ANNOUNCEMENT OF INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2017 · 2019. 8. 7. · – 2 – The board (the “Board”) of directors (the “Director(s)”) of Sinosoft Technology

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

SINOSOFT TECHNOLOGY GROUP LIMITED中國擎天軟件科技集團有限公司

(Incorporated in the Cayman Islands with limited liability)(Stock Code: 1297)

ANNOUNCEMENT OF INTERIM RESULTSFOR THE SIX MONTHS ENDED 30 JUNE 2017

HIGHLIGHTS

• RevenueoftheGroupforthesixmonthsended30June2017reachedapproximatelyRMB239.2million,representinganincreaseofapproximately16.9%ascomparedwithRMB204.7millionforthesixmonthsended30June2016.

• Profitandtotalcomprehensiveincomeforthesixmonthsended30June2017reachedapproximatelyRMB75.2million,representinganincreaseofapproximately12.6%ascomparedwithapproximatelyRMB66.8millionforthesixmonthsended30June2016.

• Basicearningspershareforthesixmonthsended30June2017wasRMB6.07cents,representinganincreaseofapproximately12.6%ascomparedwithRMB5.39cents(restated)forthesixmonthsended30June2016(Note).

Note: TheGroupdistributed1bonusshareforevery5existingsharesbasedonthe1,032,258,000ordinarysharesinissueasat19September2016(the“Bonus Issue”).Forthepurposeofcomparison,the206,451,600newlyissuedshareshavebeenregardedasifthoseshareswereinissuesince1January2016.Earningspershareforthesixmonthsended30June2016wasrestatedaccordingly.

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Theboard(the“Board”)ofdirectors(the“Director(s)”)ofSinosoftTechnologyGroupLimited(the“Company”)ispleasedtoannouncetheunauditedinterimresultsoftheCompanyanditssubsidiaries(collectively,the“Group”)forthesixmonthsended30June2017,togetherwiththecomparativefiguresforthecorrespondingperiodin2016,asfollows:

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEFOR THE SIX MONTHS ENDED 30 JUNE 2017

Six months ended 30 June 2017 30June2016 NOTES RMB’000 RMB’000 (unaudited) (unaudited)

Revenue 3 239,175 204,671Value-addedtaxrefund 4,696 4,198Costofsales (94,254) (77,630)Researchanddevelopmentcosts (29,026) (31,120)Otherincomeandgains 4 4,930 6,563Distributionandsellingexpenses (18,845) (12,758)Administrativeandgeneralexpenses (23,466) (18,600)Otherexpensesandlosses (597) (2,825)

Profitbeforetaxation 5 82,613 72,499Taxation 6 (7,393) (5,689)

Profitandtotalcomprehensiveincomefortheperiod 75,220 66,810

RMB RMB cents cents (unaudited) (unaudited) (restated)

Earnings per share—Basicanddiluted 7 6.07 5.39

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CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITIONAT 30 JUNE 2017

As at Asat 30 June 31December 2017 2016 NOTES RMB’000 RMB’000 (unaudited) (audited)

Non-current assetsProperty,plantandequipment 105,271 107,335Leaseprepaymentforlanduserights 14,488 14,714Intangibleassets 9 197,638 200,650Available-for-saleinvestments 2,000 2,000

319,397 324,699

Current assetsInventories 1,626 12,796Tradeandotherreceivables 11 671,684 607,243Pledgedbankdeposits — 18,207Bankbalancesandcash 244,064 277,415

917,374 915,661

Current liabilitiesTradeandbillspayables 12 57,149 80,289Otherpayables 81,974 65,943Taxliabilities 5,270 15,553

144,393 161,785

Net current assets 772,981 753,876

Total assets less current liabilities 1,092,378 1,078,575

Non-current liabilityDeferredtaxliabilities 10 44,964 43,277

Net Assets 1,047,414 1,035,298

Capital and reservesSharecapital 10,009 10,009Reserves 1,037,405 1,025,289

Total equity attributable to owners of the Company 1,047,414 1,035,298

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2017

1. BASIS OF PREPARATION

ThecondensedconsolidatedfinancialstatementshavebeenpreparedinaccordancewithInternationalAccountingStandard(“IAS”)34,Interim Financial Reporting,issuedbytheInternationalAccountingStandardsBoardaswellastheapplicabledisclosurerequirementsofAppendix16totheRules(the“Listing Rules”)GoverningtheListingofSecuritiesonTheStockExchangeofHongKongLimited(the“Stock Exchange”).

2. PRINCIPAL ACCOUNTING POLICIES

Thecondensedconsolidatedfinancialstatementshavebeenpreparedonthehistoricalcostbasis.

Theaccountingpoliciesandmethodofcomputationusedinthecondensedconsolidatedfinancialstatementsforthesixmonthsended30June2017arethesameasthosefollowedinthepreparationoftheGroup’sconsolidatedfinancialstatementsfortheyearended31December2016.

