TIDMJSI
RNS Number : 9455K
Jiasen International Holdings Ltd
27 September 2016
JIASEN INTERNATIONAL HOLDINGS LIMITED
half-yearly results for the six months ended 30 june 2016
Jiasen International Holdings Limited ("Jiasen" or "the
Company"), together with its subsidiaries ("the Group"), is pleased
to report its unaudited results for the six month period ended 30
June 2016 ("HY2016"). Jiasen is an international property fit-out
business specialising in designing, manufacturing, and installing a
range of wooden products for residential and commercial
properties.
Trading conditions continued to be challenging, driven by slower
economic growth and a weaker property development market in China
which has led to increased credit risk for the property sector. In
response to reduced demand and to insulate the business from the
risk of doubtful debts, in Q4 2015 the Company began to restructure
the business by scaling back its property segment, shifting its
focus to the wholesale distribution segment and significantly
reducing its cost base to align to the expected trading
revenues.
The restructuring is now complete and the shift in focus has
established a stable and sustainable platform from which the
business can grow. In the period under review, the Company
delivered an increase in operating profit margin of 200 basis
points to 24.2%. No trade receivables are more than three months
overdue as at 30 June 2016. As a result, no further provisions for
bad and doubtful debts were required to be made in HY2016.
Financial Key Points
-- Revenue decreased by 58.3% to RMB 178 million (HY2015: RMB 427 million)
-- Operating profit margin was 24.2%, up 200 basis points (HY2015: 22.2%)
-- Profit before tax decreased by 54.8% to RMB 42 million (HY2015: RMB 93 million)
-- Profit after tax decreased by 52.9% to RMB 32 million (HY2015: RMB 68 million)
-- Net profit margin was 17.9%, up 200 basis point (HY2015: 15.9%)
-- Strong balance sheet with cash and cash equivalents of RMB
373 million as at 30 June 2016 (30 June 2015: RMB 339 million and
31 December 2015: RMB 299 million)
-- As at 31 December 2015, a bad debt provision of RMB 52.3
million was made against a trade receivable of RMB 84 million. The
Company agreed with the customer that the balance be repaid as and
when the properties within which the Group's products are installed
are ultimately sold. The Company has actively managed the current
debtor and in HY2016, RMB 40 million was received from the customer
with a further RMB 44 million to be received as more properties are
sold
-- The Board has decided to maintain its suspension of dividend
payments (as first announced on 30 June 2015) and will review the
decision again when conditions and the Company's performance
improves.
Operational Key Points
-- No new property projects were undertaken in the period in
order to insulate the business from risk of doubtful debts. This
restructuring of the business by suspending its property segment
and reducing its cost base proportionately has allowed for the
establishment of a stable and sustainable platform from which the
business can grow.
-- Wholesale distribution revenue increased by 10% to RMB 148
million (HY2015: RMB 135 million) and accounted for 84% (HY2015:
32%) of the Group's revenue
-- Export contributed 16% (HY2015: 12%) of the Group's revenue
-- Furniture and fittings accounted for 56% (HY2015: 71%) of the Group's revenue
-- Continued focus on the sale of non-door products where there are higher margins
-- As indicated in the Company's final results for the year
ended 31 December 2015, in light of the wider macroeconomic
conditions and the lack of demand for the Company's products in the
property segment, the Board has agreed with the local government
(Quanzhou Economic Development District - Guangqiao Sector)
("QEDD") to defer the decision to purchase 47 hectares of land for
its new factory until the end of 2016. Should the Company decide
against the investment, QEDD will refund the down payment in full.
Jiasen is exploring the opportunity to finance and develop the new
land.
