目錄 Contents Page(s) Corporate Information 2 Financial Highlights 4 Management Discussion and Analysis 7 Report on Review of Condensed Interim Financia

Transcription

1 (Incorporated in Bermuda with limited liability ) (Stock Code : 970) Interim Report 2016/2017 * for identification purpose only

2 目錄 Contents Page(s) Corporate Information 2 Financial Highlights 4 Management Discussion and Analysis 7 Report on Review of Condensed Interim Financial Information 20 Consolidated Statement of Comprehensive Income 22 Consolidated Statement of Financial Position 24 Consolidated Statement of Changes in Equity 26 Condensed Consolidated Statement of Cash Flows 27 Notes to the Condensed Interim Financial Information 28 Additional Information 56 Sparkle Roll Group Limited 耀萊集團有限公司 1

3 公司資料 Corporate Information BOARD OF DIRECTORS Tong Kai Lap (Chairman) Zheng Hao Jiang (Deputy Chairman and Chief Executive Officer) Zhu Lei Zhang Si Jian* * Gao Yu* * Qi Jian Wei* * Choy Sze Chung, Jojo** ** Lam Kwok Cheong** ** Lee Thomas Kang Bor** ** * Non-Executive Director ** Independent Non-Executive Director * ** AUDIT COMMITTEE Choy Sze Chung, Jojo (Chairman) Lam Kwok Cheong Lee Thomas Kang Bor REMUNERATION Lam Kwok Cheong (Chairman) COMMITTEE Choy Sze Chung, Jojo Lee Thomas Kang Bor Tong Kai Lap Zheng Hao Jiang NOMINATION Lee Thomas Kang Bor (Chairman) COMMITTEE Lam Kwok Cheong Choy Sze Chung, Jojo LEGAL ADVISERS Chiu & Partners F. Zimmern & Co. King & Wood Mallesons FINANCIAL Li Yat Ming, FCPA, MHKSI FCPA, MHKSI CONTROLLER & COMPANY SECRETARY 2 Sparkle Roll Group Limited 耀萊集團有限公司

4 公司資料 Corporate Information PRINCIPAL BANKERS Bank of Beijing Co., Ltd. Bank of East Asia, Limited Ping An Bank Co., Ltd Standard Chartered Bank (Hong Kong) Limited AUDITOR BDO Limited (Certified Public Accountants) REGISTERED OFFICE Clarendon House 2 Church Street Hamilton HM11 Bermuda Clarendon House 2 Church Street Hamilton HM11 Bermuda PRINCIPAL OFFICE Rooms , 20/F Sun Hung Kai Centre 30 Harbour Road Wanchai Hong Kong REGISTRARS (in Hong Kong) Tricor Secretaries Limited Level 22, Hopewell Centre 183 Queen s Road East Hong Kong REGISTRARS (in Bermuda) MUFG Fund Services (Bermuda) Limited The Belvedere Building 69 Pitts Bay Road Pembroke HM08 Bermuda MUFG Fund Services (Bermuda) Limited The Belvedere Building 69 Pitts Bay Road Pembroke HM08 Bermuda STOCK CODE WEBSITE Sparkle Roll Group Limited 耀萊集團有限公司 3

5 財務摘要 Financial Highlights Revenue for the six months period ended 30 September 2016 increased by 13.04% from HK$1,211,351,000 to HK$1,369,359,000 when compared with the revenue recorded in the corresponding period last year. 1,211,351, % 1,369,359,000 Gross profit for the financial period ended 30 September 2016 increased from HK$101,844,000 to HK$147,817, ,844, ,817,000 Other income and net gains decreased from HK$46,433,000 for the six months period ended 30 September 2015 to HK$38,345,000 for the six months period ended 30 September ,433,000 38,345,000 Selling and administrative expenses amounted to HK$142,744,000 for the six months period ended 30 September 2016, representing a slight decrease of HK$1,177,000 from HK$141,567,000 recorded in the corresponding period of ,744, ,567,000 1,177,000 Net profit attributable to owners of Sparkle Roll Group Limited (the Company ) for the six months period ended 30 September 2016 was HK$34,214,000 as compared with net loss attributable to owners of the Company of HK$23,291,000 recorded for the corresponding period of ,214,000 23,291,000 Earnings per share attributable to owners of the Company were HK1.15 cents for the six months period ended 30 September 2016 as compared with loss of HK0.78 cent per share in the last financial period No interim dividend was declared for the six months period ended 30 September 2016 (2015: nil). 4 Sparkle Roll Group Limited 耀萊集團有限公司

6 財務摘要 Financial Highlights Revenue () 2,000,000 1,500,000 1,541,476 1,526,346 1,624,616 1,369,359 1,211,351 1,000, , / / / / /2017 Gross Profit and Gross Profit Margin () 300, % 10.8% 12.0% 250, % 8.4% 200, % 150, , % 5.9% 147, % 100,000 94,465 95, , % 50, % / / / / / % Sparkle Roll Group Limited 耀萊集團有限公司 5

7 財務摘要 Financial Highlights Financial Position: 2016/2017 FY2016 interim Total Assets 1,574,992 1,735,506 Total Liabilities 473, ,780 Net Assets 1,101,657 1,083,726 Net Tangible Worth 894, ,005 Financial Ratios: 2016/ /2016 interim interim Gross profit margin 10.8% 8.4% Operating profit margin 3.2% 0.6% 2016/2017 FY2016 interim Current ratio Gearing ratio 28.0% 45.1% 6 Sparkle Roll Group Limited 耀萊集團有限公司

