Apollo Future Mobility Group Limited — Interim / Quarterly Report 2016

Jun 27, 2016

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2016

O LUXE HOLDINGS LIMITED

The board (“Board”) of directors (“Directors”) of O Luxe Holdings Limited (“Company”) announces the unaudited condensed consolidated financial statements of the Company and its subsidiaries (collectively, the “Group”) for the six months ended 31 March 2016, which have been reviewed by the Company’s audit committee.

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 31 MARCH 2016

		For the six	months
		ended 31	March
		2016	2015
		HK$’000	HK$’000
	Notes	(Unaudited)	(Unaudited)
			(Restated)
CONTINUING OPERATIONS
Revenue	4	186,554	149,117
Cost of sales		(112,392)	(114,289)
Gross profit		74,162	34,828
Change in fair value of contingent
consideration receivable		(15,320)	120,758
Other revenue and net gains	4	2,647	814
Amortisation of intangible assets		(5,309)	(11,267)
Fair value loss on held-for-trading
investment		(24,682)	–
Impairment loss on goodwill		–	(79,317)
Reversal of/(Impairment loss) on
intangible assets		3,207	(79,878)
Selling and distribution expenses		(14,559)	(19,018)
Administrative expenses		(21,344)	(16,122)
Loss from operating activities	6	(1,198)	(49,020)
Finance costs	7	(1,948)	(2,820)
Loss before taxation		(3,146)	(51,840)
Income tax (expense)/credit	8	(3,386)	14,025
Loss for the period from continuing
operation		(6,532)	(37,815)
DISCONTINUED OPERATION
Loss for the period from discontinued
operation	9	(4,423)	(978)

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INTERIM REPORT 2016

O LUXE HOLDINGS LIMITED

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME (continued)

FOR THE SIX MONTHS ENDED 31 MARCH 2016

		For the six	months
		ended 31	March
		2016	2015
		HK$’000	HK$’000
	Notes	(Unaudited)	(Unaudited)
			(Restated)
Loss for the period		(10,955)	(38,793)
Items that may be classified
subsequently to profit or loss:
Exchange difference arising on
translation of foreign operations		(14,894)	(8,943)
Total comprehensive expenses
for the period		(25,849)	(47,736)
Loss for the period attributable to:
Owners of the Company		(11,290)	(34,864)
Non-controlling interests		335	(3,929)
		(10,955)	(38,793)
Total comprehensive expenses
attributable to:
Owners of the Company		(26,342)	(42,436)
Non-controlling interests		493	(5,300)
		(25,849)	(47,736)
Loss per share from continuing
and discontinued operations
— Basic and diluted	11	HK(0.46) cents	HK(0.46) cents
Loss per share from continuing
operations
— Basic and diluted		HK(0.28) cents	HK(0.44) cents

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O LUXE HOLDINGS LIMITED

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AT 31 MARCH 2016

		At 31 March	At 30 September
		2016	2015
		HK$’000	HK$’000
	Notes	(Unaudited)	(Audited)
Non-current assets
Intangible assets	12	112,111	115,871
Property, plant and equipment		5,354	16,672
Goodwill		29,555	29,555
Contingent consideration receivable	13	48,451	63,771
		195,471	225,869
Current assets
Inventories		306,711	278,508
Trade and other receivables	14	90,836	133,053
Loan receivables	15	239,500	203,000
Held-for-trading investments		53,214	66,869
Amount due from shareholder of
a subsidiary		5,066	5,165
Bank balances and cash		736,188	758,939
Assets of discontinued operation		1,431,515	1,445,534
classified as held for sale	9	24,255	–
Total currents assets		1,455,770	1,445,534
Current liabilities
Trade payables	16	4,985	31,977
Accruals and other payables		34,126	27,128
Borrowings	17	70,886	61,060
Income tax payable		8,156	5,451
Liabilities of discontinued operations
classified as held for sale	9	14,590	–
Total current liabilities		132,743	125,616
Net Current Assets		1,323,027	1,319,918

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O LUXE HOLDINGS LIMITED

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued)

AT 31 MARCH 2016

		At 31 March	At 30 September
		2016	2015
		HK$’000	HK$’000
	Notes	(Unaudited)	(Audited)
Total assets less current liabilities		1,518,498	1,545,787
Non-current liabilities
Deferred tax liabilities	18	27,019	28,459
Net assets		1,491,479	1,517,328
Capital and reserves
Share capital	19	245,177	245,177
Reserves		1,219,328	1,245,670
Equity attributable to the owners of
the Company		1,464,505	1,490,847
Non-controlling interests		26,974	26,481
		1,491,479	1,517,328

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O LUXE HOLDINGS LIMITED

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 31 MARCH 2016

	Attributable to owners of the Company Share capital Share premium Exchange reserve Statutory reserve Other reserve Accumulated losses Total Non- controlling interests Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (Note a) 65,490 2,060,977 63,442 792 11 (1,096,548) 1,094,164 28,734 1,122,898 – – (7,572) – – (34,864) (42,436) (5,300) (47,736) 16,235 124,547 – – – – 140,782 – 140,782 81,725 2,185,524 55,870 792 11 (1,131,412) 1,192,510 23,434 1,215,944
At 1 October 2014 (Audited) Total comprehensive expenses for the period Issue of shares on acquisition of a subsidiary
At 31 March 2015 (Unaudited)
At 1 October 2015 (Audited) Total comprehensive expenses for the period
	245,177 2,509,148 31,893 792 11 (1,296,174) 1,490,847 26,481 1,517,328
	– – (15,052) – – (11,290) (26,342) 493 (25,849)
At 31 March 2016 (Unaudited)
	245,177 2,509,148 16,841 792 11 (1,307,464) 1,464,505 26,974 1,491,479

