China Supply Chain : ANNOUNCEMENT OF INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2020

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CHINA SUPPLY CHAIN HOLDINGS LIMITED ʕ਷ԶᏐᗡପุණྠϞࠢʮ̡

(formerly known as “Yat Sing Holdings Limited ˚ϓછٰϞࠢʮ̡ “)

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 3708)

ANNOUNCEMENT OF INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2020

FINANCIAL HIGHLIGHTS

(All in Hong Kong dollar)

Six months ended 31 December 2020 2019

The board (the “Board“) of directors (the “Directors“) of China Supply Chain Holdings Limited (the “Company“) hereby present the unaudited interim condensed consolidated results of the Company and its subsidiaries (collectively the “Group“) for the six months ended 31 December 2020 (the “Period“), together with the comparative figures for the corresponding period in 2019.

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the six months ended 31 December 2020

Six months ended

31 December 2020

2019

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 December 2020

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the six months ended 31 December 2020

• 1. BASIS OF PREPARATION

  The condensed consolidated financial statements of China Supply Chain Holdings Limited and its subsidiaries (collectively referred to as the “Group“) for the six months ended 31 December 2020 have been prepared in accordance with the applicable disclosure provisions of Appendix 16 to the Rules Governing the Listing of Securities (the “Listing Rules“) on The Stock Exchange of Hong Kong Limited (the “Stock Exchange“) and with Hong Kong Accounting Standard (“HKAS“) 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA“).

• 2. PRINCIPAL ACCOUNTING POLICIES

  The condensed consolidated financial statements have been prepared on the historical cost basis except for certain financial instruments that are measured at fair value.

  The accounting policies used in the condensed consolidated financial statements are consistent with those followed in the preparation of the Group’s annual consolidated financial statements for the year ended 30 June 2020.

  All HKFRSs effective for the accounting periods commencing from 1 January 2020 and relevant to the Group, have been adopted by the Group in the preparation of the unaudited condensed consolidated results. The adoption of these new and revised HKFRSs did not result in significant changes to the Group’s results and financial position.

  The Group has not applied the new HKFRSs that have been issued but are not yet effective. The Group has already commenced an assessment of the impact of these new HKFRSs in current or future reporting periods, these new HKFRSs are not expected to have a material impact on its results of operations and financial position.

  All significant transactions and balances among the companies comprising the Group have been eliminated on consolidation.

3.

SEGMENT INFORMATION

The Group’s reportable and operating segments, based on information reported to the chairman of the Board, being the chief operating decision maker (the “CODM“) for the purposes of resources allocation and performance assessment focuses on types of goods sold or services provided. No operating segments identified by the CODM have been aggregated in arriving at the reportable segments of the Group.

Specifically, the Group’s reportable segments are as follows:

• (i) Building maintenance; and

• (ii) Renovation.

• (a) Segment revenue and results

  The following is an analysis of the Group’s revenue and results by reportable and operating segments:

  For the six months ended 31 December 2020

Building maintenanceRenovation

Total

HK$’000 (Unaudited)

HK$’000 (Unaudited)

HK$’000 (Unaudited)

Segment revenue

110,760

63,865 174,625

Segment profit

8,525

3,491 12,016

Unallocated corporate income 4,051

Central administration costs Finance costs

(14,932)

(35)

Profit before taxation

1,100

For the six months ended 31 December 2019

Building

maintenanceRenovation

Total

HK$’000 (Unaudited)

HK$’000 (Unaudited)

HK$’000 (Unaudited)Segment revenue

134,525

67,630 202,155

Segment profit

8,162

2,409 10,571

Unallocated corporate income 1,545

Central administration costs Finance costs

(14,242)

(64)Loss before taxation

(2,190)The accounting policies of the reporting and operating segments are the same as the Group’s accounting policies. Segment profit represents the profit earned by each segment without allocation of certain unallocated corporate income, central administration costs and finance costs. This is the measure reported to the CODM for the purposes of resource allocation and performance assessment.

There were no inter-segment sales between different business segments for the six months ended 31

December 2020 and 2019.

(b)

Segment assets and liabilities

The following is an analysis of the Group’s assets and liabilities by reportable and operating segments:

4.

