JSI.L Regulatory News (JSI)

The following replaces The Final Results Announcement released at 07.00 hours today under RNS number 3561K and amends the ex-dividend date and record date in the Financial Highlights, Outlook and Note 9.

All other details in the announcement remain the same. The full text of the amended announcement is set out below.

JIASEN INTERNATIONAL HOLDINGS LIMITED

嘉森國際控股有限公司

PRELIMINARY ANNOUNCEMENT

Jiasen International Holdings Limited ("Jiasen" or "the Company"), together with its subsidiaries ("the Group"), is pleased to report its unaudited trading results for the year ended 31 December 2014 (FY2014). Jiasen is a designer, manufacturer and wholesaler of wooden home furnishings, high-end solid wooden doors and other wooden design solutions to both the domestic Chinese and overseas markets.

Financial Highlights

· Revenue for the year ended 31 December 2014 increased by 11% to RMB 871 million (FY2013: RMB 783 million) resulting from its strategy to diversify revenue streams away from a reliance on door products and securing larger projects for property developers.

· In line with the Group's previously stated guidance, gross margin decreased by 6 percentage points to 31% (2013: 37%). The reduction in the gross margin is partly due to the increase in the average cost of materials as the Group's focuses on securing larger and more luxurious property projects, which require higher quality furniture, fixtures and fittings.

· Profit before tax for the year ended 31 December 2014 decreased by 9% to RMB 214 million (FY2013: RMB 236 million).

· Profit after tax for the year ended 31 December 2014 decreased by 11% to RMB 158 million (FY2013: RMB 177 million).

· Cash and cash equivalents as at 31 December 2014 increased by 29% to RMB 334 million (FY2013: RMB 258 million).

· The Group has a strong order book of RMB 307 million as at 31 December 2014. The order book is mainly made up of orders from property developers and is expected to be completed by mid of 2015.

· The Company proposes to pay a final dividend of 2.35 pence (GBP) per share. Subject to approval on the upcoming Annual General Meeting, the final dividend is payable on 25 June 2015 to shareholders on the register at the close of business on 5 June 2015.

Operational Highlights

· Revenue streams towards higher margin non-door products.

· Secured 18 new contracts and 12 of which are worth more than RMB 20 million each during the year.

· Wholesale distribution revenue grew by 11% as a result of new outlets opened in 2014. The Group has 16 distributors which operate 52 outlets across China. 17 outlets are currently being renovated and will be completed in 2015. Upon completion the total number of outlets will be 69.

· On 18 November 2014, the Group signed a contract with the local government (Quanzhou Economic Development District - Guanqiao Sector) to purchase 47 hectares of land which will be used to build our new factory on and we will reduce our reliance on outsourcing to third party manufacturers. Currently the Group's existing factory runs at full capacity. The land is being bought for RMB 217 million and a down payment of RMB 69 million was paid in February 2015.

Outlook

· The Board expects the property market in China to stabilise driven by the easing of property cooling measures and the lowering of interest rates.

· The desire for semi-furnished new apartments, known as Refined Housing Decoration (RHD) continues to increase which is expected to drive demand for the Group's multiple product offering.

· Continued to focus on winning larger and more luxurious property projects.

· Expand sales and marketing efforts for higher margin non-door products and diversify our revenue streams further.

· We are seeking foreign and local brand partnerships and investment opportunities.

· The completion of the purchase of the land is subject to government approval which we expect to receive in the next few months.

· Trading to date in the current financial year is in line with the Group's expectation.

Commenting on the results, Weigang Chen, Chairman said:

"We are pleased to announce our first full year results since listing on AIM. Jiasen has delivered strong revenue growth and a profitable performance driven by the demand for semi-furnished apartments in China. During the year, we have successfully diversified our revenue streams towards non-door products and secured larger and more luxurious property projects, which will continue to be our focus for the year ahead. We have had a positive start to 2015 underpinned by a strong order book and the Board is confident of delivering further future growth."

