Apollo Future Mobility Group Limited - Annual Report 2015

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

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O Luxe Holdings Limited 奧立仕控股有限公司

(formerly known as Ming Fung Jewellery Group Limited ( 明豐珠寶集團有限公司 *)) (Incorporated in the Cayman Islands with limited liability)

(Stock code: 860)

ANNUAL RESULTS ANNOUNCEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2015

The board (the “Board”) of directors (the “Directors”) of O Luxe Holdings Limited (the “Company”) is pleased to announce the audited consolidated results of the Company and its subsidiaries (collectively, the “Group”) for the year ended 30 September 2015, together with the comparative figures for the year ended 30 September 2014, as follows:

For identification purpose only

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CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the year ended 30 September 2015

Notes Revenue 4 Cost of sales Gross profit (loss) Change in fair value of contingent consideration receivable 14 Other revenue and net gains 5 Selling and distribution expenses Administrative expenses Amortisation of intangible assets 11 Fair value loss on held-for-trading investments Impairment loss on goodwill 13 Impairment loss on intangible assets 11 Impairment loss on property, plant and equipment Impairment loss of trade and other receivables Loss on deregistration/disposal of subsidiaries Property, plant and equipment written-off Loss from operating activities 6 Finance costs 7 Loss before taxation Income tax credit 8 Loss for the year Other comprehensive expenses Items that may be classified subsequently to profit or loss: Exchange difference arising on translation of foreign operations Exchange reserve realised upon disposal of subsidiaries Total other comprehensive expenses for the year Total comprehensive expenses for the year	2015 *HK$’000* 365,201 (283,853) 81,348 53,277 9,084 (34,903) (48,121) (26,803) (42,316) (79,317) (37,369) (25,247) (64,715) (146) (80) (215,308) (4,270) (219,578) 13,957 (205,621) (27,807) – (27,807) (233,428)	2014 HK$’000 1,207,105 (2,069,595) (862,490) 4,739 309 (54,766) (39,307) (12,415) – (53,943) (68,920) – (39,100) (17,980) (3,457) (1,147,330) (3,117) (1,150,447) 84,353 (1,066,094) (8,260) (4,328) (12,588) (1,078,682)

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Notes Loss for the year attributable to: Owners of the Company Non-controlling interests Total comprehensive expenses for the year attributable to: Owners of the Company Non-controlling interests Loss per share 10 Basic Diluted	2015 *HK$’000* (199,626) (5,995) (205,621) (231,175) (2,253) (233,428) HK11.80 cents N/A	2014 HK$’000 (1,052,066) (14,028) (1,066,094) (1,064,697) (13,985) (1,078,682) (Restated) HK138.87 cents N/A

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 30 September 2015

Notes NON-CURRENT ASSETS Intangible assets 11 Exploration and evaluation assets Property, plant and equipment 12 Goodwill 13 Contingent consideration receivable 14 CURRENT ASSETS Inventories Trade and other receivables 15 Loan receivables Contingent consideration receivable 14 Held-for trading investments Amount due from a shareholder of a subsidiary Bank balances and cash CURRENT LIABILITIES Trade payables 16 Other payables and accruals Borrowings Income tax payable NET CURRENT ASSETS	2015 *HK$’000* 115,871 – 16,672 29,555 63,771 225,869 278,508 133,053 203,000 – 66,869 5,165 758,939 1,445,534 31,977 27,128 61,060 5,451 125,616 1,319,918	2014 HK$’000 111,118 – 47,484 29,555 –
		188,157
		134,029 625,951 – 118,246 – 1,978 202,042
		1,082,246
		26,711 18,089 63,095 1,713
		109,608
		972,638

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Notes TOTAL ASSETS LESS CURRENT LIABILITIES NON-CURRENT LIABILITIES Deferred tax liabilities NET ASSETS CAPITAL AND RESERVES Share capital 17 Reserves Equity attributable to the owners of the Company Non-controlling interests TOTAL EQUITY	2015 *HK$’000* 1,545,787 28,459 1,517,328 245,177 1,245,670 1,490,847 26,481 1,517,328	2014 HK$’000 1,160,795 37,897
		1,122,898
		65,490 1,028,674
		1,094,164 28,734
		1,122,898

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1. CORPORATE INFORMATION

O Luxe Holdings Limited (the “Company”) was incorporated in the Cayman Islands as an exempted company with limited liability. Its shares are listed on the Main Board of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).

With effect from 11 March 2015, the name of the Company was changed from Ming Fung Jewellery Group Limited to O Luxe Holdings Limited.

The functional currency of the Company and its subsidiaries (collectively referred to as the “Group”) is Hong Kong dollars (“HK$”) and for those subsidiaries established in the People’s Republic of China (the “PRC”) and Italy are Renminbi (“RMB”) and Euro respectively. The consolidated financial statements are presented in Hong Kong dollars (“HK$”) for the convenience of users of the consolidated financial statements as the Company is listed in Hong Kong.

The Company is engaged in investment holding and the principal activities of its subsidiaries are exports and domestic trading, retail and wholesale of jewellery products, writing instruments and watches, mining, money lending and securities investments.

2. APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS (“HKFRSs”) AND NEW HONG KONG COMPANIES ORDINANCE

The Group has applied, for the first time in the current year, the following new and revised Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) and a new interpretation.

Amendments to HKFRSs Annual improvements to HKFRSs 2010–2012 Cycle Amendments to HKFRSs Annual improvements to HKFRSs 2011–2013 Cycle Amendments to HKAS 19 Defined benefit plans: Employee contributions Amendments to HKFRS 10, Investment entities HKFRS 12 and HKAS 27 Amendments to HKAS 32 Offsetting financial assets and financial liabilities Amendments to HKAS 36 Recoverable amount disclosures for non-financial assets Amendments to HKAS 39 Novation of derivatives and continuation of hedge accounting HK(IFRIC)-Int 21 Levies

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The application of the amendments to HKFRSs and a new interpretation in the current year has had no material impact on the Group’s financial performance and positions for the current and prior years and/or on the disclosures set out in these consolidated financial statement.

Part 9 of Hong Kong Companies Ordinance (Cap. 622)

In addition, the annual report requirements of Part 9 “Accounts and Audit” of the Hong Kong Companies Ordinance (Cap. 622) come into operation during the financial year. As a result, there are changes to presentation and disclosures of certain information in the consolidated financial statements.

New and revised HKFRSs issued but not yet effective

The Group has not early applied the following new and revised HKFRSs, amendments to HKFRSs and interpretation that have been issued but not yet effective:

HKFRS 9	Financial instruments1
HKFRS 14	Regulatory deferral accounts2
HKFRS 15	Revenue from contracts with customers3
Amendments to HKFRS 11	Accounting for acquisitions of interests in
	joint operations4
Amendments to HKAS 16	Clarification of acceptable methods of depreciation
and HKAS 38	and amortisation4
Amendments to HKAS 16	Agriculture: Bearer plants4
and HKAS 41
Amendments to HKAS 27	Equity method in separate financial statements4
Amendments to HKFRS 10	Sale or contribution of assets between an investor
and HKAS 28	and its associate or joint venture4
Amendments to HKAS 1	Disclosure initiative4
Amendments to HKFRS 10,	Investment entities: Applying the consolidation
HKFRS 12 and HKAS 28	exception4
Amendments to HKFRSs	Annual improvements to HKFRSs 2012–2014 Cycle4

1 Effective for annual periods beginning on or after 1 January 2018, with earlier application permitted.
2 Effective for first annual HKFRS financial statements beginning on or after 1 January 2016, with earlier application permitted.
3 Effective for annual periods beginning on or after 1 January 2017, with earlier application permitted.
4 Effective for annual periods beginning on or after 1 January 2016, with earlier application permitted.

