ZHONGMIN BAIHUI RETAIL GROUP LTD.

Transcription

1 ZHONGMIN BAIHUI RETAIL GROUP LTD. (Company Registration No.: C) UNAUDITED FINANCIAL STATEMENT FOR THE FOURTH QUARTER AND FINANCIAL YEAR ENDED 31 DECEMBER 2017 PART I INFORMATION REQUIRED FOR ANNOUNCEMENTS OF QUARTERLY (Q1, Q2 & Q3), HALF YEAR AND FULL YEAR RESULTS 1(a) An income statement and statement of comprehensive income, or a statement of comprehensive income, for the group, together with a comparative statement for the corresponding period of the immediately preceding financial year. Consolidated statement of comprehensive income for the fourth quarter ( 4Q 2017 ) and financial year ended 31 December 2017 ( FY 2017 ) 3 months ended Change 12 months ended Change 31/12/ /12/2016 +/(-) 31/12/ /12/2016 +/(-) RMB'000 RMB'000 % RMB'000 RMB'000 % Revenue (1) 237, , , , Cost of sales (163,364) (159,523) 2.4 (680,676) (575,818) 18.2 Gross profit 73,833 75,284 (1.9) 290, ,582 (2.0) Other income 22,354 19, , ,604 (42.2) Interest income 111 (111) n.m. 4,046 4,241 (4.6) Selling and distribution expenses (57,418) (52,944) 8.5 (212,161) (213,268) (0.5) Administrative expenses (29,229) (21,483) 36.1 (88,201) (89,918) (1.9) Profit before taxation and share 9,651 20,003 (51.8) 82, ,241 (45.0) of results of joint venture and associate Share of results of joint venture (517) - n.m. (726) - n.m. Share of results of associate (4) (25) (84.0) (173) (147) 17.7 Profit before taxation (2) 9,130 19,978 (54.3) 81, ,094 (45.5) Income tax expense (5,423) (8,878) (38.9) (27,703) (51,271) (46.0) Profit after taxation 3,707 11,100 (66.6) 53,516 97,823 (45.3) Other comprehensive income: Items that may be reclassified subsequently to profit or loss Currency translation gain/(loss) (129) (926) (86.1) 1,301 (622) n.m. Other comprehensive income, net of tax (129) (926) (86.1) 1,301 (622) n.m. Total comprehensive income for the for the period attributable to the owners of the Company 3,578 10,174 (64.8) 54,817 97,201 (43.6) n.m. Not meaningful Page 1 of 18

2 Notes to the consolidated statement of comprehensive income 1. Revenue The s revenue represents the net amount received and receivable for goods sold by direct sales, commission from concessionaire sales, rental income and income from managed rental. An analysis of the s revenue for the financial period is as follows: 3 months ended Change 12 months ended Change 31/12/ /12/2016 +/(-) 31/12/ /12/2016 +/(-) RMB'000 RMB'000 % RMB'000 RMB'000 % Revenue: - Direct sales 184, , , , Commission from concessionaire sales 38,110 38,470 (0.9) 143, , Rental income 11,249 9, ,692 51,864 (19.6) - Managed rental 3,708 3, ,466 23,137 (37.5) 237, , , , Gross revenue from concessionaire sales 190, , , , Gross sales proceeds* 389, , ,516,775 1,381, * Gross sales proceeds represent the aggregate sum of revenue received and receivable for goods sold by direct sales, gross revenue from concessionaire sales, rental income and income from managed rental. Page 2 of 18

