Annual Report 2007 DPWFSCBDLBJ Corporate Profile Vision and Strategies Our vision for fashion is to dress up one’s life with style. We target at young consumers with fashion consciousness. Our positioning is the leading trendy fashion house and we are dedicated to bring quality fashion to different parts of the world. g19g21g3g38g82g81g87g72g81g87g86g16g27g20g19g28g22g72 27/07/2007, 11:552p>

01 Contents

3 Financial Highlights

6 Corporate Information

7 Information for Investors

8 Chairman’s Statement

11 Management Discussion and Analysis

17 Directors and Senior Management

20 Corporate Governance Report

25 Report of the Directors

35 Independent Auditors’ Report

Audited Financial Statements

37 Consolidated Income Statement

38 Consolidated Balance Sheet

40 Consolidated Statement of Changes in Equity

41 Consolidated Cash Flow Statement

43 Balance Sheet of the Company

44 Notes to Financial Statements

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02 Financial Highlights
Annual Report 2007
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03 Financial Highlights
Annual Report 2007
Segmental Information
Turnover (HK$ Million)
Market 2007 2006 % change
Retail Operation
Hong Kong 383.6 355.4 7.9%
Taiwan 42.8 28.2 51.8%
People’s Republic
of China (“PRC”) 2.7 — —
429.1 383.6 11.9%
Wholesale Operation
Japan 25.6 11.1 130.6%
Elsewhere 25.9 23.6 9.7%
51.5 34.7 48.4%
Franchise Business
PRC & Macau 28.7 17.7 62.1%
509.3 436.0 16.8%
Number of self-managed retail outlets
Hong Kong Taiwan Shanghai TOTAL
As at 31 March 2007
BAUHAUS 28 ——28
TOUGH 4 13 2 19

SALAD 8 2 — 10
80/20 3 3 — 6
ELITE 1 —— 1
44 18 2 64

Aggregate floor area
(in Sq. feet) 63,291 10,471 1,560 75,322
Sales Growth (HK$ Million)
2007
509.3
2006
436.0
2005
342.7
2004
306.8

Gross Profit & Net Profit (HK$ Million)
2003
271.6
324.7
277.3
220.0
186.1
155.4
20072006200520042003
33.7
41.3
47.1
50.9
57.2

Gross Profit Net Profit
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04 Financial Highlights
Annual Report 2007
Five Year Financial Summary
A summary of the consolidated results and assets and liabilities of the Group for the year, as extracted from the current
year's consolidated financial statements, and the pro forma consolidated results and assets and liabilities of the Group for
the four preceding years, as extracted from the pro forma consolidated financial statements of the Group and the Company’s
annual report or listing prospectus dated 29 April 2005 which also set out the details of the basis of presentation and are
restated/reclassified as appropriate, is set out below.
Year ended 31 March
2007 2006 2005 2004 2003

HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
RESULTS
REVENUE 509,248 436,008 342,726 306,768 271,630

Cost of sales (184,580) (158,746) (122,767) (120,637) (116,210)
Gross profit 324,668 277,262 219,959 186,131 155,420
Other income and gains 4,931 4,156 1,501 428 919
Selling and distribution costs (198,036) (169,954) (128,209) (105,457) (94,496)
Administrative expenses (58,953) (48,387) (35,571) (27,716) (26,580)
Other expenses (5,848) (1,622) (910) (2,556) (115)
Finance costs (236) (397) (201) (28) (154)
Share of profits and losses of associates — — — 599 3,932
PROFIT BEFORE TAX 66,526 61,058 56,569 51,401 38,926

Tax (9,301) (10,197) (10,012) (10,096) (5,209)
PROFIT FOR THE YEAR 57,225 50,861 46,557 41,305 33,717

Attributable to:
Equity holders of the parent 57,225 50,861 47,065 41,305 33,717
Minority interests — — (508) — —
57,225 50,861 46,557 41,305 33,717
ASSETS AND LIABILITIES
TOTAL ASSETS 373,389 325,692 194,944 159,299 142,874

TOTAL LIABILITIES (43,573) (34,710) (51,513) (24,160) (40,372)
329,816 290,982 143,431 135,139 102,502

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05 Financial Highlights
Annual Report 2007
Notes FY 06/07 FY 05/06 Change +/–
Key Financial Ratios
Performance
Gross Margin (%) 1 63.8 63.6 +0.2% pt.
Adjusted Gross Margin (%) 2 66.1 64.0 +2.1% pts.
Net Profit Margin (%) 3 11.2 11.7 –0.5 % pt.
Adjusted Net Profit Margin (%) 4 13.6 12.0 +1.6% pts.
Return on Average Equity (%) 5 18.4 23.4 –5.0% pts.
Return on Average Assets (%) 6 16.4 19.5 –3.1% pts.
Operating
Inventory Turnover Days 7 182 173 +9 days
Debtors' Turnover Days 8 11 9 +2 days
Creditors' Turnover Days 9 18 16 +2 days
Liquidity and Gearing
Current Ratio 10 6.8 7.4 –8.1%
Quick Ratio 11 4.5 4.9 –8.2%
Gearing Ratio (%) 12 — 1.1 –1.1% pts.
Per Share Data
Book Value Per Share (HK cents) 13 91.76 82.98 +10.6%
Earnings Per Share (HK cents) 14 16.26 15.05 +8.0%
Dividend Per Share
Interim (HK cents) 2.50 2.50 0.0%
Special Interim (HK cents) — 2.00 –100.0%
Proposed Final (HK cents) 3.00 2.60 +15.4%
Proposed Special (HK cents) 5.50 3.65 +50.7%
11.00 10.75 +2.3%
9. “Creditors’ Turnover Days” is based on average of opening and
closing balance of trade and bills payables divided by purchases and
then multiplied by number of days during the year.
10. “Current Ratio” represents current assets divided by current liabilities.
11. “Quick Ratio” represents current assets less inventories then divided
by current liabilities.
12. “Gearing Ratio” represents total interest-bearing borrowings divided
by total assets.
13. “Book Value Per Share” represents shareholders’ equity divided by
the total number of issued shares at the balance sheet date of
359,450,000 (2006: 350,650,000).
14. “Earnings Per Share” is calculated based on the profit for the year
attributable to ordinary equity holders of the parent of
HK$57,225,000 (2006: HK$50,861,000) and the weighted average
number of ordinary shares in issue during the year under review of
351,951,918 (2006: 338,047,123).
Notes:
1. “Gross Margin” is based on gross profit divided by turnover during
the year.
2. “Adjusted Gross Margin” is based on gross profit excluding net
provision for slow-moving inventories of HK$11.8 million (2006:
HK$1.7 million) divided by turnover during the year.
3. “Net Profit Margin” is calculated as net profit divided by turnover
during the year.
4. “Adjusted Net Profit Margin” is based on net profit excluding net
provision for slow-moving inventories of HK$11.8 million (2006:
HK$1.7 million) divided by turnover during the year.
5. “Return on Average Equity” represents net profit during the year
divided by average of opening and closing balance of shareholders’
equity.
6. “Return on Average Assets” represents net profit during the year
divided by average of opening and closing balance of total assets.
7. “Inventory Turnover Days” is based on average of opening and
closing balance of inventories divided by cost of sales and then
multiplied by number of days during the year.
8. “Debtors’ Turnover Days” is based on average of opening and closing
balance of trade and bills receivables divided by turnover and then
multiplied by number of days during the year.
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06 Corporate Information
Annual Report 2007
NAME OF THE COMPANY

Bauhaus International (Holdings) Limited
g755g2301g3164g2589g4300g127g2689g1622g128g964g2057g660g775
DIRECTORS

Executive directors:
Mr. Wong Yui Lam (Chairman and Chief Executive Officer)
Madam Tong She Man, Winnie (Vice-Chairman)
Madam Lee Yuk Ming
Mr. Yeung Yat Hang
Independent non-executive directors:
Mr. Chu To Ki
Mr. Mak Wing Kit
Dr. Wong Yun Kuen
COMPANY SECRETARY

Mr. Chung Chi Keung, CPA, FCCA
QUALIFIED ACCOUNTANT

Mr. Chung Chi Keung, CPA, FCCA
AUTHORISED REPRESENTATIVES

Mr. Wong Yui Lam
Madam Tong She Man, Winnie
MEMBERS OF AUDIT COMMITTEE

Mr. Mak Wing Kit (Chairman)
Mr. Chu To Ki
Dr. Wong Yun Kuen
MEMBERS OF REMUNERATION
COMMITTEE

Mr. Mak Wing Kit (Chairman)
Mr. Chu To Ki
Dr. Wong Yun Kuen
MEMBERS OF NOMINATION COMMITTEE

Dr. Wong Yun Kuen (Chairman)
Mr. Chu To Ki
Mr. Mak Wing Kit
PRINCIPAL AUDITORS

Ernst & Young, Certified Public Accountants
18th Floor
Two International Finance Centre
8 Finance Street, Central
Hong Kong
COMPLIANCE ADVISER

Sun Hung Kai International Limited
Level 12, One Pacific Place
88 Queensway
Hong Kong
PRINCIPAL BANKERS

The Hongkong and Shanghai Banking Corporation
Limited
1 Queen’s Road, Central
Hong Kong
Bank of China (Hong Kong) Limited
382–384 Prince Edward Road
Kowloon City
Kowloon
Hong Kong
REGISTERED OFFICE

Cricket Square
Hutchins Drive
P.O. Box 2681
Grand Cayman KY1-1111
Cayman Islands
HEAD OFFICE AND PRINCIPAL PLACE OF
BUSINESS IN HONG KONG

Room 501, Sino Industrial Plaza
9 Kai Cheung Road
Kowloon Bay, Kowloon
Hong Kong
PRINCIPAL SHARE REGISTRAR AND
TRANSFER OFFICE

Butterfield Bank (Cayman) Limited
Butterfield House
68 Fort Street, P.O. Box 705
George Town
Grand Cayman
Cayman Islands
HONG KONG BRANCH SHARE
REGISTRAR AND TRANSFER OFFICE

