SOURCE: SINCERE WATCH (HONG KONG) LIMITED

SINCERE WATCH (HONG KONG) LIMITED

November 29, 2010 22:58 ET

Sincere Watch (Hong Kong) Limited Interim Results Announcement for the Six Months Ended 30 September 2010

HONG KONG--(Marketwire - November 29, 2010) - SINCERE WATCH (HONG KONG) LIMITED (Incorporated in the Cayman Islands with limited liability) (Stock Code: 0444)

FINANCIAL HIGHLIGHTS

--  Turnover for the six months ended 30 September 2010 (H1 FY2011)
    increased by 147.9% to HK$407,344,000 when compared with HK$164,304,000
    for the corresponding period of last year.

--  Gross margin increased from 21.3% to 29.2% mainly due to lower slow
    moving stock provision. Gross profit for the six months ended 30
    September 2010 increased by 240.4% from HK$34,993,000 to
    HK$119,099,000.

--  Profit/Loss after taxation for the six months ended 30 September 2010
    increased from Loss after taxation of HK$27,962,000 to Profit after
    taxation of HK$33,014,000, primarily attributable to improving market
    conditions and decreased provision for the slow moving inventories.

--  Loss per share of 6.9 HK cents in H1 FY2010 increased to Earnings per
    share of 8.1 HK cents in H1 FY2011.

--  Net asset value increased to 67.10 HK cents per share as at 30
    September 2010 vs 60.88 HK cents per share as at 31 March 2010.


INTERIM RESULTS

The board of directors (the "Board") of Sincere Watch (Hong Kong) Limited (the "Company") is pleased to announce the unaudited consolidated results of the Company and its subsidiaries (the "Group") for the six months ended 30 September 2010 (the "Period"), together with the unaudited comparative figures for the corresponding six months ended 30 September 2009.


CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 September 2010

                                              For the Six months ended
                                                     30 September
                                                 2010             2009
                                             (Unaudited)      (Unaudited)
                                    Notes      HK$'000          HK$'000
Turnover                              3            407,344         164,304
Cost of sales                                     (288,245)       (129,311)
                                            --------------  --------------
Gross profit                                       119,099          34,993

Other income                                           499             447
Selling and distribution costs       12            (18,163)         (6,935)
General and administrative expenses  13            (54,876)        (42,446)
                                            --------------  --------------
Profit (loss) before taxation and
 exchange (losses) gains                            46,559        (13,941)

Realised exchange gain (loss)                        7,397         (3,731)

Unrealised exchange loss                           (23,693)       (14,864)

Gain from changes in fair value of
 financial assets designated as at
 fair value through profit or loss                   9,064               -
                                            --------------  --------------

Profit (loss) before taxation                       39,327         (32,536)

Income tax (expense) credit           4             (6,313)          4,574
                                            --------------  --------------

Profit (loss) for the period,
 attributable to owners of the
 company                              5             33,014         (27,962)
                                            ==============  ==============

Other comprehensive income

  Exchange differences on
   translation of foreign
   operations, representing
   other comprehensive income                          518           1,619
                                            --------------  --------------

Total comprehensive income (loss)
 for the period, attributable to
 owners of the company                              33,532         (26,343)
                                            --------------  --------------

Earnings(loss) per share - basic       7      8.1 HK cents  (6.9) HK cents
                                            --------------  --------------





CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

                                            30 September       31 March
                                                2010              2010
                                             (Unaudited)       (Audited)
                                    Notes      HK$'000          HK$'000
Non-current assets
  Property, plant and equipment       8              8,059           8,015
  Intangible assets                                  8,595           9,247
  Deferred tax assets                               23,991          22,877
                                            --------------  --------------
                                                    40,645          40,139
                                            --------------  --------------
Current assets