3 2. Profit before taxation 3 months ended Change 12 months ended Change 31/12/ /12/2016 +/(-) 31/12/ /12/2016 +/(-) RMB'000 RMB'000 % RMB'000 RMB'000 % Profit before tax is arrived at after (charging)/crediting the following: Inventories written (down)/back (103) (961) (89.3) Other income: Advertisement and promotion fees 18,753 16, ,796 63, Exchange gain/(loss) (15) (246) (93.9) 203 1,202 (83.1) Leisure facilities charges (3.4) (50.4) Management fees 1,238 1,238-4,929 5,960 (17.3) Write-back of free-rent incentives and step - - n.m. 9,570 73,980 (87.1) rental provision Selling and distribution expenses: Employee benefit expenses - Defined contribution plans (3,486) 12 n.m. (11,053) (6,978) Salaries, wages, bonuses and other costs (19,167) (17,295) 10.8 (62,117) (55,964) 11.0 Rental expenses* (21,496) (23,089) (6.9) (88,381) (100,553) (12.1) Utilities (6,030) (7,488) (19.5) (27,851) (29,315) (5.0) Amortisation of intangible assets (120) (152) (21.1) (478) (608) (21.4) Advertisement and promotion fees (1,337) (1,190) 12.4 (5,201) (3,046) 70.7 Business tax and surcharges (3,112) (1,698) 83.3 (9,370) (10,837) (13.5) Admininstrative expenses: Employee benefit expenses - Defined contribution plans (2,052) (408) (5,943) (4,532) Salaries, wages, bonuses and other costs (15,012) (15,974) (6.0) (52,509) (51,289) 2.4 Accrued step rental income written off - - n.m. - (1,496) n.m. Bank charges (1,267) (1,152) 10.0 (4,654) (3,554) 31.0 Director fees (183) (182) 0.5 (734) (794) (7.6) Depreciation of property, plant and equipment (3,361) (1,597) (10,836) (6,787) 59.7 Office supplies (330) (423) (22.0) (1,125) (1,359) (17.2) Impairment on property, plant and equipment (4,500) - n.m. (4,500) - n.m. Net loss on disposal of property, plant and (1) - n.m. (1) (13,310) (100.0) equipment Receivables written off - - n.m. - (970) n.m. * Inclusive of rental payments of RMB21.7 million in 4Q 2017 (4Q 2016: RMB22.5 million) and RMB86.3 million FY 2017 (FY 2016: RMB85.7 million) and a straight-line recognition of the lease expenses over the lease term, reversal of provision for rent-free incentives and step rental of RMB0.2 million in 4Q 2017 (4Q 2016: provision for rent-free incentives and step rental of RMB0.6 million) and provision for rent-free incentives and step rental of RMB2.1 million in FY 2017 (FY 2016: RMB14.9 million) respectively. n.m. Not meaningful Page 3 of 18

4 1(b)(i) A statement of financial position (for the issuer and group), together with a comparative statement as at the end of the immediately preceding financial year. Company 31/12/ /12/ /12/ /12/2016 RMB'000 RMB'000 RMB'000 RMB'000 Non-current assets Property, plant and equipment 160,098 45, Intangible assets 5,840 6, Investment in subsidiaries ,378 48,378 Investment in an joint venture 1, Investment in an associate 24,503 24, Long-term investment 3,800 3, Deferred tax assets 13,830 14, Other assets 4,591 3, ,936 98,518 48,387 48,390 Current assets Inventories 104, , Prepayments 18,501 22, Trade and other receivables 31,475 28, Amount due from an associate 8,400 4, Amount due from related parties 11,506 6, Cash and cash equivalents 186, ,832 27,829 61, , ,096 27,899 61,367 Less: Current liabilities Trade and other payables 307, , Other liabilities 30,826 27,842 2,438 1,662 Amount due to related parties 1,444 2, Income tax payable 18,713 12, , ,310 2,439 1,663 Net current assets 2, ,786 25,460 59,704 Non-current liabilities Other liabilities 42,543 49, Deferred tax liabilities 7,365 4,873 5,710 3,355 49,908 54,868 5,710 3,355 Net assets 166, ,436 68, ,739 Equity attributable to the holders of the Company Share capital 67,148 67,148 67,148 67,148 Treasury shares (24,741) (9,011) (24,741) (9,011) Statutory common reserve 26,299 24, Currency translation reserve (657) (1,958) (667) (1,968) Revenue reserve 98,286 79,848 26,397 48,570 Total equity 166, ,436 68, ,739 Page 4 of 18

5 1(b)(ii) Aggregate amount of group s borrowings and debt securities. Amount repayable in one year or less, or on demand None. Amount repayable after one year None. Details of any collateral Not applicable. Page 5 of 18

