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

Transcription

1 SPARKLE ROLL GROUP LIMITED (Incorporated in Bermuda with limited liability 於百慕達註冊成立之有限公司) (Stock Code 股份代號: 970) 耀 萊集團有限 公司 970 Interim Report 2015/2016 Interim Report 中期報告 中 期 報 告 2015/2016 * for identification purpose only 僅供識別

2 目錄 Contents Page(s) Corporate Information 2 Financial Highlights 4 Management Discussion and Analysis 7 Report on Review of Interim Financial Information 18 Consolidated Statement of Comprehensive Income 20 Consolidated Statement of Financial Position 22 Consolidated Statement of Changes in Equity 24 Condensed Consolidated Statement of Cash Flows 25 Notes to the Interim Financial Information 26 Additional Information 57 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) Zhao Xiao Dong (Deputy Chairman and Chief Operating Officer) 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 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. China CITIC Bank Corporation Limited Hang Seng Bank Limited Ping An Bank Co., Ltd Shanghai Pudong Development Bank Co., Ltd. Standard Chartered Bank (Hong Kong) Limited AUDITOR BDO Limited 25th Floor, Wing On Centre 111 Connaught Road Central Hong Kong 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 financial period ended 30 September 2015 decreased by 25.4% from HK$1,624,616,000 to HK$1,211,351,000 when compared with the revenue recorded in the last financial period. 1, 6 2 4, 6 1 6, % 1,211,351,000 Gross profit for this financial period increased from HK$95,470,000 to HK$104,844, ,470, ,844,000 Other income and net gains decreased significantly from HK$113,251,000 for the period ended 30 September 2014 to HK$46,424,000 for the period ended 30 September ,251,000 46,424,000 Selling and administrative expenses amounted to HK$141,567,000 for the period ended 30 September 2015, representing a decrease of 24.6% over HK$187,821,000 recorded in the corresponding period of ,567, ,821, % Net loss attributable to owners of the Company for the financial period ended 30 September 2015 was HK$23,291,000 as compared with net profit attributable to owners of the Company of HK$3,486,000 recorded for the period ended 30 September ,291,000 3,486,000 Losses per share attributable to owners of the Company were HK0.79 cent for this financial period as compared with HK$0.12 cent earnings per share in the last financial period No interim dividend was declared for this financial period (2014: nil). 4 Sparkle Roll Group Limited 耀萊集團有限公司

