Apollo Future Mobility Group Limited — Annual Report 2021

Jan 28, 2021

==> picture [596 x 509] intentionally omitted <==

==> picture [336 x 266] intentionally omitted <==

CONTENTS

Corporate Information	02
Chairman’s Statement	03-09
Management Discussion and Analysis	10-15
Report of the Directors	16-28
Directors and Senior Management	29-31
Corporate Governance Report	32-44
Environmental, Social and Governance Report	45-65
Independent Auditor’s Report	66-73
Consolidated Statement of Profit or Loss	74
Consolidated Statement of Comprehensive Income	75
Consolidated Statement of Financial Position	76-77
Consolidated Statement of Changes in Equity	78-79
Consolidated Statement of Cash Flows	80-81
Notes to the Consolidated Financial Statements	82-185
Particulars of Properties Held by the Group	186

APOLLO FUTURE MOBILITY GROUP LIMITED

CORPORATE INFORMATION

BOARD OF DIRECTORS Executive Directors

Mr. Ho King Fung, Eric (Chairman) Mr. Sung Kin Man (Chief Executive Officer)

Non-executive Director

LEGAL ADVISOR

Reed Smith Richards Butler

AUTHORISED REPRESENTATIVES

Mr. Ho King Fung, Eric Mr. Moy Yee Wo, Matthew

Mr. Zhang Jinbing (Co-Chairman)

REGISTERED OFFICE

Independent Non-executive Directors

Mr. Tam Ping Kuen, Daniel Mr. Teoh Chun Ming Mr. Peter Edward Jackson Mr. Charles Matthew Pecot III

AUDIT COMMITTEE

Mr. Teoh Chun Ming (Chairman) Mr. Tam Ping Kuen, Daniel Mr. Peter Edward Jackson Mr. Charles Matthew Pecot III

Cricket Square Hutchins Drive, P.O. Box 2681 Grand Cayman, KY1-1111 Cayman Islands

HEAD OFFICE AND PRINCIPAL PLACE OF BUSINESS

Units 301 and 302, Third Floor, Building 22E, Phase Three, Hong Kong Science Park, Pak Shek Kok, New Territories, Hong Kong

REGISTRARS

REMUNERATION COMMITTEE

Mr. Teoh Chun Ming (Chairman) Mr. Tam Ping Kuen, Daniel Mr. Peter Edward Jackson Mr. Charles Matthew Pecot III

Principal Share Registrar and Transfer Office Suntera (Cayman) Limited Royal Bank House — 3rd Floor 24 Shedden Road Grand Cayman, KY1-1110 Cayman Islands

NOMINATION COMMITTEE

Mr. Ho King Fung, Eric (Chairman) Mr. Teoh Chun Ming Mr. Peter Edward Jackson Mr. Charles Matthew Pecot III

Hong Kong Branch Share Registrar and Transfer Office Tricor Tengis Limited Level 54, Hopewell Centre 183 Queen’s Road East Hong Kong

INVESTMENT COMMITTEE

Mr. Ho King Fung, Eric (Chairman) Mr. Sung Kin Man Mr. Teoh Chun Ming

AUDITORS

Ernst & Young

WEBSITE

CORPORATE GOVERNANCE COMMITTEE

http://www.apollofmg.com

Mr. Sung Kin Man (Chairman) Mr. Teoh Chun Ming Mr. Peter Edward Jackson Mr. Charles Matthew Pecot III

COMPANY SECRETARY

Mr. Moy Yee Wo, Matthew

02

ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

CHAIRMAN’S STATEMENT

Dear Shareholders,

It is my honor to deliver this statement as the Chairman of Apollo Future Mobility Group Limited (the “Company” and together with its subsidiaries, the “Group” or “we”) in respect of the Group’s annual results for the year ended 30 September 2020 (the “Year”) and the Group’s prospects.

INDUSTRY OVERVIEW

Mobility Technology Solutions Market

The world faced unprecedented challenges during the Year as a result of the outbreak of the COVID-19 pandemic and the rising uncertainty of the macro-economic environment. The automotive industry is not immune to the disruptions caused by the pandemic. Plummeted demand for new cars, lockdown of cities, slowdowns of production and consequent delays in delivery dampened global vehicle sales in 2020. Despite such circumstances, the electric vehicle (“EV(s)”) industry remains a bright spot even though the COVID-19 crisis adversely impacted the automobile industry. According to EV Volumes, which is an EV world sales database, the global sales of passenger plug-in EVs for the first nine months of 2020 reached approximately 1.784 million, representing approximately 11% growth over the corresponding period of 2019 and approximately 3.4% average market share of the entire car market. New opportunities were also created in outsourcing mobility technology solutions in light of the increased demand from automobile original equipment manufacturers (“OEM(s)”) for ongoing technological innovations and cost efficiency.

The growth of the automotive market in the People’s Republic of China (the “PRC”) has resumed. Rebound in demand for automobiles in the PRC starting in the second half of the Year indicated signs of recovery resulting from gradual resumption of industry activities and further containment of the COVID-19 pandemic. Automobile retail sales resumed growth by the end of the Year following a staggering plunge of approximately 79% in February 2020, according to the China Passenger Car Association. In September 2020, overall car sales in the PRC increased by approximately 8% yearon-year, while sales of the plug-in segment grew by approximately 66% year-on-year, according to the EV Sales Blog.

Governments worldwide continued to take various progressive measures, such as extending subsidies, to encourage and accelerate the adoption of EVs. The PRC Government remained committed to the transition to electrification as part of a long-term strategy to address climate change. In April 2020, the PRC Government announced the extension of tax exemptions on new energy vehicle (“NEV(s)”) purchases for two years to 2022, which was previously set to expire at the end of 2020. In addition, 10 cities in the PRC released incentive schemes for the NEV industry. For example, the Guangzhou Municipal Government announced a subsidy of RMB10,000 for each NEV sold between March and December 2020. These measures taken are expected to stimulate the sector’s development and boost EV sales in the PRC.

Hypercar Market

The outbreak of the COVID-19 pandemic had an impact on the hypercar market to a certain extent, causing delays in launching new car models, cancellation of racing events and disruptions to supply chains during the Year. Nevertheless, whilst the automotive market registered a drop in overall demand caused by various unfavorable factors, demand for hypercars remained nearly unscathed as such market mainly targets ultra-high-net-worth individuals and car collectors and is typically non-cyclical.

ANNUAL REPORT 2020 03

APOLLO FUTURE MOBILITY GROUP LIMITED

CHAIRMAN’S STATEMENT

BUSINESS REVIEW

During the Year, the Group successfully accomplished a number of milestones in transforming itself to a mobility technology solutions provider through a series of acquisitions, strategic cooperations and technological innovations.

The Group completed the acquisition of Sino Partner Global Limited (“Apollo”) in March 2020 (the “Apollo Acquisition”) and officially changed the Company’s English name to “Apollo Future Mobility Group Limited” with a new company logo and website address, so as to highlight its strategic position as a full-service mobility solutions provider. To further strengthen its ability in providing cutting edge technological solutions, in October 2019, the Group announced the proposed acquisition of Ideenion Automobil AG (“Ideenion”), a German mobility solutions provider which together with its subsidiaries is principally engaged in the design, development and prototyping of internal combustion engine (“ICE”) vehicles and NEVs.

With the completion of the Group’s rebranding, the Group now focuses on expanding its three pillars of business, namely automotive manufacturing, engineering services and technology development, being conducted by the Group’s two business units, Apollo Automobil and Apollo Advanced Technologies. In addition to the development and sales of hypercars and its cross-branding licensing business under the “Apollo” brand, the Group provides one-stop turnkey mobility technology solutions by integrating Apollo Automobil’s and the Group’s existing EV technologies, striving to offer the global mobility market with a seamless and comprehensive solution platform for the provision of services from ideation, design, modeling, engineering, simulation, prototype production and actual testing to the delivery of preproduction prototypes to customers. In addition, the Group is also devoted to the research and development (“R&D”) of technologies for the mobility industry by allowing external parties to use our internally developed technologies, in return for license fees to the Group. The Group launched/commenced the development of several advanced technologies and innovations during the Year including 800V Silicon Carbide (“SiC”) Dual Inverter, Urban Delivery Vehicle (“UDV”), Electric Mobility Scooter (“EMS”) and Autonomous Development Chassis.

To showcase its latest technologies, the Group participated in the third China International Import Expo (“CIIE”) held in November 2020 in Shanghai, PRC. The event marked the Group’s global launch as a technology provider in future mobility, at which the Group showcased its proprietary innovations among some 2,000 exhibitors from over 100 countries and regions. The Apollo Intensa Emozione (the “Apollo IE”) “Golden Dragon” was showcased at the event, which marked the first appearance of any Apollo IE in Mainland China. The Group was honoured to have business elites, government officials, industry partners and consumers visited its booth and was very encouraged by the discussions and meetings as a result of the CIIE.

Following a successful conclusion of its participation in the CIIE, the Group brought the technologies back home and hosted a technology showcase for the investor community and media in Hong Kong to show the breakthroughs its technologies can bring and how it will redefine mobility.

The Group gained massive media coverage and positive feedback on the fruits of its mobility innovation at both events.

Key milestones in our transformation including acquisitions, strategic cooperations and technological innovations are set out below.

04 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

CHAIRMAN’S STATEMENT

Change of Company Name

To better reflect its pioneering position in the mobility industry, the Group announced the official completion of its rebranding exercise on 8 May 2020, with the English name of the Company changed to “Apollo Future Mobility Group Limited”. The English stock short name of the Company for trading in the shares of the Company on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) was changed from “WE SOLUTIONS” to “APOLLO FMG”. In addition, the dual foreign name in Chinese of the Company (力世紀有限公司) remaining unchanged will help to maintain stability and development of the Group’s business and goodwill in the PRC. Meanwhile, the Company adopted a new company logo, its website address was changed to www.apollofmg.com, marking the Group’s new journey to proactively promote its mobility technology business and its determination to explore in-depth technological innovation. The change of company name and rebranding exercise are set out in the announcements of the Company dated 23 December 2019 and 8 May 2020 and the circular of the Company dated 18 February 2020.

Automotive Manufacturing

Completed Acquisition of 86.06% of Apollo, a European Hypercar Manufacturer

The Company entered into a sale and purchase agreement on 16 May 2019 and supplemental agreements on 15 August 2019 and 3 January 2020 with (among others) Ideal Team, pursuant to which the Company conditionally agreed to purchase, and Ideal Team conditionally agreed to sell, approximately 86.06% of the total issued share capital of Apollo, which is principally engaged in the design, development, manufacturing and sales of high performance hypercars under the brand “Apollo” worldwide. The Apollo Acquisition was completed on 17 March 2020. It provides an opportunity to strengthen the Group’s business strategy of becoming a world leading mobility solutions provider in the NEV and mobility industry and to create substantial synergies with the Group’s other investments in the mobility business. The completion of the Apollo Acquisition is set out in the announcement of the Company dated 17 March 2020.

Every Apollo vehicle is handmade and engineered to perfect precision. The Apollo IE features the first all-carbon fiber production chassis of its kind, from the monocoque to subframes and crash structures. Key features of the chassis are its modular design, increased safety, increased torsional rigidity, symmetrical design and weight reduction. The Apollo IE also incorporates advanced composite materials and three-dimensional (“3D”) printed parts in its production.

During the Year, and prior to the completion of the Apollo Acquisition, Apollo delivered two of its flagship hypercar, the Apollo IE. Delivery ceremonies took place in Miami, the United States of America and Kyoto, Japan in late 2019. The Apollo IE “Orange Dragon” even received The Best in Class Award at the Miami Concours.

Subsequent to the reporting period, the third Apollo IE “Black Dragon” was also delivered to customer in Mexico. The delivery of the Apollo IEs received wide attention from media, investor community and industry peers.

==> picture [257 x 172] intentionally omitted <==

ANNUAL REPORT 2020 05

APOLLO FUTURE MOBILITY GROUP LIMITED

CHAIRMAN’S STATEMENT

Engineering Services

Proposed Acquisition of 100% of Ideenion, a Leading German Mobility Solutions Provider

To further strengthen its ability in providing cutting edge technological solutions, the Group entered into a sale and purchase agreement with three independent third parties (the “Vendors”) on 31 October 2019, pursuant to which the Company conditionally agreed to purchase, and the Vendors conditionally agreed to sell, the entire issued share capital of Ideenion, which is principally engaged in the design, development and prototyping of ICE vehicles and NEVs (“Project Ideenion”). With Ideenion’s advanced design and engineering expertise, Project Ideenion is expected to further enhance the Group’s ability to provide high-end technological solutions to customers. Project Ideenion is in line with the Group’s business strategy of expanding its provision of NEV solutions and services and becoming a world leading full-service solutions provider.

The completion of Project Ideenion is conditional upon the fulfilment of several conditions, including, among other things, the shareholders of the Company having approved Project Ideenion and the specific mandate for the issue of shares of the Company (as part of the consideration) at an extraordinary general meeting of the Company. Further details in relation to, among other things, Project Ideenion are set out in the announcements of the Company dated 31 October 2019, 12 December 2019, 13 March 2020, 11 June 2020, 15 September 2020 and 14 December 2020 and the circular of the Company dated 24 December 2020.

Formation of a Joint Venture Company with Jinpeng

In view of the rapid development of the EV industry in the PRC, the Group grasped opportunities for accelerating its business expansion plan in the NEV market by partnering with Chinese automobile OEMs. On 12 November 2019, Jiangsu Jemmell New Energy Automobile Company Limited (“Jemmell”, a related company of Jiangsu Jinpeng Group Company Limited (“Jinpeng”)), GLM Co., Ltd. (“GLM”, a non wholly-owned subsidiary of the Company), and the Company entered into a joint venture agreement pursuant to which the parties agreed to form a joint venture company (the “JV Company”) in the PRC to engage primarily in the design, R&D, and production of NEVs and related automobile parts. The JV Company will be owned by Jemmell, GLM and the Company as to approximately 57%, approximately 29% and approximately 14%, respectively.

Jinpeng is one of the largest EV tricycle manufacturers in the PRC with well-established supply chains and distribution channels. Combining with GLM’s brand and research capability, the JV Company will primarily engage in the design, research and development, and production of NEVs targeting the young generation to meet the market demands in the PRC, Japan and Southeast Asian countries. Further details in relation to, among other things, the formation of the JV Company are set out in the announcement of the Company dated 12 November 2019.

Technology Development

License Agreement with De Tomaso

The Group has been actively exploring different sources of income leveraging on its renowned brand name and proprietary technologies. The Group’s indirect non wholly-owned subsidiary, Apollo Automobil Limited (“Apollo Automobil”), entered into a license agreement with a term of three years commencing from 12 May 2020 and ending on 11 May 2023 with De Tomaso Automobili Limited (“De Tomaso”) whereby De Tomaso is granted the rights to use the new vehicular platform designed and developed by Apollo Automobil (“the Platform”) in “De Tomaso” branded vehicles worldwide at a minimum aggregate license fee of US$10,000,000 (equivalent to approximately HK$78,000,000). The cooperation is expected to strengthen the Group’s business strategy of creating a turnkey platform for “Future Mobility” and it is expected that the Group will be able to leverage on the success and branding of De Tomaso through the license of the Platform and further market its capabilities to other potential customers. Further details in relation to, among other things, the license agreement with De Tomaso is set out in the announcement of the Company dated 12 May 2020.

06 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

CHAIRMAN’S STATEMENT

Cooperation with ROHM on Co-development of 800V SiC Dual Inverter

On 18 February 2020, GLM, a non wholly-owned subsidiary of the Company which engages in the development and sales of EVs in Japan, announced its collaboration with ROHM Co., Ltd (“ROHM”), a semiconductor and electronic component manufacturer, to jointly develop the 800V SiC Dual Inverter.

The newly developed next generation SiC Dual Inverter 800V system incorporates SiC for power element and offers significant advantages over insulated gate bipolar transistor (“IGBT”) switching technologies. The 3-in-1 package system is equipped with solid state battery (“SSB”) battery management system (“BMS”) and integrates two 800V inverters and

==> picture [220 x 152] intentionally omitted <==

a Power Distribution Unit, allowing the new inverter system to achieve further miniaturization, weight reduction, higher output and shorter time required for charging compared to the current commonly seen 400V IGBT inverter.

By incorporating this inverter into GLM’s new EV system, GLM will be able to further optimize its core technology and expand its component business focusing on the development of new models and the supply of EV systems. Prototype production completed in May 2020 while testing in drivable electric prototype cars is expected to commence at the beginning of 2021. The project aims for mass production in Spring 2022.

Urban Delivery Vehicle

The UDV is designed to be a cost and time effective tool to fulfill the last mile in the supply chain. This fully functional proof of concept EV was developed to accelerate customer acceptance and downstream prototype/series development processes.

The UDV is a L7e-CU vehicle (EU regulation) that can be open to numerous use-cases depending on the customer’s individual requirements. Key features of the UDV include its Trolley Battery System that allows a Quick-Change-Charging scenario that keeps the vehicle on the road without any delivery downtime, modular cargo units that can be used as closed box or open pick-up, and keyless access that is ideal for fleet and sharing usage.

To achieve low cost manufacturing, the UDV can be shipped in knockdown kits that will be assembled in local micro factories in markets such as Southeast Asia and Middle East and North Africa (MENA) where it will also create job opportunities in the mobility industry. The start of production of the UDV is expected to be in 2022.

ANNUAL REPORT 2020 07

APOLLO FUTURE MOBILITY GROUP LIMITED

CHAIRMAN’S STATEMENT

Electric Mobility Scooter

The EMS is a mobility concept released by GLM. GLM seeks to address the social challenge of freedom of movement facing the ever-growing aging population. It aims to support seniors going through the transition from car to an EMS to continue to stay active, independent and outgoing.

The EMS focuses heavily on the design and the stimulation of the desire to ride a mobility scooter. It gives consumers a design-led product which shows a fun and fresh approach to mobility. The EMS features 2 DC24V 200W motors (for left and right independent drive) and a 24V 60Ah battery at a mere 85 kg. The EMS is undergoing further development targetting commercialization by the end of 2022.

Autonomous Development Chassis

Applying the in-house proprietary chassis technology developed by GLM for the Tommy Kaira ZZ, the Autonomous Development Chassis provides a low cost and easily customizable platform for autonomous driving software developers. The Autonomous Development Chassis features electrical power steering, e-brake system, high power EV motor and 4 LiDAR sensors that can be customized with any autonomous software or algorithm based on customer needs.

==> picture [211 x 141] intentionally omitted <==

==> picture [211 x 142] intentionally omitted <==

Other Legacy Businesses

During the Year, due to the deterioration of market conditions primarily caused by the COVID-19 pandemic, the Group continued to scale down its legacy businesses including retailing of jewellery and watches, money lending and property investment. In particular, during the Year, the Group was notified by the Expropriation Office of Dadong District, Shenyang City, PRC that certain investment properties owned by the Group were included in a local expropriation plan. The Group subsequently entered into an agreement with the local bureau to handover certain investments properties for an agreed compensation during the Year. In view of the pessimistic outlook, the Group will continue to gradually shift away from the legacy businesses and focus its resources on the new businesses with more promising prospects.

PROSPECTS AND OUTLOOK

Sales of passenger EVs are forecasted to fall by 18% in 2020 to 1.7 million worldwide with the COVID-19 pandemic interrupting successive years of strong industry growth, according to the annual Long-Term Electric Vehicle Outlook published by BloombergNEF. Sales of ICE cars are set to drop even faster this year by 23%, while global vision of longterm electrification is projected to accelerate in the years ahead. The report estimates that by 2040, EV models will account for 58% of new passenger car sales globally and 31% of all vehicle models. As vaccines are expected to be available in the near future with a view to control and curb the COVID-19 pandemic, the global automobile market (especially in the PRC) is expected to gradually recover. Long-term prospects of the EV industry is expected to remain positive given strong policy support, ambitious automobile electrification targets and local automakers’ commitment.

08 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

CHAIRMAN’S STATEMENT

Strong demand for NEVs and mobility technology solutions are expected to grow by way of unprecedented opportunities. According to a report issued by Grand View Research, the global automotive engineering services outsourcing market size is expected to reach US$469.6 billion by 2027, representing a compound annual growth rate of 27.8% from 2020 to 2027. Growing partnerships between OEMs and engineering service providers and utilisation of technologies to enhance efficiency and safety enhancement are expected to drive market development. Apart from conventional engineering capabilities such as modeling, drafting, and testing automobile parts, the growing trend of shared mobility, autonomous driving, advanced driver-assistance systems, powertrain engineering and connectivity are expected to create more opportunities for the market.

To grasp the opportunities in the NEV market, the Group is working diligently on technological advancement by accelerating the launch of the breakthrough 800V SiC Dual Inverter system as well as other mobility innovations being developed by the Group including the UDV, EMS and Autonomous Development Chassis. The Group is also stepping up to explore cooperation opportunities with motor manufacturers under a licensing model to market the new 800V SiC Dual Inverter (equipped with the BMS with SSB) and the motor manufacturers’ own motors as a complete package to international mobility brands. Furthermore, the Group is proactively exploring collaboration with different business partners globally for various applications of its technologies which will further expand the Group’s source of revenue and to allow better focus on R&D and innovation.

The Group is constantly identifying and developing new technologies that can significantly re-shape the mobility industry. Not only is the Group able to deliver mobility products and engineering services, it is also developing proprietary technologies and solutions tailored around artificial intelligence, intelligent infrastructure, applied materials, safety and state-of-the-art modular platform technology.

The Group targets to deliver the remaining seven Apollo IEs by 2021 and create more consumer products. Both Apollo and GLM are in the process of designing and developing next generation own brand vehicles. Following its successful track record, the Group is confident in its robust product pipeline and the future of its mobility business.

In view of the potential opportunities and risks brought by the COVID-19 pandemic, the Company entered into a subscription agreement with certain investors on 7 December 2020 to further strengthen its capital base in order to navigate through the storms.

Looking forward, the Group believes that the disruption caused by the COVID-19 pandemic is temporary and the Group will continue to strive to achieve the ultimate sustainable future of mobility by providing cleaner, safer and smarter mobility options and technologies to build ecosystems that will connect people, goods and services.

Ho King Fung, Eric

Chairman APOLLO FUTURE MOBILITY GROUP LIMITED

Hong Kong 30 December 2020

ANNUAL REPORT 2020 09

APOLLO FUTURE MOBILITY GROUP LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS

FINANCIAL REVIEW

During the Year, the revenue of the Group decreased by approximately 33.3% year-on-year to approximately HK$357.7 million as compared to approximately HK$536.4 million last year. The revenue comprised sales of jewellery products and watches of approximately HK$291.9 million (2019: HK$421.1 million), interest income from loan financing of approximately HK$46.0 million (2019: HK$79.6 million), rental income from investment properties of approximately HK$16.3 million (2019: HK$31.5 million) and sales and distribution of vehicles and provision of engineering services of approximately HK$3.5 million (2019: HK$4.2 million). During the Year, sales of jewellery products and watches decreased due to (i) the termination of the wholesale distributorship of certain jewellery products and watches in the PRC; and (ii) weak sentiment in the retail market. Income from loan financing also decreased due to deterioration in market conditions. In addition, rental income decreased as certain investment properties in Shenyang, PRC were expropriated by the local government. Furthermore, due to lockdowns in Germany and Japan as a result of the COVID-19 pandemic, delivery of vehicles and certain engineering projects were disrupted which caused a decrease in the sales and distribution of vehicles and provision of engineering services.

The Group’s gross profit amounted to approximately HK$125.9 million for the Year as compared to approximately HK$142.6 million last year. The gross profit margin increased to approximately 35.2% (2019: 26.6%) mainly due to the absence of a write down of inventories of approximately HK$40.8 million recorded last year.

Other gains and losses, net for the Year mainly comprised: (i) fair value losses of investment properties of approximately HK$26.6 million (2019: HK$71.7 million) due to the worsening of the market condition in Mainland China; (ii) gain on expropriation of investment properties of approximately HK$315.9 million (2019: Nil) (which also resulted in a decrease in investment properties, an increase in prepayments, deposits and other receivables mainly due to an increase in compensation receivables from the local government and a one-off tax expense of approximately HK$353.3 million provided in accordance with the relevant tax regulations concerning the expropriation); (iii) impairment of loans receivable of approximately HK$29.1 million (2019: HK$257.3 million); (iv) fair value losses of financial assets at fair value through profit or loss of HK$133.3 million (2019: HK$21.9 million) due to unfavorable market conditions; (v) impairment of goodwill of approximately HK$29.6 million (2019: HK$199.3 million) due to the termination of the wholesale distributorship of certain jewellery products and watches in Mainland China; and (vi) fair value loss on contingent consideration payable of approximately HK$21.9 million (2019: Nil) arising from the Apollo Acquisition.

Other income, selling and distribution expenses, general and administrative expenses and research and development costs remained relatively stable.

Income tax expense significantly increased due to the inclusion of a one-off tax provision resulting from the expropriation of investment properties as discussed above.

As a result of the foregoing, the Group’s loss for the Year reduced from approximately HK$619.3 million last year to approximately HK$359.4 million for the Year.

10 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS

Significant Investments Held

Details of significant investments held by the Group were set out as follows:

					For the year
					ended
					30
					September
		As at	30 September	2020	2020	Fair	value
			Percentage
			of preferred	Percentage		As at
		Number of	shares held	to the		30		As at
		preferred	in such	Group’s	Fair value	September	1	October	Investment
		shares held	investee	total assets	loss	2020		2019	cost
Nature of investments		‘000	%	%	HK$’000	HK$’000	HK$’000		HK$’000
Financial assets at fair value through
profit or loss with a value of 5% or
more of total assets:
(i)	EV Power
	— Preferred shares	142,820	50.29	7.93	(53,308)	421,946		475,254	407,679*
	— Call option	N/A	N/A	0.19	(902)	10,077		10,979
					(54,210)	432,023		486,233	407,679
(ii)	Divergent
	— Preferred shares	4,139	44.49	8.01	(38,987)	426,198		465,185	469,378
	— 2019 Divergent Convertible
Note		N/A	N/A	1.52	(14,469)	80,601		95,070	97,500
					(53,456)	506,799		560,255	566,878

• Represented the aggregate consideration

ANNUAL REPORT 2020 11

APOLLO FUTURE MOBILITY GROUP LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS

(i) Investment in EV Power

EV Power Holding Limited and its subsidiaries (“EV Power”) are principally engaged in the provision of convenient, safe and cost-effective EV charging solutions in Hong Kong and the PRC. The company ranked fourth in the PRC, covering 28 major cities in the country. It operates more than 6,000 charging stations and manages more than 23,000 charging piles. The Group’s investment in EV Power represents an opportunity for the Group to create strong synergies with EV Power through the Group’s proprietary EV technologies and thereby completing the full value chain of mobility.

(ii) Investment in Divergent

Divergent Technologies, Inc. (“Divergent”) is a company based in the United States of America which uses 3D metal printing technology through its patented hardware and software platform to conduct research, design, development and production of 3D printed vehicle structures. Not only does the patented digital manufacturing system radically reduces capital needs and design risks, it also reduces product cycle time and increases market response. The Group believes that the investment in Divergent will create synergies with the Group’s mobility businesses by vastly improving existing factory economics of automobile OEMs.

Liquidity, Financial Resources and Gearing

As at 30 September 2020, the cash and cash equivalents of the Group amounted to approximately HK$184.5 million (2019: HK$447.6 million), which were mainly denominated in HK$, Renminbi (“RMB”), Euro and Japanese Yen.

The current assets and current liabilities of the Group were approximately HK$1,677.1 million and HK$869.9 million, respectively (2019: current assets of approximately HK$1,190.4 million and current liabilities of approximately HK$407.4 million). The net current assets comprised inventories of approximately HK$172.7 million (2019: HK$214.8 million), accounts receivable, prepayments, deposits and other receivables of approximately HK$639.0 million (2019: HK$52.3 million), loans receivable of approximately HK$678.1 million (2019: HK$473.8 million) and financial assets at fair value through profit or loss of approximately HK$1.4 million (2019: HK$2.0 million).

The Group’s inventory turnover, accounts receivable turnover and accounts payable turnover periods for the year were 305 days, 26 days and 113 days, respectively. Overall, the turnover periods were consistent and in line with the respective policies of the Group on credit terms granted to customers and credit terms obtained from suppliers.

During the Year, the Group financed its operations and investment activities through a combination of (i) operating cashflows; and (ii) interest-bearing borrowings. As at 30 September 2020, equity attributable to owners of the Company amounted to approximately HK$3,607.2 million (2019: HK$3,924.3 million).

The Group’s total interest-bearing bank and other borrowings as at 30 September 2020 amounting to approximately HK$167.0 million (2019: HK$126.5 million) were mainly denominated in RMB and Japanese Yen. The interest-bearing bank and other borrowings were mainly used for working capital purpose and all of which were at commercial lending variable interest rates. The maturity profile was spread over a period, with approximately HK$147.5 million repayable within one year and approximately HK$19.6 million repayable after one year.

The Group monitors capital on the basis of the gearing ratio. As at 30 September 2020, the gearing ratio was approximately 4.5% (2019: 3.1%). This ratio is calculated as total debts divided by total equity.

Contingent Liabilities

Details of contingent liabilities of the Group are set out in note 39 to the consolidated financial statements.

12 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS

Pledge of Assets

As at 30 September 2020, the Group’s freehold land and buildings, certain building including right-of-use assets and accounts receivable with an aggregate carrying amount of approximately HK$110.9 million were pledged to secure certain bank loans to the Group of principal amount of approximately HK$77.7 million.

Final Dividend

The Board does not recommend the payment of any dividend in respect of the Year (2019: Nil).

Capital Management

The Group’s objectives when managing capital are to ensure that members of the Group will be able to continue as a going concern while maximizing the return to shareholders of the Company through the optimization of its debt and equity balance. The Group manages the amount of capital in proportion to risk, and makes adjustments to its overall capital structure through the payment of dividend, new share issues as well as the issue of new debts or the repayment of existing debts.

Foreign Exchange Exposure

The Group’s sales and purchases during the Year were mostly denominated in HK$, RMB and Japanese Yen. The Group was exposed to certain foreign currency exchange risks but currency fluctuations did not cause, and the Group does not anticipate future currency fluctuations to cause, material operational difficulties or liquidity problems to the Group. Nevertheless, 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. Further details of foreign exchange exposure of the Group are set out in note 43 to the consolidated financial statements.

Events After the Reporting Period

Events subsequent to the end of the Year are set out in note 44 to the consolidated financial statements.

Material Acquisitions or Disposals

Save as disclosed in this report, there was no other material acquisition or disposal of subsidiaries, associates or joint ventures by the Group during the Year.

Proceeds brought forward from Issue of Listed Securities of the Company in Previous Years and Use of Proceeds

A summary of the issue of listed securities by the Company in previous financial years from which there were proceeds brought forward to the Year and the use of such proceeds is set out below:

Date of announcement	8 May 2019	8 July 2019
Date of completion	15 May 2019	15 July 2019
Name of subscriber(s)	Great Dawn Investments Limited,	Sino-Alliance International, Ltd, a
	a wholly owned subsidiary of	wholly owned subsidiary of
	Agile Group Holdings Limited	Shanghai Alliance Investment
	(“Agile Group”)	Ltd.* (上海聯和投資有限公司)
		(“SAIL”)
Number of Shares issued	400,000,000	382,352,000
Class of Shares issued	ordinary shares	ordinary shares

13

ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS

Issue price per Share HK$0.51 HK$0.51 Net price per Share HK$0.51 HK$0.51 Aggregate nominal value of Share issued HK$40,000,000.00 HK$38,235,200

Closing price per Share on which the terms HK$0.485 (as at 8 May 2019) of the issue were fixed

HK$0.385 (as at 8 July 2019)

Gross proceeds Approximately HK$204 million Net proceeds Approximately HK$203 million

Approximately HK$195 million Approximately HK$194 million

• Reason for the issue The Board considered that the issue of Shares would provide a good opportunity to establish a strategic partnership with Agile Group to facilitate implementation of the proposed cooperation under the cooperation framework agreement dated 8 May 2019 and entered into between the Company and the subscriber and align the interests of the Company and Agile Group accordingly

The Board considered that the issue of Shares would provide a good opportunity to raise additional funds to finance future investment opportunities to further cement the Group’s foothold in the NEV industry and to establish a strategic partnership with SAIL and align the interests of the Company and SAIL

Intended use of proceeds

• The Company intended to use the net proceeds for the following purposes:

• The Company intended to use the net proceeds for the following purposes:

• (1) Approximately 90%, (1) Approximately 90%, representing representing approximately HK$183 approximately HK$175 million, would be used for million, would be used for the proposed cooperation future potential between the Company acquisition or investment and Agile Property Land in NEV-related businesses Co., Ltd. (“Agile or technologies; and Property”) for the production, research and (2) Approximately 10%, development of NEVrepresenting related technology and approximately HK$19 products in the PRC; and million, would be used for general working capital

• (2) Approximately 10%, representing approximately HK$20 million, would be used for general working capital

14 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS

Amount of proceeds brought forward to the Year and actual use of such proceeds

Approximately 90% of the net proceeds, representing approximately HK$183 million, intended to be used for the proposed cooperation between the Company and Agile Property for the production, research and development of NEV-related technology and products in the PRC were brought forward to the Year and were fully utilised as intended

Approximately 32% of the net proceeds, representing approximately HK$62 million, intended to be used for future potential acquisition or investment in NEV related businesses or technologies were brought forward to the Year and were fully utilised as intended

Amount of proceeds that are not utilized as N/A at the date of this report and expected timeline of use

N/A

• English name for identification only

There was no issue of listed securities of the Company during the Year.

Employees and Remuneration Policies

As at 30 September 2020, the Group had 204 (2019: 221) employees. The related employees’ costs for the year (including directors’ remuneration) amounted to approximately HK$63,805,000 (2019: HK$87,659,000). In addition to basic salary, employees are entitled to other benefits including those under social insurance contribution, employee provident fund schemes and share option scheme of the Company. The remuneration of employees was in line with market trend and commensurate to the levels of pay in the industry and to the performance of individual employees that are regularly reviewed each year.

The annual salary of Directors is determined by reference to their performance for the year, experience, qualification, duties and responsibilities in the Company and the prevailing market rate and will be subject to review by the remuneration committee of the Board (the “Remuneration Committee”) and the Board from time to time. Further details of Directors’ and chief executive’s remuneration and the five highest paid employees are set out in notes 10 and 11 to the financial statements, respectively.

FUTURE PLANS FOR MATERIAL INVESTMENTS OR CAPITAL ASSETS

Save as disclosed in this report, there was no other specific plan for material investments or capital assets as at 30 September 2020.

ANNUAL REPORT 2020 15

APOLLO FUTURE MOBILITY GROUP LIMITED

REPORT OF THE DIRECTORS

The Board is pleased to present its report together with the audited consolidated financial statements of the Group for the Year.

PRINCIPAL ACTIVITIES

The principal activity of the Company in the course of the Year is investment holding. Details of the principal activities of the subsidiaries of the Company in the course of the Year are set out in note 1 to the consolidated financial statements.

SEGMENT INFORMATION

An analysis of the Group’s revenue and results by geographical segment based on the location of customers and business segments for the Year is set out in note 4 to the consolidated financial statements.

RESULTS AND DIVIDENDS

The Group’s results for the Year and the financial position of the Group and of the Company as at 30 September 2020 are set out in the consolidated financial statements on pages 74 to 185, respectively.

The Board did not recommend the payment of any dividend for the Year (2019: Nil).

INDUSTRY OVERVIEW, BUSINESS REVIEW, PROSPECTS AND OUTLOOK, FINANCIAL REVIEW, EVENTS AFTER THE REPORTING PERIOD AND FINAL DIVIDEND

The disclosures set out in the sub-sections headed “Industry Overview”, “Business Review” and “Prospects and Outlook” in the section headed “Chairman’s Statement” and the sub-sections headed “Financial Review”, “Events After The Reporting Period” and “Final Dividend” in the section headed “Management Discussion and Analysis” of this annual report form part of this report of the Directors.

RELATIONSHIP WITH STAKEHOLDERS

The Group recognises that employees, customers and business partners are key to its sustainable development. The Group is committed to establishing a close and caring relationship with its employees, providing quality services to its customers and enhancing cooperation with its business partners.

The Company provides a fair and safe workplace, promotes diversity to our staff, and provides competitive remuneration and benefits and career development opportunities based on their merits and performance. The Group also puts ongoing efforts to provide adequate training and development resources to the employees so that they can keep abreast of the latest development of the market and the industry and, at the same time, improve their performance and self-fulfilment in their positions.

The Group understands that it is important to maintain good relationship with customers and provide the products and services in a way that satisfies the needs and requirements of the customers. The Group enhances the relationship by continuous interaction with customers to gain insight on the changing market demand for the products so that the Group can respond proactively. The Group has also established procedures in place for handling customers’ complaints to ensure they are dealt with in a prompt and timely manner.

The Group is also dedicated to develop and maintain good and long term relationships with suppliers and contractors to ensure stability of the Group’s business.

16 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

REPORT OF THE DIRECTORS

PRINCIPAL RISKS AND UNCERTAINTIES FACING THE COMPANY

The Group’s financial conditions, results of operations, businesses and prospects may be affected by a number of risks and uncertainties. The following are the key risks and uncertainties identified by the Group. There may be other risks and uncertainties which are not known to the Group or which may not be material now but could turn out to be material in the future.

Business Risk

A substantial portion of the operating assets of the Group is located in the PRC and the Group expects that a material portion of the turnover will continue to be derived from the operations in the PRC. The results of operations and prospects are subject, to a significant degree, to economic, political and legal developments in the PRC. The economy of the PRC differs from the economies of most developed countries in many respects, including the extent of government involvement, the level of development, the growth rate, and government control of foreign exchange. The Group cannot predict whether changes in the PRC’s political, economic and social conditions, laws, regulations and policies will have any material adverse effect on the current or future business, results of operation or financial condition of the Group.

Financial Risk

The financial risk management of the Group is set out in note 43 to the consolidated financial statements.

FINANCIAL STATEMENTS

The financial performance of the Group for the Year and the financial position of the Group as at 30 September 2020 are set out on pages 74 to 77.

CLOSURE OF REGISTER OF MEMBERS

The register of members of the Company will be closed from 15 March 2021 to 19 March 2021 (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 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong for registration no later than 4:30 p.m. on 12 March 2021.

ANNUAL REPORT 2020 17

APOLLO FUTURE MOBILITY GROUP LIMITED

REPORT OF THE DIRECTORS

FIVE YEAR FINANCIAL SUMMARY

The following is a summary of the published consolidated results and of the assets and liabilities of the Group for each of the five years ended 30 September 2020:

Results

		Year	ended 30 September	ended 30 September
	2020	2019	2018	2017	2016
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Revenue	357,705	536,355	717,023	545,533	392,502
(Loss)/profit from operating activities	(69,713)	(621,564)	(103,522)	(698,162)	11,454
Finance costs	(8,253)	(4,039)	(5,585)	(4,118)	(3,875)
(Loss)/profit before tax	(77,966)	(625,603)	(109,107)	(702,280)	7,579
Income tax (expense)/credit	(281,397)	6,274	(1,230)	(3,065)	(8,513)
Loss for the year from a deconsolidated
subsidiary	–	–	–	–	(27,755)
Loss for the year	(359,363)	(619,329)	(110,337)	(705,345)	(28,689)
Attributable to:
Owners of the Company	(345,177)	(605,392)	(94,096)	(700,128)	(32,673)
Non-controllinginterests	(14,186)	(13,937)	(16,241)	(5,217)	3,984
	(359,363)	(619,329)	(110,337)	(705,345)	(28,689)

18 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

REPORT OF THE DIRECTORS

FIVE YEAR FINANCIAL SUMMARY (continued)

Assets and Liabilities

			At	30 September
	2020	2019		2018	2017	2016
	HK$’000	HK$’000		HK$’000	HK$’000	HK$’000
Non-current assets	3,640,800	3,362,862		2,910,330	2,517,707	732,707
Current assets	1,677,070	1,190,447		1,587,486	2,366,206	887,759
Total assets	5,317,870	4,553,309		4,497,816	4,883,913	1,620,466
Current liabilities	869,875	407,368		330,077	348,855	130,704
Non-current liabilities	714,603	102,276		132,500	139,294	28,644
Total liabilities	1,584,478	509,644		462,577	488,149	159,348
Net assets	3,733,392	4,043,665		4,035,239	4,395,764	1,461,118

PROPERTY, PLANT AND EQUIPMENT

Details of movements in the Group’s property, plant and equipment during the Year are set out in note 15 to the consolidated financial statements.

ISSUED CAPITAL

Details of the share capital of the Company during the Year are set out in note 32 to the consolidated financial statements.

PRE-EMPTIVE RIGHTS

There is no provision for pre-emptive rights under the Company’s articles of association (the “Articles”) or the laws of the Cayman Islands, being the jurisdiction in which the Company was incorporated, which would oblige the Company to offer new shares on a pro-rata basis to its existing shareholders.

PURCHASE, REDEMPTION OR SALE OF LISTED SECURITIES OF THE COMPANY

Neither the Company nor any of its subsidiaries has purchased, sold or redeemed any of the Company’s listed securities during the Year.

RESERVES

Details of movements in the reserves of the Group during the Year are set out in the consolidated statement of changes in equity on pages 78 to 79 of this report.

