Citychamp Watch & Jewellery : ANNOUNCEMENT OF UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2019

August 29, 2019 at 06:31 pm EDT

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

CITYCHAMP WATCH & JEWELLERY GROUP LIMITED

冠城鐘錶珠寶集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 256)

ANNOUNCEMENT OF UNAUDITED INTERIM RESULTS

FOR THE SIX MONTHS ENDED 30 JUNE 2019

INTERIM RESULTS

The board of directors (the "Board") of Citychamp Watch & Jewellery Group Limited (the "Company") is pleased to announce the unaudited condensed consolidated results of the Company and its subsidiaries (collectively referred to as the "Group") for the six months ended 30 June 2019 together with comparative figures for the corresponding period in 2018.

- 1 -

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2019

		Six months ended 30 June
		2019		2018
	Notes	HK$'000	HK$'000
		(Unaudited)	(Unaudited)
Interest income from banking business		112,844		105,333
Interest expenses from banking business		(18,181)	(20,167)

Net interest income from banking business	4a	94,663		85,166
Service fees and commission income from

banking business		149,352		161,110
Service fees and commission expenses from
banking business		(39,182)	(44,042)
Net service fees and commission income

from banking business	4b	110,170		117,068

Trading income from banking business	4c	28,608		36,185
Service fees and commission income from
financial business	4d	858		1,752
Interest income from financial business	4d	102		104
Sales of goods from non-banking and
financial businesses	4e	1,182,778		1,234,892
Rental income from non-banking and
financial businesses	4e	5,145		2,640

Total revenue		1,422,324		1,477,807
Cost of sales from non-banking and financial

businesses		(499,558)	(494,253)
Other ordinary income and other net gains or
losses	5	45,272	62,927
Selling and distribution expenses		(382,556)	(417,715)
Administrative expenses		(400,138)	(361,102)
Share of loss of joint ventures		(1,345)	(1,433)
Share of profit of associates		6,756	5,278
Finance costs	6	(40,882)	(27,313)

Profit before income tax	7	149,873		244,196
Income tax expense	8	(39,884)	(50,619)

Profit for the period		109,989		193,577

- 2 -

Six months ended 30 June

20192018

Notes HK$'000 HK$'000

(Unaudited) (Unaudited)

Other comprehensive income

Items that will not be subsequently reclassified to profit or loss

Change in fair value of financial assets at fair value through other comprehensive

income	12	(74,790)	(156,087)
- Remeasurement of net defined benefit
obligation		(1,316)	-

		(76,106)	(156,087)
Item that may be subsequently reclassified to

profit or loss
- Exchange differences on translation to
presentation currency		(4,266)	(54,593)

Other comprehensive income for the period		(80,372)	(210,680)

Total comprehensive income for the period		29,617		(17,103)
Profit for the period attributable to:


Owners of the Company		88,608		167,100
Non-controlling interests		21,381	26,477

		109,989		193,577
Total comprehensive income for the period


attributable to:
Owners of the Company		8,765		(33,504)
Non-controlling interests		20,852	16,401

		29,617		(17,103)
Earnings per share attributable to owners


of the Company for the period	10
- Basic		HK2.04 cents	HK3.84 cents


- Diluted		HK2.04 cents	HK3.84 cents

- 3 -

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2019

		30 June	31 December
		2019		2018
	Notes	HK$'000	HK$'000
		(Unaudited)	(Audited)
Assets
Cash and deposits		6,529,741		7,701,743
Due from clients		1,805,195		1,575,438
Due from banks		3,538,406	3,387,836
Trading portfolio investments	11	162,628	123,606
Financial assets at fair value through other
comprehensive income	12	552,410	627,200
Derivative financial assets		4,370	7,694
Trade receivables	13	541,661	571,424
Other financial assets at amortised cost	14	1,254,621	1,034,773
Inventories	15	2,264,078	2,314,545
Income tax recoverable		18,235	13,269
Interests in joint ventures		1,094	2,439
Interests in associates		109,675	102,919
Property, plant and equipment		1,158,815	1,036,736
Investment properties		179,133	179,133
Prepaid land lease payments		-	47,605
Intangible assets	16	52,706	53,310
Goodwill	17	1,071,576	1,071,552
Deferred tax assets		12,394	9,437
Other assets		597,866	397,570

Total assets		19,854,604		20,258,229

- 4 -

		30 June	31 December
		2019		2018
	Notes	HK$'000	HK$'000
		(Unaudited)	(Audited)
Liabilities
Due to banks		1,670		4,181
Due to clients		11,886,077		12,504,591
Derivative financial liabilities		33,554	20,866
Trade payables	18	388,498	324,106
Contract liabilities		12,742	30,918
Corporate bonds		767,966	760,244
Income tax payables		78,512	73,867
Borrowings	19	1,046,407	1,047,189
Provisions		478	476
Lease liabilities		104,938	-
Deferred tax liabilities		60,118	60,369
Due to a shareholder		-	73,000
Other liabilities		539,161	548,931

Total liabilities		14,920,121		15,448,738
EQUITY

Equity attributable to owners of
the Company
Share capital		435,189		435,189
Reserves		4,077,346	4,004,602

		4,512,535		4,439,791
Non-controlling interests		421,948	369,700

Total equity		4,934,483		4,809,491

Total liabilities and equity		19,854,604		20,258,229

- 5 -

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

For the six months ended 30 June 2019

BASIS OF PREPARATION
The unaudited condensed interim financial information ("the Unaudited Interim Financial Information") has been prepared in accordance with Hong Kong Accounting Standard ("HKAS") 34, Interim financial reporting, issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA") and with the applicable disclosure provisions in Appendix 16 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules").
The Unaudited Interim Financial Information is presented in Hong Kong Dollars ("HK$"), which is also the functional currency of the Company and all values are rounded to the nearest thousand ("HK$'000") unless otherwise stated.
The Unaudited Interim Financial Information for the six months ended 30 June 2019 was approved for issue by the board of directors on 29 August 2019.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Unaudited Interim Financial Information has been prepared in accordance with the accounting policies and method of computation used in the 2018 Annual Financial Statements, except for the adoption of the new or amended Hong Kong Financial Reporting Standards ("HKFRSs"), which include individual HKFRSs, HKAS and Interpretations ("Int"). The Group has not early adopted any new HKFRSs that have been issued but are not yet effective. The Unaudited Interim Financial Information should be read in conjunction with the 2018 Annual Financial Statements.
This is the first set of the Group's financial statements in which HKFRS 16 has been adopted. The impact of the adoption of HKFRS 16 Leases have been summarised in below. The other new or amended HKFRSs that are effective from 1 January 2019 did not have any significant impact on the Group's accounting policies.
1. Impact of the adoption of HKFRS 16
  HKFRS 16 brings significant changes in accounting treatment for lease accounting, primarily for accounting for lessees. It replaces HKAS 17 Leases ("HKAS 17"), HK(IFRIC)-Int 4 Determining whether an Arrangement contains a Lease, HK(SIC)-Int 15 Operating Leases-Incentives and HK(SIC)-Int 27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. From a lessee's perspective, almost all leases are recognised in the condensed consolidated statement of financial position as a right-of-use assets and a lease liabilities, with the narrow exception to this principle for leases which the underlying assets are of low-value or are determined as short-term leases. From a lessor's perspective, the accounting treatment is substantially unchanged from HKAS 17. For details of HKFRS 16 regarding its new definition of a lease, its impact on the Group's accounting policies and the transition method adopted by the Group as allowed under HKFRS 16, please refer to section (ii) to (v) of this note.
  The Group has applied HKFRS 16 using the cumulative effect approach and recognised the right- of-use asset at the amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised in the condensed consolidated statement of financial position immediately before 1 January 2019. There were no onerous lease contracts that would have required a significant adjustment to the right-of-use assets at the date of initial application on 1 January 2019. The comparative information presented in 2018 has not been restated and continues to be reported under HKAS 17 and related interpretations as allowed by the transition provision in HKFRS 16.

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Impact of the adoption of HKFRS 16 (Continued)

The following table summarises the impact of the adoption of HKFRS 16 on the Group's condensed consolidated statement of financial position as at 1 January 2019.

	As at			HKFRS 16	As at
	31 December	HKFRS 16	Contract	1 January
	2018	Reclassification	Capitalisation	2019
	HK$'000	HK$'000	HK$'000	HK$'000
Assets:
Property, plant and
equipment	1,036,736		47,605		90,627	1,174,968
Prepaid land lease
payments	47,605		(47,605)	-	-
Liabilities:
Lease liabilities	-	-	(90,627)	(90,627)

The following reconciliation explains how the operating lease commitments disclosed applying HKAS 17 at the end of 31 December 2018 could be reconciled to the lease liabilities at the date of initial application recognised in the condensed consolidated statement of financial position as at 1 January 2019:

Reconciliation of operating lease commitment to lease liabilities
	HK$'000
Operating lease commitment as at 31 December 2018	112,456
Less: short term leases for which lease terms end within 31 December 2019	(12,866)
Less: future interest expenses	(8,963)

Total lease liabilities as of 1 January 2019	90,627

The weighted average lessee's incremental borrowing rate applied to lease liabilities recognised in the condensed consolidated statement of financial position as at 1 January 2019 is 5%.

Prepaid land lease payments in respect of the land use right in the PRC are currently recognised as right-of-use assets under HKFRS 16.

