Half Yearly Report

JIASEN INTERNATIONAL HOLDINGS LIMITED

嘉森國際控股有限公司

Unaudited HALF-YEARLY results

Jiasen International Holdings Limited ("Jiasen", "the Company"), together with its subsidiaries, is pleased to report its trading for the six months to 30 June 2014 (unaudited). Jiasen is a designer, manufacturer and wholesaler of wooden home furnishing, high-end solid wooden doors and other wooden design solutions to both the domestic Chinese and overseas markets.

Financial Highlights

· Revenue up 12.9% to RMB 415.8 million (H1 2013: RMB 368.2 million).

· Gross margin maintained at 36.2% (H1 2013: 36.1%).

· Profit before tax rose by 16.8% to RMB 122.3 million (H1 2013: RMB 104.7 million).

· Net Profit after tax increased by 16.2% to RMB 91.6 million (H1 2013: RMB 78.4 million).

· Cash and cash equivalents increased by 7.6% to RMB 342.7 million (H1 2013: RMB 239.7 million). Purchase of new land for the new production facility will be funded by cash.

· Strong order book from property developers worth RMB 137 million as at 30 June 2014, expected to be completed by the end of 2014.

· Maiden interim cash dividend of 1.5 pence per share to be paid on 12 September 2014 in line with our stated dividend policy and payment plan.

Operational Highlights

· Diversifying our revenue streams towards higher margin non-door products.

· Four new contracts signed with repeat customers worth more than RMB20 million each.

· Wholesale revenue grew by 27% as a result of new outlets opened in 2013.

· Our new office building completed ahead of schedule and our staffs have relocated to the new premises.

· Increasing brand awareness by participating at more trade fairs, and increasing spend on sponsorship of promotional events and advertising.

Outlook

· Improving property market in China - the easing of property cooling measures has been announced in more than 30 cities and two provinces (Fujian and Hunan provinces) in China. In addition, six major Chinese banks have recently lowered mortgage interest rates to incentivise first time buyers.

· The demand for semi-furnished new apartments, known as Refined Housing Decoration (RHD) is likely to increase.

· Continue to bid for larger property projects.

· Increasing sales and marketing efforts for higher margin non-door products.

· Actively seeking foreign brand partnerships.

· Discussions for the purchase of land for a new production facility have commenced.

Commenting on the results, Weigang Chen, Chairman said:

"We have delivered a good set of results for the first half of 2014 and importantly Jiasen is well positioned for the second half of the year supported by a strong order book. Despite the slowdown in the property market in China, we have successfully diversified our revenue streams and increased the sales of higher margin non-door products to property developers as the demand for semi furnished apartments grows. This demand is driven both by growing popularity amongst buyers along with government support.

"Our distributors opened 10 new stores in 2013 which have the benefit of increasing our brand awareness in several cities across China, and encouragingly, they are contributing strongly to revenue. With the easing of property cooling measures in China spreading across many cities, increasing urbanisation and more affordable mortgages, we believe Jiasen is well positioned to deliver further growth."

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Notes to Editors

· Jiasen (PRC) 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 1,400 employees. According to Euromonitor International Limited, Jiasen PRC, ranked first in terms of manufacturer sales value for the year ended 31 December 2012 within the high-end solid wooden doors segment in China, with an estimated market share of 6.1%.

· The Group'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 to retailers such as B&Q in the UK. The Group's products are sold in three main segments: residential and property development projects, wholesale and export.

· In FY13, the Directors estimate the Group sold in excess of 300,000 solid wooden doors, fixture items and furniture pieces and generated Group revenue of RMB 782.8million (circa £77.2million) and net profit after tax of RMB 177.8million (circa £17.5 million).

Executive Chairman's Statement

Introduction

I am delighted to present Jiasen's first interim results since our successful admission to AIM on 14 July 2014. The Group has delivered a strong set of results and made significant developments to strengthen the business to ensure we remain ahead of market developments. Revenue grew by 13% to RMB 415.8 million (H1 2013: RMB 368.2 million). Property developers contributed strongly to this growth and accounted for approximately 63% of revenue. We achieved gross profit of RMB 150.4 million, an increase of 13% and we maintained gross profit margin at approximately 36%.

