00_SummaryⅡ 10H 0..0

445 Pages·2014·4.82 MB·English

L & A INTERNATIONAL HOLDINGS LIMITED L & A INTERNATIONAL HOLDINGS LIMITED
樂L

&
樂 亞 國 際 控 股 有 限 公 司 亞 樂 亞 國 際 控 股 有 限 公 司

A
(於開曼群島註冊成立的有限公司) 國 ((IInnccoorrppoorraatteedd iinn tthhee CCaayymmaann IIssllaannddss wwiitthh lliimmiitteedd lliiaabbiilliittyy))
I
股份代號 : 8195 N Stock code : 8195
際
T
控E
R
股
N
有A
T
限I
O
公N
A
司
L

H
O
L
D
I
N
G
S

L
I
M
I
T
E
D
以配售方式 BY WAY OF PLACING
保薦人 Sponsor
聯席賬簿管理人及聯席牽頭經辦人 Joint Bookrunners and Joint Lead Managers
IMPORTANT
If you are in anydoubt about anyof thecontentsof thisprospectus,youshouldobtainindependent professional advice.
L & A INTERNATIONAL HOLDINGS LIMITED
樂 亞 國 際 控 股 有 限 公 司
(incorporated in the Cayman Islands with limited liability)
LISTING ON THE GROWTH ENTERPRISE MARKET
OF THE STOCK EXCHANGE OF HONG KONG LIMITED
BY WAY OF PLACING
Number of Placing Shares : 100,000,000 Placing Shares
Placing Price : Not more than HK$0.60 per Placing Share,
and expected to be not less than
HK$0.40 per Placing Share (payable
in full upon application, plus brokerage
fee of 1%, SFC transaction levy of
0.003%, and Stock Exchange trading
fee of 0.005%)
Nominal value : HK$0.10 per Share
Stock code : 8195
Sponsor
Joint Bookrunners and Joint Lead Managers
Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing
Company Limited take no responsibility for the contents of this prospectus, make no representation as to its accuracy or
completeness and expresslydisclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or
anypart of thecontentsof thisprospectus.
A copy of this prospectus, having attached thereto the documents specified in the paragraph headed ‘‘Documents Delivered to the
RegistrarofCompaniesandAvailableforPublic InspectioninHongKong’’inAppendixVItothisprospectus,hasbeenregistered
with the Registrar of Companies in Hong Kong as required by Section 342C of the Companies (Winding Up and Miscellaneous
Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong). The Registrar of Companies in Hong Kong and the Securities and
Futures Commission of Hong Kong take no responsibility as to the contents of this prospectus or any of the other documents
referredto above.
ThePlacingPriceisexpectedtobefixedbyagreement betweentheCompanyandtheJointLeadManagers(forthemselvesandon
behalf of the Underwriters) on the Price Determination Date, which is currently scheduled on or around Tuesday, 30 September
2014 (Hong Kong time). The Placing Price will be not more than HK$0.60 per Placing Share and is expected to be not less than
HK$0.40 per Placing Share. If the Company and the Joint Lead Managers (for themselves and on behalf of the Underwriters) are
unable to reach an agreement on the Placing Price by that date or such later date as agreed by the Company and the Joint Lead
Managers (forthemselvesandonbehalf of the Underwriters), the Placing will not become unconditional and will not proceed.
Prior to making an investment decision, prospective investors should consider carefully all of the information set out in this
prospectus, including but not limited tothe riskfactorsset out in the section headed ‘‘RiskFactors’’ inthis prospectus.
Prospective investors of the Placing Shares should note that the Underwriters is entitled to terminate their obligations under the
UnderwritingAgreement bynoticeinwritinggivenbytheJoint LeadManagers(forthemselvesandonbehalfoftheUnderwriters)
upon the occurrence of any of the events set forth under the paragraph headed ‘‘Grounds for termination’’ in the section headed
‘‘Underwriting’’ in this prospectus, at anytimepriorto8:00a.m. (HongKongtime) on the Listing Date.
