MIRA INFORM REPORT

Report Date :

16.09.2013

IDENTIFICATION DETAILS

Name :	I.T APPARELS LTD.
Registered Office :	31/F., Tower A, Southmark, 11 Yip Hing Street, Wong Chuk Hang
Country :	Hong Kong
Date of Incorporation :	30.11.1993
Com. Reg. No.:	17629617
Legal Form :	Private Limited Company
Line of Business :	Importer and Retailer of Chain Fashion Stores Operator and all kinds of fashion wears and accessories, shoes, cosmetics and houseware.
No. of Employees :	6,314

RATING & COMMENTS

MIRA’s Rating :

Ba

RATING		STATUS	PROPOSED CREDIT LINE
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory

Status :	Satisfactory
Payment Behaviour :	No complaints
Litigation :	Clear

NOTES :

Any query related to this report can be made on e-mail: infodept@mirainform.com while quoting report number, name and date.

ECGC Country Risk Classification List – March 31^st, 2013

Country Name	Previous Rating (31.12.2012)	Current Rating (31.03.2013)
Hong Kong	A2	A2

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

HONG KONG - ECONOMIC OVERVIEW

Hong Kong has a free market economy, highly dependent on international trade and finance - the value of goods and services trade, including the sizable share of re-exports, is about four times GDP. Hong Kong levies excise duties on only four commodities, namely: hard alcohol, tobacco, hydrocarbon oil, and methyl alcohol. There are no quotas or dumping laws. Hong Kong's open economy left it exposed to the global economic slowdown that began in 2008. Although increasing integration with China, through trade, tourism, and financial links, helped it to make an initial recovery more quickly than many observers anticipated, it again faces a possible slowdown as exports to the Euro zone and US slump. The Hong Kong government is promoting the Special Administrative Region (SAR) as the site for Chinese renminbi (RMB) internationalization. Hong Kong residents are allowed to establish RMB-denominated savings accounts; RMB-denominated corporate and Chinese government bonds have been issued in Hong Kong; and RMB trade settlement is allowed. The territory far exceeded the RMB conversion quota set by Beijing for trade settlements in 2010 due to the growth of earnings from exports to the mainland. RMB deposits grew to roughly 9.1% of total system deposits in Hong Kong by the end of 2012, an increase of 59% from the previous year. The government is pursuing efforts to introduce additional use of RMB in Hong Kong financial markets and is seeking to expand the RMB quota. The mainland has long been Hong Kong's largest trading partner, accounting for about half of Hong Kong's exports by value. Hong Kong's natural resources are limited, and food and raw materials must be imported. As a result of China's easing of travel restrictions, the number of mainland tourists to the territory has surged from 4.5 million in 2001 to 34.9 million in 2012, outnumbering visitors from all other countries combined. Hong Kong has also established itself as the premier stock market for Chinese firms seeking to list abroad. In 2012 mainland Chinese companies constituted about 46.6% of the firms listed on the Hong Kong Stock Exchange and accounted for about 57.4% of the Exchange's market capitalization. During the past decade, as Hong Kong's manufacturing industry moved to the mainland, its service industry has grown rapidly. Growth slowed to 5% in 2011, and less than 2% in 2012. Credit expansion and tight housing supply conditions caused Hong Kong property prices to rise rapidly and inflation to rise 4.1% in 2012. Lower and middle income segments of the population are increasingly unable to afford adequate housing. Hong Kong continues to link its currency closely to the US dollar, maintaining an arrangement established in 1983

Source : CIA

Company name and address

I.T APPARELS LTD.

ADDRESS: 31/F., Tower A, Southmark, 11 Yip Hing Street, Wong Chuk Hang, Hong Kong.

PHONE: 852-3199 1991, 3197 1108, 2838 1810

FAX: 852-2739 7893, 2237 6794, 2891 2676

E-MAIL: recruit@ithk.com

MANAGEMENT

Chairman & Chief Executive Officer: Mr. Sham Kar Wai

SUMMARY

Incorporated on: 30th November, 1993.

Organization: Private Limited Company.

Capital: Nominal: HK$500,000.00

Issued: HK$500,000.00

Business Category: Boutique Operator.

Group Turnover: HK$6,543,109,000 (Year ended 28-02-2013)

Company Employees: 40. (Including associated companies)

Group Employees: 6,314. (As at 28-02-2013)

Main Dealing Banker: Standard Chartered Bank (Hong Kong) Ltd., Hong Kong.

