annual report and financial statements for the year...

Oriental City Group Plc

Annual Report and Financial StatementsFor the year ended 31 March 2012

Oriental City Group PlcAnnual Report and Financial StatementsFor the year ended 31 March 2012

CONTENTS

PAGES

Directors’ report 1 - 4

Independent auditor’s report 5

Consolidated statement of comprehensive income 6

Consolidated statement of financial position 7

Statement of financial position 8

Consolidated statement of changes in equity 9

Statement of changes in equity 10

Consolidated statement of cash flows 11

Statement of cash flows 12

Notes to the consolidated financial statements 13 - 41

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Oriental City Group PlcDirectors’ Report

The directors of the Company (the “Directors”) are pleased to present their annual report and the audited financial statements of the Company and its subsidiaries (collectively referred to as the “Group”) for the year ended 31 March 2012.

Principal Activities

Oriental City Group plc (“OCG” or the “Company”) was incorporated in England and Wales as a Public Limited Company on 7 June 2006. Its principal activity is that of a holding company. The principal activities of its subsidiaries are investment holding.

Looking Ahead

The Group is identifying and exploring new business opportunities for enhancing its income on a stable and long term basis. The Board of Directors (the “Board”) will continue to seek new business opportunities which are in the best interest of the shareholders of the Company.

Business Review

The Group was principally engaged in investment holding after the disposal of its payment card related businesses in Hong Kong (the “Discontinued Operation”) during the year ended 31 March 2012, and Thailand and Mainland China (the “Discontinued Operations”) during the year ended 31 March 2011.

The Group’s income of GBP626,203 for the year ended 31 March 2011 was generated entirely from the Discontinued Operations. The income for the year ended 31 March 2012 was generated solely from theGroup’s investment trading business. The decrease in income was mainly attributed to the disposal of the Discontinued Operations.

Following settlement of the litigation with a former partnership bank as detailed in the prior year financial statements, Oriental City Group Asia Limited, a wholly-owned subsidiary of the Company, entered into a sale and purchase agreement (the "Agreement") on 21 October 2011 to dispose of the entire issued share capital of Oriental City Group Hong Kong Limited ("OCG HK (BVI)"), a company incorporated in British Virgins Islands, to Mr. Yu Chun Fai ("Mr. Yu"), a former director and former substantial shareholder of the Company.

OCG HK (BVI) is an investment holding company with two wholly owned subsidiaries, Oriental City Group Limited ("OCG HK") and Oriental City Group Bank Limited ("OCG Bank"), which were incorporated in Hong Kong and Union of Comoros respectively. As such, all OCG HK (BVI), OCG HK and OCG Bank (collectively referred to as "OCG HK Group") were disposed of to Mr. Yu (the "Disposal"). The consideration for the Disposal is HK$100, which was settled fully by cash upon signing of the sale and purchase agreement.

Before the Disposal, OCG HK Group had no business activities. A banking licence had been obtained by OCG Bank but no banking business was carried out. The licence was therefore fully written off in prior years.

The Group’s profit attributable to its equity shareholders for the year ended 31 March 2012 was GBP2,870,881, compared to GBP2,029,755 in the year ended 31 March 2011. Earnings per share for continuing and discontinued operations for the year ended 31 March 2012 was GBP0.45, compared to GBP0.32 for the year ended 31 March 2011. The increase in the Group’s net profit and earnings per share was mainly due to the derecognition of an other loan and gain on disposal of subsidiaries from the Discontinued Operation in Hong Kong amounted in aggregate to approximately GBP2,980,000 during the year ended 31 March 2012.

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Oriental City Group PlcDirectors’ Report (cont’d)

Business Review (cont’d)

The Directors have not proposed a payment of a dividend in respect of the year (2011: Nil).

The full results of the Group for the year ended 31 March 2012 are set out in the consolidated statement of comprehensive income on page 6.

Financial Instruments

A financial instrument is any contract that gives rise to both a financial asset of one enterprise and financial liability or equity instrument of another enterprise.

The Group’s financial instruments, which are recognised in the consolidated statement of financial position, comprise held-to-maturity investments, financial assets at fair value through profit or loss, cash and cash equivalents, receivables and payables. The accounting policies and methods adopted, including basis of measurement applied are disclosed, where relevant. The information about the extent and nature of these recognised financial instruments, including significant terms and conditions that may affect the amount, timing and certainty of future cash flows are disclosed in note 25 to the consolidated financialstatements, where applicable.

The Group does not generally enter into derivative transactions (such as interest rate swaps and forward foreign currency contracts) and it is, and has been throughout the year, the Group’s policy that no trading in derivative financial instruments shall be undertaken.

Principal Risks and Uncertainties

The key risks to which the business is exposed are disclosed in note 25 to the consolidated financial statements. The Group’s operations expose it to financial risks that include liquidity risk, interest rate risk, credit risk, foreign exchange risk and equity price risk.

Given the small size of the Group and of its Board, the Directors have not delegated the responsibility of monitoring financial risk management to a sub-committee of the Board. The Group’s finance department implements the policies set by the Board.

The Group are going to hold the debt securities listed in the United States until maturity in 2014 to 2016.The Group will then identify and explore new business opportunities for enhancing its revenue on a stable and long term basis. The new business opportunities may impose uncertainties to the Group, the Board will continue to seek new business opportunities which are in the best interest of the shareholders of the Company.

Directors

The Directors who held office during the year and up to the date of this report were:

Mr. Mak Yat Tang, Anthony (appointed on 28 June 2011)Mr. Cheung Chi Wai, Kenny (appointed on 9 February 2012)Mr. Lawrence Tang (appointed on 28 June 2011 and resigned on 9 February 2012)Mr. Yu Chun Fai (resigned on 28 June 2011)Ms. Wong Lai Chun (resigned on 28 June 2011)

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Directors (cont’d)

In accordance with the Company's Articles of Association, the following Directors retire, and being eligible, offer themselves for re-election at the forthcoming annual general meeting (“AGM”) of the Company :-

Mr. Mak Yat Tang, AnthonyMr. Cheung Chi Wai, Kenny

Directors’ Interests

No contracts of significance to which the Company or its subsidiaries was a party and in which a Director of the Company had a material interest, whether directly or indirectly, were in place at the end of the year or at any time during the year.

Supplier Payment Policy

The Group’s policy concerning the payment of trade payables is to:

agree the terms of payment with suppliers when agreeing the terms of each transaction; ensure that suppliers are made aware of the terms of payment by the inclusion of the relevant terms in

contracts; and pay in accordance with the Group’s contractual and other legal obligations.

Auditor

Mazars LLP resigned, and PKF (UK) LLP was appointed, as the Company’s auditor during the year.

In accordance with Section 385 of the Companies Act 2006, a resolution proposing that PKF (UK) LLP be reappointed as auditor to the Company will be put to the AGM.

Directors’ Responsibilities Statement

The Directors are responsible for preparing the directors' report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards (“IFRSs”) as adopted by the European Union. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that period.

In preparing these financial statements the Directors are required to:

select suitable accounting policies and then apply them consistently; make judgments and accounting estimates that are reasonable and prudent; state whether the financial statements have been prepared in accordance with IFRSs as adopted by

the European Union; prepare the financial statements on the going concern basis unless it is inappropriate to presume that

the Company and the Group will continue in business.

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Directors’ Responsibilities Statement (cont’d)

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions, to disclose with reasonable accuracy at any time the financialposition of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of the financial statements and other information included in annual reports may differ from legislation in other jurisdictions.

Statement of Disclosure to Auditors

The Directors confirm that:

there is no relevant audit information of which the Company’s auditors are unaware; and each Director has taken all the steps that they ought to have taken as a Director in order to be aware

of any relevant audit information needed by the auditors in connection with preparing their report and to establish that the auditors are aware of that information.

Going Concern Statement

The Directors have satisfied themselves that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, the Directors continue to prepare the accounts on a going concern basis.

Subsequent Events

Details of the subsequent events are set out in note 28 to the consolidated financial statements.

Other Information

During the Year, the Group did not make any charitable or political donations. There was no indemnity provision in place for the Directors.