TheGrouphasnotearlyappliedthefollowingnewandrevisedInternationalFinancialReportingStandards(“IFRS”)thathavebeenissuedbutarenotyeteffective:

AmendmentstoIAS7 DisclosureInitative1

AmendmentstoIAS12 RecognitionofDeferredTaxAssetsforUnrealisedLosses1

AmendmentstoIFRS2 ClassificationandMeasurementofShare-basedPayment Transactions2

AmendmentstoIFRS4 ApplyingIFRS9FinancialInstrumentswithIFRS4Insurance Contracts2

IFRS9 FinancialInstruments2

IFRS15 RevenuefromContractswithCustomers2

IFRS16 Leases3

1Effectiveforannualperiodsbeginningonorafter1January2017.2Effectiveforannualperiodsbeginningonorafter1January2018.3Effectiveforannualperiodsbeginningonorafter1January2019.

TheDirectorsanticipatethattheapplicationofIFRS15inthefuturemayhaveamaterialimpactontheamountsreportedanddisclosuresmadeintheGroup’scondensedconsolidatedfinancialstatements.However,itisnotpracticabletoprovideareasonableestimateoftheeffectofIFRS15untiltheGroupperformsadetailedreview.

Exceptasdescribedabove,theDirectorsconsiderthattheapplicationoftheothernewIFRSsandamendmentsisunlikelytohaveamaterialimpactontheGroup’scondensedfinancialpositionandperformanceaswellasdisclosure.

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3. REVENUE AND SEGMENT INFORMATION

TheGroupisorganisedintodifferentbusinessunitsbyproducts,basedonwhichinformationispreparedandreportedtotheGroup’schiefoperatingdecisionmaker(the“CODM”)(i.e.,theboardofDirectorsoftheCompany)forthepurposesofresourceallocationandassessmentofperformance.

Formanagementpurposes,theGroupisorganisedintofourcoreproducts,namely(i)taxsoftwareandrelatedservices;(ii)carbonmanagementsolutions;(iii)e-Governmentsolutions;and(iv)systemintegrationsolutions.TheseproductsformthebasisonwhichtheGroupreportsitssegmentinformation.

ThefollowingisananalysisoftheGroup’srevenueandresultsbyoperatingsegmentsfortheperiodunderreview:

Six months ended 30 June 2017 30June2016 RMB’000 RMB’000 (unaudited) (unaudited)

Segment revenueTaxsoftwareandrelatedservices 54,582 52,559Carbonmanagementsolutions 38,226 22,390e-Governmentsolutions 123,614 103,508Systemintegrationsolutions 22,753 26,214

Totalrevenue 239,175 204,671

Segment resultsTaxsoftwareandrelatedservices 46,430 45,222Carbonmanagementsolutions 25,830 12,499e-Governmentsolutions 48,099 42,256Systemintegrationsolutions 232 142

Totalsegmentresults 120,591 100,119Otherincomeandgains 4,930 6,563Distributionandsellingexpenses (18,845) (12,758)Administrativeandgeneralexpenses (23,466) (18,600)Otherexpensesandlosses (597) (2,825)

Profitbeforetaxation 82,613 72,499Taxation (7,393) (5,689)

Profitandtotalcomprehensiveincomefortheperiod 75,220 66,810

TheCODMdoesnotreviewassetsandliabilitiesbyoperatingsegmentforthepurposeofresourceallocationandperformanceassessment.

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Geographical information

TheGroup’snon-currentassetsaresubstantiallylocatedinthePeople’sRepublicofChina(the“PRC”),theplaceofdomicileoftherelevantgroupentities.SubstantiallyalloftheGroup’srevenueisderivedfromthePRC.

4. OTHER INCOME AND GAINS


Interestincome 4,002 6,350Governmentgrants(Note) 765 213Others 163 —

4,930 6,563

Note:

ThegrantsareincentivereceivedbythePRCsubsidiariesforeminentcontributiontotechnologydevelopmentandencouragementofbusinessdevelopment.Thesegrantsareaccountedforasimmediatefinancialsupportwithnofuturerelatedcostsexpectedtobeincurrednorrelatedtoanyassets.

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5. PROFIT BEFORE TAXATION

Profitbeforetaxationhasbeenarrivedataftercharging/(crediting):


Depreciationofproperty,plantandequipment 4,270 1,971Amortisationofleaseprepaymentforlanduserights 180 —Amortisationofintangibleassets: amortisationofcapitalisedsoftwarecosts (includedincostofsales) 37,639 31,522 amortisationofothersoftware(includedinresearch anddevelopmentcosts) 25,103 25,554

67,192 59,047

Netforeignexchange(loss)/gain (586) 97

Costofinventoriesrecognisedasanexpense 55,418 46,108

6. TAXATION


Currenttax: PRCenterpriseincometax(“EIT”) 5,766 9,294 Overprovisioninprioryears (60) (4,531)Deferredtaxcharge: Currentperiod 1,687 926

7,393 5,689

Note:

TheCompanyhadnoassessableprofitssubjecttoincometaxinanyjurisdictionssinceitsincorporation.