Note:

(a) The statutory reserve of the Group refers to the PRC statutory reserve fund. Appropriations to such reserve fund are made out of profit after tax of the statutory financial statements of the PRC subsidiaries and the amount should not be less than 10% of the profit after tax unless the aggregate amount exceeded 50% of registered capital of the PRC subsidiaries. The statutory reserve fund can be used to make up prior years’ losses of the PRC subsidiaries.

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O LUXE HOLDINGS LIMITED

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 31 MARCH 2016

For the six	months
ended 31	March
2016	2015
HK$’000	HK$’000
(Unaudited)	(Unaudited)
	(Restated)
Net cash (used in) generated from operating activities (11,594)	449,799
Net cash (used in) generated from investing activities (5,301) Net cash generated from financing activities 7,878	413 15,338
Net (decrease)/increase in cash and cash equivalents (9,017) Cash and cash equivalents at the beginning of the period 758,939 Effect of foreign exchange rate changes (13,734)	465,550 199,487 (3,019)
Cash and cash equivalents at the end of the period, represented by bank balance and cash 736,188	662,018

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O LUXE HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 31 MARCH 2016

1. CORPORATE INFORMATION

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

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

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

These interim financial information for the six months ended 31 March 2016 was approved by the Board of Directors on 13 May 2016.

2. BASIS OF PREPARATION

The condensed consolidated financial statements have been prepared in accordance with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on the Stock Exchange (the “Listing Rules”) and with Hong Kong Accounting Standard (“HKAS”) 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”).

The directors regard the liquidation of Omas SRL as discontinued operations and presented in accordance with HKFRS 5 “Non-current Assets Held for Sale and Discontinued Operations” in this Interim Financial Information. The comparative information in this Interim Financial Information has been restated accordingly.

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O LUXE HOLDINGS LIMITED

3. SIGNIFICANT ACCOUNTING POLICIES

The unaudited condensed financial statements have been prepared on the historical cost basis except for certain financial instruments that are measured at fair value as appropriate. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

Except for the Group has applied the following new and revised standards, amendments and interpretations (“new and revised HKFRSs”) issued by HKICPA, which are mandatory for the accounting periods beginning on or after 1 October 2014, the accounting policies and methods of computation used in the preparation of these accounts are consistent with those used in the annual accounts for the year ended 30 September 2015.

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

The executive directors of the Company anticipate that the adoption of these new and revised HKFRSs has had no material effect on the amounts reported and/or disclosures set out in these condensed consolidated financial statements.

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

Amendments to HKFRS 11	Accounting for acquisitions of interests in joint
	operations1
Amendments to HKAS 16	Clarification of acceptable methods of depreciation and
and HKAS 38	amortization1
Amendments to HKFRS 9	Mandatory effective date of HKFRS 9 and transition
and HKFRS 7	disclosures3
Amendments to HKFRSs	Annual Improvements to HKFRSs 2012–2014 cycle1
Amendments to HKAS 27	Equity method in separate financial statements1
Amendments to HKFRS 10	Sale or contribution of assets between an investor and
and HKAS 28	its associate or joint venture1
HKFRS 9	Financial instruments3
HKFRS 15	Revenue from contracts with customers2
HKFRS 14	Regulatory deferral accounts4
Amendments to HKAS 1	Disclosure initiative1
Amendments to HKFRS 10,	Investment entities: Applying the consolidation
HKFRS 12 and HKAS 28	exception1

1 Effective for annual periods beginning on or after 1 January 2016.

2 Effective for annual periods beginning on or after 1 January 2017.

3 Effective for annual periods beginning on or after 1 January 2018.

4 Effective for first annual HKFRS financial statements beginning on or after 1 January 2016.

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O LUXE HOLDINGS LIMITED

4. REVENUE AND OTHER REVENUE AND NET GAINS

Revenue of the Group comprises the following:

For the six months	For the six months	For the six months
ended 31 March
2016		2015
HK$’000		HK$’000
(Unaudited)	(Unaudited)
	(Restated)
Continuing operation Sale of goods 172,676 Interest income on loan financing 13,878		149,117 –
186,554		149,117
Continuing operation Other revenue Bank interest income 1,193		326
Watch repairing services 1,181 Sundry income 273		– 488
2,647		814

5. SEGMENT INFORMATION

Operating segments are reported in a manner consistent with internal reporting provided to the board of directors of the Company who is responsible for allocating resources and assessing performance of the operating segments.

The Group’s operating segments are structured and managed separately according to the nature of their operations and the products they provided. Each of the Group’s operating segments represents a strategic business unit that offers products which are subject to risks and returns that are different from those of the other operating segments. Summary details of the operating segments are as follows:

Discontinued operation

• (a) Exports segment — export of manufactured jewellery products and writing instruments;

Continuing operation

• (b) Domestic segment — trading of jewellery products and watches for the Group’s retail and wholesale business in the territories of the mainland China, Macau, Hong Kong and Taiwan; and

• (c) Mining segment — the mining, exploration and sale of gold resources;

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

• (e) Securities investments segment — trading of listed securities.

