中期報告 Interim Report (Incorporated in the Cayman Islands with limited liability) (於開曼群島註冊成立的有限公司) STOCK CODE 股份代號 : 2080

Transcription

1 中期報告 Interim Report (Incorporated in the Cayman Islands with limited liability) (於開曼群島註冊成立的有限公司) STOCK CODE 股份代號 : 2080

2 Contents Corporate Information 2 Management Discussion and Analysis 5 Other Information 16 Independent Review Report 27 Consolidated Statement of Profit or Loss 29 Consolidated Statement of Profit or Loss and Other Comprehensive Income 30 Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Condensed Consolidated Cash Flow Statement Notes to the Unaudited Interim Financial Report 36 Interim Report

3 Corporate Information BOARD OF DIRECTORS Executive directors Mr. Zheng Jiang (Chairman) Mr. Chan Hon Ki Ms. Chen Huajuan Ms. Shen Guoying Independent non-executive directors Mr. Poon Chiu Kwok Mr. Bau Siu Fung Ms. Lou Aidong AUDIT COMMITTEE Mr. Bau Siu Fung (Chairman) Mr. Poon Chiu Kwok Ms. Lou Aidong REMUNERATION COMMITTEE Ms. Lou Aidong (Chairman) Mr. Zheng Jiang Ms. Chen Huajuan Mr. Poon Chiu Kwok Mr. Bau Siu Fung NOMINATION COMMITTEE Mr. Zheng Jiang (Chairman) Ms. Shen Guoying Mr. Poon Chiu Kwok Mr. Bau Siu Fung Ms. Lou Aidong AUTHORIZED REPRESENTATIVES Ms. Shen Guoying Ms. Tsang Kwok Shan, Sandy FCCA FCCA 2 AUX International Holdings Limited

4 Corporate Information JOINT COMPANY SECRETARY Mr. Chan Hon Ki CPA, ACCA Ms. Tsang Kwok Shan, Sandy FCCA AUDITOR KPMG Certified Public Accountants 8th Floor, Prince s Building, 10 Chater Road, Central, Hong Kong REGISTERED OFFICE Clifton House, 75 Fort Street, P.O. Box 1350 Grand Cayman, KY1-1108, Cayman Islands HEADQUARTERS AND PRINCIPAL PLACE OF BUSINESS IN HONG KONG Room 506B, 5th Floor, Tower 1, Admiralty Centre, 18 Harcourt Road, Hong Kong HONG KONG BRANCH SHARE REGISTRAR AND TRANSFER OFFICE Tricor Investor Services Limited Level 22, Hopewell Centre, 183 Queen s Road East, Hong Kong CPA ACCA FCCA 10 8 Clifton House, 75 Fort Street, P.O. Box 1350 Grand Cayman, KY1-1108, Cayman Islands B Interim Report

5 Corporate Information LEGAL ADVISER TO THE COMPANY Chiu & Partners 40th Floor, Jardine House, 1 Connaught Place, Central, Hong Kong CAYMAN ISLANDS SHARE REGISTRAR AND TRANSFER OFFICE Estera Trust (Cayman) Limited Clifton House, 75 Fort Street, P.O. Box 1350 Grand Cayman, KY1-1108, Cayman Islands PRINCIPAL BANKERS OCBC Wing Hang Bank, Limited Bank of Communications Co., Ltd., Hong Kong Branch Yinzhou Bank COMPANY WEBSITE STOCK CODE Estera Trust (Cayman) Limited Clifton House, 75 Fort Street, P.O. Box 1350 Grand Cayman, KY1-1108, Cayman Islands AUX International Holdings Limited

6 Management Discussion and Analysis BUSINESS REVIEW The principal business activities of the Company and its subsidiaries (the Group ) are operation of clubbing business in Hong Kong (the clubbing business segment ) and provision of property management services in the People s Republic of China (the PRC ) (the property management segment ). Following the acquisition of Ningbo AUX Property Management Services Co., Ltd ( Ningbo AUX Property ) during the last financial year, the Group s performance in the property management business has been strong and it further enhanced the Company s earning profile. With the Group s financial performance being supported by the property management business, the Group has commenced renovation of Magnum Club in January 2018 to enhance its hardware and uplift its attractiveness to the Group s customers. The Group s revenue and net result achieved during the six months ended 30 September 2018 have been encouraging and improved considerably as compared with the six months ended 30 September Business review clubbing business segment During the period under review, the Group owned two clubs, namely Zentral and Magnum Club, which are characterised by their contemporary and elegant style with a span of over 20,000 square feet in the heart of Lan Kwai Fong area. Magnum Club Zentral Magnum Club 20,000 Interim Report