6 1(c) Consolidated statement of cash flow (for the group), together with a comparative statement for the corresponding period of the immediately preceding financial year. 3 months ended 12 months ended 31/12/ /12/ /12/ /12/2016 RMB'000 RMB'000 RMB'000 RMB'000 Cash flows from operating activities Profit before taxation 9,130 19,978 81, ,094 Adjustments for: Depreciation of property, plant and equipment 3,361 1,597 10,836 6,787 Amortisation of intangible assets Impairment on property, plant and equipment 4,500-4,500 - Net loss on disposal of property, plant and equipment ,310 Receivables written off Provision for/(reversal of) rent-free incentives and step rental (211) 623 2,118 14,900 Write-back of free-rent incentives and step rental provision - - (9,570) (73,980) Amortisation of step rental income (1,026) 1,164 (1,026) 1,164 Accrued step rental income written off ,496 Inventories written down/(back) (34) (16) Interest income (111) 111 (4,046) (4,241) Share of results of joint venture Share of results of associate Operating cash flows before changes in working capital 16,251 23,634 85, ,216 Decrease/(increase) in inventories 3,417 (7,995) 8,949 (13,562) Decrease/(increase) in prepayments 8,925 2,545 3,643 (2,400) Increase in trade and other receivables (1,466) (3,202) (7,831) (609) Increase/(decrease) in trade and other payables (12,043) 44,603 6,794 28,244 Cash flows generated from operation 15,084 59,585 97, ,889 Interest received 111 (111) 4,046 4,241 Tax paid 122 (4,217) (19,124) (33,287) Net cash flows generated from operating activities 15,317 55,257 81,989 93,843 Cash flows from financing activities Dividends paid - (9,439) (33,188) (42,525) Increase in amount due from an associate (1,500) (3,000) (4,200) (3,600) Purchase of treasury shares (135) (9,011) (15,730) (9,011) Net cash flows used in financing activities (1,635) (21,450) (53,118) (55,136) Cash flows from investing activities Purchases of property, plant and equipment (1,822) (3,431) (129,459) (16,747) Investment in a joint venture - - (2,000) - Long-term investment (2,850) Proceeds from disposal of property, plant and equipment ,113 Net cash flows used in investing activities (1,822) (3,431) (131,459) (18,484) Net (decrease)/increase in cash and cash equivalents 11,860 30,376 (102,588) 20,223 Effect of exchange rate changes on cash and cash equivalents (180) (964) 1,354 (540) Cash and cash equivalents at beginning of financial period 174, , , ,149 Cash and cash equivalents at end of financial period 186, , , ,832 For the purpose of the consolidated statement of cash flows, the cash and cash equivalents comprise the following: Cash on hand 5,996 6,714 5,996 6,714 Bank balances 180, , , , , , , ,832 Page 6 of 18

7 1(d) (i) A statement (for the issuer and group) showing either (i) all changes in equity or (ii) changes in equity other than those arising from capitalisation issues and distributions to shareholders, together with a comparative statement for the corresponding period of the immediately preceding financial year. Attributable to equity holders of the Company Currency Statutory Share Treasury translation Revenue common Total capital shares reserve reserve reserve equity RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 Balance at 1 January ,148 (9,011) (1,958) 79,848 24, ,436 presentation currency representing other comprehensive income for the period - - 1, ,410 Profit for the period ,807-20,807 Total comprehensive income for the period - - 1,410 20,807-22,217 Purchase of treasury shares - (12,961) (12,961) Balance at 31 March ,148 (21,972) (548) 100,655 24, ,692 presentation currency representing other comprehensive income for the period Profit for the period ,220-19,220 Total comprehensive income for the period ,220-19,287 Purchase of treasury shares - (1,692) (1,692) Dividends paid (28,503) - (28,503) Balance at 30 June ,148 (23,664) (481) 91,372 24, ,784 presentation currency representing other comprehensive income for the period - - (47) - - (47) Profit for the period ,782-9,782 Total comprehensive income for the period - - (47) 9,782-9,735 Purchase of treasury shares - (942) (942) Dividends paid (4,685) - (4,685) Balance at 30 September ,148 (24,606) (528) 96,469 24, ,892 presentation currency representing other comprehensive income for the period - - (129) - - (129) Profit for the period ,707-3,707 Transfer to statutory common reserve (1,890) 1,890 - Total comprehensive income for the period - - (129) 1,817 1,890 3,578 Purchase of treasury shares - (135) (135) Balance at 31 December ,148 (24,741) (657) 98,286 26, ,335 Page 7 of 18