  Inventories                                      204,539         243,052
  Trade and other receivables         9            124,529         105,379
  Amount due from immediate holding
   company                                              33             132
  Financial assets designated as at
   fair value through profit or loss                 9,064               -
  Taxation recoverable                                  12               -
  Pledged bank deposits                              6,900           6,900
  Bank balances and cash                           273,343         102,121
                                            --------------  --------------
                                                   618,420         457,584
                                            --------------  --------------
Current liabilities
  Trade and other payables           10            367,220         233,327
  Amount due to fellow subsidiaries                  3,841           7,996
  Taxation payable                                  13,801           7,119
                                            --------------  --------------
                                                   384,862         248,442
                                            --------------  --------------

Net current assets                                 233,558         209,142
                                            --------------  --------------

Total assets less current liabilities              274,203         249,281

Non-current liability
  Deferred tax liability                               450             900
                                            --------------  --------------
Net assets                                         273,753         248,381
                                            --------------  --------------

Capital and reserves
  Share capital                                     40,800          40,800
  Reserves                                         232,953         207,581
                                            --------------  --------------

Equity attributable to owners
 of the Company                                    273,753         248,381
                                            ==============  ==============





CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 September 2010

                                                                   Attrib-
                                                                   utable
                                                                  to owners
                                                                   of the
                                                                   Company
                                                 Trans-            -------
                      Share    Share    Special  lation   Retained
                      capital  premium  reserve  reserve  profits
                      HK$'000  HK$'000  HK$'000  HK$'000  HK$'000  Total
                      -------  -------  -------  -------  -------  -------
At 1 April 2010        40,800   59,546      801      827  146,407  248,381
                      -------  -------  -------  -------  -------  -------
2010 Dividend paid          -        -        -        -   (8,160)  (8,160)
                      -------  -------  -------  -------  -------  -------
Exchange difference
 arising from
 translation of
 financial statements
 of foreign operations
 recognised directly
 in equity                                           518        -      518
Profit for the period       -        -        -        -   33,014   33,014
                      -------  -------  -------  -------  -------  -------
At 30 September
 2010 (unaudited)      40,800   59,546      801    1,345  171,261  273,753
                      -------  -------  -------  -------  -------  -------

At 1 April 2009        40,800   59,546      801   (1,052) 141,622  241,717
                      -------  -------  -------  -------  -------  -------
Exchange difference
 arising from
 translation of
 financial statements
 of foreign operations
 recognised directly
 in equity                                         1,619        -    1,619
Loss for the period         -        -        -        -  (27,962) (27,962)
                      -------  -------  -------  -------  -------  -------
At 30 September
 2009 (unaudited)      40,800   59,546      801      567  113,660  215,374
                      -------  -------  -------  -------  -------  -------

Note: The special reserve of the Group represents the difference between
the nominal value of the shares of the acquired subsidiaries and the
nominal value of the Company's shares issued for the acquisition at the
time of the reorganisation during its listing in The Stock Exchange of
Hong Kong Limited.





CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
For the six months ended 30 September 2010

                                                 For the Six months ended
                                                       30 September
                                                   2010             2009
                                               (Unaudited)      (Unaudited)
                                                 HK$'000          HK$'000
Net cash inflow (outflow) from operating
 activities                                         183,580         (8,046)

Net cash used in investing activities                (4,198)          (994)

Net cash used in financing activities                (8,160)             -

                                              -------------  -------------
Net increase (decrease) in cash and cash
 equivalents                                        171,222         (9,040)

Cash and cash equivalents at the beginning
 of the period                                      102,121         77,569

                                              -------------  -------------
Cash and cash equivalents at the end of
 the period                                         273,343         68,529
                                              =============  =============


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS

The unaudited consolidated financial statements for the Period have been prepared in accordance with Hong Kong Financial Reporting Standards (the "HKFRSs") issued by the Hong Kong Institute of Certified Public Accountants, accounting principles generally accepted in Hong Kong including compliance with Hong Kong Accounting Standard ("HKAS") 34 "Interim financial reporting" and with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (The "Listing Rules"). The financial statements are presented in Hong Kong dollars, which is also the functional currency of the Company.