6 財務摘要 Financial Highlights Revenue () 2,500,000 2,000,000 2,087,221 1,500,000 1,541,476 1,526,346 1,624,616 1,211,351 1,000, , / / / / /2016 Gross Profit and Gross Profit Margin () 300, % 11.3% 12.0% 250, % 223, % 200, % 150, , % 5.9% 6.0% 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: 2015/2016 FY2015 interim Total Assets 2,105,088 2,410,514 Total Liabilities 1,009,221 1,280,169 Net Assets 1,095,867 1,130,345 Net Tangible Worth 889, ,546 Financial Ratios: 2015/ /2015 interim interim Gross profit margin 8.4% 5.9% Operating profit margin 0.6% 1.1% 2015/2016 FY2015 interim Current ratio Gearing ratio 79.7% 102.9% 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 China s economy grew 6.9% in the third quarter of 2015, the weakest rate since the global financial crisis in The year-onyear growth rate was also below the government s target of 7%. Sheng Laiyun, National Bureau of Statistics spokesperson mentioned that global factors amid the world economic recovery had impacted on China and expectation of a US interest rate hike prompted volatility in commodity prices, stocks and foreign currency markets. Many countries devalued their currencies, putting more pressure on Chinese exports, one of the three pillars of China s economic growth. Additionally, Goldman Sachs, a global investment banking, securities and investment management firm marked down its 2016, 2017 and 2018 China s GDP projections to 6.4%, 6.1% and 5.8%, respectively from 6.7%, 6.5% and 6.2%, previously. As for 2015, Goldman Sachs retrained its forecast of 6.8% growth, a notable deceleration from last year, when the economy expanded 7.4%. The Chinese government is targeting growth of around 7% this year. 6.9% 7% 6.7% 6.5% 6.2% 6.4% 6.1% 5.8% 6.8% 7.4% 7% In view of the violate situation during the financial period under review, the Board estimated a net loss and had issued a profit warning on 9 November According to the announcement, the Board informed the shareholders of the Company and potential investors that the Group would record a net loss in this financial period as compared with a net profit of approximately HK$1.9 million in the previous financial period. 1,900,000 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 Deceleration/Weak Sales of China s Luxury Market. According to the 2015 worldwide luxury report issued by Bain & Company on 29 October 2015, the personal luxury goods market which included leather accessories, fashion, hard luxury and fragrance & cosmetics reached 253 billion Euros in This represents a growth of 13% at current exchange rates, while real growth is significantly slowing to 1-2%. Over the past several years, Bain & Company referred luxury s new normal to a deceleration of the personal luxury goods market. The challenge for luxury brands in this environment was how to successfully navigate through hardto-predict volatility. Nevertheless, Chinese consumers continued to make up the largest portion of luxury purchases (31%) globally, followed closely by Americans (24%) and Europeans (18%). (Bain & Company) 2,530 13% 1 2% (31%) (24%)(18%) 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 CBRE, the world s leading commercial property and real estate services adviser, issued a research report entitled The Future of Luxury Retail in Asia Pacific: New Demand Drivers and Shifting Occupier Requirements in October Although the high growth period for luxury retailers in Asia Pacific is gradually coming to an end, CBRE retains a cautiously optimistic outlook. The report observed that a total of 237 luxury international retailers had opened stores for the first time in 27 cities across Asia Pacific over the past three years. Besides, over 90% of international luxury retailers, as monitored by CBRE, had at least one standalone store in the region. China had an 87% market penetration rate for luxury retailers, followed by Hong Kong at 81%, Japan at 79%, and Singapore at 75%. Mainland China and Hong Kong were the most popular destinations for brands new to Asia and accounted for one-third of new market entrants. (The Future of Luxury Retail in Asia Pacific: New Demand Drivers and Shifting Occupier Requirements) % 87% (81%)(79%) (75%) In spite of the downturn of China s economic growth, the Group is confident that China remains a potential consumption in luxury goods market driven by the largest luxury purchases portion of Chinese consumers. BUSINESS REVIEW Starting from the financial period under review, the Group represented its segments into three divisions (i) Automobile Dealerships, (ii) Watch Dealerships and Jewellery Distributorships and (iii) Others with a view to simplifying the segmental classifications based on respective revenue contributions. (i)(ii) (iii) Automobile Dealerships During the financial period under review, Lamborghini recorded positive sales results but Bentley and Rolls-Royce experienced a drop in revenue. Lamborghini performed the best with the largest sales increment, amounting to HK$55 million and representing a 20.4% increase in sales in the financial period under review from HK$45.7 million during the corresponding financial period last year, attributable to strong sales of new model Huracan. A total of 13 units of Lamborghini were sold, representing an increase of 62.5% compared with 8 in the corresponding financial period last year. 45,700,000 55,000, % Huracan % 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 According to an article issued by The Guardian entitled Sales of Lamborghinis race to a new record on 11 September 2015, Lamborghini said it would beat last year s record sales of 2,530 cars, thanks to the popularity of its Huracan model. The brand s chief executive, Stephen Winkelmann, said: We believe we will conclude the 2015 business year in a better way than the previous year. He also attributed the higher sales to the new model and the generally improved global economic outlook. Despite the economic downturn in China, sales in Mainland China remained stable, but increased with business in Hong Kong and Taiwan. The Guardian Huracan 2,530 (Stephen Winkelmann) Bentley recorded a 20.9% decrease in unit sales to 170 units sold during the financial period under review, compared with 215 units in the corresponding period last year. The brand recorded a decline in sales during this financial period with a total of HK$608.5 million, representing a decrease of 23.7% compared with that of HK$797.9 million recorded in the corresponding financial period last year. 20.9% ,500, ,900, % Rolls-Royce recorded a decline in sales during this financial period with a total of HK$364.7 million, representing a significant drop of 41.2% compared with that of HK$620.3 million recorded in the corresponding financial period last year. At the same time, a total of 63 units of Rolls-Royce were sold, representing a decrease of 35.1% compared with 97 in the corresponding financial period last year. 364,700, ,300, % % Gross profit margins of Bentley and Lamborghini improved but that of Rolls-Royce registered a decline, while the Group continued enjoying bonus from the brands. Revenue of after-sales services during this financial period remained about the same registering an increase of 0.5% as compared with the corresponding period last year. Regarding the gross profit margin, we saw an increase from 37.3% in the corresponding financial period last year to 53% in the current financial period due to substantial reduction of one-off gifts to our customers in this financial period. We expect after-sales services income will grow steadily in the upcoming financial periods. 0.5% 37.3% 53% That said, we are glad to report that the Group remains one of the leading dealers of these three brands in the PRC. 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 Watch Dealerships & Jewellery Distributorships During the current financial period, the sales performance of our super deluxe branded watch division performed satisfactorily with an increase in revenue of approximately 34.2% to approximately HK$71.4 million, as compared with approximately HK$53.2 million in the previous financial period. 34.2% 71,400,000 53,200,000 Sales of top-tier branded jewellery division decreased in term of quantity and sales amount, recorded sales revenue of HK$8.94 million as compared with HK$18.11 million in the last financial period. 8,940,000 18,110, pieces of watches were sold in this financial period compared with 141 pieces in the previous financial period. Brands included Richard Mille, Parmigiani, DeWitt, DelaCour and Buben & Zorweg Richard Mille Parmigiani DeWitt DelaCour Buben & Zorweg 204 pieces of jewellery division were sold in this financial period compared with 257 pieces in the previous financial period. Brands included Boucheron and Royal Asscher Boucheron Royal Asscher Gross profit margin of watch division declined during the current financial period from 28.6% in the last financial period to 18.4% in the current financial period while gross profit margin of jewellery division increased from 24.3% in the previous financial period to 37.6% in the current financial period. 28.6% 18.4% 24.3% 37.6% Among the watches and jewellery brands under our Group, Richard Mille performed the best. Richard Mille Others During the current financial period, the sales performance of this division performed satisfactorily with revenue recorded an approximate 89.7% increase to approximately HK$27.5 million, as compared with approximately HK$14.5 million in the previous financial period. 89.7%27,500,000 14,500,000 Among all brands under this division including fine wine, audio equipment, menswear apparel and accessories and tobacco products, Bang & Olufsen performed the best. Bang & Olufsen 10 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 In late September 2015, the Group entered into a Shareholders Agreement in relation to the formation of a New Joint Venture Company with Oettinger Davidoff AG for the purpose of carrying out the business of cigars and smoker s accessories in the Mainland China. The Group hopes the business would be able to diversify its non-auto product portfolio and to expand its top-tier branded consumer goods market in the PRC. FINANCIAL REVIEW Oettinger Davidoff AG Revenue The revenue of the Group for the six months ended 30 September 2015 was approximately HK$1,211.3 million, representing a decrease of approximately 25.4% as compared with approximately HK$1,624.6 million recorded in the same period last year. The decrease was due to the challenging retail condition. The table below sets out the Group s revenue for the period indicated: 1,211,300,000 1,624,600, % Six months ended 30 September Changes Contribution Contribution (%) (%) % Revenue Source (%) (%) % Automobile segment Sales of automobiles 1,028, % 1,463, % (435,729) -29.8% Provision of after-sales services 75, % 74, % % Total 1,103, % 1,538, % (435,360) -28.3% Branded watch and jewellery segments 80, % 71, % 9, % Other segments 27, % 14, % 13, % 1,211,351 1,624, , % 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 Gross Profit and Gross Profit Margin The gross profit of the Group for the six months ended 30 September 2015 increased by 6.7% to approximately HK$101.8 million (30 September 2014: HK$95.5 million). The increase was mainly due to (i) an increase of 42% in the gross profit from income derived from the provision of after-sale services and; (ii) a substantial increase of approximately 116% in incentive bonuses from automobile supplier which was resulted from the bargain deal in the fourth quarter of last financial year. Such bonuses were deducted from our cost of sales. 6.7%101,800,000 95,500,000 (i) 42%(ii) 116% The gross profit margin of the Group for the six months ended 30 September 2015 increased to 8.4% (30 September 2014: 5.9%). 8.4% 5.9% Other Income and Net Gains Other income and net gains decreased significantly from HK$113.8 million for the period ended 30 September 2014 to HK$46.4 million for the period ended 30 September The decrease was mainly due to (i) that the Group did not provide any training services or generate any income from training services in respect of training of initiating knowledge and skill of distributorship of branded automobiles during the six months ended 30 September 2015; and (ii) a decline in the size of sales leading to decrease in marketing bonus from suppliers. 113,800,000 46,400,000 (i) (ii) Other Operating Expenses Net realised gain on foreign currency forward contracts of this financial period was HK$368,000 as compared with an unrealised loss of HK$3,055,000 recorded in the last financial period. 368,000 3,055,000 Finance Costs The finance costs of the Group increased by 84.1% from HK$16.4 million for the period ended 30 September 2014 to HK$30.2 million for the period ended 30 September The increase was due to the increase in financing for the bulk purchase of automobiles coupled with a slower inventory turnover rate in automobile business. 16,400, % 30,200, 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 LIQUIDITY AND FINANCIAL RESOURCES The Group s total assets as at 30 September 2015 were approximately HK$2,105.1 million (31 March 2015: HK$2,410.5 million) which were supported by the owners equity and total liabilities of approximately HK$1,079.5 million (31 March 2015: HK$1,112.6 million) and HK$1,009.2 million (31 March 2015: HK$1,280.2 million) respectively. 2,105,100,000 2,410,500,000 1,079,500,000 1,112,600,000 1,009,200,000 1,280,200,000 Cash Flow The Group s bank balances and cash as of 30 September 2015 were approximately HK$123.6 million (31 March 2015: HK$63.4 million) which were mainly denominated in Hong Kong dollars ( HK$ ) and Renminbi ( RMB ). 123,600,000 63,400,000 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 increase was mainly attributable to the significant decrease in pledged deposit for banking facilities 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. Borrowings The Group s borrowings as at 30 September 2015 were approximately HK$860.9 million, representing an decrease of 24.8% from approximately HK$1,145.4 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. 860,900,000 1,145,400, % Gearing Ratio The Group s gearing ratio computed as total borrowings over the owners equity decreased to 79.7% as at 30 September 2015 (31 March 2015: 102.9%). 79.7% 102.9% 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 Inventories As at 30 September 2015, the Group s inventories decreased by 21.9% from approximately HK$1,499.6 million as at 31 March 2015 to HK$1,170.8 million, primarily due to the decrease in automobile inventories which comprised approximately 64% of the inventories of the Group. 1,499,600, % 1,170,800,000 64% The Group s average inventory turnover days increased from 116 days for the six months period ended 30 September 2014 to 220 days for the six months period ended 30 September 2015, primarily due to the challenging retail condition Exposure to Foreign Exchange The revenue and expenses of the Group are mainly denominated in RMB and HK$ 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 period under review. At 30 September 2015, the Group recognised net realised gain of approximately HK$0.4 million which resulted from the foreign currency forward contracts entered into in the last financial year (30 September 2014: net unrealised loss of HK$3.1 million). 400,000 3,100,000 Contingent Liabilities and Capital Commitment On 30 September 2015, the Group and Oettinger Davidoff AG ( ODAG ), an independent third party, entered into a shareholder s agreement (the Agreement ) for the formation of an entity (the NewCo ), which is to be held as to 50.1% by the Group and 49.9% by ODAG for the purpose of carrying out the business of cigars and smoker s accessories in the Mainland China. Pursuant to the Agreement, the Group is required to contribute capital of US$1,503,000 (equivalent to approximately HK$11,723,000) to the NewCo. Details of the Agreement for the formation of the NewCo were set out in the Company s announcement dated 2 October Oettinger Davidoff AGODAG ODAG 50.1% 49.9% 1,503,000 11,723, 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 Other than that, the Group did not have any significant capital commitment as at 30 September 2015 (31 March 2015: nil) in respect of acquisition of property, plant and equipment. The Board considered that the Group had no material contingent liabilities as at 30 September Charges on Assets As at 30 September 2015, pledged deposits and inventories of the Group with aggregate carrying amounts of approximately HK$104.5 million (31 March 2015: HK$230.5 million) and HK$669.2 million (31 March 2015: HK$793.9 million) respectively were pledged to secure general banking facilities granted to the Group. 104,500, ,500, ,200, ,900,000 Human Resources As at 30 September 2015, the Group had 485 employees (31 March 2015: 477). Staff costs (including directors emoluments) charged to profit or loss amounted to approximately HK$22 million for the six months ended 30 September 2015 (30 September 2014: HK$21 million) ,000,000 21,000,000 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 Market Watch reported that, in June 2015, new car sales in the PRC recorded the first year-on-year decline since February 2013, as slowing economic growth and falling stock markets hit the auto market. However, one of our automobile brands, Bentley, will launch a new SUV model named Bentayga in The Board is still cautiously positive towards this because such new model of ultraluxury autos will be able to stimulate sales of our auto segment. Market Watch Bentayga 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 Looking ahead, given the challenging situation of the luxury goods markets in the PRC, the Group is confident in the long term of our industry driven by Chinese spending boosted by a rise in the Middle classes. The Group is still cautiously optimistic and committed to continue our leading roles as a luxury goods brand manager. We are still committing to expand the non-auto businesses to diversify our product portfolio while destocking of our watch, jewellery and wine inventory remain a top priority. At the same time, we are reviewing and analyzing the profitability and potential of our various stores and will make appropriate adjustments if desired. During the current financial period, the Group acquired a premium branded cigars, Oettinger Davidoff AG through a joint-venture set up with our whollyowned subsidiary, Carnaby Group Limited. On 6 November 2015, the joint venture company was incorporated in Hong Kong and named as Sparkle Roll Cigars Holding Limited. Through the joint venture, we are hoping to bring the top-tier cigars and accessories into Mainland China and enhance its brand awareness. Carnaby Group Limited Oettinger Davidoff AG On the other hand, we observe that our e-commerce sales surged by approximately 3 times during this financial period as compared with the previous financial period, mainly attributable to B&O PLAY. To better seize the opportunities of the emerging e-commerce market, the Group intends to analyze and plan a larger scale of e-commerce business operation. Appropriate disclosure will be announced should further updates be available. B&O PLAY The Board recommended not to declare an interim dividend for 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 2015 (six months ended 30 September 2014: nil). 16 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 SHARE OPTION SCHEME The Company s share option scheme (the Scheme ) was adopted pursuant to an ordinary resolution passed at a 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 an 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 7 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 2015 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 2015 (as at 31 March 2015: nil). Sparkle Roll Group Limited 耀萊集團有限公司 17

