JIYI HOUSEHOLD INTERNATIONAL HOLDINGS LIMITED 集一家居國際控股有限公司 (Incorporated in the Cayman Islands with limited liability) (於開曼群島註冊成立之有限公司) Stock Code 股份代

Transcription

1 JIYI HOUSEHOLD INTERNATIONAL HOLDINGS LIMITED 集一家居國際控股有限公司 (Incorporated in the Cayman Islands with limited liability) (於開曼群島註冊成立之有限公司) Stock Code 股份代號 1495 Interim Report 2017 中期報告

2 CONTENTS Page Corporate Information 2 Management Discussion and Analysis 5 Interim Condensed Consolidated Income Statement 17 Interim Condensed Consolidated Statement of Comprehensive Income 18 Interim Condensed Consolidated Balance Sheet 19 Interim Condensed Consolidated Statement of Changes in Equity 21 Interim Condensed Consolidated Cash Flow Statement 22 Notes to the Condensed Consolidated Interim Financial Information 23 Other Information 54 01

3 CORPORATE INFORMATION DIRECTORS Executive Directors Ms. Hou Wei (Chairlady) Mr. Liu Xianxiu Non-executive Directors Mr. Hou Bo Mr. Lam On Tai Independent Non-executive Directors Mr. Ye Yihui Mr. Ho Hin Yip Mr. Hou Lianchang AUTHORISED REPRESENTATIVES Ms. Hou Wei Mr. Leung Wai Hong COMPANY SECRETARY Mr. Leung Wai Hong AUDIT COMMITTEE Mr. Ye Yihui (Chairman) Mr. Ho Hin Yip Mr. Hou Lianchang REMUNERATION COMMITTEE Mr. Hou Lianchang (Chairman) Mr. Liu Xianxiu Mr. Ye Yihui NOMINATION COMMITTEE Ms. Hou Wei (Chairlady) Mr. Hou Lianchang Mr. Ye Yihui Jiyi Household International Holdings Limited Interim Report

4 CORPORATE INFORMATION AUDITOR PricewaterhouseCoopers Certified Public Accountants 22nd Floor, Prince s Building Central, Hong Kong LEGAL ADVISER Ma Tang & Co., Solicitors 3rd Floor, Chinese Club Building Connaught Road Central Hong Kong PRINCIPAL SHARE REGISTRAR AND TRANSFER OFFICE IN CAYMAN ISLANDS Estera Trust (Cayman) Ltd. Clifton House 75 Fort Street, P.O. Box 1350 Grand Cayman KY Cayman Islands Estera Trust (Cayman) Ltd. Clifton House 75 Fort Street, P.O. Box 1350 Grand Cayman KY Cayman Islands HONG KONG SHARE REGISTRAR Computershare Hong Kong Investor Services Limited Shops , 17th Floor Hopewell Centre 183 Queen s Road East Wanchai, Hong Kong REGISTERED OFFICE Clifton House 75 Fort Street, P.O. Box 1350 Grand Cayman KY Cayman Islands Clifton House 75 Fort Street, P.O. Box 1350 Grand Cayman KY Cayman Islands HEADQUARTERS No.2 Xianzi Middle Road Meixian District, Meizhou Guangdong Province, PRC 2 03

5 CORPORATE INFORMATION PRINCIPAL PLACE OF BUSINESS IN HONG KONG Room 1405, 14th Floor, Jubilee Centre 18 Fenwick Street, Wanchai Hong Kong PRINCIPAL BANKERS Industrial and Commercial Bank of China (Asia) Limited 33rd Floor, ICBC Tower 3 Garden Road, Central Hong Kong Bank of China (Hong Kong) Limited 1 Garden Road, Central Hong Kong 1 Meizhou Branch, Bank of China No. 53 Meijiang Yi Road, Meizhou Guangdong Province, PRC 53 Meizhou Branch, Guangfa Bank No. 101 Binfang Avenue, Meizhou Guangdong Province, PRC 101 WEBSITE STOCK CODE Jiyi Household International Holdings Limited Interim Report

6 MANAGEMENT DISCUSSION AND ANALYSIS The board (the Board ) of directors (the Directors ) of Jiyi Household International Holdings Limited (the Company ) is pleased to present in this interim report the unaudited condensed consolidated results of the Company and its subsidiaries (the Group ) for the six months ended 30 June 2017 (the Reporting Period ) together with the comparative figures for the corresponding period in 2016 (the Prior Period or FY2016 ). BUSINESS AND FINANCIAL REVIEW Revenue by business operations The Group is a well-established and integrated building and home improvement materials and furnishings supplier and interior design and engineering services provider in the PRC. The Group is mainly engaged in the sale and distribution of merchandise and the provision of services. The following table sets forth the breakdown of revenue by business operations for the Reporting Period with the comparative figures of 2016: For the six months ended 30 June Changes RMB 000 RMB 000 % Sale and distribution of merchandise Building materials 115,022 75, Home improvement materials 18,242 26,730 (31.8) Furnishings 9,412 27,285 (65.5) 142, , Provision of services Household 853 2,228 (61.7) Corporate 35,257 34, ,110 36,766 (1.8) Total 178, ,

7 MANAGEMENT DISCUSSION AND ANALYSIS Total revenue of the Group increased by approximately RMB12.5 million or approximately 7.5% from approximately RMB166.3 million for the Prior Period to approximately RMB178.8 million for the Reporting Period. Such increase was mainly driven by the increase in sale of building materials during the Reporting Period % Revenue from sale of and distribution of merchandise Revenue of the Group from sale and distribution of merchandise, comprising (i) sale of building materials, (ii) sale of home improvement materials; and (iii) sale of furnishings, increased by approximately RMB13.1 million or approximately 10.1% from approximately RMB129.6 million for the Prior Period to approximately RMB142.7 million for the Reporting Period. The increase was a combined result of the followings: (i) (ii)(iii) % Sale of building materials Sale of building materials increased by approximately RMB39.4 million or approximately 52.2% from approximately RMB75.6 million for the Prior Period to approximately RMB115.0 million for the Reporting Period. Such increase was mainly due to the increase in sales of pipe and fittings, electrical wires and cables, steel and cement; and was partially offset by the decrease in sales of paint and chemicals during the Reporting Period % Sale of home improvement materials Sale of home improvement materials decreased by approximately RMB8.5 million or approximately 31.8% from approximately RMB26.7 million for the Prior Period to approximately RMB18.2 million for the Reporting Period. The decrease was mainly due to the decrease in sales of electrical materials. During the Prior Period, the Group obtained a significant sales order from a customer who was engaged in property development for its project requirement. As the demand of this customer decreased during the Reporting Period, the sale of electrical materials decreased accordingly % 18.2 Jiyi Household International Holdings Limited Interim Report

8 MANAGEMENT DISCUSSION AND ANALYSIS Sale of Furnishings Sale of furnishings decreased by approximately RMB17.9 million or approximately 65.5% from approximately RMB27.3 million for the Prior Period to approximately RMB9.4 million for the Reporting Period. Such decrease was mainly due to the keen market competition during the Reporting Period. Revenue from provision of services The revenue from provision of services slightly decreased by approximately RMB0.7 million or approximately 1.8% from approximately RMB36.8 million for the Prior Period to approximately RMB36.1 million for the Reporting Period. In light of the number and size of corporate projects secured by the Group at the moment and the progress of those projects, the Group still feels confident in the growth of this business operation in Gross profit and gross profit margin The following table sets forth the breakdown of gross profit and gross profit margin by the Group s business segments for the Reporting Period with the comparative figures of 2016: % % 36.1 For the six months ended 30 June Gross profit Gross profit margin Gross profit Gross profit margin RMB 000 % RMB 000 % Sale and distribution of merchandise Building materials 17, , Home improvement materials 7, , Furnishings 3, , , , Provision of services 4, , Total 32, ,

