting for approximately **16.9% of the Group's turnover**[202](index=202&type=chunk) - The Group's top five suppliers accounted for less than **30% of the Group's total purchases** for the year[202](index=202&type=chunk) [Auditor](index=68&type=section&id=Auditor) The consolidated financial statements for the year ended December 31, 2019, were audited by PricewaterhouseCoopers, and a resolution concerning the appointment of Ernst & Young as the company's auditor will be proposed at the 2020 Annual General Meeting - The consolidated financial statements for the year ended December 31, 2019, were audited by PricewaterhouseCoopers[203](index=203&type=chunk) - A resolution concerning the appointment of Ernst & Young as the company's auditor will be proposed at the 2020 Annual General Meeting[203](index=203&type=chunk) Independent Auditor's Report [Audit Opinion and Basis](index=79&type=section&id=Audit%20Opinion%20and%20Basis) PricewaterhouseCoopers issued an unmodified opinion on the consolidated financial statements of China State Construction Development Holdings Limited for the year ended December 31, 2019, deeming them to present a true and fair view of the Group's financial position, performance, and cash flows in accordance with Hong Kong Financial Reporting Standards, and to be properly prepared in compliance with the Companies Ordinance disclosure requirements, with the audit conducted in accordance with Hong Kong Standards on Auditing and confirming independence - The auditor believes that the consolidated financial statements present a true and fair view of the Group's consolidated financial position as of December 31, 2019, and its consolidated financial performance and consolidated cash flows for the year then ended, in accordance with Hong Kong Financial Reporting Standards[228](index=228&type=chunk) - The audit was conducted in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certified Public Accountants[229](index=229&type=chunk) - The auditor is independent of the Group in accordance with the Code of Ethics for Professional Accountants[230](index=230&type=chunk) [Key Audit Matters](index=80&type=section&id=Key%20Audit%20Matters) The auditor identified three key audit matters: revenue recognition for construction contracts, due to management's significant subjective judgments on estimated revenue, costs, and project progress; recoverability of trade receivables and contract assets, given their material amounts and reliance on management's judgment regarding customer creditworthiness, financial condition, and future events; and the carrying amount of deferred tax assets for Gamma USA, Inc. and impairment assessment of goodwill for Gamma North America, Inc., as these involve significant assumptions such as future profit forecasts and discount rates - Key audit matters include revenue recognition for construction contracts, due to management's significant subjective judgments on estimated project revenue, costs, and progress[231](index=231&type=chunk)[232](index=232&type=chunk) - Key audit matters also include the recoverability of trade receivables and contract assets, as they are the Group's most significant assets, and their recoverability assessment relies on management's significant subjective judgments regarding customer creditworthiness, financial difficulties, historical bad debt records, and future economic conditions[231](index=231&type=chunk)[233](index=233&type=chunk)[234](index=234&type=chunk) - The third key audit matter is the carrying amount of deferred tax assets for Gamma USA, Inc. and the impairment assessment of goodwill for Gamma North America, Inc., due to their material carrying amounts and reliance on significant assumptions such as future taxable profits, revenue growth rates, gross profit margins, and discount rates[231](index=231&type=chunk)[235](index=235&type=chunk)[237](index=237&type=chunk) [Responsibilities of Directors and Governance for Consolidated Financial Statements](index=83&type=section&id=Responsibilities%20of%20Directors%20and%20Governance%20for%20Consolidated%20Financial%20Statements) Directors are responsible for preparing consolidated financial statements that give a true and fair view in accordance with Hong Kong Financial Reporting Standards and the disclosure requirements of the Companies Ordinance, and for internal controls, while also assessing the Group's ability to continue as a going concern; the auditor's objective is to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, exercising professional judgment and maintaining professional skepticism throughout the audit - The company's directors are responsible for preparing consolidated financial statements that give a true and fair view in accordance with Hong Kong Financial Reporting Standards and the disclosure requirements of the Companies Ordinance, and for internal controls[239](index=239&type=chunk) - Directors are responsible for assessing the Group's ability to continue as a going concern and using the going concern basis of accounting[239](index=239&type=chunk) - The auditor's objective is to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error[240](index=240&type=chunk) - The auditor exercises professional judgment and maintains professional skepticism throughout the audit, identifying and assessing the risks of material misstatement[240](index=240&type=chunk) Consolidated Financial Statements [Consolidated Statement of Profit or Loss](index=85&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss) In fiscal year 2019, the Group's turnover was HKD 4.619 billion, with a gross profit of HKD 544 million; profit before tax was HKD 277 million, income tax expense was HKD 109 million, and profit for the year was HKD 168 million, with profit attributable to owners of the company at HKD 176 million and basic earnings per share of 8.14 HK cents Major Data from 2019 Consolidated Statement of Profit or Loss (HKD thousands) | Indicator | 2019 | 2018 (Restated) | | :--- | :----- | :------------ | | Turnover | 4,619,412 | 4,243,167 | | Gross profit | 544,064 | 486,073 | | Profit before tax | 276,913 | 252,208 | | Income tax expense | (109,173) | (73,519) | | Profit for the year | 167,740 | 178,689 | | Profit attributable to owners of the company | 175,560 | 182,780 | | Basic earnings per share (HK cents) | 8.14 | 8.48 | [Consolidated Statement of Comprehensive Income](index=86&type=section&id=Consolidated%20Statement%20of%20Comprehensive%20Income) In fiscal year 2019, the Group's profit for the year was HKD 168 million, with other comprehensive loss primarily from exchange differences on translation of foreign operations amounting to HKD 26.664 million; total comprehensive income for the year was HKD 141 million, of which total comprehensive income attributable to owners of the company was HKD 149 million Major Data from 2019 Consolidated Statement of Comprehensive Income (HKD thousands) | Indicator | 2019 | 2018 (Restated) | | :--- | :----- | :------------ | | Profit for the year | 167,740 | 178,689 | | Exchange differences on translation of foreign operations | (26,664) | (99,652) | | Total comprehensive income for the year, net of tax | 141,076 | 79,037 | | Total comprehensive income attributable to owners of the company | 148,880 | 83,844 | [Consolidated Statement of Financial Position](index=87&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) As of December 31, 2019, the Group's total non-current assets were HKD 2.461 billion, and total current assets were HKD 4.593 billion; total current liabilities were HKD 4.749 billion, and total non-current liabilities were HKD 1.247 billion, with equity attributable to owners of the company at HKD 1.125 billion, and total assets less current liabilities at HKD 2.305 billion Major Data from 2019 Consolidated Statement of Financial Position (HKD thousands) | Indicator | December 31, 2019 | December 31, 2018 (Restated) | | :--- | :------------- | :-------------------- | | Non-current assets | 2,461,154 | 2,315,494 | | Current assets | 4,592,840 | 4,423,704 | | Current liabilities | 4,748,706 | 4,069,372 | | Non-current liabilities | 1,246,775 | 1,701,270 | | Equity attributable to owners of the company | 1,125,325 | 1,027,564 | | Total assets less current liabilities | 2,305,288 | 2,669,826 | [Consolidated Statement of Changes in Equity](index=89&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Equity) As of December 31, 2019, equity attributable to owners of the company was HKD 1.125 billion, an increase from HKD 1.028 billion at the beginning of the year, with changes in equity primarily influenced by profit for the year, foreign currency exchange differences, and dividend payments, and common control combination having a restatement impact on opening equity Major Data from 2019 Consolidated Statement of Changes in Equity (HKD thousands) | Indicator | January 1, 2019 (Restated) | December 31, 2019 | | :--- | :------------------ | :------------- | | Equity attributable to owners of the company | 1,027,564 | 1,125,325 | | Non-controlling interests | (59,008) | (66,812) | | **Total Equity** | **968,556** | **1,058,513** | | Profit/(Loss) for the year | — | 175,560 | | Exchange differences on translation of foreign operations | — | (26,680) | | Dividends paid | — | (51,734) | [Consolidated Statement of Cash Flows](index=90&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) In fiscal year 2019, the Group's net cash generated from operating activities was HKD 404 million, net cash used in investing activities was HKD 277 million, and net cash generated from financing activities was HKD 14.374 million; cash and cash equivalents at the end of the period amounted to HKD 827 million, an increase of HKD 142 million from the beginning of the period Major Data from 2019 Consolidated Statement of Cash Flows (HKD thousands) | Indicator | 2019 | 2018 (Restated) | | :--- | :----- | :------------ | | Net cash generated from operating activities | 404,395 | 379,385 | | Net cash used in investing activities | (276,825) | (285,958) | | Net cash generated from/(used