Transcription

1 CITYCHAMP WATCH & JEWELLERY GROUP LIMITED TOGETHER WE ARE STRONG ANNUAL REPORT 2017 (incorporated in the Cayman Islands with limited liability Stock Code 256

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5 功成名遂

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10 卓爾不群

11 88 Teguh HALIM 1 Rudolf Heinrich ESCHER Rudolf Heinrich ESCHER Rudolf Heinrich ESCHER Rudolf Heinrich ESCHER P.O. Box 309 Ugland House South Church Street Grand Cayman Cayman Islands

12 89 24,00025, % (BBS) 51%

13 : 2,982, : 2,939, : 3,476, : 3,488, : 3,176, : 1,211, : 63, : 340, : 163, : 600, : 21,855, : 17,255, : 6,838, : 6,732, : 6,273, : 4,804, : 3,632, : 4,043, : 3,846, : 4,315,079

14 91 8,566 10,200 12,285 9,058 2,843,863 2,538,128 2,073,990 2,408,640 2,221,371 5,206 3,538 6,658 4,458 5,626 7, , , , , ,476 17

15 92

16 % , % 6% % 28,247,000

17 94

18 95

19 96 2,982,701,000 2,939,955,00042,746, % 65.6%61.6% 1,211,198,000 63,840,0001,147,358,0001,797.2%

20 97 2,982,701,0002,939,955,000 42,746,0001.5% 2.2%22.5% 1,373,937,0001,533,957, ,020, % 382,270,000109,480, ,790, % EBITDA1,624,014,000355,457,000 1,268,557, % 1,574,934,0001,489,921,000 85,013,0005.7% 1,211,198,00063,840,0001,147,358,000 1,797.2% I. I.A I.B I.C I.D II. II.A II.B III. III.A III.B III.C III.D IV. 1

21 98 I.A. 1,020,301, ,866,000992,552, ,396,000 27,749,000 35,470,0002.8% 4.2% 91% 283,536,000245,899, ,662,000249,596,000 8,126,0003,697,0002.8% 1.5% 202,381, % 219,175, % 280,421, % 300,00035,850,000 3,190 3,585 3,857 70%

22 99 685,406, ,425,000751,135, ,799,000 65,729,000 48,374,0008.8% 7.5% 70,144,000 60,833,000137,992, ,089,000 67,848,000 57,256, % 48.5% 31,692, ,910 3,174 3, ,348, % 163,515, % 185,508, % 65.6% 61.6%

23 100 I.B. 515,664, ,953, ,068, ,702,000 19,000,000123,378,000 40% (Golden Bridge)(Admiral) I.D. OEM 143,555,000 93,416,000 40,252,000 15,421,000 51% 28,247,000 Kontiki 80% I.C. 216,476, ,396, ,000 3,987,000

24 101 II.A 84.69% 84.69% (1) (2) (3) %12% 4% 54.4% 372,835, ,480, ,355, % 84.69% 106,967,000 39,913, ,054, % 3 4

25 II.B Global Opportunities Fund 8,000 A III III.A 30,389, % 237,959,000 III.B

26 103 III.D 5,118,576 Metasequoia Investment Fund SPC Global Opportunities Fund SP 30% 15% 10% 45% 20% 40% 30% 5,816, ,090 16,936,000 19,123,000 III.C ,150,000 24,312, ,863, ,987,000 19,632,000 63,206,000 IV

27 104 (1) 7,420,678,000 5,066,901, ,269,0001,190,340, ,978,000692,127,000 4,804,881,000 3,632,881,000 27% 52% 567,178,000 1,174,367,00097%99% 48,516 16,091 43, , , , ,178 16,091 (2) 20,724,000117,871, ,595,000185,263,000 (3) (i)(ii) 275,265,000381,684,000

28 105 (1) 17,255,820,000 21,855,671,000 % 560, , , % 47,251 47,251 6,813,098 4,638,078 2,175, % % 5,808,499 5,197, , % 113,571 98,037 15, % (192) (214) % (2) 13,403,130,00016,707,545,000 % 45,865 27,499 18, % 14,224,224 10,365,548 3,858, %

29 106 (3) 1,373,937,000 1,533,957, % 694,045, ,990,000 (4) (EBITDA) (EBITDA) 1,624,014, ,457, % (5) 800,923, ,444, % (6) 774,011, ,477, % (7) 1,300,392,000 1,382,042, ,378,000 70,566,000 (9) 1,170,484,000 36,703,000 3,089.1% (10) 2,027,191,000 1,996,187, % 6.9% (8) 68,453,000 79,447, %

30 107 4,600300

31 108 冠城鐘錶珠寶集團有限公司 二零一七年年報 董事及高層管理人員, 二零零 年 公司 二零零一年 一 二零一七年一 冠城 有限公司 冠城 冠城 冠城 冠城 公司 公司 Teguh Halim 二零零 年 一 公司 公司 公司珠 錶 有限公司 公司 公司 有 集團 公司 集團有限公司 一 公司 冠城 一 公司 有 二零零 年 有 有 年 有限公司 一 公司 公司 集團 公司