9 MANAGEMENT DISCUSSION AND ANALYSIS Although the Group s revenue increased by approximately RMB12.5 million or approximately 7.5% from approximately RMB166.3 million for the Prior Period to approximately RMB178.8 million for the Reporting Period, the Group s overall gross profit decreased by approximately RMB2.0 million or approximately 6.1% from approximately RMB34.5 million for the Prior Period to approximately RMB32.5 million for the Reporting Period. As a result, the Group s overall gross profit margin decreased from 20.8% for the Prior Period to 18.2% for the Reporting Period, which was mainly due to the increase in proportion of revenue generated from sales of building materials during the Reporting Period and sale of building materials entails relatively lower gross profit margin within the business segment of sale and distribution of merchandise % % % 18.2% Although the gross profit margin of sale of building materials was improved during the Reporting Period, the gross profit margin of sale and distribution of merchandise decreased from 23.3% for the Prior Period to 19.9% for the Reporting Period, which was mainly due to the increase in proportion of revenue generated from sale of building materials which entails relatively lower gross profit margin within the business segment of sale and distribution of merchandise during the Reporting Period. 23.3% 19.9% The gross profit margin of provision of services slightly decreased from 11.8% for the Prior Period to 11.4% for the Reporting Period. With the increasing volume of corporate projects and the expansion of market share, the Group believed that the gross profit margin of this business will gradually be more stable or even rise slowly. 11.8% 11.4% Selling expenses The Group s selling expenses increased by approximately RMB1.4 million or approximately 15.8% from RMB8.6 million for the Prior Period to approximately RMB10.0 million for the Reporting Period. Such increase was mainly due to the rental fees of a new flagship mall of approximately RMB1.4 million incurred during the Reporting Period (FY2016: Nil) % Jiyi Household International Holdings Limited Interim Report

10 MANAGEMENT DISCUSSION AND ANALYSIS Administrative expenses The Group s administrative expenses decreased by approximately RMB1.6 million or approximately 14.5% from approximately RMB10.5 million for the Prior Period to approximately RMB8.9 million for the Reporting Period. The decrease was mainly due to the decrease in provision for impairment of trade receivables by approximately RMB2.5 million from approximately RMB2.6 million for the Prior Period to approximately RMB0.1 million for the Reporting Period % Finance cost net The Group s net finance cost slightly decreased by approximately RMB0.1 million from approximately RMB3.7 million for the Prior Period to approximately RMB3.6 million for the Reporting Period. The Group s average bank borrowings and the interest rates on bank borrowings remained relatively stable during the Reporting Period Profit for the period As a result of the foregoing, the Group s profit for the period decreased by approximately RMB1.4 million or approximately 17.0% from approximately RMB8.2 million for the Prior Period to approximately RMB6.8 million for the Reporting Period %

11 MANAGEMENT DISCUSSION AND ANALYSIS PROSPECTS Although the revenue of the business of sale and distribution of merchandise recorded a growth during the Reporting Period, the gross profit and gross profit margin of this business segment were weakened by the keen market competition and the increase in proportion of sale in building materials which entailed relatively lower gross profit margin within the sale and distribution of merchandise business. Although the Group expects that the operating environment of the business of sale and distribution of merchandise will be very difficult in the foreseeable future, the Group believes that a new force can be provided to the improvement of this business segment, especially the sale of home improvement materials and furnishings, in the coming years after the whole new flagship mall of the Group located at Jinxiu International Home Exhibit Centre in Meixian District, Meizhou commenced its operation in the second quarter of On the other hand, the Group believes that there is plenty of room for the development of the business of provision of Interior design and engineering services. Although the revenue from provision of services during the Reporting Period was comparable to the Prior Period, the Group still feels confident in the growth of this business operation in 2017 considering the number and size of corporate projects secured by the Group at the moment and the progress of those projects. Jiyi Household International Holdings Limited Interim Report

12 MANAGEMENT DISCUSSION AND ANALYSIS LIQUIDITY, FINANCIAL AND CAPITAL RESOURCES As at 30 June 2017, the Group had a total cash and cash equivalents balances of approximately RMB68.1 million (31 December 2016: RMB105.8 million) mainly denominated in Renminbi and Hong Kong Dollars. The decrease in total cash and cash equivalents balances was mainly due to the net cash used in operating activities of approximately RMB30.4 million during the Reporting Period As at 30 June 2017, the Group had net current assets of approximately RMB252.0 million, as compared to approximately RMB246.4 million as at 31 December BORROWINGS AND PLEDGE OF ASSETS As at 30 June 2017, the Group had unutilised banking facilities for short term financing of approximately RMB104.7 million (31 December 2016: RMB101.0 million) and total bank borrowings of approximately RMB94.3 million (31 December 2016: RMB98.0 million) As at 30 June 2017, the bank borrowings of the Group were secured by buildings and land use right of the Group at the carrying amounts of approximately RMB40.8 million (31 December 2016: RMB41.2 million) and RMB2.9 million (31 December 2016: RMB2.9 million) respectively As at 30 June 2017, the notes payable of the Group was secured by bank deposits of approximately RMB0.3 million (31 December 2016: RMB0.3 million)

13 MANAGEMENT DISCUSSION AND ANALYSIS CAPITAL EXPENDITURE The Group s capital expenditure for the Reporting Period amounted to approximately RMB1.8 million, which was mainly for the purchasing and constructing of the Group s property, plant and equipment. 1.8 FINANCIAL RATIO As at 30 June December 2016 Current ratio (1) (1) Quick ratio (2) (2) Gearing ratio (%) (3) (%) (3) Net debt to equity ratio (%) (4) (%) (4) 7.8 (2.5) (1) Current ratio is calculated as the total current assets divided by the total current liabilities. (1) (2) Quick ratio is calculated as total current assets less inventories and divided by total current liabilities. (2) (3) Gearing ratio is calculated as the total debt divided by total equity and multiplied by 100%. (3) 100% (4) Net debt to equity ratio is calculated as total borrowings net of cash and cash equivalents and restricted cash, and divided by total equity and multiplied by 100%. (4) 100% Jiyi Household International Holdings Limited Interim Report

14 MANAGEMENT DISCUSSION AND ANALYSIS FOREIGN EXCHANGE EXPOSURE The Group mainly transacts and recognises its revenue in Renminbi and also incurs cost in Hong Kong dollars and Renminbi. The Group is exposed to foreign exchange risk with respect mainly to Renminbi which may affect the Group s performance. The management is aware of the possible exchange rate exposure due to the continuing fluctuation of Renminbi and will closely monitor its impact on the performance of the Group to see if any hedging policy is necessary. The Group currently does not have any foreign currency hedging policy. USE OF PROCEEDS FROM THE GLOBAL OFFERING Upon completion of the Global Offering (as defined in the prospectus of the Company dated 27 October 2015) and the primary listing on the Main Board of The Stock Exchange of Hong Kong Limited (the Stock Exchange ) on 6 November 2015, a net proceeds from the Global Offering was received by the Group which amounted to approximately HK$84.7 million after deducting the underwriting commissions and all other related expenses. The Group had utilised approximately HK$52.1 million of the net proceeds as at 30 June The unutilised portion of net proceeds is currently held in cash and have been placed in deposits with banks in Hong Kong and the PRC and it is intended that it will be applied in the manner consistent with the proposed allocations as disclosed in the announcements of the Company dated 26 May 2016 and 31 July

