Changhong Jiahua : 2019/04/30 - FIRST QUARTERLY REPORT 2019

CHANGHONG JIAHUA HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability) Stock Code : 8016

FIRST QUARTERLY

REPORT

2019

CHARACTERISTICS OF GEM OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE "STOCK EXCHANGE")

GEM has been positioned as a market designed to accommodate small and mid-sized companies to which a higher investment risk may be attached than other companies listed on the Main Board of the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration.

Given that the companies listed on GEM are generally small and mid-sized companies, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board of the Stock Exchange and no assurance is given that there will be a liquid market in the securities traded on GEM.

Hong Kong Exchanges and Clearing Limited and the Stock Exchange take no responsibility for the contents of this report, make no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this report.

This report, for which the directors (the "Directors") of Changhong Jiahua Holdings Limited (the "Company", and collectively with its subsidiaries, the "Group") collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on GEM of the Stock Exchange (the "GEM Listing Rules") for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that, to the best of their knowledge and belief: (1) the information contained in this report is accurate and complete in all material respects and not misleading or deceptive; (2) there are no other matters the omission of which would make any statement in this report misleading; and (3) all opinions expressed in this report have been arrived at after due and careful consideration and are founded on bases and assumptions that are fair and reasonable.

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HIGHLIGHTS

The Group for the three months ended 31 March 2019 increased by approximately 26.71% to HK$6,625.29 million as compared with the corresponding period in 2018. For the three months ended 31 March 2019, the Group recorded a net profit of approximately HK$94.70 million, representing a increase of approximately 54.74% as compared with the corresponding period in 2018.

RESULTS

The board of Directors (the "Board") of the Company is pleased to announce the unaudited consolidated results of the Company for the three months ended 31 March 2019, together with the comparative figures for the corresponding period of last year, as follows:

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the three months ended 31 March 2019

		2019		2018
	Notes	HK$'000	HK$'000
		Unaudited	Unaudited
Revenue	2	6,625,291		5,228,907
Cost of sales		(6,393,594)	(5,037,399)
Gross profit		231,697		191,508
Other income		9,269		3,239
Distribution and selling expenses		(58,558)	(67,292)
Administrative expenses		(29,055)	(30,980)
Profit from operation		153,353		96,475
Finance cost		(26,161)	(9,744)
Profit before taxation		127,192		86,731
Income tax expense	4	(32,488)	(25,531)
Profit for the period		94,704		61,200
Profit for the period attributed to
owners of the Company		94,704		61,200
Earnings per share
Basic and diluted (HK cents)	5	3.68		2.38

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NOTES:

For the three months ended 31 March 2019

1.BASIS OF PREPARATION

The unaudited quarterly financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards ("HKFRSs") issued by the Hong Kong Institute of Certified Public Accountants (the "HKICPA"). In addition, these financial statements include applicable disclosures required by the GEM Listing Rules and by the Hong Kong Companies Ordinance (Cap. 622).

The unaudited consolidated results for the three months ended 31 March 2019 have not been reviewed or audited by the external auditors of the Company but have been reviewed by the audit committee of the Company.

The accounting policies adopted are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2018 (the "2018 Consolidated Financial Statements"), except for the amendments and interpretations of HKFRSs (the "New HKFRSs") issued by HKICPA which have become effective in this period as detailed in the notes of the 2018 Consolidated Financial Statements. The adoption of the New HKFRSs has no material impact on the accounting policies in the Group's condensed consolidated financial statements for the period.

2.REVENUE

The principal activities of the Group are the provision of professional integrated information technology ("IT") solutions and services, and distribution of IT corporate products, digital products, own brand products and related parts and components.

Revenue represents net amount received and receivable for the sale of different types of IT products, self developed products, provision of professional integrated IT solutions and services net of corresponding sales related taxes and rebate. The amounts of each significant category of revenue recognised in revenue for the three months ended 31 March 2019 and 2018 are as follows:

	2019	2018
	HK$'000		HK$'000
IT Consumer Products	2,595,426	2,617,712
IT Corporate Products	1,912,284	1,675,916
Others	2,117,581	935,279
	6,625,291	5,228,907

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3.SEGMENT INFORMATION

Segment information is reported to the executive directors or management of the Company, being the chief operating decision maker (the "CODM"), for the purposes of making decisions about resource allocation and assessment of segment performance.

The Group's reportable and operating segments are as follows:

(a)IT Consumer Products - distribution of IT consumer products which include mainly personal computers ("PC"), digital products and IT accessories.

(b)IT Corporate Products - distribution of IT corporate products which mainly include storage products, minicomputers, networking products, personal computer servers, intelligent building management system ("IBMS") products and unified communication and contact centre ("UC & CC") products.

(c)Others - distribution of smartphones and development of its own brand products. The own brand products include but not limited to intelligent terminal products and services, mobile location-based service ("LBS") products and provision of professional integrated IT solutions and services.

Segment profit represents the profit earned by each segment without allocation of other income, finance costs as well as unallocated head office and corporate expenses. The measure reported to the CODM is for the purposes of resource allocation and performance assessment.

The following is an analysis of the Group's revenue and results by reportable and operating segment:

	For the three months ended 31 March 2019
	IT Consumer		IT Corporate
	Products		Products	Others	Total
	HK$'000		HK$'000	HK$'000	HK$'000
Revenue
External sales	2,595,426	1,912,284	2,117,581			6,625,291
Segment profit	65,141	97,764	7,189			170,094
Other income								9,269
Finance costs								(26,161)
Unallocated head office and corporate expenses								(26,010)
Profit before tax								127,192

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