7 Management Discussion and Analysis The Group offers different vibrant venues that function not only as a club, but also, has successfully built a niche for hosting private parties, corporate events, live entertainment, fashion shows, filming activities and film premiere among others. Striving to be a leading entertainment service and venue provider in Hong Kong, the Group has temporary closed Magnum Club from 14 January 2018 for renovation. While Magnum Club is under renovation, Zentral continues its focus on providing highquality service to its target customers, which are aged between Moreover, Zentral continues to develop its relationship with event organisers to forge Zentral into one of the glamourous venues in Hong Kong. Business review property management segment As a complex property management service provider, the Group provides complete services to various types of properties, which mainly focuses on residential properties and also covers non-residential properties such as A-class office buildings, commercial complexes, medium to high-end residential areas, hospitals and industrial parks. As at 30 September 2018, Ningbo AUX Property had 11 branches providing property management services in 12 cities namely, Shanghai, Ningbo, Tianjin, Nanjing, Hangzhou, Nanchang, Changsha, Jiujiang, Jinhua, Chengdu, Huzhou and Qingdao. As at 30 September 2018, the Group managed over 39 projects with a gross floor area of approximately 4.57 million square meters. Magnum Club Magnum Club Zentral18 45 Zentral Zentral AUX International Holdings Limited

8 Management Discussion and Analysis FINANCIAL REVIEW Revenue The Group s revenue recorded approximately HK$149.5 million for the six months ended 30 September 2018, representing an increase of 17.4% as compared with approximately HK$127.3 million for the six months ended 30 September The increase in revenue was mainly due to increase in revenue from the property management services business, which had increased by approximately HK$34.2 million to approximately HK$106.8 million for the six months ended 30 September 2018 from HK$72.6 million for the six months ended 30 September Such increase was mainly due to the increase in number of projects and gross floor area serviced, which outweighed the decrease in revenue from clubbing business segment by approximately HK$12.0 million to HK$42.7 million for the six months ended 30 September 2018 from HK$54.7 million for the six months ended 30 September 2017 as Magnum Club has been temporarily closed during the entire period under review % Magnum Club Interim Report

9 Management Discussion and Analysis Staff Costs The staff costs comprised salaries, wages, discretionary bonus, membership, commission, tips from customers allocated to staff and other benefits including retirement benefit costs and other allowances and benefits payable to the permanent staff and part time staff. The staff costs increased by approximately 53.9% or HK$24.8 million to approximately HK$70.8 million for the six months ended 30 September 2018 from approximately HK$46.0 million for the six months ended 30 September The increase was mainly due to increase in staff costs incurred for the property management services business of HK$25.5 million. The Group increased its number of management staff in property management services business to provide better back office support and enlarged front-line service team to uplift its service quality and cater for the anticipated increase in number of projects. Property Rentals and Related Expenses The property rentals and related expenses primarily consisted of lease payments under operating leases for the clubs of the Group and the Group s headquarters. The property rentals and related expenses decreased by approximately 25.0% or HK$4.7 million to approximately HK$14.1 million for the six months ended 30 September 2018 from approximately HK$18.8 million for the six months ended 30 September Such decrease was mainly due to decrease in rental expenses of Zentral % % Zentral 8 AUX International Holdings Limited

10 Management Discussion and Analysis Advertising and Marketing Expenses The advertising and marketing expenses primarily consisted of advertising and promotional expenses, such as the cost of inviting international disc jockeys for clubbing operations. The advertising and marketing expenses for the six months ended 30 September 2018 were approximately HK$6.4 million, which remained stable as compared to approximately HK$6.7 million for the six months ended 30 September Other operating expenses The other operating expenses increased by approximately 24.7% or HK$5.8 million to approximately HK$29.3 million for the six months ended 30 September 2018 from approximately HK$23.5 million for the six months ended 30 September The increase was mainly attributable to the expenses incurred for the property management business acquired in May 2017 for the entire period under review, including property maintenance, gardening costs, security costs, utilities and other miscellaneous expenses. Results for the period The Group s profit for the six months ended 30 September 2018 was approximately HK$2.6 million, representing a turnaround from loss of approximately HK$2.8 million for the six months ended 30 September Such turnaround was mainly due to the net foreign exchange gain in respect of Renminbi ( RMB ) denominated loan from the controlling shareholder as a result of the depreciation of RMB against Hong Kong dollars % Interim Report

11 Management Discussion and Analysis LIQUIDITY, FINANCIAL RESOURCES AND GEARING As at 30 September 2018, the Group s total current assets and current liabilities were approximately HK$265.8 million (31 March 2018: HK$282.3 million) and approximately HK$130.1 million (31 March 2018: HK$137.1 million) respectively, while the current ratio was 2.0 times (31 March 2018: 2.1 times). As at 30 September 2018, the Group maintained cash at bank and in hand of approximately HK$185.2 million (31 March 2018: approximately HK$206.8 million). In the foreseeable future, the Group expects to fund its capital expenditures, working capital and other capital requirement from the cash generated from its operation and the net proceeds from initial public offering ( IPO ) and placing of new shares under general mandate. Total interest-bearing borrowing of the Group as at 30 September 2018 was approximately HK$114.2 million (31 March 2018: HK$124.6 million), which mainly represented the unsecured loan of RMB100,000,000 with a term of five years and an interest rate of 2% per annum granted by the controlling shareholder of the Company to Starry Chance Limited for the purpose of financing its acquisition of the entire equity interests in Ningbo AUX Property. The gearing ratio calculated by dividing total interestbearing borrowings by total equity, as at 30 September 2018 was 0.83 (31 March 2018: 0.82) % AUX International Holdings Limited

