Bauhaus International : ANNOUNCEMENT OF INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 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.

Bauhaus International (Holdings) Limited

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 483)

ANNOUNCEMENT OF INTERIM RESULTS

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2019

• Turnover of the Group decreased by about 19.5% to approximately HK$410.8 million (2018: HK$510.0 million).
• Sales by operating segments are as follows:

	Six months	Six months
	ended	ended
	30 September	30 September
	2019	2018	Changes
	HK$ million	HK$ million
Hong Kong, Macau & Elsewhere	294.5	361.0	-18.4%
Taiwan	57.1	90.1	-36.6%
Mainland China	59.2	58.9	+0.5%

• Gross profit decreased to approximately HK$239.9 million (2018: HK$291.2 million)
  while the gross margin slightly improved to about 58.4% (2018: 57.1%).
• Net loss for the six months ended 30 September 2019 was approximately HK$95.2 million (2018: HK$55.9 million).
• Basic and diluted loss per share was about HK25.9 cents (2018: HK15.2 cents).

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The board of directors (the "Directors" or "Board") of Bauhaus International (Holdings) Limited (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 September 2019, prepared on the basis set out in Note 1 to the Interim Financial Statements below, together with the comparative figures of the corresponding period, as follows.

The condensed consolidated interim results have not been audited, but have been reviewed by the Company's audit committee.

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the six months ended 30 September 2019

		Six months ended
		30 September
		2019		2018
	Notes	(Unaudited)	(Unaudited)
		HK$'000	HK$'000
REVENUE	4	410,803		509,976
Cost of sales		(170,893)	(218,790)
GROSS PROFIT		239,910		291,186
Other income and gains	4	561		3,670
Selling and distribution expenses		(267,217)	(296,331)
Administrative expenses		(53,550)	(59,716)
Other expenses	6	(9,097)	(1,642)
Finance cost	5	(9,326)	-
LOSS BEFORE TAX	6	(98,719)	(62,833)
Income tax credit	7	3,523		6,947
LOSS FOR THE PERIOD
ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT		(95,196)	(55,886)
Other comprehensive income/(loss)
Item that may be reclassified to profit or loss in subsequent periods:		(4,521)
Exchange differences on translation of foreign operations		(6,712)
Item that will not be reclassified to profit or loss in subsequent
periods:
Changes in fair value of equity investments at fair value through		-
other comprehensive income		1,030
TOTAL COMPREHENSIVE LOSS FOR THE PERIOD		(99,717)
ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT		(61,568)
LOSS PER SHARE
ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT	8
Basic and diluted		HK25.9 cents		HK15.2 cents

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CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 September 2019

		As at		As at
		30 September		31 March
		2019	2019
	Notes	(Unaudited)		(Audited)
		HK$'000		HK$'000
NON-CURRENT ASSETS		180,382
Property, plant and equipment		197,152
Investment property		18,400	19,400
Intangible assets		369	431
Right-of-use assets	2	373,126		-
Equity investments at fair value		6,000
through other comprehensive income		6,000
Rental, utility and other non-current deposits		69,402	80,846
Deferred tax assets		17,520		15,212
Total non-current assets		665,199	319,041
CURRENT ASSETS
	241,871
Inventories		258,397
Trade receivables	10	23,613	42,828
Prepayments, deposits and other receivables		32,975	39,630
Tax recoverable		3,711	3,517
Cash and bank balances		136,525		198,744
Total current assets		438,695	543,116
CURRENT LIABILITIES
	24,449
Trade payables	11	36,611
Other payables and accruals		52,128	63,692
Contract liabilities		8,540	10,620
Lease liabilities	2	184,118		-
Tax payable		1,852		3,089
Total current liabilities		271,087	114,012
NET CURRENT ASSETS		167,608	429,104
TOTAL ASSETS LESS CURRENT LIABILITIES		832,807	748,145
NON-CURRENT LIABILITIES		206,952
Lease liabilities	2		-
Deferred tax liabilities		5,870		6,400
Total non-current liabilities		212,822	6,400
NET ASSETS		619,985	741,745
EQUITY
Equity attributable to equity holders of the parent		36,738
Share capital		36,738
Reserves		583,247		705,007
TOTAL EQUITY		619,985	741,745

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

30 September 2019

1. BASIS OF PRESENTATION AND PREPARATION
   These unaudited condensed consolidated interim financial statements (the "Interim Financial Statements") of Bauhaus International (Holdings) Limited (the "Company") and its subsidiaries (collectively the "Group") for the six months ended 30 September 2019 have been prepared in accordance with Hong Kong Accounting Standard ("HKAS") 34, "Interim Financial Reporting", issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA"), and the Appendix 16 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules").
   The accounting policies and basis of preparation adopted in the preparation of the Interim Financial Statements are the same as those used in the annual financial statements for the year ended 31 March 2019, except for the adoption of certain new and revised Hong Kong Financial Reporting Standards (which also include HKASs and Interpretations) (the "Standards") in current period for the first time as disclosed in Note 2 below. Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.
   These Interim Financial Statements have not been audited, but have been reviewed by the Company's audit committee and should be read in conjunction with the 2019 annual report.
2. CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES

The Group has adopted the following Standards for the first time in the preparation of these Interim Financial Statements.