31 December 2020

• 5. INCOME TAX CREDIT

  Six months ended

  31 December

  Current tax:

  Hong Kong Profits Tax Deferred tax

  2019
  HK$’000	HK$’000
  (Unaudited)	(Unaudited)
  –	–
  158	–
  158	–

  2020

• 6. PROFIT/(LOSS) FOR THE PERIOD

  Profit/(loss) for the period has been arrived at after charging/(crediting):

  Six months ended

  31 December

  2020

  2019

  HK$’000 (Unaudited)

  HK$’000 (Unaudited)

  Bank interest income Loan interest income Other income (note i)

  (271) (293)

  (556) (657)

  (3,224) (595)

  Loss on disposal of property, plant and equipment Depreciation of property, plant and equipment Depreciation of right-of-use assets

  15

  –

  348 407

  549 875

  Reversal of impairment of trade and other receivables (note ii)

  (1,885)

  –

  Notes:

  i.

  During the period ended 31 December 2020, other income included subsidies received from the Employment Support Scheme of the Hong Kong Government of approximately HK$3,211,000. During the period ended 31 December 2019, other income of approximately HK$595,000 which was mainly represented the net income from the sales of construction materials of HK$19.1 million (included in other receivables) net of cost of goods sold of approximately HK$18.8 million and the overstated staff cost of approximately HK$237,000.

  ii. Reversal of impairment of trade and other receivables credited in administrative expenses.

• 7. DIVIDENDS

  The directors of the Company do not recommend the payment of an interim dividend for the six months ended 31 December 2020 (2019: nil).

• 8. EARNINGS PER SHARE

  The calculation of basic earnings per share attributable to owners of the Company is based on the following data:

  Six months ended

  31 December

  2020 2019

  Earnings

  Earnings for the purpose of basic earnings per share

  HK$’000	HK$’000
  (Unaudited)	(Unaudited)
  1,232	244

  Six months ended

  31 December

  2020 2019

  (Unaudited)

  (Unaudited)

  Number of shares

  Weighted average number of ordinary shares for the purpose of basic earnings per share (in thousands)

  5,594,000

  5,594,000

  Basic earnings per share (in HK cents)

  0.022

  0.004

  The diluted earnings per share is equal to the basic earnings per share as there were no dilutive potential

• ordinary shares during the periods ended 31 December 2020 and 2019.

• 9. PROPERTY, PLANT AND EQUIPMENT

  During the six months ended 31 December 2020, the Group acquired property, plant and equipment amounting to approximately HK$219,000. Property, plant and equipment with a net carrying value of approximately HK$429,000 were disposed of by the Group during the six months ended 31 December 2020 for cash proceeds of HK$414,000.

  No acquisition or disposal for the six months ended 31 December 2019.

11.

12.

The Group does not have a standardised and universal credit period granted to its customers, and the credit period of individual customer is considered on a case-by-case basis and stipulated in the project contract, as appropriate, for the building maintenance and renovation services. For the sales of visible light photocatalysis products, the Group generally allows an average credit period of 120 days to the customers. The following is an ageing analysis of trade receivables, presented based on the certified report and/or based on invoice dates which approximate revenue recognition date at the end of the reporting period:

The following is an ageing analysis of trade payables presented based on the invoice date at the end of the reporting period:

Within 90 days

91 to 180 days

181 to 365 days

1 to 2 years Over 2 years

SHARE CAPITAL

Number of Nominal value ofOrdinary share

Ordinary sharesordinary shares

HK$’000

Authorised:

Ordinary share of HK$0.002 each at 30 June 2020

(audited) and 31 December 2020 (unaudited)

10,000,000,000 20,000

Issued and fully paid:

Ordinary share of HK$0.002 each at 30 June 2020

(audited) and 31 December 2020 (unaudited)

5,594,000,000 11,189

• 13. SHARE OPTION SCHEME

  The Company’s share option scheme was adopted pursuant to the written resolution passed on 18 December 2014 to attract and retain high quality staff, to provide additional incentive to eligible participants and to promote the success of the business of the Group.

  Eligible participants of the share option scheme include employees (full-time and part-time), directors, consultants, advisors, distributors, contractors, suppliers, agents, customers, business partners or service providers of the Group.

  No share options are granted since the adoption of the share option scheme and there are no outstanding

• share options as at 31 December 2020 and 30 June 2020.

• 14. CONTINGENT LIABILITIES

  • (a) Contingent liabilities in respect of legal claims

    One subsidiary of the Group is defendant in a number of claims, lawsuits and potential claims relating to employees’ compensation cases and personal injuries claims. The directors of the Company considered that the possibility of any outflow in settling the legal claims was remote as these claims were well covered by insurance and subcontractors’ indemnity. Accordingly, no provision for the contingent liabilities in respect of the litigations is necessary, after due consideration of each case and with reference to the legal opinion.