8 管理層討論及分析 Management Discussion and Analysis PROSPECT In the first three quarters of 2016, China has been facing complicated and challenging domestic conditions as the country reported a greater-than-expected fall in dollar-denominated trade in July. Global markets have been highly sensitive to hints that China s slowdown is worsening, contributing to a major equity rout in January. Externally, United Kingdom will be facing continuous challenges in the coming two to three years after it voted to leave the European Union. According to the International Monetary Fund (IMF) forecast dated 12 August 2016, China s economy will be growing by 6.6 percent in 2016 but slowing each year thereafter until The exception is 2018 and 2019, with a growth of 6.0 percent seen each year and will fall below 6 percent in Despite the slowdown, China s growth outlook remains far higher than those advanced economies and many emerging ones. The IMF sees the world average economic growth of just 3.1 percent in 2016 and 3.4 percent in Similarly, rating agency Moody s Investors Service raised its forecasts for China s economic growth in the wake of significant fiscal and monetary stimulus policies. On 17 August 2016, the rating agency raised its economic growth forecasts of China to 6.6 percent for 2016 from 6.3 percent previously and to 6.3 percent in 2017, up from 6.1 percent. 6.6% 6.0% 6% 3.1% 3.4% (Moody s Investors Service) 6.3%6.6% 6.1%6.3% The Company and its subsidiaries (together the Group ) is confident of the performance of our Automobile division and has foreseen positive results to be achieved. Therefore, we issued a positive profit alert on 4 November 2016 to keep our shareholders and potential investors informed of an expected unaudited profit recorded for the six-month period ended 30 September 2016 as compared with a net loss for the six months ended 30 September The above-mentioned positive profit alert announcement was only based on the preliminary review on the management accounts of the Group, which had not been reviewed by the Group s auditors. Sparkle Roll Group Limited 耀萊集團有限公司 7

9 管理層討論及分析 Management Discussion and Analysis China s Luxury Goods Market There are quite a few ongoing updates and research reports published from reputable authorities, investment banks and global research houses on the Changing of China s Luxury Market in terms of Purchasing Patterns. According to Bain & Company s spring luxury update issued on 24 May 2016 titled The Global Personal Luxury Goods Market in 2016 Will Mirror Last Year s Low Singledigit Real Growth, Even as Geopolitical Turmoil and Luxury Brand s Emerging Strategies Reshuffle Internal Market Dynamics, Greater China is showing signs of a comeback, particularly in Mainland China (up 2 percent at current exchange rates; 4 percent at constant exchange rates), which is on the verge of reversing a three-year decline. Bain anticipates the personal luxury goods market will continue to measure growth of 2-3 percent through 2020, reaching an estimated billion in revenue. However, that outcome is heavily contingent upon the continuous growth in Mainland China. Chinese shoppers particularly the middle class are expected to make up approximately 34 percent of global luxury consumers in the next four years, well ahead of American and European consumers. E-commerce is also rapidly gaining ground on traditional channels at 15 percent compound annual growth revenue across formats and models, with new ones emerging all the time. (Bain & Company) 2%4% 2 3% 2,800 2,950 34% 15% The Wall Street Journal, a New York based international business English newspaper, issued an article named Luxury Brands Step Up Shift to Digital in China on 20 June Although revenues from online sales are still small, just 5% of China s $22.5 billion domestic luxury market but growing fast. According to a report by business intelligence firm L2, online luxury sales rose by 20% in 2015, nearly 3 times faster than the broader luxury market, with mobile sales being the most important sector. Searches for luxury brands conducted on smartphones are nearly twice those done on a desktop, and rose 44% in 2015 on year. There are 700 million users on WeChat while Weibo has more than 200 million users. Besides, the online shift is happening as many retailers are closing their shops after quick openings during the boom years, when many rushed in to China to capture business from a burgeoning middle class. The huge but empty luxury store is a common sight in many second-and-thirdtiered Chinese cities. The drop in luxury demand is partly due to shifting consumption habits and tastes. (The Wall Street Journal) 225 5% L2 20% 44%700,000, ,000,000 8 Sparkle Roll Group Limited 耀萊集團有限公司

10 管理層討論及分析 Management Discussion and Analysis BUSINESS REVIEW Automobile Dealerships During the financial period under review, all ultra-luxury cars under our portfolio Lamborghini, Bentley and Rolls-Royce recorded positive sales results. Lamborghini performed the best with the largest sales increment, amounting to HK$89.6 million and representing a 62.9% increase in sales in the financial period under review from HK$55 million recorded in the corresponding financial period last year, attributable to strong sales of new model Huracan. A total of 22 units of Lamborghini were sold, representing an increase of 69% as compared with 13 units sold in the corresponding financial period last year. 55,000,000 89,600, % Huracan % According to an article issued by the official website of Lamborghini titled Record Sales For Automobili Lamborghini in the First Six Months of 2016: Deliveries Exceed 2,000 Units on 6 July 2016, Lamborghini reported that the brilliant results in the first six months of the 2016 fiscal year had set a new sales record in its history with 2,013 cars delivered to customers surpassing the 2,000 units mark for the first time in a half year period. The brand s chief executive officer, Stefano Domenicali, said: Thanks to the enlargement of the Huracan family, including introduction of the Spyder and rear-wheel drive version in markets worldwide in spring this year, we were able to deliver an exceptional sales performance in the first six months of He also expressed that the brand is aiming to outperform last year s sales record again with a solid order bank of Huracan and V12 model of the Aventador. 2,000 2,0132,000 (Stefano Domenicali) Huracan Spyder Huracan AventadorV12 Rolls-Royce recorded an increase in sales during the financial period under review with a total of HK$432.7 million, representing an increase of 18.6% as compared with that of HK$364.7 million recorded in the corresponding financial period last year. At the same time, a total of 74 units of Rolls-Royce were sold, representing an increase of 17% as compared with 63 units sold in the corresponding financial period last year. 432,700, ,700, % % Sparkle Roll Group Limited 耀萊集團有限公司 9