Amendments to HKFRS 9	Prepayment Features with Negative Compensation
Amendments to HKAS 19	Plan Amendment, Curtailment or Settlement
Amendments to HKAS 28	Long-term Interests in Associates and Joint Ventures
HKFRS 16	Leases
HK(IFRIC)-Int 23	Uncertainty over Income Tax Treatments
Annual Improvements	Amendments to HKFRS 3, HKFRS 11, HKAS 12 and HKAS 23
2015-2017 Cycle

Except for the impact of the adoption of HKFRS 16 as further elaborated below, the adoption of the above Standards has had no significant financial effect on these Interim Financial Statements.

The impact of the adoption of HKFRS 16 "Leases"

1. The Group's leasing activities and how these are accounted for
   The Group is a lessee of its retail shops, offices, warehouses and certain equipment. Rental contracts are typically made for fixed periods. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes.
   Before the adoption of the standard, leases of premises were classified as "operating leases". Payments made under operating leases (net of any incentives received from the lessor) were charged to profit or loss on a straight-line basis over the period of the lease.
   From 1 April 2019, leases are recognised as right-of-use assets and corresponding lease liabilities at the date at which the leased asset is available for use by the Group. Each lease payment is allocated between the lease liabilities and finance costs. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis.

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2. CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (continued) The impact of the adoption of HKFRS 16 "Leases" (continued)

1. The Group's leasing activities and how these are accounted for (continued)
   Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:
2. • fixed payments (including in-substance fixed payments), less any lease incentives receivable;
   • variable lease payment that are based on an index or a rate;
   • amounts expected to be payable by the lessee under residual value guarantees;
   • the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and
   • payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee's incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions.

Right-of-use assets are measured at cost comprising the following:

• the amount of the initial measurement of lease liability;
• any lease payments made at or before the commencement date less any lease incentives received;
• restoration cost; and
• any initial direct cost.

Payments associated with short-term leases are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less.

1. Adjustments recognised on adoption of HKFRS 16
   The Group adopted HKFRS 16 using the modified retrospective method of adoption with the date of initial application of 1 April 2019. Under this method, the standard is applied retrospectively with the cumulative effect of initial adoption as an adjustment to the opening balance of condensed consolidated statement of financial position on 1 April 2019, and the comparative information was not restated and continues to be reported under HKAS 17.
   The following table shows the adjustments for change in accounting policy recognised for each individual line item. Line items that were not affected by the changes have not been included. As a result, the sub-totals and totals disclosed cannot be recalculated from the numbers provided.

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2. CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (continued) The impact of the adoption of HKFRS 16 "Leases" (continued)

1. Adjustments recognised on adoption of HKFRS 16 (continued)

		As at	Impact on
	31 March 2019	initial	As at
		as originally	adoption of	1 April 2019
		presented	HKFRS 16	Restated
		(Audited)	(Unaudited)	(Unaudited)
		HK$'000	HK$'000	HK$'000
Non-Current Assets
Property, plant and equipment	197,152		(3,811)	193,341
Right-of-use assets		-	388,963	388,963
Current Assets
Prepayments, deposits and other receivables	39,630		(4,368)	35,262
Current Liabilities
Other payable and accruals	(63,692)	8,179	(55,513)
Lease liabilities		-	187,000	187,000
Non-Current Liabilities
Lease liabilities		-	201,963	201,963

On adoption of HKFRS 16, the Group recognised lease liabilities in relation to leases which had previously been classified as "operating leases" under the principles of HKAS 17 Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee's incremental borrowing rate as of 1 April 2019. The weighted average lessee's incremental borrowing rate applied to the lease liabilities on 1 April 2019 were ranging from about 4.2% to 7.1%.

	HK$'000
Operating lease commitment disclosed as at 31 March 2019 (Audited)	440,324
Less: discounted using the lessee's incremental borrowing rate
at date of initial application	(21,835)
Less: short-term leases recognised on a straight-line basis as expenses	(20,799)
Less: payment not classified as lease liabilities	(8,727)
Lease liabilities recognised as at 1 April 2019 (Unaudited)	388,963
of which are:
Current lease liabilities	187,000
Non-current lease liabilities	201,963
	388,963

The associated right-of-use assets at the date of initial application were measured as an amount equal to the lease liabilities, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised in the consolidated statement of financial position as at 31 March 2019.

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2. CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (continued) The impact of the adoption of HKFRS 16 "Leases" (continued)

1. Adjustments recognised on adoption of HKFRS 16 (continued)
   The carrying amounts of the Group's right-of-use assets and lease liabilities, and the movement during the six months ended 30 September 2019 are as follows:

		Right-of-use assets		Lease
		Building	Equipment		Total		liabilities
	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
		HK$'000		HK$'000		HK$'000		HK$'000
As at 1 April 2019	388,807		156	388,963		388,963
Exchange realignment	(3,648)	(1)	(3,649)	(3,649)
Transfer from property, plant and equipment	3,811			-	3,811			-
Additions	104,044		256	104,300		103,344
Depreciation	(110,234)	(37)	(110,271)		-
Write-off	(9,906)	(122)	(10,028)	(7,877)
Interest expenses		-		-		-	9,326
Payments		-		-		-	(99,037)
As at 30 September 2019	372,874		252	373,126		391,070

1. Practical expedients applied
   In applying HKFRS 16 for the first time, the Group has used the following practical expedients permitted by the standard:
2. • the use of a single discount rate to a portfolio of leases with reasonably similar characteristics;
   • replied on previous assessment of whether leases are onerous immediately before the date of initial application;
   • the use of recognition exemption to lease with a remaining lease term of less than 12 months at 1 April 2019;
   • the exclusion of initial direct costs for the measurement of the right-of-use asset at the date of initial application; and
   • the use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease.