32 二零一七年年報冠城鐘錶珠寶集團有限公司 109 二零零 年 年 有限公司 城 有限公司 Teguh Halim 公司 集團 公司 二零一零年 二零零 年 集團 Carefirst Bluecross Blueshield 公司 二零零 年 有 年 公司 集團 公司 二零零 年 一 二零零 年 一 公司 二零一二年 二 公司 有 冠城 一 公司 有限公司 Teguh Halim 公司 集團 公司

33 110 冠城鐘錶珠寶集團有限公司 二零一七年年報 董事及高層管理人員 二零一 年 有 二零零 年 冠城 二零一七年一 冠城 有 Teguh Halim Teguh HALIM Teguh Halim 二零零 年 集團 二零一 年一 二 公司 公司 公司 Halim 集團 公司 鐘錶 公司 鐘錶 有 年 Halim Halim

34 二零一七年年報冠城鐘錶珠寶集團有限公司 111 一 二零零 年 公司 一 有 年 公司 二零零零年 公 公 公 公 公 二零一二年 二零一七年一 集團 有限公司 776 有限公司 有限公司 279 公司 二零零 年 公司 一 七年 二零零一年 Newport University

35 112 冠城鐘錶珠寶集團有限公司 二零一七年年報 董事及高層管理人員 二零一 年 一 公司 一 年 一 年 一 有 年 二零零 年 有 Rudolf Heinrich ESCHER Rudolf Heinrich Escher 一 二零一七年一 公司 Escher 一 二年 (Zurich University of Applied Sciences) 二零零一年 Fontainebleau (INSEAD) 公司 Credit Suisse37 年 二零一 年 二 一 Credit Suisse Credit Suisse Escher

36 二零一七年年報冠城鐘錶珠寶集團有限公司 113 公司 公司 公司 公司 公 公 二 年 有限公司 ING Bank 二零零 年 公司 一 有 公司 一 一 公司 年 二零零七年 公司 二零一 年 公司 公司 公司 錶 有限公司 Eterna Movement AG 有 一 年 錶 錶 集團有限公司 公司 年 鐘錶 年 有

37 114 (i) E.1.2 E.1.2 (ii) A.6.7 A.6.7

38 115 Teguh HALIM Rudolf Heinrich ESCHER (i) Teguh Halim (ii) Teguh Halim (iii) Teguh Halim (iv) Teguh Halim (v) Teguh Halim

39 A

40 117 5/5 0/1 5/5 1/1 5/5 0/1 5/5 1/1 5/5 1/1 5/5 1/1 4/5 0/1 5/5 0/1 5/5 1/1 4/5 1/1 5/5 1/1 Rudolf Heinrich ESCHER 4/4 0/1

41 Rudolf Heinrich Escher Teguh Halim

42 119

43 Rudolf Heinrich Escher

44 121 1/1 1/1 1/1 Rudolf Heinrich Escher 1/1 0/1 1/1 Rudolf Heinrich Escher

45 ,300,000 3,900, , ,000 4,600,000 4,680,000 (a) (b) (c) (d)

46 123 72

47

48 (i)(ii)

49 ,725,000 4% 16% 2% 6%

50 127 Teguh Halim Rudolf Heinrich Escher (1) (2) Rudolf Heinrich Escher (3) (4) Teguh Halim 116 A Teguh Halim 3.13

51 XV 3,500,000 3,017,389,515 (1) 1,374,000 (2) 3,022,263, % 5,300,000 5,300, % 5,000,000 5,000, % 2,400,000 2,400, % 200,000,000 (3) 200,000, % 1,750, ,000,000 (4) 201,750, % (5) 5,000,000 5,000, % 1,600,000 1,600, %

52 129 (1) 3,017,389,515 1,640,128,0001,377,261,515 80%20% (2) 1,374,000 (3) 200,000, % (4) 200,000, % (5) (1) (2) 9% (1) (2) 9% (1) 91%9% XV (2) 68.5% 31.5% 31.5% 352

53 % 1,377,261, % 1,640,128, % 3,022,263, % 3,022,263, % 1. 3,022,263,515 1,377,261,5151,640,128,000 3,500,0001,374, % 100% 37.70% 80% 31.66% 20% 0.03% 336

54 ,500,000 (3,500,000) 3,500,000 (3,500,000) 1,575,000 1,575,000 5,480,000 5,480,000 10,555,000 (3,500,000) 7,055,000 25%

55 132

56 133 Rudolf Heinrich Escher 3.21 (i) (ii) (iii) (iv) (v) (vi)

57 134

58 135 2/2 2/2 1/2 Rudolf Heinrich Escher 2/2

59 136 2/2 1/2 2/2 2/2

60 % 18.2%

61 138 1,190,340, ,269,

62 ,000,000501,000,000 A

63 ,738,000919,172,000

64 141 42,525 44,427 86,952

65 142 A. A1. (NO x )(SO 2 ) CODcr SS CODcr BOD5

66 143 A , , ,867, ,967, , ,

67 A3. ISO14001

68 ,060 1,0765,089 T5 LED 24 25

69 146 B. B1. 3,735 3, % 4.2% 28.6% 0.2% 25.7% 79.1% 41.3% 782 2, , , % % 2, % 2, % % 1, % , % 1, % , % % % % % 8 0.2%

70 147 36

71 148 3,000,000

72 149 B2. (OHSAS)

73 150 B3.