DISTRIBUTABLE RESERVES

As at 30 September 2020, the Company had distributable reserves of approximately HK$2,492,827,000 (2019: HK$2,579,468,000) calculated in accordance with the Companies Law (Law 3 of 1961, as consolidated and revised) of the Cayman Islands. This includes the Company’s share premium account of approximately HK$5,989,760,000 (2019: HK$5,989,760,000) which is distributable to the shareholders of the Company provided that immediately following the date on which the dividend is proposed to be distributed, the Company will be in a position to pay off its debts as and when they fall due in the ordinary course of business. The share premium account may also be distributed in the form of fully paid bonus shares.

19

ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

REPORT OF THE DIRECTORS

MAJOR CUSTOMERS AND SUPPLIERS

During the Year, sales to the Group’s 5 largest customers combined accounted for approximately 60% of the total sales and the sales to the largest customer included therein amounted to approximately 36%.

Purchases from the Group’s 5 largest suppliers combined accounted for approximately 82% of the total purchases for the Year and the purchases from the largest supplier included therein amounted to approximately 28%.

None of the Directors or any of their close associate(s) or any shareholders of the Company (which, to the best knowledge of the Directors, own more than 5% of the Company’s issued share capital) had any beneficial interest in the Group’s 5 largest customers or 5 largest suppliers.

DIRECTORS

The Directors during the Year and up to the date of this report were:

Executive Directors

Mr. Ho King Fung, Eric (Chairman)

Mr. Sung Kin Man (Chief Executive Officer)

Non-Executive Director

Mr. Zhang Jinbing (Co-Chairman)

Independent Non-Executive Directors

Mr. Tam Ping Kuen, Daniel Mr. Teoh Chun Ming

Mr. Peter Edward Jackson

Mr. Charles Matthew Pecot III

In accordance with article 108 of the Articles, Mr. Sung Kin Man, Mr. Zhang Jinbing and Mr. Tam Ping Kuen, Daniel shall retire by rotation at the forthcoming annual general meeting of the Company (the “2021 AGM”). Mr. Zhang Jinbing has decided not to offer himself for re-election as a non-executive Director at the 2021 AGM. For further details in relation to, among other things, the retirement by rotation of Mr. Zhang Jinbing as a non-executive Director, please refer to the announcement of the Company dated 30 December 2020. Mr. Sung Kin Man and Mr. Tam Ping Kuen, Daniel, being eligible, have offered themselves for re-election at the 2021 AGM. All Directors are subject to retirement by rotation and re-election at annual general meetings of the Company at least once every three years.

None of the Directors proposed for re-election at the 2021 AGM has a service contract with the Company or any of its subsidiaries which is not determinable by the employing company within one year without payment of compensation, other than statutory compensation.

BIOGRAPHICAL DETAILS OF DIRECTORS AND SENIOR MANAGEMENT

Biographical details of the Directors and senior management of the Group are set out on pages 16 to 18 of the annual report.

20 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

REPORT OF THE DIRECTORS

CONTINUING CONNECTED TRANSACTION

The Group’s indirect non wholly-owned subsidiary, Apollo Automobil Limited (“Apollo Automobil”), entered into a license agreement (“License Agreement”) on 12 May 2020 with a term of three years commencing from 12 May 2020 and ending on 11 May 2023 with De Tomaso Automobili Limited (“De Tomaso”). Pursuant to the License Agreement, De Tomaso was granted the rights to use the new vehicular platform designed and developed by Apollo Automobil (“the Platform”) in “De Tomaso” branded vehicles worldwide at a minimum aggregate license fee of US$10,000,000 (equivalent to approximately HK$78,000,000).

The cooperation is expected to strengthen the Group’s business strategy of creating a turnkey platform for “Future Mobility” and it is expected that the Group will be able to leverage on the success and branding of De Tomaso through the license of the Platform and further market its capabilities to other potential customers.

De Tomaso is wholly-owned by Mr. Choi Sung Fung Norman, who is a director of several subsidiaries of the Company (including Apollo Automobil). De Tomaso is therefore a connected person of the Company at the subsidiary level under the Listing Rules and accordingly, the transaction under the License Agreement constitutes a continuing connected transaction of the Company at the subsidiary level.

According to the License Agreement, De Tomaso may only place orders with Apollo Automobil for the license of the Platforms from 1 October 2020 onwards, and the license fee will be payable upon placement of such order. Accordingly, no annual cap for the aggregate license fee payable by De Tomaso to Apollo Automobil under the License Agreement was set for the financial year of the Company ended 30 September 2020, and no order for any license of the Platform under the License Agreement was placed by De Tomaso with Apollo Automobil during the Year and no license fee was paid by De Tomaso to Apollo Automobil under the License Agreement during the Year.

The Directors (including the independent non-executive Directors) are of the view that the License Agreement was entered into in the ordinary and usual course of business of the Group and the terms of the License Agreement are on normal commercial terms or better arrived at after arm’s length negotiation between the parties and are fair and reasonable and in the interests of the Company and the shareholders of the Company as a whole.

Further details in relation to, among other things, the License Agreement is set out in the announcement of the Company dated 12 May 2020.

RELATED PARTY TRANSACTIONS

Details of related party transactions of the Group during the Year are set out in note 38 to the consolidated financial statements. Each of the related party transactions during the Year constitutes a connected transaction or continuing connected transaction but is fully exempted and not subject to any of the disclosure requirements under Chapter 14A of the Listing Rules.

DIRECTORS’ MATERIAL INTERESTS IN TRANSACTIONS, ARRANGEMENTS AND CONTRACTS

No transactions, arrangements or contracts of significance, to which the Company, its parent company, its subsidiaries or its fellow subsidiaries, was a party and in which a Director at any time during the Year or an entity connected with a Director at any time during the Year had any material interest, whether directly or indirectly, was entered into or subsisted at the end of the Year or at any time during the Year.

ANNUAL REPORT 2020 21

APOLLO FUTURE MOBILITY GROUP LIMITED

REPORT OF THE DIRECTORS

MANAGEMENT CONTRACTS

No contracts concerning the management and administration of the whole or any substantial part of the business of the Company were entered into or in existence during the Year, other than service contracts with the Directors and other persons engaged in the full-time employment of the Company.

PERMITTED INDEMNITY PROVISION

Pursuant to the Articles, the Directors, secretary and other officers of the Company shall be indemnified and secured harmless out of the assets and profits of the Company from and against all actions, costs, charges, losses, damages and expenses which they may incur or sustain in the execution of their duty. The Company has taken out and maintained directors’ and officers’ liability insurance throughout the Year and as at the date of this report, which provides appropriate cover for certain legal actions (if any) brought against its Directors and officers.

DIRECTORS’ AND CHIEF EXECUTIVE’S INTERESTS IN THE SHARES, UNDERLYING SHARES AND DEBENTURES

As at 30 September 2020, the interests and short positions of the Directors and the chief executive of the Company in the shares, underlying shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (the “SFO”)) as recorded in the register required to be kept by the Company pursuant to section 352 of the SFO or as notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) were as follows:

			Number of
		Number of	share options		Percentage
	Capacity and nature	ordinary	held	Total	of interest
Name of Directors	of interest	shares held	(Note 1)	interests	(Note 2)
Mr. Ho King Fung, Eric	Personal	19,000,000	50,000,000	69,000,000	0.96%
(Chairman)
Mr. Sung Kin Man	Personal	–	30,000,000	30,000,000	0.42%
(Chief Executive Officer)
Mr. Zhang Jinbing	Corporate and personal	3,960,000	1,488,000	5,448,000	0.08%
		(Note 4)
Mr. Tam Ping Kuen, Daniel	Personal	960,000	2,488,000	3,448,000	0.05%
Mr. Teoh Chun Ming	Personal	–	1,000,000	1,000,000	0.01%
Mr. Peter Edward Jackson	Personal	–	1,000,000	1,000,000	0.01%

Notes:

1. Details of share options held by the Directors are shown in the section “Share Option Scheme” below.

2. Based on 7,170,198,562 shares of the Company in issue as at 30 September 2020.

3. All the interests disclosed above represent long positions in the shares of the Company.

4. Among 3,960,000 shares, (i) 3,240,000 shares are owned by Prestige Rich Holdings Limited, a private company wholly-owned by Mr. Zhang Jinbing; and (ii) 720,000 shares are beneficially owned by Mr. Zhang Jinbing.

22 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

REPORT OF THE DIRECTORS

DIRECTORS’ RIGHTS TO ACQUIRE SHARES OR DEBENTURES

Save as disclosed under the section “Share Option Scheme” below, at no time during the Year or at the end of the Year was the Company, or any of its holding companies or subsidiaries, or any of its fellow subsidiaries, a party to any arrangement to enable the Directors or chief executive of the Company or their respective associates (as defined under the Listing Rules) to have any right to subscribe for securities of the Company or any of its associated corporations as defined in the SFO or to acquire benefits by means of acquisition of shares in, or debentures of, the Company or any other body corporate.

DIRECTORS’ INTERESTS IN A COMPETING BUSINESS

During the Year and up to the date of this report, none of the Directors and directors of the Company’s subsidiaries or their respective associates had any interests in any businesses, apart from the Group’s business, which compete or are likely to compete either directly or indirectly, with the businesses of the Company and its subsidiaries as required to be disclosed pursuant to the Listing Rules.

SHARE OPTION SCHEME

The existing share option scheme (the “Share Option Scheme”) was adopted by the Company on 1 March 2013, the purpose of which is to incentivize and reward eligible participants for their contribution to the Group and to align their interests with that of the Company so as to encourage them to work towards enhancing the value of the Company.

The Share Option Scheme shall be valid and effective for a period of 10 years commencing on the adoption date, after which period no further options will be granted under the Share Option Scheme but the provisions of the Share Option Scheme will remain in full force and effect to the extent necessary to give effect to the exercise of any options granted prior thereto.

Eligible participants under the Share Option Scheme include, among others, employees, Directors, customers, advisors, consultants, suppliers or service providers of the Group.

Details of the Share Option Scheme are as follows:

• (a) The maximum number of ordinary shares issuable upon exercise of the share options (the “Share Options”) which may be granted under the Share Option Scheme and any other share option scheme of the Group (if any) to each participant in any 12-month period shall not exceed 1% of the issued share capital of the Company. Any further grant of Share Options in excess of this limit is subject to shareholders’ approval in a general meeting.

• (b) The exercise period of the Share Options granted is determinable by the Board, and commences after a certain vesting period and ends on a date which is not later than 10 years from the date of the grant of the Share Options or other expiry date(s) stipulated in the Share Option Scheme, whichever is the earlier.

• (c) The offer of a grant of Share Options may be accepted within 21 days from the date of the offer, upon payment of a nominal consideration of HK$1.00 by the grantee.

• (d) The exercise price of the Share Options is determinable by the Board but may not be less than the highest of (i) the closing price of the Company’s shares as stated in the Stock Exchange’s daily quotations sheet on the date of the offer; (ii) the average closing price of the Company’s shares as stated in the Stock Exchange’s daily quotations sheets for the five trading days immediately preceding the date of the offer; or (iii) the nominal value of the Company’s shares.

Further details in relation to Share Options are set out in note 33 to the consolidated financial statements.

23

ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

REPORT OF THE DIRECTORS

SHARE OPTION SCHEME (continued)

Details of the movements of the Share Options during the Year under the Share Option Scheme are as follows:

Date of Grant	Number of Share Options As at 1 October 2019 Granted during the Year Lapsed/ Cancelled during the Year Exercised during the Year As at 30 September 2020 Vesting and exercise period Exercise price per share Closing price per share immediately before date of grant HK$ HK$
Directors and Chief Executive Mr. Ho King Fung, Eric 6 April 2017 30 May 2019 Mr. Sung Kin Man (also the chief executive officer) 30 May 2019 Mr. Zhang Jinbing 19 July 2016 Mr. Tam Ping Kuen, Daniel 19 July 2016 30 May 2019 Mr. Teoh Chun Ming 30 May 2019 Mr. Peter Edward Jackson 30 May 2019 Others Substantial shareholder 13 March 2018 Employees 19 July 2016 3 April 2018 30 May2019	20,000,000 – – – 20,000,000 Note 1 0.85 0.84 30,000,000 – – – 30,000,000 Note 2 0.475 0.485 30,000,000 – – – 30,000,000 Note 2 0.475 0.485 1,488,000 – – – 1,488,000 Note 3 0.65 0.65 1,488,000 – – – 1,488,000 Note 3 0.65 0.65 1,000,000 – – – 1,000,000 Note 2 0.475 0.485 1,000,000 – – – 1,000,000 Note 2 0.475 0.485 1,000,000 – – – 1,000,000 Note 2 0.475 0.485 50,000,000 – – – 50,000,000 Note 4 1.782 1.71 11,973,204 – – – 11,973,204 Note 3 0.65 0.65 1,700,000 – – – 1,700,000 Note 5 1.776 1.72 15,000,000 – – – 15,000,000 Note 2 0.475 0.485
Total	164,649,204 – – – 164,649,204

The refreshment of the scheme mandate limit under the Share Option Scheme was approved by the shareholders of the Company at the annual general meeting of the Company held on 26 March 2020. Please refer to the circular of the Company dated 23 January 2020 for further details. The total number of shares available for issue upon the exercise of all Share Options granted or to be granted under the Share Option Scheme is 881,669,060 (2019: 260,126,314) representing approximately 11.86% (2019: 3.63%) of the Company’s total number of issued shares as at the date of this report.

Notes:

1. From 6 April 2017 to 5 April 2027.

2. From 30 May 2019 to 29 May 2029.

3. Subject to the rules of the Share Option Scheme, the Share Options are exercisable in the following manner for a period from the date of acceptance of the Share Options to 10 years from the date of grant:

Percentage of the Share Options that are vested and exercisable Period for the exercise of the relevant Share Options

20% Additional 20% (i.e. up to 40% in total) Additional 20% (i.e. up to 60% in total) Additional 20% (i.e. up to 80% in total) Additional 20% (i.e. up to 100% in total)

From 19 July 2017 to 18 July 2026 From 19 July 2018 to 18 July 2026 From 19 July 2019 to 18 July 2026 From 19 July 2020 to 18 July 2026 From 19 July 2021 to 18 July 2026

1. From 13 March 2018 to 12 March 2028.

2. From 3 April 2018 to 2 April 2028.

24 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

REPORT OF THE DIRECTORS

SUBSTANTIAL SHAREHOLDERS

As at 30 September 2020, the following persons (other than the Directors or the chief executive of the Company) had interests or short positions in the shares or underlying shares of the Company as recorded in the register required to be kept by the Company under section 336 of the SFO:

	Capacity and	Number of	Percentage of
Name of shareholders	nature of interest	shares held	shares in issue
			(Note 1)
Mr. Ho King Man, Justin	Beneficial owner and interest	1,797,196,474	25.06%
	in a controlled corporation	(Note 2)
Ruby Charm Investment Limited	Beneficial owner	1,699,220,474	23.70%
		(Note 3)
Mr. Li Ka Shing	Interest in controlled corporations	663,090,100	9.25%
		(Note 4)
Great Dawn Investments Limited	Beneficial owner	645,524,000	9.00%
		(Note 5)
Agile Capital Investment	Interest in a controlled corporation	645,524,000	9.00%
Group Limited		(Note 5)
Agile Capital Investment	Interest in controlled corporations	645,524,000	9.00%
Holdings Limited		(Note 5)
Eastern Supreme Group	Interest in controlled corporations	645,524,000	9.00%
Holdings Limited		(Note 5)
Agile Group Holdings Limited	Interest in controlled corporations	645,524,000	9.00%
		(Note 5)
Top Coast Investment Limited	Interest in controlled corporations	645,524,000	9.00%
		(Note 5)
Full Choice Investments Limited	Interest in controlled corporations	645,524,000	9.00%
		(Note 6)
Mr. Chen Zhuo Lin	Beneficiary of a trust	645,524,000	9.00%
		(Note 6)
Mr. Chan Cheuk Yin	Beneficiary of a trust	645,524,000	9.00%
		(Note 6)
Ms. Luk Sin Fong, Fion	Beneficiary of a trust	645,524,000	9.00%
		(Note 6)
Mr. Chan Cheuk Hung	Beneficiary of a trust	645,524,000	9.00%
		(Note 6)
Mr. Chan Cheuk Hei	Beneficiary of a trust	645,524,000	9.00%
		(Note 6)
Mr. Chan Cheuk Nam	Beneficiary of a trust	645,524,000	9.00%
		(Note 6)
Ms. Chan Siu Na	Spouse	645,524,000	9.00%
		(Note 7)
Ms. Zheng Huiqiong	Spouse	645,524,000	9.00%
		(Note 8)
Ms. Lu Liqing	Spouse	645,524,000	9.00%
		(Note 9)
Ms. Lu Yanping	Spouse	645,524,000	9.00%
		(Note 10)
Vivaldi International Limited	Beneficial owner	526,640,929	7.34%
		(Note 11)
Ms. Chau Hoi Shuen Solina Holly	Interest in a controlled corporation	526,640,929	7.34%
		(Note 11)
Sino-Alliance International, Ltd.	Beneficial owner	431,876,000	6.02%
		(Note 12)
Shanghai Alliance Investment Ltd.	Interest in a controlled corporation	431,876,000	6.02%
		(Note 12)

25

ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

REPORT OF THE DIRECTORS

SUBSTANTIAL SHAREHOLDERS (continued)

Notes:

1. Based on 7,170,198,562 shares of the Company in issue as at 30 September 2020.

2. Among 1,797,196,474 shares, (i) 1,699,220,474 shares are owned by Ruby Charm Investment Limited (see also note 3 below); (ii) 47,976,000 shares are beneficially owned by Mr. Ho King Man, Justin; and (iii) 50,000,000 shares represent the Share Options granted to Mr. Ho King Man, Justin on 13 March 2018 pursuant to the terms of the Share Option Scheme, which entitle him to subscribe for shares of the Company. Details of share options held by Mr. Ho King Man, Justin as a substantial shareholder of the Company are shown in the section “Share Option Scheme” above.

3. Ruby Charm Investment Limited is a private company directly wholly owned by Mr. Ho King Man, Justin.

4. Among 663,090,100 shares, (i) 311,619,512 shares are owned through Ocean Dynasty Investments Limited, a private company indirectly wholly owned by Mr. Li Ka Shing; and (ii) 351,470,588 shares are owned by Goldrank Limited, a company wholly owned by Li Ka Shing (Global) Foundation (“LKSGF”). By virtue of the terms of the constitutional documents of LKSGF, Mr. Li Ka Shing is regarded as having the ability to exercise or control the exercise of one-third or more of the voting power at general meetings of LKSGF.

5. Great Dawn Investments Limited is a private company directly wholly owned by Agile Capital Investment Group Limited. Agile Capital Investment Group Limited is a private company directly wholly owned by Agile Capital Investment Holdings Limited. Agile Capital Investment Holdings Limited is a private company directly wholly owned by Eastern Supreme Group Holdings Limited. Eastern Supreme Group Holdings Limited is a private company directly wholly owned by Agile Group Holdings Limited. Agile Group Holdings Limited, a company listed on the Stock Exchange (stock code: 3383), is a company directly non-wholly owned as to approximately 62.63% by Top Coast Investment Limited. Top Coast Investment Limited is a private company directly wholly owned by Full Choice Investments Limited.

6. Full Choice Investments Limited is a trustee of the Chen’s Family Trust, the beneficiaries of which are Mr. Chen Zhuo Lin, Mr. Chan Cheuk Yin, Ms. Luk Sin Fong, Fion, Mr. Chan Cheuk Hung, Mr. Chan Cheuk Hei and Mr. Chan Cheuk Nam.

7. Ms. Chan Siu Na is the spouse of Mr. Chan Cheuk Nam and is deemed to be interested in the shares.

8. Ms. Zheng Huiqiong is the spouse of Mr. Chan Cheuk Yin and is deemed to be interested in the shares.

9. Ms. Lu Liqing is the spouse of Mr. Chan Cheuk Hung and is deemed to be interested in the shares.

10. Ms. Lu Yanping is the spouse of Mr. Chan Cheuk Hei and is deemed to be interested in the shares.

11. Vivaldi International Limited is a private company directly wholly-owned by Ms. Chau Hoi Shuen Solina Holly.

12. Sino-Alliance International, Ltd is a private company directly wholly owned by Shanghai Alliance Investment Ltd.

13. All the interests stated above represent long positions in the shares of the Company.

INTEREST-BEARING BANK AND OTHER BORROWINGS

Particulars of interest-bearing bank and other borrowings of the Group as at 30 September 2020 are set out in note 30 to the consolidated financial statements.

PUBLIC FLOAT

Based on information that is publicly available to the Company and within the knowledge of the Directors, as at the latest practicable date prior to the issue of this report, the Company has maintained sufficient public float as prescribed under the Listing Rules.

26

ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

REPORT OF THE DIRECTORS

CORPORATE GOVERNANCE

During the Year, the Company has complied with the code provisions set out in the Corporate Governance Code (the “Code”) as stated in Appendix 14 of the Listing Rules. Further information on the Company’s corporate governance practices is set out in the Corporate Governance Report contained in the annual report.

MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS

The Company has adopted the Model Code as set out in Appendix 10 of the Listing Rules regarding securities transactions by the Directors. Following specific enquiry by the Company, all Directors confirmed that they have fully complied with the Model Code during the Year.

INDEPENDENT NON-EXECUTIVE DIRECTORS

The Company currently has four independent non-executive Directors, which number meets the minimum requirement of the Listing Rules that the number of independent non-executive directors must represent at least one-third of the Board.

The Company has received a written confirmation of independence from each of the independent non-executive Directors, and considers them to be independent.

ENVIRONMENTAL POLICY

The Group is committed to supporting environmental sustainability. The Group is committed to maintaining sustainable working practices and pays close attention to ensure all resources are efficiently utilized. The Group strives to become an environmental-friendly corporation by saving electricity and encouraging the recycling of office supplies and other materials. Details of the Group’s environmental policy and performance are set out in the Environmental, Social and Governance Report contained in this annual report.

COMPLIANCE WITH RELEVANT LAWS AND REGULATIONS

During the Year, as far as the Company is aware, there was no material breach of or non-compliance with applicable laws and regulations by the Group that has a significant impact on the Group.

AUDIT COMMITTEE

The Company has established the Audit Committee with written terms of reference in compliance with the Code.

During the Year and as at the date of this report, the Audit Committee consists of the following members, all being independent non-executive Directors:

Mr. Teoh Chun Ming (Chairman)

Mr. Tam Ping Kuen, Daniel

Mr. Peter Edward Jackson

Mr. Charles Matthew Pecot III

The primary responsibilities of the Audit Committee are to assist the Board in providing an independent view of the effectiveness of the Company’s financial controls, internal control and risk management systems, to review and monitor the effectiveness of the audit process and to perform other duties and responsibilities as assigned by the Board. The Audit Committee has reviewed and discussed the annual results and the consolidated financial statements of the Company for the Year.

27

ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

REPORT OF THE DIRECTORS

CHANGE OF AUDITORS

In May 2018, KTC Partners CPA Limited (“KTC”) resigned as the auditors of the Company with effect from 29 May 2018 as the Company and KTC could not reach a consensus on the audit fee for the financial year ending 30 September 2018. Ernst & Young (“EY”) was appointed as the auditors of the Company with effect from 29 May 2018 to fill the casual vacancy following the resignation of KTC as the auditors of the Company and EY has been appointed as the auditors of the Company since then.

AUDITORS

The consolidated financial statements of the Company for the Year have been audited by EY, who will retire and, being eligible, offer themselves for re-appointment as the auditors of the Company at the forthcoming annual general meeting of the Company.

On behalf of the Board

APOLLO FUTURE MOBILITY GROUP LIMITED Ho King Fung, Eric Chairman

Hong Kong 30 December 2020

28 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

DIRECTORS AND SENIOR MANAGEMENT

DIRECTORS

Executive Directors

Mr. Ho King Fung, Eric, aged 43, joined the Company as an executive Director and the Co-Chairman of the Board on 1 November 2016. He was re-designated as the Chairman of the Board and was appointed as the chairman of the nomination committee (the “Nomination Committee”) and investment committee (the “Investment Committee”) of the Board with effect from 24 November 2017.

He has extensive experience in investment banking origination, capital markets and legal practice. He was an analyst at JP Morgan in 2000. He is a solicitor of the Hong Kong Special Administrative Region. He worked at Linklaters between 2003 and 2006 and his last position with Linklaters was associate solicitor. Between 2007 and 2010, he worked at Deutsche Bank AG, Hong Kong Branch and his last position held was vice president and the head of Hong Kong and Macau Origination. He is a committee member of the Chinese People’s Political Consultative Conference of Beijing, a role which he has held since 2008. He is also the president of the Macau Money Exchangers’ Association. He was awarded the Chinese Economics Elite Award in 2009.

He has served as an independent non-executive director of Nature Home Holding Company Limited, a company listed on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) (stock code: 2083), since May 2011. He was appointed as a non-executive director of EPI (Holdings) Limited, a company listed on the Stock Exchange (stock code: 689), in April 2013 and was re-designated as a non-executive chairman in July 2013, and he resigned from both positions in October 2016. He also served as a non-executive director of AGTech Holdings Limited, a company listed on the Stock Exchange (stock code: 8279), from May 2013 to August 2016. He is currently the chairman of P&W Money Changer Limited and Jing Yang Company Limited.

He graduated with a Bachelor of Commerce degree (majoring in Finance) and a Bachelor of Laws degree from the University of New South Wales in Australia.

Mr. Sung Kin Man, aged 49, was appointed as an executive Director, the chief executive officer of the Company, the chairman of the corporate governance committee of the Board (the “Corporate Governance Committee”) and a member of the Investment Committee with effect from 1 February 2019. He joined the Company as the chief strategy officer of the Company on 1 January 2019 and ceased to be the chief strategy officer of the Company with effect from 1 February 2019. He is responsible for the overall management, business strategy and development, as well as merger and acquisition activities of the Group.

Mr. Sung has been working in the finance industry and international capital markets in Hong Kong and other parts of Asia since 1994. He has extensive management experience and was an executive director of UBS Securities Asia Ltd., responsible for business in Greater China. He was also a director of the Global Equity Division of Merrill Lynch Asia Inc. from 2005 to 2007. Mr. Sung was an executive director and the chief executive officer of Sino Prosper (Group) Holdings Limited, a company listed on the Stock Exchange (stock code: 766), from November 2009 to March 2015, and was an executive director of China Netcom Technology Holdings Limited, a company listed on the Stock Exchange (stock code: 8071), from May 2014 to March 2015. Mr. Sung served as an executive director and the chief executive officer of China Silver Group Limited, a company listed on the Stock Exchange (stock code: 815), during the period from April 2015 to December 2018.

He graduated from the University of Southern California and obtained a Bachelor’s Degree of Science in Business Administration majoring in finance and minoring in marketing.

ANNUAL REPORT 2020 29

APOLLO FUTURE MOBILITY GROUP LIMITED

DIRECTORS AND SENIOR MANAGEMENT

Non-Executive Director

Mr. Zhang Jinbing, aged 49, was re-designated as the Co-Chairman of the Board and was re-designated as a nonexecutive Director with effect from 24 November 2017. He has extensive experience in corporate management. He was an executive Director of the Company for the period from January 2015 to 23 November 2017 and was the Chairman of the Company for the period from June 2015 to 23 November 2017. He has served as an executive director and a cochairman of the board of directors of Chong Kin Group Holdings Limited (“Chong Kin”), a company listed on the Stock Exchange (stock code: 1609), since 5 January 2018, and he has been re-designated as the chairman of Chong Kin and appointed as the chief executive officer of Chong Kin with effect from 12 January 2018. He has also served as an executive director of State Energy Group International Assets Holdings Limited (“State Energy”), a company listed on the Stock Exchange (stock code: 918), since 12 September 2018 and he has been re-designated as the Chairman of State Energy with effect from 25 October 2018. He was also an executive director of Synertone Communication Corporation, a company listed on the Stock Exchange (stock code: 1613), for the period from August 2012 to April 2014.

He is the founder and the director of China Golden Holdings Limited, a private company incorporated in Hong Kong and principally engaged in sundry trading (including hardware parts, car parts and PVC products). From 2004 to 2006, he worked as a general manager at Guangdong Copper Alloy Material Company Limited. Mr. Zhang graduated with a Bachelor of Arts degree from Guangzhou Foreign Language Institute in 1994.

Independent Non-Executive Directors

Mr. Teoh Chun Ming, aged 50, was appointed as an independent non-executive Director with effect from 24 November 2017. He also serves as the chairman of the audit committee of the Board (the “Audit Committee”) and a member of the Remuneration Committee, Nomination Committee, Investment Committee and Corporate Governance Committee with effect from 24 November 2017 and the chairman of the Remuneration Committee with effect from 17 December 2018.

He has over 28 years of accounting and finance experience. He obtained a Master of Professional Accounting degree from the Hong Kong Polytechnic University in 2005. He has been a fellow member of the Association of Chartered Certified Accountants since 2005, a fellow member of the Hong Kong Institute of Certified Public Accountants since 2010 and a fellow member of the Institute of Chartered Accountants in England and Wales since 2015.

He has served as a non-executive director of Nature Home Holding Company Limited, a company listed on the Stock Exchange (stock code: 2083), since July 2012, upon the end of his term as its chief financial officer and company secretary commencing in September 2008 and March 2009 respectively. He previously served as an independent non-executive director of EPI (Holdings) Limited, a company listed on the Stock Exchange (stock code: 689), from January 2014 to October 2016. He has also served as the chief financial officer and company secretary of Joyer Auto HK Company Limited since July 2012.

Mr. Tam Ping Kuen, Daniel, aged 57, was appointed as an independent non-executive Director in May 2006 and he is a member of the Audit Committee and Remuneration Committee. He has served as an independent non-executive director of Chong Kin, a company listed on the Stock Exchange (stock code: 1609), since 3 September 2018. He is the founder of Daniel Tam & Co., Certified Public Accountants (Practising). Mr. Tam holds a Master of Financial Economics degree from the University of London and is an associate member of Hong Kong Institute of Certified Public Accountants and a fellow member of Association of Chartered Certified Accountants.

30 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

DIRECTORS AND SENIOR MANAGEMENT

Mr. Peter Edward Jackson, aged 72, was appointed as an independent non-executive Directors with effect from 23 April 2018 and was appointed as a member of the Audit committee, Remuneration committee, Nomination committee and Corporate Governance Committee with effect from 17 December 2018.

He has over 40 years’ international experience in the satellite and telecommunications industry. He was a non-executive director of Asia Satellite Telecommunications Holdings Limited, a company previously listed on the Stock Exchange (stock code: 1135), (“AsiaSat”) from January 2012 to August 2018 and he is a non-executive director of SpeedCast International Limited, a company listed on the Australian Stock Exchange. He was also a consultant to CITIC Group Corporation and worked with several private equity and venture capital firms in board or advisory positions from January 2012 to July 2018.

Previously, he was an executive director of AsiaSat from May 1996 to July 2011. He was also the chief executive officer and the executive chairman of AsiaSat from May 1996 to July 2010 and from August 2010 to July 2011 respectively. Prior to joining AsiaSat in July 1993 as its chief executive officer before its listing on the Stock Exchange, he held engineering, marketing and management positions at Cable & Wireless plc (“Cable & Wireless”) and the last position he held at Cable & Wireless was Regional Director, Asia Pacific. During his time at Cable & Wireless, he worked on ventures in the Caribbean, the Middle East, Macau and the People’s Republic of China. He had also worked with British Telecom.

Mr. Charles Matthew Pecot III, aged 59, was appointed as an independent non-executive Director and as a member of the Audit committee, Remuneration committee, Nomination committee and Corporate Governance Committee with effect from 1 June 2019.

Mr. Pecot has been working in the finance industry and international capital markets worldwide since 1994 and has extensive management experience. He is currently serving as the Head of Markets at Barclays Capital Asia Limited, a position which he has held since July 2019. He manages the trading operations of Barclays in Asia Pacific, including all Equities, Credit and Macro (including Rates and Foreign Exchange). Prior to that, he was the Head of Equities at Barclays, responsible for leading the equities franchise in Asia Pacific only. Previously, he was the Head of Prime Services and Head of Equities Distribution in Asia Pacific at Credit Suisse (Hong Kong) Limited for the period from July 2009 to June 2017. Mr. Pecot was also the Head of Prime Services and Prime Brokerage Services in Asia Pacific at UBS Securities Asia Limited for the period from April 2004 to February 2007.

He graduated with a bachelor’s degree in mechanical engineering and obtained a master’s degree major in science in operations research and minor in applied statistics at the Air Force Institute of Technology, Ohio, the United States of America.

Company Secretary

Mr. Moy Yee Wo, Matthew, aged 41, is the chief financial officer and company secretary of the Company. Mr. Moy joined our Company in 2019 and is responsible for our Group’s strategic planning, corporate finance activities, oversight of financial reporting procedures, company secretary matters, internal controls and compliance with the requirements under the Rules Governing the Listing of Securities on the Stock Exchange (the”Listing Rules”). Before joining the Company, Mr. Moy served as the chief financial officer, the company secretary and an authorised representative of China Silver Group Limited, a company listed on the Stock Exchange (stock code: 815), from August 2012 to January 2019. Mr. Moy has been an independent non-executive director of Chi Ho Development Holdings Limited (stock code: 8423) and Reach New Holdings Limited (stock code: 8471), both being companies listed on the Stock Exchange, since 22 February and 24 June 2017 respectively. Mr. Moy has over 15 years of experience in the financial industry and is a member of the Hong Kong Institute of Certified Public Accountants. Mr. Moy graduated with a bachelor’s degree in business administration in accounting and obtained a master’s degree in business administration at the Hong Kong University of Science and Technology.

31

ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

CORPORATE GOVERNANCE REPORT

CORPORATE GOVERNANCE PRACTICES

The Board and the management of the Company are committed to establishing good corporate governance practices and procedures. The maintenance of high standard of business ethics and corporate governance practices has always been one of the Group’s goals. The Company believes that good corporate governance provides a framework that is essential for effective management, successful business growth and a healthy corporate culture, thereby leading to the enhancement of shareholders’ value.

The Board has adopted the Code as set out in Appendix 14 to the Listing Rules. Continuous efforts are made to review and enhance the Group’s internal controls and procedures in light of changes in regulations and developments in best practices. To us, maintaining high standards of corporate governance practices is not just complying with the provisions but also the intent of the regulations to enhance corporate performance and accountability.

During the Year, the Company has complied with the code provisions of the Code.

DIRECTORS’ SECURITIES TRANSACTIONS

The Company has adopted the Model Code as its own code of conduct regarding securities transactions by Directors. Having made specific enquiry with all Directors, the Directors confirmed that they had complied with the required standard set out in the Model Code throughout the year.

BOARD OF DIRECTORS

During the Year and up to the date of this report, the Board comprises:

Executive Directors	:	Mr. Ho King Fung, Eric_(Chairman)_
		Mr. Sung Kin Man
Non-executive Director	:	Mr. Zhang Jinbing_(Co-Chairman)_
Independent Non-Executive Directors	:	Mr. Tam Ping Kuen, Daniel
		Mr. Teoh Chun Ming
		Mr. Peter Edward Jackson
		Mr. Charles Matthew Pecot III

Each of the current independent non-executive Directors has given an annual confirmation of his independence pursuant to Rule 3.13 of the Listing Rules to the Company, and the Company considers them to be independent under Rule 3.13 of the Listing Rules.

32 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

CORPORATE GOVERNANCE REPORT

BOARD OF DIRECTORS (continued)

During the Year, a total of four (4) regular Board meetings and one (1) annual general meeting (the “2020 AGM”) and one (1) extraordinary general meeting (the “EGM“) were held and the attendance of each of the Directors is set out as follows:

		Number of meetings
	held and attended during the Year
	Regular board
Name of Directors	meetings	2020 AGM	EGM
Mr. Ho King Fung, Eric	4/4	1/1	1/1
Mr. Sung Kin Man	4/4	1/1	1/1
Mr. Zhang Jinbing	3/4	1/1	1/1
Mr. Teoh Chun Ming	4/4	1/1	1/1
Mr. Tam Ping Kuen, Daniel	4/4	1/1	1/1
Mr. Peter Edward Jackson	4/4	1/1	1/1
Mr. Charles Matthew Pecot III	4/4	1/1	1/1

All Directors (including the chairman of the Board and chairmen of all Board committees) attended the 2020 AGM and EGM to answer questions and collect views of the shareholders of the Company.

RESPONSIBILITIES OF THE BOARD

The Board is responsible for leadership and control of the Group and be collectively responsible for promoting the success of the Group by directing and supervising the Group’s affairs. The Board focuses on formulating the Group’s overall strategies, authorising the development plan and budget; monitoring financial and operating performance; reviewing the effectiveness of the internal control system; supervising and managing management’s performance of the Group; and setting the Group’s values and standards. The Board delegates the day-to-day management, administration and operation of the Group to management. The delegated functions are reviewed by the Board periodically to ensure that they accommodate the needs of the Group.

ANNUAL REPORT 2020 33

APOLLO FUTURE MOBILITY GROUP LIMITED

CORPORATE GOVERNANCE REPORT

DIRECTORS’ INDUCTION AND PROFESSIONAL DEVELOPMENT

On appointment to the Board, each Director receives a comprehensive induction package covering business operations, policy and procedures of the Company as well as the general, statutory and regulatory obligations of being a Director to ensure that he/she is sufficiently aware of his/her responsibilities under the Listing Rules and other relevant regulatory requirements.

The Directors are regularly updated and apprised of the amendments to or updates on the relevant laws, rules, regulations and guidelines, particularly the effects of such new or amended laws, rules, regulations and guidelines on directors specifically, and the Company and the Group generally.

On an ongoing basis, Directors are encouraged to keep up-to-date on all matters relevant to the Group and to attend briefings, seminars and relevant training courses as appropriate. The Directors are requested to provide the Company with their respective training record pursuant to the requirement of the Code on continuous professional development.

During the Year, all of Mr. Ho King Fung, Eric, Mr. Sung Kin Man, Mr. Zhang Jinbing, Mr. Teoh Chun Ming, Mr. Tam Ping Kuen, Daniel, Mr. Peter Edward Jackson and Mr. Charles Matthew Pecot III have participated in appropriate continuous professional development activities by way of attending training sessions, conferences and seminars and reading materials relevant to the Company’s business, directors’ duties and responsibilities, corporate governance and recent amendments to the Listing Rules.

CORPORATE GOVERNANCE FUNCTIONS

The corporate governance committee has been established since 24 November 2017 and is responsible for performing the corporate governance functions such as developing and reviewing the Company’s policies, practices on corporate governance, training and continuous professional development of directors and senior management, the Company’s policies and practices on compliance with legal and regulatory requirements and reviewing Company’s compliance with the Code.

The Board held meetings from time to time whenever necessary. At least 14 days’ notice of regular Board meetings is given to all Directors and they can include matters for discussion in the agenda as they think fit. The agenda accompanying Board papers are sent to all Directors at least 3 days before the date of a Board meeting in order to allow sufficient time for the Directors to review the documents.

Minutes of each Board meeting are circulated to all Directors for their perusal and comments prior to confirmation of the minutes. The Board also ensures that it is supplied in a timely manner with all necessary information in a form and of a quality appropriate to enable it to discharge its duties.

Every Board member has full access to the advice and services of the company secretary with a view to ensuring that Board procedures, and all applicable rules and regulations are followed and they are also entitled to have full access to Board papers and related materials so that they are able to make an informed decision and to discharge their duties and responsibilities.

34 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

CORPORATE GOVERNANCE REPORT

CHAIRMAN AND CHIEF EXECUTIVE OFFICER

During the Year and as at the date of this report, Mr. Ho King Fung, Eric is the Chairman while Mr. Sung Kin Man is the chief executive officer of the Company.

The Chairman and the Chief Executive Officer have been serving clearly delineated functions within the Group. The Chairman is primarily responsible for providing the overall leadership in the Board’s affairs and in the strategic development of the business of the Group, along with the responsibilities of the Chairman under the Articles and the Listing Rules while the Chief Executive Officer is responsible for the overall management, business strategy and development, as well as merger and acquisition activities of the Group. There is also a clear understanding by and expectation from the Board and within the Group as to the separation of roles and responsibilities between the Chairman and the Chief Executive Officer.

APPOINTMENT AND RE-ELECTION OF DIRECTORS

All non-executive Directors (including independent non-executive Directors) are appointed for a specific term.

Mr. Zhang Jinbing, as a non-executive Director (who will retire by rotation and has decided not to offer himself for reelection at the 2021 AGM) has entered into a letter of appointment with the Company. His current term of service commenced from 24 November 2017 for a period of 36 month. Upon expiry of the term of appointment of Mr. Zhang Jinbing, there was no new service contract or letter of appointment entered into between him and the Company.

Mr. Teoh Chun Ming, as an independent non-executive Director has entered into a formal letter of appointment with the Company. His current term of service commenced from 24 November 2017 for a period of 36 months and was renewed automatically for a successive term of 12 months.

Mr. Tam Ping Kuen, Daniel, as an independent non-executive Director has entered into a formal letter of appointment with the Company. His current term of service commenced from 28 December 2018 for a period of 36 months and is renewable automatically for a successive term of 12 months.

Mr. Peter Edward Jackson, as an independent non-executive Director has entered into a formal letter of appointment with the Company. His current term of service commenced from 23 April 2018 for a period of 36 months and is renewable automatically for a successive term of 36 months.

Mr. Charles Matthew Pecot III, as an independent non-executive Director has entered into a formal letter of appointment. His current term of service commenced from 1 June 2019 for a period of 36 months and is renewable automatically for a successive term of 36 months.