On behalf of the Board on 30 August 2012

Mak Yat Tang, AnthonyDirector

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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ORIENTAL CITY GROUP PLC

We have audited the financial statements of Oriental City Group Plc for the year ended 31 March 2012 which comprise the Consolidated statement of comprehensive income, the Consolidated and Parent Company statements of financial position, the Consolidated and Parent Company statements of changes in equity, the Consolidated and Parent Company statements of cash flows, and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the Parent Company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditor

As explained more fully in the Directors’ responsibilities statement, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group's and the Parent Company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on financial statements

In our opinion ; the financial statements give a true and fair view of the state of the Group’s and the Parent Company’s affairs as

at 31 March 2012 and of the Group’s profit for the year then ended; the consolidated financial statements have been properly prepared in accordance with IFRSs as adopted by the

European Union; the Parent Company financial statements have been properly prepared in accordance with IFRSs as adopted by

the European Union as applied in accordance with the provisions of the Companies Act 2006; and the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matter prescribed by the Companies Act 2006

In our opinion the information given in the Directors’ Report for the financial year for which the financialstatements are prepared is consistent with the financial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or

the Parent Company financial statements are not in agreement with the accounting records and returns; or certain disclosures of directors’ remuneration specified by law are not made; or we have not received all the information and explanations we require for our audit.

Linda Cooper (Senior statutory auditor)for and on behalf of PKF (UK) LLP, Statutory auditorLeeds, UK30 August 2012

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Oriental City Group PlcConsolidated Statement of Comprehensive IncomeFor the year ended 31 March 2012

Note 2012 2011GBP GBP

Continuing operationsLoss on disposal of financial assets at fair valuethrough profit or loss (39,726) -

Fair value gain on financial assets at fair valuethrough profit or loss, net 33,050 -

General and administrative expenses (160,102) (99,945)

Operating loss 5 (166,778) (99,945)Interest income from held-to-maturity investments 30,294 -Finance income 6 41,504 7Finance costs 7 - (826)Other income 8 3,285 2,439

Loss before taxation (91,695) (98,325)Taxation 9 - -

Loss for the year from continuing operations (91,695) (98,325)

Discontinued operationsProfit for the year from discontinued operations 10 2,962,576 2,086,643

Profit for the year 2,870,881 1,988,318

Other comprehensive incomeThe movement on the exchange reserve being exchangedifference arising on translation of financial statements offoreign operations net of reclassification of amounts previouslyrecognised in respect of operations disposed of in currentyear as detailed in note 10 (222,791) (550,068)

Total comprehensive income for the year 2,648,090 1,438,250

Profit attributable to:Equity holders of the Company 2,870,881 2,029,755Non-controlling interest - (41,437)

2,870,881 1,988,318

Total comprehensive income attributable to :-Equity holders of the Company 2,648,090 1,968,064Non-controlling interest - (529,814)

2,648,090 1,438,250

Loss per share attributable to equity holders of theCompany from continuing operationsBasic and Diluted 11 (0.01) (0.02)

Earnings per share attributable to equity holders of theCompany from continuing and discontinued operationsBasic and Diluted 11 0.45 0.32

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Oriental City Group PlcConsolidated Statement of Financial PositionAt 31 March 2012(Company registration number 05839657)

2012 2011Note GBP GBP

ASSETS

Non-current assetsProperty, plant and equipment 13 2,598 -Held-to-maturity investments 14 1,351,480 -

1,354,078 -Current assets

Financial assets at fair value through profit or loss 15 108,110 -Other receivables and prepayments 16 38,427 11,481Loan receivable 17 805,451 -Cash and cash equivalents 18 119,764 2,282,504

1,071,752 2,293,985

Total assets 2,425,830 2,293,985

EQUITY AND LIABILITIES

Capital and reservesShare capital 23 636,759 636,759Reserves 1,492,938 (1,155,152)

Total equity/(deficit) attributable to equity holders of the Company 2,129,697 (518,393)

Current liabilitiesAccrued expenses and other payables 19 65,823 329,239Bank borrowings 20 230,310 -Other loans 21 - 1,776,909

296,133 2,106,148Non-current liability

Amount due to a former related company 22 - 706,230

Total liabilities 296,133 2,812,378

Total equity and liabilities 2,425,830 2,293,985

Approved and authorised for issue by the Board of Directors on 30 August 2012


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Oriental City Group PlcParent Company Statement of Financial PositionAt 31 March 2012


ASSETS

Non-current assetsInvestments in subsidiaries 12 - -

Current assetsCash and cash equivalents 3,384 247

Total assets 3,384 247

EQUITY AND LIABILITIES

Capital and reservesShare capital 23 636,759 636,759Reserves (715,632) (687,721)

Total deficit (78,873) (50,962)

Current liabilitiesAccrued expenses and other payables 19 42,685 51,209Amount due to a subsidiary 12 39,572 -

Total liabilities 82,257 51,209

Total equity and liabilities 3,384 247

Approved and authorised for issue by the Board of Directors on 30 August 2012


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Oriental City Group PlcConsolidated Statement of Changes in EquityFor the year ended 31 March 2012

Attributable to equity holders of the CompanyAccumulated Share-based Non-

Share Share profits/ Exchange payment Merger controllingcapital premium (losses) reserve reserve reserve Total interest Total

GBP GBP GBP GBP GBP GBP GBP GBP GBP

At 1 April 2010 401,259 1,650,029 (5,549,366) (274,482) 789,396 261,207 (2,721,957) 529,814 (2,192,143)

Total comprehensiveincome for the year - - 2,029,755 (61,691) - - 1,968,064 (529,814) 1,438,250

Allotment of ordinaryshares 235,500 - - - - - 235,500 - 235,500

Transfer of share basedpayment reserve - - 789,396 - (789,396) - - - -

At 31 March 2011 and1 April 2011 636,759 1,650,029 (2,730,215) (336,173) - 261,207 (518,393) - (518,393)

Total comprehensiveincome for the year - - 2,870,881 (222,791) - - 2,648,090 - 2,648,090

At 31 March 2012 636,759 1,650,029 140,666 (558,964) - 261,207 2,129,697 - 2,129,697

Share premiumThe share premium reserve represents the consideration that has been received in excess of the nominal value of shares on issue of new ordinary share capital.

Exchange reserveThe exchange reserve represents exchange differences arising on translation of overseas foreign subsidiaries.

Share-based payment reserveThe reserve represents the share-based payment recognised in previous year.

Merger reserveThe merger reserve represents the difference between the nominal value of the share capital and share premium of the subsidiaries acquired in a group reorganisation carried out in prior years and the nominal value of the share capital of the Company issued in exchange thereof.

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Oriental City Group PlcParent Company Statement of Changes in EquityFor the year ended 31 March 2012

Attributable to equity holders of the CompanyShare Share Accumulated

capital premium losses TotalGBP GBP GBP GBP

At 1 April 2010 401,259 1,650,029 (2,112,363) (61,075))

Allotment of ordinary shares 235,500 - - 235,500

Loss and total comprehensive loss for the year - - (225,387) (225,387)

At 31 March 2011 and 1 April 2011 636,759 1,650,029 (2,337,750) (50,962)

Loss and total comprehensive loss for the year - - (27,911) (27,911)

At 31 March 2012 636,759 1,650,029 (2,365,661) (78,873)

Share premiumThe share premium reserve represents the consideration that has been received in excess of the nominal value of shares on issue of new ordinary share capital.