74 151 6,651 9,2997,07410, % 1, % 18.5% 1,720 2,716 3, % 1, % 1, % 1, % 1, % 2, % 2, % 3, % 4, % B4.

75 152 B B6. 1 2

76 153 B7. B (BBS) 2017

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79 156 11, ,600AAAA

80 Citychamp Watch & Jewellery Group Limited INDEPENDENT AUDITOR S REPORT 157 TO THE MEMBERS OF CITYCHAMP WATCH & JEWELLERY GROUP LIMITED (incorporated in Cayman Islands with limited liability) OPINION We have audited the consolidated financial statements of Citychamp Watch & Jewellery Group Limited (the Company ) and its subsidiaries (together the Group ) set out on pages 162 to 329, which comprise the consolidated statement of financial position as at 31 December 2017, and 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 31 December 2017, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with Hong Kong Financial Reporting Standards 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

81 Citychamp Watch & Jewellery Group Limited INDEPENDENT AUDITOR S REPORT 158 Impairment assessment on goodwill and intangible assets Refer to notes 32 and 31 to the consolidated financial statements and the significant accounting policies in notes 4.6 and 4.12 to the consolidated financial statements As at 31 December 2017, the Group had goodwill and intangible assets with carrying amounts (before current year s impairment assessment) of HK$925,036,000 and HK$136,514,000 respectively arising from the acquisitions of bank, financial and watch businesses. Management will perform impairment assessment on the amount of goodwill and intangible assets with indefinite useful lives annually, and will perform impairment assessment when there is an indication that an intangible asset with definite useful lives may be impaired. For the purpose of assessing impairment, management assessed the recoverable amount of these assets based on higher of its fair value less costs of disposal and value-in-use. These assets were allocated to cash generating units ( CGU ), and the recoverable amount of each CGU was determined by management based on value-in-use calculations using cash flow projections ,036,000136,514,000 The impairment test involves significant judgements and assumption by the management underly the value-in-use calculation. Management concluded that, based on the impairment assessment, impairment losses on goodwill of HK$19,000,000 and intangible assets of HK$123,378,000 have been recognised for the year respectively. How the matter was addressed in our audit Our procedures on the management s impairment assessment on goodwill and intangible assets included: 19,000, ,378,000 (i) Assessing the reasonableness of discount rates and growth rates applied in determining the recoverable amount; (i) (ii) Challenging the reasonableness of other key assumption based on our knowledge of the business and industry; and (ii) (iii) Checking input data to supporting evidence, such as approved budgets and considering the reasonableness of these budgets. (iii) Revenue recognition relating to sales of goods Refer to note 7 to the consolidated financial statements and the significant accounting policies in note 4.21 to the consolidated financial statements A substantial portion of the Group s revenue was derived from sales of watches and timepieces For sales of watches and timepieces, the amount of revenue recognised during the year is dependent on the point in time the ownership transfers from the Group to the customers. We identified the recognition of revenue relating to sales of goods as key audit matter because revenue is one of the key performance indicators of the Group and there is a significant inherent risk over the recognition of revenue by the management to meet specific targets or expectations.

82 Citychamp Watch & Jewellery Group Limited INDEPENDENT AUDITOR S REPORT 159 How the matter was addressed in our audit Our procedures on the revenue recognition relating to sales of goods included: (i) Assessing, on a sample basis, whether sales transactions recorded during the financial year had been recognised properly by inspecting the transactions selected with relevant underlying documentations; (i) (ii) assessing, on a sample basis, whether sales transactions before and after the financial year end had been recognised in the appropriate period by comparing the transactions selected with relevant underlying documentations; and (ii) (iii) reviewing if there are any significant adjustments to revenue during the reporting period, understanding the reasons for such adjustments and comparing the details of the adjustments with relevant underlying documentations. (iii) OTHER INFORMATION IN THE ANNUAL REPORT The directors are responsible for the other information. The other information comprises the information included in the Company s annual report, but does not include 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. DIRECTORS RESPONSIBILITY FOR THE CONSOLIDATED FINANCIAL STATEMENTS The directors are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with Hong Kong Financial Reporting Standards 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 either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

83 Citychamp Watch & Jewellery Group Limited INDEPENDENT AUDITOR S REPORT 160 The directors are also responsible for overseeing the Group s financial reporting process. The Audit Committee assists the directors in discharging their responsibilities in the regard. AUDITOR S RESPONSIBILITY 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. This report is made solely to you, as a body, in accordance with the terms of our engagement, 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 skepticism 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. 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.