15 MANAGEMENT DISCUSSION AND ANALYSIS As at 30 June 2017 Use of proceeds Net proceeds Utilised Unutilised HK$ million HK$ million HK$ million 1. Purchasing and setting up major facilities including fire safety and security system, as well as renovating the display area of a new flagship mall (Note 1) 2. Purchasing inventories for display and initial operation at the new flagship mall (Note 1) Refurbishing the Meijiang Outlet Upgrading the information system General working capital Funding engineering services projects (Note 2) Notes: (1) As disclosed in the announcement of the Company dated 26 May 2016, the Board resolved to change the proposed site of the new flagship mall from Meijiang District, Meizhou to Meixian District, Meizhou. The whole flagship mall has been put into operation since the second quarter of (1) (2) As disclosed in the announcement of the Company dated 31 July 2017, the Board resolved to change the unutilised proceeds of approximately HK$32.6 million for establishing a new logistic centre and a sales outlet in Wuhua County of Meizhou to funding engineering service projects. The proceeds are expected to be fully utilised before November (2) 32.6 Jiyi Household International Holdings Limited Interim Report

16 MANAGEMENT DISCUSSION AND ANALYSIS PLACING OF NEW SHARES UNDER GENERAL MANDATE AND THE USE OF PROCEEDS On 20 June 2016, the Company completed a placing of shares up to 72,000,000 new ordinary shares of the Company ( Placing Share ) at a placing price of HK$0.78 per Placing Share, representing a discount of approximately 11.4% to the closing price of HK$0.88 on the date of the placing agreement, to not less than six placees who and whose ultimate beneficial owners were third parties independent of the Company and its connected persons. The net proceeds from the placing, after deducting the related placing commission, professional fees and all related expenses, was approximately HK$55.5 million. It was planned that HK$49.9 million, representing approximately 90% of the net proceeds from the placing, would be used for funding any potential engineering services projects and the remaining portion of approximately HK$5.6 million, representing approximately 10% of the net proceeds from the placing, would be used as general working capital of the Group. As at 30 June 2017 and the date of this interim report, the unutilised proceeds amounted to approximately HK$23.0 million and HK$0.8 million, respectively, which were for funding engineering services projects. 72,000, % % % Details of the placing of shares by the Company are set out in the Company s announcements dated 6 June 2016 and 20 June CONTINGENT LIABILITIES The Group had no significant contingent liabilities as at 30 June 2017 (31 December 2016: Nil). CAPITAL COMMITMENTS The Group had no significant outstanding capital commitment as at 30 June 2017 (31 December 2016: Nil). 15

17 MANAGEMENT DISCUSSION AND ANALYSIS EMPLOYEE AND REMUNERATION POLICY As at 30 June 2017, the Group had a total number of 232 employees (31 December 2016: 255) and the total staff costs, including Directors remuneration, amounted to approximately RMB7.0 million for the Reporting Period (FY2016: RMB5.3 million). The increase was mainly due to salary increment of employees during the Reporting Period The Group offers competitive remuneration packages commensurate with industry practice and provides various fringe benefits to employees. The Group conducts induction training for all of its new employees and on-going training from time to time during their employment. The nature of training offered depends on their specific field of operation. The objective of the Group s remuneration policy is to maintain fair and competitive packages based on business requirements and industry practice. In order to determine the level of remuneration paid to its employees (including Directors and senior management), the following factors are considered: workload, responsibility and job complexity; business requirements; individual performance and contribution to results; company performance and profitability; retention considerations and the potential of individuals; corporate goals and objectives; market rates and changes in relevant markets, including supply and demand fluctuations and changes in competitive conditions; and general economic situation. Jiyi Household International Holdings Limited Interim Report

18 INTERIM CONDENSED CONSOLIDATED INCOME STATEMENT For the six months ended 30 June 2017 Unaudited Six months ended 30 June Note RMB 000 RMB 000 Revenue 6 178, ,334 Cost of sales 6 (146,331) (131,787) Gross profit 32,455 34,547 Selling expenses (10,016) (8,647) Administrative expenses (8,944) (10,458) Other income and gains net Operating profit 7 13,575 15,639 Finance income Finance expenses (3,654) (3,794) Finance cost net (3,555) (3,655) Profit before income tax 10,020 11,984 Income tax expense 8 (3,218) (3,789) Profit for the period, all attributable to equity holders of the Company 6,802 8,195 Earnings per share attributable to equity holders of the Company for the period Basic and diluted (RMB cents) The notes on pages 23 to 53 are an integral part of this condensed consolidated interim financial information

19 INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the six months ended 30 June 2017 Unaudited Six months ended 30 June RMB 000 RMB 000 Profit for the period 6,802 8,195 Other comprehensive income: Items that may be reclassified to profit or loss Currency translation differences (1,908) 636 Total comprehensive income for the period, all attributable to equity holders of the Company 4,894 8,831 The notes on pages 23 to 53 are an integral part of this condensed consolidated interim financial information Jiyi Household International Holdings Limited Interim Report

20 INTERIM CONDENSED CONSOLIDATED BALANCE SHEET As at 30 June 2017 Unaudited Audited 30 June December 2016 Note RMB 000 RMB 000 ASSETS Non-current assets Property, plant and equipment 11 74,274 75,249 Land use right 2,873 2,919 Intangible assets Deferred income tax assets 14 2,122 1,790 79,791 80,495 Current assets Inventories 45,219 32,315 Trade and other receivables , ,924 Restricted cash Cash and cash equivalents 68, , , ,343 Total assets 488, ,838 19

21 INTERIM CONDENSED CONSOLIDATED BALANCE SHEET As at 30 June 2017 Unaudited Audited 30 June December 2016 Note RMB 000 RMB 000 EQUITY Capital and reserves attributable to equity holders of the Company Share capital 15 35,638 35,638 Share premium , ,832 Other reserves (54,270) (52,362) Retained earnings 106,575 99,773 Total equity 331, ,881 LIABILITIES Current liabilities Trade and other payables 16 53,257 54,826 Bank borrowings 17 94,300 98,000 Current income tax liabilities 9,393 7, , ,957 Total liabilities 156, ,957 Total equity and liabilities 488, ,838 The notes on pages 23 to 53 are an integral part of this condensed consolidated interim financial information Jiyi Household International Holdings Limited Interim Report

22 INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the six months ended 30 June 2017 Unaudited Attributable to equity holders of the Company Share capital Share premium Other reserves Retained earnings Total equity RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 Balance at 1 January , ,467 (53,927) 82, ,200 Comprehensive income: Profit for the period ended 30 June ,195 8,195 Other comprehensive income: Currency translation differences Transactions with owners: New shares placing (Note 15(a)) 15(a) 6,154 41,365 47,519 Balance at 30 June , ,832 (53,291) 90, ,550 Balance at 1 January , ,832 (52,362) 99, ,881 Comprehensive income: Profit for the period ended 30 June ,802 6,802 Other comprehensive income: Currency translation differences (1,908) (1,908) Balance at 30 June , ,832 (54,270) 106, ,775 21

