TIDMJSI
RNS Number : 1585A
Jiasen International Holdings Ltd
25 September 2015
JIASEN INTERNATIONAL HOLDINGS LIMITED
half-yearly results for the six months ended 30 june 2015
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 2015 ("HY2015"). Jiasen is an international property fit-out
business specialising in designing, manufacturing, and installing a
range of wooden products for residential and commercial
properties.
Financial Highlights
-- Revenue increased by 2.6% to RMB 427 million (HY2014: RMB 416 million).
-- The Group operates a highly flexible production policy in
order to accommodate short-term changes in end-user demand. During
the period under review, output of doors was reduced in favour of
furniture and fixtures.
-- During the period, the Group continued to diversify its
product mix away from a reliance on doors in response to a market
requirement for a more comprehensive offering and to stabilise
gross profit margin due to increased competition within the door
category.
-- Gross margin for HY2015 is 27.5% in line with our previously
stated guidance range of 27% to 30% (HY2014: 35.5%).
-- The Group's strategy of diversification mitigated significant
market margin erosion seen within bulk door supply by expanding
higher margin segments.
-- The reduction in gross profit margin was also partly due to
the increase in the average cost of materials and our competitive
pricing strategy implemented mid-2014 to secure larger and
multi-product order, to ensure a predictable and visible revenue
stream moving forward.
-- Profit before tax decreased by 23.6% to RMB 93 million (HY2014: RMB 122 million).
-- Profit after tax decreased by 25.8% to RMB 68 million (HY2014: RMB 92 million).
-- The Group has a strong order book of RMB 159 million as at 30
June 2015 (HY2014: RMB 137 million). The order book is mainly made
up of orders from property developers and is expected to be
completed by end of 2015.
-- Cash and cash equivalents as at 30 June 2015 amounted to RMB
339 million (31 December 2014: RMB 334 million).
Operational Highlights
-- Secured six new contracts, five of which are worth more than
RMB 20 million each during the period under review. Of these
contracts, one is worth more than RMB100 million.
-- Wholesale distribution revenue grew by 13% as a result of new
outlets opened during the period. The Group now has 16 distributors
which operate 54 outlets across China. 15 outlets are currently
under renovation and are expected to be completed in following
months. Upon completion the total number of outlets will be 69.
-- Although exports during the first half increased relative to
2014 largely due to contract timing, the percentage of total sales
for the whole of 2015 is expected to be similar.
Outlook
-- The property market in China continues to stabilise driven by
a relaxation of regulatory limits on home purchases and more
favourable monetary policies.
-- The Group's core business driver is the preference for
semi-furnished homes (known as Refined Housing Decoration (RHD))
which continues to increase. This in turn drives the demand for the
Group's multiple product offering by property developers.
-- Continued focus on winning larger and more luxurious property projects.
-- Intention to expand sales and marketing efforts for higher
margin non-door products and diversify our revenue streams
further.
-- We are seeking foreign and local brand partnerships and investment opportunities.
-- Trading to date in the current financial year is slightly below the Group's expectations.
-- Appointment of two new directors, Gareth Wong, as Finance
Director, and Curt Riley, as Non-executive Director.
Land Purchase and Future Development
On 18 November 2014, the Group signed a contract with the local
government (Quanzhou Economic Development District - Guanqiao
Sector) ("QEDD") to purchase 47 hectares of land for the purpose of
its new factory. The land is being bought for RMB 217 million and a
down payment of RMB 69 million was paid in February 2015. The
completion of the purchase of the land was subject to QEDD
approval.
The directors are pleased to advise that approval has been
granted subject to the final payment of approximately RMB 150
million. Following the payment being made, QEDD will issue the land
use rights certificate and planning consent. It is the intention of
the directors to make the final payment during the course of 2016
and commence construction during the same year which is expected to
take approximately 18 months.
The construction of the new factory buildings, (which will
occupy a site of approximately 12 hectares) plant and machinery is
expected to cost in the region of RMB 470 million. The Directors
are working with the planners to finalise the design of the
factory.
The Company intends to continue to use its existing facility
during construction of the new factory. Following completion of the
new factory, the Company will retain the use of a portion of the
existing facilities it owns which will be used for the production
of export products, head office functions and will house the
Company's showroom.
Interim Dividend
The Directors are pleased to report that the Company will
declare an interim dividend of 0.5p per share to shareholders who
are on the register as the close of business on 16 October 2015.
The ex-dividend date will be 15 October 2015 and it is expected
that the dividend will be paid on or around 16 November 2015.