84 Citychamp Watch & Jewellery Group Limited INDEPENDENT AUDITOR S REPORT 161 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, related safeguards. From the matters communicated with the directors, 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. BDO Limited Certified Public Accountants Lui Chi Kin Practising Certificate Number P06162 Hong Kong, 28 March 2018 P06162

85 Citychamp Watch & Jewellery Group Limited CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 31 December Notes HK$ 000 HK$ 000 Interest income from banking business 120,604 26,934 Interest expenses from banking business (25,612) (8,951) Net interest income from banking business 7a 94,992 17,983 Service fees and commission income from banking business Service fees and commission expenses from banking business Net service fees and commission income from banking business 307,041 95,896 (94,425) (23,301) 7b 212,616 72,595 Trading income from banking business 7c 65,227 18,902 Service fees and commission income from financial business 7d 9,307 Interest income from financial business 7d 128 Sales of goods from non-banking and financial businesses Rental income from non-banking and financial businesses 7e 2,583,495 2,811,352 7e 16,936 19,123 Total revenue 2,982,701 2,939,955 Cost of sales from non-banking and financial businesses (1,226,494) (1,296,518) Other ordinary income and other net gains or losses 8 1,300,392 63,165 Selling and distribution expenses (800,923) (841,444) Administrative expenses (774,011) (648,477) Share of loss of joint ventures 26 (1,159) Share of profit of associates 27 20,711 23,134 Finance costs from non-banking business 9 (68,453) (79,447) Profit before income tax 10 1,432, ,368 Income tax expense 11 (221,566) (96,528) Profit for the year 1,211,198 63,840 Other comprehensive income Item that will not be subsequently reclassified to profit or loss Remeasurement of net defined benefit obligations ,186 14,368 Items that may be subsequently reclassified to profit or loss Exchange differences on translation to presentation currency Release of exchange reserve to profit or loss upon disposal of subsidiaries Share of exchange differences on translation of associates Changes in fair value of available-for-sale financial assets 233,906 (226,038) 12 (2,809) 4, (112) 23 (5,041) (75,210) 226,152 (296,659) Other comprehensive income for the year 241,338 (282,291) Total comprehensive income for the year 1,452,536 (218,451)

86 Consolidated Statement of Comprehensive Income Note HK$ 000 HK$ 000 Profit for the year attributable to: Owners of the Company 1,170,484 36,703 Non-controlling interests 40,714 27,137 Total comprehensive income for the year attributable to: 1,211,198 63,840 Owners of the Company 1,395,850 (227,203) Non-controlling interests 56,686 8,752 1,452,536 (218,451) Earnings per share attributable to owners of the Company 14 Basic HK26.91 cents HK0.84 cent Diluted HK26.87 cents HK0.84 cent

87 Citychamp Watch & Jewellery Group Limited CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 December Notes HK$ 000 HK$ 000 Assets Cash and deposits 17 7,420,678 5,066,901 Due from clients 18 1,011, ,809 Due from banks 18 5,921,878 5,295,369 Trading portfolio investments , ,089 Income tax recoverable 10,133 9,693 Derivative financial assets 20 4,680 2,338 Trade receivables , ,585 Inventories 22 2,027,191 1,996,187 Available-for-sale financial assets , ,352 Held-to-maturity investments 24 1,138, ,709 Short-term investments ,969 Interests in joint ventures 26 5,117 Interests in associates 27 99,648 88,841 Property, plant and equipment 28 1,027, ,022 Investment properties , ,779 Prepaid land lease payments 30 51,083 59,042 Intangible assets 31 13, ,904 Goodwill , ,834 Deferred tax assets 41 6,900 10,741 Other assets , ,656 Total assets 21,855,671 17,255,820 Liabilities Due to banks 3,042 3,007 Due to clients 34 14,270,089 10,393,047 Derivative financial liabilities 20 35,656 2,050 Trade payables , ,837 Corporate bonds , ,127 Income tax payables 101,985 87,654 Borrowings ,269 1,190,340 Provisions Subordinated debt 39 95,674 83,345 Deferred tax liabilities 41 8,188 33,196 Other liabilities , ,995 Total liabilities 16,707,545 13,403,130

88 Consolidated statement of financial position Notes HK$ 000 HK$ 000 Equity Equity attributable to owners of the Company Share capital , ,682 Reserves 44 4,369,849 3,198,199 4,804,881 3,632,881 Non-controlling interests 343, ,809 Total equity 5,148,126 3,852,690 Total liabilities and equity 21,855,671 17,255,820 The consolidated financial statements on pages 162 to 329 were approved and authorised for issue by the board of directors on 28 March 2018 and are signed on its behalf by: Hon Kwok Lung Director Shang Jianguang Director