19 中期財務資料審閱報告 Report on Review of Interim Financial Information To the Board of Directors of Sparkle Roll Group Limited (incorporated in Bermuda with limited liability) INTRODUCTION We have reviewed the interim financial information set out on pages 20 to 56 which comprises the consolidated statement of financial position of Sparkle Roll Group Limited as of 30 September 2015 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 interim financial information in accordance with HKAS Our responsibility is to form a conclusion on the 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. 18 Sparkle Roll Group Limited 耀萊集團有限公司

20 中期財務資料審閱報告 Report on Review of 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 interim financial information. CONCLUSION 2410 Based on our review, nothing has come to our attention that causes us to believe that the 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, 27 November 2015 Sparkle Roll Group Limited 耀萊集團有限公司 19

21 綜合全面收入報表 Consolidated Statement of Comprehensive Income For the six months ended 30 September 2015 Six months ended 30 September Notes (Unaudited) (Unaudited) Revenue 1,211,351 1,624,616 Cost of sales (1,109,507) (1,529,146) Gross profit 101,844 95,470 Other income and net gains 5 46, ,759 Selling and distribution costs (107,314) (147,819) Administrative expenses (34,253) (40,002) Other operating expenses (3,055) Operating profit 6 6,710 18,353 Finance costs 7 (30,162) (16,387) (Loss)/profit before income tax (23,452) 1,966 Income tax expense 8 (845) (101) (Loss)/profit for the period (24,297) 1,865 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 (10,181) 2,189 Total comprehensive income for the period (34,478) 4, Sparkle Roll Group Limited 耀萊集團有限公司

22 綜合全面收入報表 Consolidated Statement of Comprehensive Income For the six months ended 30 September 2015 Six months ended 30 September Notes (Unaudited) (Unaudited) (Loss)/profit for the period attributable to: Owners of the Company (23,291) 3,486 Non-controlling interests (1,006) (1,621) (24,297) 1,865 Total comprehensive income attributable to: Owners of the Company (33,038) 5,675 Non-controlling interests (1,440) (1,621) (34,478) 4,054 (Loss)/earnings per share attributable to owners of the Company during the period Basic and diluted (loss)/earnings per share 10 HK(0.78) cent HK0.12 cent Sparkle Roll Group Limited 耀萊集團有限公司 21

23 綜合財務狀況報表 Consolidated Statement of Financial Position As at 30 September September March 2015 Notes (Unaudited) (Audited) ASSETS AND LIABILITIES Non-current assets Property, plant and equipment 126, ,227 Goodwill 206, ,171 Other intangible assets Rental deposits paid to a related party 11(a) 17,554 18, , ,207 Current assets Inventories 12 1,170,781 1,499,550 Trade receivables 13 2, Deposits, prepayments and other receivables 333, ,324 Amounts due from related parties 11(b) 18,229 19,410 Pledged deposits 104, ,470 Cash at banks and in hand 123,638 63,417 1,753,965 2,034,307 Current liabilities Trade payables 16 27,736 24,065 Receipts in advance, accrued charges and other payables 114, ,783 Derivative financial instruments 15 3,880 Provision for taxation 4,644 4,636 Borrowings ,884 1,145,364 1,007,812 1,278,728 Net current assets 746, ,579 Total assets less current liabilities 1,097,276 1,131, Sparkle Roll Group Limited 耀萊集團有限公司

24 綜合財務狀況報表 Consolidated Statement of Financial Position As at 30 September September March 2015 Notes (Unaudited) (Audited) Non-current liabilities Other payables Deferred tax liabilities 1,037 1,046 1,409 1,441 Net assets 1,095,867 1,130,345 EQUITY Share capital 18 5,959 5,959 Reserves 19 1,073,567 1,106,605 Equity attributable to owners of the Company 1,079,526 1,112,564 Non-controlling interests 16,341 17,781 Total equity 1,095,867 1,130,345 Sparkle Roll Group Limited 耀萊集團有限公司 23