In light of the Company's forthcoming financial need for the
development of Company's new factory, the Company will review its
final dividend in line with its capital need and its stated
dividend policy.
Commenting on the results, Weigang Chen, Executive Chairman
said:
"These results reflect the Company's hard work to drive the
business forward and we are pleased that our strategy to pursue
larger and more luxurious projects has delivered a strong order
book thereby ensuring a visible and predictable revenue stream. We
are also pleased with the progress made with the local authorities
on the land purchase approval. Furthermore our management team are
working with the planners on the design and layout of our proposed
new factory.
We believe the property market is showing signs of stabilisation
and increased market confidence and that this is set to continue
for the remainder of the year. We remain cautiously optimistic
about stabilising margins.
We are also very pleased to welcome Gareth Wong and Curt Riley,
who recently joined the Board and look forward to working with
them."
Indicative exchange rate as at 24 September 2015: GBP1: RMB
9.75
Source:www.oanda.com
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 7148
(Nominated Adviser) Liam Murray 7900
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Jon Levinson
Beaufort Securities Limited Saif Janjua +44 (0)20 7382
(Broker) Elliot Hance 8300
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Shan Shan Willenbrock +44 (0)20 7930
Cardew Group David Roach 0777
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Notes to Editors
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 by its workforce
of more than 1,500 employees.
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
I am pleased to present Jiasen's results for the six months
ended 30 June 2015. The Company has delivered a strong revenue
performance and we have continued to execute our strategy to secure
larger, more luxurious, property projects and diversify our product
offering to enable us to deliver long term sustainable growth.
Revenue grew by 2.6% to RMB 427 million (HY2014: RMB 416
million). All three divisions performed well with wholesale
distribution and property developer projects contributing 88% of
revenue. Gross profit margin for the period under review is 27.5%
which, despite having shown a decrease due to more competitive
pricing, remains and is in line with our previously stated guidance
of 27% to 30% (HY2014: 35.5%). As we previously indicated, in order
to secure larger property projects, the Group has had to offer more
competitive pricing and increase the quality of its furniture,
fixtures and fittings. This approach has enabled us to secure a
strong order book of RMB 159 million as at 30 June 2015 (HY2014:
RMB 137 million) but led to some margin erosion as a result. The
order book is mainly made up of orders from property developers and
is expected to be completed by end of 2015.
(MORE TO FOLLOW) Dow Jones Newswires
September 25, 2015 02:02 ET (06:02 GMT)
Wholesale distribution revenues grew by 13.2% to RMB 135 million
(HY 2014: RMB 119 million) driven by relocation and renovation of
strategic outlets and new stores set up in 2014. Our wholesale
business has been successful in driving both our door and non-door
products. Export remains a small part of our business contributing
11.8% of revenue, although the channel has shown improved
growth.
The property market is showing signs of stabilisation as a
result of the implementation of more favourable monetary policies.
This is supported by the recent positive performances of major
listed property developers in China. Evidence suggests that market
confidence is returning and we expect interest rates to fall
further in 2015. The Board believes that the market, together with
continued demand for semi-furnished homes, positions the Company
strongly to deliver further growth.
In the light of recent share price underperformance and
confidence in Jiasen's long term prospects, the Board is
considering a number of options to help improve the Company's share
price performance. Recognising this opportunity to capture future
growth and the fact that Group's existing dividend policy provides
for an unrealistically high yield on the current share price,
management has decided to commence a review of these options which
may result in a reduction, or even cancellation of, future dividend
payments.
Financial and Operational Review
Revenue growth for the six month period ended 30 June 2015 (the
"period" or "HY2015") has been driven by strong demand for our
products. Importantly, the Group has diversified its revenue
streams and increased sales of non-door products to property
developers as well as through its wholesale distribution
network.
Revenue breakdown by channels and products are as follow:-
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%
HY2014 (unaudited) Property Distribution Export Total % of total
RMB'000 RMB'000 RMB'000 RMB'000 revenue
(by Products)
- Door 101,888 35,436 3,230 140,554 34%
- Furniture &
fixtures 113,113 72,695 30,189 215,997 52%
- Wall panel 48,226 10,981 - 59,207 14%
Total 263,227 119,112 33,419 415,758
------------ ------------- --------- ---------
% of total revenue
(by Channels) 63% 29% 8% 100%
Revenue from the Group's top three customers contributed
approximately RMB 201 million (or 47%) of the total revenue for the
six month period ended 30 June 2015 (HY2014 : RMB 185 million or
44%).
