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Nature Home Profit for FY2017 Surges by 28 times to RMB53.46 million

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Nature Home Profit for FY2017 Surges by 28 times to RMB53.46 million

Considerable Rise of 80.8% in Basic Earnings per Share

Sales Volumes of Flooring Products Reached Record High of 35 million sq. m. 

Financial Highlights

  • Revenue increases by 10.1% to approximately RMB2.55 billion (2016: approximately RMB2.32 billion)
  • Gross profit increased by 20.4% to approximately RMB777 million (2016: approximately RMB645 million)
  • Profit before taxation increased by 1.3 times to approximately RMB137 million (2016: approximately RMB59 million)
  • EBITDA increased by 64.1% to approximately RMB228 million (2016: approximately RMB139 million)
  • Profit for the Year Increased by 28.3 times to RMB53.47 million (2016: approximately RMB1.82 million)
  • Profit attributable to equity shareholders of the Company increased by 78.1% to approximately RMB68.18 million (2016: approximately RMB38.28 million)
  • Basic earnings per share increased by 80.8% to RMB0.047 (2016: RMB0.026)

 HONG KONG, CHINA – Media OutReach – 29 March 2018 – Nature Home Holding Company Limited (“Nature Home” or the “Company”, together with its subsidiaries, the “Group”; HKEx Stock Code: 2083), announced its audited annual results for year ended 31 December 2017 (the “Year”).

Benefiting from the steady growth of the overall economy and the real estate market in the People’s Republic of China (”PRC”), the Group achieved encouraging growth in overall sales. The Group’s overall turnover increased by 10.1% to RMB2.55 billion when compared to last year, which was mainly attributable to the net effect of (i) the increase in revenue from flooring products in the PRC; and (ii) the decrease in revenue from trading of timber resulted from a one-off clearance sale of inventories in Peru in 2016. Profit for the Year surged significantly by 28.3 times to RMB53.47 million from RMB1.82 million in 2016. The EBITDA and the profit attributable to shareholders were 64.1% and 78.1% respectively higher than those in 2016.

Due to the continuous growth in the sales of home decoration products of the Group in the PRC, manufacturing and sale of home decoration products, the Group’s core business, recorded an increase in sales amounts of 21.8% to approximately RMB2.03 billion. Among which, total sales volumes of flooring products consecutively reached a record high of approximately 35,000,000 square meters, representing an increase of 15.2% as compared to last year, boosting revenue from flooring products in the PRC (arising from manufacturing and sales of self-manufactured flooring products, fees income from authorised flooring products manufacturers and trading of flooring products) increased by 20.8% from approximately RMB1.52 billion in last year to approximately RMB1.911 billion for the Year. 

Mr. Se Hok Pan, Chairman of Nature Home said, “During the Year, we continued to restructure and optimise our sales channels and business, bringing in satisfactory result for flooring products business. In order to meet the needs of wider range of customers, the Group also continued to launch new home decoration products actively during the Year, such as kitchen and bathroom floorings, underfloor heating floorings, and water-based paint wooden doors. Furthermore, we had deepened the business development of wooden doors, wardrobes and cabinets, and established a number of sub-brands to further tap into the home decoration products market.”

On 1 Dec 2017, the Group has sold the entire issued share capital of the Nature Flooring (Europe) Company Limited and ceased to be engaged in trading of timbers business. This allows the Group to focus on the business of home decoration products, which mainly comprise of floorings, wooden doors, wardrobes, cabinets and wall paper. As at 31 Dec 2017, the Group has 3,604 flooring stores, 547 stores for wooden doors, 148 wardrobe and cabinet stores and 591 wall paper stores. Meanwhile, it currently owns 5 production plants for flooring products, 2 production plants for wooden door products, 2 production plants for wardrobes and cabinets products, and 1 production plants for wall papers products. To cope with market needs, the Group is now constructing two new plants to produce kitchen and bathroom floorings and laminated floorings, while an existing floor production plant is being transformed into a wooden door production plant.

