Half Yearly Report

30 September 2013

Resource Holding Management Limited

("RHM" or "the Group")

Half Yearly Financial Results

Six Months Ended 30 June 2013

RHM (AIM: RHM), a leading media, advertising and marketing business with distribution channels in both Malaysia and China, is pleased to announce its unaudited half yearly results for the six months ended 30 June 2013.

HIGHLIGHTS:

· Revenue improved by 12% to RM22.3 million (2012 H1: RM20.0 million)

· Gross profit reduced by 10% to RM8.0 million (2012 H1: RM8.8 million)

· Gross margin decreased to 35.6% (2012 H1: 43.7%)

· Profit before tax marginally lower than the previous period, reported at RM4.4 million (2012 H1: RM4.5 million)

· Basic earnings per share decreased by 13.6% to 10.48 sen per share (2012 H1 : 12.13 sen per share)

· Cash balances available for use at 30 June 2013 stood at RM1.1 million (FYE 2012: RM2.3 million and 2012 H1:RM0.8 million)

· Net assets increased by 7.3% to RM66.5 million (2012: RM62.0 million and 2012 H1: RM56.2 million)

Commenting on the financial results for the first half of the year, the Group's Chairman, Datuk Oh Chong Peng stated:

In 2012, the Group successfully steered the organisation's focus towards profitability and increased its gross profit margins significantly, by 10%. Whereas the first half of 2013 has seen resources pooled to ensure the Group is awarded key contracts that contribute to its repertoire in the region.

One such contract won was the Hangzhou Tourism Project awarded by the Tourism Ministry of Hangzhou, Zhejiang Province, China to promote the scenic city as a tourism destination amongst tourists in Southeast Asia. The Group's credibility as a regional player in the South East Asian and China markets gained significant visibility in the industry.

During the period under review, the Group continued to focus on enlarging its client base, resulting in the need to cater to our clients needs by offering more advertising products and services with lower margins. All-in-all, the strategy of re-positioning the Group's regional presence led to acquisitions of new clientele.

The transaction with PUC Founder MSC Berhad was approved by Bursa Malaysia Securities Berhad on 22 April 2013 subject to various conditions, and the Board expects to complete the transaction before the end of 2013.

The Board remains positive about the Group's continued growth, especially with its increased presence in China, having been awarded its first contract with the government of the PRC. We believe this marks a big step forward for the Group and will contribute to an improving performance for the remainder of 2013.

Notes to editors:

Exchange rate: £1 = RM4.82 (as at 30 June 2013)

Resource Holding Management Limited (AIM: RHM), is a Cayman Islands incorporated holding company, of a diverse range of businesses, which currently operates its advertising agency business in Malaysia and China and is expanding its business through acquisition of media businesses. Its principal place of business covers Malaysia and the major cities of the People's Republic of China ("PRC"), namely Shanghai, Beijing and Hong Kong.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 JUNE 2013

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS AT 30 JUNE 2013

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 30 JUNE 2013

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2013

Notes to the unaudited results for the six months to 30 June 2013

1. General information

Resource Holding Management Limited is quoted on the AIM Market of the London Stock Exchange

The Group's interim financial statements for the six months to 30 June 2013, from which this financial information has been extracted, and for the comparative six months ended 30 June 2012, are prepared on a going concern basis and in accordance with IFRS including IAS34 " Interim Financial Reporting " as adopted in the European Union.

The financial information contained in this announcement does not constitute full statutory accounts. The figures are extracted from the interim financial statements for the six month period to 30 June 2013. 

These interim financial statements consolidate the accounts of Resource Holding Management Limited and all of its subsidiary undertakings draw up to 30 June each year. Where shown, the comparatives for the year ended 31 December 2012 are the Company's full statutory accounts for that year the auditors' report on those accounts was unqualified.

The financial information in this announcement has been reviewed but has not been audited by the Company's auditors.

2. Accounting policies

This financial information has been prepared using accounting bases and policies consistent with those used in the preparation of the audited accounts of the Group for the year ended 31 December 2012 and those to be used for the year ending 31 December 2013.

3. Segmental reporting

For the purpose of presenting segment information, the activities of the group are divided into operating segments in accordance with the rules contained in IFRS 8 "Operating Segments". Operating segments are identified on the same basis that is used internally to manage and report on performance and takes account of the organizational structure of the group based on the various services of the reportable segments. The activities of the group are broken down into the operating segments advertising, financial services and other entities.

The advertising segment connects advertisers and media owners and places advertisements for its clients. The financial services segment market insurance and financial products and services and provide advisory service. The ultimate holding company is included in the other entities segment. Eliminations comprise the effects of eliminating business relationships between the operating segments. Internal management and reporting segment information is prepared in conformity with the accounting policies adopted for preparing and presenting the group financial statements. There was no change in accounting policies compared to previous periods. Inter-segment receivables and payables, provisions, income, expenses and profits are eliminated in the column "elimination". Inter-segment sales take place at arm's length prices. The role of "chief operating decision maker" with respect to resource allocation and performance assessment of reportable segments is embodied in the full Board of Directors. In order to assist the decision making process, various measures of segment result and of segment assets have been set for the different operating segments. The advertising, financial services and other entities segments are managed on the basis of the profit after taxation. Capital employed is the corresponding measure of segment assets used to determine how to allocate resources. Total assets are used as the basis for assessing the allocation of resources.