in) financing activities | 14,374 | (50,401) | | Increase in cash and cash equivalents | 141,944 | 43,026 | | Cash and cash equivalents at end of period | 826,576 | 696,736 | - Major non-cash transactions included the acquisition of **100% equity** and shareholder loans of Futian Enterprise Limited and Value Idea Investments Limited, with a total consideration of **HKD 295 million**, of which **HKD 117 million** was settled through amounts payable to group companies[255](index=255&type=chunk) Notes to the Consolidated Financial Statements [General Information and Basis of Preparation](index=92&type=section&id=General%20Information%20and%20Basis%20of%20Preparation) The Group primarily engages in general contracting, facade engineering, and operation management services, with the company incorporated in the Cayman Islands and listed on the Hong Kong Stock Exchange; in 2019, the company's name changed from "Far East Global Group Limited" to "China State Construction Development Holdings Limited," and the consolidated financial statements are prepared on a historical cost basis and going concern assumption, with comparative figures restated due to the acquisition of 100% equity in Shenyang Huanggu Thermal Power Co., Ltd. through a common control combination on December 30, 2019 - The company's name was officially changed from Far East Global Group Limited to China State Construction Development Holdings Limited in **2019**[256](index=256&type=chunk) - The company's immediate holding company is Gabo Holdings Limited, and its ultimate holding company is China State Construction Engineering Corporation[256](index=256&type=chunk) - The consolidated financial statements are prepared on a historical cost basis and a going concern basis[257](index=257&type=chunk) - On December 30, 2019, the Group acquired **100% equity** in Shenyang Huanggu Thermal Power Co., Ltd. through a common control combination, and the comparative figures in the consolidated financial statements have been restated[258](index=258&type=chunk) [Summary of Significant Accounting Policies](index=95&type=section&id=Summary%20of%20Significant%20Accounting%20Policies) This section details the Group's accounting policies for consolidated accounts, foreign currency translation, property, plant and equipment, interests in infrastructure projects, intangible assets, impairment of non-financial assets, financial assets, inventories, trade and other receivables, cash and cash equivalents, trade payables, borrowings, borrowing costs, deferred income, share capital, income tax, provisions, leases, employee benefits, share-based payments, revenue recognition, contingent liabilities and contingent assets, insurance contracts, dividend distribution, and contract-related assets and liabilities, with significant changes in lease accounting due to the adoption of Hong Kong Financial Reporting Standard 16 "Leases" effective January 1, 2019 - Hong Kong Financial Reporting Standard 16 "Leases" was adopted effective **January 1, 2019**, requiring lessees to recognize right-of-use assets and lease liabilities for all leases[262](index=262&type=chunk) - Revenue recognition principle is to recognize revenue when control of goods or services is transferred to the customer, based on the progress of satisfying performance obligations or when the customer obtains control of the asset[310](index=310&type=chunk)[312](index=312&type=chunk) - Revenue from construction contracts is recognized based on project progress, measured by direct measurement of the value of units delivered or survey measurement of work completed[312](index=312&type=chunk) - Revenue from thermal power business includes heating, steam, and electricity supply, as well as connection services, recognized over time at rates specified in contract terms[312](index=312&type=chunk) [Financial Risk Management](index=115&type=section&id=Financial%20Risk%20Management) The Group faces market risks (foreign exchange risk, interest rate risk), credit risk, and liquidity risk, which are managed through natural hedging, regular monitoring, risk diversification, and assessing counterparty creditworthiness; the Group's capital management policy aims to safeguard continuous operation, monitoring capital structure through the net gearing ratio, which decreased to 3.9% in 2019 - The Group faces foreign exchange risk (primarily involving USD and AUD), interest rate risk (from floating rate borrowings), credit risk (from financial assets), and liquidity risk[318](index=318&type=chunk)[319](index=319&type=chunk)[321](index=321&type=chunk)[322](index=322&type=chunk)[323](index=323&type=chunk) - Foreign exchange risk is primarily managed through borrowings denominated in relevant foreign currencies, with no formal foreign currency hedging policy currently in place[320](index=320&type=chunk) - Credit risk is managed by establishing policies to ensure sales to customers with appropriate credit records and regularly reviewing the recoverability of trade debts[322](index=322&type=chunk) - The Group's capital management policy aims to safeguard continuous operation, monitoring capital structure through the net gearing ratio, which decreased from **5.5% to 3.9%** in 2019[325](index=325&type=chunk)[326](index=326&type=chunk) [Critical Accounting Estimates and Judgments](index=119&type=section&id=Critical%20Accounting%20Estimates%20and%20Judgments) The Group's financial statements involve critical accounting estimates and judgments in areas such as the percentage of completion for construction contracts, estimates of foreseeable losses, asset impairment (goodwill, property, plant and equipment), income tax and deferred tax, and impairment of receivables and warranty provisions, all of which significantly impact the financial statements and require management's assessment based on experience and future forecasts - The percentage of completion for construction contracts and estimates of foreseeable losses rely on management's estimates and regular reviews of costs, revenue, and progress[329](index=329&type=chunk)[330](index=330&type=chunk) - Goodwill impairment assessment involves significant judgments and assumptions regarding financial budgets, turnover growth rates, gross profit margins, and discount rates[331](index=331&type=chunk) - The recognition of income tax and deferred tax depends on judgments regarding future taxable profits and the availability of tax loss offsets[333](index=333&type=chunk) - Impairment assessments for receivables, contract assets, and amounts due from related parties are conducted on a forward-looking basis and require significant estimates and judgments regarding probability of default and future economic conditions[334](index=334&type=chunk) - Warranty provisions are estimated based on past experience of repair and return levels and are regularly reviewed for adequacy[335](index=335&type=chunk) [Revenue and Segment Information](index=121&type=section&id=Revenue%20and%20Segment%20Information) The Group primarily operates three segments: facade engineering, general contracting, and operation management businesses; in 2019, total turnover was HKD 4.619 billion, with a gross profit of HKD 544 million, facade engineering revenue was HKD 2.786 billion, general contracting revenue was HKD 941 million, and operation management revenue was HKD 893 million, with facade engineering revenue mainly from Greater China, Asia, and other regions, and operation management business revenue primarily from Greater China, and one facade engineering customer accounted for over 10% of the Group's turnover - The Group primarily operates three operating segments: facade engineering business, general contracting business, and operation management business[336](index=336&type=chunk) 2019 Segment Turnover, Gross Profit, and Segment Results (HKD thousands) | Segment Business | Turnover | Gross Profit | Segment Results | | :------- | :----- | :--- | :------- | | Facade Engineering | 2,785,753 | 233,623 | 123,001 | | General Contracting Engineering | 940,564 | 56,594 | 47,410 | | Operation Management | 893,095 | 253,847 | 199,284 | | **Total** | **4,619,412** | **544,064** | **369,695** | - Segment turnover for facade engineering primarily originated from Greater China, Asia, and other regions (**HKD 2.314 billion**) and North America (**HKD 471 million**)[338](index=338&type=chunk) - One facade engineering customer generated approximately **HKD 779 million** in turnover, accounting for over **10%** of the Group's total turnover[341](index=341&type=chunk) [Other Income and Other Gains, Net](index=122&type=section&id=Other%20Income%20and%20Other%20Gains%2C%20Net) In 2019, the Group's other income and other gains, net, amounted to HKD 19.64 million, primarily comprising bank interest income, exchange gains, insurance compensation, rental income, and service income; cost of sales was HKD 4.075 billion, administrative, selling, and other operating expenses were HKD 248 million, and finance costs were HKD 38.687 million 2019 Other Income and Other Gains, Net (HKD thousands) | Item | 2019 | 2018 (Restated) | | :--- | :----- | :------------ | | Bank interest income | 2,737 | 3,318 | | Exchange gains, net | 7,355 | — | | Insurance compensation | 653 | — | | Rental income | 3,001 | 842 | | Service income | 2,191 | 1,531 | | Miscellaneous income | 4,126 | 2,582 | | (Loss)/gain on disposal of property, plant and equipment | (423) | 509 | | **Total** | **19,640** | **8,782** | 2019 Expenses by Nature (HKD thousands) | Item | 2019 | 2018 (Restated) | | :--- | :----- | :------------ | | Cost of sales | 4,075,348 | 3,757,094 | | Administrative, selling and other operating expenses | 248,104 | 213,603 | | Finance costs | 38,687 | 29,044 | - Factory relocation expenses amounted to approximately **HKD 42 million**, including salaries, bonuses, and allowances of **HKD 31.05 million**, and operating lease expenses of **HKD 11.121 million**[343](index=343&type=chunk) [Directors' and Chief Executive's Emoluments](index=125&type=section&id=Directors%27%20and%20Chief%20Executive%27s%20Emoluments) In 