The Company's ultimate holding company is Sincere Holdings Limited, ("SHL"), a company incorporated in the Cayman Islands and controlled by a consortium of investors. The Company's immediate holding company is Sincere Watch Limited ("SWL"), a company incorporated in the Republic of Singapore. On 30 September 2009, SHL announced that it would make a voluntary conditional cash offer for all the issued ordinary shares of SWL and the cash offer has been executed on 22 December 2009.

2. SIGNIFICANT ACCOUNTING POLICIES

The unaudited consolidated financial statements have been prepared on the historical cost basis. The principal accounting policies used in the preparation of the unaudited consolidated financial statements are consistent with those applied in the Group's audited financial statements for the year ended 31 March 2010.

The adoption of HKFRS 3 (Revised 2008) may affect the Group's accounting for business combinations for which the acquisition dates are on or after the beginning of the first annual reporting period beginning on after 1 July 2009. HKAS 27 (Revised 2008) will affect the accounting treatment for changes in the Group's ownership interest in a subsidiary that do not result in loss of control of the subsidiary. Changes in the Group's ownership interest that do not result in loss of control of the subsidiary will be accounted for as equity transactions.

The Group has not early applied new and revised standards, amendments or interpretations that have been issued but are not yet effective. The directors of the Company anticipate that the application of the new and revised standards, amendments or interpretations will have no material impact on the consolidated financial statements of the Group.

3. SEGMENT INFORMATION

The Group has adopted HKFRS 8 "Operating Segments" with effect from 1 April 2009. HKFRS 8 is a disclosure standard that requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker for the purpose of allocating resources to segments and to assessing their performance. The chief operating decision makers of the Group have been identified as the executive directors of the Company (the "Executive Directors"). The adoption of HKFRS 8 has not resulted in a redesignation of the Group's reportable segments as compared with the primary reportable segments determined in accordance with HKAS 14 nor change in measurement of segment results.

The Group determines its operating segments based on the internal reports reviewed by the Executive Directors that are used to allocate resources and assess performance, which are analysed based on the geographical locations of the sales.

Segment results represents the profit before taxation earned by each segment and excluding unallocated other income and unallocated corporate expenses such as central administration costs, selling and distribution costs, exchange gain or loss and directors' salaries. This is the measure reported to the Executive Directors for the purpose of resource allocation and assessment of segment performance.

The Group's principal activity is distribution of branded luxury watches, timepieces and accessories.

An analysis of the Group's turnover and results by operating segments:


For the six months ended 30 September 2010

                       Hong Kong     PRC Other   Other Asian         Total
                                          than     locations  ------------
                                     Hong Kong
                      (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
                         HK$'000       HK$'000       HK$'000       HK$'000
REVENUE
External Sales           319,714        66,987        20,643       407,344
                    ------------  ------------  ------------  ------------
RESULT
Segment results           89,804        23,236         6,059       119,099
                    ------------  ------------  ------------
Unallocated expenses                                               (80,271)
Unallocated income                                                     499
                                                              ------------
Profit before taxation                                              39,327
                                                              ------------

For the six months ended 30 September 2009

                       Hong Kong     PRC Other   Other Asian         Total
                                          than     locations  ------------
                                     Hong Kong
                      (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
                         HK$'000       HK$'000       HK$'000       HK$'000
REVENUE
External Sales           112,382        41,209        10,713       164,304
                    ------------  ------------  ------------  ------------
RESULT
Segment results           14,597        17,104         3,292        34,993
                    ------------  ------------  ------------
Unallocated expenses                                               (67,976)
Unallocated income                                                     447
                                                              ------------
Loss before taxation                                               (32,536)
                                                              ------------


4. INCOME TAX (EXPENSES) CREDIT

                                                 For the Six months ended
                                                       30 September
                                                   2010             2009
                                               (Unaudited)      (Unaudited)
                                                 HK$'000          HK$'000
The charge comprises:
Current tax
  Hong Kong                                          (6,890)             -
  Other jurisdictions                                  (939)          (589)
                                              -------------  -------------
                                                     (7,829)          (589)
Deferred tax                                          1,516          5,163
                                              -------------  -------------
                                                     (6,313)         4,574
                                              -------------  -------------


The provision for Hong Kong Profits Tax is calculated at 16.5% (30 September 2009: 16.5%) of the estimated assessable profits for the Period. Taxation arising in other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.