Tricor Investor Services Limited
26th Floor, Tesbury Centre
28 Queen’s Road East
Wanchai, Hong Kong
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07 Information for Investors
Annual Report 2007
Listing information
Listing exchange: Main Board of
We conducted our audit in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute
of Certified Public Accountants. Those standards require that we comply with ethical requirements and plan and
perform the audit to obtain reasonable assurance as to whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditors’ judgement, including the assessment of the
risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk
assessments, the auditors consider internal control relevant to the entity’s preparation and true and fair
presentation of the financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal
control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness
of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
35 Independent Auditors’ Report
Annual Report 2007

OPINION
In our opinion, the financial statements give a true and fair view of the state of affairs of the Company and of the
Group as at 31 March 2007 and of the Group’s profit and cash flows for the year then ended in accordance with
Hong Kong Financial Reporting Standards and have been properly prepared in accordance with the disclosure
requirements of the Hong Kong Companies Ordinance.
Ernst & Young
Certified Public Accountants
Hong Kong
16 July 2007
36 Independent Auditors’ Report
Annual Report 2007

2007 2006
Notes HK$’000 HK$’000
REVENUE 5 509,248 436,008

Cost of sales (184,580) (158,746)
Gross profit 324,668 277,262
Other income and gains 5 4,931 4,156
Selling and distribution costs (198,036) (169,954)
Administrative expenses (58,953) (48,387)
Other expenses (5,848) (1,622)
Finance costs 7 (236) (397)
PROFIT BEFORE TAX 6 66,526 61,058

Tax 10 (9,301) (10,197)
PROFIT FOR THE YEAR 57,225 50,861
DIVIDENDS 12

Interim 8,766 8,766
Special interim — 7,013
Proposed final 10,783 9,117
Proposed special 19,770 12,799
39,319 37,695
EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY
HOLDERS OF THE PARENT 13

Basic 16.26 cents 15.05 cents
37 Consolidated Income Statement
Year ended 31 March 2007
Annual Report 2007

2007 2006
Notes HK$’000 HK$’000
NON-CURRENT ASSETS

Property, plant and equipment 14 31,009 32,635
Prepaid land lease payments 15 7,174 7,329
Intangible assets 16 1,898 1,272
Available-for-sale financial asset 18 3,900 3,900
Deferred tax assets 19 6,989 4,163
Rental, utility and other non-current deposits 30,395 25,655
Total non-current assets 81,365 74,954
CURRENT ASSETS

Inventories 20 98,248 85,776
Trade and bills receivables 21 19,201 11,331
Prepayments, deposits and other receivables 22 11,116 12,500
Prepaid land lease payments, current portion 15 155 155
Tax recoverable 2,205 1,316
Cash and cash equivalents 23 161,099 139,660
Total current assets 292,024 250,738
CURRENT LIABILITIES

Trade and bills payables 24 9,553 6,319
Other payables and accruals 25 27,868 21,246
Interest-bearing bank borrowings 26 — 3,527
Due to a related company 31(b) 198 180
Tax payable 5,272 2,690
Total current liabilities 42,891 33,962
NET CURRENT ASSETS 249,133 216,776
TOTAL ASSETS LESS CURRENT LIABILITIES 330,498 291,730
NON-CURRENT LIABILITIES

Deferred tax liabilities 19 682 748
Net assets 329,816 290,982
38 Consolidated Balance Sheet
31 March 2007
Annual Report 2007

2007 2006
Notes HK$’000 HK$’000
EQUITY

Equity attributable to equity holders of the parent
Issued capital 27 35,945 35,065
Reserves 28(a) 263,318 234,001
Proposed dividends 12 30,553 21,916
Total equity 329,816 290,982
Wong Yui Lam Tong She Man, Winnie
Chairman Vice-Chairman
39 Consolidated Balance Sheet
31 March 2007
Annual Report 2007

Issued
capital
Share
premium
account
Contributed
surplus
Exchange
fluctuation
reserve
Reserve
funds
Proposed
dividends
Retained
profits
Total
equity
Notes HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
(note 28(a))
At 1 April 2005 100 3,875 3,882 350 ——135,224 143,431
Exchange realignment and
total income for the
year recognised
directly in equity —— — 57 ———57
Profit for the year —— —50,861 50,861
Total income for the year —— — 57 ——50,861 50,918
Issue of shares 10,465 120,347 —————130,812
Capitalisation of the share
premium account 27 24,500 (24,500) — —— ———
Transfer to contributed
surplus — (3,875) 3,875 —— ———
Share issue expenses — (18,400) —————(18,400)
Interim 2006 dividend 12 —— — — (8,766) (8,766)
Special interim 2006
dividend 12 ——(7,013) —— ——(7,013)
Proposed final 2006
dividend 12 —— — ——9,117 (9,117) —
Proposed special 2006
dividend 12 —— — ——12,799 (12,799) —
At 31 March 2006 and at
1 April 2006 35,065 77,447 744 407 — 21,916 155,403 290,982
Exchange realignment and
total income for the
year recognised
directly in equity —— — 983 ———983
Profit for the year —— —57,225 57,225
Total income for the year —— — 983 ——57,225 58,208
Transfer to reserve funds —1,146 — (1,146) —
Issue of shares 27 880 10,560 ——— —11,440
Share issue expenses — (132) — (132)
Final 2006 dividend
declared —— — ——(9,117) — (9,117)
Special 2006 dividend
declared —— — ——(12,799) — (12,799)
Interim 2007 dividend 12 —(8,766) (8,766)
Proposed final 2007
dividend 12 —— — ——10,783 (10,783) —
Proposed special 2007
dividend 12 —— — ——19,770 (19,770) —
At 31 March 2007 35,945 87,875 744 1,390 1,146 30,553 172,163 329,816
These reserve accounts comprise the consolidated reserves of HK$263,318,000 (2006: HK$234,001,000) in the
consolidated balance sheet.
40 Consolidated Statement of Changes in Equity
Year ended 31 March 2007
Annual Report 2007

2007 2006
Notes HK$’000 HK$’000
CASH FLOWS FROM OPERATING ACTIVITIES

Profit before tax 66,526 61,058
Adjustments for:
Finance costs 7 236 397
Bank interest income 5 (2,236) (3,011)
Depreciation 6 11,556 10,850
Loss on disposal/write-off of items of property, plant and
equipment 6 690 22
Impairment of items of property, plant and equipment 6 — 912
Recognition of prepaid land lease payments 15 155 155
Impairment of intangible assets 6 — 15
Write-off of intangible assets 6 — 72
Amortisation of intangible assets 6 352 396
Provision for slow-moving inventories, net 6 11,795 1,676
Impairment of trade receivables 6 4,384 —
93,458 72,542

Increase in rental, utility and other non-current deposits (4,318) (2,904)
Increase in inventories (24,267) (23,002)
Increase in trade and bills receivables (12,254) (860)
Decrease/(increase) in prepayments, deposits and other receivables 962 (6,640)
Increase/(decrease) in trade and bills payables 3,234 (1,555)
Increase in other payables and accruals 6,622 2,650
Increase in an amount due to a related company 18 157
Cash generated from operations 63,455 40,388
Interest received 2,236 3,011
Interest paid (236) (397)
Income tax paid (10,500) (12,791)
Net cash inflow from operating activities 54,955 30,211
CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of items of property, plant and equipment 14 (10,621) (14,882)
Proceeds from disposal of items of property, plant and equipment 157 77
Additions to intangible assets 16 (978) (392)
Net cash outflow from investing activities (11,442) (15,197)
41 Consolidated Cash Flow Statement
Year ended 31 March 2007
Annual Report 2007

2007 2006
Notes HK$’000 HK$’000
CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issue of shares 27 11,440 130,812
Share issue expenses (132) (13,140)
Increase/(decrease) in trust receipt loans (3,527) 2,640
Repayment of bank loans — (5,962)
Dividends paid (30,682) (15,779)
Net cash inflow/(outflow) from financing activities (22,901) 98,571
NET INCREASE IN CASH AND CASH EQUIVALENTS 20,612 113,585

Cash and cash equivalents at beginning of year 139,660 26,032
Effect of foreign exchange rate changes, net 827 43
CASH AND CASH EQUIVALENTS AT END OF YEAR 161,099 139,660
ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS

Cash and bank balances 23 105,497 76,491
Non-pledged time deposits with original maturity of less than three
months when acquired 23 55,602 63,169
161,099 139,660

42 Consolidated Cash Flow Statement
Year ended 31 March 2007
Annual Report 2007

2007 2006
Notes HK$’000 HK$’000
NON-CURRENT ASSETS

Investments in subsidiaries 17 143,631 143,631
CURRENT ASSETS

Due from subsidiaries 17 128,137 124,697
Prepayment and other receivable 22 137 122
Cash and cash equivalents 23 57,864 54,345
Total current assets 186,138 179,164
CURRENT LIABILITIES

Due to subsidiaries 17 63 63
Other payables and accruals 25 179 8
Total current liabilities 242 71
NET CURRENT ASSETS 185,896 179,093

Net assets 329,527 322,724
EQUITY

Issued capital 27 35,945 35,065
Reserves 28(b) 263,029 265,743
Proposed dividends 12 30,553 21,916
Total equity 329,527 322,724
Wong Yui Lam Tong She Man, Winnie
Chairman Vice-Chairman
43 Balance Sheet
31 March 2007
Annual Report 2007

1. CORPORATE INFORMATION
Bauhaus International (Holdings) Limited is a limited liability company incorporated in the Cayman Islands.
The principal place of business of the Company is located at Room 501, Sino Industrial Plaza, 9 Kai Cheung
Road, Kowloon Bay, Kowloon, Hong Kong.
During the year, the Group was engaged in the manufacture and trading of garments and accessories.
In the opinion of the directors, the holding company and the ultimate holding company of the Company is
Huge Treasure Investments Limited, which is incorporated in the British Virgin Islands.
2.1 GROUP REORGANISATION, BASIS OF PRESENTATION AND PREPARATION

Group Reorganisation
The Company was incorporated in the Cayman Islands as an exempted company with limited liability on 8
October 2004 under the Companies Law of the Cayman Islands.
On 21 April 2005, pursuant to a reorganisation scheme to rationalise the structure of the Group in
preparation for the listing of the Company’s shares on the Main Board of 1 each in the share capital
of the Company to the then shareholders of Bauhaus (BVI). The Company then became the holding
company of the companies now comprising the Group (the ‘‘Group Reorganisation’’).
Further details of the Group Reorganisation were set out in the Company’s listing prospectus dated 29 April
2005.