Outlook
-- Trading in the first two months of the second half of 2016
has continued to be challenging, and is expected to remain so for
the remainder of the year
-- Continued focus on the wholesale distribution segment of the
business to mitigate exposure to the property segment and the risk
of bad debt
-- The Company intends to selectively take on new property
projects in the future but will only service developers which are
financially robust and can demonstrate the ability to meet
contractual obligations
-- Focus on working more closely with the Company's distributors
and seek to appoint new distributors to enhance performance
COMMENTING ON THE RESULTS, WEIGANG CHEN (CHAIRMAN) SAID:
"In response to the difficult trading environment, the Board
initiated a number of actions in Q4 2015 to insulate the business
from the turbulent property sector in China. These actions, which
included scaling back the property segment and reducing our cost
base to better reflect our expected trading revenue, have
established a stable and sustainable platform from which the
Company can grow. This is evidenced by the improvement in our
margin and the reduction of trade receivables in the period. We
expect that trading conditions will continue to be challenging for
the remainder of the year, however, we are now well positioned and
confident of the future."
For further information, please visit www.jsih.net or
contact:
Jiasen International
Holdings Limited Gareth Wong +86 18016603993
-------------------------- ----------------------- ----------------
Cairn Financial Advisers
LLP Jo Turner +44 (0)20
(Nominated Adviser) Liam Murray 7148 7900
-------------------------- ----------------------- ----------------
Beaufort Securities
Limited +44 (0)20
(Broker) Elliot Hance 7382 8300
-------------------------- ----------------------- ----------------
Shan Shan Willenbrock +44 (0)20
Cardew Group David Roach 7930 0777
-------------------------- ----------------------- ----------------
Notes to Editors
-- Jiasen is an international property fit-out business
specialising in designing, manufacturing, kitting and installation
of multiple wooden products for residential properties. The Company
was established in 2001 and is based in Quanzhou City, Fujian
province, located in south-eastern China. Its products are sold and
marketed under the 'Fuyou' brand and produced in its 83,000 sqm
factory in Nan'an City, Fujian province.
-- Jiasen's main products include doors, wall panels and
assorted fixtures, such as fitted wardrobes, cupboards and skirting
boards, and furniture which are sold principally to property
development projects, through branded 'Fuyou' retail stores and to
export markets. The Company's products are sold in three main
segments: residential and property development projects, wholesale
distribution and export.
EXECUTIVE CHAIRMAN'S STATEMENT
Introduction
This has been a challenging half year for the Company. Turnover
decreased 58.3% to RMB 178 million (HY2015: RMB 427 million) and
profit before tax decreased by 54.8% to RMB 42 million (HY2015: RMB
93 million). Business performance was impacted by China's economic
growth and the slowdown in property which has meant property
developers have either delayed projects or decreased their
investment in residential developments. This has affected demand
for Refined Housing Decoration or semi-furnished homes across the
country, resulting in significantly reduced demand for our products
in the property segment. In light of the difficult trading
environment, the Board took swift and prudent action to restructure
the business by scaling back its property segment in Q4 2015,
significantly reducing its cost base to align to the expected
trading revenues and focusing on the wholesale distribution
segment. While overall revenue and profit has reduced, profit
margins have increased and the prudent strategy has insulated the
business from the risk of bad and doubtful debts in the period.
Given the scale and size of our property projects, any bad debt
would have a significant impact on our business and our actions
were necessary to ensure the business is on a stable and
sustainable platform from which it can grow. At final results, we
made a provision of RMB 52 million against a trade receivable of
RMB 84 million. We agreed with the customer that the balance be
repaid as the properties within the Group's products are installed
and ultimately sold. We actively managed the debtor and in HY2016,
RMB 40 million was received from the customer with a further RMB 44
million to be received as more properties are sold.
The wholesale distribution segment of our business performed
strongly and revenues grew by 10% to RMB 148 million (HY2015: RMB
135 million) as a result of new outlets in strategic locations
which opened in 2015. The Company now has 16 distributors which
operate 54 outlets across China. We have focused on working more
closely with distributors and seeking to appoint new distributors
to enhance our performance.
Export remains a small part of our business, contributing 16%
(HY2015: 12%) of the Group's revenue.
Land Purchase and Future Development
As announced at our final results for 2015, in light of a weaker
property market, the Board has decided to review the decision to
purchase 47 hectares of land for its new factory, and any decision
deferred until the end of 2016. This has been verbally agreed with
the local government (Quanzhou Economic Development District -
Guangqiao Sector) ("QEDD"). The total cost of the land is RMB 217
million and the Company made a down payment of RMB 69 million in
February 2015. Should the Company decide against the investment,
QEDD will refund the down payment in full.