Note on Expenses
Selling and distribution expenses for the six month period ended
30 June 2015 decreased by 23.8% to RMB 15 million (HY2014: RMB 20
million). This is mainly due to lower advertisement cost incurred
during the first half year in 2015. Selling and distribution
expenses as a proportion of revenue is lower at 3.5% for the six
month period ended 30 June 2015 (HY2014: 4.7%).
Administrative expenses for the six month period ended 30 June
2015 increased by 43.3% to RMB 9 million (HY2014: RMB 6 million)
due mainly to higher depreciation charged for the new office
building completed in 2014 and other professional expenses for
maintaining AIM listing status since the group listed in July 2014.
Administrative expenses as a proportion of revenue remain largely
in line with last period at 2.1%.
Included in the other operating income for the six month period
ended 30 June 2015 is RMB 1 million (HY2014 : RMB 2 million), being
a cash grant received from the local government. During the six
month period ended 30 June 2015, interest income amounted to RMB
0.6 million (HY2014: RMB 0.5 million).
The Group's gross profit margin decreased by 8 percentage points
to 27.5% (HY2014 :35.5%). The reduction in the gross profit margin
is partly due to the increase in the average cost of materials as
the Group focuses on securing larger and more luxurious property
projects, which require higher quality furniture, fixtures and
fittings.
Profit before tax for the year decreased by 23.6% to RMB 93
million (HY2014: RMB 122 million) representing an operating profit
before tax margin of 21.8% as compared to 29.4% recorded in HY2014.
Net profit after tax for the six month period ended 30 June 2015
decreased by 25.8% to RMB 68 million (HY2014: RMB 92 million).
The Board believes that confidence is returning to the Company's
targeted sector of the Chinese property market. The Board remains
confident on the future development and performance of the Group in
the second half of the year.
Notes on Statement of Financial Position
As at 30 June 2015, the Group's total assets amounted to RMB 740
million, total liabilities were RMB 180 million, and shareholders'
equity recorded at RMB 560 million.
("HY2015") ("HY2014) ("FY2014")
Unaudited Unaudited Audited
30 Jun 2015 30 Jun 2014 31 Dec 2014
-------------------------- -------------- -------------- --------------
Account receivables
(days) 87 59 74
Inventory (days) 21 11 26
Accounts payables (days) 14 16 11
The average working capital cycle for the period was 94 days
(FY2014: 89 days). This was mainly due to the increase in trade
receivables when compared with FY2014.
Trade receivables increased by 15% to RMB 203 million as at 30
June 2015 (FY2014: RMB 176 million) due to different project timing
and delivery schedules. None of the trade debtors were considered
as impaired.
The average inventory turnover cycle decrease by 5 days to 21
days as at 30 June 2015, from the level of 26 days in 31 December
2014. Most of the time, completed finished goods will be shipped
out immediately after production. Inventory as at 30 June 2015
amounted to RMB 50 million (FY2014: RMB 61 million)
The average trade payable cycle remained relatively the same at
14 days (FY2014: 11 days). Other payables increased by almost 121%
to RMB 63 million as at 30 June 2015 (FY2014: RMB 28 million) due
mainly to higher collection of advance receipts and down payment
collected from project developers. Our credit management policy
ensures timely payment to suppliers and sub-contractors to secure
quality raw materials and timely delivery of subcontracted
products.
The Group has a cash balance of RMB 339 million as of 30 June
2015 (FY2014: RMB 334 million) and intend to use most of this cash
to fund the purchase and development of a new piece of land for
additional production facility.
Condensed Interim Consolidated Statement Of Comprehensive
Income
For The Financial Period Ended 30 June 2015
Audited
Unaudited Unaudited 12 months
RMB'000 6 months 6 months ended
ended ended 31 December
Note 30 June 2015 30 June 2014 2014
Revenue 426,704 415,758 870,902
Cost of sales (309,326) (268,174) (603,361)
Gross profit 117,378 147,584 267,541
Other operating
income 1,390 2,216 5,843
Selling and distribution
expenses (14,918) (19,583) (37,242)
Administrative expenses (8,964) (6,257) (18,105)
Other expenses - (9) (411)
Operating profit 94,886 123,951 217,626
Finance income 580 504 1,167
Finance cost (2,090) (2,183) (4,389)
Profit before taxation 93,376 122,272 214,404
Income tax expense (25,444) (30,682) (55,945)
Profit for the period/year 67,932 91,590 158,459
Other comprehensive - - -
income
Total comprehensive
(MORE TO FOLLOW) Dow Jones Newswires
September 25, 2015 02:02 ET (06:02 GMT)
income for the period/year 67,932 91,590 158,459
Total comprehensive
income attributable:-
Owners of the Company 67,932 91,590 158,459
Earnings per share
* Basic and diluted (RMB) 4 0.6 2.1 1.9
The notes are an integral part of the condensed interim
consolidated financial statements.
