Interim report 2026

China In-Tech Limited

(Incorporated in the Cayman Islands with limited liability) Stock Code: 00A64

Page

1. Corporate Information 2

2. Highlights 3

3. Management Discussion and Analysis 4

4. Supplementary Information 21

5. Condensed Consolidated Statement of Profit or Loss and 38

   Other Comprehensive Income

6. Condensed Consolidated Statement of Financial Position 40

7. Condensed Consolidated Statement of Changes in Equity 42

8. Condensed Consolidated Statement of Cash Flows 43

9. Notes to the Condensed Consolidated Financial Statements 44

Mr. Zhang Huijun (Chairman)

Ms. Cai Dongyan

(Chief Executive Officer)

Mr. Zhou Li Yang

Mr. Hu Zhigang Mr. Zhang Jiayou Mr. Ma Yu-heng

Mr. Ong Kam Chit Vincent

Mr. Ma Yu-heng (Chairman)

Mr. Hu Zhigang Mr. Zhang Jiayou

Mr. Hu Zhigang (Chairman)

Ms. Cai Dongyan Mr. Zhang Jiayou Mr. Ma Yu-heng

Mr. Hu Zhigang (Chairman)

Mr. Zhang Huijun Mr. Zhang Jiayou Mr. Ma Yu-heng

Cricket Square Hutchins Drive

P.O. Box 2681

Grand Cayman KY1-1111 Cayman Islands

Unit 506, 5/F,

New World Tower 1,

18 Queen's Road Central, Central, Hong Kong Telephone: (852) 3756 0012

Facsimile: (852) 3005 8292 Email: Info@co-nuoxin.com

Suntera (Cayman) Limited

Suite 3204, Unit 2A, Block 3, Building D

P.O. Box 1586, Gardenia Court, Camana Bay Grand Cayman, KY1-1100

Cayman Islands

Computershare Hong Kong Investor Services Limited

Shop 1712-1716,

17th Floor, Hopewell Centre 183 Queen's Road East Wanchai, Hong Kong

ZHONGHUI ANDA CPA Limited

Raymond Siu & Lawyers

Hang Seng Bank Limited

The Hongkong and Shanghai Banking Corporation Limited

Dah Sing Bank Limited

https://www.chinaintech464.com

00464

The board (the "Board") of directors (the "Directors") of China In-Tech Limited (the "Company") is pleased to present the unaudited interim results of the Company and its subsidiaries (collectively the "Group") for the six months ended 30 September 2025 (the "Period") together with the comparative figures for the corresponding period of last year (the "Last Corresponding Period").

During the Period, the Group recorded a revenue of approximately HK$43,601,000 (2024: HK$57,186,000), representing a decrease of approximately 23.8% from the Last Corresponding Period. The decrease in revenue was the combined effect of the increase in the revenue of approximately HK$9,565,000 from the information technology services segment and decrease in the revenue of approximately HK$23,150,000 from the electrical haircare appliances segment.

The decrease in revenue from the electrical haircare appliances segment was mainly due to the low consumer sentiment resulting from the worldwide economic uncertainties and the geopolitical tensions. It has adversely affected our orders from European and Asian markets for the Period.

The detailed reasons of decrease in revenue in the electrical haircare appliances segment during the Period are as follows:

By product types

The unit prices of hair dryer and hair straightener, being two major products of this business segment, increased during the Period but those of other products decreased. However, the quantities of these two major products sold during the Period decreased by approximately 51.0% and 58.0%, respectively. The total quantities of products sold during the Period decreased by approximately 60.0%.

By customers

The business from five major customers of the Group for the Period decreased by approximately 45.7% in term of revenue and 54.9% in term of quantity. Due to the weak demand, only four out of five major customers of the Group for the Last Corresponding Period remains the major customers for the Period.

By locations

In 2025, the economic growth of the European region remains sluggish with the growth rate below expectations. Due to the uncertainties of trade policy, geopolitical risks and interest rates, revenues from certain major European countries of the Group, such as United Kingdom, Netherlands, Hungary and Slovakia, decreased in the range of approximately 18% to 54%.