12 Management Discussion and Analysis CAPITAL STRUCTURE On 10 July 2017, the Company entered into a placing agreement with Chung Sun Securities Limited (the Placing Agent ) pursuant to which the Company had conditionally agreed to place, through the Placing Agent, on a best effort basis, a maximum of 60,000,000 new shares of the Company under the general mandate granted by the shareholders of the Company on 19 August 2016 to not less than six placees who are professional, institutional or other investors and who and whose ultimate beneficial owners are third parties independent of and not connected with the Company and its connected persons (as defined in the Rules (the Listing Rules ) Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the Stock Exchange )) at a placing price of HK$0.91 per share (the Placing ). The Placing was completed on 2 August 2017 in accordance with the terms and conditions of the placing agreement. The gross and net proceeds raised from the Placing were approximately HK$54.6 million and HK$54.1 million respectively, which were intended to be applied for supplementing the Group s working capital and for financing potential investments or acquisitions should the suitable opportunities arise. The net price to the Company of each subscription share was approximately HK$0.90. As at the date of approval of this interim report, approximately HK$18.2 million of the net proceeds raised from the Placing had been used to supplement the Group s working capital. The remaining balance was deposited to licensed financial institutions in Hong Kong. 60,000, Interim Report

13 Management Discussion and Analysis The Group manages its capital to safeguard the Group s ability to continue as a going concern while maximising the return to shareholders through maintaining the equity and debt in a balanced position. The capital structure of the Group consisted of equity of approximately HK$137.5 million (31 March 2018: approximately HK$151.8 million) and loan from the controlling shareholder of HK$113.5 million as at 30 September 2018 (31 March 2018: approximately HK$123.8 million). Except for the loan from the controlling shareholder and obligations under finance lease, the Group had no other bank borrowings, debt securities or other capital instruments as at 30 September SIGNIFICANT INVESTMENT HELD During the six months ended 30 September 2018, the Group did not hold any significant investment. MATERIAL ACQUISITIONS OR DISPOSALS OF SUBSIDIARIES AND ASSOCIATED COMPANIES The Group did not have any material acquisitions or disposals of subsidiaries or associated companies during the six months ended 30 September CHARGE ON ASSETS As at 30 September 2018, the Group s pledged bank deposits were approximately HK$1.0 million (31 March 2018: approximately HK$1.0 million) AUX International Holdings Limited

14 Management Discussion and Analysis FUTURE PLANS FOR MATERIAL INVESTMENT OR CAPITAL ASSETS The Group intends to conduct more indepth reviews on the suitable development strategies for the Group, including the feasibility of diversifying the income stream of the Group by exploring different business and investment opportunities in different business areas, which may or may not include any assets and/or business acquisitions or disposals by the Group, and will consider all options. Any such plans will be subject to review and approval by the Board and compliance with the applicable requirements under the Listing Rules where appropriate. FOREIGN EXCHANGE EXPOSURE The Group operates in Hong Kong and Mainland China and is exposed to foreign exchange risk arising from fluctuations in the Hong Kong dollar-renminbi exchange rate. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities in operations in Mainland China. The Group did not use any forward contracts to hedge its foreign currency exposure during the reporting period. The Group will from time to time review and adjust the Group s hedging and financial strategies based on the RMB and Hong Kong dollars exchange rate movement. CONTINGENT LIABILITIES As at 30 September 2018, the Group did not have any material contingent liabilities. Interim Report

15 Management Discussion and Analysis EMPLOYEE AND REMUNERATION POLICY As at 30 September 2018, the Group had approximately 1,129 employees (31 March 2018: 1,083 employees). The Group offers competitive remuneration packages to its staff, including share option scheme, mandatory provident fund schemes and discretionary bonus. PROSPECTS The Group expects that the adverse impact on the overall economic conditions in Hong Kong and China resulting from the recent trade disputes between China and USA will gradually emerge in the coming months. While the Group s clubbing business might be more susceptible to economic fluctuations due to its luxury consumable tendency, the Group is confident that combined with its property management service, which is a necessity in nature, the Group will be well-positioned to endure future economic turbulence. While the Group enjoys its balanced earning portfolio, the Group will continue to seek healthy development of the clubbing business segment, review the business performance on a regular basis and identify favourable market changes in order to pursue suitable investment opportunities and broaden income sources. Clubbing business segment The Group understands the importance and the necessity to improve its ability to continue exciting existing customers and alluring potential customers. As a result, the Group 1,129 1, AUX International Holdings Limited

16 Management Discussion and Analysis has spent considerable time and resources to upgrade Magnum Club s hardware since January With the renovation work being close to its completion, the Group expects Mangum Club will be reopened on or around Christmas in The Group expects the soon-to-be reopened Magnum Club will enhance the Group s brand name as a leading entertainment services provider in Lan Kwai Fong and generate organic growth momentum in the Group s clubbing business segment. Apart from that, the Group will continue its search for opportunities to improve clubbing business performance in the future. Property management services segment The Group values long term growth and will not be hesitating to allocate its resources on areas that can enhance its future sustainability, especially when the Group anticipates that the competition in the property management service industry of China will only become more and more intense in the future. As a result, the Group will continue its enhancement in its operation and management, perfecting its scope of service and uplift its brand image as the Group sees service quality and brand image as essential qualities to equip the Group for future challenges. In the future, the Group will continue its effort in creating its brand advantages along with the vision to provide our customer a beautiful living environment for caring and comfortable life. Magnum Club Magnum Club Magnum Club Interim Report

