Hong Kong Exchanges and Clearing : ANNOUNCEMENT OF UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2019

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

Heng Hup Holdings Limited

興 合 控 股 有 限 公 司

(incorporated in the Cayman Islands with limited liability)

(Stock Code: 1891)

ANNOUNCEMENT OF UNAUDITED INTERIM RESULTS

FOR THE SIX MONTHS ENDED 30 JUNE 2019

FINANCIAL HIGHLIGHTS

• Revenue for the six months ended 30 June 2019 amounted to RM499.0 million, representing an increase of 20.7% from RM413.5 million for the six months ended 30 June 2018.
• Gross profit for the six months ended 30 June 2019 amounted to RM29.1 million, representing a decrease of 0.4% from RM29.2 million for the six months ended 30 June 2018.
• Profit attributable to owners of the Company for the six months ended 30 June 2019 amounted to RM7.8 million, representing a decrease of 29.4% from RM11.1 million for the six months ended 30 June 2018.
• If excluding the listing expenses from the net profit attributable to owners of the Company, the adjusted profit attributable to owners of the Company for the six months ended 30 June 2019 would have been RM11.5 million, representing a decrease of 17.9% from RM14.0 million for the six months ended 30 June 2018.
• The equity attributable to owners of the Company as at 30 June 2019 amounted to RM179.9 million, representing an increase of 53.2% from RM117.4 million as at 31 December 2018.
• The Board does not declare the payment of any dividend for the six months ended 30 June 2019 (six months ended 30 June 2018: Nil).

In this announcement, "we", "us", "our" and "Heng Hup" refer to the Company (as defined below) and where the context otherwise requires, the Group (as defined below).

The board (the "Board") of directors (the "Directors") of Heng Hup Holdings Limited 興合控股 有限公司(the "Company") is pleased to announce the unaudited condensed consolidated interim results of the Company and its subsidiaries (collectively, the "Group") for the six months ended 30 June 2019, together with the comparative figures for the corresponding period in 2018. The audit committee of the Company (the "Audit Committee") has reviewed the unaudited condensed consolidated interim financial statements of the Group for the six months ended 30 June 2019.

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CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2019 and 2018

		For the six months
		ended 30 June
	Notes	2019		2018
		RM' 000	RM' 000
		(Unaudited)	(Unaudited)
Revenue	3	498,973		413,496
Cost of sales	6	(469,869)	(384,276)
Gross profit		29,104		29,220
Other income	4	26		93
Other gains, net	5	264		111
Distribution and selling expenses	6	(7,118)	(4,043)
Administrative expenses	6	(10,327)	(9,128)
Finance costs, net	7	(248)	(200)
Share of post-tax loss of an associate		(233)	-
Profit before income tax		11,468		16,053
Income tax expenses	8	(3,638)	(4,964)
Profit for the period attributable to the
owners of the company		7,830		11,089
Other comprehensive income for the period:
Exchange differences on translation of
foreign operations		250		-
Total comprehensive income for the period
attributable to owners of the Company		8,080		11,089
Earnings per share attributable to owners of the Company
for the period (expressed in sen per share)
- Basic earnings per share	9	0.87		1.48
- Diluted earnings per share	9	0.87		1.48

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CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2019 and 31 December 2018

		As at	As at
		30 June	31 December
	Notes	2019		2018
		RM' 000	RM' 000
		(Unaudited)	(Audited)
ASSETS
Non-current assets
Property, plant and equipment		10,668		18,657
Right-of-use assets		12,072		-
Investment properties		4,039		4,052
Investment in an associate		783		-
Deferred income tax assets		53		53
		27,615		22,762
Current assets
Inventories		17,512		8,794
Trade and other receivables	11	129,852		113,127
Fixed deposits and pledged bank deposits		24,464		5,232
Cash and cash equivalents		18,581		5,572
		190,409		132,725
Total assets		218,024		155,487
EQUITY AND LIABILITIES
Equity attributable to owners of the Company
Share capital/Combined capital		5,206		112,313
Share premium		49,306		-
Capital reserve		29,168		(82,826)
Foreign translation reserve		250		-
Retained earnings		95,932		87,911
Total equity		179,862		117,398

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		As at	As at
		30 June	31 December
	Notes	2019		2018
		RM' 000	RM' 000
		(Unaudited)	(Audited)
Non-current liabilities
Finance lease liabilities		-	763
Lease liabilities		2,666		-
Borrowings		3,739		3,981
		6,405		4,744
Current liabilities
Trade and other payables	12	24,727		26,536
Current income tax liabilities		556		841
Finance lease liabilities		-	371
Lease liabilities		1,474		-
Borrowings		5,000		5,597
		31,757		33,345
Total liabilities		38,162		38,089
Total equity and liabilities		218,024		155,487

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1 REORGANISATION, BASIS OF PRESENTATION AND GENERAL INFORMATION

1.1 Reorganisation

In preparing for the listing of the Company's shares on the Main Board of The Stock Exchange of Hong Kong Limited, the following reorganisation activities were carried out.