- 7 -

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The new definition of a lease
Under HKFRS 16, a lease is defined as a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration. A contract conveys the right to control the use of an identified asset for a period of time when the customer, throughout the period of use, has both: (a) the right to obtain substantially all of the economic benefits from use of the identified asset and (b) the right to direct the use of the identified asset.
For a contract that contains a lease component and one or more additional lease or non-lease components, a lessee shall allocate the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components, unless the lessee apply the practical expedient which allows the lessee to elect, by class of underlying asset, not to separate non-lease components from lease components, and instead account for each lease component and any associated non-lease components as a single lease component.
The Group has elected not to separate non-lease components and account for all each lease component and any associated non-lease components as a single lease component for all leases.
Accounting as a lessee
Under HKAS 17, a lessee has to classify a lease as an operating lease or a finance lease based on the extent to which risks and rewards incidental to ownership of a lease asset lie with the lessor or the lessee. If a lease is determined as an operating lease, the lessee would recognise the lease payments under the operating lease as an expense over the lease term. The asset under the lease would not be recognised in the condensed consolidated statement of financial position of the lessee.
Under HKFRS 16, all leases (irrespective of they are operating leases or finance leases) are required to be capitalised in the condensed consolidated statement of financial position as right-of-use assets and lease liabilities, but HKFRS 16 provides accounting policy choices for an entity to choose not to capitalise (i) leases which are short-term leases and/or (ii) leases for which the underlying asset is of low-value. The Group has elected not to recognise right-of-use assets and lease liabilities for low-value assets and leases for which at the commencement date have a lease term less than 12 months. The lease payments associated with those leases have been expensed on straight-line basis over the lease term.
The Group recognised a right-of-use asset and a lease liability at the commencement date of a lease.
Right-of-use asset
The right-of-use asset should be recognised at cost and would comprise: (i) the amount of the initial measurement of the lease liability (see below for the accounting policy to account for lease liability); (ii) any lease payments made at or before the commencement date, less any lease incentives received; (iii) any initial direct costs incurred by the lessee and (iv) an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset to the condition required by the terms and conditions of the lease, unless those costs are incurred to produce inventories. The Group measures the right-to-use asset at cost, less any accumulated depreciation and any impairment losses, and adjusted for any remeasurement of lease liability.

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Accounting as a lessee (Continued) Right-of-useasset (Continued)
For the Group, leasehold land and buildings that were held for rental or capital appreciation purpose would continue to be accounted for under HKAS 40 and would be carried at fair value. For leasehold land and buildings which is held for own use would continue to be accounted for under HKAS 16 and would be carried at cost, less any accumulated depreciation and any impairment losses. The adoption of HKFRS 16 therefore does not have any significant impact on these right- of-use assets. Other than the above right-of-use assets, the Group also has leased a number of properties under tenancy agreements which the Group exercises it judgement and determines that it is a separate class of asset apart from the leasehold land and buildings which is held for own use. As a result, the right-of-use asset arising from the properties under tenancy agreements are carried at depreciated cost.
Lease liability
The lease liability should be recognised at the present value of the lease payments that are not paid at the date of commencement of the lease. The lease payments shall be discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Group shall use the Group's incremental borrowing rate.
The following payments for the right-to-use the underlying asset during the lease term that are not paid at the commencement date of the lease are considered to be lease payments: (i) fixed payments less any lease incentives receivable: (ii) variable lease payments that depend on an index or a rate, initially measured using the index or rate as at commencement date; (iii) amounts expected to be payable by the lessee under residual value guarantees; (iv) the exercise price of a purchase option if the lessee is reasonably certain to exercise that option and (v) payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.
Subsequent to the commencement date, a lessee shall measure the lease liability by: (i) increasing the carrying amount to reflect interest on the lease liability; (ii) reducing the carrying amount to reflect the lease payments made; and iii) remeasuring the carrying amount to reflect any reassessment or lease modifications, e.g. a change in future lease payments arising from change in an index or rate, a change in the lease term, a change in the in substance fixed lease payments or a change in assessment to purchase the underlying asset.
Accounting as a lessor
The Group has leased out its investment property to a number of tenants. As the accounting under HKFRS 16 for a lessor is substantially unchanged from the requirements under HKAS 17, the adoption of HKFRS 16 does not have significant impact on these condensed consolidated interim financial statements.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
1. Transition
  As mentioned above, the Group has applied HKFRS 16 using the cumulative effect approach and recognised the right-of-use asset at the amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised in the condensed consolidated statement of financial position immediately before 1 January 2019. There were no onerous lease contracts that would have required a significant adjustment to the right-of-use assets at the date of initial application on 1 January 2019. The comparative information presented in 2018 has not been restated and continues to be reported under HKAS 17 and related interpretations as allowed by the transition provision in HKFRS 16.
  The Group has recognised the lease liabilities at the date of 1 January 2019 for leases previously classified as operating leases applying HKAS 17 and measured those lease liabilities at the present value of the remaining lease payments, discounted using the lessee's incremental borrowing rate at 1 January 2019.
  The Group has elected to recognise all the right-of-use assets at 1 January 2019 for leases previously classified operating leases under HKAS 17 as if HKFRS 16 had been applied since the commencement date, but discounted using the lessee's incremental borrowing rate at the date of initial application. For all these right-of-use assets, the Group has applied HKAS 36 Impairment of Assets at 1 January 2019 to assess if there was any impairment as on that date.
  The Group has also applied the following practical expedients: (i) applied a single discount rate to a portfolio of leases with reasonably similar characteristics; and (ii) applied the exemption of not to recognise right-of-use assets and lease liabilities for leases with term that will end within 12 months of the date of initial application (1 January 2019) and accounted for those leases as short-term leases.
SEGMENT INFORMATION
The chief operating decision-maker is identified as executive directors. The executive directors have identified the Group's product and service lines as operating segments as follows:
1. manufacture and distribution of watches and timepieces;
2. property investments; and
3. banking and financial businesses.

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3. SEGMENT INFORMATION (CONTINUED)

These operating segments are monitored and strategic decisions are made on the basis of adjusted segment operating results.

			Six months ended 30 June 2019
					Banking
	Watches			and
	and	Property	financial
	timepieces	investments	businesses	Unallocated	Total
	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000
	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
Segment revenue:
Net interest income from banking business	-	-	94,663	-	94,663
Net service fees and commission income from
banking business	-	-	110,170	-	110,170
Trading income from banking business	-	-	28,608	-	28,608
Service fees and commission income from
financial business	-	-	858	-	858
Interest income from financial business	-	-	102	-	102
Sales of goods from non-banking and financial
businesses	1,182,778	-	-	-	1,182,778
Rental income from non-banking and financial
businesses	-	5,145	-	-	5,145

Total revenue	1,182,778		5,145		234,401	-	1,422,324


Segment results	131,011		3,942		102,540	-	237,493
Unallocated corporate income and expenses, net	-	-	-	(52,149)	(52,149)
Share of loss of joint ventures	-	-	-	(1,345)	(1,345)
Share of profit of associates	-	-	-	6,756	6,756
Finance costs	(12,788)	-	(427)	(27,667)	(40,882)

Profit before income tax	118,223		3,942		102,113	(74,405)	149,873
Income tax expense	(27,036)	(227)	(12,621)	-	(39,884)

Profit for the period	91,187		3,715		89,492	(74,405)	109,989

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3. SEGMENT INFORMATION (CONTINUED)

			Six months ended 30 June 2018
					Banking
	Watches			and
	and	Property	financial
	timepieces	investments	businesses	Unallocated	Total
	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000
	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
Segment revenue:
Net interest income from banking business	-	-	85,166	-	85,166
Net service fees and commission income from
banking business	-	-	117,068	-	117,068
Trading income from banking business	-	-	36,185	-	36,185
Service fees and commission income from
financial business	-	-	1,752	-	1,752
Interest income from financial business	-	-	104	-	104
Sales of goods from non-banking and financial
businesses	1,234,892	-	-	-	1,234,892
Rental income from non-banking and financial
businesses	-	2,640	-	-	2,640
Total revenue
1,234,892		2,640		240,275	-	1,477,807
Segment results

177,233		1,914		109,162	-	288,309
Unallocated corporate income and expenses, net	-	-	-	(20,751)	(20,751)
Share of loss of joint ventures	-	-	-	(1,433)	(1,433)
Share of profit of associates	-	-	-	5,278	5,278
Finance costs	(5,887)	-	(106)	(21,214)	(27,207)

Profit before income tax	171,346		1,914		109,056	(38,120)	244,196
Income tax expense	(36,999)	-	(13,620)	-	(50,619)

Profit for the period	134,347		1,914		95,436	(38,120)	193,577

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4. REVENUE

The Group is principally engaging in manufacture and distribution of watches and timepieces, property investments and banking and financial businesses.

For banking and financial businesses, revenue mainly comprises net interest income, net service fees and commission income and net trading income. For non-banking and financial businesses, revenue mainly represents the net invoiced value of goods sold, after allowance for returns and trade discounts and rental income received and receivables.

Revenue recognised during the period is as follows:

Net interest income from banking business

	Six months ended 30 June
	2019		2018
	HK$'000	HK$'000
	(Unaudited)	(Unaudited)
Interest income from banking business
arising from:
Interest income - due from banks	79,983		79,918
Interest income - due from clients	14,092		14,170
Interest income from trading portfolio investments	3		63
Interest income from mortgage loans	6,998		3,009
Interest income from debt instruments	11,794		5,319
Interest income from money market papers	-	2,906
Negative interest expense on due to clients	(26)	(52)

	112,844		105,333
Interest expenses from banking business arising

from:
Interest expense on due to banks	(17,611)	(18,229)
Interest expense on due to clients	(500)	(149)
Interest expense for issued debt instruments	-	(1,665)
Negative interest income on due from banks
and clients	(70)	(124)

	(18,181)	(20,167)

Net interest income from banking business	94,663		85,166

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4. REVENUE (CONTINUED)

Net service fees and commission income from banking business

	Six months ended 30 June
	2019		2018
	HK$'000	HK$'000
	(Unaudited)	(Unaudited)
Service fees and commission income from
banking business arising from:
Commission income from loans	4,666		1,431
Brokerage fees	16,123		18,833
Custody account fees	13,523		12,915
Commission on investment advice and asset
management	46,423		55,264
Commission income from service fees	36,656		44,665
Commission income from fiduciary fees	296		356
Commission income from retrocession	3,043		1,893
Other commission income	28,622		25,753

	149,352		161,110
Service fees and commission expenses from banking

business	(39,182)	(44,042)
Net service fees and commission income from

banking business	110,170		117,068

Trading income from banking business

	Six months ended 30 June
	2019		2018
	HK$'000	HK$'000
	(Unaudited)	(Unaudited)
Debt instruments	(55)	74
Securities	-	5
Forex and precious metals	27,929		36,146
Funds	734		(40)

Trading income from banking business	28,608		36,185
(d) Revenue from financial business


	Six months ended 30 June
	2019		2018
	HK$'000	HK$'000
	(Unaudited)	(Unaudited)
Service fees and commission income	858		1,752
Interest income	102		104