For further information, please visit www.jsih.net or contact:

Notes to Editors

· Quanzhou Jiasen Wood Co., Ltd. ("Jiasen PRC"), the operating subsidiary of the Company was established in 2001 and is based in Quanzhou City, Fujian province, located in south-eastern China. Its products are sold and marketed under the 'Fuyou' brand and produced in its 83,000 sqm factory in Nan'an City, Fujian province by its workforce of more than 1,500 employees.

· The Group's main products include doors, wall panels and assorted fixtures, such as fitted wardrobes, cupboards and skirting boards, and furniture which are sold principally to property development projects, through branded 'Fuyou' retail stores and to export markets. The Group's products are sold in three main segments: residential and property development projects, wholesale distribution and export.

Executive Chairman's Statement

Introduction

I am pleased to present Jiasen's first full year results since our successful admission to AIM on 14 July 2014. Total revenue grew by 11% to RMB 871 million (FY2013: RMB 783 million). Wholesale distribution and property developer projects contributed strongly to this growth and together accounted for approximately 87% of revenue. As previously indicated, in order to secure larger and more luxurious property projects, the Group has had to offer more competitive pricing and increase the quality of its furniture, fixtures and fittings. The average cost of materials has therefore increased which led to a reduction in gross profit by 7% to RMB 268 million and gross profit margin recorded at approximately 31% down 6 percentage points from 37% in 2013.

Wholesale distribution revenues grew by 11% to RMB 222 million (FY2013: RMB 199 million) driven by relocation and renovation of strategic outlets and new stores set up in 2014. Our wholesale business has been particularly successful in driving sales of our non-door products. Export remains a small part of our business contributing 13% of revenue in 2014, although the channel has shown improved growth.

The Board believes the property market is likely to stablise driven by the implementation of several new policies and interest rates expected to fall further in 2015.

Strategy

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

· Securing larger and more luxurious property projects.

- We have a strong order book and there are on-going discussions with property developers to secure further projects.

· Expand and diversify our product offering - moving from a wooden door manufacturer to a multiple wooden products house furnishing company.

- Our sales and marketing strategy has increased the sales of non-door products and we continue to focus on diversifying our product offering.

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

- Together with our distributors, we have renovated existing stores and opened new stores which have raised our brand awareness and visibility in the marketplace. This has in turn successfully delivered increased sales especially in non-door products. We continue to look to appoint further distributors.

· Seek suitable, complementary foreign brands in permanent fixtures for strategic collaboration in the medium to long-term.

- The search is on-going and several intermediaries and trade associations have been approached for recommendations and referrals.

Outlook

We are pleased with the Group's progress made in the year under review and the new year has had a positive start. Looking ahead we have secured a strong order book and will continue to focus on increasing our brand presence through our new stores.

Our strategy to increase the sale of non-door products means that we are diversifying our revenue streams and allowing us to provide our customers an one-stop shopping experience. The easing of property cooling measures along with more affordable mortgages are encouraging developments and as such we are well positioned to capitalise on the increased demand for semi furnished apartments.

On behalf of the Board, I am pleased to announce that the Group proposes to pay a final dividend of 2.35 pence (GBP) per share to our shareholders which are consistent to our stated dividend policy. The dividend is subject to shareholder approval and the appropriate approvals of the Chinese authorities. The final dividend of 2.35 pence per share is expected to be paid on 25 June 2015 to shareholders on the register at the close of business on 5 June 2015. The shares will trade ex-dividend on 4 June 2015 following approval at the Annual General Meeting.

I would like to thank my fellow Board members and all of our staff for their dedication and commitment. The recent fall in our share price is disappointing and the Board believes it does not reflect the underlying value of the business. Our financial performance is positive and our strategy is clearly delivering solid growth. We therefore look to the future with confidence.

Financial and Operational Review

Revenue growth for the year ended 31 December 2014 (the "year" or "FY2014") has been driven by strong demand for our products. Importantly, the Group has diversified its revenue streams and increased sales of non-door products to property developers as well as through its wholesale distribution network.