23 INTERIM CONDENSED CONSOLIDATED CASH FLOW STATEMENT For the six months ended 30 June 2017 Unaudited Six months ended 30 June Note RMB 000 RMB 000 Cash flows from operating activities Cash used in operations (25,643) (53,801) Interest paid (3,507) (3,794) Income tax paid (1,288) (3,754) Net cash used in operating activities (30,438) (61,349) Cash flows from investing activities Purchase of property, plant and equipment 11 (1,793) (2,588) Disposal of property, plant and equipment 145 Purchase of intangible assets (19) Release of restricted cash ,870 Addition of restricted cash (300) (30,115) Addition of long term deposit (56,500) Net cash used in investing activities (1,648) (70,352) Cash flows from financing activities Proceeds from bank borrowings 45,300 55,000 Repayments of bank borrowings (49,000) (25,900) Net proceeds from new shares placing 47,519 Net cash (used in)/generated from financing activities (3,700) 76,619 Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of the period (35,786) (55,082) 105, ,412 Exchange (losses)/gains on cash and cash equivalents (1,908) 636 Cash and cash equivalents at end of the period 68,110 60,966 The notes on pages 23 to 53 are an integral part of this condensed consolidated interim financial information Jiyi Household International Holdings Limited Interim Report

24 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION 1 GENERAL INFORMATION 1. Jiyi Household International Holdings Limited (the Company ) was incorporated in the Cayman Islands on 2 February 2015 as an exempted company with limited liability under the Companies Law (as revised) of the Cayman Islands. The address of the Company s registered office is Clifton House, 75 Fort Street, P.O. Box 1350, Grand Cayman, KY1-1108, Cayman Islands. The address of its principal place of business is Room 1405, 14/F., Jubilee Centre, 18 Fenwick Street, Wanchai, Hong Kong. Clifton House, 75 Fort Street, P.O. Box 1350, Grand Cayman, KY1-1108, Cayman Islands The Company is an investment holding company and its subsidiaries (together the Group ) are principally engaged in the business of sale and distribution of building and home improvement materials and furnishings and provision of interior design and engineering services in the People s Republic of China (the PRC ). The controlling shareholder of the Group is Xinling Limited, a company incorporated in British Virgin Islands ( BVI ) which is wholly-owned by Ms. Hou Wei ( Ms. Hou ). This condensed consolidated interim financial information is presented in thousands of Renminbi ( RMB ), unless otherwise stated. This condensed consolidated interim financial information was approved for issue on 30 August

25 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION 1 GENERAL INFORMATION (Continued) 1 The financial information relating to the year ended 31 December 2016 that is included in the condensed consolidated interim financial information for the six months ended 30 June 2017 as comparative information does not constitute the Company s statutory annual consolidated financial statements for that year but is derived from those financial statements. Further information relating to these statutory financial statements required to be disclosed in accordance with section 436 of the Hong Kong Companies Ordinance (Cap. 622) is as follows: The Company has delivered the financial statements for the year ended 31 December 2016 to the Registrar of Companies as required by section 662(3) of, and Part 3 of Schedule 6 to, the Hong Kong Companies Ordinance (Cap. 622) (3)6 3 2 BASIS OF PREPARATION 2 This condensed consolidated interim financial information for the six months ended 30 June 2017 has been prepared in accordance with HKAS 34, Interim financial reporting. The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 31 December 2016, which have been prepared in accordance with Hong Kong Financial Reporting Standards (the HKFRS ). 34 Jiyi Household International Holdings Limited Interim Report

26 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION 3 ACCOUNTING POLICIES Except as described below, the accounting policies applied are consistent with those of the annual financial statements for the year ended 31 December 2016, as described in those annual financial statements. 3 (a) New and amended standards that are effective for the (a) financial year beginning on or after 1 January 2017 and do not have a material impact on the Group: Amendments to HKAS 12 Income taxes ; 12 Amendments to HKAS 7 Statement of cash flows; 7 Annual improvements cycle. (b) New standards, new interpretations and amendments to standards and interpretations that have been issued but are not effective for the financial year beginning on 1 January 2017 and have not been early adopted by the Group: (b) Effective for the financial year beginning on or after HKFRS 9 Financial instruments 1 January HKFRS 15 Revenue from contracts with customers 1 January Amendments to HKFRS 1 First time adoption of HKFRS 1 January Amendments to HKFRS 2 2 Classification and measurement of share-based payment transactions 1 January

27 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION 3 ACCOUNTING POLICIES (Continued) 3 (b) New standards, new interpretations and amendments to standards and interpretations that have been issued but are not effective for the financial year beginning on 1 January 2017 and have not been early adopted by the Group: (Continued) (b) Effective for the financial year beginning on or after Amendments to HKFRS 4 Insurance contracts 1 January Amendments to HKAS 28 Investment in associates and joint ventures 1 January Amendments to HKAS 40 Investment property 1 January HK(IFRIC)-Int Foreign Currency Transactions and Advance Consideration 1 January 2018 HKFRS 16 Leases 1 January Amendments to HKFRS 10 and HKAS Sale or contribution of assets between an investor and its associate or joint venture To be determined Jiyi Household International Holdings Limited Interim Report

28 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION 3 ACCOUNTING POLICIES (Continued) (b) New standards, new interpretations and amendments to standards and interpretations that have been issued but are not effective for the financial year beginning on 1 January 2017 and have not been early adopted by the Group: (Continued) None of these is expected to have a significant impact on the condensed consolidated interim financial information of the Group, except for the followings: 3 (b) HKFRS 9, Financial instruments 9 HKFRS 9 addresses the classification, measurement and derecognition of financial assets and financial liabilities, introduces new rules for hedge accounting and a new impairment model for financial assets. 9 While the Group has yet to undertake a detailed assessment of the classification and measurement of financial assets, debt instruments currently classified as available-for-sale (AFS) financial assets would appear to satisfy the conditions for classification as at fair value through other comprehensive income (FVOCI) and hence there will be no change to the accounting for these assets. Accordingly, the Group does not expect the new guidance to have a significant impact on the classification and measurement of its financial assets. There will be no impact on the Group s accounting for financial liabilities, as the new requirements only affect the accounting for financial liabilities that are designated at fair value through profit or loss and the Group does not have any such liabilities. The derecognition rules have been transferred from HKAS 39 Financial Instruments: Recognition and Measurement and have not been changed

29 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION 3 ACCOUNTING POLICIES (Continued) 3 (b) New standards, new interpretations and amendments to standards and interpretations that have been issued but are not effective for the financial year beginning on 1 January 2017 and have not been early adopted by the Group: (Continued) (b) HKFRS 9, Financial instruments (Continued) 9 The new hedge accounting rules will align the accounting for hedging instruments more closely with the Group s risk management practices. As a general rule, more hedge relationships might be eligible for hedge accounting, as the standard introduces a more principlesbased approach. While the Group is yet to undertake a detailed assessment, it would appear that the Group s current hedge relationships would qualify as continuing hedges upon the adoption of HKFRS 9. Accordingly, the Group does not expect a significant impact on the accounting for its hedging relationships. 9 The new impairment model requires the recognition of impairment provisions based on expected credit losses (ECL) rather than only incurred credit losses as is the case under HKAS 39. It applies to financial assets classified at amortised cost, debt instruments measured at FVOCI, contract assets under HKFRS 15 Revenue from Contracts with Customers, lease receivables, loan commitments and certain financial guarantee contracts. While the Group has not yet undertaken a detailed assessment of how its impairment provisions would be affected by the new model, it may result in an earlier recognition of credit losses Jiyi Household International Holdings Limited Interim Report

