According to the medium-term development plan established by the Company, the Company will strive to become an overseas capital operations platform with leading edges for China Aerospace Science & Technology Corporation (“CASC”).  The Company is actively carrying out each key business according to the plan, such as to ensure a steady growth of the hi-tech manufacturing business, and the construction works for both hi-tech property projects, namely Shenzhen Aerospace Science & Technology Plaza and the Complex Zone of the Launching Site in Hainan Province, are progressing in an orderly manner. In addition, corresponding to the direction of developing aerospace technology application industry, the Company had made a significant move through the acquisition of a polyimide business and the establishment of a company engaging in the business of internet of things.

Hi-tech manufacturing

Dampened by multiple factors including the monetary tightening and the rise in labour and material costs in the PRC, the appreciation of RMB and the implementation of power supply control measures by the local governments, the manufacturing sector was exposed to another severe challenge after the financial tsunami in 2008. Nevertheless, pivoting on the sales efforts of the experienced management team, the hi-tech manufacturing business of the Company maintained a stable growth in revenue in the first half of the year. However, the operating profit decreased.

For the six months ended 30 June 2011, the hi-tech manufacturing business recorded a turnover of HK$1,006,745,000, representing an increase of 15.83% as compared with the same period of last year. Operating profit amounted to HK$97,240,000, representing a decrease of 14.60% as compared with the same period of last year. Both segments of printed circuit boards and plastic products attained prominent performance by contributing a turnover of HK$213,731,000 and HK$389,242,000 respectively, representing an increase of 19.38% and 19.07% as compared with the same period of last year respectively.

The profit before tax of each hi-tech manufacturing business segment dropped at varying degrees. The operating profit of the intelligent chargers segment was HK$16,732,000, representing a decrease of 0.32% as compared with the same period of last year. The operating profit of the printed circuit boards segment was HK$42,083,000, representing a decrease of 5.44% as compared with the same period of last year. The operating profit of the plastic products segment was HK$29,293,000, representing a decrease of 25.30% as compared with the same period of last year. The operating profit of the liquid crystal display segment was HK$5,816,000, representing a decrease of 18.12% as compared with the same period of last year.

Shenzhen Aerospace Science & Technology Plaza

In early 2011, Aerospace Science & Technology Finance Company Limited* (“航天科技財務有限責任公司”), a subsidiary of CASC, formed a syndicate with the Bank of China and the Industrial and Commercial Bank of China in respect of the provision of a syndicate loan in the amount of RMB1,500,000,000 to finance the construction of Shenzhen Aerospace Science & Technology Plaza. The syndicate loan and the related mortgage on the land use right, which constituted connected transactions of the Company, were approved by the independent shareholders of the Company at the Extraordinary General Meeting held on 25 March 2011, details of which please refer to the announcements of the Company dated 14 January 2011, 23 January 2011 and 25 March 2011, and the circular dated 25 January 2011. Amid the economic tightening in the macro-market conditions, the syndicate loan has timely provided a satisfactory financing for the project of Shenzhen Aerospace Science & Technology Plaza.

The foundation excavation and earthwork of the project of Shenzhen Aerospace Science & Technology Plaza have been basically completed. At present, the foundation works of the project are in progress and are expected to be completed in early 2012. To step up the marketing efforts on the project upon completion, a team of professional consultants has been engaged to fully gear up for the in-depth research of market positioning and preliminary market development of the project. As at 30 June 2011, the construction-in-progress together with the land use rights of Shenzhen Aerospace Science & Technology Plaza was valued at RMB1,422,000,000.

The Complex Zone of the Launching Site in Hainan Province

In 2011, the project of the Complex Zone of the Launching Site in Hainan Province  was mainly focused on expropriation of lands and establishment of resettlement zones. Currently, agreements have been reached with most of the local residents in respect of the terms of demolishment compensation. The detailed site planning and design of the resettlement zones have been basically completed and will be proceeded to the review and approval process. In relation to the Hainan Space Park, the detailed project planning and design will be commenced immediately after the optimization of the design plan. On the other hand, according to an agreement entered into, upon negotiation, with the host organization of the “Space Home Pavilion” of the Shanghai World Expo, a permanent home for the “Space Home Pavilion” will be located in the Complex Zone of the Launching Site in Hainan Province.

New materials business

New materials sector is one of the seven strategic and emerging industries that is emphasized to develop according to China’s “12th Five-year Plan”, and is also a major industry that is keenly developed by CASC at the forefront of aerospace technology applications. To capture the prevailing opportunities, the Company, after careful research, decided to step into the new organic polymer materials business with immense potentials through the acquisition of a 55% equity interest in Shenzhen Rayitek Hi-tech Film Company Limited* (深圳瑞華泰薄膜科技有限公司) (“Shenzhen Rayitek”).

Shenzhen Rayitek has been committed to the development of polyimide as the new polymer materials since its inception in 2004. It is a high-tech company engaging in the research and development, manufacturing and marketing of polyimide films and related composite materials. Polyimide is a special kind of new polymer materials. With its excellent properties of high temperature resistance and high insulation, polyimide has become an indispensable key material for the development of microelectronics technology. The polyimide materials, as a kind of special engineering materials, are actually in widespread use in a wide variety of aspects including aviation, aerospace, microelectronics, nanotechnology, liquid crystals, membranes and lasers.

The polyimide film products produced by Shenzhen Rayitek, such as insulation materials of wire, cable and electrical machinery, substrates of flexible printed circuit (FPC), tape automated bonding (TAB) and pressure-sensitive tape (PST), are mainly used in fields stretching from aviation, aerospace, microelectronic devices, electrical equipment to information industry. In early 2011, the polyimide film production line of Shenzhen Rayitek was officially put into operation, and was identified as a demonstration project of national high-tech industrialization by the National Development and Reform Commission.

Others

To optimize the Company’s assets, improve asset structure and the overall financial position, and promote the development of the Company’s main business operations, the Company entered into an agreement to dispose its entire interest in CASIL Satellite Holdings Limited in March 2011. The transaction is expected to be completed in the second half of the year and to generate a gain of approximately HK$100,000,000 for the Company, subject to final audit.

In May 2011, the Company set up Aerospace Digitnexus Information Technology (Shenzhen) Limited* (航天數聯信息技術（深圳）有限公司) by establishing a strategic partnership with international experts of internet of things, thereby laying a solid foundation for tapping into the business of internet of things.

In line with the Company’s future development plans, the Company had retained a professional manpower consulting company to conduct a research and analysis of the Company’s organizational structure, as well as the continued development and configuration of human resources, and to put forward optimization recommendations thereon. With reference to the relevant opinion, the Company had formed several new departments such as Corporate Development Department, Asset Management Department and Corporate Finance Department. The Company is of the view that the change of the organizational structure will effectively enhance the Company’s strengths in planning formulation, asset management, investment monitoring, financial management and investor relations.