By locations (Continued)

For the Asian region, the Japanese market, which serves as the primary contributor of revenue in the region, continued to experience a decline in revenue during the Period due to persistently weakening demand. Revenue from Japan market decreased by 91.2% compared to the Last Corresponding Period, primarily attributable to a substantial reduction in revenue from one major Japanese customer that had contributed significantly in the Last Corresponding Period. To compensate the loss of revenue from this source, the Group has initiated discussions with other customers in the region and has been endeavouring to maintain its market share.

The increase in revenue from the information technology services segment was mainly due to the increase in the number of completed orders during the Period. Given that potential customers in general prefer service providers with established track records and reputation, the order confirmation probability is inevitably unstable. The slower-than-expected economic recovery during the post pandemic era also posed difficulties and challenges to the business of this business segment.

Electrical haircare appliances Information technology

services Total

Electrical haircare appliances Information technology services

Total

During the Period, the Group reported a gross profit of approximately HK$4,038,000 (2024: gross loss of HK$682,000), representing a gross profit margin of approximately 9.1% (2024: gross loss margin 1.2%).

The increase in gross profit from the electrical haircare appliances segment was mainly caused by the decrease in the production cost of the segment: (i) the decrease in the overall prices of raw materials, especially plastic materials due to the decrease in demand in manufacturing industries; and (ii) the decrease in labour cost per product in the Period.

The profit margin of the information technology services segment increased during the Period but it was still lower than that of 2023/24. Due to the economic uncertainties, the demand of the information technology service was relatively low during the Period. Besides, in order to maintain the customers' loyalty, we had to keep our service fee at a market competitive level. In the meantime, retaining our technical staff to provide high standard of services to our customers is important to the business operation. Those factors above led to a low gross profit margin of this segment comparing with previous years.

Electrical haircare appliances Information technology services Unallocated

Total

Net loss for the Period was approximately HK$19,040,000, which represented a decrease of approximately 19.1% from approximately HK$23,495,000 in the Last Corresponding Period.

Basic loss per share was HK2.988 cents, which represented a decrease of approximately 24.1% from the loss per share of HK3.939 cents in the Last Corresponding Period.

The Board has resolved not to declare the payment of an interim dividend for the six months ended 30 September 2025 (six months ended 30 September 2024: HK$Nil).

The Group is principally engaged in the design, manufacture and sale of electrical haircare appliances and provision of information technology system platform development services in the People's Republic of China (the "PRC"). Its headquarter is in Hong Kong and it operates a manufacturing base in Dongguan, the PRC and an operational office in Xiamen, the PRC.

Electrical Haircare Appliances

The products of the electrical haircare appliances segment are mainly sold on original design manufacturing ("ODM") and original equipment manufacturing ("OEM") basis. Its customers are mainly leading brand owners and importers which resell the products to beauty supply retailers and wholesalers, chain stores, mass merchandisers, warehouse clubs, catalogues and grocery stores.

During the Period, the Group continued to face challenging and adverse business environment. The recovery of global economy was procrastinated by the uncertainties such as high inflation, high interest rate and geopolitical conflicts such as the Russia-Ukraine conflict, the Israeli-Palestinian conflict and US tariffs on imported products from the PRC. It led to sluggish demand and weak consumer sentiment.

Most of the Group's customers are renowned global brands. The five major customers of this segment have accounted for approximately 97.3% and 86.4% of its total turnover during the Period and the Last Corresponding Period, respectively. The Group believes that the European and Asian markets will remain as the major revenue contributors of this segment from the geographical perspective in the coming years even the orders from those markets have reduced during the Period.

Mainland China remains as the Group's major production center. Similar to other manufacturers in Mainland China, the Group has faced a series of operating challenges, such as the slow recovery in export markets and the increasing other manufacturing expenses.

Electrical Haircare Appliance (Continued)

General market for the electrical haircare appliances

Due to the worldwide economic uncertainties and the geopolitical tensions, the consumer sentiment was still low during the Period. It was observed that the ultimate consumers take longer period of time to replace home appliances in general. In particular, for electrical haircare appliances, as the useful lives of the products of the Group are usually long under normal daily household operations, they do not need to replace their electrical haircare appliances unless there is new product function or other necessary advanced requirement. It affected the demand of the products from the customers (mainly branding distributors) which sell the products to the ultimate consumers. Thus, it decreased the quantities of the products sold during the Period.