89 Citychamp Watch & Jewellery Group Limited CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 31 December Share capital Share premium account* * Share option reserve* * Equity attributable to owners of the Company Goodwill arising on Statutory consolidation* reserve* Other reserve* Exchange reserve* Investment revaluation reserve* Retained profits* Noncontrolling interests Total equity Total * * * * * * HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 (note 42) (note 44) (note 44) (note 44) (note 44) (note 44) (note 44) (note 44) Balance at 1 January , ,571 2,038 22,692 (15,300) 30,581 (44,588) 197,756 2,567,565 4,043, ,234 4,234,487 Transactions with owners Repurchase of ordinary shares (6,544) (68,907) (75,451) (75,451) Proceeds from shares issued under share option scheme Exercise of share options 437 (437) Disposal of a subsidiary (61,212) (61,212) Arising from the acquisition of subsidiaries 98,851 98, final dividend (note 13) 13 (108,654) (108,654) (108,654) Dividends paid to non-controlling interests (17,816) (17,816) Total transactions with owners (6,256) (67,822) (437) (108,654) (183,169) 19,823 (163,346) Comprehensive income Profit for the year 36,703 36,703 27,137 63,840 Other comprehensive income Remeasurement of net defined benefit obligations 13,876 13, ,368 Exchange differences on translation to presentation currency (207,188) (207,188) (18,850) (226,038) Release of exchange reserve to profit or loss upon disposal of subsidiaries Share of exchange differences on translation of associates Change in fair value of available-for-sale financial assets Total comprehensive income for the year 4,701 4,701 4,701 (112) (112) (112) (75,183) (75,183) (27) (75,210) (202,599) (75,183) 50,579 (227,203) 8,752 (218,451) Appropriation to statutory reserve 29,567 (29,567) Balance at 31 December 2016 and 1 January 2017 Transactions with owners Proceeds from shares issued under share option scheme 434, ,749 1,601 22,692 (15,300) 60,148 (247,187) 122,573 2,479,923 3,632, ,809 3,852, ,138 1,138 Exercise of share options 531 (531) Disposal of subsidiaries 22,145 22,145 Partial deemed disposal of interests in subsidiaries without loss of control (2,935) (2,935) 33,743 30,808 Acquisition of non-controlling interests (4,537) (4,537) (11,556) (16,093) 2016 special dividend (note 13.1) 13.1 (3,866) (213,650) (217,516) (217,516) Dividends paid to non-controlling interests (17,630) (17,630) Capital injection from non-controlling interests 40,048 40,048 Total transactions with owners 350 (2,547) (531) (7,472) (213,650) (223,850) 66,750 (157,100) Comprehensive income Profit for the year 1,170,484 1,170,484 40,714 1,211,198 Other comprehensive income Remeasurement of defined benefit obligations 16,162 16,162 (976) 15,186 Exchange differences on translation to presentation currency Release of exchange reserve to profit or loss upon disposal of subsidiaries Share of exchange differences on translation of associates Change in fair value of available-for-sale financial assets Total comprehensive income for the year 216, ,965 16, ,906 (2,809) (2,809) (2,809) (5,048) (5,048) 7 (5,041) 214,252 (5,048) 1,186,646 1,395,850 56,686 1,452,536 Appropriation to statutory reserve 31,045 (31,045) Release of statutory reserve upon disposal of subsidiaries Balance at 31 December 2017 (115) , ,202 1,070 15,220 (15,300) 91,078 (32,935) 117,525 3,421,989 4,804, ,245 5,148,126 * These reserve accounts comprise the consolidated reserves of HK$4,369,849,000 (2016: HK$3,198,199,000) in the consolidated statement of financial position. * 4,369,849,0003,198,199,000

90 CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 31 December Notes HK$ 000 HK$ 000 Cash flows from operating activities Profit before income tax 1,432, ,368 Adjustments for: Depreciation and amortisation 122, ,642 Provision and impairment losses 198,933 86,057 Net (surplus)/deficit on revaluation of investment properties 29 (17,605) 3,897 Share of profit of associates 27 (20,711) (23,134) Share of loss of joint ventures 1,159 Bank and other interest income from non-banking and financial businesses 8 (9,723) (22,453) Finance costs from non-banking business 9 68,453 79,447 (Gain)/loss on disposal of property, plant and equipment 8 (1,711) 328 Gain on repurchase of corporate bonds 8 (312) Gain/(loss) on disposal of subsidiaries 12 (1,382,042) 28,699 Dividend income (4,842) (6,916) Operating profit before working capital changes 387, ,623 Increase/(decrease) in due to clients 3,294,092 (1,195,865) (Increase)/decrease in due from clients (346,798) 119,201 Decrease in due to banks (122) (16,557) Increase in due from banks (344,243) (177,308) (Increase)/decrease in trade receivables (35,523) 118,394 Decrease/(increase) in inventories 10,592 (169,263) (Increase)/decrease in other assets (211,580) 15,048 (Increase)/decrease in derivative financial assets (2,199) 9,516 Increase/(decrease) in derivative financial liabilities 33,606 (14,616) (Decrease)/increase in trade payables (39,539) 33,573 (Increase)/decrease in trading portfolio investments (443,429) 179,365 Increase in other liabilities 50,025 66,426 Cash generated from/(used in) operations 2,352,354 (610,463) Income tax paid (87,327) (94,269) Net cash generated from/(used in) operating activities Cash flows from investing activities Proceeds from disposal of property, plant and equipment, intangible assets and brand name 2,265,027 (704,732) 12, Net cash inflow from disposal of subsidiaries 12 1,560,381 47,161 Dividends received 24,842 6,916 (Increase)/decrease in held-to-maturity Investments (773,608) 9,596