A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment that is subject to risks and returns that is different from those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment that is subject to risks and returns that is different from those of segments operating in other economic environments. The group's operating businesses are organised and managed separately according to the nature of products produced and services provided, with each segment representing a strategic business unit that offers different products and serves different markets. In the directors' opinion the group has the following segments:

Business segments - two business segments, which are advertising and financial services.

The Group operate in two (2) geographical segments which are i) Malaysia; and ii) China, Hong Kong & Offshore.

The segment result for period ended 30 June 2013 were as follow:

4. Earnings Per Share

The basic earnings per ordinary share has been calculated using the profit for the six months ended 30 June 2013 attributable to the company's equity shareholders of RM4,326,361 (31 Dec 2012: RM10,076,300, 30 June 2012: RM4,503,165) and the weighted average number of ordinary shares in issue of 41,266,249 (2012: 38,905,615, 30 June 2012: 37,116,697).

For the purpose of calculating diluted earnings per share, the weighted average number of ordinary shares in issue during the financial period/year have been adjusted for the dilutive effects of all potentially dilutive ordinary shares.

5. Intangible assets

Intangible assets are amortised over 3 to 10 years. The directors have assessed the carrying value of the intangible assets and in their opinion no provision for impairment is currently considered necessary.

6. Goodwill

Goodwill acquired in business combinations is allocated, at acquisition, to the cash generating units ("CGUs") that are expected to benefit from the business combinations.

The carrying amount of goodwill was allocated as follows as of 30 June 2013:

The group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired.

The recoverable amounts of the CGU's are determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the discount rates, growth rates and expected changes to selling prices and direct costs during the forecast period. Management estimated the discount rates of 15% using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGU's.

Future cash flows are derived from the most recent financial budget approved by management for the next five years, beyond that period cash flows are extrapolated using a growth rate of 3%. The growth rates are based on industry growth forecasts. Changes in selling prices and direct costs are based on past practices and expectations of future changes in the market.

During the financial period, the Group paid a sum of RM1.4 million to the vendor of IMM as deferred consideration of the business acquired after satisfying the profit target per the terms and conditions in the sales and purchase agreement.

7. Trade and other receivables

8. Cash and cash equivalents

Cash and cash equivalents excludes fixed deposits of RM1,741,393 (31 Dec 2012 : RM1,741,393, 30 June 2012 : RM1,662,000) pledged as security for bank borrowings. As these are pledged accounts they are not included in the cash and cash equivalents in the cash flow statement and are shown separately on the balance sheet.

9. Bank overdrafts

The interest rate per annum during the 6-months to 30 June 2013 for bank overdrafts was 8.35% per annum (2012: 9.54%, 30 June 2012: 8.5%).

The bank overdrafts are secured by the following:

a) Fixed deposits of RM1,741,393 together with interest accrued thereon;

b) Certificate of Guarantee from Credit Guarantee Corporation Malaysia Berhad under Enhancer Scheme for RM800,000; and

c) Personal guarantee by one of the directors.

10. Redeemable Convertible Cumulative Preference Shares

The redeemable convertible cumulative preference shares ("RCCPS")are issued by the company's subsidiaries, mainly RH Media Group Sdn. Bhd. ("RHMG"). The group intends to use the net proceeds of the investment to pursue its strategy of growing organically and through potential acquisitions, particularly in China.

The main investments received are of USD1.0 million and RM1.5 million in RHMG in receipt for 1 million Class A RCCPS and RM1.5 million Class B RCCPS respectively. The subscriber, namely, Kumpulan Modal Perdana Sdn. Bhd., a Malaysian government linked corporation based in Kuala Lumpur, has been granted a coupon rate of 8% per annum and 4% per annum respectively for the investments and has the right to convert the RCCPS into ordinary shares in RHMG at their discretion. RHMG shall warrant an exit strategy for the subscriber upon conversion of its RCCPS via a listing of RHMG on the mutually accepted stock exchange within 48 months from the dates of investments with either:

i. a return of 3 times the investment value; or

ii. a 40% discount to the listing price, whichever results in lower cost per share at point of conversion.

In the event a listing does not occur within 48 months from the dates of investments, the subscriber at its sole discretion shall have an option to either grant a 12 month extension or exercise a put-option for 2 times of the initial investment value. The put option, if exercised, would be paid in cash or an equivalent value through the issuance of equity shares by the company based on a 5 day average of the company's share price prior to the date of exercise.

In the event of a breach of agreement by RHMG, insolvency or liquidation of RHMG, commencement of any criminal prosecution against the board of directors of RHMG or Cheong Chia Chieh ceasing to be a director of the company, the subscriber shall reserve the right to redeem the RCCPS or exercise a put-option to RHMG which grants the subscriber returns of investments with an 8% coupon rate for Class A RCCPS and 4% coupon rate for Class B RCCPS and 10% annual rate of return of the investment value to be paid in cash or an equivalent value by issuance of equity of the company's shares based on a 5 day average of the company's share price prior to the date of exercise.

11. Interim Report

The interim financial statement will be, in accordance with AIM Rule 26 of the AIM Rules for Companies, be available shortly on the Group's website (www.redhot.asia).

-Ends-