17 Other Information INTERIM DIVIDEND The Board did not recommend the payment of an interim dividend for the six months ended 30 September 2018 (for the six months ended 30 September 2017: nil). COMPLIANCE WITH THE MODEL CODE FOR SECURITIES TRANSACTIONS The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the Model Code ) set out in Appendix 10 to the Listing Rules as its own code of conduct regarding securities transactions by the 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 six months ended 30 September AUX International Holdings Limited

18 Other Information DIRECTORS AND CHIEF EXECUTIVE S INTEREST AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES As at 30 September 2018, the interests or short positions of the Directors and chief executive of the Company in the shares, underlying shares and debentures of the Company and any of its associated corporations (within the meaning of Part XV of the Securities and Future Ordinance (the SFO )), which had been 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 and chief executive were deemed or taken to have under such provisions of the SFO) or were recorded in the register required to be kept, pursuant to section 352 of the SFO, or had been notified to the Company pursuant to the Model Code contained in the Listing Rules were as follows: XV XV Interim Report

19 Other Information Long positions in the shares and underlying shares of associated corporation of the Company Name of associated Corporation Name of Directors Capacity/ Nature of interest Number and class of shares Approximately percentage of the issued share capital Huiri Limited (Note 1) Zheng Jiang Interest in a controlled corporation 0.1 ordinary shares % China Prosper Enterprise Holding Co., Ltd. (Note 1) China Prosper Enterprise Holding Co., Ltd.1 Note: Zheng Jiang Interest in a controlled corporation 1,000 ordinary shares 1,000 10% 1. Ze Hong Limited, a company wholly-owned by Mr. Zheng Jiang, was interested in (i) 10% of the issued share capital of Huiri Limited, being the holding company of the Company; and (ii) 10% of the issued share capital of China Prosper Enterprise Holding Co., Ltd., being a fellow subsidiary of Huiri Limited. Mr. Zheng Jiang was deemed to be interested in the shares of Huiri Limited and China Prosper Enterprise Holding Co., Ltd. as held by Ze Hong Limited by virtue of the SFO. 1. (i) 10% (ii) China Prosper Enterprise Holding Co., Ltd. 10% China Prosper Enterprise Holding Co., Ltd. 18 AUX International Holdings Limited

20 Other Information Apart from the foregoing, as at 30 September 2018, none of the Directors or chief executive of the Company had or was deemed to have any interests or short positions in the shares, underlying shares or debentures of the Company, or any of its holding companies, subsidiaries or other associated corporation (within the meaning of Part XV of the SFO), which had been 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 and chief executive were deemed or taken to have under such provisions of the SFO), or had been recorded in the register required to be kept by the Company pursuant to section 352 of the SFO, or had been notified to the Company pursuant to the Model Code. XV XV Interim Report

21 Other Information SUBSTANTIAL SHAREHOLDERS INTEREST AND SHORT POSITION IN SHARES AND UNDERLYING SHARES As at 30 September 2018, the persons (other than the Directors or the chief executive of the Company) who had interests or short positions in the shares or underlying shares of the Company which had been disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO as recorded in the register required to be kept by the Company pursuant to section 336 of the SFO were as follows: 336 XV 2 3 Name of shareholder Capacity/Nature of Interest Long position in ordinary shares held Percentage of the issued share capital (approximately) (Note 1) 1 Zheng Jian Jiang (Note 2) 2 Ze Hui Limited (Note 2) 2 Interest in a controlled corporation Interest in a controlled corporation 219,950, % 219,950, % Huiri Limited (Note 2) Beneficial owner 219,950, % 2 He Yi Ju (Note 3) Interest of spouse 219,950, % 3 Xu Xingen Beneficial owner 32,400, % Chen Yongan Beneficial owner 21,600, % 20 AUX International Holdings Limited

22 Other Information Notes: 1. On the basis of 374,984,000 shares of the Company in issue as at 30 September Huiri Limited, a company incorporated in the British Virgin Islands with limited liability, is owned as to 90% by Ze Hui Limited (which is in turn wholly and beneficially owned by Mr. Zheng Jian Jiang) and 10% by Ze Hong Limited (which is in turn wholly and beneficially owned by Mr. Zheng Jiang, a current executive Director and the chairman of the Board). By virtue of SFO, Mr. Zheng Jian Jiang and Ze Hui Limited were taken to be interested in the same number of shares of the Company in which Huiri Limited was interested. 3. Ms. He Yi Ju is the spouse of Mr. Zheng Jian Jiang. Under the SFO, Ms. He Yi Ju was taken to be interested in the same number of shares in which Mr. Zheng Jian Jiang was interested. Apart from the foregoing, no other person had any interests or short positions in the shares or underlying shares of the Company which had been disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO as recorded in the register required to be kept by the Company pursuant to section 336 of the SFO. SHARE OPTION SCHEME The Company adopted the share option scheme (the Share Option Scheme ) on 3 January 2014 which shall be valid and effective for a period of 10 years from that date, subject to early termination by the Company in a general meeting or by the Board. The purpose of the Share Option Scheme is to provide incentives to Eligible Participants (as defined below) and is established to recognise and acknowledge the contributions the Eligible Participants have ,984, % 10% XV 2 3 Interim Report

