SINCEREWATCH HK: The arbitration ruling results are basically in line with the group's original expectations

SINCEREWATCH HK announced that the arbitration results of its subsidiary SBML with Multicontinental and GFM were largely as expected. The arbitration ruling stated that the exclusive distribution agreement was wrongfully terminated, and SBML is entitled to damages, but the agreement is deemed terminated as of October 3, 2022. SBML's customer indemnity claims and Multicontinental's minimum purchase claims were both dismissed. Multicontinental must return the withheld watches within 60 days, and SBML must return the consignment products and pay the related amounts

According to the announcement from SINCEREWATCH HK (00444), a subsidiary of the company (i.e., Sincere Brand Management Limited (SBML)) has been in arbitration since January 2023 with Multicontinental Distribution (Asia) DMCC (Multicontinental) and GFMWatchland SA (GFM) regarding the claim of termination of SBML's exclusive distribution rights for Franck Muller watches and related parts in the People's Republic of China, Hong Kong, Macau, and Taiwan (exclusive regions) based on the exclusive distribution agreement established between SBML and Multicontinental in 2018. Since November 2022, Multicontinental has ceased supplying Franck Muller (FM) watches and related parts to the group.

The company has recently received the arbitration results, and the summary of the ruling is as follows:

The exclusive distribution agreement was wrongfully terminated, but it is deemed to have been terminated since October 3, 2022, and SBML is entitled to damages;
The customer indemnity guarantee claim made by SBML has been rejected;
The claim made by Multicontinental regarding minimum purchase requirements has been rejected;
Multicontinental must repair and return the withheld watches to SBML within 60 days from the date of the partial ruling notification (excluding watches related to consignment inventory);
SBML must return consignment products and organize inspections for this, and SBML must pay Multicontinental and GFM for each consignment product sold. The book value of consignment products held by SBML as of March 31, 2025, is approximately HKD 338 million;
The sole arbitration tribunal ruled that both Multicontinental and GFM are eligible to be sued;
SBML must immediately cease and desist from any use of the FM trademark and stop claiming to be the (exclusive) distributor of the products, which is a result derived from the sole arbitration tribunal's ruling that the exclusive distribution agreement must be deemed terminated.

The company believes that the arbitration ruling results are generally in line with the group's original expectations and will further study the ruling and take appropriate actions to safeguard the group's rights and interests