25 綜合股本權益變動表 Consolidated Statement of Changes in Equity For the six months ended 30 September 2015 Share option reserve* Attributable to owners of the Company Share Share Capital Special Contributed Exchange Other Statutory Retained Total capital premium* reserve* reserve* surplus* reserve* reserve* reserve* profits* Total equity * * * * * * * * * At 1 April , ,335 3,508 1,309 (36,810) 27,535 40,061 30,575 12, ,629 1,573,571 17,878 1,591,449 Profit for the period 3,486 3,486 (1,621) 1,865 Other comprehensive income Exchange differences on translation of foreign operations 2,189 2,189 2,189 Total comprehensive income for the period 2,189 3,486 5,675 (1,621) 4,054 Lapse of share options (1,309) 1,309 At 30 September 2014 (Unaudited) 5, ,335 3,508 (36,810) 28,844 42,250 30,575 12, ,115 1,579,246 16,257 1,595,503 Share option reserve* Attributable to owners of the Company Noncontrolling interests Noncontrolling interests Share Share Capital Special Contributed Exchange Other Statutory Retained Total capital premium* reserve* reserve* surplus* reserve* reserve* reserve* profits* Total equity * * * * * * * * * 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 foreign operations (9,747) (9,747) (434) (10,181) Total comprehensive income for the period (9,747) (23,291) 5,675 (1,621) 4,054 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 * These reserve accounts comprise the consolidated reserves of HK$1,073,567,000 (31 March 2015: HK$1,106,605,000) in the consolidated statement of financial position as at 30 September * 1,073,567,000 1,106,605, Sparkle Roll Group Limited 耀萊集團有限公司

26 簡明綜合現金流量表 Condensed Consolidated Statement of Cash Flows For the six months ended 30 September 2015 Six months ended 30 September Note (Unaudited) (Unaudited) Net cash generated from operating activities 223,730 7,045 Net cash generated from/(used in) investing activities 133,678 (46,895) Net cash used in financing activities (299,892) (157,085) Net increase/(decrease) in cash and cash equivalents 57,516 (196,935) Cash and cash equivalents at beginning of the period 52, ,298 Effect of foreign exchange rate changes, net (3,182) 268 Cash and cash equivalents at end of the period 106, ,631 Analysis of balances of cash and cash equivalents Cash at banks and in hand 123, ,615 Bank overdrafts 17 (16,685) (8,984) 106, ,631 Sparkle Roll Group Limited 耀萊集團有限公司 25

27 中期財務資料附註 Notes to the Interim Financial Information For the six months ended 30 September GENERAL INFORMATION 1. 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 Hong Kong. The Company s shares are listed on The Stock Exchange of Hong Kong Limited (the Stock Exchange ). Clarendon House, 2 Church Street, Hamilton HM11, Bermuda 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 2. The 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 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 2015 (the 2015 Annual Financial Statements ), except for the adoption of the new or amended 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 interim financial information. 3 The 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 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 2015 Annual Financial Statements. 26 Sparkle Roll Group Limited 耀萊集團有限公司

28 中期財務資料附註 Notes to the Interim Financial Information For the six months ended 30 September ADOPTION OF NEW OR AMENDED HKFRSs 3. In the current period, the Group has applied for the first time the following new or amended HKFRSs issued by the HKICPA which are relevant for the preparation of the interim financial information for the current accounting period: HKFRSs Annual Improvements Cycle (Amendments) 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 2015 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 27

29 中期財務資料附註 Notes to the 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. In prior years, the executive directors have identified the reportable and operating segments by major product and service lines. During the six months ended 30 September 2015, the Group has reorganised its internal reporting structure by simplifying the segmental classification based on revenue contribution from its product and service lines so as to enhance operational efficiency. Accordingly, the comparative segment information has been re-presented to conform to current period s presentation. The Group s reportable and operating segments for financial reporting purposes have been reorganised as follows: (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) distribution of audio equipment, distribution of menswear apparels and accessories and distribution of 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 are priced with reference to prices charged to external parties for similar order. 28 Sparkle Roll Group Limited 耀萊集團有限公司

30 中期財務資料附註 Notes to the 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 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 For the six months ended 30 September 2014 Automobiles Branded watches and jewelleries Others Total (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Re-presented) (Re-presented) Revenue from external customers 1,538,821 71,317 14,478 1,624,616 Other income and net gains 97,916 6,553 6, ,847 Reportable segment revenue 1,636,737 77,870 20,856 1,735,463 Reportable segment results 61,736 (15,366) (11,407) 34,963 Sparkle Roll Group Limited 耀萊集團有限公司 29

31 中期財務資料附註 Notes to the Interim Financial Information For the six months ended 30 September SEGMENT INFORMATION (Continued) 4. Segment assets and liabilities As at 30 September 2015 Automobiles Branded watches and jewelleries Others Total (Unaudited) (Unaudited) (Unaudited) (Unaudited) Reportable segment assets 1,556, , ,820 2,091,514 Deposits, prepayments and other receivables 1,305 Corporate assets: financial assets 7,890 non-financial assets 4,379 Consolidated total assets 2,105,088 Reportable segment liabilities 93,979 24,147 21, ,256 Borrowings 860,884 Corporate liabilities: financial liabilities 3,400 non-financial liabilities 5,681 Consolidated total liabilities 1,009, Sparkle Roll Group Limited 耀萊集團有限公司

32 中期財務資料附註 Notes to the Interim Financial Information For the six months ended 30 September SEGMENT INFORMATION (Continued) 4. Segment assets and liabilities (Continued) As at 31 March 2015 Automobiles Branded watches and jewelleries Others Total (Audited) (Audited) (Audited) (Audited) (Re-presented) (Re-presented) Reportable segment assets 1,846, , ,627 2,367,104 Deposits, prepayments and other receivables 18,324 Corporate assets: financial assets 20,174 non-financial assets 4,912 Consolidated total assets 2,410,514 Reportable segment liabilities 97,016 10,023 16, ,591 Borrowings 1,145,364 Derivative financial instruments 3,880 Corporate liabilities: financial liabilities 1,652 non-financial liabilities 5,682 Consolidated total liabilities 1,280,169 Sparkle Roll Group Limited 耀萊集團有限公司 31

33 中期財務資料附註 Notes to the 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 interim financial information is as follows: Six months ended 30 September (Unaudited) (Unaudited) Reportable segment results 19,258 34,963 Bank interest income 1, Net realised and unrealised gains/ (losses) on derivative financial instruments 368 (3,055) Unallocated corporate income 1,304 2,359 Unallocated corporate expenses (15,561) (16,467) Finance costs (30,162) (16,387) (Loss)/profit before income tax (23,452) 1,966 Unallocated corporate expenses mainly comprised the corporate expenses of the Group s headquarters which are not directly attributable to the business activities of any operating segment. 32 Sparkle Roll Group Limited 耀萊集團有限公司

34 中期財務資料附註 Notes to the 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 1, Bonuses from suppliers 9,348 24,537 Exchange gain, net 508 Net realised gains on derivative financial instruments (note 15) Fair value gains on financial assets at fair value through profit or loss (note 14) 14 5 Gain on disposals of property, plant and equipment Income from exhibition and other services income 3,465 3,456 Income from insurance brokerage 16,886 21,168 Income from training services* * 51,300 Sub-lease income 14,016 10,603 Others 820 1,591 46, ,759 * Income from training services of approximately HK$51,300,000 for the six months ended 30 September 2014 represented income from provision of training of initiating knowledge and skill of distributorship of branded automobiles. * 51,300,000 Sparkle Roll Group Limited 耀萊集團有限公司 33

35 中期財務資料附註 Notes to the 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 assets # # 39 1,431 Write-down of inventories ## ## 3,000 Depreciation of property, * plant and equipment* 12,269 22,398 Exchange differences, net 1,192 (508) Net realised and unrealised (gains)/losses on derivative financial instruments^ Gain on disposals of property, plant and equipment Operating lease payments in respect of rented premises ^ (368) 3,055 (189) (38) 69,184 61,271 Defined contribution retirement benefits scheme contributions for employees Staff costs, including directors emoluments 4,677 3,862 17,443 17,171 Total staff costs 22,120 21,033 # Amortisation of other intangible assets 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, 1 8 6, a n d HK$2,083,000 (six months ended 30 September 2014: HK$18,518,000 and HK$3,880,000) have been included in selling and distribution costs and administrative expenses respectively. # * 10,186,000 2,083,000 18,518,000 3,880,000 ^ The amount has been included in other income and net gains (six months ended 30 September 2014: other operating expenses) (note 15). ^ 15 ## The amount has been included in cost of sales. ## 34 Sparkle Roll Group Limited 耀萊集團有限公司