23 Other Information had or may have made to the Group. Under the Share Option Scheme, the Board may offer to grant an option to any director or employee, or any advisor, consultant, suppliers or customers of the Group (the Eligible Participants ). The Company s shares (the Shares ) which may be issued upon exercise of all outstanding options granted and yet to be exercised under the Share Option Scheme and any other share option scheme of the Company at any time shall not exceed 30% of the Shares in issue from time to time. The maximum number of Shares available for issue under options which may be granted under the Share Option Scheme or other share option scheme adopted by the Company must not in aggregate exceed 10% of the Shares in issue immediately following completion of the IPO (but taking no account of any Shares which may be allotted or issued pursuant to the exercise of the Over-allotment Option (as defined in the Prospectus)), being 30,000,000 Shares (the General Scheme Limit ), subject to refreshment of such General Scheme Limit by shareholders approval in a general meeting of the Company. The General Scheme Limit so refreshed must not exceed 10% of the Shares in issue as at the date of such shareholders approval. The Company may also seek shareholders approval for grant of share options beyond the General Scheme Limit. The total number of Shares issued and which may fall to be issued upon exercise of the options granted pursuant to the Share Option Scheme to an Eligible Participant in any 12-month period shall not exceed 1% of the number of Shares in issue as at the date of grant unless approved by the shareholders of the Company in general meeting. 30% 10% 30,000,000 10% 12 1% 22 AUX International Holdings Limited

24 Other Information The subscription price of a Share in respect of any particular option granted under the Share Option Scheme shall be determined by the Board provided that it shall not be less than the highest of: (i) the closing price of the Shares as stated in the Stock Exchange s daily quotation sheet on the date of grant, which must be a trading day; (ii) the average closing price of the Shares as stated in the Stock Exchange s daily quotation sheets for the five trading days immediately preceding the date of grant; and (iii) the nominal value of a Share. Upon acceptance of the option, the grantee shall pay HK$1 to the Company by way of consideration for the grant. An option may be exercised in accordance with the terms of the Share Option Scheme at any time after the date upon which the option is deemed to be granted and accepted and prior to the expiry of 10 years from that date. The period during which an option may be exercised will be determined by the Board in its absolute discretion, save that no option may be exercised more than 10 years after it has been granted. For the six months ended 30 September 2018, no option was granted by the Company under the Share Option Scheme. As at 1 April 2018 and 30 September 2018, there was no option outstanding under the Share Option Scheme. As at the date of this interim report, options carrying the right to subscribe for up to 27,316,000 Shares representing 7.28% of the issued share capital of the Company, are available for grant under the Share Option Scheme. (i) (ii) (iii) 1 27,316, % Interim Report

25 Other Information USE OF NET PROCEEDS The net proceeds from the IPO amounted to approximately HK$105.6 million, among which approximately HK$97.4 million had been utilised as at 30 September As mentioned in the announcement of the Company dated 22 June 2017, as at 31 March 2017, the Group had used approximately HK$19.5 million and approximately HK$10.4 million respectively for the decoration and other opening costs for Zentral and for additional working capital and other general corporate purposes, which were designated uses as disclosed in the prospectus of the Company dated 13 January 2014, and the unutilised net proceeds amounted to approximately HK$75.7 million. As at 30 September 2018, parts of such remaining net proceeds from the IPO had been utilised as follows in accordance with the revised allocation plan as set out in the announcement of the Company dated 22 June 2017, and the unutilised portion has been deposited to licensed financial institutions in Hong Kong Zentral 75.7 Uses of Proceeds Proposed use of unutilised net proceeds from the IPO as set out in the announcement dated 22 June 2017 Utilised Proceeds as at 30 September 2018 Unutilised Proceeds as at 30 September 2018 HK$ million HK$ million HK$ million (i) settlement of consideration payable for acquisition of Ningbo AUX Property; (ii) research of business expansion including but not limited to clubbing business and property management business; (iii) capital expenditures, working capital, other capital requirements and other general corporate purposes. (i) (ii) (iii) AUX International Holdings Limited

26 Other Information The net proceeds from the Placing of new shares of the Company were approximately HK$54.1 million, which had been used in the manner as disclosed in the announcement of the Company dated 10 July As at 30 September 2018, the Group had utilised approximately HK$18.2 million of such net proceeds for working capital. It is expected that the unutilised proceeds will be applied for the intended uses as set out in the announcement of the Company dated 10 July COMPLIANCE WITH CORPORATE GOVERNANCE CODE The Company has adopted the Corporate Governance Code (the CG Code ) as set forth in Appendix 14 to the Listing Rules as its corporate governance code of practices. The Board is of opinion that the Company had complied with the CG Code during the six months ended 30 September PURCHASE, SALE OR REDEMPTION OF THE LISTED SECURITIES OF THE COMPANY During the six months ended 30 September 2018, neither the Company nor any of its subsidiaries had purchased, sold or redeemed any of the Company s listed securities. AUDIT COMMITTEE The primary duties of the audit committee of the Company (the Audit Committee ) are to review and supervise the financial reporting process and internal control procedures of the Company. The Audit Committee had reviewed Interim Report