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O LUXE HOLDINGS LIMITED

5. SEGMENT INFORMATION (continued)

Segment information about these reportable segments is presented below:

(a) Segment revenues and results

For the six months ended 31 March

		Continuing operation	Continuing operation		Total
	Domestic	Mining	Money lending	Securities investments
	2016 2015 HK$’000 HK$’000 (Unaudited) (Unaudited) (Restated)	2016 2015 HK$’000 HK$’000 (Unaudited) (Unaudited) (Restated)	2016 2015 HK$’000 HK$’000 (Unaudited) (Unaudited) (Restated)	2016 2015 HK$’000 HK$’000 (Unaudited) (Unaudited) (Restated)	2016 2015 HK$’000 HK$’000 (Unaudited) (Unaudited) (Restated)
Segment revenue: External sales	172,676 149,117	– –	13,878 –	– –	186,554 149,117
Segment results	31,704 (28,822) (384) (12,844) 12,016 –			(24,682) –	18,654 (41,666) (25,186) 3,851
Unallocated corporate income and expenses Loss for the period from continuing operation
					(6,532) (37,815)

The segment results represent the results earned by each segment without allocation of central administration costs, directors’ salaries, interest income and finance costs. This is the measure reported to the chief operating decision makers, being the directors of the Company, for the purposes of resource allocation and assessment of segment performance.

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O LUXE HOLDINGS LIMITED

5. SEGMENT INFORMATION (continued) (b) Segment assets and liabilities

		Continuing operation	Continuing operation		Total
	Domestic	Mining	Money lending	Securities investments
	At At 31 March 30 September 2016 2015 HK$’000 HK$’000 (Unaudited) (Audited)	At At 31 March 30 September 2016 2015 HK$’000 HK$’000 (Unaudited) (Audited)	At At 31 March 30 September 2016 2015 HK$’000 HK$’000 (Unaudited) (Audited)	At At 31 March 30 September 2016 2015 HK$’000 HK$’000 (Unaudited) (Audited)	At At 31 March 30 September 2016 2015 HK$’000 HK$’000 (Unaudited) (Audited)
ASSETS Segment assets	345,997 396,596	88,511 88,346	251,497 206,877	53,214 66,869	739,219 758,688
Unallocated segment assets Total assets LIABILITIES Segment liabilities	26,020 46,957	1,626 948	2,335 –	5,002 –	887,767 912,715
					1,626,986 1,671,403
					34,983 47,905 110,189 106,170
Unallocated segment liabilities Total liabilities
					145,172 154,075

For the purpose of monitoring segment performances and allocating resources between segment:

• all assets are allocated to operating segments, other than contingent consideration receivables and bank balances and cash which are not able to allocate into reportable segments.

• all liabilities are allocated to operating segments, other than borrowings, deferred tax liabilities and income tax payable which are not able to allocate into reportable segments.

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O LUXE HOLDINGS LIMITED

5. SEGMENT INFORMATION (continued)

(c) Geographic information

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

	Revenue from	Revenue from
	external	customers
	For the six months		Non-current assets at
	ended	31 March	31 March	30 September
	2016	2015	2016	2015
	HK$’000	HK$’000	HK$’000	HK$’000
	(Unaudited)	(Unaudited)	(Unaudited)	(Audited)
		(Restated)		(Restated)
Europe	–	–	–	–
Middle East and Asia	186,554	149,117	147,022	162,098
	186,554	149,117	147,022	162,098

Note: Non-current assets excluded contingent consideration receivable.

6. LOSS FROM OPERATING ACTIVITIES

The Group’s loss from operating activities is arrived at after charging:

For the six months	For the six months	For the six months
ended 31 March
2016		2015
HK$’000		HK$’000
(Unaudited)	(Unaudited)
	(Restated)
Continuing operations Cost of inventories sold 112,392		114,289
Depreciation of property, plant and equipment 639 Minimum lease payments under operating leases on leasehold land and buildings 5,360 Staff costs (excluding directors’ remuneration): — wages, salaries and other benefits 9,676 — retirement benefits scheme contributions 208		3,041 2,047 8,142 718
— directors’ remuneration 1,719		310

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O LUXE HOLDINGS LIMITED

7. FINANCE COSTS

	For the six months	For the six months
	ended 31 March
	2016	2015
	HK$’000	HK$’000
	(Unaudited)	(Unaudited)
		(Restated)
Continuing operations
Interest on bank loans wholly repayable within five years	1,948	2,820

8. INCOME TAX EXPENSE/(CREDIT) (RELATING TO CONTINUING OPERATION)

	For the six months	For the six months	For the six months
	ended 31 March
	2016		2015
	HK$’000		HK$’000
	(Unaudited)	(Unaudited)
		(Restated)
Current period provision
Hong Kong Profits Tax	2,597		174
Overseas taxation	186		751
Deferred taxation	603		(14,950)
Income tax expense/(credit)	3,386		(14,025)

Hong Kong Profits Tax is calculated at 16.5% of the estimated assessable profits for both periods. Taxation arising in other jurisdictions is calculated at the rates prevailing in the relevant jurisdictions.

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

9. DISCONTINUED OPERATION

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

Management has actively seeking for potential buyers in the market and considered that the sale is highly probable.