11 管理層討論及分析 Management Discussion and Analysis Bentley recorded a 12% increase in unit sales to 191 units sold during the financial period under review, as compared with 170 units sold in the corresponding period last year. The brand recorded an increase in sales during the financial period under review with a total of HK$661 million, representing an increase of 8.6% as compared with that of HK$608.5 million recorded in the corresponding financial period last year. 12% ,000, ,500, % Gross profit margins of Bentley and Rolls-Royce improved while that of Lamborghini declined, and the Group continued enjoying bonus from the brands. Revenue from after-sales services during the financial period under review decreased. It reached approximately HK$65.3 million, a drop of 13.2% as compared with the same recorded in the corresponding period last year. Regarding the gross profit margin, we saw a decrease from 53% in the corresponding financial period last year to 46.2% in the current financial period. The decrease in gross profit margin was due to keen competition between service providers during the financial period under review. 65,300, % 53% 46.2% Watch Dealerships & Jewellery Distributorships During the financial period under review, the sales performance of our super deluxe branded watch division recorded a decline in revenue showing an approximate 10.6% decrease to approximately HK$63.8 million, as compared with that of approximately HK$71.4 million in the corresponding financial period last year. 10.6% 63,800,000 71,400,000 Sales of top-tier branded jewellery division increased in terms of quantity and sales amount, recorded sales revenue of HK$13.13 million as compared with that of HK$8.94 million in the previous financial period. 13,130,000 8,940, Sparkle Roll Group Limited 耀萊集團有限公司

12 管理層討論及分析 Management Discussion and Analysis 112 pieces of watches were sold in this financial period as compared with 122 pieces sold in the previous financial period. Brands included Richard Mille, Parmigiani, DeWitt, DelaCour and Buben & Zorweg Richard Mille Parmigiani DeWitt DelaCour Buben & Zorweg 325 pieces of jewellery were sold in this financial period as compared with 204 pieces sold in the previous financial period. Brands included Boucheron and Royal Asscher Boucheron Royal Asscher Gross profit margins of Watch division declined during the current financial period from 18.4% in the last financial period to 14.9% in the current financial period while gross profit margin of Jewellery division also decreased from 37.6% in the previous financial period to 37.4% in the current financial period. 18.4% 14.9% 37.6% 37.4% Among the watches and jewellery brands under our Group, Richard Mille performed the best in terms of revenue contribution. Richard Mille Others During the current financial period, the sales of our Others division performed satisfactorily with revenue recorded of approximate 59.6% increase to approximately HK$43.9 million, as compared with that of approximately HK$27.5 million in the previous financial period. 59.6%43,900,000 27,500,000 Among all brands under this division including fine wine, audio equipment, menswear apparel and accessories and cigars and smoker s accessories, Bang & Olufsen performed the best in terms of revenue contribution, attributable to both sales from our points-ofsale and e-commerce sales of B&O PLAY for the six months ended 30 September Bang & Olufsen B&O PLAY Sparkle Roll Group Limited 耀萊集團有限公司 11

13 管理層討論及分析 Management Discussion and Analysis FINANCIAL REVIEW Revenue The revenue of the Group for the six months ended 30 September 2016 was approximately HK$1,369.4 million, representing a increase of approximately 13.0% as compared with that of approximately HK$1,211.4 million recorded in the same period last year. The increase was due to increase of sales volume of automobiles. The table below sets out the Group s revenue for the period indicated: 1,369,400,000 1,211,400, % Six months ended 30 September Changes Contribution Contribution (%) (%) % Revenue Source (%) (%) % Automobile segment Sales of automobiles 1,183, % 1,028, % 155, % Provision of after-sales services 65, % 75, % (9,951) -13.2% Total 1,248, % 1,103, % 145, % Branded watch and jewellery segments 76, % 80, % (3,449) -4.3% Other segments 43, % 27, % 16, % 1,369,359 1,211, , % 12 Sparkle Roll Group Limited 耀萊集團有限公司

14 管理層討論及分析 Management Discussion and Analysis Gross Profit and Gross Profit Margin The gross profit of the Group for the six months ended 30 September 2016 increased by 45.2% to approximately HK$147.8 million (30 September 2015: HK$101.8 million) while the gross profit margin of the Group for the six months ended 30 September 2016 increased from 8.4% to 10.8%. 45.2%147,800, ,800, %10.8% The increase was mainly due to the increase in gross profit from sales of automobiles resulted from the launch of a new model of Bentley SUV as well as significant improvement in sales of Rolls- Royce. The gross profit of the automobiles segment increased from HK$36.2 million for the period ended 30 September 2015 to HK$87.8 million for the period ended 30 September ,200,000 87,800,000 However, the gross profit of the provision of after-sales services for the six months ended 30 September 2016 decreased by 24.6% to approximately HK$30.1 million (30 September 2015: HK$39.9 million). The decrease was mainly due to the reduction of average after-sale service fee resulting from keen competition % 30,100,000 39,900,000 Other Income and Net Gains Other income and net gains decreased from HK$46.4 million for the period ended 30 September 2015 to HK$38.3 million for the period ended 30 September The decrease was mainly due to lack of sub-lease rental income for the six months ended 30 September 2016 as compared with the same period last year, but offset by an increase in income from insurance brokerage. 46,400,000 38,300,000 Other Operating Expenses The selling and distribution costs increased by 4.6% while administrative expenses decreased by 10.9% respectively. The changes were mainly due to the increase in marketing expenses but the increment was covered by the significantly decrease in rental expense of the Group. 4.6% 10.9% Sparkle Roll Group Limited 耀萊集團有限公司 13