30 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION 3 ACCOUNTING POLICIES (Continued) 3 (b) New standards, new interpretations and amendments to standards and interpretations that have been issued but are not effective for the financial year beginning on 1 January 2017 and have not been early adopted by the Group: (Continued) (b) HKFRS 9, Financial instruments (Continued) 9 The new standard also introduces expanded disclosure requirements and changes in presentation. These are expected to change the nature and extent of the Group s disclosures about its financial instruments particularly in the year of the adoption of the new standard. HKFRS 9 must be applied for financial years commencing on or after 1 January Based on the transitional provisions in the completed HKFRS 9, early adoption in phases was only permitted for annual reporting periods beginning before 1 February After that date, the new rules must be adopted in their entirety. The Group does not intend to adopt HKFRS 9 before its mandatory date HKFRS 15, Revenue from contracts with customers 15 HKFRS 15 is a new standard for the recognition of revenue. This standard will replace HKAS 18 which covers contracts for goods and services and HKAS 11 which covers construction contracts. The new standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer. The standard permits either a full retrospective or a modified retrospective approach for the adoption

31 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION 3 ACCOUNTING POLICIES (Continued) 3 (b) New standards, new interpretations and amendments to standards and interpretations that have been issued but are not effective for the financial year beginning on 1 January 2017 and have not been early adopted by the Group: (Continued) (b) HKFRS 15, Revenue from contracts with customers (Continued) 15 Management is currently assessing the effects of applying the new standard on the Group s financial statements and has identified the following areas that are likely to be affected: revenue from service the application of HKFRS 15 may result in the identification of separate performance obligations which could affect the timing of the recognition of revenue. 15 accounting for certain costs incurred in fulfilling a contract certain costs which are currently expensed may need to be recognised as an asset under HKFRS At this stage, the Group is not able to estimate the impact of the new rules on the Group s financial statements. The Group will make more detailed assessments of the impact over the next six months. HKFRS 15 is mandatory for financial years commencing on or after 1 January At this stage, the Group does not intend to adopt the standard before its effective date. 15 Jiyi Household International Holdings Limited Interim Report

32 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION 3 ACCOUNTING POLICIES (Continued) 3 (b) New standards, new interpretations and amendments to standards and interpretations that have been issued but are not effective for the financial year beginning on 1 January 2017 and have not been early adopted by the Group: (Continued) (b) HKFRS 16, Leases 16 HKFRS 16 will result in almost all leases being recognised on the balance sheet, as the distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial liability to pay rentals are recognised. The only exceptions are short-term and low-value leases. 16 The accounting for lessors will not significantly change. The standard will affect primarily the accounting for operating leases. The Group has not yet determined t o w h a t e x t e n t o f t h e G ro u p s e x i s t i n g n o n - cancellable operating lease commitments will result in the recognition of an asset and a liability for future payments and how this will affect the Group s profit and classification of cash flows. Some of the commitments may be covered by the exception for short-term and low value leases and some commitments may relate to arrangements that will not qualify as leases under HKFRS The new standard is mandatory for financial years commencing on or after 1 January At this stage, the Group does not intend to adopt the standard before its effective date. 31

33 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION 4 ESTIMATES 4 The preparation of condensed consolidated interim financial information requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing this condensed consolidated interim financial information, the significant judgements made by management in applying the Group s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 December FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS 5 Financial risk factors The Group s activities expose it to a variety of financial risks: interest rate risk, credit risk and liquidity risk. The Group s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group s financial performance. The interim condensed consolidated financial information do not include all financial risk management information and disclosures required in the annual financial statements, and should be read in conjunction with the Group s annual financial statements as at 31 December There have been no changes in the risk management policies since year end. Jiyi Household International Holdings Limited Interim Report

34 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION 6 SEGMENT INFORMATION 6 The chief operating decision-maker ( CODM ) has been identified as the chief executive officer of the Company. The chief executive officer reviews the Group s internal reporting in order to assess performance and allocate resources. The chief executive officer has determined the operating segments based on these reports. The chief executive officer considers the business from products and services perspective, and determines that the Group has the following operating segments: (i) Sale and distribution of merchandise (i) (ii) Provision of interior design and engineering services (ii) The CODM assesses the performance of the operating segments mainly based on segment revenue and gross profit of each operating segment. The Company currently does not allocate assets and liabilities to its segments, as the CODM does not use this information to allocate resources to or evaluate the performance of the operating segments. Therefore, the Company does not report a measure of total assets or total liabilities for each reportable segment. 33

35 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION 6 SEGMENT INFORMATION (Continued) 6 The segment information provided to the CODM for the reportable segments for the period is as follows: Six months ended 30 June RMB 000 RMB 000 Segment Revenue Sale and distribution of merchandise Total segment revenue 158, ,692 Inter-segment revenue (16,282) (10,124) Revenue from external customers 142, ,568 Provision of interior design and engineering services Total segment revenue 38,924 36,766 Inter-segment revenue (2,814) Revenue from external customers 36,110 36, , ,334 Jiyi Household International Holdings Limited Interim Report

36 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION 6 SEGMENT INFORMATION (Continued) 6 Six months ended 30 June RMB 000 RMB 000 Segment Cost Sale and distribution of merchandise 114,337 99,371 Provision of interior design and engineering services 31,994 32, , ,787 Six months ended 30 June RMB 000 RMB 000 Segment gross profit Sale and distribution of merchandise 28,339 30,197 Provision of interior design and engineering services 4,116 4,350 32,455 34,547 35

37 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION 6 SEGMENT INFORMATION (Continued) 6 Six months ended 30 June RMB 000 RMB 000 Segment gross profit 32,455 34,547 Other income and gains net Selling expenses (10,016) (8,647) Administrative expenses (8,944) (10,458) Finance cost net (3,555) (3,655) Income tax expense (3,218) (3,789) Profit for the period 6,802 8,195 During the period, all revenues of the Group were derived from the PRC. Non-current assets, other than deferred income tax assets, were mainly located in the PRC as at 30 June 2017 and 31 December During the period, there was one external customer contributed (2016: Nil) over 10% of the total revenue of the Group. The revenue derived from this customer was RMB21,393,000 during the period. 10% 21,393,000 Jiyi Household International Holdings Limited Interim Report

38 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION 6 SEGMENT INFORMATION (Continued) 6 Breakdown of the revenue by products or services is as follow: Six months ended 30 June RMB 000 RMB 000 Segment Revenue Sale and distribution of merchandise Building materials 128,576 80,929 Home improvement materials 20,370 31,046 Furnishings 10,012 27, , ,692 Provision of interior design and engineering services 38,924 36,766 Elimination (19,096) (10,124) 178, ,334 37

39 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION 7 OPERATING PROFIT 7 An analysis of the amounts presented as operating items in the financial information is given: Six months ended 30 June RMB 000 RMB 000 Operating items 13,529 12,977 (Reversal of)/provision for write-down of inventories (57) 102 Provision for impairment of trade receivables 103 2,560 Operating profit 13,575 15,639 8 INCOME TAX EXPENSE 8 Six months ended 30 June RMB 000 RMB 000 Current income tax 3,550 4,422 Deferred income tax (Note 14) 14 (332) (633) 3,218 3,789 Jiyi Household International Holdings Limited Interim Report

40 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION 8 INCOME TAX EXPENSE (Continued) 8 The taxation on the Group s profit before income tax differs from the theoretical amount that would arise using the tax rate applicable to profit of the Group as follows: Six months ended 30 June RMB 000 RMB 000 Profit before income tax 10,020 11,984 Tax calculated at the tax rate applicable to profits in the respective companies 2,505 2,996 Tax losses for which no deferred income tax asset was recognised Tax exemptions Expenses not deductible for tax purposes ,218 3,789 Cayman Islands income tax The Company is incorporated in the Cayman Islands as an exempted company with limited liability under the Companies Law (as revised) of the Cayman Islands and accordingly, is exempted from the Cayman Islands income tax. BVI income tax The Company s subsidiary in the BVI was incorporated under the International Business Companies Act of the BVI and, accordingly, is exempted from the BVI income tax. 39