HKFRS 9 “Financial instruments”

A final version of HKFRS 9 (that includes classification and measurement of financial assets and financial liabilities, impairment and general hedge accounting) was issued in 2014.

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Key requirements of HKFRS 9 are described below:

All recognised financial assets that are within the scope of HKAS 39 “Financial instruments: Recognition and measurement” are subsequently measured at amortised cost or fair value. Debt investments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortised cost at the end of subsequent accounting periods. All other debt investments and equity investments are measured at their fair value at the end of subsequent accounting periods.
An expected loss model (rather than an incurred loss model) has been adopted by HKFRS 9.
The new general hedge accounting requirements retain the three types of hedge accounting. However, greater flexibility has been introduced to the types of transactions eligible for hedge accounting, specifically broadening the types of instruments that qualify for hedging instruments and the types of risk components of non-financial items that are eligible for hedge accounting.

The directors of the Company will assess the impact of the application of HKFRS 9. For the moment, it is not practicable to provide a reasonable estimate of the effect of the application of HKFRS 9 until the Group performs a detailed review.

HKFRS 15 “Revenue from contracts with customers”

In July 2014, HKFRS 15 was issued which establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. HKFRS 15 will supersede the current revenue recognition guidance including HKAS 18 “Revenue”, HKAS 11 “Construction contracts” and the related interpretations when it becomes effective.

The core principle of HKFRS 15 is that an entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Specifically, the standard introduces a 5-step approach to revenue recognition:

Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation

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Under HKFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when control of the goods or services underlying the particular performance obligation is transferred to the customer. Far more prescriptive guidance has been added in HKFRS 15 to deal with specific scenarios. Furthermore, extensive disclosures are required by HKFRS 15.

The directors of the Company anticipate that the HKFRS 15 may have significant impact on amounts reported in the consolidated financial statements. However, it is not practicable to provide a reasonable estimate of the effect of HKFRS 15 until the Group performs a detailed review.

The directors of the Company do not anticipate that the application of the other new and revised HKFRSs will have a material impact on the Group’s consolidated financial statements.

3. SEGMENT INFORMATION

Information reported to the board of directors, being the chief operating decision marker, for the purposes of resource allocation and assessment of segment performance focuses on types of goods provided. No operating segments identified by the chief operating decision maker have been aggregated in arriving at the reportable segments of the Group.

Specifically, the Group’s reportable and operating segments under HKFRS 8 are as follows:

Exports segment — export of manufactured jewellery products and writing instruments;
Domestic segment — trading of jewellery products and watches for the Group’s retail and wholesale business in Asia;
Mining segment — the mining, exploration and sale of gold resources;
Money lending segment — provision of loan finance; and
Securities investments segment — trading of listed securities.

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(a) Segment revenues and results

The following is an analysis of the Group’s revenue and result by reportable and operating segments.

For the year ended 30 September

Segment revenue: External sales Segment results Unallocated corporate income and expenses Loss before taxation	Exports 2015 2014 *HK$’000* HK$’000 12,410 19,489 (49,349) (67,243)	Domestic 2015 2014 *HK$’000* HK$’000 345,531 1,187,616 (178,490) (1,034,249)	Mining 2015 2014 *HK$’000* HK$’000 – – (2,519) (31,665)	Money lending 2015 2014 *HK$’000* HK$’000 7,260 – 3,648 –	Securities in 2015 *HK$’000* – (42,316)	vestments 2014 HK$’000 – –	Total 2015 2014 *HK$’000* HK$’000 365,201 1,207,105 (269,026) (1,133,157) 49,448 (17,290) (219,578) (1,150,447)	l 2014 HK$’000 1,207,105

Segment results represent the results earned by each segment without allocation of change in fair value of contingent consideration receivable, loss on deregistration/ disposal of subsidiaries, central administration costs, directors’ salaries, interest income and finance costs. This is the measure reported to the chief operating decision makers, being the directors of the Company, for the purposes of resource allocation and assessment of segment performance.

(b) Segment assets and liabilities

The following is an analysis of the Group’s assets and liabilities by reportable and operating segments.

At 30 September

ASSETS Segment assets Unallocated segment assets Total assets LIABILITIES Segment liabilities Unallocated segment Liabilities Total liabilities	Exports 2015 2014 *HK$’000* HK$’000 23,250 77,707 8,523 10,170	Do 2015 *HK$’000* 396,596 46,957	mestic 2014 HK$’000 775,495 30,646	Mining 2015 2014 *HK$’000* HK$’000 88,346 93,781 948 1,002	Money lending 2015 2014 *HK$’000* HK$’000 206,877 – – –	Securities 2015 *HK$’000* 66,869 –	investments 2014 HK$’000 – –	T 2015 *HK$’000* 781,938 889,465 1,671,403 56,428 97,647 154,075	otal 2014 HK$’000 946,983 323,420
									1,270,403
									41,818 105,687
									147,505

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For the purpose of monitoring segment performance and allocating resources between segments:

all assets are allocated to operating segments, other than contingent consideration receivables, amount due from a shareholder of a subsidiary and bank balances and cash.
all liabilities are allocated to operating segments, other than borrowings, deferred tax liabilities and income tax payable.

(c) Other segment information:

	Exports	Exports	Domestic	Domestic	Mining	Mining	Money	lending	Securities	investments	Unallocated	Unallocated	Total	Total
	2015	2014	2015	2014	2015	2014	2015	2014	2015	2014	2015	2014	2015	2014
	*HK$’000*	HK$’000	*HK$’000*	HK$’000	*HK$’000*	HK$’000	*HK$’000*	HK$’000	*HK$’000*	HK$’000	*HK$’000*	HK$’000	*HK$’000*	HK$’000
Amounts included
in the measure of
segment profit or
loss or segment
assets
Additions to
non-current assets
(Note)	754	2,697	75,772	4,701	–	–	–	–	–	–	49	–	76,575	7,398
Allowances for
inventories
write-down	(9,174)	–	(16,210)	–	–	–	–	–	–	–	–	–	(25,384)	–
Amortisation of
intangible assets	–	–	(26,803)	(12,415)	–	–	–	–	–	–	–	–	(26,803)	(12,415)
Change in fair value of
contingent
consideration
receivable	–	–	–	–	–	–	–	–	–	–	53,277	4,739	53,277	4,739
Depreciation of
property, plant and
equipment	(2,147)	(1,732)	(2,256)	(6,838)	–	–	–	–	–	–	(137)	(149)	(4,540)	(8,719)
Gain on disposal of
property, plant and
equipment	–	–	2	–	–	–	–	–	–	–	–	–	2	–
Impairment loss on
goodwill	–	(19,882)	(79,317)	(34,061)	–	–	–	–	–	–	–	–	(79,317)	(53,943)
Impairment loss on
intangible assets	(5,981)	(41,561)	(30,238)	–	(1,150)	(27,359)	–	–	–	–	–	–	(37,369)	(68,920)
Fair value loss on
held-for-trading
investments	–	–	–	–	–	–	–	–	(42,316)	–	–	–	(42,316)	–
Impairment loss of
trade and other
receivables	(2,271)	–	(61,539)	(37,441)	–	(1,659)	–	–	–	–	(905)	–	(64,715)	(39,100)
Property, plant and
equipment
written off	(78)	–	–	(3,457)	(2)	–	–	–	–	–	–	–	(80)	(3,457)
Impairment loss on
property, plant and
equipment	(25,247)	–	–	–	–	–	–	–	–	–	–	–	(25,247)	–
Loss on deregistration/
disposal of
subsidiary	–	–	–	–	–	–	–	–	–	–	(146)	(17,980)	(146)	(17,980)
Bad debt recovered	–	–	803	–	–	–	–	–	–	–	–	–	803	–
Amounts regularly
provided to the
chief operating
decision makers but
not included in the
measure of segment
profit or loss or
segment assets
Interest income	33	–	2,142	92	–	–	–	–	–	–	–	–	2,175	92
Interest expenses	–	–	(4,270)	(3,117)	–	–	–	–	–	–	–	–	(4,270)	(3,117)

Note: Non-current assets included property, plant and equipment and intangible assets.