Revenue breakdown by channels and products are as follow:-

Revenue from the Group's top three customers contributed approximately RMB 396 million (or 46%) of the total revenue for the year ended 31 December 2014 (FY2013 : RMB 267 million or 34%).

Note on Expenses

Selling and distribution expenses for the year ended 31 December 2014 increased by 11% to RMB 37 million (FY2013: RMB 34 million). This is mainly attributed to the rise in trade receivables written-off and shipping costs of approximately RMB 3 million in total. The Group also helped the distributors to relocate a number of outlets to more strategic locations that see more incentives and marketing cost incurred.

Selling and distribution expenses as a proportion of revenue remained stable at 4% for the year ended 31 December 2014 (FY2013: 4%).

Administrative expenses for the year ended 31 December 2014 increased by 54% to RMB 18 million (FY2013: RMB 12 million) due mainly to higher depreciation charged for the new office building completed in 2014, increased staff costs including an one-off charge for the share based payment, warrant costs and professional expenses for maintaining AIM listing status. Administrative expenses as a proportion of revenue remain in line with last year at 2%.

Included in the other operating income for the year ended 31 December 2014 is RMB 3 million (FY2013: Nil), being a cash incentive received from the Chinese government and the one-off reversal of unclaimed money of RMB 2 million (FY2013: Nil) for long outstanding payables under the PRC laws and regulations. During the year ended 31 December 2014, interest income amounted to RMB 1.2 million (FY2013: RMB 0.9 million).

Financial costs decreased by 25% to RMB 4 million (FY2013: RMB 6 million) due mainly to lower short-term interest bearing borrowing during the year.

The Group's gross profit margin decreased by 6 percentage points to 31% (2013: 37%). The reduction in the gross profit margin is partly due to the increase in the average cost of materials as the Group focus on securing larger and more luxurious property projects, which require higher quality furniture, fixtures and fittings.

Operating profit before tax for the year decreased by 9% to RMB 214 million (FY2013: RMB 236 million) representing an operating profit before tax margin of 25% as compared to 30% recorded in FY2013. Net profit after tax for the year decreased by 10% to RMB 158 million (FY2013: RMB 177 million).

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

Notes on Statement Of Financial Position

For the year ended 31 December 2014, the Group's total assets amounted to RMB 650 million, total liabilities were RMB 131 million, and shareholders' equity recorded at RMB 519 million.

The average working capital cycle for the period was 89 days (FY2013: 75 days). This was mainly due to the increase in inventory and trade receivables when compared with FY2013.

Trade receivables increased by 29% to RMB 176 million as at 31 December 2014 (FY2013: RMB 137 million) due to export shipment towards the end of year which push up the average trade receivable turnover days rise to 74 days from 64 days twelve months ago. None of the trade debtors were considered as impaired. As for wholesale distribution segment, the Group believes that the support it provides to its distributors in running their stores is essential and will also continue to monitor all the project customers to ensure good repayment relationship.

The average inventory turnover cycle increase by 8 days to 26 days as at 31 December 2014, from the level of 18 days in 31 December 2013, due mainly to work-in-progress accounted for during the cut off period as a result of different project timing and delivery schedules. Most of the time, completed finished goods will be shipped out immediately after production. Inventory as at 31 December 2014 amounted to RMB 61 million, where RMB 30 million being work-in-progress and had been shipped out during the beginning of 2015.

The average trade payable cycle remained relatively the same at 11 days (2013: 7 days). Our credit management policy ensures timely payment to suppliers and sub-contractors to secure quality raw materials and timely delivery of subcontracted products.