15 管理層討論及分析 Management Discussion and Analysis Finance Costs The finance costs of the Group decreased by 73.5% from HK$30.2 million for the period ended 30 September 2015 to HK$8.0 million for the period ended 30 September The decrease was due to the substantial reduction of average balance of borrowings during the period and reduction of interest rates by the People s Bank of China. LIQUIDITY AND FINANCIAL RESOURCES 30,200, % 8,000,000 The Group s total assets as at 30 September 2016 were approximately HK$1,575.0 million (31 March 2016: HK$1,735.5 million) which were supported by the owners equity and total liabilities of approximately HK$1,074.6 million (31 March 2016: HK$1,056.2 million) and HK$473.3 million (31 March 2016: HK$651.7 million) respectively. 1,575,000,000 1,735,500,000 1,074,600,000 1,056,200, ,300, ,700,000 Cash Flow The Group s bank balances and cash as of 30 September 2016 were approximately HK$103.1 million (31 March 2016: HK$157.2 million) which were mainly denominated in Hong Kong dollars ( HK$ ) and Renminbi ( RMB ). 103,100, ,200,000 The Group s primary uses of cash are to repay the Group s borrowings, to pay for purchases of inventories and to fund the Group s working capital and normal operating costs. Such decrease was mainly attributable to the substantial repayment of borrowings during the period under review. The directors of the Company (the Directors ) consider that the Group will have sufficient working capital for its existing operations and financial resources for financing future business expansion and capital expenditures. 14 Sparkle Roll Group Limited 耀萊集團有限公司

16 管理層討論及分析 Management Discussion and Analysis Borrowings The Group s borrowings as at 30 September 2016 were approximately HK$308.4 million, representing a decrease of 36.9% from approximately HK$488.7 million as at 31 March The Group s borrowings were mainly denominated in RMB. The decrease was mainly due to substantial repayment of borrowings during the period under review. 308,400, ,700, % Gearing Ratio The Group s gearing ratio computed as total borrowings over the total equity decreased to 28.0% as at 30 September 2016 (31 March 2016: 45.1%). 28.0% 45.1% Inventories As at 30 September 2016, the Group s inventories decreased by 13.2% from approximately HK$1,000.2 million as at 31 March 2016 to HK$867.8 million, primarily due to the decrease in automobile inventories which accounted for approximately 55.5% of the inventories of the Group. 1,000,200, % 867,800, % The Group s average inventory turnover days decreased from 220 days for the six months period ended 30 September 2015 to 140 days for the six months period ended 30 September 2016, primarily due to substantial decrease in average inventories resulting from the improvement in the automobile retail market Sparkle Roll Group Limited 耀萊集團有限公司 15

17 管理層討論及分析 Management Discussion and Analysis Exposure to Foreign Exchange The revenue and expenses of the Group are mainly denominated in RMB and HK$ while the production cost and purchases are mainly denominated in RMB, HK$, Euro ( EUR ) and Swiss Franc ( CHF ). The Group did not enter into any foreign currency forward contract for the financial period under review. At 30 September 2016, the Group did not have any unrealised gain or loss in respect of the foreign currency forward contracts (30 September 2015: net realised gain of HK$0.4 million). 400,000 Contingent Liabilities and Capital Commitment The Group did not have any significant capital commitment as at 30 September 2016 (31 March 2016: nil) in respect of acquisition of property, plant and equipment. The board of directors (the Board ) of the Company considered that the Group had no material contingent liabilities as at 30 September Charges on Assets As at 30 September 2016, pledged deposits and inventories of the Group with aggregate carrying amounts of approximately HK$64.3 million (31 March 2016: HK$55.7 million) and HK$261.2 million (31 March 2016: HK$424.6 million) respectively were pledged to secure general banking facilities granted to the Group. 64,300,000 55,700, ,200, ,600, Sparkle Roll Group Limited 耀萊集團有限公司

18 管理層討論及分析 Management Discussion and Analysis Human Resources As at 30 September 2016, the Group had 502 employees (31 March 2016: 485). Staff costs (including Directors emoluments) charged to profit or loss amounted to approximately HK$23 million for the six months ended 30 September 2016 (30 September 2015: HK$22 million) ,000,000 22,000,000 The Group provided benefits, which included basic salary, commission, discretionary bonus, medical insurance and retirement funds, to employees to sustain competitiveness of the Group. The package was reviewed on an annual basis based on the Group s performance and employees performance appraisal. The Group also provided training to the employees for their future advancement. OUTLOOK Luxury cars in the People s Republic of China (the PRC ) have been adversely affected by the current Chinese Government s corruption crackdown. However, the outlook for the luxury car market in China is promising. It is expected that by 2020, China will become the world s leading luxury car market, leaving the United States behind. Automobile dealerships are our primary focused business and the Directors of our Group remain cautiously positive towards the Automobile division. On 20 October 2016, the Group entered into a conditional Sales and Purchase Agreement with the companies wholly-owned by Mr. Qi Jian Hong ( Mr. Qi ), our single largest shareholder, regarding the proposed acquisition by the Company of approximately 15.09% shareholding in Bang & Olufsen A/S and 49% equity interests in Balanorm Beo (Beijing) Trading Development Limited*. A joint announcement to this effect was issued on the same date. It is expected that completion of such acquisition will take place at or around the end of Please refer to the joint announcement issued by the Company and Sparkle Roll Holdings Limited ( SRHL ) dated 20 October 2016 for details. Bang & Olufsen A/S 15.09% 49% * For identification purpose only Sparkle Roll Group Limited 耀萊集團有限公司 17

19 管理層討論及分析 Management Discussion and Analysis Looking ahead, given the still challenging environment of the luxury goods markets in the PRC, the Group is nonetheless cautiously optimistic and committed to continue our leading roles as a luxury goods manager. As mentioned previously, we have been targeting to destock our non-auto inventory, we are glad to report that satisfactory progress has been achieved during the six months ended 30 September As such, the Group plans to extend such destocking program to Others division, especially to those products with low stock turnover rate. As regards Sparkle Roll Online project, the Group remains committed to establishing an e-commerce platform, Sparkle Roll Online, to capture the evolving e-commerce market. The second stage of such project is expected to be launched at the end of the first quarter of The Board does not recommend to declare an interim dividend for this financial period despite the Group was able to turn around to profitability in this financial period. The Group would like to reserve more capital to capture opportunities and meet the challenges ahead. PRINCIPAL ACTIVITIES The Company is an investment holding company. Its subsidiaries are principally engaged in distributorships of luxury goods. The operations are mainly based in Hong Kong, Mainland China and Malaysia. INTERIM DIVIDEND The Board has resolved not to recommend the payment of an interim dividend for the six months ended 30 September 2016 (six months ended 30 September 2015: nil). 18 Sparkle Roll Group Limited 耀萊集團有限公司