The Articles provide that subject to the manner of retirement by rotation of Directors as from time to time prescribed by the Listing Rules, at each annual general meeting, one-third of the Directors for the time being shall retire from office by rotation and that every Director shall be subject to retirement by rotation at least once every three years.

ANNUAL REPORT 2020 35

APOLLO FUTURE MOBILITY GROUP LIMITED

CORPORATE GOVERNANCE REPORT

AUDIT COMMITTEE

During the Year and as at the date of this report, the Audit Committee has four members, namely Mr. Teoh Chun Ming (Chairman), Mr. Tam Ping Kuen, Daniel, Mr. Peter Edward Jackson and Mr. Charles Matthew Pecot III, all being independent non-executive Directors. Mr. Teoh Chun Ming, who is a certified public accountant of the Hong Kong Institute of Certified Public Accountants, has the appropriate professional qualification to lead and chair the Audit Committee. The terms of reference of the Audit Committee are available on the websites of the Company and the Stock Exchange.

The primary responsibilities of the Audit Committee are to assist the Board in providing an independent view of the effectiveness of the Company’s financial controls, internal control and risk management systems, to review and monitor the effectiveness of the audit process and to perform other duties and responsibilities as assigned by the Board.

According to the terms of reference of the Audit Committee, meeting of the Audit Committee shall be held at least twice a year. Two (2) meetings of the Audit Committee were held during the Year. The attendance of each member of the Audit Committee is set out as follows:

	Number of meetings
	held and attended
Name of members of Audit Committee	during the Year
Mr. Teoh Chun Ming_(Chairman)_	2/2
Mr. Tam Ping Kuen, Daniel	2/2
Mr. Peter Edward Jackson	2/2
Mr. Charles Matthew Pecot III	2/2

The works performed by the Audit Committee during the Year includes the following:

• reviewed the annual report and the annual results announcement of the Company for the year ended 30 September 2019;

• reviewed the interim report and the interim results announcement of the Company for the six months ended 31 March 2020;

• reviewed the adequacy of resources, staff qualifications and experience, training programmes and budget of the Group’s accounting and financial reporting function;

• reviewed the risk management and internal control systems of the Group; and

• reviewed the effectiveness of the Company’s internal audit function.

36 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

CORPORATE GOVERNANCE REPORT

REMUNERATION COMMITTEE

During the Year and as at the date of this report, the Remuneration Committee has four members, namely Mr. Teoh Chun Ming (Chairman), Mr. Tam Ping Kuen, Daniel, Mr. Peter Edward Jackson and Mr. Charles Matthew Pecot III, all being independent non-executive Directors. The terms of reference of the Remuneration Committee are available on the websites of the Company and the Stock Exchange.

The Remuneration Committee has adopted the model described in code provision B.1.2(c)(ii) of the Code in its terms of reference. It makes recommendations to the Board on the remuneration packages for individual executive Directors and senior management, with the Board retaining the final authority to approve such remuneration packages. The other principal responsibilities of the Remuneration Committee include (i) making recommendations to the Board on the Company’s policy and structure for all Directors’ and senior management remuneration and on the establishment of a formal and transparent procedure for developing remuneration policy; (ii) making recommendations to the Board on the remuneration of the non-executive Directors; and (iii) reviewing and recommending the management’s remuneration proposals with reference to the Board’s corporate goals and objectives.

According to the terms of reference of the Remuneration Committee, meeting of the Remuneration Committee shall be held at least once a year. Two (2) meetings were held during the Year. The attendance of each member of the Remuneration Committee is set out as follows:

	Number of meetings
	held and attended
Name of members of Remuneration Committee	during the Year
Mr. Teoh Chun Ming_(Chairman)_	2/2
Mr. Tam Ping Kuen, Daniel	2/2
Mr. Peter Edward Jackson	2/2
Mr. Charles Matthew Pecot III	2/2

The work performed by the Remuneration Committee during the Year includes the following:

• reviewed and determined the policy for the remuneration of Directors and senior management;

• assessed performance of Directors and senior management; and

• reviewed and recommended the remuneration package of the Directors and senior management to the Board.

For the Year, the remuneration payable (including equity-settled share option expense) to two senior management (excluding Directors) each fell within the band of HK$3,500,001 to HK$4,000,000.

Further details of the remuneration of the Directors and the five highest paid individuals are set out in notes 10 and 11 to the financial statements.

ANNUAL REPORT 2020 37

APOLLO FUTURE MOBILITY GROUP LIMITED

CORPORATE GOVERNANCE REPORT

NOMINATION COMMITTEE

During the Year and as at the date of this report, the Nomination Committee has four members, namely Mr. Ho King Fung, Eric (Chairman), Mr. Teoh Chun Ming, Mr. Peter Edward Jackson and Mr. Charles Matthew Pecot III. A majority of the members of the Nomination Committee, namely Mr. Teoh Chun Ming, Mr. Peter Edward Jackson and Mr. Charles Matthew Pecot III are independent non-executive Directors. Mr. Ho King Fung, Eric, the chairman of the Nomination Committee, is the Chairman and an executive Director of the Company. The terms of reference of the Nomination Committee are available on the websites of the Company and the Stock Exchange.

The roles and functions of the Nomination Committee include reviewing the structure, size and composition of the Board at least annually, making recommendations on any proposed changes to the Board to complement the Company’s corporate strategy, identifying individuals suitably qualified to become members of the Board and selecting individuals nominated for directorship (if necessary), assessing the independence of the independent non-executive Directors and making recommendations to the Board on the appointment or re-appointment of Directors and succession planning for Directors, in particular the chairman and the chief executive officer of the Company. For the appointment and nomination of new Directors, the Nomination Committee would consider the candidates on merit against objective criteria and with due regards to the benefits of diversity on the Board and take into account the qualification, ability, working experience, leadership and professional ethics of the candidates, especially their experience in the relevant industry and/or other professional areas. During the Year, there was no appointment of new Director.

According to the terms of reference of the Nomination Committee, meeting of the Nomination Committee shall be held at least once a year. One (1) meeting of the Nomination Committee was held during the Year. The attendance of each member of the Nomination Committee is set out as follows:

	Number of meetings
	held and attended
Name of members of Nomination Committee	during the Year
Mr. Ho King Fung, Eric_(Chairman)_	1/1
Mr. Teoh Chun Ming	1/1
Mr. Peter Edward Jackson	1/1
Mr. Charles Matthew Pecot III	1/1

The works performed by the Nomination Committee during the Year includes the following:

• reviewed the structure, size and composition of the Board; and

• accessed the independence of independent non-executive Directors.

38 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

CORPORATE GOVERNANCE REPORT

BOARD DIVERSITY POLICY

The Board has adopted a board diversity policy effective on 1 September 2013. The Company seeks to achieve board diversity through the consideration of a number of factors, including but not limited to age, cultural and educational background, ethnicity, professional experience, skills, knowledge and length of service. All board appointments will be based on meritocracy, and candidates will be considered against objective criteria, having due regard for the benefits of diversity on the Board.

Selection of candidates will be based on a range of diversity perspectives, including but not limited to gender, age, cultural background and ethnicity, in addition to educational background, professional experience, skills, knowledge and length of service. The ultimate decision will be based on merit and contribution that the selected candidates will bring to the Board.

As at the date of this report, the Board comprises seven Directors. Four of them are independent non-executive Directors, thereby promoting critical review and control of the management process. The Board is also characterised by significant diversity, whether considered in terms of nationality, professional background and skills.

CORPORATE GOVERNANCE COMMITTEE

The Corporate Governance Committee was established on 24 November 2017 and during the Year and as at the date of this report comprises Mr. Sung Kin Man (Chairman), Mr. Teoh Chun Ming, Mr. Peter Edward Jackson and Mr. Charles Matthew Pecot III. A majority of the members of the Corporate Governance Committee, namely Mr. Teoh Chun Ming, Mr. Peter Edward Jackson and Mr. Charles Matthew Pecot III are independent non-executive Directors. Mr. Sung Kin Man, the chairman of the Corporate Governance Committee, is an executive Director and the chief executive officer of the Company. The terms of reference of the Corporate Governance Committee are available at the Company’s website.

The primary responsibilities of the Corporate Governance Committee include, among other things, developing and reviewing the Company’s policies and practices on corporate governance and making recommendations to the Board, and reviewing and monitoring the Company’s policies and practices on compliance with legal and regulatory requirements, and reviewing the Company’s compliance with the Code.

According to the terms of reference of the Corporate Governance Committee, meeting of the Corporate Governance Committee shall be held at least once a year. One (1) meeting was held during the Year. The attendance of each member of the Corporate Governance Committee is set out as follows:

	Number of meetings
	held and attended
Name of members of the Corporate Governance Committee	during the Year
Mr. Sung Kin Man_(Chairman)_	1/1
Mr. Teoh Chun Ming	1/1
Mr. Peter Edward Jackson	1/1
Mr. Charles Matthew Pecot III	1/1

ANNUAL REPORT 2020 39

APOLLO FUTURE MOBILITY GROUP LIMITED

CORPORATE GOVERNANCE REPORT

CORPORATE GOVERNANCE COMMITTEE (continued)

The works performed by the Corporate Governance Committee during the Year includes the following:

• developed and reviewed the Company’s policies and practices on corporate governance and made recommendations to the Board;

• reviewed and monitored the training and continuous professional development of Directors and senior management;

• reviewed and monitored the Company’s policies and practices on compliance with legal and regulatory requirements;

• reviewed the Company’s compliance with the Code; and

• reviewed the corporate governance report in the 2019 annual report of the Company.

INVESTMENT COMMITTEE

The Investment Committee was established on 7 March 2016 and during the Year and as at the date of this report comprises Mr. Ho King Fung, Eric (Chairman), Mr. Sung Kin Man and Mr. Teoh Chun Ming. The terms of reference of the Investment Committee are available at the Company’s website.

ACCOUNTABILITY AND AUDIT

Financial Reporting

The management provides such explanation and information to the Board and reports regularly to the Board on financial position and prospects of the business of the Company so as to enable the Board to make an informed assessment of the financial and other information put before the Board for approval.

The Directors acknowledge their responsibilities (as set out in the Independent Auditor’s Report) for preparing the consolidated financial statements of the Group that give a true and fair view of the state of affairs of the Group. The Board was not aware of any material uncertainties relating to events or conditions that might cast significant doubt upon the Group’s ability to continue as a going concern and the Board has prepared the consolidated financial statements on a going concern basis. The responsibility of the external auditor is to form an independent opinion, based on their audit, on those consolidated financial statements prepared by the Board and to report their opinion to the shareholders of the Company. A statement issued by EY, the auditors of the Company, about their reporting responsibility is set out in the Independent Auditor’s Report.

40 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

CORPORATE GOVERNANCE REPORT

INTERNAL CONTROL AND RISK MANAGEMENT

The Board is responsible for the risk management and internal control systems and reviewing their effectiveness. Such systems are designed to manage rather than eliminate the risk of failure to achieve business objectives, and can only provide reasonable and not absolute assurance against material misstatement or loss.

The Board, as supported by the Audit Committee, reviews the Group’s risk management and internal control systems annually in respect of the relevant financial year. The review includes major financial, operational and compliance controls. The Group has not established an internal audit department and the Board is of the view that given the size, nature and complexity of the business of the Group, it would be more cost effective to appoint external independent professional firms to perform the internal audit function for the Group in order to meet its needs.

The Board has, through the Audit Committee, conducted review of the effectiveness of the risk management and internal control systems of the Group for the Year with the assistance of a professional firm. The review report with examination results (including the identification of major risks in operation) and relevant improvement recommendations were duly reported to the Audit Committee and the Board for them to assess risks controls of the Group and the effectiveness of the risk management system and any material failings or weaknesses in the internal control system, and to take appropriate actions to remedy any of these failings or weaknesses in a timely manner. All remedial actions will be regularly followed up where necessary to ensure that the failings and weaknesses have been duly addressed.

The Board considers that the risk management and internal control systems are effective and adequate and that the Group has complied with the code provisions relating to risk management and internal control of the Code.

DISSEMINATION OF INSIDE INFORMATION

The Group regulates the handling and dissemination of inside information according to internal procedures and policy so as to ensure inside information remains confidential until the disclosure and publication of such information is appropriately approved, and the dissemination of such information is efficiently and consistently made.

The Board is responsible for approving the policy on disclosure of inside information which aims at providing guiding principles, practices and procedures to assist employees and officers of the Group in (i) relaying inside information to the Board to enable it to make timely decisions on disclosure, if necessary; and (ii) communicating with the Group’s stakeholders, in ways which are in compliance with the SFO and the Listing Rules.

An employee who becomes aware of a matter or event that he/she considers to be material or inside information shall report to his division/department head who will assess the sensitivity of the relevant information and, if considered appropriate, escalate and report to the Board and/or the company secretary of the Company.

ANNUAL REPORT 2020 41

APOLLO FUTURE MOBILITY GROUP LIMITED

CORPORATE GOVERNANCE REPORT

AUDITORS’ REMUNERATION

The remuneration of external auditors of the Company, EY, in respect of audit services and non-audit services for the Year is set out below:

Services rendered	Fees paid/payable
	(HK$’000)
Audit services	5,268
Non-audit services
— Review of interim financial information	1,250
— Certainprocedures on major transactions	1,300
	7,818

COMPANY SECRETARY

Mr. Moy Yee Wo Matthew (“Mr. Moy”) was appointed as the company secretary of the Company with effect from 13 February 2019. The biographical details of Mr. Moy are set out under the section headed “Directors and Senior Management”.

In accordance with Rule 3.29 of the Listing Rules, Mr. Moy has taken no less than 15 hours of relevant professional training during the Year.

SHAREHOLDERS’ RIGHTS

The general meetings of the Company provide an opportunity for communication between the shareholders of the Company and the Board. An annual general meeting of the Company shall be held in each year and at the place as may be determined by the Board. Each general meeting, other than an annual general meeting, shall be called an EGM.

• Right to convene extraordinary general meeting

Any one or more members holding at the date of the deposit of the requisition not less than one-tenth of the paidup capital of the Company carrying the right of voting at general meetings of the Company, shall at all times have the right, by written requisition sent to the Company’s principal office as set out in the manner below, to require an EGM to be called by the Board for the transaction of any business specified in such requisition; and such meeting shall be held within two (2) months after the deposit of such requisition.

The written requisition must state the purposes of the meeting, signed by the requisitionist(s) and deposit it to the Board or the company secretary of the Company at the Company’s principal place of business at Units 301 and 302, Third Floor, Building 22E, Phase Three, Hong Kong Science Park, Pak Shek Kok, New Territories, Hong Kong, and such may consist of several documents in like form, each signed by one or more requisitionists.

42 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

CORPORATE GOVERNANCE REPORT

SHAREHOLDERS’ RIGHTS (continued)

• Right to convene extraordinary general meeting (continued)

• The request will be verified with the Company’s branch share registrars in Hong Kong and upon their confirmation that the request is proper and in order, the company secretary of the Company will ask the Board to convene an EGM by serving sufficient notice in accordance with the statutory requirements to all the registered members. On the contrary, if the request has been verified is not in order, the shareholders will be advised of this outcome and accordingly, an EGM will not be convened as requested. If within twenty-one days from the date of the deposit of the requisition the Board fails to proceed to convene such meeting, the requisitionist(s), may convene a meeting in the same manner, and all reasonable expenses incurred by the requisitionist(s) as a result of the failure of the Board shall be reimbursed by the Company to the requisitionist(s).

The notice period to be given to all the registered members for consideration of the proposal raised by the requisitionist(s) concerned at the EGM varies according to the nature of the proposal, as follows:

• At least 14 clear days’ notice in writing (and not less than 10 business days) if the proposal constitutes an ordinary resolution of the Company;

• At least 21 clear days’ notice in writing (and not less than 20 business days) if calling for an annual general meeting or the proposal constitutes a special resolution of the Company in an EGM.

• Right to put enquiries to the Board

Shareholders have the right to put enquiries to the Board. All enquiries shall be in writing and sent by post to the principal place of business of the Company in Hong Kong or by e-mail to info@apollofmg.com for the attention of the company secretary of the Company.

• Right to put forward proposals at general meetings

There are no provisions allowing shareholders of the Company to propose new resolutions at the general meetings under the Cayman Islands Companies Law (2011 Revision). However, shareholders are requested to follow Article 64 of the Articles for including a resolution at a general meeting. The requirements and procedures are set out above. Pursuant to Article 113 of the Company’s articles of association, no person, other than a Director retiring at a meeting, shall, unless recommended by the Directors for election, be eligible for appointment as a Director at any general meeting unless there shall have been lodged at the head office or at the registration office notice in writing signed by a shareholder (other than the person to be proposed) duly qualified to attend and vote at the meeting for which such notice is given of his intention to propose that person for election as a Director and also notice in writing signed by that person of his willingness to be elected as a director. Unless otherwise determined by the Directors and notified by the Company to the shareholders, the period for lodgment of the said notices shall be a seven day period commencing on the day after the dispatch of the notice of the general meeting for such election of Director(s) and ending on the date falling seven days after the dispatch of the said notice of the general meeting. The written notice must state that person’s biographical details as required by Rule 13.51(2) of the Listing Rules. The procedures for shareholders of the Company to propose a person for election as a Director is posted on the Company’s website.

ANNUAL REPORT 2020 43

APOLLO FUTURE MOBILITY GROUP LIMITED

CORPORATE GOVERNANCE REPORT

DIVIDEND POLICY

The Board has approved and adopted a dividend policy on 28 December 2018 (the “Dividend Policy”).

It is the policy of the Board, in considering the payment of dividends, to allow shareholders of the Company to participate in the Company’s profits whilst retaining adequate reserves for the Group’s future growth.

The Board shall consider the following factors before declaring or recommending any dividends:

• a. the Company’s actual and expected financial performance;

• b. the Group’s liquidity position;

• c. retained earnings and distributable reserves of the Company and each of the members of the Group;

• d. the level of the Group’s debts to equity ratio, return on equity and the relevant financial covenants;

• e. any restrictions on payment of dividends that may be imposed by the Group’s lenders;

• f. the Group’s expected working capital requirements and future expansion plans;

• g. general economic conditions and other internal or external factors that may have an impact on the business or financial performance and position of the Company; and

• h. any other factors that the Board deem appropriate.

The shareholders of the Company may not expect any dividends under the following circumstances:

• a. during the growth phase of the Group or during significant expansion or undertaking of any acquisitions or joint ventures requiring higher allocation of capital;

• b. whenever the Company proposes or plans to utilize surplus cash to repurchase the shares of the Company; or

• c. inadequacy of profits or if the Company incurs losses.

The declaration, recommendation and payment of any dividends are also subject to compliance with applicable laws, regulations and the Articles. The Board will continually review the Dividend Policy from time to time and there can be no assurance that dividends will be paid in any particular amount for any given period.

INVESTOR RELATIONS

The Company has established a range of communication channels between itself and its shareholders, investors and other stakeholders. These include the annual general meeting, the annual and interim reports, notices, announcements and circulars and the Company’s website at www.apollofmg.com.

During the Year, there has not been any change in the Company’s memorandum of association and Articles. The Company’s memorandum of association and Articles are available on the websites of the Company and the Stock Exchange.

44 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

1. ABOUT THE REPORT

We are pleased to present our Environmental, Social and Governance Report (the “ESG Report”). The report presents the Group’s concern to environmental and social impacts, policies and initiatives of the Group to demonstrate our long-term commitment to ensure that our activities, at all levels, are economically, socially and environmentally sustainable development to stakeholders. Additional information in relation to the Group’s corporate governance and financial performance can be referred to our annual report for the year ended 30 September 2020.

1.1 Scope and Reporting Boundary

The scope of the ESG Report covers the environmental and social performances of the Group’s principal operating activities spanning over the period from 1 October 2019 to 30 September 2020. The Group is principally engaged in the business of designing, developing, manufacturing and sales of high performance hypercars and provision of mobility technology solutions, retailing and wholesale of jewellery products and watches, money lending and property investment in Germany, Japan, the PRC and Hong Kong.

While we seek to establish a consistent boundary for reporting ESG aspects across the Group’s structure, the reporting boundary of the ESG Report is hence established based on the criteria that all operations and entities reported are substantially owned by the Group and are under our management. As a result, we do not report entities which are outside of the Group’s structure, where we do not own the assets and do not directly engage or employ the workforce, and where we do not operate the asset under a contractual obligation. In addition, we do not report entities which were sold or acquired during the Year.

Part of the content may look back upon the performance of the Group in past years with a view to presenting the ESG Report in a more informative and comparable manner.

1.2 Reporting Guidelines

The “Environmental, Social and Governance Reporting Guide” (the “ESG Reporting Guide”) which is set out in Appendix 27 to the Listing Rules serves as the reporting guidelines of this report.

1.3 Reporting Principles

The reporting principles of this ESG Report are governed by “materiality” and “quantitative”. With respect to “materiality”, we ensure that ESG issues discussed in this report are sufficiently important and material to investors and stakeholders including clients, communities, employees, institutions, governments, nongovernmental organizations, shareholders, subcontractors, suppliers and industry associations. With respect to “quantitative”, Key Performance Indicators (“KPI(s)”) required by the ESG Reporting Guide are measurable such that the effectiveness of our ESG policies and management systems can be evaluated and validated continuously.

The Group is determined to be a responsible enterprise and is committed to perfecting its business and improving the local community. In order to determine what issues are relevant and material to our business with respect to sustainability, the Group is aware that the key is to understand what issues that our stakeholders concerned most. We define our stakeholders as people who affect our business or who are affected by our business. In our daily business, we actively exchange information with our stakeholders through our transparent platform while we are devoted to continuous improvement of our communication system. In addition, we are committed to maintaining a long-term partnership with our stakeholders and are actively engaged in addressing their concerns with timely follow-up actions. The Group is working to create a sustainable growth for the benefit of all our stakeholders.

ANNUAL REPORT 2020 45

APOLLO FUTURE MOBILITY GROUP LIMITED

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

1. ABOUT THE REPORT (continued)

1.4 Reporting Framework

With reference to the ESG Reporting Guide and the Group’s business operation, the presentation of our ESG Report divides the relevant aspects and KPI, which are considered to be relevant and material to the Group, into four subject areas: Environmental Protection, Employment and Labour Practices, Operating Practices and Community Investments.

A complete index in compliance with the ESG Reporting Guide is also available at the end of this report for reference. Except for provisions that the Group considers are inapplicable to its operations, for which explanations have been given on the rightmost column in the said index, this report is compliant with all the “comply or explain” provisions set out in the ESG Reporting Guide.

1.5 Data Collection

Data in this report are extracted from the Group’s internal management system and statistics, and part of the data collected in previous years.

1.6 Contact

We welcome all sorts of comments and suggestions from our stakeholders with respect to this ESG Report or our sustainability performance. Comments or views can be sent to info@apollofmg.com.

2. OUR RESPONSE TO COVID-19

In early 2020, the outbreak of the novel coronavirus epidemic (COVID-19) has brought exceptional challenges to Hong Kong and the world. The pandemic has resulted in unprecedented public health measures across all geographies, with business shutdowns and stay-at-home policies disrupting the global economy at a scale which was never seen in our lifetime. The effects of the COVID-19 crisis on the automotive industry are far-reaching and complex: the crisis has limited the operations of many businesses and has had implications for employees, supply chains, cash flows and investor returns.

While multiple industries are preparing to adapt to the slumps in demand and production, as part of the “new normal”, the health and well-being of all our customers and employees, as well as their families and friends, is our utmost priority in these challenging times. We have an important role to look after our employees, support our customers, and aid our communities. We are dedicating resources to help those in need and help us, as a society, emerge stronger on the other side.

46 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

2. OUR RESPONSE TO COVID-19 (continued)

2.1 Employee Health and Safety

The foremost priority for the Group is to provide our employees with a safe and healthy working environment during the COVID-19 pandemic, maintaining a firm grasp of all applicable obligations (whether mandated or voluntary). The Group has taken the following precautionary measures at our workplaces to minimise the risk of transmission of COVID-19.

• We enhance implementation of hygienic measures in all physical locations and provide guidance to strengthen employees care for frontline employees;

• We inspect ventilation systems on a regular basis to ensure they are operating properly;

• We provide adequate surgical masks and 70–80% alcohol-based sanitisers to employees, while advising all staff members to maintain good personal hygiene and to avoid touching eyes, mouth and nose before cleaning hands;

• Cleansing employees should wear appropriate personal protective equipment including: surgical mask, Latex gloves and eye protection (goggles/face shield);

• Any person who has symptoms of fever, or other respiratory symptoms would be advised to seek medical advice and would be refused entry to workplaces;

• Common areas such as toilets are disinfected with 1 in 99 diluted bleaching agents daily; and

• Friendly message of upkeeping personal and environmental hygiene, health and safety as individual’s own responsibility are posted on workplaces.

2.2 Adapted Management — Actions for a sustainable “new normal”

• We review, update and modify crisis management plans, as needed, and ensure that employees follow these plans during the pandemic;

• We ensure that we comply with operational and monitoring requirements imposed by law, permit conditions and consent orders;

• We ensure that key employees have access to and/or knowledge about critical records and recordkeeping requirements;

• We ensure that emergency and security protocols remain in place for shuttered facilities or those operating with reduced staff to ensure the health and safety of employees remaining on site and the nearby community;

• We leverage pandemic update provided by the government such as daily active cases or percentage of positive cases, along with public health guidelines, to inform its level of permitted employee or customer contact; and

• We build our plan of action for those sustainability opportunities identified and mobilize immediately with a cross-functional team that includes business unit leadership, human resources, finance and investor relations, marketing, R&D and other teams.

47

ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

2. OUR RESPONSE TO COVID-19 (continued)

2.3 Migrating to a Remote Workforce

Through active management and resources planning, the Group encouraged its administration and supporting personnel to work-from-home to form the remote workforce, whenever feasible and appropriate, in order to reduce employees’ exposure to travelling and crowded public transport. At the same time, we seek to upgrade digital infrastructure for employees to better facilitate remote work.

We continue to monitor and assess the situation, keeping all employees and customers posted. The resolve, dedication, commitment and hard work of the Group and all its employees to fight this unprecedented threat to mankind is strong and undeterred. We will remain resilient, ensuring our operations are maintained as smoothly and efficiently as possible during these exceptionally challenging times.

3. OUR ESG MANAGEMENT AND STRATEGY

“Green Automotive” Business

The automotive industry has traditionally been seen as one of the most polluting industries and has been held responsible for many global sustainability issues that we are all facing today, given its pollutant emissions and energy consumption. The Group is aware that consumers are gradually becoming more sensitive to those issues which start to influence the purchasing decisions of average consumers. Where once customers would rarely question how a product was made or what it was made of, corporates are now expected to clearly state where products come from and how the ESG policies inform their choice of processes, materials and deployment of human resources. The change of consumer mentality is progressively transforming the purchasing decisions.

As such, it has never been more important for the Group to implement sound ESG practices into our business model. Our two main business units, Apollo Automobil and Apollo Advanced Technologies, are working to make the best value of renewable materials for commercial production of vehicles. Our full-service mobility solutions of mobility-related technologies aim to reduce the effects of global warming and improve air quality.

We are also committed to instilling the consciousness of resource conservation, deeply indoctrinated the lowcarbon concept and environmental protection into the work and life of every employee. We continue to seek business partners who share our philosophy, commitment to environment conservation and compliance with the applicable environmental laws and regulations. Although change is always difficult and requires careful management, we believe that these initiatives will become part of our competitiveness and are reflective of our commitment to offering our community the best quality of services with the least adverse impact on our planet, building a greener and healthier environment together.

48 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

4. ENVIRONMENTAL PROTECTION

4.1 Corporate Environmental Policy

With growing concerns of climate change and environmental degradation, sustainable environment protection has become a strategic priority for the automotive industry. The Group is committed to upholding the high environmental standards to fulfil relevant requirements throughout our operation, and will continue to devote human and financial resources for environmental conservation, reduction of carbon footprint and environmental compliance as required under applicable laws and regulations.

The Group formulated relevant rules and regulations for a sound and effective management of energy consumption, Greenhouse Gas (“GHG”) emission, as well as discharge of waste and sewage and other pollutants, highlighted as below.

• Comply with applicable environmental protection laws and regulations;

• Integrate environmental considerations in our operations;

• Define appropriate objectives and targets on a regular basis for our ESG management approach;

• Continuously improve our ESG management system to set and maintain rigorous standards;

• Ensure environmentally responsible when sourcing materials;

• Prevent pollution and to protect the environment by conserving natural resources and minimizing waste;

• Promote environmental awareness among our workforce with regular communication; and

• Communicate our environmental performance to stakeholders and seek their involvement wherever applicable.

During the Year, the Group complied with environmental protection laws and regulations in relation to air and GHG emissions, discharge into water and land, and generation of hazardous and non-hazardous waste. The Group did not violate any environmental protection laws or regulations of the region where we operate, nor was it subject to significant fines, non-monetary penalties and litigation relating to environmental protection.

ANNUAL REPORT 2020 49

APOLLO FUTURE MOBILITY GROUP LIMITED

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

4. ENVIRONMENTAL PROTECTION (continued)

4.2 Climate Change Mitigation

Given our Group’s business by nature, we do not generate a significant amount of exhaust gas and GHG directly throughout our operation. However, our daily operation and office administration inevitably involve consumption of fossil fuel directly or indirectly, which releases Nitrogen Oxides (NOx), Sulphur Oxides (SOx), and Carbon Dioxide (CO2) into the air. The Group is highly aware that such GHG emission is one of the major sources of global warming. Therefore, we strive to reduce our carbon and ecological footprint and adopt practices that are sustainable to the environment and minimize our impact on the environment. The sustainable measures adopted by the Group includes:

• Migration to product materials with a longer durability and a lower carbon footprint whenever possible;

• Maintaining indoor temperature at an optimal level for comfort;

• Providing on-off and zoning control of lighting and ventilation system in the workplace according to the operation schedule;

• Encouraging employees to switch off machines and devices, such as computers and monitors when not in use;

• Encouraging employees to make the best use of modern telecommunication system to avoid unnecessary travel arrangement;

• Placing “green message” reminders on office equipment and workplace to further enhance employees’ environmental awareness; and

• Organizing training sessions including case studies to improve awareness of energy efficiency and GHG saving and to engage staff to adopt the energy saving practices together whenever possible.

The Group believes that the adoption of the above mitigation measures will help change the behaviour of the use of energy in the workplace and finally achieve the goal of reducing the GHG emission and protecting our environment.

4.3 Exhaust Gas and GHG Emissions

In accordance with the ESG Reporting Guide set out by the Stock Exchange, our environmental performance of “Emissions” during the Year is tabulated below.

Table 1 — Emissions

	Unit	2020	2019
GHG Emissions	CO2e (t)	23.1	43.7
Nitrogen Oxides	g	10,089	13,895
Sulphur Oxides	g	24.70	39.12
Particulate Matter	g	967	1,657

50 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

4. ENVIRONMENTAL PROTECTION (continued)

4.4 Waste Management

Waste Management Policy

Waste reduction is the focus of our emission control efforts. The Group’s principal waste management policy endeavours to achieve a green and paperless operation, a minimal generation of waste from the source during our operation wherever possible and practical, endorsing ‘4-R Principles — Reduce, Reuse, Replace and Recycle’ as our key policy of waste management.

Hazardous Waste

Given our business nature, the Group’s operation does not directly produce hazardous waste. However, with respect to our business of mobility technology solutions, the Group encourages the development of new technologies and progressive designs to integrate with environmental sustainability in all aspects through minimizing application of hazardous materials in designs and through compliance with the latest regulatory requirements.

In addition, we are dedicated to recycle electronic waste throughout our operation wherever practical, ultimately reducing both the monetary and environmental costs involved in disposal of these electrical parts that would otherwise be scrapped and treated as hazardous waste.

Non-hazardous Waste

The non-hazardous wastes generated by the Group are mainly domestic waste including cardboard, packaging materials, and paper from our operations, among which, recyclable wastes will be recycled for reuse.

Wastewater Discharge

The Group ensures all domestic sewage is properly discharged into the urban sewage pipe network for subsequent sewage treatment.

Table 2 — Waste Discharge

	Unit	2020	2019
Domestic Waste	kg	25,334	21,037

In respect of waste management, the Group constantly strives to maintain a high standard of waste reduction requirement, actively encouraging our employees to appreciate the significance of sustainable development through continuous development in skills and knowledge.

ANNUAL REPORT 2020 51

APOLLO FUTURE MOBILITY GROUP LIMITED

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

4. ENVIRONMENTAL PROTECTION (continued) 4.5 Use of Resources

In light of finite earth’s resources, the Group considers the conservation of natural resources as an indispensable component of our sustainable business. Through actively promoting various environmentally friendly measures, we encourage efficient use of resources, including energy, paper, water and other raw materials. As such, the Group initiated policies to raise the awareness of electricity conservation and taken energy saving measures throughout our daily operations as elaborated in the section of “Exhaust Gas and GHG Emissions”.

Water Consumption

We strive to engage all employees, clients, suppliers and business partners to develop a habit of conserving water consciously. Pantry and washrooms are posted with environmental messages to remind employee the importance and urgency of water conservation. The utility facilities are serviced regularly to ensure that water seepage or leaking pipelines are replaced or repaired on a timely basis. The Group also seeks to reduce water usage, reuse water and improve the quality of wastewater discharged from our working stations wherever possible.

Packaging Material

Given our business nature, the Group does not have manufacturing facilities and does not consume significant amount of packaging materials. However, we encourage our suppliers to use less packaging material.

Environmental Performance

In accordance with the ESG Reporting Guide set out by HKEX, our environmental performance of “Energy and Resources Use” during the Year are tabulated below.

Table 3 — Energy and Resources Use

	Unit	2020	2019
Electricity	kWh	39,871	44,541
Purchased Gas Unleaded Petrol	kg L	n/a 1,680	n/a 2,625
Diesel	L	n/a	n/a
Paper	kg	297	499
Water*	m3	n/a	n/a

• The use of water was covered by the office rent during the Year

52 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

5. EMPLOYMENT AND LABOUR PRACTICES

5.1 Recruitment and Promotion

The Group fully understands that our corporate development and growth are largely driven by the continued quality services delivered by our experienced and competent workforce. As such, it is imperative for the Group to uphold an open, fair, just and reasonable human resource policy with respect to equal opportunities, diversity and anti-discrimination, so as to proactively manage our talent pipeline and career development for employees.

During the Year, we continue to strictly observe applicable laws and regulations and follow our employment policies relating to recruitment and promotion, compensation and dismissal, working hours, rest periods, equal opportunity, diversity, anti-discrimination, and other benefits and welfare, by providing competitive remuneration package, including internal promotion opportunities and performance-based bonus, so as to recruit and retain experienced employees.

5.2 Employment and Labour

In order to attract and retain our employees, which are our most valuable assets, the Group offers competitive wages, medical insurance, disability and invalidity coverage, maternity leave and other compensation to our employees. The Group decides the remunerations payable to its staff based on their duties, work experience and the prevailing market practices. Apart from basic remuneration, share options may be granted to eligible employees by reference to the performance of the Group and individual employees. During the Year, the Group was not aware of any material non-compliance with laws and regulations in respect of human resources.

Hong Kong Region

In Hong Kong, the Group complied with the Labour Law of Hong Kong and relevant employment laws and regulations throughout the Year, including the Mandatory Provident Fund Schemes Ordinance by participating in the Mandatory Provident Fund retirement benefit scheme (the “MPF Scheme”) for our eligible employees, Minimum Wage Ordinance, Employment Ordinance and Employees’ Compensation Ordinance by offering (amongst others) competitive wages, medical insurance, disability and invalidity coverage, maternity leave and other compensation to our employees.

PRC Region

In the PRC, we participated in welfare schemes concerning pension insurance, unemployment insurance, maternity insurance, occupational injury insurance and medical insurance in accordance with the local regulations including the Regulations on the Administration of Housing Provident Funds and the Social Insurance Law of the PRC.

Japan Region

In Japan, the Group during the Year participated in Employee’s Pension Insurance scheme, accident insurance and medical insurance for eligible employee in accordance with the local regulations including the Labour Standards Law of Japan. We also observed the Labour Contract Law during the Year.

ANNUAL REPORT 2020 53

APOLLO FUTURE MOBILITY GROUP LIMITED

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

5. EMPLOYMENT AND LABOUR PRACTICES (continued)

5.3 Occupational Health and Safety

The Group is highly aware that employees’ health and safety is of paramount importance to our operation. The goals of our Occupational Safety and Health (“OSH”) policy are highlighted as below:

• Pursuit of a healthy, comfortable and safe working environment for our employees;

• Commitment of appropriate resources and leadership to the OSH management system;

• The OSH management system aims at identification, prevention and management of risks and hazards throughout the workplaces as well as follow-up actions for accidents or personal injuries;

• Zero tolerance for accidents and injuries;

• Promotion of safety culture among employees;

• Regular review of the performance of various OSH measures; and

• Compliance with applicable laws and regulations in relation to occupational safety and health.

To achieve the goals of our OSH policy, the following measures are adopted:

• Formulation of emergency response plans, risk assessment and accident investigation mechanism so as to ensure compliance with OSH;

• Organization of fire drills and emergency evacuation simulations to raise the employees’ awareness of fire prevention;

• Promotion of safety culture among colleagues;

• Organization of induction programs and safety training programs to new employees such that they can be familiar with our corporate policies in relation to health and safety matters as quickly as they can;

• Installation of air purifiers in relatively crowded areas such as conference and meeting rooms;

• Prohibition of smoking and abuse of alcohol and drugs in the workplace;

• Provision of clean and tidy rest area such as corridors and pantry;

• Provision of adjustable chairs and monitors for eye protection; and

• Set up of posters of proper working postures and lifting method accessible on the intranet and at appropriate locations in offices.

54 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

5. EMPLOYMENT AND LABOUR PRACTICES (continued)

5.3 Occupational Health and Safety (continued)

During the Year, the Group complied with the Occupational Safety and Health Ordinance (Chapter 509 of the Laws of Hong Kong), the Work Safety Law of the PRC and other relevant laws and regulations by ensuring that the employees are working in a safe environment in respect of health, hygiene, ventilation, gas safety, building structure and means of escape. During the Year, the Group did not record any accidents that resulted in death or serious physical injury. No material non-compliance with laws and regulations relevant to health and safety of employees were identified during the Year.

5.4 Development and Training

The Group envisions that empowering its people through development and training is the cornerstone of our success in the long-run. The Group ensures that every new joiner receives proper orientation training and mentoring in order to help them adapt to the new working environment affirmatively and quickly. Continuous training is committed by the Group in different ways including internal training programs, comprehensive training for specific skill development, anti-corruption seminars and courses for continuous professional development for relevant employees so as to ensure that they possess the appropriate qualities and skill-sets. Implementation of safety training and comprehensive risk assessments are also one of the most important tasks in the Group. We provided the management with a series of thematic courses to strengthen and refresh their knowledge, leadership and management skills, which is expected to drive the team to grow for the best interest of the Group.

During the Year, employees at all levels satisfied their needs of trainings through multiple training programs, including induction training, technical skills training and pre-post training. These training programs not only facilitate the career prospect of individual employee, but also further enhance the sustainable development of the Group. Our training programmes are designed not only to meet our business vision and to provide skillset required for the operation, but also for the benefit of society as a whole wherever possible.

5.5 Harmonious Culture

The Group is strongly convinced that sense of belonging and morale of the employees are always the key drivers to the Group’s healthy and prosperous growth. To achieve this, we utilize a variety of channels including regular all-staff meetings to update on business performance, delivery of festive foods to employees during traditional festivals (such as Lunar New Year and Mid-Autumn Festival) in recognition of their contributions to the Group and organization of regular and festival gatherings during the Year to enhance the harmonious spirit of different levels of staff members throughout the Group. The Group believes that such a corporate culture and harmonic working environment will naturally achieve a synergistic result to facilitate employee retention and to improve productivity.

ANNUAL REPORT 2020 55

APOLLO FUTURE MOBILITY GROUP LIMITED

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

5. EMPLOYMENT AND LABOUR PRACTICES (continued)

5.6 Labour Standards

Being fully aware that exploitation of child and forced labour violates human rights and international labour conventions, the Group strictly prohibits the employment of any child labour and forced labour in any form. New employees are required to provide true and accurate personal data when they are onboard. Recruiters should strictly review the entry documents including medical examination certificates, academic certificates and identity cards. The Group constantly rejects to engage suppliers and contractors, that hire child labour or forced labour in their operations.

During the Year, the Group strictly complied with relevant laws and regulations, including Labour Law of the PRC, the Protection of Minors and the Prohibition of Using Child Labour of the PRC and the Employment Ordinance of Hong Kong. During the Year, no material non-compliance with the laws and regulations related to the prevention of child labour or forced labour have been found by the Group.

6. OPERATING PRACTICES

In order to achieve our goal to be a responsible corporation in the Asia-Pacific region, we realize that we must operate in a sustainable fashion with a comprehensive ESG management approach and dissemination of pursuing sustainability into our core business. A series of management systems and procedures has been developed in accordance with the Code. It is additionally essential for us to encourage all business partners to incorporate those sustainability practices and policies into their operations thoroughly in order to work together in our pursuit of sustainable development.

6.1 Innovation-Driven Development

The Group anticipates that innovation and technology strategies shall play a crucial role in our long-term business development. As such, we are determined to set ourselves in a good position to continuously and proactively introduce products, services and processes derived from high-tech oriented research and development, into our operation and business model wherever commercially feasible and appropriate.

