Half Yearly Report

30 September 2014

Resource Holding Management Limited

("RHM", "the Company" or "the Group")

Half Yearly Financial Results

Six Months Ended 30 June 2014

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 2014.

HIGHLIGHTS:

· Completed the transaction with PUC Founder MSC Bhd ("PUCF") on 2 January 2014 for the sale of the Company's operating subsidiaries in return for a 62.48% interest in PUCF, listed on Malaysia's stock exchange.

· Revenue improved by 26.7% to RM28.3 million (2013 H1: RM22.3 million)

· Gross profit improved by 56.7% to RM12.5 million (2013 H1: RM7.9 million)

· Gross margin increased to 44.1% (2013 H1: 35.6%)

· Profit before tax has reduced with a reported loss of RM8.1 million after taking account of a RM12.3 million non-recurring extraordinary expense following the transaction with PUCF (2013 H1: RM4.4 million)

· Loss per share of 21.00 sen per share (2013 H1: 10.48 sen per share)

· Cash and cash equivalents balances available for use at 30 June 2014 stood at RM3.4 million (FYE 2013: RM3.1 million and 2013 H1: RM1.1 million)

· Net assets increased by 51% to RM100.5 million (2013: RM75.9 million and 2013 H1: RM66.5 million)

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

The first half of 2014 has seen an increase in turnover by 27% compared to the same period in 2013 primarily as a result of revenue contributions from the biometric business of PUCF, also leading to the 57% increase in gross profit for the period.

During the period under review and following completion of the transaction with PUCF, RHM has incurred a non-recurring one-off extraordinary expense of RM12.3 million. These charges were a result of the treatment of transferring shares in PUCF to investors who held convertible securities in subsidiaries of RHM, and introducers who facilitated the transaction with PUCF, as disclosed in the circular to shareholders dated 18 October 2013. This has led to a net loss of RM8.3 million in the period. Excluding this one-off extraordinary item RHM generated a profit before tax of RM4.2 million in the period (compared to RM4.4 million in H1 2013).

Operationally in the advertising and media business we have seen an increasing acceptance of digital media in the region and the Group continues to scout for potential acquisition opportunities.

In the period under review the Group has expanded its business and undertaken a number of significant corporate activities. RedHot Media Group Sdn Bhd, a wholly-owned subsidiary of PUCF, has signed a licensing agreement with Hainan Xin Ze Tong Ying Advertising Co. Ltd to offer a unique mobile platform to benefit shoppers in Malaysia. The new mobile platform, called "Shopinfo", helps shoppers find the best shopping deals within the radius of their real time location.

This collaboration corresponds directly with the government-to-government (G2G) initiatives recently agreed between China and Malaysia which aims to improve ICT cooperation and bilateral trade and investment cooperation between the two countries. The board believes the agreement will facilitate strategic leverage of business networks in China and assist in the Group's increased future presence in China.

PUCF also announced in July 2014 a proposed private placement, bonus issue of shares and the grant of warrants. We believe that these proposed corporate exercises are in line with PUCF's current scale of operations and key objectives, which are to further strengthen its development of its 3 pillars, namely Founder Qube(e-content), Shopinfo (online to offline ("O2O") social media) and Founder Pay(e-payment).

On 9 September 2014 the Group announced the sale of 15.218m shares in PUCF for total cash proceeds of RM3.45 million (approximately £0.67 million) which the Company intends to utilise for working capital. Following the partial sale of RHM's interest in PUCF, RHM retain an interest in 512,721,106 shares in PUCF representing 57.4 per cent. of PUCF's current issued share capital.

We are confident that we will continue to maintain our credibility as a regional player in both Malaysia and China within our spheres of activity and we will aim to enhance shareholders' value by delivering our commitment to achieve sustainable, improved performance throughout the remainder of 2014.

Notes to editors:

Exchange rate: £1 = RM5.47 (as at 30 June 2014)

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 2014

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS AT 30 JUNE 2014

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 30 JUNE 2014

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2014

Notes to the unaudited results for the six months to 30 June 2014

1. General information

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

On 01 January 2014, the Group disposed of the entire issued share capital of its subsidiary, Red Media Asia Ltd, including all operating subsidiary companies, to PUC Founder (MSC) Berhad ("Founder") which is listed on the Malaysian Stock Exchange, Bursa Malaysia Securities Berhad. This has resulted in the Group holding a 62.48% stake in Founder as at 30 June 2014. The business combination is reflected in the interims statements for 2014 in view that RHM has a controlling shareholding in Founder and the ability to affect its returns, or rights to variable returns, from its involvement with the Group since January 2014.

The Group's interim financial statements for the six months to 30 June 2014, from which this financial information has been extracted, and for the comparative six months ended 30 June 2013, 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 2014. 

These interim financial statements consolidate the accounts of Resource Holding Management Limited and all of its subsidiary undertakings drawn up to 30 June each year. Where shown, the comparatives for the year ended 31 December 2013 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 2013 and those to be used for the year ending 31 December 2014.

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, biometrics, 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 - three business segments, which are advertising, biometrics and financial services.

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

The segment results for period ended 30 June 2014 were as follow:

4. (Loss)/ Earnings Per Share

The basic loss per ordinary share has been calculated using the loss for the six months ended 30 June 2014 attributable to the company's equity shareholders of RM10,056,862 (31 Dec 2013: profit of RM6,074,931, 30 June 2013: profit of RM4,326,361) and the weighted average number of ordinary shares in issue of 47,885,353 (2013: 42,066,097, 30 June 2013: 41,266,249).

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. Comparative Proforma Group Statements of Financial Position

Below shows the estimated Group Statements of Financial Position as at 31 December 2013 arising from the acquisition of PUCF group.

7. 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 2014:

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.

8. Trade and other receivables

9. Cash and cash equivalents

Cash and cash equivalents excludes fixed deposits of RM1,794,717 (31 Dec 2013 : RM1,776,621, 30 June 2013 : RM1,741,393) 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.

10. Bank overdrafts

The interest rate per annum during the 6-months to 30 June 2014 for bank overdrafts was 8.35% per annum (2013: 8.35%, 30 June 2013: 8.35%).

The bank overdrafts are secured by the following:

a) Fixed deposits of RM1,794,717 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.

11. Redeemable Convertible Cumulative Preference Shares