Dividend Policy
The Board has decided to maintain its suspension of dividend
payments (as first announced on 30 June 2015) and will review the
decision again when conditions and the Company's performance
improves.
Strategy and Outlook
In China, we continue to face difficult trading conditions. The
Board's decision to scale back its property segment was necessary
in order to insulate the business, and to mitigate exposure to the
property segment and the risk of bad and doubtful debts. The
Group's business structure provides us with the flexibility to
switch our focus as appropriate, and protect the business from the
prevailing tough market conditions which we do not expect to change
in the short term. As a consequence, the Group is now focused on
its wholesale distribution segment and well-located retail outlets
which sell our branded premium products principally to homeowners
and interior designers. The Company intends to take on new property
projects in the future but will only service developers which are
financially robust and can demonstrate the ability to meet
contractual obligations
Diversification of our product offering remains a core focus and
we will continue to increase the sale of non-door products through
our wholesale distribution segment. We continue to seek suitable,
complementary foreign brands in permanent fixtures for strategic
collaboration in the medium to long-term.
Weigang Chen
Executive Chairman
Financial and Operational Review
The Group's revenue reduced by 58.3% to RMB 178 million (HY2015:
RMB 427 million) as the result of a weaker economy and property
market. As mentioned in the Chairman's review, the Group focused on
wholesale distribution which performed well and contributed 84% of
total revenue.
Revenue breakdown by channels and products are as follows:-
HY2016 (unaudited) Property Distribution Export Total % of total
RMB'000 RMB'000 RMB'000 RMB'000 revenue
(by Products)
- Door - 71,695 3,928 75,623 43%
- Furniture
& fixtures - 74,122 25,331 99,453 56%
- Wall panel - 2,576 - 2,576 1%
Total - 148,393 29,259 177,652
---------- ------------- --------- ---------
% of total
revenue
(by Channels) - 84% 16% 100%
HY2015 (unaudited) Property Distribution Export Total % of total
RMB'000 RMB'000 RMB'000 RMB'000 revenue
(by Products)
- Door 25,135 51,041 1,516 77,692 18%
- Furniture
& fixtures 178,074 73,727 49,042 300,843 71%
- Wall panel 38,138 10,031 - 48,169 11%
Total 241,347 134,799 50,558 426,704
--------- ------------- --------- ---------
% of total
revenue
(by Channels) 56% 32% 12% 100%
Revenue from the Group's top three customers contributed
approximately RMB 59 million (or 33%) of the total revenue for the
six month period ended 30 June 2016 (HY2015: RMB 201 million or
47%).
Note on Expenses
Selling and distribution expenses for the six month period ended
30 June 2016 decreased by 46.6% to RMB 8 million (HY2015: RMB 15
million). This is mainly due to zero installation costs having been
incurred during the first half year in 2016 (HY2015: RMB 6
million). Selling and distribution expenses as a proportion of
revenue are higher at 4.2% for the six month period ended 30 June
2016 (HY2015: 3.5%).
Administrative expenses for the six month period ended 30 June
2016 decreased by 11.1% to RMB 8 million (HY2015: RMB 9 million)
due mainly to reductions in salary-related expenses as a result of
a lower headcount during the first half in 2016. Administrative
expenses as a proportion of revenue are higher at 4.4% for the six
month period ended 30 June 2016 (HY2015: 2.1%).
Included in the other operating income for the six month period
ended 30 June 2016 is RMB 9 million (HY2015 : RMB 1 million), being
the reversal of impairment of trade receivables of RMB 8
million.
The Group's gross profit margin remained stable for the six
month period ended 30 June 2016 at 28.0% (HY2015: 27.5%).
Profit before tax for the year decreased by 54.8% to RMB 42
million (HY2015: RMB 93 million), representing an operating profit
before tax margin of 23.9% as compared to 21.8% recorded in HY2015.
Net profit after tax for the six month period ended 30 June 2016
decreased by 52.9% to RMB 32 million (HY2015: RMB 68 million).