20 管理層討論及分析 Management Discussion and Analysis SHARE OPTION SCHEME The Company s share option scheme (the Scheme ) was adopted pursuant to an ordinary resolution passed at the special general meeting of the Company held on 7 October 2002 for the primary purpose of providing incentives to directors and eligible employees. The Scheme was expired on 6 October Pursuant to an ordinary resolution passed at the annual general meeting of the Company held on 20 August 2012, the Company s new share option scheme (the New Scheme ) was adopted and the Scheme was terminated. The New Scheme shall be valid and effective for a term of ten years commencing on 20 August There was approximately 6 years remaining life of the New Scheme. The total number of shares in respect of which options may be granted under the New Scheme as at 30 September 2016 was 297,982,885 shares (including options for nil share that have been granted but not yet lapsed or exercised), representing 10% of the issued share capital of the Company as at 30 September ,982,885 10% The Company operates the New Scheme for the purpose of providing incentives and rewards to eligible participants who contribute to the success of the Group s business. Eligible participants of the New Scheme include any director (including executive, non-executive and independent non-executive director), any employee, or any consultant, advisor, customer and business associates. There was no outstanding share to be issued under the New Scheme as at 30 September 2016 (as at 31 March 2016: nil). Sparkle Roll Group Limited 耀萊集團有限公司 19

21 簡明中期財務資料審閱報告 Report on Review of Condensed Interim Financial Information To the Board of Directors of Sparkle Roll Group Limited (incorporated in Bermuda with limited liability) INTRODUCTION We have reviewed the condensed interim financial information set out on pages 22 to 55 which comprises the consolidated statement of financial position of Sparkle Roll Group Limited as of 30 September 2016 and the related consolidated statement of comprehensive income, consolidated statement of changes in equity and condensed consolidated statement of cash flows 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 information to be in compliance with the relevant provisions thereof and Hong Kong Accounting Standard 34 Interim Financial Reporting ( HKAS 34 ) issued by the Hong Kong Institute of Certified Public Accountants. The directors are responsible for the preparation and presentation of the condensed interim financial information in accordance with HKAS Our responsibility is to form a conclusion on the condensed interim financial information based on our review 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. 20 Sparkle Roll Group Limited 耀萊集團有限公司

22 簡明中期財務資料審閱報告 Report on Review of Condensed Interim Financial Information 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 interim financial information consists of making inquiries, 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 on the condensed interim financial information. CONCLUSION 2410 Based on our review, nothing has come to our attention that causes us to believe that the condensed interim financial information is not prepared, in all material respects, in accordance with HKAS BDO Limited Certified Public Accountants Lui Chi Kin Practising Certificate Number P06162 P06162 Hong Kong, 22 November 2016 Sparkle Roll Group Limited 耀萊集團有限公司 21

23 綜合全面收入報表 Consolidated Statement of Comprehensive Income For the six months ended 30 September 2016 Six months ended 30 September Notes (Unaudited) (Unaudited) Revenue 1,369,359 1,211,351 Cost of sales (1,221,542) (1,109,507) Gross profit 147, ,844 Other income and net gains 5 38,345 46,433 Selling and distribution costs (112,231) (107,314) Administrative expenses (30,513) (34,253) Operating profit 6 43,418 6,710 Finance costs 7 (7,969) (30,162) Profit/(loss) before income tax 35,449 (23,452) Income tax expense 8 (1,382) (845) Profit/(loss) for the period 34,067 (24,297) Other comprehensive income, net of tax Item that may be reclassified subsequently to profit or loss: Exchange differences on translation of financial statements of foreign operations (16,136) (10,181) Total comprehensive income for the period 17,931 (34,478) 22 Sparkle Roll Group Limited 耀萊集團有限公司

24 綜合全面收入報表 Consolidated Statement of Comprehensive Income For the six months ended 30 September 2016 Six months ended 30 September Notes (Unaudited) (Unaudited) Profit/(loss) for the period attributable to: Owners of the Company 34,214 (23,291) Non-controlling interests (147) (1,006) 34,067 (24,297) Total comprehensive income attributable to: Owners of the Company 18,466 (33,038) Non-controlling interests (535) (1,440) 17,931 (34,478) Earnings/(loss) per share attributable to owners of the Company during the period 10 Basic and diluted HK1.15 cents HK(0.78) cent Sparkle Roll Group Limited 耀萊集團有限公司 23

25 綜合財務狀況報表 Consolidated Statement of Financial Position As at 30 September September March 2016 Notes (Unaudited) (Audited) ASSETS AND LIABILITIES Non-current assets Property, plant and equipment 11 95, ,023 Goodwill 206, ,171 Other intangible asset Amount due from a non-controlling interest 12(a) 2,320 Rental deposits paid to a related party 12(b) 16,744 17, , ,618 Current assets Inventories ,766 1,000,203 Trade receivables 14 8,091 8,527 Deposits, prepayments and other receivables 194, ,350 Amounts due from related parties 12(c) 17,554 18,677 Amount due from a non-controlling interest 12(a) 774 9,281 Pledged deposits 64,289 55,686 Cash at banks and in hand 103, ,164 1,255,868 1,401,888 Current liabilities Trade payables 16 9,914 27,444 Receipts in advance, accrued charges and other payables 148, ,545 Amount due to a related party 12(c) 24 Amounts due to non-controlling interests 12(a) 1,761 1,284 Provision for taxation 3,469 3,458 Borrowings , , , ,471 Net current assets 783, ,417 Total assets less current liabilities 1,102,960 1,085, Sparkle Roll Group Limited 耀萊集團有限公司