The Chinese property market is evolving. Previously it was more commonplace for apartments to be sold bare and buyers would have to employ contractors to build kitchen units, built in wardrobes and other essential furniture and fittings. Apartments are now increasingly sold semi-furnished, driven by demand from buyers and government support. This concept is known as Refined Housing Decoration ("RHD"). Most new apartments in tier one cities come with RHD and we believe this will continue to grow in popularity in the tier two, three and four cities. As a result of this trend, we have successfully implemented a new sales and marketing strategy to diversify our revenue streams towards selling more of our higher margin non-door products which include wall panels, furniture and fixtures. The focus on these products has helped to offset the decline in the sales of doors.

Wholesale revenues grew by 27% to RMB 119.1 million (H1 2013: RMB 93.8 million) driven by our 10 new stores opened in 2013 and increased sales of non-door products. Export remains a small part of our business contributing 8% of revenue in the first half of 2014.

The Group signed four new contracts with repeat property developer customers in the first half of 2014 and these are worth more than RMB 20 million each. We expect these projects to complete by the end of the year.

Property market developments

The Board is cautiously optimistic on the outlook of the property market in China. More than 30 cities and two provinces (Fujian and Hunan) in China have announced easing of property cooling measures. Six major Chinese banks have recently lowered mortgage interest rates for first time buyers. These developments bode well for the younger generation looking to get onto the housing ladder, as they aspire to own their own homes.

According to a report by the National Statistics Bureau in August 2014, investment by Chinese property developers for the first seven months of 2014 reached RMB 5 trillion, representing a growth of 13.7% compared to same period in the previous year. We therefore believe the property market in China will return to stable growth in the long run.

In addition, the Chinese government has set up a US$6 trillion fund to undertake a nationwide urbanization programme and this will drive real demand for property as people move from rural areas to cities.

Strategy

We are making good progress on our stated objectives at IPO and these include:

· Increasing our production facility since there is limited space for further expansion. Discussions have begun to secure a new land for expansion.

· Expanding and diversifying our products.

We have implemented a new sales and marketing strategy which has resulted in the increased sales of higher margin non-door products.

· Increasing the number of distributors to our network and opening more stores.

We are currently in discussion with new and existing distributors.

· Strengthening and increasing brand awareness.

We have increased our spending on sponsorship of promotional events and advertising and increased our participation in trade fairs.

· Building international partnerships.

We intend to seek suitable complementary foreign brands for distribution of their products through our existing channels in China. This search has begun and several intermediaries and trade associations have been approached for recommendations and referrals.

Outlook

We are pleased with the progress made in the period under review. Looking ahead we have secured a strong order book and will continue to focus on increasing our brand presence through our new stores. Our strategy to increase the sale of non-door products means that we are diversifying our revenue streams. The easing of property cooling measures along with more affordable mortgages are encouraging developments and as such we are well positioned to capitalise on the increased demand for semi furnished apartments. We therefore look to the future with confidence.

Financial Review

Revenue growth for the six months ended 30 June 2014 (the "period") 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:-

Revenue from the Group's top three customers contributed approximately RMB 184.8 million (or 44.4%) of the total revenue for the six months ended 30 June 2014 (H1 2013 : RMB 119.2 million or 32.4%

The Group's operating profit before tax increased by 16.8% to RMB 122.3 million (H1 2013 : RMB 104.7 million) representing an operating profit before tax margin of 29.4% as compared to 28.4% recorded in first half of 2013. Net Profit after tax increased by 16.2% to RMB 91.6 million (H1 2013: RMB 78.4 million).

This is a positive performance for the business and we have a solid financial base to take the business to the next stage of growth.

Consolidated statement of comprehensive income

6 months ended 30 June 2014

Consolidated statement of financial position

6 months ended 30 June 2014

Consolidated statement of changes in equity

6 months ended 30 June 2014

Consolidated statement of cash flows

6 months ended 30 June 2014

Notes to the financial information

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 is a holding company for Jiasen Holdings (HK) Company Limited ("Jiasen HK") and Quanzhou Jiasen Wood Co., Ltd. ("Jiasen PRC"),(together, the "Group").

The main activity of both 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").

This interim financial information is unaudited and has not been reviewed by the auditors and does not constitute statutory financial statements.

This consolidated half-yearly financial information has been approved for issue by the board of directors on 25 August 2014.

2. Accounting policies

The unaudited half-yearly consolidated financial information has been prepared in accordance with the principles of International Financial Reporting Standards as adopted by the European Union ("IFRS") issued by the International Accounting Standards Board ("IASB"), including related Interpretations issued by the International Financial Reporting Interpretations Committee ("IFRIC").

