2018/10/19 - Third quarterly results announcement for the nine months period ended 30 september 2018

Changhong Jiahua Holdings Limited €ڗࠀԳശછٰϞࠢʮ̡

(Incorporated in Bermuda with limited liability)

(Stock Code: 8016)

THIRD QUARTERLY RESULTS ANNOUNCEMENT

FOR THE NINE MONTHS PERIOD ENDED 30 SEPTEMBER 2018

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

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

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

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

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

HIGHLIGHTS

The Group's unaudited consolidated revenue for the nine months ended 30 September 2018 increased by approximately 5.97% to HK$15,994.81 million comparing with that for the same period in 2017. The Group achieved net profit of approximately HK$213.49 million for the nine months ended 30 September 2018, representing an increase of approximately 17.51% comparing with that for the same period in 2017.

RESULTS

The board of directors (the "Board") of the Company is pleased to announce the unaudited results of the Group for the three months and nine months ended 30 September 2018, together with the comparative figures for the corresponding periods of 2017, as follows:-

Consolidated Statement of Comprehensive Income

For the three months and nine months ended 30 September 2018

NOTES:

For the nine months ended 30 September 2018

1. BASIS OF PREPARATION

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

The unaudited consolidated results for the nine months ended 30 September 2018 have not been reviewed or audited by the external auditors of the Company but have been reviewed by the audit committee of the Company.

The accounting policies and basis of preparation used in the preparation of the unaudited condensed consolidated results are consistent with those used in the Company's annual financial statements for the year ended 31 December 2017, except for the new amendments to HKFRSs issued by the HKICPA that the Group has applied, for the first time, for the preparation of the Group's condensed consolidated financial statements:

The new and amendments to HKFRSs have been applied in accordance with the relevant transition provisions in the respective standards and amendments which results in changes in accounting policies, amounts reported and/or disclosures as described below.

1.1 Impacts and changes in accounting policies of application on HKFRS 15 Revenue from Contracts with Customers

The Group has applied HKFRS 15 for the first time in the latest interim period. HKFRS 15 superseded HKAS 18

Revenue, HKAS 11 Construction Contracts and the related interpretations.

A contract liability represents the Group's obligation to transfer goods or services to a customer for which the Group has received consideration (or an amount of consideration is due) from the customer.

1.2 Impacts and changes in accounting policies of application on HKFRS 9 Financial Instruments

In the current period, the Group has applied HKFRS 9 Financial Instruments and the related consequential amendments to other HKFRSs. HKFRS 9 introduces new requirements for 1) the classification and measurement of financial assets and financial liabilities, 2) expected credit losses ("ECL") for financial assets and 3) general hedge accounting.

The Group has applied HKFRS 9 in accordance with the transition provisions set out in HKFRS 9. i.e. applied the classification and measurement requirements (including impairment) retrospectively to instruments that have not been derecognised as at 1 January 2018 (date of initial application) and has not applied the requirements to instruments that have already been derecognised as at 1 January 2018. The difference between carrying amounts as at 31 December 2017 and the carrying amounts as at 1 January 2018 are recognised in the opening retained profits and other components of equity, without restating comparative information.

Accordingly, certain comparative information may not be comparable as comparative information was prepared under HKAS 39 Financial Instruments: Recognition and Measurement.

1.2.1 Key changes in accounting policies resulting from application of HKFRS 9

Classification and measurement of financial assets

Trade receivables arising from contracts with customers are initially measured in accordance with HKFRS 15.

All recognised financial assets that are within the scope of HKFRS 9 are subsequently measured at amortised cost or fair value, including unquoted equity investments measured at cost less impairment under HKAS 39.

Equity instrument designated as at fair value through other comprehensive income ("FVTOCI")

At the date of initial application, the Group may make an irrevocable election (on an instrument-by-instrument basis) to designate investments in equity instruments as at FVTOCI.

Investments in equity instruments at FVTOCI are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognised in OCI and accumulated in reserve; and are not subject to impairment assessment.

1.2.2 Summary of effects arising from initial application of HKFRS 9

The Group elected to present in OCI for the fair value changes of its equity investment previously classified as available-for-sale investments, which related to unquoted equity investments previously measured at cost less impairment under HKAS 39. These investments are not held for trading and not expected to be sold in the foreseeable future. At the date of initial application of HKFRS 9, HK$21,384,000 were reclassified from available-for-sale investments to equity instruments at FVTOCI, which related to unquoted equity investments previously measured at cost less impairment under HKAS 39.

The application of the other new amendments to HKFRSs in the current interim period has had no material effect on the amounts reported in these condensed consolidated financial statements and/or disclosures set out in these condensed consolidated financial statements.

The Group has not early adopted any other standard, amendment or interpretation that has been issued but is not yet effective.

Comparative figures

Certain comparative figures have been reclassified to conform to the current period's presentation. The Directors considered that the reclassification would result in more appropriate manner to reflect the core business of the Group. These reclassifications have no impact on the Group's total equity as at 30 September 2017 or the Group's profit or loss for the three months and nine months ended 30 September 2017.

2. REVENUE

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

Revenue represents net amount received and receivable for the sales of different types of IT products, self developed products, provision of professional integrated IT solutions and services net of corresponding sales related taxes and rebate. The amounts of each significant category of revenue recognised in revenue for the nine months ended 30 September 2018 and 2017 are as follows:

For the nine months ended 30 September 2018

2017