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TheCompany’ssubsidiariesestablishedinthePRCaresubjecttoPRCEITatratesprevailingundertherelevantlawsandregulationsinthePRCasfollows:

1. On31October2014,NanjingSkytechCo.,Limited(“Nanjing Skytech”)andJiangsuSkyinformationCo.,Limited(“Jiangsu Skyinformation”)obtained“High-techEnterprise”certificates.Accordingly,theapplicableincometaxratesforbothNanjingSkytechandJiangsuSkyinformationforthecurrentperiodare15%(sixmonthsended30June2016:15%).

Inadditiontobeingrecognisedasa“High-techEnterprise”,enjoyingapreferentialcorporateincometaxrateof15%,ifanenterpriseisapprovedandcertifiedbyrelevantregulatoryauthoritiesas“KeySoftwareEnterpriseundertheNationalPlan”fortheperiod,itcanfurtherenjoyapreferentialtaxrateof10%.In2016,CaiShui[2016]No.49hasbeenenactedthatentitiescanregisterforthe“KeySoftwareEnterpriseundertheNationalPlan”intaxbureauiftheentitiescomplywithrelevantrequirements.NanjingSkytechwasconsideredtomeetthoserequirements.Therefore,NanjingSkytechusedapreferentialcorporateincometaxrateof10%(sixmonthsended30June2016:10%)forthecurrentperiod.TheapplicationofthepreferentialtaxratestatedaboveissubjecttocriticalaccountingestimatesoftheGroup’smanagementbasedontheirpastexperience.

2. NanjingSkytechQuanShuiTongInformationTechnologyCo.,Limited(“Quan Shui Tong”)wasformerlyeligibleforcertaintaxholidaysandconcessionsandwereexemptedfromPRCEITfortwoyearsstartingfromitsfirstprofit-makingyear,followedbya50%reductionforthefollowingthreeyears.QuanShuiTongcommenceditsfirstprofit-makingyearinthefinancialyearended31December2014.Accordingly,forthecurrentperiod,QuanShuiTonghad50%reductiononPRCEIT(sixmonthsended30June2016:50%reduction)(i.e.taxrateat12.5%forbothperiods)andthetaxholidaysandconcessionsforQuanShuiTongwillendintheyearending31December2018.

3. TheapplicableEITrateforZhenjiangSkyinformationCo.,Limited(“Zhenjiang Skyinformation”),JiangsuSkytechInvestmentManagementCo.,Limited,(“Jiangsu Skytech Investment”),QingdaoSkytechSoftwareCo.,Limited(“Qingdao Skytech Software”)andNanjingAisitaRealEstateCo.,Limited(“Nanjing Aisita”)are25%forthecurrentperiod(sixmonthsended30June2016:25%).

7. EARNINGS PER SHARE

Thecalculationofbasicearningspershareisbasedontheunauditedprofitforthesixmonthsended30June2017ofapproximatelyRMB75,220,000(sixmonthsended30June2016:RMB66,810,000)and1,238,709,600shares(asat30June2016:restated1,238,709,600shares).

DilutiveearningspershareisthesameasbasicearningspershareastheGrouphadnopotentialoutstandingordinarysharesthroughoutthesix-monthperiodended30June2017and30June2016.

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8. DIVIDENDS

Duringthesixmonthsended30June2017,a2016finaldividendamountingtoRMB0.0233(approximatelyHKD0.0267)persharewasproposedbytheDirectorson30March2017,andsubsequentlyapprovedattheannualgeneralmeetingdated10June2017.TheDirectorsdidnotrecommendpaymentofaninterimdividendforthesix-monthperiodended30June2017(six-monthperiodended30June2016:nil).

Duringthesixmonthsended30June2016,a2015finaldividendamountingtoRMB0.0195(approximatelyHKD0.0228)pershare(adjustedforBonusIssue)wasproposedbytheDirectorson20March2016,andsubsequentlyapprovedattheannualgeneralmeetingdated28June2016.

9. INTANGIBLE ASSETS

Duringthesixmonthsended30June2017,theGroupincurredtheadditionsofcostatapproximatelyRMB59,730,000(sixmonthsended30June2016:RMB30,884,000)whichrepresentedthecapitalisedsoftwarecostsgeneratedinternallyamountingtoapproximatelyRMB44,615,000(sixmonthsended30June2016:RMB19,139,000)andotherpurchasedsoftwareamountingtoapproximatelyRMB15,115,000(sixmonthsended30June2016:RMB11,745,000)forthenewsoftwareproductdevelopment.

10. DEFERRED TAXATION

Thefollowingarethedeferredtaxassets/(liabilities)recognisedbytheGroupandmovementsthereonduringthecurrentandpriorperiods:

Withholding Allowance for tax on Capitalised doubtful undistributed software receivables profits costs Total RMB’000 RMB’000 RMB’000 RMB’000

At1January2016(audited) 395 (8,038) (23,701) (31,344)Credit/(charge)toprofitorloss 423 (3,300) 1,951 (926)

At30June2016(unaudited) 818 (11,338) (21,750) (32,270)

At1January2017(audited) 817 (17,038) (27,056) (43,277)Credit/(charge)toprofitorloss — (4,000) 2,313 (1,687)

At30June2017(unaudited) 817 (21,038) (24,743) (44,964)

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UndertheEITLawofPRC,dividendspaidtonon-residentoverseasshareholdersdeclaredinrespectofprofitsearnedbythePRCsubsidiariesfrom1January2008onwardsissubjecttoaPRCwithholdingtaxrateofupto10%.ForinvestorsincorporatedinSingapore,apreferentialrateof5%willbeappliedwhereappropriate.Asat30June2017and31December2016,theGrouphasfullyprovidedthedeferredtaxliabilitiesofwithholdingtaxontheundistributedearningsofthePRCsubsidiaries.