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Oriental City Group PlcConsolidated Statement of Cash FlowsFor the year ended 31 March 2012


CASH FLOWS FROM OPERATING ACTIVITIES

Profit before income tax 2,870,881 2,005,361Adjustments for :-

Interest income (71,806) (2,231)Gain on disposal of subsidiaries (1,209,109) (2,234,886)De-recognition of other loans (1,770,464) -Fair value gain on financial assets at fair value through profit or loss (33,050) -Depreciation 358 9,239Interest expense - 2,723Exchange difference (11,327) (238,877)Loss on disposal of financial assets at fair value through profit or loss 39,726 -

Operating loss before working capital changes (184,791) (458,671)Acquisition of financial assets at fair value through profit or loss (701,261) -Proceeds from disposal of financial assets at fair value through profit or loss 586,522 -(Increase)/decrease in other receivables and prepayments (3,904) 3,418Decrease in restricted cash - 14,462Increase/(decrease) in accrued expenses and other payables 7,135 (1,167,784)

Cash used in operations (296,299) (1,608,575)Interest received 213 2,231Income tax paid - (2,837)

NET CASH USED IN OPERATING ACTIVITIES (296,086) (1,609,181)

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of property, plant and equipment (2,954) (15,116)Acquisition of held-to-maturity investments (1,362,306) -Disposal of subsidiaries 10 (268) 1,636,195Loan to a third party (1,529,692) -Repayment of loan to a third party 724,591 -Interest received 59,853 -

NET CASH (USED IN)/FROM INVESTING ACTIVITIES (2,110,776) 1,621,079

CASH FLOWS FROM FINANCING ACTIVITIES

Issue of share capital - 235,500Proceeds from bank borrowings 244,700 -Repayment of bank borrowings (14,491) -

NET CASH FROM FINANCING ACTIVITIES 230,209 235,500

NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (2,176,653) 247,398

EFFECT OF FOREIGN EXCHANGE RATE CHANGES 13,913 86,479

CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR 2,282,504 1,948,627

CASH AND CASH EQUIVALENTS AT END OF THE YEAR 119,764 2,282,504

ANALYSIS OF THE BALANCES OF CASH AND CASH EQUIVALENTS

Cash and cash equivalents 119,764 2,282,504

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Oriental City Group PlcParent Company Statement of Cash FlowsFor the year ended 31 March 2012

2012 2011GBP GBP

CASH FLOWS FROM OPERATING ACTIVITIES

Loss before income tax and operating loss beforeworking capital changes (27,911) (225,387)

Decrease in accrued expenses and other payables (8,524) (12,767)

NET CASH USED IN OPERATING ACTIVITIES (36,435) (238,154)

CASH FLOWS FROM FINANCING ACTIVITIES

Increase in amount due to a subsidiary 39,572 -Issue of share capital - 235,500

NET CASH FROM FINANCING ACTIVITIES 39,572 235,500

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 3,137 (2,654)

CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR 247 2,901

CASH AND CASH EQUIVALENTS AT END OF THE YEAR 3,384 247

ANALYSIS OF THE BALANCES OF CASH AND CASH EQUIVALENTS

Cash and cash equivalents 3,384 247

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Oriental City Group PlcNotes to the consolidated financial statementsFor the year ended 31 March 2012

1. General information

Oriental City Group plc (the “Company”) was incorporated in England and Wales on 7 June 2006 under the Companies Act as a public company limited by shares with registered number 05839657. The Company was admitted to the PLUS-quoted market in October 2006. The registered office of the Company is located at Tower Bridge House, St Katharine’s Way, London, E1W 1DD and the principal place of business is located at Room 2602, Golden Centre, 188 Des Voeux Road Central, Hong Kong.

The Company is an investment holding company and the principal activities of its subsidiaries are set out in note 12 to the consolidated financial statements.

During the year ended 31 March 2012, the Group disposed of its entire interest in the wholly-owned subsidiary, Oriental City Group Hong Kong Limited, to the former director, Mr. Yu Chu Fai(Note 10).

The consolidated financial statements are presented in Great British Pounds (“GBP”).

2. Basis of preparation

(a) Compliance with International Financial Reporting Standards

The consolidated financial statements of the Company and its subsidiaries (together, the “Group”) and the individual financial statements of the Company have been prepared in accordance with those International Financial Reporting Standards and Interpretations in force (“IFRSs”), as adopted by the European Union, and those parts of the Companies Act 2006 applicable to companies preparing financial statements under IFRSs.

The preparation of these financial statements in conformity with IFRSs also requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement and complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 4 “Critical accounting estimates and judgements”.

(b) Basis of consolidation

The consolidated financial statements comprise the financial statements of the Group and all of its subsidiaries at 31 March each year. The financial statements of the subsidiaries are prepared for the same reporting year as that of the Group using consistent accounting policies.

All intra-group balance, transactions, income and expenses and profits and losses resulting from intra-group transactions are eliminated in full. The results of subsidiaries are consolidated from the date on which the Group obtains control and continue to be consolidated until the date when such control ceased.

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2. Basis of preparation (cont’d)

(c) Initial application of new and revised IFRSs

In the current year, the Group initially applied the following IFRSs issued by the International Accounting Standards Board:

IAS 24 (Revised) Related Party DisclosuresIFRIC 19 Extinguishing Financial Liabilities with Equity

InstrumentsAmendments to IFRIC 14 Prepayments of a Minimum Funding RequirementImprovements to IFRSs (2010)

The initial application of these IFRSs does not necessitate material changes in the Group’s accounting policies or retrospective adjustments of the comparatives presented.

(d) IFRSs in issue but not yet effective

The Group has not early applied the following new and revised IFRSs that have been issued but are not yet effective:

IAS 19 (2011) Employees Benefits2

IAS 27 (2011) Separate Financial Statements2

IAS 28 (2011) Investments in Associates and Joint Ventures2

IFRS 9 Financial Instruments3

IFRS 10 Consolidated Financial Statements2

IFRS 11 Joint Arrangements2

IFRS 12 Disclosure of Interests in Other Entities2

IFRS 13 Fair Value Measurement2

IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine2

Amendments to IAS 1 Presentation of Items of Other Comprehensive Income5

Amendments to IAS 12 Deferred Tax: Recovery of Underlying Assets4

Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities6

Amendments to IFRS 7 (2010) Disclosures - Transfers of Financial Assets1

Amendments to IFRS 7 (2011) Disclosures - Offsetting Financial Assets and FinancialLiabilities2

1 Effective for annual periods beginning on or after 1 July 20112 Effective for annual periods beginning on or after 1 January 20133 Effective for annual periods beginning on or after 1 January 20154 Effective for annual periods beginning on or after 1 January 20125 Effective for annual periods beginning on or after 1 July 20126 Effective for annual periods beginning on or after 1 January 2014

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3. Significant accounting policies

The significant accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

(a) Measurement basis

The consolidated financial statements have been prepared on the historical cost basis except for certain financial instruments that are measured at fair values, as explained in the accounting policies set out below.

(b) Subsidiaries

A subsidiary is an entity in which the Company, directly or indirectly, has the power to govern the financial and operating policies so as to obtain benefits from its activities.

(c) Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation andaccumulated impairment losses. The cost of an item of property, plant and equipment comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Repairs and maintenance are charged to profit or loss during the period in which they are incurred.

Depreciation is provided to write off the cost less accumulated impairment losses of property, plant and equipment, over their estimated useful lives from the date on which they are available for use and after taking into account of their estimated residual values, using the straight-line method, at the following rate per annum:

Office equipment 20%Computer equipment 20% - 33.33%

Assets held under finance lease are depreciated over the shorter of their expected useful lives or the term of lease.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the profit or loss in the period in which the item is derecognised.

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3. Significant accounting policies (cont’d)

(d) Impairment of non-financial assets

At the end of each reporting period, the Group reviews internal and external sources of information for indications of whether the carrying amounts of its property, plant and equipment have suffered an impairment loss or impairment loss previously recognised no longer exists or may be reduced. If any such indication exists, the recoverable amount ofthe asset is estimated, based on the higher of its fair value less costs to sell and value in use. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the smallest group of assets that generates cash flows independently (i.e. a cash-generating unit).

If the recoverable amount of an asset or a cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount. Impairment losses are recognised as an expense immediately.

A reversal of impairment losses is limited to the carrying amount of the asset or cash-generating unit that would have been determined had no impairment loss been recognised in prior periods. Reversal of impairment losses is recognised as income immediately.

(e) Financial instruments

Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the instruments and on a trade date basis.