6.2 Supply Chain Management

The Group understands that the supply chain management is always one of the key aspects of the Group’s operations. Our sustainable supply chain includes adoption of environmentally conscious operations in logistics, being environmentally responsible when sourcing raw materials, due diligence of material and product procurement, distribution, warehousing and inventory management.

Our supply chain management team not only considers economic and commercial benefits during the tendering processes, but also evaluates the suppliers’ and contractors’ track record relating to legal and regulatory compliance, workers’ health and safety and mitigation of environmental impacts. We developed a vendor and supplier selection mechanism based on potential vendors’ compliance with all applicable laws and regulations in relation to the safety, environment, forced labour, child labour and other social aspects. Products and services with environmentally friendly and socially responsible features will be given a higher technical score during our assessment process. Inspections and assessments may be conducted by the Group if deemed necessary. Every supplier is required to comply with our code of practice. In addition, the Group encourages all business partners to develop energy-saving and consumption-reducing policies in order to work together in our pursuit of sustainable development.

56 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

6. OPERATING PRACTICES (continued)

6.2 Supply Chain Management (continued)

We believe that, through the above review process, we can minimize the potential environmental and social risks associated with the supply chain management. Major suppliers of the Group were located in the region where we operated. No complaint was received from the suppliers and there was no disputed debts or unsettled debts.

6.3 Product Responsibility

To be a successful business, we are committed to the highest standards of service or product we deliver. The Group undertakes the defined quality assurance protocol to ensure products and services constantly meet customer requirements and legal and safety standards for its intended use and for circumstances of reasonably foreseeable misuse. We carry out regular assessment for each product type with respect to the aspects of environmental impact, health impact, safety and hazards associated with the raw materials. We ensure that every product is correctly labelled with sufficient information and directions for use required by legislation and industry codes of practice. We perform continuous and regular assessments of the product quality and review of opportunities for improvements and changes.

During the Year, our operations in Hong Kong complied with relevant laws and regulations, including the Trade Description Ordinance (Chapter 362 of the Laws of Hong Kong). Our operations in the PRC, during the Year, complied with relevant laws and regulations in relation to advertising, labelling and consumer protection, such as “Consumer Protection Law of the PRC”, “Advertising Law of the PRC”, and “Product Quality Law of the PRC”, by ensuring that there are no false and misleading messages in our advertisements and promotion activities. During the Year, the Group did not identify any material non-compliance of the laws and regulations related to the quality of products and services.

6.4 Customer Feedback and Handling

Regular communication channels and feedback systems are in place to gather information on satisfaction and suggestions for improvement from our diverse portfolio of customers. The Group established various complaints and feedback channels, such as telephone hotline, emails and websites, to collect suggestions and advice from customers. There were no cases of product recall nor complaints received against our services due to health and safety issues during the Year.

6.5 Privacy Protection

The Group undertakes to strictly comply with relevant laws and regulations in relation to privacy that have an impact on the Group, ensuring that all data are securely kept in our internal system with access control. The Group also set out data privacy requirements in our corporate policies, under which customer and supplier data would be used exclusively for matters relating to the Group’s operation only. We strive to ensure all collected data kept is free of unauthorized or accidental access, processing, destruction or other use.

ANNUAL REPORT 2020 57

APOLLO FUTURE MOBILITY GROUP LIMITED

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

6. OPERATING PRACTICES (continued)

6.6 Anti-Corruption

The Group makes every effort to uphold a high standard of business ethics and prohibition of any forms of bribery and corrupt practices. The Group has developed a series of policies and compiled code-of-conduct with respect to anti-fraud and anti-bribery, which apply to all staff-members. We organize seminars in relation to anti-corruption and avoidance of conflict of interest for our employees. Employees are encouraged to report any concern in relation to accounting controls and audit matters to the Audit Committee which will review each complaint and decide how the investigation should be conducted.

During the Year, the Group observed with related laws and regulations that have a significant impact on the Group relating to bribery, extortion, fraud and money laundering, such as the Prevention of Bribery Ordinance (Chapter 201 of the laws of Hong Kong) and Criminal Law and the Regulations for Suppression of Corruption of the PRC. No cases of anti-corruption were concluded whereas the Audit Committee identified no complaint from employees during the Year.

6.7 Whistle-Blowing

In order to encourage our employees to report illegality, irregularity, malpractice, unethical acts or behaviours, inappropriate conducts or actions, which may damage the Group’s interests, we established whistle-blowing policy and implement procedures for our employees to report improprieties via a confidential reporting channel to the extent that is made possible to all employees.

The Group is committed to addressing concerns for “whistle-blowers” in a fair and reasonable manner and to handle the reports with due care and conducting a detailed investigation seriously for each reasonably established report. All “whistle-blowers” who report in good faith are reasonably protected from retaliation or adverse consequence of their employment regardless of whether the allegation is substantiated.

7. SUPPORTING THE COMMUNITY

We believe the Group benefits from the overall social development and should give back to the society in return. Going forward, the Group will be actively committed to fostering the culture of active participation in community services, encouraging our staff members to be engaged in voluntary services and join hands together to disseminate the spirit of services in the community where we all depend on.

58 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

8. HKEX ESG GUIDE CONTENT INDEX

		Relevant
Aspects, General		sections in the
Disclosures and KPIs	Description	ESG Report	Remarks
Aspect A1: Emissions
General Disclosure	Information on:	Environmental
		Protection
	(a) the policies; and
	(b) compliance with relevant laws and
	regulations that have a significant
	impact on the issuer relating to air
	and greenhouse gas emissions,
	discharges into water and land, and
	generation of hazardous and non-
	hazardous waste
KPI A1.1	Types of emissions and respective	Environmental
	emissions data	Protection
KPI A1.2	Greenhouse gas emissions in total and,	Environmental	Intensity is not applicable
	where appropriate, intensity	Protection	to the Group as the
			Group did not possess
			production facilities
			during the Year
KPI A1.3	Total hazardous waste produced and,	–	The Group has not
	where appropriate, intensity		identified any hazardous
			waste produced by the
			Group’s operation
KPI A1.4	Total non-hazardous waste produced and	Environmental	Intensity is not applicable
	intensity	Protection	to the Group as the
			Group did not possess
			production facilities
			during the Year
KPI A1.5	Description of measures to mitigate	Environmental
	emissions and results achieved	Protection
KPI A1.6	Description of how hazardous and non	Environmental
	— hazardous waste are handled, reduction	Protection
	initiatives and results achieved

59

ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

1. HKEX ESG GUIDE CONTENT INDEX (continued)

		Relevant
Aspects, General		sections in the
Disclosures and KPIs	Description	ESG Report	Remarks
Aspect A2: Use of Resources
General Disclosure	Policies on efficient use of resources	Environmental
	including energy, water and other raw	Protection
	materials
KPI A2.1	Direct and/or indirect energy consumption	Environmental	Intensity is not applicable
	by type in total and intensity	Protection	to the Group as the
			Group did not possess
			production facilities
			during the Year
KPI A2.2	Water consumption in total and intensity	Environmental	Intensity is not applicable
		Protection	to the Group as the
			Group did not possess
			production facilities
			during the Year
KPI A2.3	Description of energy use efficiency	Environmental
	initiatives and results achieved	Protection
KPI A2.4	Description of whether there is any issue in	–	Defined to be irrelevant
	sourcing water, water efficiency initiatives		to the Group’s operation
	and results achieved
KPI A2.5	Total packaging material used for finished	–	Use of packaging material
	products and, if applicable, with reference		is not applicable to the
	to per unit produced		Group’s operation
Aspect A3: The Environment and Natural Resources
General Disclosure	Policies on minimizing the issuer’s	Environmental
	significant impact on the environment and	Protection
	natural resources
KPI A3.1	Description of the significant impacts of	Environmental
	activities on the environment and natural	Protection
	resources and actions taken to manage
	them

60 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

8. HKEX ESG GUIDE CONTENT INDEX (continued)

			Relevant
Aspects, General			sections in the
Disclosures and KPIs	Description		ESG Report	Remarks
Aspect B1: Employment
General Disclosure	Information on:		Employment and
			Labour Practices
	(a)	the policies; and
	(b)	compliance with relevant laws and
		regulations that have a significant
		impact on the issuer relating to
		compensation and dismissal,
		recruitment and promotion, working
		hours, rest periods, equal
		opportunity, diversity, anti —
		discrimination, and other benefits
		and welfare
KPI B1.1	Total	workforce by gender, employment	–
	type,	age group and geographical region
KPI B1.2	Employee turnover rate by gender, age		–
	group and geographical region

ANNUAL REPORT 2020 61

APOLLO FUTURE MOBILITY GROUP LIMITED

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

1. HKEX ESG GUIDE CONTENT INDEX (continued)

		Relevant
Aspects, General		sections in the
Disclosures and KPIs	Description	ESG Report	Remarks
Aspect B2: Health and	Safety
General Disclosure	Information on:	Employment and
		Labour Practices
	(a) the policies; and
	(b) compliance with relevant laws and
	regulations that have a significant
	impact on the issuer relating to
	providing a safe working environment
	and protecting employees from
	occupational hazards
KPI B2.1	Number and rate of work-related fatalities	–
KPI B2.2	Lost days due to work injury	Employment and
		Labour Practices
KPI B2.3	Description of occupational health and	Employment and
	safety measures adopted, how they are	Labour Practices
	implemented and monitored
Aspect B3: Development and Training
General Disclosure	Policies on improving employees’	Employment and
	knowledge and skills for discharging duties	Labour Practices
	at work. Description of training activities
KPI B3.1	The percentage of employees trained by	Employment and
	gender and employee category	Labour Practices
KPI B3.2	The average training hours completed per	Employment and
	employee by gender and employee	Labour Practices
	category

62 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

8. HKEX ESG GUIDE CONTENT INDEX (continued)

		Relevant
Aspects, General		sections in the
Disclosures and KPIs	Description	ESG Report	Remarks
Aspect B4: Labour Standards
General Disclosure	Information on:	Employment and
		Labour Practices
	(a) the policies; and
	(b) compliance with relevant laws and
	regulations that have a significant
	impact on the issuer relating to
	preventing child and forced labour
KPI B4.1	Description of measures to review	Employment and
	employment practices to avoid child and	Labour Practices
	forced labour
KPI B4.2	Description of steps taken to eliminate	–	No such incidents were
	child and forced labour practices when		reported during the Year.
	discovered
Aspect B5: Supply Chain Management
General Disclosure	Policies on managing environmental and	Operating
	social risks of the supply chain	Practices
KPI B5.1	Number of suppliers by geographical	Operating
	region	Practices
KPI B5.2	Description of practices relating to	Operating
	engaging suppliers, number of suppliers	Practices
	where the practices are being
	implemented, how they are implemented
	and monitored

ANNUAL REPORT 2020 63

APOLLO FUTURE MOBILITY GROUP LIMITED

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

1. HKEX ESG GUIDE CONTENT INDEX (continued)

		Relevant
Aspects, General		sections in the
Disclosures and KPIs	Description	ESG Report	Remarks
Aspect B6: Product Responsibility
General Disclosure	Information on:	Operating
		Practices
	(a) the policies; and
	(b) compliance with relevant laws and
	regulations that have a significant
	impact on the issuer relating to health
	and safety, advertising, labelling and
	privacy matters relating to products
	and services provided and methods
	of redress
KPI B6.1	Percentage of total products sold or	Operating	Not applicable to the
	shipped subject to recalls for safety and	Practices	Group’s operation
	health reasons
KPI B6.2	Number of products and service related	Operating	No products and service
	complaints received and how they are dealt	Practices	related complaints
	with		received during the Year.
KPI B6.3	Description of practices relating to	–
	observing and protecting intellectual
	property rights
KPI B6.4	Description of quality assurance process	–	Not applicable to the
	and recall procedures		Group’s core operation
KPI B6.5	Description of consumer data protection	Operating
	and privacy policies, how they are	Practices
	implemented and monitored

64 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

8. HKEX ESG GUIDE CONTENT INDEX (continued)

		Relevant
Aspects, General		sections in the
Disclosures and KPIs	Description	ESG Report	Remarks
Aspect B7: Anti-corruption
General Disclosure	Information on:	Operating
		Practices
	(a) the policies; and
	(b) compliance with relevant laws and
	regulations that have a significant
	impact on the issuer relating to
	bribery, extortion, fraud and money
	laundering
KPI B7.1	Number of concluded legal cases	Operating	No concluded legal cases
	regarding corrupt practices brought	Practices	regarding corrupt
	against the issuer or its employees during		practices during the Year.
	the Year and the outcomes of the cases
KPI B7.2	Description of preventive measures and	Operating
	whistle — blowing procedures, how they	Practices
	are implemented and monitored
Aspect B8: Community Investment
General Disclosure	Policies on community engagement to	Supporting the
	understand the needs of the communities	Community
	where the issuer operates and to ensure its
	activities takes into consideration
	communities’ interests
KPI B8.1	Focus areas of contribution	–
KPI B8.2	Resources contributed to the focus areas	–

ANNUAL REPORT 2020 65

APOLLO FUTURE MOBILITY GROUP LIMITED

INDEPENDENT AUDITOR’S REPORT

==> picture [87 x 71] intentionally omitted <==

To the shareholders of Apollo Future Mobility Group Limited (formerly known as WE Solutions Limited)

(Incorporated in the Cayman Islands with limited liability)

OPINION

We have audited the consolidated financial statements of Apollo Future Mobility Group Limited (the “Company”) and its subsidiaries (the “Group”) set out on pages 74 to 185, which comprise the consolidated statement of financial position as at 30 September 2020, and the consolidated statement of profit or loss, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 30 September 2020, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) and have been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance.

BASIS FOR OPINION

We conducted our audit in accordance with Hong Kong Standards on Auditing (“HKSAs”) issued by the HKICPA. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report. We are independent of the Group in accordance with the HKICPA’s Code of Ethics for Professional Accountants (the “Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

KEY AUDIT MATTERS

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the consolidated financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying consolidated financial statements.

66 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

INDEPENDENT AUDITOR’S REPORT

KEY AUDIT MATTERS (continued)

Key audit matter

How our audit addressed the key audit matter

Impairment assessment of goodwill and other intangible assets with indefinite useful lives

As at 30 September 2020, the Group had goodwill and other intangible assets with indefinite useful lives, representing trademarks (the “Intangible Assets”), acquired through business combinations allocated to mobility technology solutions cashgenerating units (“CGUs”) of the Group with net carrying a m o u n t s o f a p p r o x i m a t e l y H K $ 1 , 9 9 4 , 5 2 0 , 0 0 0 a n d HK$171,481,000, respectively. Goodwill and the Intangible Assets are tested for impairment annually or more frequently if events or changes in circumstances indicate that their carrying amounts may be impaired.

Impairment is determined by assessing the recoverable amounts of the respective CGUs to which the goodwill and the Intangible Assets relate and whether the recoverable amounts of the respective CGUs are less than their carrying amounts. For the year under review, the recoverable amounts of the respective CGUs have been determined based on the respective CGUs’ fair value less costs of disposal using cash flow projections specific to each CGU and applying a discount rate which reflects specific risks relating to the CGU, with the assistance from certain independent professionally qualified valuers (the “external valuers”).

The impairment testing of goodwill and the Intangible Assets required management to make certain estimates and assumptions that would affect the reported amounts of goodwill and the Intangible Assets and related disclosures in the consolidated financial statements.

We focused on this area due to the magnitude of the balances involved and the significant judgements and estimates required in determining the recoverable amounts of the relevant CGUs.

We evaluated management’s impairment assessment of goodwill and the Intangible Assets. The key audit procedures we performed on evaluating the methodologies, assumptions and estimates used in the impairment assessment included, inter alia, (i) assessing the historical accuracy of the prior year’s assumptions and estimates made by management, as appropriate; (ii) obtaining an understanding of the current and expected future developments of the CGUs and factors that might affect key assumptions and estimates of the fair values or cash flow projections and discount rates applicable to the CGUs; (iii) evaluating the objectivity, capabilities and competence of the external valuers engaged by the Group; (iv) involving our internal valuation specialists to assist us in evaluating the methodologies used and certain key assumptions and estimates made by management and/or the external valuers, including, inter alia, the specific discount rate and long term growth rate of each relevant CGU, with reference to relevant historical/ market information, and other information, assumptions and estimates for the assessment of fair value less costs of disposal; (v) evaluating management’s assessment about reasonable possible changes in relevant key assumptions and estimates, as appropriate; and (vi) reviewing the related disclosures in the consolidated financial statements.

The related disclosures are included in notes 2.4, 3, 18 and 19 to the consolidated financial statements.

ANNUAL REPORT 2020 67

APOLLO FUTURE MOBILITY GROUP LIMITED

INDEPENDENT AUDITOR’S REPORT

KEY AUDIT MATTERS (continued)

Key audit matter

How our audit addressed the key audit matter

Valuation of financial assets at fair value through profit or loss As at 30 September 2020, the Group’s financial assets at fair value through profit or loss of approximately HK$954,621,000 were categorised as Level 3 within the fair value hierarchy. For Level 3 valuation, the Group engaged certain independent professionally qualified valuers (the “external valuers”) to apply valuation techniques to determine the fair values of the financial assets at fair value through profit or loss that are not quoted in active markets. These valuation techniques, in particular those that included significant unobservable inputs, involved subjective judgements, estimations and assumptions. The sensitivity of the assumptions used may have material impact on the valuation of these financial assets.

We focused on this area due to the magnitude of the balance involved and the significant accounting judgements and estimates required in determining the fair values of these financial assets.

With the assistance from our internal valuation specialists, we evaluated the valuation methodologies and assumptions adopted in the valuation of the financial assets at fair value through profit or loss that were categorised as Level 3 within the fair value hierarchy by (i) examining the terms of the financial instruments and the relevant agreements; and (ii) assessing the key parameters used, such as volatility, risk-free rate, earning multiples and discount rate, against available market information.

We evaluated the objectivity, capabilities and competence of the external valuers engaged by the Group.

We also reviewed the related disclosures in the consolidated financial statements.

The related disclosures are included in notes 2.4, 3, 22, and 42 to the consolidated financial statements.

68 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

INDEPENDENT AUDITOR’S REPORT

KEY AUDIT MATTERS (continued)

Key audit matter

How our audit addressed the key audit matter

Impairment assessment of loans receivable

As at 30 September 2020, the Group had outstanding loans receivable with a net carrying amount of approximately HK$704,711,000. Impairment losses recognised in the consolidated statement of profit or loss for the year in respect of the Group’s loans receivable amounted to approximately HK$29,102,000.

The Group assessed the expected credit loss for each loan receivable by applying the probability of default approach under Hong Kong Financial Reporting Standard 9 Financial Instruments (“HKFRS 9”), with the assistance of certain independent professionally qualified valuers (the “external valuers”). Significant accounting judgements, estimates and assumptions are required in determining the expected credit losses of loans receivable.

We focused on this area due to the magnitude of the balance involved and the significant accounting judgments and estimates required in assessing the loss allowance for impairment of loans receivable.

The related disclosures are included in notes 2.4, 3 and 23 to the consolidated financial statements.

With the assistance of our internal specialists, we evaluated the reasonableness and appropriateness of the methodologies and assumptions adopted as well as information and parameters used in the Group’s impairment assessment of loans receivable. Our key audit procedures performed included, inter alia, (i) examining background information and repayment capability of the loan debtors, such as available credit assessments and information regarding the creditability/financial strengths of the loan debtors; (ii) assessing the reasonableness and appropriateness of management’s judgement on determining if a significant increase in credit risk has occurred or a loan receivable is credit-impaired and the basis for classification of exposures into the 3 stages as required by HKFRS 9 and examining supporting information to assess the appropriateness of the classification of exposures as at the end of the reporting period; (iii) testing the accuracy of key data sources and parameters applied in the expected credit loss computations by checking to appropriate supporting information and the relevant loan agreements; and (iv) assessing the reasonableness and appropriateness of the methodologies and assumptions adopted as well as information and parameters used by checking to applicable external data sources and other available information, taking into consideration the fair value of any collaterals and other relevant information, and the impact of forward looking factors.

We evaluated the objectivity, capabilities and competence of the external valuers engaged by the Group.

We also reviewed the related disclosures in the consolidated financial statements.

ANNUAL REPORT 2020 69

APOLLO FUTURE MOBILITY GROUP LIMITED

INDEPENDENT AUDITOR’S REPORT

KEY AUDIT MATTERS (continued)

Key audit matter

How our audit addressed the key audit matter

Assessment of net realisable value of inventories

As at 30 September 2020, the Group had inventories with a net carrying amount of approximately HK$172,662,000. The Group performs periodic review of the carrying amounts of inventories to determine whether any write-down of inventories to net realisable value is required after considering, inter alia, the ageing analysis of inventories, the condition of inventory items, current market conditions, relevant historical and current sales information, and the expected future sales of goods.

The determination of net realisable value requires management to make significant accounting judgements, estimates and assumptions that affect the reported amount of inventories.

We focused on this area due to the magnitude of the balance involved and the significant accounting judgements and estimates required in assessing the net realisable value of inventories.

We evaluated management’s assessment of whether the estimated net realisable value of inventories declined below their carrying amounts. Our procedures included, inter alia, (i) understanding and assessing the Group’s processes over identifying and valuing damaged, slow-moving and other potentially impaired inventory items for which their net realisable values might decline below their carrying amounts; and (ii) assessing the write-down of inventories required by checking the correctness of the ageing analysis of inventories, sales made subsequent to the end of the reporting period, current market conditions, relevant historical and current sales information, pricing policy and strategies, and the expected future sales of goods.

The related disclosures are included in notes 2.4, 3 and 25 to the consolidated financial statements.

70 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

INDEPENDENT AUDITOR’S REPORT

KEY AUDIT MATTERS (continued)

Key audit matter

How our audit addressed the key audit matter

Purchase price allocation of a business combination

On 17 March 2020, the Group acquired 86.06% equity interest in Sino Partner Global Limited (“Apollo”). Apollo and its subsidiaries (the “Apollo Group”) are principally engaged in the design, development, manufacturing and sale of high performance hypercars under the brand “Apollo” worldwide. As at the date of acquisition, the aggregate fair value of the identifiable net assets o f t h e A p o l l o G r o u p a m o u n t e d t o a p p r o x i m a t e l y HK$140,835,000, and goodwill of HK$648,016,000 was recognised arising from the acquisition.

The Group engaged certain independent professionally qualified valuers (the “external valuers”) to perform the purchase price allocation on the fair values of the considerations transferred and the identifiable assets acquired and liabilities assumed in the business combination.

We focused on this area due to the magnitude of the balances involved and the significant judgements and estimates required in (i) the identification of the assets acquired and liabilities assumed; and (ii) the determination of the fair values of the contingent consideration transferred and the identifiable assets acquired and liabilities assumed.

With the assistance of our internal valuation specialists, we evaluated the valuation methodologies and assumptions adopted by the external valuers in the purchase price allocation by (i) examining the terms of the sale and purchase agreement; (ii) assessing the reasonableness and appropriateness of the identification of the assets acquired and liabilities assumed; (iii) assessing the valuation methodologies adopted for the purpose of determining the fair values of the contingent consideration payable and the identifiable assets acquired and liabilities assumed; and (iv) benchmarking the key parameters, such as royalty rate, discount rate and long term growth rate, against market data.

We evaluated the objectivity, capabilities and competence of the external valuers engaged by the Group.

We also reviewed the related disclosures in the consolidated financial statements.

The related disclosures are included in notes 2.4, 3 and 35 to the consolidated financial statements.

OTHER INFORMATION INCLUDED IN THE ANNUAL REPORT

The directors of the Company are responsible for the other information. The other information comprises the information included in the Annual Report, other than the consolidated financial statements and our auditor’s report thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

ANNUAL REPORT 2020 71

APOLLO FUTURE MOBILITY GROUP LIMITED

INDEPENDENT AUDITOR’S REPORT

RESPONSIBILITIES OF THE DIRECTORS FOR THE CONSOLIDATED FINANCIAL STATEMENTS

The directors of the Company are responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with HKFRSs issued by the HKICPA and the disclosure requirements of the Hong Kong Companies Ordinance, and for such internal control as the directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the directors of the Company are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors of the Company either intend to liquidate the Group or to cease operations or have no realistic alternative but to do so.

The directors of the Company are assisted by the Audit Committee in discharging their responsibilities for overseeing the Group’s financial reporting process.

AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Our report is made solely to you, as a body, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with HKSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with HKSAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

72 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

INDEPENDENT AUDITOR’S REPORT

AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL

STATEMENTS (continued)

• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

From the matters communicated with the Audit Committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor’s report is Wong Tsz Tat.

Ernst & Young Certified Public Accountants

22/F, CITIC Tower 1 Tim Mei Avenue Central, Hong Kong

30 December 2020

ANNUAL REPORT 2020 73

APOLLO FUTURE MOBILITY GROUP LIMITED

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

Year ended 30 September 2020

		2020	2019
	Notes	HK$’000	HK$’000
REVENUE	5	357,705	536,355
Cost of sales		(231,790)	(393,724)
Gross profit		125,915	142,631
Other income	6	18,812	21,156
Other gains/(losses), net	7	36,713	(542,051)
Selling and distribution expenses		(56,553)	(43,607)
General and administrative expenses		(170,649)	(163,688)
Research and development costs		(28,643)	(21,191)
Other expenses		(149)	(3,707)
Finance costs	9	(8,253)	(4,039)
Share of profits and losses of:
Joint venture		(6)	(5,108)
Associates		4,847	(5,999)
LOSS BEFORE TAX	8	(77,966)	(625,603)
Income tax credit/(expense)	12	(281,397)	6,274
LOSS FOR THE YEAR		(359,363)	(619,329)
Attributable to:
Owners of the Company		(345,177)	(605,392)
Non-controllinginterests		(14,186)	(13,937)
		(359,363)	(619,329)
LOSS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS
OF THE COMPANY	14
Basic		HK(4.81) cents	HK(9.26) cents
Diluted		HK(4.81) cents	HK(9.66) cents

74 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Year ended 30 September 2020

		2020	2019
	Note	HK$’000	HK$’000
LOSS FOR THE YEAR		(359,363)	(619,329)
OTHER COMPREHENSIVE INCOME
Other comprehensive income/(loss) that may be reclassified to
profit or loss in subsequent periods:
Exchange differences on translation of foreign operations		31,382	58,852
Reclassification adjustment for a foreign operation
disposed of duringtheyear	36	(4,269)	–
Share of other comprehensive income/(loss) of		27,113	58,852
ajoint venture and an associate		1,430	(797)
OTHER COMPREHENSIVE INCOME FOR THE YEAR		28,543	58,055
TOTAL COMPREHENSIVE LOSS FOR THE YEAR		(330,820)	(561,274)
Attributable to:
Owners of the Company		(319,444)	(542,539)
Non-controllinginterests		(11,376)	(18,735)
		(330,820)	(561,274)

ANNUAL REPORT 2020 75

APOLLO FUTURE MOBILITY GROUP LIMITED

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

30 September 2020

		2020	2019
	Notes	HK$’000	HK$’000
NON-CURRENT ASSETS
Property, plant and equipment	15	102,834	138,773
Investment properties	16	63,228	358,026
Right-of-use assets	17(a)	73,394	–
Goodwill	18	1,994,520	1,363,308
Other intangible assets	19	310,290	48,940
Interest in a joint venture	20	381	387
Interests in associates	21	25,365	19,089
Financial assets at fair value through profit or loss	22	1,028,342	1,161,086
Loans receivable	23	26,656	225,392
Deferred tax assets	31	5,934	3,768
Deposits	24	9,856	44,093
Total non-current assets		3,640,800	3,362,862
CURRENT ASSETS
Inventories	25	172,662	214,842
Accounts receivable	26	17,772	32,872
Loans receivable	23	678,055	473,778
Prepayments, deposits and other receivables	24	621,183	19,380
Financial assets at fair value through profit or loss	22	1,376	1,969
Tax recoverable		1,481	–
Cash and cash equivalents	27	184,541	447,606
Total current assets		1,677,070	1,190,447
CURRENT LIABILITIES
Accounts payable	28	44,319	99,167
Other payables and accruals	29	297,705	198,987
Interest-bearing bank and other borrowings	30	147,474	104,678
Lease liabilities	17(b)	8,099	–
Tax payable		372,278	4,536
Total current liabilities		869,875	407,368
NET CURRENT ASSETS		807,195	783,079
TOTAL ASSETS LESS CURRENT LIABILITIES		4,447,995	4,145,941

76 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued)

30 September 2020

		2020	2019
	Notes	HK$’000	HK$’000
NON-CURRENT LIABILITIES
Other payables	29	15,909	–
Interest-bearing bank borrowings	30	19,561	21,809
Lease liabilities	17(b)	15,068	–
Contingent consideration payable	22	619,069	–
Deferred tax liabilities	31	44,996	80,467
Total non-current liabilities		714,603	102,276
Net assets		3,733,392	4,043,665
EQUITY
Equity attributable to owners of the Company
Issued capital	32	717,019	717,019
Reserves	34	2,890,176	3,207,237
Non-controllinginterests		3,607,195 126,197	3,924,256 119,409
Total equity		3,733,392	4,043,665

Mr. Ho King Fung, Eric Director

Mr. Sung Kin Man Director

ANNUAL REPORT 2020 77

APOLLO FUTURE MOBILITY GROUP LIMITED

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Year ended 30 September 2020

Notes	Attributable to owners of the Company Issued capital Share premium account Exchange fluctuation reserve Reserve funds Share option reserve Other reserve Accumulated losses Total Non- controlling interests Total equity HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
At 1 October 2018 Loss for the year Other comprehensive income/(loss) for the year: Exchange differences on translation of foreign operations Share of other comprehensive loss of a joint venture and an associate	591,788 5,359,641 (24,198) 689 119,559 11 (2,274,139) 3,773,351 132,416 3,905,767 – – – – – – (605,392) (605,392) (13,937) (619,329) – – 63,650 – – – – 63,650 (4,798) 58,852 – – (797) – – – – (797) – (797)
Total comprehensive loss for the year	– – 62,853 – – – (605,392) (542,539) (18,735) (561,274)
Contribution from a non- controlling shareholder Dividend paid to a non- controlling shareholder Issue of shares 32 Share issue expenses 32 Equity-settled share option arrangements 33 Transfer of share option reserve upon forfeiture of share options	– – – – – – – – 6,501 6,501 – – – – – – – – (773) (773) 125,231 568,392 – – – – – 693,623 – 693,623 – (15,850) – – – – – (15,850) – (15,850) – – – – 15,671 – – 15,671 – 15,671 – – – – (54,328) – 54,328 – – –
At 30 September 2019	717,019 5,912,183 38,655 689 80,902 11 (2,825,203) 3,924,256 119,409 4,043,665

78 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued)

Year ended 30 September 2020

Notes	Attributable to owners of the Company Issued capital Share premium account Exchange fluctuation reserve Reserve funds Share option reserve Other reserve Accumulated losses Total Non- controlling interests Total equity HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
At 1 October 2019 Loss for the year Other comprehensive income/(loss) for the year: Exchange differences on translation of foreign operations Reclassification adjustment for a foreign operation disposed of during the year 36 Share of other comprehensive income of a joint venture and an associate
	717,019 5,912,183 38,655 689 80,902 11 (2,825,203) 3,924,256 119,409 4,043,665
	– – – – – – (345,177) (345,177) (14,186) (359,363)
	– – 26,890 – – – – 26,890 4,492 31,382
	– – (2,587) – – – – (2,587) (1,682) (4,269)
	– – 1,430 – – – – 1,430 – 1,430
Total comprehensive loss for the year
	– – 25,733 – – – (345,177) (319,444) (11,376) (330,820)
Acquisition of subsidiaries 35 Acquisition of non-controlling interests Dividend paid to a non- controlling shareholder Equity-settled share option arrangements 33 Transfer to reserve funds
	– – – – – – – – 19,632 19,632
	– – – – – – (652) (652) 142 (510)
	– – – – – – – – (1,610) (1,610)
	– – – – 3,035 – – 3,035 – 3,035
	– – – 264 – – (264) – – –
At 30 September 2020
	717,019 5,912,183 64,388 953 83,937 11 (3,171,296) 3,607,195 126,197 3,733,392

• These reserve accounts comprise the consolidated reserves of HK$2,890,176,000 (2019: HK$3,207,237,000) in the consolidated statement of financial position.

ANNUAL REPORT 2020 79

APOLLO FUTURE MOBILITY GROUP LIMITED

CONSOLIDATED STATEMENT OF CASH FLOWS

Year ended 30 September 2020

		2020	2019
	Notes	HK$’000	HK$’000
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before tax		(77,966)	(625,603)
Adjustments for:
Finance costs	9	8,253	4,039
Share of losses/(profits) of associates, net		(4,847)	5,999
Share of loss of a joint venture		6	5,108
Bank interest income	6	(2,241)	(1,289)
Fair value loss on contingent consideration payable	7	21,850	–
Fair value losses on investment properties	7	26,638	71,690
Fair value losses on financial assets at fair value
through profit or loss, net	7	133,337	21,852
Gain on expropriation of investment properties	7	(315,940)	–
Loss on disposal of a subsidiary	7	10,204	5,555
Impairment of goodwill	7	29,555	199,257
Impairment/(reversal of impairment) of accounts receivable	7	177	(2,328)
Impairment of loans receivable	7	29,102	257,331
Impairment/(reversal of impairment) of other intangible assets	7	27,135	(14,350)
Loss on disposal of items of property, plant and equipment, net	7	685	–
Write-off of items of property, plant and equipment	7	878	–
Depreciation of right-of-use assets	8	8,796	–
Depreciation of property, plant and equipment	8	8,694	8,974
Equity-settled share option expense	8	3,035	15,671
Write-down/(reversal of write-down) of inventories to net realisable value	8	(10,955)	40,835
Amortisation of other intangible assets	8	9,186	3,138
Gain on termination of a lease		(2)	–
		(94,420)	(4,121)
Decrease/(increase) in inventories		81,119	(51,932)
Decrease in accounts receivable		18,532	15,516
Increase in loans receivable		(91,306)	(144,497)
Decrease/(increase) in prepayments, deposits and other receivables		(317,161)	12,934
Decrease in accounts payable		(65,489)	(5,767)
Increase in otherpayables and accruals		5,340	34,536
Cash used in operations		(463,385)	(143,331)
Hong Kong profits tax refunded/(paid)		1,977	(2,222)
Overseas taxespaid		(413)	(249)
Net cash flows used in operatingactivities		(461,821)	(145,802)

80 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

CONSOLIDATED STATEMENT OF CASH FLOWS (continued)

Year ended 30 September 2020

		2020	2019
	Notes	HK$’000	HK$’000
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received		2,241	1,289
Deposit paid for acquisition of a subsidiary		–	(40,000)
Acquisition of subsidiaries	35	(124,296)	–
Additions of other intangible assets		(20,344)	–
Addition of investment properties		(9,296)	(1,103)
Purchases of/deposits paid for the purchases of items of property,
plant and equipment		(9,635)	(17,151)
Proceeds from disposal of items of property, plant and equipment		3,363	–
Settlement from expropriation of investment properties		377,772	–
Proceeds from redemption of a financial asset at fair value
through profit or loss		–	19,500
Disposal of a subsidiary	36	2,850	1,241
Investment in a joint venture		–	(5,496)
Increase in financial assets at fair value throughprofit or loss		–	(295,374)
Net cash flows from/(used in) investingactivities		222,655	(337,094)
CASH FLOWS FROM FINANCING ACTIVITIES
Interest paid		(5,148)	(4,039)
New bank borrowings		94,344	93,357
Repayment of bank borrowings		(103,319)	(39,847)
Acquisition of non-controlling interests		(510)	–
Principal portion of lease payments		(6,159)	–
Interest element of lease payments		(1,202)	–
Proceeds from issue of shares		–	568,625
Share issue expense		–	(15,850)
Dividend paid to a non-controlling shareholder		(1,610)	(773)
Contributions from non-controllingshareholders		–	6,501
Net cash flows from/(used in) financingactivities		(23,604)	607,974
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS		(262,770)	125,078
Cash and cash equivalents at beginning of year		447,606	326,221
Effect of foreign exchange rate changes, net		(295)	(3,693)
CASH AND CASH EQUIVALENTS AT END OF YEAR		184,541	447,606
ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS
Cash and bank balances	27	111,760	240,549
Non-pledged time deposits with original maturity of
less than three months when acquired	27	72,781	207,057
		184,541	447,606

81

ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

1. CORPORATE AND GROUP INFORMATION

Apollo Future Mobility Group Limited (formerly known as WE Solutions Limited) was incorporated in the Cayman Islands as an exempted company with limited liability. The address of the registered office of the Company is Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1-1111, Cayman Islands and its principal place of business in Hong Kong is located at Units 301 and 302, Third Floor, Building 22E, Phase Three, Hong Kong Science Park, Pak Shek Kok, New Territories, Hong Kong.

Pursuant to a special resolution of the Company passed at the extraordinary general meeting held on 12 March 2020, the English name of the Company was changed from “WE Solutions Limited” to “Apollo Future Mobility Group Limited” during the year.

During the year, the Company and its subsidiaries (collectively referred to as the “Group”) were involved in the following principal activities:

• designing, developing, manufacturing and sales of high performance hypercars and provision of mobility technology solutions;

• retailing and wholesale of jewellery products and watches;

• money lending; and

• property investment.

Information about subsidiaries

Particulars of the Company’s principal subsidiaries are as follows:

	Place of	Issued	Percentage of
	incorporation/	ordinary/	equity attributable
	registration	registered	to the Company		Principal
Name	and business	share capital	2020	2019	activities
Ming Fung Investment	British Virgin Islands	US$1,000	100	100	Investment holding
Holdings Limited	(“BVI”)
(“Ming Fung Investment”)
GLM Co., Ltd. (“GLM”)	Japan	JPY1,563,570,000	88.56	88.50	Provision of mobility
					technology solutions
Sino Partner Global Limited	BVI	US$23,299	86.06	–	Investment holding
(“Sino Partner”) (note (e))
Apollo Automobile Limited	England and Wales	£100	86.06	–	Holder of trademark

82 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

1. CORPORATE AND GROUP INFORMATION (continued)

Information about subsidiaries (continued)

	Place of	Issued	Percentage of	Percentage of
	incorporation/	ordinary/	equity attributable
	registration	registered	to the Company		Principal
Name	and business	share capital	2020	2019	activities
Apollo Automobil Limited	Hong Kong	HK$10,000	86.06	–	Sales of high performance
					hypercars
Apollo Automobil GmbH	Germany	EUR25,000	86.06	–	Design, development and
					manufacturing of
					high performance
					hypercars
Apollo Automobil Group Limited	England and Wales	£1	100	–	Provision of mobility
					technology solutions
Grand Destiny Venture Ltd.	BVI	US$1	100	100	Investment holding
(“Grand Destiny”)
Global 3D Printing Ltd.	Cayman Islands	US$1	100	100	Investment holding
(“Global 3D Printing”)
Shenzhen Qijingda Trading	People’s Republic of	RMB100,000,000	100	100	Retail and wholesale of
Company Limited	China (the “PRC”)/				jewellery products and
(深圳市琪晶達貿易有限公司)	Mainland China				watches
(notes (b), (c) and (d))
Swiss Mechanical Times	Hong Kong	HK$10,000	100	100	Wholesale of watches
(Hong Kong) Limited
Chi Feng Guo Jin Mining	PRC/	RMB5,000,000	–	60.6	Mining
Company Limited	Mainland China
(赤峰國金礦業有限公司)
(“Chi Feng”) (notes (b), (c) and (f))
Chance Achieve Limited	Hong Kong	HK$1	100	100	Money lending
Marvel Bloom Limited	BVI	US$1,000	100	100	Money lending
Raise Success Limited	Hong Kong	HK$2	100	100	Money lending
(“Raise Success”)

ANNUAL REPORT 2020 83

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

1. CORPORATE AND GROUP INFORMATION (continued)

Information about subsidiaries (continued)

	Place of	Issued	Percentage of	Percentage of
	incorporation/	ordinary/	equity attributable
	registration	registered	to the Company		Principal
Name	and business	share capital	2020	2019	activities
Shenyang Commercial City	PRC/	RMB249,000,000	100	100	Property investment
(Group) Co., Ltd.	Mainland China
(沈陽商業城(集團)有限公司)
(notes (b) and (c))
Shenyang Storage and	PRC/	RMB30,425,099	61.52	61.52	Property investment and
Transportation Group Logistic	Mainland China				retail and wholesale of
Co., Ltd.					jewellery products and
(沈陽儲運集團物流配送有限公司)					watches
(notes (b) and (c))
Shenyang Dongmao Paper	PRC/	RMB8,262,601	54.08	54.08	Property investment
Trading Centre Co., Ltd.	Mainland China
(沈陽東貿紙品交易中心有限公司)
(notes (b) and (c))

Notes:

• (a) Except for Ming Fung Investment, Sino Partner, Raise Success, Grand Destiny, Global 3D Printing and the 85.52% equity interest in GLM which are directly held by the Company, all the above subsidiaries and the remaining 3.04% (2019: 2.98%) equity interest in GLM are indirectly held by the Company.

• (b) Limited liability companies established in the PRC

• (c) English names for identification only

• (d) Registered as a wholly-foreign-owned enterprise in the PRC

• (e) During the year, the Group acquired 86.06% equity interest in Sino Partner. Further details of this acquisition are included in note 35 to the financial statements.