36 中期財務資料附註 Notes to the Interim Financial Information For the six months ended 30 September FINANCE COSTS 7. Six months ended 30 September (Unaudited) (Unaudited) Interest expenses on borrowings 30,162 16, INCOME TAX EXPENSE 8. Hong Kong Profits Tax is provided at the rate of 16.5% (six months ended 30 September 2014: 16.5%) on estimated assessable profit derived in Hong Kong for the period. 16.5% 16.5% Income tax of certain subsidiaries of the Company in Mainland China is charged at 25% (six months ended 30 September 2014: 25%) on estimate assessable profit in accordance with relevant tax regulations in Mainland China. 25% 25% 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 Sparkle Roll Group Limited 耀萊集團有限公司 35

37 中期財務資料附註 Notes to the Interim Financial Information For the six months ended 30 September INCOME TAX EXPENSE (Continued) 8. Six months ended 30 September (Unaudited) (Unaudited) Current tax Other jurisdictions: Charge for the period Under-provision in prior year Deferred tax Tax for the period (9) (140) Total income tax expense DIVIDENDS 9. No dividend was paid or proposed during the six months ended 30 September 2015 and 2014, nor has any dividend been proposed since the end of reporting period. 36 Sparkle Roll Group Limited 耀萊集團有限公司

38 中期財務資料附註 Notes to the Interim Financial Information For the six months ended 30 September (LOSS)/EARNINGS PER SHARE 10. (a) Basic (a) The calculation of basic (loss)/earnings per share is based on the loss attributable to owners of the Company of HK$23,291,000 (six months ended 30 September 2014: 23,291,000 profit of HK$3,486,000) and on the weighted average of 2,979,828,850 (six months ended 30 September 2014: 3,486,000 2,979,828,850) ordinary shares in issue during the period. 2,979,828,850 2,979,828,850 (b) Diluted (b) The diluted (loss)/earnings per share for the six months ended 30 September 2015 and 2014 are the same as basic (loss)/earnings per share as the potential ordinary shares have no dilutive effect on (loss)/earnings per share. 11. BALANCES WITH RELATED PARTIES 11. (a) Rental deposits paid to a related party (a) 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 17,554,000 of HK$17,554,000 (31 March 2015: HK$18,181,000) have been recognised as non-current assets as at 30 18,181,000 September Sparkle Roll Group Limited 耀萊集團有限公司 37

39 中期財務資料附註 Notes to the Interim Financial Information For the six months ended 30 September BALANCES WITH RELATED PARTIES (Continued) 11. (b) Amounts due from related parties (b) The amount due from Mr. Qi of HK$17,456,000 (31 March 2015: HK$18,000,000) which results from prepaid rental expenses for leasing of properties as office premises, warehouse and showrooms in Mainland China to the 17,456,000 Group is unsecured, interest-free and repayable on 18,000,000 demand but the directors of the Company expect such amount would be utilised through setting off of future rental expenses payable to this related party within one year. The amount due from (a company controlled by Mr. Qi) ( BJSRGB ) of HK$773,000 (31 March 2015: HK$1,410,000), resulting from provision of management services, is unsecured, interest-free and 773,000 repayable on demand. 1,410, INVENTORIES September 2015 (Unaudited) 31 March 2015 (Audited) Raw materials and consumables 27,277 30,586 Merchandised goods 1,143,504 1,468,964 1,170,781 1,499, Sparkle Roll Group Limited 耀萊集團有限公司

40 中期財務資料附註 Notes to the Interim Financial Information For the six months ended 30 September INVENTORIES (Continued) 12. As at 30 September 2015, merchandised goods of a p p r o x i m a t e l y H K $ 6 6 9, 2 0 2, ( 3 1 M a r c h : HK$793,944,000) have been pledged for borrowings of approximately HK$787,712,000 (31 March 2015: HK$939,433,000) (Note 17). 13. TRADE RECEIVABLES 669,202, ,944, ,712, ,433, An ageing analysis of trade receivables as at the reporting dates, based on the invoice dates, and net of impairment losses, is as follows: 30 September 2015 (Unaudited) 31 March 2015 (Audited) 0 30 days , days , days , It is the Group s credit policy that sales to retail customers are mainly on receipts in advance from customers, cash on delivery or on a credit basis up to 2 months (31 March 2015: 2 months), while sales to wholesale customers are mainly on a credit basis up to 18 months (31 March 2015: up to 18 months) Sparkle Roll Group Limited 耀萊集團有限公司 39

41 中期財務資料附註 Notes to the Interim Financial Information For the six months ended 30 September FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS 14. The Group had in prior year acquired certain wine futures which are classified as financial assets at fair value through profit or loss. During the six months ended 30 September 2014, the Group had exercised these wine futures and a gain of approximately HK$5,000 arising from the exercise of wine futures had been recognised in profit or loss for the six months ended 30 September 2014 and included in other income and net gains as disclosed in note 5. The Group did not own any wine futures during the six months ended 30 September 2015 and as at 30 September DERIVATIVE FINANCIAL INSTRUMENTS 5, The Group used foreign currency forward contracts to mitigate exchange rate exposure of Euros ( EUR ) against HK$. The foreign currency forward contracts were not designated for hedge purposes and are measured at fair value through profit or loss as described in note 24. Realised gains on foreign currency forward contracts amounting to HK$368,000 were credited to profit or loss during the period (six months ended 30 September 2014: unrealised losses of HK$3,055,000). The Group did not enter into any foreign currency forward contracts during the six months ended 30 September 2015 and as at 30 September ,000 3,055, Sparkle Roll Group Limited 耀萊集團有限公司

42 中期財務資料附註 Notes to the Interim Financial Information For the six months ended 30 September TRADE PAYABLES 16. The following is an ageing analysis of trade payables as at the reporting dates based on the invoice dates: 30 September 2015 (Unaudited) 31 March 2015 (Audited) 0 30 days ,170 3, days ,101 2, days ,697 6,885 Over 90 days 90 6,768 10,320 27,736 24, BORROWINGS September 2015 (Unaudited) 31 March 2015 (Audited) Current portion: Bank loans, guaranteed 3, ,726 Bank loans, secured 78, ,444 Other loans, secured 164, ,337 Bank loans, secured and guaranteed 357, ,410 Other loans, secured and guaranteed 240, ,649 Bank overdrafts, secured and guaranteed 16,685 10, ,884 1,145,364 Sparkle Roll Group Limited 耀萊集團有限公司 41

43 中期財務資料附註 Notes to the Interim Financial Information For the six months ended 30 September BORROWINGS (Continued) 17. As at the reporting date, the borrowings were scheduled to repay on demand or within one year. The effective interest rates (which are also equal to contracted interest rates) on the Group s borrowings are: 30 September 2015 (Unaudited) 31 March 2015 (Audited) Bank loans, secured and/or guaranteed HIBOR +2.5% to HIBOR + 3% per annum, LIBOR +1.8% to LIBOR + 2.5% per annum and 5.29% to 7.28% per annum + 2.5% + 3% +1.8% +2.5% 5.29% 7.28% HIBOR +2.5% to HIBOR + 3% per annum, LIBOR +1.8% to LIBOR + 2.5% per annum and 5.7% to 7.8% per annum + 2.5% + 3% +1.8% +2.5% 5.7% 7.8% Other loans, secured and/or guaranteed 7.1% to 8% per annum 7.1% 8% 7.1% to 8.25% per annum 7.1% 8.25% Bank overdrafts, secured and guaranteed HIBOR + 3% per annum +3% HIBOR + 3% per annum +3% 42 Sparkle Roll Group Limited 耀萊集團有限公司