– 11 –

(d) Geographic information

The Group is domicile in Asia and the operations are principally located in the PRC and Hong Kong.

Information about the Group’s revenue from external customers and non-current assets is presented based on the location of operations and geographical location of assets respectively.

	Revenue from	external
	customers
	For the year	ended	Non-current	assets (Note)
	30 September		At 30 September
	2015	2014	2015	2014
	*HK$’000*	HK$’000	*HK$’000*	HK$’000
Europe	12,410	19,489	10,806	48,781
Asia (including the PRC)	352,791	1,187,616	151,292	139,376
	365,201	1,207,105	162,098	188,157

Note: Non-current assets excluded contingent consideration receivable.

(e) Information about major customers

Revenue from customers of the corresponding years contributing over 10% of the total revenue of the Group as follows:

		2015	2014
		*HK$’000*	HK$’000
Customer A	Revenue generated from the	39,462	143,751
	domestic segment
Customer B	Revenue generated from the	–	141,909
	domestic segment

4. REVENUE

Revenue of the Group comprises the following:

Sales of goods Interest income on loan financing	2015 *HK$’000* 357,941 7,260 365,201	2014 HK$’000 1,207,105 –
		1,207,105

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5. OTHER REVENUE AND NET GAINS

Other revenue: Bank interest income Bad debts recovered Gain on contingent consideration receivable_(Note 14)_ Watch repairing services Sundry income Other net gain: Gain on disposal of property, plant and equipment 6. LOSS FROM OPERATING ACTIVITIES Loss from operating activities is arrived at after charging: Staff costs (excluding directors’ remuneration): Wages, salaries and other benefits Retirement benefits scheme contributions Auditor’s remuneration Cost of inventories sold Inventories write-down (included in cost of sales) Depreciation of property, plant and equipment Minimum lease payments under operating leases on leasehold land and buildings	2015 *HK$’000* 2,175 803 1,754 2,721 1,629 9,082 2 9,084 2015 *HK$’000* 18,207 523 18,730 2,080 258,469 25,384 4,540 11,037	2014 HK$’000 92 – – – 217
		309
		–
		309
		2014 HK$’000 17,779 2,163
		19,942
		1,748 2,069,595 – 8,719 6,951

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7. FINANCE COSTS

Interest expenses on: — bank loans wholly repayable within 5 years 8. INCOME TAX CREDIT The income tax credit comprises: Current year — Hong Kong Profits Tax — Overseas taxation — PRC Enterprise Income Tax (Over) under-provision in previous years: — Hong Kong Profits Tax — Overseas taxation — PRC Enterprise Income Tax Deferred taxation Income tax credit for the year	2015 *HK$’000* 4,270 2015 *HK$’000* 3,057 (6) 2,771 5,822 (47) – 18 (19,750) (13,957)	2014 HK$’000 3,117 2014 HK$’000 1,679 121 10,314 12,114 – (73,117) 69 (23,419) (84,353)

Hong Kong Profits Tax is calculated at 16.5% of the estimated assessable profits for the two years ended 30 September 2015 and 2014.

Taxation arising in other jurisdictions is calculated at the rates prevailing in the relevant jurisdictions.

Under the Law of the PRC on Enterprise Income Tax (the “EIT Law”) and Implementation Regulation of the EIT Law, the tax rate of the Group’s subsidiaries in the PRC is 25% from 1 January 2008 onwards.

9. DIVIDENDS

No dividend was paid or proposed for the year ended 30 September 2015 (2014: Nil), nor has any dividend been proposed since the end of the reporting period.

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10. LOSS PER SHARE

The calculation of basic loss per share is based on the loss for the year attributable to owners of the Company of approximately HK$199,626,000 (2014: HK$1,052,066,000) divided by the weighted average number of ordinary shares of 1,692,290,710 (2014: 757,613,229) in issue during the year.

The weighted average number of ordinary shares for the purposes of calculating basic and diluted loss per share in 2014 has been adjusted for the share consolidation and open offer as completed and disclosed in the announcement of the Company dated 23 April 2015.

The computation of diluted loss per share for the years ended 30 September 2015 and 2014 is the same as the basic loss per share because the Company had no dilutive potential shares.

11. INTANGIBLE ASSETS

Mining rights Distribution rights HK$’000 HK$’000 (Note i) (Note ii) Cost At 1 October 2013 352,620 55,150 Exchange realignment (1,447) (226) At 30 September 2014 351,173 54,924 Exchange realignment (11,326) (1,771) Additions through acquisition of subsidiaries_(Note 18)_ – 72,787 At 30 September 2015 339,847 125,940 Accumulated amortisation and impairment losses At 1 October 2013 233,802 29,137 Exchange realignment (913) (92) Provided for the year – 12,415 Impairment loss recognised 27,359 – At 30 September 2014 260,248 41,460 Exchange realignment (8,428) (1,555) Provided for the year – 26,803 Impairment loss recognised 1,150 30,238 At 30 September 2015 252,970 96,946 Carrying amount At 30 September 2015 86,877 28,994 At 30 September 2014 90,925 13,464	Trademarks HK$’000 (Note iii) 48,466 (2,859) 45,607 (5,310) – 40,297 – (2,683) – 41,561 38,878 (4,562) – 5,981 40,297 – 6,729	Total HK$’000 456,236 (4,532) 451,704 (18,407) 72,787 506,084 262,939 (3,688) 12,415 68,920 340,586 (14,545) 26,803 37,369 390,213 115,871 111,118

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Notes:

i. The Group obtained the mining rights granted by 赤峰市國土資源局 for the exploration of gold mine in certain area in Inner Mongolia in the PRC as part of a business combination in prior years. No amortisation was provided for the years ended 30 September 2015 and 2014 as the gold mines are still in a development stage and no mining activities are conducted.

At 30 September 2015, the management has engaged an independent professional valuer, Grant Sherman Appraisal Limited (“Grant Sherman”), to carry out valuations on the mining rights for the purposes of an impairment review on the mining rights. As the future income stream was still uncertain, Grant Sherman adopted the market based approach, and the recoverable amount was determined based on the fair value less cost to sell. Fair value less cost to sell was determined in a similar manner as in 2014. Based on the valuation report, an impairment loss of approximately HK$1,150,000 (2014: HK$27,359,000) was recognised for the year ended 30 September 2015.

ii. The distribution rights consist of:
(a) The distribution rights were related to an exclusive distributor to use the Gucci Marks in connection with the marketing, distribution, advertising, promoting and sale of the products in Hong Kong, Macau and the PRC in accordance with the distribution agreement signed between Luxury Timepieces (HK) Limited and Shenzhen Qijingda. The distribution agreement was for a five year period commencing from 1 January 2011. Amortisation is provided by using the straight line method over its remaining useful life. Based on valuation report prepared by Grant Sherman, no impairment loss was recognised for the year ended 30 September 2015 (2014: Nil).
(b) The distribution rights were acquired as part of a business combination in this year relating to an exclusive right of the products of “GIRARD-PERREGAUX” and “JEANRICHARD” (collectively, the “Brands”) in Hong Kong, Macau, the PRC and Taiwan in accordance with the distribution agreement signed between Sowind SA and Swiss Mechanical Times (Hong Kong) Limited. The distribution agreement was for a two year period commencing from 31 December 2014 assuming it would be renewable for further two years. Amortisation is provided by using straight line method over its remaining life. The management engaged Grant Sherman to carry out valuation on the distribution right for impairment review purpose. Grant Sherman adopted Multiperiod Excess Earnings Method (“MPEEM”) of an income based approach using expected cash flow projection based on financial budgets, approved by management covering the period of 3.3 years up to the expiry of the distribution agreement. Based on the valuation report prepared by Grant Sherman, an impairment loss of approximately HK$30,238,000 was recognised during the year ended 30 September 2015.