Change of consumer preference

In the past, consumers mainly focused on electrical haircare appliances with strong wind, high temperature and functions like ionic function and cool/hot conversion. Nowadays, in addition to the above functions, consumers expect advanced technology such as AI temperature control with memory of consumer's preference, more convenient and portable in size for storage and travelling. In some major countries in the European regions, the market prefers more advanced products according to market research and it caused the revenue from the European regions experiencing a significant decrease.

Electrical Haircare Appliance (Continued)

Change of consumer preference (Continued)

In light of the above, the Group has been endeavouring to expend effort in the research and development of new products with new features. However, it takes time to achieve a breakthrough in technology and some of the existing products were phased out during the Period. The Group will closely communicate with the customers to understand and accommodate their requests and provide appropriate solutions to overcome this challenge.

As always, the Group has put efforts on improving the competitiveness of its high quality products together with bolstering its research and development capabilities with an aim to enhancing its market share and achieving a long-term relationship with its customers.

Information Technology Services

The Group commenced the business of provision of tailor-made information technology system platform (the "Platform") development services in the PRC to the customers in the second half of 2023 with a business partner (the "Business Partner") which holds 49% of the equity interest of Xiamen Tianyang Digital Technology Company Limited* (廈門天洋數字科技有限公司) ("Xiamen Tianyang"), an indirect non wholly-owned subsidiary of the Company.

Information Technology Service (Continued)

In the recent years, the government of the PRC has actively promoted digital management of cities and used data to carry out urban governance and provide various services. They require the operations of different industries to carry out information management to improve urban governance standards and the quality of public services and thus accelerate economic development. With the promulgation of new policies for digital city, data elements and big data, the implementation of major projects in the PRC and the need for economic recovery after the pandemic, enterprises are also digitising their operations to meet their needs.

The Group designs tailor-made platforms to provide data integration and consolidation process services according to the requirements and needs of customers. The processes include data extracting, transforming and loading (ETL). The platforms integrate data from different systems, applications or data sources into a unified and user-friendly format to provide the customers of the Group with a unified, accessible, easy and convenient view of relevant data to facilitate analysis, reporting, and business decision-making. The Group also assists the customers in providing training for the use of the customised systems.

The services of the Group allow its customers to improve the quality of decision-making, save cost of management and monitoring, increase operational efficiency, gain deeper customer understanding and promote innovation.

Save for certain administrative issue, the business of Xiamen Tianyang in general proceeded as planned. The Business Partner, equipped with a development team, has extensive experience in information technology support and system development in the PRC. Although the customers' orders confirmation was unstable under the current business environment and led to a decrease in revenue comparing with the previous years, the Group still believes that the information technology services segment has good prospects for development under the current plan of the government in the PRC during the post pandemic era.

Information Technology Service (Continued)

During the Period, the Group has provided services to customers in different aspects, including but not limited to, as follows:

Agricultural management platform

The platform integrates traditional agricultural management with modern information technology to form an intelligent management system. It incorporates sensor technology and big data analysis to assist farmers in improving production efficiency, reducing costs, and enhancing the quality and yield of agricultural products. The platform has multiple functional modules covering farmland utilisation, crop growth management, agricultural product quality monitoring, environmental monitoring and equipment management.

Smart campus management system for an educational institute

The system monitors the campus overview comprehensively covering, inter alia, climate, equipment, pedestrian flow, and patrol data. It also assists in emergency management including area monitoring, alarm monitoring and emergency notification to keep the teachers, students and staff safe.

Supply chain management system

The system coordinates, integrates, and optimises various links of the supply chain, covering the entire process from raw material procurement, production, inventory management, order processing, logistics transportation to product delivery to the end consumer. The system improves supply chain operational efficiency and transparency through demand forecasting, real-time data analysis, and monitoring, reduces inventory costs, lowers production and logistics risks, and enhances customer satisfaction.

Information Technology Service (Continued)

AI customer service management system

The system uses AI technology combined with multi-channel customer service and intelligent chatbots to achieve automated customer support and management. The system provides real-time responses, supports both voice and text customer service, integrates social platforms and websites, enhances service efficiency and customer experience, and optimises response processes through intelligent learning and data analysis. This helps enterprises to reduce labor costs and improve overall operational efficiency.