5. PROFIT (LOSS) FOR THE PERIOD

                                                 For the Six months ended
                                                       30 September
                                                   2010             2009
                                               (Unaudited)      (Unaudited)
                                                 HK$'000          HK$'000
Profit for the period has been arrived at
 after charging:

Directors' remuneration                              10,242          3,707
Other staff costs                                    10,354          7,144
Other staff's retirement benefits
 scheme contributions                                   187            163
                                              -------------  -------------
Total staff costs                                    20,783         11,014
                                              -------------  -------------

Allowances for inventories                            9,084         26,022
Amortisation of intangible assets (included
 in general and administrative expenses)                653            653
Depreciation of property, plant and
 equipment                                            4,197          5,063
Minimum lease payments in respect of rented
 Premises
                                                     21,470         20,793


6. DIVIDEND

The Board has resolved not to declare the payment of any interim dividend for the six months ended 30 September 2010 (30 September 2009: Nil).

Final dividend for the year ended 31 March 2010 amounting to HK$8,160,000 was approved by the shareholders at the annual general meeting held on 27 August 2010 and was paid during the period. (2009: No final dividend was paid in respect of the year ended 31 March 2009.)

7. EARNINGS(LOSS) PER SHARE

The calculation of basic earnings(loss) per share is based on the Profit for the Period of HK$33,014,000 (30 September 2009: Loss HK$27,962,000) and on the number of 408,000,000 shares (30 September 2009: 408,000,000 shares) that have been in issue throughout the Period.

8. MOVEMENTS IN PROPERTY, PLANT AND EQUIPMENT

During the period, the Company spent approximately HK$4,234,000 (30 September 2009: HK$1,000,000) on acquisition of property, plant and equipment.

9. TRADE AND OTHER RECEIVABLES

                                              30 September     31 March
                                                  2010           2010
                                               (Unaudited)     (Audited)
                                                 HK$'000        HK$'000
Trade receivables                                   107,496         74,349
Other receivables                                    17,033         31,030
                                              -------------  -------------
                                                    124,529        105,379
                                              -------------  -------------
The following is an aged analysis
 of trade receivables:
Within 30 days                                       59,886         35,129
31-90 days                                           47,610         38,043
91-120 days                                               -          1,177
Over 120 days                                           484            484
                                              -------------  -------------
                                                    107,980         74,833
Allowance for doubtful debts                           (484)          (484)
                                              -------------  -------------
                                                    107,496         74,349
                                              -------------  -------------


The Group allows a credit period normally ranging from 30 to 90 days to its trade customers.

10. TRADE AND OTHER PAYABLES

                                              30 September     31 March
                                                  2010           2010
                                               (Unaudited)     (Audited)
                                                 HK$'000        HK$'000
Trade payables                                      302,820        194,373
Other payables                                       64,400         38,954
                                              -------------  -------------
                                                    367,220        233,327
                                              -------------  -------------
The following is an aged analysis
 of trade payables:
Within 90 days                                      119,677         87,843
91-365 days                                         149,332         70,825
Over 365 days                                        33,811         35,705
                                              -------------  -------------
                                                    302,820        194,373
                                              -------------  -------------


The amount of trade payables above includes HK$297,891,000 (31 March 2010: HK$193,070,000), HK$413,000 (31 March 2010: HK$227,000) and HK$4,516,000 (31 March 2010: HK$1,008,000) which are denominated in Swiss Franc, Euro and SGD respectively.