Banking Relation: Good.

ADDRESS

Registered Head Office:-

31/F., Tower A, Southmark, 11 Yip Hing Street, Wong Chuk Hang, Hong Kong.

Branch Office:-

13/F., Vita Tower, 29 Wong Chuk Hang, Aberdeen, Hong Kong.

Merchandising Division:-

18/F., Tower A, Southmark, 11 Yip Hing Street, Wong Chuk Hang, Hong Kong.

Business Names:- (Same BR No. 17629617)

5cm

A.P.C.

Ann Demeulemeester

b+ab

Beams Boy + Beams T

Blackbarrett

Cabane de Zucca

Comme des Garcons

ETE

Eye CDG Junya Watanabe Man

Frapbois

Fred Perry

Gareth Pugh

Hoods Hong Kong

http://www.izzue.com

Hysteric Glamour

I.T

I.T Outlet

Isabel Marant

Maison Martin Margiela

Mercibeaucoup

N. Hoolywood

Sonia By Sonia Rykiel

Soph.

Tsumori Chisato

Visvim

Vivayou

etc.

Immediate Holding Company:-

ithk associates Ltd., British Virgin Islands.

Penultimate Holding Company:-

ithk holdings Ltd., British Virgin Islands.

Ultimate Holding Company:-

I.T Ltd., Bermuda/Hong Kong.

Sister & Associated Companies:-

I.T Group of Companies

3WH Ltd., Hong Kong.

b&ab Ltd., Hong Kong.

Blossom Glory Ltd., Hong Kong.

Camper (Shanghai) Ltd., China.

Camper I.T China Ltd., Hong Kong.

Century Team Corporation Ltd., Hong Kong.

Charm Source Ltd., Hong Kong.

Cheerwood Ltd., Hong Kong.

Chocoolate Ltd., Hong Kong.

Double Park Ltd., Hong Kong.

Elegant Century Enterprises Ltd., Hong Kong.

FCIT (Macau) Ltd., Macau.

FCIT China Ltd., Hong Kong.

FCUK IT Co., Hong Kong.

Galeries Lafayette (China) Ltd., Hong Kong. (same address)

Galeries Llafayette (Beijing) Ltd., China.

Glory Premium Ltd., Hong Kong.

I.T (Macau) Ltd., Macau.

I.T China Ltd., Hong Kong. (same address)

I.T Distribution Ltd., Hong Kong. (same address)

I.T Nowhere Holdings (HK) Ltd., Hong Kong. (same address)

I.T Taiwan Ltd., Hong Kong. (same address)

Income Team Ltd., Hong Kong.

Izzue Ltd., Hong Kong.

Jandix Ltd., Hong Kong.

Jetchance Ltd., Hong Kong.

Joyful Fair Ltd., Hong Kong.

Kenchart Apparels (Shanghai) Ltd., China.

Kenchart Investments Ltd., Hong Kong.

King Chart Ltd., Hong Kong.

Legend Grace International Ltd., Hong Kong.

Mega Charm Apparels (Beijing) Ltd., China.

Mega Charm Apparels (Shanghai) Ltd., China.

New Concepts Corporation Ltd., Hong Kong.

Nowhere Co. Ltd., Japan.

Online Profit Ltd., Hong Kong.

Popbest Ltd., Hong Kong.

Prime Vantage Trading (Shanghai) Ltd., China.

Shine Team Development Ltd., Hong Kong.

Top Honour Corporation Ltd., Hong Kong.

USApe LLC, USA.

Venilla Suite Ltd., Hong Kong.

Veston Ltd., Hong Kong.

Young Ranger Investment Ltd., Hong Kong.

ZIT H.K. Ltd., Hong Kong.

Zoompac Apparel (Shanghai) Ltd., China.

etc.