91 Citychamp Watch & Jewellery Group Limited 168 Purchase of property, plant and equipment intangible assets, prepaid land lease payments and convertible bond investment Notes HK$ 000 HK$ 000 (202,252) (167,043) Capital injection for joint ventures 26 (6,276) Deposits paid for acquisition of subsidiaries (13,000) Consideration paid for acquisition of subsidiary (11,638) Interest received from non-banking and financial businesses 9,723 22,453 Proceeds received from disposal of brand name 5,000 Decrease in short-term investments 112,969 22,422 Net cash inflow from acquisition of subsidiaries 49 71,295 4,620,984 Proceeds from disposal of treasury notes and bills 617,285 (Increase)/decrease in available-for-sales financial assets (133,817) 2,477 Net cash generated from investing activities 675,434 5,163,343 Cash flows from financing activities Proceeds from shares issued under share option scheme 1, Proceeds from disposal of interests in subsidiaries to non-controlling interest 50 30,808 Proceeds from sales of repurchased corporate bonds 392 Acquisition of non-controlling interest 50 (16,093) Repurchase of ordinary share (75,451) Interest paid (68,282) (73,080) Proceeds from borrowings 136, ,489 Repayment of borrowings (703,737) (563,092) Dividends paid to the owners of the Company 13.1 (217,516) (108,654) Dividends paid to the non-controlling interests (17,630) (17,816) Capital injection in subsidiaries by non-controlling interests 40,048 Repurchase of corporate bonds 36 (1,697) Increase/(decrease) in subordinated debt 16,627 (812) Net cash used in financing activities (797,672) (130,177) Net increase in cash and cash equivalents 2,142,789 4,328,434 Cash and cash equivalents at 1 January 4,949, ,065 Effect of foreign exchange rate changes, net 274,235 (215,311) Cash and cash equivalents at 31 December 7,366,212 4,949,188 Analysis of balances of cash and cash equivalents Cash and deposits 17 7,373,427 5,066,901 Cash held on behalf of clients 17 47,251 Bank overdrafts 37 (54,466) (117,713) 7,366,212 4,949,188

92 Citychamp Watch & Jewellery Group Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December GENERAL INFORMATION Citychamp Watch & Jewellery Group Limited (the Company ) is a limited liability company incorporated in Cayman Islands. Its registered office address is P.O. Box 309, Ugland House, South Church Street, Grand Cayman, Cayman Islands and its principal place of business is Units , Level 19, International Commerce Centre, 1 Austin Road West, Kowloon, Hong Kong. The Company s shares are listed on The Stock Exchange of Hong Kong Limited (the Stock Exchange ). During the year, the principal activities of the Company and its subsidiaries (together referred to as the Group ) include: 1. P.O. Box 309, Ugland House, South Church Street, Grand Cayman, Cayman Islands Manufacturing and distribution of watches and timepieces; Property investments; and Banking and financial businesses. The Group has completed the acquisition of entire equity interest in Shun Heng Securities Limited ( Shun Heng ) and Hong Kong Metasequoia Capital Management Limited ( Metasequoia Capital ) in February In September 2017, the Group has completed the disposal of the entire equity interest in Seti Timber Industry (Shenzhen) Co., Ltd. and its subsidiaries ( Seti Timber Group ) at the consideration of RMB1,513,515,000 (approximately HK$1,762,703,000). The disposal constituted a discloseable transaction of the Company pursuant to the listing rules, details of which were contained in the announcements of the Company dated 23 March 2017 and 28 March In December 2017, the Group has completed the disposal of the 51% equity interest in Gold Vantage Industrial Limited and its subsidiaries (together as Gold Vantage Group ) to its associate Fair Future Industrial Limited ( Fair Future ) at the consideration of HK$5,100. Other than the aforementioned transactions, there was no other significant change in the Group s operations during the year. The Group s principal places of the business are in Hong Kong, Switzerland, United Kingdom, Liechtenstein and the People s Republic of China (the PRC ). 1,513,515,0001,762,703,000 5,100 51%

93 Citychamp Watch & Jewellery Group Limited ADOPTION OF HONG KONG FINANCIAL REPORTING STANDARDS ( HKFRSs ) (a) Adoption of new or revised HKFRSs effective 1 January 2017 In the current year, the Group has applied for the first time the following new or revised standards, amendments and interpretations (the new or revised HKFRSs ) issued by the Hong Kong Institute of Certified Public Accountants ( HKICPA ), which are relevant to and effective for the Group s consolidated financial statements for the annual period beginning on 1 January 2017: 2. (a) Amendments to HKAS 7 Amendments to HKAS 12 Annual Improvements to HKFRSs Cycle Disclosure Initiative Recognition of Deferred Tax Assets for Unrealised Losses Amendments to HKFRS 12, Disclosure of Interests in Other Entities Amendments to HKAS 7 Disclosure Initiative The amendments introduce an additional disclosure that will enable users of financial statements to evaluate changes in liabilities arising from financing activities. 7 The adoption of the amendments has led to the additional disclosure presented in the notes to the consolidated cash flows statement. Amendments to HKAS 12 Recognition of Deferred Tax Assets for Unrealised Losses The amendments relate to the recognition of deferred tax assets and clarify some of the necessary considerations, including how to account for deferred tax assets related to debt instruments measured of fair value. 12 The adoption of the amendments has no impact on these consolidated financial statements as the clarified treatment is consistent with the manner in which the Group has previously recognised deferred tax assets. Annual Improvements to HKFRSs Cycle Amendments to HKFRS 12, Disclosure of Interests in Other Entities The amendments issued under the annual improvements process make small, non-urgent changes to standards where they are currently unclear. They include amendments to HKFRS 12, Disclosure of Interests in Other Entities, to clarify that the disclosure requirements of HKFRS 12, other than the requirements to disclose summarised financial information, also apply to an entity s interests in other entities classified as held for sale or discontinued operations in accordance with HKFRS 5, Non-Current Assets Held for Sale and Discontinued Operations