– 16 –

The major factors leading to a significant impairment loss being recognised for the year is mainly attributed to a significant decrease in the future income streams resulting from:

sudden and wild Swiss Franc appreciation that happened on 15 January 2015 and this sudden appreciation led to substantial corresponding depreciation of the Euro and Yen. As a result, Europe and Japan prices of the Brands are at least 20% cheaper than those in the PRC, Hong Kong and Taiwan. The dealers in the said regions therefore refused to purchase to the new products from the Group. The distribution business is stalled.

Details of the reasons and events leading to the impairment were disclosed in the Company’s announcement dated 13 August 2015.

Key assumptions used in the calculation of value of the distribution rights were discount rate, growth rate and budgeted revenue. The discount rate used 34.3% was a pre-tax measure based on the risk-free rate obtained from the yield on 10year bonds issued by the government in the relevant market, adjusted for a risk premium to reflect specific risks relating to the cash-generating units. Budgeted revenue has been based on past experience and future expectations in the light of anticipated economic and market conditions.

iii. The trademarks were acquired as part of a business combination in prior years and are registered in Europe for selling various types of consumer goods, mainly luxury products under the trademark “Omas”. As the remaining useful life of the trademark ranged from six to eight years, and are entitled for renewal after expiry, the trademarks is considered by the management as having an infinitive useful life. The trademarks will not be amortised until its useful life is determined to be finite.

As stated in Note 20, the Group’s subsidiary owned the trademarks in Italy went to liquidation after the reporting period, and the carrying amount of trademark of approximately HK$5,981,000 at 30 September 2015 was accordingly fully impaired for the year ended 30 September 2015.

For the year ended 30 September 2014, based on the valuation report prepared by Grant Sherman, an impairment loss of approximately HK$41,561,000 was recognised for that year.

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12. PROPERTY, PLANT AND EQUIPMENT

Cost At 1 October 2013 Exchange realignment Additions Disposal of subsidiaries Written off_(note ii) At 30 September 2014 Exchange realignment Additions Additions through acquisition of subsidiaries(Note 18) Disposals Written off(note ii) At 30 September 2015 Accumulated depreciation and impairment losses At 1 October 2013 Exchange realignment Provided for the year Eliminated on disposal of subsidiaries Eliminated on written off At 30 September 2014 Exchange realignment Provided for the year Disposals Impairment loss recognised (note iii)_ At 30 September 2015 Carrying amount At 30 September 2015 At 30 September 2014	Leasehold land and buildings Leasehold improvement HK$’000 HK$’000 (note i) 43,115 11,361 (2,457) (32) – 4,172 (1,389) (1,666) – (5,915) 39,269 7,920 (4,627) (247) – 943 – 1,454 – (160) – – 34,642 9,910 967 4,553 (87) (9) 610 5,200 (137) (1,189) – (2,458) 1,353 6,097 (572) (221) 1,252 1,795 – – 21,803 – 23,836 7,671 10,806 2,239 37,916 1,823	Plant and machinery HK$’000 1,853 (152) 2,663 – – 4,364 (407) 628 – (158) (78) 4,349 1,172 (59) 974 – – 2,087 (208) 775 (32) 1,727 4,349 – 2,277	Furniture, fixtures and office equipment HK$’000 5,259 (179) 563 (1,875) – 3,768 (323) 341 422 (21) (2) 4,185 2,196 (57) 535 (1,135) – 1,539 (175) 236 (2) 1,717 3,315 870 2,229	Motor vehicles HK$’000 9,714 (50) – (4,140) – 5,524 – – – – – 5,524 3,399 (50) 1,400 (2,464) – 2,285 – 482 – – 2,767 2,757 3,239	Total HK$’000 71,302 (2,870) 7,398 (9,070) (5,915) 60,845 (5,604) 1,912 1,876 (339) (80) 58,610 12,287 (262) 8,719 (4,925) (2,458) 13,361 (1,176) 4,540 (34) 25,247 41,938 16,672 47,484

– 18 –

Note:

(i) The leasehold land and buildings with a carrying amount of approximately HK$10,806,000 (2014: HK$37,916,000) is situated outside of Hong Kong and held under a long lease (2014: long lease).
(ii) During the year ended 30 September 2015, the net carrying values of the Group’s property, plant and equipment amounting to approximately HK$80,000 (2014: HK$3,457,000) were written off due to obsolescence.
(iii) As stated in Note 20, the Group’s subsidiary in Italy went to liquidation after the reporting period, and an impairment loss of approximately HK$25,247,000 (2014: Nil) was recognised for the year ended 30 September 2015.

13. GOODWILL

Cost At 1 October 2013 Derecognised on disposal of a subsidiary At 30 September 2014 Acquisition of subsidiaries_(Note 18)_ At 30 September 2015 Accumulated impairment losses At 1 October 2013 Recognised for the year Derecognised on disposal of a subsidiary At 30 September 2014 Recognised for the year At 30 September 2015 Carrying amount At 30 September 2015 At 30 September 2014	HK$’000 675,520 (11,569) 663,951 79,317 743,268 592,022 53,943 (11,569) 634,396 79,317 713,713 29,555 29,555

– 19 –

Impairment test:

Goodwill set out above has been allocated to the individual cash generating units (“CGU”) as at 30 September 2015. The carrying amounts of goodwill (net of accumulated impairment losses) at the end of the reporting period allocated to these are as follows:

Export Domestic — Sinoforce Group Domestic — Other Mining	2015 *HK$’000* – – 29,555 – 29,555	2014 HK$’000 – – 29,555 –
		29,555

Export

The recoverable amount of the export CGU is the higher of the fair value less cost to sell or value-in-use. At 30 September 2014, the recoverable amount of this CGU was determined based on the fair value less costs to sell and based on the valuation report produced by Grant Sherman, the carrying amount of goodwill of approximately HK$19,882,000 at 30 September 2014, was fully impaired for that year.

Domestic — Sinoforce Group

The goodwill associated with Sinoforce Group arose when that business was acquired by the Group on 18 December 2014 (see Note 18).

The recoverable amount of the domestic CGU was based on its value-in-use calculation using cash flow projections based on financial budgets approved by management covering the period of 5 years.

Based on the revaluation report prepared by Grant Sherman on 20 May 2015, the carrying amount of the goodwill of approximately HK$79,317,000 at 31 March 2015 was fully impaired during the interim period ended 31 March 2015 and the year ended 30 September 2015.

The major factors leading to a significant impairment loss being recognised for the year is mainly attributed to a significant decrease in the future income streams of the CGU resulting from:

Sudden and wild Swiss Franc appreciation that happened on 15 January 2015 and this sudden appreciation led to substantial corresponding depreciation of the Euro and Yen. As a result, Europe and Japan prices of the Brands are at least 20% cheaper than those in the PRC, Hong Kong and Taiwan. The dealers in the said regions therefore refused to purchase to the new products from the Group. The distribution business is stalled.