Notes on Statement of Financial Position
As at 30 June 2016, the Group's total assets amounted to RMB 666
million, total liabilities were RMB 92 million, and shareholders'
equity recorded at RMB 573 million.
("HY2016") ("HY2015") ("FY2015")
Unaudited Unaudited Audited
30 Jun 30 Jun 31 Dec
2016 2015 2015
----------------------- ------------- ------------- -------------
Account receivables
(days) 103 87 82
Inventory (days) 47 21 23
Accounts payables
(days) 11 14 3
The average working capital cycle for the period was 139 days
(FY2015: 102 days).
Trade receivables decreased by 29% to RMB 101 million as at 30
June 2016 (FY2015: RMB 143 million) due to decrease in revenue in
the first half of 2016.
The average inventory turnover cycle increased by 24 days to 47
days as at 30 June 2016, from 23 days as at 31 December 2015. Most
of the time, completed finished goods will be shipped out
immediately after production. Inventory as at 30 June 2016 amounted
to RMB 46 million (FY2015: RMB 41 million)
The average trade payable cycle remained at the relatively low
level of 11 days (FY2015: 3 days). Our credit management policy
ensures timely payment to suppliers and sub-contractors to secure
quality raw materials and timely delivery of subcontracted
products. Other payables decreased by 21% to RMB 22 million as at
30 June 2016 (FY2015: RMB 28 million).
The Group has a cash balance of RMB 373 million as at 30 June
2016 (FY2015: RMB 299 million).
Condensed Interim Consolidated Statement Of Comprehensive
Income
For The Financial Period Ended 30 June 2016
Audited
Unaudited Unaudited 12 months
RMB'000 6 months 6 months ended
ended ended 31 December
Note 30 June 30 June 2015
2016 2015
Revenue 177,652 426,704 639,188
Cost of sales (127,998) (309,326) (466,469)
Gross profit 49,654 117,378 172,719
Other operating
income 8,840 1,390 4,166
Selling and
distribution
expenses (7,592) (14,918) (25,342)
Administrative
expenses (7,850) (8,964) (16,925)
Other expenses - - (53,446)
Operating profit 43,052 94,886 81,172
Finance income 662 580 1,088
Finance cost (1,237) (2,090) (4,402)
Profit before
taxation 42,477 93,376 77,858
Income tax expense (10,674) (25,444) (22,044)
Profit for the
period/year 31,803 67,932 55,814
Other comprehensive - - -
income
Total comprehensive
income for the
period/year 31,803 67,932 55,814
Total comprehensive
income attributable:-
Owners of the
Company 31,803 67,932 55,814
Earnings per
share
* Basic and diluted (RMB) 4 0.3 0.6 0.5
The notes are an integral part of the condensed interim
consolidated financial statements.
Condensed Interim Consolidated Statement Of Financial
Position
As At 30 June 2016
Unaudited Unaudited Audited
30 Jun 30 Jun 31 Dec
2016 2015 2015
RMB'000 RMB'000 RMB'000
ASSETS
NON-CURRENT ASSETS
Property, plant and
equipment 56,905 60,997 58,896
Land use rights 6,069 6,236 6,153
Deferred tax asset 11,150 - 13,075
74,124 67,233 78,124
CURRENT ASSETS
Inventories 45,970 49,805 40,886
Trade receivables 100,761 203,111 143,417
Other receivables,
deposit and prepayments 71,435 80,682 71,612
Cash and cash equivalents 373,302 339,162 299,095
591,468 672,760 555,010
TOTAL ASSETS 665,592 739,993 633,134
EQUITY AND LIABILITY
EQUITY
Share capital 74,913 74,913 74,913
Share premium 15,411 15,411 15,411
Reserves 82,342 82,342 82,342
Retained earnings 400,654 386,834 368,851
TOTAL EQUITY 573,320 559,500 541,517
CURRENT LIABILITIES
Trade payables 7,842 22,983 3,412
Other payables and
accruals 21,829 74,771 28,188
Interest-bearing bank
borrowings 52,600 67,600 52,600
Current tax payable 10,001 15,139 7,417
TOTAL LIABILITY 92,272 180,493 91,617
TOTAL EQUITY AND LIABILITY 665,592 739,993 633,134
The notes are an integral part of the condensed interim
consolidated financial statements.