• (f) During the year, the Group disposed of its equity interest in Chi Feng. Further details of this disposal are included in note 36 to the financial statements.

The above table lists the subsidiaries of the Company which, in the opinion of the directors, principally affected the results for the year or formed a substantial portion of the net assets of the Group. To give details of the other subsidiaries would, in the opinion of the directors, result in particulars of excessive length.

84 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

2.1 BASIS OF PREPARATION

These financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”) (which include all Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards (“HKASs”) and Interpretations) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”), accounting principles generally accepted in Hong Kong and the disclosure requirements of the Hong Kong Companies Ordinance. They have been prepared under the historical cost convention, except for investment properties, financial assets at fair value through profit or loss and contingent consideration payable which have been measured at fair value. These financial statements are presented in Hong Kong dollars (“HK$”) and all values are rounded to the nearest thousand except when otherwise indicated.

Basis of consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiaries for the year ended 30 September 2020. A subsidiary is an entity (including a structured entity), directly or indirectly, controlled by the Company. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee (i.e., existing rights that give the Group the current ability to direct the relevant activities of the investee).

When the Company has, directly or indirectly, less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

• (a) the contractual arrangement with the other vote holders of the investee;

• (b) rights arising from other contractual arrangements; and

• (c) the Group’s voting rights and potential voting rights.

The financial statements of the subsidiaries are prepared for the same reporting period as the Company, using consistent accounting policies. The results of subsidiaries are consolidated from the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.

Profit or loss and each component of other comprehensive income are attributed to the owners of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control described above. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

If the Group loses control over a subsidiary, it derecognises (i) the assets (including goodwill) and liabilities of the subsidiary, (ii) the carrying amount of any non-controlling interest and (iii) the cumulative translation differences recorded in equity; and recognises (i) the fair value of the consideration received, (ii) the fair value of any investment retained and (iii) any resulting surplus or deficit in profit or loss. The Group’s share of components previously recognised in other comprehensive income is reclassified to profit or loss or retained profits/accumulated losses, as appropriate, on the same basis as would be required if the Group had directly disposed of the related assets or liabilities.

85

ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

2.2 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES

The Group has adopted the following new and revised HKFRSs for the first time for the current year’s financial statements.

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

Except for the amendments to HKFRS 9 and HKAS 19, and Annual Improvements to HKFRSs 2015–2017 Cycle , which are not relevant to the preparation of the Group’s financial statements, the nature and the impact of the new and revised HKFRSs are described below:

(a) HKFRS 16

HKFRS 16 replaces HKAS 17 Leases , HK(IFRIC)-Int 4 Determining whether an Arrangement contains a Lease , HK(SIC)-Int 15 Operating Leases — Incentives and HK(SIC)-Int 27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease . The standard sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model to recognise and measure right-of-use assets and lease liabilities, except for certain recognition exemptions. Lessor accounting under HKFRS 16 is substantially unchanged from HKAS 17. Lessors continue to classify leases as either operating or finance leases using similar principles as in HKAS 17. HKFRS 16 did not have any significant impact on leases where the Group is the lessor.

The Group has adopted HKFRS 16 using the modified retrospective method with the date of initial application of 1 October 2019. Under this method, the standard has been applied retrospectively with the cumulative effect of initial adoption recognised as an adjustment to the opening balance of accumulated losses at 1 October 2019, and the comparative information for the year ended 30 September 2019 was not restated and continued to be reported under HKAS 17 and related interpretations.

New definition of a lease

Under HKFRS 16, a contract is, or contains, a lease if the contract conveys a right to control the use of an identified asset for a period of time in exchange for consideration. Control is conveyed where the customer has both the right to obtain substantially all of the economic benefits from use of the identified asset and the right to direct the use of the identified asset. The Group elected to use the transition practical expedient allowing the standard to be applied only to contracts that were previously identified as leases applying HKAS 17 and HK(IFRIC)-Int 4 at the date of initial application. Contracts that were not identified as leases under HKAS 17 and HK(IFRIC)-Int 4 were not reassessed. Therefore, the definition of a lease under HKFRS 16 has been applied only to contracts entered into or changed on or after 1 October 2019.

86 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

2.2 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (continued)

(a) HKFRS 16 (continued)

As a lessee — Leases previously classified as operating leases

Nature of the effect of adoption of HKFRS 16

The Group has lease contracts for retail shops, office premises and directors’ quarters. As a lessee, the Group previously classified leases as either finance leases or operating leases based on the assessment of whether the lease transferred substantially all the rewards and risks of ownership of assets to the Group. Under HKFRS 16, the Group applies a single approach to recognise and measure right-of-use assets and lease liabilities for all leases, except for two elective exemptions for leases of low-value assets (elected on a lease-by-lease basis) and leases with a lease term of 12 months or less (“short-term leases”) (elected by class of underlying asset). Instead of recognising rental expenses under operating leases on a straight-line basis over the lease term commencing from 1 October 2019, the Group recognises depreciation (and impairment, if any) of the rightof-use assets and interest accrued on the outstanding lease liabilities (as finance costs).

Impact on transition

Lease liabilities at 1 October 2019 were recognised based on the present value of the remaining lease payments, discounted using the incremental borrowing rate at 1 October 2019. The right-of-use assets were measured at the amount of the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to the lease recognised in the statement of financial position immediately before 1 October 2019. All these assets were assessed for any impairment based on HKAS 36 Impairment of Assets on that date. The Group elected to present the right-of-use assets separately in the statement of financial position. This includes the leasehold land of HK$53,172,000 that was reclassified from property, plant and equipment.

For the leasehold land and buildings (that were held to earn rental income and/or for capital appreciation) previously included in investment properties and measured at fair value, the Group has continued to include them as investment properties at 1 October 2019. They continue to be measured at fair value applying HKAS 40 Investment Property .

The Group has used the following elective practical expedients when applying HKFRS 16 at 1 October 2019:

• Applying the short-term lease exemptions to leases with a lease term that ends within 12 months from the date of initial application

• Applying a single discount rate to a portfolio of leases with reasonably similar characteristics when measuring the lease liabilities at 1 October 2019

ANNUAL REPORT 2020 87

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

2.2 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (continued)

(a) HKFRS 16 (continued)

Financial impact at 1 October 2019

The impact arising from the adoption of HKFRS 16 at 1 October 2019 was as follows:

	Increase/
	(decrease)
	HK$’000
Assets
Increase in right-of-use assets	76,390
Decrease inproperty,plant and equipment	(53,172)
Increase in total assets	23,218
Liabilities
Increase in lease liabilities	25,337
Decrease in otherpayables and accruals	(2,119)
Increase in total liabilities	23,218
The lease liabilities as at 1 October 2019 reconciled to the operating lease commitments as at 30 September
2019 are as follows:

		HK$’000
Operating lease commitments as at 30 September 2019		33,597
Less: Commitments relating to short-term leases and those leases
with a remaininglease term ended on or before 30 September 2020		(4,594)
ended on or before 30 September 2020	(4,594)
		29,003
Weighted average incremental borrowingrate as at 1 October 2019		5%
Discounted operating lease commitments and lease liabilities as at 1 October 2019		25,337

(b) Amendments to HKAS 28

Amendments to HKAS 28 clarify that the scope exclusion of HKFRS 9 only includes interests in an associate or joint venture to which the equity method is applied and does not include long-term interests that in substance form part of the net investment in the associate or joint venture, to which the equity method has not been applied. Therefore, an entity applies HKFRS 9, rather than HKAS 28, including the impairment requirements under HKFRS 9, in accounting for such long-term interests. HKAS 28 is then applied to the net investment, which includes the long-term interests, only in the context of recognising losses of an associate or joint venture and impairment of the net investment in the associate or joint venture. The Group assessed its business model for its long-term interests in associates and a joint venture upon adoption of the amendments on 1 October 2019 and concluded that the long-term interests in associates and joint venture continued to be measured at amortised cost in accordance with HKFRS 9. Accordingly, the amendments did not have any impact on the financial position or performance of the Group.

88 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

2.2 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (continued)

(c) HK(IFRIC)-Int 23

HK(IFRIC)-Int 23 addresses the accounting for income taxes (current and deferred) when tax treatments involve uncertainty that affects the application of HKAS 12 (often referred to as “uncertain tax positions”). The interpretation does not apply to taxes or levies outside the scope of HKAS 12, nor does it specifically include requirements relating to interest and penalties associated with uncertain tax treatments. The interpretation specifically addresses (i) whether an entity considers uncertain tax treatments separately; (ii) the assumptions an entity makes about the examination of tax treatments by taxation authorities; (iii) how an entity determines taxable profits or tax losses, tax bases, unused tax losses, unused tax credits and tax rates; and (iv) how an entity considers changes in facts and circumstances. The interpretation did not have any impact on the financial position or performance of the Group.

2.3 ISSUED BUT NOT YET EFFECTIVE HONG KONG FINANCIAL REPORTING STANDARDS

The Group has not applied the following new and revised HKFRSs, that have been issued but are not yet effective, in these financial statements.

Amendments to HKFRS 3	_Definition of a Business_1
Amendments to HKFRS 3	_Reference to the Conceptual Framework_4
Amendments to HKFRS 9,	_Interest Rate Benchmark Reform_1
HKAS 39 and HKFRS 7
Amendments to HKFRS 9, HKAS 39,	_Interest Rate Benchmark Reform — Phase 2_3
HKFRS 7, HKFRS 4 and HKFRS 16
Amendments to HKFRS 10	Sale or Contribution of Assets between an Investor and
and HKAS 28 (2011)	_its_Associate or_Joint Venture_6
Amendment to HKFRS 16	_Covid-19-Related Rent Concessions_2
HKFRS 17	_Insurance Contracts_5
Amendments to HKFRS 17	_Insurance Contracts_5, 8
Amendments to HKAS 1 and HKAS 8	Definition of Material1
Amendments to HKAS 1	_Classification of Liabilities as Current or Non-current_5, 7
Amendments to HKAS 16	_Property, Plant and Equipment: Proceeds before Intended Use_4
Amendments to HKAS 37	_Onerous Contracts — Cost of Fulfilling a Contract_4
Annual Improvements to	Amendments to HKFRS 1, HKFRS 9, Illustrative Examples
HKFRSs 2018–2020	accompanying HKFRS 16, and HKAS 414

• 1 Effective for annual periods beginning on or after 1 January 2020

• 2 Effective for annual periods beginning on or after 1 June 2020 with earlier application permitted

• 3 Effective for annual periods beginning on or after 1 January 2021

• 4 Effective for annual periods beginning on or after 1 January 2022

• 5 Effective for annual periods beginning on or after 1 January 2023

• 6 No mandatory effective date yet determined but available for adoption

• 7 As a consequence of the amendments to HKAS 1, Hong Kong Interpretation 5 Presentation of Financial Statements — Classification by the Borrower of a Term Loan that Contains a Repayment on Demand Clause was revised in October 2020 to align the corresponding wording with no change in conclusion

• 8 As a consequence of the amendments to HKFRS 17 issued in October 2020, HKFRS 4 was amended to extend the temporary exemption that permits insurers to apply HKAS 39 rather than HKFRS 9 for annual periods beginning before 1 January 2023

ANNUAL REPORT 2020 89

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

2.3 ISSUED BUT NOT YET EFFECTIVE HONG KONG FINANCIAL REPORTING STANDARDS

(continued)

Further information about those HKFRSs that are expected to be applicable to the Group is described below.

Amendments to HKFRS 3 clarify and provide additional guidance on the definition of a business. The amendments clarify that for an integrated set of activities and assets to be considered a business, it must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output. A business can exist without including all of the inputs and processes needed to create outputs. The amendments remove the assessment of whether market participants are capable of acquiring the business and continue to produce outputs. Instead, the focus is on whether acquired inputs and acquired substantive processes together significantly contribute to the ability to create outputs. The amendments have also narrowed the definition of outputs to focus on goods or services provided to customers, investment income or other income from ordinary activities. Furthermore, the amendments provide guidance to assess whether an acquired process is substantive and introduce an optional fair value concentration test to permit a simplified assessment of whether an acquired set of activities and assets is not a business. The Group expects to adopt the amendments prospectively from 1 October 2020. Since the amendments apply prospectively to transactions or other events that occur on or after the date of first application, the Group will not be affected by these amendments on the date of transition.

Amendments to HKFRS 3 are intended to replace a reference to the previous Framework for the Preparation and Presentation of Financial Statements with a reference to the Conceptual Framework for Financial Reporting issued in June 2018 without significantly changing its requirements. The amendments also add to HKFRS 3 an exception to its recognition principle for an entity to refer to the Conceptual Framework to determine what constitutes an asset or a liability. The exception specifies that, for liabilities and contingent liabilities that would be within the scope of HKAS 37 or HK(IFRIC)-Int 21 if they were incurred separately rather than assumed in a business combination, an entity applying HKFRS 3 should refer to HKAS 37 or HK(IFRIC)-Int 21 respectively instead of the Conceptual Framework. Furthermore, the amendments clarify that contingent assets do not qualify for recognition at the acquisition date. The Group expects to adopt the amendments prospectively from 1 October 2022. Since the amendments apply prospectively to business combinations for which the acquisition date is on or after the date of first application, the Group will not be affected by these amendments on the date of transition.

Amendments to HKFRS 9, HKAS 39 and HKFRS 7 address issues affecting financial reporting in the period before the replacement of an existing interest rate benchmark with an alternative risk-free rate (“RFR”). The amendments provide temporary reliefs which enable hedge accounting to continue during the period of uncertainty before the introduction of the alternative RFR. In addition, the amendments require companies to provide additional information to investors about their hedging relationships which are directly affected by these uncertainties. The Group expects to adopt the amendments prospectively from 1 October 2020. The amendments are not expected to have any significant impact on the Group’s financial statements.

90 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

2.3 ISSUED BUT NOT YET EFFECTIVE HONG KONG FINANCIAL REPORTING STANDARDS

(continued)

Amendments to HKFRS 9, HKAS 39, HKFRS 7, HKFRS 4 and HKFRS 16 address issues not dealt with in the previous amendments which affect financial reporting when an existing interest rate benchmark is replaced with an alternative RFR. The Phase 2 amendments provide a practical expedient to allow the effective interest rate to be updated without adjusting the carrying amount when accounting for changes in the basis for determining the contractual cash flows of financial assets and liabilities, if the change is a direct consequence of the interest rate benchmark reform and the new basis for determining the contractual cash flows is economically equivalent to the previous basis immediately preceding the change. In addition, the amendments permit changes required by the interest rate benchmark reform to be made to hedge designations and hedge documentation without the hedging relationship being discontinued. Any gains or losses that could arise on transition are dealt with through the normal requirements of HKFRS 9 to measure and recognise hedge ineffectiveness. The amendments also provide a temporary relief to entities from having to meet the separately identifiable requirement when an RFR is designated as a risk component. The relief allows an entity, upon designation of the hedge, to assume that the separately identifiable requirement is met, provided the entity reasonably expects the RFR risk component to become separately identifiable within the next 24 months. Furthermore, the amendments require an entity to disclose additional information to enable users of financial statements to understand the effect of interest rate benchmark reform on an entity’s financial instruments and risk management strategy. The amendments are effective for annual periods beginning on or after 1 January 2021 and shall be applied retrospectively, but entities are not required to restate the comparative information.

Amendments to HKFRS 10 and HKAS 28 (2011) address an inconsistency between the requirements in HKFRS 10 and in HKAS 28 (2011) in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The amendments require a full recognition of a gain or loss when the sale or contribution of assets between an investor and its associate or joint venture constitutes a business. For a transaction involving assets that do not constitute a business, a gain or loss resulting from the transaction is recognised in the investor’s profit or loss only to the extent of the unrelated investor’s interest in that associate or joint venture. The amendments are to be applied prospectively. The previous mandatory effective date of amendments to HKFRS 10 and HKAS 28 (2011) was removed by the HKICPA in January 2016 and a new mandatory effective date will be determined after the completion of a broader review of accounting for associates and joint ventures. However, the amendments are available for adoption now.

Amendments to HKAS 1 clarify the requirements for classifying liabilities as current or non-current. The amendments specify that if an entity’s right to defer settlement of a liability is subject to the entity complying with specified conditions, the entity has a right to defer settlement of the liability at the end of the reporting period if it complies with those conditions at that date. Classification of a liability is unaffected by the likelihood that the entity will exercise its right to defer settlement of the liability. The amendments also clarify the situations that are considered a settlement of a liability. The amendments are effective for annual periods beginning on or after 1 January 2023 and shall be applied retrospectively. Earlier application is permitted. The amendments are not expected to have any significant impact on the Group’s financial statements.

Amendments to HKAS 1 and HKAS 8 provide a new definition of material. The new definition states that information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements. The amendments clarify that materiality will depend on the nature or magnitude of information. A misstatement of information is material if it could reasonably be expected to influence decisions made by the primary users. The Group expects to adopt the amendments prospectively from 1 October 2020. The amendments are not expected to have any significant impact on the Group’s financial statements.

ANNUAL REPORT 2020 91

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

2.3 ISSUED BUT NOT YET EFFECTIVE HONG KONG FINANCIAL REPORTING STANDARDS

(continued)

Amendment to HKFRS 16 provides a practical expedient for lessees to elect not to apply lease modification accounting for rent concessions arising as a direct consequence of the covid-19 pandemic. The practical expedient applies only to rent concessions occurring as a direct consequence of the pandemic and only if (i) the change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change; (ii) any reduction in lease payments affects only payments originally due on or before 30 June 2021; and (iii) there is no substantive change to other terms and conditions of the lease. The amendment is effective for annual periods beginning on or after 1 June 2020 with earlier application permitted and shall be applied retrospectively. The Group expects to adopt the amendment from 1 October 2020. The amendment is not expected to have any significant impact on the Group’s financial statements.

Amendments to HKAS 16 prohibit an entity from deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognises the proceeds from selling any such items, and the cost of those items, in profit or loss. The amendments are effective for annual periods beginning on or after 1 January 2022 and shall be applied retrospectively only to items of property, plant and equipment made available for use on or after the beginning of the earliest period presented in the financial statements in which the entity first applies the amendments. Earlier application is permitted. The amendments are not expected to have any significant impact on the Group’s financial statements.

Amendments to HKAS 37 clarify that for the purpose of assessing whether a contract is onerous under HKAS 37, the cost of fulfilling the contract comprises the costs that relate directly to the contract. Costs that relate directly to a contract include both the incremental costs of fulfilling that contract (e.g., direct labour and materials) and an allocation of other costs that relate directly to fulfilling that contract (e.g., an allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract as well as contract management and supervision costs). General and administrative costs do not relate directly to a contract and are excluded unless they are explicitly chargeable to the counterparty under the contract. The amendments are effective for annual periods beginning on or after 1 January 2022 and shall be applied to contracts for which an entity has not yet fulfilled all its obligations at the beginning of the annual reporting period in which it first applies the amendments. Earlier application is permitted. Any cumulative effect of initially applying the amendments shall be recognised as an adjustment to the opening equity at the date of initial application without restating the comparative information. The amendments are not expected to have any significant impact on the Group’s financial statements.

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Investments in associates and a joint venture

An associate is an entity in which the Group has a long term interest of generally not less than 20% of the equity voting rights and over which it is in a position to exercise significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies.

92 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Investments in associates and a joint venture (continued)

A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

The Group’s investments in associates and a joint venture are stated in the consolidated statement of financial position at the Group’s share of net assets under the equity method of accounting, less any impairment losses. Adjustments are made to bring into line any dissimilar accounting policies that may exist. The Group’s share of the post-acquisition results and other comprehensive income of associates and joint venture is included in the consolidated statement of profit or loss and consolidated other comprehensive income, respectively. In addition, when there has been a change recognised directly in the equity of the associates or joint venture, the Group recognises its share of any changes, when applicable, in the consolidated statement of changes in equity. Unrealised gains and losses resulting from transactions between the Group and its associates or joint venture are eliminated to the extent of the Group’s investments in the associates or joint venture, except where unrealised losses provide evidence of an impairment of the assets transferred. Goodwill arising from the acquisition of associates or joint venture is included as part of the Group’s investments in associates or a joint venture.

If an investment in an associate becomes an investment in a joint venture or vice versa, the retained interest is not remeasured. Instead, the investment continues to be accounted for under the equity method. In all other cases, upon loss of significant influence over the associate or joint control over the joint venture, the Group measures and recognises any retained investment at its fair value. Any difference between the carrying amount of the associate or joint venture upon loss of significant influence or joint control and the fair value of the retained investment and proceeds from disposal is recognised in profit or loss.

Business combinations and goodwill

Business combinations are accounted for using the acquisition method. The consideration transferred is measured at the acquisition date fair value which is the sum of the acquisition date fair values of assets transferred by the Group, liabilities assumed by the Group to the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. For each business combination, the Group elects whether to measure the non-controlling interests in the acquiree that are present ownership interests and entitle their holders to a proportionate share of net assets in the event of liquidation at fair value or at the proportionate share of the acquiree’s identifiable net assets. All other components of non-controlling interests are measured at fair value. Acquisition-related costs are expensed as incurred.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts of the acquiree.

If the business combination is achieved in stages, the previously held equity interest is remeasured at its acquisition date fair value and any resulting gain or loss is recognised in profit or loss.

ANNUAL REPORT 2020 93

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Business combinations and goodwill (continued)

Any contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisition date. Contingent consideration classified as an asset or liability is measured at fair value with changes in fair value recognised in profit or loss. Contingent consideration that is classified as equity is not remeasured and subsequent settlement is accounted for within equity.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred, the amount recognised for non-controlling interests and any fair value of the Group’s previously held equity interests in the acquiree over the identifiable net assets acquired and liabilities assumed. If the sum of this consideration and other items is lower than the fair value of the net assets acquired, the difference is, after reassessment, recognised in profit or loss as a gain on bargain purchase.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. The Group performs its annual impairment test of goodwill as at 30 September. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units.

Impairment is determined by assessing the recoverable amount of the cash-generating unit (group of cashgenerating units) to which the goodwill relates. Where the recoverable amount of the cash-generating unit (group of cash-generating units) is less than the carrying amount, an impairment loss is recognised. An impairment loss recognised for goodwill is not reversed in a subsequent period.

Where goodwill has been allocated to a cash-generating unit (or group of cash-generating units) and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on the disposal. Goodwill disposed of in these circumstances is measured based on the relative value of the operation disposed of and the portion of the cashgenerating unit retained.

Fair value measurement

The Group measures its investment properties, financial assets at fair value through profit or loss and contingent consideration payable at fair value at the end of each reporting period. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible by the Group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

94 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Fair value measurement (continued)

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

• Level 1 — based on quoted prices (unadjusted) in active markets for identical assets or liabilities

• Level 2 — based on valuation techniques for which the lowest level input that is significant to the fair value measurement is observable, either directly or indirectly

• Level 3 — based on valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

Impairment of non-financial assets

Where an indication of impairment exists, or when annual impairment testing for an asset is required (other than inventories, deferred tax assets, financial assets and investment properties), the asset’s recoverable amount is estimated. An asset’s recoverable amount is the higher of the asset’s or cash-generating unit’s value in use and its fair value less costs of disposal, and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case the recoverable amount is determined for the cash-generating unit to which the asset belongs.

An impairment loss is recognised only if the carrying amount of an asset exceeds its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss is charged to the statement of profit or loss in the period in which it arises.

An assessment is made at the end of each reporting period as to whether there is an indication that previously recognised impairment losses may no longer exist or may have decreased. If such an indication exists, the recoverable amount is estimated. A previously recognised impairment loss of an asset other than goodwill is reversed only if there has been a change in the estimates used to determine the recoverable amount of that asset, but not to an amount higher than the carrying amount that would have been determined (net of any depreciation/ amortisation) had no impairment loss been recognised for the asset in prior years. A reversal of such an impairment loss is credited to the statement of profit or loss in the period in which it arises.

ANNUAL REPORT 2020 95

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Related parties

A party is considered to be related to the Group if:

• (a) the party is a person or a close member of that person’s family and that person

• (i) has control or joint control over the Group;

• (ii) has significant influence over the Group; or

• (iii) is a member of the key management personnel of the Group or of a parent of the Group;

or

• (b) the party is an entity where any of the following conditions applies:

• (i) the entity and the Group are members of the same group;

• (ii) one entity is an associate or joint venture of the other entity (or of a parent, subsidiary or fellow subsidiary of the other entity);

• (iii) the entity and the Group are joint ventures of the same third party;

• (iv) one entity is a joint venture of a third entity and the other entity is an associate of the third entity;

• (v) the entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to the Group;

• (vi) the entity is controlled or jointly controlled by a person identified in (a);

• (vii) a person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity); and

• (viii) the entity, or any member of a group of which it is a part, provides key management personnel services to the Group or to the parent of the Group.

96 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Property, plant and equipment and depreciation

Property, plant and equipment, other than construction in progress, are stated at cost less accumulated depreciation and any impairment losses. The cost of an item of property, plant and equipment comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use.

Expenditure incurred after items of property, plant and equipment have been put into operation, such as repairs and maintenance, is normally charged to the statement of profit or loss in the period in which it is incurred. In situations where the recognition criteria are satisfied, the expenditure for a major inspection is capitalised in the carrying amount of the asset as a replacement. Where significant parts of property, plant and equipment are required to be replaced at intervals, the Group recognises such parts as individual assets with specific useful lives and depreciates them accordingly.

Depreciation is calculated on the straight-line basis to write off the cost of each item of property, plant and equipment to its residual value over its estimated useful life. The principal annual rates used for this purpose are as follows:

Freehold land	Not depreciated
Buildings	2% to 5%
Leasehold improvements	Over the shorter of lease terms and 10% to 20%
Plant and machinery	20%
Furniture, fixtures and office equipment	20% to 33%
Motor vehicles	15% to 50%

Where parts of an item of property, plant and equipment have different useful lives, the cost of that item is allocated on a reasonable basis among the parts and each part is depreciated separately. Residual values, useful lives and the depreciation method are reviewed, and adjusted if appropriate, at least at each financial year end.

An item of property, plant and equipment including any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on disposal or retirement recognised in the statement of profit or loss in the year the asset is derecognised is the difference between the net sales proceeds and the carrying amount of the relevant asset.

Construction in progress represents a building under construction, which is stated at cost less any impairment losses, and is not depreciated. Cost comprises the direct costs of construction during the period of construction. Construction in progress is reclassified to the appropriate category of property, plant and equipment when completed and ready for use.

ANNUAL REPORT 2020 97

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Investment properties

Investment properties are interests in land and buildings (including the leasehold property held as a right-of-use asset (2019: leasehold interest under an operating lease) which would otherwise meet the definition of an investment property) held to earn rental income and/or for capital appreciation, rather than for use in the production or supply of goods or services or for administrative purposes; or for sale in the ordinary course of business. Such properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at the end of the reporting period.

Gains or losses arising from changes in the fair values of investment properties are included in the statement of profit or loss in the year in which they arise.

Any gains or losses on the retirement or disposal of an investment property are recognised in the statement of profit or loss in the year of the retirement or disposal.

Intangible assets (other than goodwill)

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is the fair value at the date of acquisition. The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are subsequently amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each financial year end.

Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the cashgenerating unit level. Such intangible assets are not amortised. The useful life of an intangible asset with an indefinite life is reviewed annually to determine whether indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is accounted for on a prospective basis.

The Group’s intangible assets represent (i) distribution rights, which are stated at cost less any impairment losses and are amortised on the straight-line basis over the period of the rights granted under relevant distribution agreements; and (ii) mining rights with indefinite useful lives, which are stated at cost less any impairment losses; (iii) trademarks with indefinite useful lives, which are stated at cost less any impairment losses; and (iv) deferred development costs as further explained below.

Research and development costs

All research costs are charged to the statement of profit or loss as incurred.

Expenditure incurred on projects to develop new products is capitalised and deferred only when the Group can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the project and the ability to measure reliably the expenditure during the development. Product development expenditure which does not meet these criteria is expensed when incurred.

Deferred development costs are stated at cost less any impairment losses and are amortised using the straight-line basis over the commercial lives of the underlying products not exceeding seven years.

98 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Leases (applicable from 1 October 2019)

The Group assesses at contract inception whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

Group as a lessee

The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Group recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.

• (a) Right-of-use assets

Right-of-use assets are recognised at the commencement date of the lease (that is the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and any impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease terms and the estimated useful lives of the assets as follows:

Leasehold land Over the lease terms Leased properties Over the lease terms

If ownership of the leased asset transfers to the Group by the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.

When a right-of-use asset meets the definition of investment property, it is included in investment properties. The corresponding right-of-use asset is initially measured at cost, and subsequently measured at fair value, in accordance with the Group’s policy for “investment properties”.

(b) Lease liabilities

Lease liabilities are recognised at the commencement date of the lease at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including insubstance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for termination of a lease, if the lease term reflects the Group exercising the option to terminate. The variable lease payments that do not depend on an index or a rate are recognised as an expense in the period in which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in lease payments (e.g., a change to future lease payments resulting from a change in an index or rate) or a change in assessment of an option to purchase the underlying asset.

ANNUAL REPORT 2020 99

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Leases (applicable from 1 October 2019) (continued)

Group as a lessee (continued)

• (c) Short-term leases and leases of low-value assets

The Group applies the short-term lease recognition exemption to its short-term leases (that is those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the recognition exemption for leases of low-value assets to leases that are considered to be of low value. Lease payments on short-term leases and leases of low-value assets are recognised as an expense on a straight-line basis over the lease term.

Group as a lessor

When the Group acts as a lessor, it classifies at lease inception (or when there is a lease modification) each of its leases as either an operating lease or a finance lease.

Leases in which the Group does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. When a contract contains lease and non-lease components, the Group allocates the consideration in the contract to each component on a relative stand-alone selling price basis. Rental income is accounted for on a straight-line basis over the lease terms and is included in revenue in the statement of profit or loss due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.

Leases that transfer substantially all the risks and rewards incidental to ownership of an underlying asset to the lessee are accounted for as finance leases.

Leases (applicable before 1 October 2019)

Leases that transfer substantially all the rewards and risks of ownership of assets to the Group, other than legal title, are accounted for as finance leases. At the inception of a finance lease, the cost of the leased asset is capitalised at the present value of the minimum lease payments and recorded together with the obligation, excluding the interest element, to reflect the purchase and financing. Assets held under capitalised finance leases, including prepaid land lease payments under finance leases, are included in property, plant and equipment, and depreciated over the shorter of the lease terms and the estimated useful lives of the assets. The finance costs of such leases are charged to the statement of profit or loss so as to provide a constant periodic rate of charge over the lease terms.

Leases where substantially all the rewards and risks of ownership of assets remain with the lessor are accounted for as operating leases. Where the Group is the lessor, assets leased by the Group under operating leases are included in non-current assets, and rentals receivable under the operating leases are credited to the statement of profit or loss on the straight-line basis over the lease terms. Where the Group is the lessee, rentals payable under operating leases net of any incentives received from the lessor are charged to the statement of profit or loss on the straightline basis over the lease terms.

Prepaid land lease payments under operating leases are initially stated at cost and subsequently recognised on the straight-line basis over the lease terms. When the lease payments cannot be allocated reliably between the land and buildings elements, the entire lease payments are included in the cost of land and buildings as a finance lease in property, plant and equipment.

100 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Investments and other financial assets

Initial recognition and measurement

Financial assets of the Group are classified, at initial recognition, as subsequently measured at amortised cost and fair value through profit or loss.

The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Group’s business model for managing them. With the exception of accounts receivable that do not contain a significant financing component or for which the Group has applied the practical expedient of not adjusting the effect of a significant financing component, the Group initially measures a financial asset at its fair value, plus in the case of a financial asset not at fair value through profit or loss, transaction costs. Accounts receivable that do not contain a significant financing component or for which the Group has applied the practical expedient are measured at the transaction price determined under HKFRS 15 in accordance with the policies set out for “Revenue recognition” below.

In order for a financial asset to be classified and measured at amortised cost, it needs to give rise to cash flows that are solely payments of principal and interest (“SPPI”) on the principal amount outstanding. Financial assets with cash flows that are not SPPI are classified and measured at fair value through profit or loss, irrespective of the business model.

The Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. Financial assets classified and measured at amortised cost are held within a business model with the objective to hold financial assets in order to collect contractual cash flows. Financial assets which are not held within the aforementioned business model are classified and measured at fair value through profit or loss.

All regular way purchases and sales of financial assets are recognised on the trade date, that is, the date that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace.

Subsequent measurement

The subsequent measurement of financial assets depends on their classification as follows:

Financial assets at amortised cost (debt instruments)

Financial assets at amortised cost are subsequently measured using the effective interest method and are subject to impairment. Gains and losses are recognised in the statement of profit or loss when the asset is derecognised, modified or impaired.

ANNUAL REPORT 2020 101

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Investments and other financial assets (continued)

Subsequent measurement (continued)

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value recognised in the statement of profit or loss.

This category includes derivative instruments and equity investments which the Group had not irrevocably elected to classify at fair value through other comprehensive income. Dividends on equity investments classified as financial assets at fair value through profit or loss are also recognised in the statement of profit or loss when the right of payment has been established, it is probable that the economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.

A derivative embedded in a hybrid contract, with a financial liability or non-financial host, is separated from the host and accounted for as a separate derivative if the economic characteristics and risks are not closely related to the host; a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and the hybrid contract is not measured at fair value through profit or loss. Embedded derivatives are measured at fair value with changes in fair value recognised in the statement of profit or loss. Reassessment only occurs if there is either a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required or a reclassification of a financial asset out of the fair value through profit or loss category.

A derivative embedded within a hybrid contract containing a financial asset host is not accounted for separately. The financial asset host together with the embedded derivative is required to be classified in its entirety as a financial asset at fair value through profit or loss.

Derecognition of financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e., removed from the Group’s consolidated statement of financial position) when:

• the rights to receive cash flows from the asset have expired; or

• the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a “pass-through” arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if, and to what extent it, has retained the risk and rewards of ownership of the asset. When it has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the Group continues to recognise the transferred asset to the extent of the Group’s continuing involvement. In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.

102 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Impairment of financial assets

The Group recognises an allowance for expected credit losses (“ECLs”) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

General approach

ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12 months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

At each reporting date, the Group assesses whether the credit risk on a financial instrument has increased significantly since initial recognition. When making the assessment, the Group compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information that is available without undue cost or effort, including historical and forward-looking information.

The Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

Financial assets at amortised cost are subject to impairment under the general approach and they are classified within the following stages for measurement of ECLs except for accounts receivable which apply the simplified approach as detailed below.

• Stage 1 Financial instruments for which credit risk has not increased significantly since initial recognition and for which the loss allowance is measured at an amount equal to 12-month ECLs

• Stage 2 Financial instruments for which credit risk has increased significantly since initial recognition but that are not credit-impaired financial assets and for which the loss allowance is measured at an amount equal to lifetime ECLs

• Stage 3 Financial assets that are credit-impaired at the reporting date (but that are not purchased or originated credit-impaired) and for which the loss allowance is measured at an amount equal to lifetime ECLs

Simplified approach

For accounts receivable that do not contain a significant financing component or when the Group applies the practical expedient of not adjusting the effect of a significant financing component, the Group applies the simplified approach in calculating ECLs. Under the simplified approach, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.

ANNUAL REPORT 2020 103

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Financial liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, or payables, as appropriate.

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

Subsequent measurement

The subsequent measurement of financial liabilities depends on their classification as follows:

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by HKFRS 9. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on liabilities held for trading are recognised in the statement of profit or loss. The net fair value gain or loss recognised in the statement of profit or loss does not include any interest charged on these financial liabilities.

Financial liabilities designated upon initial recognition as at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in HKFRS 9 are satisfied. Gains or losses on liabilities designated at fair value through profit or loss are recognised in the statement of profit or loss, except for the gains or losses arising from the Group’s own credit risk which are presented in other comprehensive income with no subsequent reclassification to the statement of profit or loss. The net fair value gain or loss recognised in the statement of profit or loss does not include any interest charged on these financial liabilities.

Financial liabilities at amortised cost (loans and borrowings)

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost, using the effective interest rate method unless the effect of discounting would be immaterial, in which case they are stated at cost. Gains and losses are recognised in the statement of profit or loss when the liabilities are derecognised as well as through the effective interest rate amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The effective interest rate amortisation is recognised in the statement of profit or loss.

104 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Financial liabilities (continued)

Subsequent measurement (continued)

Financial guarantee contracts

Financial guarantee contracts issued by the Group are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. A financial guarantee contract is recognised initially as a liability at its fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequent to initial recognition, the Group measures the financial guarantee contracts at the higher of: (i) the ECL allowance determined in accordance with the policy as set out in “Impairment of financial assets”; and (ii) the amount initially recognised less, when appropriate, the cumulative amount of income recognised.

Derecognition of financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged or cancelled, or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and a recognition of a new liability, and the difference between the respective carrying amounts is recognised in the statement of profit or loss.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

Derivative financial instruments

Initial recognition and subsequent measurement

Derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative.

Any gains or losses arising from changes in fair value of derivatives are taken directly to the statement of profit or loss.

Current versus non-current classification

Derivative instruments that are not designated as effective hedging instruments are classified as current or noncurrent or separated into current and non-current portions based on an assessment of the facts and circumstances (i.e., the underlying contracted cash flows).

• Where the Group expects to hold a derivative as an economic hedge (and does not apply hedge accounting) for a period beyond 12 months after the end of the reporting period, the derivative is classified as non-current (or separated into current and non-current portions) consistently with the classification of the underlying item.

• Embedded derivatives that are not closely related to the host contract are classified consistently with the cash flows of the host contract.

• Derivative instruments that are designated as, and are effective hedging instruments, are classified consistently with the classification of the underlying hedged item. The derivative instruments are separated into current portions and non-current portions only if a reliable allocation can be made.

ANNUAL REPORT 2020 105

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined on the first-in, first out basis and, in the case of finished goods and work in progress, comprises direct materials, direct labour and an appropriate proportion of overheads. Net realisable value is based on estimated selling prices less any estimated costs to be incurred to completion and disposal.

Cash and cash equivalents

For the purpose of the consolidated statement of cash flows, cash and cash equivalents comprise cash on hand and demand deposits, and short term highly liquid investments, that are readily convertible into known amounts of cash, are subject to an insignificant risk of changes in value, and have a short maturity of generally within three months when acquired, less bank overdrafts which are repayable on demand and form an integral part of the Group’s cash management.

For the purpose of the consolidated statement of financial position, cash and cash equivalents comprise cash on hand and at banks, including term deposits, and assets similar in nature to cash, which are not restricted as to use.

Provisions

A provision is recognised when a present obligation (legal or constructive) has arisen as a result of a past event and it is probable that a future outflow of resources will be required to settle the obligation, provided that a reliable estimate can be made of the amount of the obligation.

When the effect of discounting is material, the amount recognised for a provision is the present value at the end of the reporting period of the future expenditures expected to be required to settle the obligation. The increase in the discounted present value amount arising from the passage of time is recognised in the statement of profit or loss.

Income tax

Income tax comprises current and deferred tax. Income tax relating to items recognised outside profit or loss is recognised outside profit or loss, either in other comprehensive income or directly in equity.

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period, taking into consideration interpretations and practices prevailing in the countries/jurisdictions in which the Group operates.

Deferred tax is provided, using the liability method, on all temporary differences at the end of the reporting period between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

106 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Income tax (continued)

Deferred tax liabilities are recognised for all taxable temporary differences, except:

• when the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• in respect of taxable temporary differences associated with investments in subsidiaries, associates and a joint venture, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, and the carryforward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences, and the carryforward of unused tax credits and unused tax losses can be utilised, except:

• when the deferred tax asset relating to the deductible temporary differences arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• in respect of deductible temporary differences associated with investments in subsidiaries, associates and a joint venture, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and future taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at the end of each reporting period and are recognised to the extent that it has become probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and deferred tax liabilities are offset if and only if the Group has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

ANNUAL REPORT 2020 107

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Government grants

Government grants are recognised at their fair value where there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the costs, which it is intended to compensate, are expensed. Where the grant relates to an asset, the fair value is credited to a deferred income account and is released to the statement of profit or loss over the expected useful life of the relevant asset by equal annual instalments.

Revenue recognition

Revenue from contracts with customers

Revenue from contracts with customers is recognised when control of goods or services is transferred to the customers at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services.

When the consideration in a contract includes a variable amount, the amount of consideration is estimated to which the Group will be entitled in exchange for transferring the goods or services to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved.

When the contract contains a financing component which provides the customer with a significant benefit of financing the transfer of goods or services to the customer for more than one year, revenue is measured at the present value of the amount receivable, discounted using the discount rate that would be reflected in a separate financing transaction between the Group and the customer at contract inception. When the contract contains a financing component which provides the Group a significant financial benefit for more than one year, revenue recognised under the contract includes the interest expense accreted on the contract liability under the effective interest method. For a contract where the period between the payment by the customer and the transfer of the promised goods or services is one year or less, the transaction price is not adjusted for the effects of a significant financing component, using the practical expedient in HKFRS 15.

• (a) Sales of jewellery products and watches

Revenue from the sale of jewellery products and watches is recognised at the point in time when control of the asset is transferred to the customer, generally on delivery of the goods.

Some contracts for the sale of jewellery products and watches provide customers with volume rebates, which give rise to variable consideration.

Volume rebates

Retrospective volume rebates may be provided to certain customers once the quantity of goods purchased during the period exceeds a threshold specified in the contract. Rebates are offset against amounts payable by the customer. To estimate the variable consideration for the expected future rebates, the most likely amount method is used for contracts with a single-volume threshold. The requirements on constraining estimates of variable consideration are applied and a refund liability for the expected future rebates is recognised.