8 Attributable to equity holders of the Company Currency Statutory Share Treasury translation Revenue common Total capital shares reserve reserve reserve equity RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 Balance at 1 January ,148 - (1,336) 26,457 22, ,771 presentation currency representing other comprehensive income for the period - - 1, ,067 Profit for the period ,404-20,404 Transfer to statutory common reserve (719) Total comprehensive income for the period - - 1,067 19, ,471 Balance at 31 March ,148 - (269) 46,142 23, ,242 presentation currency representing other comprehensive income for the period - - (544) - - (544) Profit for the period ,025-54,025 Total comprehensive income for the period - - (544) 54,025-53,481 Dividends paid (23,381) - (23,381) Balance at 30 June ,148 - (813) 76,786 23, ,342 presentation currency representing other comprehensive income for the period - - (219) - - (219) Profit for the period ,294-12,294 Total comprehensive income for the period - - (219) 12,294-12,075 Dividends paid (9,705) - (9,705) Balance at 30 September ,148 - (1,032) 79,375 23, ,712 presentation currency representing other comprehensive income for the period - - (926) - - (926) Profit for the period ,100-11,100 Transfer to statutory common reserve (1,188) 1,188 - Total comprehensive income for the period - - (926) 9,912 1,188 10,174 Purchase of treasury shares - (9,011) (9,011) Dividends paid (9,439) - (9,439) Balance at 31 December ,148 (9,011) (1,958) 79,848 24, ,436 Page 8 of 18

9 Attributable to equity holders of the Company Currency Share Treasury translation Revenue Total capital shares reserve reserve equity RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 Company Balance at 1 January ,148 (9,011) (1,968) 48, ,739 presentation currency representing other comprehensive income for the period - - 1,410-1,410 Loss for the period (2,175) (2,175) Total comprehensive income for the period - - 1,410 (2,175) (765) Purchase of treasury shares - (12,961) - - (12,961) Balance at 31 March ,148 (21,972) (558) 46,395 91,013 presentation currency representing other comprehensive income for the period Loss for the period (1,628) (1,628) Total comprehensive income for the period (1,628) (1,561) Purchase of treasury shares (1,692) (1,692) Dividends paid (28,503) (28,503) Balance at 30 June ,148 (23,664) (491) 16,264 59,257 presentation currency representing other comprehensive income for the period - - (47) - (47) Profit for the period ,685 19,685 Total comprehensive income for the period - - (47) 19,685 19,638 Purchase of treasury shares (942) (942) Dividends paid (4,685) (4,685) Balance at 30 September ,148 (24,606) (538) 31,264 73,268 presentation currency representing other comprehensive income for the period - - (129) - (129) Loss for the period (4,867) (4,867) Total comprehensive income for the period - - (129) (4,867) (4,996) Purchase of treasury shares - (135) - - (135) Balance at 31 December ,148 (24,741) (667) 26,397 68,137 Page 9 of 18

10 Attributable to equity holders of the Company Currency Share Treasury translation Revenue Total capital shares reserve reserve equity RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 Company Balance at 1 January ,148 - (1,346) 35, ,348 presentation currency representing other comprehensive income for the period - - 1,067-1,067 Profit for the period ,219 6,219 Total comprehensive income for the period - - 1,067 6,219 7,286 Balance at 31 March ,148 - (279) 41, ,634 presentation currency representing other comprehensive income for the period - - (545) - (545) Profit for the period ,293 10,293 Total comprehensive income for the period - - (545) 10,293 9,748 Dividends paid (23,381) (23,381) Balance at 30 June ,148 - (824) 28,677 95,001 presentation currency representing other comprehensive income for the period - - (218) - (218) Profit for the period ,756 14,756 Total comprehensive income for the period - - (218) 14,756 14,538 Dividends paid (9,705) (9,705) Balance at 30 September ,148 - (1,042) 33,728 99,834 presentation currency representing other comprehensive income for the period - - (926) - (926) Profit for the period ,281 24,281 Total comprehensive income for the period - - (926) 24,281 23,355 Purchase of treasury shares - (9,011) - - (9,011) Dividends paid (9,439) (9,439) Balance at 31 December ,148 (9,011) (1,968) 48, ,739 Page 10 of 18