94 Notes to the consolidated financial statements ADOPTION OF HONG KONG FINANCIAL REPORTING STANDARDS ( HKFRSs ) (continued) (a) Adoption of new or revised HKFRSs effective 1 January 2017 (continued) Annual Improvements to HKFRSs Cycle Amendments to HKFRS 12, Disclosure of Interests in Other Entities (continued) The adoption of the amendments to HKFRS 12 has no impact on these consolidated financial statements as the latter treatment is consistent with the manner in which the Group has previously dealt with disclosures relating to its interests in other entities classified as held for sale or discontinued operations in accordance with HKFRS 5. (b) New or revised HKFRSs that have been issued but are not yet effective The following new or revised HKFRSs, potentially relevant to the Group s consolidated financial statements, have been issued but are not yet effective and have not been early adopted by the Group. Annual Improvements to HKFRSs Cycle Annual Improvements to HKFRSs Cycle Amendments to HKFRS 1, First-time Adoption of Hong Kong Financial Reporting Standards 1 Amendments to HKAS 28, Investments in Associates and Joint Ventures 1 Amendments to HKFRS 10 Sale or Contribution of Assets between and HKAS 28 an Investor and its Associate or Joint Venture 3 Amendments to HKAS 40 Transfers of Investment Property 1 Amendments to HKFRS 2 Classification and Measurement of Share-based Payment Transactions 1 HKFRS 9 Financial Instruments 1 Amendments to HKFRS 9 Prepayment Features with Negative Compensation 2 HKFRS 15 Revenue from Contracts with Customers 1 Amendments to HKFRS 15 Revenue from Contracts with Customers (Clarifications to HKFRS 15) 1 HKFRS 16 Leases 2 HK(IFRIC)-Int 22 Foreign Currency Transactions and Advance Consideration 1 HK(IFRIC)-Int 23 Uncertainty over Income Tax Treatments 2 1 Effective for annual periods beginning on or after 1 January Effective for annual periods beginning on or after 1 January The amendments were originally intended to be effective for periods beginning on or after 1 January The effective date has now been deferred/removed. Early application of the amendments of the amendments continue to be permitted. 2. (a) (b)

95 Citychamp Watch & Jewellery Group Limited ADOPTION OF HONG KONG FINANCIAL REPORTING STANDARDS ( HKFRSs ) (continued) (b) New or revised HKFRSs that have been issued but are not yet effective (continued) Annual Improvements to HKFRSs Cycle Amendments to HKFRS 1, First-time Adoption of Hong Kong Financial Reporting Standards The amendments issued under the annual improvements process make small, non-urgent changes to standards where they are currently unclear. They include amendments to HKFRS 1, First-time Adoption of Hong Kong Financial Reporting Standards, removing transition provision exemptions relating to accounting periods that had already passed and were therefore no longer applicable. Annual Improvements to HKFRSs Cycle Amendments to HKAS 28, Investments in Associates and Joint Ventures The amendments issued under the annual improvements process make small, non-urgent changes to standards where they are currently unclear. They include amendments to HKAS 28, Investments in Associates and Joint Ventures, clarifying that a Venture Capital organisation s permissible election to measure its associates or joint ventures at fair value is made separately for each associate or joint venture. Amendments to HKFRS 10 and HKAS 28 (2011) Sale or Contribution of Assets between an Investor and its Associate or Joint Venture The amendments clarify the extent of gains or losses to be recognised when an entity sells or contributes assets to its associate or joint venture. When the transaction involves a business the gain or loss is recognised in full, conversely when the transaction involves assets that do not constitute a business the gain or loss is recognised only to the extent of the unrelated investors interests in the joint venture or associate. Amendments to HKAS 40, Investment Property Transfers of Investment Property The amendments clarify that to transfer to or from investment properties there must be a change in use and provides guidance on making this determination. The clarification states that a change of use will occur when a property meets, or ceases to meet, the definition of investment property and there is supporting evidence that a change has occurred. 2. (b) The amendments also re-characterise the list of evidence in the standard as a non-exhaustive list, thereby allowing for other forms of evidence to support a transfer.