The shares of the Company were listed on the Stock Exchange on 12 May 2005.
Basis of presentation
The Group Reorganisation above involved companies under common control, and the Group resulting from
the Group Reorganisation is regarded and accounted for as a continuing group. Accordingly, the
consolidated financial statements have been prepared on the merger basis as if the Company had been the
holding company of the companies now comprising the Group during the year ended 31 March 2006.
Under this basis, the Company has been treated as the holding company of its subsidiaries pursuant to the
Group Reorganisation during the year ended 31 March 2006, rather than from the date of acquisition of the
subsidiaries.
Basis of preparation
These financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards
(‘‘HKFRSs’’) (which also include Hong Kong Accounting Standards (‘‘HKASs’’) and Interpretations) issued by
the Hong Kong Institute of Certified Public Accountants, accounting principles generally accepted in Hong
Kong and the disclosure requirements of the Hong Kong Companies Ordinance. They have been prepared
under the historical cost convention, except for an available-for-sale financial asset, which has been
measured at fair value. These financial statements are presented in Hong Kong dollars and all values are
rounded to the nearest thousand, except when otherwise indicated.
44 Notes to Financial Statements
31 March 2007
Annual Report 2007

2.1 GROUP REORGANISATION, BASIS OF PRESENTATION AND PREPARATION
(Continued)
Basis of consolidation
The consolidated financial statements include the financial statements of the Company and its subsidiaries
for the year ended 31 March 2007. The results of subsidiaries are consolidated from the date of acquisition,
being the date on which the Group obtains control, and continue to be consolidated until the date that
such control ceases. All significant intercompany transactions and balances within the Group are eliminated
on consolidation.
2.2 IMPACT OF NEW AND REVISED HONG KONG FINANCIAL REPORTING
STANDARDS

The Group has adopted the following new and revised HKFRSs for the first time for the current year’s
financial statements. Except for in certain cases which give rise to new and revised accounting policies and
additional disclosures, the adoption of these new and revised standards and interpretation has had no
material effect on these financial statements.
HKAS 39 & HKFRS 4 Amendments Financial Guarantee Contracts
HKAS 39 Amendment The Fair Value Option
HK(IFRIC)-Int 4 Determining whether an Arrangement Contains a Lease
The principal changes in accounting policies are as follows:
HKAS 39 Financial Instruments: Recognition and Measurement
Amendment for financial guarantee contracts
This amendment has revised the scope of HKAS 39 to require financial guarantee contracts issued that are
not considered insurance contracts, to be recognised initially at fair value and to be remeasured at the
higher of the amount determined in accordance with HKAS 37 Provisions, Contingent Liabilities and
Contingent Assets and the amount initially recognised less, when appropriate, cumulative amortisation
recognised in accordance with HKAS 18 Revenue. The adoption of this amendment has had no material
impact on these financial statements.
2.3 IMPACT OF ISSUED BUT NOT YET EFFECTIVE HONG KONG FINANCIAL
REPORTING STANDARDS

The Group has not applied the following new and revised HKFRSs, that have been issued but are not yet
effective, in these financial statements.
HKAS 1 Amendment Capital Disclosures
HKAS 23 (Revised) Borrowing Costs
HKFRS 7 Financial Instruments: Disclosures
HKFRS 8 Operating Segments
HK(IFRIC)-Int 8 Scope of HKFRS 2
HK(IFRIC)-Int 9 Reassessment of Embedded Derivatives
HK(IFRIC)-Int 10 Interim Financial Reporting and Impairment
HK(IFRIC)-Int 11 HKFRS 2 — Group and Treasury Share Transactions
HK(IFRIC)-Int 12 Service Concession Arrangements
45 Notes to Financial Statements
31 March 2007
Annual Report 2007

2.3 IMPACT OF ISSUED BUT NOT YET EFFECTIVE HONG KONG FINANCIAL
REPORTING STANDARDS (Continued)
The HKAS 1 Amendment shall be applied for annual periods beginning on or after 1 January 2007. The
revised standard will affect the disclosures about qualitative information about the Group’s objective,
policies and processes for managing capital; quantitative data about what the Company regards as capital;
and compliance with any capital requirements and the consequences of any non-compliance.
HKFRS 7 shall be applied for annual periods beginning on or after 1 January 2007. The standard requires
disclosures that enable users of the financial statements to evaluate the significance of the Group’s financial
instruments and the nature and extent of risks arising from those financial instruments.
HKFRS 8 shall be applied for annual periods beginning on or after 1 January 2009. The standard sets out
requirements for disclosure of information about an entity’s operating segments and also about the entity’s
products and services, the geographical areas in which it operates and revenue from its major customers.
HK(IFRIC)-Int 8, HK(IFRIC)-Int 9, HK(IFRIC)-Int 10, HK(IFRIC)-Int 11, HK(IFRIC)-Int 12 and HKAS 23 (Revised)
shall be applied for annual periods beginning on or after 1 May 2006, 1 June 2006, 1 November 2006, 1
March 2007, 1 January 2008 and 1 January 2009, respectively.
The Group is in the process of making an assessment of the impact of these new and revised HKFRSs upon
initial application. So far, it has concluded that while the adoption of the HKAS 1 Amendment, HKFRS 7 and
HKFRS 8 may result in new or amended disclosures, these new and revised HKFRSs are unlikely to have a
significant impact on the Group’s results of operations and financial position.
2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Subsidiaries
A subsidiary is an entity whose financial and operating policies the Company controls, directly or indirectly,
so as to obtain benefits from its activities.
The results of subsidiaries are included in the Company’s income statement to the extent of dividends
received and receivable. The Company’s interests in subsidiaries are stated at cost less any impairment
losses.
Impairment of non-financial assets
Where an indication of impairment exists, or when annual impairment testing for an asset is required (other
than inventories, deferred tax assets and financial assets), the asset’s recoverable amount is estimated. An
asset’s recoverable amount is calculated as the higher of the asset’s or cash-generating unit’s value in use
and its fair value less costs to sell, and is determined for an individual asset, unless the asset does not
generate cash inflows that are largely independent of those from other assets or groups of assets, in which
case, the recoverable amount is determined for the cash-generating unit to which the asset belongs.
An impairment loss is recognised only if the carrying amount of an asset exceeds its recoverable amount. In
assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to
the asset. An impairment loss is charged to the income statement in the period in which it arises.
46 Notes to Financial Statements
31 March 2007
Annual Report 2007

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Impairment of non-financial assets (Continued)
An assessment is made at each reporting date as to whether there is any indication that previously
recognised impairment losses may no longer exist or may have decreased. If such indication exists, the
recoverable amount is estimated. A previously recognised impairment loss of an asset other than certain
financial assets is reversed only if there has been a change in the estimates used to determine the
recoverable amount of that asset, however not to an amount higher than the carrying amount that would
have been determined (net of any depreciation/amortisation), had no impairment loss been recognised for
the asset in prior years. A reversal of such impairment loss is credited to the income statement in the period
in which it arises.
Related parties
A party is considered to be related to the Group if:
(a) the party, directly or indirectly through one or more intermediaries, (i) controls, is controlled by, or is
under common control with, the Group; (ii) has an interest in the Group that gives it significant
influence over the Group; or (iii) has joint control over the Group;
(b) the party is an associate;
(c) the party is a jointly-controlled entity;
(d) the party is a member of the key management personnel of the Group or its parent;
(e) the party is a close member of the family of any individual referred to in (a) or (d); or
(f) the party is an entity that is controlled, jointly controlled or significantly influenced by or for which
significant voting power in such entity resides with, directly or indirectly, any individual referred to in
(d) or (e).
Property, plant and equipment and depreciation
Property, plant and equipment are stated at cost less accumulated depreciation and any 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.
Expenditure incurred after items of property, plant and equipment have been put into operation, such as
repairs and maintenance, is normally charged to the income statement in the period in which it is incurred.
In situations where it can be clearly demonstrated that the expenditure has resulted in an increase in the
future economic benefits expected to be obtained from the use of an item of property, plant and
equipment, and where the cost of the item can be measured reliably, the expenditure is capitalised as an
additional cost of that asset or as a replacement.
47 Notes to Financial Statements
31 March 2007
Annual Report 2007

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Property, plant and equipment and depreciation (Continued)
Depreciation is calculated on the straight-line basis to write off the cost of each item of property, plant and
equipment to its residual value over its estimated useful life. The principal annual rates used for this purpose
are as follows:
Buildings 2%
Leasehold improvements Over the lease terms
Plant and machinery 9% to 25%
Computer equipment 20% to 30%
Furniture, fixtures and equipment 18% to 25%
Motor vehicles 20% to 30%
Where parts of an item of property, plant and equipment have different useful lives, the cost of that item is
allocated on a reasonable basis among the parts and each part is depreciated separately.
Residual values, useful lives and depreciation method are reviewed, and adjusted if appropriate, at each
balance sheet date.
An item of property, plant and equipment is derecognised upon disposal or when no future economic
benefits are expected from its use or disposal. Any gain or loss on disposal or retirement recognised in the
income statement in the year the asset is derecognised is the difference between the net sales proceeds and
the carrying amount of the relevant asset.
Intangible assets
The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite
lives are amortised over the useful economic life and assessed for impairment whenever there is an
indication that the intangible asset may be impaired. The amortisation period and the amortisation method
for an intangible asset with a finite useful life are reviewed at least at each balance sheet date.
Trademarks with definite useful lives are stated at cost less any impairment losses and are amortised on the
straight-line basis over their useful lives of 5 to 15 years.
Leases
Leases where substantially all the rewards and risks of ownership of assets remain with the lessor are
accounted for as operating leases. Where the Group is the lessee, rentals payable under the operating leases
are charged to the income statement on the straight-line basis over the lease terms.
Prepaid land lease payments under operating leases are initially stated at cost and subsequently recognised
on the straight-line basis over the lease terms.
Investments and other financial assets
Financial assets in the scope of HKAS 39 are classified as financial assets at fair value through profit or loss,
loans and receivables, and available-for-sale financial assets, as appropriate. When financial assets are
recognised initially, they are measured at fair value, plus, in the case of investments not at fair value through
profit or loss, directly attributable transaction costs. The Group considers whether a contract contains an
embedded derivative when the Group first becomes a party to it. The embedded derivatives are separated
from the host contract which is not measured at fair value through profit or loss when the analysis shows
that the economic characteristics and risks of embedded derivatives are not closely related to those of the
host contract.
48 Notes to Financial Statements
31 March 2007
Annual Report 2007