108 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Revenue recognition (continued)

Revenue from contracts with customers (continued)

• (b) Sales and distribution of vehicles and related components and provision of engineering services Revenue from the sale of vehicles and related components and provision of engineering services is recognised at the point in time when control of the asset is transferred to the customer, generally upon delivery to the customers.

Revenue from the provision of distribution right of vehicles is recognised over the distribution period on a straight-line basis, as the customer simultaneously receives and consumes the benefits provided under the distribution arrangement.

Revenue from other sources

Interest income from loan financing is recognised on an accrual basis using the effective interest method by applying the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, when appropriate, to the net carrying amount of the financial asset.

Rental income is recognised on a time proportion basis over the lease terms.

Other income

Bank interest income is recognised on an accrual basis using the effective interest method by applying the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, when appropriate, to the net carrying amount of the financial asset.

Marketing subsidies are recognised when there is reasonable assurance that the subsidies will be received and all attaching conditions will be complied with.

Government subsidies are recognised when there is reasonable assurance that the government subsidies will be received and all attaching conditions will be complied with, as further explained in the accounting policies for “Government grants“.

Contract liabilities

A contract liability is recognised when a payment is received or a payment is due (whichever is earlier) from a customer before the Group transfers the related goods or services. Contract liabilities are recognised as revenue when the Group performs under the contract (i.e., transfers control of the related goods or services to the customer).

Share-based payments

The Company operates a share option scheme for the purpose of providing incentives and rewards to eligible participants who contribute to the success of the Group’s operations. Employees (including directors) of the Group receive remuneration in the form of share-based payments, whereby employees render services as consideration for equity instruments (“equity-settled transactions”).

The cost of equity-settled transactions with employees is measured by reference to the fair value of the equity instruments at the date at which they are granted. The fair value of the share options granted is determined by certain external valuers using a binomial model, further details of which are given in note 33 to the financial statements.

The cost of equity-settled transactions is recognised in employee benefit expense, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled. The cumulative expense recognised for equity-settled transactions at the end of each reporting period until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The charge or credit to the statement of profit or loss for a period represents the movement in the cumulative expense recognised as at the beginning and end of that period.

ANNUAL REPORT 2020 109

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Share-based payments (continued)

Service and non-market performance conditions are not taken into account when determining the grant date fair value of awards, but the likelihood of the conditions being met is assessed as part of the Group’s best estimate of the number of equity instruments that will ultimately vest. Market performance conditions are reflected within the grant date fair value. Any other conditions attached to an award, but without an associated service requirement, are considered to be non-vesting conditions. Non-vesting conditions are reflected in the fair value of an award and lead to an immediate expensing of an award unless there are also service and/or performance conditions.

For awards that do not ultimately vest because non-market performance and/or service conditions have not been met, no expense is recognised. Where awards include a market or non-vesting condition, the transactions are treated as vesting irrespective of whether the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.

Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified, if the original terms of the award are met. In addition, an expense is recognised for any modification that increases the total fair value of the share-based payments, or is otherwise beneficial to the employee as measured at the date of modification.

Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. This includes any award where non-vesting conditions within the control of either the Group or the employee are not met. However, if a new award is substituted for the cancelled award, and is designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of earnings per share.

Other employee benefits

Pension schemes

The Group operates a defined contribution Mandatory Provident Fund retirement benefit scheme (the “MPF Scheme”) under the Hong Kong Mandatory Provident Fund Schemes Ordinance for those employees who are eligible to participate in the MPF Scheme. Contributions are made based on a percentage of the employees’ basic salaries and are charged to the statement of profit or loss as they become payable in accordance with the rules of the MPF Scheme. The assets of the MPF Scheme are held separately from those of the Group in an independently administered fund. The Group’s employer contributions vest fully with the employees when contributed into the MPF Scheme, except for the Group’s employer voluntary contributions, which are refunded to the Group when the employee leaves employment prior to the contributions vesting fully, in accordance with the rules of the MPF Scheme.

The employees of the Group’s subsidiaries which operate in Mainland China and overseas are required to participate in central pension schemes operated by the local government. These subsidiaries are required to contribute a certain percentage of their payroll costs to the central pension schemes. The contributions are charged to the statement of profit or loss as they become payable in accordance with the rules of the central pension schemes.

110 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Foreign currencies

These financial statements are presented in Hong Kong dollars, which is the Company’s functional currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Foreign currency transactions recorded by the entities in the Group are initially recorded using their respective functional currency rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency rates of exchange ruling at the end of the reporting period. Differences arising on settlement or translation of monetary items are recognised in the statement of profit or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was measured. The gain or loss arising on translation of a nonmonetary item measured at fair value is treated in line with the recognition of the gain or loss on change in fair value of the item (i.e., translation difference on the item whose fair value gain or loss is recognised in other comprehensive income or profit or loss is also recognised in other comprehensive income or profit or loss, respectively).

In determining the exchange rate on initial recognition of the related asset, expense or income on the derecognition of a non-monetary asset or non-monetary liability relating to an advance consideration, the date of initial transaction is the date on which the Group initially recognises the non-monetary asset or non-monetary liability arising from the advance consideration. If there are multiple payments or receipts in advance, the Group determines the transaction date for each payment or receipt of the advance consideration.

The functional currencies of certain overseas subsidiaries, associates and joint venture are currencies other than the Hong Kong dollar. As at the end of the reporting period, the assets and liabilities of these entities are translated into Hong Kong dollars at the exchange rates prevailing at the end of the reporting period and their statements of profit or loss are translated into Hong Kong dollars at the weighted average exchange rates for the year. The resulting exchange differences are recognised in other comprehensive income and accumulated in the exchange fluctuation reserve. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in the statement of profit or loss.

Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on acquisition are treated as assets and liabilities of the foreign operation and translated at the closing rate.

For the purpose of the consolidated statement of cash flows, the cash flows of overseas subsidiaries are translated into Hong Kong dollars at the exchange rates ruling at the dates of the cash flows. Frequently recurring cash flows of overseas subsidiaries which arise throughout the year are translated into Hong Kong dollars at the weighted average exchange rates for the year.

ANNUAL REPORT 2020 111

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES

The preparation of the Group’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and their accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amounts of the assets or liabilities affected in the future.

Judgements

In the process of applying the Group’s accounting policies, management has made the following judgements, apart from those involving estimations, which have the most significant effect on the amounts recognised in the financial statements:

Income taxes

The Group has exposure to income taxes in different jurisdictions. Significant judgement is involved in determining the provision for income taxes. Determining income tax provisions involves judgement on the future tax treatment of certain transactions and interpretation of tax rules. The Group carefully evaluates tax implications of transactions and tax provisions are set up accordingly. The tax treatment of such transactions is reconsidered periodically to take into account all changes in tax legislations, interpretations and practices in respect thereof.

Rebuttable presumption on fair value of investment properties recovered through sale

For the purposes of measuring deferred tax liabilities arising from investment properties located in Mainland China that are measured using the fair value model, the management of the Group has reviewed the Group’s investment properties and concluded that the Group’s investment properties are held under a business model whose objective is to consume substantially all of the economic benefits embodied in the investment properties over time. Therefore, in determining the Group’s deferred tax on investment properties, the directors have determined that the presumption that investment properties measured using the fair value model are recovered through sale is rebutted.

Accordingly, the Group recognises deferred tax in respect of the changes in fair value of the investment properties based on management’s best estimate assuming future tax consequences through usage of such properties for rental purposes, rather than through sale. The final tax outcome could be different from the deferred tax liabilities recognised in the consolidated financial statements should the investment properties are subsequently disposed of by the Group, rather than all of the economic benefits embodied in the investment properties are consumed substantially by leasing over time. In the event the investment properties are being disposed of, the Group may be liable to higher tax upon disposal considering the impact of corporate income tax and land appreciation tax.

112 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (continued)

Estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below.

Variable consideration for volume rebates

The Group estimates variable consideration to be included in the transaction price for the sale of jewellery products and watches with volume rebates.

The Group’s expected volume rebates are analysed on a per customer basis for contracts that are subject to a single volume threshold. Determining whether a customer will likely be entitled to a rebate depends on the customer’s historical rebate entitlement and accumulated purchases to date. Estimates of volume rebates are sensitive to changes in circumstances and the Group’s past experience regarding rebate entitlements may not be representative of customers’ actual rebate entitlements in the future.

Inventory provision

The Group sells jewellery products and watches, which are subject to changing consumer demands and fashion trends, and high performance vehicles and related components. Significant judgement is required to assess the appropriate level of inventory provision for these jewellery products and watches and vehicles and related components which might be sold below cost.

To consider whether any write-down of inventories is required, the Group estimates the net realisable value of inventories based on, inter alia, the condition of the inventories, current market conditions, relevant historical and current sales information, and the expected future sales of goods, as well as the ageing of inventories to identify slow-moving items.

Impairment of non-financial assets (other than goodwill)

The Group assesses whether there are any indicators of impairment for all non-financial assets (including right-ofuse assets) at the end of each reporting period. Indefinite life intangible assets are tested for impairment annually and at other times when such an indicators exists. Other non-financial assets are tested for impairment when there are indicators that the carrying amounts may not be recoverable. An impairment exists when the carrying value of an asset or a cash-generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The calculation of the fair value less costs of disposal is based on available data from binding sales transactions in an arm’s length transaction of similar assets, observable market prices, or transaction prices of similar assets in less active markets, with adjustments to reflect any changes in economic conditions since the date of the transactions that occurred at those prices, or other valuation techniques, as appropriate, less incremental costs for disposing of the asset. When value in use calculations are undertaken, management must estimate the expected future cash flows from the asset or cash generating unit and choose a suitable discount rate in order to calculate the present value of those cash flows.

PRC land appreciation tax (“LAT”)

The Group is subject to LAT in the PRC. The provision for LAT is based on management’s best estimates according to the understanding of the requirements set forth in the relevant PRC tax laws and regulations. The actual LAT liabilities are subject to the determination by the tax authorities. The Group has not finalised its LAT calculation and payments with the tax authorities for certain of its properties. The final outcome could be different from the amounts that were initially recorded.

ANNUAL REPORT 2020 113

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (continued)

Estimation uncertainty (continued)

Impairment of goodwill

The Group determines whether goodwill is impaired at least on an annual basis or at other times when such indicators exist. This requires an estimation of the fair value less costs of disposal or value in use of each cashgenerating unit to which the goodwill is allocated. The determination of fair value less costs of disposal is based on available data from comparable binding sales transactions in an arm’s length transaction or observable market prices, or other valuation techniques, as appropriate. Estimating the fair value less costs of disposal using the discounted cash flow method or value in use requires the Group to make an estimate of the expected future cash flows from the cash-generating unit and also to choose a suitable discount rate in order to calculate the present value of those cash flows.

The net carrying amount of goodwill at 30 September 2020 was approximately HK$1,994,520,000 (2019: HK$1,363,308,000), including goodwill of HK$1,994,520,000 (2019: HK$1,333,753,000) allocated to the mobility technology solutions cash-generating units (2019: electric vehicle cash-generating unit). Further details of the methodologies, assumptions and estimates adopted to arrive at the recoverable amounts of the respective cashgenerating units to which the goodwill is allocated are set out in note 18 to the financial statements. Attributable to the nature and the underlying stage of development of the cash-generating units, the related industries and relevant markets, as well as other forward-looking factors, and the valuation methodologies adopted, the recoverable amounts of the respective cash-generating units are sensitive to the assumptions and estimates, in particular the respective estimated long term growth rates and discount rates adopted, underlying their calculation. Any significant unexpected changes/variations of underlying assumptions and estimates might have material impact on the recoverable amounts of the respective cash-generating units and, consequently, the net carrying amounts of the goodwill allocated to the respective cash-generating units within the next financial year.

Leases — Estimating the incremental borrowing rate

The Group cannot readily determine the interest rate implicit in a lease, and therefore, it uses an incremental borrowing rate (“IBR”) to measure lease liabilities. The IBR is the rate of interest that the Group would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The IBR therefore reflects what the Group “would have to pay”, which requires estimation when no observable rates are available (such as for subsidiaries that do not enter into financing transactions) or when it needs to be adjusted to reflect the terms and conditions of the lease (for example, when leases are not in the subsidiary’s functional currency). The Group estimates the IBR using observable inputs (such as market interest rates) when available and is required to make certain entity-specific estimates, as applicable.

Purchase price allocation of business combination

The purchase price allocation of the Group’s business combination, as detailed in note 35 to the financial statements, requires the determination of fair values of the contingent consideration transferred and the identifiable assets acquired and liabilities assumed. The net assets acquired, include amongst others, inventories, property, plant and equipment and other intangible assets, of which their fair values are dependent on a range of estimates, including royalty rate, discount rate and long term growth rate. The inputs to these models are taken from an observable market where possible but where this is not feasible, a degree of judgement and estimation is required in establishing fair values. Changes in assumptions about these factors could affect the reported fair values.

Useful lives of intangible assets with finite useful lives

Management determines the estimated useful lives of the Group’s intangible assets with finite lives for the calculation of amortisation of intangible assets. This estimate is determined after considering the expected period in which economic benefits can be generated from the intangible assets. Management reviews the estimated useful lives on an annual basis and future amortisation charges are adjusted where management believes the useful lives differ from previous estimates.

114 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (continued)

Estimation uncertainty (continued)

Estimation of fair value of investment properties

Subsequent to initial recognition, the Group’s investment properties are stated at fair value, which reflects market conditions at the end of the reporting period. The Group’s investment properties are revalued at the end of each reporting period based on valuations performed by certain independent professionally qualified valuers using recognised property valuation techniques.

In the absence of current prices in an active market for similar properties, the valuation may consider information from a variety of sources, as appropriate, including:

• (a) current prices in an active market for properties of a different nature, condition or location, adjusted to reflect those differences; and

• (b) recent prices of similar properties in less active markets, with adjustments to reflect any changes in economic conditions since the dates of the transactions that occurred at those prices.

Provision for expected credit losses on accounts receivable

The Group uses a provision matrix to calculate ECLs for accounts receivable. The provision rates are based on days past due for groupings of various customer segments that have similar loss patterns.

The provision matrix is initially based on the Group’s historical observed default rates. The Group will calibrate the matrix to adjust the historical credit loss experience with forward-looking information. For instance, if forecast economic conditions (i.e., gross domestic product) are expected to deteriorate over the next year which can lead to an increased number of defaults, the historical default rates are adjusted. At each reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.

The assessment of the correlation among historical observed default rates, forecast economic conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in circumstances and forecast economic conditions. The Group’s historical credit loss experience and forecast of economic conditions may also not be representative of a customer’s actual default in the future. The information about the ECLs on the Group’s accounts receivable is disclosed in note 26 to the financial statements.

Provision for expected credit losses on loans receivable

The measurement of impairment losses under HKFRS 9 on loans receivable requires judgement and estimates, in particular, the estimation of the amount and timing of future cash flows and collateral values when determining impairment losses and the assessment of a significant increase in credit risk. These estimates are driven by a number of factors, changes in which can result in different levels of allowances.

At each reporting date, the Group assesses whether there has been a significant increase in credit risk for exposures since initial recognition by comparing the risk of default occurring over the expected life between the reporting date and the date of initial recognition. The Group considers reasonable and supportable information that is relevant and available without undue cost or effort for this purpose. This includes qualitative and quantitative information and also forward-looking analysis. The information about the ECLs on the Group’s loans receivable is disclosed in note 23 to the financial statements.

ANNUAL REPORT 2020 115

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (continued)

Estimation uncertainty (continued)

Fair value measurement of financial instruments

When the fair values of financial assets and financial liabilities recorded in the statement of financial position cannot be derived from active markets, their fair values are determined using valuation techniques including the use of comparable recent arm’s length transactions and other valuation techniques commonly used by other market participants. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. The judgements and estimates include considerations of inputs such as volatility, risk-free rate, earning multiples and discount rate. Changes in assumptions about these factors could affect the reported fair value of financial instruments.

Fair value of share options

The determination of the fair value of the share options granted requires judgements and estimates in determining the expected volatility of share price, the expected dividend yield, the expected life of the options and the number of share options that are expected to vest. Where the outcome of the number of options that are vested is different, such difference will impact the profit or loss in the subsequent remaining vesting period of the relevant share options.

4. OPERATING SEGMENT INFORMATION

For management purposes, the Group is organised into business units based on their products and services and has four reportable operating segments as follows:

• (a) Mobility technology solutions segment — designing, developing, manufacturing and sales of high performance hypercars and provision of mobility technology solutions;

• (b) Jewellery products and watches segment — retailing and wholesale of jewellery products and watches;

• (c) Property investment segment — investments of properties; and

• (d) Money lending segment — provision of loan finance.

Management monitors the results of the Group’s operating segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on reportable segment profit/loss, which is a measure of adjusted profit/loss before tax. The adjusted profit/loss before tax is measured consistently with the Group’s loss before tax except that bank interest income, non-leaserelated finance costs (other than interest on lease liabilities), impairment/(reversal of impairment) of other intangible assets, fair value losses on listed equity investments, loss on disposal of a subsidiary, equity-settled share-based payment expense as well as head office and corporate income and expenses are excluded from such measurement.

116 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

4. OPERATING SEGMENT INFORMATION (continued)

Segment assets exclude tax recoverable, cash and cash equivalents, listed equity investments, certain other intangible assets, deferred tax assets and other unallocated head office and corporate assets as these assets are managed on a group basis.

Segment liabilities exclude tax payable, deferred tax liabilities, certain interest-bearing bank borrowings and other unallocated head office and corporate liabilities as these liabilities are managed on a group basis.

During the year ended 30 September 2020, the Group changed the internal reporting structure for making decisions about resource allocation and performance assessment. The “Mining” and “Securities investment” operations are no longer reportable operating segments. Accordingly, the amounts previously reported under these reportable operating segments have been separately disclosed or included in corporate and other unallocated income and expenses and corporate and other unallocated assets and liabilities.

Year ended 30 September 2020/at 30 September 2020

Mobility technology solutions HK$’000	Jewellery products and watches HK$’000	Property investment HK$’000	Money lending HK$’000	Total HK$’000
Segment revenue: Revenue from external customers 3,545
	291,931	16,279	45,950	357,705
Segment results (176,674)
	(38,923)	275,276	(17,810)	41,869
Reconciliation Bank interest income Loss on disposal of a subsidiary Impairment of other intangible assets Fair value losses on listed equity investments Corporate and other unallocated income and expenses, net Finance costs (other than interest on lease liabilities)
				2,241
				(10,204)
				(27,135)
				(21,470)
				(56,216)
				(7,051)
Loss before tax
				(77,966)
Segment assets 3,433,655 Reconciliation Corporate and other unallocated assets
	267,154	619,352	713,944	5,034,105
				283,765
Total assets
				5,317,870
Segment liabilities 842,341 Reconciliation Corporate and other unallocated liabilities
	132,214	81,158	19,301	1,075,014
				509,464
Total liabilities
				1,584,478

ANNUAL REPORT 2020 117

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

4. OPERATING SEGMENT INFORMATION (continued)

Year ended 30 September 2020/at 30 September 2020 (continued)

	Mobility	Jewellery
	technology	products	Property	Money
	solutions	and watches	investment	lending	Total
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Other segment information:
Capital expenditure*	345,511	2,411	9,812	5	357,739
Interests in associates	20,350	5,015	–	–	25,365
Interest in a joint venture	381	–	–	–	381
Share of losses/(profits) of associates	(5,186)	339	–	–	(4,847)
Share of loss of a joint venture	6	–	–	–	6
Reversal of write-down of inventories to net
realisable value	(907)	(10,048)	–	–	(10,955)
Amortisation of other intangible asset	9,186	–	–	–	9,186
Impairment of accounts receivable	–	177	–	–	177
Impairment of loans receivable	–	–	–	29,102	29,102
Impairment of goodwill	–	29,555	–	–	29,555
Fair value losses on investment properties	–	–	26,638	–	26,638
Depreciation of property, plant and equipment**	4,919	474	10	2,332	7,735
Depreciation of right-of-use assets***	–	2,194	–	5,018	7,212
Fair value losses on financial assets
at fair value through profit or loss, net	111,867	–	–	–	111,867
Fair value loss on contingent consideration payable	21,850	–	–	–	21,850

• Capital expenditure consists of additions to property, plant and equipment, investment properties, other intangible assets and deposits paid for purchases of items of property, plant and equipment including additions to property, plant and equipment and other intangible assets from acquisition of subsidiaries. Capital expenditure for additions to property, plant and equipment amounting to HK$33,000 is included in corporate and other unallocated assets above.

** Depreciation of property, plant and equipment amounting to HK$959,000 is included in corporate and other unallocated income and expenses, net above.

*** Depreciation of right-of-use assets amounting to HK$1,584,000 is included in corporate and other unallocated income and expense, net above.

118 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

4. OPERATING SEGMENT INFORMATION (continued)

Year ended 30 September 2019/at 30 September 2019 (restated)

	Mobility	Jewellery
	technology	products	Property	Money
	solutions	and watches	investment	lending	Total
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Segment revenue:
Revenue from external customers	4,214	421,065	31,451	79,625	536,355
Segment results	(236,374)	(44,146)	(65,984)	(217,490)	(563,994)
Reconciliation
Bank interest income					1,289
Loss on disposal of a subsidiary					(5,555)
Reversal of impairment of other intangible assets					14,350
Fair value losses on listed equity investments					(31,980)
Corporate and other unallocated income and
expenses, net					(35,674)
Finance costs					(4,039)
Loss before tax					(625,603)
Segment assets	2,521,434	359,498	366,264	698,094	3,945,290
Reconciliation
Corporate and other unallocated assets					608,019
Total assets					4,553,309
Segment liabilities	72,165	203,735	50,805	2,424	329,129
Reconciliation
Corporate and other unallocated
liabilities					180,515
Total liabilities					509,644

ANNUAL REPORT 2020 119

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

4. OPERATING SEGMENT INFORMATION (continued)

Year ended 30 September 2019/at 30 September 2019 (restated) (continued)

	Mobility	Jewellery
	technology	products	Property	Money
	solutions	and watches	investment	lending	Total
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Other segment information:
Capital expenditure*	47,670	6,549	1,132	4,659	60,010
Interests in associates	13,734	5,355	–	–	19,089
Interest in a joint venture	387	–	–	–	387
Share of losses of associates	5,359	640	–	–	5,999
Share of loss of a joint venture	5,108	–	–	–	5,108
Write-down of inventories to net realisable value	5,462	35,373	–	–	40,835
Amortisation of other intangible asset	–	3,138	–	–	3,138
Reversal of impairment of accounts receivable	–	(2,328)	–	–	(2,328)
Impairment of loans receivable	–	–	–	257,331	257,331
Impairment of goodwill	199,257	–	–	–	199,257
Fair value losses on investment properties	–	–	71,690	–	71,690
Depreciation of property, plant and equipment**	2,349	3,642	95	2,236	8,322
Fair value gains on financial assets
at fair value through profit or loss, net	(10,128)	–	–	–	(10,128)

• Capital expenditure consists of additions to property, plant and equipment, investment properties, deposits paid for purchases of items of property, plant and equipment, deposits paid for acquisitions of a subsidiary and investment in a joint venture. Capital expenditure for additions to property, plant and equipment amounting to HK$3,740,000 is included in corporate and other unallocated assets above.

** Depreciation amounting to HK$652,000 is included in corporate and other unallocated income and expenses above.

120 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

4. OPERATING SEGMENT INFORMATION (continued)

Geographic information

• (a) Revenue from external customers

2020 HK$’000	2019 HK$’000
Mainland China 212,901 Hong Kong 135,935 Others 8,869	353,581 162,912 19,862
357,705	536,355

The revenue information above is based on the location of the customers.

(b) Non-current assets

2020 HK$’000	2019 HK$’000
Mainland China 231,866 Hong Kong 692,328 Japan 1,323,169 Europe 335,474 Others 33	508,496 65,588 1,399,339 – 55
2,582,870	1,973,478

The non-current asset information above is based on the location of the assets and excludes financial assets.

Information about a major customer

Revenue from an external customer contributing 10% or more to the Group’s total revenue is as follows:

	2020	2019
	HK$’000	HK$’000
Customer A	77,485	–

The above revenue is reported under the jewellery products and watches segment.

ANNUAL REPORT 2020 121

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

5. REVENUE

An analysis of revenue is as follows:

2020	2019
HK$’000	HK$’000
Revenue from contracts with customers Sales of jewellery products and watches 291,931 Sales and distribution of vehicles and related components and provision of engineeringservices 3,545	421,065 4,214
295,476	425,279
Revenue from other sources Interest income from loan financing 45,950 Rental income from investmentproperties 16,279	79,625 31,451
62,229	111,076
357,705	536,355

Revenue from contracts with customers

(i) Disaggregated revenue information

For the year ended 30 September 2020

	Mobility	Jewellery
	technology	products
Segments	solutions	and watches	Total
	HK$’000	HK$’000	HK$’000
Types of goods or services
Sales of jewellery products and watches	–	291,931	291,931
Sales and distribution of vehicles and provision of
engineeringservices	3,545	–	3,545
Total revenue from contracts with customers	3,545	291,931	295,476
Geographical markets
Hong Kong	–	91,435	91,435
Mainland China	2,588	192,584	195,172
Japan	957	–	957
Taiwan	–	7,912	7,912
Total revenue from contracts with customers	3,545	291,931	295,476
Timing of revenue recognition
At a point in time	957	291,931	292,888
Overtime	2,588	–	2,588
Total revenue from contracts with customers	3,545	291,931	295,476

122 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

5. REVENUE (continued)

Revenue from contracts with customers (continued)

(i) Disaggregated revenue information (continued)

For the year ended 30 September 2019

	Mobility	Jewellery
	technology	products
Segments	solutions	and watches	Total
	HK$’000	HK$’000	HK$’000
Types of goods or services
Sales of jewellery products and watches	–	421,065	421,065
Sales and distribution of vehicles and related
components andprovision of engineeringservices	4,214	–	4,214
Total revenue from contracts with customers	4,214	421,065	425,279
Geographical markets
Hong Kong	–	83,287	83,287
Mainland China	–	322,130	322,130
Japan	4,214	–	4,214
Taiwan	–	15,648	15,648
Total revenue from contracts with customers	4,214	421,065	425,279
Timing of revenue recognition
At a point in time	4,214	421,065	425,279

ANNUAL REPORT 2020 123

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

5. REVENUE (continued)

Revenue from contracts with customers (continued)

(i) Disaggregated revenue information (continued)

Set out below is the reconciliation of the revenue from contracts with customers with the amounts disclosed in the segment information:

For the year ended 30 September 2020

	Mobility	Jewellery
	technology	products
Segments	solutions	and watches	Total
	HK$’000	HK$’000	HK$’000
Revenue from contracts with customers
External customers	3,545	291,931	295,476
For the year ended 30 September 2019
	Mobility	Jewellery
	technology	products
Segments	solutions	and watches	Total
	HK$’000	HK$’000	HK$’000
Revenue from contracts with customers
External customers	4,214	421,065	425,279

The following table shows the amount of revenue recognised in the current reporting period that was included in the contract liabilities at the beginning of the reporting period:

2020	2019
HK$’000	HK$’000
Revenue recognised that was included in contract liabilities at the beginning of the reporting period: Sales of jewellery products and watches 89,094 Provision of engineeringservices 464	81,496 –
89,558	81,496

124 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

5. REVENUE (continued)

Revenue from contracts with customers (continued)

(ii) Performance obligations

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

Sales of jewellery products and watches

The performance obligation is satisfied upon delivery of the jewellery products and watches and payment is generally due immediately at the point the customer purchases the goods or within 30 to 90 days from delivery, except for new customers, where payment in advance is normally required. Some contracts provide certain customers with volume rebates which give rise to variable consideration subject to constraint.

Sales and distribution of vehicles and related components and provision of engineering services

The performance obligation for the sale of vehicles and related components and provision of engineering services is satisfied upon delivery of the vehicles or engineering platform and payment is generally due within 30 days from delivery.

The performance obligation for the provision of distribution right of vehicles is satisfied over time as services are rendered and customers simultaneously receive and consume the benefits over the distribution period. Payment was made in advance of the distribution period.

The amounts of transaction prices allocated to the remaining performance obligations (unsatisfied or partially unsatisfied) as at 30 September are as follows:

2020 HK$’000	2019 HK$’000
Amounts expected to be recognised as revenue: Within one year 254,020 After oneyear 15,909	89,558 –
269,929	89,558

The amounts of transaction prices allocated to the remaining performance obligations which are expected to be recognised as revenue after one year relate to the provision of distribution of vehicles, of which the performance obligations are to be satisfied within five years. All the other amounts of transaction prices allocated to the remaining performance obligations are expected to be recognised as revenue within one year. The amounts disclosed above do not include variable consideration which is contrained.

ANNUAL REPORT 2020 125

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

6. OTHER INCOME

An analysis of the Group’s other income is as follows:

2020	2019
HK$’000	HK$’000
Bank interest income 2,241	1,289
Marketing subsidies 12,497 Government subsidies (note) 806	17,410 –
Others 3,268	2,457
18,812	21,156

Note:

Government subsidies mainly represent subsidies received in connection with the support from the Anti-epidemic Fund of the government of Hong Kong Special Administrative Region. There are no unfulfilled conditions or contingencies relating to these subsidies.

7. OTHER GAINS/(LOSSES), NET

An analysis of the Group’s other gains/(losses), net, is as follows:

2020	2019
HK$’000	HK$’000
Gain on expropriation of investment properties 315,940 Impairment of goodwill (29,555) Reversal of impairment/(impairment) of other intangible assets (27,135) Reversal of impairment/(impairment) of accounts receivable, net (177) Impairment of loans receivable, net (29,102) Fair value losses on investment properties (26,638) Fair value losses on financial assets at fair value through profit or loss, net — mandatorily classified as such, including those held for trading (133,337) Loss on disposal of a subsidiary (10,204) Foreign exchange differences, net 334 Loss on disposal of items of property, plant and equipment, net (685) Write-off of items of property, plant and equipment (878) Fair value loss on contingent considerationpayable (21,850)	– (199,257) 14,350 2,328 (257,331) (71,690) (21,852) (5,555) (3,044) – – –
36,713	(542,051)

126 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

8. LOSS BEFORE TAX

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

2020	2019
HK$’000	HK$’000
Cost of inventories sold 236,897 Write-down/(reversal of write-down) of inventories to net realisable value (10,955) Depreciation of property, plant and equipment 8,694 Depreciation of right-of-use assets 8,796 Minimum lease payments under operating leases – Contingent rents 6,495 Lease payments not included in the measurement of lease liabilities 6,176 Auditor’s remuneration 5,268 Amortisation of other intangible assets 9,186 Direct operating expenses (including repairs and maintenance) arising from rental-earning investment properties 2,179 Employee benefit expense (including directors’ and chief executive’s remuneration (note 10)): Salaries, allowances, bonuses and other benefits 56,276 Equity-settled share option expense 3,035 Pension scheme contributions (defined contribution schemes) (note (i)) 4,494	344,319 40,835 8,974 – 20,092 3,033 – 4,860 3,138 3,569 66,871 15,671 5,117
63,805	87,659

Note:

(i) At 30 September 2020, the Group had no material forfeited contributions available to reduce its contributions to the pension schemes in future years (2019: Nil).

9. FINANCE COSTS

An analysis of finance costs is as follows:

2020	2019
HK$’000	HK$’000
Interest on interest-bearing bank and other borrowings 7,051 Interest on lease liabilities 1,202	4,039 –
8,253	4,039

ANNUAL REPORT 2020 127

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

10. DIRECTORS’ AND CHIEF EXECUTIVE’S REMUNERATION

Directors’ and chief executive’s remuneration for the year, disclosed pursuant to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, section 383(1)(a), (b), (c) and (f) of the Hong Kong Companies Ordinance and Part 2 of the Hong Kong Companies (Disclosure of Information about Benefits of Directors) Regulation, is as follows:

Group
2020	2019
HK$’000	HK$’000
Fees 800	684
Other emoluments: Salaries, allowances and other benefits 18,566	14,530
Equity-settled share option expense 182 Pension scheme contributions 54	11,715 58
18,802	26,303
19,602	26,987

In prior years, certain directors and the chief executive were granted share options, in respect of their services to the Group, under the share option scheme of the Company, further details are set out in note 33 to the financial statements. The fair value of such options, which has been recognised in the consolidated statement of profit or loss over the vesting period, was determined as at the date of grant and the amount included in the financial statements for the current year is included in the above directors’ and chief executive’s remuneration disclosures.

128 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

10. DIRECTORS’ AND CHIEF EXECUTIVE’S REMUNERATION (continued)

(a) Independent non-executive directors

Fees HK$’000	Equity-settled share option expense HK$’000	Total remuneration HK$’000
2020 Mr. Tam Ping Kuen, Daniel 200 Mr. Teoh Chun Ming 200 Mr. Peter Edward Jackson 200 Mr. Charles Matthew Pecot III 200
	91	291
	–	200
	–	200
	–	200
• 800	•	•
	91	891
558 Fees HK$’000	255 Equity-settled share option expense HK$’000	813 Total remuneration HK$’000
2019 Mr. Tam Ping Kuen, Daniel 175 Mr. Teoh Chun Ming 200 Mr. Peter Edward Jackson 200 Mr. Charles Matthew Pecot III (note (i)) 67 Mr. HeungChee Hang, Eric (note (ii)) 42	340 181 181 – –	515 381 381 67 42
• 684	• 702	• 1,386
558 255 813 Notes: (i) Mr. Charles Matthew Pecot III was appointed as an independent non-executive director of the Company with effect from 1 June 2019.

(ii) Mr. Heung Chee Hang, Eric resigned as an independent non-executive director of the Company with effect from 17 December 2018.

There were no other emoluments payable to the independent non-executive directors during the year (2019: Nil).

ANNUAL REPORT 2020 129

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

10. DIRECTORS’ AND CHIEF EXECUTIVE’S REMUNERATION (continued)

• (b) Executive directors, the chief executive and non-executive director

Fees HK$’000	Salaries, allowances and other benefits HK$’000	Pension scheme contributions HK$’000	Equity- settled share option expense HK$’000	Total remuneration HK$’000
2020 Executive directors/chief executive Mr. Ho King Fung, Eric – Mr. SungKin Man –
	7,200	18	–	7,218
	6,000	18	–	6,018
–
	13,200	36	–	13,236
Non-executive director Mr. ZhangJinbing –
	5,366	18	91	5,475
–
	18,566	54	91	18,711
Fees HK$’000	Salaries, allowances and other benefits HK$’000	Pension scheme contributions HK$’000	Equity- settled share option expense HK$’000	Total remuneration HK$’000
2019 Executive directors/chief executive Mr. Ho King Fung, Eric – Mr. Sung Kin Man (note (i)) – Mr. Ho Chi Kit (note (ii)) –	4,600 2,500 2,202	18 14 8	5,427 5,427 –	10,045 7,941 2,210
–	9,302	40	10,854	20,196
Non-executive director Mr. ZhangJinbing –	5,228	18	159	5,405
–	14,530	58	11,013	25,601

130 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

10. DIRECTORS’ AND CHIEF EXECUTIVE’S REMUNERATION (continued)

• (b) Executive directors, the chief executive and non-executive director (continued)

Notes:

• (i) Mr. Sung Kin Man was appointed as an executive director and the chief executive officer of the Company with effect from 1 February 2019.

• (ii) Mr. Ho Chi Kit resigned as the chief executive officer and an executive director of the Company with effect from 1 February 2019.

There was no arrangement under which a director or the chief executive waived or agreed to waive any remuneration during the year.

The above directors’ and chief executive’s remuneration only included remuneration during the tenure of each director and the chief executive of the Company.

11. FIVE HIGHEST PAID EMPLOYEES

The five highest paid employees during the year included three directors (2019: four directors), details of whose remuneration are set out in note 10 above. Details of the remuneration for the year of the remaining two (2019: one) highest paid employees who are neither a director nor chief executive of the Company are as follows:

2020 HK$’000	2019 HK$’000
Salaries, allowances and other benefits 7,200 Equity-settled share option expense – Pension scheme contributions 36	1,350 1,809 12
7,236	3,171

The number of non-director and non-chief executive highest paid employees whose remuneration fell within the following bands is as follows:

Number of employees 2020 2019	Number of employees 2020 2019
HK$3,000,001 to HK$3,500,000 – HK$3,500,001 to HK$4,000,000 2	1 –
2	1

During the prior year, share options were granted to a non-director and non-chief executive highest paid employee in respect of his services to the Group, further details of which are included in the disclosures in note 33 to the financial statements. The fair value of such options, which has been recognised in the consolidated statement of profit or loss over the vesting period, was determined as at the date of grant and the amount included in the financial statements for the prior year is included in the above non-director and non-chief executive highest paid employees’ remuneration disclosures.

ANNUAL REPORT 2020 131

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

12. INCOME TAX

Hong Kong profits tax has been provided at the rate of 16.5% (2019: 16.5%) on the estimated assessable profits arising in Hong Kong during the year, except for one subsidiary of the Group which is a qualifying entity under the two-tiered profits tax rates regime effective from the year of assessment 2018/2019. The first HK$2,000,000 (2019: HK$2,000,000) of assessable profits of this subsidiary is taxed at 8.25% and the remaining assessable profits are taxed at 16.5%. Taxes on profits assessable elsewhere have been calculated at the rates of tax prevailing in the countries/jurisdictions in which the Group operates.

2020	2019
HK$’000	HK$’000
Current: Hong Kong Charge for the year 1,724 Overprovision in prior years (423) Elsewhere Charge for the year 72,405 Land appreciation tax (“LAT”) 281,209 Deferred (note 31) (73,518)	4,132 – 4,874 – (15,280)
Total tax charge/(credit) for the year 281,397	(6,274)

A reconciliation of the tax credit applicable to loss before tax at the Hong Kong statutory rate, for the jurisdiction in which the Company’s and certain of its subsidiaries’ principal place of operations is located, to the tax expense/ (credit) at the Group’s effective tax rate is as follows:

2020	2019
HK$’000	HK$’000
Loss before tax (77,966)	(625,603)
Tax credit at the Hong Kong statutory tax rate of 16.5% (2019: 16.5%) (12,864) Effect of different tax rates for or enacted by other jurisdictions/local authority 10,436 Lower tax rate under the Hong Kong two-tiered profits tax rates regime (165) Adjustments in respect of current tax of previous periods (423) Losses/(profits) attributable to associates and a joint venture (799) Income not subject to tax (3,534) Expenses not deductible for tax 46,094 Tax losses not recognised 23,705 Tax losses utilised from previous periods (487) LAT 281,209 Tax effect of LAT deductible for PRC corporate income tax (70,302) Others 8,527	(103,224) (11,297) – – 1,833 (6,185) 104,875 6,796 – – – 928
Tax charge/(credit) at the Group’s effective rate 281,397	(6,274)

132 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

13. DIVIDEND

The board of directors of the Company does not recommend the payment of any dividend in respect of the year (2019: Nil).

14. LOSS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE COMPANY

The calculation of the basic loss per share amounts is based on the loss for the year attributable to ordinary equity holders of the Company, and the weighted average number of ordinary shares of 7,170,198,562 (2019: 6,537,558,374) in issue during the year.

The calculation of the diluted loss per share amount for the year ended 30 September 2019 is based on the loss for the year attributable to ordinary equity holders of the Company, adjusted for the effect of dilutive potential ordinary shares arising from adjustment to the share of loss of an associate. The weighted average number of ordinary shares used in the calculation of the diluted loss per share amount for the year ended 30 September 2019 is the number of ordinary shares in issue during the year, as used in the basic loss per share calculation, as the impact of the share options outstanding had an anti-dilutive effect on the basic loss per share amount presented.

No adjustment has been made to the basic loss per share amount presented for the year ended 30 September 2020 in respect of a dilution as the impact of the adjustment to the share of profit of an associate and the share options outstanding had an anti-dilutive effect on the basic loss per share amount presented.