A financial asset is derecognised when the Group’s contractual rights to future cash flows from the financial asset expire or when the Group transfers the financial asset and the Group has transferred substantially all the risks and rewards of ownership of the financial asset. A financial liability is derecognised only when the liability is extinguished, that is, when the obligation specified in the relevant contract is discharged, cancelled or expires.

The Group’s financial assets are classified into the following categories: financial assets at fair value through profit or loss, held-to-maturity investments, and loan and receivables.The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

Financial assets at fair value through profit or loss

A financial asset at fair value through profit or loss is recognised when the Groupbecomes a party to the contractual provisions of the instrument. Purchases and sales of financial assets are recognised using trade date accounting.

Financial assets at fair value through profit or loss are financial assets acquired principally for the purpose of selling in the short-term. Derivatives are classified as financial assets at fair value through profit or loss unless they are designated as hedges. Financial assets at fair value through profit or loss are carried at fair value. Fair value is the quoted market price on The Hong Kong Stock Exchange at year end. Gains andlosses arising from changes in the fair value of financial assets at fair value through profit or loss are included in profit or loss in the period in which they arise.

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(e) Financial instruments (cont’d)

Held-to-maturity investments

Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as held to maturity when the Group has the positive intention and ability to hold them to maturity. Held-to-maturity investments are subsequently measured at amortised cost using the effective interest rate method less any allowance for impairment.Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The effective interest rate amortisation is included in interest income in the profit or loss. The loss arising from impairment is recognised in the profit or loss.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are not held for trading. They are measured at amortised cost using the effective interest method, except where receivables are interest-free loans and repayable on demand or the effect of discounting would be insignificant. For interest-free loans on initial recognition, the receivables are stated at fair value, discounting using a market rate of interest, and subsequently accounted for using the effective interest rate method. Amortised cost is calculated by taking into account any discount or premium on acquisition over the period to maturity. Gains and losses arising from derecognition, impairment or through the amortisation process are recognised in the profit or loss.

Impairment of financial assets

At the end of each reporting period, the Group assesses whether there is objective evidence that financial assets are impaired. The impairment loss of financial assets carried at amortised cost is measured as the difference between the assets’ carrying amount and the present value of estimated future cash flow discounted at the financial asset’s original effective interest rate. Such impairment loss is reversed in subsequent periods through the profit or loss when an increase in the asset’s recoverable amount can be related objectively to an event occurring after the impairment was recognised, subject to a restriction that the carrying amount of the asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

Financial liabilities measured at amortised costs

The Group’s financial liabilities are recognised initially at their fair value and subsequently measured at amortised cost, using the effective interest method, unless the effect of discounting would be insignificant, in which case they are stated at cost.

- 18 -



(f) Cash and cash equivalents

For the purpose of the statement of cash flows, cash equivalents represent short-term highly liquid investments which are readily convertible into known amounts of cash and which are subject to an insignificant risk of change in value. For classification in the statement of financial position, cash equivalents represent assets similar in nature to cash and which are not restricted as to use.

(g) Loans and interest-bearing borrowings

All loans and borrowings are recognised initially at fair value, net of transaction costs incurred. After initial recognition, loans and borrowings are measured at amortised cost using the effective interest method.

(h) Share capital

Ordinary shares are classified as equity.

(i) Revenue recognition

Revenue is recognised when it is probable that the economic benefits will flow to the Group and when the revenue and costs, if applicable, can be measured reliably and on the following bases:

- Net gains/losses on financial assets at fair value through profit or loss and those held for trading include realised gains/losses which are recognised on the transaction dates when the relevant contract notes are executed and entered; and unrealised fair value gains/losses which are recognised in the period in which they arise.

- Interest income is recognised on an accrual basis using the effective interest method by applying the rate that exactly discounts the estimated future cash receipts through the expected life of the financial instrument or a shorter period,when appropriate, to the net carrying amount of the financial asset.

- Management service fee income is recognised when the services have been rendered.

(j) Foreign currency translation

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (“functional currency”). The consolidated financial statements are presented in GBP, which is the Company’s functional and presentation currency.

Foreign currency transactions are translated into the functional currency of each Group’s entities using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the profit or loss.

- 19 -



(j) Foreign currency translation (cont’d)

On consolidation, the results and financial position of all the Group’s entities that have a functional currency different from the presentation currency (“foreign operations”) are translated into the presentation currency as follows:

- Assets and liabilities for each statement of financial position presented are translated at the closing rate at the end of the reporting period;

- Income and expenses for each income statement and statement of comprehensive income are translated at average rates; and

- All resulting exchange differences arising from the above translation and exchange differences arising from a monetary item form part of the Group’s net investment in a foreign operation are recognised as a separate component of equity. On disposal of a foreign operation, the cumulative amount of the exchange differences deferred in the separate component of equity relating to that foreign operation is recognised in the profit or loss when the gain or loss on disposal is recognised.

(k) Employee benefits

Short term employee benefits

Salaries, annual bonuses, paid annual leave, contributions to defined contribution retirement plans and the cost of non-monetary benefits are accrued in the period in which the associated services are rendered by employees. Where payment or settlement is deferred and the effect would be material, these amounts are stated at their present values.

Defined contribution plans

The obligations for contributions to defined contribution retirement plans are recognised as expenses in profit or loss as incurred. The assets of the plans are held separately from those of the Group in certain independently administered funds.

(l) Borrowing costs

All borrowing costs are recognised as an expense in the period in which they are incurred.

(m) Taxation

Income tax comprises current and deferred taxes.

The charge for current income tax is based on the results for the period as adjusted for items that are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

- 20 -



(m) Taxation (cont’d)

Deferred tax is provided, using the liability method, on all temporary differences at the end of the reporting period between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. However, any deferred tax arising from initial recognition of goodwill; or other asset or liability in a transaction other than a business combination that at the time of the transaction affects neither the accounting profit nor taxable profit or loss is not recognised.

The deferred tax liabilities and assets are measured at the tax rates that are expected to apply to the period when the asset is recovered or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the end of the reporting period.

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences, tax losses and credits can be utilised.

Deferred tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversal of the temporary differences is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

(n) Related parties

For the purposes of these financial statements, parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common significant influence. Related parties for the Group and the Company may be individuals (being members of key management personnel, significant shareholders and/or their close family members) or other entities and include entities which are under the significant influence of related parties of the Group where those parties are individuals, and post-employment benefit plans which are for the benefit of employees of the Group or of any entity that is a related party of the Group.

- 21 -



(o) Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of economic benefit will be required to settle the obligations, and a reliable estimate of the amount to be paid.

(p) Segment reporting

Operating segments, and the amounts of each segment item reported in the consolidated financial statements, are identified from the financial information provided regularly to the Group’s Chief Operating Decision Maker for the purpose of allocating resources to, and assessing the performance of, the Group’s various lines of business and geographical locations.

Individual material operating segments are not aggregated for financial reporting purposes unless the segments have similar economic characteristics and are similar inrespect of the nature of products and services, the nature of production processes, the type or class of customers, the methods used to distribute the products or provide the services, and the nature of the regulatory environment. Operating segments which are not individually material may be aggregated if they share a majority of these criteria.

4. Critical accounting estimates and judgements

Estimates and assumptions concerning the future and judgements are made by the management in the preparation of the consolidated financial statements. They affect the application of the Group’s accounting policies, reported amounts of assets, liabilities, income and expenses, and disclosures made. They are assessed on an on-going basis and are based on experience and relevant factors, including expectations of future events that are believed to be reasonable under the circumstances. Where appropriate, revisions to accounting estimates are recognised in the period of revision and future periods, in case the revision also affects future periods.

(a) Critical judgements made in applying accounting policies

Classification of held-to-maturity investments

The Group follows the guidance of IAS 39 on classifying non-derivative financial assets with fixed or determinable payments and fixed maturity as held-to-maturity. This classification requires significant judgement. In making this judgement, the Group evaluates its intention and ability to hold such investments to maturity. If the Group fails to keep these investments to maturity other than for the specific circumstances - for example, selling more than an insignificant amount close to maturity - it will be required to reclassify the entire class as available for sale. The investments would therefore be measured at fair value not amortised cost.