  • (b) Guarantee issued

    At the end of each reporting period, the Group had provided guarantees to bank in respect of the following:

    31 December	30 June
    2020	2020
    HK$’000	HK$’000
    (Unaudited)	(Audited)
    Performance bonds in favor of its clients	1,250	1,250

    As at 31 December 2020, HK$1,250,000 (30 June 2020: HK$1,250,000) of performance bonds were given by a bank in favour of some of the Group’s customers as security for the due performance and observance of the Group’s obligations under the service contracts entered into between the Group and its customers. If the Group fails to provide satisfactory performance to its customers to whom performance bonds have been given, such customers may demand the bank to pay to them the sum or sums stipulated in such demand. The Group will then become liable to compensate such banks accordingly. The performance bonds will released upon completion of the contract work for the relevant customers.

• 15. PLEDGE OF ASSETS

  As at 31 December 2020, the Group had pledged bank deposits of approximately HK$1,261,000 (30 June 2020: HK$1,435,000) to banks to secure the banking facilities granted to the Group. In addition, the Group’s obligations under finance leases were secured by the lessors’ title to the leased motor vehicles with carrying value of approximately HK$917,000 (30 June 2020: nil).

RELATED PARTY TRANSACTIONS

Compensation of key management personnel

The remuneration of directors of the Company and other members of key management personnel during the period were as follows:

Six months ended

31 December 2020

2019

MANAGEMENT DISCUSSION AND ANALYSIS

BUSINESS REVIEW

China Supply Chain Holdings Limited (the “Company“, together with its subsidiaries, the “Group“) is a building maintenance and renovation service provider in Hong Kong. All revenue for the six months period ended 31 December 2020 (the “Period“) was derived from building maintenance and renovation services.

Revenue for the Period was approximately HK$174.6 million, representing an decrease of approximately HK$27.6 million or 13.6% when compared to the same period last year of approximately HK$202.2 million. It was mainly from the decrease of the revenue of building maintenance services which is due to no new contract of renovation service awarded during the Period and the new awarded contract of building maintenance services commenced in the last quarter of 2020.

Building maintenance services

As at 31 December 2020, we had 2 building maintenance contracts on hand with a notional or estimated contract value of approximately HK$552.4 million. As at 30 June 2020, we had 3 building maintenance contracts on hand with a notional or estimated contract value of approximately HK$553.3 million. During the Period, the Group had completed 1 building maintenance contract.

Renovation services

As at 31 December 2020, we had 4 renovation contracts on hand (including contracts in progress and contracts which are yet to commence) with a notional or estimated contract value of approximately HK$125.1 million. As at 30 June 2020, we had 4 renovation contracts on hand with a notional or estimated contract value of approximately HK$125.1 million.

RECENT DEVELOPMENT

Building maintenance services

During the Period, we had been successfully awarded for 1 building maintenance contract with a notional or estimated contract value of approximately HK$302.2 million, which commenced during the Period.

Renovation services

During the Period, we had no new contract for renovation services.

FUTURE DEVELOPMENT

We will focus on identifying opportunities for building maintenance projects, especially in the public sector, which is our core business. For renovation projects, with the growth in consciousness of building refurbishment in Hong Kong, we are confident in attaining new projects from the private sector.

FINANCIAL REVIEW

Revenue

Revenue derived from building maintenance services decreased by approximately HK$23.7 million or 17.6% from approximately HK$134.5 million for the same period in 2019 to approximately HK$110.8 million during the Period. As the new awarded contract of building maintenance services commenced in the last quarter of 2020, revenue of building maintenance services decreased compared with the same period in 2019.

Revenue derived from renovation services showed a decrease of approximately HK$3.7 million or 5.5% from approximately HK$67.6 million in the same period in 2019 to approximately HK$63.9 million during the Period. The decrease in revenue was caused by no new contract awarded during the Period.

Gross profit and gross profit margin

During the Period, the Group’s gross profit amounted to approximately HK$11.0 million (2019: HK$10.6 million) representing a slight increase of approximately HK$0.4 million. Gross profit margin for the Period was approximately 6.3% (2019: 5.2%). The increase in gross profit margin was caused by the increase in the gross profit margin for building maintenance and renovation services as mentioned below.

Gross profit attributable to building maintenance services for the Period amounted to approximately HK$8.5 million (2019: HK$8.2 million). The Group’s gross profit margin for building maintenance services for the Period was approximately 7.7% (2019: 6.1%). The increase in gross profit margin during the Period was attributable to cost control procedures implemented under the current difficult economic environment.