Revenue from financial business	960		1,856

- 14 -

4. REVENUE (CONTINUED)

Revenue from non-banking and financial businesses

Six months ended 30 June

20192018

HK$'000HK$'000

(Unaudited) (Unaudited)

Sale of goods	1,182,778	1,234,892
Rental income	5,145	2,640
Revenue from non-banking and financial

businesses	1,187,923	1,237,532

5. OTHER ORDINARY INCOME AND OTHER NET GAINS OR LOSSES

		Six months ended 30 June
		2019	2018
		HK$'000		HK$'000
		(Unaudited)		(Unaudited)
	Gain on fair value changes in trading portfolio investments,
	net	4,375	15,655
	Bank and other interest income from non-banking and
	financial business	1,775	6,281
	Dividend income from trading portfolio investments	400	1,111
	Dividend income from financial asset at FVOCI	12,262	11,481
	Gain/(loss) on disposal of property, plant and equipment	22	(34)
	Government subsidies	15,365	19,039
	Other sundry income	11,073	9,394

		45,272	62,927
6.	FINANCE COSTS


		Six months ended 30 June
		2019	2018
		HK$'000		HK$'000
		(Unaudited)		(Unaudited)
	Interests on lease liabilities	2,564		-
	Interests charged on corporate bonds	14,222	12,424
	Interests charged on bank borrowings and bank overdrafts	23,748	14,783
	Margin loan interest	348	106

		40,882	27,313

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7. PROFIT BEFORE INCOME TAX

The Group's profit before income tax was arrived at after charging:

			Six months ended 30 June
			2019		2018
			HK$'000	HK$'000
			(Unaudited)	(Unaudited)
	Depreciation of property, plant and equipment	66,836		51,469
	Amortisation of prepaid land lease payments	-	630
	Amortisation of intangible assets	888		936
8.	INCOME TAX EXPENSE


			Six months ended 30 June
			2019		2018
			HK$'000	HK$'000
			(Unaudited)	(Unaudited)
	Current tax for the period
	PRC	26,522		39,034
	Liechtenstein	13,148		13,574
	Switzerland	749		602
	Under-provision in respect of prior periods
	PRC	-	851
	Deferred tax for the period	(535)	(3,442)

	Total income tax expense	39,884		50,619

For both the six months ended 30 June 2019 and 2018, no provision for Hong Kong profits tax has been made as the Group has no assessable profits arising in Hong Kong. The subsidiaries established in the PRC are subject to income taxes at tax rates ranging between 15% and 25% (Six months ended 30 June 2018: between 15% and 25%). Overseas tax is calculated at the rates applicable in the respective jurisdictions.

The Group is subject to PRC withholding tax at the rate of 5% or 10% in respect of its PRC sourced income earned, including rental income from properties in PRC, dividend income derived from PRC incorporated company and profit arising from the transfer of equity interest in PRC incorporated company.

- 16 -

9. DIVIDENDS

Dividends attributable to the interim period were as follows:
The directors do not recommend the payment of an interim dividend for the period ended 30 June 2019 (Six months ended 30 June 2018: Nil).
Dividends attributable to the previous financial year, approved and paid during the period were as follows:

	Six months ended 30 June
	2019	2018
	HK$'000		HK$'000
	(Unaudited)		(Unaudited)
Final dividend in respect to previous financial year
(six months ended 30 June 2018: HK6 cents per
share)	-	261,113

	-	261,113

The dividend payable for 2017 final dividend as at 30 June 2018 was HK$261,113,000. During the six months ended 30 June 2018, 1,575,000 ordinary shares were issued due to exercise of share options. The aforementioned issuance of ordinary shares were completed before the closure of members' register on 29 June 2018. As such, ordinary shares newly issued during the six months ended 30 June 2018 were entitled to the 2017 final dividend.

10. EARNINGS PER SHARE

The calculations of the basic and diluted earnings per share attributable to owners of the Company are based on the following data:

	Six months ended 30 June
	2019	2018
	HK$'000		HK$'000
	(Unaudited)		(Unaudited)
Profit attributable to owners of the Company for the
purpose of calculating basic and diluted earnings per
share	88,608	167,100

- 17 -

10. EARNINGS PER SHARE (CONTINUED)
	Number of shares
	Six months ended 30 June
	2019		2018
	'000	'000
	(Unaudited)	(Unaudited)
Weighted average number of shares for the purpose of
calculating basic earnings per share	4,351,888		4,350,844
Effect of dilutive potential shares:
- share options issued by the Company	-*	5,291
Weighted average number of shares for the purpose of

calculating diluted earnings per share	4,351,888		4,356,135

There was no potential dilutive ordinary share in existence for the six months ended 30 June 2019.

11. TRADING PORTFOLIO INVESTMENTS

	30 June		31 December
	2019	2018
	HK$'000		HK$'000
	(Unaudited)		(Audited)
Equity instruments
Listed equity instruments in Hong Kong at market value	35,570	42,793
Listed equity instruments outside Hong Kong at market
value	68,472	35,429

Total equity instruments	104,042	78,222
Debt instruments

Debt instruments of financial institutions listed outside
Hong Kong	-	603
Unlisted debt instruments of financial institutions	5,673	12,890

Total debt instruments	5,673	13,493
Investment fund units

Investment fund units listed outside Hong Kong	-	793
Unlisted investments fund units	46,855	7,851

Total investment fund units	46,855	8,644

Investments in other financial products	6,058	23,247

Total trading portfolio investments	162,628	123,606

- 18 -

12. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

	30 June		31 December
	2019	2018
	HK$'000		HK$'000
	(Unaudited)		(Audited)
Listed equity instruments in Hong Kong (note (a))	384,334	492,759
Listed equity instruments outside Hong Kong (note (b))	162,386	128,730
Unlisted equity investments	5,690	5,711

Total	552,410	627,200

Notes:

As at 30 June 2019 and 31 December 2018, the listed equity investments in Hong Kong represented 14.76% equity interest in Min Xin Holdings Limited ("Min Xin Shares"). As at 30 June 2019 and 31 December 2018, the Group held 88,150,000 Min Xin Shares.
As at 30 June 2019 and 31 December 2018, the listed equity investments outside Hong Kong represented 2.04% equity interest in Citychamp Dartong Company Limited ("Citychamp Dartong Shares") listed in Shanghai Stock Exchange in the PRC. As at 30 June 2019 and 31 December 2018, the Group held 30,389,058 Citychamp Dartong Shares.

During the six months ended 30 June 2019, the decrease in fair value of financial assets at fair value through other comprehensive income of HK$74,790,000 (Six months ended 30 June 2018: HK$156,087,000) has been dealt with in other comprehensive income and FVOCI reserve.

13. TRADE RECEIVABLES

As at 30 June 2019, the Group's trade receivables is amounted to HK$541,661,000 (31 December 2018: HK$571,424,000), in which HK$539,549,000 (31 December 2018: HK$562,674,000) is arising from watches and timepieces businesses and HK$2,112,000 (31 December 2018: HK$8,750,000) is arising from financial business.

The Group's trading terms with its customers of watches and timepieces businesses are mainly on credit, except for certain customers, where payment in advance is required. The credit period is generally for a period of one to six months (31 December 2018: one to six months) for major customers. Each customer has a maximum credit limit. The credit term for customers is determined by the management according to industry practice together with consideration of their creditability. Trade receivables are non-interest bearing.

Ageing analysis of trade receivables arising from watches and timepieces businesses as at the reporting dates, based on invoice date, and net of provisions, is as follows:

	30 June		31 December
	2019	2018
	HK$'000		HK$'000
	(Unaudited)		(Audited)
1 to 3 months	456,413	401,115
4 to 6 months	5,100	73,448
Over 6 months	78,036	88,111

	539,549	562,674

- 19 -

14. OTHER FINANCIAL ASSETS AT AMORTISED COST

		30 June		31 December
		2019	2018
		HK$'000		HK$'000
		(Unaudited)		(Audited)
Listed debt instruments, at amortised cost	1,254,621	1,034,773
Issued by:


Governments and public sector	43,711	7,822
Financial institutions	816,820	716,747
Corporations	394,090	310,204

		1,254,621	1,034,773
15. INVENTORIES


		30 June		31 December
		2019	2018
		HK$'000		HK$'000
		(Unaudited)		(Audited)
Raw materials	392,893	584,342
Work-in-progress	539,756	359,015
Finished goods and merchandise	1,331,429	1,371,188

		2,264,078	2,314,545

- 20 -

16. INTANGIBLE ASSETS
	Supplier
	and
	distribution	Brand	Trading
	networks	names	rights	Total
	HK$'000	HK$'000	HK$'000	HK$'000
Six months ended 30 June 2019
(Unaudited)
Opening carrying amount	3,935	42,129	7,246	53,310
Amortisation	(888)	-	-	(888)
Exchange realignment	(24)	308	-	284

Closing carrying amount	3,023		42,437		7,246	52,706
Year ended 31 December 2018


(Audited)
Opening carrying amount	5,585		305		7,246	13,136
Acquisition of subsidiaries	-	42,000	-	42,000
Amortisation	(1,718)	(76)	-	(1,794)
Exchange realignment	68	(100)	-	(32)
Closing carrying amount
3,935		42,129		7,246	53,310

As at 30 June 2019, intangible assets of HK$45,460,000 (31 December 2018: HK$46,064,000) are attributable to watches and timepieces businesses while intangible assets of HK$7,246,000 (31 December 2018: HK$7,246,000) are attributable to financial business.

17. GOODWILL
	30 June		31 December
	2019	2018
	HK$'000		HK$'000
	(Unaudited)		(Audited)
Balance at the beginning of period/year	1,071,552	906,036
Acquisition of subsidiaries	-	201,454
Exchange realignment	24	(35,938)

Balance at the end of period/year	1,071,576	1,071,552

As at 30 June 2019, goodwill of HK$823,027,000 (31 December 2018: HK$824,280,000) are attributable to watches and timepieces businesses while goodwill of HK$248,549,000 (31 December 2018: HK$247,272,000) are attributable to banking and financial businesses.

- 21 -

18. TRADE PAYABLES

As at 30 June 2019, the Group's trade payables is amounted to HK$388,498,000 (31 December 2018: HK$324,106,000), in which HK$272,482,000 (31 December 2018: HK$280,567,000) is arising from watches and timepieces business and HK$116,016,000 (31 December 2018: HK$43,539,000) is arising from financial business.