Accordingly, management reclassified Omas’s all assets and liabilities as assets of discontinued operation classified as held for sale and liabilities of discontinued operation classified as held for sale as at 31 March 2016, as the carrying amount would be recovered principally through sale, the assets and liabilities of Omas are available for immediate sale.

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O LUXE HOLDINGS LIMITED

9. DISCONTINUED OPERATION (continued)

The results of the discontinued operation for the period ended 31 March are presented below:

	For the six months	For the six months	For the six months
	ended 31 March
		2016		2015
	HK$’000		HK$’000
	(Unaudited)		(Unaudited)
			(Restated)
Revenue		–		8,338
Cost of sales		–		(5,829)
Selling and distribution expenses Administrative expenses	– (4,423)			(1,421) (2,066)
Loss of the discontinued operation	(4,423)			(978)
Loss for the period from discontinued operation include the following Depreciation		–		301
The assets and liabilities of Omas included in the consolidated statement of financial position are
as follows:
			31 March
				2016
			HK$’000
			(Unaudited)
Assets
Property, plant and equipment				10,913
Inventories				10,216
Trade receivables				2,311
Bank balances and cash				815
Transfer to assets of discontinued operation classified as held for sale				24,255
Liabilities
Trade and other payables				11,183
Provision				1,344
Deferred tax liabilities				2,063
Transfer to liabilities of discontinued operation classified as held for sale				14,590
Non-controlling interests				957
Net assets of discontinued operations directly attributable to the Group				8,708

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O LUXE HOLDINGS LIMITED

10. DIVIDEND

The Board does not recommend the payment of an interim dividend for the six months ended 31 March 2016 (for the six months ended 31 March 2015: Nil).

11. LOSS PER SHARE

The calculation of basis loss per share from continuing and discontinued operation is based on the loss for the six months ended 31 March 2016 attributable to the owners of the Company of approximately HK$11,290,000 (six months ended 31 March 2015: loss of approximately HK$34,864,000) and the weighted average number of 2,451,771,105 (2015: 7,619,499,891) ordinary shares in issue during the period.

The calculation of basis loss per share from continuing operations is based on the loss for the six months ended 31 March 2016 attributable to the owners of the Company before discontinued operation of approximately HK$6,867,000 (six months ended 31 March 2015: HK$33,886,000) and the weighted average number of 2,451,771,105 (2015: 7,619,499,891) ordinary shares in issue during the period.

The computation of diluted loss per share for the six months ended 31 March 2016 is the same as the basic loss per share because the Company had no dilutive potential shares.

12. INTANGIBLE ASSETS

	Mining	Distribution
	rights	rights	Trademarks	Total
	HK$’000	HK$’000	HK$’000	HK$’000
Carrying amount at 1 October 2015
(Audited)	86,877	28,994	–	115,871
Exchange realignment	(1,658)	–	–	(1,658)
Amortisation for the period	–	(5,309)	–	(5,309)
Reversal of impairment loss (Note)	–	3,207	–	3,207
Carrying amount at 31 March 2016
(Unaudited)	85,219	26,892	–	112,111
Carrying amount at 1 April 2015
(Unaudited)	78,264	7,168	6,026	91,458
Exchange realignment	(2,441)	(74)	(45)	(2,560)
Amortisation for the period	–	(15,536)	–	(15,536)
Reversal of impairment loss/
(Impairment loss recognized)	11,054	37,436	(5,981)	42,509
Carrying amount at 30 September 2015
(Audited)	86,877	28,994	–	115,871

Note: During the six months ended 31 March 2016, based on the valuation report prepared by Grant Sherman Appraisal Limited (“Grant Sherman”), a reversal of impairment loss of HK$3,207,000 of the Group’s distribution rights was made.

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O LUXE HOLDINGS LIMITED

13. CONTINGENT CONSIDERATION RECEIVABLE

At fair value	HK$’000
At 1 April 2015	129,498
Change in fair value	(65,727)
At 30 September 2015	63,771
Change in fair value	(15,320)
At 31 March 2016	48,451

Notes: The fair value of the contingent consideration receivable is related to the acquisition of Sinoforce Group Limited (“Sinoforce Group”) and its former owner’s profit guarantee of HK$69,000,000 for Sinoforce Group’s three financial years ending 31 December 2015, 2016 and 2017.

The fair value of the contingent consideration receivable at 31 March 2016 and 30 September 2015 are based on the valuations performed by Grant Sherman, using a Monte Carlo simulation.

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

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

	31 March	30 September
Inputs into Monte Carlo simulation	2016	2015
Profit guarantee amount	HK$69,000,000	HK$69,000,000
Standardised SD of profit	56.3%	49.7%
Number of iterations	1,000,000	1,000,000
Discount rate	0.60%	0.53%
Time to settlement date	2.17	2.67

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O LUXE HOLDINGS LIMITED

14. TRADE AND OTHER RECEIVABLES

At	At
31 March	30 September
2016	2015
HK$’000	HK$’000
(Unaudited)	(Audited)
Trade receivables 40,583 Less: Impairment loss recognised –	118,610 (69,668)
40,583	48,942
Deposits, prepayment and other receivables 40,299 Interest receivables 9,954 Amount due from a related party (Note) –	54,347 3,870 60,000
50,253 Less: Impairment loss recognised –	118,217 (34,106)
50,253	84,111
90,836	133,053

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

Certain trade receivables with carrying amount of HK$26,680,000 as at 31 March 2016 (30 September 2015: HK$15,286,000) are pledged against short-term bank borrowings (see Note 17) granted to the Group.