Thedeferredtaxbalancehasreflectedthetaxratesthatareexpectedtoapplyintherespectiveperiodswhentheassetisrealisedortheliabilityissettled.

11. TRADE AND OTHER RECEIVABLES

As at Asat 30 June 31December 2017 2016 RMB’000 RMB’000 (unaudited) (audited)

Tradereceivables 644,577 557,138Less:Allowancefordoubtfuldebts (5,453) (5,453)

639,124 551,685

Prepaymentstosuppliers 23,109 24,031Prepaymenttothetrustee 4 23,525Deposits 2,141 1,296Value-addedtaxrecoverable 661 2,242Advancestoemployees 4,255 2,785Leaseprepaymentforlanduserights 360 314Others 2,030 1,365

Totaltradeandotherreceivables 671,684 607,243

TheGroup’stradecustomersareprincipallygovernmentagenciesandtheGroupofferedcredittermstothemwithreferencetotheexpectedtimingofsettlementfromthecustomers,whichwasaroundoneyear,althoughalongercredittermmaybeextendedtocertaincustomers,dependingonprice,thesizeofthecontract,credibilityandreputationofthecustomers.Thefollowingisanagedanalysisoftradereceivablesnetofallowancefordoubtfuldebtspresentedbasedonthedateofdeliveryofgoodsorrenderingofservicestocustomerswhichapproximatedtherespectivedatesonwhichrevenuewasrecognised.

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0to60days 224,513 266,95861to90days 182 6,51391to180days 8,862 6,642181to365days 219,189 93,423Over1yearbutlessthan2years 111,787 108,815Over2years 74,591 69,334

639,124 551,685

12. TRADE AND BILLS PAYABLES

Thefollowingisanagedanalysisoftradeandbillspayablespresentedbasedontheinvoicedateattheendofthereportingperiod:


0to90days 51,229 72,34691to180days 759 387181to365days 2,051 2,862Over1year 3,110 4,694

57,149 80,289

Thetradeandbillspayablescompriseamountsoutstandingfortradepurchases.Paymenttermswithsuppliersaremainlyoncreditwithin90daysfrominvoicedate.

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MANAGEMENT DISCUSSION AND ANALYSIS

OVERALL DEVELOPMENT

Duringthefirsthalfof2017,informatizationcontinuedtodevelop.Underthebackdropofincreasinglabourcosts,enterpriseswerekeentoenhanceefficiencythroughinformationtechnology.Customers’demandfortheGroup’sproductsincreasedaccordingly,whichinturnbroughttheGrouptoachievesatisfactoryyear-on-yeargrowthinrevenue,profitandcashflowforthesixmonthsended30June2017.

Duringtheperiodunderreview,theGroupcontinuedtoutilizenewtechnologiessuchascloudcomputingandbigdata,tointegrategovernmentservicesandinternetapplications,soastocontinuouslydevelopmoreinnovativeapplicationsoftwareproductsforgovernmentsandindustries.Amongthenewproductslaunchedinthefirsthalfof2017intheareaoftaxsoftwareandrelatedservicessegmentistheonlineinvoiceverificationsystem,whileunderthee-Governmentsegment,acityelectronicdoornumbersystemandDidipolice-aproductforpoliceserviceswhichisderivedfromsharedeconomymodelwaslaunched.Intheareaofcarbonmanagement,alowcarbontransportationplatformwasintroduced.TheseproductsareallfirstofitskindinventedinChina.Inaddition,alloftheseproductsareabletofacilitateworkflowforgovernmentagenciesandenterprises,aswellastobringconveniencetocitizens,thus,recognizedbythemarket.

REVENUE

Forthesixmonthsended30June2017,theGroup’srevenuerecordedapproximatelyRMB239.2million,representinganapproximately16.9%growthwhencomparedtoapproximatelyRMB204.7millionforthesameperiodin2016.Duringtheperiodunderreview,theGroup’scorebusinesssegmentsnamelytaxsoftwareandrelatedservices,carbonmanagementsolutionsande-Governmentsolutionsrecordedanincreaseinrevenue,withagrowthrateforcarbonmanagementsolutionsreachingover70%,whichinturncontributedtotheincreaseoftheGroup’sresultsforthefirsthalfof2017.

Tax Software and Related Services

Duringtheperiodunderreview,theGroupadjusteditsstrategiesinordertocombatthechallengesbroughtaboutbythecontinuouseconomicandexportslowdown.Apartfromprovidingtaxsoftwareandrelatedservicestoenterprises,theGroupalsocooperatedwithalargeforeigntradeintegratedserviceprovider,tooffercomprehensiveexporttaxrebateriskscontrolsolutions.RevenuefromtaxsoftwareandrelatedservicesrecordedapproximatelyRMB54.6million,representinganincreaseofapproximately3.8%whencomparedwithapproximatelyRMB52.6millionforthesameperiodin2016.