41 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION 8 INCOME TAX EXPENSE (Continued) Hong Kong profits tax Entities incorporated in Hong Kong are subject to Hong Kong profits tax at a rate of 16.5% for the six months ended 30 June 2017 (six months ended 30 June 2016: 16.5%) on the estimated assessable profit for the period. No Hong Kong profits tax has been provided for as there was no business operation that is subject to Hong Kong profits tax during the period. PRC enterprise income tax ( EIT ) The entities incorporated in the PRC are subject to EIT. According to the EIT law effective from 1 January 2008, all PRC enterprises are subject to a standard EIT rate of 25%. PRC withholding tax ( WHT ) According to the applicable PRC tax regulations, dividends distributed by a company established in the PRC to a foreign investor with respect to profits derived after 1 January 2008 are generally subject to a 10% WHT. If a foreign investor incorporated in Hong Kong meets the conditions and requirements under the double taxation treaty arrangement entered into between the PRC and Hong Kong, the relevant WHT rate will be reduced from 10% to 5%. During the period, the directors of the Company reassessed the dividend policy of the major subsidiary established in the PRC, Guangdong Jiyi Household Building Materials Chain Co., Ltd. ( Jiyi Household ), based on the Group s current business plan and financial position, no retained earnings as of 30 June 2017 generated by Jiyi Household would be distributed to its non-prc registered intermediate holding company and as such, no deferred tax liability has been provided by the Group for the earnings expected to be retained by Jiyi Household in the PRC and not to be remitted out of the PRC in the foreseeable future % 16.5% 25% 10% 10%5% Jiyi Household International Holdings Limited Interim Report

42 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION 9 EARNINGS PER SHARE 9 Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period. Six months ended 30 June Profit attributable to equity holders of the Company (RMB 000) 6,802 8,195 Weighted average number of ordinary shares in issue (thousands of shares) (a) (a) 432, ,352 Basic earnings per share (RMB cents) (a) Pursuant to the resolutions in writing of the shareholders of the company passed on 6 October 2015, the authorised share capital of the Company was increased from HK$380,000 to HK$500,000,000 divided into 5,000,000,000 shares with a par value of HK$0.10 each by the creation of an additional 4,996,200,000 shares. An aggregate of 269,990,000 shares were issued and allotted to the existing shareholders as at 6 October 2015 (the Capitalisation Issue ). (a) 4,996,200,000380, ,000,000 5,000,000, ,990,000 In determining the number of shares of the Company in issue, the total of 270,000,000 shares issued (1 share issued on the incorporation of the Company, 9,999 shares issued on the reorganisation of the Group and 269,990,000 shares issued on Capitalisation Issue) were deemed to have been in issue since 1 January ,000,000 9, ,990,000 41

43 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION 9 EARNINGS PER SHARE (Continued) 9 (a) (Continued) (a) Upon the completion of the Global Offering (as defined in the prospectus of the Company dated 27 October 2015), the Company issued 90,000,000 new shares. On 20 June 2016, the Company completed the placing of 72,000,000 new shares. 90,000,000 72,000,000 For the six months ended 30 June 2017, diluted earnings per share were the same as basic earnings per share due to the absence of dilutive potential ordinary shares as at period end date. 10 DIVIDEND 10 The Board does not recommend any payment of interim dividend for the six months ended 30 June Jiyi Household International Holdings Limited Interim Report

44 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION 11 PROPERTY, PLANT AND EQUIPMENT 11 Buildings Motor vehicles Furniture, fittings and equipment Leasehold improvements Construction in progress Total RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 Six months ended 30 June 2016 Opening net book amount 42,946 1, , ,811 Additions 2, ,588 Transfer 308 (308) Depreciation (874) (107) (70) (2,052) (3,103) Closing net book amount 44,448 1, , ,296 Six months ended 30 June 2016 Cost 53,775 2,259 1,175 29, ,478 Accumulated depreciation (9,327) (982) (1,021) (18,852) (30,182) Net book amount 44,448 1, , ,296 Six months ended 30 June 2017 Opening net book amount 41,188 3, ,947 19,967 75,249 Additions 329 1,464 1,793 Disposal (170) (170) Transfer ,000 (18,452) Depreciation (820) (262) (164) (1,352) (2,598) Closing net book amount 40,820 3, ,595 2,979 74,274 Six months ended 30 June 2017 Cost 52,202 4,612 1,798 49,356 2, ,947 Accumulated depreciation (11,382) (1,328) (1,202) (22,761) (36,673) Net book amount 40,820 3, ,595 2,979 74,274 43

45 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION 12 TRADE AND OTHER RECEIVABLES 12 As at 30 June 2017 RMB December 2016 RMB 000 Trade receivables due from third parties 208, ,620 Trade receivables due from a related party (Note 18) 18 4,800 2,334 Less: allowance for impairment of trade receivables (3,965) (3,862) Trade receivables, net 209, ,092 The credit period granted to customers is between 0 to 360 days. The ageing analysis of the trade receivables from the date of sales is as follows: As at 30 June 2017 RMB December 2016 RMB 000 Up to 6 months 149, ,491 6 to 12 months 59,384 34,037 Over 12 months 4,978 10, , ,954 Jiyi Household International Holdings Limited Interim Report

46 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION 12 TRADE AND OTHER RECEIVABLES (Continued) 12 As at 30 June 2017, trade receivables of RMB12,145,000 (31 December 2016: RMB9,224,000) was past due but not impaired. These relate to a number of independent customers for whom there is no significant financial difficulty and based on past experience, the overdue amounts can be recovered. The aging analysis of these trade receivables is as follows: 12,145,000 9,224,000 As at 30 June 2017 RMB December 2016 RMB to 12 months 8,809 Over 12 months 3,336 9,224 12,145 9,224 45

47 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION 13 RESTRICTED CASH 13 As at 30 June 2017 RMB December 2016 RMB 000 Restricted cash Bank deposits amounted to RMB300,000 (31 December 2016: RMB300,000) were placed as guarantee deposits for issuing notes payable. 300, ,000 As at 30 June 2017, the effective interest rate on restricted cash was 1.30% (31 December 2016: 1.30%) per annum. 1.30% 1.30% Jiyi Household International Holdings Limited Interim Report

48 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION 14 DEFERRED INCOME TAX 14 As no deferred income tax liabilities were recognised, there are no offset amounts as at 30 June 2017 (31 December 2016: Nil). As at 30 June 2017 RMB December 2016 RMB 000 Deferred tax assets: to be recovered within 12 months 2,122 1,790 The movements in deferred tax assets are as follows: Deferred tax assets: Accrued rental Accrued payroll Provision for impairment of trade and other receivables Provision for impairment of inventories Total RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 At 1 January ,753 Credited/(Charged) to profit or loss 32 (65) At 30 June ,386 At 1 January ,790 Credited/(Charged) to profit or loss 338 (18) 26 (14) 332 At 30 June ,122 47

49 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION 14 DEFERRED INCOME TAX (Continued) 14 At 30 June 2017, the Group did not recognise deferred income tax assets of RMB106,000 (30 June 2016: RMB45,000) in respect of losses amounting to RMB426,000 (30 June 2016: RMB181,000) as it is not probable that future taxable profits against which the losses can be utilised. The estimated tax losses are subject to approval by the relevant tax authorities. 426, , ,000 45, SHARE CAPITAL AND SHARE PREMIUM 15 Ordinary shares, issued and fully paid: Share Share Capital Premium Number of ordinary shares (of HK$0.10 each) RMB 000 RMB At 1 January ,000,000 29, ,467 New shares placing (a) (a) 72,000,000 6,154 41,365 At 30 June ,000,000 35, ,832 At 1 January 2017 and 30 June ,000,000 35, ,832 Jiyi Household International Holdings Limited Interim Report