The Group has also elected not to reassess whether a contract is, or contains a lease at the date of initial application. Instead, for contracts entered into before the transition date the Group relied on its assessment made applying HKAS 17.

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1. CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (continued) The impact of the adoption of HKFRS 16 "Leases" (continued)
2. 1. Judgements in determining the lease term
      The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease, if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.
      The Group applies judgements in evaluating whether it is reasonably certain to exercise the option to renew. It considers all relevant factors that create an economic incentive for it to exercise the renewal. Potential future cash outflows have not been included in the lease liability because it is not reasonably certain that the leases will be extended (or not terminated). After the lease commencement date, the Group reassesses the lease term if there is a significant event or change in circumstances that is within the control of the Group and affects its ability to exercise the option to renew.
3. OPERATING SEGMENT INFORMATION
   The Group is principally engaged in the design and retail of trendy apparel, bags and fashion accessories. For management purposes, the Group is organised into business units that offer products to customers located in different geographical areas. In determining the Group's reportable operating segments, revenues, results, assets and liabilities attributable to the segment are based on the location of the customers.
   The Group has three reportable operating segments as follows:
4. 1. Hong Kong, Macau and Elsewhere
   2. Taiwan
   3. Mainland China

Management monitors the results of the Group's operating segments separately for the purpose of making decisions about resources allocation and performance assessment. Segment performance is evaluated based on reportable segment profit/(loss), which is a measure of adjusted profit/(loss) before tax. The adjusted profit/(loss) before tax is measured consistently with the Group's profit/(loss) before tax except that interest income, finance cost, fair value gain/(loss) on an investment property and unallocated expenses are excluded from this measurement.

Segment assets exclude an investment property, equity investments at fair value through other comprehensive income, deferred tax assets, tax recoverable and other unallocated corporate assets as these assets are managed on a group basis.

Segment liabilities exclude deferred tax liabilities, tax payable and other unallocated corporate liabilities as these liabilities are managed on a group basis.

Segment non-current assets exclude an investment property, equity investments at fair value through other comprehensive income, deferred tax assets and other unallocated corporate non-current assets as these assets are managed on a group basis.

Intersegment sales and transfers are transacted with reference to the selling prices used for sales made to third parties at the then prevailing market prices.

Information about major customers

Since there was no customer to whom the Group's sales amounted to 10% or more of the Group's revenue during the period under review, no major customer information is presented.

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3. OPERATING SEGMENT INFORMATION (continued)

	Hong Kong,
	Macau and			Mainland
	Elsewhere	Taiwan	China	Total
	HK$'000	HK$'000	HK$'000	HK$'000
For the six months ended 30 September 2019 (Unaudited)
Segment revenue:	294,484		57,136	59,183		410,803
Sales to external customers
Intersegment sales	9,934		15,428	2,340		27,702
Reconciliation:	304,418		72,564	61,523		438,505
						(27,702)
Elimination of intersegment sales
Revenue							410,803
Segment results:	(22,047)	(22,692)	(17,870)	(62,609)
Reconciliation:							24
Interest income
Finance cost							(9,326)
Fair value loss on an investment property							(1,000)
Unallocated expenses, net							(25,808)
Loss before tax							(98,719)
Other segment information:
9,108		909	2,895		12,912
Capital expenditure*
Unallocated capital expenditure*							1,209
Total capital expenditure							14,121
Depreciation of owned assets	9,879		5,307	5,077		20,263
Depreciation of right-of-use assets	92,178		3,232	14,861		110,271
Unallocated depreciation							3,032
Total depreciation							133,566
As at 30 September 2019 (Unaudited)
Segment assets:	624,871		100,683	175,142		900,696
Reconciliation:							18,400
Investment property
Equity investments at fair value through other							6,000
comprehensive income
Deferred tax assets							17,520
Tax recoverable							3,711
Unallocated assets							157,567
Total assets							1,103,894
Segment liabilities:	390,328		20,688	53,396		464,412
Reconciliation:							5,870
Deferred tax liabilities
Tax payable							1,852
Unallocated liabilities							11,775
Total liabilities							483,909
Segment non-current assets:	408,417	21,666	64,902		494,985
Reconciliation:							18,400
Investment property
Equity investments fair value through							6,000
other comprehensive income
Deferred tax assets							17,520
Unallocated non-current assets							128,294
Total non-current assets							665,199

• Capital expenditure consists of additions to property, plant and equipment and intangible assets.

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3. OPERATING SEGMENT INFORMATION (continued)