The calculations of basic and diluted loss per share are based on:

Loss

2020	2019
HK$’000	HK$’000
Loss attributable to ordinary equity holders of the Company, used in the basic loss per share calculation (345,177) Effect of dilutive potential ordinary shares arising from adjustment to the share of loss of an associate –	(605,392) (25,829)
Loss attributable to ordinary equity holders of the Company, used in the diluted loss per share calculation (345,177)	(631,221)

Shares

Number 2020	of shares 2019
Weighted average number of ordinary shares in issue during the year used in the basic and diluted loss per share calculations 7,170,198,562	6,537,558,374

ANNUAL REPORT 2020 133

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

15. PROPERTY, PLANT AND EQUIPMENT

					Furniture,
					fixtures and
	Freehold		Leasehold	Plant and	office	Motor
	land	Buildings	improvements	machinery	equipment	vehicles	Total
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
30 September 2020
At 1 October 2019 (restated):
Cost	13,668	41,307	28,290	321	16,562	9,560	109,708
Accumulated depreciation	–	(2,390)	(13,184)	(210)	(5,978)	(2,345)	(24,107)
Net carrying amount	13,668	38,917	15,106	111	10,584	7,215	85,601
At 30 September 2019, net of
accumulated depreciation	13,668	92,089	15,106	111	10,584	7,215	138,773
Effect of adoption of HKFRS 16
(note 2.2)	–	(53,172)	–	–	–	–	(53,172)
At 1 October 2019 (restated)	13,668	38,917	15,106	111	10,584	7,215	85,601
Additions	–	–	765	1,040	2,093	62	3,960
Acquisition of subsidiaries
(note 35)	5,725	12,218	–	5,919	372	1,893	26,127
Depreciation provided
during the year	–	(1,069)	(2,860)	(633)	(2,567)	(1,565)	(8,694)
Disposals/Write-off	–	–	–	–	(695)	(4,231)	(4,926)
Disposal of a subsidiary
(note 36)	–	–	–	–	(4)	–	(4)
Exchange realignment	131	546	(227)	409	(153)	64	770
At 30 September 2020,
net of accumulated
depreciation	19,524	50,612	12,784	6,846	9,630	3,438	102,834
At 30 September 2020:
Cost	19,524	54,109	28,750	7,789	17,910	6,530	134,612
Accumulated depreciation	–	(3,497)	(15,966)	(943)	(8,280)	(3,092)	(31,778)
Net carrying amount	19,524	50,612	12,784	6,846	9,630	3,438	102,834

134 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

15. PROPERTY, PLANT AND EQUIPMENT (continued)

					Furniture,
					fixtures and
	Freehold		Leasehold	Plant and	office	Motor	Construction
	land	Buildings	improvements	machinery	equipment	vehicles	In progress	Total
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
30 September 2019
At 1 October 2018:
Cost	12,982	29,638	15,532	195	11,120	4,797	13,225	87,489
Accumulated depreciation	–	(664)	(10,373)	(88)	(3,256)	(957)	–	(15,338)
Net carrying amount	12,982	28,974	5,159	107	7,864	3,840	13,225	72,151
At 1 October 2018, net of
accumulated depreciation	12,982	28,974	5,159	107	7,864	3,840	13,225	72,151
Additions	–	58,157	8,496	100	5,242	4,541	–	76,536
Depreciation provided
during the year	–	(1,771)	(2,958)	(102)	(2,903)	(1,240)	–	(8,974)
Disposal of a subsidiary
(note 36)	–	–	(26)	–	(69)	–	–	(95)
Transfers	–	8,981	4,720	–	–	–	(13,701)	–
Exchange realignment	686	(2,252)	(285)	6	450	74	476	(845)
At 30 September 2019,
net of accumulated
depreciation	13,668	92,089	15,106	111	10,584	7,215	–	138,773
At 30 September 2019:
Cost	13,668	95,289	28,290	321	16,562	9,560	–	163,690
Accumulated depreciation	–	(3,200)	(13,184)	(210)	(5,978)	(2,345)	–	(24,917)
Net carrying amount	13,668	92,089	15,106	111	10,584	7,215	–	138,773

At the end of the reporting period, the Group’s freehold land with carrying amounts of approximately HK$5,725,000 (2019: Nil) and HK$13,799,000 (2019: HK$13,668,000) are situated in Germany and Japan, respectively.

As at 30 September 2020, the Group’s freehold land and buildings in Japan and certain leasehold land including right-of-use assets (note 17) and buildings in Mainland China with net carrying amounts of HK$50,146,000 (2019: HK$50,645,000) and HK$56,061,000 (2019: Nil), respectively, were pledged to secure certain bank loans granted to the Group (note 30).

ANNUAL REPORT 2020 135

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

16. INVESTMENT PROPERTIES

2020	2019
HK$’000	HK$’000
Carrying amount at beginning of year 358,026 Additions during the year 9,296 Expropriated during the year (note) (282,449) Net loss from a fair value adjustment (26,638) Exchange realignment 4,993	441,377 1,103 – (71,690) (12,764)
Carrying amount at end of year 63,228	358,026

• Note: During the year, certain investment properties located in Shenyang were expropriated by the local government. The settlement agreement provided the Group with cash settlement of RMB566.1 million (approximately HK$628.3 million) in exchange for the properties. The settlement gave rise to a gain on expropriation of investment properties of HK$315.9 million.

During the year, the Group received RMB340.4 million (approximately HK$377.8 million) and the remaining receivables of RMB225.7 million (approximately HK$256.7 million) was included in prepayments, deposits and other receivables as at 30 September 2020.

The Group’s investment property consists of one (2019: three) property in Mainland China. The directors of the Company have determined that the investment property consists of one class of asset, i.e., commercial/industrial, based on the nature, characteristics and risks of the property. The Group’s investment property was revalued on 30 September 2020 based on valuations performed by Graval Consulting Limited, independent professionally qualified valuers, at approximately HK$63,228,000. Each year, the Group’s management decides to appoint which external valuer to be responsible for the external valuations of the Group’s properties. Selection criteria include market knowledge, reputation, independence and whether professional standards are maintained. The Group’s management has discussions with the valuer on the valuation assumptions and valuation results twice a year when the valuation is performed for annual and interim financial reporting.

Certain of the investment properties were leased to third parties under operating leases, further summary details of which are included in note 17 to the financial statements.

Further particulars of the Group’s investment property are included on page 186.

136 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

16. INVESTMENT PROPERTIES (continued)

Fair value hierarchy

The following table illustrates the fair value measurement hierarchy of the Group’s investment properties:

	Fair value measurement as at 30 September 2020 using	Fair value measurement as at 30 September 2020 using	Fair value measurement as at 30 September 2020 using	Total HK$’000
	Quoted prices in active markets (Level 1) HK$’000	Significant observable inputs (Level 2) HK$’000	Significant unobservable inputs (Level 3) HK$’000
Recurring fair value measurement for commercial properties
	–	–	63,228	63,228

	Fair value measurement as at 30 September 2019 using Quoted prices Significant Significant in active observable unobservable markets inputs inputs (Level 1) (Level 2) (Level 3) Total HK$’000 HK$’000 HK$’000 HK$’000
Recurring fair value measurement for commercial/industrial properties	– – 358,026 358,026

During the year, there were no transfers of fair value measurements between Level 1 and Level 2 and no transfers into or out of Level 3 (2019: Nil).

ANNUAL REPORT 2020 137

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

16. INVESTMENT PROPERTIES (continued)

Fair value hierarchy (continued)

Reconciliation of fair value measurements categorised within Level 3 of the fair value hierarchy:

	Commercial/
	industrial
	properties
	HK$’000
Carrying amount at 1 October 2018	441,377
Additions during the year	1,103
Net loss from a fair value adjustment recognised in profit or loss	(71,690)
Exchange realignment	(12,764)
Carrying amount at 30 September 2019 and 1 October 2019	358,026
Additions during the year	9,296
Expropriated during the year	(282,449)
Net loss from a fair value adjustment recognised in profit or loss	(26,638)
Exchange realignment	4,993
Carrying amount at 30 September 2020	63,228

Below is a summary of the valuation technique used and the key input to the valuation of investment properties:

		Significant	Range
	Valuation technique	unobservable input	2020	2019
Commercial/industrial	Market comparison	Estimated price per	RMB6,000 –	RMB2,080 –
properties	method	square metre	RMB7,900	RMB11,300

Under the market comparison approach, fair value is estimated with reference to recent transactions for similar properties in the proximity with adjustments for the differences in floor area, etc. between the comparable properties and the subject properties.

A significant increase/(decrease) in the estimated price per square metre in isolation would result in a significant increase/(decrease) in the fair value of the investment properties. The valuations take into account the characteristics of the properties which included the location, size and other factors collectively.

138 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

17. LEASES

The Group as a lessee

The Group has lease contracts for retail shops, office premises and directors’ quarters. Lump sum payments were made up-front to acquire the leased land from owners with lease periods of 70 years and no ongoing payments will be made under the terms of these land leases. Leases of leased properties generally have lease terms between 2 and 11 years.

(a) Right-of-use assets

The carrying amounts of the Group’s right-of-use assets and the movements during the year are as follows:

Leasehold land HK$’000	Leased properties HK$’000	Total HK$’000
As at 1 October 2019 53,172 Additions – Termination of a lease – Depreciation charge (1,090) Remeasurement on lease modifications – Exchange realignment 1,809
	23,218	76,390
	5,454	5,454
	(91)	(91)
	(7,706)	(8,796)
	(1,395)	(1,395)
	23	1,832
As at 30 September 2020 53,891
	19,503	73,394

Further details of the leasehold land pledged to secure certain bank loans of the Group are disclosed in note 15 to the financial statements.

(b) Lease liabilities

The carrying amount of lease liabilities and the movements during the year are as follows:

	HK$’000
Carrying amount at 1 October 2019	25,337
New leases	5,454
Termination of a lease	(93)
Accretion of interest recognised during the year	1,202
Remeasurement on lease modifications	(1,395)
Payments	(7,361)
Exchange realignment	23
Carrying amount at 30 September 2020	23,167
Analysed into:
Current portion	8,099
Non-currentportion	15,068
	23,167

The maturity analysis of lease liabilities is disclosed in note 43 to the financial statements.

ANNUAL REPORT 2020 139

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

17. LEASES (continued)

The Group as a lessee (continued)

(c) The amounts recognised in profit or loss in relation to leases are as follows:

	2020
	HK$’000
Interest on lease liabilities	1,202
Depreciation charge of right-of-use assets	8,796
Expense relating to short-term leases and other leases with remaining
lease terms ended on or before 30 September 2020 (note (i))	6,176
Variable lease payments not included in the measurement of lease liabilities (note (ii))	6,495
Gain on termination of a lease	(2)
Total amount recognised in profit or loss	22,667

Note:

(i) Expense relating to short-term leases and other leases with remaining lease term ended on or before 30 September 2020 of HK$738,000 and HK$5,438,000 has been included in selling and distribution expenses and administrative expenses, respectively.

(ii) Variable lease payment not included in the measurement of lease liabilities has been included in selling and distribution expenses.

(d) The total cash outflow for leases is disclosed in note 37(c) to the financial statements.

The Group as a lessor

The Group leases certain of its investment properties under operating lease arrangements. Rental income recognised by the Group during the year was HK$16,279,000 (2019: HK$31,451,000), details of which are included in note 5 to the financial statements.

At 30 September 2020, the undiscounted lease payments receivable under non-cancellable operating leases with its tenants are as follows:

2020 HK$’000	2019 HK$’000
Within one year – After oneyear but within twoyears –	1,427 5
–	1,432

140 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

18. GOODWILL

	HK$’000
At 1 October 2018:
Cost	2,147,479
Accumulated impairment	(662,386)
Net carrying amount	1,485,093
Cost at 1 October 2018, net of accumulated impairment	1,485,093
Impairment during the year	(199,257)
Exchange realignment	77,472
At 30 September 2019	1,363,308
At 30 September 2019 and at 1 October 2019:
Cost	2,228,699
Accumulated impairment	(865,391)
Net carrying amount	1,363,308
Cost at 1 October 2019, net of accumulated impairment	1,363,308
Acquisition of subsidiaries (note 35)	648,016
Impairment during the year	(29,555)
Exchange realignment	12,751
At 30 September 2020	1,994,520
At 30 September 2020:
Cost	2,891,407
Accumulated impairment	(896,887)
Net carrying amount	1,994,520

ANNUAL REPORT 2020 141

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

18. GOODWILL (continued)

Impairment testing of goodwill and trademarks with indefinite useful lives

Goodwill and trademarks with indefinite useful lives acquired through business combinations are allocated to individual cash-generating units (“CGUs”), which are separate business operations, for annual impairment testing:

• Mobility technology solutions (“Mobility Technology Solutions”)

• Jewellery products and watches (“Jewellery Products and Watches”)

Mobility Technology Solutions CGUs

At the end of the reporting period, the Group had goodwill and trademarks with indefinite useful lives acquired through business combinations allocated to the mobility technology solutions unit (2019: electric vehicle unit) and hypercars unit in the Mobility Technology Solutions CGUs of the Group.

For the purpose of the annual impairment test, the recoverable amounts of the Mobility Technology Solutions CGUs have been determined based on fair value less costs of disposal calculations using discounted cash flow projections. The discounted cash flow projections are based on financial estimates approved by management covering a five-year period and discount rates which reflect specific risks relating to the Mobility Technology Solutions CGUs. Cash flows beyond the five-year period are extrapolated using estimated long term growth rates of 2% to 2.5% (2019: 3%), with reference to certain external data.

The Group has engaged certain independent professionally qualified valuers to assist in the determination of the fair value less costs of disposal of the respective Mobility Technology Solutions CGUs based on the cash flow projections using discount rates of 20.6% to 25% (2019: 25%) determined by reference to weighted average cost of capital reflecting the specific risks of the Mobility Technology Solutions CGUs (including, inter alia, its stage of development and other relevant factors), with reference to certain external data.

142 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

18. GOODWILL (continued)

Impairment testing of goodwill and trademarks with indefinite useful lives (continued) Mobility Technology Solutions CGUs (continued)

The Group considers the discounted cash flow method as a generally acceptable valuation technique that incorporates more information about the future prospects of the Mobility Technology Solutions CGUs for the determination of their recoverable amounts.

Assumptions were used in the fair value less costs of disposal calculations of the respective Mobility Technology Solutions CGUs. The following describes key assumptions on which management has based its discounted cash flow projections to undertake impairment testing of goodwill and trademarks with indefinite useful lives.

Estimated revenue/margins — The basis used to determine the value assigned to the estimated revenue/margins reflects the latest strategy and forecast taking into account expected economic, industry and market developments for the relevant markets.

Discount rate — The discount rate used is after tax and reflects specific risks relating to the Mobility Technology Solutions CGUs.

The fair value measurements of the Mobility Technology Solutions CGUs as at 30 September 2020 and 30 September 2019 fall within Level 3 of the fair value measurement hierarchy. During the years ended 30 September 2020 and 30 September 2019, there were no transfers into or out of Level 3 for such fair value measurement.

30 September 2020

Management believes that a reasonably possible change in any of the above key assumptions would not cause the carrying amounts of the Mobility Technology Solutions CGUs at 30 September 2020 to materially exceed their respective recoverable amounts.

As at 30 September 2020, the aggregate carrying amounts of goodwill and trademarks with indefinite useful lives allocated to the mobility technology solutions unit and hypercars unit within the Mobility Technology Solutions CGU amounted to HK$1,346,504,000 and HK$819,497,000 (including the carrying amounts of trademark of HK$171,481,000), respectively.

30 September 2019

The challenging external environment and the changes in certain policies and regulations of relevant markets in the second half of the financial year ended 30 September 2019, the overall effect of which became more apparent after the strategic planning and forecasting process that underpinned the year end impairment review of that year, resulted in an impairment of goodwill for the year ended 30 September 2019 of approximately HK$199.3 million based on the recoverable amount of the Electric Vehicle CGU as at 30 September 2019 of approximately HK$1,572.7 million. The impairment loss is included in other gains/(losses), net, in the consolidated statement of profit or loss.

As at 30 September 2019, goodwill allocated to the Electric Vehicle CGU amounted to HK$1,333,753,000.

ANNUAL REPORT 2020 143

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

18. GOODWILL (continued)

Impairment testing of goodwill and trademarks with indefinite useful lives (continued)

Jewellery Products and Watches CGU

The recoverable amount of the Jewellery Products and Watches CGU has been determined based on a value in use calculation using cash flow projections based on financial budgets covering a one-year (2019: five-year) period approved by management. The discount rate applied to the cash flow projections is 21.6% (2019: 21.6%). The growth rate used to extrapolate the cash flows of the Jewellery Products and Watches CGU beyond the five-year period is 3%.

Assumptions were used in the value in use calculation of the Jewellery Products and Watches CGU. The following describes each key assumption on which management has based its cash flow projections to undertake impairment testing of goodwill:

Budgeted revenue — The basis used to determine the value assigned to the budgeted revenue is the revenue achieved in the year immediately before the budget year, adjusted for expected economic conditions and market development.

Discount rate — The discount rate used is before tax and reflects specific risks relating to the Jewellery Products and Watches CGU.

30 September 2020

The termination of a wholesale distributorship of the Jewellery Products and Watches CGU in Mainland China is an impairment indicator under HKAS 36 that underpinned an impairment review, resulted in a full impairment of goodwill allocated to the Jewellery Products and Watches CGU for the year ended 30 September 2020 of HK$29.6 million. The impairment loss is included in other gains/(losses), net in the consolidated statement of profit or loss.

30 September 2019

Management believed that a reasonably possible change in any of the above key assumptions would not cause the carrying amount of the Jewellery Products and Watches CGU as at 30 September 2019 to materially exceed its then recoverable amount. As at 30 September 2019, the carrying amount of goodwill allocated to the Jewellery Products and Watches CGU is HK$29,555,000.

144 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

19. OTHER INTANGIBLE ASSETS

		Deferred
Mining	Distribution	development
rights	rights	costs	Trademarks	Total
HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
(note (i))	(note (ii))	(note (iii))	(note (iv))
30 September 2020 Cost at 1 October 2019, net of accumulated amortisation and impairment 48,940 Additions – Acquisition of subsidiaries (note 35) – Disposal of a subsidiary (note 36) (21,937) Amortisation provided during the year – Impairment during the year (27,135) Exchange realignment 132	– – – – – – –	– 20,344 120,889 – (9,186) – 6,762	– – 171,481 – – – –	48,940 20,344 292,370 (21,937) (9,186) (27,135) 6,894
At 30 September 2020 –	–	138,809	171,481	310,290
At 30 September 2020: Cost – Accumulated amortisation and impairment –	72,787 (72,787)	148,311 (9,502)	171,481 –	392,579 (82,289)
Net carrying amount –	–	138,809	171,481	310,290

ANNUAL REPORT 2020 145

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

19. OTHER INTANGIBLE ASSETS (continued)

	Mining	Distribution
	rights	rights	Total
	HK$’000	HK$’000	HK$’000
	(note (i))	(note (ii))
30 September 2019
At 1 October 2018:
Cost	316,818	123,953	440,771
Accumulated amortisation and impairment	(280,485)	(120,815)	(401,300)
Net carrying amount	36,333	3,138	39,471
Cost at 1 October 2018, net of accumulated amortisation
and impairment	36,333	3,138	39,471
Amortisation provided during the year	–	(3,138)	(3,138)
Reversal of impairment during the year	14,350	–	14,350
Exchange realignment	(1,743)	–	(1,743)
At 30 September 2019	48,940	–	48,940
At 30 September 2019 and at 1 October 2019:
Cost	305,923	123,953	429,876
Accumulated amortisation and impairment	(256,983)	(123,953)	(380,936)
Net carrying amount	48,940	–	48,940

146 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

19. OTHER INTANGIBLE ASSETS (continued)

Notes:

• (i) The mining rights with indefinite useful life is subject to annual impairment testing and at other times when such an indicator exists. The recoverable amount of the mining rights has been determined based on fair value less costs of disposal of the underlying mineral asset. The fair value of the mining rights is determined using the comparable transactions method under the market approach with reference to the transaction prices of comparable completed market transactions, subject to certain adjustments, including adjustment to reflect changes in the price of gold, with the assistance from certain independent professionally qualified valuers. The fair value measurement of the mining rights falls within Level 3 (201 9 : Level 3) of the fair value measurement hierarchy. During the year, there were no transfers into or out of Level 3 for such fair value measurement (2019: Nil).

A significant decline in the comparable transaction prices selected and the price of gold, on which the recoverable amount is based, would cause the mining rights’ carrying amount to exceed its recoverable amount.

During the year ended 30 September 2020, the challenging external environment and the decline in comparable transaction prices are impairment indicators which underpinned an impairment review, resulted in an impairment loss of HK$27,135,000 recognised for the year based on a recoverable amount of HK$21,900,000.

Based on an annual impairment testing for 30 September 2019, the recoverable amount of the mining rights at 30 September 2019 determined using the above basis amounted to HK$48,940,000, which was then higher than the carrying amount of the mining rights (before reversal of impairment during the year). Accordingly, a reversal of impairment of HK$14,350,000 was recognised in the consolidated statement of profit or loss for the year ended 30 September 2019.

• (ii) The distribution rights were acquired as part of the business combinations in prior years relating to certain exclusive rights in connection with certain luxury brand products in accordance with distribution agreements and are stated at cost less any impairment losses and are amortised on the straight-line basis over the period of the rights granted under the relevant distribution agreements.

• (iii) Deferred development costs were acquired as part of the acquisition of the Apollo Group (as defined in note 35 to the financial statements) for the year ended 30 September 2020 relating to the development of hypercars and are stated at cost less any impairment losses and are amortised on the straight-line basis over the commercial lives of the underlying products. During the year ended 30 September 2020, additions of deferred development costs of HK$20,344,000 were developed internally.

• (iv) The trademarks are allocated to the Mobility Technology Solutions CGUs. Trademarks are regarded as having indefinite useful lives because the trademarked products are expected to generate net cash inflows indefinitely. Details of impairment testing are set out in note 18 to the financial statements.

ANNUAL REPORT 2020 147

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

20. INTEREST IN A JOINT VENTURE

2020 HK$’000	2019 HK$’000
Share of net assets 381	387

Particulars of the Group’s joint venture are as follows:

Name Place of registration and business Registered capital	Percentage of Principal activity Ownership interest Voting power Profit sharing
WESail New Energy Automotive Co. Ltd# (上海聯和力世紀新能源汽車 有限公司) PRC/ Mainland China US$10,000,000	50 50 50 Provision of electric vehicle engineering platform services

The above investment is indirectly held by the Company.

• English name for identification purposes only.

The following table illustrates the financial information of the Group’s joint venture:

2020 HK$’000	2019 HK$’000
Share of the joint venture’s loss for the year (6) Share of the joint venture’s total comprehensive loss for the year (6) Aggregate carrying amount of the Group’s investment in the joint venture 381	(5,108) (5,109) 387

21. INTERESTS IN ASSOCIATES

2020 HK$’000	2019 HK$’000
Share of net liabilities (31,686) Goodwill on acquisition 57,051	(36,061) 55,150
25,365	19,089

As at the end of the reporting period, the Group held 7.9% of the issued ordinary shares of EV Power Holding Limited (“EV Power”) (the “EV Power Ordinary Share Investment”). Based on the proportion of voting rights held by the Group as further detailed below, the Group considers it is in a position to exercise significant influence over EV Power and, accordingly, has accounted for the EV Power Ordinary Share Investment as an investment in an associate.

148 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

21. INTERESTS IN ASSOCIATES (continued)

Particulars of the associates are as follows:

Name Place of incorporation and business Particulars of issued shares held	Percentage of Principal activities Ownership interest Voting power 2020 2019 2020 2019 Indirect Indirect
Sun King Watch Limited （新景鐘錶行有限公司） Macau Ordinary shares EV Power BVI/ Hong Kong Ordinary shares	50 50 50 50 Retail of watches 7.9 7.9 38.1 38.1 Provision of electric vehicle charging solutions

• This reflects only the ownership interest based on the EV Power Ordinary Share Investment.

• ** The Group also held certain preferred shares of EV Power, which have been accounted for as financial assets at fair value through profit or loss (note 22). The percentage of voting power as shown above has reflected the total voting rights currently held by the Group attributable to its investments in ordinary shares and preferred shares of EV Power.

The following table illustrates the aggregate financial information of the Group’s associates that are not individually material:

	2020	2019
	HK$’000	HK$’000
Share of the associates’ profits/(losses) for the year	4,847	(5,999)
Share of the associates’ other comprehensive income/(loss)	1,429	(796)
Share of the associates total comprehensive income/(loss)	6,276	(6,795)
Aggregate carrying amount of the Group’s interests in the associates	25,365	19,089

22. FINANCIAL ASSETS/LIABILITY AT FAIR VALUE THROUGH PROFIT OR LOSS

Assets 2020 2019 HK$’000 HK$’000	Assets 2020 2019 HK$’000 HK$’000
Non-current assets Unlisted investments 954,621 Listed equityinvestment 73,721	1,066,488 94,598
1,028,342	1,161,086
Current assets Listed equity investments 1,376	1,969

ANNUAL REPORT 2020 149

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

22. FINANCIAL ASSETS/LIABILITY AT FAIR VALUE THROUGH PROFIT OR LOSS (continued)

Liability 2020 2019 HK$’000 HK$’000	Liability 2020 2019 HK$’000 HK$’000
Non-current liability Contingent consideration payable 619,069	–

The above unlisted investments are mainly comprised of:

• (i) Investment in Divergent Technologies Inc. (“Divergent”) in the aggregate amount of HK$506,799,000 (2019: HK$560,255,000), including preferred shares of Divergent and a convertible note issued by Divergent of US$12.5 million with a coupon rate of 5% per annum and will mature on 31 December 2021.

• (ii) Investment in EV Power in the aggregate amount of HK$432,023,000 (2019: HK$486,233,000), including preferred shares of EV Power and a call option to acquire additional ordinary shares of EV Power at nil consideration, which was granted by a shareholder of EV Power and is exercisable within 60 days after the issuance of the audited financial statements of EV Power for the year ending 31 December 2020, in the event that the annual earnings before interest, tax, depreciation and amortisation of EV Power for the year ending 31 December 2020 is less than RMB450 million.

The above unlisted investments were mandatorily classified as financial assets at fair value through profit or loss.

The above listed equity investment included in non-current assets as at 30 September 2020 represented equity investment in Tom Group Limited, a company with its shares listed on The Stock Exchange of Hong Kong Limited. The fair value of this investment at the date of approval of these financial statements was approximately HK$45,016,000. The above listed equity investments were classified as financial assets at fair value through profit or loss as the Group has not elected to recognise the fair value gain or loss through other comprehensive income.

Contingent consideration payable represented the fair value of the contingent shares payable which may be allotted and issued by the Company for the acquisition of the Apollo Group, details of which are disclosed in note 35 to the financial statements.

23. LOANS RECEIVABLE

2020 HK$’000	2019 HK$’000
Loans receivable 1,127,003 Less: Impairment allowance (422,292)	1,079,974 (380,804)
704,711 Portion classified as non-current assets (26,656)	699,170 (225,392)
Portion classified as current assets 678,055	473,778

150 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

23. LOANS RECEIVABLE (continued)

Included in the Group’s loans receivable as at 30 September 2020 are loans advanced to an associate with a total carrying amount of HK$12,264,000 which bear interest at 10% per annum and are repayable within a year.

The Group seeks to maintain strict control over its outstanding loans receivable so as to minimise credit risk. The granting of loans is subject to approval by management, whilst overdue balances are reviewed regularly for recoverability.

Loans receivable of the Group bear interest at rates ranging from 4.75% to 15.6% (2019: 4.75% to 15.6%) per annum. At 30 September 2020, certain loans receivable with aggregate carrying amounts of HK$239,628,000 (2019: HK$188,749,000) and HK$219,060,000 (2019: HK$368,535,000) were secured by the pledge of certain equity interest and property, and personal guarantees provided by certain independent third parties, respectively.

The table below shows the credit quality and maximum exposure to credit risk as at 30 September 2020 and 30 September 2019 based on the Group’s internal credit rating system and year end staging classification. The amounts presented are gross of impairment allowances.

As at 30 September 2020

		Lifetime ECLs	Lifetime ECLs
	12-month	not credit-	credit-
	ECLs	impaired	impaired
	Stage 1	Stage 2	Stage 3	Total
	HK$’000	HK$’000	HK$’000	HK$’000
Loans receivable — Performing — Individuallyimpaired (i)	646,198 –	95,147 –	– 385,658	741,345 385,658
Total	646,198	95,147	385,658	1,127,003
As at 30 September 2019
		Lifetime ECLs	Lifetime ECLs
	12-month	not credit-	credit-
	ECLs	impaired	impaired
	Stage 1	Stage 2	Stage 3	Total
	HK$’000	HK$’000	HK$’000	HK$’000
Loans receivable
— Performing	700,969	20,210	–	721,179
— Individuallyimpaired (i)	–	–	358,795	358,795
Total	700,969	20,210	358,795	1,079,974

(i) Impaired loans receivable include those with objective evidence of impairment.

ANNUAL REPORT 2020 151

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

23. LOANS RECEIVABLE (continued)

Analysis of the gross carrying amount and the corresponding ECL allowance is as follows:

		Lifetime ECLs	Lifetime ECLs
	12-month	not credit-	credit-
	ECLs	impaired	impaired
	Stage 1	Stage 2	Stage 3	Total
	HK$’000	HK$’000	HK$’000	HK$’000
Gross carrying amount as at 1 October 2018	948,920	–	–	948,920
New loans drawdown and accreted interest	529,323	–	–	529,323
Transfer from Stage 1 to Stage 2	(20,210)	20,210	–	–
Transfer from Stage 1 to Stage 3	(358,795)	–	358,795	–
Repaid during the year	(384,824)	–	–	(384,824)
Exchange realignment	(13,445)	–	–	(13,445)
Gross carrying amount as at
30 September 2019 and 1 October 2019	700,969	20,210	358,795	1,079,974
New loans drawdown and accreted interest	238,093	2,581	–	240,674
Transfer from Stage 1 to Stage 2	(95,147)	95,147	–	–
Transfer from Stage 2 to Stage 3	–	(8,791)	8,791	–
Transfer from Stage 1 to Stage 3	(5,686)	–	5,686	–
Repaid during the year	(192,577)	(14,000)	–	(206,577)
Exchange realignment	546	–	12,386	12,932
Gross carrying amount as at
30 September 2020	646,198	95,147	385,658	1,127,003
ECL allowance as at 1 October 2018	(129,965)	–	–	(129,965)
Loss allowance recognised	(3,573)	–	(253,758)	(257,331)
Transfer from Stage 1 to Stage 2	3,456	(3,456)	–	–
Transfer from Stage 1 to Stage 3	105,037	–	(105,037)	–
Exchange realignment	6,492	–	–	6,492
ECL allowance as at 30 September 2019 and
1 October 2019	(18,553)	(3,456)	(358,795)	(380,804)
Loss allowance recognised	(27,119)	(1,983)	–	(29,102)
Transfer from Stage 1 to Stage 2	17,644	(17,644)	–	–
Transfer from Stage 2 to Stage 3	–	5,439	(5,439)	–
Transfer from Stage 1 to Stage 3	3,555	–	(3,555)	–
Exchange realignment	–	–	(12,386)	(12,386)
ECL allowance as at 30 September 2020	(24,473)	(17,644)	(380,175)	(422,292)

152 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

24. PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES

2020	2019
HK$’000	HK$’000
Deposits 6,921 Deposits paid for purchases of items of property, plant and equipment 6,924 Deposit paid for acquisition of a subsidiary – Prepayments and other receivables 265,797 Settlement receivable from the expropriation of investment properties 256,692 Due from a non-controlling shareholder 93,250 Due from an associate 1,455	6,979 1,187 40,000 14,347 – – 1,455
631,039 Impairment allowance –	63,968 (495)
631,039 Portion classified as non-current assets (9,856)	63,473 (44,093)
Portion classified as current assets 621,183	19,380

The amounts due from an associate are unsecured, interest-free and repayable on demand.

The movements in the loss allowance for impairment are as follows:

2020	2019
HK$’000	HK$’000
At beginning of year 495 Amount written off as uncollectible (495)	512 –
Exchange realignment –	(17)
At 30 September –	495

Financial assets amounting to HK$495,000 as at 30 September 2019 were considered to be credit-impaired and were assessed specifically by management.

The remaining financial assets included in the above balances are neither past due nor impaired as at 30 September 2020 and 2019, for which there was no recent history of default. Their recoverability was assessed with reference to the credit status of the debtors, and the expected credit loss as at 30 September 2020 and 2019 is considered by management to be minimal.

ANNUAL REPORT 2020 153

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

25. INVENTORIES

2020	2019
HK$’000	HK$’000
Vehicles and related components (note) 49,962 Jewellery products and watches 122,700	– 214,842
172,662	214,842

Note: Included in the balance is work-in-progress of HK$13,901,000 (2019: Nil) for the development of vehicles and provision of engineering services.

26. ACCOUNTS RECEIVABLE

2020	2019
HK$’000	HK$’000
Accounts receivable 18,545	33,722
Impairment (773)	(850)
17,772	32,872

The Group’s trading terms with its customers are mainly on credit, except for new customers, where payment in advance may be required. The credit period is generally one month, extending up to three months or more for certain customers. The Group seeks to maintain strict control over its outstanding receivables to minimise credit risk. Overdue balances are reviewed regularly by senior management. The Group does not hold any collateral or other credit enhancements over its accounts receivable balances. Accounts receivable are non-interest-bearing.

As at 30 September 2020, accounts receivable with a net carrying amount of HK$4,726,000 (2019: Nil) were pledged to secure a bank loan granted to the Group (note 30).

An ageing analysis of the accounts receivable as at the end of the reporting period, based on the invoice date and net of loss allowance, is as follows:

2020 HK$’000	2019 HK$’000
Within 30 days 13,629 31 to 60 days 2,137 61 to 90 days 962 Over 90 days 1,044	27,279 2,155 557 2,881
17,772	32,872

154 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

26. ACCOUNTS RECEIVABLE (continued)

The movements in the loss allowance for impairment of accounts receivable are as follows:

2020	2019
HK$’000	HK$’000
At beginning of year 850 Impairment losses/(reversal of impairment losses), net 177 Amount written off as uncollectible (257)	4,064 (2,328) (845)
Exchange realignment 3	(41)
At end of year 773	850

An impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses. The provision rates are based on days past due for groupings of various customer segments with similar loss patterns. The calculation reflects the probability-weighted outcome and reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions.

Set out below is the information about the credit risk exposure on the Group’s accounts receivable using a provision matrix:

As at 30 September 2020

Credit- impaired receivables Current	Past due Less than 1 to 3 1 month months Total
Expected credit loss rate 100% 3.19% Gross carrying amount (HK$’000) 15 14,069 Expected credit losses (HK$’000) 15 449
	4.60% 7.24% 4.17%
	522 3,939 18,545
	24 285 773

As at 30 September 2019

Credit- impaired receivables Current	Past due Less than 1 to 3 1 month months Total
Expected credit loss rate 100% 0.73% Gross carrying amount (HK$’000) 275 27,531 Expected credit losses (HK$’000) 275 202	1.24% 9.24% 2.52% 2,173 3,743 33,722 27 346 850

ANNUAL REPORT 2020 155

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

27. CASH AND CASH EQUIVALENTS

2020	2019
HK$’000	HK$’000
Cash and bank balances 111,760	240,549
Non-pledged time deposits with original maturity of less than three months when acquired 72,781	207,057
Cash and cash equivalents 184,541	447,606

At the end of the reporting period, the cash and bank balances of the Group denominated in Renminbi (“RMB”) amounted to approximately HK$149,960,000 (2019: HK$151,049,000). The RMB is not freely convertible into other currencies, however, under Mainland China’s Foreign Exchange Control Regulations and Administration of Settlement, Sale and Payment of Foreign Exchange Regulations, the Group is permitted to exchange RMB for other currencies through banks authorised to conduct foreign exchange business.

Certain cash at banks earns interest at floating rates based on daily bank deposit rates. Short term time deposits are made for a period of three months depending on the immediate cash requirements of the Group, and earn interest at the respective short term time deposit rates. The bank balances are deposited with creditworthy banks with no recent history of default.

28. ACCOUNTS PAYABLE

An ageing analysis of the accounts payable as at the end of the reporting period, based on the invoice date, is as follows:

2020	2019
HK$’000	HK$’000
Within 30 days 30,768 31 to 60 days – 61 to 90 days 149 Over 90 days 13,402	29,349 35,667 18,382 15,769
44,319	99,167

156 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

29. OTHER PAYABLES AND ACCRUALS

2020	2019
HK$’000	HK$’000
Other payables and accruals (note (a)) 142,776 Contract liabilities (note (b)) 166,268 Receipts in advance – Due to a former shareholder of a subsidiary 4,570	101,910 89,558 3,102 4,417
313,614 Portion classified as non-current liabilities (15,909)	198,987 –
Portion classified as current liabilities 297,705	198,987

Notes:

(a) Other payables are non-interest-bearing and generally have an average term of 30 days.

(b) Details of contract liabilities are as follows:

	30 September	30 September	1 October
	2020	2019	2018
	HK$’000	HK$’000	HK$’000
Consideration received from customers in advance:
Sales of jewellery products and watches	80,961	89,094	81,056
Sales and distribution of vehicles and provision
of engineering services	85,307	464	440
Total contract liabilities	166,268	89,558	81,496

Contract liabilities relate to consideration received from customers in advance. The increase in contract liabilities in 2020 and 2019 was mainly due to the acquisition of the Apollo Group (as defined in note 35 to the financial statements) and the increase in consideration received from customers for the sales of jewellery products and watches, respectively.

ANNUAL REPORT 2020 157

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

30. INTEREST-BEARING BANK AND OTHER BORROWINGS

	2020			2019
Contractual		Contractual
interest rate		interest rate
(%)	Maturity	HK$’000	(%)	Maturity	HK$’000
Current Bank loans — unsecured 0.4% to 5.69%	2021	43,109 PBC3+1.376%		2020	104,678
		to	1.7% or
		0.4% to 5.65%
Bank loans — secured PRIME1–2.1%	2021	58,092	–	–	–
or 5.2% Other loans — unsecured HIBOR2+5% or 18%	On demand	46,273	–	–	–
		147,474			104,678
Non-current Bank loan — secured PRIME1–2.1%	2036	19,561 PRIME1–2.1%		2036	21,809
		19,561			21,809
		167,035			126,487
Analysed into:				2020	2019
				HK$’000	HK$’000
Bank borrowings repayable:
Within one year				101,201	104,678
In the second year				1,233	2,433
In the third to fifth years, inclusive				3,699	3,664
Beyond fiveyears				14,629	15,712
				120,762	126,487
Other borrowings repayable:
On demand				46,273	–
				167,035	126,487

• 1 Japan prime lending rate (“PRIME”) 2 Hong Kong Interbank Offered Rate (“HIBOR”) 3 People’s Bank of China’s Benchmark Lending Rate (“PBC”)

158 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

30. INTEREST-BEARING BANK AND OTHER BORROWINGS (continued)

Notes:

• (a) Certain of the Group’s bank loans are secured by (i) mortgage/pledge of certain land and buildings and right-of-use assets with an aggregate carrying amount of HK$106,207,000 (2019: HK$50,645,000) (note 15); and (ii) pledge of certain accounts receivable with carrying amount of HK$4,726,000 (2019: Nil) (note 26).

• (b) The Group’s bank borrowings as at 30 September 2020 of approximately HK$85,290,000 (2019: HK$90,139,000) and HK$35,472,000 (2019: HK$36,348,000) are denominated in RMB and JPY, respectively.

• (c) The Group’s other loans as at 30 September 2020 are denominated in EUR.

31. DEFERRED TAX

The movements in deferred tax liabilities and assets during the year are as follows:

Deferred tax liabilities

	Temporarydifferences arisingfrom Other intangible assets Property, plant and equipment Investment properties Total HK$’000 HK$’000 HK$’000 HK$’000
At 1 October 2018 Deferred tax charged/(credited) to profit or loss during the year Exchange realignment	9,516 2,110 86,436 98,062 3,069 (76) (17,922) (14,929) (506) 195 (2,355) (2,666)
At 30 September 2019 and at 1 October 2019 Deferred tax charged/(credited) to profit or loss during the year Acquisition of subsidiaries (note 35) Disposal of a subsidiary (note 36) Exchange realignment
	12,079 2,229 66,159 80,467
	(7,893) (77) (63,382) (71,352)
	39,643 – – 39,643
	(5,322) – – (5,322)
	841 (4) 723 1,560
At 30 September 2020
	39,348 2,148 3,500 44,996

ANNUAL REPORT 2020 159

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

31. DEFERRED TAX (continued)

Deferred tax assets

	Impairment
	of financial
	assets
	HK$’000
At 1 October 2018	3,417
Deferred tax credited toprofit or loss duringtheyear	351
At 30 September 2019 and at 1 October 2019 Deferred tax credited toprofit or loss duringtheyear	3,768 2,166
At 30 September 2020	5,934

At 30 September 2020, the Group had tax losses arising in Hong Kong of HK$48,482,000 (2019: HK$3,994,000), Japan of HK$356,580,000 (2019: HK$337,486,000) and Mainland China of HK$35,993,000 (2019: Nil) that may be carried forward indefinitely for Hong Kong, nine years for Japan and five years for Mainland China, respectively, for offsetting against future taxable profits of the companies in which the losses arose. Deferred tax assets have not been recognised in respect of these tax losses as they have arisen in subsidiaries that have been loss-making for some time and/or it is currently not considered probable that taxable profits will be available against which the tax losses can be utilised.

Pursuant to the PRC Corporate Income Tax Law, a 10% withholding tax is levied on dividends declared to foreign investors from the foreign investment enterprises established in Mainland China. The requirement is effective from 1 January 2008 and applies to earnings after 31 December 2007. A lower withholding tax rate may be applied if there is a tax treaty between Mainland China and the jurisdiction of the foreign investors. For the Group, the applicable rate is 10%. The Group is therefore liable for withholding taxes on dividends distributed by those subsidiaries in Mainland China in respect of earnings generated from 1 January 2008.

At 30 September 2020, no deferred tax has been recognised for withholding taxes that would be payable on the unremitted earnings that are subject to withholding taxes of the Group’s subsidiaries established in Mainland China. In the opinion of the directors, it is not probable that these subsidiaries will distribute such earnings in the foreseeable future. The aggregate amount of temporary differences associated with investments in subsidiaries in Mainland China for which deferred tax liabilities have not been recognised amounted to approximately HK$1,259,000 (2019: HK$3,136,000).