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Investments and other financial assets (Continued)
The Group determines the classification of its financial assets after initial recognition and, where allowed
and appropriate, re-evaluates this designation at the balance sheet date.
All regular way purchases and sales of financial assets are recognised on the trade date, that is, the date
that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales
of financial assets that require delivery of assets within the period generally established by regulation or
convention in the marketplace.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. Such assets are subsequently carried at amortised cost using the effective
interest method. Amortised cost is calculated taking into account any discount or premium on acquisition
and includes fees that are an integral part of the effective interest rate and transaction costs. Gains and
losses are recognised in the income statement when the loans and receivables are derecognised or impaired,
as well as through the amortisation process.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are designated as available for sale
or are not classified in any of the other two categories. After initial recognition, available-for-sale financial
assets are measured at fair value, with gains or losses recognised as a separate component of equity until
the investment is derecognised or until the investment is determined to be impaired, at which time the
cumulative gain or loss previously reported in equity is included in the income statement.
Fair value
The fair value of investments that are actively traded in organised financial markets is determined by
reference to quoted market bid prices at the close of business at the balance sheet date. For investments
where there is no active market, fair value is determined using valuation techniques. Such techniques
include using recent arm’s length market transactions; reference to the current market value of another
instrument which is substantially the same; and a discounted cash flow analysis.
Impairment of financial assets
The Group assesses at each balance sheet date whether there is any objective evidence that a financial asset
or a group of financial assets is impaired.
Assets carried at amortised cost
If there is objective evidence that an impairment loss on loans and receivables carried at amortised cost has
been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount
and the present value of estimated future cash flows (excluding future credit losses that have not been
incurred) discounted at the financial asset’s original effective interest rate (i.e., the effective interest rate
computed at initial recognition). The carrying amount of the asset is reduced either directly or through the
use of an allowance account. The amount of the impairment loss is recognised in the income statement.
49 Notes to Financial Statements
31 March 2007
Annual Report 2007

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Impairment of financial assets (Continued)
Assets carried at amortised cost (Continued)
The Group first assesses whether objective evidence of impairment exists individually for financial assets that
are individually significant, and individually or collectively for financial assets that are not individually
significant. If it is determined that no objective evidence of impairment exists for an individually assessed
financial asset, whether significant or not, the asset is included in a group of financial assets with similar
credit risk characteristics and that group is collectively assessed for impairment. Assets that are individually
assessed for impairment and for which an impairment loss is or continues to be recognised are not included
in a collective assessment of impairment.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognised, the previously recognised impairment
loss is reversed. Any subsequent reversal of an impairment loss is recognised in the income statement, to the
extent that the carrying value of the asset does not exceed its amortised cost at the reversal date.
In relation to trade and bills receivables, a provision for impairment is made when there is objective evidence
(such as the probability of insolvency or significant financial difficulties of the debtor) that the Group will not
be able to collect all of the amounts due under the original terms of an invoice. The carrying amount of the
receivables is reduced through the use of an allowance account. Impaired debts are derecognised when they
are assessed as uncollectible.
Available-for-sale financial assets
If an available-for-sale asset is impaired, an amount comprising the difference between its cost (net of any
principal payment and amortisation) and its current fair value, less any impairment loss previously recognised
in the income statement, is transferred from equity to the income statement. Impairment losses on equity
instruments classified as available for sale are not reversed through the income statement.
Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial
assets) is derecognised where:
. the rights to receive cash flows from the asset have expired;
. the Group retains the rights to receive cash flows from the asset, but has assumed an obligation to
pay them in full without material delay to a third party under a ‘‘pass-through’’ arrangement; or
. the Group has transferred its rights to receive cash flows from the asset and either (a) has transferred
substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained
substantially all the risks and rewards of the asset, but has transferred control of the asset.
Where the Group has transferred its rights to receive cash flows from an asset and has neither transferred
nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset
is recognised to the extent of the Group’s continuing involvement in the asset. Continuing involvement that
takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying
amount of the asset and the maximum amount of consideration that the Group could be required to repay.
50 Notes to Financial Statements
31 March 2007
Annual Report 2007

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Derecognition of financial assets (Continued)
Where continuing involvement takes the form of a written and/or purchased option (including a cash-settled
option or similar provision) on the transferred asset, the extent of the Group’s continuing involvement is the
amount of the transferred asset that the Group may repurchase, except in the case of a written put option
(including a cash-settled option or similar provision) on an asset measured at fair value, where the extent of
the Group’s continuing involvement is limited to the lower of the fair value of the transferred asset and the
option exercise price.
Financial liabilities at amortised cost (including interest-bearing bank borrowings)
Financial liabilities, including trade and bills payables, other payables, an amount due to a related company
and interest-bearing bank borrowings, are initially stated at fair value less directly attributable transaction
costs and are subsequently measured at amortised cost, using the effective interest method unless the effect
of discounting would be immaterial, in which case they are stated at cost.
Gains and losses are recognised in the income statement when the liabilities are derecognised as well as
through the amortisation process.
Derecognition of financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or
expires.
When an existing financial liability is replaced by another from the same lender on substantially different
terms, or the terms of an existing liability are substantially modified, such an exchange or modification is
treated as a derecognition of the original liability and a recognition of a new liability, and the difference
between the respective carrying amounts is recognised in the income statement.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined on the weighted
average basis and, in the case of work in progress and finished goods, comprises direct materials, direct
labour and an appropriate proportion of overheads. Net realisable value is based on estimated selling prices
less any estimated costs to be incurred to completion and disposal.
Cash and cash equivalents
For the purpose of the consolidated cash flow statement, cash and cash equivalents comprise cash on hand
and demand deposits, and short term highly liquid investments which are readily convertible into known
amounts of cash and which are subject to an insignificant risk of changes in value, and have a short
maturity of generally within three months when acquired, less bank overdrafts which are repayable on
demand and form an integral part of the Group’s cash management.
For the purpose of the balance sheets, cash and cash equivalents comprise cash on hand and at banks,
including term deposits, which are not restricted as to use.
Income tax
Income tax comprises current and deferred tax. Income tax is recognised in the income statement, or in
equity if it relates to items that are recognised in the same or a different period directly in equity.
51 Notes to Financial Statements
31 March 2007
Annual Report 2007

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income tax (Continued)
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to
be recovered from or paid to the taxation authorities.
Deferred tax is provided, using the liability method, on all temporary differences at the balance sheet date
between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred tax liabilities are recognised for all taxable temporary differences, except:
. where the deferred tax liability arises from the initial recognition of an asset or liability in a transaction
that is not a business combination and, at the time of the transaction, affects neither the accounting
profit nor taxable profit or loss; and
. in respect of taxable temporary differences associated with investments in subsidiaries, where the
timing of the reversal of the temporary differences can be controlled and it is probable that the
temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, carryforward of unused tax
credits and unused tax losses, to the extent that it is probable that taxable profit will be available against
which the deductible temporary differences, and the carryforward of unused tax credits and unused tax
losses can be utilised except:
. where the deferred tax asset relating to the deductible temporary differences arises from the initial
recognition of an asset or liability in a transaction that is not a business combination and, at the time
of the transaction, affects neither the accounting profit nor taxable profit or loss; and
. in respect of deductible temporary differences associated with investments in subsidiaries, deferred tax
assets are only recognised to the extent that it is probable that the temporary differences will reverse
in the foreseeable future and taxable profit will be available against which the temporary differences
can be utilised.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent
that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred
tax asset to be utilised. Conversely, previously unrecognised deferred tax assets are reassessed at each
balance sheet date and are recognised to the extent that it is probable that sufficient taxable profit will be
available to allow all or part of the deferred tax asset to be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period
when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted
or substantively enacted at the balance sheet date.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current
tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same
taxation authority.
52 Notes to Financial Statements
31 March 2007
Annual Report 2007

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenue recognition
Revenue is recognised when it is probable that the economic benefits will flow to the Group and when the
revenue can be measured reliably, on the following bases:
(a) from the sale of goods, when the significant risks and rewards of ownership have been transferred to
the buyer, provided that the Group maintains neither managerial involvement to the degree usually
associated with ownership, nor effective control over the goods sold; and
(b) interest income, on an accrual basis using the effective interest method by applying the rate that
discounts the estimated future cash receipts through the expected life of the financial instrument to
the net carrying amount of the financial asset.
Employee benefits
Paid leave carried forward
The Group provides paid annual leave to its employees under their employment contracts on a calendar year
basis. Under certain circumstances, such leave which remains untaken as at the balance sheet date is
permitted to be carried forward and utilised by the respective employees in the following year. An accrual is
made at the balance sheet date for the expected future cost of such paid leave earned during the year by
the employees and carried forward.
Pension schemes and other retirement benefits
The Group operates a defined contribution Mandatory Provident Fund retirement benefits scheme (the ‘‘MPF
Scheme’’) under the Mandatory Provident Fund Schemes Ordinance, for those employees who are eligible to
participate in the MPF Scheme. Contributions are made based on a percentage of the employees’ basic
salaries and are charged to the income statement as they become payable in accordance with the rules of
the MPF Scheme. The assets of the MPF Scheme are held separately from those of the Group in an
independently administered fund. The Group’s employer contributions vest fully with the employees when
contributed into the MPF Scheme.
The Group’s subsidiaries established in Mainland China participate in defined contribution retirement plans
managed by the local municipal government in the People’s Republic of China (‘‘PRC’’) of the region where
they operate. The relevant authorities of the local municipal government in the PRC undertake the
retirement obligations of the Group’s employees. The Group has no obligation for the payment of
retirement benefits beyond the monthly contributions. The contribution payable is charged as an expense to
the income statement as and when incurred.
According to the existing relevant regulations in Taiwan, a subsidiary of the Group incorporated in Taiwan is
required to participate in the retirement plan or scheme operated by the government of Taiwan (the
’’Taiwan Scheme’’) for the provision of pension benefits to its employees. This Taiwan subsidiary is required
to contribute a certain percentage of its payroll costs to the Taiwan Scheme to fund the benefits.
Contributions under the Taiwan Scheme are charged to the income statement as they become payable in
accordance with the rules of the Taiwan Scheme, and the outstanding payment of the contribution is
reflected on the balance sheet.
53 Notes to Financial Statements
31 March 2007
Annual Report 2007