	Hong Kong,
		Macau and			Mainland
		Elsewhere	Taiwan	China	Total
		HK$'000	HK$'000	HK$'000	HK$'000
For the six months ended 30 September 2018 (Unaudited)
Segment revenue:
Sales to external customers	360,959		90,085	58,932		509,976
Intersegment sales		3,284		54,176	-	57,460
Reconciliation:		364,243		144,261	58,932		567,436
Elimination of intersegment sales								(57,460)
Revenue								509,976
Segment results:
13,107		(29,792)	(13,948)	(30,633)
Reconciliation:
Interest income								63
Fair value gain on an investment property								400
Unallocated expenses, net								(32,663)
Loss before tax								(62,833)
Other segment information:
Capital expenditure*	22,911		5,103	14,838		42,852
Unallocated capital expenditure*								1,315
Total capital expenditure								44,167
Depreciation of owned assets	11,119	6,212	2,440		19,771
Unallocated depreciation								2,972
Total depreciation								22,743
As at 31 March 2019 (Audited)
Segment assets:	334,215		123,931	143,536		601,682
Reconciliation:
Investment property								19,400
Equity investments at fair value through other
comprehensive income								6,000
Deferred tax assets								15,212
Tax recoverable								3,517
Unallocated assets								216,346
Total assets								862,157
Segment liabilities:
61,298		6,843	32,246		100,387
Reconciliation:
Deferred tax liabilities								6,400
Tax payable								3,089
Unallocated liabilities								10,536
Total liabilities								120,412
Segment non-current assets:
106,873		12,242	30,936		150,051
Reconciliation:
Investment property								19,400
Equity investments at fair value through other
comprehensive income								6,000
Deferred tax assets								15,212
Unallocated non-current assets								128,378
Total non-current assets								319,041

• Capital expenditure consists of additions to property, plant and equipment and intangible assets.

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4. REVENUE, OTHER INCOME AND GAINS

An analysis of revenue, other income and gains is as follows:

	Six months ended
	30 September
	2019	2018
	(Unaudited)		(Unaudited)
	HK$'000		HK$'000
Revenue
Sale of garment products and accessories transferred at
a point in time	410,803	509,976
Disaggregated revenue information
Segments
Geographical markets
Hong Kong, Macau and Elsewhere	294,484	360,959
Taiwan	57,136	90,085
Mainland China	59,183	58,932
Total revenue from contracts with customers	410,803	509,976
Other income
Bank interest income	24	63
Rental income	340	260
Others	197	2,301
	561	2,624
Gains
Foreign exchange gains, net	-	646
Fair value gain on an investment property	-	400
	-	1,046
	561	3,670
Performance obligations

Information about the Group's performance obligations is summarised below:

Sale of garment products and accessories

The Group sells garment products and accessories directly to retail customers via retail stores, department stores and internet. The performance obligation is satisfied when the product is transferred to the customers upon delivery of goods. Payment of the transaction price is due immediately when the customers purchase the goods. The payment is usually settled in cash or using credit cards.

The Group also sells goods to wholesalers. The performance obligation is satisfied when control of the products has been transferred, being when the products are delivered to the wholesalers and there is no unfulfilled obligation that could affect the wholesaler's acceptance of the products. The payment is generally due within one to two months from delivery, except for certain wholesalers, where payment in advance is normally required.

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5. FINANCE COST

An analysis of finance cost is as follows:

Six months ended

30 September

20192018

(Unaudited) (Unaudited)

HK$'000 HK$'000

Interest expenses on lease liabilities

9,326

-

6. LOSS BEFORE TAX

The Group's loss before tax is arrived at after charging/(crediting):

	Six months ended
	30 September
	2019	2018
	(Unaudited)		(Unaudited)
	HK$'000		HK$'000
Cost of inventories sold*	170,043	199,221
Provision for inventories, net*	850	19,569
Depreciation:	23,295
owned assets	22,743
right-of-use assets	110,271		-
	133,566	22,743
Minimum lease payments under operating leases	10,315	119,009
Contingent rents under operating leases	4,084	19,237
	14,399	138,246
Employee benefit expenses (including directors' remuneration):
93,328
Wages, salaries and other benefits	102,692
Pension scheme contributions	5,718	6,255
	99,046	108,947
Fair value gain on an investment property	-	(400)
Other expenses:	1,000
Fair value loss on an investment property		-
Loss on disposal of items of property, plant and equipment, net	2,308	1,371
Loss on disposal of trademarks	-	1
Amortisation of intangible assets	62	75
Write-off of deposits	2,784		-
Write-off of right-of-use assets	2,151		-
Impairment of items of property, plant and equipment	454	185
Foreign exchange losses, net	338		-
Others	-	10
	9,097	1,642

• Included in "cost of sales" on the face of the condensed consolidated statement of profit or loss and other comprehensive income.

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7. INCOME TAX

Hong Kong profit tax has been provided at a rate of 16.5% (2018: 16.5%) on the estimated assessable profits arising in Hong Kong during the six months ended 30 September 2019. The People's Republic of China corporate income tax ("CIT") is applicable to subsidiaries operated in Mainland China. All of these subsidiaries were subject to the applicable CIT rate of 25.0% (2018: 25.0%) for the period under review. Taxes on profits assessable elsewhere had been calculated at the rates of tax prevailing in the countries/ jurisdictions in which the Group operates.

Six months ended

30 September

20192018

(Unaudited) (Unaudited)

HK$'000 HK$'000

Current tax charge/(credit), net
- Hong Kong	292		(626)
- Mainland China	(722)	(38)
- Elsewhere	(197)	74
Deferred tax credit, net	(2,896)	(6,357)
Total tax credit for the period, net	(3,523)	(6,947)

8. LOSS PER SHARE ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT

The calculation of the basic loss per share is based on the loss for the period attributable to equity holders of the parent of HK$95,196,000 (2018: HK$55,886,000) and the weighted average number of ordinary shares of 367,380,000 (2018: 367,380,000) in issue during the six months ended 30 September 2019.

The Group had no potentially dilutive ordinary shares in issue during the six months ended 30 September 2019 and 2018.