30 September 2014
CHARACTERISTICS OF GEM
GEM has been positioned as a market designed to accommodate companies to which a
higher investment risk may be attached than other companies listed on the Stock Exchange.
Prospective investors should be aware of the potential risks of investing in such companies
and should make the decision to invest only after due and careful consideration. The
greater risk profile and other characteristics of GEM mean that it is a market more suited
to professional and other sophisticated investors.
Given the emerging nature of companies listed on GEM, there is a risk that securities
traded on GEM may be more susceptible to higher market volatility than securities traded
on the Main Board and no assurance is given that there will be a liquid market in the
securities traded on GEM.
The principal means of information dissemination on GEM is publication on the
Internet website operated by the Stock Exchange. Listed companies are not generally
required to issue paid announcements in gazetted newspaper. Accordingly, prospective
investors should note that they need to have access to the HKEx website at
www.hkexnews.hk in order to obtain up-to-date information on GEM-listed issuers.
– i –
EXPECTED TIMETABLE
2014
(Note 1)
Price Determination Date (Note 2) on or before. . . . . . . . . . . . . . . . . . . .Tuesday, 30 September
Announcement of the Placing Price and the level of indication of interest in
the Placing to be published on the Stock Exchange’s
website at www.hkexnews.hk and the Company’s
website at www.lna.com.hk (Note 3) on or before . . . . . . . . . . . . . . . . . . .Thursday, 9 October
Allotment of Placing Shares to placees (or their designated
person(s)) on or before. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 9 October
Deposit of share certificates for the Placing Shares into
CCASS on or before (Note 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 9 October
Dealings in the Shares on GEM to commence at 9:00 a.m. on. . . . . . . . . . . . . Friday, 10 October
Notes:
1. In this prospectus, unless otherwise stated, all times and dates refer to Hong Kong local times and dates.
2. The Price Determination Date is expected to be on or about Tuesday, 30 September 2014. If for any reason, the
Placing Price is not agreed by Tuesday, 30 September 2014, or such later date as agreed by the Company and the
Joint Lead Managers (for themselves and on behalf of the Underwriters), the Placing will not become unconditional
and will not proceed.
3. None of the Company’s website or any of the information contained in the website forms part of this prospectus.
4. The share certificates for the Placing Shares to be distributed via CCASS are expected to be deposited into CCASS
on or before Thursday, 9 October 2014 for credit to the relevant CCASS Participants’stock accounts designated by
the Joint Lead Managers, the placees or their respective agents (as the case may be). No temporary documents or
evidence of title will be issued.
5. If there is any change to the above expected timetable, the Company will make an appropriate announcement on the
HKEx website to inform investors accordingly.
6. All share certificates will only become valid certificates of title when the Placing has become unconditional in all
respects and the Underwriting Agreement has not been terminated in accordance with its terms at any time prior to
8:00 a.m. (Hong Kong time) on the Listing Date. If the Underwriting Agreement does not become unconditional or
is terminated in accordance with the terms and conditions therein, the Company will make an announcement as soon
as possible. No dealings in the Placing Shares should take place prior to the Listing Date, investors who trade the
Shares prior to such date shall do so entirely at this own risk.
Details of the structure of the Placing, including the conditions thereto, are set out in the
section headed ‘‘Structure and Conditions of the Placing’’ in this prospectus.
– ii –
CONTENTS
IMPORTANT NOTICE TO INVESTORS
This prospectus is issued by the Company solely in connection with the Placing and does
not constitute an offer to sell or a solicitation of an offer to buy any security other than the
Placing Shares offered by this prospectus pursuant to the Placing. This prospectus may not be
used for the purpose of, and does not constitute, an offer to sell or a solicitation of an offer in
any other jurisdiction or in any other circumstances.
You should rely only on the information contained in this prospectus to make your
investment decision. The Company, the Sponsor, the Joint Lead Managers, the Joint Bookrunners
and the Underwriters have not authorised anyone to provide you with information that is
different from what is contained in this prospectus. Any information or representation not made
in this prospectus must not be relied on by you as having been authorised by the Company, the
Sponsor, the Joint Lead Managers, the Joint Bookrunners, the Underwriters, any of their
respective directors, advisers, officers, employees, agents or representatives or any other person
involved in the Placing.