Consolidated Statement Of Comprehensive Income

For The Financial Year Ended 31 December 2014

Consolidated Statement Of Financial Position At 31 December 2014

Consolidated Statement Of Changes In Equity

For The Financial Year Ended 31 December 2014

Consolidated Statement Of Changes In Equity (Cont'd)

For The Financial Year Ended 31 December 2014

Consolidated Statement Of Cash Flows

For The Financial Year Ended 31 December 2014

Consolidated Statement Of Cash Flows (Cont'd)

For The Financial Year Ended 31 December 2014

1. General Information

Jiasen International Holdings Limited (the "Company" or "Jiasen") was incorporated on 31 October 2012 and is domiciled in the British Virgin Islands. The Company's registered office is Commerce House, Wickhams Cay 1, P. O. Box 3140, Road Town, Tortola, VG1110, British Virgin Islands.

Jiasen was established as an investment holding company for two wholly owned subsidiaries, Jiasen Holdings (HK) Company Limited ("Jiasen HK") and Quanzhou Jiasen Wood Co., Ltd. ("Jiasen PRC"), (together, the "Group").

The main activity of the Company and Jiasen HK is that of an investment holding company. Jiasen PRC is principally engaged in the business of design, manufacturing and wholesalers of high quality wooden doors and home furnishings. The principal place of business of the Group is in the People's Republic of China ("PRC"). Amounts are reported in RMB thousands, unless otherwise stated. 

2. Basis of Preparation

The preliminary consolidated financial statements ("the financial information") comprise the financial statements of the Company and its subsidiaries and are prepared in accordance with International Financial Reporting Standards ("IFRS").

The financial information does not constitute the Company's statutory financial statements for the years ended 31 December 2014 or 2013 but is derived from those accounts prepared in accordance with IFRS. The preliminary consolidated financial statements for the years ended 31 December 2014 and 2013 are unaudited and are expected to be approved in May 2015.

This accounts prepared, in which the financial information is derived, will be the first set of consolidated financial statements to prepared for the Group in accordance with International Financial Reporting Standards and the Group has applied International Financial Reporting Standard 1 (First-time Adoption of International Financial Reporting Standards).

The financial information of the Group is prepared under the historical cost convention and modified to include other bases of valuation as disclosed in other sections under significant accounting policies, and in compliance with International Financial Reporting Standards ("IFRS").

2.1 The Group has adopted the new accounting standards, interpretations and amendments effective for the year ended 31 December 2014. The adoption of these interpretations and revised standards had no impact on the disclosures and presentation of the financial information during the year.

2. Basis of Preparation (Cont'd)

2.2 The financial information for the year ended 31 December 2013 is unaudited and are prepared in accordance with International Financial Reporting Standards, on the assumption that the group structure (see Note 3.1) has been in place since 1 January 2012. Group accounting policies have been consistently applied across all periods.

2.3 A number of new standards and amendments to existing standards have been published which are mandatory, but are not effective for the year ended 31 December 2014. The Directors do not anticipate that the adoption of these revised standards and interpretations will have a significant impact on the figures included in the financial information in the period of initial application other than the following:

· IFRS 9 Financial Instruments; and

· IFRS 15 Revenue from Contracts with Customers.

2.4 Going Concern

The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the financial information.

3. Basis Of Consolidation 

The financial information incorporates the results of the Company and its subsidiaries. A subsidiary is an entity (including special purposes entities) over which the Group has the power to govern the financial operating policies, generally accompanied by a shareholding giving rise to the majority of the voting rights, as to obtain benefits from their activities.

A subsidiary is consolidated from the date on which control is transferred to the Group up to the effective date on which control ceases, as appropriate.

The financial information presents the results of the Company and its subsidiaries (the "Group") as if they formed a single entity.

Intra-group balances and transactions and any income and expenses arising from intra-group transactions are eliminated on consolidation. Unrealised gains and losses arising from transactions with associates and joint ventures are eliminated against the investment to the extent of the Group's interest in the investee.

3. Basis Of Consolidation (Cont'd)

The financial information of the subsidiaries is prepared for the same reporting period as that of Group, using consistent accounting policies.

3.1 Business Combinations Outside The Scope of IFRS 3

The Company was incorporated on 31 October 2012 under the control of Mr Ping Ping Tsoi. On 11 November 2013 as part of a restructuring exercise, the Company acquired the entire equity interest of Jiasen HK from Mr Ping Ping Tsoi. Upon completion, the Company became the sole shareholder of Jiasen HK.