The calculations of the basic loss per share are based on:

	Six months ended
	30 September
	2019	2018
	(Unaudited)		(Unaudited)
	HK$'000		HK$'000
Loss
Loss attributable to equity holders of the parent,
used in the basic loss per share calculation	95,196	55,886
	Number of Shares
Shares
Weighted average number of ordinary shares in issue during the
six months period under review used in the basic loss per share
calculation	367,380,000	367,380,000

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1. DIVIDEND
   A final dividend of HK$22,043,000 for the year ended 31 March 2019 (2018: HK$27,554,000) was paid in September 2019.
   The Board did not declare the payment of an interim dividend for the six months ended 30 September 2019 (2018: Nil).
2. TRADE RECEIVABLES
   Sales (both online and offline) are made on cash terms or with short credit terms, except for certain well-established customers with a long business relationship with the Group, where the general credit terms are ranging from 30 days to 60 days. The Group seeks to maintain strict control over its outstanding receivables to minimise credit risk. Overdue balances are regularly reviewed. In view of the aforementioned and the fact the Group's trade receivables relate to a large number of diversified customers, there is no significant concentration of credit risk. The Group does not hold any collateral or other credit enhancements over these balances. Trade receivables are non-interest-bearing.
   The ageing analysis of the trade receivables as at the end of the reporting period, based on the invoice date and net of provisions, is as follows:

	As at		As at
	30 September		31 March
	2019	2019
	(Unaudited)		(Audited)
	HK$'000		HK$'000
Within 90 days	23,039	42,298
91 to 180 days	71	6
181 to 365 days	13	3
Over 365 days	490	521
	23,613	42,828

11. TRADE PAYABLES

The ageing analysis of the trade payables as at the end of the reporting period, based on the invoice date, is as follows:

	As at		As at
	30 September		31 March
	2019	2019
	(Unaudited)		(Audited)
	HK$'000		HK$'000
Within 90 days	23,844	26,915
91 to 180 days	525	9,017
181 to 365 days	7	374
Over 365 days	73	305
	24,449	36,611

The trade payables are non-interest-bearing and are normally settled on terms of 30 to 60 days.

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BUSINESS REVIEW

The Group is principally engaged in the design and retail of trendy apparel, bags and fashion accessories. It operates various retail channels (both online and offline) in Hong Kong, Macau, Taiwan and Mainland China. The Group's turnover is mostly contributed by its major in- house labels like "SALAD", "TOUGH" and "80/20" as well as some reputable licensed brands including "SUPERDRY".

As at 30 September 2019, the Group had a total of 184 self-managed offline shops in operation (31 March 2019: 196).

	As at		As at
	30 September		31 March
	2019	2019		Changes
Hong Kong & Macau	73	77	-4
Taiwan	69	73	-4
Mainland China	42	46	-4
TOTAL	184	196		-12

The intensifying China-US trade war, depreciation of the Renminbi and, more seriously the recent social unrest in Hong Kong since June 2019, created extreme challenges to the Group's retail business in various regions, adversely affecting the Group's performance during the six months ended 30 September 2019. The overall turnover of the Group dropped by about 19.5% to approximately HK$410.8 million (2018: HK$510.0 million) and its net loss increased to about HK$95.2 million (2018: HK$55.9 million) for the period under review.

As at the date of this announcement, the Group has sufficient cash on hand to meet current business needs. Yet facing the great challenges, the Group has adopted a prudent finance management approach with proactive implementation of a number of cost control measures, including but not limited to negotiating for rental reduction and more flexible lease term structure with landlords, controlling effectively operational expenses such as staff costs, marketing expenses, other selling and administration costs, shop renovation expenditures, etc. The Group has also been launching more promotional campaigns to boost sales and lower the inventory level and preserve liquidity. The Group considers these measures can help it to sustain its core and productive operations through this difficult time.

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Hong Kong, Macau and Elsewhere

This combined geographical unit, contributed mostly from Hong Kong's retail operation, makes up the largest operating segment of the Group. Unfortunately, Hong Kong's economy shrank 2.9% year-on-year in real terms in the third quarter of 2019, the slowest in a decade, and officially slipped into a technical recession. The intensifying China-US trade tensions and the social instability since June 2019 has adversely affected retail sentiment and deeply depressed both local consumers spending as well as inbound tourist traffic to the city. In addition, with increasingly violent anti-government protests since July 2019, the Group has to frequently halt retail operations in many core shopping areas due to safety concerns for its frontline staff and customers as well as temporary shutdown of major shopping malls.

As a result, the turnover of the segment declined by about 18.4% to about HK$294.5 million for the period under review (2018: HK$361.0 million). The Group recorded a same-store-sales growth of about -15% (2018: +2%) for the six months ended 30 September 2019. The segment also recorded a loss of about HK$22.0 million for the six months ended 30 September 2019 (2018: profit of about HK$13.1 million).

As at 30 September 2019, the Group operated 73 (31 March 2019: 77) self-managed retail shops in Hong Kong and Macau. In view of the recent unfavourable retail business environment, the Group has proactively been re-negotiating lease terms with landlords and strive for reasonable rental concessions to moderate its cost pressure in due course. The Group had closed certain significantly loss-making stores during the period under review and might need to further reduce its offline retail network in Hong Kong, if the business conditions remain extremely unfavourable.

Taiwan

The Group regrets that the business performance in Taiwan continued to be disappointing during the period under review. The retail sales in Taiwan dropped significantly by about 36.6% to about HK$57.1 million (2018: HK$90.1 million). However, as the Group had eliminated many significant loss-making stores last year and was further downsizing its retail network progressively, the region's loss was reduced to about HK$22.7 million (2018: HK$29.8 million) for the six months ended 30 September 2019. At the end of the reporting period, there was a total of 69 stores/counters/outlets (31 March 2019: 73) in operation, present mainly in reputable department stores within major Taiwan cities.