In the Period, the revenue of the information technology services segment accounted for approximately 46.7% of the revenue of the Group.

As at 30 September 2025, the Group had approximately HK$34,632,000 bank and cash balances (31 March 2025: HK$11,399,000). The increase in bank and cash balances was mainly attributable to the decrease in costs and expenses and increase in proceeds from the issue of new shares.

As at 30 September 2025, the Group had total borrowings of approximately HK$35,311,000 (31 March 2025: HK$35,005,000), comprising trade finance of approximately HK$2,333,000 (31 March 2025: HK$1,781,000), bank borrowings of approximately HK$32,682,000 (31 March 2025: HK$26,896,000), bank overdraft of approximately HK$296,000 (31 March 2025: HK$nil) and loans from a related party of HK$nil (31 March 2025: HK$6,328,000). The trade finance and bank borrowings carried interest rates ranging from HIBOR/LIBOR plus 1.8% to 2.0% (31 March 2025: 1.8% to 2.0%) or 1% (31 March 2025: 1%) below Prime Rate and 8% (31 March 2025: 8%) over Prime Rate, respectively.

The net current liabilities as at 30 September 2025 amounted to approximately HK$13,950,000 (31 March 2025: HK$3,624,000). Current ratio of the Group as at 30 September 2025 was approximately 0.88 (31 March 2025: 0.96).

The Group has adopted a prudent financial and funds management approach towards its treasury policies and will continuously monitor its financial resources to ensure sufficient funding to meet working capital and capital expenditure requirements.

The Group's financial statements are denominated in Hong Kong dollars. The Group conducts its business transactions mainly in Hong Kong dollars, United States dollars and Renminbi. As the Hong Kong dollar remains pegged to the United States dollar, there is no material exchange rate risk in this respect. During the Period, the Group did not engage in any derivatives activities and did not commit to any financial instruments to hedge its exposure to foreign exchange risk.

Based on the information that is publicly available to the Company and within the knowledge of its Directors, as at the latest practicable date prior to the printing of this report, the Company has maintained sufficient public float of its issued shares as required under the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited (the "Listing Rules").

As at 30 September 2025, the Group had capital commitments of HK$497,000 (31 March 2025: HK$912,000).

As at 30 September 2025, the Group had no material contingent liabilities (31 March 2025: HK$Nil).

As at 30 September 2025, the Group had a total workforce of 297 (31 March 2025: 344) including 19 employees (31 March 2025: 22) in Hong Kong. Employee costs, including directors' emoluments, amounted to approximately HK$16,171,000 for the Period (2024: HK$21,604,000) and the decrease in staff costs was mainly attributable to the decrease in the size of the total work force in electrical haircare appliances segment. The Group's remuneration policy is underscored by the principle of awarding equitable packages to employees, incentive-based where applicable, with remuneration being performance-oriented and market-competitive. Remuneration packages are normally reviewed on a regular basis. Apart from salary payments, the Group offers other staff benefits, including share options, performance-based bonuses, provident fund contributions and medical insurance coverage.

On 14 April 2025, the Company, as the issuer, entered into six subscription agreements with six subscribers, pursuant to which the subscribers had conditionally agreed to subscribe for, and the Company had conditionally agreed to allot and issue, 46,000,000 new ordinary Shares in aggregate at the subscription price of HK$0.22 per subscription Share. The subscription Shares were allotted and issued under the general mandate granted by the Shareholders at the annual general meeting of the Company held on 3 September 2024. The net issue price was approximately HK$0.22 per subscription Share. The table below sets out the background of the subscribers:

Subscriber A An individual investor with extensive experience in equity investment and is a merchant.

Subscriber B An individual investor with extensive experience in equity investment and is a merchant.

Subscriber C An individual investor with extensive experience in equity investment and engages in cloud computing business in the PRC.

Subscriber D An individual investor with extensive experience in equity investment and engages in electronic commerce in the PRC.

Subscriber E An individual investor with extensive experience in equity investment and engages in electronic commerce in the PRC.

Subscriber F An individual investor with extensive experience in equity investment and a consultant for an energy company in the PRC.

To the best of the knowledge, information and belief of the Directors, having made all reasonable enquiries, the subscribers were independent of the Company and its connected persons.