BUSINESS REGISTRATION NUMBER

17629617

COMPANY FILE NUMBER

0455773

MANAGEMENT

Chairman & Chief Executive Officer: Mr. Sham Kar Wai

CAPITAL

Nominal Share Capital: HK$500,000.00 (Divided into 500,000 shares of HK$1.00 each)

Issued Share Capital: HK$500,000.00

SHAREHOLDERS

(As per registry dated 30-11-2012)

Name		No. of shares
ithk associates Ltd. P.O. Box 3340, Road Town, Tortola, British Virgin Islands.		499,999
Optimum Performance Ltd., Hong Kong.		1
		–––––––
	Total:	500,000 ======

DIRECTORS

(As per registry dated 30-11-2012)

Name (Nationality)	Address
SHAM Kar Wai	Flat D, 38/F., Tower 3, Tregunter, 14 Tregunter Path, Hong Kong.
SHAM Kin Wai	Flat B, 38/F., Tower 3, Tregunter, 14 Tregunter Path, Hong Kong.
SHAM Sau Wai	Flat B, 47/F., Tower 3, Tregunter, 14 Tregunter Path, Hong Kong.
SHAM Sau Han	Flat C, 11/F., Tower 3, Tregunter, 14 Tregunter Path, Hong Kong.

SECRETARY

(As per registry dated 30-11-2012)

Name	Address
HO Suk Han, Sophia	Flat E, 10/F., Pacific Palisades, 1 Braemar Hill Road, Hong Kong.

HISTORY

The subject was incorporated on 30th November, 1993 as a private limited liability company under the Hong Kong Companies Ordinance.

Originally the subject was registered under the name of King Fame Ltd., name changed to I. T. Ltd. on 2nd June, 1997; and further to I.T Apparels Ltd. on 26th November, 2004.

The registered head office was formerly located at 2/F., Two Chinachem Plaza, 68 Connaught Road Central, Hong Kong, but it has become a branch office since the new registered head office had been located at Room 6206, 62/F., The Center, 99 Queen”s Road Central, Hong Kong with effect from 29th May, 2000. The registered head office was relocated at the present address in July 2003.

Apart from these, neither material change nor amendment has been ever traced and noted.

OPERATIONS

Activities: Importer and Retailer; Chain Fashion Stores Operator.

Lines: All kinds of fashion wears and accessories, shoes, cosmetics and houseware.

Company Employees: 40. (Including associated companies)

Group Employees: 6,314. (As at 28-02-2013)

Commodities Imported: Imported from Japan, Italy, France, etc.

Markets: Hong Kong, etc.

Group Turnover: HK$2,733,256,000 (Year ended 28-02-2009)

HK$2,995,952,000 (Year ended 28-02-2010)

HK$3,834,422,000 (Year ended 28-02-2011)

HK$5,741,642,000 (Year ended 29-02-2012)

HK$6,543,109,000 (Year ended 28-02-2013)

Terms/Sales: COD, or as per contracted.

Terms/Buying: L/C, T/T, etc.

FINANCIAL INFORMATION

Nominal Share Capital: HK$500,000.00 (Divided into 500,000 shares of HK$1.00 each)

Issued Share Capital: HK$500,000.00

Mortgage or Charge: (See attachment)

Indebtedness: HK$630,000,085.00 (Total amount outstanding on all mortgages and charges as per last Annual Return dated 30-11-2012)

Group Net Profit: HK$ 42,555,000 (Year ended 28-02-2009)

HK$262,688,000 (Year ended 28-02-2010)

HK$388,146,000 (Year ended 28-02-2011)

HK$473,130,000 (Year ended 29-02-2012)

HK$385,031,000 (Year ended 28-02-2013)

Profit or Loss: Operation is profitable.

Condition: Keeping in a satisfactory manner.

Facilities: Making active use of general banking facilities.

Payment: So far so good.

Commercial Morality: Satisfactory.

Bankers:-

Standard Chartered Bank (Hong Kong) Ltd., Hong Kong.

Industrial & Commercial Bank of China (Asia) Ltd., Hong Kong.

Standard Chartered International (USA) Ltd., Hong Kong Branch.

Fubon Bank (Hong Kong) Ltd., Hong Kong.

Citibank N.A., Hong Kong Branch.

Standing: Good.

GENERAL

I.T Apparels Ltd., incorporated in November 1993, is a wholly-owned subsidiary of ithk associates Ltd., a BVI-registered firm, which is in turn wholly-owned by ithk holdings Ltd., also a BVI-registered firm. The ultimate holding company is I.T Ltd. [I.T], a Bermuda-incorporated company.