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Carbon Management Solutions

Underthebackdropofcontinuouspropellingenergysaving,environmentalprotectionandecologicalcivilizationpolicies,togetherwiththesoontobelaunchednationalcarbontradingmarket,demandforcarbonmanagementsolutionsfromdifferentadministrativelevelsandenterprisesisstrong.Duringthesixmonthsended30June2017,theGrouphasimplementedcarbonmanagementsolutionsin4lowcarbonpilotcities,drivingtherevenueinthissegmenttosurgebyapproximately70.7%toapproximatelyRMB38.2million,ascomparedtoapproximatelyRMB22.4millionforthesameperiodin2016.

e-Government Solutions

Forthesixmonthsended30June2017,revenuegeneratedfrome-GovernmentsolutionsachievedapproximatelyRMB123.6million,representinganincreaseofapproximately19.4%whencomparedwithapproximatelyRMB103.5millionforthesameperiodin2016.Duringtheperiodunderreview,theGroup’ssignatureproductsofjudicialandsecurityrelatedplatformscontinuedtorecordstrongsales.ClientsforjudicialproductscoveredalladministrativelevelsfromtheCentralGovernmenttoprovincialandmunicipalgovernments,assuch,nationallayoutforjudicialproductsexpansionwasachieved.AlongwiththeCentralGovernment’sintensifyingdemandininformatizationmanagementcapabilities,e-Governmentsolutionsisenteringintoaprosperousperiod.Theincreasedinsuchrelatedspendinghelpedbringaboutgovernmentagencies’demandfornewproductsaswellasupgradingofexistingproducts,whichinturncontributedtotheincreaseinrevenue.

System Integration Solutions

SystemintegrationsolutionsisnottheGroup’skeybusinesssegment,butacomplementaryservicetotheGroup’sothercorebusinesssegmentspurportingtoprovideatotalsolutionsservicetotheGroup’scustomers.Duringthesixmonthsended30June2017,revenuegeneratedfromsystemintegrationsolutionssegmentamountedtoapproximatelyRMB22.8million,ascomparedtoapproximatelyRMB26.2millionforthesameperiodin2016.

COST OF SALES

TheGroup’scostofsalesislargelymadeupofamortisationofcapitalisedsoftwaredevelopmentcostsaswellasthecostsforpurchasingsystemsandcomponentsforsomeofitsprojects.Duringtheperiodunderreview,theGrouphasbeenintensifyingitsinvestmentindevelopingnewproducts,whichledtotheincreasesinbothamortisationcostsandcoststopurchasesystemsandcomponents.Thesehaveresultedinanincreaseofapproximately21.4%intheGroup’scostofsales,fromapproximatelyRMB77.6millionduringthesixmonthsended30June2016toapproximatelyRMB94.3millionduringthesixmonthsended30June2017.

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SEGMENT RESULTS AND SEGMENT RESULTS MARGIN

TheGroup’stotalsegmentresults(representingthesumofrevenueandvalue-addedtaxrefund,lesscostofsalesandresearchanddevelopmentcosts)grewbyapproximately20.4%toapproximatelyRMB120.6millionforthesixmonthsended30June2017fromapproximatelyRMB100.1millionforthesixmonthsended30June2016.

TheGroup’soverallsegmentresultsmarginincreasedtoapproximately50.4%inthesix-monthperiodended30June2017,ascomparedwithapproximately48.9%inthesix-monthperiodended30June2016,attributabletotheincreaseinsegmentresultsmarginofcarbonmanagementsolutions.

RESEARCH AND DEVELOPMENT COSTS

Forthesixmonthsended30June2017,theGroup’sresearchanddevelopment(“R&D”)costsdecreasedbyapproximately6.7%toapproximatelyRMB29.0millionascomparedwithapproximatelyRMB31.1millionforthesixmonthsended30June2016.ApartfromtheamortisationofpurchasedsoftwareforR&Dactivities,R&Dcostsalsoincludedrental,utilitiesandotherexpensesassociatedwiththeGroup’sR&Ddepartment.ThedecreaseinR&DcostsismainlyduetothesavinginrentalcostsaftertheacquisitionbytheCompanyoftheofficebuildinginNanjing,whichtheCompanyusedtooccupyastenantforitsheadquarter,duringthesecondhalfof2016.

OTHER INCOME AND GAINS

TheGroup’sotherincomeandgainswhichwasmainlymadeupoftheinterestincomeearnedfrombankdepositsdecreasedfromapproximatelyRMB6.6millionforthesixmonthsended30June2016toapproximatelyRMB4.9millionforthesixmonthsended30June2017,mainlyduetothelowerinterestrateenvironment.

DISTRIBUTION AND SELLING EXPENSES

TheGroup’sdistributionandsellingexpensesincreasedfromapproximatelyRMB12.8millionduringthesixmonthsended30June2016toapproximatelyRMB18.8millionduringthesixmonthsended30June2017,attributabletoproactivebusinessexpansion.