44 中期財務資料附註 Notes to the Interim Financial Information For the six months ended 30 September BORROWINGS (Continued) 17. As at 30 September 2015, the Group s inventories of HK$669,202,000 (31 March 2015: HK$793,944,000) and bank deposits of HK$104,536,000 (31 March 2015: HK$230,470,000) were pledged to banks or other financial institutions to secure general banking facilities granted to the Group. 669,202, ,944, ,536, ,470,000 The borrowings were also subject to corporate guarantees executed by the Company and certain subsidiaries during the six months ended 30 September 2015 and the year ended 31 March The carrying amounts of the borrowings are denominated in the following currencies: 30 September 2015 (Unaudited) 31 March 2015 (Audited) EUR 2,230 Hong Kong Dollars 21,959 14,074 Renminbi ( RMB ) 836,617 1,115,912 Swiss Franc 2,308 10,445 United States Dollars 2, ,884 1,145,364 Sparkle Roll Group Limited 耀萊集團有限公司 43

45 中期財務資料附註 Notes to the Interim Financial Information For the six months ended 30 September SHARE CAPITAL 18. Number of ordinary shares Amount Authorised: Ordinary shares of HK$0.002 each At 1 April 2014, 30 September 2014, 31 March 2015, 1 April 2015 and 30 September ,000,000, ,000 Issued and fully paid: Ordinary shares of HK$0.002 each At 1 April 2014 (Audited), 30 September 2014 (Unaudited), 31 March 2015 (Audited), 1 April 2015 (Audited) and 30 September 2015 (Unaudited) ,979,828,850 5, RESERVES 19. (a) The special reserve of the Group represents the difference (a) between the nominal amount of the shares of the subsidiaries at the date on which they were acquired by the Company and the nominal amount of the shares issued for the acquisition under a group reorganisation in Sparkle Roll Group Limited 耀萊集團有限公司

46 中期財務資料附註 Notes to the Interim Financial Information For the six months ended 30 September RESERVES (Continued) 19. (b) The contributed surplus of the Group consists of: (b) (i) Pursuant to a special resolution passed at the (i) annual general meeting of the Company on 10 August 2004, the Company reduced its share premium by an amount of approximately HK$286,300,000 in accordance with the provisions 46 of Section 46 of the Bermuda Companies Act ,300,000 and transferred the same amount to the contributed surplus account of the Company. On the same date, the Company applied an amount of approximately HK$236,906,000 from the contributed surplus 236,906,000 account against the accumulated losses; and (ii) Pursuant to a special resolution passed at the (ii) annual general meeting of the Company on 31 July 2009, the Company reduced its share premium by an amount of approximately HK$260,000,000 and transferred the same amount to the contributed 260,000,000 surplus account of the Company. On the same date, the Company applied an amount of approximately HK$206,327,000 from the contributed surplus 206,327,000 account against the accumulated losses; and (iii) Dividends paid in prior years for a total of (iii) approximately HK$76,999,000; and 76,999,000 (iv) Transfer of approximately HK$1,467,000 and (iv) HK$1,309,000 from share option reserve due to forfeiture/lapse of share options during the years ended 31 March 2014 and 2015 respectively. 1,467,000 1,309,000 Sparkle Roll Group Limited 耀萊集團有限公司 45

47 中期財務資料附註 Notes to the Interim Financial Information For the six months ended 30 September RESERVES (Continued) 19. (c) Other reserve represents the difference between the (c) (i) consideration and (i) the carrying amount of the partial (ii) interest in subsidiaries disposed of and (ii) the carrying amount of the non-controlling interest acquired. (d) The Group s statutory reserve represents appropriations (d) of profits retained by the Company s subsidiaries in the People s Republic of China (the PRC ). In accordance with the respective articles of associations of the Company s PRC subsidiaries, they are required to appropriate amount not less than 10% of their profits 10% after income tax to statutory reserve each year, until the 50% reserve balance reaches 50% of its registered capital. Such a reserve may be used to reduce any losses incurred or for capitalisation as paid-up capital. 20. SHARE-BASED EMPLOYEE COMPENSATION 20. The Company s share option scheme (the Scheme ) was adopted pursuant to an ordinary resolution passed at a 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 an 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. Under the New Scheme, the board of directors of the Company may, at its discretion, grant options to eligible employees, including executive directors, suppliers, customers, advisers or consultants and joint venture partners or business alliances of the Company or any of its subsidiaries to subscribe for shares in the Company. 46 Sparkle Roll Group Limited 耀萊集團有限公司

48 中期財務資料附註 Notes to the Interim Financial Information For the six months ended 30 September SHARE-BASED EMPLOYEE COMPENSATION (Continued) 20. The total number of shares in respect of which options may be granted under the New Scheme is not permitted to exceed 10% of the shares of the Company in issue at any point in time, without prior approval from the Company s shareholders. The number of shares in respect of which options may be granted to any individual in any one year is not permitted to exceed 1% of the shares of the Company in issue at any point in time, without prior approval from the Company s shareholders. Options granted to substantial shareholder or independent non-executive directors in excess of 0.1% of the Company s share capital or with a value in excess of HK$5,000,000 must be approved in advance by the Company s shareholders. 10% 1% 0.1% 5,000,000 Options granted must be taken up within 21 days of the date of grant, upon payment of HK$1 per each grant of options. Options may be exercised from the date of grant of the share option to the tenth anniversary of the date of grant. The exercise price is determined by the directors of the Company and will not be less than the highest of the closing price of the shares on the Stock Exchange on the date of grant, the average closing prices of the shares on the Stock Exchange on the five trading days immediately preceding the date of grant of the options or the nominal value of the shares The New Scheme shall remain valid and effective for a period of ten years commencing from 20 August 2012, being the date on which the scheme was deemed to take effect in accordance with the terms. Sparkle Roll Group Limited 耀萊集團有限公司 47

49 中期財務資料附註 Notes to the Interim Financial Information For the six months ended 30 September SHARE-BASED EMPLOYEE COMPENSATION (Continued) 20. All share-based employee compensation will be settled in equity. The Group has no legal or constructive obligation to repurchase or settle the options other than by issuing the Company s ordinary shares. Details of the share options granted by the Company pursuant to the Scheme and the share options outstanding as at the reporting dates were as follows: Type of grantee Date of grant Exercisable period Exercise price HK$ Balance at 1 April 2014 Number of options Lapsed during the period Balance at 30 September 2014 and 2015 Employees 4 July July 2011 to 3 July ,456,000 (4,456,000) No share option was granted since 1 October There was no share option outstanding under the New Scheme as at 30 September 2015 and The weighted average exercise price for the lapsed share options were HK$1.52 per share during the six months ended 30 September Sparkle Roll Group Limited 耀萊集團有限公司

50 中期財務資料附註 Notes to the Interim Financial Information For the six months ended 30 September RELATED PARTY DISCLOSURES 21. (a) Related party transactions (a) During the period, save as disclosed elsewhere in this interim financial information, the Group also had the following significant transactions with related parties: Six months ended 30 September Notes (Unaudited) (Unaudited) Rental expense to Mr. Qi* Management fees income from BJSRGB * (i) 36,000 36,191 (ii) 739 1,172 * Mr. Qi is a substantial shareholder of the Company * All the related party transactions are conducted in the ordinary course of business at prices and terms based on mutual agreement. Sparkle Roll Group Limited 耀萊集團有限公司 49

51 中期財務資料附註 Notes to the Interim Financial Information For the six months ended 30 September RELATED PARTY DISCLOSURES (Continued) 21. (a) Related party transactions (Continued) (a) Remuneration of key management of the Group, being the directors of the Company, during the period was as follows: Six months ended 30 September (Unaudited) (Unaudited) Salaries and other benefits 2,610 2,610 Contributions to retirement benefits schemes 9 9 2,619 2,619 (b) Operating lease commitment to a related party (b) As at the reporting date, the total future minimum lease payments payable by the Group to Mr. Qi under non- cancellable operating leases were as follows: 30 September 2015 (Unaudited) 31 March 2015 (Audited) Within one year 70,244 72,000 In the second to fifth years inclusive 280, ,000 After five years 73, , , , Sparkle Roll Group Limited 耀萊集團有限公司