11. RELATED PARTY TRANSACTIONS

(a) Transaction

During the Period, the Group had HK$4,065,000 (30 September 2009: HK$4,635,000) purchases from a fellow subsidiary and nil (30 September 2009: HK$425,000) sales to immediate holding company.

(b) Compensation of key management personnel

The remuneration of Directors during the Period was as follows:


                                                 For the Six months ended
                                                       30 September
                                                   2010             2009
                                               (Unaudited)      (Unaudited)
                                                 HK$'000          HK$'000
Directors' Remuneration                              10,242          3,707
                                              -------------  -------------


The remuneration of Directors is determined by the remuneration committee and management respectively having regard to the performance of individuals and market trends.

12. SELLING AND DISTRIBUTION COSTS

The increase in selling and distribution costs was mainly due to higher commission and increased promotional and marketing activities held during the period.

13. GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses comprised mainly rentals, depreciation and staff costs. The increase in general and administrative expenses was mainly due to the increased directors' remuneration and other staff costs.

MANAGEMENT DISCUSSION AND ANALYSIS

FINANCIAL REVIEW

The Group reported a sterling performance for the six months ended 30 September 2010 with Group sales surging 147.9% to HK$407.3 million from HK$164.3 million over the same period last year. The revenue achieved in the period under review was about 92% of the total sales of the full year ended March 2010 (FY2010).The surge in sales was due to improved market conditions and rebounded economy.

Gross profits also leapt by 240.3 per cent to HK$119.1 million from HK$35.0 million over the same period last year. The gross profits over sales improved to 29.2% from 21.3% due to improved sales and lower stock provision.

The Group's profit before tax and exchange differences also rebounded strongly to HK$46.6 million -- against a loss of HK$13.9 million in the same period last year.

Spurred by the higher revenue and margins, the Group reported an interim net profit of HK$33.0 million -- reversing a loss of HK$28.0 million in the same period of the last financial year. It was almost seven times higher than the net profit of HK$4.8 million for the whole of FY2010.

The Group's interim net profit surge was achieved despite unrealised foreign exchange losses and higher selling and distribution expenses and administrative expenses. These forex losses went up 59% to HK$23.7 million from HK$14.9 million in the same period last year.

Excluding the realised and unrealised exchange differences, the Group's net profit was about HK$40.2 million for the six-month period ended 30 September 2010.

Such foreign exchange difference arose from trade payables denominated in foreign currencies, which were translated at the exchange rates prevailing at the balance sheet dates and any differences in valuation were then recognised in the income statement as unrealised gains or losses.

Selling and distribution expenses increased mainly due to higher commission and increased promotional and marketing activities held during the period. General and Administrative expenses also went up mainly because of increased directors' remuneration and other staff costs.

Inventory levels declined 15.8% from HK$243.1 million to HK$204.5 million in the period under review due to the increase in sales volume.

The performance of the Group reflected the continued robust recovery in the regions economy and the improved overall business climate, resulting in a strong comeback of consumer demand in all of the Group's key markets. The Group's growth in the past six months was also spurred by accelerated growth in the luxury industry in Asia and the delivery of new watch models.

Group Net Asset Value per share (NAV) rose by about 10.2% to 67.10 HK cents from 60.88 HK cents in the same period last year.

Group earnings per share (EPS) for the first six months ended 30 September 2010 returned to the black at HK$0.081 or 8.1 HK cents against a loss per share of HK$0.0685 or 6.9 HK cents in the same period last year. The Group's EPS for the full year FY2010 was 1.2 HK cents.

Performance by Geographical markets

All its markets recorded stronger profit performances.