ADMINISTRATIVE AND GENERAL EXPENSES

TheGroup’sadministrativeandgeneralexpensesincreasedfromapproximatelyRMB18.6millionduringthesixmonthsended30June2016toapproximatelyRMB23.5millionduringthesixmonthsended30June2017,attributabletocontinuousbusinessgrowth.

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OTHER EXPENSES AND LOSSES

OtherexpensesandlossesoftheGroupdecreasedtoapproximatelyRMB0.6millionforthesixmonthsended30June2017,ascomparedtoapproximatelyRMB2.8millionforthesixmonthsended30June2016.ThisisduetotherecognitionofallowancefortradereceivablesofapproximatelyRMB2.8millionmadeduringthesixmonthsended30June2016.

INCOME TAX EXPENSE

TheGroup’sincometaxexpenseincreasedbyapproximately30.0%fromapproximatelyRMB5.7millionforthesixmonthsended30June2016,toapproximatelyRMB7.4millionforthesixmonthsended30June2017.TheincreasewasmainlyduetoawritebackofincometaxexpenseamountingtoapproximatelyRMB4.5millionduringthesixmonthsended30June2016.

PROFIT AND TOTAL COMPREHENSIVE INCOME

ProfitandtotalcomprehensiveincomeoftheGroupforthesixmonthsended30June2017amountedtoapproximatelyRMB75.2million,representinganincreaseofapproximately12.6%ascomparedwithRMB66.8millionforthesixmonthsended30June2016.Fortheperiodunderreview,netprofitmarginwasmaintainedatasatisfactorylevelofapproximately31.4%.

NET CURRENT ASSETS

Asat30June2017,theGrouphadnetcurrentassetsofapproximatelyRMB773.0million(31December2016:RMB753.9million).

FINANCIAL RESOURCES AND LIQUIDITY

Duringthesixmonthsended30June2017,theGroup’sprimarysourceoffundingcamefromcashgeneratedfromitsoperatingactivities.Asat30June2017,thenetcashinflowfromoperatingactivitiesamountedtoapproximatelyRMB45.2million(30June2016:approximatelyRMB0.5million)andtheGrouphadcashandcashequivalentofapproximatelyRMB244.1million(31December2016:RMB277.4million).

Asat30June2017,theGrouphasnoborrowings(31December2016:Nil)andnosignificantcontingentliabilities.AstheGrouphasnoborrowingsasat30June2017,nogearingratio(whichiscalculatedastotaldebtdividedbytotalequity)wasshown.AssetsoftheGrouphadnotbeenchargedtoanythirdpartyintheperiodunderreview.

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INTANGIBLE ASSETS

TheGroup’sintangibleassetsconsistmainlyofcapitalisedsoftwarecostsandpurchasedsoftware.TheincreaseinintangibleassetswasmainlyattributabletotheadditiontocapitalisedsoftwarecostsofapproximatelyRMB44.6million(30June2016:RMB19.1million)andtheadditiontopurchasedsoftwareofapproximatelyRMB15.1million(30June2016:RMB11.7million)lesstheamortisationchargesfortheperiodunderreview.

HUMAN RESOURCES

Asat30June2017,theGrouphadatotalof647employees(31December2016:635).TheGroupofferedcompetitivesalarypackages,aswellasdiscretionarybonusesandcontributiontosocialinsurancetoitsemployees.InordertoensurethattheGroup’semployeesremaincompetitiveintheindustry,theGroupadoptedtrainingprogramsforitsemployeesmanagedbyitshumanresourcesdepartment.TheCompanyhasalsoadoptedashareoptionschemeandshareawardschemetorecogniseandmotivatecontributionsofitsemployees.FurtherdetailsregardingtheshareoptionschemeandshareawardschemehasbeensetoutintheCompany’sannualreportfortheyearended31December2016.

FOREIGN EXCHANGE EXPOSURE

TheprimaryeconomicenvironmentinwhichtheGroupoperatesisinthePRCanditsfunctionalcurrencyisRenminbi(“RMB”).However,certainoftheGroup’sbankbalancesandotherpayablesaredenominatedinUnitedStatesDollar(“USD”)andHongKongDollar(“HKD”),whicharecurrenciesotherthanthefunctionalcurrencyoftherelevantgroupentitiesandexposetheGrouptoforeigncurrencyrisk.

Duringtheperiodunderreview,theGrouprecordedanexchangelossofapproximatelyRMB586,000(30June2016:exchangegainofapproximatelyRMB97,000).Thisexchangelossduringthesixmonthsended30June2017wasaresultoftheappreciationofRMBagainsttheUSDandHKDwhereduringtheperiodunderreview,theGrouphadnetassetsinUSDandHKD.

Nocurrencyhedgingarrangementsweremadeasat30June2017.TheGroupwillcontinuetocloselymonitorandmanageitsexposuretofluctuationinforeignexchangeratesandmakeappropriatearrangementasandwhennecessary.