52 中期財務資料附註 Notes to the Interim Financial Information For the six months ended 30 September OPERATING LEASE COMMITMENTS 22. (a) Group as lessor (a) The Group sub-leases out a number of rented premises under operating leases. The leases run for an initial non-cancellable period of three to five years (31 March 2015: five years). The rentals on these leases are calculated based on a percentage of the relevant sales of the tenants or at a fixed rate pursuant to the rental agreements. Contingent rents recognised in profit or loss during the six months ended 30 September 2015 amounted to approximately HK$1,794,000 (six months 1,794,000 ended 30 September 2014: HK$10,603,000). 10,603,000 As at the reporting date, the total future minimum lease payments receivable by the Group under non-cancellable operating leases are as follows: 30 September 2015 (Unaudited) 31 March 2015 (Audited) Within one year 30,864 In the second to fifth years, inclusive 107, ,846 Sparkle Roll Group Limited 耀萊集團有限公司 51

53 中期財務資料附註 Notes to the Interim Financial Information For the six months ended 30 September OPERATING LEASE COMMITMENTS (Continued) 22. (b) Group as lessee (b) As at the reporting date, the total future minimum lease payments payable by the Group under non-cancellable operating leases, including operating lease commitment to a related party, are as follows: 30 September 2015 (Unaudited) 31 March 2015 (Audited) Within one year 131, ,853 In the second to fifth years inclusive 435, ,839 After five years 73, , , ,154 The Group leases a number of office premises, warehouse, showrooms and staff quarters under operating leases. The leases run for an initial period of one to ten years (31 March 2015: one to ten years). None of these leases include contingent rentals. 52 Sparkle Roll Group Limited 耀萊集團有限公司

54 中期財務資料附註 Notes to the Interim Financial Information For the six months ended 30 September CAPITAL COMMITMENTS September 2015 (Unaudited) 31 March 2015 (Audited) Contracted but not provided for capital contributions in a subsidiary 11,723 On 30 September 2015, the Group and Oettinger Davidoff AG ( ODAG ), an independent third party, entered into a shareholder s agreement (the Agreement ) for the formation of an entity (the NewCo ), which is to be held as to 50.1% by the Group and 49.9% by ODAG for the purpose of carrying out the business of cigars and smoker s accessories in the Mainland China. Pursuant to the Agreement, the Group is obligated to contribute capital of US$1,503,000 (equivalent to approximately HK$11,723,000) to the New Co. Details of the Agreement for the formation of the NewCo were set out in the Company s announcement dated 2 October Oettinger Davidoff AG ODAG O D A G 50.1% 49.9% 1,503,000 11,723,000 Sparkle Roll Group Limited 耀萊集團有限公司 53

55 中期財務資料附註 Notes to the Interim Financial Information For the six months ended 30 September FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS 24. The fair values of rental deposits paid to a related party, trade and other receivables, balances with related parties, pledged deposits, cash at banks and in hand, trade payables, accrued charges and other payables and borrowings approximate to their carrying amounts largely due to the short term maturities of these instruments. The fair value of other payables has been calculated by discounting the expected future cash flows using the rates currently available for instruments on similar terms, credit risk and remaining maturities. Fair value hierarchy The fair value hierarchy groups financial assets into three levels based on the relative reliability of significant inputs used in measuring the fair value of these financial assets. The fair value hierarchy has the following levels: Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities; Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). 54 Sparkle Roll Group Limited 耀萊集團有限公司

56 中期財務資料附註 Notes to the Interim Financial Information For the six months ended 30 September FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS (Continued) 24. The level in the fair value hierarchy within which the financial asset or liability is categorised in its entirety is based on the lowest level of input that is significant to the fair value measurement. Valuation for the financial instruments, including financial assets at fair value through profit or loss which are categorised into Level 3 of the fair value hierarchy, is prepared at each reporting date, and is reviewed and approved by the directors. The financial assets and liabilities measured at fair value in the consolidated statement of financial position are grouped into the fair value hierarchy as follows: Level 1 Level 2 Level 3 Total As at 31 March 2015 Liabilities Derivative financial instruments (note) 3,880 3,880 There have been no significant transfers between Levels 1 and 2 and no transfers into or out of Level 3 during the reporting period. Sparkle Roll Group Limited 耀萊集團有限公司 55

57 中期財務資料附註 Notes to the Interim Financial Information For the six months ended 30 September FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS (Continued) 24. The methods and valuation techniques used for the purpose of measuring fair value are unchanged compared to previous reporting periods. Note: The Group entered into foreign currency forward contracts with a creditworthy bank in Hong Kong. These forward currency contracts were measured using valuation techniques similar to a forward pricing model, with the resulting value discounted back to present value. The models incorporated various market observable inputs including the credit quality of counterparties, and foreign exchange spot and forward rates. The carrying amounts of these forward currency contracts were the same as their fair values. The derivatives entered into by the Group were included in Level APPROVAL OF THE INTERIM FINANCIAL INFORMATION 25. This unaudited interim financial information was approved and authorised for issue by the board of directors on 27 November Sparkle Roll Group Limited 耀萊集團有限公司

58 額外資料 Additional Information For the six months ended 30 September 2015 DIRECTORS INTERESTS IN SHARES, UNDERLYING SHARES AND DEBENTURES OF THE COMPANY AND ITS ASSOCIATED CORPORATIONS As at 30 September 2015, the interests and short positions of the Directors and/or the chief executives of the Company in the Shares, underlying Shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (the SFO )) which were required to be (i) notified to the Company and The Stock Exchange of Hong Kong Limited (the Stock Exchange ) pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which he or she was taken or deemed to have under such provisions of the SFO); or (ii) as recorded in the register required to be maintained by the Company pursuant to Section 352 of the SFO; or (iii) as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Rules (the Listing Rules ) Governing the Listing of Securities on the Stock Exchange, were as follows: XV (i)xv 78 (ii) 352 (iii) Long position in the Shares, underlying shares and debentures of the Company Approximate Number of percentage of Name of director Capacity Shares held interest (Note 2) 2 Mr. Tong Kai Lap Founder of discretionary trust (Note 1) 10,274, % 1 Beneficial owner 9,760, % Subtotal 20,034, % Sparkle Roll Group Limited 耀萊集團有限公司 57

59 額外資料 Additional Information For the six months ended 30 September 2015 Approximate Number of percentage of Name of director Capacity Shares held interest (Note 2) 2 Mr. Zheng Hao Jiang Beneficial owner 10,640, % Mr. Choy Sze Chung, Jojo Beneficial owner 1,000, % Mr. Lam Kwok Cheong Beneficial owner 4, % Mr. Lee Thomas Kang Bor Beneficial owner 1,256, % Notes: (1) These 10,274,400 Shares were held by Rapid Alert International Limited, a company controlled by a discretionary trust of which Mr. Tong is the founder. Accordingly, Mr. Tong was deemed to be interested in these Shares. (1) 10,274,400 Rapid Alert International Limited (2) The denominator used is 2,979,828,850 Shares, being the total number of Shares in issue as at 30 September (2) 2,979,828, Sparkle Roll Group Limited 耀萊集團有限公司

60 額外資料 Additional Information For the six months ended 30 September 2015 SUBSTANTIAL SHAREHOLDERS INTERESTS IN SHARES AND UNDERLYING SHARES OF THE COMPANY As at 30 September 2015, the register maintained by the Company pursuant to Section 336 of the SFO shows that, other than a Director or chief executive of the Company, the following shareholders had notified the Company of relevant interests and short positions in the Shares and underlying Shares of the Company: 336 Long position in the Shares and underling Shares of the Company Name of shareholder Capacity Number of Shares Approximate percentage of interest (Note 4) 4 Substantial shareholders Sparkle Roll Holdings Limited ( SRHL ) Beneficial owner 843,440, % Mr. Qi Jian Hong ( Mr. Qi ) Beneficial owner 4,960, % Interest of controlled corporation (Note 1) 1 843,440, % Ms. Zhu Shuang ( Ms. Zhu ) Interest of spouse (Note 1) 848,400, % 1 Mr. Wang Qiang ( Mr. Wang ) Beneficial owner 200, % Interest of controlled corporation (Note 2) 2 240,000, % Sparkle Roll Group Limited 耀萊集團有限公司 59