– 20 –

Details of the reasons and events leading to the impairment were disclosed in the Company’s announcement dated 13 August 2015.

Key assumptions used in the calculation of value-in-use were discount rate, growth rate and budgeted revenue. The discount rate used 17.1% was a pre-tax measure based on the risk-free rate obtained from the yield on 10-year bonds issued by the government in the relevant market, adjusted for a risk premium to reflect specific risks relating to the CGUs. A growth rate ranging from 0% to 10% was used. Cash flow, beyond the five-year were projected by using a steady growth rate of 3%. Budgeted revenue has been based on past experience and future expectations in the light of anticipated economic and market conditions.

Domestic — Other

The goodwill associated with Joy Charm Holdings Limited arose when that business was acquired by the Group on 8 June 2011.

The recoverable amount of the domestic CGU was based on its value-in-use calculation using cash flow projections based on financial budgets approved by management covering the period of 5 years. Value in use in 2015 was determined in a similar manner as in 2014.

Key assumptions used in the calculation of value-in-use were discount rate, growth rate and budgeted revenue. The discount rate used 26.1% (2014: 28.5%) was a pre-tax measure based on the risk-free rate obtained from the yield on 10-year bonds issued by the government in the relevant market, adjusted for a risk premium to reflect specific risks relating to the CGUs. A growth rate ranging from 3% to 5% (2014: 5% to 10%) was used. Cash flow, beyond the five-year were projected by using a steady growth rate of 3% (2014: 3%). Budgeted revenue has been based on past experience and future expectations in the light of anticipated economic and market conditions. Based on the valuation report prepared by Grant Sherman, no impairment loss was recognised for the year (2014: HK$34,061,000).

Mining

Goodwill allocated to this CGU was contributed by Chi Zhou Donghai Mining Development Company Limited (池州東海礦業發展有限公司) (“Chi Zhou”) and Chi Feng Guo Jin Mining Company Limited (赤峰國金礦業有限公司) (“Chi Feng”) that owns the exploration rights and mining rights in certain area in the PRC September 2014. As Chi Zhou was disposed during the year ended 30 September 2014, the goodwill allocated was therefore derecognised for that year.

The carrying amount of all CGU was determined to be lower than its recoverable amount. Based on the valuation report prepared by Grant Sherman, the carrying amount of goodwill allocated was fully impaired during the year ended 30 September 2013.

– 21 –

14. CONTINGENT CONSIDERATION RECEIVABLE

At fair value Notes At 1 October 2013 Change in fair value At 30 September 2014 (i) Compensation from profit guarantee (i) Gain on contingent consideration receivable (i) Acquisition of subsidiary (ii) Change in fair value At 30 September 2015	HK$’000 113,507 4,739 118,246 (120,000) 1,754 10,494 53,277 63,771

Notes:

(i) The fair value of contingent consideration receivable is related to the acquisition of Omas Int’l and its former owner’s profit guarantee for Omas Int’l’s total net profits of HK$120,000,000 for the financial years ended 31 December 2012, 2013 and 2014. As the vendor of Omas Int’l had not met the profit guarantee, a compensation of HK$120,000,000 was obtained and a gain of approximately HK$1,754,000 (see Note 5) was therefore recognised from the difference arising upon settlement. During the year, HK$60,000,000 was received and the outstanding balance of HK$60,000,000 was included in other receivables at 30 September 2015 (see Note 15).

The receivable is unsecured and repayable within 12 months of the end of the profit guarantee period.

(ii) The fair value of the contingent consideration receivable is related to profit guarantee of HK$69,000,000 by the vendor of Sinoforce Group and Zhang Jinbing for three financial years ending 31 December 2015, 2016 and 2017 (see Note 18).

The fair value of the contingent consideration receivable at 30 September 2015 and 2014 are based on the valuations performed by Grant Sherman, using a Monte Carlo simulation and probability model respectively.

As the profit guarantee relating to the acquisition of Sinoforce Group, covers period of more than one year, hence there are more interactions to be assessed for the results. Monte Carlo simulation is therefore adopted as the simulation produces distribution of possible outcome values. By assuming probability distributions, variables can have different probabilities of different outcomes occurring. Probability distributions are a much more realistic way of describing uncertainty in variables of the result.

– 22 –

The variable and assumptions used in computing the fair value of the contingent consideration receivable are based on the management’s best estimate. The value of the contingent consideration receivable varies with different variables of certain subjective assumptions.

Inputs into Monte Carlo simulation
Profit guarantee amount
Standardised SD of profit
Number of iterations
Discount rate
Time to settlement date
Inputs into probability model
Profit guarantee amount
Scenario
Optimistic
Base
Pessimistic
Settlement date
Discount rate
Discount factor
TRADE AND OTHER RECEIVABLES
Trade receivables
Less: Impairment loss recognised
Deposits
Prepayment and other receivables
Interest receivables
Amount due from a related party_(Note)_
Less: Impairment loss recognised

2015
HK$69,000,000
49.7%
1,000,000
0.53%
2.67
2014
HK$120,000,000
Probability
20%
60%
20%
7 January 2015
5.58%
0.985384
2015
2014
HK$’000
HK$’000
118,610
630,009
(69,668)
(37,441)
48,942
592,568
6,284
623
48,063
34,419
3,870
–
60,000
–
118,217
35,042
(34,106)
(1,659)
84,111
33,383
133,053
625,951

15. TRADE AND OTHER RECEIVABLES

Note: The amount represents the profit guarantee compensation due from Hengdeli International Company Limited and is interest free, unsecured and repayable on demand.

– 23 –

Certain trade receivables with carrying amount of HK$15,286,000 (2014: Nil) as at 30 September 2015 are pledged against short-term bank borrowings granted to the Group.

The Group normally allows credit terms to established customers ranging from 30 to 120 days. In addition, for certain customers with long-established relationship and good past repayment histories, a longer credit period may be granted. The Group seeks to maintain strict control over its outstanding receivables. Overdue balances are reviewed regularly by senior management.

An aging analysis of the trade receivables at the end of the reporting period, based on the date of recognition of the sale, is as follows:

	2015	2014
	*HK$’000*	HK$’000
1–30 days	39,791	574,340
31–60 days	4,248	6,300
61–90 days	1,687	3,410
Over 90 days	3,216	8,518
	48,942	592,568

16. TRADE PAYABLES

The Group normally obtains credit terms ranging from 30 to 120 days from its suppliers.