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Employee benefits (Continued)
Pension schemes and other retirement benefits (Continued)
A subsidiary of the Group incorporated in Macau makes monthly contributions to the social security fund
managed by the relevant authority of the local government, which undertakes the retirement obligations of
the Group’s employees. The Group has no obligation for payment of retirement benefits beyond the
monthly contributions. The contribution payable is charged as an expense to the income statement as and
when incurred.
Dividends
Final and special dividends proposed by the directors are classified as a separate allocation of retained
profits within the equity section of the balance sheet, until they have been approved by the shareholders in
a general meeting. When these dividends have been approved by the shareholders and declared, they are
recognised as a liability.
Interim and special interim dividends are simultaneously proposed and declared, because the memorandum
and articles of association of the Company grant the directors the authority to declare interim dividends.
Consequently, interim dividends are recognised immediately as a liability when they are proposed and
declared.
Foreign currencies
These financial statements are presented in Hong Kong dollars, which is the Company’s functional and
presentation currency. Each entity in the Group determines its own functional currency and items included in
the financial statements of each entity are measured using that functional currency. Foreign currency
transactions are initially recorded using the functional currency rates ruling at the date of the transactions.
Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency
rates of exchange ruling at the balance sheet date. All differences are taken to the income statement. Non-
monetary items that are measured in terms of historical cost in a foreign currency are translated using the
exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a
foreign currency are translated using the exchange rates at the date when the fair value was determined.
The functional currencies of certain overseas subsidiaries are currencies other than the Hong Kong dollar. As
at the balance sheet date, the assets and liabilities of these entities are translated into the presentation
currency of the Company at the exchange rates ruling at the balance sheet date and, their income
statements are translated into Hong Kong dollars at the weighted average exchange rates for the year. The
resulting exchange differences are included in the exchange fluctuation reserve. On disposal of a foreign
entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is
recognised in the income statement.
For the purpose of the consolidated cash flow statement, the cash flows of overseas subsidiaries are
translated into Hong Kong dollars at the exchange rates ruling at the dates of the cash flows. Frequently
recurring cash flows of overseas subsidiaries which arise throughout the year are translated into Hong Kong
dollars at the weighted average exchange rates for the year.
54 Notes to Financial Statements
31 March 2007
Annual Report 2007

3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES
Judgements
In the process of applying the Group’s accounting policies, management has not come across significant
judgements, apart from those involving estimations, which have significant effect on the amounts
recognised in the financial statements.
Estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the balance
sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets
and liabilities within the next financial year, are discussed below.
Estimation of useful lives of property, plant and equipment
The management estimates the useful lives of property, plant and equipment when acquired based on the
period over which the item of property, plant and equipment is expected to be available for use to the
Group. The useful lives of property, plant and equipment are reviewed, and adjusted if appropriate, at each
balance sheet date. The carrying value of property, plant and equipment at 31 March 2007 was
HK$31,009,000 (2006: HK$32,635,000).
Impairment test of property, plant and equipment
Management estimates the recoverable amount of property, plant and equipment when an indication of
impairment exists. This requires an estimation of the value in use of the cash-generating units. Estimating
the value in use requires the management to make an estimate of the expected future cash flows from the
cash-generating unit and also to choose a suitable discount rate in order to calculate the present value of
those cash flows. Changing the assumptions selected by management to determine the level of impairment,
including the discount rates or the growth rate assumptions in the cash flow projections, could materially
affect the net present value used in the impairment test. The carrying value of property, plant and
equipment at 31 March 2007 was HK$31,009,000 (2006: HK$32,635,000).
Deferred tax assets
Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable
profit will be available against which the losses can be utilised. Significant management judgement is
required to determine the amount of deferred tax assets that can be recognised, based upon the likely
timing and level of future taxable profits together with future tax planning strategies. The carrying value of
deferred tax assets relating to recognised tax losses at 31 March 2007 was HK$153,000 (2006:
HK$184,000). The amount of unrecognised tax losses at 31 March 2007 was HK$5,710,000 (2006:
HK$1,218,000). Further details are contained in note 19 to the financial statements.
Impairment of trade and bills receivables
The Group maintains an allowance for estimated loss arising from the inability of its customers to make the
required payments. The Group makes its estimates based on the ageing of its trade and bills receivable
balances, customers’ creditworthiness, and historical write-off experience. If the financial condition of its
customers is to deteriorate so that the actual impairment loss might be higher than expected, the Group will
be required to revise the basis of making the allowance, and its future results would be affected. The
carrying value of trade and bills receivables at 31 March 2007 was HK$19,201,000 (2006: HK$11,331,000).
55 Notes to Financial Statements
31 March 2007
Annual Report 2007

4. SEGMENT INFORMATION
Segment information is presented by way of two segment formats: (i) on a primary segment reporting basis,
by geographical segment; and (ii) on a secondary segment reporting basis, by business segment.
Each of the Group’s geographical segments represents a strategic business unit that offers products to
customers located in different geographical areas which are subject to risks and returns that are different
from those of the other geographical segments. The Group’s customer-based geographical segments are as
follows:
(a) Hong Kong
(b) Taiwan
(c) Japan
(d) Mainland China
(e) Elsewhere
In determining the Group’s geographical segments, revenues and assets are attributed to the segments
based on the location of the customers. Intersegment sales and transfers are transacted with reference to
the selling prices used for sales made to third parties at the then prevailing market prices.
With respect to the Group’s secondary reporting by business segment, the Group has three business
segments and each of them represents a strategic business unit that offers products and services which are
subject to risks and returns that are different from those of the other business segments. The Group’s
business segments comprise:
(a) Retail operation which is engaged in retail business through the operations of the Group’sretail
outlets;
(b) Wholesale operation which is engaged in the sale of garments and accessories to customers for
distribution; and
(c) Franchise business which is engaged in the sale of garments and accessories to the designated
franchisees for their own operations of retail business in the designated locations.
56 Notes to Financial Statements
31 March 2007
Annual Report 2007

4. SEGMENT INFORMATION (Continued)
(a) Geographical segments
The following tables present revenue, profit and certain asset, liability and expenditure information for
the Group’s geographical segments for the years ended 31 March 2007 and 2006.
Hong Kong Taiwan Japan Mainland China Elsewhere Eliminations Total
2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Segment revenue:
Sales to
external
customers 383,573 355,823 42,827 28,216 25,580 11,109 32,490 17,734 24,778 23,126 — — 509,248 436,008
Intersegment
sales — — 15,634 14,744 — — 499 — — — (16,133) (14,744) — —
Total 383,573 355,823 58,461 42,960 25,580 11,109 32,989 17,734 24,778 23,126 (16,133) (14,744) 509,248 436,008
Segment results 59,259 63,543 1,170 1,854 8,538 2,224 14,244 7,851 2,739 5,180 — — 85,950 80,652
Bank interest
income 2,236 3,011
Unallocated
expenses (21,424) (22,208)
Finance costs (236) (397)
Profit before tax 66,526 61,058
Tax (9,301) (10,197)
Profit for the year 57,225 50,861
57 Notes to Financial Statements
31 March 2007
Annual Report 2007

4. SEGMENT INFORMATION (Continued)
(a) Geographical segments (Continued)
Hong Kong Taiwan Japan Mainland China Elsewhere Total
2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Assets and liabilities
Segment assets 120,642 132,685 20,351 20,694 8,253 2,379 29,760 3,561 8,102 3,326 187,108 162,645
Unallocated assets 186,281 163,047
Total assets 373,389 325,692
Segment liabilities 18,898 11,008 1,455 1,024 425 45 6,215 3,886 1,626 740 28,619 16,703
Unallocated liabilities 14,954 18,007
Total liabilities 43,573 34,710
Other segment information:
Capital expenditure 6,117 7,547 656 1,258 121 — 948 174 1,381 539 9,223 9,518
Unallocated capital expenditure 2,376 5,756
11,599 15,274

Depreciation 8,438 7,715 878 605 8 8 83 7 109 58 9,516 8,393
Unallocated depreciation 2,040 2,457
11,556 10,850

Loss on disposal/write-off of items of
property, plant and equipment 690 22 — — — — — — — — 690 22
Impairment of items of property, plant
and equipment — 912 — — — — — — — — — 912
Recognition of prepaid land lease
payments 155 155 — — — — — — — — 155 155
Impairment of intangible assets — 15 — — — — — — — — — 15
Write-off of intangible assets — — — — — — — 72 — — — 72
Amortisation of intangible assets 62 95 23 37 16 8 53 79 198 177 352 396
Impairment of trade receivables — — 3,784 — — — — — 600 — 4,384 —
58 Notes to Financial Statements
31 March 2007
Annual Report 2007

4. SEGMENT INFORMATION (Continued)
(b) Business segments
The following tables present revenue and certain asset and expenditure information for the Group’s
business segments for the years ended 31 March 2007 and 2006.
2007 2006

HK$’000 HK$’000
Segment revenue:
Sales to external customers:
Retail 429,021 383,627
Wholesale 51,497 34,647
Franchise 28,730 17,734
509,248 436,008

Other segment information:
Segment assets:
Retail 160,714 147,146
Wholesale 21,620 11,938
Franchise 4,774 3,561
187,108 162,645

Corporate and other unallocated assets 186,281 163,047
Total assets 373,389 325,692
Capital expenditure:
Retail 7,256 8,805
Wholesale 444 539
Franchise 1,523 174
9,223 9,518

Corporate and other unallocated amounts 2,376 5,756
Total capital expenditure 11,599 15,274
59 Notes to Financial Statements
31 March 2007
Annual Report 2007

5. REVENUE, OTHER INCOME AND GAINS
Revenue, which is also the Group’s turnover, represents the net invoiced value of goods sold, after
allowances for returns and trade discounts and sales tax during the year.
An analysis of revenue, other income and gains is as follows:
Group
2007 2006