11 1(d) (ii) Details of any changes in the company's share capital arising from rights issue, bonus issue, share buy-backs, exercise of share options or warrants, conversion of other issues of equity securities, issue of shares for cash or as consideration for acquisition or for any other purpose since the end of the previous period reported on. State the number of shares that may be issued on conversion of all the outstanding convertibles, if any, against the total number of issued shares excluding treasury shares and subsidiary holdings of the issuer, as at the end of the current financial period reported on and as at the end of the corresponding period of the immediately preceding financial year. State also the number of shares held as treasury shares and the number of subsidiary holdings, if any, and the percentage of the aggregate number of treasury shares and subsidiary holdings held against the total number of shares outstanding in a class that is listed as at the end of the current financial period reported on and as at the end of the corresponding period of the immediately preceding financial year. There were no changes in the share capital of the Company in 4Q There were a total of 4,468,300 treasury shares held as at 31 December 2017 (31 December 2016: 1,544,700). There were no outstanding convertibles issued or subsidiary holdings as at 31 December (d) (iii) Total number of issued shares excluding treasury shares as at the end of the current financial period and as at the end of the immediately preceding year. The total number of issued shares (excluding treasury shares) as at 31 December 2017 were 191,851,700 (31 December 2016: 194,775,300). 1(d) (iv) A statement showing all sales, transfers, cancellation and/or use of treasury shares as at the end of the current financial period reported on. 3 months ended 12 months ended 31/12/ /12/ /12/ /12/2016 Balance at beginning of financial period 4,440,300-1,544,700 - Purchase of treasury shares 28,000 1,544,700 2,923,600 1,544,700 Balance at end of financial period 4,468,300 1,544,700 4,468,300 1,544,700 1(d) (v) A statement showing all sales, transfers, cancellation and/or use of subsidiary holdings as at the end of the current financial period reported on. Not applicable. 2 Whether the figures have been audited or reviewed and in accordance with which auditing standard or practice. The figures have not been audited or reviewed by the auditors. 3 Where the figures have been audited or reviewed, the auditors report (including any qualifications or emphasis of matter). Not applicable. Page 11 of 18

12 4 Whether the same accounting policies and methods of computation as in the issuer s most recently audited annual financial statements have been applied. Except as disclosed in paragraph 5 below, the has applied the same accounting policies and methods of computation as in the financial statements for the current financial period compared with those of the audited financial statements as at 31 December If there are any changes in the accounting policies and methods of computation, including any required by an accounting standard, what has changed, as well as the reasons for, and the effect of, the change. The adopted the new/revised FRS and Interpretations of FRS ( INT FRS ) that are effective for annual periods beginning on or after 1 January The adoption of the above FRS and INT FRS did not have any significant impact on the financial statements of the. 6 Earnings per ordinary share of the group for the current period reported on and the corresponding period of the immediately preceding financial year, after deducting any provision for preference dividends. 3 months ended 12 months ended 31/12/ /12/ /12/ /12/2016 RMB cents RMB cents RMB cents RMB cents (a) Based on weighted average no. of shares (b) Based on fully diluted basis Weighted average no. of shares applicable to basic earnings per share 191,857, ,303, ,448, ,063,683 Weighted average no. of shares based on fully diluted basis 191,857, ,303, ,448, ,063,683 7 Net asset value (for the issuer and group) per ordinary share based on the total number of issued shares excluding treasury shares of the issuer at the end of the (a) current financial period reported on and (b) immediately preceding financial year. Company 31/12/ /12/ /12/ /12/2016 RMB cents RMB cents RMB cents RMB cents Net asset value per ordinary share A review of the performance of the group, to the extent necessary for a reasonable understanding of the group s business. The review must discuss any significant factors that affected the turnover, costs, and earnings of the group for the current financial period reported on, including (where applicable) seasonal or cyclical factors. It must also discuss any material factors that affected the cash flow, working capital, assets or liabilities of the group during the current financial period reported on. Page 12 of 18

