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