Hong Kong

Hong Kong continues to be the Group's major market, accounting for 78.5% of the Group's revenue in the six months ended 30 September 2010. Performance in this market recorded the greatest increase in revenue. Sales surged almost two folds or 185% to HK$319.7 million from HK$112.4 million in the previous period

PRC other than Hong Kong

PRC and Macau accounted for about 16.4% of the Group's revenue in the first six months of the year ended 30 September 2010. Sales in this region jumped to HK$67.0 million, up 62.6% from HK$41.2 million in the same period last year.

This region's percentage contribution to the Group's total sales declined as the rate of sales growth was lower than Hong Kong. The PRC and Macau market accounted for about 25.1% of Group total sales in the same period last year.

Other Asian locations

Sales from the other Asian territories (including Taiwan and Singapore) rebounded strongly.

Revenue from the other Asian markets doubled to reach HK$20.6 million from HK$10.7 million in the previous corresponding period.

This region's contribution to the Group's overall revenue has decreased to about 5.1% against about 6.5% of Group total revenue in the same period last year.

Taiwan has seen a rebound in the business mainly due to recovery of the economy and changes made to the distribution mix and improvement in the Franck Muller boutique's performance. The boutique has seen a marked improvement with half year turnover already over last year full year's performance.

BUSINESS REVIEW

The Group is the sole distributor of Franck Muller watches and accessories in Hong Kong, Macau and the PRC. We also represent five other exclusive luxury brands -- de Grisongono, CVSTOS, Pierre Kunz and European Company Watch and the latest addition -- Backes & Strauss.

Backes & Strauss was launched into the market in September with a presentation to key media and will be available in the Hong Kong from October.

The Group increased its overall brand portfolio as it focused its attention on expanding its market share in North Asia, by growing its distribution network of independent watch retailers and its own operated mono-brand boutiques. These mono-brand boutiques form a vital part of the Group's brand management strategy, as they are located in prime shopping areas and act as a showcase for the exclusive luxury brands that the Group represents.

New tie ups with key retail operators such as Chow Tai Fook allowed the group high exposure opportunities in high end heavy foot fall areas. This will also give access to their retail chain in China in the future.

Distribution network and market penetration

The Group has an extensive network of 46 points of sales in the region run by 23 independent watch dealers throughout North Asia -- including Hong Kong, Macau, the PRC and Taiwan.

The Group has consistently undertaken niche marketing initiatives to underscore the wow factor of its global watch brands and to delight its customers. This included several unique events in China -- one of the world's fastest growing markets for luxury watches.

The Group has also expanded its range of watch brands under its portfolio. It launched a new brand, Backes & Strauss, in September 2010. Backes & Strauss, founded in the UK in 1789, combines a genius for horology with a passion for diamonds; and it has produced some of the world's finest and most luxurious watch collections.

With the addition of this brand, the Group now has 6 key watch brands: Franck Muller, de Grisogono, CVSTOS, Pierre Kunz, European Company Watch and Backes & Strauss.

In the period under review, the Group also undertook several high profile events to launch new watch collections. These included the Franck Muller "Liberty" series of watches with in-house produced self-winding movements -- which represent a major breakthrough for the Franck Muller manufactory, giving them less dependence on external sourcing.

The Group held media presentations in Beijing and Shanghai in June 2010 to launch the Liberty series.

In Taiwan, a presentation to the media was made to show the new collections launched earlier in the year in Geneva.

In the period under review, the Group has maintained its strong distribution network. The Group has opened four new points of sales in Hong Kong while closing two underperforming sales outlets.

Brand enhancement activities

The Group also continued to reinforce its brand leadership with the introduction of new POS display units, light boxes focused product placements in relevant media. Two new advertising layouts were introduced concentrating on the Infinity and Liberty collection.

PROSPECTS

The centre of gravity of the luxury business is shifting rapidly to Asia with China forecasted to be the world's largest luxury market in the next few years (source: Boston Consulting Group)

The latest figures from the Federation of the Swiss Watch Industry reinforced Asia's eminent position as the main engine of growth for the Swiss watch industry. Asia, including the Middle East, took the lion's share of about 51% of the total value of all Swiss watch imports at the end of September 2010. The same report showed Hong Kong as the top destination of most Swiss watch industry products, capturing 19.4% of total world imports amounting to CHF 279 million -- outpacing other leading markets such as U.S. and Japan.