Jiasen HK was incorporated on 29 August 2012 under the control of Mr Ping Ping Tsoi and entered into an agreement to acquire the entire issued share capital of Jiasen PRC from Mr Ping Ping Tsoi on 4 March 2014. Upon completion, Jiasen HK became the sole shareholder of Jiasen PRC. Jiasen PRC, the Group's principal operating subsidiary, was incorporated on 9 October 2001 in the PRC.

In determining the appropriate accounting treatment for these transactions, the Directors considered IFRS 3 "Business Combinations" (Revised 2008) and concluded that these transactions fell outside the scope of IFRS 3 (revised 2008) since the transactions described above represented a combination of entities under common control by Mr Ping Ping Tsoi at that time.

In accordance with IAS 8 "Accounting Policies, changes in accounting estimates and errors", in developing an appropriate accounting policy, the Directors have considered the pronouncements of other standard setting bodies and specifically looked to accounting principles generally accepted in the United Kingdom ("UK GAAP") for guidance (FRS 6 - Acquisitions and mergers) and US guidance which do not conflict with IFRS and reflect the economic substance of the transaction.

Under UK GAAP, the assets and liabilities of both entities are recorded at book value, not fair value (although adjustments are made to achieve uniform accounting policies). Intangible assets and contingent liabilities are recognised only to the extent that they were recognised by the legal acquirer in accordance within applicable IFRS. No goodwill is recognised, any expenses of the combination are written off immediately to the income statement and comparative amounts, if applicable, are restated as if the combination had taken place at the beginning of the earliest accounting period presented.

Therefore, although the Group reconstruction did not become unconditional until 4 March 2014, the financial information is presented as if the Group structure has always been in place, including the activity from incorporation of the Group's trading subsidiary.

On this basis, the Directors have decided that it is appropriate to reflect the restructuring using a merger or pooling of interest basis as is all entities had always been combined in order to give a true and fair view. No fair value adjustments have been made as a result of these transactions.

4. Significant Accounting Policies

(a) Critical Accounting Estimates And Judgements

Estimates and judgements are continually evaluated by the Directors and management and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Directors consider that there are no key estimates and judgements that affect the application of the Group's accounting policies and disclosures, which might have a significant risk of causing a material adjustment to the carrying amounts of assets, liabilities, income and expenses.

(b) Functional and Foreign Currencies

(i) Functional Currency

The Group has determined the Chinese Renminbi ("RMB") as its functional currency, as this is the currency of the economic environment in which the Company and Group predominantly operate.

(ii) Transactions and Balances

Transactions in currencies other than RMB are recorded at the rates of exchange prevailing on the dates of the transactions. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting date. Non-monetary assets and liabilities carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Gains and losses arising on exchange are included in profit and loss.

(c) Financial Instruments

Financial instruments are recognised in the statements of financial position when the Group has become a party to the contractual provisions of the instruments.

Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument classified as a liability, are reported as an expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity.

Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously.

4. Significant Accounting Policies (Cont'd)

(c) Financial Instruments (Cont'd)

A financial instrument is recognised initially at its fair value. Transaction costs that are directly attributable to the acquisition or issue of the financial instrument (other than a financial instrument at fair value through profit or loss) are added to/deducted from the fair value on initial recognition, as appropriate. Transaction costs on a financial instrument at fair value through profit or loss are recognised immediately in profit or loss.

Financial instruments recognised in the statements of financial position are disclosed in the individual policy statement associated with each item.

(i) Financial Assets

On initial recognition, financial assets are classified as either financial assets at fair value through profit or loss, held-to-maturity investments, loans and receivables financial assets, or available-for-sale financial assets, as appropriate.

As at the end of the reporting period, there were no financial assets classified as financial assets at fair value through profit or loss, held-to-maturity investments or available-for-sale financial assets.