160 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

32. ISSUED CAPITAL

Shares

2020	2019
HK$’000	HK$’000
Authorised: 10,000,000,000 ordinary shares of HK$0.1 each 1,000,000	1,000,000
Issued and fully paid: 7,170,198,562 (2019: 7,170,198,562) ordinary shares of HK$0.1 each 717,019	717,019

A summary of movements in the Company’s issued capital is as follows:

	Number of
	ordinary	Issued
	shares in issue	capital
	’000	HK$’000
At 1 October 2018	5,917,886	591,788
Issue of subscription shares (notes (a), (b), (c) and (d))	1,252,313	125,231
At 30 September 2019, 1 October 2019 and 30 September 2020	7,170,199	717,019

Notes:

• (a) On 31 October 2018, 137,360,000 ordinary shares of the Company of HK$0.1 each (“Shares”) were allotted and issued at a subscription price of HK$0.91 per share to TOM in exchange for the subscription of 65,240,000 ordinary shares of TOM at a subscription price of HK$1.916 per share of TOM, with the difference in subscription considerations of approximately HK$2,000 being paid by the Group to TOM.

• (b) On 19 December 2018, 332,601,176 Shares were allotted and issued at a subscription price of HK$0.51 per share to certain subscribers for a total cash consideration, before expenses, of approximately HK$169,627,000.

• (c) On 15 May 2019, 400,000,000 Shares were allotted and issued at a subscription price of HK$0.51 per share to a subscriber for a total cash consideration, before expenses, of approximately HK$204,000,000.

• (d) On 16 July 2019, 382,352,000 Shares were allotted and issued at a subscription price of HK$0.51 per share to a subscriber for a total cash consideration, before expenses, of approximately HK$195,000,000.

ANNUAL REPORT 2020 161

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

33. SHARE OPTION SCHEME

The Company operates a share option scheme (the “Share Option Scheme”) for the purpose of providing incentives and rewards to eligible participants (including, inter alia, employees, directors, advisors and consultants) who contribute to the success of the Group’s operations. The Share Option Scheme became effective on 1 March 2013 and, unless otherwise cancelled or amended, will remain in force for 10 years from that date.

Certain details of the Share Option Scheme:

• (a) The maximum number of shares issuable upon exercise of the options which may be granted under the Share Option Scheme and any other share option scheme of the Group to each eligible participant within any 12-month period shall not exceed 1% of the shares of the Company in issue at any time. Any further grant of share options in excess of this limit is subject to shareholders’ approval in advance in a general meeting;

• (b) The exercise period of the share options granted is determinable by the directors, and commences after certain vesting period and ends on a date which is not later than 10 years from the date of the grant of the share options or other expiry date(s) stipulated in the Share Option Scheme, whichever is the earlier;

• (c) The offer of a grant of share options may be accepted within 21 days from the date of the offer, upon payment of a nominal consideration of HK$1 by the grantee; and

• (d) The exercise price of the share options is determinable by the directors but may not be less than the highest of (i) the closing price of the Company’s shares as stated in the daily quotations sheet of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) on the date of the offer of grant, which must be a trading day; (ii) the average closing price of the Company’s shares as stated in the Stock Exchange’s daily quotations sheets for the 5 trading days immediately preceding the date of the offer of the grant; and (iii) the nominal value of the Company’s shares.

The total number of shares available for issue under the Share Option Scheme is 881,669,060, representing approximately 11.86% of the Company’s issued share capital of the Company as at the date of this report.

Share options do not confer rights on the holders to dividends or to vote at shareholders’ meeting.

The following share options were outstanding under the Share Option Scheme during the year:

2020 2019 Weighted Weighted average Number of average Number of exercise price options exercise price options HK$ per share HK$ per share	2020 2019 Weighted Weighted average Number of average Number of exercise price options exercise price options HK$ per share HK$ per share	2020 2019 Weighted Weighted average Number of average Number of exercise price options exercise price options HK$ per share HK$ per share
At the beginning of the year 0.95 Granted during the year – Forfeited duringtheyear –	164,649,204 1.45 – 0.48 – 1.57 164,649,204 0.95	145,649,204 78,000,000 (59,000,000)
At the end of the year 0.95		164,649,204

162 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

33. SHARE OPTION SCHEME (continued)

The exercise prices and exercise periods of the share options outstanding as at the end of the reporting period are as follows:

2020
	Exercise price*
Number of options	HK$ per share	Exercise period
56,484	0.65	19 July 2017 to 18 July 2026
19,200	0.65	19 July 2018 to 18 July 2026
4,957,842	0.65	19 July 2019 to 18 July 2026
4,957,839	0.65	19 July 2020 to 18 July 2026
4,957,839	0.65	19 July 2021 to 18 July 2026
20,000,000	0.85	6 April 2017 to 5 April 2027
50,000,000	1.782	13 March 2018 to 12 March 2028
1,700,000	1.776	3 April 2018 to 2 April 2028
78,000,000	0.475	30 May 2019 to 29 May 2029
164,649,204
2019
	Exercise price*
Number of options	HK$ per share	Exercise period
56,484	0.65	19 July 2017 to 18 July 2026
19,200	0.65	19 July 2018 to 18 July 2026
4,957,842	0.65	19 July 2019 to 18 July 2026
4,957,839	0.65	19 July 2020 to 18 July 2026
4,957,839	0.65	19 July 2021 to 18 July 2026
20,000,000	0.85	6 April 2017 to 5 April 2027
50,000,000	1.782	13 March 2018 to 12 March 2028
1,700,000	1.776	3 April 2018 to 2 April 2028
78,000,000	0.475	30 May 2019 to 29 May 2029
164,649,204

• The exercise price of the share options is subject to adjustment in the case of rights or bonus issues, or other similar changes in the Company’s share capital.

The fair value of the share options granted during the year ended 30 September 2019 was HK$14,110,000 (HK$0.18 each). The Group recognised a share option expense of HK$3,035,000 (2019: HK$15,671,000) during the year ended 30 September 2020.

ANNUAL REPORT 2020 163

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

33. SHARE OPTION SCHEME (continued)

The fair value of equity-settled share options granted during the year ended 30 September 2019 was estimated as at the date of grant using a binomial model, taking into account the terms and conditions upon which the options were granted. The following table lists the inputs to the model used:

	2019
Dividend yield (%)	–
Expected volatility (%)	63.41
Risk-free interest rate (%)	2.03
Expected life of options (years)	10
Weighted average share price (HK$ per share)	0.95

The expected life of the options is based on the historical exercise patterns and is not necessarily indicative of the exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome.

No other feature of the options granted was incorporated into the measurement of fair value.

No share options were exercised during the years ended 30 September 2020 and 2019.

At the end of the reporting period, the Company had 164,649,204 share options outstanding under the Share Option Scheme. The exercise in full of the outstanding share options would, under the present capital structure of the Company, result in the issue of 164,649,204 additional ordinary shares of the Company and additional share capital of approximately HK$16,465,000 and share premium of HK$139,421,000 (before issue expenses).

At the date of approval of these financial statements, the Company had 164,649,204 share options outstanding under the Share Option Scheme, which represented approximately 2.22% of the Company’s shares in issue as at that date.

34. RESERVES

The amounts of the Group’s reserves and the movements therein for the current and prior years are presented in the consolidated statement of changes in equity on pages 78 to 79 of the financial statements.

(a) Share premium account

The share premium account of the Group includes: (i) the difference between the combined net asset value of the subsidiaries acquired pursuant to the group reorganisation on 12 August 2002 over the nominal value of the share capital of the Company issued in exchange therefor; (ii) the premium arising from the new issue; (iii) the premium arising from the capitalisation issue; and (iv) the premium arising from issue of shares upon exercise of share options.

(b) Reserve funds

The reserve funds represent PRC statutory reserve funds. Appropriations to such reserve funds are made out of profit after tax of the statutory financial statements of the relevant subsidiaries of the Group established in the PRC which are restricted as to use and the amount should not be less than 10% of the profit after tax unless the aggregate amount exceeded 50% of the registered capital of the relevant subsidiaries. The reserve funds can be used to make up prior years’ losses of the relevant subsidiaries.

164 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

35. BUSINESS COMBINATION

The Company entered into a sale and purchase agreement on 16 May 2019 and supplemental agreements on 15 August 2019 and 3 January 2020 with (among others) Ideal Team Ventures Limited (“Ideal Team”) (collectively referred to as the “Agreements”), pursuant to which the Company conditionally agreed to purchase, and Ideal Team conditionally agreed to sell, approximately 86.06% of the total issued share capital of Sino Partner Global Limited (“Apollo”), which together with its subsidiaries (the “Apollo Group”) are principally engaged in the design, development, manufacturing and sales of high performance hypercars under the brand “Apollo” worldwide (the “Apollo Acquisition”). The Apollo Acquisition was completed on 17 March 2020.

The aggregate consideration for the Apollo Acquisition comprises:

• (a) cash consideration of HK$172,000,000; and

• (b) consideration shares of up to 1,655,232,000 ordinary shares of the Company which may be allotted and issued by the Company to Ideal Team (the “Consideration Shares”). In terms of the number of the Consideration Shares which may be allotted and issued, it shall be determined based on a calculation of the consolidated earnings before interests and taxes (“EBIT”) of the Apollo Group as shown in the audited consolidated financial statements of the Apollo Group for the year ending 31 December 2021 less the consolidated loss before interests and taxes of the Apollo Group (if any) as shown in the audited consolidated financial statements of the Apollo Group for the years ended/ending 31 December 2019 and 31 December 2020 to be prepared in accordance with HKFRSs (“EBIT Calculation”). The number of the Consideration Shares which may be issued to Ideal Team is as follows:

• (i) if the EBIT Calculation is more than or equal to EUR1,890,000 but less than EUR3,780,000, then 66,432,000 Consideration Shares;

• (ii) if the EBIT Calculation is more than or equal to EUR3,780,000 but less than EUR5,670,000, then 463,632,000 Consideration Shares;

• (iii) if the EBIT Calculation is more than or equal to EUR5,670,000 but less than EUR7,560,000, then 860,832,000 Consideration Shares;

• (iv) if the EBIT Calculation is more than or equal to EUR7,560,000 but less than EUR9,450,000, then 1,258,032,000 Consideration Shares; or

• (v) if the EBIT Calculation is more than or equal to EUR9,450,000, then 1,655,232,000 Consideration Shares.

The Group has elected to measure the non-controlling interests in the Apollo Group at the non-controlling interests’ proportionate share of the Apollo Group’s identifiable net assets.

ANNUAL REPORT 2020 165

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

35. BUSINESS COMBINATION (continued)

The fair values of the purchase consideration and the identifiable assets and liabilities of the Apollo Group as at the date of acquisition were as follows:

	Notes	HK$’000
Property, plant and equipment	15	26,127
Other intangible assets	19	292,370
Inventories		23,345
Accounts receivable		2,888
Prepayments, deposits and other receivables		14,747
Cash and cash equivalents		7,704
Accounts payable		(9,514)
Other payables and accruals		(134,408)
Interest-bearing other borrowings		(41,544)
Tax payable		(1,237)
Deferred tax liabilities	31	(39,643)
Total identifiable net assets at fair value		140,835
Non-controlling interests		(19,632)
Goodwill on acquisition	18	648,016
Satisfied by cash and contingent consideration		769,219
Analysis of fair value of purchase consideration:
Cash		172,000
Contingent considerationpayable		597,219
		769,219

Goodwill arose in the acquisition of the Apollo Group because the considerations paid for the acquisition effectively included, inter alia, amounts in relation to the benefits of expected synergies from combining the respective operations of the Apollo Group and the Group. These benefits are not recognised separately from goodwill because they do not meet the recognition criteria for identifiable intangible assets. None of the goodwill recognised is expected to be deductible for income tax purposes.

166 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

35. BUSINESS COMBINATION (continued)

As part of the Agreements, contingent consideration shares is payable, which is dependent on the EBIT Calculation. The fair value amounts recognised upon initial recognition and as at 30 September 2020, amounted to HK$597,219,000 and HK$619,069,000, respectively, which were determined using a scenario analysis and is within Level 3 fair value measurement. The Consideration Shares shall be allotted and issued by the Company to Ideal Team as soon as practicable after the finalisation of the audited consolidated financial statements of the Apollo Group for the year ending 31 December 2021, which is currently expected to be no later than the end of April 2022.

Significant unobservable valuation input for the fair value measurement of the contingent consideration payable upon initial recognition and as at 30 September 2020 are as follows:

EBIT Calculation HK$16,184,000 to HK$80,920,000

A significant decrease in EBIT Calculation would result in a significant decrease in the fair value of the contingent consideration payable.

The fair values of accounts and other receivables as at the date of acquisition amounted to approximately HK$2,888,000 and HK$14,747,000, respectively. The gross contractual amounts of accounts and other receivables were HK$2,888,000 and HK$14,747,000, respectively, which are expected to be collectible.

The Group incurred transaction costs of HK$6,230,000 for this acquisition. These transaction costs have been expensed and are included in general and administrative expenses in the consolidated statement of profit or loss.

An analysis of the cash flows in respect of the Apollo Acquisition is as follows:

	HK$’000
Cash consideration	(172,000)
Decrease in deposit paid for acquisition of subsidiaries	40,000
Cash and cash equivalents acquired	7,704
Net outflow of cash and cash equivalents included in cash flows used in investing activities	(124,296)
Transaction costs of the acquisition included in cash flows from operatingactivities	(6,230)
	(130,526)

Since the acquisition on 17 March 2020, the Apollo Group contributed revenue and loss for the year of HK$2,588,000 and HK$18,083,000, respectively, to the Group. Had the combination taken place at 1 October 2019, the revenue and the loss for the year of the Group would have been approximately HK$400,594,000 and HK$367,896,000, respectively.

ANNUAL REPORT 2020 167

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

36. DISPOSAL OF SUBSIDIARIES

Year ended 30 September 2020

During the year, the Group completed the transaction to dispose of its entire equity interest in Chi Feng for a cash consideration of HK$2,850,000. The disposal of Chi Feng was completed on 28 June 2020.

	Notes	HK$’000
Net assets disposed of:
Property, plant and equipment	15	4
Intangible asset	19	21,937
Prepayment, deposits and other receivables		707
Accruals and other payables		(3)
Deferred tax liabilities	31	(5,322)
Exchange fluctuation reserve released		17,323 (4,269)
Loss on disposal of a subsidiary		13,054 (10,204)
		2,850
Satisfied by cash		2,850
An analysis of the net inflow of cash and cash equivalents in respect of the disposal of Chi Feng is		as follows:
		HK$’000
Cash consideration and inflow of cash and cash equivalents
in respect of the disposal of a subsidiary		2,850

168 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

36. DISPOSAL OF SUBSIDIARIES (continued)

Year ended 30 September 2019

During the year ended 30 September 2019, the Group completed the transaction to dispose of a 100% equity interest in Shenzhen Qijinda Trading (HK) Company Limited (“Qijinda HK”) for a cash consideration of HK$11,000,000. The disposal of Qijinda HK was completed on 29 May 2019.

	HK$’000
Net assets disposed of:
Property, plant and equipment	95
Inventories	13,521
Accounts receivable	5,527
Prepayments, deposits and other receivables	3,736
Cash and cash equivalents	9,759
Accounts payable	(4,754)
Other payables and accruals	(9,280)
Taxpayable	(2,049)
	16,555
Loss on disposal of a subsidiary	(5,555)
	11,000
Satisfied by cash	11,000
An analysis of the net inflow of cash and cash equivalents in respect of the disposal of Qijinda HK is as follows:
	HK$’000
Cash consideration	11,000
Cash and cash equivalents disposed of	(9,759)
Net inflow of cash and cash equivalents in respect of the disposal of a subsidiary	1,241

ANNUAL REPORT 2020 169

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

37. NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS

• (a) Major non-cash transactions

• (i) During the year ended 30 September 2020, the Group had non-cash additions to right-of-use assets and lease liabilities of HK$5,454,000 and HK$5,454,000, respectively, in respect of lease arrangements for leased properties (2019: Nil).

• (ii) During the year ended 30 September 2020, the Group had non-cash lease modifications to right-of-use assets and lease liabilities of HK$1,395,000 and HK$1,395,000 respectively in respect of lease arrangement for leased properties (2019: Nil).

• (iii) During the year ended 30 September 2019, 137,360,000 Shares were allotted and issued, credited as fully paid, as the consideration for the acquisition of 65,240,000 ordinary shares of TOM, as further detailed in note 32(a) to the financial statements.

(b) Changes in liabilities arising from financing activities

Lease liabilities HK$’000	Interest-bearing bank and other borrowings HK$’000
At 1 October 2018 – Changes from financing cash flows – Foreign exchange movement –	74,284 53,510 (1,307)
At 30 September 2019 – Effect of adoption of HKFRS 16 25,337	126,487 –
At 1 October 2019 (restated) 25,337 Changes from financing cash flows (7,361) New leases 5,454 Termination of a lease (93) Remeasurement on lease modifications (1,395) Acquisition of subsidiaries – Interest expense 1,202 Foreign exchange movement 23
	126,487
	(8,975)
	–
	–
	–
	41,544
	1,903
	6,076
At 30 September 2020 23,167
	167,035

• (c) Total cash outflow for leases included in the statement of cash flows is as follows:

	2020
	HK$’000
Within operating activities	12,671
Within financingactivities	7,361
	20,032

170 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

38. RELATED PARTY TRANSACTIONS

• (a) In addition to the transactions, arrangements and balances detailed elsewhere in these financial statements, the Group had the following transactions with related parties during the current and prior years.

• (i) During the current year, lease payments for a property in the aggregate of approximately HK$2,940,000 (2019: HK$2,940,000) were paid or payable by the Group to a company controlled by a director of the Company based on terms as agreed by the relevant parties as set out in a tenancy agreement.

Pursuant to the tenancy agreement, as at 30 September 2019, the Group had total future minimum lease payments to the related party under the non-cancellable operating lease of the property of HK$2,940,000 and HK$1,715,000 falling due within one year and within the second to fifth years, respectively.

• (b) Compensation of key management personnel of the Group The directors of the Company comprise the key management personnel of the Group. Details of the compensation of the directors of the Company are included in note 10 to the financial statements.

The related party transactions in respect of item (a)(i) above also constitute connected transactions or continuing connected transactions as defined in Chapter 14A of the Listing Rules but are fully exempted and not subject to any of the disclosure requirements thereunder.

39. CONTINGENT LIABILITIES

At the end of the reporting period, the Group had contingent liabilities not provided for in the financial statements in respect of certain corporate guarantees given by a subsidiary of the Company (the “Subsidiary”) to certain property purchasers who purchased properties from a former investee of the Subsidiary to the extent of approximately HK$53,266,000 (2019: HK$53,300,000) in connection with certain property transactions and other arrangements of the former investee in prior years.

40. COMMITMENTS

• (a) Operating lease commitments as at 30 September 2019

The Group leased certain of its office properties, staff quarters and retail shops under operating lease arrangements. Leases for properties were negotiated for terms ranging from two to ten years.

At 30 September 2019, the Group had total future minimum lease payments under non-cancellable operating leases falling due as follows:

	2019
	HK$’000
Within one year	10,949
In the second to fifth years, inclusive	15,993
After fiveyears	6,655
	33,597

In addition to the future minimum lease payments disclosed above, the Group had commitments to pay contingent rents based on a proportion of turnover/revenue for certain leased retail shops. Contingent rents were not included in the above commitments as it was not possible to estimate the amounts which might be payable.

ANNUAL REPORT 2020 171

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

40. COMMITMENTS (continued)

(b) Capital commitments

The Group had the following capital commitments at the end of the reporting period:

	2020	2019
	HK$’000	HK$’000
Contracted, but not provided for:
Capital contributions to a joint venture	33,331	33,454

41. FINANCIAL INSTRUMENTS BY CATEGORY

The carrying amounts of each of the categories of financial instruments as at the end of the reporting period are as follows:

2020

Financial assets

	Financial assets at fair value through profit or loss Mandatorily designated as such Financial assets at amortised cost Total HK$’000 HK$’000 HK$’000
Loans receivable Accounts receivable Financial assets included in prepayments, deposits and other receivables Financial assets at fair value through profit or loss Cash and cash equivalents
	– 704,711 704,711
	– 17,772 17,772
	– 391,226 391,226
	1,029,718 – 1,029,718
	– 184,541 184,541
	1,029,718 1,298,250 2,327,968

172 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

41. FINANCIAL INSTRUMENTS BY CATEGORY (continued)

The carrying amounts of each of the categories of financial instruments as at the end of the reporting period are as follows: (continued)

2020

Financial liabilities

Financial liabilities at fair value through profit or loss HK$’000	Financial liabilities at amortised cost HK$’000	Total HK$’000
Accounts payable – Financial liabilities included in other payables and accruals – Interest-bearing bank and other borrowings – Lease liabilities – Contingent considerationpayable 619,069
	44,319	44,319
	76,937	76,937
	167,035	167,035
	23,167	23,167
	–	619,069
619,069
	311,458	930,527

2019

Financial assets

	Financial assets at fair value through profit or loss Mandatorily designated as such Financial assets at amortised cost Total HK$’000 HK$’000 HK$’000
Loans receivable Accounts receivable Financial assets included in prepayments, deposits and other receivables Financial assets at fair value through profit or loss Cash and cash equivalents	– 699,170 699,170 – 32,872 32,872 – 15,956 15,956 1,163,055 – 1,163,055 – 447,606 447,606
	1,163,055 1,195,604 2,358,659

ANNUAL REPORT 2020 173

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

41. FINANCIAL INSTRUMENTS BY CATEGORY (continued)

The carrying amounts of each of the categories of financial instruments as at the end of the reporting period are as follows: (continued)

2020

Financial liabilities

	Financial
	liabilities at
	amortised cost
	HK$’000
Accounts payable	99,167
Financial liabilities included in other payables and accruals	74,981
Interest-bearingbank borrowings	126,487
	300,635

42. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS

As at 30 September 2020 and 30 September 2019, the carrying amounts of the Group’s financial assets and financial liabilities reasonably approximated to their fair values.

Management has assessed that the fair values of cash and cash equivalents, accounts receivable, the current portion of loans receivable, financial assets included in prepayments, deposits and other receivables, accounts payable, financial liabilities included in other payables and accruals and the current portion of interest-bearing bank and other borrowings reasonably approximate to their carrying amounts largely due to the short term maturities of these instruments or the effect of discounting is not material.

The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The fair values of listed equity investments are based on quoted market prices. The following methods and assumptions were used to estimate the fair values of the Group’s other financial instruments.

The fair values of the non-current portion of loans receivable, financial assets included in deposits and interestbearing bank and other borrowings have been calculated by discounting the expected future cash flows using rates currently available for instruments with similar terms, credit risk and remaining maturities. The changes in fair value as a result of the Group’s own non-performance risk for interest-bearing bank and other borrowings as at the end of the reporting period were assessed to be insignificant. In the opinion of the directors, the fair values of these financial instruments reasonably approximate to their carrying amounts.

The fair value of the contingent consideration payable has been determined using a scenario analysis, taking into account the probabilities in which each EBIT target would be achieved.

The fair value of the unlisted investments have been determined by equity value allocation model with option pricing formula or scenario analysis. The underlying equity values have been determined based on market-based approach, such as certain earnings multiples, or income approach, such as discounted cash-flow.

The fair value of the convertible note has been determined based on the probability-weighted and option pricing method, which takes into account the probability-weighted value across multiple future outcomes, while using the option pricing method to estimate the allocation of value within one or more of those scenarios.

The fair value of unlisted options have been determined using the probability weighted and option pricing method or the binomial option pricing model. The valuations take into account of the different scenarios values and probabilities and expected future value discounted at the rate reflecting the risk of the payoff.

174 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

42. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS (continued)

Below is a summary of significant unobservable inputs to the valuation of financial instruments together with a quantitative sensitivity analysis:

		Significant	Percentage	Sensitivity of fair
	Valuation technique	unobservable input	or ratio	value to the input
Unlisted investments	Equity allocation method	Risk-free rate	0.22% to 0.24%	1 percentage point increase in
	(2019: Implied company		(2019: 1.59%	risk-free rate would result in
	transaction)		to 1.61%)	decrease in fair value by
				HK$8,155,000 (2019: HK$8,144,000)
		Volatility	55.77% to 56.33%	10% increase in volatility rate
			(2019: 45.45%	would result in decrease in
			to 59.18%)	fair value by HK$19,804,000
				(2019 HK$2,662,000)
		Earnings multiples	5.24 to 5.44	10% decrease in earnings multiples
			(2019: Nil)	would result in decrease
				in fair value by HK$54,758,000
				(2019: Nil)
Convertible note	Scenario analysis	Risk-free rate	0.23% to 0.26%	1 percentage point increase in
			(2019: 1.42%	risk-free rate would result in
			to 1.62%)	decrease in fair value by
				HK$1,006,000 (2019: HK$992,000)
		Volatility	55.71% to 59.25%	10% increase in volatility
			(2019: 43.96%	would result in decrease in
			to 48.64%)	fair value by HK$2,588,000
				(2019: HK$1,667,000)
		Earnings multiples	5.24	10% decrease in earnings multiples
			(2019: Nil)	would result in decrease in
				fair value by HK$2,289,000
				(2019: Nil)
Unlisted options	Scenario analysis	Discount rate	35%	10% increase in discount rate
			(2019: 35%)	would result in decrease in
				fair value by HK$775,000
				(2019: HK$1,368,000)
		Earnings multiples	15.6	10% decrease in earnings multiple
			(2019: 13.0)	would result in decrease in
				fair value by HK$1,550,000
				(2019: HK$1,048,000)
	Binomial option	Volatility	33%	10% decrease in volatility rate
	pricing model		(2019: 27%)	would result in decrease in
				fair value by HK$1,117,000
				(2019: HK$1,319,000 )
		Risk-free rate	0.1%	1 percentage point decrease in
			(2019: 1.64%)	risk-free rate would result in
				decrease in fair value by
				HK$568,000 (2019: HK$1,105,000)

ANNUAL REPORT 2020 175

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

42. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS (continued)

Fair value hierarchy

The following tables illustrate the fair value measurement hierarchy of the Group’s financial instruments:

Financial assets measured at fair value:

As at 30 September 2020

	Fair value measurement using Quoted prices in active markets (Level 1) Significant observable inputs (Level 2) Significant unobservable inputs (Level 3) Total HK$’000 HK$’000 HK$’000 HK$’000
Financial assets at fair value through profit or loss
	75,097 – 954,621 1,029,718

As at 30 September 2019

	Fair value measurement using Quoted prices in active markets (Level 1) Significant observable inputs (Level 2) Significant unobservable inputs (Level 3) Total HK$’000 HK$’000 HK$’000 HK$’000
Financial assets at fair value through profit or loss	96,567 – 1,066,488 1,163,055

During the year, there were no transfers of fair value measurements between Level 1 and Level 2 and no transfers into or out of Level 3 for financial assets (2019: Nil).

176 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

42. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS (continued)

Financial liabilities measured at fair value:

As at 30 September 2020

	Fair value measurement using	Fair value measurement using	Fair value measurement using	Total HK$’000
	Quoted prices in active markets (Level 1) HK$’000	Significant observable inputs (Level 2) HK$’000	Significant unobservable inputs (Level 3) HK$’000
Contingent considerable payable
	–	–	619,069	619,069

The Group did not have any financial liabilities measured at fair value as at 30 September 2019.

During the year, there were no transfers of fair value measurements between Level 1 and Level 2 and no transfers into or out of Level 3 for financial liabilities (2019: Nil).

The movements in fair value measurements within Level 3 during the year are as follows:

Assets Liabilities 2020 2019 2020 2019 HK$’000 HK$’000 HK$’000 HK$’000	Assets Liabilities 2020 2019 2020 2019 HK$’000 HK$’000 HK$’000 HK$’000	Assets Liabilities 2020 2019 2020 2019 HK$’000 HK$’000 HK$’000 HK$’000
At the beginning of the year 1,066,488 Total gain/(loss) recognised in the consolidated statement of profit or loss (111,867) Purchases – Acquisition of subsidiaries – Disposal –	780,488 – 10,128 (21,850) 295,372 – – (597,219) (19,500) –	– – – – –
At the end of the year 954,621	1,066,488 (619,069)	–

ANNUAL REPORT 2020 177

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

43. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group’s principal financial instruments comprise bank and other borrowings and cash and cash equivalents. The main purpose of these financial instruments is to raise finance for the Group’s operations. The Group has various other financial assets and liabilities, which mainly arise directly from its operations or its investing activities.

The main risks arising from the Group’s financial instruments are interest rate risk, foreign currency risk, credit risk, equity price risk and liquidity risk. The board of directors reviews and agrees policies for managing each of these risks and they are summarised below.

Interest rate risk

The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s bank and other borrowings with floating interest rates. The Group’s policy is to obtain the most favourable interest rates available for its borrowings.

For JPY and EUR floating-rate bank and other borrowings, a 100 basis point increase/decrease in interest rates, with all other variables held constant at 30 September 2020, would have increased/decreased the Group’s loss before tax for the year ended 30 September 2020 by approximately HK$355,000 and HK$346,000, respectively.

For RMB and JPY floating-rate bank borrowings, a 100 basis point increase/decrease in interest rates, with all other variables held constant at 30 September 2019, would have increased/decreased the Group’s loss before tax for the year ended 30 September 2019 by approximately HK$901,000 and HK$355,000, respectively.

Foreign currency risk

The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. The Group currently does not have a foreign currency policy to hedge its currency exposure arising from the net assets of the Group’s foreign operations.

The Group also has transactional currency exposures mainly arising from purchases by operating units in currencies other than the units’ functional currencies. The currency giving rise to this risk is primarily Swiss Franc (“CHF”). The Group does not hold or issue any derivative financial instruments for trading purposes or to hedge against fluctuations in foreign exchange rates. The Group mitigates this risk by conducting the sales and purchases transactions in the same currency, whenever possible.

The following table demonstrates the sensitivity at the end of the reporting period to a reasonably possible change in the CHF exchange rate, with all other variables held constant, of the Group’s loss before tax (due to changes in the fair values of monetary assets and liabilities).

	Increase/	Increase/
	(decrease) in	(decrease) in
	CHF rate	loss before tax
	%	HK$’000
2020
If the Hong Kong dollar weakens against the CHF	5	(27)
If the Hong Kong dollar strengthens against the CHF	(5)	27
2019
If the Hong Kong dollar weakens against the CHF	5	1,230
If the Hong Kong dollar strengthens against the CHF	(5)	(1,230)

178 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

43. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)

Credit risk

The Group mainly transacts on credit with creditworthy customers. Receivable balances are monitored on an ongoing basis. In respect of loan receivables, individual credit evaluations are performed on borrowers. These evaluations take into account information specific to the borrowers. Certain of these loan receivables are secured by certain assets of the respective borrowers.

At the end of the reporting period, the Group had certain concentration of credit risk in relation to accounts receivable as 52% (2019: 21%) and 85% (2019: 42%) of its accounts receivable were due from its largest trade debtor and the five largest trade debtors, respectively.

At the end of the reporting period, the Group had certain concentration of credit risk in relation to loans receivable as 20% (2019: 20%) and 70% (2019: 77%) of its loans receivable were due from its largest borrower and the five largest borrowers, respectively.

Maximum exposure and year-end staging

The tables below show the credit quality and the maximum exposure to credit risk based on the Group’s credit policy, which is mainly based on past due information unless other information is available without undue cost or effort, and year-end staging classification as at 30 September. The amounts presented are gross carrying amounts for financial assets.

As at 30 September 2020

	12-month ECLs Stage 1 HK$’000		Lifetime ECLs	Lifetime ECLs	Total HK$’000
		Stage 2 HK$’000	Stage 3 HK$’000	Simplified approach HK$’000
Loans receivable — Normal — Doubtful Accounts receivable Financial assets included in prepayments, deposits and other receivables — Normal* Cash and cash equivalents — Notyetpast due
	646,198	95,147	–	–	741,345
	–	–	385,658	–	385,658
	–	–	–	18,545	18,545
	391,226	–	–	–	391,226
	184,541	–	–	–	184,541
	1,221,965	95,147	385,658	18,545	1,721,315

ANNUAL REPORT 2020 179

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

43. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)

Credit risk (continued)

As at 30 September 2019

	12-month ECLs Stage 1 HK$’000	Lifetime ECLs Stage 2 Stage 3 Simplified approach Total HK$’000 HK$’000 HK$’000 HK$’000
Loans receivable — Normal — Doubtful Accounts receivable Financial assets included in prepayments, deposits and other receivables — Normal — Doubtful* Cash and cash equivalents — Notyetpast due	700,969 – – 15,956 – 447,606	20,210 – – 721,179 – 358,795 – 358,795 – – 33,722 33,722 – – – 15,956 – 495 – 495 – – – 447,606
	1,164,531	20,210 359,290 33,722 1,577,753

• For accounts receivable to which the Group applies the simplified approach for impairment, information based on the provision matrix is disclosed in note 26 to the financial statements.

** The credit quality of loans receivable and financial assets included in prepayments, deposits and other receivables is considered to be “normal” when they are not past due and there is no information indicating that the financial assets had a significant increase in credit risk since initial recognition. Otherwise, the credit quality of the financial assets is considered to be “doubtful”.

180 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

43. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)

Equity price risk

Equity price risk is the risk that the fair values of investment securities decrease as a result of changes in the levels of equity indices or the value of individual securities. The Group is exposed to equity price risk arising from individually listed equity investments and unlisted investments included in financial assets at fair value through profit or loss (note 22) as at 30 September 2020. The Group’s listed equity investments are listed on The Stock Exchange of Hong Kong Limited and are valued at quoted market prices at the end of the reporting period.

The following table demonstrates the sensitivity to every 10% change in the fair values of the investment securities, with all other variables held constant and before any impact on tax, based on their carrying amounts at the end of the reporting period.

	Carrying
	amount	Change in
	of equity	loss
	investments	before tax
	HK$’000	HK$’000
30 September 2020
Investments listed in Hong Kong	75,097	7,510
Unlisted investments	954,621	95,462
30 September 2019
Investments listed in Hong Kong	96,567	9,657
Unlisted investments	1,066,488	106,649

ANNUAL REPORT 2020 181

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

43. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)

Liquidity risk

The Group’s objective is to ensure there are adequate funds to meet its contractual payments for financial liabilities in the short and longer terms. In the management of liquidity risk, the Group monitors and maintains a level of cash and bank balances deemed adequate by management to finance the Group’s operations and mitigate the effects of fluctuations in cash flows. Cash flows of the Group are closely monitored by senior management on an ongoing basis.

The maturity profile of the Group’s financial liabilities as at the end of the reporting period, based on the contractual undiscounted payments, is as follows:

ANNUAL REPORT 2020 182 On demand/ less than 1 year HK$’000 Accounts payable 44,319 Financial liabilities included in other payables and accruals 76,937 Interest-bearing bank and other borrowings 155,298 Lease liabilities 8,657 122,5 285,211 On demand/ less than 1 year HK$’000 Accounts payable 99,167 Financial liabilities included in other payables and accruals 74,981 Interest-bearingbank borrowings 106,582 122,5 280,730	On demand/ less than 1 year HK$’000	2020 1 to 5 years Over 5 years HK$’000 HK$’000	2020 1 to 5 years Over 5 years HK$’000 HK$’000	Total HK$’000
	Accounts payable 44,319 Financial liabilities included in other payables and accruals 76,937 Interest-bearing bank and other borrowings 155,298 Lease liabilities 8,657
		–	–	44,319
		–	–	76,937
		28,619	23,123	207,040
		13,300	4,015	25,972
	122,5 285,211
		41,919	27,138	354,268
	On demand/ less than 1 year HK$’000	2019 1 to 5 years Over 5 years HK$’000 HK$’000		Total HK$’000
	Accounts payable 99,167 Financial liabilities included in other payables and accruals 74,981 Interest-bearingbank borrowings 106,582	– – – – 611 23,640		99,167 74,981 130,833
	122,5 280,730	611 23,640		304,981

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

43. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)

Capital management

The primary objectives of the Group’s capital management are to safeguard the Group’s ability to continue as a going concern and to maintain healthy capital ratios in order to support its business and maximise shareholders’ value.

The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Group is not subject to any externally imposed capital requirements. No changes were made in the objectives, policies or processes for managing capital during the years ended 30 September 2020 and 30 September 2019.

The Group monitors capital using a gearing ratio, which is calculated by dividing the total debts, which comprised interest-bearing bank and other borrowings, by total equity. As at 30 September 2020, the Group’s gearing ratio was 4.5% (2019: 3.1%).

44. EVENTS AFTER THE REPORTING PERIOD

• (a) On 7 December 2020, the Company and no less than six subscribers (the “Subscribers”) entered into a subscription agreement (the “Subscription Agreement”), pursuant to which the Subscribers have agreed to subscribe for, and the Company has agreed to allot and issue to the Subscribers, an aggregate of 1,066,596,000 new ordinary shares of the Company at the subscription price of HK$0.46 per subscription share (the “Subscriptions”).

Further details in relation to, among other things, the Subscriptions are set out in the announcement of the Company dated 7 December 2020.

• (b) On 31 October 2019, the Group entered into a sale and purchase agreement with three independent third parties (the “Ideenion Vendors”), pursuant to which the Group conditionally agreed to purchase and the Ideenion Vendors conditionally agreed to sell the entire issued share capital of Ideenion Automobil AG, which is principally engaged in the design, development and prototyping of internal combustion engine vehicles and new energy vehicles (“Project Ideenion”). The Company published a circular dated 24 December 2020 in relation to, among other things, Project Ideenion.

45. COMPARATIVE AMOUNTS

Certain comparative amounts have been reclassified, to conform with the current year’s presentation and disclosures. The directors consider that such presentation would better reflect the financial performance and position of the Group.

ANNUAL REPORT 2020 183

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

46. STATEMENT OF FINANCIAL POSITION OF THE COMPANY

Information about the statement of financial position of the Company at the end of the reporting period is as follows:

	2020	2019
	HK$’000	HK$’000
NON-CURRENT ASSETS
Property, plant and equipment	2,578	3,332
Right-of-use assets	1,269	–
Investments in subsidiaries	2,318,896	1,544,997
Financial assets at fair value through profit or loss	188,791	209,668
Deposits	4,332	40,943
Total non-current assets	2,515,866	1,798,940
CURRENT ASSETS
Prepayments, deposits and other receivables	1,566	2,021
Due from subsidiaries	1,788,812	1,799,102
Cash and cash equivalents	7,997	177,866
Total current assets	1,798,375	1,978,989
CURRENT LIABILITIES
Due to a subsidiary	394,357	394,365
Other payables and accruals	4,471	5,138
Lease liabilities	2,297	–
Taxpayable	264	1,037
Total current liabilities	401,389	400,540
NET CURRENT ASSETS	1,396,986	1,578,449
TOTAL ASSETS LESS CURRENT LIABILITIES	3,912,852	3,377,389
NON-CURRENT LIABILITY
Contingent considerationpayable	619,069	–
Total non-current liability	619,069	–
Net assets	3,293,783	3,377,389
EQUITY
Issued capital	717,019	717,019
Reserves (note)	2,576,764	2,660,370
Total equity	3,293,783	3,377,389

184 ANNUAL REPORT 2020

APOLLO FUTURE MOBILITY GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 September 2020

46. STATEMENT OF FINANCIAL POSITION OF THE COMPANY (continued)

Note:

A summary of the Company’s reserves is as follows:

	Share
	premium	Share option	Accumulated
	account	reserve	losses	Total
	HK$’000	HK$’000	HK$’000	HK$’000
	Note (i)
At 1 October 2018	5,437,218	119,559	(3,409,807)	2,146,970
Total comprehensive loss for the year	–	–	(54,813)	(54,813)
Issue of subscription shares	568,392	–	–	568,392
Share issue expenses	(15,850)	–	–	(15,850)
Equity-settled share option arrangements	–	15,671	–	15,671
Transfer of share option reserve upon forfeiture of share options	–	(54,328)	54,328	–
At 30 September 2019 and at 1 October 2019	5,989,760	80,902	(3,410,292)	2,660,370
Total comprehensive loss for the year	–	–	(86,641)	(86,641)
Equity-settled share options arrangements	–	3,035	–	3,035
At 30 September 2020	5,989,760	83,937	(3,496,933)	2,576,764

Note:

(i) In accordance with the Companies Law, Chapter 22 (Law 3 of 1961, as consolidated and revised) of the Cayman Islands, the share premium account is distributable to the shareholders of the Company provided that immediately following the date on which the dividend is proposed to be distributed, the Company will be in a position to pay off its debts as and when they fall due in the ordinary course of business. The share premium account may also be distributed in the form of fully paid bonus shares.

The share premium account of the Company includes: (i) the difference between the nominal value of the share capital of the subsidiaries acquired pursuant to a group reorganisation on 12 August 2002 over the nominal value of the share capital of the Company issued in exchange therefor; (ii) the premium arising from new share issues; (iii) the premium arising from a capitalisation issue; and (iv) the premium arising from the issue of shares upon exercise of share options of the Company.

47. APPROVAL OF THE FINANCIAL STATEMENTS

The financial statements were approved and authorised for issue by the board of directors on 30 December 2020.

ANNUAL REPORT 2020 185

APOLLO FUTURE MOBILITY GROUP LIMITED

PARTICULARS OF PROPERTIES HELD BY THE GROUP

30 September 2020

INVESTMENT PROPERTIES

	Attributable
	interest of
Properties	the Group	Ownership	Tenure	Existing use
The land parcel and various buildings	100%	Leasehold	Long term	Vacant
erected thereon located at No. 6			lease
Gou, Xiuhu North Bank, Qipanshan
Development Zone, Shenyang City,
Liaoning Province, the PRC

186 ANNUAL REPORT 2020