27 Other Information the accounting principles and practices adopted by the Group and discussed financial reporting matters concerning the unaudited consolidated results of the Group for the six months ended 30 September CHANGE IN INFORMATION OF THE DIRECTORS Mr. Poon Chiu Kwok, an independent nonexecutive Director of the Company, had resigned as a non-executive director of Chong Kin Group Holdings Limited, a company listed on the main board of the Stock Exchange (stock code: 1609), with effect from 6 June Mr. Bau Siu Fung, an independent nonexecutive Director of the Company, had been appointed as an independent nonexecutive director of FSM Holdings Limited, a company listed on the main board of the Stock Exchange of 16 July 2018, on 22 June Save as disclosed above, there is no information regarding the Directors which is required to be disclosed in this interim report pursuant to Rule 13.51B of the Listing Rules. By order of the Board 1609 FSM Holdings Limited 13.51B Mr. Zheng Jiang Chairman Hong Kong, 28 November AUX International Holdings Limited

28 Independent Review Report Review report to the board of directors of AUX International Holdings Limited (Incorporated in the Cayman Islands with limited liability) INTRODUCTION We have reviewed the interim financial report set out on pages 29 to 72 which comprises the consolidated statement of financial position of AUX International Holdings Limited as of 30 September 2018 and the related consolidated statement of profit or loss, consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and condensed consolidated cash flow statement for the six month period then ended and explanatory notes. The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited require the preparation of an interim financial report to be in compliance with the relevant provisions thereof and Hong Kong Accounting Standard 34, Interim financial reporting, issued by the Hong Kong Institute of Certified Public Accountants. The directors are responsible for the preparation and presentation of the interim financial report in accordance with Hong Kong Accounting Standard 34. Our responsibility is to form a conclusion, based on our review, on the interim financial report and to report our conclusion solely to you, as a body, in accordance with our agreed terms of 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 Interim Report

29 Independent Review Report SCOPE OF REVIEW We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410, Review of interim financial information performed by the independent auditor of the entity, issued by the Hong Kong Institute of Certified Public Accountants. A review of the interim financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly we do not express an audit opinion. CONCLUSION Based on our review, nothing has come to our attention that causes us to believe that the interim financial report as at 30 September 2018 is not prepared, in all material respects, in accordance with Hong Kong Accounting Standard 34, Interim financial reporting KPMG Certified Public Accountants 8th Floor, Prince s Building 10 Chater Road Central, Hong Kong 28 November AUX International Holdings Limited

30 Consolidated Statement of Profit or Loss For the six months ended 30 September 2018 unaudited (Expressed in Hong Kong dollars) Six months ended 30 September Note $ 000 $ 000 Revenue 3 149, ,345 Other revenue 4 2,900 1,370 Other net income 5 10,288 Cost of inventories sold 6(d) (8,896) (12,807) Property cleaning expenses (19,541) (12,952) Staff costs 6 (70,815) (45,983) Depreciation and 6(d) amortisation (7,865) (7,832) Property rentals and related expenses (14,105) (18,771) Advertising and marketing expenses (6,412) (6,702) Other operating expenses (29,294) (23,526) Profit from operations 5, Finance costs 6(a) (1,196) (290) Profit/(loss) before taxation 6 4,546 (148) Income tax 7 (1,962) (2,701) Profit/(loss) for the period 2,584 (2,849) Earnings/(loss) per share 8 Basic and diluted 0.7 cent (0.9) cent The notes on pages 36 to 72 form part of this interim financial report Interim Report

31 Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended 30 September 2018 unaudited (Expressed in Hong Kong dollars) Six months ended 30 September $ 000 $ 000 Profit/(loss) for the period Other comprehensive income for the period 2,584 (2,849) Item that may be reclassified subsequently to profit or loss: Exchange difference on translation of the financial statements of a subsidiary (nil tax effect) (16,896) 283 Total comprehensive income for the period (14,312) (2,566) The notes on pages 36 to 72 form part of this interim financial report AUX International Holdings Limited

32 Consolidated Statement of Financial Position At 30 September 2018 unaudited (Expressed in Hong Kong dollars) At 30 September 2018 At 31 March 2018 (Note) Note $ 000 $ 000 Non-current assets Property, plant and equipment 9 11,605 14,395 Intangible asset 10 63,516 73,120 Goodwill 10 55,450 60,321 Deferred tax assets 1,175 1, , ,334 Current assets Inventories 3,552 2,990 Trade and other receivables 11 72,235 68,272 Amount due from a related party 540 Restricted bank deposits 12 3,791 2,726 Pledged bank deposits 12 1,000 1,000 Cash at bank and in hand 185, , , ,316 Current liabilities Trade and other payables 13 85, ,457 Contract liabilities 14 41,071 Amount due to the controlling shareholder 1,181 Obligations under finance lease Current taxation 2,084 3, , ,097 Net current assets 135, ,219 Interim Report