2019, the total remuneration for directors and the chief executive was HKD 12.365 million, comprising HKD 5.409 million in salaries and allowances and HKD 6.44 million in discretionary bonuses; among the five highest-paid individuals, two were directors, and the remaining three non-director individuals received total remuneration of HKD 7.705 million, while senior management (excluding directors and the chief executive) received total remuneration of HKD 16.043 million 2019 Directors' and Chief Executive's Emoluments (HKD thousands) | Name | Fees | Salaries and Allowances | Discretionary Bonuses | Employer's Contributions to Retirement Benefit Schemes | Total | | :--- | :--- | :------- | :------- | :------------------- | :--- | | Zhang Haipeng | — | — | — | — | — | | Wu Mingqing | — | 2,395 | 3,759 | 18 | 6,172 | | Wang Hai | — | 1,721 | 2,268 | — | 3,989 | | Chen Shanhong | — | 1,293 | 413 | 18 | 1,724 | | Huang Jiang | — | — | — | — | — | | Zhou Jinsong | 180 | — | — | — | 180 | | Hong Winn | 150 | — | — | — | 150 | | Kwong Sum Yee | 150 | — | — | — | 150 | | **Total** | **480** | **5,409** | **6,440** | **36** | **12,365** | 2019 Remuneration of Five Highest-Paid Individuals (Non-Directors) (HKD thousands) | Item | 2019 | | :--- | :----- | | Basic salaries and allowances | 3,552 | | Discretionary bonuses | 4,021 | | Contributions to retirement benefit schemes | 132 | | **Total** | **7,705** | 2019 Remuneration of Senior Management (Excluding Directors and Chief Executive) (HKD thousands) | Item | 2019 | | :--- | :----- | | Salaries and other benefits | 15,743 | | Contributions to pension schemes | 300 | | **Total** | **16,043** | [Earnings Per Share and Dividends](index=128&type=section&id=Earnings%20Per%20Share%20and%20Dividends) In fiscal year 2019, basic earnings per share attributable to owners of the company were 8.14 HK cents, a decrease compared to 8.48 HK cents in 2018 (restated); the Board of Directors did not recommend a final dividend for 2019, with an interim dividend of HKD 1.2 cents per share already paid, totaling HKD 25.867 million 2019 Earnings Per Share (HK cents) | Indicator | 2019 | 2018 (Restated) | | :--- | :----- | :------------ | | Basic earnings per share (HK cents) | 8.14 | 8.48 | | Diluted earnings per share (HK cents) | 8.14 | 8.48 | 2019 Dividend Distribution (HKD thousands) | Item | 2019 | 2018 | | :--- | :----- | :----- | | Interim dividend paid, HKD 1.2 cents per share | 25,867 | 21,555 | | No final dividend proposed | — | 25,867 | | **Total** | **25,867** | **47,422** | [Notes to Statement of Financial Position Items](index=129&type=section&id=Notes%20to%20Statement%20of%20Financial%20Position%20Items) This section provides detailed information, changes, and accounting treatments for the Group's property, plant and equipment, leases, interests in infrastructure projects, goodwill, subsidiaries, inventories, contract assets and contract liabilities, trade and other receivables, cash and cash equivalents, bank borrowings, trade payables, other payables and accrued expenses, and deferred tax; specifically, in 2019, the net book value of property, plant and equipment was HKD 1.728 billion, goodwill carrying amount was HKD 138 million, net trade receivables were HKD 930 million, and contract assets were HKD 1.018 billion - In 2019, the net book value of property, plant and equipment was **HKD 1.728 billion** (2018 restated: HKD 1.838 billion)[359](index=359&type=chunk) - In 2019, right-of-use assets increased by **HKD 17.045 million**, with current lease liabilities of **HKD 7.641 million** and non-current lease liabilities of **HKD 29.99 million**[362](index=362&type=chunk) - Interests in infrastructure projects amounted to **HKD 248 million**, of which **HKD 54.01 million** was due within one year; the effective interest rate ranged from **10.2% to 10.7%** per annum[365](index=365&type=chunk)[366](index=366&type=chunk) - The carrying amount of goodwill was **HKD 138 million**, primarily related to Gamma North America, Inc. and its North American segment subsidiaries, with impairment tests conducted annually[368](index=368&type=chunk) - In 2019, net trade receivables were **HKD 930 million**, and contract assets were **HKD 1.018 billion**; the average credit period for trade receivables did not exceed **90 days**[378](index=378&type=chunk)[381](index=381&type=chunk)[382](index=382&type=chunk) - In 2019, cash and cash equivalents amounted to **HKD 827 million**, of which **HKD 678 million** was denominated in RMB; total bank borrowings were **HKD 868 million**, with an average interest rate of **4.19%**[387](index=387&type=chunk)[388](index=388&type=chunk)[390](index=390&type=chunk) - In 2019, deferred tax liabilities were **HKD 4.535 million**, and deferred tax assets were **HKD 172 million**; the Group had unrecognized tax losses of **HKD 1.32 billion** available to offset future taxable income[395](index=395&type=chunk)[397](index=397&type=chunk) [Share Capital and Reserves](index=147&type=section&id=Share%20Capital%20and%20Reserves) As of December 31, 2019, the company's issued and fully paid share capital was HKD 21.555 million, with total share premium and reserves amounting to HKD 1.103 billion; distributable reserves were approximately HKD 993 million, and reserves included share premium, foreign currency translation rese

[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 company's business is primarily divided into two major segments: engineering business and operations management business - The company's business is primarily divided into two major segments: **engineering business** and **operations management business**[4](index=4&type=chunk) [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%E6%9C%83) This section details the composition of the Board of Directors and its various committees, including audit, remuneration, and nomination committees Board Members and Committee Composition | Board Position | Name | Committee Position | Name | | :--- | :--- | :--- | :--- | | Chairman and Non-executive Director | Zhang Haipeng | Audit Committee Chairman | Zhou Jinsong, CPA | | Executive Director | Wu Mingqing (Vice Chairman and CEO) | Audit Committee Member | HONG Winn, Kuang Xinyi | | Executive Director | Wang Hai | Remuneration Committee Chairman | Zhou Jinsong | | Executive Director | Chen Shanhong | Remuneration Committee Member | Zhang Haipeng, Wu Mingqing, HONG Winn, Kuang Xinyi | | Non-executive Director | Huang Jiang | Nomination Committee Chairman | Zhang Haipeng | | Independent Non-executive Director | Zhou Jinsong | Nomination Committee Member | Wu Mingqing, Zhou Jinsong, HONG Winn, Kuang Xinyi | | Independent Non-executive Director | HONG Winn | | | | Independent Non-executive Director | Kuang Xinyi | | | [Company Information](index=5&type=section&id=%E5%85%AC%E5%8F%B8%E8%B5%84%E6%96%99) Key corporate details including authorized representatives, company secretary, share registrars, auditor, legal counsel, stock code, and important dates Key Company Information | Metric | Details | | :--- | :--- | | Authorized Representatives | Zhang Haipeng, Wu Mingqing | | Company Secretary | Liu Shuxian | | Principal Share Registrar | MaplesFS Limited | | Hong Kong Branch Share Registrar | Tricor Investor Services Limited | | Auditor | PricewaterhouseCoopers | | Legal Counsel | Mayer Brown | | Stock Code | 00830 | | Company Website | www.cscd.com.hk | | Interim Results Announcement | August 20, 2019 | | Closure of Register of Members | September 5 to 6, 2019 | | Interim Dividend Payment | October 4, 2019 | [Chairman's Report](index=6&type=section&id=%E4%B8%BB%E5%B8%AD%E6%8A%A5%E5%91%8A%E4%B9%A6) The Chairman's Report provides an overview of the group's performance, business review, corporate governance, risk management, and future outlook [Performance](index=6&type=section&id=%E4%B8%9A%E7%BB%A9) In the first half of 2019, the Group's main business revenue increased by 15.2% to HKD 2.031 billion, and profit attributable to shareholders increased by 20.4% to HKD 109.4 million H1 2019 Performance Overview | Metric | H1 2019 (HKD) | Y-o-Y Growth | | :--- | :--- | :--- | | Main Business Revenue | 2.031 billion | 15.2% | | Profit Attributable to Shareholders | 109.4 million | 20.4% | | Earnings Per Share | 0.0508 cents | 20.4% | [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 0.012 cents per share, representing a 20.0% increase compared to the same period last year Interim Dividend Distribution | Metric | H1 2019 (HKD) | H1 2018 (HKD) | Y-o-Y Growth | | :--- | :--- | :--- | :--- | | Interim Dividend Per Share | 0.012 cents | 0.010 cents | 20.0% | [Business Review](index=6&type=section&id=%E4%B8%9A%E5%8A%A1%E5%9B%9E%E9%A1%BE) Despite a complex global economic environment, the Group achieved record new curtain wall contracts, steady general contracting, stable mainland supervision, and significant progress in asset operation transformation [Market Conditions](index=6&type=section&id=%E5%B8%82%E5%9C%BA%E5%BD%A2%E5%8A%BF) Global economic growth slowed, with increased trade protectionism and financial market volatility, while China's economy maintained stable and progressive development - Global economic growth is slowing, with US trade protectionism and financial market volatility exacerbating downward pressure on emerging economies[9](index=9&type=chunk) - China's economy is transitioning to high-quality development, maintaining stable and progressive operations[9](index=9&type=chunk) - The Group adheres to its "rooted in Hong Kong and Macau, relying on the mainland, radiating overseas, and internal-external linkage" strategy, prudently bidding and actively expanding quality projects[10](index=10&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) The construction engineering business saw continued growth in Hong Kong and Macau curtain wall projects, strategic focus on high-margin projects in North America, and steady progress in general contracting [Curtain Wall Engineering](index=7&type=section&id=%E5%B9%95%E5%A2%99%E5%B7%A5%E7%A8%8B) Curtain wall