Half Yearly Report

25 September 2012

Resource Holding Management Limited

("RHM" or "the Group")

Half Yearly Financial Results

Six Months Ended 30 June 2012

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 2012.

HIGHLIGHTS:

·; Gross profit increased by 1% to RM8.8 million (2011 H1: RM8.7 million)

·; Gross margin improved to 43.7% (2011 H1: 31.3%) as the Group refocused on higher margin sales and revised its media broking business model

·; Revenue decreased by 28% to RM20.0 million (2011 H1: RM27.7 million)

·; Profit before tax marginally lower than the previous period, reported at RM4.5 million (2011 H1: RM4.6 million)

·; Basic earnings per share decreased by 5.7% to 12.13 sen per share (2011 H1 : 12.87 sen per share)

·; Cash balances available for use at 30 June 2012 stood at RM0.8 million (FYE 2011: RM0.2 million and 2011 H1:RM1.3 million)

·; Net assets increased by 11.2% to RM56.2 million compared to 31 December 2011 (31 December 2011: RM50.5 million and 2011 H1: RM43.2 million)

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

Following the Group's positive performance for the financial year ended 2011 and its success in enlarging its client base with reputable brand names, the first half of 2012 has seen a continuation of this trend.

During the period under review, the Group leveraged on its enlarged client base, and focused on profitability by offering more, high margin advertising products and services such as out-of-home and digital media.

This strategy also required us to offer less of the conventional media services and products, where margins tend to be very low yet contribute significantly to the top-line. As a result, the Group saw an expected decrease in revenue, though gross profit and profit before tax levels are at par with the comparative period of H1 2011.

The Board believes that this switch of strategy is in the best interest of the business moving forward and expects to hit its full year 2012 profit forecasts albeit with a lower revenue than forecasted.

Our strategy of focusing on profitability has also led to further acquisitions of new blue chip clients with strong domestic brands, whilst also retaining clients with internationally renowned brands.

In May of this year, the Group announced its intent to obtain an Equity Line Facility ("ELF") of up to £20 million from Dutchess Opportunity Cayman Fund Ltd ("Dutchess"). The terms of the ELF are still being considered by RHM and remain under negotiation with Dutchess.

Our expansion strategy remains unchanged as we continue to seek potential businesses to acquire; namely out-of-home media and interactive advertising businesses in the social media sector.

The Group's transaction with PUC Founder MSC Berhad ("Founder") continues to progress, and updates on our submissions have needed to be made to Bursa Malaysia to reflect the new financial periods. In the meantime, the Group continues to explore opportunities with Founder through its vast presence in China.

We pride ourselves on creating greater value for our shareholders, and at our AGM on 15 July 2012, our shareholders approved the Board's proposition for a dividend by way of a bonus issue of shares of 1 new ordinary share to every 10 shares held by shareholders, and an additional subsequent scrip dividend of 1 new ordinary share to every 5 shares held by shareholders. The timing for the subsequent scrip dividend remains to be determined by the Board. At this AGM shareholder approval was also given by shareholders of the Group to the change of the Company's name to Resource Holding Management. This became effective on 20 July 2012.

RHM remains optimistic in its growth with recurring business contributions from a reputable list of clientele and its new acquisitions of several key new blue chip accounts in the first half of 2012.

The Board believes that with these encouraging turn of events during 2012 alongside the Group's strategic focus on building profitability, there will be ample room for growth in performance for what remains of 2012.

Notes to editors:

Exchange rate: £1 = RM4.98 (as at 30 June 2012)

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 2012

The results shown above relate entirely to continuing operations.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS AT 30 JUNE 2012

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 30 JUNE 2012

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2012

The group's other reserves comprise the following:

Notes to the unaudited results for the six months to 30 June 2012

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 2012, from which this financial information has been extracted, and for the comparative six months ended 30 June 2011, 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 2012. 

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 2011 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 2011 and those to be used for the year ending 31 December 2012.

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 2012 H1 were as follow:

Geographical information

4. Earnings Per Share

The basic earnings per ordinary share has been calculated using the profit for the six months ended 30 June 2012 attributable to the company's equity shareholders of RM4,503,165 (31 Dec 2011: RM10,263,125, 30 June 2011: RM4,653,454) and the weighted average number of ordinary shares in issue of 37,116,697 (2011: 36,435,686, 30 June 2011: 36,291,812).

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 amounts of goodwill was allocated as follows as of 30 June 2011:

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 RM5.2 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 RM1,662,000 (31 Dec 2011 : RM1,662,000, 30 June 2011 : RM1,630,000) 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 2012 for bank overdrafts was 8.5% per annum (2011: 8.5%, 30 June 2011: 8.5%).

The bank overdrafts are secured by the following:

a) Fixed deposits of RM1,662,000 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. Subsequent Event

The company is formerly known as RedHot Media International Ltd. Following shareholder approval obtained at the Annual General Meeting held on 18 July 2012, the Company's name change from RedHotMedia International Limited to Resource Holding Management Limited has taken effect.

On 19 July 2012, the Company has issued 3,727,837 new Ordinary Shares under the Bonus Issue I, a bonus share issue to shareholders of one new ordinary US$0.10 share in the Company for every ten Ordinary Shares heldon 18 July 2012. Following the bonus issue, the Company have 41,025,025 Ordinary Shares in issue, each with voting rights.

12. 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-