26 綜合財務狀況報表 Consolidated Statement of Financial Position As at 30 September September Non-current liabilities Other payables Deferred tax liabilities 1,036 1, March 2016 Notes (Unaudited) (Audited) 1,303 1,309 Net assets 1,101,657 1,083,726 EQUITY Share capital 18 5,959 5,959 Reserves 19 1,068,685 1,050,219 Equity attributable to owners of the Company 1,074,644 1,056,178 Non-controlling interests 27,013 27,548 Total equity 1,101,657 1,083,726 Sparkle Roll Group Limited 耀萊集團有限公司 25

27 綜合股本權益變動表 Consolidated Statement of Changes in Equity For the six months ended 30 September 2016 Attributable to owners of the Company At 1 April , ,335 3,508 (36,810) 28,844 34,739 30,575 12, ,911 1,112,564 17,781 1,130,345 Loss for the period (23,291) (23,291) (1,006) (24,297) Other comprehensive income Exchange differences on translation of financial statements of foreign operations (9,747) (9,747) (434) (10,181) Total comprehensive income for the period (9,747) (23,291) (33,038) (1,440) (34,478) At 30 September 2015 (Unaudited) 5, ,335 3,508 (36,810) 28,844 24,992 30,575 12, ,620 1,079,526 16,341 1,095,867 Attributable to owners of the Company Share capital Share premium* Capital reserve* Special reserve* Contributed surplus* Exchange reserve* Other reserve* Statutory reserve* Retained profits* Total Noncontrolling interests Total equity * * * * * * * * Share capital Share premium* Capital reserve* Special reserve* Contributed surplus* Exchange reserve* Other reserve* Statutory reserve* Retained profits* Total Noncontrolling interests Total equity * * * * * * * * At 1 April , ,335 3,508 (36,810) 28,844 10,681 30,575 12, ,576 1,056,178 27,548 1,083,726 Profit/(loss) for the period 34,214 34,214 (147) 34,067 Other comprehensive income Exchange differences on translation of finacial statements of foreign operations (15,748) (15,748) (388) (16,136) Total comprehensive income for the period (15,748) 34,214 18,466 (535) 17,931 At 30 September 2016 (Unaudited) 5, ,335 3,508 (36,810) 28,844 (5,067) 30,575 12, ,790 1,074,644 27,013 1,101,657 * These reserve accounts comprise the consolidated reserves of HK$1,068,685,000 (31 March 2016: HK$1,050,219,000) in the consolidated statement of financial position as at 30 September * 1,068,685,000 1,050,219, Sparkle Roll Group Limited 耀萊集團有限公司

28 簡明綜合現金流量表 Condensed Consolidated Statement of Cash Flows For the six months ended 30 September 2016 Net cash generated from operating activities Six months ended 30 September (Unaudited) (Unaudited) 130, ,730 Cash flows from investing activities (Increase)/decrease in pledged bank deposits (9,873) 127,430 Purchases of property, plant and equipment (7,212) (3,964) Proceeds from disposals of property, plant and equipment 6,439 12,383 Settlement of derivative financial instruments, net (3,512) Interest received 260 1,341 Net cash (used in)/generated from investing activities (10,386) 133,678 Cash flows from financing activities Capital contribution from a non-controlling interest of a subsidiary 10,827 Advances from a non-controlling interest of a subsidiary 511 New borrowings raised 1,221,811 1,458,816 Repayments of borrowings (1,392,941) (1,728,546) Bank interest paid (7,969) (30,162) Net cash used in financing activities (167,761) (299,892) Net (decrease)/increase in cash and cash equivalents (48,128) 57,516 Cash and cash equivalents at beginning of the period 157,164 52,619 Effect of foreign exchange rate changes, net (5,910) (3,182) Cash and cash equivalents at end of the period 103, ,953 Analysis of balances of cash and cash equivalents Cash at banks and in hand 103, ,638 Bank overdrafts (16,685) 103, ,953 Sparkle Roll Group Limited 耀萊集團有限公司 27

29 簡明中期財務資料附註 Notes to the Condensed Interim Financial Information For the six months ended 30 September GENERAL INFORMATION Sparkle Roll Group Limited (the Company ) is a limited liability company incorporated in Bermuda. The address of its registered office is Clarendon House, 2 Church Street, Hamilton HM11, Bermuda and its principal place of business is in Hong Kong. The Company s shares are listed on The Stock Exchange of Hong Kong Limited (the Stock Exchange ). The principal activities of the Company and its subsidiaries (together the Group ) are the distributorships of luxury goods. The Group s operations are based mainly in Hong Kong, Mainland China and Malaysia. 2. BASIS OF PREPARATION The condensed interim financial information has been prepared in accordance with Hong Kong Accounting Standard 34 Interim Financial Reporting ( HKAS 34 ) issued by the Hong Kong Institute of Certified Public Accountants ( HKICPA ) and the applicable disclosure provisions of the Rules Governing the Listing of Securities on the Stock Exchange. The condensed interim financial information has been prepared in accordance with the same accounting policies adopted in the Group s annual financial statements for the year ended 31 March 2016 (the 2016 Annual Financial Statements ), except for the adoption of the new and revised Hong Kong Financial Reporting Standards (which include individual Hong Kong Financial Reporting Standards ( HKFRSs ), Hong Kong Accounting Standards ( HKASs ) and Interpretations) as disclosed in note 3 to the condensed interim financial information. The condensed interim financial information is unaudited, but has been reviewed by BDO Limited 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. The condensed interim financial information does not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the 2016 Annual Financial Statements. 1. Clarendon House, 2 Church Street, Hamilton HM11, Bermuda Sparkle Roll Group Limited 耀萊集團有限公司