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OUTLOOK

In2017,theCentralGovernmentofthePRChasclearlysetamacro-goalforpromotingmodernizationinstategovernancesystemandgovernancecapability.InformatizationhasbeentakenasastrategicmeasureforChina’sreformationingovernance.Alllevelsofgovernmentdepartmentsarefocusedon“informatizationthinking”,topromotemodernizationingovernanceandinformatizationinpublicservices.Thishasbroughtaboutagrowingdemandforinformationtechnologyfromgovernmentagencies,enterprisesandcitizenswhichleadstoanincreaseinmarketdemandforapplicationsoftware.Underthemegatrendofinformatization,togetherwithincreasingpoliciesforpromotinge-Governmentsolutions,lowcarbonandenvironmentalprotection,aswellasenhancingtechnologicalapplicationstandard,theGroupispresentedwithmanybusinessopportunities.Withyearsofexperienceaccumulatedandpossessingprofessionalknowledgeintax,lowcarbonande-Governmentindustries,combiningtheapplicationofadvancedtechnologies,theGroupwillcontinuetoseekoutopportunitiesforofferingefficientandinnovativesolutionssoastobringaboutsustainablegrowth.

Fortaxsoftwareandrelatedservices,theGroupwillcontinuetoleverageonitsexperienceintheexportindustry,understandingincustomers’demandandprofessionalknowledge.Togetherwithbreakingtheboundaryofsoftwareproductsbyimplementinginternetcapabilitiesandcloudcomputingtechnologyintonewproducts,theGroupstrivestoprovideall-timeaccessibilityandwidecoverageinternet-basedproductsandcloud-basedservices.TheGrouprecentlylaunchedsoftwareproductsrelatedtoinvoiceverificationwhichfurtherhelpenhanceefficiencyforexportenterprises,aswellasenrichtheGroup’staxproductlines.TheGroupwillcontinuetointensifythepromotionof“cloud-basedtrainingprogram”,enablingstaffsofexportenterprisestoparticipateintrainingwithgreaterflexibility.Thesenewproductsandservicesthatutilizecloudplatformforcoveringthewholecountry,willensurethattheGroup’staxproductsarenolongerrestrictedtoaspecificregion.Assuch,itwillbemorefavorableforpromotingtaxsoftwareandrelatedservicestomarketsoutsideofJiangsuProvince.

Forcarbonmanagementsolutions,alongwiththenationalcarbontradingmarketwhichisexpectedtobelaunchedsoon,demandforvariouscarbonmanagementrelatedproductsfromrelevantparties,suchasdifferentadministrativelevels,carbonemissionenterprisesandcarbontradingagencies,willprobablysurge.Forcarbonemissionenterprises,theestablishmentofcarbontradingmarketwilltranslatelowcarbonrelatedexternalpolicypressureintointernaleconomicincentives.Therefore,enterprises,especiallythoseinthehighenergyconsumptionindustriesandtraditionalmanufacturingindustries,willhaveenormousdemandforenterprisescarbonassetmanagementsoftwareproducts.Meanwhile,differentadministrativelevelsalsohaveincreasingdemandforcarbontradingrelatedproducts.TheGroupwillseizetheopportunitiesandpromoteitsabundantcarbonmanagementproductlinestodifferentgeographicalmarkets.Apartfromthecarbonmanagementrelatedplatforms,theGroup’spollutionrightstradingsystemseriesthatis

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relatedtoenvironmentalprotection,isridingonthestrategicdirectionofapplyingtechnologytoenhanceecologyandenvironment.Ithassetthebenchmarkfortheindustryandisbeingpursuedbymanyprovincesandmunicipalsandisexpectedtoobtainahugemarket.

Fore-Governmentsolutions,theGroupwillcontinuetoenhancefeaturesinjudicialandsecurityrelatedplatforms,toexploremoreconvenientandinnovativeapplications,andtopromotetomarketsoutsideJiangsuProvince.Intelligentjudicialproducts,whichhavebeenbrewingfortwoyears,havefinallyspreadoutitsnationalexpansionlayoutinthefirsthalfof2017.Goingforward,alongwiththetrendofincreasingspendinginthirdpartyservicesbythegovernment,theGroupwillapplyitscapabilityinbigdataanalysis,toplanaseriesofinnovativeproductsforlegalservices,legalpromotionandlawenforcementmanagementetc.,andtopromoteindifferentprovincesacrossthecounty.Inaddition,withthecityelectronicdoornumbersystemwhichwaslaunchedinthefirsthalfofthisyear,theGroupwillleverageonbigdataanalysisanddevelopdifferentproductstargetinggovernmentagencies,enterprisesandcitizens.Atthesametime,theGroupwillcontinuouslyexplorethepotentialincomputingabilityofAlibabaCloudComputingLimited,andpaymentandfinanceplatformbyAntFinancialServicesGroup,todevelopothere-Governmentproducts,especiallyproductsrelatedtogovernmentservicesandcitymanagement.Thus,theobjectiveisultimatelytoestablishnewsmartcityandfurtherexpandthemarket.

Ridingonthetrendofinformatization,togetherwiththecompetitiveedgesandprospectsindifferentcorebusinesssegments,theGroupwillcontinuetostrengthenitsR&Dandenhanceitscompetitiveness,toprepareforgreatergrowthinthefuture.