33 Consolidated Statement of Financial Position At 30 September 2018 unaudited (Expressed in Hong Kong dollars) At 30 September 2018 At 31 March 2018 (Note) Note $ 000 $ 000 Total assets less current liabilities Non-current liabilities 267, ,553 Loan from the controlling 15 shareholder 113, ,845 Obligations under finance lease Deferred tax liabilities 15,878 18, , ,743 NET ASSETS 137, ,810 CAPITAL AND RESERVES 16 Share capital 3,750 3,750 Reserves 133, ,060 TOTAL EQUITY 137, ,810 Note: The Group has initially applied HKFRS 9 and HKFRS 15 at 1 April Under the transition methods chosen, comparative information is not restated. See note 2. The notes on pages 36 to 72 form part of this interim financial report AUX International Holdings Limited

34 Consolidated Statement of Changes in Equity For the six months ended 30 September 2018 unaudited (Expressed in Hong Kong dollars) Share Share Capital Exchange Statutory Accumulated Total capital premium reserve reserve reserve losses equity $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Balance at 1 April 2017 Changes in equity for the six months ended 30 September 2017: 3, ,542 2,500 (16,460) 112,732 Loss for the period (2,849) (2,849) Other comprehensive income for the period Total comprehensive income for the period 283 (2,849) (2,566) Placing of new shares ,458 54,058 Balance at 30 September 2017 and 1 October 2017 Changes in equity for the six months ended 31 March 2018: 3, ,000 2, (19,309) 164,224 Loss for the period (22,668) (22,668) Other comprehensive income for the period 10,254 10,254 Total comprehensive income for the period 10,254 (22,668) (12,414) Balance at 31 March 2018 and 1 April 2018 Changes in equity for the six months ended 30 September 2018: 3, ,000 2,500 10,537 (41,977) 151,810 Profit for the period 2,584 2,584 Other comprehensive income for the period (16,896) (16,896) Total comprehensive income for the period (16,896) 2,584 (14,312) Transferred to statutory reserve 765 (765) Balance at 30 September , ,000 2,500 (6,359) 765 (40,158) 137,498 The notes on pages 36 to 72 form part of this interim financial report Interim Report

35 Condensed Consolidated Cash Flow Statement For the six months ended 30 September 2018 unaudited (Expressed in Hong Kong dollars) Six months ended 30 September $ 000 $ 000 Operating activities Cash (used in)/generated from operations The People s Republic of China (the PRC ) income tax paid (6,041) 5,145 (3,896) (4,250) Net cash (used in)/ generated from operating activities (9,937) 895 Investing activities Payment for the purchase of property, plant and equipment Net cash outflow from acquisition of subsidiary Proceeds from redemption of available-for-sale financial assets Proceeds from sale of property, plant and equipment Other cash flows arising from investing activities (1,397) (1,812) (177,139) 105, ,911 1,080 Net cash generated from/ (used in) investing activities 514 (72,091) 34 AUX International Holdings Limited

36 Condensed Consolidated Cash Flow Statement For the six months ended 30 September 2018 unaudited (Expressed in Hong Kong dollars) Six months ended 30 September $ 000 $ 000 Financing activities Net proceeds from placing of new shares Proceeds from loan from the controlling shareholder Capital element of finance lease rentals paid Interest element of finance lease rentals paid 54, ,481 (79) (15) Net cash (used in)/ generated from financing activities (94) 171,539 Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of the period (9,517) 100, ,788 93,589 Effect of foreign exchange rate changes Cash and cash equivalents at end of the period (12,096) 1, , ,581 The notes on pages 36 to 72 form part of this interim financial report Interim Report

37 Notes to the Unaudited Interim Financial Report (Expressed in Hong Kong dollars) 1 BASIS OF PREPARATION 1 (a) General information (a) AUX International Holdings Limited (the Company ) was incorporated in the Cayman Islands on 14 January 2013 as an exempted company with limited liability under the Companies Law (2013 Revision) (as consolidated and revised) of the Cayman Islands. The Company and its subsidiaries (hereinafter collectively referred to as the Group ) are principally engaged in operation of clubbing business and provision of property management services. Statement of compliance This interim financial report has been prepared in accordance with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, including compliance with Hong Kong Accounting Standard ( HKAS ) 34, Interim financial reporting, issued by the Hong Kong Institute of Certified Public Accountants ( HKICPA ). It was authorised for issue on 28 November AUX International Holdings Limited

38 Notes to the Unaudited Interim Financial Report (Expressed in Hong Kong dollars) 1 BASIS OF PREPARATION (Continued) 1 Statement of compliance (Continued) This interim financial report has been prepared in accordance with the same accounting policies adopted in the consolidated financial statements for the financial year ended 31 March 2018, except for the accounting policy changes that are expected to be reflected in the consolidated financial statements for the financial year ending 31 March Details of any changes in accounting policies are set out in note 2. 2 The preparation of an interim financial report in conformity with HKAS 34 requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses on a year to date basis. Actual results may differ from these estimates. 34 Interim Report

39 Notes to the Unaudited Interim Financial Report (Expressed in Hong Kong dollars) 1 BASIS OF PREPARATION (Continued) 1 Statement of compliance (Continued) This interim financial report contains condensed consolidated financial statements and selected explanatory notes. The notes include an explanation of events and transactions that are significant to an understanding of the changes in financial position and performance of the Group since the consolidated financial statements for the financial year ended 31 March The condensed consolidated interim financial statements and notes thereon do not include all of the information required for full set of financial statements prepared in accordance with Hong Kong Financial Reporting Standards ( HKFRSs ). This interim financial report is unaudited, but has been reviewed by KPMG in accordance with Hong Kong Standard on Review Engagements 2410, Review of interim financial information performed by the independent auditor of the entity, issued by the HKICPA. KPMG s independent review report to the Board of Directors is included on pages 27 and AUX International Holdings Limited