3. Basis of consolidation

Subsidiary is entities controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are currently exercisable or convertible are taken into account. The financial information of subsidiaries is included in the consolidated financial information from the date that control commences until the date control ceases.

Intragroup transactions and balances are eliminated on consolidation.

4. Note on Expenses

Selling and distribution expenses for the period increased by 11% to RMB 18.2 million (H1 2013: RMB 16.4 million). This is mainly attributed to the rise in advertising costs of approximately RMB 1.6 million. The Group increased its advertising efforts by participating in more trade fairs, sponsoring promotional events.

Selling and distribution expenses as a proportion of revenue remained stable at 4% (H1 2013: 4%).

Administrative expenses for the period increased by 20% to RMB 8.9 million (H1 2013: RMB 7.5 million) due mainly to higher staff costs and one off listing costs. Administrative expenses as a proportion of revenue remain in line with the same period last year at 2%.

Included in the Other operating income for the period is RMB 2.0 million (H1 2013: Nil), being the one-off reversal of unclaimed money for long outstanding payables under the PRC laws and regulations. As at end of 30 June 2014, the interest income of the Group was RMB 0.5 million (H1 2013: RMB 0.2 million).

Financial costs decreased by 34% to RMB 2.2 million (H1 2013: RMB 3.3 million) due mainly to lower short-term interest bearing borrowing being drawn down during the 6 months period under review.

5. Note on Balance Sheet

As of 30 June 2014, the Group's total assets amounted to RMB 571.9 million, total liabilities were RMB 120.6 million, and shareholders' equity recorded at RMB 451.3 million.

The average working capital cycle for the period was 53 days (31 December 2013: 75 days). This was mainly due to the reduction in inventory and trade receivables when compared with previous period.

Trade receivables decreased by 1% to RMB 134.9 million as at 30 June 2014 (31 December 2013 : RMB 136.9 million), although the average trade receivable turnover days fell to 59 days from 64 days six months ago. None of the trade debtors were considered as impaired. The Group believes that the support it provides to its distributors in running their stores is essential and will also continue to monitor all the project customers to ensure good repayment relationship.

The average inventory turnover cycle was merely 11 days for period ended 30 June 2014, a slight decrease from the level of 18 days in 31 December 2013, due mainly to different project timing and delivery schedules, most of the time, completed finished goods will be shipped out immediately after production. Inventory amounted to RMB 24.8 million, a reduction of 36% as compared with the RMB 38.6 million at 31 December 2013.

The average trade payable cycle had increased to 17 days for period ended 30 June 2013, compared with the 7 days for the year ended 31 December 2013. This is due to timely payment to suppliers and sub-contractors to secure quality raw materials and timely delivery of OEM products.

6. Earnings per share

The earnings and weighted average number of ordinary shares used in the calculation of basic and diluted earnings per shares are as follow:-

7. Dividend

The Group has on 15 July 2014 announced that it intends to pay a maiden interim dividend of 1.5 pence. The interim dividend will be payable on 12 September 2014 to shareholders on the register at the close of business on 31 July 2014.

8. Subsequent Events

During the period under review, the Group undertook some restructuring exercises prior to its IPO in 14 July 2014. On 4 March 2014, Jiasen HK acquired the entire registered capital of Jiasen PRC from our major shareholder, Mr. Tsoi Ping Ping ("Mr. Tsoi") for a consideration of US$11.9 million. The consideration for the transfer was based on the then registered capital of Jiasen PRC.

Subsequently, on 5 April 2014, pursuant to a deed of debt assignment and capitalisation entered into between Mr. Tsoi, Jiasen HK and the Company. Mr. Tsoi assigned the debt of US$ 11.9 million due to him from Jiasen HK to the Company in exchange for 11.9 million ordinary shares of US$ 1.00 each in the Company.

On 25 April 2014, the Company capitalised the debt due by Jiasen HK in exchange of 9,999 shares in Jiasen HK credited as fully paid upon issue, for an aggregate issue price of US$ 11.9 million. The following day, on 26 April 2014, the Company allotted and issued 11.9 million shares of US$ 1.00 each to Mr. Tsoi.

On 22 May 2014, the Company effected a share split 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. All fractional shares arising as a result of the share split, all of which were fully paid, were surrendered to the Company for nil consideration.