Though there were no sudden and drastic events like in Hong Kong, the prolonged weak retail climate in Taiwan has generally eroded the region's profitability and led to an unhealthily high inventory level (as compared to its sales performance) in the region. Given the higher priority for stock clearance, in particular the aged and off-season products, the Group had heavily cut the supply of new season goods to Taiwan and let the region had more rooms to digest the aged and slow-moving items and restore its healthy liquidity position. A series of promotional activities and larger number of short-term bargain outlets had been launched as well to accelerate stock clearance rate during the period under review.

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However, with a lower proportion of new seasonal merchandise and reduction in the number of regular brand-building stores, the sales performance in normal stores was inevitably affected. The Group recorded a substantial negative year-on-year growth of about 39% (2018: +3%) in same-store-sales during the period under review. It is expected to undergo a further in-depth restructuring and adjustments across the region's retail portfolio and for a longer time.

Mainland China

As at 30 September 2019, the Group operated 42 (31 March 2019: 46) self-managed retail shops in Mainland China. Unfortunately, with the international trade disputes increasing uncertainties on China's economic growth, the turnover from the Mainland China segment just increased slightly by about 0.5% to about HK$59.2 million (2018: HK$58.9 million) during the period under review while the same-store-sales growth was still negative at about 6% (2018: -10%). The segment also recorded a larger loss of about HK$17.9 million (2018: HK$13.9 million) for the six months ended 30 September 2019.

As a prudent strategic move, the Group had closed retail operations in Hangzhou during the period under review and has also decided to close its offline retail network in Shanghai and Beijing gradually within one to two years. Instead, the Group intends to focus its resources and skillful retail manpower to develop and build a more solid foundation of retail business in the Greater Bay Area in Mainland China. In addition, the Group put greater efforts to facilitate cooperation among its offline and online sales channels to create greater synergies and to operate at a relatively lower cost. With a business presence both offline and online, the Group was able to pursue nationwide retail coverage and enhance its brand awareness.

FINANCIAL REVIEW

Turnover and Segment Information

Turnover of the Group decreased by about 19.5% to approximately HK$410.8 million (2018: HK$510.0 million) for the six months ended 30 September 2019. The Group recorded overall same-store-sales growth rate of about -19% (2018: +1%) for the first half of the financial year under review. Hong Kong, Macau and Elsewhere remains the key operating segment of the Group's retail business, accounting for approximately 71.7% (2018: 70.8%) of its turnover, while performed poorly with a negative growth in same-store-sales of about 15% (2018: +2%) during the period under review. Details of the Group's segmental turnover and results are shown in Note 3 to the Interim Financial Statements.

Gross Profit and Gross Margin

The Group's gross profit decreased by about 17.6% to approximately HK$239.9 million (2018: HK$291.2 million) for the six months ended 30 September 2019. In view of the unstable operating environment in Hong Kong and prolonged weak sales performance in Taiwan, the Group exerted great efforts to galvanise customer traffic and reduce slow-moving inventories in these regions. The gross margin was about 58.4% (2018: 57.1%) for the six months ended 30 September 2019.

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Operating Expenses and Cost Control

The Group carefully managed expenses during the six months ended 30 September 2019. On controlling rental costs, a major component of its operating expenses, the Group regularly reviewed the performance of each retail store and consolidated under-performing shops. At the same time, the Group was cautious in identifying appropriate sites to re-allocate certain shops to less costly locations to strike a balance between prospective sales opportunities and cost efficiency. Lease expenses (including rental expenses, depreciation of right-of-use assets and related interest expenses on lease liabilities) decreased slightly to about HK$134.0 million (2018: HK$138.2 million), which accounted for about 39.5% (2018: 38.6%) of the Group's total operating expenses for the period under review. To attain a lower cost structure, the Group has adopted an ongoing practice of strategically relocating, consolidating and converting its retail portfolio. Besides, in view of the recent social unrest in Hong Kong since June 2019 adversely and severely affecting the retail business environment, the Group has proactively been re-negotiating rental and other lease terms with landlords.

Efforts to control costs in other areas are also important. The regular review on work procedures and performance is in place to raise effectiveness and to eliminate any inefficiency. As a result of the contraction of retail networks in certain regions with unsatisfactory business performance and a series of cost-cutting schemes implemented since August 2019, the total number of staff has been reduced by about 17.8% to 1,042 as at 30 September 2019 (31 March 2019:1,268) and the staff cost also dropped to approximately HK$99.0 million (2018: HK$108.9 million) during the period under review.

Depreciation charges of the owned assets was about HK$23.3 million (2018: HK$22.7 million) for the period under review. Marketing and advertising spending remained comparable with the same period last year at approximately HK$13.6 million (2018: HK$13.5 million), representing about 3.3% (2018: 2.6%) of the Group's turnover. The Group intended to exert marketing efforts wisely on key brands and products to capture optimum promotional benefits.

The Group's overall operating expenses declined by about 5.2% to approximately HK$339.2 million (2018: HK$357.7 million) during the period under review.

Net Loss

The Group incurred a net loss for the six months ended 30 September 2019 of about HK$95.2 million (2018: HK$55.9 million). The unfavourable results were primarily attributed to stagnant sales performance in its core markets, particularly in Hong Kong and Taiwan.