61 額外資料 Additional Information For the six months ended 30 September 2015 Name of shareholder Capacity Number of Shares Approximate percentage of interest (Note 4) 4 Street Smart Properties Limited ( Street Smart ) Street Smart Properties Limited Street Smart Beneficial owner (Note 2) 240,000, % 2 Hua Lang Limited ( Hua Lang ) Beneficial owner 432,896, % Jiang Hairong ( Mr. Jiang ) Interest of controlled corporation (Note 3) 3 432,896, % Yang Lili ( Ms. Yang ) Interest of spouse (Note 3) 432,896, % 3 LC Fund V, L.P. Beneficial owner 149,048, % LC Fund V, L.P. Notes: (1) These 843,440,000 Shares were held by SRHL. SRHL is a company wholly owned by Mr. Qi. Accordingly, Mr. Qi was deemed to be interested in the Shares held by SRHL. Ms. Zhu is the wife of Mr. Qi. Accordingly, Ms. Zhu was deemed to be interested in the Shares held by SRHL and Mr. Qi. (2) These 240,000,000 shares were held by Street Smart Properties Limited ( Street Smart ). Street Smart is a company wholly owned by Mr. Wang. Accordingly, Mr. Wang was deemed to be interested in the Shares held by Street Smart. (3) These 432,896,000 Shares were held by Hua Lang Limited ( Hua Lang ). Hua Lang is a company wholly owned by Mr. Jiang. Accordingly, Mr. Jiang was deemed to be interested in the Shares held by Hua Lang. Ms. Yang is the wife of Mr. Jiang. Accordingly, Ms. Yang was deemed to be interested in the Shares held by Hua Lang and Mr. Jiang. (4) The denominator used is 2,979,828,850 Shares, being the total number of Shares in issue as at 30 September (1) 843,440,000 (2) 2 4 0, 0 0 0, S t re e t S m a r t Properties LimitedStreet Smart Street Smart Street Smart (3) 432,896,000 (4) 2,979,828, Sparkle Roll Group Limited 耀萊集團有限公司

62 額外資料 Additional Information For the six months ended 30 September 2015 Save as disclosed above, as at 30 September 2015, the Directors were not aware of any other person (other than the Directors and the chief executive of the Company) who had, or was deemed to have, interests or short positions in the shares or underlying shares (including any interests in options in respect of such capital), which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was directly or indirectly interested in 5% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any member of the Group. DIRECTORS BIOGRAPHICAL DETAILS UPDATE XV 23 5% Directors biographical details update since the date of the 2015 Annual Report of the Company, which are required to be disclosed pursuant to Rule 13.51B (1) of the Rules Governing the Listing of Securities on The Stock Exchange ( Listing Rules ), are set out below: 13.51B(1) Name of Director Biographical details update since 2015 Annual Report Effective Date Lam Kwok Cheong Resigned as a NED of Sky Forever Supply Chain 28 July 2015 Management Group Limited (Stock Code: 8047) 8047 Save for the information disclosed above, there is no other information required to be disclosed pursuant to Rule 13.51B(1) of the Listing Rules. PURCHASE, SALE OR REDEMPTION OF THE COMPANY S LISTED SECURITIES 13.51B(1) Neither the Company, nor any of its subsidiaries purchased, sold or redeemed any of the Company s listed securities during the period. Sparkle Roll Group Limited 耀萊集團有限公司 61

63 額外資料 Additional Information For the six months ended 30 September 2015 PRE-EMPTIVE RIGHTS There are no provisions for pre-emptive rights under the Company s Bye-laws or the laws of Bermuda, which would oblige the Company to offer new shares on a pro-rata basis to the existing shareholders. MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS The Company has adopted the Model Code for Securities Transaction by Directors of Listed Issuers (the Model Code ) contained in Appendix 10 to the Listing Rules to govern securities transactions by the Directors. After having made specific enquiry of all Directors, all Directors confirmed that they have complied with the Model Code throughout the six months ended 30 September The Company also adopted the Model Code as guidelines for its relevant employees who are likely to be in possession of unpublished inside information of the Company in respect of their dealings in securities of the Company. No incident of non-compliance of the Model Code by the relevant employees was noted by the Company. CORPORATE GOVERNANCE PRACTICES The Group is committed to maintaining a high standard of corporate governance. The Board agrees that corporate governance practices are increasingly important for maintaining and promoting investor confidence. Corporate governance requirements keep changing, therefore the Board reviews its corporate governance practices from time to time to ensure that all practices can be met with legal and statutory requirements. Throughout the six months ended 30 September 2015, the Group has adopted the principles and code provisions in the Corporate Governance Code and Corporate Governance Report (the CG Code ) contained in Appendix 14 to the Listing Rules. The Company has been in compliance with the CG Code throughout the six months ended 30 September Sparkle Roll Group Limited 耀萊集團有限公司

64 額外資料 Additional Information For the six months ended 30 September 2015 Audit Committee The Audit Committee comprises three independent non-executive directors, namely Mr. Choy Sze Chung, Jojo (Chairman of the Audit Committee), Mr. Lam Kwok Cheong and Mr. Lee Thomas Kang Bor with written terms of reference in line with the code provisions set out in the CG Code. The Audit Committee has reviewed and approved the Interim Financial Information for the six months ended 30 September The Audit Committee is not aware of any material modifications that should have been made to the Interim Financial Information for the six months ended 30 September BDO Limited has reviewed the Interim Financial Information in accordance with the Hong Kong Standard on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the HKICPA Remuneration Committee The Remuneration Committee comprises three independent nonexecutive directors, namely, Mr. Lam Kwok Cheong (Chairman of the Remuneration Committee), Mr. Choy Sze Chung, Jojo, Mr. Lee Thomas Kang Bor, and two executive directors, namely Mr. Tong Kai Lap (Chairman of the Board) and Mr. Zheng Hao Jiang (Chief Executive Officer). The principal responsibilities of the Remuneration Committee include making recommendations to the Board on the Company s policy and structure in relation to the remuneration of directors and senior management and reviewing the specific remuneration packages of all executive directors and senior management by reference to corporate goals and objectives resolved by the Board from time to time. Nomination Committee The Nomination Committee comprises three independent nonexecutive directors, namely, Mr. Lee Thomas Kang Bor (Chairman of the Nomination Committee), Mr. Choy Sze Chung, Jojo and Mr. Lam Kwok Cheong. Sparkle Roll Group Limited 耀萊集團有限公司 63

65 額外資料 Additional Information For the six months ended 30 September 2015 The principal responsibilities of the Nomination Committee include reviewing the structure, size and composition (including the skills, knowledge and experience) of the Board on a regular basis and make recommendations to the board regarding any proposed changes, identifying individuals suitably qualified to become Board members, and select or make recommendations to the Board on the selection of individuals nominated for directorships, assessing the independence of independent non-executive directors; and making recommendations to the Board on relevant matters relating to the appointment or re-appointment of directors and succession planning for directors in particular the chairman and the chief executive officer. Directors Responsibilities for the Financial Statements The directors are responsible for the preparation of the financial statements for each financial period which give a true and fair view of the state of affairs of the Group and of the results and cash flows for that period. In preparing the Interim Financial Information, the directors have selected suitable accounting policies and applied them consistently, made judgements and estimates that are prudent, fair and reasonable and prepared the Interim Financial Information on a going concern basis. The directors are also responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Group, for safeguarding the assets of the Group and for taking reasonable steps for the prevention and detection of fraud and other irregularities. Sufficiency of Public Float The Company has maintained a sufficient public float throughout the six months ended 30 September By order of the Board Tong Kai Lap Chairman Hong Kong, 27 November Sparkle Roll Group Limited 耀萊集團有限公司