50 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION 15 SHARE CAPITAL AND SHARE PREMIUM (Continued) 15 (a) On 20 June 2016, the Company issued and allotted (a) 72,000,000 new ordinary shares at a par value of 0.78 HK$0.10 per share for a cash consideration of HK$ ,000, each. All the ordinary shares issued rank pari passu with the then existing ordinary shares in all respects. 16 TRADE AND OTHER PAYABLES 16 The ageing analysis of trade payables based on invoice date were as follows: As at 30 June 2017 RMB December 2016 RMB 000 Up to 3 months 18,247 17,780 3 to 6 months 1,792 1,607 6 to 12 months 2,135 1,772 Over 12 months ,636 22,122 The credit period secured by the Group s suppliers ranges from 0 to 90 days

51 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION 17 BANK BORROWINGS 17 As at 30 June 2017 RMB December 2016 RMB 000 Secured bank borrowings 94,300 98,000 (a) As at 30 June 2017, the bank borrowings of the (a) Group were secured by buildings and land use right of 40,820,000 RMB40,820,000 (31 Dcember 2016: RMB41,188,000) and RMB2,873,000 (31 December 2016: RMB2,919,000) 41,188,000 respectively. The bank borrowings were also jointly 2,873,000 guaranteed by Ms. Hou, Mr. Deng Jianshen, husband 2,919,000 of Ms. Hou, and Meizhou Enterprise Credit Finance Guarantee Investment Co., Ltd.. Jiyi Household International Holdings Limited Interim Report

52 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION 17 BANK BORROWINGS (Continued) 17 (b) The weighted average effective interest rates during the period are as follows: (b) Six months ended 30 June Bank borrowings 5.62% 5.92% The carrying amounts of the Group s borrowings were approximated to their fair values as at 30 June 2017 as the interest rates of most of the borrowings were variable and original term within one year. The carrying amounts of bank borrowings are all denominated in RMB. 51

53 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION 18 RELATED PARTY TRANSACTIONS 18 The directors of the Company are of the view that the following companies and individuals were related parties that had transactions or balances with the Group during the period: Name of the related party Principal business activities Relationship with the Group Ms. Hou Wei Controlling Shareholder Meizhou Xikang Construction Company Limited ( Meizhou Xikang ) Architectural Engineering An entity is significantly influenced by a close member of the Controlling Shareholder Mr. Wen Jingfeng ( Mr. Wen ) Son of Ms. Deng Haiming, key management Saved as disclosed in Note 17(a) in this interim financial information, the following transactions were carried out between the Group and related parties: 17(a) (a) Key management compensation (a) Six months ended 30 June RMB 000 RMB 000 Wages, allowance and bonus 1,772 1,331 Contributions to pension plans and others ,842 1,382 Jiyi Household International Holdings Limited Interim Report

54 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION 18 RELATED PARTY TRANSACTIONS (Continued) 18 (b) Transactions with related parties (b) In the opinion of the directors of the Company, the related party transactions were carried out in the normal course of business and at terms negotiated between the Group and the respective related parties. Six months ended 30 June RMB 000 RMB 000 Sales to Meizhou Xikang 2, Rental paid to Mr. Wen (c) Balances with related parties (c) As at 30 June 2017 RMB December 2016 RMB 000 Amounts due from Meizhou Xikang 4,800 2,334 The balances due from a related party are denominated in RMB, unsecured, interest free and repayable on demand. No balance due from related companies is past due or impaired. 53

55 OTHER INFORMATION DIVIDEND The Board does not recommend the payment of an interim dividend for the six months ended 30 June 2017 and there is no arrangement that a shareholder has waived or agreed to waive any dividend. PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES OF THE COMPANY The Company nor any of its subsidiaries purchased, sold or redeemed any of the Company s listed securities during the during the six months ended 30 June DIRECTORS INTERESTS IN COMPETING BUSINESS None of the Directors had engaged in or were interested in any business which competed or was likely to compete, either directly or indirectly, with the business of the Group during the Reporting Period. Jiyi Household International Holdings Limited Interim Report

56 OTHER INFORMATION DIRECTORS AND CHIEF EXECUTIVES INTERESTS AND SHORT POSITIONS IN SHARES AND UNDERLYING SHARES As at 30 June 2017, the interests and short positions of each Director and chief executive of the Company in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong, the SFO )), which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of the SFO; as recorded in the register required to be kept by the Company pursuant to Section 352 of the SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the Model Code ) as set out in Appendix 10 to the Rules Governing the Listing of Securities on the Stock Exchange (the Listing rules ), were as follows: 571 XV Aggregate long positions in the shares and underlying shares of the Company Name of Director Nature of interest Number of shares of the Company Approximate percentage of the issued share capital (Note 1) 1 Ms. Hou Wei ( Ms. Hou ) (Note 2) 2 Interest in a controlled corporation 189,054, % Mr. Hou Bo ( Mr. Hou ) (Note 3) 3 Interest in a controlled corporation 5,562, % 55

57 OTHER INFORMATION Notes: 1. The percentage figures were calculated based on 432,000,000 ordinary shares ( Shares ) of the Company having a par value of HK$0.1 each in issue as at 30 June ,000, Ms. Hou was beneficially interested in 100% of the issued share capital of Xinling Limited ( Xinling ). Xining was the registered holder of 189,054,000 Shares. Under Part XV of the SFO, Ms. Hou was therefore deemed to have interests in 189,054,000 Shares in which Xinling was interested % 189,054,000 XV 189,054, Mr. Hou was beneficially interested in 100% of the issued share capital of Jiesi Global Investments Limited ( Jiesi Global ). Jiesi Global was the registered holder of 5,562,000 Shares. Under Part XV of the SFO, Mr. Hou was therefore deemed to have interests in 5,562,000 Shares in which Jiesi Global was interested % 5,562,000 XV 5,562,000 Save as disclosed above, as at 30 June 2017, none of the Directors and chief executive of the Company had or was deemed to have any interests or short positions in any Shares, underlying shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO), which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of the SFO or which were required to be kept pursuant to Section 352 of the SFO or which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code. XV Jiyi Household International Holdings Limited Interim Report

58 OTHER INFORMATION SUBSTANTIAL SHAREHOLDERS INTERESTS AND SHORT POSITIONS IN THE SHARES, DEBENTURES AND UNDERLYING SHARES OF THE COMPANY As at 30 June 2017, the following persons (other than the Directors or chief executive of the Company) had interests or short positions in the Shares or underlying Shares of the Company which would be required to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the register required to be kept by the Company under Section 336 of the SFO: XV Aggregate long positions in the Shares and underlying shares of the Company Name of Shareholder Nature of interest Number of Shares Approximate percentage of the issued share capital (Note 1) 1 Xinling (Note 2) Beneficial owner 189,054, % 2 Yiju Holdings Limited ( Yiju Holdings ) (Note 3) 3 Beneficial owner 40,188, % Mr. Liu Shui ( Mr. Liu ) (Note 3) Interest in a controlled corporation 40,188, % 3 Lucky Union Int l Co., Ltd. ( Lucky Union ) (Note 4) Lucky Union Int l Co., Ltd.Lucky Union 4 Beneficial owner 26,566, % Mr. Lin Kuan Ming ( Mr. Lin ) (Note 4) Interest in a controlled corporation 35,827, % 4 Ms. Lin Ling Yu ( Ms. Lin ) (Note 4) Interest in a controlled corporation 26,566, % 4 Interest of spouse 9,261, % 57