The Group normally allows credit terms to established customers ranging from 30 to 120 days.

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

	At	At
	31 March	30 September
	2016	2015
	HK$’000	HK$’000
	(Unaudited)	(Audited)
1–30 days	11,421	39,791
31–60 days	3,435	4,248
61–90 days	6,597	1,687
Over 90 days	19,130	3,216
	40,583	48,942

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O LUXE HOLDINGS LIMITED

15. LOAN RECEIVABLES

			At	At
			31 March	30 September
			2016	2015
			HK$’000	HK$’000
			(Unaudited)	(Audited)
Within	12	months	239,500	203,000

The Group seeks to maintain strict control over its outstanding loan and interest receivables so as to minimise credit risk. The granting of loans is subject to approval by the management, whilst overdue balances are received regularly for recoverability. The loan receivables charged interests at contract rates ranging approximately 12%–21.6% (30 September 2015: 12%–21.6%) per annum and was entered with contractual maturity within 6–12 months.

The loan receivables were neither past due nor impaired at the end of the reporting period. The directors of the Company are of the opinion that no provision for impairment is necessary in respect of this loan receivable as there has not been a significant change in credit quality and the balance is still considered fully recoverable.

16. TRADE PAYABLES

The Group normally obtains credit terms ranging from 30 to 180 days from its suppliers.

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

	At	At
	31 March	30 September
	2016	2015
	HK$’000	HK$’000
	(Unaudited)	(Audited)
1–30 days	4,513	31,975
31–60 days	–	–
61–90 days	–	2
91–120 days	472	–
	4,985	31,977

17. BORROWINGS

	At	At
	31 March	30 September
	2016	2015
	HK$’000	HK$’000
	(Unaudited)	(Audited)
Secured bank loans (Note)	70,886	61,060

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O LUXE HOLDINGS LIMITED

17. BORROWINGS (continued)

Total current bank loans and other borrowings were repayable as follows:

	At		At
	31 March	30 September
	2016		2015
	HK$’000		HK$’000
	(Unaudited)		(Audited)
Carrying amounts repayable:
On demand or within one year	70,886		61,060
The Bank loans were secured by the Group’s assets at their carrying amounts as		follows:
	At		At
	31 March	30 September
	2016		2015
	HK$’000		HK$’000
	(Unaudited)		(Audited)
Trade receivables	20,680		15,286

Note: Bank loans bear interest at variable rates by reference to the People’s Bank of China’s lending rate, ranging from 5% to 7% per annum (30 September 2015: 5% to 7% per annum).

18. DEFERRED TAX LIABILITIES

The movements in deferred tax liabilities during the year are as follows:

	Total
	HK$’000
At 1 April 2015 (Unaudited)	34,846
Exchange realignment	(1,587)
Debit/(Credit) to profit and loss	(4,800)
At 30 September 2015 (Audited)	28,459
Exchange realignment	(3)
Debit to profit and loss	626
Transfer to liabilities of discontinued operations classified as held for sale	(2,063)
At 31 March 2016 (Unaudited)	27,019

Under the EIT Law of PRC, withholding tax is imposed on dividends in respect of profits earned by PRC subsidiaries from 1 January 2008 onwards (the “Post-2008 Earnings”). Deferred taxation has not been provided for in the consolidation financial statements in respect of temporary difference attributable to the “Post-2008 Earnings” as the Group is able to control the timing of the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future.

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O LUXE HOLDINGS LIMITED

19. SHARE CAPITAL

	At	At
	31 March	30 September
	2016	2015
	HK$’000	HK$’000
	(Unaudited)	(Audited)
Authorised:
10,000,000,000 Ordinary shares of HK$0.1 each
(30 September 2015: 10,000,000,000 Ordinary shares
of HK$0.1 each)	1,000,000	1,000,000
	Number of	Nominal
	Shares	value
	’000	HK$’000
Issued and fully paid:
At 1 April 2015 (Unaudited)	817,257	81,725
Open offer (Note i)	1,634,514	163,452
At 30 September 2015 (Audited) and
At 31 March 2016 (Unaudited)	2,451,771	245,177

Notes:

(i) On 23 April 2015, the Company completed the open offer on the basis two offer share for every one consolidated shares held on the record date and 1,634,514,070 shares were issued. The net proceeds from the open offer was approximately HK$487,100,000.

20. CONTINGENT LIABILITIES

The Group did not have any significant contingent liabilities as at 31 March 2016 (30 September 2015: Nil).