The closing price was HK$0.27 per Share as quoted on the Stock Exchange on the date of the subscription agreements. The aggregate nominal value of the subscription Shares was HK$46,000. The subscriptions were completed and 46,000,000 new Shares in aggregate were allotted and issued to the subscribers on 30 April 2025. Immediately after the completion of the subscriptions, no subscriber was regarded as a substantial Shareholder and a connected person of the Company under Chapter 14A of the Listing Rules.

The net proceeds from the subscriptions amounted to approximately HK$10.0 million. Approximately HK$5.0 million and HK$5.0 million were fully utilised for repayment of debts and general working capital as intended respectively. The Directors considered that the subscriptions represented a good opportunity to raise additional funds to strengthen the financial position and liquidity of the Group and meet any future development and financial obligations at a reasonable cost. The Directors were of the view that, apart from debt financing, the subscriptions help to broaden the Company's funding channels.

For the details of the subscriptions, please refer to the announcements of the Company dated 14 April 2025 and 30 April 2025.

Given the ongoing global economic uncertainties and evolving market conditions, the Group adopts a cautious approach towards the outlook for its electrical haircare appliances and information technology services segments.

For the electrical haircare appliances segment, ongoing pressure on demand is expected in the second half of the current financial year due to the low consumer sentiment, changing consumer preference and increased competition in the market. The Group continues on developing new products with innovative features to meet the consumer expectation and address the intense competition. On the other hand, to improve the liquidity and the performance, the Group will continue prioritising product quality and cost control, while carefully managing inventory and maintaining communication with customers and suppliers to sustain steady performance.

For the information technology services segment, the business environment remains challenging with tightening budgets among corporate clients and rapid technological changes. The Group plans to focus on operational efficiency and selective investment in high-potential areas, aiming to preserve profitability while pursuing opportunities for exploring new income stream.

The Company considers that Web3.0 and blockchain technology will increase its dominance in the technology world in the near future and anticipates that blockchain market involving on-chain data services is expected to experience rapid growth over the next 5 to 10 years. The Group intends to put more resources in this field with a view to enhance its ability to build solutions or applications with Web3.0 technology and to offer add-on settlement/payment solutions and services offerings to the Group's existing information technology system platform and provide linkage of such settlement/payment solutions with traditional bank settlement platform. The Group is in the process of assessing various arrangements to carry out this business development and identifying different business partners.

The Group will continue to explore opportunities and to expand and diversify its business activities, with a view to create new sources of income and to maximise the return to the Company and the shareholders of the Company (the "Shareholder(s)") in the long run.

As at 30 September 2025, the number of listed shares of HK$0.001 each in the share capital of the Company (the "Shares") was 639,154,000 Shares (31 March 2025: 593,154,000 Shares).

Neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the listed Shares during the Period.

The Board has resolved not to declare payment of an interim dividend for the six months ended 30 September 2025 (six months ended 30 September 2024: HK$Nil).

As at 30 September 2025, none of the Directors or chief executives of the Company had any interests and short positions in the Shares, underlying Shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (the "SFO")), as recorded in the register maintained by the Company under Section 352 of the SFO; or as notified to the Company and the Stock Exchange of Hong Kong Limited (the "Stock Exchange") pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code") as set out in Appendix C3 to the Listing Rules.

As at 30 September 2025, the interests and short positions of the persons, other than Directors and chief executive of the Company, in the Shares and underlying Shares as recorded in the register required to be kept under section 336 of the SFO or which would fall to be disclosed to the Company and the Stock Exchange pursuant to Divisions 2 and 3 of Part XV of the SFO were as follows:

China Yuen Capital Limited (Note 1) Beneficial owner 252,132,500 39.45%

China Investment International Limited

(Note 1)

Interest of controlled corporation

252,132,500 39.45%

Asia Glory Management Group Limited

(Note 1)

Interest of controlled corporation

252,132,500 39.45%

Luckever Holdings Limited (Note 1) Interest of controlled

corporation

252,132,500 39.45%

Note:

1. Luckever Holdings Limited is owned as to 60.87% by Mr. Liu Xuezhong and 39.13% by Ms. Li Yuelan (the spouse of Mr. Liu Xuezhong).