30 簡明中期財務資料附註 Notes to the Condensed Interim Financial Information For the six months ended 30 September ADOPTION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS 3. In the current period, the Group has applied for the first time the following new and revised HKFRSs issued by the HKICPA which are relevant for the preparation of the condensed interim financial information for the current accounting period: Amendments to Disclosure Initiative HKAS 1 1 Amendments to Clarification of Acceptable Methods of HKAS 16 and Depreciation and Amortisation 16 HKAS HKFRSs Annual Improvements Cycle (Amendments) The adoption of these new and revised HKFRSs did not change the Group s accounting policies as followed in the preparation of the 2016 Annual Financial Statements. The Group has not early adopted any new and revised HKFRSs that has been issued but is not yet effective for the current accounting period. Sparkle Roll Group Limited 耀萊集團有限公司 29

31 簡明中期財務資料附註 Notes to the Condensed Interim Financial Information For the six months ended 30 September SEGMENT INFORMATION 4. Operating segments are reported in a manner consistent with internal reporting provided to executive directors of the Company who is responsible for allocating resources and assessing performance of the operating segments. The executive directors have identified the following reportable operating segments: (i) Automobiles Distribution of branded automobiles, (i) namely Bentley, Lamborghini and Rolls-Royce, provision of related after-sale services and provision of training of initiating knowledge and skill of distributorship of branded automobiles; (ii) Branded watches and jewelleries Distribution of (ii) Richard branded watches, namely Richard Mille, DeW itt, M i l l e D e W i t t P a r m i g i a n i Parmigiani, DeLaCour and Buben & Zorweg, and DeLaCour Buben & Zorweg distribution of branded jewelleries, namely Boucheron and Boucheron Royal Asscher; and Royal Asscher (iii) Others Distribution of certain brands of fine wines, (iii) audio equipment, menswear apparels and accessories and cigars and smoker s accessories. Each of these operating segments is managed separately as each of the product and service lines requires different resources as well as marketing approaches. Inter-segment transactions, if any, are priced with reference to prices charged to external parties for similar transaction. 30 Sparkle Roll Group Limited 耀萊集團有限公司

32 簡明中期財務資料附註 Notes to the Condensed Interim Financial Information For the six months ended 30 September SEGMENT INFORMATION (Continued) 4. Segment revenue and results For the six months ended 30 September 2016 Automobiles Branded watches and jewelleries Others Total (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenue from external customers 1,248,521 76,933 43,905 1,369,359 Other income and net gains 33,674 1, ,764 Reportable segment revenue 1,282,195 78,264 44,664 1,405,123 Reportable segment results 71,163 (5,115) (6,660) 59,388 For the six months ended 30 September 2015 Automobiles Branded watches and jewelleries Others Total (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenue from external customers 1,103,461 80,382 27,508 1,211,351 Other income and net gains 27,187 8,676 7,557 43,420 Reportable segment revenue 1,130,648 89,058 35,065 1,254,771 Reportable segment results 37,548 (6,854) (11,436) 19,258 Sparkle Roll Group Limited 耀萊集團有限公司 31

33 簡明中期財務資料附註 Notes to the Condensed Interim Financial Information For the six months ended 30 September SEGMENT INFORMATION (Continued) 4. Segment assets and liabilities As at 30 September 2016 Automobiles Branded watches and jewelleries Others Total (Unaudited) (Unaudited) (Unaudited) (Unaudited) Reportable segment assets 1,063, , ,894 1,543,539 Deposits, prepayments and other receivables 2,164 Corporate assets: financial assets 25,699 non-financial assets 3,590 Consolidated total assets 1,574,992 Reportable segment liabilities 119,664 11,543 27, ,420 Borrowings 308,399 Corporate liabilities: financial liabilities 2,011 non-financial liabilities 4,505 Consolidated total liabilities 473, Sparkle Roll Group Limited 耀萊集團有限公司

34 簡明中期財務資料附註 Notes to the Condensed Interim Financial Information For the six months ended 30 September SEGMENT INFORMATION (Continued) 4. Segment assets and liabilities (Continued) As at 31 March 2016 Automobiles Branded watches and jewelleries Others Total (Audited) (Audited) (Audited) (Audited) Reportable segment assets 1,155, , ,934 1,722,237 Deposits, prepayments and other receivables 3,846 Corporate assets: financial assets 5,484 non-financial assets 3,939 Consolidated total assets 1,735,506 Reportable segment liabilities 105,044 23,912 27, ,614 Borrowings 488,740 Corporate liabilities: financial liabilities 1,932 non-financial liabilities 4,494 Consolidated total liabilities 651,780 Sparkle Roll Group Limited 耀萊集團有限公司 33

35 簡明中期財務資料附註 Notes to the Condensed Interim Financial Information For the six months ended 30 September SEGMENT INFORMATION (Continued) 4. A reconciliation between the total presented for the Group s operating segments and the Group s key financial figures as presented in the condensed interim financial information is as follows: Six months ended 30 September (Unaudited) (Unaudited) Reportable segment results 59,388 19,258 Bank interest income 260 1,341 Net realised gains on derivative financial instruments 368 Unallocated corporate income 2,321 1,304 Unallocated corporate expenses (18,551) (15,561) Finance costs (7,969) (30,162) Profit/(loss) before income tax 35,449 (23,452) Unallocated corporate income and expenses mainly comprised gain on disposals of property, plant and equipment, income from exhibitions and other services and other corporate income and expenses of the Group s headquarter which are not directly attributable to the business activities of any operating segment. 34 Sparkle Roll Group Limited 耀萊集團有限公司