business sustained growth in Hong Kong and Macau, focused on profitable projects in North America, secured major contracts in mainland China, and advanced overseas projects - Curtain wall business in Hong Kong and Macau continues to grow, consolidating its leading position in Hong Kong and stabilizing in Macau[11](index=11&type=chunk) - North American market focuses on high-margin, controllable-risk quality projects, winning the **700 St Jacques Victoria Sur Le Parc project** in Montreal, Canada[11](index=11&type=chunk) - Mainland China curtain wall market prudently selects large projects with good client credit, including the **Huawei Production Center G1 building curtain wall renovation project**[11](index=11&type=chunk) - Zhuhai new factory actively increases intelligent and automated applications, effectively improving production capacity utilization and laying the foundation for scale advantages[11](index=11&type=chunk) - Projects such as the Melbourne Police Headquarters in Australia, Melbourne West Side Place Stage 1, and The Stage in London, UK, are progressing smoothly[12](index=12&type=chunk) [General Contracting Business](index=8&type=section&id=%E6%80%BB%E6%89%BF%E5%8C%85%E5%B7%A5%E7%A8%8B) The general contracting business maintained stable development, actively participating in bids for small and medium-sized residential building projects in Hong Kong, with ongoing projects progressing smoothly - Construction contracting business developed steadily, actively participating in bids for Hong Kong's small and medium-sized residential building projects[13](index=13&type=chunk) - Ongoing projects, including the **Chuang's Tuen Mun Town Lot 514 residential development** and **Henderson Ma Tau Wai project** in Hong Kong, are progressing smoothly[13](index=13&type=chunk) [Operations 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) The Group completed the acquisition of Nanchang Bridge and Nanchang China Overseas New Bayi Bridge operations, marking a strategic shift towards asset operation, and is exploring elderly care industry investments - Completed the acquisition of **Nanchang Bridge** and **Nanchang China Overseas New Bayi Bridge** operations management business, officially launching a strategic transformation towards operations management specialization[14](index=14&type=chunk) - China Overseas Supervision adheres to the "large market, large client, large project" strategy, consolidating its business advantages[14](index=14&type=chunk) - Actively exploring investment in the elderly care industry, with the **Toronto, Canada elderly care apartment project** having completed preliminary planning and design, now entering the construction phase[14](index=14&type=chunk) [New Contracts Awarded](index=8&type=section&id=%E6%96%B0%E6%89%BF%E6%8E%A5%E5%B7%A5%E7%A8%8B) In the first half of 2019, the Group secured new contracts totaling HKD 2.453 billion, with curtain wall engineering and operations services being the primary contributors H1 2019 New Contracts Awarded Overview | Metric | Amount (HKD) | | :--- | :--- | | Total New Contracts Awarded | 2.453 billion | | Glass Curtain Wall Projects | 2.183 billion | | Operations Services | 256 million | [Projects Under Construction](index=8&type=section&id=%E5%9C%A8%E5%BB%BA%E5%B7%A5%E7%A8%8B) As of the first half of 2019, the total contract value for projects under construction was HKD 12.677 billion, with outstanding contracts amounting to HKD 7.229 billion H1 2019 Projects Under Construction Overview | Metric | Amount (HKD) | | :--- | :--- | | Total Contract Value for Projects Under Construction | 12.677 billion | | Outstanding Contract Value | 7.229 billion | [Corporate Governance](index=9&type=section&id=%E4%BC%81%E4%B8%9A%E7%AE%A1%E6%B2%BB) The Group upholds integrity, transparency, and efficiency, strictly adhering to laws and listing rules, continuously improving its governance structure and internal controls to ensure sound corporate governance - The Group adheres to corporate governance principles of integrity, honesty, transparency, and efficiency, strictly complying with laws, regulations, and listing rules[17](index=17&type=chunk) - Continuously improving corporate governance structure and measures, establishing and refining policy systems, internal control systems, and management mechanisms and processes[17](index=17&type=chunk) [Risk Management](index=9&type=section&id=%E9%A3%8E%E9%99%A9%E7%AE%A1%E6%8E%A7) The Group continuously enhances its internal control system to improve risk assessment and management, strengthens supervision of key areas, and mitigates operational, political, and foreign exchange risks in overseas markets - Continuously improving the internal control management system to enhance risk prediction capabilities and control effectiveness, integrating internal control management with business processes[18](index=18&type=chunk) - Strengthening supervision over key areas and critical matters to prevent operational risks and plug management loopholes[18](index=18&type=chunk) - Continuously monitoring overseas market policies and exchange rate trends, concentrating resources on core cities in Europe and America to mitigate political and foreign exchange risks[18](index=18&type=chunk) [Financial Management](index=9&type=section&id=%E8%B4%A2%E5%8A%A1%E7%AE%A1%E7%90%86) The Group strengthened financial management, improved capital efficiency, expanded financing channels, and accelerated project collections, maintaining a sound financial position with sufficient credit facilities - Strengthened financial management, improved capital utilization efficiency, actively explored financing channels, and accelerated project collection[19](index=19&type=chunk) H1 2019 Financial Status Summary | Metric | June 30, 2019 (HKD) | | :--- | :--- | | Total Bank Deposits | 443 million | | Total Borrowings | 724 million | | Net Gearing Ratio | 25.0% | | Committed and Undrawn Credit and Project Guarantee Facilities | 1.456 billion | [Human Resources Management](index=10&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 recruitment, training, appraisal, and remuneration systems, enhancing employee satisfaction and efficiency - Adheres to a people-oriented approach, emphasizing talent acquisition, retention, and development through improved recruitment, training, appraisal, and remuneration incentive systems[20](index=20&type=chunk) - Implemented a lecturer system, refined KPI appraisal, and continuously promoted various incentive systems like the "Site Target Management Responsibility System" to boost employee motivation[20](index=20&type=chunk) Total Number of Employees | Date | Total Employees (persons) | | :--- | :--- | | June 30, 2019 | 2,496 | | December 31, 2018 | 2,735 | [Social Responsibility](index=10&type=section&id=%E7%A4%BE%E4%BC%9A%E8%B4%A3%E4%BB%BB) The Group actively fulfills its corporate social responsibility by participating in various charitable activities and achieving multiple environmental and social certifications - Participated in public welfare activities such as "Walk for Millions" and "Children's Dreams" for many consecutive years[21](index=21&type=chunk) - Received honorary certifications including "Green Office," "Global Caring Company," "Healthy Workplace," and "Low Carbon Care," and has been awarded the "Caring Company" logo by the Hong Kong Council of Social Service for five consecutive years[21](index=21&type=chunk) [Future Outlook](index=11&type=section&id=%E6%9C%AA%E6%9D%A5%E5%B1%95%E6%9C%9B) The second half of 2019 anticipates global economic slowdown, trade tensions, and Brexit uncertainties, while North American construction remains robust, Hong Kong stable, Macau recovering, and the Greater Bay Area offers opportunities [Business and Development Strategies](index=11&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 will focus on curtain wall business in key markets, prudently expand overseas, develop small to medium-sized building projects in Hong Kong, and deepen operations management with asset acquisition opportunities - Curtain wall business, as the core principal business, adheres to the "large market, large client, large project" strategy, deepening its layout in the three major markets of Hong Kong and Macau, North America, and mainland China[23](index=23&type=chunk) - Prudently expanding overseas markets such as Australia, the UK, and the Asia-Pacific region, strengthening project management, brand promotion, and design team building[23](index=23&type=chunk) - General contracting business will actively develop high-quality small and medium-sized building construction projects in Hong Kong[24](index=24&type=chunk) - Operations management business will deepen its operating model, explore innovative business directions in mainland China, actively seek high-quality asset acquisition opportunities, and promote industry-finance integration to achieve the "dual-core driven" strategic goal[24](index=24&type=chunk) [Acknowledgements](index=12&type=section&id=%E8%87%B4%E8%B0%A2) The Board expresses gratitude to shareholders, clients, suppliers, and employees for their support, committed to fostering a healthy ecosystem that promotes mutual benefits and sustained growth in profitability - The Board expresses sincere gratitude to shareholders, clients, suppliers, and all employees for their strong support and hard work[24](index=24&type=chunk) - Committed to establishing and maintaining a healthy ecosystem where multiple stakeholders, including shareholders, the Board, management, employees, clients, and suppliers, mutually benefit, driving continuous growth in the Group's profitability and capabilities[24](index=24&type=chunk) [Management Discussion and Analysis](index=13&type=section&id=%E7%AE%A1%E7%90%86%E5%B1%82%E8%AE%A8%E8%AE%BA%E5%8F%8A%E5%88%86%E6%9E%90) This section provides an in-depth analysis of the Group's overall financial performance, segmental results, administrative and finance costs, new contracts, liquidity, treasury policy, and human resources [Overall Performance](index=13&type=section&id=%E6%95%B4%E4%BD%93%E8%A1%A8%E7%8E%B0) In