   China Yuen Capital Limited is owned as to 100% by China Investment International Limited, which is owned as to 100% by Asia Glory Management Group Limited, which in turn is owned as to 100% by Luckever Holdings Limited. By virtue of the SFO, each of China Investment International Limited, Asia Glory Management Group Limited, Luckever Holdings Limited, Mr. Liu Xuezhong and Ms. Li Yuelan were deemed to be interested in the 252,132,500 Shares held by China Yuen Capital Limited.

   Mr. Liu Xuezhong also holds 3,452,000 Shares as beneficial owner. By virtue of the SFO, Ms. Li Yuelan was deemed to be interested in the 3,452,000 Shares held by Mr. Liu Xuezhong.

2. 東海證券股份有限公司 is the 100% immediate holding company of Donghai International Financial Holdings Company Limited. By virtue of the SFO, 東海證券股份有限公司 is deemed to be interested in the 226,332,500 Shares held by Donghai International Financial Holdings Company Limited.

Save as disclosed above, as at 30 September 2025, no person (other than Directors and chief executive of the Company) had an interest or short position in the Shares and underlying Shares which were recorded in the register required to be kept under section 336 of the SFO or which would fall to be disclosed to the Company and the Stock Exchange pursuant to Divisions 2 and 3 of Part XV of the SFO.

Pursuant to a Shareholders' resolution passed on 6 August 2015, the Company adopted a share option scheme (the "2015 Share Option Scheme") which remained in force for a period of ten (10) years. It expired on 5 August 2025. There was no option granted, exercised, cancelled or lapsed under the 2015 Share Option Scheme during the Period (31 March 2025: Nil). There was no outstanding option under the 2015 Share Option Scheme as at 30 September 2025 (31 March 2025: Nil).

As at 1 April 2025, the number of share options available for grant under the 2015 Share Option Scheme was 44,564,600.

Pursuant to a Shareholders' resolution passed on 22 August 2025, the Company adopted a new share option scheme (the "New Share Option Scheme") which will remain in force for a period of ten (10) years. There was no option granted, exercised, cancelled or lapsed under the New Share Option Scheme during the Period. There was no outstanding option under the New Share Option Scheme as at 30 September 2025.

As at 30 September 2025, the number of share options available for grant under the New Share Option Scheme was 63,915,400.

Save and except the New Share Option Scheme, the Company has not adopted any other share scheme.

Save as disclosed above, at no time during the Period were there any rights to acquire benefits by means of the acquisition of securities of the Company granted to any Director or their respective spouse or children under 18 years of age, or were there any such rights exercised by them; or was the Company, its holding company, its subsidiaries or fellow subsidiaries a party to any arrangement to enable the Directors to acquire such rights in any other body corporate.

Save and except for interests in the Group, none of the Directors and controlling Shareholders nor their respective associates (as defined under the Listing Rules) had any interest in any other companies as at 30 September 2025 which may, directly or indirectly, compete with the Group's business.

To enhance accountability, transparency, independence, responsibility and fairness to the Shareholders and stakeholders of the Company, the Company is dedicated to develop the appropriate framework of corporate governance for the Group. The Group will keep on evaluating and improving the corporate governance practices and procedures from time to time to ensure its commitment to the corporate governance standard and strive for the enhancement of shareholder value.

In the opinion of the Board, the Company has complied with the applicable code provisions of the Corporate Governance Code (the "CG Code") as set out in Appendix C1 of the Listing Rules throughout the Period and up to the date of this report.

The Company has adopted procedures governing directors' securities transactions in compliance with the Model Code as set out in Appendix C3 of the Listing Rules. Upon enquiry by the Company, all the Directors have confirmed that they have fully complied with the required standards as set out in the Model Code throughout the Period.

The Board comprises six Directors, three of whom are executive Directors, namely, Mr. Zhang Huijun (Chairman), Ms. Cai Dongyan (Chief Executive Officer) and Mr. Zhou Li Yang, and three of whom are independent non-executive Directors, namely, Mr. Hu Zhigang, Mr. Zhang Jiayou and Mr. Ma Yu-heng.