Ageing analysis of trade payables arising from watches and timepieces business as at the reporting dates, based on invoice dates, is as follows:

	30 June		31 December
	2019	2018
	HK$'000		HK$'000
	(Unaudited)		(Audited)
1 to 3 months	202,414	215,854
4 to 6 months	7,509	25,151
Over 6 months	62,559	39,562

	272,482	280,567
19. BORROWINGS


	30 June		31 December
	2019	2018
	HK$'000		HK$'000
	(Unaudited)		(Audited)
Bank overdrafts	62	14,822
Bank borrowings	1,034,742	1,030,774
Margin loan payable	11,603	1,593

	1,046,407	1,047,189

As at 30 June 2019, the amount of the Group's bank overdrafts and bank borrowing repayable within one year or on demand is HK$879,936,000 (31 December 2018: HK$823,493,000). The remaining balances are repayable over one year.

20. EVENTS AFTER REPORTING PERIOD

Entering into a facility agreements
On 16 July 2019, the Company has entered into a facility agreement with a syndicate of financial institutions in respect of a 3-year term loan facility in the amount up to US$150,000,000. Details of the transactions are set out in the Company's announcement dated 16 July 2019.
Redemption of corporate bonds
On 24 July 2019, Citychamp Watch and Jewellery SwissCo AG, a wholly-owned subsidiary of the Company, has redeemed and repaid all of the outstanding corporate bonds at the principal amount of CHF100,000,000. Details of the transactions are set out in the Company's announcement dated 24 July 2019.

- 22 -

MANAGEMENT DISCUSSION AND ANALYSIS

OUR STRATEGY

The Group takes a long-term perspective in formulating our corporate strategy. We engage capital and people where we identify opportunities to generate returns which exceed our cost of capital over the long term and invest in the existing and new businesses. It is our intention to remain a conglomerate with different businesses capable of generating sustainable long- term growth.

FINANCIAL HIGHLIGHTS
	Six months ended 30 June
	2019	2018	Variation
	HK$'000	HK$'000	%
Total revenue	1,422,324	1,477,807	-3.8%
Operating expenses	782,694	778,817	0.5%
Gross profit generated from
non-banking and financial businesses	688,365	743,279	-7.4%
Gross profit generated from banking
and financial businesses	234,401	240,275	-2.4%
EBITDA	258,479	324,544	-20.4%
Profit before tax	149,873	244,196	-38.6%
Net profit after tax	109,989	193,577	-43.2%
Earnings per share attributable to owners of
the Company for the period
- Basic	HK2.04 cents	HK3.84 cents	-46.9%
- Diluted	HK2.04 cents	HK3.84 cents	-46.9%
	30 June	31 December
	2019	2018	Variation
	HK$'000	HK$'000	%
Total assets	19,854,604	20,258,229	-2.0%
Total liabilities	14,920,121	15,448,738	-3.4%
Total equity	4,934,483	4,809,491	2.6%

OPERATING RESULTS

For the six months ended 30 June 2019, the Group recorded total revenue of approximately HK$1,422,324,000 (Six months ended 30 June 2018: HK$1,477,807,000), a decrease of HK$55,483,000 or 3.8% over the corresponding period last year.

- 23 -

Operating expenses (including selling and distribution expenses and administrative expenses) for the six months ended 30 June 2019 was approximately HK$782,694,000 (Six months ended 30 June 2018: HK$778,817,000), an increase of HK$3,877,000 or 0.5% over the corresponding period last year.

Gross profit generated from non-banking and financial businesses for the six months ended 30 June 2019 was approximately HK$688,365,000 (Six months ended 30 June 2018: HK$743,279,000), a decrease of HK$54,914,000 or 7.4% over the corresponding period last year.

Gross profit generated from banking and financial businesses for the six months ended

30 June 2019 was approximately HK$234,401,000 (Six months ended 30 June 2018: HK$240,275,000), a decrease of HK$5,874,000 or 2.4% over the corresponding period last year.

The EBITDA for the six months ended 30 June 2019 was approximately HK$258,479,000 (30 June 2018: HK$324,544,000), a decrease of HK$66,065,000 or 20.4% over the corresponding period last year.

Net profit after tax for the six months ended 30 June 2019 was approximately HK$109,989,000 (Six months ended 30 June 2018: HK$193,577,000), a decrease of HK$83,588,000 or 43.2% over the corresponding period last year.

PERFORMANCE

The first half year performance was delivered against a challenging external environment as the continued trade tensions between the US and Mainland China, which have significantly impacted market confidence.

Notwithstanding the challenging environment, we have collectively made progress towards our strategic goals. Our Group comprises three key divisions - watches and timepieces businesses, banking and financial businesses, and various investment businesses. These divisions are described in more details in the following review.

Watches and timepieces businesses I.A - local proprietary brands
I.B - foreign proprietary brands I.C - non-proprietary brands I.D - others

Banking and financial businesses II.A - Bendura Bank AG
II.B - Shun Heng Finance Holding (Hong Kong) Limited

Various investment business III.A - listed equity investment III.B - property investment III.C - other marketable securities

- 24 -

I.A Watches and timepieces businesses - Local proprietary brands

Zhuhai Rossini Watch Industry Limited

For the six months ended 30 June 2019, Zhuhai Rossini Watch Industry Limited ("Rossini"), a 91% subsidiary of the Group, recorded revenue of HK$544,719,000, a decrease of HK$28,374,000 or 5.0%, from HK$573,093,000 for the same period last year. Net profit after tax attributable to owners of the Company for the period under review was HK$136,644,000, representing a decrease of HK$12,545,000 or 8.4%, from HK$149,189,000 in the same period last year.

Although sales from physical stores and e-commerce contributed approximately 84.8% of Rossini's total revenue in the first half of 2019, their proportion to Rossini's total revenue dropped compared to the corresponding period last year. On the contrary, sales from industrial tourism and group purchase reached record high and the growth was significant.

Proportions to Rossini's total revenue by different types of sales

For the six months ended 30 June

			48.0%

2019		36.8%

	8.2%

	6.1%	58.5%	Physical stores




2018		33.1%	E-commerce


	4.9%		Industrial tourism
	1.7%


				Group purchase and overseas

E-commerce sales continued to maintain a stable growth. For the six months ended 30 June 2019, e-commerce sales increased to HK$200,309,000 from HK$189,664,000 for the same period last year, representing an increase of 5.6%. In addition to the existing online direct-sale stores, Rossini has also expanded its territory for occupying more market shares by opening online distributor on the leading e-commerce platforms including Taobao, Tmall and JD.

In the past few years, the ever-goinge-commerce in Mainland China has brought significant impact and challenges to the traditional retail model which watch industry has been heavily relying on for a long term. Creative exhibition models such as roving pop-up watch museum at shopping malls was attempted to boost physical store sales and enhance the brand awareness.

Rossini's revenue earned from e-commerce sales

For the six months ended 30 June

2019					HK$200,309,000


			36.8%

2018				HK$189,664,000


		33.1%	Revenue from e-commerce sales

2017	HK$131,307,000


	26.4%				Proportion to its total revenue

- 25 -

Rossini's industrial tourism hit record highs in terms of tourists' amount and revenue. In the first half of 2019, more than 230,000 tourists visited the watch museum and brought revenue of approximately HK$44,868,000, representing an increase of approximately 60.3% over the corresponding period of last year.

EBOHR Group

EBOHR Group is composed of EB Brand Limited, EBOHR Luxuries International Limited ("EBOHR") and its subsidiaries (the "EBOHR Group").

Revenue of EBOHR Group for the six months ended 30 June 2019 was HK$257,632,000

decrease of HK$60,455,000 or 19.0%, from HK$318,087,000 for the same period last year. Net profit after tax for the six months ended 30 June 2019 was HK$2,903,000, representing a decrease of HK$32,672,000 or 91.8%, compared with HK$35,575,000 for the same period last year.

In the first half of 2019, EBOHR recorded a decrease in sales from both physical stores and e-commerce. EBOHR's traditional physical stores kept performing unsatisfactorily, affected by the e-commerce boom in the Mainland China and the frequent opening and closing down of its physical stores. In the first half of 2019, sales from physical stores dropped approximately 17% over the corresponding period in 2018.

EBOHR's revenue earned from e-commerce sales

For the six months ended 30 June

24.6%	23.8%	22.4%
HK$63,241,000	HK$75,374,000	HK$79,829,000
2019	2018	2017

Revenue from e-commerce sales

Proportion to its total revenue

For the first half of 2019, the revenue earned from e-commerce decreased to HK$63,241,000 from HK$75,374,000 for the corresponding period last year, representing a decrease of 16.1%. Products distributed on the e-commerce platforms were not optimised in terms of design, popularity and pricing. New strategies and measures have to be implemented for EBOHR's e-commerce to regain its power and back to track, including recruiting experienced e-commerce talents, launching more models with stronger brand DNA, improving marketing and brand publicity, and focusing resources on the key items.

While the revenue was declining, the expenses were not. To boost sales performance, sales and distribution expenses were invested disproportionally. EBOHR's new headquarters which became operational in 2018 continued to incur more expenses relating to the depreciation of property, amortisation of intangible assets and administrative expenses in the first half of 2019, which further adversely affected EBOHR's profitability.

- 26 -

Mainland China is our home and remains the backbone of our business. Rossini and EBOHR Group continued to be the major sources of revenue and accounted for more than 68% of the total revenue from non-banking and financial businesses of the Group (Six months ended 30 June 2018: 72%). Rossini has remained as the major contributor of net profits after tax for the Group.

The rapid growth of digital economy is changing consumer behavior, and Rossini and EBOHR are aggressively implementing strategies to enhance e-commerce. It is believed that the proportion of the e-commerce sales to both companies' revenue and profit will increase.

I.B Watches and timepieces businesses - Foreign proprietary brands

Foreign

proprietary

brands

Corum

Eterna

Dreyfuss Group

Ernest Borel

Ernest Borel Group

In September 2018, the Group acquired 58.22% equity interest in Ernest Borel Holdings Limited (stock code: 01856) ("Ernest Borel") at the consideration of approximately HK$374 million. The acquisition triggered an unconditional mandatory cash offer. As a result of the offer, the Group held an aggregate of 82.50% equity interest in Ernest Borel as at 31 December 2018. Following the subsequent share placements in the first half of 2019, the Group held an aggregate of 64.08% equity interest in Ernest Borel as at 30 June 2019.