H1 2019, total revenue increased by 15.2% to HKD 2.031 billion, profit attributable to shareholders rose by 20.4% to HKD 109.4 million, and net cash inflow from operations was HKD 75 million H1 2019 Overall Financial Performance | Metric | H1 2019 (HKD) | H1 2018 (HKD) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Total Revenue | 2.031 billion | 1.763 billion | +15.2% | | Profit Attributable to Shareholders | 109.4 million | 90.9 million | +20.4% | | Net Cash Inflow/(Outflow) from Operating Activities | 75 million (inflow) | 30 million (outflow) | Significant improvement | | Basic Earnings Per Share | 0.0508 cents | 0.0422 cents | +20.4% | - Acquired 100% equity and shareholder loans of Futian Enterprise Limited and Value Idea Investments Limited for **HKD 295 million**, gaining operation management rights for Nanchang Bridge and Nanchang China Overseas New Bayi Bridge[26](index=26&type=chunk) [Segmental Analysis](index=13&type=section&id=%E5%88%86%E9%83%A8%E5%88%86%E6%9E%90) Curtain wall engineering saw significant growth, general contracting declined due to project cycles, and operations management surged following the acquisition of Nanchang Bridge operations [Curtain Wall Engineering Business](index=13&type=section&id=%E5%A4%96%E5%A2%99%E5%B7%A5%E7%A8%8B%E4%B8%9A%E5%8A%A1) Revenue and operating profit for the curtain wall engineering business significantly increased, driven by expansion in the Greater China market and stringent cost controls Curtain Wall Engineering Business Performance | Metric | H1 2019 (HKD) | H1 2018 (HKD) | | :--- | :--- | :--- | | Segment Revenue | 1.430 billion | 1.055 billion | | Operating Profit | 89 million | 61 million | - Revenue increase primarily attributed to continuous expansion in the Greater China market, while operating profit growth resulted from the completion of certain Hong Kong projects and strict cost control[27](index=27&type=chunk) [General Contracting Business](index=13&type=section&id=%E6%80%BB%E6%89%BF%E5%8C%85%E4%B8%9A%E5%8A%A1) Revenue and operating profit for the general contracting business decreased, mainly due to reduced contributions from projects nearing completion in 2018 and new projects being in early construction phases General Contracting Business Performance | Metric | H1 2019 (HKD) | H1 2018 (HKD) | | :--- | :--- | :--- | | Segment Revenue | 459 million | 589 million | | Operating Profit | 26 million | 51 million | - The decrease in revenue and operating profit was primarily due to reduced contributions from projects nearing completion in 2018 and new projects awarded in 2018 being in their initial construction phases[28](index=28&type=chunk) [Operations Management Business](index=14&type=section&id=%E8%BF%90%E8%90%A5%E7%AE%A1%E7%90%86%E4%B8%9A%E5%8A%A1) Revenue and operating profit for the operations management business significantly increased, primarily driven by the acquisition of Nanchang China Overseas New Bayi Bridge and Nanchang Bridge operations Operations Management Business Performance | Metric | H1 2019 (HKD) | H1 2018 (HKD) | | :--- | :--- | :--- | | Segment Revenue | 142 million | 118 million | | Operating Profit | 55 million | 36 million | - The increase in revenue and operating profit was mainly due to the acquisition of Nanchang China Overseas New Bayi Bridge and Nanchang Bridge operations, as well as contributions from engineering consulting services[30](index=30&type=chunk) [Administrative Expenses](index=14&type=section&id=%E8%A1%8C%E6%94%BF%E5%BC%80%E6%94%AF) Administrative expenses decreased by 14.5% to HKD 94 million, reflecting strict cost control measures across the three core business segments Administrative Expenses Change | Metric | H1 2019 (HKD) | H1 2018 (HKD) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Administrative Expenses | 94 million | 110 million | -14.5% | - The reduction in administrative expenses was primarily due to strict cost control measures implemented across the three core business segments[31](index=31&type=chunk) [Finance Costs](index=14&type=section&id=%E8%B4%A2%E5%8A%A1%E8%B4%B9%E7%94%A8) Finance costs increased by 36.4% to HKD 15 million for the six months ended June 30, 2019, primarily due to rising interest rates Finance Costs Change | Metric | H1 2019 (HKD) | H1 2018 (HKD) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Finance Costs | 15 million | 11 million | +36.4% | - The increase in finance costs was primarily due to rising interest rates[31](index=31&type=chunk) [New Contracts Awarded and Projects Under Construction](index=14&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) In H1 2019, new contracts totaled HKD 2.453 billion, achieving 49.1% of the annual target, with total outstanding contracts amounting to HKD 7.229 billion New Contracts Awarded and Projects Under Construction Overview | Segment Business | New Contracts Awarded (HKD billion) | Total Contract Value (HKD billion) | Outstanding Contract Value (HKD billion) | | :--- | :--- | :--- | :--- | | Glass Curtain Wall | 2.183 | 9.853 | 6.029 | | Building Construction Projects | 0.014 | 2.361 | 0.915 | | Operations Management | 0.256 | 0.463 | 0.285 | | **Total** | **2.453** | **12.677** | **7.229** | - New contracts awarded in H1 2019 amounted to **HKD 2.453 billion**, achieving **49.1%** of the annual target (not less than HKD 5 billion)[32](index=32&type=chunk) [Liquidity and Financial Resources](index=15&type=section&id=%E6%B5%81%E5%8A%A8%E8%B5%84%E9%87%91%E5%8F%8A%E8%B4%A2%E5%8A%A1%E8%B5%84%E6%BA%90) The Group maintains a sound financial position with HKD 443 million in cash, HKD 724 million in total borrowings, a net gearing ratio of 25.0%, and HKD 1.456 billion in undrawn credit facilities Liquidity and Financial Resources Overview | Metric | June 30, 2019 (HKD) | December 31, 2018 (HKD) | | :--- | :--- | :--- | | Bank and Cash Balances | 443 million | 387 million | | Total Borrowings | 724 million | 717 million | | Net Gearing Ratio | 25.0% | 32.1% | | Undrawn Bank Credit Facilities | 1.456 billion | Not applicable | Total Borrowings Maturity Profile (HKD thousand) | Maturity Period | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Repayable on demand or within one year | 511,771 | 505,178 | | More than one year but not exceeding two years | 482 | 455 | | More than two years but not exceeding five years | 201,575 | 201,485 | | More than five years | 9,907 | 9,806 | | **Total Borrowings** | **723,735** | **716,924** | Bank Deposits Currency Mix (%) | Currency | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | HKD | 50 | 20 | | RMB | 29 | 35 | | USD | 1 | 3 | | MOP | 6 | 6 | | Others | 14 | 36 | [Treasury Policy](index=16&type=section&id=%E5%BA%AB%E5%8A%A1%E6%94%BF%E7%AD%96) The Group adopts a prudent treasury policy, centralizing treasury matters to manage risks and reduce funding costs, with most cash held in short-term HKD or USD deposits - Adopts a prudent treasury policy, centralizing treasury matters to effectively manage risks and reduce funding costs[38](index=38&type=chunk) - Most cash is held in short-term HKD or USD deposits, with liquidity and financial requirements regularly reviewed[38](index=38&type=chunk) [Employees and Remuneration Policy](index=16&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, 2019, the Group had 2,496 employees, maintaining an effective management incentive policy and competitive remuneration system to align interests of management, employees, and shareholders Number of Employees | Date | Total Employees (persons) | | :--- | :--- | | June 30, 2019 | 2,496 | | December 31, 2018 | 2,735 | - Maintains an effective management incentive policy and competitive remuneration to align the interests of management, employees, and shareholders[39](index=39&type=chunk) [Foreign Exchange Risk](index=16&type=section&id=%E5%A4%96%E6%B1%87%E9%A3%8E%E9%99%A9) The Group's foreign currency risk primarily arises from sales or purchases denominated in USD, RMB, CAD, GBP, and MOP, with no current hedging policy but ongoing monitoring - Foreign currency risk primarily arises from sales or purchases denominated in USD, RMB, CAD, GBP, and MOP[40](index=40&type=chunk) - Currently, there is no foreign currency hedging policy, but management will continue to monitor foreign exchange risk and consider hedging when necessary[40](index=40&type=chunk) [Unaudited Condensed Consolidated Statement of Profit or Loss](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%E6%94%B6%E7%9B%8A%E8%A1%A8) This statement presents the Group's revenue, costs, gross profit, other income, expenses, finance costs, profit before tax, income tax, and profit for the period Condensed Consolidated Statement of Profit or Loss (For the six months ended June 30) | Metric (HKD thousand) | 2019 | 2018 | | :--- | :--- | :--- | | Revenue | 2,031,435 | 1,763,034 | | Cost of sales | (1,793,813) | (1,532,368) | | **Gross profit** | **237,622** | **230,666** | | Other income and other gains, net | 7,536 | 2,242 | | Administrative, selling and other operating expenses | (94,122) | (110,128) | | Finance costs | (14,909) | (11,115) | | **Profit before tax** | **136,127** | **111,665** | | Income tax expense | (31,947) | (23,615) | | **Profit for the period** | **104,180** | **88,050** | | Profit attributable to owners of the Company | 109,445 | 90,888 | | Non-controlling interests | (5,265) | (2,838) | | **Earnings per share (HK cents)** | **5.08** | **4.22** | [Unaudited Condensed Consolidated Statement of Comprehensive Income](index=18&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) This statement details the profit for the period and other comprehensive income items, including exchange differences on translation of foreign operations, leading to total comprehensive income Condensed Consolidated Statement of Comprehensive Income (For the six months ended June 30) | Metric (HKD thousand) | 2019 | 2018 | | :--- | :--- | :--- | | Profit for the period | 104,180 | 88,050 | | Other comprehensive income (items that may be reclassified subsequently to profit or loss) | | | | Exchange differences