The remuneration committee of the Company (the "Remuneration Committee") was established with the purpose (i) to review and give comment to the overall remuneration policy and remuneration packages of the Group; (ii) to review and give comment to the basic salary of the executive Directors and senior management of the Group; (iii) to review and give comment to the performance bonus of the executive Directors; (iv) to note the fact that no compensation had been paid to the executive Directors and senior management of the Group in relation to their resignation, if any; (v) to recommend the remuneration packages of the executive Directors and senior management of the Group for each financial year prior to recommending them to the Board for determination; and (vi) to review the share schemes of the Company.

The Remuneration Committee comprises of three independent non-executive Directors namely, Mr. Hu Zhigang, Mr. Zhang Jiayou and Mr. Ma Yu-heng and one executive Director, Mr. Zhang Huijun. Mr. Hu Zhigang was appointed as chairman of the Remuneration Committee.

The nomination committee of the Company (the "Nomination Committee") was established to formulate nomination policy for the consideration of the Board and to implement the nomination policy laid down by the Board. It has adopted the terms of reference, which are in line with the CG Code under Appendix C1 to the Listing Rules.

The Nomination Committee comprises three independent non-executive Directors namely, Mr. Hu Zhigang, Mr. Zhang Jiayou and Mr. Ma Yu-heng and one executive Director, Ms. Cai Dongyan. Mr. Hu Zhigang was appointed as the chairman of the Nomination Committee.

The audit committee of the Company (the "Audit Committee") was established on 29 April 2005 with written terms of reference in compliance with Rule 3.21 of the Listing Rules and the CG Code as set out in Appendix C1 to the Listing Rules. The primary duties of the Audit Committee are, inter alia, to review and supervise the financial reporting process, risk management and internal control system of the Group, to review the financial statements focusing particularly on (i) any changes in accounting policies and practices of the Group; (ii) the compliance with accounting standards and (iii) the compliance with the legal requirements, as well as to review the Company's annual reports and interim reports.

The Audit Committee has the responsibilities and powers set forth in the terms of reference of the Audit Committee. Committee members shall meet at least twice per year to review and consider the interim and final results of the Company prepared by the Board.

The Audit Committee comprises three independent non-executive Directors, namely, Mr. Hu Zhigang, Mr. Zhang Jiayou and Mr. Ma Yu-heng. Mr. Ma Yu-heng was appointed as the chairman of the Audit Committee. None of the Audit Committee members are members of the former or existing auditors of the Company.

The Audit Committee has discussed with the management the accounting principles and policies adopted by the Group, and reviewed this report and the Group's unaudited interim condensed consolidated financial statements for the Period.

The Company has set up an internal audit department since February 2008. The Audit Committee has met with the internal auditor and discussed with the Board about the internal control report. The Board also, through the Audit Committee, conducted a review of the effectiveness of the systems of internal control and risk management of the Group which cover all material controls, including strategic, financial, operational and compliance controls. The Audit Committee considers the systems effective and adequate.

The Company has engaged an accountant with appropriate working experiences in the Finance & Accounting Department of the Group as the internal auditor.

The Board was satisfied with the adequacy of resources, staff qualifications and experiences, training programmes and budget of the Company's accounting, internal audit and financial reporting functions.

The Board recognises risk management as one of the key elements to the success of the Company. The Group takes a pragmatic approach to manage different risks to align with its business development strategically. The management identifies potential risks, assesses their impact and likelihood and develops appropriate action plans to mitigate risks to a level that the Company is willing to take in achieving the Company's objectives on a regular basis. The Group will continue to enhance the risk management practices and internal control system and adopt a stringent governance framework with reference to the best practice in the market.

The Board has the overall responsibility in maintaining sound and effective internal control and risk management systems within the Group and reviewing their effectiveness, particularly in respect of the financial, operational, and compliance controls, and setting appropriate policies so that the objectives of the Group can be effectively and efficiently achieved and the associated risks can be identified, managed and mitigated to an acceptable level.

Appropriate policies and procedures are provided to our staff to take all measures that can (i) safeguard assets against unauthorised use or disposition; (ii) keep proper and accurate accounting records and enhance the reliability of financial reporting; and (iii) ensure efficiency and effectiveness of operations and compliance with applicable laws and regulations. The design of the internal control and risk management systems is to provide reasonable, but not absolute, assurance against material misstatement or loss, and to manage and minimise the risk of failure in the Group's operational systems.

The Group did not have any significant investment, material acquisitions and disposals of subsidiaries, associates and joint ventures during the Period.