Under its own brand "Ernest Borel", Ernest Borel (together with its subsidiaries, the "Ernest Borel Group") is engaged in the design, production, marketing and sale of mechanical and quartz premium watches. Established since 1856 in Switzerland, Ernest Borel has a proud heritage spanning over 160 years. Throughout the course of its history and across its operations, the Ernest Borel Group has focused on producing quality Swiss watches.

- 27 -

Ernest Borel Group recorded revenue and net loss after tax attributable to the owners of the Company for the six months ended 30 June 2019 of HK$55,734,000 and HK$23,049,000, respectively.

The extensive distribution network of the Ernest Borel Group covers retail markets in Mainland China, Hong Kong, Macau and South Asian countries. The PRC remains the major market of the Ernest Borel Group. As at 30 June 2019, Ernest Borel Group had 808 POS, comprising 635 POS in Mainland China and 125 POS in Hong Kong, Macau and South Asian countries.

For the period, the revenue from e-commerce was HK$6,397,000. Greater efforts such as exploring more e-commerce platforms would be put into e-commerce in the second half of the year.

The top priority of Ernest Borel is to improve revenue by working closely with distribution outlets on sales policies and promotional activities, and reduce the inventory through special promotion events on e-commerce platforms and in the distribution outlets.

Other foreign proprietary brands

Collectively, Corum, Eterna and The Dreyfuss Group Limited (the "Dreyfuss Group") contributed revenue and net loss after tax for the period ended 30 June 2019 of HK$184,499,000(Six months ended 30 June 2018: HK$205,686,000) and HK$27,431,000 (Six months ended 30 June 2018: HK$52,916,000), respectively.

The general outlook remains positive in the Asia market, Corum's largest market contributing approximately 65% to its total revenue in the first half of 2019, witnessed a modest growth compared to the first half of 2018. Among others, the South East Asia market showed a strong reception to the 2019 novelties and confirmed orders have been doubled compared to the corresponding period last year. The positive growth is a reflection of Corum's efforts into the Asia specifically the South East Asia markets with strong potential. On the contrary, proportion of sales from Europe market dropped from 18% for the first half of 2018 to 13% this year, mainly due to the European political situation and lower level of marketing exposure. Some actions have been taken such as, taking into account the decreasing sales from the Europe market, adapting the business structure to the current level of sales leading to reduce the level of operating expense and launching the new marketing strategy to meet the trend of globalisation and the drastically changing marketing means such as digitalization and social media.

The operation and management of Corum and Eterna has been integrated since 2017. 2019 is a year of transition since many operational and managerial projects have been or will be launched. The first change would be a new management model, shifting from the former structure with a CEO to a team management of four pillars, Operations, Sales and Marketing, Finance and Human Resources. Another change that is closely followed

- 28 -

is the level of account receivables with an aim to increase Corum and Eterna's ability to collect the cash and enhance the liquidity of Corum and Eterna. Therefore, both Corum and Eterna also monitor their inventories globally in order to increase the rotation of the stocks as well as to accelerate the transformation of stocks into cash inflows. All the strategical initiatives were made with the focus of turning Corum and Eterna into a sales-oriented company with improved financial results.

In the first half of 2019, Eterna Movement still faced big challenges including loss and corresponding liquidity problems. To improve the profitability, Eterna Movement has to increase the sales volume, increase the sale prices but to an extend acceptable by the markets and reduce the production costs. However, Eterna Movement still relied heavily on the intercompany orders from Corum and Eterna, whereas orders from third party customers were only a small proportion to its whole sales volume.

As UK is the Dreyfuss Group's largest single market, representing approximately 81% of its total turnover in the first half of 2019, the economic factors affecting its marketplace also heavily influence the Dreyfuss Group's overall performance. The ongoing political uncertainty over Brexit has contributed to a crisis of confidence in the UK watch market. The Dreyfuss Group's key strategy for the UK market is to increase the profitability of trade with the major customers. The Dreyfuss Group will continue to focus on building the relationships with major customers, with the objective of maximising the sales opportunities and establishing a sound basis for sales growth going forward. The development of international market is now a strategic priority for the Dreyfuss Group given its over reliance on the UK market. In the first half of 2019, with a primary focus on Germany, the European team continued to achieve modest growth by planting and developing distributor business in other countries including Scandinavia, Central and Eastern Europe. Sales to Asia and Europe markets fell below budget but sales to North America were higher than expectation. In the first half of 2019, gross profit was reduced due to the need to reduce the inventory level by 16% compared to the corresponding period in 2018. To mitigate the negative impact on the gross profit, the Dreyfuss Group has been aggressively managing its selling expenses and administrative expenses, streamlining the operational structure and increasing internal efficiencies.

Backed by our competitive strengths and deep understanding of the needs of our customers, we will redeploy our resources to realize gains in efficiency and synergy and will build on the good progress we have made to provide long-term value.

I.C Watches and timepieces businesses - Non-proprietary brands

Currently, the Group held four distribution companies. Collectively, distribution companies contributed revenue and net profit after tax attributable to owners of the Company for the period ended 30 June 2019 of HK$125,449,000 (Six months ended

30 June 2018: HK$120,873,000) and HK$2,451,000 (Six months ended 30 June 2018: HK$4,677,000) respectively.

- 29 -

I.D Watches and timepieces businesses - Others

Other non-major subsidiaries of the Group are also engaged in other non-major categories of watches and timepieces businesses, which collectively contributed revenue and net loss after tax for the six months ended 30 June 2019 of HK$14,744,000 and HK$4,192,000, respectively.

II.A Bendura Bank AG

Bendura Bank aims to accompany its clients from one generation to the next and to provide long-term wealth creation and protection. The range of private banking is comprehensive, focusing on, among others, following areas:

Asset management and investment advice;
Transaction banking; and
Security issuance and investment funds.

Assets under management slightly reduced to CHF3.7 billion as of 30 June 2019 (30 June 2018: CHF3.8 billion) as a result of refraining from cooperating with businesses that have a dubious reputation or arm manufacturing, arm trading, adult entertainment or online betting services. Specifically, it does not work with companies related to cryptocurrencies as it can not control the source of funds for cryptocurrencies. During the period, there was an outflow of CHF298 million (Six months ended 30 June 2018: inflow of CHF3 million).

Despite a challenging market environment, Bendura Bank has succeeded in consistently pursuing the path it has taken in previous years and in continuing the satisfactory results of previous years. Revenue for the period ended 30 June 2019 was HK$233,441,000, a decrease of HK$4,978,000 or 2.1%, from HK$238,419,000 over the same period last year. Net profit after tax attributable to owners of the Company for the period ended 30 June 2019 was HK$66,508,000 compared with HK$86,489,000 over the same period last year, a decrease of HK$19,981,000 or 23.1%.

The decrease in net profit was attributable firstly to the reduced assets under management, secondly to the decrease in brokerage activities and thirdly to the increase in personnel and general expenses.

Particularly, the increase in interest income was contributed by the higher income from USD interbank deposits and foreign exchange swaps and the expansion of the loan portfolio. Net income from interest and dividends increased strongly by approximately CHF1.5 million or 15% compared with the same period last year. Net income from commission and service fees amounted to CHF14 million, a decrease of 3% over the same period last year mainly due to lower commission income from payment operation services . Brokerage revenue fell short of the previous period's level despite the volatile stock market environment. The result from trading income amounted to approximately CHF3.6 million and it was 18% lower compared to the same period last year, as a result of lower number of customers.

- 30 -

Operating expense amounted to CHF17 million in the first half of 2019 and hence increased 19% compared to the same period last year. On one hand, this was because of higher personnel costs, which increased due to the increase of employees. On the other hand, general and administrative expenses increased by CHF1.9 million or 24% compared to the same period last year.

The net profit generated in the first half of 2019 enables Bendura Bank to maintain sound capital base and capital ratios.

Bendura Bank has stepped up training to build a more flexible and productive workforce. That our highly qualified employees are multilingual, collectively catering to over 20 languages with the necessary cultural understanding, enables efficient market access internationally. The international and multicultural approach is considered to be one of the key success factors.

Bendura Bank continues to invest in the Mandarin speaking team so as to work on opportunities for Mandarin speaking clients. The representative office in Hong Kong provides personal touch and direct communication as well as strengthens trust and professionalism.

Bendura Bank is working on the expansion of premises in Bendern, Liechtenstein. The space would be able to accommodate additional 150 employees with improved facilities. The construction work has begun and the target date of completion is in 2021.

It is the objective of Bendura Bank to focus primarily on the commissions and fees income by providing quality services. It continues to provide loans to selective clients on secured basis but maintains a broad extent of diversification.

Bendura Bank is optimistic on the long-term prospects. It has continued to plant the seeds that will deliver better performance over time to make the Bank a better organization. Bendura Bank is fully committed to providing bespoke financial services to our customers and realize our vision to be the bank serving their needs. We believe that this commitment, combined with our unique resources built over the past decades, will propel the Group's growth in the businesses of banking and financial businesses and contributed to delivering steady return to our shareholders in spite of comprehensive regulatory and legal innovations as well as increasingly strict Liechtenstein and international requirements.

- 31 -

II.B Shun Heng Finance Holding (Hong Kong) Limited

The Group currently conducts securities and asset management businesses under the umbrella of Shun Heng Finance Holding (Hong Kong) Limited ("Shun Heng Finance Holding"), which is 60% owned by the Group. It comprises Shun Heng Securities Limited and Hong Kong Metasequoia Capital Management Limited as subsidiaries.

For the period ended 30 June 2019, Shun Heng Finance Holding contributed revenue and net profit after tax attributable to owners of the Company of HK$960,000 and HK$5,464,000 respectively (Six months ended 30 June 2018: HK$1,856,000 and net loss after tax of HK$2,384,000 respectively).

Shun Heng Securities Limited ("Shun Heng Securities")

Shun Heng Securities, a corporate licensed to conduct Type 1 (dealing in securities) regulated activity under the Securities and Futures Ordinance (the "SFO"), is mainly engaged in securities brokerage and margin businesses. Following Shun Heng Securities upgrading its online trading system which provides higher security and better user experience, the account opening numbers has continued to increase in the first half of 2019.