arising on translation of foreign operations | 7,874 | 2,087 | | **Other comprehensive income for the period, net of tax** | **7,874** | **2,087** | | **Total comprehensive income for the period, net of tax** | **112,054** | **90,137** | | Total comprehensive income for the period attributable to: | | | | Owners of the Company | 116,831 | 93,349 | | Non-controlling interests | (4,777) | (3,212) | [Unaudited Condensed Consolidated Statement of Financial Position](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%E8%B4%A2%E5%8A%A1%E7%8A%B6%E5%86%B5%E8%A1%A8) This statement presents the Group's assets, liabilities, and equity as of June 30, 2019, and December 31, 2018, detailing non-current and current components Condensed Consolidated Statement of Financial Position (As at June 30) | Metric (HKD thousand) | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | **Non-current assets** | | | | Property, plant and equipment | 530,796 | 476,959 | | Prepaid lease payments | — | 32,491 | | Interests in infrastructure project investments | 220,839 | — | | Goodwill | 138,149 | 138,149 | | Deferred tax assets | 93,068 | 92,647 | | **Total non-current assets** | **982,852** | **740,246** | | **Current assets** | | | | Contract assets | 1,182,883 | 967,471 | | Trade and other receivables | 1,341,460 | 1,173,875 | | Deposits and prepayments | 61,480 | 53,842 | | Interests in infrastructure project investments | 60,235 | — | | Inventories | 9,468 | 7,014 | | Tax recoverable | 1,783 | 707 | | Amounts due from group entities | 41,574 | 37,026 | | Amounts due from related companies | 3,951 | — | | Bank and cash balances | 443,024 | 386,630 | | **Total current assets** | **3,145,858** | **2,626,565** | | **Total assets** | **4,128,710** | **3,366,811** | | **Current liabilities** | | | | Bank borrowings | 511,771 | 505,178 | | Trade and other payables and accrued expenses | 1,210,354 | 1,049,699 | | Contract liabilities | 245,131 | 299,857 | | Lease liabilities | 7,360 | — | | Amounts due under finance leases | — | 793 | | Tax payable | 102,395 | 88,880 | | Dividends payable | 25,867 | — | | Amounts due to group entities | 644,188 | 170,240 | | Amounts due to related companies | 1,494 | — | | **Total current liabilities** | **2,748,560** | **2,114,647** | | **Total assets less current liabilities** | **1,380,150** | **1,252,164** | | **Capital and reserves** | | | | Share capital | 21,555 | 21,555 | | Share premium and reserves | 1,167,010 | 1,075,736 | | Equity attributable to owners of the Company | 1,188,565 | 1,097,291 | | Non-controlling interests | (63,785) | (59,008) | | **Total equity** | **1,124,780** | **1,038,283** | | **Non-current liabilities** | | | | Bank borrowings | 211,964 | 211,746 | | Lease liabilities | 18,906 | — | | Amounts due under finance leases | — | 1,842 | | Deferred tax liabilities | 24,500 | 293 | | **Total non-current liabilities** | **255,370** | **213,881** | [Unaudited Condensed Consolidated Statement of Changes in Equity](index=21&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) This statement outlines the changes in equity attributable to owners of the Company and non-controlling interests, including profit for the period, other comprehensive income, and dividend distributions - The condensed consolidated statement of changes in equity illustrates the movements in equity attributable to owners of the Company and non-controlling interests during the reporting period, encompassing profit for the period, other comprehensive income, and dividend distributions[46](index=46&type=chunk) - The special reserve arose from the difference between the fair value consideration for the acquisition of Haiyue Construction Engineering Co., Ltd. under common control and the net assets at the acquisition date, as well as the transfer of net liabilities from the capitalization of increased equity interest in a subsidiary[46](index=46&type=chunk) - Another portion of the special reserve originated from the common control merger with China Overseas Supervision Co., Ltd., representing the difference between the acquisition price and the acquired company's capital[47](index=47&type=chunk) [Unaudited Condensed Consolidated Statement of Cash Flows](index=22&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) This statement presents the Group's cash flows from operating, investing, and financing activities, showing the net increase or decrease in cash and cash equivalents for the period Condensed Consolidated Statement of Cash Flows (For the six months ended June 30) | Metric (HKD thousand) | 2019 | 2018 | | :--- | :--- | :--- | | Net cash generated from/(used in) operating activities | 75,590 | (30,159) | | Cash flows from investing activities | | | | Purchase of property, plant and equipment | (11,298) | (77,136) | | Proceeds from disposal of property, plant and equipment | 4 | 75 | | Interest received | 415 | 851 | | **Net cash used in investing activities** | **(10,879)** | **(76,210)** | | Cash flows from financing activities | | | | Finance costs | (14,332) | (11,016) | | Net proceeds from/(repayment of) bank loans | 6,308 | 2,752 | | Payment of lease liabilities | (4,075) | — | | Repayment of amounts due under finance leases | — | (472) | | **Net cash used in financing activities** | **(12,099)** | **(8,736)** | | **Increase/(decrease) in cash and cash equivalents** | **52,612** | **(115,105)** | | Effect of foreign exchange rate changes | 3,782 | 2,144 | | Cash and cash equivalents at beginning of period | 386,630 | 478,137 | | **Cash and cash equivalents at end of period** | **443,024** | **365,176** | [Notes to the Unaudited Condensed Consolidated Financial Statements](index=23&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%E6%8A%A5%E8%A1%A8%E9%99%84%E6%B3%A8) This section provides detailed notes explaining the basis of preparation, adoption of new accounting standards, estimates, segment information, and other financial disclosures [Basis of Preparation](index=23&type=section&id=%E7%BC%96%E5%88%B6%E5%9F%BA%E5%87%86) The condensed consolidated financial statements are prepared in accordance with HKFRS 34 and HKEX Listing Rules, based on historical cost and presented in HKD - The condensed consolidated financial statements are prepared in accordance with Appendix 16 of the Hong Kong Stock Exchange Listing Rules and Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the HKICPA[50](index=50&type=chunk) - The statements are prepared on a historical cost basis and presented in HKD[50](index=50&type=chunk) [Adoption of New and Revised Standards, Amendments and Interpretations](index=23&type=section&id=%E9%87%87%E7%94%A8%E6%96%B0%E7%9A%84%E5%87%86%E5%88%99%E3%80%81%E4%BF%AE%E8%AE%A2%E6%9C%AC%E5%8F%8A%E6%94%B9%E8%BF%9B%E7%8E%B0%E6%9C%89%E4%B9%8B%E5%87%86%E5%88%99%E5%8F%8A%E8%AF%A0%E9%87%8A) The Group adopted HKFRS 16 "Leases" and other new standards in the current interim period, with no significant impact on accounting policies except for HKFRS 16 - The Group first applied new and revised standards, including **Hong Kong Financial Reporting Standard 16 "Leases,"** during the current interim period[51](index=51&type=chunk)[52](index=52&type=chunk) - Except for HKFRS 16, other standard amendments and new interpretations had no significant impact on the Group's accounting policies[52](index=52&type=chunk) - The Group has not early adopted new standards issued but not yet effective, and anticipates no significant impact on the consolidated financial statements in the future[54](index=54&type=chunk) [Adoption of HKFRS 16](index=24&type=section&id=%E9%87%87%E7%94%A8%E9%A6%99%E6%B8%AF%E8%B4%A2%E5%8A%A1%E6%8A%A5%E5%91%8A%E5%87%86%E5%88%99%E7%AC%AC16%E5%8F%B7) Effective January 1, 2019, HKFRS 16 eliminated the distinction between operating and finance leases, requiring recognition of right-of-use assets and lease liabilities, increasing assets and financial liabilities on the statement of financial position - Effective **January 1, 2019**, HKFRS 16 was adopted, eliminating the distinction between operating and finance leases, requiring recognition of right-of-use assets and lease liabilities for all leases[55](index=55&type=chunk) - The modified retrospective approach was applied, without restating comparative information for prior periods, and recognizing the cumulative effect of initial application guidance[56](index=56&type=chunk) - The new standard will result in an increase in assets and financial liabilities on the consolidated statement of financial position[57](index=57&type=chunk) Impact of Adopting HKFRS 16 on Statement of Financial Position (January 1, 2019, HKD thousand) | Item | Impact Amount | | :--- | :--- | | Decrease in prepaid lease payments | 32,491 | | Decrease in property, plant and equipment — land, buildings and motor vehicles | 33,491 | | Increase in property, plant and equipment — right-of-use assets | 93,111 | | Decrease in current amounts due under finance leases | 793 | | Decrease in non-current amounts due under finance leases | 1,842 | | Increase in current lease liabilities | 7,339 | | Increase in non-current lease liabilities | 22,425 | Impact of Adopting HKFRS 16 on Statement of Profit or Loss (For the six months ended June 30, 2019, HKD thousand) | Item | Impact Amount | | :--- | :--- | | Decrease in administrative, selling and other operating expenses | 3,738 | | Increase in depreciation — administrative, selling and other operating expenses | 3,560 | | Increase in amortization — projects under construction | 340 | [Estimates](index=29&type=section&id=%E4%BC%B0%E8%AE%A1) The preparation of interim financial statements requires management judgments, estimates, and assumptions that affect reported amounts, and actual results may differ from these estimates - The preparation of interim financial statements requires management to make judgments, estimates, and assumptions, and actual results may differ from these estimates[66](index=66&type=chunk) - The significant judgments made by management in applying the accounting policies and the key sources of estimation uncertainty are the same