Gross profit attributable to renovation services for the Period amounted to approximately HK$2.5 million (2019: HK$2.4 million), representing a slight increase of approximately HK$0.1 million or 4.2%. It was consistent with no change in combination of contracts on hand during the Period. Gross profit margin from renovation services during the Period was approximately 3.9%, which was slightly higher than the same period in 2019 of approximately 3.6%. The improvement in gross profit margin was attributable to cost control procedures of renovation services.

Other income

During the Period, other income of the Group mainly comprised to the subsidies from the Employment Support Scheme of the Hong Kong Government amounted to approximately HK$3,211,000, the loan interest income to approximately HK$556,000 and bank interest income to approximately HK$271,000. For the same period in 2019, other income of the Group mainly comprised to the net income from the sales of construction materials amounted to HK$0.3 million, the loan interest income amounted to approximately HK$0.7 million and other income included bank interest income amounted to approximately HK$0.5 million.

Administrative expenses

Administrative expenses decreased by approximately HK$313,000 or 2.2% from approximately HK$14.2 million for the same period in 2019 to approximately HK$13.9 million for the Period. There was no significant change in administrative expenses of the Period compared with the same period in 2019.

Finance costs

Finance costs decreased by approximately HK$29,000 or 45.3% from approximately HK$64,000 for the same period in 2019 to approximately HK$35,000 for the Period. The decrease was mainly due to the decrease in the bank borrowings of the Group.

Profit for the Period

The Group recorded profit for the Period of approximately HK$1.3 million (2019: loss of approximately HK$2.2 million). The change was mainly attributable to the subsidies received from the Employment Support Scheme and reversal of impairment of trade and other receivables.

Liquidity, financial resources and capital structure

The Group generally finances its operation through cash from operations, bank borrowings and finance leases. As at 31 December 2020, the Group had total cash and bank balances of approximately HK$30.4 million (30 June 2020: HK$37.1 million). As at 31 December 2020, the Group had finance lease of approximately HK$617,000 (30 June 2020: nil). As at 31 December 2020, the share capital and equity attributable to owners of the Company amounted to approximately HK$11.2 million and HK$151.0 million respectively (30 June 2020: HK$11.2 million and HK$149.8 million respectively).

Foreign exchange risk

The Group’s business operations were conducted in Hong Kong. The transactions, monetary assets and liabilities of the Group were denominated in Hong Kong dollar. With the insignificant portion of monetary assets denominated in foreign currencies, the Group did not engage in the any derivatives agreement and did not commit to any financial instruments to hedge its foreign exchange exposure during the Period.

Gearing ratio

Gearing ratio is calculated based on the total debts divided by the total equity. The gearing ratio was approximately 1.5% and 0.2% as at 31 December 2020 and 30 June 2020, respectively. The increase in gearing ratio is due to increase in lease liabilities.

Charge over assets of the Group

As at 31 December 2020, the Group had pledged bank deposits of approximately HK$1.3 million (30 June 2020: HK$1.4 million) to banks to secure the banking facilities granted to the Group. In addition, the Group’s obligations under finance leases were secured by the lessors’ title to the leased motor vehicles with carrying value of approximately HK$917,000 (30 June 2020: nil).

Significant investments, acquisitions and disposals

The Group did not enter into any new significant investment during the six months ended 31 December 2020. The Group did not make any material acquisition and disposal of subsidiaries, associates or joint ventures for the Period.

Contingent liabilities

(a)Contingent liabilities in respect of legal claims

One subsidiary of the Group is defendant in a number of claims, lawsuits and potential claims relating to employees’ compensation cases and personal injuries claims. The Directors considered that the possibility of any outflow in settling the legal claims was remote as these claims were well covered by insurance and subcontractors’ indemnity. Accordingly, no provision for the contingent liabilities in respect of the litigations is necessary, after due consideration of each case and with reference to the legal opinion.

(b)Guarantee issued

At the end of each reporting period, the Group had provided guarantees to bank in respect of the following:

As at 31 December 2020, HK$1,250,000 (30 June 2020: HK$1,250,000) of performance bonds were given by a bank in favour of some of the Group’s customers as security for the due performance and observance of the Group’s obligations under the service contracts entered into between the Group and its customers. If the Group fails to provide satisfactory performance to its customers to whom performance bonds have been given, such customers may demand the bank to pay to them the sum or sums stipulated in such demand. The Group will then become liable to compensate such banks accordingly. The performance bonds will released upon completion of the contract work for the relevant customers.