Looking ahead, Mr. Se added, “We will move on to develop more diversified products that integrate environmental protection and smart home concept based on the household product strategy and provide consumers with environmental-friendly and smart products. Moreover, the Group will continue to strengthen its internal management and integrate its resources with an aim to improve product quality and operational efficiency comprehensively. We anticipate that the proportion of affordable housing and hardbound housing in the real estate market of the PRC will further increase in the future. In addition, benefiting from rising consumer spending in the PRC market, the demand for renovation will increase substantially. Therefore, we consider that the domestic home decoration product market in the PRC will continue to grow rapidly. We will seize this opportunity to increase our market share continuously to maintain our leading position in the flooring market and explore other home decoration product markets to create more values for our shareholders.”

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Bringing finance into the 21st Century – How COVID and collaboration are catalysing digital transformation

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Bringing finance into the 21st Century – How COVID and collaboration are catalysing digital transformation 1

By Keith Phillips, CEO of TISATech

If just six or seven months ago someone had told you that in a matter of weeks people around the world would be locked down in their homes, trying to navigate modern work systems from a prehistoric laptop, bickering with family over who’s hogging the Wi-Fi, migrating online to manage all financial services digitally, all while washing their hands every five minutes in fear of a global pandemic… You’d think they had lost their mind. But this very quickly became the reality for huge swathes of the world and we’re about to go through that all over again as the UK government has asked that those who can work from home should.

Unsurprisingly, statistics show that lockdown restrictions introduced by the UK government in March, led to a sharp increase in people adopting digital services. Banks encouraged its customers to log onto online banking, as they limited (and eventually halted) services at branches. This forced many customers online as their primary means of managing personal finances for the first time.

If anyone had doubts before, the Covid-19 pandemic proved to us the importance of well-functioning, effective digital financial services platforms, for both financial institutions and the people using them.

But with this sudden mass online migration, it’s become clear that traditional banks have struggled to keep up with servicing clients virtually. Legacy banking systems have always stilted the digitisation of financial services, but the pandemic thrust this issue into the limelight. Fintech firms, which focus intently on digital and mobile services, knew it was only a matter of time before financial institutions’ reliance was to increase at an unprecedented rate.

For years, fintechs have been called upon by traditional players to find solutions to problems borne from those clunky legacy systems, like manual completion of account changes and money transfers. Now it is the demand for these services to be online coupled with the need for financial services firms to cut costs, since Covid-19 hit the economy.

Covid-19 has catalysed the urgent need to bring digital transformation to a wider pool of financial services businesses. Customers now have even higher expectations of larger institutions, demanding that they keep up with what the younger and more nimble challengers have to offer. Industry leaders realise that they must transform their businesses as soon as possible, by streamlining and digitising operations to compete and, ultimately, improve services for their customers.

The race for digital acceleration began far before the recent pandemic – in fact, following the 2008 financial crisis is likely more accurate. Since the credit crunch, there has been a wave of new fintech firms, full of young, bright techies looking to be the next big thing. Fintechs have marketed themselves hard at big conferences and expos or by hosting ‘hackathons’, trying to prove themselves as the fastest, most innovative or the most vital to the future of the industry.

However, even during this period where accelerating innovation in online financial services and legacy systems is crucial, the conditions brought about by the pandemic have not been conducive to this much-needed transformation.

The second issue, which again was clear far before the pandemic, is that fact that no matter how nimble or clever the fintechs’ solutions are, it is still hard to implement the solutions seamlessly, as the sector is highly fragmented with banks using extremely outdated systems populated with vast amounts of data.

With the significance of the pandemic becoming more and more clear, and the need for better digital products and services becoming more crucial to financial services firms and consumers by the day, the industry has finally come together to provide a solution.