The demand for Swiss watches in Asia was such that Hong Kong surpassed the United States and Europe as the world's top market for Swiss watches for three consecutive years since 2007.

By September 2010, Hong Kong and China posted a year-on-year increase of 50.3% and 35.5% respectively in Swiss watch imports.

The Group's other markets such as Singapore and Taiwan also showed robust rises in demand for Swiss watches -- registering growth of 27.8% and 21.2% respectively.

The Group's ultimate holding company, Sincere Holdings Limited, is now controlled by a consortium of investors including Triple A Enterprises Pte Ltd (which is owned by Mr. Tay Liam Wee -- Executive Chairman of Sincere Watch Ltd), Standard Chartered Private Equity Limited, L Capital Sincere Cayman Limited (a member of the world's top luxury group -- LVMH), and a group of banks. With the resources of this global consortium and in the light of the improved outlook, the Group is optimistic of its prospects in the coming months.

The Group will take advantage of the strong rebound in consumer sentiment and the sustained global economic recovery to bring forth new initiatives to expand market share and grow its business network.

The Group is looking into setting up new boutiques and the appointment of distribution partner in China.

LIQUIDITY, FINANCIAL RESOURCES AND GEARING RATIO

As at 30 September 2010, the Group strengthened its healthy financial position with cash and bank deposits, including pledged bank deposit, up 157% to reach HK$280.2 million from HK$109.0 million, as of 31 March 2010. The cash level also represents a substantial increase of 272% from HK$75.4 million (as at 30 September 2009). The Group also has no outstanding bank loan.

The Group generally finances its operations and investing activities with internally generated cash flows. As at 30 September 2010, the Group's net current asset rose 11.7% to HK$233.6 million from HK$209.1 million as the end of March 2010. This is also a 32.9% improvement compared to HK$175.8 million recorded on 30 September 2009. The directors believe the Group's existing financial resources are sufficient to fulfill its commitments and current working capital requirements.

CAPITAL STRUCTURE AND FOREIGN EXCHANGE EXPOSURE

The income of the Group is mainly denominated in Hong Kong Dollars and the Group has adequate recurring cash flow to meet the working capital needs.

The Group recorded realised exchange gain of HK$7.4 million as at end September 2010 compared to a loss of HK$3.7 million in the same period last year. In addition, the Group had unrealised exchange loss of about HK$23.7 million in the first half ended 30 September 2010 against an unrealised exchange loss of about HK$14.9 million recorded in the same period last year. Besides, the Group recorded HK$9.1 million gain from changes in fair value of financial assets designated as at fair value through profit or loss, which represents the "mark-to-market" gain on foreign currency forward contracts.

The Group pursued a prudent policy on financial risk management and the management of foreign currencies and interest rate. The Group benefits from favourable payment terms from its suppliers that may result in unrealised gain or losses from time to time in applying Hong Kong Accounting Standard 21 "The Effects of Changes in Foreign Exchange Rates."

CHARGE ON ASSETS

The Group had a pledged bank deposit of HK$6,900,000 as at 30 September 2010 (31 March 2010: HK$6,900,000) to secure undrawn banking facilities.

SIGNIFICANT ACQUISITION OF SUBSIDIARY

No significant acquisition of subsidiary was made in the current period.

FUTURE PLANS FOR MATERIAL INVESTMENTS AND CAPITAL ASSETS

There was no definite future plan for material investments and acquisition of material capital assets as at 30 September 2010.

CONTINGENT LIABILITIES

The Group did not have any contingent liabilities as at 30 September 2010.(31 March 2010: Nil)

STAFF AND EMPLOYMENT

As at 30 September 2010, the Group's work force stood at 72 including directors. (31 March 2010: 72)

Employees were paid at market rates with discretionary bonus and medical benefits and covered under the mandatory provident fund scheme. The Group is constantly reviewing its staff remuneration to ensure it stays competitive with market practice.