· Loans and Receivables Financial Assets

Trade receivables and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables financial assets. Loans and receivables financial assets are measured at amortised cost using the effective interest method, less any impairment loss. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

Loans and receivables financial assets are classified as current assets, except for those having settlement dates later than 12 months after the reporting date which are classified as non-current assets.

(ii) Financial Liabilities

All financial liabilities are initially measured at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method other than those categorised as fair value through profit or loss.

Fair value through profit or loss category comprises financial liabilities that are either held for trading or are designated to eliminate or significantly reduce a measurement or recognition inconsistency that would otherwise arise.

4. Significant Accounting Policies (Cont'd)

(c) Financial Instruments (Cont'd)

(iii) Equity Instruments

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new Ordinary shares or options are shown in equity as a deduction, net of tax, from proceeds.

Dividends on Ordinary shares are recognised as liabilities when approved for appropriation.

(iv) Statutory Reserve

One of the Group's subsidiaries, Jiasen PRC is required to maintain certain statutory reserves by appropriating from profit after taxation in accordance with the relevant laws and regulations in the PRC and Articles of Association of the subsidiary before declaration or payment of dividends. The reserves form part of the equity of Jiasen PRC. The statutory reserve fund can be used to increase the registered capital and eliminate future losses of the company, but it cannot be distributed to shareholders except in the event of a solvent liquidation of Jiasen PRC.

The appropriation to the statutory surplus reserve represents 10 percent of the profit after taxation of the Jiasen PRC. In accordance with the laws and regulations in the PRC, the appropriations to statutory reserve cease when the balances of the reserve reach 50 percent of the registered capital of the Jiasen PRC. The statutory reserve is not distributable by way of dividends. Jiasen PRC has voluntarily continued to appropriate to the statutory surplus reserve at the end of the reporting period.

(d) Property, Plant and Equipment

(i) Owned Assets

Items of property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses, if any. The cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to the location and condition for its intended use.

Depreciation is charged to profit or loss (unless it is included in the carrying amount of another asset) on the straight-line basis to write off the depreciable amount of the assets net of the estimated residual values over their estimated useful lives. Depreciation of an asset does not cease when the asset becomes idle or is retired from active use unless the asset is fully depreciated.

4. Significant Accounting Policies (Cont'd)

(d) Property, Plant and Equipment (Cont'd)

(ii) Depreciation

The principal annual rates used for this purpose are:-

The depreciation method, useful lives and residual values are reviewed, and adjusted if appropriate, at the end of each reporting period to ensure that the amounts, method and periods of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of the property, plant and equipment.

(iii) Cost

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when the cost is incurred and it is probable that the future economic benefits associated with the asset will flow to the Group and the cost of the asset can be measured reliably. The carrying amount of parts that are replaced is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred. Cost also comprises the initial estimate of dismantling and removing the asset and restoring the site on which it is located for which the Company and its subsidiaries are obligated to incur when the asset is acquired, if applicable.

Fully depreciated assets are retained in the financial statements until they are no longer in use. The gain or loss on disposal or retirement of an item of equipment recognised in profit or loss is the difference between the net sale proceeds and the carrying amount of the relevant asset.

(iv) Construction-In-Progress

Construction-in-progress is stated at cost. Cost comprises the direct expenditure incurred on the construction and commissioning of the capital asset. Buildings under construction are not depreciated until its completion and availability for commercial use.

4. Significant Accounting Policies (Cont'd)

(e) Land Use Rights

All land in China is owned by the State or collectives. Individuals and companies are permitted to acquire land use rights for general or specific purposes. In the case when land is used for industrial purposes, the land use rights are granted for a period of 50 years. The rights may be renewed at the expiration of the initial and any subsequent terms according to the relevant PRC laws. Granted land use rights are transferable and may be used as security for borrowings and other obligations. The cost of acquisition of land use rights is capitalised and amortised on a straight-line basis over the lease term of the land of 50 years. The amortisation expense is recognised in profit and loss.