36 簡明中期財務資料附註 Notes to the Condensed Interim Financial Information For the six months ended 30 September OTHER INCOME AND NET GAINS 5. Six months ended 30 September (Unaudited) (Unaudited) Bank interest income 260 1,341 Bonuses from suppliers 9,081 9,348 Net realised gains on derivative financial instruments (note 15) Gain on disposals of property, plant and equipment 2, Income from exhibitions and other services 1,286 2,726 Income from insurance brokerage 23,811 16,886 Sub-lease income 14,016 Management fee income Others ,345 46,433 Sparkle Roll Group Limited 耀萊集團有限公司 35

37 簡明中期財務資料附註 Notes to the Condensed Interim Financial Information For the six months ended 30 September OPERATING PROFIT 6. Operating profit is arrived at after charging/(crediting): Six months ended 30 September (Unaudited) (Unaudited) Amortisation of other intangible asset # # Cost of inventories recognised as expense, including 1,221,542 1,109,507 Write-down of inventories 1,047 3,000 Depreciation of property, * plant and equipment* 12,033 12,269 Exchange differences, net 1,305 1,192 Net realised gains on derivative financial instruments Gain on disposals of property, plant and equipment Operating lease payments in respect of rented premises (368) (2,195) (189) 47,029 69,184 Defined contribution retirement benefits scheme contributions for employees Staff costs, including directors emoluments 4,683 4,677 18,813 17,443 Total staff costs 23,496 22,120 # Amortisation of other intangible asset has been included in administrative expenses. # * D e p r e c i a t i o n o f a p p r o x i m a t e l y H K $ 1 0, 8 2 2, a n d HK$1,211,000 (six months ended 30 September 2015: HK$10,186,000 and HK$2,083,000) have been included in selling and distribution costs and administrative expenses, respectively. * 10,822,000 1,211,000 10,186,000 2,083, Sparkle Roll Group Limited 耀萊集團有限公司

38 簡明中期財務資料附註 Notes to the Condensed Interim Financial Information For the six months ended 30 September FINANCE COSTS 7. Six months ended 30 September (Unaudited) (Unaudited) Interest on bank loans and overdraft 6,955 19,117 Interest on other loans 1,014 11,045 7,969 30, INCOME TAX EXPENSE 8. Hong Kong Profits Tax is provided at the rate of 16.5% (six months ended 30 September 2015: 16.5%) on estimated assessable profit derived in Hong Kong for the period. 16.5% 16.5% The Group s subsidiaries in Mainland China are subject to income tax at the rate of 25% except that a subsidiary is entitled to tax exemption for the six months ended 30 September % Sparkle Roll Group Limited 耀萊集團有限公司 37

39 簡明中期財務資料附註 Notes to the Condensed Interim Financial Information For the six months ended 30 September INCOME TAX EXPENSE (Continued) 8. Income tax of certain subsidiaries of the Company in Malaysia is charged at 3% on the assessable profit for the period or a fixed amount of Malaysian Ringgit 20,000, whichever is lower. 3% 20,000 Current tax Hong Kong Six months ended 30 September (Unaudited) (Unaudited) Under-provision in prior years 405 Other jurisdictions: Charge for the period Under-provision in prior years , Deferred tax Tax for the period (9) Total income tax expense 1, Sparkle Roll Group Limited 耀萊集團有限公司

40 簡明中期財務資料附註 Notes to the Condensed Interim Financial Information For the six months ended 30 September DIVIDENDS 9. No dividend was paid or proposed during the six months ended 30 September 2016 and 2015, nor has any dividend been proposed since the end of reporting period. 10. EARNINGS/(LOSS) PER SHARE 10. (a) Basic (a) The calculation of basic earnings/(loss) per share is based on the profit attributable to owners of the Company of HK$34,214,000 (six months ended 30 September 2015: 34,214,000 loss of HK$23,291,000) and on the weighted average of 2,979,828,850 (six months ended 30 September 2015: 23,291,000 2,979,828,850) ordinary shares in issue during the period. 2,979,828,850 2,979,828,850 (b) Diluted (b) The diluted earnings/(loss) per share for the six months ended 30 September 2016 and 2015 are the same as basic earnings/(loss) per share as the potential ordinary shares have no dilutive effect on earnings/(loss) per share. 11. PROPERTY, PLANT AND EQUIPMENT 11. During the six months ended 30 September 2016, the Group acquired items of property, plant and equipment at a total cost of HK$7,212,000 (six months ended 30 September 2015: HK$3,964,000). Items of property, plant and equipment with a net carrying amount of HK$4,244,000 (six months ended 30 September 2015: HK$12,194,000) were disposed of during the six months ended 30 September ,212,000 3,964,000 4,244,000 12,194,000 Sparkle Roll Group Limited 耀萊集團有限公司 39

41 簡明中期財務資料附註 Notes to the Condensed Interim Financial Information For the six months ended 30 September BALANCES WITH NON-CONTROLLING INTERESTS/RELATED PARTIES 12. (a) Amounts due from/to non-controlling interests (a) As at 30 September 2016, the amount due from a non- controlling interest, representing capital contribution receivables from the non-controlling interest of Sparkle Roll Cigars Holdings Limited, is unsecured, interest- free and receivable in September 2017 (31 March 2016: HK$9,281,000 is receivable within one year 9,281,000 from the reporting date while the remaining balance of 2,320,000 HK$2,320,000 is receivable in September 2017). The amounts due to the non-controlling interests are unsecured, interest-free and repayable on demand. (b) Rental deposits paid to a related party (b) The Group entered into several agreements with Mr. Qi Jian Hong ( Mr. Qi ), a substantial shareholder of the Company, for leasing of properties as office premises, warehouse and showrooms in Mainland China to the Group. The rental deposits paid to Mr. Qi 16,744,000 of HK$16,744,000 (31 March 2016: HK$17,554,000) have been recognised as non-current assets as at 30 17,554,000 September Sparkle Roll Group Limited 耀萊集團有限公司