An aging analysis of the trade payables at the end of the reporting period, based on the date of receipt of goods purchased, is as follows:

1–30 days 31–60 days 61–90 days Over 90 days	2015 *HK$’000* 31,975 – 2 – 31,977	2014 HK$’000 26,188 23 51 449
		26,711

– 24 –

17. SHARE CAPITAL

Ordinary shares Authorised: At 1 October 2013 and 30 September 2014 (HK$0.01 each) Share consolidation_(Note iii) Increased(Note iii) At 30 September 2015 (HK$0.1 each) Issued and fully paid: At 1 October 2013 Issue of shares upon open offer(Note i) As 30 September 2014 Issues of shares by acquisition of subsidiaries(Note ii) Share consolidation(Note iii) Issue of shares upon open offer(Note iv)_ At 30 September 2015	Number of shares ’000 10,000,000 (9,000,000) 1,000,000 9,000,000 10,000,000 4,366,027 2,183,014 6,549,041 1,623,529 (7,355,313) 1,634,514 2,451,771	Amount HK$’000 100,000 –
		100,000 900,000
		1,000,000
		43,660 21,830
		65,490 16,235 – 163,452
		245,177

Notes:

(i) On 10 April 2014, the Company completed the open offer on the basis one offer share for every two shares held on the record date and 2,183,013,646 shares were issued. The net proceeds from the open offer was approximately HK$172,100,000 and would be used as general working capital for the Group.
(ii) On 18 December 2014, the Company issued of 1,623,529,411 consideration shares at a quoted market price of HK$0.087 for acquisition of 100% of the issued share capital of Sinoforce Group Limited (see Note 18).
(iii) There was capital reorganization of the Company effected on 17 March 2015 which comprised (1) Share consolidation — it was implemented to consolidate every ten issued and unissued shares of par value of HK$0.01 each into one share (“Consolidated Share”) of par value of HK$0.1 each. (2) Increase in authorised capital from HK$100,000,000 dividend into 1,000,000,000 Consolidated Shares of par value of HK$0.1 each to HK$1,000,000,000 divided into 10,000,000,000 Consolidated Shares of par value of HK$0.1 each.

– 25 –

(iv) On 23 April 2015, the Company completed the open offer on the basis two offer shares for every one consolidated share held on the record date and 1,634,514,070 shares were issued. The net proceeds from the open offer was approximately HK$487,100,000 and would be used as general working capital for the Group.
(v) All shares issued during the year rank pari passu with the existing shares in all respects.

18. ACQUISITION OF SUBSIDIARIES

Business Combination

Acquisition of Sinoforce Group Limited (“Sinoforce Group”) and its subsidiary

On 6 October 2014, the Group entered into the sale and purchase agreement to acquire the entire interest in Sinoforce Group, which directly hold 100% of Swiss Mechancial Times (Hong Kong) Limited, and indirectly hold the exclusive distribution right of the products of “GRAND-PERREGAUX” and “JEANRICHARD” in the territories of the mainland China, Macau, Hong Kong and Taiwan. The consideration for the acquisition is HK$138 million and was satisfied by the Company to allot and issue to the vendor 1,623,529,411 new shares, credited as fully paid, at the issue price of HK$0.085 per share upon completion of the acquisition. The fair value of the shares to be issued was determined using the published closing price of HK$0.087 at the date of completion, amounting to approximately HK$141 million. The completion date of the acquisition was on 18 December 2014, which is also the acquisition date (“Acquisition Date”) for accounting purpose. Sinoforce Group is an investment holding company incorporated in the British Virgin Islands.

– 26 –

Assets acquired and liabilities recognized at the date of acquisition
were as follows:
Plant and equipment
Distribution rights_(Note 11)
Inventories
Trade receivables
Prepayment, deposit and other receivables
Bank balances and cash
Trade payables
Other payables and accruals
Deferred tax liabilities
Net assets
Goodwill arising on acquisition(Note 13)
Total consideration
Total purchase consideration satisfied by:
Issuance of new shares
Contingent consideration receivables(Note)_
Net cash inflow arising on acquisition:
Bank balances and cash acquired

Acquirees’
fair value at
acquisition date
HK$’000
1,876
72,787
115,563
1,960
3,597
3,393
(51,466)
(84,729)
(12,010)
50,971
79,317
130,288
140,782
(10,494)
130,288
3,393

Note: An arrangement requires the former owner of Sinoforce Group to guarantee the Group that the total net profits of Sinoforce Group after tax for the financial years ended 31 December 2015, 2016 and 2017 shall not be less than HK$69 million. If the total net profits fail to meet in the sum of HK$69,000,000 by 31 December 2017, the former owner shall have the option either: (i) to compensate the Group on the shortfall to the total net profits in cash based on the formula (amount of compensation = (HK$69,000,000 – actual net profits) x 2), or (ii) to have the actual number of the consideration shares to be released to the former owner or its nominee(s) by the escrow agent on the payment date downward adjusted in accordance with the formula (adjusted number of consideration shares = actual net profits/HK$69,000,000 x 1,623,529,411 shares). Fair value of contingent consideration receivable of HK$10,494,000 at date of acquisition is based on valuation results of Grant Sherman, by using the method of Monte Carlo simulation.

– 27 –

Goodwill arising on the acquisition of Sinoforce Group in the current year is determined on the fair value of the net identifiable assets acquired. The management of the Company has engaged an independent professional valuer, Grant Sherman Appraisals Limited, to carry out a valuation on the fair value of the net identifiable assets acquired and contingent consideration receivable as at date of acquisition.

Net cash in on acquisition of subsidiary

Consideration paid in cash Less: cash and cash equivalent balance acquired	Acquirees’ fair value at acquisition date HK$’000 – (3,393) (3,393)

Impact if acquisitions on the results of the Group

Included in the loss for the year is HK$29,126,000 attributable to the additional business generated by Sinoforce Group. Revenue for the year includes HK$73,130,000 in respect of Sinoforce Group.

Had these business combinations been effected at 1 October 2014, the revenue of the Group from continuing operations would have been HK$97,893,000, and the loss for the year from continuing operations would have been HK$28,198,000. The director of the Group consider these ’pro-forma’ numbers to represent and approximate measure of the performance of the combined group on an annualised basis and to provide a reference point for comparison in future periods.

In determining the ‘pro-forma’ revenue and loss of the Group had Sinoforce Group been acquired at the beginning of the current year, the directors have:

Calculated depreciation of plant and equipment acquired on the basis of the fair values arising in the initial accounting for the business combination rather than the carrying amounts recognised in the pre-acquisition financial statements; and
Based borrowing costs on the funding levels, credit ratings and debt/equity position of the Group after the business combination.

19. CONTINGENT LIABILITIES

The Group did not have any significant liabilities as at 30 September 2015 (2014: Nil).

– 28 –

20. EVENT AFTER THE REPORTING PERIOD

Due to continuously financial losses and severe adverse business environment in Europe, in October 2015, the Group ceased to provide financial support to its subsidiary, Omas SRL (“Omas”), a company incorporated in Italy. Because of insolvency, Omas ceased its operation and on 17 November 2015 a resolution was passed by the shareholders of Omas to get Omas dissolved and liquidated with effect from 1 December 2015.

In view of the foregoing, for the year ended 30 September 2015, the Group (i) recognised impairment loss of approximately HK$25,247,000 to write down the property, plant and equipment; (ii) recognised impairment loss of approximately HK$5,981,000 for trademarks; (iii) provided an allowance of approximately HK$9,174,000 for write-down of inventories at 30 September 2015; (iv) provided an allowance for doubtful debts of approximately HK$2,271,000 for all outstanding receivables at 30 September 2015; and (v) provided a provision for redundancy of approximately HK$1,331,000.

In the opinion of the Directors, the cessation of the operation of Omas will not pose any liabilities, either actual or contingent which are material and have adverse effects to the Group.

The assets and liabilities of Omas included in the consolidated statement of financial position as at 30 September 2015 are as follows:

Property, plant and equipment Inventories Trade receivables Bank balances and cash Trade and other payables Provision Deferred tax liabilities	HK$’000 10,806 10,115 2,288 807 (6,693) (1,331) (2,043) 13,949

– 29 –

BUSINESS REVIEW AND PROSPECTS

Given the moderating growth of the PRC economy and the overall slackening landscapes in the luxury goods market, the Group’s turnover for the year ended 30 September 2015 substantially decreased by 69.8% from approximately HK$1,207.1 million last year to HK$365.2 million. The decrease was mainly attributable to (1) the discount block sale of slow moving inventories in 2014, (2) the disposal of retail business in Liaoning in June 2014, and (3) the continuously weakening demand of luxury consumer goods market in Hong Kong and China. The Group’s gross profit amounted to HK$81.3 million (2014: gross loss of HK$862.5 million). Loss attributable to shareholders for the year was approximately HK$199.6 million as compared to HK$1,052 million for the previous year.