In addition to the traditional brokerage business, Shun Heng Securities continues to expand the underwriting business for overseas bonds issued by Chinese enterprises.

Hong Kong Metasequoia Capital Management Limited ("Metasequoia Capital")

Metasequoia Capital, a corporate licensed to conduct Type 4 (advisory on securities) and Type 9 (asset management) regulated activities under the SFO, is mainly engaged in asset management business.

Metasequoia Capital has launched two funds, namely Global Opportunities Fund and Stable Growth Fund. Global Opportunities Fund invests mainly in securities markets in Hong Kong and the US, with asset under management increased from US$10.24 million initially to US$11.66 million now. The Stable Growth Fund invests in domestic CNY bond and reached asset under management of approximately US$5 million as at 30 June 2019. As at 30 June 2019, the asset under management of Metasequoia Capital was approximately USD16.66 million (year ended 31 December 2018: USD10.41 million).

- 32 -

III.A Listed Equity Investment

Citychamp Dartong Company Limited
As at 30 June 2019, financial assets at fair value through other comprehensive income of the Group was HK$552,410,000. HK$162,386,000 was related to the listed equity investment in the equity share of Citychamp Dartong Company Limited ("Citychamp Dartong"). Citychamp Dartong is a company listed on the Shanghai Stock Exchange (Stock code: 600067) and engaged in real estate, enameled wire, banking and new energy. As at 30 June 2019, the Group owned 30,389,058 shares of Citychamp Dartong at the market price of RMB4.71 per share (equivalent to HK$5.344 per share) with the fair value of HK$162,386,000. The shares held by the Group accounted for 2.04% of the total issued share capital of Citychamp Dartong as at 30 June 2019. Such fair value accounted for 0.8% of the Group's total assets.
The Group incurred a net gain on fair value change through other comprehensive income in investment in Citychamp Dartong of HK$33,656,000 for the period ended 30 June 2019, as a result of increase in the share price of Citychamp Dartong from RMB3.72 (equivalent to HK$4.236) as at 31 December 2018 to RMB4.71 (equivalent to HK$5.344) as at 30 June 2019. The Group recognized dividend receivable of HK$3,447,000 from Citychamp Dartong for the six months ended 30 June 2019.
This is the Group's long-term investment due to its dividend yield and long- term share price appreciation. Given its substantial land bank for development and profitability of certain business segments, we are optimistic about the future prospects of the Citychamp Dartong.
Min Xin Holdings Limited
Investment in Min Xin Holdings Limited ("Min Xin") (Stock code: 222) was measured at fair value through other comprehensive income. The Company intends to hold the investment on a long-term basis.
Min Xin is a company engaged in financial services, securities trading, real estate development, toll road and manufacturing. As at 30 June 2019, the investment in Min Xin was HK$384,334,000, i.e. 88,150,000 shares at the market price of HK$4.36 per share as at 30 June 2019. Such fair value of the investment accounted for 1.9% of the Group's total assets. The shares held by the Company accounted for 14.76% of the total issued share capital of Min Xin as at 30 June 2019.

- 33 -

The Company incurred a net loss on fair value change in Min Xin's investment of HK$108,425,000 for the period ended 30 June 2019 (Six months ended 30 June 2018: net loss of HK$60,824,000), as a result of decrease in the share price of Min Xin from HK$5.59 as at 1 January 2019 to HK$4.36 as at 30 June 2019. For the six months ended 30 June 2019, the Company's dividend receivable from Min Xin was HK$8,815,000.

III.B Property Investment

The properties in Mainland China and Hong Kong owned by the Group have been leased out, with stable rental returns to the Group. During the period, these investment properties generated rental income of HK$5,145,000 (Six months ended 30 June 2018: HK$2,640,000). Net profit after tax from the property investment business for the six months ended 30 June 2019 was HK$3,715,000, representing an increase of HK$1,801,000 or 94.1%, compared with HK$1,914,000 for the same period last year.

III.C Other Marketable Securities

The Group has acted as the founder investor and invested USD5.12 million in "Metasequoia Investment Fund SPC - Global Opportunities Fund SP" (the "Fund") since 15 August 2017 in order to facilitate establishing the fund management business with an initial capital of USD10.24 million and the rest of the fund was subscribed by other investors with the capital of USD5.12 million. As of 30 June 2019, the total net asset value of the Fund was USD11.66 million, which composed by USD5.84 million and USD5.82 million for the Group and other inventors respectively. The composition of investments in the Fund were approximately 20% in consumer staples sector, 20% in financials sector, 15% in communication services sector, 13% in information technology sector, 8% in consumer discretionary sector, 7% in health care sector and the rest 17% in other sectors. Geographically, the Fund invested in companies of origin were approximately 54% in Mainland China, 27% in the US, 1% in Hong Kong and the remaining 18% in other countries. For the six months ended 30 June 2019, the unrealized gain on fair value of the investment was approximately USD636,000.

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Headquarter and others

Losses from administrative expenses, finance costs and income tax of the headquarter and other non-major subsidiaries and/or non-major categories of businesses for the six months ended 30 June 2019 was HK$74,405,000.

FINANCIAL POSITION

Liquidity, financial resources and capital structure
As at 30 June 2019, the Group had non-pledged cash and bank balances of approximately HK$6,529,741,000 (31 December 2018: HK$7,701,743,000). Based on the bank borrowings of HK$1,046,407,000 (31 December 2018: HK$1,047,189,000), the corporate bonds of approximately HK$767,966,000 (31 December 2018: HK$760,244,000), due to a shareholder of Nil (31 December 2018: HK$73,000,000) and shareholders' equity of HK$4,512,535,000 (31 December 2018: HK$4,439,791,000), the Group's gearing ratio (being borrowings plus corporate bonds divided by shareholders' equity) was 40% (31 December 2018: 42%).
As at 30 June 2019, the Group's borrowings amounting to HK$891,539,000 (31 December 2018: HK$825,086,000) were repayable within one year, representing 85% (31 December 2018: 79%).
List of borrowings by currencies and by nature of interest rate and by duration

				Duration
		Duration	More than
Currency	Nature of interest rate	Within 1 year	1 year
		HK$'000	HK$'000
CHF	Fixed/Floating	63,845		-
GBP	Floating	6,393	-
HKD	Floating	531,955	154,868
RMB	Floating	277,743	-
USD	Floating	11,603	-

		891,539		154,868

- 35 -

Charge on assets
As at 30 June 2019, banking facilities of the Company were secured by the Group's trade receivables of HK$11,570,000 and land and buildings in Switzerland with net book values of HK$135,362,000, totaling HK$146,932,000 (31 December 2018: HK$135,350,000).
Capital commitment
Capital commitments as at 30 June 2019 were HK$270,000,000 in total (31 December 2018: HK$270,000,000) for investment in an associate-Citychamp Allied International Limited.

Except for the above, the Group had no other material capital commitments as at 30 June 2019.

FINANCIAL REVIEW

Total assets

T o t a l a s s e t s d e c r e a s e d t o H K $ 19,854,604,000 a s a t 30 J u n e 2019 f r o m HK$20,258,229,000 as at 31 December 2018, mainly attributable to a decrease in cash and deposits.

Cash and deposits
				Increase/
	30 June	31 December	(decrease)
	2019		2018	Amount
	HK$'000	HK$'000	HK$'000
Cash and bank balance	395,230	395,444	(214)
Cash held on behalf of clients	126,822	46,932	79,890
Sight deposits with central banks	6,007,689	7,259,367	(1,251,678)
Due from banks


				Increase/
	30 June	31 December	(decrease)
	2019	2018	Amount
	HK$'000	HK$'000	HK$'000
Due from banks on a daily basis	3,325,358	3,205,104	120,254
Due from banks other claims	214,570	185,557	29,013
Valuation adjustments	(1,522)	(2,825)	(1,303)

- 36 -

Investments
The investments as at 30 June 2019 included (a) trading portfolio investments of HK$162,628,000; (b) derivative financial assets of HK$4,370,000; (c) other financial assets at amortised cost of HK$1,254,621,000; and (d) financial assets at fair value through other comprehensive income of HK$552,410,000 (the "Investments").
1. Trading portfolio investments of HK$162,628,000

		30 June		31 December
		2019	2018
		HK$'000		HK$'000
Equity Instruments
Listed equity instruments in Hong Kong
at market value	35,570	42,793
Listed equity instruments outside Hong Kong
at market value	68,472	35,429

Total equity instruments	104,042	78,222
Debt instruments

Debt instruments of financial institutions
listed outside Hong Kong	-	603
Unlisted debt instruments of financial
institutions	5,673	12,890

Total debt instruments	5,673	13,493

Investment fund units
Investment fund units listed outside
Hong Kong	-	793
Unlisted investment fund units	46,855	7,851

Total investment fund units	46,855	8,644

Investments in other financial products	6,058	23,247

Total trading portfolio investments	162,628	123,606

As of 30 June 2019, Bendura Bank's trading assets of CHF5.9 million consisted of one single investment in the form of an unlisted investment fund.

- 37 -

It is the objective of the Group to maintain certain level of liquidity in the form of trading portfolio investments for unplanned capital expenditure. The liquidity is usually parked with the listed equities in order to generate short term return.

All unlisted debt instruments of financial institutions invested in Mainland China by a subsidiary in Mainland China. The investment policy of Bendura Bank also includes strict implementation of the investment process and is subject to constant review by the investment committee.

Derivative financial assets of HK$4,370,000

	30 June		31 December
	2019	2018
	HK$'000		HK$'000
Forward and option contracts	4,370	7,694

	4,370	7,694

In the derivative financial assets of HK$4,370,000, there were forward and option contracts conducted by Bendura Bank.

Bendura Bank offers derivative products including currency forwards and swaps to its clients. These derivative positions were managed through entering back-to-back deals with external parties to ensure that remaining exposures are within acceptable risk levels. First-rate banks serve as counterparties, as is generally the case in trading business. It is not the objective of Bendura Bank to speculate the gain on the change in the price by conducting forward and option contracts without having invested in the underlying assets.