as those applied to the consolidated financial statements for the year ended December 31, 2019[66](index=66&type=chunk) [Revenue and Segment Information](index=30&type=section&id=%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 total revenue for H1 2019 was HKD 2.031 billion, primarily from curtain wall engineering, general contracting, and operations management, with significant growth in operations management due to infrastructure investment interests - The Group primarily engages in curtain wall engineering, general contracting, and operations management businesses, with revenue representing income from construction and management contracts[67](index=67&type=chunk) Segment Performance Overview (For the six months ended June 30, HKD thousand) | Segment | 2019 Revenue | 2018 Revenue | 2019 Gross Profit | 2018 Gross Profit | 2019 Segment Results | 2018 Segment Results | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Curtain Wall Engineering | 1,430,001 | 1,055,469 | 137,251 | 127,109 | 88,642 | 60,998 | | General Contracting | 459,078 | 589,250 | 30,886 | 53,035 | 26,359 | 51,023 | | Operations Management | 142,356 | 118,315 | 69,485 | 50,522 | 55,239 | 35,946 | | **Total** | **2,031,435** | **1,763,034** | **237,622** | **230,666** | **170,240** | **147,967** | - In H1 2019, revenue from interests in infrastructure project investments for the operations management business was **HKD 16,402,000** (H1 2018: zero)[67](index=67&type=chunk) [Other Income and Other Gains, Net](index=31&type=section&id=%E5%85%B6%E4%BB%96%E6%94%B6%E5%85%A5%E5%8F%8A%E5%85%B6%E4%BB%96%E6%94%B6%E7%9B%8A%EF%BC%8C%E5%87%80%E9%A2%9D) In H1 2019, other income and other gains, net, significantly increased to HKD 7,536,000, primarily driven by higher exchange gains Other Income and Other Gains, Net (For the six months ended June 30, HKD thousand) | Item | 2019 | 2018 | | :--- | :--- | :--- | | Bank interest income | 416 | 851 | | Exchange gains | 5,119 | — | | Miscellaneous income | 2,001 | 1,391 | | **Total** | **7,536** | **2,242** | - Exchange gains amounted to **HKD 5,119,000** in H1 2019, compared to zero in H1 2018[69](index=69&type=chunk) [Finance Costs](index=31&type=section&id=%E8%B4%A2%E5%8A%A1%E8%B4%B9%E7%94%A8) In H1 2019, the Group's finance costs increased to HKD 14,909,000, mainly comprising interest on bank borrowings and overdrafts, and lease liabilities Finance Costs (For the six months ended June 30, HKD thousand) | Item | 2019 | 2018 | | :--- | :--- | :--- | | Interest on bank borrowings and overdrafts | 14,332 | 11,016 | | Finance lease charges | — | 99 | | Interest on lease liabilities | 577 | — | | **Total** | **14,909** | **11,115** | - Interest on lease liabilities amounted to **HKD 577,000** in H1 2019, resulting from the adoption of Hong Kong Financial Reporting Standard 16[70](index=70&type=chunk) [Profit Before Tax](index=32&type=section&id=%E7%A8%85%E5%89%8D%E6%BA%A2%E5%88%A9) In H1 2019, the Group's profit before tax was stated after deducting depreciation and amortization totaling HKD 22,086,000, a significant increase from the prior year Items Deducted from Profit Before Tax (For the six months ended June 30, HKD thousand) | Item | 2019 | 2018 | | :--- | :--- | :--- | | Amortization of prepaid lease payments | — | 309 | | Depreciation and amortization — amounts included in projects under construction | 15,603 | 5,827 | | Depreciation — amounts included in administrative, selling and other operating expenses | 6,483 | 3,643 | | **Total** | **22,086** | **9,470** | - Total depreciation and amortization increased from **HKD 9,470,000** in H1 2018 to **HKD 22,086,000** in H1 2019[72](index=72&type=chunk) [Income Tax Expense](index=32&type=section&id=%E6%89%80%E5%BE%97%E7%A8%85%E8%B4%B9%E7%94%A8) In H1 2019, the Group's income tax expense increased to HKD 31,947,000, primarily comprising Hong Kong profits tax, overseas tax, and deferred tax, with Hong Kong tax calculated at 16.5% Income Tax Expense (For the six months ended June 30, HKD thousand) | Item | 2019 | 2018 | | :--- | :--- | :--- | | Current tax — Hong Kong profits tax (provision for the period) | 17,814 | 17,300 | | Current tax — Overseas (provision for the period) | 9,168 | 7,005 | | Deferred tax | 4,958 | — | | **Current income tax expense** | **31,947** | **23,615** | - Hong Kong profits tax is calculated at a rate of **16.5%** on the estimated assessable profit for the period[74](index=74&type=chunk) [Dividends](index=33&type=section&id=%E8%82%A1%E6%81%AF) The Board declared an interim dividend of HKD 0.012 cents per share, totaling approximately HKD 25,867,000, an increase from the prior year Dividends Recognized (For the six months ended June 30, HKD thousand) | Item | 2019 | 2018 | | :--- | :--- | :--- | | 2018 final dividend of HKD 0.012 cents per share (paid on July 5, 2019) | 25,867 | — | | 2017 final dividend of HKD 0.010 cents per share (paid in H1 2018) | — | 21,555 | - The Board declared an interim dividend of **HKD 0.012 cents** per share (2018: HKD 0.010 cents per share), totaling approximately **HKD 25,867,000**, which was not recognized as a liability during the period[75](index=75&type=chunk) [Earnings Per Share](index=34&type=section&id=%E6%AF%8F%E8%82%A1%E7%9B%88%E5%88%A9) In H1 2019, basic and diluted earnings per share attributable to owners of the Company were HKD 0.0508 cents, a 20.4% increase, with no potentially dilutive ordinary shares during the period Earnings Per Share Calculation (For the six months ended June 30) | Metric | 2019 | 2018 | | :--- | :--- | :--- | | Profit attributable to owners of the Company for basic and diluted earnings per share calculation (HKD thousand) | 109,445 | 90,888 | | Weighted average number of ordinary shares (thousand shares) | 2,155,545 | 2,155,545 | | **Basic and diluted earnings per share (HK cents)** | **5.08** | **4.22** | - During the period, no diluted earnings per share were presented as the Company had no potentially dilutive ordinary shares[77](index=77&type=chunk) [Interests in Infrastructure Project Investments](index=34&type=section&id=%E5%9F%BA%E5%BB%BA%E9%A1%B9%E7%9B%AE%E6%8A%95%E8%B5%84%E6%9D%83%E7%9B%8A) The Group acquired interests in infrastructure project investments on January 7, 2019, representing RMB-denominated funds for PPP projects in mainland China, with effective interest rates ranging from 10.2% to 10.7% annually - Acquired interests in infrastructure project investments on **January 7, 2019**, through the acquisition of Value Idea Investment Limited and Futian Enterprise Limited[78](index=78&type=chunk) - These investments represent RMB-denominated funds for PPP infrastructure project joint ventures in mainland China, expected to be completed by **2025**[78](index=78&type=chunk) - The effective interest rate for infrastructure project investments ranges from **10.2% to 10.7%** per annum[78](index=78&type=chunk) [Property, Plant and Equipment](index=35&type=section&id=%E7%89%A9%E4%B8%9A%E3%80%81%E5%8E%82%E6%88%BF%E5%8F%8A%E8%AE%BE%E5%A4%87) In H1 2019, the Group added approximately HKD 11,298,000 in property, plant, and equipment, a significant decrease compared to the same period last year Additions to Property, Plant and Equipment (HKD thousand) | Item | H1 2019 | H1 2018 | | :--- | :--- | :--- | | Additions to property, plant and equipment | 11,298 | 77,137 | [Goodwill](index=35&type=section&id=%E5%95%86%E8%AA%89) The carrying amount of goodwill is allocated to cash-generating units related to Gamma North America, Inc. and its North American subsidiaries, with recoverable amounts based on value-in-use calculations Goodwill Carrying Amount (HKD thousand) | Item | June 30, 2019 and December 31, 2018 | | :--- | :--- | | Cost | 159,707 | | Accumulated impairment | (21,558) | | **Carrying amount** | **138,149** | - The carrying amount of goodwill has been allocated to cash-generating units related to Gamma North America, Inc. and its North American segment subsidiaries[81](index=81&type=chunk) - The recoverable amount is calculated based on value-in-use, with key assumptions including discount rates, revenue growth rates, and projected gross profit margins[81](index=81&type=chunk) [Trade and Other Receivables](index=36&type=section&id=%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, 2019, total trade and other receivables increased to HKD 1.341 billion, with trade receivables and retention money both rising, and an average credit period of no more than 90 days Aging Analysis of Trade and Other Receivables (HKD thousand) | Item | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | **Trade receivables** | | | | 0 – 30 days | 419,983 | 450,025 | | 31–60 days | 90,884 | 25,859 | | 61–90 days | 7,964 | 2,944 | | Over 90 days | 92,601 | 85,685 | | **Subtotal** | **611,432** | **564,513** | | Retention money receivable | 613,424 | 549,706 | | Other receivables | 116,604 | 59,656 | | **Total trade and other receivables** | **1,341,460** | **1,173,875** | - The Group generally grants customers an average credit period of no more than **90 days**, with retention money receivable repayable approximately one year after the expiry of the project warranty period[83](index=83&type=chunk) [Bank Borrowings](index=37&type=section&id=%E9%93%B6%E8%A1%8C%E5%80%9F%E6%AC%BE) As of June 30, 2019, total bank borrowings were HKD 724 million, mostly repayable within one year, with the average interest rate increasing to 3.98% Bank Borrowings Repayment Period (HKD thousand) | Repayment Period | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Repayable on demand or within one year | 511,771 | 505,178 | | Repayable in the second year | 482 | 455 | | Repayable in the third to fifth years | 201,575 | 201,485 | | Repayable over five years | 9,907 | 9,806 | | **Total borrowings** | **723,735** | **716,924** | Bank Borrowings by Currency (HKD thousand) | Currency | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | HKD | 280,000 | 280,000 | | CAD | 23,063 | 13,071 | | USD | 420,672 | 423,853 | | **Total** | **723,735** | **716,924** | - The average interest rate for bank loans was **3.98%** as of June 30, 2019 (December 31, 2018: 3.82%)[85](index=85&type=chunk) [Trade and Other Payables and Accrued Expenses](index=38&type=section&id=%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, 2019, total trade and other payables and accrued expenses increased to HKD 1.210 billion, with both trade payables and retention money payable showing growth Aging Analysis of Trade and Other Payables and Accrued Expenses (HKD thousand) | Item | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | **Trade payables** | | | | 0 – 30 days | 753,812 | 510,174 | | 31–60 days | 26,840 | 27,294 | | Over 60 days | 64,898 | 175,444 | | **Subtotal** | **845,550** | **712,912** | | Retention money payable | 229,717 | 189,179 | | Other payables and accrued expenses | 135,087 | 147,608 | | **Total** | **1,210,354** | **1,049,699** | - As of June 30, 2019, retention money payable expected to be due after twelve months amounted to approximately **HKD 95,905,000**[87](index=87&type=chunk) [Share Capital](index=39&type=section&id=%E8%82%A1%E6%9C%AC) As of June 30, 2019, the Company's total issued and fully paid share capital comprised 2,155,545,000 ordinary shares of HKD 0.01 each, amounting to HKD 21,555,000 Share Capital Information | Item | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Number of issued and fully paid shares (thousand shares) | 2,155,545 | 2,155,545 | | Amount (HKD thousand) | 21,555 | 21,555 | [Commitments](index=39&type=section&id=%E6%89%BF%E6%93%94) As of June 30, 2019, the Group's capital commitments for property, plant, and equipment under construction, contracted but not provided for, amounted to HKD 1,880,000 Contracted but Not Provided For Commitments (HKD thousand) | Item | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Construction in progress for property, plant and equipment | 1,880 | 18,265 | [Related Party Transactions](index=40&type=section&id=%E5%85%B3%E8%BF%9E%E4%BA%BA%E5%A3%AB%E4%BA%A4%E6%98%93) In H1 2019, related party transactions included receiving engineering fees of HKD 731 million and service income of HKD 18.59 million from group entities, and paying service fees of HKD 13.80 million to group entities Related Party Transactions (For the six months ended June 30, HKD thousand) | Item | 2019 | 2018 | | :--- | :--- | :--- | | Engineering fees received from group entities | 730,796 | 358,183 | | Service income received from group entities | 18,592 | 18,615 | | Service fees paid to group entities | 13,800 | 18,849 | [Other Information](index=41&type=section&id=%E5%85%B6%E4%BB%96%E8%B5%84%E6%96%99) This section covers interim dividend details, share register closure, share capital, share options, directors' and major shareholders' interests, and corporate governance compliance [Interim Dividend](index=41&type=section&id=%E4%B8%AD%E6%9C%9F%E8%82%A1%E6%81%AF) The Board declared an interim dividend of HKD 0.012 cents per share, payable on October 4, 2019, to shareholders registered on September 6, 2019 Interim Dividend Distribution Details | Metric | 2019 | 2018 | | :--- | :--- | :--- | | Interim Dividend Per Share | 0.012 cents | 0.010 cents | | Payment Date | October 4, 2019 | Not applicable | | Record Date | September 6, 2019 | Not applicable | [Closure of Register of Members](index=41&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 eligibility for the interim dividend, the Company's register of members will be closed from September 5 to September 6, 2019 - The register of members will be closed from **September 5 to September 6, 2019** (both dates inclusive)[92](index=92&type=chunk) - Shareholders wishing to qualify for the interim dividend must lodge all transfer documents for registration by **4:30 p.m. on September 4, 2019**[92](index=92&type=chunk) [Share Capital](index=41&type=section&id=%E8%82%A1%E6%9C%AC) As of June 30, 2019, the Company's total issued share capital consisted of 2,155,545,000 ordinary shares with a par value of HKD 0.01 each Total Issued Share Capital | Date | Total Ordinary Shares (shares) | Par Value Per Share | | :--- | :--- | :--- | | June 30, 2019 | 2,155,545,000 | HKD 0.01 | [Share Options](index=41&type=section&id=%E8%B4%AD%E8%82%A1%E6%9D%83) The Company adopted a share option scheme on March 10, 2010, valid for ten years, with no options granted, exercised, cancelled, or lapsed during H1 2019, and no outstanding options at period-end - The Company adopted a share option scheme on **March 10, 2010**, with a validity period of ten years[93](index=93&type=chunk) - During the six months ended June 30, 2019, no share options were granted to or exercised by any directors, chief executives, or employees, nor were any share options cancelled or lapsed[93](index=93&type=chunk) - As of January 1, 2019, and June 30, 2019, there were no outstanding share options under the scheme[93](index=93&type=chunk) [Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures](index=42&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, 2019, certain directors held long positions in the Company's shares and shares of its associated corporations, including China State Construction Engineering Corporation Limited [Long Positions in Shares of the Company](index=42&type=section&id=%E4%BA%8E%E6%9C%AC%E5%85%AC%E5%8F%B8%E8%82%A1%E4%BB%BD%E7%9A%84%E5%A5%BD%E4%BB%93) As of June 30, 2019, Directors Zhang Haipeng, Wu Mingqing, Chen Shanhong, and Huang Jiang held beneficial ownership in the Company's shares Directors' Long Positions in Shares of the Company (June 30, 2019) | Director's Name | Capacity | Nature of Interest | Number of Shares | 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% | | Chen Shanhong | Beneficial Owner | Personal Interest | 50,000 | 0.002% | | 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=43&type=section&id=%E4%BA%8E%E6%9C%AC%E5%85%AC%E5%8F%B8%E7%9B%B8%E8%81%94%E6%B3%95%E5%9B%A2%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) Directors Zhang Haipeng, Wu Mingqing, Wang Hai, Huang Jiang, and Chen Shanhong held long positions in shares of associated corporations, primarily China State Construction Engineering Corporation Limited and China State Construction International Holdings Limited - Zhang Haipeng, Wu Mingqing, Wang Hai, and Huang Jiang held A shares of China State Construction Engineering Corporation Limited, while Chen Shanhong held ordinary shares of China State Construction International Holdings Limited[96](index=96&type=chunk) - All interests in China State Construction Engineering Corporation Limited A shares were granted by China State Construction Engineering Corporation Limited under its share incentive scheme[96](index=96&type=chunk) [Substantial Shareholders' Interests and Short Positions in Shares and Underlying Shares of the Company](index=44&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, 2019, Gabo Holdings Limited and its parent companies, including China State Construction International Holdings Limited, held a 74.06% long position in the Company's shares Substantial Shareholders' Long Positions in Shares of the Company (June 30, 2019) | Shareholder Name | Capacity | Number of Ordinary Shares Held | Total | Percentage of Issued Shares (1) | | :--- | :--- | :--- | :--- | :--- | | Gabo Holdings Limited ("Gabo") | Beneficial Owner | 1,596,403,279 | 1,596,403,279 | 74.06 | | China State Construction International Holdings Limited ("CSCI") (2) | Interest in controlled corporation | 1,596,403,279 | 1,596,403,279 | 74.06 | | China Overseas Holdings Limited ("COHL") (2) | Interest in controlled corporation | 1,596,403,279 | 1,596,403,279 | 74.06 | | China State Construction Engineering Corporation Limited ("CSCEC") (2) | Interest in controlled corporation | 1,596,403,279 | 1,596,403,279 | 74.06 | | China State Construction Group Co., Ltd. ("CSCG") (2) | Interest in controlled corporation | 1,596,403,279 | 1,596,403,279 | 74.06 | - Gabo Holdings Limited is a wholly-owned subsidiary of China State Construction International Holdings Limited, which is approximately **64.66%** owned by China Overseas Holdings Limited, a wholly-owned subsidiary of China State Construction Engineering Corporation Limited, which in turn is a subsidiary of China State Construction Group Co., Ltd.[99](index=99&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=45&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, 2019, neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - During the six months ended June 30, 2019, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[101](index=101&type=chunk) [Corporate Governance](index=45&type=section&id=%E4%BC%81%E4%B8%9A%E7%AE%A1%E6%B2%BB) The Group complied with the Corporate Governance Code throughout the reporting period, with the Vice Chairman and CEO presiding over the AGM due to the Chairman's other commitments - The Group has complied with all code provisions of the Corporate Governance Code as set out in Appendix 14 of the Listing Rules throughout the reporting period[101](index=101&type=chunk) - Mr. Zhang Haipeng, Chairman and Non-executive Director, was unable to attend the Annual General Meeting held on May 29, 2019, due to other business commitments, and Mr. Wu Mingqing, Vice Chairman and Chief Executive Officer, chaired the meeting[101](index=101&type=chunk) [Directors' Securities Transactions](index=45&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 with the code during the reporting period - The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as its code of conduct for directors' securities transactions[102](index=102&type=chunk) - All directors have confirmed that all their securities transactions during the reporting period complied with the Model Code[102](index=102&type=chunk) [Review of Accounts](index=45&type=section&id=%E8%B4%A6%E7%9B%AE%E5%AE%A1%E9%98%85) The Audit Committee, comprising three independent non-executive directors, has reviewed the Company's and its subsidiaries' unaudited condensed consolidated financial statements for the six months ended June 30, 2019 - 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, 2019[103](index=103&type=chunk)