The subject, formerly known as King Fame Ltd., has been operating a chain of fashion stores under the name of I.T engaged in retailing imported ladies and gent’s garments and accessories. Initially, it was owned by the Sham brothers and sisters but had been owned through their investment arm Yearful (Hong Kong) Ltd. since January 1997. The subject changed its name to I. T. Ltd., on 2nd June, 1997 and further to I.T Apparels Ltd. on 26th November, 2004.

The subject opened its 200 sq.ft. shop which was named Green Peace in 1988 by a group of young fashion-lovers. Introducing the very trendy brands including “Dr. Martens”, “Levis 501 Jeans”, “Chevignon” and “Paul Smith”, etc. at that time, that little shop soon became significant in Hong Kong.

Now, the Group has numerous stores in Hong Kong which are located in all major busy districts such as Central, Causeway Bay and Tsimshatsui with a team of over 1,000 staff. Most of the stores bear the names of I.T, i.t, ETE, ZUCCA, b+ab, double-park, http://www.izzue.com, etc. They are selling garments and accessories carrying the brand names of “5cm”, “A.P.C.”, “Aem Kei”, “Alexander Mcqueen”, “Alexandre Herchcovitch”, “Alpha Industries”, “Anglomania”, “Ann Demulemeester”, “As know as de base”, “Bikkembergs”, “Bulle De Savn”, “Camper”, “Carhartt”, “Childwoman”, “Cimarron”, “Clone”, “CoiGirl Magic”, “Comme des Garcons Shirt”, “Customer Own Property”, “Cydwoq”, “Dirk Bikkembergs”, “DKNY Jeans”, “Eley Kishimoto”, “Edwin Jeans”, “Final Home”, “Fiorucci”, “GameHeads”, “Global Rhythm Essence”, “Gomme”, “Helmut Lang”, “House of Jazz”, “Hyoma”, “I.S.”, “I Wish”, “Imitation of Christ”, “Isabel Marant”, “JPG”, “Jean Colonna”, “k.a.t.”, “Katharine Hamnett Denim”, “Kosuke Tsumura”, “Lacoste”, “LEE”, “Levis”, “Manufacture Dessai”, “Martin Margiela Line 6”, “Mcqueen Jeans”, “Miu Miu”, “National Standard”, “Nike”, “ODO”, “ORFI”, “Ozone Community”, “Par Ici”, “Pas De Calais”, “Paul Smith”, “Pou Dou Dou”, “Raf Simons”, “RAS”, “Relacher”, “Revisitation”, “Roiuge Vif”, “See by Chloe”, “Shinichiro Arakawa”, “Stephan Schneidier”, “TC Creperie”, “Tout a Coup”, “Tsumori Chisato”, “Vert Dense”, “Viktor & Rolf”, “Vivayou”, “Vivienne Westwood”, “WXYZ”, “Y”s bis Limi”, “Yuji Yamada”, “Zucca”, etc.

Other stores such as Y”saccs, Tsumori Chisato, Abahouse, Abahouse Devinette, 5cm, As know as de base, Arnold Palmer, French Connection, X‑Girl, Vert Dense, Vivayou, CoiGirl Magic, Camper and Carhartt have been opened in Paterson Street, Causeway Bay, etc. selling self-owned products. Some of the commodities are mainly imported from Japan, Italy and France.

The Group also has diversified to sell cosmetic and household items in its store in Sino Plaza located at Causeway Bay, Hong Kong.

The ultimate holding company, I.T, was incorporated in Bermuda on 18th October, 2004 as an exempted company with limited liability under the Companies Act 1981 of Bermuda. On 5th February, 2005, I.T acquired the entire issued share capital of ithk holdings limited through a share exchange and consequently became the holding company of the I.T Group. I.T’s shares have been listed on The Stock Exchange of Hong Kong Ltd. with stock code 999 since 4th March, 2005. The I.T Group is principally engaged in retailing and trading of fashion wears and accessories.

In 2007, the Group completed the acquisition to buy back the China joint venture (covering markets of China, Macau and Taiwan). The fully control of the China operation allows the Group to expand in the fastest growing consumer market in the world. The Group plans the China market is able to contribute approximately one-third of the Group’s net profit in about 3 years time.

Now, the Group has secured about 30,000 sq.ft. retail space at the shopping mall of the Venetian Hotel in Macau. Besides, new shops also have been opened in Shanghai and Beijing, China.

For the year ended 29th February, 2013, the I.T Group’s turnover reached HK$6,543.1 million (2012: HK$5,741.6 million), increased by 14.0%; with net profit at HK$385.0 million (2012: HK$473.1 million), decreased by 18.6%.