- 22 -


4. Critical accounting estimates and judgements (cont’d)

(b) Key sources of estimation uncertainty

Impairment on loans and receivables

The Group reviews its loans and receivables at each reporting date to assess whether an allowance for impairment should be recorded in profit or loss. In particular, judgement by the management is required in the estimation of the amount and timing of future cash flows when determining the level of allowance required. Such estimates are based on assumptions about a number of factors and actual results may differ, resulting in future changes to the allowance.

5. Operating loss

Continuing operations Discontinued operations Consolidated2012 2011 2012 2011 2012 2011GBP GBP GBP GBP GBP GBP

Fee payable to the Company’s auditor for the audit of the Company’s financial statements 16,000 18,900 - - 16,000 18,900Fees payable to the Company’s auditor and its associates for other services

- The auditing of financial statements of the subsidiaries of the Company pursuant to legislation 7,779 11,571 - 19,443 7,779 31,014- Non-audit services - - - - - -

Directors’ remuneration- Fees - - - - - -- Salaries 9,661 - - 7,438 9,661 7,438- Contributions to retirement scheme - - - 992 - 992

9,661 - - 8,430 9,661 8,430Staff costs- Salaries 29,681 36,822 18,018 165,069 47,699 201,891- Contributions to retirement scheme 945 1,812 889 5,561 1,834 7,373

30,626 38,634 18,907 170,630 49,533 209,264Depreciation 358 7 - 9,232 358 9,239Operating lease payments - - - 29,641 - 29,641

At 31 March 2012, the Group had 4 staff (2011: 4) which 2 of them were management (2011: 2) and 2 (2011: 2) of them were for the general administrative function. Average monthly number of employees for the years ended 31 March 2012 and 2011 were 4 and 12 respectively.

- 23 -


6. Finance income


Bank interest income 206 7 7 2,224 213 2,231Loan interest income 41,298 - - - 41,298 -

41,504 7 7 2,224 41,511 2,231

7. Finance costs


Finance costs on otherlong-term liabilities - - - 1,897 - 1,897

Interest expenses on other short-term loans - 826 - - - 826

- 826 - 1,897 - 2,723

8. Other incomeContinuing operations Discontinued operations Consolidated

2012 2011 2012 2011 2012 2011GBP GBP GBP GBP GBP GBP

Management service income(Note 24) - 2,402 3,953 - 3,953 2,402Sundry income 3,285 37 - - 3,285 37

3,285 2,439 3,953 - 7,238 2,439

9. Income tax expense

Income tax expense in the consolidated statements of comprehensive income represents:


Current tax - - - 17,043 - 17,403Deferred tax - - - - - -

Income tax expense - - - 17,043 - 17,403

The Company

The Company is subject to Corporation Tax at 20% in the United Kingdom. Tax has not been provided in the financial statements as the Company incurred losses for the years ended 31 March 2012 and 2011.

- 24 -


9. Income tax expense (cont’d)

Subsidiaries

(i) Hong Kong Profits Tax

Hong Kong Profits Tax has not been provided as the Group had no assessable profits arising in or derived from Hong Kong for the years ended 31 March 2012 and 2011.

(ii) Income taxes outside Hong Kong

The subsidiaries established in the BVI are exempted from the payment of income tax in the BVI.

The income tax expense differs from the theoretical amount that would arise using the tax rate applicable to the (loss)/profit before taxation of the Group as follows:

Continued operations Discontinued operations Consolidated2012 2011 2012 2011 2012 2011GBP GBP GBP GBP GBP GBP

(Loss)/profit before taxation (91,695 ) (98,325) 2,962,576 2,103,686 2,870,881 2,005,361

Applicable tax rates: 19% 18% 16.5% 16% 16% 16%

Income tax at applicabletax rates (17,459 ) (18,136) 488,825 335,179 471,366 317,043

Tax effect of non-deductibleexpenses 10,350 3,234 2,805 47,763 13,155 50,997

Tax effect of non-taxableincome (17,300 ) - (491,630 ) (369,940) (508,930) (369,940 )

Tax effect of accelerateddepreciation allowance (428 ) - - - (428) -

Tax effect of unrecognisedtax losses 24,837 14,902 - 4,041 24,837 18,943

Income tax expense - - - 17,043 - 17,043

The applicable tax rate is the weighted average of the tax rates prevailing in the territories in which the Group’s entities operate. The change in applicable tax rate is caused by changes in the results of the Group’s subsidiaries in the respective countries.

The components of unrecognised deductible temporary differences are as follows:

2012 2011GBP GBP

Accelerated depreciation allowances 2,598 -Unutilised tax losses 896,014 2,130,738

898,612 2,130,738

- 25 -


9. Income tax expense (cont’d)

No deferred tax asset has been recognised in respect of the deductible temporary differences as it is not certain whether the potential taxation benefit will be realised in the foreseeable future. All unutilised tax losses can be carried forward indefinitely.

At 31 March 2011, the unrecognised unutilised tax losses included losses of approximatelyGBP1,375,000 attributable from Oriental City Group Limited (“OCG HK”). This temporary difference had not been carried forward to 31 March 2012 as OCG HK was disposed of during the year (Note 10).

10. Discontinued operations

Year ended 31 March 2012

Oriental City Group Asia Limited, a wholly-owned subsidiary of the Company, entered into a sale and purchase agreement (the "Agreement") on 21 October 2011 to dispose of the entire issued share capital of Oriental City Group Hong Kong Limited ("OCG HK (BVI)"), a company incorporated in British Virgins Islands, to Mr. Yu Chun Fai ("Mr. Yu"), a former director and former substantial shareholder of the Company.

OCG HK (BVI) is an investment holding company with two wholly owned subsidiaries, Oriental City Group Limited ("OCG HK") and Oriental City Group Bank Limited ("OCG Bank"), which were incorporated in Hong Kong and Union of Comoros respectively. As such, all OCG HK (BVI), OCG HK and OCG Bank (collectively referred to as "OCG HK Group") were disposed of to Mr. Yu (the "Disposal"). The consideration for the Disposal is HK$100, which was settled fully by cash upon signing of the sale and purchase agreement.

Before the Disposal, OCG HK Group had no business activities. A banking licence had been obtained by OCG Bank but no banking business was carried out. The licence was therefore fully written off in prior years.

The results of OCG HK Group are presented as discontinued operations for the year ended 31 March 2012.

Prior to the completion of the Disposal, the Company had direct or indirect interests in the following entities of OCG HK Group:

Place and date Particulars of issued Effective ownershipof incorporation/ and paid-up capital/ interests held Principal

Name establishment registered capital by the Company activitiesDirectly Indirectly

Oriental City Group Hong Kong Limited

The BVI,7 May 2007

Ordinary,US$1

- 100% Investment holding

Oriental City Group Limited Hong Kong,14 November 2001

Ordinary,HK$231

- 100% Inactive

Oriental City Group Bank Limited

Union of Comoros,26 June 2007

Ordinary,US$1,000,000

- 100% Inactive

- 26 -


10. Discontinued operations (cont’d)

Year ended 31 March 2011

On 5 January 2011, the Group entered into and completed a sale and purchase agreement with an independent third party to dispose of its entire interests in Oriental City Group Holdings Limited (“OCG Holdings”), a 67%-owned subsidiary, at a consideration of HK$40,200,000 (approximately GBP 3,322,000) with a gain on disposal amounting to HK$27,041,000 (approximately GBP 2,235,000) recognised in the statement of comprehensive income for the year ended 31 March 2011.

Accordingly, the results of OCG Holdings Group are presented as discontinued operations for the year ended 31 March 2011.