40 Notes to the Unaudited Interim Financial Report (Expressed in Hong Kong dollars) 2 CHANGES IN ACCOUNTING POLICIES 2 (a) Overview (a) The HKICPA has issued a number of new Hong Kong Financial Reporting Standards ( HKFRSs ) and amendments to HKFRSs that are first effective for the current accounting period of the Group. Of these, the following developments are relevant to the Group s consolidated financial statements: HKFRS 9, Financial instruments 9 HKFRS 15, Revenue from contracts with customers 15 HK(IFRIC) 22, Foreign currency transactions and advance consideration 22 The Group has not applied any new standard or interpretation that is not yet effective for the current accounting period, except for the amendments to HKFRS 9, Prepayment features with negative compensation which have been adopted at the same time as HKFRS The Group has been impacted by HKFRS 9 in relation to measurement of credit losses, and HKFRS 15 in relation to presentation of contract assets and contract liabilities. Details of the changes in accounting policies are discussed in note 2 for HKFRS 9 and note 2(c) for HKFRS (c) Interim Report

41 Notes to the Unaudited Interim Financial Report (Expressed in Hong Kong dollars) 2 CHANGES IN ACCOUNTING POLICIES (Continued) 2 (a) Overview (Continued) (a) Under the transition methods chosen, the Group recognises cumulative effect of the initial application of HKFRS 9 and HKFRS 15 as an adjustment to the opening balance of equity at 1 April Comparative information is not restated. The adoption of HKFRS 9 does not have a material impact to the opening balance as at 1 April The following table gives a summary of the opening balance adjustments recognised for each line item in the consolidated statement of financial position that has been impacted by HKFRS 15: At 31 March 2018 Impact on initial application of HKFRS At 1 April 2018 (Note 2(c)) 2(c) $ 000 $ 000 $ 000 Contract liabilities 47,573 47,573 Trade and other payables 133,457 (47,573) 85,884 Total current liabilities 137, ,097 Further details of these changes are set out in sub-sections and (c) of this note. (c) 40 AUX International Holdings Limited

42 Notes to the Unaudited Interim Financial Report (Expressed in Hong Kong dollars) 2 CHANGES IN ACCOUNTING POLICIES (Continued) 2 HKFRS 9, Financial instruments, including the amendments to HKFRS 9, Prepayment features with negative compensation 9 9 HKFRS 9 replaces HKAS 39, Financial instruments: recognition and measurement. It sets out the requirements for recognising and measuring financial assets, financial liabilities and some contracts to buy or sell nonfinancial items The Group has applied HKFRS 9 retrospectively to items that existed at 1 April 2018 in accordance with the transition requirements. The Group has recognised the cumulative effect of initial application as an adjustment to the opening equity at 1 April Therefore, comparative information continues to be reported under HKAS Interim Report

43 Notes to the Unaudited Interim Financial Report (Expressed in Hong Kong dollars) 2 CHANGES IN ACCOUNTING POLICIES (Continued) 2 HKFRS 9, Financial instruments, including the amendments to HKFRS 9, Prepayment features with negative compensation (Continued) Further details of the nature and effect of the changes to previous accounting policies are set out below: 9 9 Credit losses HKFRS 9 replaces the incurred loss model in HKAS 39 with the expected credit loss ( ECL ) model. The ECL model requires an ongoing measurement of credit risk associated with a financial asset and therefore recognises ECLs earlier than under the incurred loss accounting model in HKAS 39. The Group applies the new ECL model to financial assets measured at amortised cost (including cash and cash equivalents and trade and other receivables) AUX International Holdings Limited

44 Notes to the Unaudited Interim Financial Report (Expressed in Hong Kong dollars) 2 CHANGES IN ACCOUNTING POLICIES (Continued) 2 HKFRS 9, Financial instruments, including the amendments to HKFRS 9, Prepayment features with negative compensation (Continued) Credit losses (Continued) Measurement of ECLs ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all expected cash shortfalls (i.e. the difference between the cash flows due to the Group in accordance with the contract and the cash flows that the Group expects to receive). The expected cash shortfalls are discounted using the following discount rates where the effect of discounting is material: fixed-rate financial assets, trade and other receivables and contract assets: effective interest rate determined at initial recognition or an approximation thereof; variable-rate financial assets: current effective interest rate. 9 9 Interim Report

45 Notes to the Unaudited Interim Financial Report (Expressed in Hong Kong dollars) 2 CHANGES IN ACCOUNTING POLICIES (Continued) 2 HKFRS 9, Financial instruments, including the amendments to HKFRS 9, Prepayment features with negative compensation (Continued) Credit losses (Continued) Measurement of ECLs (Continued) The maximum period considered when estimating ECLs is the maximum contractual period over which the Group is exposed to credit risk. In measuring ECLs, the Group takes into account reasonable and supportable information that is available without undue cost or effort. This includes information about past events, current conditions and forecasts of future economic conditions AUX International Holdings Limited