DIRECTORS' INTERESTS IN SHARES

At 30 September 2010, none of the directors, chief executives, nor their associates had any interests or short positions in any shares, underlying shares or debentures of the Company or any of its associated corporations as recorded in the register maintained by the Company pursuant to Section 352 of the Securities and Futures Ordinance ("SFO"), or as otherwise notified to the Company and The Stock Exchange of Hong Kong Limited (the "Stock Exchange") pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers.

SUBSTANTIAL SHAREHOLDERS

At 30 September 2010, the following persons (other than the interests disclosed above in respect of directors or chief executives of the Company) had interests in the share capital of the Company as recorded in the register required to be kept by the Company pursuant to Section 336 of the SFO:


                                                              Percentage of
                                               Number of      shareholding
Name                           Capacity       shares held    in the Company
-----------------------------  ------------  --------------  --------------
                                                (Note 1)

Sincere Watch Limited ("SWL")  Beneficial    306,000,000 (L)       75%
                               owner
                               (Note 2)

Sincere Holdings Limited       Interest of   306,000,000 (L)       75%
                               a controlled
                               corporation
                               (Note 3)

Chartered Asset Management     Investment     27,408,000 (L)     6.72%
 Pte Ltd.                      manager

CAM-GTF Limited                Investment     24,637,000 (L)     6.04%
                               fund
Notes:

1. The letter "L" denotes the person's long position in the shares.

2. These 306,000,000 shares of the Company are registered in the name of
   and beneficially owned by SWL.

3. Sincere Holdings Limited is deemed to be interested in the 306,000,000
   shares of the Company as referred to in Note 2 above as it holds more
   than one-third of the issued share capital of SWL.


Other than as disclosed above, the Company has not been notified of any other relevant interests or short positions in the shares or underlying shares of the Company as at 30 September 2010.

COMPLIANCE WITH CODE ON CORPORATE GOVERNANCE PRACTICES AND MODEL CODE

The Company has complied with the code provisions set out in the Code on Corporate Governance Practices ("Code") contained in Appendix 14 to the Listing Rules during the Period save that Mr. Tay Liam Wee, the Chairman of the Company, did not attend the annual general meeting of the Company held on 27 August 2010 as he was engaged in other business of the Company. In accordance with the Code, Mr. Tay Liam Wee should attend the annual general meeting of the Company. The annual general meeting was chaired by Mr. Chau Kwok Fun, Kevin, the Vice Chairman and Executive Director of the Company.

AUDIT COMMITTEE

The Audit Committee has reviewed the Group's unaudited financial statements for the six months ended 30 September 2010.

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

The Company has not redeemed any of its shares and neither the Company nor any of its subsidiaries has purchased or sold any of the shares of the Company during the six months ended 30 September 2010.

PUBLICATION OF FURTHER INFORMATION ON THE STOCK EXCHANGE'S WEBSITE

The interim report containing all the information required by the Listing Rules will be published on the Stock Exchange's website and the Company's website in due course.

By order of the Board

Tay Liam Wee

Chairman

Hong Kong, 24 November 2010

As at the date of the announcement, the Executive Directors are Mr. Tay Liam Wee, Mr. Chau Kwok Fun, Kevin and Ms. Tay Liam Wuan; the Non-executive Director is Mr. John Howard Batchelor and the Independent Non-executive Directors are Mr. Lew, Victor Robert, Dr. King Roger and Mr. Lam Man Bun, Alan.

Contact Information

  • Contacts:
    Ms Tham Moon Yee
    Stratagem Consultants Pte Ltd
    Tel: +65-62270502
    Email : Email Contact

    Mr Lee Yew Meng
    Stratagem Consultants Pte Ltd
    Tel: +65-62270502
    Email: Email Contact