13 Statement of Comprehensive Income A review of the statement of Comprehensive Income for the three-month period ended 31 December 2016 ( 4Q 2016 ) and 4Q 2017 and the financial year ended 31 December 2016 ( FY 2016 ) and FY 2017 are as follows:- The revenue rose slightly to RMB237.2 million (RMB234.8 million) in 4Q 2017 and 11% to RMB971.4 million (RMB872.4 million) in FY 2017 mainly due to contribution from its additional stores opened in the second half of Despite higher revenue achieved this year, the s gross profit declined by 2% to RMB73.8 million (RMB75.3 million) in 4Q 2017 mainly due to lower gross profit margin for direct sales activities. It declined by 2% to RMB290.8 million (RMB296.6 million) in FY 2017 mainly due to lower revenue from rental and managed rental segments. The revenue from rental and managed rental segments, however, has been relatively stable quarter to quarter since 4Q As our cost of sales is incurred solely in respect of our direct sales activities, a discussion on the gross profit margins for our rental, managed rental and concessionaire sales activities is not meaningful. The s gross profit and gross profit margin in respect of our direct sales activities are set out below: 3 months ended Change 12 months ended Change 31/12/ /12/2016 +/(-) 31/12/ /12/2016 +/(-) RMB'000 RMB'000 % RMB'000 RMB'000 % Revenue from direct sales activities 184, , , , Cost of sales (163,364) (159,523) 2.4 (680,676) (575,818) 18.2 Gross profit from direct sales activities 20,766 23,568 (11.9) 90,899 86, Gross profit margin on direct sales activities 11.3% 12.9% (1.6) 11.8% 13.0% (1.2) The gross profit margin for the direct sales activities decreased to 11.3% (12.9%) in 4Q 2017 and 11.8% (13.0%) in FY 2017 mainly due to higher sales promotions in Other income increased by 16% to RMB22.4 million (RMB19.3 million) in 4Q 2017 mainly due to higher advertisement and promotion income recognised in 4Q However it fell 42% to RMB87.7 million (RMB151.6 million) in FY 2017 mainly due to lower non-recurring income, which were non-cash in nature, being recognised. The write-back of rent-free incentives and step rental provision, amounting to RMB74.0 million, arising from store closure was recognised in 1H 2016 while the write-back of Quanzhou Hui an Chengnan Store s rent-free incentives and step rental provision, amounting to RMB9.6 million, in relation to the acquisition of its retail premises, was recognised in 1H Selling and distribution expenses increased by 9% to RMB57.4 million (RMB52.9 million) in 4Q 2017 mainly due to higher staff costs from additional stores and salary increment for front-line staff, however, declined by 1% to RMB212.2 million (RMB213.3 million) in FY 2017 mainly due to lower rental expenses resulting from the acquisition of the premises of Quanzhou Hui an Chengnan Store. Page 13 of 18

14 For rental expenses, most of our stores operate on leased premises on a fixed tenure and rental is charged on an increasing basis over their lease periods. Based on the s accounting policy, rental expenses on increasing basis are amortised equally over the entire period of any lease. As such, apart from the actual rental expense charged by the landlords, reversal of provision for rent-free incentives and step rental of RMB0.2 million and provision for rent-free incentives and step rental of RMB2.1 million were reflected in 4Q 2017 and FY 2017 and were non-cash in nature. Administrative expenses increased by 36% to RMB29.2 million (RMB21.5 million) in 4Q 2017 mainly due to additional administrative expenses for the operation of the additional stores, depreciation of Quanzhou Chengnan Store s premises and impairment charges of RMB4.5 million on the property, plant and equipment of the s underperforming stores. However, it decreased by 2% to RMB88.2 million (RMB89.9 million) in FY 2017 mainly due to loss on disposal of property, plant and equipment amounting to RMB13.3 million for the store closure in 1H The tax expenses of the decreased by 39% to RMB5.4 million (RMB8.9 million) in 4Q 2017 mainly due to deferred tax income arising from impairment on property, plant and equipment. It decreased by 46% to RMB27.7 million (RMB51.3 million) in FY 2017 mainly due to reversal of deferred tax assets in relation to the write-back of rent-free incentives and step rental provision of the store closure in 1H As a result of the preceding factors mentioned, net profit for the declined by 67% to RMB3.7 million (RMB11.1 million) in 4Q 2017 and 45% to RMB53.5 million (RMB97.8 million) in FY 2017 mainly due to impairment on property, plant and equipment and the financial impact from the store closure amounting to RMB42.0 million in FY Balance Sheet A review of the balance sheet items as at 31 December 2016 and 31 December 2017 are as follows:- Non-current assets increased by RMB115.4 million or 117% to RMB213.9 million (RMB98.5 million) as at 31 December 2017 mainly due to increase in property, plant and equipment by RMB114.1 million arising mainly from the acquisition of Quanzhou Hui an Chengnan Store s retail premises, which was partly offset by depreciation charges of RMB10.8 million and impairment charges of RMB4.5 million for the financial year. Current assets decreased by RMB101.9 million or 22% to RMB361.2 million (RMB463.1 million) as at 31 December 2017 mainly due to (i) decrease in inventories by RMB9.1 million due to the upcoming festive season in February 2018, a month later compared to the previous year; and (ii) decrease in cash and cash equivalents by RMB101.2 million resulting from the acquisition of Quanzhou Hui an Chengnan Store s retail premises, cash dividend payout and the Company s share buyback which was offset by the cash generated from the s operations, offset by (iii) advance to an associate amounting to RMB4.2 million during the financial year; and (iv) increase in amount due from related parties by RMB5.0 million resulting from purchases made by consumers using the managed stores prepaid cash cards at the s stores. Current liabilities increased by RMB12.6 million or 4% to RMB358.9 million (RMB346.3 million) as at 31 December 2017 mainly due to (i) increase in trade and other payables by RMB4.4 million as a result of advances from sales of prepaid cash cards to consumers; (ii) increase in other liabilities by RMB3.0 million resulting from higher accruals of operating expenses; and (iii) increase in income tax payable by RMB5.8 million arising from additional provision during the financial year. Page 14 of 18