Prior to the completion of the disposal, the Company had direct or indirect interests in the following entities of OCG Holdings Group:

Place and date Particulars of issued Effective ownershipof incorporation/ and paid-up capital/ interests held Principal

Name establishment registered capital by the Company activitiesDirectly Indirectly

Oriental City Group Holdings Limited

Cayman Islands,12 December 2007

Ordinary,HK$6,000,000

67% - Investment holding

Charm Act Group Limited The BVI,30 November 2007

Ordinary,US$100


OCG South Asia (BVI) Limited

The BVI,19 March 2010

Ordinary,US$1


Oriental City Group China Limited

The BVI,7 May 2007

Ordinary,US$1

- 100% Investment holding and marketing business

Oriental City Group Thailand Limited

The BVI,7 May 2007

Ordinary,US$1


Oriental City Group Lao Co., Limited

Laos,8 January 2010

Registered capital,US$100,000

- 100% Card acceptance business

奧思知(海南)服務有限公司Oriental City Group (Hainan) Services Limited *

The PRC,24 October 2005

Registered capital,HK$150,000

- 100% Co-branded cards partnership business

Oriental City Group (Thailand) Company Limited

Thailand,27 September 2004

Ordinary,Baht6,250,000Preference,Baht1,375,000

-

-

40%

Nil

Card acceptance business

* The English name is for identification purpose only.

- 27 -



The net (liabilities)/assets of the discontinued operations at the date of disposal were as follows:

2012 2011GBP GBP

Property, plant and equipment - 26,045Other non-current assets - 6,715Trade and other receivables 1,024 598,366Restricted bank balances - 13,320Bank balances and cash 276 1,652,757Trade and other payables (278,285) (543,709)Tax payable - (17,844)Other non-current liabilities (710,068) (29,290)

Net (liabilities)/assets disposed of (987,053) 1,706,360

2012 2011GBP GBP

Total considerations received in cash 8 3,322,493Direct transaction costs - (33,541)

Net considerations 8 3,288,952Net liabilities/(assets) disposed of 987,053 (1,706,360)Non-controlling interest - 624,573Reclassification adjustment of exchange differences arising from disposed subsidiaries from equity to statement of comprehensive income 222,048 27,721

Gain on disposal of discontinued operations 1,209,109 2,234,886

Net cash (outflow)/inflow arising from disposal of subsidiaries:Net cash considerations received 8 3,288,952Cash and bank balances disposed (276) (1,652,757)

(268) 1,636,195

- 28 -



The results and net cash flows of the discontinued operations are summarised below:

2012 2011GBP GBP

Revenue - 626,203Costs of services rendered - (361,151)

Gross profit - 265,052Other income 3,960 2,224Derecognition of other loan (Note 21(b)) 1,770,464 -General and administrative expenses (20,957) (360,215)Selling and distribution costs - (36,364)Finance costs - (1,897)

Profit/(loss) before taxation 1,753,467 (131,200)Taxation - (17,043)

Profit/(loss) after taxation 1,753,467 (148,243)Gain on disposal of discontinued operations 1,209,109 2,234,886

Profit for the year from discontinued operations 2,962,576 2,086,643

Attributable to:Equity holders of the Company 2,962,576 2,128,080Non-controlling interests - (41,437)

2,962,576 2,086,643

The Group earned no income from its discontinued operations for the year. An analysis of the Group’s income from discontinued operations for the year ended 31 March 2011 is as follows:

2012 2011GBP GBP

Co-branded card annual and transaction fee income - 2,778Card acceptance transaction fee income - 418,668Foreign exchange rate discount income - 108,058Marketing service fee income - 96,699

- 626,203

No tax payable for the Group at 31 March 2012.

- 29 -



2012 2011GBP GBP

Net cash flows from:Operating activities (20,957) (202,900)Investing activities - (15,601)Financing activities (2,279,046) -

(2,300,003) (218,501)

11. (Loss)/earnings per share

Basic (loss)/earnings per share is calculated by dividing the (loss)/profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year. The Company consolidated its ordinary shares subsequent to the end of the reporting period as disclosed in note 28 to the consolidated financial statements. In accordance with IAS 33, the (loss)/earnings per share for all periods presented are adjusted retrospectively based on the new number of ordinary shares of 6,367,551.

For continuing operations: 2012 2011

Loss attributable to equity holders of the Group GBP(91,695) GBP(98,325)Weighted average number of ordinary shares in issue 6,367,551 6,367,551Basic loss per share GBP(0.01) GBP(0.02)

For discontinued operations: 2012 2011

Profit attributable to equity holders of the Group GBP2,962,576 GBP2,086,643Weighted average number of ordinary shares in issue 6,367,551 6,367,551Basic earnings per share GBP0.47 GBP0.33

For continuing and discontinued operations: 2012 2011

Profit attributable to equity holders of the Group GBP2,870,881 GBP2,029,755 Weighted average number of ordinary shares in issue 6,367,551 6,367,551Basic earnings per share GBP0.45 GBP0.32

Diluted (loss)/earnings per share amount have not been disclosed as there were no dilutive options and other potential dilutive ordinary shares in issue during the current and prior years.

- 30 -


12. Interests in subsidiaries2012 2011GBP GBP

Cost At beginning and end of year 231,170 231,170

Accumulated impairment losses At beginning and end of year (231,170) (231,170)

Net book value At beginning and end of year - -

Details of the subsidiaries included in the consolidation at the end of the reporting period are as follows:

Particulars of issued Effective ownershipPlace of and paid-up capital/ interests held by the

Name incorporation registered capital Company Principal activitiesDirectly Indirectly

Oriental City Group International Limited

The BVI Ordinary,No par value

100% Investment holding

Oriental City Group Asia Limited (“OCG Asia”)

The BVI Ordinary,No par value


Able Wise Limited (“Able Wise”) *

Hong Kong Ordinary,HK$2


* The investment in Able Wise is held by OCG Asia

Loss attributable to the Company

The loss for the year in the parent company amounted to GBP27,911 (2011: GBP225,387). The directors have taken advantage of the exemptions available under Section 408 of the Companies Act 2006 and not presented a statement of comprehensive income for the Company alone.

Amount due to a subsidiary

The amount due to a subsidiary of GBP39,572 is interest-free, unsecured and repayable on demand.

- 31 -


13. Property, plant and equipment - The Group

Office Computerequipment equipment Total

GBP GBP GBPCost

At 1 April 2010 186,529 23,124 209,653Additions 15,116 - 15,116Disposals (347) - (347)Disposals of subsidiaries (207,079) (70) (207,149)Exchange differences 8,000 (1,452) 6,548

At 31 March 2011 and 1 April 2011 2,219 21,602 23,821Additions - 2,954 2,954Disposals of subsidiaries (2,219) (21,602) (23,821)Exchange differences - 2 2

At 31 March 2012 - 2,956 2,956

Accumulated depreciation

At 1 April 2010 167,814 23,064 190,878Charge for the year 9,186 53 9,239Disposals (347) - (347)Disposals of subsidiaries (181,039) (65) (181,104)Exchange differences 6,605 (1,450) 5,155

At 31 March 2011 and 1 April 2011 2,219 21,602 23,821Charge for the year - 358 358Disposals of subsidiaries (2,219) (21,602) (23,821)

At 31 March 2012 - 358 358

Net book value

At 31 March 2012 - 2,598 2,598

At 31 March 2011 - - -

At 1 April 2010 18,715 60 18,775

- 32 -


14. Held-to-maturity investments - The Group

2012 2011GBP GBP

Debt securities, at amortised cost:Listed in United States 1,351,480 -

The market value of the Group’s investments in listed debt securities was approximately GBP1,352,095 was determined directly by reference to their published price quotations in active markets as at 31 March 2012.

The debt securities bear interest at effective rates ranging from 8.13%. to 28.38% per annum.

All the issuers of held-to-maturity investments are corporate entities.

15. Financial assets at fair value through profit or loss - The Group

2012 2011GBP GBP

Listed equity securities in Hong Kong, at market value 108,110 -

The market value of the Group’s investments in listed equity securities was determined directly by reference to their published price quotations in active markets at 31 March 2012.

The securities are held by the wholly-owned subsidiary, Able Wise Limited (“Able Wise”). At 31 March 2012, listed equity securities with market value of approximately GBP83,500 were acquired and held via the account with a licensed exchange participant in which the father ofdirector Mr. Mak Yat Tang Anthony has 5% equity interest and is a director.

Able Wise holds two Margin Securities Trading Accounts with licensed exchange participants, which are guaranteed by director Mr. Mak Yat Tang Anthony and the Company respectively. During the year ended 31 March 2012, the margin account guaranteed by the Company was inactive.