The TISAtech project was launched last month by The Investing and Saving Alliance (TISA), a membership organisation in the UK with more than 200 leading financial institutions as members. TISA asked The Disruption House, a specialist benchmarking and data analytics business, to create a clearing house platform for the industry to help it more effectively integrate new financial technology. The project aims to enhance products and services while reducing friction and ultimately lowering costs which are passed on to the customers.

With nearly 4,000 fintechs from around the world participating, it will be the world’s largest marketplace dedicated to Open Finance, Savings, and Investment.

Not only will it provide a ‘matchmaking’ service between financial institutions an fintechs, it will also host a sandbox environment. Financial institutions can pose real problems with real data and the fintechs are given the space to race to the bottom – to find the most constructive, cost-effective solution.

Yes, there are other marketplaces, but they all seem to struggle to achieve a return on investment. There is a genuine need for the ‘Trivago’ of financial technology – a one stop shop, run by an independent body, which can do more than just matchmaking. It needs to go above and beyond to encompass the sandboxing, assessments, profiling of fintechs to separate the wheat from the chaff, and provide a space for true collaboration.

The pandemic has taught us that we are more effective if we work together. We need mass support and collaboration to find solutions to problems. Businesses and industries are no different. If fintechs and financial institutions can work together, there is a real chance that we can start to lessen the economic hit for many businesses and consumers by lowering costs and streamlining better services and products. And even if it is just making it that little bit easier to manage personal finances from home when fighting with your children for the Wi-Fi, we are making a difference.

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What to Know Before You Expand Across Borders

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What to Know Before You Expand Across Borders 2

By Sean King, Director of International Tax at McGuire Sponsel

The American retail giant, Target Corporation, has a market cap of $64 billion and access to seemingly limitless resources and advisors. So, when the company engaged in its first global expansion, how could anything possibly go wrong?

Less than two years after opening its first Canadian store in 2013, Target shut down all133 Canadian locations and terminated more than 17,000 Canadian employees.

Expansion of an operation to another country can create unique challenges that may impact the financial viability of the entire enterprise. If Target Corporation can colossally fail in its expansion to Canada, how might Mom ‘N’ Pop LLC fare when expanding into Switzerland, Singapore, or Australia?

Successful global expansion requires an understanding of multilayered taxes, regulatory hurdles, employment laws, and cultural nuances. Fortunately, with the right guidance, global expansion can be both possible and profitable for businesses of any size.

Permanent establishment

Any company with global ambitions must first consider whether the company’s expansion outside of the U.S. will give rise to a taxable presence in the local country. In the cross-border context, a “permanent establishment” can be created in a local country when the enterprise reaches a certain level of activity, which is problematic because it exposes the U.S. multinational to taxation in the foreign country.

Foreign entity incorporation

To avoid permanent establishment risk, many U.S. multinationals choose to operate overseas through a formal corporate subsidiary, which reduces the company’s foreign income tax exposure, though it may result in an additional level of foreign income tax on the subsidiary’s earnings. In most jurisdictions, multinationals can operate their business in the foreign country as a branch, a pass through (e.g., partnership,) or a corporation.

As a branch, the U.S. multinational does not create a subsidiary in the foreign country. It holds assets, employees, and bank accounts under its own name. With a pass through, the U.S. multinational creates a separate entity in the foreign country that is treated as a partnership under the tax law of the foreign country but not necessarily as a partnership under U.S. tax law.

U.S. multinationals can also create corporate subsidiaries in the foreign country treated as corporations under the tax law of both the foreign country and the U.S., with possibly two levels of income taxation in the foreign country plus U.S. income taxation of earnings repatriated to the U.S. as dividends.

Check-the-box planning

Under U.S. entity classification rules, certain types of entities can “check the box” to elect their classification to be taxed as a corporation with two levels of tax, a partnership with pass-through taxation, or even be disregarded for U.S. federal income tax purposes. The check the box election allows U.S. multinationals to engage in more effective global tax planning.