On 18 December 2014, the Group successfully acquired the entire interest in Sinoforce Group Limited, which indirectly hold the exclusive distribution right of the products of “GIRARD-PERREGAUX” and “JEANRICHARD” in the territories of the mainland China, Macau, Hong Kong and Taiwan, the acquisition aimed at strengthening the Group’s distributor business with a longterm perspective.

During the year ended 30 September 2015, the Group entered into the money lending and investments in securities business. The new businesses allow the Group to diversify its source of income with the aim of generating appropriate returns to our shareholders. During the year, the Group recorded interest income and the fair value loss on held-for-trading investments of HK$7.3 million and HK$42.3 million respectively.

For the gold mining business, the production schedule of the Chi Feng gold mines has been delayed due to an extensive time has been spent on (i) preparation of the Environmental Impact Assessment Report , (ii) reviewing and negotiating the construction cost of the infrastructure of the mining facilities with the PRC mining institution, and (iii) revision of production plan in compliance with the PRC safety regulation. The Group will continue to carry out such work as necessary to generate revenue contribution in the near future.

To further consolidate the business, the Group decided to close down the underperforming manufacturing business of “OMAS” in Italy in November 2015. Facing the further deterioration of economic scenario ahead, the Group will continue to exercise prudence in managing its expenditures and look for new investment opportunity to cope with existing market environment and constantly review the business strategy in a cautious manner.

– 30 –

MANAGEMENT DISCUSSION AND ANALYSIS

FINANCIAL REVIEW

For the year ended 30 September 2015, turnover of the Group decreased by 69.8% year-on-year to approximately HK$365.2 million as compared to HK$1,207.1 million for the previous year. The decrease was mainly attributable to the discount block sale of slow moving inventories in 2014, which contributed 51.8% of 2014’s turnover, the disposal of retail business in Liaoning in June 2014, and the weakened consumption of luxury goods in Hong Kong and China.

The Group’s gross profit amounted to HK$81.3 million, as compared to the gross loss amounted to HK$862.5 million for the previous year. Loss attributable to shareholders for the year was HK$199.6 million as compared to HK$1,052.0 million for the previous year. The loss was inclusive of impairment on goodwill, other intangible assets, property, plant and equipment, trade and other receivable, held-for-trading investments, loss on deregistration of subsidiaries of totalling HK$249.0 million.

The impairment on goodwill and distribution rights amounted to HK$79.3 million and HK$30.2 million respectively, which were attributable to the downward revision of financial projection in the newly acquired business. Resulting from the impact of weakening Euro since January 2015 and the slowing demand for luxury watches as compared to last year. In response, the Group has successfully lower the direct cost by reaching a consensus with the sole supplier in July 2015. According to the sale and purchase agreement, the vendor will compensate the Company if the newly acquired business fail to meet the total net profits in the sum of HK$69,000,000 by 31 December 2017. The change of fair value of contingent consideration receivable of HK$53.3 million has been recorded during the year, which is reflecting the possible compensation from the vendor. Details of the key assumptions used are set out in notes 11, 13 and 14 to the financial statements.

The impairment of trade and other receivables of approximately HK$64.7 million was recorded during the year, which represent the full provision against the long outstanding trade and other receivables as at 30 September 2015.

For the second half of the year, the Group recorded interest income from the money lending business of approximately HK$7.3 million and the fair value loss of HK$42.3 million from the investment in securities business, the fair value loss on held-for-trading investments was attributable to the turmoil in financial market since July 2015.

– 31 –

In October 2015, the Group has ceased to provide financial support to its subsidiary in Italy, Omas SRL, due to the continuous financial losses and severe adverse business environment in Europe. Accordingly, Omas SRL ceased to operate and went to liquidation in November 2015 and the Group recognised impairment losses and provision of approximately HK$44.0 million, details of the impairment losses and provision are set out in note 20.

For the year ended 30 September 2015, selling and distribution expenses decreased by 36.3% to approximately HK$34.9 million as compared to HK$54.8 million for the year ended 30 September 2014. The decrease was mainly due to the disposal of 遼寧時全飾美投資管理有限公司 and the decrease in turnover as compared to the year end 30 September 2014. Administrative expenses increased by 22.4% to HK$48.1 million, compared with HK$39.3 million for the corresponding period of last year. The increase in administrative expenses largely reflected the results of approximately 9 months consolidation of the accounts of Sinoforce Group Limited, which was acquired on 18 December 2014.

Liquidity, Financial Resources and Gearing

Finance costs during the year under review amounted to HK$4.3 million as compared to HK$3.1 million for the corresponding period of last year.

As at 30 September 2015, the contingent consideration receivable amounted to approximately HK$63.8 million, which is in relation to the profits guarantee of HK$69.0 million given by the vendor in the acquisition of Sinoforce Group Limited. As at 30 September 2014, the contingent consideration receivable amounted to approximately HK$118.2 million is in relation to the profit guarantee of HK$120 million given by the vendor in the acquisition of Omas International S.A., and which has been fully settled in December 2015.

The Group’s net current assets increased from HK$972.6 million to HK$1,320.0 million. The net current assets are comprised of inventories of HK$278.5 million (2014: HK$134.0 million), trade and other receivables of approximately HK$133.1 million (2014: HK$626.0 million), loan receivables of HK$203.0 million (2014: Nil), and held-for-trading investments of HK$66.9 million (2014: Nil). The inventories have increased by HK$144.5 million of which, HK$143.3 million is belongs to the newly acquired business in December 2014. The trade and other receivables have decreased by HK$492.9 million which is due to the settlement of trade receivable in relation to the discount block sale in 2014.

– 32 –

At 30 September 2015, the cash and bank balances amounted to approximately HK$758.9 million (2014: HK$202.0 million) and current liabilities of approximately HK$125.6 million (2014: HK$109.6 million). The increase in cash and bank balance of HK$556.9 million is due to the settlement of trade receivable in 2014 and completion of the open offer in 2015.

The Group’s inventory turnover, trade receivables turnover and trade payables turnover periods were 358 days, 49 days and 41 days, respectively. Overall the turnover times were consistent and complied with the respective policies of the Group on credit terms granted to customers and credit terms obtained from suppliers.

On 4 February 2015, the Board proposed to implement a share consolidation on the basis that every ten issued and unissued existing shares of HK$0.01 each in the share capital of the Company be consolidated into one consolidated share of HK$0.1 each. The Board also proposed to increase the existing authorized share capital of the Company to HK$1,000,000,000 divided into 10,000,000,000 shares of nominal value HK$0.1 each by the creation of an additional 9,000,000,000 unissued shares immediately following the share consolidation become effective. The Board further proposed to raise approximately HK$490.4 million before expenses, by issuing 1,634,514,070 offer shares at the subscription price of HK$0.3 per offer share. The open offer of the Company was on the basis of two offer share for every consolidated share held on the record date. The Board further proposed to change the board lot size of the consolidated shares of the Company from 30,000 existing shares to 12,000 consolidated shares upon the share consolidation became unconditional. Details of the share consolidation, increase in authorized share capital, open offer and change in board lot size were set out in the Company’s announcements dated 4 and 25 February 2015. and the Company’s circular dated 27 February 2015. The share consolidation, increase in the authorized share capital and open offer were approved in the extraordinary meeting on 16 March 2015. The share consolidation, increase in authorized share capital and change in board lot size took effect on 17 March 2015.