SEASONALITY

Seasonality has heavy bearing on the sales and results of the Group as its track record shows. The first half of each financial year has historically been less important than the second half. In general, more than 50% of the Group's annual sales and most of its net profit are derived from the second half of the financial year, within which the holiday seasons of Christmas, New Year and the Lunar New Year fall.

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CAPITAL STRUCTURE

As at 30 September 2019, the Group had net assets of approximately HK$620.0 million (31 March 2019: HK$741.7 million), comprising non-current assets of approximately HK$665.2 million (31 March 2019: HK$319.0 million), net current assets of approximately HK$167.6 million (31 March 2019: HK$429.1 million) and non-current liabilities of approximately HK$212.8 million (31 March 2019: HK$6.4 million).

LIQUIDITY AND FINANCIAL RESOURCES

As at 30 September 2019, the Group had cash and bank balances of approximately HK$136.5 million (31 March 2019: HK$198.7 million). At the end of the reporting period, the Group had aggregate banking facilities of approximately HK$174.7 million (31 March 2019: HK$174.7 million) comprising an interest-bearing bank overdraft, revolving loans, rental and utility guarantees as well as import facilities, of which approximately HK$167.8 million had not been utilised (31 March 2019: HK$170.4 million). The Group had no bank borrowing as at 30 September 2019 (31 March 2019: Nil) and hence, the gearing ratio at the end of the reporting period, representing a percentage of total interest-bearing bank borrowing to total assets, was 0% (31 March 2019: 0%).

CASH FLOWS

For the six months ended 30 September 2019, net cash flows from operating activities was about HK$76.5 million (2018: cash flows used in operating activities of about HK$61.3 million). The increase was mainly due to the repayment of lease liabilities being included in financing activities upon the adoption of HKFRS 16. Net cash flows used in investing activities reduced substantially by about 68.1% to approximately HK$14.1 million (2018: HK$44.2 million) mainly due to a significant decrease in capital expenditure for store renovation and new shop openings. Net cash flows used in financing activities was approximately HK$121.1 million (2018: HK$27.6 million), which consisted of the repayment of lease liabilities of about HK$99.1 million and the payment of 2019 final dividends of about HK$22.0 million.

SECURITY

The Group's general banking facilities were secured by its land and buildings situated in Hong Kong, which had an aggregate carrying value at the end of the reporting period of approximately HK$42.0 million (31 March 2019: HK$42.6 million).

COMMITMENTS

The Group had no material capital commitments contracted, but not provided for as at 30 September 2019 (31 March 2019: Nil).

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EVENT AFTER THE REPORTING PERIOD

On 22 November 2019, the Group entered into a provisional sale and purchase agreement with an independent third party to sell a property situated in Hong Kong for an aggregate cash consideration of HK$45.0 million. The transaction is expected to be completed on or before 31 January 2020 and the Group expects to record a gain on disposal of approximately HK$29.8 million (before any related expense) upon completion of the transaction.

CONTINGENT LIABILITIES

As at 30 September 2019, the Group had contingent liabilities in respect of guarantees given in lieu of utility and property rental deposits amounting to approximately HK$5.0 million (31 March 2019: HK$5.0 million).

In addition, the Group early terminated certain leases for properties. Pursuant to the respective lease agreements, the Group might be required to compensate for losses or damages to the respective landlords subject to various conditions. As at the end of the reporting period, it is not practicable to estimate the related losses or damages as the outcome which could determine the compensation is not wholly within the control of the Group. In the opinion of the Directors, the likelihood of an outflow of resources embodying economic benefits by the Group is uncertain.

HUMAN RESOURCES

Including the Directors, the Group had 1,042 (31 March 2019: 1,268) employees as at 30 September 2019. To attract and retain high quality staff, the Group provided competitive remuneration packages with performance bonuses, mandatory provident fund, insurance and medical coverage as well as entitlements to share options to be granted under a share option scheme based on employees' performance, experience and the prevailing market rate. Remuneration packages were reviewed regularly. Regarding staff development, the Group provided regular in-house training to retail staff and subsidised external training programmes for their professional development.

FOREIGN EXCHANGE RISK MANAGEMENT

The Group's sales and purchases during the period under review were mostly denominated in Hong Kong dollars, New Taiwan dollars, Renminbi and Pounds Sterling. The Group has been exposed to certain foreign currency exchange risks but it does not anticipate future currency fluctuations to cause material operational difficulties or liquidity problems. However, the Group continuously monitors its foreign exchange position and, when necessary, will hedge foreign exchange exposure arising from contractual commitments in sourcing apparel from overseas suppliers.

DIVIDEND

The Directors did not declare the payment of an interim dividend for the six months ended 30 September 2019 (2018: Nil).

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PROSPECTS

In the review period, the ongoing trade war between China and the United States, as well as the escalating social movement in Hong Kong, had led to economic uncertainty and deteriorating consumer sentiment around the world, including the markets where the Group operates. In view of the ongoing economic stagnation and uncertainty, the Group will prudently pursue its business development, including streamlining its retail network and reducing inventories, in order to enhance its cash flow and financial strength, thereby providing greater resilience to respond to ever-changing market conditions.

The operations in Hong Kong, Macau and Elsewhere, comprising the major business segment of the Group, was deeply hit by the worsening retail climate, and the escalation of social tension in Hong Kong. Thus, the Group will continue to maintain a prudent approach and consolidate the retail network in the region. However, as high rental expenses still persist, the Group will continue to strategically optimise its cost structure.