INTERIM DIVIDEND

TheBoarddidnotrecommendthepaymentofaninterimdividendforthesixmonthsended30June2017(Forthesixmonthsended30June2016:nil).

COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE

TheCompanyhasadoptedtheCorporateGovernanceCode(the“CG Code”)assetforthinAppendix14totheListingRulesasitscorporategovernancecodeofpractices.TheCompanyhascompliedwithalloftheapplicablecodeprovisionsassetoutintheCGCodethroughoutthesixmonthsended30June2017,saveforthedeviationofcodeprovisionA.2.1asbelow:

CodeprovisionA.2.1oftheCGCodeprovidesthat,amongstothers,therolesofchairmanandchiefexecutiveshouldbeseparateandshouldnotbeperformedbythesameindividual.Ms.XinYingmeiiscurrentlythechairladyandchiefexecutiveofficeroftheCompanyresponsibleforoverseeingtheoperationsoftheGroup.

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TheBoardhasconsideredthemeritsofseparatingtherolesofchairladyandchiefexecutivebutisoftheviewthatitisinthebestinterestsoftheCompanytovestthetworolesinMs.XinYingmei.TheBoardconsidersthatvestingthetworolesinMs.XinYingmeiensuresthattheCompanyisunderaconsistentleadershipandfacilitatestheimplementationandexecutionoftheGroup’sbusinessstrategiescurrentlyandintheforeseeablefuture.TheGroupwillneverthelessreviewthestructurefromtimetotimeinlightoftheprevailingcircumstances.

COMPLIANCE WITH THE MODEL CODE FOR SECURITIES TRANSACTIONS

TheCompanyhasadoptedtheModelCodeforSecuritiesTransactionsbyDirectorsofListedIssuers(the“Model Code”)assetforthinAppendix10totheListingRulesasthecodeforsecuritiestransactionsbytheDirectors.TheCompanyhasmadespecificenquirieswiththeDirectorsandalltheDirectorshaveconfirmedthattheyhavecompliedwiththeModelCodethroughoutthesixmonthsended30June2017.

TheCompanywasnotawareofanyincidenceofnon-compliancewiththeModelCodebytheDirectorsduringthesixmonthsended30June2017.

PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES OF THE COMPANY

Duringthesixmonthsended30June2017,neithertheCompanynoranyofitssubsidiarieshadpurchased,soldorredeemedanyoftheCompany’slistedsecurities.

REVIEW OF INTERIM RESULTS

TheunauditedinterimresultsoftheGroupforthesixmonthsended30June2017hasbeenreviewedbytheauditoroftheCompany,BakerTillyHongKongLimited,inaccordancewithHongKongStandardonReviewEngagements2410—“ReviewofInterimFinancialInformationPerformedbytheIndependentAuditoroftheEntity”issuedbytheHongKongInstituteofCertifiedPublicAccountants.TheindependentreviewreportoftheauditorwillbeincludedintheinterimreportoftheCompanytobedespatchedtoitsshareholders.TheunauditedinterimresultsoftheGroupforthesixmonthsended30June2017hasalsobeenreviewedbytheauditcommitteeoftheCompany(the“Audit Committee”).TheAuditCommitteehasbeenestablishedincompliancewithRule3.21andRule3.22oftheListingRulesandwithwrittentermsofreferenceincompliancewiththeCGCode.TheAuditCommitteeconsistsofthreeindependentnon-executiveDirectors:Mr.KangChoonKiat,Mr.KwaukTehMing,WalterandMr.ZongPing.Mr.KwaukTehMing,WalterservesasthechairmanoftheAuditCommittee.TheprimaryresponsibilitiesoftheAuditCommitteearetoreviewandmonitorthefinancialreporting,internalcontrolsandriskmanagementsystemsoftheCompanyandtoassisttheBoardtofulfillitsdutiesandresponsibilitiesasassignedbytheBoard.

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PUBLICATION OF INTERIM RESULTS ANNOUNCEMENT AND INTERIM REPORT

ThisinterimresultsannouncementispublishedonthewebsiteoftheStockExchangeat www.hkexnews.hkandontheCompany’swebsiteatwww.sinosoft-technology.com.TheinterimreportoftheGroupforthesixmonthsended30June2017containingalltherelevantinformationrequiredbytheListingRuleswillbedespatchedtotheshareholdersandpublishedonthewebsitesoftheStockExchangeandtheCompanyinduecourse.

ByOrderoftheBoard Sinosoft Technology Group Limited Xin Yingmei Chairlady

HongKong,22August2017

As at the date of this announcement, the executive Directors of the Company are Ms. Xin Yingmei and Mr. Yu Yifa, the non-executive Director of the Company is Mr. Hu Xiaoming, Simon, and the independent non-executive Directors of the Company are Mr. Kang Choon Kiat, Mr. Kwauk Teh Ming, Walter and Mr. Zong Ping.

Documents

ANNOUNCEMENT OF INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2017 · 2019. 8. 7. · – 2 – The board (the “Board”) of directors (the “Director(s)”) of Sinosoft Technology