59 OTHER INFORMATION Notes: 1. The percentage figures were calculated based on 432,000,000 Shares having a par value of HK$0.1 each in issue as at 30 June ,000, Xining was the registered holder of 189,054,000 Shares ,054, Mr. Liu was beneficially interested in 100% of the issued share capital of Yiju Holdings. Yiju Holdings was the registered holder of 28,188,000 Shares. Under Part XV of the SFO, Mr. Liu was therefore deemed to have interests in 40,188,000 Shares in which Yiju Holdings was interested % 28,188,000 XV 40,188, Mr. Lin is deemed to be interested in a total of 35,827,000 Shares, which were held as to 9,261,000 Shares by Corporate Image Limited and 26,566,000 Shares by Lucky Union. On the other hand, Ms. Lin is deemed to be interested in a total of 35,827,000 Shares, which were held as to 26,566,000 Shares by Lucky Union and of which 9,261,000 Shares Mr. Lin is interested in. By virtue of the SFO, as Mr. Lin beneficially owns the entire issued share capital of Corporate Image Limited, he is deemed to be interested in 9,261,000 Shares held by Corporate Image Limited and Ms. Lin, as his spouse, is also deemed to be interested in these 9,261,000 Shares. Further, Mr. Lin, Ms. Lin, Ms. Lin Hsin Hui and Ms. Lin Chia Hui, the daughters of Mr. Lin and Ms. Lin, own 30%, 50%, 10% and 10% of the issued share capital of Lucky Union, respectively. By virtue of the SFO, both Mr. Lin and Ms. Lin are deemed to be interested in 26,566,000 Shares held by Lucky Union ,827,000 9,261,00026,566,000 Corporate Image Limited Lucky Union 35,827,000 26,566,000Lucky Union 9,261,000 Corporate Image Limited Corporate Image Limited 9,261,000 9,261,000 Lucky Union 30% 50% 10% 10% Lucky Union 26,566,000 Save as disclosed above, as at 30 June 2017, the Company had not been notified of any other persons (other than the Directors or chief executive of the Company) who had interests or short positions in the Shares or underlying Shares of the Company which would be required to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the register required to be kept by the Company under Section 336 of the SFO. XV Jiyi Household International Holdings Limited Interim Report

60 OTHER INFORMATION SHARE OPTION SCHEME Pursuant to the share option scheme adopted on 6 October 2015 (the Share Option Scheme ), the Company may grant share options to any directors, employees, advisers, consultants, suppliers, customers, distributors and such other persons who, in the sole discretion of the Board, will contribute or have contributed to the growth and development of the Group so as to provide incentives or rewards for their contribution to the success of the Group s operation. As at 30 June 2017, no share option has been granted by the Company under the Share Option Scheme. Summary of the terms of the Share Option Scheme is as follows: (a) Purposes (a) The purposes of the Share Option Scheme are to enable the Group to grant options to the eligible participants to (i) motivate them to optimise their performance efficiently for the benefit of the Group; and (ii) attract and retain or maintain on-going business relationship with the eligible participants whose contributions are or will be beneficial to the long-term growth of the Group. (i) (ii) (b) Eligible Participants (b) Any employees (whether full time or part time), directors (including executive, non-executive and independent non-executive directors), advisers, consultants, suppliers, customers, distributors of the Group and such other persons (the Eligible Participants ) who, in the sole opinion of the Board, will contribute or have contributed to the growth and development of the Group. 59

61 OTHER INFORMATION (c) Maximum number of Shares available for issue (c) The maximum number of Shares which may be allotted and issued upon the exercise of all outstanding options granted and yet to be exercised under the Share Option Scheme and any other share option schemes of the Company must not, in aggregate, exceed 30% of the total number of Shares in issue from time to time. The total number of Shares in respect of which options may be granted under the Share Option Scheme and any other share option schemes of the Company shall not exceed 10% of the total number of Shares in issue as at the date of listing of the Shares, being 36,000,000 Shares, unless the Company obtains the approval of the shareholders in a general meeting for refreshment. 30% 10%36,000,000 (d) Maximum entitlement of each Eligible Participant (d) The total number of Shares issued and to be issued upon exercise of options (whether exercised or outstanding) granted in any 12-month period to: 12 (i) each Eligible Participant must not exceed 1.0% of the total number of Shares in issue; and (i) 1.0% (ii) a substantial shareholder of the Company or an independent non-executive director must not exceed 0.1% of the total number of Shares in issue and not exceed HK$5.0 million in aggregate value. (ii) 0.1%5.0 Jiyi Household International Holdings Limited Interim Report

62 OTHER INFORMATION (e) Period within which the Shares must be taken up under an option (e) An option must be exercised within 10 years from the date on which it is granted or such shorter period as the Board may specify at the time of grant. 10 (f) Minimum period, if any, for which an option must be held (f) No minimum period for which the option has to be held before it can be exercised is specified in the Share Option Scheme (g) Period open for acceptable of an option and amount payable upon acceptance (g) An offer of grant of an option may be accepted by an Eligible Participant within 21 days from the date of the offer of grant of the option. A consideration of HK$1.00 is payable on acceptable of the offer of grant of an option (h) Basis of determining the subscription price of an option (h) The exercise price must be at least the highest of (i) the closing price of the Shares as stated in the Stock Exchange s daily quotation sheet on the date of grant; (ii) the average closing prices of the Shares as stated in the Stock Exchange s daily quotation sheets for the five trading days immediately preceding the date of grant; and (iii) the nominal value of a Share. (i) (ii) (iii) 61

63 OTHER INFORMATION (i) Validity of the Share Option Scheme (i) The Share Option Scheme has a life of 10 years and will expire on 5 October 2025 unless otherwise terminated in accordance with the terms of the Share Option Scheme. ARRANGEMENT TO PURCHASES SHARES OR DEBENTURES At no time during the six months ended 30 June 2017 and up to the date of this interim report was the Company or any of its subsidiaries or a party to any arrangement to enable the Directors to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate. SUFFICIENCY OF PUBLIC FLOAT The Company has maintained a sufficient public float as required under the Listing Rules throughout the Reporting Period. EVENT AFTER THE REPORTING PERIOD There is no material subsequent event undertaken by the Company or by the Group after 30 June 2017 and up to the date of this interim report. Jiyi Household International Holdings Limited Interim Report

64 OTHER INFORMATION COMPLIANCE WITH CORPORATE GOVERNANCE PRACTICES The Company is committed to maintaining high standard of corporate governance to safeguard the interests of the shareholders of the Company and to enhance corporate value and responsibility. The Board comprises two executive Directors, two non-executive Directors and three independent non-executive Directors. The Board has adopted the code provisions of the Corporate Governance Code (the CG Code ) set out in Appendix 14 to the Listing Rules. During the Reporting Period, the Company has complied with the code provisions under the CG Code, save and except for the deviation to code provision A.2.1 below. A.2.1 Code provision A.2.1 of the CG Code stipulates that the roles of chairman and chief executive officer should be separate and should not be performed by the same individual. The chairlady and chief executive officer of the Company are held by Ms. Hou Wei who has extensive experience in the industry. The Board believes that Ms. Hou can provide the Company with strong and consistent leadership and allows for effective and efficient planning and implementation of business decisions and strategies. The Board also considers that the current structure of vesting the roles of chairlady and chief executive officer in the same person will not impair the balance of power and authority between the Board and the management of the Company. The Board shall review this structure from time to time to ensure appropriate and timely action to meet changing circumstances. A