21. OPERATING LEASE ARRANGEMENTS

The Group leases certain premises under operating lease arrangements. Leases are negotiated for a term ranging from three to five years. The Group does not have an option to purchase the leased assets at the expiry of the lease period. At the end of the reporting period, the Group’s total future minimum lease payments under non-cancellable operating leases are as follows:

	At	At
	31 March	30 September
	2016	2015
	HK$’000	HK$’000
	(Unaudited)	(Audited)
Within 1 year	7,921	8,452
In 2 to 5 years, inclusive	2,825	6,097
	10,746	14,549

20 INTERIM REPORT 2016

O LUXE HOLDINGS LIMITED

1. FAIR VALUE MEASUREMENTS RECOGNISED IN THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION

The fair value of financial assets and financial liabilities are determined as follows:

• the fair value of financial assets and financial liabilities with standard terms and conditions and traded in active liquid markets are determined with reference to quoted market bid prices and ask prices, respectively;

• the fair value of other financial assets and financial liabilities (excluding held-for-trading investments) is determined in accordance with generally accepted pricing models based on discounted cash flow analysis using prices from observable current market transactions and dealer quotes for similar instruments; and

• the fair value of held-for-trading investments is calculated using quoted prices. Where such prices are not available, the fair value is estimated using discounted cash flow analysis and the applicable curve for the duration of the instruments. For contingent consideration receivable, the fair value is estimated using a probability model.

The directors of the Company consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the consolidated financial statements approximate to their fair values due to their short-term maturities.

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable.

Level 1 — fair value measurement are those derived from quoted price (unadjusted) in active market for identical assets or liabilities.

Level 2 — fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3 — fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Fair value hierarchy at 31 March 2016:

	Level 1	Level 1	Level 2	Level 2	Level 3	Level 3	Total	Total
		30		30		30		30
	31 March	September	31 March	September	31 March	September	31 March	September
	2016	2015	2016	2015	2016	2015	2016	2015
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Contingent consideration
receivable	–	–	–	–	48,451	63,771	48,451	63,771
Financial assets held at FVTPL
— Held-for-trading
investments	53,214	66,869	–	–	–	–	53,214	66,869

During the six months ended 31 March 2016 and year ended 30 September 2015, there were no transfer between Level 1, 2 and 3.

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O LUXE HOLDINGS LIMITED

23. RELATED PARTY AND CONTINUING CONNECTED TRANSACTIONS

• (a) In addition to a related party balances detailed in the consolidated financial statements and respective notes, the Group entered into the following significant transactions with related parties during the period, some of which are also deemed to be connected parties pursuant to the Listing Rules:

			Six Months	Six Months
			ended	ended
			31 March	31 March
			2016	2015
			HK$’000	HK$’000
Sales of goods	to Hengdeli	Group	25,174	20,014

(b) Key management compensation

The key management personnel of the Group comprises the directors of the Company only. Details of compensation of directors are included in Note 17.

24. EVENTS AFTER THE REPORTING PERIOD

There was no material event after the reporting period.

22 INTERIM REPORT 2016

O LUXE HOLDINGS LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS FINANCIAL REVIEW

The Group’s revenue from continuing operations for the six months ended 31 March 2016 increased by 25.2% from approximately HK$149.1 million last year to approximately HK$186.6 million. The Group’s gross profit from continuing operations amounted to HK$74.2 million (six months ended 31 March 2015: HK$34.8 million), the gross profit margin from continuing operations improved to 39.8% (six months ended 31 March 2015: 23.4%). The increase in both the Group’s revenue and gross profit margin from continuing operations was attributable to (1) the contribution from interest income on loan financing business of HK$13.9 million (six months ended 31 March 2015: Nil) and (2) the results of six months consolidation of the accounts of Sinoforce Group Limited while there was only three months consolidation of the accounts in the same period of 2015.

Loss attributable to shareholders was approximately HK$26.3 million (six months ended 31 March 2015: Loss attributable to shareholders of HK$42.4 million). The loss was attributable to (1) the change in fair value of contingent consideration receivable of approximately HK$15.3 million, the fair value was decreased from approximately HK$63.8 million on 30 September 2015 to approximately HK$48.5 million. Details of the key assumptions used in the calculation of contingent consideration receivable are set out in Note 13. (2) the fair value loss on held-for-trading investment of HK$24.7 million due to the turmoil in financial market for the period under review.

During the period, the selling and distribution expenses from continuing operations of the Group decreased by 23.2% to approximately HK$14.6 million, as compared to HK$19.0 million from the corresponding period last year. The Group’s administrative expenses increased by 32.2% from approximately HK$16.1 million last year to approximately HK$21.3 million. The increase was largely reflected the results of six months consolidation of the accounts of Sinoforce Group Limited while there was only three months consolidation of the accounts in the same period of 2015.

For the money lending and investments in securities business, the Group recorded interest income and the fair value loss on held-for-trading investments of HK$13.9 million (six months ended 31 March 2015: Nil) and HK$24.7 million (six months ended 31 March 2015: Nil) respectively.

For the period under review, the Group has further provided liquidation cost of approximately HK$4.4 million in relation to its subsidiary, Omas SRL, a company incorporated in Italy, which has ceased business and started the liquidated process since 1 December 2015.

INTERIM REPORT 2016 23

O LUXE HOLDINGS LIMITED

BUSINESS REVIEW AND PROSPECTS

In the first half of the financial year, the performance of the Group still affected by the moderating growth of the PRC economic and the deteriorating luxury retail market. During the period under review, the Group’s revenue from continuing operations for the six months ended 31 March 2016 increased by 25.2% from approximately HK$149.1 million last year to approximately HK$186.6 million, loss attributable to shareholders was approximately HK$26.3 million as compared to the loss attributable to shareholders of HK$42.4 million for the same period last year.

To further consolidate the business, the Group decided to close down the underperforming manufacturing business of “OMAS” in Italy in November 2015. Accordingly, Omas SRL started the liquidated process on 1 December 2015, the Group has made further provision against the liquidation cost of HK$4.4 million during the six months ended 31 March 2016.