HK$’000 HK$’000
Revenue
Sale of garment products and accessories 509,248 436,008
Other income
Bank interest income 2,236 3,011
Others 2,594 1,145
4,830 4,156

Gains
Foreign exchange differences, net 101 —
4,931 4,156

60 Notes to Financial Statements
31 March 2007
Annual Report 2007

6. PROFIT BEFORE TAX
The Group’s profit before tax is arrived at after charging:
2007 2006

Notes HK$’000 HK$’000
Cost of inventories sold 172,785 157,070
Depreciation 14 11,556 10,850
Provision for slow-moving inventories, net 11,795 1,676
Rental expenses under operating leases in respect of
equipment 185 —
Rental expenses under operating leases in respect of
land and buildings:
Minimum lease payments 87,313 72,216
Contingent rents 12,459 8,571
99,772 80,787

Auditors’ remuneration 1,721 1,404
Employee benefits expense (excluding directors’
remuneration (note 8)):
Wages, salaries and other benefits 86,377 75,654
Pension scheme contributions 3,913 3,194
90,290 78,848

Other expenses:
Loss on disposal/write-off of items of property, plant
and equipment 690 22
Impairment of items of property, plant and
equipment 14 — 912
Impairment of intangible assets 16 — 15
Write-off of intangible assets 16 — 72
Amortisation of intangible assets 16 352 396
Foreign exchange differences, net — 205
Impairment of trade receivables 4,384 —
Others 422 —
5,848 1,622

At the balance sheet date, the Group had no forfeited contribution available to reduce its contributions to the
pension schemes in future years.
61 Notes to Financial Statements
31 March 2007
Annual Report 2007

7. FINANCE COSTS
Group
2007 2006

HK$’000 HK$’000
Interest on bank loans wholly repayable within five years 211 376
Interest on bank overdrafts 3 15
Others 22 6
236 397

8. DIRECTORS’ REMUNERATION
Directors’ remuneration for the year, disclosed pursuant to the Listing Rules and Section 161 of the Hong
KongCompaniesOrdinance,isasfollows:
Group
2007 2006

HK$’000 HK$’000
Fees 360 330
Other emoluments:
Salaries, allowances and benefits in kind 2,606 3,226
Performance related bonuses 960 330
Pension scheme contributions 48 48
3,614 3,604
3,974 3,934

Certain executive directors of the Company are entitled to bonus payments which are determined based on the
operating results of the Group.
62 Notes to Financial Statements
31 March 2007
Annual Report 2007

8. DIRECTORS’ REMUNERATION (Continued)
(a) Independent non-executive directors
The fees paid to independent non-executive directors during the year are as follows:
2007 2006

HK$’000 HK$’000
Mr. Chu To Ki 120 110
Mr. Mak Wing Kit 120 110
Dr. Wong Yun Kuen 120 110
360 330

There were no other emoluments payable to the independent non-executive directors during the year
(2006: Nil).
(b) Executive directors
Fees
Salaries,
allowances
and benefits
in kind
Performance
related
bonuses
Pension
scheme
contributions
Total
remuneration
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
2007

Mr. Wong Yui Lam — 520 480 12 1,012
Madam Tong She Man,
Winnie — 520 480 12 1,012
Madam Lee Yuk Ming — 900 — 12 912
Mr. Yeung Yat Hang — 666 — 12 678
— 2,606 960 48 3,614
2006

Mr. Wong Yui Lam — 880 — 12 892
Madam Tong She Man,
Winnie — 880 — 12 892
Madam Lee Yuk Ming — 816 174 12 1,002
Mr. Yeung Yat Hang — 650 156 12 818
— 3,226 330 48 3,604
There was no arrangement under which a director waived or agreed to waive any remuneration during
the year (2006: Nil).
63 Notes to Financial Statements
31 March 2007
Annual Report 2007

9. FIVE HIGHEST PAID EMPLOYEES
The five highest paid employees during the year included two (2006: three) executive directors, details of
whose remuneration are set out in note 8 above. Details of the remuneration of the remaining three (2006:
two) non-director, highest paid employees for the year are as follows:
Group
2007 2006

HK$’000 HK$’000
Salaries, allowances and benefits in kind 1,755 960
Performance related bonuses 2,327 2,140
Pension scheme contributions 36 24
4,118 3,124

The number of non-director, highest paid employees whose remuneration fell within the following bands is
as follows:
Number of employees
2007 2006

HK$1,000,001 to HK$1,500,000 2 1
HK$1,500,001 to HK$2,000,000 1 1
3 2
10. TAX

Hong Kong profits tax has been provided at the rate of 17.5% (2006: 17.5%) on the estimated assessable
profits arising in Hong Kong during the year. Taxes on profits assessable elsewhere had been calculated at
the rates of tax prevailing in the countries/jurisdictions in which the Group operates, based on existing
legislation, interpretations and practices in respect thereof.
The corporate income tax (‘‘CIT’’) applicable to the four (2006: three) subsidiaries located in Mainland China
ranges from 15% to 18%. Two of those subsidiaries are entitled to tax holidays with a full exemption of CIT
for the first two profit-making years, followed by a 50% reduction of CIT for the succeeding three years.
One of those two subsidiaries is entitled to a 50% reduction of CIT commencing in 2007 while the tax
holiday of the remaining one already expired in 1996.
The subsidiary in Taiwan is subject to income tax at the statutory tax rate of 25%. In addition, a further
10% income tax is charged on any undistributed earnings as at each calendar year end date for that
subsidiary. However, no financial impact is resulted from this requirement as the Taiwan subsidiary has been
loss-making.
64 Notes to Financial Statements
31 March 2007
Annual Report 2007

10. TAX (Continued)
No Macau profits tax has been provided as the Macau subsidiary of the Company is exempt from Macau
Complementary Tax (2006: Nil).
On 16 March 2007, the National People’s Congress approved the Corporate Income Tax Law of the PRC (the
‘‘New CIT Law’’), which is effective from 1 January 2008. The New CIT Law introduces a wide range of
changes which include, but are not limited to, the unification of the income tax rate for domestic-invested
and foreign-invested enterprises at 25%. At the date of approval of these financial statements, detailed
implementation and administrative requirements relating to the New CIT Law have yet to be announced.
Those detailed requirements include regulations concerning the computation of taxable income, as well as
specific preferential tax treatments and their related transitional provisions. The Group will further evaluate
the impact on its operating results and financial positions of future periods as more detailed requirements
are issued.
Group
2007 2006

HK$’000 HK$’000
Current tax — Hong Kong
Provision for the year 10,785 10,091
Overprovision in prior years (222) (323)
Current tax — Elsewhere
Provision for the year 1,659 601
Underprovision/(overprovision) in prior years (29) 173
Deferred tax credit (note 19) (2,892) (345)
Total tax charge for the year 9,301 10,197
65 Notes to Financial Statements
31 March 2007
Annual Report 2007

10. TAX (Continued)
A reconciliation of the tax expense applicable to profit before tax using the applicable rates for the
countries/jurisdictions in which the Company and the majority of its subsidiaries are domiciled to the tax
expense at the effective tax rates, and a reconciliation of the applicable rates (i.e., the statutory tax rates) to
the effective tax rates, are as follows:
Group
2007

Hong Kong Elsewhere Total
HK$’000 % HK$’000 % HK$’000 %
Profit before tax 50,520 16,006 66,526
Tax at the statutory or applicable
tax rates 8,841 17.5 2,510 15.7 11,351 17.1
Adjustments in respect of current tax
of previous periods (222) (0.4) (29) (0.2) (251) (0.4)
Income not subject to tax (656) (1.3) (2,388) (14.9) (3,044) (4.6)
Expenses not deductible for tax 280 0.5 86 0.5 366 0.5
Temporary differences not recognised 152 0.3 (342) (2.1) (190) (0.3)
Tax losses utilised from previous
periods (31) (0.1) ——(31) —
Tax losses not recognised 1,100 2.2 1,100 1.7
Tax charge/(credit) at the Group’s
effective rate 9,464 18.7 (163) (1.0) 9,301 14.0
2006

Hong Kong Elsewhere Total
HK$’000 % HK$’000 % HK$’000 %
Profit before tax 56,271 4,787 61,058
Tax at the statutory or applicable tax
rates 9,847 17.5 817 17.1 10,664 17.5
Adjustments in respect of current tax
of previous periods (323) (0.6) 173 3.6 (150) (0.2)
Income not subject to tax (527) (0.9) (1,357) (28.3) (1,884) (3.1)
Expenses not deductible for tax 159 0.3 1,133 23.6 1,292 2.1
Temporary differences not recognised 1,182 2.1 (191) (4.0) 991 1.6
Tax losses utilised from previous
periods (716) (1.3) ——(716) (1.2)
Tax charge at the Group’s
effective rate 9,622 17.1 575 12.0 10,197 16.7
66 Notes to Financial Statements
31 March 2007
Annual Report 2007

11. PROFIT ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
The consolidated profit attributable to equity holders of the parent for the year ended 31 March 2007
includes a profit of HK$26,177,000 (2006: HK$82,460,000) which has been dealt with in the financial
statements of the Company (note 28(b)).
12. DIVIDENDS

Company
2007 2006

HK$’000 HK$’000
Interim — HK2.5 cents (2006: HK2.5 cents) per ordinary share 8,766 8,766
Special interim — Nil (2006: HK2.0 cents) per ordinary share — 7,013
Proposed final — HK3.0 cents (2006: HK 2.6 cents)
per ordinary share 10,783 9,117
Proposed special — HK5.5 cents (2006: HK3.65 cents)
per ordinary share 19,770 12,799
39,319 37,695

The special interim dividend for the year ended 31 March 2006 was distributed out of the contributed
surplus of the Company arising as a result of the Group Reorganisation.
The proposed final and proposed special dividends for the current year are subject to the approval of
the Company’s shareholders at the forthcoming annual general meeting.
13. EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF
THE PARENT

The calculation of basic earnings per share amounts is based on the profit for the year attributable to
ordinary equity holders of the parent of HK$57,225,000 (2006: HK$50,861,000) and the weighted average
number of ordinary shares in issue during the year of 351,951,918 (2006: 338,047,123).
Diluted earnings per share amounts have not been presented as no diluting events existed during the years
ended 31 March 2007 and 2006.
67 Notes to Financial Statements
31 March 2007
Annual Report 2007