Condensed Interim Consolidated Statement Of Changes In
Equity
For The Financial Period Ended 30 June 2016
Share Share Statutory Retained Merger Other Warrant
Capital Premium Reserve Earnings Reserve Reserve Reserve Total
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
--------------- -------- -------- ---------- ------------------- -------- -------- -------- -------------------
Unaudited as
at
1 January
2015 74,913 15,411 65,276 346,029 14,440 1,500 1,126 518,695
Total
comprehensive
income for
the
period - - - 67,932 - - - 67,932
Dividends - - - (27,127) - - - (27,127)
Unaudited as
at
30 June 2015 74,913 15,411 65,276 386,834 14,440 1,500 1,126 559,500
Unaudited as
at
1 July 2015 74,913 15,411 65,276 386,834 14,440 1,500 1,126 559,500
Total
comprehensive
income for
the
period - - - (12,118) - - - (12,118)
Dividends - - - (5,865) - - - (5,865)
Audited as at
31
December 2015 74,913 15,411 65,276 368,851 14,440 1,500 1,126 541,517
Condensed Interim Consolidated Statement Of Changes In Equity
(Cont'd)
For The Financial Period Ended 30 June 2015
Share Share Statutory Retained Merger Other Warrant
Capital Premium Reserve Earnings Reserve Reserve Reserve Total
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
--------------- -------- -------- ---------- ----------------- -------- -------- -------- -----------------
Unaudited as
at
1 January
2016 74,913 15,411 65,276 368,851 14,440 1,500 1,126 541,517
Total
comprehensive
income for
the
period - - - 31,803 - - - 31,803
Unaudited as
at
30 June 2016 74,913 15,411 65,276 400,654 14,440 1,500 1,126 573,320
The notes are an integral part of the condensed interim
consolidated financial statements.
Condensed Interim Consolidated Statement Of Cash Flows
For The Financial Period Ended 30 June 2016
Unaudited Unaudited Audited
30 Jun 30 Jun 31 Dec
2016 2015 2015
RMB'000 RMB'000 RMB'000
CASH FLOWS FROM OPERATING
ACTIVITIES
Profit before taxation 42,477 93,376 77,858
Adjustments for:-
Amortisation of land use
rights 84 84 167
Impairment loss on trade
receivables - - 52,300
Reversal of impairment
loss on trade receivables (7,700) - -
Trade receivables written
off 5,554 4,025 9,216
Depreciation of property,
plant and equipment 1,997 2,009 4,110
Interest expense 575 2,090 4,402
Gain on foreign exchange - (21) (2,016)
Interest income (662) (580) (1,088)
Operating profit before
working capital changes 42,325 100,983 144,949
(Increase)/Decrease in
inventories (5,084) 11,585 20,504
Decrease/(Increase) in
trade and other receivables 44,979 (32,263) (18,974)
(Decrease)/Increase in
trade and other payables (3,167) 46,002 (34,015)
CASH FROM OPERATIONS 79,053 126,307 112,464
Interest paid (575) (2,090) (4,402)
Income tax paid (6,165) (22,374) (39,771)
NET CASH FROM OPERATING
ACTIVITIES 72,313 101,843 68,291
CASH FLOW FOR INVESTING
ACTIVITIES
Purchase of property, plant
and equipment (6) (106) (106)
Deposit for land use right - (69,929) (69,929)
Interest received 662 580 1,088
NET CASH FROM INVESTING
ACTIVITIES 656 (69,455) (68,947)
CASH FLOWS FOR FINANCING
ACTIVITIES
Dividends paid - (27,127) (27,762)
Advanced from a shareholder 1,238 - 8,612
Drawdown of interest-bearing
bank borrowings 47,000 47,000 -
Repayment of interest-bearing
bank borrowings (47,000) (47,000) (15,000)
NET CASH FROM FINANCING
ACTIVITIES 1,238 (27,127) (34,150)
Condensed Interim Consolidated Statement Of Cash Flows
(Cont'd)
For The Financial Period Ended 30 June 2016
Unaudited Unaudited Audited
30 Jun 30 Jun 31 Dec
2016 2015 2015
RMB'000 RMB'000 RMB'000
NET INCREASE/(DECREASE)
IN CASH AND CASH EQUIVALENTS 74,207 5,261 (34,806)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF THE FINANCIAL
PERIOD 299,095 333,901 333,901
CASH AND CASH EQUIVALENTS
AT OF THE PERIOD 373,302 339,162 299,095
1. General Information
Jiasen International Holdings Limited (the "Company" or
"Jiasen") was incorporated on 31 October 2012 and is domiciled in
the British Virgin Islands. The Company's registered office is
Commerce House, Wickhams Cay 1, P. O. Box 3140, Road Town, Tortola,
VG1110, British Virgin Islands.