As at 30 June 2019, positive replacement values totaling HK$4,370,000, whereof approximately HK$8,000 related to FX swaps entered by Bendura Bank. Based upon risk/return considerations, client deposits denominated in foreign currencies were, in part, no longer invested on the interbank market but were swapped into Swiss francs using currency swaps and deposited with the Swiss National Bank (SNB). Income from the interest component of currency swaps exceeded the expense of SNB negative interest and the reduced level of interest from banks. During the first half of 2019, Bendura Bank recorded CHF4.8 million profits with FX swaps.

- 38 -

Other financial assets at amortised cost of HK$1,254,621,000

	30 June		31 December
	2019	2018
	HK$'000		HK$'000
Listed debt instruments, at amortised cost
Issued by:
Governments and public sector	43,711	7,822
Financial institutions	816,820	716,747
Corporations	394,090	310,204

	1,254,621	1,034,773

Bendura Bank invested in listed debt instruments issued by government and public sector, financial institutions and corporations amounting to HK$1,254,621,000. The portfolio was composed of 58 listed debt instruments with different maturity, geography, segment and currency and hence, diversification is ensured. Almost all listed debt instruments were considered upper-medium-grade and are subject to low credit risk. The average remaining term of the held-to-maturity investment is 2.6 years, while the modified duration of the portfolio is only 1.27%. Largest single investments are bonds issued by International Bank for Reconstruction and Development and European Investment Bank. Both issuers are triple-A rated. Risk concentration is analyzed and presented to the senior management on a monthly basis.

Relatively major listed debt instruments as at 30 June 2019 are as follows:

	Nature of				Value
Issuer	interest rate	Sector	Maturity date	(CHF'000)
Mondelez International	Fixed	Corporations	30	March 2020	5,000
Deutsche Bank AG	Floating	Financial Institutions	16	May 2022	7,749
Bank of Nova Scotia	Floating	Financial Institutions	05	October 2022	8,482
ABN AMRO Bank N.V.	Floating	Financial Institutions	19	July 2022	7,808
China Merchants Bank, Lux	Fixed	Financial Institutions	19	June 2022	5,547
European Investment Bank	Floating	Financial Institutions	24	March 2021	11,730
Intl Bk Recon & Develop	Floating	Financial Institutions	18	March 2020	29,268
Others					81,237

Total					156,821

Equivalent to HK$'000					1,254,621

- 39 -

Relatively major listed debt instruments as at 31 December 2018 are as follows:

	Nature of				Value
Issuer	interest rate	Sector	Maturity date	(CHF'000)
Mondelez International	Fixed	Corporations	30	March 2020	5,000
Deutsche Bank AG	Floating	Financial Institutions	16	May 2022	7,869
Bank of Nova Scotia	Floating	Financial Institutions	05	October 2022	8,566
ABN AMRO Bank N.V.	Floating	Financial Institutions	19	July 2022	7,863
Industrial & Commercial	Floating	Financial Institutions	14	December 2022	4,914
Bank of China, London
European Investment Bank	Floating	Financial Institutions	24	March 2021	11,825
Intl Bk Recon & Develop	Floating	Financial Institutions	18	March 2020	19,658
Others					64,323

Total					130,018

Equivalent to HK$'000					1,034,773

During the first half of 2019, Bendura Bank generated interest income of CHF1.5 million from those listed debt instruments. Besides, there was no impairment made. The fair value of other financial assets at amortized cost as at 30 June 2019 was CHF156.8 million.

Collectively, listed debt instruments at amortised cost accounted for 6.3% of the Group's total assets.

Financial assets at fair value through other comprehensive income of HK$552,410,000

	30 June	31 December
	2019		2018
	HK$'000	HK$'000
Listed equity instruments in Hong Kong	384,334		492,759
Listed equity instruments outside Hong Kong	162,386		128,730
Unlisted equity investments	5,690		5,711

	552,410		627,200

Listed equity instruments of HK$162,386,000 related to investment in Citychamp Dartong and HK$384,334,000 related to investment in Min Xin.

- 40 -

Total liabilities
Total liabilities decreased to HK $14,920,121,000 as at 30 June 2019 from HK$15,448,738,000 as at 31 December 2018, mainly attributable to a decrease in due to clients of Bendura Bank.
Due to clients

					Increase/
	30 June	31 December	(decrease)
	2019	2018	Amount
	HK$'000	HK$'000	HK$'000	%
Due to clients precious metals	67,663	73,950	(6,287)	-8.5%
Other amounts due to clients, mainly
bank deposits	11,818,414	12,430,641	(612,227)	-4.9%

	11,886,077		12,504,591		(618,514)	-4.9%

Gross profit from non-banking and financial businesses
Gross profit from non-banking and financial businesses was HK$688,365,000, a decrease of HK$54,914,000 or 7.4%.
EBITDA
EBITDA was HK$258,479,000, a decrease of HK$66,065,000 or 20.4%.
Selling and distribution expenses
Total selling and distribution expenses was HK$382,556,000, a decrease of HK$35,159,000 or 8.4%. Rossini and EBOHR contributed selling and distribution expenses of HK$161,483,000 and HK$126,485,000 respectively.
Administrative expenses
Total administrative expenses was HK$400,138,000, an increase of HK$39,036,000 or 10.8%. Rossini, EBOHR and Bendura Bank contributed administrative expenses of HK$43,729,000, HK$40,828,000 and HK$141,692,000 respectively.

- 41 -

Share of profit of associates
The share of profit of Fair Future Industrial Limited ("Fair Future"), a 25% owned associate of the Group, was HK$6,756,000, representing an increase of HK$1,478,000 or 28.0%. Fair Future is one of the leading OEM quartz watch manufacturers in Mainland China.
Finance costs
Finance costs was HK$40,882,000, representing an increase of HK$13,569,000 or 49.7%. It was mainly composed of the interest charged on bank borrowings and bank overdrafts.
Gearing ratios of non-banking business
As of 30 June 2019, the net debt balance of the non-banking business amounted to HK$1,034,804,000 (30 June 2018: HK$1,045,596,000). Net debt to equity ratio was 22.9% (30 June 2018: 23.6%).
Net profit attributable to owners of the Company
Net profit attributable to owners of the Company was HK$88,608,000, a decrease of HK$78,492,000 or 47.0%.
Inventories
Inventories was HK$2,264,078,000, a decrease of 2.2% from HK$2,314,545,000 as at 31 December 2018. Rossini, EBOHR and Corum contributed inventories of HK$427,114,000, HK$467,302,000 and HK$442,745,000 respectively.
Events after reporting period
On 16 July 2019, the Company entered into a facility agreement with a syndicate of financial institutions in respect of a 3-year term loan facility in the amount up to US$150,000,000 (the "Loans"). The first withdrawal of the Loans was applied to redeem the CHF100,000,000 3.625% bonds due 24 July 2019 issued by Citychamp Watch and Jewellery SwissCo AG (the "CHF Bonds").
On 24 July 2019, Citychamp Watch and Jewellery SwissCo AG redeemed and repaid all of the outstanding CHF Bonds at the principal amount of CHF100,000,000. The CHF Bonds are no longer listed and traded on the SIX Swiss Exchange.

- 42 -

REVIEW OF FINANCIAL STATEMENTS

The audit committee has reviewed the Group's unaudited financial statements for the six months ended 30 June 2019. Based on this review and discussions with the management, the audit committee was satisfied that the unaudited financial statements for the six months ended 30 June 2019 were prepared in accordance with applicable accounting standards and fairly present the Group's financial position and results for the six months ended 30 June 2019.

CORPORATE GOVERNANCE

The Board remains focused on improving its effectiveness and the efficiency of the governance processes. We believe that an appropriate mix of skills, experience and perspectives within the Board helps strengthen its effectiveness.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE PERFORMANCE

Good Environmental, Social and Governance, or ESG, practices have always been an integral part of the Group's business strategy and management approach. As a good corporate citizen, the Group contributes to the community that we operate our businesses.

We are committed to integrating sustainability into our core business activities and contributing to our community. We supported a wide range of philanthropic initiatives, with an emphasis on education and social welfare. Supporting our community and helping businesses and individuals realize their potential make what we do truly worthwhile. Specifically, Bendura Bank is working on the disclosure of an ESG rating for all financial instruments and investment solutions for their asset management and investment advice business so as to meet the future regulatory requirements. Besides, the Company participated in a "School-Company- Parent Program" held by the Young Entrepreneur Development Council and through the Program, our colleagues helped secondary school students build positive corporate spirits before they step into their career.

RISK MANAGEMENT

We monitor our risks and uncertainties facing the Group and formulate and adopt appropriate risk management measures against each principal risk and uncertainty. In view of our increasing focus on private banking, fund management and securities trading business, risk management will continue to be of great importance for the Group. To cope with the legal risks of money laundering and tax fraud, Bendura Bank reviews the business models of its customers and their structuring with regard to tax compliance. Customers with active economic activities (production, trade, services, etc.), particularly those domiciled in offshore jurisdictions, must prove that they have adequate assets (premises, infrastructure and qualified personnel). If the proof cannot be provided, Bendura Bank would terminate the business relationship and, if necessary, submit a report to the Financial Intelligence Unit.

- 43 -

OUTLOOK

The current spectre of the US-China trade dispute has contributed to affect the economic growth of Mainland China. In the first half of 2019, the economic growth rate was probably around 6.3%, that was the most sluggish in last decade. While this is in no way detrimental to the economy, it may affect income growth, employment outlook and consumer confidence. Coupled with high and rising levels of existing debt and the preference for individuals to save money amid economic uncertainties were limiting individuals' spending, they are likely to hold back private consumption.

In response to those issues, the central government has taken a series of steps to boost consumption, including cutting personal income taxes by a total of about RMB308 billion last year and offering purchasing subsidies. More target measures are expected to be rolled out in coming months after a new inter-ministerial body was set up recently to coordinate government efforts to support consumption.

In the long run, it is likely that the US-China trade dispute would be dealt with and the market conditions are expected to improve gradually when the consumer confidence is recovered and the demand for watches therefore grows modestly all over Mainland China.

Bendura Bank rank fourth among the 14 Liechtenstein banks in terms of profit after taxes. A total of 41 key employees of Bandura Bank still hold 15% of the shares of the Bank. The rigorous focus on expanding our core markets will be honed further by the opening of our representative office in Hong Kong in particular. Our expertise in the attractive Asian markets is also being continuously enhanced in the asset management, benefiting our clients above all.