The trade dispute, depreciation of the Renminbi and a slowdown of economic growth had adversely impacted Mainland China's retail market. In view of these factors, the Group has stopped its expansion strategy in Mainland China and is also comprehensively reviewing its current retail network, so as to identify and close underperforming stores, in order to realise higher efficiency. The Group will also review the potential of different markets in Mainland China, and identify future engines of its business development when the market resumes growth, especially in the Guangdong-HongKong-Macao Greater Bay Area, which is a strategic focus of China's future economic development.

In Taiwan, with the prolonged weakening of the economic and retail climate, the Group will further extend its efforts to reduce the scale of its operations, and focus on clearing aged and slow-moving inventories. These measures are intended to achieve a more streamlined cost structure, and strengthen its cash position and financial conditions, in order to better prepare for the headwinds moving forward.

Moreover, the Group will further rationalise its workflow so as to bolster its operating efficiency, as well as maintain various expenses, such as staff cost and marketing and advertising expenses, at efficient levels, in order to optimise its cost structure while operating in such a challenging environment.

To conclude, in a sluggish operating environment, as a result of various macroeconomic and social factors, in particular the Sino-US trade war and social tensions in Hong Kong, the Group will focus on rationalising its operations, reducing structural costs, and reinforcing its financial resilience. Meanwhile, the Group will leverage its unique brand portfolio and well- established market standing to enhance its brand awareness and market leadership, helping it to achieve sustainable growth and bring returns to shareholders in the long run.

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CORPORATE GOVERNANCE

The Company has complied with the code provisions set out in the Corporate Governance Code (the "CG Code") as contained in Appendix 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules") throughout the six months ended 30 September 2019 except for not having a separate chairman (the "Chairman") and chief executive officer (the "CEO") of the Company. Both positions are currently held by Mr. Wong Yui Lam ("Mr. Wong").

CG Code Provision A.2.1 stipulates that the roles of chairman and chief executive officer should be separate and should not be performed by the same individual. As the founder of the Group, Mr. Wong has substantial experience in the fashion industry and retail operations. The Directors consider that the present structure provides the Group with strong and consistent leadership which facilitates the development of the Group's business strategies and execution of its business plans in the most efficient and effective manner. The Directors believe that it is in the best interest of the Company and its shareholders as a whole that Mr. Wong continues to assume the roles of the Chairman and the CEO.

CHANGES IN DIRECTORSHIP AND OTHER CHANGES IN DIRECTORS' INFORMATION

Pursuant to Rule 13.51B(1) of the Listing Rules, the changes in directorship and other changes in the information of the Directors since the publication of the annual report of the Company for the year ended 31 March 2019 up to the date of this announcement are set out below:

Name of Director	Details of changes
Madam Tong She Man,	•	Appointed as an executive director and the
Winnie ("Madam Tong")		vice chairlady of the Company with effect
		from 12 September 2019
	•	Madam Tong, aged 60, is the co-founder of
		the Group and the controlling shareholder of
		the Company. She was a former executive
		Director from October 2004 to March 2009.
		Madam Tong has extensive experience in the
		fashion industry. She conceived the concept
		and brand name "SALAD", the second in-

house brand of the Group. Madam Tong was awarded the diploma by Hong Kong Shue Yan College (Department of Journalism) in 1983. Madam Tong is the mother of Ms. Wong Hei Ting and Ms. Wong Hei Man, Frances, both of whom are the senior management of the Group.

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MODEL CODE OF SECURITIES TRANSACTIONS BY DIRECTORS

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 (the "Model Code") to the Listing Rules as its own code of conduct for dealing in securities of the Company by the Directors. Based on specific enquiry with the Directors, all the Directors confirmed that they have complied with the required standards as set out in the Model Code throughout the six months ended 30 September 2019.

PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES

Neither the Company, nor any of its subsidiaries purchased, redeemed or sold any of the Company's listed securities during the six months ended 30 September 2019.

REVIEW OF FINANCIAL INFORMATION

An audit committee of the Company (the "Audit Committee") with written terms of reference comprises three independent non-executive Directors. The Audit Committee has reviewed the accounting principles and practices adopted by the Group, including the review of the Interim Financial Statements for the six months ended 30 September 2019, and discussed risk management, internal control and financial reporting matters.

PUBLICATION OF THE INTERIM RESULTS ANNOUNCEMENT AND INTERIM REPORT

The interim results announcement for the six months ended 30 September 2019 is published on the website of the Company (www.bauhaus.com.hk) and The Stock Exchange of Hong Kong Limited (www.hkexnews.hk). The Company's 2019/20 interim report will be dispatched to the shareholders of the Company and made available on the above websites in due course.

APPRECIATION

On behalf of the Board, I would like to express my deep gratitude to our shareholders, business partners and customers for their unstinting support. I would also like to extend my sincere appreciation to all the Group's employees for their dedication.

By Order of the Board

Bauhaus International (Holdings) Limited

Wong Yui Lam

Chairman

Hong Kong, 30 November 2019

BOARD OF DIRECTORS

As at the date of this announcement, the board of Directors comprises four executive Directors, namely Mr. Wong Yui Lam, Madam Tong She Man, Winnie, Madam Lee Yuk Ming and Mr. Yeung Yat Hang and three independent non-executive Directors, namely Mr. Chu To Ki, Mr. Mak Wing Kit and Mr. Mak Siu Yan.

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