16. Other receivables and prepayments - The Group

2012 2011GBP GBP

Other receivables 22,941 10,119Prepayments 15,486 1,362

38,427 11,481

- 33 -


17. Loan receivable

On 8 June 2011, the Group granted a loan of approximately GBP1,530,000 (equivalent to HK$19,000,000) to an independent party, Help U Credit Finance Limited. The loan carriesinterest at 4% per annum, is unsecured and repayable on 7 June 2012.

The lender made partial repayment during the year giving a year end balance of GBP805,451 and fully settled this remaining loan balance in April 2012.

18. Cash and cash equivalents

At 31 March 2012, 78% of the cash and cash equivalents was denominated in Hong Kong dollars (“HKD”), 20% was denominated in United States dollars (“USD”) and the remaining 2% was denominated in GBP.

19. Accrued expenses and other payables

The Group The Company2012 2011 2012 2011GBP GBP GBP GBP

Accruals and other payables 65,823 115,815 42,685 51,209Due to a former shareholder - 213,424 - -

65,823 329,239 42,685 51,209

The amount due to a former shareholder in the prior year was unsecured and interest-free, and had been settled in the current year.

20. Bank borrowings

The bank borrowings are mainly denominated in USD and repayable on demand.

Bank borrowings are interest-bearing at 1% per annum over the higher of the bank’s prevailing overdraft rate or cost of funds for the relevant CLC Acceptable Currency (as conclusively determined by the bank in its sole and absolute discretion), secured by the Group’s held-to-maturity investments of GBP1,351,480 and guaranteed in full by director Mr. Mak Yat Tang, Anthony.

21. Other loans2012 2011GBP GBP

Other loan (Note 21(a)) - 16,015Share of loss of co-brand theme card program (Note 21(b)) - 1,760,894

- 1,776,909

- 34 -


21. Other loans (cont’d)

Notes:

(a) The loan was unsecured and interest-bearing at 5% per annum.

(b) The loan represented balances due to a former partnership bank of a co-brand theme cards program, which comprised share of losses of the co-brand theme cards programentered into by Oriental City Group Hong Kong Limited as detailed in note 27. The balances due were unsecured and interest-free. Pursuant to the deed of settlement entered into by the Group and the bank on 4 August 2011, all liabilities under the arbitration for the theme cards program among the two parties were fully and finally discharged (Note 27). Accordingly, the loan (after the deduction of the costs directly related to the arbitration) was derecognised and reflected in profit or loss during the year.

22. Amount due to a former related company

The amount of GBP706,230 was due to David KK Chan Ltd., a company owned by Ng Ka Wai Benny, a former director of OCG HK (BVI). The amount was secured by a personal guarantee of a director and was interest-free, and the amount of GBP710,377 was derecognised upon the disposal of OCG HK (BVI) during the year.

23. Share capital and capital management

Share capital 2012 2011GBP GBP

Authorised:300,000,000 ordinary shares of GBP0.01 each 3,000,000 3,000,000

Issued and fully paid:63,675,933 ordinary shares of GBP0.01 each 636,759 636,759

The Company has one class of ordinary shares which carry no right to fixed income.

Capital management

Capital represents assets remaining after deduction of liabilities. The objectives of the Group’s capital management are to safeguard its ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders, to maintain an optimal capital structure to reduce the cost of capital and to support the Group’s stability and growth. The directors consider the total equity as disclosed in the consolidated statement of financial position as the Group’s capital.

The Group actively and regularly reviews and manages its capital structure to ensure optimal capital structure and shareholder returns, taking into consideration the future capital requirements of the Group. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, issue new shares or return capital to shareholders. No changes were made in the objectives, policies or processes during the years ended 31 March 2012 and 2011.

- 35 -


24. Related party transactions

Apart from the transactions as disclosed in notes 10, 15, 19, 20 and 22 to the consolidated financial statements, the Group had the following transactions with its related parties during thecurrent and preceding years:

2012 2011GBP GBP

Management service income received 3,953 2,402

The income was received from a former subsidiary, Oriental City Group Holdings Limited (Note 10), in which the former director Yu Chun Fai was a director.

Remuneration of Directors and key management personnel 2012 2011GBP GBP

Salaries, allowance and other benefit in kind 9,661 7,438Defined contribution retirement scheme contribution - 992

9,661 8,430

25. Financial instruments

(a) Financial risk management objectives and policies

At the end of the reporting period, the Company and Group’s principal financial instruments comprise debt and equity investments, loan receivable, cash and bank balances that are carried at amortised cost using effective interest method except for equity investments which are carried at fair value. The main purpose of these financial instruments is to raise and maintain finance for the Company’s and the Group’s operations. The Company and the Group also have other financial instruments such as other debtors as well as other creditors, accruals and bank borrowings which are carried at amortised cost using effective interest rate, arising directly from their business activities.

The main risks arising from the Company and the Group’s financial instruments are (i) foreign currency risk; (ii) interest rate risk; (iii) credit risk; (iv) liquidity risk; and (v) equity price risk. The Company and the Group do not have any written risk management policies and guidelines. However, the directors meet regularly to identify and evaluate risks and generally adopt conservative strategies on risk management and limits the Company’s and the Group’s exposure to these risks to a minimum as follows:

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25. Financial instruments (cont’d)

(a) Financial risk management objectives and policies (cont’d)

(i) Foreign currency risk

The Group operates in Hong Kong with a majority of business transactions being denominated and settled in Hong Kong dollars (“HKD”), which is the functional currency of the operating subsidiaries. The Group’s debt and equity investments are denominated in United States dollars (“USD”) and Renminbi (”RMB”).

Since HKD is pegged with USD, exchange rates of HKD against USD remained stable.

At 31 March 2012, if RMB strengthened/weakened against HKD by 10% with all other variables including tax rate being constant, profit for the year would have been GBP16,184 higher/lower. Profit is more sensitive to movement in RMB against HKD in 2012 than 2011 because of the acquisition of RMB-denominated financial assets during the year. The functional and presentation currency of the Company is GBP.

(ii) Interest rate risk

The Group’s exposure to market risk for changes in interest rates is related primarily to interest-bearing financial asset of bank balances and interest-bearing financial liability of bank borrowings.

The Group holds the bank balances mainly for operation purpose with interest income earned incidentally. Bank balances bore floating interest rates and were exposed to interest rate risk at the end of the reporting period. No sensitivity analysis is performed as the effect on the Group’s profit for the year would be insignificant.

The Group is also exposed to interest rate risk arising from the bank borrowings that carried floating interest rate. It is estimated that a general increase/decrease of 100basis points in interest rate, with all other variables held constant, would have no significant effect to the Group’s profit for the year.

(iii) Credit risk

The Group’s maximum exposure to credit risk is represented by the carrying amount of each applicable financial asset as stated in the consolidated and the Company’s statements of financial position. The maximum credit risk is attributable to held-to-maturity investments, other debtors, loan receivable and bank balances amounted in aggregate to GBP2,298,991.

Credit risk refers to the risk that debtors will default on their obligations to repay the amounts due to the Group, resulting in a loss to the Group. The Group performs ongoing credit evaluation of the debtors’ financial condition and maintains an account for allowance for doubtful debts based upon the expected collectibles of all receivables.

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(iii) Credit risk (cont’d)

Held-to-maturity investments were issued by reputable large corporations with credit rating of either the issuers or the notes of Caa1 or above issued by Moody’s or B- or above issued by Standard & Poor’s. For instruments without credit rating, the Group has undergone a detailed credit assessment review process and closely monitor its creditworthiness. Financial instruments were either entered with reputable private investment bank with credit rating of BBB+ issued by Moody’s or licensed exchange participants.

The management considers the credit risk in respect of bank balances is minimal because the counter-parties are authorised financial institution in Hong Kong and overseas with high credit ratings.

The Group limits its exposure to credit risk by rigorously selecting the counter-parties with reference to their past credit history and/or market reputation.