14. PROPERTY, PLANT AND EQUIPMENT
Group
Buildings
Leasehold
improvements
Plant and
machinery
Computer
equipment
Furniture,
fixtures and
equipment
Motor
vehicles Total
31 March 2007 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
At 31 March 2006 and
at 1 April 2006:
Cost 13,046 31,709 2,365 6,559 10,906 2,127 66,712
Accumulated depreciation
and impairment (447) (19,986) (350) (4,222) (7,042) (2,030) (34,077)
Net carrying amount 12,599 11,723 2,015 2,337 3,864 97 32,635
At 1 April 2006, net of
accumulated depreciation
and impairment 12,599 11,723 2,015 2,337 3,864 97 32,635
Additions 71 6,473 799 886 1,877 515 10,621
Depreciation provided during
the year (268) (7,802) (273) (1,126) (1,920) (167) (11,556)
Disposals — (461) (31) (92) (263) — (847)
Exchange realignment — 59 77 6 14 — 156
At 31 March 2007, net of
accumulated depreciation
and impairment 12,402 9,992 2,587 2,011 3,572 445 31,009
At 31 March 2007:
Cost 13,117 32,597 3,201 7,207 12,125 2,323 70,570
Accumulated depreciation
and impairment (715) (22,605) (614) (5,196) (8,553) (1,878) (39,561)
Net carrying amount 12,402 9,992 2,587 2,011 3,572 445 31,009
68 Notes to Financial Statements
31 March 2007
Annual Report 2007

14. PROPERTY, PLANT AND EQUIPMENT (Continued)
Group
Buildings
Leasehold
improvements
Plant and
machinery
Computer
equipment
Furniture,
fixtures and
equipment
Motor
vehicles Total
31 March 2006 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
At 1 April 2005:
Cost 13,046 22,446 889 5,325 9,591 2,397 53,694
Accumulated depreciation (186) (12,936) (89) (3,209) (5,487) (2,187) (24,094)
Net carrying amount 12,860 9,510 800 2,116 4,104 210 29,600
At 1 April 2005, net of
accumulated depreciation 12,860 9,510 800 2,116 4,104 210 29,600
Additions — 10,408 1,464 1,360 1,650 — 14,882
Depreciation provided during
the year (261) (7,231) (260) (1,118) (1,867) (113) (10,850)
Disposals — (53) — (23) (23) — (99)
Impairment — (912) ————(912)
Exchange realignment — 111 2 14
At 31 March 2006, net of
accumulated depreciation
and impairment 12,599 11,723 2,015 2,337 3,864 97 32,635
At 31 March 2006:
Cost 13,046 31,709 2,365 6,559 10,906 2,127 66,712
Accumulated depreciation
and impairment (447) (19,986) (350) (4,222) (7,042) (2,030) (34,077)
Net carrying amount 12,599 11,723 2,015 2,337 3,864 97 32,635
At 31 March 2007, certain of the Group’s buildings with net book value of approximately HK$6,742,000
(2006: HK$6,885,000) were pledged to secure general banking facilities. As at 31 March 2006, the said
buildings were also pledged to secure the trust receipt loans granted to the Group (note 26), which had
been repaid during the year.
69 Notes to Financial Statements
31 March 2007
Annual Report 2007

15. PREPAID LAND LEASE PAYMENTS
Group
2007 2006

HK$’000 HK$’000
Carrying amount at 1 April 7,484 7,639
Recognised during the year (155) (155)
Carrying amount at 31 March 7,329 7,484
Current portion (155) (155)
Non-current portion 7,174 7,329
The leasehold land is held under a medium term lease and is situated in Hong Kong.
At 31 March 2007, certain of the Group’s prepaid land lease payments with net carrying value of
approximately HK$3,495,000 (2006: HK$3,570,000) were pledged to secure general banking facilities. As at
31 March 2006, the said prepaid land lease payments were also pledged to secure the trust receipt loans
granted to the Group (note 26), which had been repaid during the year.
70 Notes to Financial Statements
31 March 2007
Annual Report 2007

16. INTANGIBLE ASSETS
Group
Trademarks
2007 2006

HK$’000 HK$’000
At 1 April:
Cost 2,396 2,102
Accumulated amortisation and impairment (1,124) (739)
Net carrying amount 1,272 1,363
Cost at beginning of year, net of accumulated amortisation and
impairment 1,272 1,363
Additions 978 392
Amortisation provided during the year (352) (396)
Write-off during the year — (72)
Impairment during the year — (15)
At 31 March 1,898 1,272
At 31 March:
Cost 3,294 2,396
Accumulated amortisation and impairment (1,396) (1,124)
Net carrying amount 1,898 1,272
17. INTERESTS IN SUBSIDIARIES

Company
2007 2006

HK$’000 HK$’000
Unlisted shares, at cost 143,631 143,631
The amounts due from and to subsidiaries included in the Company’s current assets and current liabilities of
HK$128,137,000 (2006: HK$124,697,000) and HK$63,000 (2006: HK$63,000), respectively, are unsecured,
interest-free and are repayable on demand. The carrying amounts of these balances approximate to their fair
values.
71 Notes to Financial Statements
31 March 2007
Annual Report 2007

17. INTERESTS IN SUBSIDIARIES (Continued)
Particulars of the principal subsidiaries are as follows:
Name
Place of
incorporation/
registration
and
operations
Nominal value of
issued ordinary/
registered share
capital
Percentage of
equity
attributable to
the Company Principal
activitiesDirect Indirect
Bauhaus Investments (BVI)
Limited
British Virgin
Islands
Ordinary
US$200
100 — Investment
holding
Bauhaus Holdings Limited Hong Kong Non-voting
deferred
HK$2 and ordinary
HK$2
— 100 Trading of
garments and
accessories
Tough Jeans Retail Limited Hong Kong Ordinary
HK$2
— 100 Trading of
garments and
accessories
Tough Jeans Limited Hong Kong Non-voting
deferred
HK$5 and ordinary
HK$2
— 100 Trading of
garments and
accessories
Tough Jeans Macao Commercial
Offshore Limited
Macau Ordinary
MOP100,000

— 100 Trading of
garments and
accessories
包豪氏企業有限公司 Taiwan NT$500,000 — 100 Trading of
garments and
accessories
Kai Yip Manufactory Limited
(‘‘Kai Yip’’)
Hong Kong Ordinary
HK$300,000
— 100 Trading of
garments and
accessories
Wide World Development Limited Hong Kong Ordinary HK$1 — 100 Trading of
garments and
accessories
Eighty Twenty Products Limited Hong Kong Ordinary HK$1 — 100 Trading of
garments and
accessories
72 Notes to Financial Statements
31 March 2007
Annual Report 2007

17. INTERESTS IN SUBSIDIARIES (Continued)
Name
Place of
incorporation/
registration
and
operations
Nominal value of
issued ordinary/
registered share
capital
Percentage of
equity
attributable to
the Company Principal
activitiesDirect Indirect
Eighty Twenty Retail Limited Hong Kong Ordinary HK$1 — 100 Trading of
garments and
accessories
包浩斯貿易(深圳)有限公司
(note)
PRC/
Mainland China
HK$950,000 — 100 Trading of
garments and
accessories
強韌貿易(深圳)有限公司
#
(note)
PRC/
Mainland China
RMB12,000,000 — 100 Trading of
garments and
accessories
汕頭市包浩斯服飾製品有限公司
(note)
PRC/
Mainland China
RMB20,000,000

(2006:
RMB10,000,000)
— 100 Manufacture
of
garments and
accessories
Shan Tou Tat Yeung Leather &
Plastic Co., Limited
(note)
PRC/
Mainland China
RMB1,455,659 — 100 Manufacture
of
garments and
accessories
Bauhaus Property Limited Hong Kong Ordinary HK$2 — 100 Property
holding
Bauhaus Management Limited Hong Kong Ordinary
HK$1,000,000
— 100 Provision for
management
services
The statutory financial statements of these subsidiaries were not audited by Ernst & Young Hong Kong or other
Ernst & Young International member firms.
#
NewlyregisteredinthePRCduringtheyear.
The above table lists the subsidiaries of the Company which, in the opinion of the directors, principally affected the results
for the year or formed a substantial portion of the net assets of the Group. To give details of other subsidiaries would, in
the opinion of the directors, result in particulars of excessive length.
Note:
These subsidiaries are registered as wholly-foreign-owned enterprises under PRC law.
73 Notes to Financial Statements
31 March 2007
Annual Report 2007

18. AVAILABLE-FOR-SALE FINANCIAL ASSET
Group
2007 2006

HK$’000 HK$’000
Time deposit, at fair value 3,900 3,900
During the year, no gain or loss of the Group’s available-for-sale financial asset has been recognised directly
in equity (2006: Nil).
The time deposit has a maturity date of 31 October 2008. The full principal amount of HK$3,900,000 will
be repaid on maturity date, subject to early repayment at the bank’s option or the Group’s request. Interest
income is charged at a rate determined with reference to LIBOR times the number of calendar days in the
relevant period on which the LIBOR is within a pre-determined range. The fair value of the available-for-sale
financial asset has been estimated using a valuation technique based on the prevailing market interest rate.
The directors believe that the estimated fair value resulting from such valuation technique, which is recorded
directly in the consolidated balance sheet, is reasonable, and that it is the most appropriate value at the
balance sheet date.
19. DEFERRED TAX

Group
Deferred tax assets
Decelerated
tax
depreciation
Losses
available for
offsetting
against future
taxable profit
Provision for
unrealised
profit on
inventories
Other
provisions Total
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
At 1 April 2005 910 900 1,750 — 3,560
Deferred tax credited/
(charged) to the income
statement 729 (716) 590 — 603
At 31 March 2006 and 1
April 2006 1,639 184 2,340 — 4,163
Deferred tax credited/
(charged) to the income
statement 305 (31) 760 1,792 2,826
At 31 March 2007 1,944 153 3,100 1,792 6,989
74 Notes to Financial Statements
31 March 2007
Annual Report 2007