Page
Characteristics of GEM ........................................................... i
Expected Timetable ............................................................... ii
Contents .......................................................................... iii
Summary ......................................................................... 1
Definitions ........................................................................ 18
Forward-Looking Statements ...................................................... 29
Risk Factors ...................................................................... 31
Information about this Prospectus and the Placing .................................. 51
Directors and Parties Involved in the Placing ....................................... 55
Corporate Information ............................................................ 60
– iii –
CONTENTS
Page
Industry Overview ................................................................ 62
Regulatory Overview .............................................................. 72
History, Reorganisation and Corporate Structure ................................... 90
Business .......................................................................... 104
Relationship with the Controlling Shareholders ..................................... 188
Connected Transactions ........................................................... 195
Directors, Senior Management and Staff ........................................... 203
Substantial Shareholders .......................................................... 215
Share Capital ..................................................................... 217
Financial Information ............................................................. 221
Future Plans and Use of Proceeds .................................................. 290
Sponsor’s Interests ................................................................ 295
Underwriting ..................................................................... 296
Structure and Conditions of the Placing ............................................ 303
Appendix I — Accountants’ Report ............................................. I-1
Appendix II — Unaudited Pro Forma Financial Information ...................... II-1
Appendix III — Property Valuation .............................................. III-1
Appendix IV — Summary of the Constitution of the Company and
Cayman Islands Company Law ................................. IV-1
Appendix V — Statutory and General Information ............................... V-1
Appendix VI — Documents Delivered to the Registrar of
Companies and Available for Public Inspection in Hong Kong ... VI-1
– iv –
SUMMARY
This summary aims to give you an overview of the information contained in this prospectus
and should be read in conjunction with full text of this prospectus. As this is a summary, it does
not contain all of the information which may be important to you. You should read the whole
prospectus before you decide to invest in the Placing Shares.
There are risks associated with any investment. Some of the particular risks in investing in
the Placing Shares are set out in the section headed ‘‘Risk Factors’’ in this prospectus. You
should read that section carefully before you decide to invest in the Placing Shares.
PROFIT WARNING
The Company may issue a profit warning after Listing in respect of the Group’s very
substantial reduction in the financial results for the six months ended 30 September 2014 and the
year ending 31 March 2015. It is preliminarily reviewed and estimated by the Board that there
will be a very substantial reduction in the profit of the Group and may be in a loss position for
the six months ended 30 September 2014 as a result of the listing expenses amounting to
approximately HK$8.1 million, which are one-off non-recurring expenses, and the profit of the
Group for the financial year ending 31 March 2015 will also be significantly adversely affected
by the estimated listing expenses amounting to approximately HK$11.4 million and to a lesser
extent, by the expected increase in administrative expenses such as Directors’ remuneration and
expenses relating to the opening of new retail stores such as staff salaries, rental expenses and
amortisation and the Group may be in a loss position after including such expenses. Such listing
expenses are current estimates for reference only and the final amount to be charged to the profit
and loss account of the Group for the six months ended 30 September 2014 and the year ending
31 March 2015 is subject to change.
OVERVIEW
The Group principally derives its revenue from manufacturing and selling Pure Cashmere
Apparel and Other Apparel products under its two business arms: (i) OEM business segment, which
entails product design and development, raw material sourcing and procurement, manufacturing and
product quality control management (the ‘‘OEM Business’’) and (ii) apparel retail business
segment, which entails designing, procuring, manufacturing, marketing and retailing of Pure
Cashmere Apparel and Other Apparel products and accessories through a retail network in Hong
Kong under the Group’s proprietary trademarks ‘‘Casimira’’ and ‘‘Les Ailes’’ (the ‘‘Retail
Business’’). During the Track Record Period, approximately 94.2% and 90.3% of the Group’s
revenue, respectively, were generated from its OEM Business.