(f) Impairment

(i) Impairment of Financial Assets

All financial assets (other than those categorised at fair value through profit or loss), are assessed at the end of each reporting period to determine whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset.

An impairment loss in respect of held-to-maturity investments and loans and receivables financial assets is recognised in profit or loss and is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the financial asset's original effective interest rate.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the financial asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised. In respect of available-for-sale equity instruments, impairment losses previously recognised in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss made is recognised in other comprehensive income.

(ii) Impairment of Non-Financial Assets

The carrying values of assets, other than those to which IAS 36 - Impairment of Assets does not apply, are reviewed at the end of each reporting period for impairment when there is an indication that the assets might be impaired. Impairment is measured by comparing the carrying values of the assets with their recoverable amounts. The recoverable amount of the assets is the higher of the assets' fair value less costs to sell and their value‑in‑use, which is measured by reference to discounted future cash flows.

4. Significant Accounting Policies (Cont'd)

(f) Impairment (Cont'd)

(ii) Impairment of Non-Financial Assets (Cont'd)

An impairment loss is recognised in profit or loss.

When there is a change in the estimates used to determine the recoverable amount, a subsequent increase in the recoverable amount of an asset is treated as a reversal of the previous impairment loss and is recognised to the extent of the carrying amount of the asset that would have been determined (net of amortisation and depreciation) had no impairment loss been recognised. The reversal is recognised in profit or loss immediately.

(g) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined on the weighted average basis.

Cost of raw materials comprises the original cost of purchase plus costs of bringing the inventories to their present location and condition.

The cost of finished goods and work in progress include the cost of raw materials, direct labour and a proportion of manufacturing overheads based on normal operating capacity of the manufacturing facilities.

Net realisable value represents the estimated selling price less the estimated costs necessary to make the sale.

Where necessary, due allowance is made for all damaged, obsolete and slow moving items.

(h) Income Taxes

Income tax for the year comprises current and deferred tax.

Current taxation is the expected amount of income taxes payable in respect of the taxable profit for the reporting period and is measured using the tax rates that have been enacted or substantively enacted at the end of the reporting period, and any adjustment to tax payable in respect of previous financial years.

Deferred taxation is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the profit or loss. Deferred taxation is, however, not recognised on temporary differences arising from the initial recognition of assets or liabilities that affect neither accounting nor taxable profit. The amount of deferred taxation provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the end of the reporting period.

4. Significant Accounting Policies (Cont'd)

(h) Income Taxes (Cont'd)

A deferred taxation asset is recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

(i) Value Added Tax ("VAT")

The Group's sale of goods in the PRC are subjected to Value-added tax ("VAT") at the applicable tax rate of 17% for PRC domestic sales. Input VAT on purchases can be deducted from output VAT. The net amount of VAT recoverable from, or payable to, the taxation authority is included as part of "other receivables" or "other payables" in the statements of financial position as applicable.

Revenues, expenses and assets are recognised net of the amount of VAT except where:-

(i) VAT incurred on the purchase of assets or services is not recoverable fromthe taxation authority, in which case VAT is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and receivables and payables include the amount of VAT due.

(j) Cash and Cash Equivalents

Cash and cash equivalents comprise cash in hand, bank balances, demand deposits, deposits pledged with financial institutions, bank overdrafts and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value with original maturities period three months or less at the date of inception.

(k) Employee Benefits

Wages, salaries, paid annual leave and sick leave, bonuses and non-monetary benefits are measured on an undiscounted basis and are recognised in profit or loss in the period in which the associated services are rendered by employees of the Group.

Pursuant to the relevant regulations of the PRC government, one of the Group's subsidiary, Jiasen PRC participates in a local municipal government retirement benefits scheme (the "Scheme"), whereby Jiasen PRC is required to contribute a certain percentage of the basic salaries of its employees to the Scheme to fund their retirement benefits. The local municipal government undertakes to assume the retirement benefits obligations of all existing and future retired employees of the Company. The only obligation of Jiasen PRC with respect to the Scheme is to pay the ongoing required contributions under the Scheme mentioned above. Contributions under the Scheme are recognized in profit and loss as a defined contribution scheme.