Toll charges, transfer pricing and treaties

When establishing a foreign corporate subsidiary, the U.S. multinational will likely need to transfer certain assets to the new entity to make it fully operational. However, in many cases, the U.S. multinational cannot perform the transfer without recognizing taxable income. In the international context, the IRS imposes certain outbound “toll charges” on the transfer of appreciated property to a foreign entity, which are usually provided for in IRC Section 367 and subject to various exceptions and nuances.

Instead, the U.S. multinational may prefer to license intellectual property to the foreign subsidiary for a fee rather than transfer the property outright. However, licensing requires the company and foreign subsidiary to adhere to transfer pricing rules, as dictated by IRC Section 482. The U.S. multinational and the foreign subsidiary must interact in an arms-length manner regarding pricing and economic terms. Furthermore, any such arrangement may attract withholding taxes when royalties are paid across a border.

Are you GILTI?

Certain U.S. multinationals opt to focus on deferring the income recognition at the U.S. level. In doing so, they simply leave overseas profits overseas and delay repatriating any of the earnings to the U.S.

Despite the general merits of this form of planning, U.S. multinationals will be subject to certain IRS anti-deferral mechanisms, commonly known as “Subpart F” and GILTI. Essentially, U.S. shareholders of certain foreign corporations are forced to recognize their pro rata share of certain types of income generated by these foreign entities at the time the income is earned instead of waiting until the foreign entity formally repatriates the income to the U.S.

The end goal

Essentially, all effective international tax planning boils down to treasury management. Effective and early tax planning can properly allow a company to better achieve its initial goal: profitability.

If global expansion is on the horizon for your company, consult a licensed professional for advice concerning your specific situation.

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Pandemic risks eclipse treasury priorities as businesses diversify investments to mitigate impact

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The Covid-19 pandemic has shunted aside existing challenges to sit atop treasurers’ priority lists, according to “The resilient treasury: Optimising strategy in the face of covid-19”, a survey run by the Economist Intelligence Unit (EIU) and sponsored by Deutsche Bank.

The results show that treasurers are looking to diversify their investments in a bid to mitigate the pandemic impacts, including heightened liquidity, foreign-exchange and interest-rate risk. As many as 55% plan to increase investments in long-term instruments, with 48% increasing investments in bank deposits, another 48% in local investment products, and 47% in money-market funds.

“The Covid-19 pandemic has drastically altered business plans in 2020. It has placed a certain level of strain on treasury processes, but the challenge it presents has been managed by traditional treasury skills. It is clear that pandemic risk will be on the treasury checklist for years to come, but it is one of many risks the department faces and will continue to manage,” says Melanie Noronha, the EIU editor of the report.

Despite Covid-19 looming large, other challenges wait in the wings. Notably, the replacement of the London Interbank Offered Rate was identified by 38% of respondents as the main challenge of their function.

Technology, meanwhile, continues to be a pressing issue, with treasury teams becoming increasingly reliant on IT solutions. Here, data quality is rising up the list of concerns. Already highlighted as very or somewhat concerning in 2019 by 69% of respondents, the figure rose to 78% in 2020. Acquiring the necessary skill sets to realise the full benefits of this data and technology is also a continuing priority – with some progress registered from last year. In 2020, 30% of respondents say they have all the skills they need to manage technological change, up from 22% in 2018.

“Treasury’s focus on technology is not only helping teams operate more efficiently in a remote-working environment, it has long played – and continues to play – a key role in realising their long-term priorities,” notes Ole Matthiessen, Head of Cash Management, Corporate Bank, Deutsche Bank. The survey shows that

Release 1 | 2  managing relationships with banks and suppliers (highlighted by 32% of respondents) and collaborating with other functions of the business (also 32%) remain top of the agenda – and seamless digital systems will help give treasurers the bandwidth and insight to be more effective partners for both internal and external stakeholders.

Based on a global survey of 300 treasury executives, conducted between April and May, the survey explores stakeholders’ attitudes among corporate treasurers towards the drivers of strategic change in the treasury function – from the pandemic through to regulation and technology – and their priorities for the next five years.

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