15 Non-current liabilities decreased by RMB5.0 million or 9% to RMB49.9 million (RMB54.9 million) as at 31 December 2017 mainly due to (i) decrease in other liabilities by RMB7.5 million resulting from the reversal of rent-free incentives and step rental provision for Quanzhou Hui an Chengnan Store, offset by (ii) increase in deferred tax liabilities by RMB2.5 million as a result of provision for withholding tax on undistributed profit of the s subsidiaries. Cash flow statement The reported a net decrease of RMB101.2 million in cash and cash equivalents in FY 2017 mainly due to: 1 Net cash used in financing activities amounting to RMB53.1 million in FY 2017 mainly for distribution of dividends amounting to RMB33.2 million and the Company s share buyback of RMB15.7 million. 2 Net cash used in investing activities amounting to RMB131.5 million in FY 2017 mainly for the acquisition of Quanzhou Hui an Chengnan Store s retail premises. Offset by: 3 Net cash generated from operating activities amounting to RMB82.0 million in FY This was attributable mainly to (i) operating cash flows before working capital changes of RMB85.5 million in FY 2017 after adjustment mainly for rental-free incentives and step rental provision of RMB2.1 million and its write-back of RMB9.6 million which were non-cash in nature, depreciation of property, plant and equipment of RMB10.8 million and its impairment charges of RMB4.5 million; (ii) an decrease in inventories by RMB8.9 million due to the upcoming festive season beginning a month later compared to the previous year; and (iii) an increase in trade and other payables by RMB6.8 million as a result of advances from sales of prepaid cash cards to consumers and higher accruals of operating expenses; offset by (iv) increase in trade and other receivables by RMB7.8 million resulting from advance to an associate and purchases made by consumers using the managed stores prepaid cash cards at the s stores; and (v) payment of income tax of RMB19.1 million in FY Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and the actual results. The s performance in 4Q 2017 is largely in line with what was previously reported or disclosed. 10 A commentary at the date of the announcement of the significant trends and competitive conditions of the industry in which the group operates and any known factors or events that may affect the group in the next reporting period and the next 12 months. According to the National Bureau of Statistics of China, the Chinese GDP grew 6.8% in the fourth quarter of 2017 and 6.9% for the whole year of Retail sales of consumer goods grew by 10.2% in Although the Chinese economy and domestic retail sales continue to grow, competition in the retail sector remains intense. Page 15 of 18