Condensed Interim Consolidated Statement Of Financial
Position
As At 30 June 2015
Unaudited Unaudited Audited
30 Jun 2015 30 Jun 2014 31 Dec 2014
RMB'000 RMB'000 RMB'000
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 60,997 55,064 62,900
Land use rights 6,236 6,330 6,320
67,233 61,394 69,220
CURRENT ASSETS
Inventories 49,805 24,849 61,390
Trade receivables 203,111 134,939 176,240
Other receivables, deposit
and prepayments 80,682 7,956 9,386
Cash and cash equivalents 339,162 342,725 333,901
672,760 510,469 580,917
TOTAL ASSETS 739,993 571,863 650,137
EQUITY AND LIABILITY
EQUITY
Share capital 74,913 73,163 74,913
Share premium 15,411 - 15,411
Reserves 82,342 63,445 82,342
Retained earnings 386,834 314,643 346,029
TOTAL EQUITY 559,500 451,251 518,695
CURRENT LIABILITIES
Trade payables 22,983 24,164 17,973
Other payables and accruals 74,771 15,714 33,800
Interest-bearing bank borrowings 67,600 67,600 67,600
Current tax payable 15,139 13,134 12,069
TOTAL LIABILITY 180,493 120,612 131,442
TOTAL EQUITY AND LIABILITY 739,993 571,863 650,137
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 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
2014 6 - 49,005 236,053 87,597 - - 372,661
Total
comprehensive
income for the
period - - - 91,590 - - - 91,590
Capitalisation
of
shareholder's
loan 73,157 - - - (73,157) - - -
Dividends - - - (13,000) - - - (13,000)
Unaudited as at
30 June
2014 73,163 - 49,005 314,643 14,440 - - 451,251
Unaudited as at
1 July
2014 73,163 - 49,005 314,643 14,440 - - 451,251
Total
comprehensive
income for the
period - - - 66,869 - - - 66,869
Shares issued
on admission
to trading on
AIM 1,750 22,864 - - - - - 24,614
Share issue
costs - (7,453) - - - - - (7,453)
Transfer to
statutory
reserve - - 16,271 (16,271) - - - -
Share based
payment - - - - - 1,500 - 1,500
Warrants issued - - - - - - 1,126 1,126
Dividends - - - (19,212) - - - (19,212)
Audited as at
31 December
2014 74,913 15,411 65,276 346,029 14,440 1,500 1,126 518,695
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
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
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 2015
Unaudited Unaudited Audited
30 Jun 2015 30 Jun 2014 31 Dec
2014
RMB'000 RMB'000 RMB'000
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before taxation 93,376 122,272 214,404
Adjustments for:-
Amortisation of land use rights 84 172 182
Trade receivables written off 4,025 7,035 11,174
Depreciation of property, plant
and equipment 2,009 899 2,706
Interest expense 2,090 2,183 4,389
Share based payment - - 1,500
Warrant costs - - 1,126
Gain on foreign exchange (21) - (723)
Interest income (580) (504) (1,167)
Operating profit before working
capital changes 100,983 132,057 233,591
(Increase)/Decrease in inventories 11,585 13,732 (23,726)
(Increase)/Decrease in trade and
other receivables (32,263) 7,013 (39,134)
Increase/(Decrease) in trade and
other payables 46,002 (7,447) 4,448
CASH FROM OPERATIONS 126,307 145,355 175,179
Interest paid (2,090) (2,183) (4,389)
Income tax paid (22,374) (32,510) (58,837)
NET CASH FROM OPERATING ACTIVITIES 101,843 110,662 111,953
CASH FLOW FOR INVESTING ACTIVITIES
Purchase of property, plant and
equipment (106) (13,443) (22,170)
Deposit for land use right (69,929) - -
Interest received 580 504 1,167
NET CASH FOR INVESTING ACTIVITIES (69,455) (12,939) (21,003)
CASH FLOWS FOR FINANCING ACTIVITIES
Net proceeds from share issuance - 17,161
Dividends paid (27,127) (13,000) (32,212)
Drawdown of interest-bearing bank
borrowings 47,000 62,000 -
Repayment of interest-bearing bank
borrowings (47,000) (62,000) -
NET CASH FOR FINANCING ACTIVITIES (27,127) (13,000) (15,051)
Condensed Interim Consolidated Statement Of Cash Flows
(Cont'd)
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September 25, 2015 02:02 ET (06:02 GMT)
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