During the year, the Group financed its operations and investing activities through a combination of operating cash inflows and interest bearing borrowings. The capital structure of the Company solely consists of share capital. As at 30 September 2015, shareholder equity in the Group amounted to HK$1,490.8 million (2014: HK$1,094.2 million).

The Group’s total interest bearing bank borrowings as at 30 September 2015 amounted to approximately HK$61.1 million (2014: HK$63.1 million). The interest bearing bank borrowings were mainly used for working capital purpose and carried at commercial lending interest rates.

– 33 –

As at 30 September 2015, the Company has no significant contingent liabilities (2014: Nil).

Final Dividend

The directors do not recommend the payment of any dividend in respect of the year ended 30 September 2015 (2014: Nil).

Capital Management

The Group’s objectives when managing capital are to ensure that entities in the Group will be able to continue as a going concern while maximising the return to owners though the optimisation of the debt and equity balance. The management reviews the capital structure by considering the cost of capital and the risks associated with each class of capital. In view of this, the Company will balance its overall capital structure through the payment of dividends and new share issues as it sees fit and appropriate.

The Group monitors capital on the basis of the gearing ratio. As at 30 September 2015, the gearing ratio was 10.3% (2014: 13.5%). This ratio is calculated as total debt divided by total capital.

Capital Commitment

As at the end of the reporting period, the Group does not have any significant capital commitment.

Material Acquisitions or Disposals

Save as disclosed below, there was no material acquisition or disposal of subsidiaries and associated companies by the Group for the year ended 30 September 2015.

On 18 December 2014, the Group has acquired the entire interest of Sinoforce Group Limited and its subsidiary at a consideration of HK$141 million. The acquisition was approved in on Extraordinary General Meeting of the Company held on 25 November 2014.

– 34 –

Subsequent to 30 September 2015, the Group ceased to provide financial support to its subsidiary, Omas. Because of insolvency, Omas ceased its operation and on 17 November 2015, a resolution was passed by the shareholder of Omas to get Omas dissolved and liquidated on 1 December 2015, details of the financial impact are set out in note 20.

Foreign Exchange Exposure

The Group’s sales and purchases during the year were mostly denominated in Hong Kong dollars, Renminbi, US dollars and Euro. The Group was exposed to certain foreign currency exchange risks but it does not anticipate future currency fluctuations to cause material operational difficulties or liquidity problems. However, the Group continuously monitors its foreign exchange position and, when necessary, will hedge foreign exchange exposure arising from contractual commitments in sourcing products from overseas suppliers.

Employees and Remuneration Policies

As at 30 September 2015, the Group had a staff roster of 87 (2014: 93). The remuneration of employees was in line with market trends and commensurate to the levels of pay in the industry and to the performance of individual employees that are regularly reviewed every year.

Pledge of Assets

At 30 September 2015, trade receivables of approximately HK$15.3 million (2014: Nil) were pledged to secure the Group’s bank borrowings.

CLOSURE OF REGISTER OF MEMBERS

The register of members will be closed from 2 March 2016 to 4 March 2016 (both days inclusive), during which period no transfer of shares will be effected. In order to qualify for attending and voting at the forthcoming annual general meeting, all transfers of shares accompanied by the relevant share certificates must be lodged with the Hong Kong branch share registrars of the Company, Tricor Tengis Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong for registration no later than 4:30 p.m. on 1 March 2016.

– 35 –

PURCHASE, REDEMPTION OR SALE OF LISTED SECURITIES OF THE COMPANY

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 Company’s listed securities during the year.

CORPORATE GOVERNANCE

During the year ended 30 September 2015, the Company has complied with the code provisions set out in the Corporate Governance Code (the “Code”) as stated in Appendix 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited except the following deviations (Code Provisions A.2.1 and E.1.2):

Mr. Wong Chi Ming, Jeffry (“Mr. Wong”) was the Chairman of the Company. The Company has no such title as the chief executive officer before 9 January 2015 and the daily operation and management of the Company is monitored by the executive directors as well as the senior management. The Board is of the view that although there is no chief executive officer before 9 January 2015, the balance of power and authority is ensured by the operation of the Board, which comprises experienced individuals and meet from time to time to discuss issues affecting the operation of the Company. The Company has appointed Mr. Zhang Jinbing as chief executive officer with effect from 9 January 2015 and has complied with code provision A.2.1 since 9 January 2015. On 12 June 2015, Mr. Zhang Jinbing was appointed as the Chairman and Mr. Wong Chi Ming, Jeffry was appointed as the chief executive officer of the Company.

The chief executive officer attended 2015 annual general meeting (“2015 AGM”) to answer questions and collect views of shareholders. Though other directors were unable to attend 2015 AGM due to other business engagements, their representative, the company secretary and the auditors had attended the meeting to answer questions at the meeting.

The Chairman attended all the extraordinary general meetings held during the year while other directors cannot attend due to other business engagements but the company secretary and their representatives and a representative of the relevant independent financial advisors had attended the meetings to answer questions at the meetings.

Further information on the Company’s corporate governance practices is set out in the Corporate Governance Report contained in the annual report.

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MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS OF LISTED COMPANIES (“MODEL CODE”)

The Company has adopted the Model Code as set out in Appendix 10 of the Listing Rules. The Company has made specific enquiry on all directors regarding any non-compliance with the Model Code during the year under review and they all confirmed that they have fully complied with the required standards set out in the Model Code.

AUDIT COMMITTEE

The Company has an audit committee which was established in accordance with the requirements of the Code, for the purposes of reviewing and providing supervision over the Group’s financial reporting process and internal controls. Currently the audit committee comprises the 3 independent non-executive directors, who have reviewed the financial statements for the year ended 30 September 2015.

INTERNAL CONTROL AND RISK MANAGEMENT

The Board is responsible for the Company’s internal control system and risk management procedures and for reviewing the effectiveness of the Company’s internal control. The Board has conducted a review of, and is satisfied with the effectiveness of the system of internal controls of the Group.

The Group is committed to the identification, monitoring and management of risks associated with its business activities. The Group’s internal control system is designed to provide reasonable assurance against material misstatement or loss and to manage and eliminate risks of failure in operational systems and fulfillment of business objective. The system includes a defined management structure with segregation of duties and a cash management system such as monthly reconciliation of bank accounts.

The Board reviews the effectiveness of the Group’s material internal controls and is of the opinion that the resources for and qualifications of staff of the Company’s accounting and financial reporting function are adequate and sufficient. Based on information furnished to it and on its own observations, the Board is satisfied with present internal controls of the Group.

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PUBLICATION OF ANNUAL REPORT

The 2015 annual report containing all the information required by the Listing Rules will be released on the website of The Stock Exchange of Hong Kong Limited (www.hkex.com.hk) and on the website of the Company (www.oluxe.com.hk) and dispatched to shareholders in due course.

APPRECIATION

On behalf of all members of the Board, I would like to express my sincere appreciation to all shareholders and staff members for their dedication and commitment over the past twelve months as well as my heartfelt gratitude to our customers and business partners for their enduring support.

On behalf of the Board O Luxe Holdings Limited Zhang Jinbing Chairman

Hong Kong, 31 December 2015

As at the date hereof, the Company’s executive directors are Mr. Zhang Jinbing, Mr. Wong Chi Ming, Jeffry and Mr. Yu Fei, Philip, non-executive director is Mr. Xiao Gang, and independent non-executive directors are Mr. Tam Ping Kuen, Daniel, Dr. Li Yifei and Dr. Zhu Zhenfu.

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