FINANCIAL PERFORMANCE FOR THE YEAR ENDING 31 MARCH 2015
The Directors consider the Group’s financial performance for the year ending 31 March 2015
will be significantly affected by the increase in listing expenses and administrative expenses
primarily in relation to the Listing and the subsequent increase in remuneration of the Directors and
the increase in expenses relating to the opening of new retail stores such as staff salaries, rental
expenses and amortisation. A one-off listing expense of approximately HK$11.4 million will be
charged to the consolidated statement of profit or loss and other comprehensive income for the year
– 1 –
SUMMARY
ending 31 March 2015. In addition, there will be an expected increase in administrative expenses
which is primarily attributable to the increase in Directors’ remuneration from approximately
HK$3.3 million for the year ended 31 March 2014 to approximately HK$7.0 million for the year
ended 31 March 2015 arising from the increase in remuneration of the existing Directors and the
appointment of the new independent non-executive Directors prior to the Listing. The Directors
would like to emphasize that such amount of listing expenses and the increase in Directors’
remuneration are current estimates for reference only, and the final amount is subject to adjustment
based on audit and changes in variables and assumptions.
Based on the said increases in listing expenses, administrative expenses and expenses relating
to the opening of new retail stores, the Directors are of the opinion that there is no fundamental
deterioration in the commercial and operational viability in the Group’s business despite the
increase in the Directors’ remuneration and the non-recurring listing expenses. Accordingly, the
Shareholders and prospective investors should be informed that the financial results of the Group
for the year ending 31 March 2015 will be materially affected by the estimated increases in listing
expenses, administrative expenses and expenses relating to the opening of new retail stores that
may amount to approximately HK$15.1 million in aggregate, which represents approximately
103.4% and 214.1% of the Group’s net profit for the year ended 31 March 2013 and 2014,
respectively. Given the expected increase in listing expenses, administrative expenses and
expenses relating to the opening of new retail stores after the Listing, the Group’s net profit
for the year ending 31 March 2015 will significantly decline as compared with the prior
financial years and may be in a loss position after including the listing expenses, and the
Company may issue a profit warning shortly after the Listing in light of such decline in net
profit.
FINANCIAL PERFORMANCE OF THE GROUP DURING THE TRACK RECORD PERIOD
Set out below is the breakdown of the Group’s turnover, gross profit, gross profit margin and
segment results by business segment during the Track Record Period:
Revenue
Year ended 31 March 2013 Year ended 31 March 2014
HK$’000 % HK$’000 %
OEM Business 352,358 94.2 343,387 90.3
Retail Business 21,729 5.8 37,058 9.7
Total revenue 374,087 100.0 380,445 100.0
Gross profit and gross profit margin
Year ended 31 March 2013 Year ended 31 March 2014
Gross profit Gross profit margin Gross profit Gross profit margin
HK$’000 % HK$’000 %
OEM Business 62,524 17.7 60,205 17.5
Retail Business 5,294 24.4 10,718 28.9
Total gross profit and
gross profit margin 67,818 18.1 70,923 18.6
– 2 –
SUMMARY
Segment results
Year ended 31 March 2013 Year ended 31 March 2014
HK$’000 HK$’000
OEM Business 25,286 11,286
Retail Business (4,474) (324)
Revenue from the Group’s OEM Business was derived from the manufacturing and selling of
women’s, men’s and children’s Pure Cashmere Apparel and Other Apparel to the Group’s OEM
customers, which are mostly international reputable apparel brand owners and chain department
stores headquartered in the US and Europe selling their products under their own private labels
worldwide. The Group’s revenue generated from its OEM Business decreased from approximately
HK$352.4 million for the year ended 31 March 2013 to approximately HK$343.4 million for the
year ended 31 March 2014, representing a decrease of approximately 2.5% compared to the
previous year. This is primarily attributable to the Group’s strategy to reduce its reliance on major
OEM customers by obtaining sales orders from other existing and new customers. The said sales
orders were mainly for Other Apparel. Despite a significant increase in the quantity of Other
Apparel sold, they have a significantly lower average selling price than Pure Cashmere Apparels.