Prior to the incorporation of the Company and the completion of the reorganisation as described below (the "Reorganisation"), the business of the Group was primarily carried out by Heng Hup Metal Sdn. Bhd., Heng Hup Paper Sdn. Bhd., Heng Hup Paper (Melaka) Sdn. Bhd., Heng Hup Hardware (M) Sdn. Bhd. (formerly known as Heng Hup Recycle Sdn. Bhd.) and Heng Hup Metal (Johor) Sdn. Bhd. (collectively, the "Operating Companies").

Pursuant to the Reorganisation, the Operating Companies were transferred to the Company through the following steps:

1. On 22 December 2017, Heng Hup Holdings (Malaysia) Sdn. Bhd. was incorporated in Malaysia. One share was allotted and issued, credited as fully paid, to each of the Sia Brothers (as defined below), all as initial subscribers.
2. On 18 January 2018, Heng Hup Hardware (M) Sdn. Bhd. acquired 20% of the issued share capital of Heng Hup Metal (Johor) Sdn. Bhd. from Goh Eng Kiat for a cash consideration of RM337,000, which was based on 20% of the net asset value of Heng Hup Metal (Johor) Sdn. Bhd. as at 30 November 2017 and settled by Heng Hup Hardware (M) Sdn. Bhd. in cash in January 2018.
3. On 10 April 2018, 5S Holdings (BVI) Limited was incorporated in the British Virgin Islands. 2,000 shares were allotted and issued, credited as fully paid at par, to each of the Sia Brothers as initial subscribers. On 13 April 2018, 5S Holdings (BVI) Limited allotted and issued 5,000 shares, 1,250 shares, 1,250 shares, 1,250 shares and 1,250 shares, all credited as fully paid at par, to Mr. Sia Kok Chin, Datuk Sia Keng Leong, Mr. Sia Kok Chong, Mr. Sia Kok Seng and Mr. Sia Kok Heong respectively.
4. On 12 April 2018, the Company was incorporated in the Cayman Islands. One share was allotted and issued for cash at par to the initial third party subscriber and such share was transferred to 5S Holdings (BVI) Limited on the same date, and further allotted and issued 6,799 shares, for cash at par, to 5S Holdings (BVI) Limited and 640 shares, for cash at par, to each of the Sia Brothers.
5. On 17 April 2018, Heng Hup (BVI) Limited was incorporated in the British Virgin Islands. 10,000 shares were allotted and issued, credited as fully paid at par, to the Company as the initial subscriber.
6. a) On 7 May 2018, Heng Hup Holdings (Malaysia) Sdn. Bhd. acquired the entire issued share capital of Heng Hup Paper Sdn. Bhd. from the Sia Brothers for an aggregate nominal consideration of RM5, which was satisfied by Heng Hup Holdings (Malaysia) Sdn. Bhd. by issuing and allotting one share to each of the Sia Brothers for RM1 per share (the "Share Swap I"). The Share Swap I was completed on 24 May 2018.
7. 1. On 7 May 2018, Heng Hup Holdings (Malaysia) Sdn. Bhd. acquired the entire issued share capital of Heng Hup Paper (Melaka) Sdn. Bhd. from the Sia Brothers for an aggregate nominal consideration of RM5, which was satisfied by Heng Hup Holdings (Malaysia) Sdn. Bhd. by issuing and allotting one share to each of the Sia Brothers for RM1 per share (the "Share Swap II"). The Share Swap II was completed on 24 May 2018.
   2. On 7 May 2018, Heng Hup Holdings (Malaysia) Sdn. Bhd. acquired the entire issued share capital of Heng Hup Metal (Johor) Sdn. Bhd. from Heng Hup Hardware (M) Sdn. Bhd. for an aggregate nominal cash consideration of RM1, which was paid by Heng Hup Holdings (Malaysia) Sdn. Bhd. in May 2018.

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