16 The store rollout plan over the next 12 months includes a 1,413 sq m store in Zhangzhou City in 1H2018 and a 6,416 sq m store in Anxi in late In addition, the 200,000 sq m complex in Changsha, Hunan, which is managed by a joint venture company formed between Chongqing Sasseur Outlets and the, is expected to start operations around the end of Barring any unforeseen circumstances, we expect the s performance to remain satisfactory in the near future. 11 Dividend (a) Current Financial Period Reported On Any dividend recommended for the current financial period reported on? Name of Dividend Interim Final Dividend Type Cash Cash Dividend amount per ordinary share 1.5 Singapore cent 1.0 Singapore cents Tax rate One-tier tax exempt One-tier tax exempt (b) Corresponding Period of the Immediately Preceding Financial Year Any dividend declared for the corresponding period of the immediately preceding financial year? Name of Dividend Interim Final Dividend Type Cash Cash Dividend amount per ordinary share 3.0 Singapore cent 2.0 Singapore cents Tax rate One-tier tax exempt One-tier tax exempt (c) Date payable The proposed dividend will be paid on or about 28 May 2018 and is subject to the approval of shareholders at the forthcoming Annual General Meeting. (d) Books closure date Notice is hereby given that the Share Transfer Books and Register of Members of the Company will be closed at 5.00 pm on 15 May 2018 for the purpose of determining shareholders entitlements to the final dividend. Duly completed registrable transfers received by the Company s Share Transfer Agent, boardroom Corporate & Advisory Services Pte. Ltd. at 50 Raffles Place, #32-01 Singapore Land Tower, Singapore up to 5.00 p.m. on 15 May 2018 will be registered to determine shareholders entitlements to the final dividend. Page 16 of 18

17 Shareholders (being depositors) whose securities accounts with The Central Depository (Pte) Limited are credited with shares as at 5.00 p.m. on 15 May 2018 will be entitled to the final dividend. 12 If no dividend has been declared/recommended, a statement to that effect. Not applicable. 13 Interested person transactions Name of interested person Management fees charged to a related party: Quanzhou Zhongmin Baihui Shopping Co., Ltd. Aggregate value of all interested person transactions during the financial year under review (excluding transactions less than S$100,000 and transactions conducted under shareholders mandate pursuant to Rule 920) RMB4,929,245 Aggregate value of all interested person transactions conducted under shareholders mandate pursuant to Rule 920 (excluding transactions less than S$100,000) - Commission from concessionaires sales charged to a related party: Fujian Hancai Garments Co., Ltd. RMB490,729 - The has not obtained a general mandate from Shareholders for interested person transactions. 14. Confirmation that the issuer has procured undertakings from all its directors and executive officers under Rule 720(1) The Company hereby confirms that it has procured undertakings from all the directors and executive officers under Rule 720(1). PART II - ADDITIONAL INFORMATION REQUIRED FOR FULL YEAR ANNOUNCEMENT (This part is not applicable to Q1, Q2, Q3 or Half Year Results) 15 Segmented revenue and results for business or geographical segments (of the group) in the form presented in the issuer s most recently audited annual financial statements, with comparative information for the immediately preceding year. No reporting by geographical location and business segments is presented as the business operations of the are solely in the retail industry in the PRC. Page 17 of 18

18 16 In the review of performance, the factors leading to any material changes in contributions to turnover and earnings by the business or geographical segments. Not applicable. 17 A breakdown of sales. Full year ended Full year ended Change 31/12/ /12/2016 +/(-) RMB'000 RMB'000 % Revenue - first half 492, , second half 479, , , , Profit after taxation - first half 40,027 74,429 (46.2) - second half 13,489 23,394 (42.3) 53,516 97,823 (45.3) 18 A breakdown of the total annual dividend (in dollar value) for the issuer s latest full year and its previous full year. Full year ended 31/12/ /12/2016 S$ 000 S$ 000 Ordinary - Interim - Final* 2,881 1,919 5,876 3,843 Total: 4,800 9,719 * FY 2017 s final dividend is estimated based on number of shares (excluding treasury shares) outstanding as at the end of the financial year, and is subject to the approval of shareholders at the forthcoming Annual General Meeting. 19. Disclosure of person occupying a managerial position in the issuer or any of its principal subsidiaries who is a relative of a director or chief executive officer or substantial shareholder of the issuer pursuant to Rule 704(10). If there are no such persons, the issuer must make an appropriate negative statement. The Board of Directors hereby confirms that none of the personnel occupying managerial positions in the Company or any of its principal subsidiaries is a relative of a director, chief executive officer or substantial shareholder of the Company. BY ORDER OF THE BOARD ZHONGMIN BAIHUI RETAIL GROUP LTD. LEE SWEE KENG EXECUTIVE CHAIRMAN 27 February 2018 Page 18 of 18