The Group also reviews the recoverable amount of each individual debtor at the end of each reporting period to ensure adequate impairment losses are made for irrecoverable amount.

(iv) Liquidity risk

Management of the Group aims at maintaining sufficient level of cash and cash equivalents to finance the Group’s operations and expected expansion. The Group’s primary cash requirements include payments for operating expenses and investments. The Group finances its working capital requirements mainly by the funds generated from operations and bank borrowings.

The Group’s non-derivative financial liabilities at the end of the reporting period based on contractual undiscounted payments are summarised below:

2012 2011

Contractual undiscounted cash flows Contractual undiscounted cash flows

Within Within

Carrying 1 year or Within 2 Carrying 1 year or Within 2

amount Total on demand to 5 years amount Total on demand to 5 years

HK$ HK$ HK$ HK$ HK$ HK$ HK$ HK$

Accrued expenses and

other payables 65,823 65,823 65,823 - 329,239 329,239 329,239 -

Bank borrowings 230,310 233,742 233,742 - - - - -

Other loans - - - - 1,776,909 1,776,909 1,776,909 -

Amount due to an

ex-related company - - - - 706,230 706,230 - 706,230

296,133 299,565 299,565 - 2,812,378 2,812,378 2,106,148 706,230

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(iv) Liquidity risk (cont’d)

The Company’s non-derivative financial liabilities at the end of the reporting period based on contractual undiscounted payments are summarised below:

2012 2011

Contractual undiscounted cash flows Contractual undiscounted cash flows

Within 1 Within Within 1 Within

Carrying year or on 2 to 5 Carrying year or on 2 to 5

amount Total demand years amount Total demand years

HK$ HK$ HK$ HK$ HK$ HK$ HK$ HK$

Accrued expenses and

other payables 42,685 42,685 42,685 - 51,209 51,209 51,209 -

Amount due to a

subsidiary 39,572 39,572 39,572 - - - - -

82,257 82,257 82,257 - 51,209 51,209 51,209 -

(v) Equity price risk

Market price risk is the risk that the fair value or future cash flows of a financial instrument traded in the market will fluctuate because of changes in market prices. The Group manages market prick risk through diversification and placing limits on individual and total financial instruments. At 31 March 2012, the Group was exposed to market price risk arising from listed equity investments classified as financial assets at fair value through profit or loss.

The Group’s listed equity investments are listed on The Stock Exchange of Hong Kong. The decisions to buy or sell listed equity investments are based on monitoring of the performance of individual securities compared to that of the Hang Seng Index, other listed equity investments within the same industry and other industry indicators, as well as the Group’s liquidity needs.

Should the market prices of the financial assets at fair value through profit or loss at31 March 2012 fluctuate by 10%, the carrying amount of financial assets at fair value through profit or loss, and the Group’s equity at 31 March 2012 would increase/decrease and the profit for the year then ended would increase/decrease by GBP10,811 (2011 : Nil).

(b) Categories and fair value of financial instruments

(i) Financial instruments carried at fair value

The following table presents the carrying value of financial instruments measured at fair value at 31 March 2012 across the three levels of the fair value hierarchy defined in IFRS 7, Financial Instruments : Disclosures, with the fair value of each financialinstrument categorised in its entirety based on the lowest level of input that is significant to that fair value measurement. The levels are defined as follows:

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(b) Categories and fair value of financial instruments (cont’d)

(i) Financial instruments carried at fair value (cont’d)

Level 1 (highest level) : fair values measured using quoted prices (unadjusted) in active markets for identical financial instruments

Level 2 : fair values measured using quoted prices in active markets for similarfinancial instruments, or using valuation techniques in which all significant inputs are directly or indirectly based on observable market data

Level 3 (lowest level) : fair values measured using valuation techniques in which any significant input is not based on observable market data

2012 2011

Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 TotalGBP GBP GBP GBP GBP GBP GBP GBP

Financial assets at fair fair value through profit or loss 108,110 - - 108,110 - - - -

During the year ended 31 March 2012, there were no significant transfers between financial instruments in Level 1 and Level 2.

(ii) Financial instruments carried at other than fair value

The carrying amounts of other financial assets and liabilities carried at cost or amortised costs were not materially different from their fair values at 31 March 2012 and 2011.

26. Segment information

Under IFRS 8, reported segment information is based on internal management reporting information that is regularly reviewed by the directors. The directors assess segment profit or loss using a measure of operating profit. The measurement policies the Group uses for segment reporting under IFRS 8 are the same as those used in its IFRS financial statements.

Based on the regular internal financial information reported to the Group’s directors for their decisions about resources allocation to the Group’s business components and review of these components’ performance, the Group has identified only one operating segment, financial instrument investments. In addition, a majority of the Group’s assets and liabilities are located in Hong Kong. Accordingly, segment disclosures are not presented.

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27. Litigation

Pursuant to an agreement dated 19 April 2002 and related supplemental agreement dated 28 February 2005 (collectively “the Agreements”) signed between the former subsidiary, OCG HK (BVI), and a former partnership bank, both parties agreed to jointly operate a co-brand theme credit cards program (“Theme Cards Program”) in Hong Kong. The Theme Cards Program was terminated on 30 June 2007 because both parties were unable to arrive at an agreement to extend the co-operative period upon expiry of the Agreements.

OCG HK (BVI) then claimed against the former partnership bank for breach of the Agreements, which included but not limited to, charging excessive card administration fee to the Theme Cards Program, and damages for conducting marketing promotions to the Theme Cards Program card-members without the knowledge and approval of OCG HK (BVI).

OCG HK (BVI) commenced arbitration against the former partnership bank and issued a Notice of Arbitration on 10 June 2008 giving the former partnership bank 14 days to reply as to whether the former partnership bank agrees to appoint an arbitrator as nominated by the Company to determine the disputes.

On 24 June 2008, a Writ of Summons was brought by the former partnership bank and filed with the High Court of the Hong Kong Special Administrative Region (“High Court”) which threatened claim against the OCG HK (BVI) for breach of the Agreements for an alleged amount not less than HK$15 million in relation to the operating losses of the Theme Cards Program plus interest and their legal costs.

On 26 June 2008, OCG HK (BVI) filed an application to the High Court for an order that the matters in dispute shall be stayed for arbitration pursuant to the Agreements. On 22 July 2008, an arbitrator was appointed by the Law Society of Hong Kong. On 25 July 2008, the former partnership bank agreed to stay the case for arbitration.

On 4 August 2011, OCG HK (BVI) entered into a Deed of Settlement (the “Deed”) with the former partnership bank that (i) both parties agree to wholly and irrevocably discontinue their claims against each other for the disputes under the Theme Cards Program; (ii) all further liabilities as against each other arising from, out of and/or in connection with the disputes under the Theme Cards Program are fully and finally discharged; and (iii) all the costs related to the arbitration shall be shared equally between the parties. In addition, both parties agree that the Deed is in full and final settlement of any and all disputes, claims, actions, proceedings that they have or may have between or against each other, including but not limited to the disputes under the Theme Cards Program.

Pursuant to the Deed, the Group derecognised other loans in respect of the Theme Cards Program of approximately HK$22 million (approximately GBP1.8 million) (Note 21(b)) and reported the amount in profit or loss, after deduction for the costs directly related to the arbitration, during the year ended 31 March 2012.

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28. Subsequent events

Following a special resolution passed on 25 July 2012, the issued share capital of the Company being 63,675,933 ordinary shares of 1p each were consolidated so that every 10 ordinary shares of 1p each held by a shareholder became 1 ordinary share of 10p each.

Any residual holdings of less than 10 ordinary shares of 1p each held by a shareholder were reclassified as deferred shares of 1p each and the rights attaching to them were varied as set out in the new articles of association.

The resulting issued ordinary share capital was then reorganised so that each ordinary share of 10p each held by a shareholder was sub-divided into 1 ordinary share of 1p and nine deferred shares of 1p having the rights attaching (as the case may be) as set out in the new articles of association.

The Company now has issued share capital of 6,367,551 ordinary shares of 1p each and approximately 57,308,382 deferred shares of 1p each.

annual report and financial statements for the year...

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