The recent interest rate cuts in the US and in Europe are likely to have an adverse effect on the net interest income of Bendura Bank but not our commission related businesses. Given the current momentum of growth, Bendura Bank becomes an increasingly important revenue and profit driver of the Group.

The global economy has continued to grow, but geopolitical uncertainties and the spectre of trade protectionism remain. Undoubtedly, there will be shocks and bumps along the way for the watches and timepieces businesses and the finance and banking businesses. While we are fully aware of the key issues and risks, we believe that the opportunities in our markets remain substantial and the work that we have done in recent years in enhancing our capabilities and strengthening in our resilience puts us now in a better place to capture them. We are confident that as we execute our strategic objectives with discipline and passion, and we will generate sustainable growth and create long-term value for all our stakeholders.

EMPLOYEES AND REMUNERATION POLICY

Our sustained success would not be possible without the high levels of expertise, professionalism and commitment shown by our employees.

- 44 -

As at 30 June 2019, the Group had approximately 4,400 full-time staff in Hong Kong and Mainland China and approximately 360 in Europe. The remuneration packages offered to the employees were determined and reviewed on an arm's length basis with reference to the market condition and individual performance. The Group also provides other benefits to its employees, including year-end double pay, medical insurance and retirement benefits, and incentive bonuses are offered with reference to the Group's operating results and employees' individual performance. All employees of the Group in Hong Kong have joined the provident fund schemes. Employees of Group's subsidiaries in Mainland China also participate in social insurance scheme administrated and operated by local authorities and contributions are made according to the local laws and regulations.

DIVIDEND

The Board has resolved not to distribute an interim dividend for the six months ended 30 June 2019 (Six months ended 30 June 2018: Nil).

CORPORATE GOVERNANCE CODE

During the six months period ended 30 June 2019, the Company has complied with all the code provisions of the Code on Corporate Governance Practices (the "CG Code") as set out in Appendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules"), except with the details disclosed below:

CG CODE E.1.2
CG Code E.1.2 stipulates that the chairman of the board of directors should attend the annual general meeting. The Chairman of the board of director of the Company was unable to attend the annual general meeting of the Company held on 30 May 2019 (the "AGM 2019") due to other business engagement.
CG CODE A.6.7

CG Code A.6.7 stipulates that independent non-executive directors should attend general meetings. Three independent non-executive directors did not attend the AGM 2019 due to other business engagements.

MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS

The Company has adopted the Model Code as the Company's code of conduct for dealings in securities of the Company by the directors. Based on specific enquiry of the Company's directors, the directors have complied with the required standards set out in the Model Code throughout the six months ended 30 June 2019.

- 45 -

BOARD COMMITTEES

Audit Committee

The audit committee of the Company currently comprises following members:

Independent Non-executive Directors

Fung Tze Wa (Committee Chairman)

Kwong Chun Wai, Michael

Zhang Bin

Rudolf Heinrich Escher

During the period under review, the audit committee met with the Company's external auditor, the board of directors and senior management. The audit committee reviewed the financial reporting and other information to shareholders (including a review of the unaudited financial statements for the six months ended 30 June 2019), the accounting system, the system of internal controls and performed other duties set out in the terms of reference. The audit committee also reviewed the accounting principles and practices adopted by the Group and discussed internal controls and financial reporting matters with the board of directors and senior management of the Company.

Remuneration Committee

The remuneration committee of the Company currently comprises following members:

Independent Non-executive Directors

Fung Tze Wa (Committee Chairman)

Kwong Chun Wai, Michael

Zhang Bin

Rudolf Heinrich Escher

Executive Directors

Hon Kwok Lung

Shang Jianguang

The remuneration committee makes recommendations to the board on the Company's policy and structure for all directors' and senior management's remuneration and on the establishment of a formal and transparent procedure for developing remuneration policy. The remuneration committee also makes recommendations to the board on the remuneration packages of individual executive directors and senior management. The remuneration committee ensures that no director or any of his/her associates is involved in deciding his/her own remuneration.

- 46 -

Nomination Committee

The nomination committee of the Company currently comprises following members:

Executive Directors

Hon Kwok Lung (Committee Chairman)

Shang Jianguang

Independent Non-executive Directors

Fung Tze Wa

Kwong Chun Wai, Michael

Zhang Bin

Rudolf Heinrich Escher

The principal duties of the nomination committee are to review the structure, size, composition and diversity (including but not limited to gender, age, cultural and educational background, independence from or relationship with other members of the Board, experience (professional or otherwise), skills, knowledge and length of service) of the board, identify and nominate individuals suitably qualified to become board members and make recommendations to the board on the appointment or re-appointment of directors and succession planning for directors. The nomination committee also develops, maintains and reviews the board diversity policy. The nomination committee is also responsible for assessing the independence of independent non-executive directors.

Risk Management Committee

The risk management committee currently comprises following members:

Executive Directors

Sit Lai Hei (Committee Chairman)

Shi Tao

Lam Toi Man

Bi Bo

The principal duties of the risk management committee are to evaluate and determine the risk appetite that the Group is willing to take in achieving its strategic objectives, to oversee the Group's risk management system on an ongoing basis and conduct a review on the effectiveness of the system at least once annually, and to identify significant risks to which the Group is exposed and develop plans and measures to management or mitigate such significant risks.

BUY-BACK, REDEMPTION OR SALE OF LISTED SECURITIES OF THE COMPANY

During the six months ended 30 June 2019, the Company did not buy back any Company's listed shares (whether on the Stock Exchange or otherwise).

- 47 -

PUBLICATION OF 2019 INTERIM RESULTS AND 2019 INTERIM REPORT ON THE WEBSITES OF THE STOCK EXCHANGE AND THE COMPANY

The 2019 interim results announcement is published on the websites of the Stock Exchange (www.hkexnews.hk) and the Company (www.irasia.com/listco/hk/citychamp and www.citychampwj.com), and the 2019 Interim Report containing all the information required by the Listing Rules will be despatched to the shareholders of the Company and published on the respective websites of the Stock Exchange and the Company in due course.

APPRECIATION

Our financial performance and strategic moves reflected the joint efforts of the board and management in successfully pursuing our mission. Our performance could not have achieved without the leadership of the board and our management team. I would like to express my deep gratitude to our employees, customers, suppliers, bankers, professional consultants, business partners, and shareholders for their support.

By Order of the Board

Citychamp Watch & Jewellery Group Limited

Hon Kwok Lung

Chairman

Hong Kong, 29 August 2019

As at the date of this announcement, the Board of the Company comprises Mr. Hon Kwok Lung, Mr. Shang Jianguang, Mr. Shi Tao, Mr. Lam Toi Man, Mr. Bi Bo, Ms. Sit Lai Hei, Mr. Hon Hau Wong and Mr. Teguh Halim as the Executive Directors and Mr. Fung Tze Wa, Dr. Kwong Chun Wai, Michael, Mr. Zhang Bin and Mr. Rudolf Heinrich Escher as the Independent Non-Executive Directors.

- 48 -

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Citychamp Watch & Jewellery Group Limited published this content on 30 August 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 August 2019 22:30:13 UTC

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Citychamp Watch & Jewellery Expect a HK$50 Million Profit in 2023	Mar. 26	MT
Citychamp Watch & Jewellery Group Limited Provides Preliminary Unaudited Group Earnings Guidance for the Year Ended 31 December 2023	Mar. 25	CI
Citychamp Watch & Jewellery Subsidiary to Pare Stake in Ernest Borel	23-10-26	MT
Citychamp Watch & Jewellery Group Limited Reports Earnings Results for the Half Year Ended June 30, 2023	23-08-30	CI
Citychamp Watch & Jewellery to Swing to H1 Profit	23-08-16	MT
Citychamp Watch & Jewellery Group Limited Provides Earnings Guidance for the Six Months Ended June 30, 2023	23-08-15	CI
Citychamp Watch & Jewellery Group Limited Reports Earnings Results for the Full Year Ended December 31, 2022	23-03-30	CI
Citychamp Watch & Jewellery Group Limited Announces Resignation of Bi Bo as Executive Director and a Member of the Risk Management Committee	23-03-03	CI
Citychamp Watch & Jewellery's H1 Loss Nearly Doubles	22-08-30	MT
Citychamp Watch & Jewellery Group Limited Reports Earnings Results for the Half Year Ended June 30, 2022	22-08-30	CI
Citychamp Unit to Sell Ernest Borel Shares for $1.5 Million	22-07-13	MT
Citychamp Watch & Jewellery Group Limited Reports Earnings Results for the Full Year Ended December 31, 2021	22-03-30	CI
Citychamp Watch & Jewellery Appoints Co-CEOs Following Incumbent's Exit	22-01-06	MT
Citychamp Watch & Jewellery Group Limited Announces Executive Changes	22-01-05	CI
Citychamp Watch & Jewellery Group Limited Board and Committee Changes	22-01-05	CI
Citychamp Terminates $455 Million Sale of Watch Business; Shares Jump 3%	22-01-04	MT
Sincere View International Limited cancelled the acquisition of 7 subsidiaries from Citychamp Watch & Jewellery Group Limited.	22-01-02	CI
Citychamp Watch & Jewellery Group Limited Reports Earnings Results for the Half Year Ended June 30, 2021	21-08-30	CI

	1st Jan change	Capi.
CITYCHAMP WATCH & JEWELLERY GROUP LIMITED	-10.43%	580M
CITIZEN WATCH CO., LTD.	+20.45%	1.58B
SEIKO GROUP CORPORATION	+59.24%	1.12B
MOVADO GROUP, INC.	-9.52%	610M
FIYTA PRECISION TECHNOLOGY CO., LTD.	-7.12%	538M
KDDL LIMITED	-7.83%	392M
TIMEX GROUP INDIA LIMITED	-18.99%	161M
TIME WATCH INVESTMENTS LIMITED	-10.75%	104M
ERNEST BOREL HOLDINGS LIMITED	+2.63%	90.04M
HENGDELI HOLDINGS LIMITED	-4.73%	79.59M

Citychamp Watch & Jewellery Group Limited

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256

KYG2161T1004

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Citychamp Watch & Jewellery : ANNOUNCEMENT OF UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2019

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