Jiasen was established as an investment holding company for two
wholly owned subsidiaries, Jiasen Holdings (HK) Company Limited
("Jiasen HK") and Quanzhou Jiasen Wood Co., Ltd. ("Jiasen PRC"),
(together, the "Group").
The main activity of the Company and Jiasen HK is that of an
investment holding company. Jiasen PRC is principally engaged in
the business of design, manufacturing and wholesalers of high
quality wooden doors and home furnishings. The principal place of
business of the Group is in the People's Republic of China ("PRC").
Amounts are reported in RMB thousands, unless otherwise stated.
2. Basis of Preparation And Accounting Policies
The condensed interim consolidated financial statements (the
"interim financial information") have been prepared on the basis of
the accounting policies set out in the last audited consolidated
financial statements, which are in accordance with AIM rule 18,
"Half yearly reports and accounts", and should be read in
conjunction with the annual financial statements for the year ended
31 December 2015.
This interim financial information is unaudited and has not been
reviewed by the auditors and does not constitute statutory
financial statements for the six month period ended 30 June
2016.
The interim financial information is prepared on the assumption
that the group structure has been in place since 1 January 2012.
Group accounting policies, accounting estimates and judgements have
been consistently applied across all periods. No new standards that
have become effective in the period have had a material effect on
the Group's financial statements.
3. Basis Of Consolidation
The interim financial information incorporates the results of
the Company and its subsidiaries. A subsidiary is an entity
(including special purposes entities) over which the Group has the
power to govern the financial operating policies, generally
accompanied by a shareholding giving rise to the majority of the
voting rights, as to obtain benefits from their activities.
A subsidiary is consolidated from the date on which control is
transferred to the Group up to the effective date on which control
ceases, as appropriate.
The interim financial information presents the results of the
Company and its subsidiaries as if they formed a single entity.
Intra-group balances and transactions and any income and expenses
arising from intra-group transactions are eliminated on
consolidation. Unrealised gains and losses arising from
transactions with associates and joint ventures are eliminated
against the investment to the extent of the Group's interest in the
investee.
4. Earnings per share
Basic and diluted earnings per share are calculated by dividing
the profit attributable to equity holders of the Company by the
weighted average number of Ordinary shares in issue during the
period.
Unaudited Unaudited Audited
30 Jun 30 Jun 31 Dec
2016 2015 2015
RMB'000 RMB'000 RMB'000
Profit attributable
to equity holders
(RMB'000) 31,803 67,932 55,814
Weighted average
number of shares 121,656,361 121,656,361 121,656,361
Basic and diluted
per share (RMB) 0.3 0.6 0.5
------------ ------------ ------------
Although the Group reconstruction did not become unconditional
until 4 March 2014, the interim financial information is presented
as if the Group structure has always been in place, including a
share split effected by the Company on 26 May 2014 by which each of
its Ordinary shares, with a par value of US$ 1.00 per share, was
split into 10 Ordinary shares, with a par value of US$ 0.10 per
share.
No adjustment has been made to the basic earnings per share in
respect of a dilution as the impact of the warrant outstanding had
an anti-dilutive effect on the basic earnings per share.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR GCGDCIUDBGLR
(END) Dow Jones Newswires
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