As for the gold mining business in Chi Feng, the production schedule of the Chi Feng gold mines has been delayed due to an extensive time has been spent on (i) reviewing and negotiating the construction cost of the infrastructure of the mining facilities with the PRC mining institution, and (ii) revision of production plan in compliance with the PRC safety regulation. The Group has been adopting stringent and prudent approach in the development plan and its implementation schedule in the Chi Feng gold mine and will adjust the development pace as and when appropriate.

Looking forward, the challenging environment in PRC luxury goods market is expected to persist, the Group will continue to adopt stringent cost control measures, employ appropriate strategies to further diversify its source of income and actively explore new business opportunities to cope with existing market environment.

LIQUIDITY AND FINANCIAL RESOURCES

As at 31 March 2016, the bank balances and cash on hand of the Group amounted to HK$736.1 million (30 September 2015: HK$758.1 million). The Group’s current assets and current liabilities were approximately HK$1,455.8 million and HK$132.7 million respectively (30 September 2015: current assets HK$1,445.5 million; current liabilities HK$125.6 million).

The Group’s non-current assets amounted to approximately HK$195.5 million (30 September 2015: HK$225.9 million).

The Group’s inventory turnover, trade receivables turnover and trade payables turnover periods were 499 days, 43 days and 8 days, respectively. These turnover periods are consistent with the respective policies of the Group on credit terms granted to customers and credit terms obtained from suppliers.

24 INTERIM REPORT 2016

O LUXE HOLDINGS LIMITED

During the period under review, the Group financed its operations and investing activities through a combination of operating cash inflows and interest bearing borrowings. The capital structure of the Company solely consists of share capital. As at 31 March 2016, shareholder equity in the Group amounted to HK$1,464.5 million (30 September 2015: HK$1,490.8 million).

The Group’s total interest bearing bank borrowings as at 31 March 2016 amounted to approximately HK$70.9 million (30 September 2015: HK$61.1 million). The interest bearing bank borrowing were mainly used for working capital purpose and carried at commercial lending interest rates.

CONTINGENT LIABILITIES

As at the end of the reporting period, the Group did not have any significant contingent liabilities.

MATERIAL ACQUISITIONS OR DISPOSALS

There was no material acquisition or disposal of subsidiaries and associated companies by the Group during the six months ended 31 March 2016.

FOREIGN EXCHANGE EXPOSURE

The sales and purchases of the Group were mostly denominated in the Swiss Franc, US dollars, Hong Kong dollars and Renminbi. The cash and cash equivalents and interest bearing borrowings of the Group were denominated in Hong Kong dollars, US dollars and Renminbi. Since the Group’s exposure to fluctuations in foreign exchange rates was minimal, the Group did not use any hedging instruments.

CAPITAL STRUCTURE

As at 31 March 2016, the total number of shares of HK$0.1 each in the capital of the Company in issue was 2,451,771,105 and the capital and reserves attributable to the Company’s equity holders amounted to HK$1,479.3 million (30 September 2015: HK$1,490.8 million).

Apart from those set out above, the current information in other management and discussion analysis has not changed materially from those information disclosed in the last published 2015 annual report.

INTERIM REPORT 2016 25

O LUXE HOLDINGS LIMITED

DIRECTORS’ INTERESTS AND SHORT POSITIONS IN THE SHARES, UNDERLYING SHARES AND DEBENTURES OF THE COMPANY OR ANY ASSOCIATED CORPORATIONS

As at 31 March 2016, the interests of the Directors in the shares and underlying shares of the Company or its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (“SFO”)), which (a) were required to be notified to the Company and The Stock Exchange of Hong Kong Limited (“Stock Exchange”) pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which the Directors are taken or deemed to have under such provisions of the SFO); or (b) were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein; or (c) were required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (“Model Code”) were as follows:

		Number of	Number of
		issued ordinary	underlying	Total	Percentage
Director	Type of interests	shares held	shares held	interests	of interest
Mr. Zhang Jinbing	Corporate (Note (a)&(b))	673,622,316	–	673,622,316	27.47%
Mr. Li Yifei	Personal (Note (b))	1,068,000	–	1,068,000	0.044%
Mr. Xiao Gang	Personal (Note (b))	72,000	–	72,000	0.003%
Notes:

(a) The interest disclosed represents the 673,622,316 shares held by Prestige Rich Holdings Limited, a company incorporated in the British Virgin Islands which is wholly owned by Mr. Zhang Jinbing by virtue of Section 344(3) of the SFO.

(b) All the interests disclosed above represent long positions in the shares of the Company.

Mr. Zhang Jinbing is the sole shareholder of Prestige Rich Holdings Limited.

In addition to the above, certain Directors have non-beneficial personal equity interests in certain subsidiaries of the Company held in trust for the Company solely for the purpose of complying with the statutory minimum number of shareholders required for Hong Kong incorporated companies which was in force prior to 13 February 2004.

Save as disclosed above, as at 31 March 2016, none of the Directors, or their associate(s) had any interests or short positions in the shares or debt securities of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which (a) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which the Directors are taken or deemed to have under such provisions of the SFO); or (b) were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein; or (c) were required to be notified to the Company and the Stock Exchange pursuant to the Model Code.