Hong Kong remained the Group’s principal market and the largest sales/profit contributor. Total turnover in Hong Kong amounted to HK$3,708.0 million in FY12/13, representing an 8.8% increase over previous year, accounted for 56.7% of total Group turnover.

Total turnover of its Mainland China businesses achieved another year of strong growth to HK$2,036.4 million, representing a 31.8% increase compared to the same period of previous year. It contributed 31.1% to total Group turnover. Despite the challenging market environment in Mainland China, the Group continued to expand its retail network at the fastest pace among all operating regions.

Turnover of its Japan businesses grew in a diminishing manner on the back of a higher base FY11/12, landed at HK$514.4 million, an 8.1% decline compared to previous year, contributing 7.9% to total Group turnover.

Operating profit decreased by 23.4% to HK$274.1 million at 7.4% operating margin (FY11/12: 10.5%). The decline was mainly caused by the impact of narrowed gross margin percentage of 58.0% (FY11/12: 61.0%) driven by more aggressive discount offers. Operating cost ratio remained flat at 50.4% (FY11/12: 50.4%).

The Group had a total of 6,314 employees as at 28th February 2013 (FY11/12: 6,089).

The subject is fully supported by the I.T Group.

On the whole, in view of the parentage of the subject, consider it good for normal business engagements.

REMARK

Brief information of the principal director:-

Mr. SHAM Kar Wai, aged 46, is an Executive Director, the Chairman and the Chief Executive Officer of I.T. He founded the Group in November 1988 with his brother, Mr. Sham Kin Wai, and is responsible for the overall management and strategic development of the Group. Mr. Sham Kar Wai has 20 years of experience in the fashion retail industry and has established an extensive network of contacts with international design houses.

Property information of associate:-

Property Location: Flat B on 38/F. of Tower 3, Tregunter, 14 Tregunter Path, Hong Kong.

Owner: Shine Team Development Ltd.

Date of Purchase: 31-03-1994

Purchased Price: HK$17,200,000 pt.

Incumbrances:-

Date of Mortgage	Amount Consideration	Mortgagee	Nature
13-06-1997	-	International Bank of Asia Ltd., Hong Kong. [Now known as Fubon Bank (Hong Kong) Ltd.]	Legal charge to secure general banking facilities

MORTGAGE OR CHARGE

Date	Particulars	Amount
01-09-1997	Instrument: Triparty Agreement Property: All of the Company’s right, title and interest in and to all sums now or hereafter due and owing to the Company from American Express International Inc. under the Establishment Agreement Mortgagee: American Express Bank Ltd., Hong Kong Branch. [Now known as Standard Chartered International (USA) Ltd.	To secure all moneys advanced to or paid for or on account of the Company by the Bank and all other liabilities of the Company to the Bank whether actual or contingent, present or future, joint or several and all interest thereon and all commission, costs charges and expenses chargeable by the Bank to the Company
24-05-2013	Instrument: Trade Finance Security Assignment Property: The Borrower as beneficial owner:- (A) Assigns and agrees to assign absolutely to the Bank all the present and future rights, title, interests and benefits of the Borrower in and to the following assets:- (i) Export Credits; (ii) Export Collection Bills; (iii) Sales Contracts; (iv) Invoice Receivables; (v) Insurances; (vi) Trade Documents; and (vii) All claims, remedies and proceeds in connection with any of the foregoing; and (B) Charges and agrees to charge to the Bank by way of first fixed charge all the present and future rights, title, interests and benefits of the Borrower in and to the following assets:- (i) The Goods together with their proceeds; (ii) The Pledged Goods; and (iii) To the extent any Security Assets is not effectively assigned under sub-clause, such are now or may in the future be in the possession of the Bank (C) Pledges & agrees to pledge to the Bank the Pledged Goods and the Trade Documents which are now or may in the future be in the Bank’s possession Mortgagee: United Overseas Bank Ltd., Hong Kong Branch.	All obligations and liabilities of whatever nature of the Borrower owed to the bank at any time and in any currency and whether present of future

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.63.79
UK Pound	1	Rs.100.70
Euro	1	Rs.84.6

INFORMATION DETAILS

Report Prepared by :

NIS

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
--	NB	New Business	--

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions

This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.