Save as disclosed above, the Group had no material contingent liabilities as at 31 December 2020 (30 June 2020: nil).

Employees and remuneration policies

As at 31 December 2020, the Group had approximately 93 employees (30 June 2020: 93). The staff related costs included salaries, wages and other staff benefits, contributions and retirement schemes, provisions for staff long service payment and untaken paid leave. The Group recruits and promotes individuals based on their performance and development potential in the positions held. In order to attract and retain high quality staff and enable smooth operations within the Group, the Group offered competitive remuneration packages (with reference to market conditions and individual qualifications and experience) and various in-house training courses. The remuneration packages were subject to review on a regular basis. The emoluments of the Directors and senior management have been reviewed by the remuneration committee of the Company, having regard to the Company’s operating results, market competitiveness, individual performance and achievement, and approved by the Board.

Events after reporting period

There is no important events affecting the Group which have occurred since the end of the Period.

INTERIM DIVIDEND

The Board does not recommend the payment of an interim dividend for the six months ended 31 December 2020 (2019: nil).

PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SECURITIES

During the Period, neither the Company nor any of its subsidiaries had purchased, sold or redeemed any of the listed securities of the Company.

COMPLIANCE WITH LISTING RULES

Reference is made to the announcement of the Company dated 18 February 2021 . The Company failed to comply with Rules 3.10(1), 3.10(2), 3.10A, 3.21 and 3.25 of the Listing Rules and code provision A.5.1 of the Corporate Governance Code (the “Corporate Governance Code“) set out in Appendix 14 to the Listing Rules resulting from the retirement of two independent non-executive directors with effect from 17 and 18 February 2021, respectively. Following the appointment of Mr. Limjoco and Ms. Wong as set out above, the Board comprises nine directors including four executive directors, one non-executive director and four independent non-executive directors of which one of independent non-executive directors have appropriate professional qualifications or accounting or related financial management expertise. As a result, the Company has complied with the requirements under Rules 3.10(1), 3.10(2), 3.10A, 3.21 and 3.25 of the Listing Rules and code provision A.5.1 of the Corporate Governance Code since the appointment of Mr. Limjoco and Ms. Wong came into effect.

CORPORATE GOVERNANCE

Save as disclosed above, the Company has adopted and complied with all code provisions as set out under the Corporate Governance Code during the Period.

COMPLIANCE WITH MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS

The Company has adopted the Model Code as set out in Appendix 10 of the Listing Rules.

Upon enquiry by the Company, all the Directors have confirmed that they had complied with the required standard set out in the Model Code during the Period.

AUDIT COMMITTEE

The Company has an audit committee (the “Audit Committee“) established in compliance with Rule 3.21 of the Listing Rules with written terms of reference in compliance with the Corporate Governance Code. The responsibilities of the Audit Committee include reviewing financial statements, monitoring the appointment of and non-audit work undertaken by external auditors and reviewing the effectiveness of the internal controls of the Group. The Audit Committee consists of three independent non-executive Directors, namely Mr. Ross Yu Limjoco (chairman of the Audit Committee), Ms. Wong Carol Ka Low and Ms. Song Dan.

The interim financial results of the Group for the Period are unaudited but have been reviewed by the Audit Committee, which was of the opinion that the preparation of such results complied with the applicable accounting standards and requirements as well as the Listing Rules and that adequate disclosures have been made.

PUBLICATION OF INFORMATION ON THE WEBSITE OF THE STOCK EXCHANGE

This interim results announcement is published on the websites of the Stock Exchange (www.hkex.com.hk) and the Company (www.yat-sing.com.hk). The interim report for the six months ended 31 December 2020 containing all the information required by the Listing Rules will be despatched to the shareholders of the Company and published on the respective websites of the Stock Exchange and the Company in due course.

By order of the Board

China Supply Chain Holdings Limited

Ma Huijun

Chairman

Hong Kong, 28 February 2021

As at the date of this announcement, the Board comprises four executive Directors, namely Ms. Ma Huijun (Chairman), Mr. Dai Jian (Vice Chairman and Chief Executive Officer),

Mr. Lai Aizhong and Mr. Dai Ming; a non-executive Director, namely Mr. Zhang Junze and four independent non-executive Directors, namely Mr. Huang Shuhui, Ms. Song Dan, Mr.

Ross Yu Limjoco and Ms. Wong Carol Ka Low.