Revenue from the Retail Business increased from approximately HK$21.7 million to approximately
HK$37.1 million for the two years ended 31 March 2014, representing an approximate increase of
70.5%. The increase was primarily attributable to the Group’s successful marketing campaigns and
strategic selection of store locations.
During the Track Record Period, gross profit and gross profit margin increased primarily due
to increases in gross profit generated by and proportion of sales from the Retail Business, which
has a relatively higher gross profit margin than the OEM Business. Gross profit and gross profit
margin of the OEM Business decreased slightly, as Other Apparel sales (which yield a lower profit
margin) for the year ended 31 March 2014 increased proportionally (against Pure Cashmere Apparel
sales) as compared to the previous year. Own Brand Products sales rose as a result of the Group’s
successful retail marketing campaign and store location strategies. The Group’s OEM Business
generated segment profits of approximately HK$25.3 million and HK$11.3 million for the two
years ended 31 March 2014 respectively.
The gross profit and gross profit margin of the Retail Business increased during the Track
Record Period. The product quality of the Own Brand Products and the Group’s marketing
campaign has enabled the Group to build customer loyalty and brand awareness. Accordingly, the
Group was able to raise the selling price of Own Brand Products. The higher selling prices of Own
Brand Products resulted in increased gross profit and gross profit margin. Notwithstanding the gross
profit recorded by the Retail Business, the Retail Business reported segment losses of
approximately HK$4.5 million and HK$0.3 million for the two years ended 31 March 2014
respectively. The reason for the segment loss for the Group’s Retail Business was mainly due to the
charging of the overhead costs amounting to approximately HK$4.6 million and HK$4.1 million for
the two years ended 31 March 2014 respectively. Such overhead costs include advertising expenses
and salary for staff of the sales & marketing department who were put in charge of the Group’s
overall retail sales and marketing activities etc. Losses were reduced in 2014 due to improvements
in (i) mix of store types and locations, (ii) marketing and advertising strategies and (iii) an
increased scale of operations to cover overhead cost.
– 3 –
SUMMARY
OPERATING SEGMENTS OF THE GROUP
OEM Business
The Group produces a wide range of smart and business casual knitwear products for its OEM
customers. Over the years, the Group has developed a unique set of production know-how to
achieve the quality, appearance, texture and price points of pure cashmere garments that have
captured the loyalty of its customers. Besides cashmere products, the Group also produces blended
cashmere, merino wool, linen and cotton products. Services provided under the OEM Business
comprises raw material sourcing and procurement, manufacturing, quality assurance and control and
packaging and delivery. As part of the Group’s ancillary value-added services, the Group also offers
product design and development services upon customers’ request at no additional charges. While
the Group may be requested to present its design originations to customers, the same customers
may also present their own design inspirations and instruct the Group to adopt directly or modify
for production suitability. The following diagram illustrates the OEM Business model:
The Group’s turnover by its OEM customers’ geographical locations is set out below:
Turnover Year ended 31 March 2013 Year ended 31 March 2014
HK$’000 % HK$’000 %
USA 344,448 97.8 315,840 92.0
Europe 1,813 0.5 17,868 5.2
Other (Hong Kong, Canada, Mexico) 6,097 1.7 9,679 2.8
Total 352,358 100.0 343,387 100.0
Retail Business
To explore the Hong Kong retail market, and as a diversification strategy to expand beyond
the OEM Business, the Group set foot in the local fashion apparel retail market in 2009, offering
cashmere and non-cashmere apparel at affordable price points to budget-sensitive consumers. Its
first retail outlet, located in Quarry Bay, Hong Kong, offered a range of affordable quality apparel
under its proprietary trademarks, ‘‘Casimira’’ and ‘‘Les Ailes’’. As at the Latest Practicable Date,
the Group had 12 retail shops located in 11 communities in Hong Kong. The following diagram
illustrates the Retail Business model:
– 4 –