26 INTERIM REPORT 2016

O LUXE HOLDINGS LIMITED

DIRECTORS’ RIGHTS TO ACQUIRE SHARES OR DEBENTURES

At no time during the period were the rights to acquire benefits by means of the acquisition of shares in or debentures of the Company granted to any Director or their respective spouse or children under 18 years of age, or were any such rights exercised by them; or was the Company or its holding company or any of its subsidiaries or fellow subsidiaries a party to any arrangement to enable the Directors to acquire such rights in the Company or any other body corporate.

SHARE OPTION SCHEME

The Company operates a share option scheme (“Scheme”) for the purpose of providing incentives and rewards to eligible participants who contribute to the success of the Group’s operations. The Scheme was adopted at an annual general meeting held on 1 March 2013 and unless otherwise cancelled or amended, will remain in force for 10 years from its date of adoption on 1 March 2013.

Salient details of the Scheme are:

• (a) The maximum number of shares issuable upon exercise of the options which may be granted under the Scheme and any other share option scheme of the Group to each participant in any 12-month period shall not exceed 1% of the issued share capital of the Company for the time being. 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 directors, 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 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 Stock Exchange’s daily quotations sheet 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.

No share options were granted, cancelled or lapsed during the period.

Since adoption of the Scheme, no share options have been offered and/or granted to the directors of the Group under the Scheme.

27

INTERIM REPORT 2016

O LUXE HOLDINGS LIMITED

SUBSTANTIAL SHAREHOLDERS

As at 31 March 2016, the following persons (other than the information disclosed in the section of Directors’ Interests) had interest in the shares and the underlying shares of the Company which (a) would fall to be disclosed to the Company and the Stock Exchange pursuant to Divisions 2 and 3 of Part XV of the SFO; or (b) were required, pursuant to Section 336 of the SFO, to be entered in the register referred to therein:

	Number of issued
	ordinary shares and	Percentage of
Name	underlying shares held	total issued
Hengdeli Holdings Limited	300,000,000	12.24%
	(Notes (a) and (c))
Alpha Key Investments Limited	300,000,000	12.24%
	(Notes (a) and (c))
Prestige Rich Holdings Limited	673,622,316	27.47%
	(Notes (b) and (c))

Notes:

• (a) Alpha Key Investments Limited is a controlled corporation of Hengdeli Holdings Limited which is deemed to be interested in the same parcel of shares.

• (b) These interests are also included as corporate interests of Mr. Zhang Jinbing, as disclosed under the heading “Directors’ interests and short positions in the shares, underlying shares and debentures of the Company or any associated corporations”.

• (c) All the interests stated above represent long positions in the shares of the Company.

Save as disclosed above, as at 31 March 2016, there was no person who (i) had an interest or short position in the shares and underlying shares of the Company which (a) would fall to be disclosed to the Company and the Stock Exchange pursuant to Divisions 2 and 3 of Part XV of the SFO; or (b) were required, pursuant to Section 336 of the SFO, to be entered in the register referred to therein; or (ii) were, directly or indirectly, interested in 5% or more of the nominal value of any class of share capital carrying the right to vote in all circumstances at general meetings of the Company or any options in respect of such capital.

28 INTERIM REPORT 2016

O LUXE HOLDINGS LIMITED

EMPLOYEES AND EMPLOYMENT POLICIES

As at 31 March 2016, the Group had a staff roster of 88 (30 September 2015: 87). 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 Group has established a share option scheme for its employees and other eligible participants with a view to providing an incentive to or as a reward for their contribution to the Group.

PLEDGE OF ASSETS

At 31 March 2016, trade receivables of approximately HK$26.7 million (30 September 2015: HK$15.3 million) were pledged to secure the Group’s bank borrowings.

PURCHASE, REDEMPTION OR SALE OF LISTED SECURITIES OF THE COMPANY

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

CORPORATE GOVERNANCE

None of the directors of the Company is aware of information that would reasonably indicate that the Company is not, or was not during the six months ended 31 March 2016 in compliance with the code provisions of the Corporate Governance Code (the “Code”) as set out in Appendix 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) except the following deviation:

CODE PROVISION E.1.2

The chief executive officer attended 2016 annual general meeting (“2016 AGM”) to answer questions and collect views of shareholders. Though other directors were unable to attend 2016 AGM due to other business engagements, their representative, the company secretary and the auditors had attended the meeting to answer questions at the meeting.

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 its directors. The Company has made specific enquiry of all Directors regarding any non-compliance with the Model Code. All the Directors confirmed that they have fully complied with the required standard set out in the Model Code during the period.

INTERIM REPORT 2016 29

O LUXE HOLDINGS LIMITED

AUDIT COMMITTEE

The Company has an audit committee which was established, for the purposes of reviewing and providing supervision over the Group’s financial reporting process and internal controls. Currently the audit committee comprises the three independent non-executive Directors of the Company. The unaudited interim report for the period has been reviewed and approved by the audit committee.

INTERIM DIVIDEND

The Board does not declare an interim dividend for the six months ended 31 March 2016 (six months ended 31 March 2015: nil).

APPRECIATION

On behalf of the Board, I would like to express our appreciation to all our management and staff members for their ongoing contribution and hard work. We would also like to thank our shareholders for their continuing support.

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

Hong Kong, 13 May 2016

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

30 INTERIM REPORT 2016