96 Notes to the consolidated financial statements ADOPTION OF HONG KONG FINANCIAL REPORTING STANDARDS ( HKFRSs ) (continued) (b) New or revised HKFRSs that have been issued but are not yet effective (continued) Amendments to HKFRS 2 Classification and Measurement of Share-based Payment Transactions The amendments provide requirements on the accounting for the effects of vesting and non-vesting conditions on the measurement of cash-settled share-based payments; share-based payment transactions with a net settlement feature for withholding tax obligations; and a modification to the terms and conditions of a sharebased payment that changes the classification of the transaction from cash-settled to equity-settled. 2. (b) 2 HKFRS 9 Financial Instruments HKFRS 9 introduces new requirements for the classification and measurement of financial assets. Debt instruments that are held within a business model whose objective is to hold assets in order to collect contractual cash flows (the business model test) and that have contractual terms that give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding (the contractual cash flow characteristics test) are generally measured at amortised cost. Debt instruments that meet the contractual cash flow characteristics test are measured at fair value through other comprehensive income ( FVTOCI ) if the objective of the entity s business model is both to hold and collect the contractual cash flows and to sell the financial assets. Entities may make an irrevocable election at initial recognition to measure equity instruments that are not held for trading at FVTOCI. All other debt and equity instruments are measured at fair value through profit or loss ( FVTPL ). HKFRS 9 includes a new expected loss impairment model for all financial assets not measured at FVTPL replacing the incurred loss model in HKAS 39 and new general hedge accounting requirements to allow entities to better reflect their risk management activities in financial statements. HKFRS 9 carries forward the recognition, classification and measurement requirements for financial liabilities from HKAS 39, except for financial liabilities designated at FVTPL, where the amount of change in fair value attributable to change in credit risk of the liability is recognised in other comprehensive income unless that would create or enlarge an accounting mismatch. In addition, HKFRS 9 retains the requirements in HKAS 39 for derecognition of financial assets and financial liabilities

97 Citychamp Watch & Jewellery Group Limited ADOPTION OF HONG KONG FINANCIAL REPORTING STANDARDS ( HKFRSs ) (continued) (b) New or revised HKFRSs that have been issued but are not yet effective (continued) Based on an analysis of the Group s financial assets and financial liabilities as at 31 December 2017 and the facts and circumstances that exist at that date, the Group have performed a preliminary assessment of the impact of HKFRS 9 to the Group s consolidated financial statements. Application of HKFRS 9 in the future would have impact on the classification and measurement of the Group s financial assets. In addition, the expected credit loss model would result in early provision of credit losses, which are not yet incurred in relation to the Group s financial assets measured at amortised cost. The change in fair value of the Group s financial liabilities designated at FVTPL that is attributable to changes in credit risk could be presented in other comprehensive income. However, it is not practicable to provide a reasonable estimate of the effect of HKFRS 9 until the completion of the detailed review. Amendments to HKFRS 9 Prepayment Features with Negative Compensation The amendments clarify that prepayable financial assets with negative compensation can be measured at amortised cost or at fair value through other comprehensive income if specified conditions are met instead of at fair value through profit or loss. HKFRS 15 Revenue from Contracts with Customers The new standard establishes a single revenue recognition framework. The core principle of the framework is that an entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. HKFRS 15 supersedes existing revenue recognition guidance including HKAS 18 Revenue, HKAS 11 Construction Contracts and related interpretations. HKFRS 15 requires the application of a 5 steps approach to revenue recognition: Step 1: Identify the contract(s) with a customer Step 2: Identify the performance obligations in the contract Step 3: Determine the transaction price Step 4: Allocate the transaction price to each performance obligation Step 5: Recognise revenue when each performance obligation is satisfied 2. (b)

98 Notes to the consolidated financial statements ADOPTION OF HONG KONG FINANCIAL REPORTING STANDARDS ( HKFRSs ) (continued) (b) New or revised HKFRSs that have been issued but are not yet effective (continued) HKFRS 15 Revenue from Contracts with Customers (continued) HKFRS 15 includes specific guidance on particular revenue related topics that may change the current approach taken under HKFRSs. The standard also significantly enhances the qualitative and quantitative disclosures related to revenue. The directors anticipate that the initial application of the HKFRS 15 will result in changes to the accounting policies relating to revenue recognition. Additional disclosures will also be made in respect of trade receivables and revenue recognition, including any significant judgement and estimation made. The directors have performed a preliminary analysis of the requirements of the initial application of the HKFRS 15 and have anticipated that the adoption of HKFRS 15 will not have a material impact on the consolidated financial statements of the Group. 2. (b) Amendments to HKFRS 15 Revenue from Contracts with customers (Clarifications to HKFRS 15) The amendments to HKFRS 15 included clarifications on identification of performance obligations; application of principal versus agent; licenses of intellectual property; and transition requirements. HKFRS 16 Leases HKFRS 16, which upon the effective date will supersede HKAS 17 Leases and related interpretations, introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. Specifically, under HKFRS 16, a lessee is required to recognise a right-of-use asset representing its right to use the underlying leased asset and a lease liability representing its obligation to make lease payments. Accordingly, a lessee should recognise depreciation of the right-of-use asset and interest on the lease liability, and also classifies cash repayments of the lease liability into a principal portion and an interest portion and presents them in the statement of cash flows. Also, the right-of-use asset and the lease liability are initially measured on a present value basis. The measurement includes non-cancellable lease payments and also includes payments to be made in optional periods if the lessee is reasonably certain to exercise an option to extend the lease, or not to exercise an option to terminate the lease. This accounting treatment is significantly different from the lessee accounting for leases that are classified as operating leases under the predecessor standard, HKAS