4. Significant Accounting Policies (Cont'd)

(l) Fair Value Measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using a valuation technique. The measurement assumes that the transaction takes place either in the principal market or in the absence of a principal market, in the most advantageous market. For non-financial assets, the fair value measurement takes into account a market's participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

For financial reporting purposes, the fair value measurements are analysed into level 1 to level 3 as follows:-

Level 1: Inputs are quoted prices (unadjusted) in active markets for identical assets or liability that the entity can access at the measurement date;

Level 2: Inputs are inputs, other than quoted prices included within level 1, that are observable for the asset or liability, either directly or indirectly; and

Level 3: Inputs are unobservable inputs for the asset or liability.

The transfer of fair value between levels is determined as of the date of the event or change in circumstances that caused the transfer.

(m) Revenue and Other Income

(i) Sale of Goods

Revenue from the sale of goods is measured at fair value of consideration received or receivables, net of returns and trade discounts where applicable. Revenue is recognised upon delivery of goods when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably.

(ii) Interest Income

Interest income is recognised on an accrual basis using the effective interest method.

4. Significant Accounting Policies (Cont'd)

(n) Borrowing Costs

Borrowing costs, directly attributable to the acquisition, construction or production of a qualifying asset, are capitalised as part of the cost of those assets, until such time as the assets are ready for their intended use or sale. Capitalisation of borrowing costs is suspended during extended periods in which active development is interrupted.

All other borrowing costs are recognised in profit or loss as expenses in the period in which they are incurred.

(o) Operating Leases

Leases where substantially all the risks and rewards of ownership of assets remain with the lessor are accounted for as operating leases. Annual rentals applicable to such operating leases are charged to profit or loss on a straight-line basis over the lease term except where an alternative basis is more representative of the pattern of benefits to be derived from the leased assets. Lease incentives received are recognised in profit or loss as an integral part of the aggregate net lease payments made. Contingent rentals are charged to profit or loss in the accounting period in which they are incurred.

(p) Operating Segments

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group's other components. An operating segment's operating results are reviewed regularly by the chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

(q) Share Based Payment

IFRS 2 "Share‑based Payment" requires the recognition of equity‑settled share‑based payments at fair value at the date of grant and the recognition of liabilities for cash‑settled share‑based payments at the current fair value at each statement of financial position date. The total amount expensed is recognised over the vesting period, which is the period over which performance conditions are to be satisfied.

The fair value is measured using the Black Scholes pricing model. The inputs used in the model are based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

5. Operating Segments

Operating segments are prepared in a manner consistent with the internal reporting provided to the management as its chief operating decision maker in order to allocate resources to segments and to assess their performance. For management purposes, the Group is organised into business units based on their products and services provided.

The Group is organised into three main business segments as follows:-

(a) Project segment - involved in the design, manufacture and installation of wooden doors, door frames, home furnishing wall panels, furniture and fittings for property developers in their respective projects throughout China.

(b) Distribution segment - involved in the design, manufacture and wholesale of wooden doors, door frames, home furnishing wall panels, furniture and fittings to distribution wholesalers who run exclusive retail stores/outlets across the China.

(c) Export segment - involved in the design, manufacture and sale of wooden doors, door frames, home furnishing wall panels, furniture and fittings to overseas customers outside China.

The Directors assesses the performance of the operating segments based on operating profit or loss which is measured differently from those disclosed in the financial information.

Subsidiary financing (including finance costs) and income taxes are managed on a group basis and are not allocated to operating segments.

Assets, liabilities and expenses which are common and cannot be meaningfully allocated to the operating segments are presented under unallocated items. Unallocated operating expenses comprise mainly installation charges, transportation fees and staff costs from selling and distribution and administrative departments.

5. Operating Segments (Cont'd)

Business Segments

5. Operating Segments (Cont'd)

(b) Business Segments (Cont'd)