19. DEFERRED TAX (Continued)
Deferred tax liabilities
Accelerated
tax
depreciation
HK$’000
At 1 April 2005 490
Deferred tax charged to the income statement 258
At 31 March 2006 and 1 April 2006 748
Deferred tax credited to the income statement (66)
At 31 March 2007 682
The total deferred tax credited to the consolidated income statement during the year amounted to HK$2,892,000
(2006: HK$345,000) (note 10).
At the balance sheet date, the Group had tax losses arising in Hong Kong of HK$5,710,000 (2006:
HK$1,218,000) that are available indefinitely for offsetting against future taxable profits of the companies in
which the losses arose. Deferred tax assets have not been recognised in respect of these losses as they have
arisen in subsidiaries that have been loss-making for some time and it is not considered probable that
taxable profits will be available against which the tax losses can be utilised.
At the balance sheet date, there were no unrecognised deferred tax liabilities for taxes that would be
payable on the unremitted earnings of certain of the Group’s subsidiaries as the Group has no liability to
additional tax should such amounts be remitted.
There are no income tax consequences attaching to the payment of dividends by the Company to its
shareholders.
20. INVENTORIES

Group
2007 2006

HK$’000 HK$’000
Raw materials 16,995 12,977
Work in progress 2,227 5,819
Finished goods 79,026 66,980
98,248 85,776

75 Notes to Financial Statements
31 March 2007
Annual Report 2007

21. TRADE AND BILLS RECEIVABLES
Retail sales are made on cash terms or by credit card with very short credit terms. Wholesale and franchise
sales are made to customers with general credit terms ranging from 30 days to 60 days, except for certain
well-established customers with a long business relationship with the Group, where the terms are extended.
The Group seeks to maintain strict control over its outstanding receivables to minimise credit risk. Overdue
balances are regularly reviewed by senior management of the Group. In view of the aforementioned and the
fact that the Group’s trade receivables relate to a large number of diversified customers, there is no
significant concentration of credit risk. The Group’s bills receivable are normally settled on 30-day to 60-day
terms. Trade and bills receivables are non-interest-bearing.
An aged analysis of the trade and bills receivables as at the balance sheet date, based on the invoice date
and net of provisions, is as follows:
Group
2007 2006

HK$’000 HK$’000
Within 90 days 18,170 10,658
91 to 180 days 1,031 257
181 to 365 days — 416
19,201 11,331
22. PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES

The carrying amounts of the deposits and other receivables approximate to their fair values.
23. CASH AND CASH EQUIVALENTS

Group Company
2007 2006 2007 2006

HK$’000 HK$’000 HK$’000 HK$’000
Cash and bank balances 105,497 76,491 2,262 1,232
Non-pledged time deposits with
original maturity of less than
three months when acquired 55,602 63,169 55,602 53,113
Cash and cash equivalents 161,099 139,660 57,864 54,345
76 Notes to Financial Statements
31 March 2007
Annual Report 2007

23. CASH AND CASH EQUIVALENTS (Continued)
At the balance sheet date, the cash and bank balances of the Group denominated in Renminbi (‘‘RMB’’)
amounted to approximately HK$25,189,000 (2006: HK$5,955,000). The RMB is not freely convertible into
other currencies, however, under Mainland China’s Foreign Exchange Control Regulations and
Administration of Settlement, Sale and Payment of Foreign Exchange Regulations, the Group is permitted to
exchange RMB for other currencies through banks authorised to conduct foreign exchange business.
Cash at banks earns interest at floating rates based on daily bank deposit rates. Time deposits are made for
varying periods of between one day and three months depending on the immediate cash requirements of
the Group, and earn interest at the respective time deposit rates. The carrying amounts of the cash and cash
equivalents approximate to their fair values.
24. TRADE AND BILLS PAYABLES

An aged analysis of the trade and bills payables as at the balance sheet date, based on invoice date, is as
follows:
Group
2007 2006

HK$’000 HK$’000
Within 90 days 9,194 6,279
91–180 days 346 40
181–365 days 13 —
9,553 6,319

The trade payables are non-interest-bearing and are normally settled on 30-day to 60-day terms. The
carrying amounts of trade and bills payables approximate to their fair values.
25. OTHER PAYABLES AND ACCRUALS

Other payables are non-interest-bearing and are normally settled on 30-day to 60-day terms. The carrying
amounts of other payables approximate to their fair values.
77 Notes to Financial Statements
31 March 2007
Annual Report 2007

26. INTEREST-BEARING BANK BORROWINGS
2007 2006

Group
Effective
interest
rate (%) Maturity HK$’000
Effective
interest
rate (%) Maturity HK$’000
Current
Secured trust receipt loans
repayable within one year ———4.71-8.25 2007 3,527
At 31 March 2007, the Group’s general banking facilities were secured by certain of its buildings and
prepaid land lease payments with net book value and carrying value of approximately HK$6,742,000 (2006:
HK$6,885,000) (note 14) and HK$3,495,000 (2006: HK$3,570,000) (note 15), respectively. As at 31 March
2006, the said buildings and prepaid land lease payments were also pledged to secure the trust receipt
loans granted to the Group, which had been repaid during the year.
At 31 March 2006, the Group’s trust receipt loans were denominated in Hong Kong dollar, bore interest at
floating rates and their carrying amounts approximated to their fair values.
27. SHARE CAPITAL

Shares
Company
2007 2006

HK$’000 HK$’000
Authorised:
2,000,000,000 ordinary shares of HK$0.1 each 200,000 200,000
Issued and fully paid:
359,450,000 (2006: 350,650,000) ordinary shares of HK$0.1 each 35,945 35,065
The movement in the Company’s authorised and issued share capital during the years ended 31 March 2007
and 2006 were as follows:
Note
Number of
ordinary shares
of HK$0.1 each
Nominal value
of ordinary
shares
HK’000
Authorised:
At 1 April 2005 1,000,000 100
Increase in authorised share capital (a) 1,999,000,000 199,900
As at 31 March 2007 and 2006 2,000,000,000 200,000
78 Notes to Financial Statements
31 March 2007
Annual Report 2007

27. SHARE CAPITAL (Continued)
Shares (Continued)
Company
Notes
Number of
ordinary
shares of
HK$0.1 each
Nominal
value of
ordinary
shares
HK’000
Issued:
At 1 April 2005 200,000 —
On acquisition of Bauhaus (BVI)
— new issue of shares (a) 800,000 80
— nil paid shares credited as fully paid (a) — 20
Capitalisation issue credited as fully paid and being
conditional on the share premium account of the
Company being credited as a result of the issue of
the new shares to the public (b) 245,000,000 —
Pro forma share capital as at 1 April 2005 246,000,000 100
New issue of shares (c) 104,650,000 10,465
Capitalisation of the share premium account (b) — 24,500
As at 31 March 2006 and 1 April 2006 350,650,000 35,065
Issue of shares (d) 8,800,000 880
As at 31 March 2007 359,450,000 35,945
Notes:
(a) Pursuant to the written resolutions passed on 21 April 2005, the authorised share capital of the Company was
increased from HK$100,000 to HK$200,000,000 by the creation of 1,999,000,000 additional shares of HK$0.1
each. On the same day, (i) an aggregate of 800,000 shares of HK$0.1 each were allotted and issued, credited and
fully paid at par; and (ii) the 200,000 shares allotted and issued nil paid on 1 April 2005 were credited as fully paid
at par, in consideration for the acquisition of a total of 1,000 shares of US$1 each in Bauhaus (BVI), the then
intermediate holding company of the subsidiaries of the Group.
(b) Pursuant to the written resolution passed on 22 April 2005, a total of 245,000,000 shares of HK$0.1 each in the
Company were allotted and issued as fully paid at par, by way of capitalisation of the sum of HK$24,500,000
standing to the credit of the share premium account of the Company. This allotment and capitalisation were
conditional on the share premium account being credited as a result of the issue of new shares to the public in
connection with the Company’s initial public offering as detailed in (c) below.
79 Notes to Financial Statements
31 March 2007
Annual Report 2007

27. SHARE CAPITAL (Continued)
Shares (Continued)
Notes: (Continued)
(c) In connection with the Company’s initial public offering on 21 May 2005, 104,650,000 shares of HK$0.1 each were
issued at a price of HK$1.25 per share for a total cash consideration, before expenses, of HK$130,812,000.
(d) Pursuant to the written resolution passed on 5 February 2007, 8,800,000 shares of HK$0.1 each were issued at a
price of HK$1.30 per share for a total cash consideration, before expenses, of HK$11,440,000.
Share options
On 22 April 2005, the Company adopted a share option scheme (the ‘‘Scheme’’) for the purpose of
providing incentives and rewards to eligible participants who contribute to the success of the Group’s
operations. Eligible participants of the Scheme include the Company’s directors, including independent non-
executive directors, other employees of the Group, suppliers of goods or services to the Group, customers of
the Group, any consultants, advisers, managers or officers of the Group, and the Company’s shareholders.
The Scheme will remain in force for 10 years from the date of its adoption.
The maximum number of unexercised share options currently permitted to be granted under the Scheme is
an amount equivalent, upon their exercise, to 10% of the shares of the Company in issue at any time. The
maximum number of shares issuable under share options to each eligible participant in the Scheme within
any 12-month period is limited to 1% of the shares of the Company in issue at any time. Any further grant
of share options in excess of this limit is subject to shareholders’ approval in a general meeting.
Share options granted to a director, chief executive or substantial shareholder of the Company, or to any of
their associates, are subject to approval in advance by the independent non-executive directors (excluding
any independent non-executive director who is the proposed grantee). In addition, any share options
granted to a substantial shareholder or an independent non-executive director of the Company, or to any of
their associates, in excess of 0.1% of the shares of the Company in issue at any time and with an aggregate
value (based on the closing price of the Company’s shares at the date of grant) in excess of HK$5 million,
within any 12-month period, are subject to shareholders’ approval in advance in a general meeting.
The offer of a grant of share options may be accepted within 28 days from the date of offer, upon payment
of a nominal consideration of HK$1 in total by the grantee. The exercise period of the share options granted
is determinable by the directors, and commences after a certain vesting period and ends on a date which is
not later than 10 years from the date of offer of the share options or the expiry date of the Scheme, if
earlier.
The exercise price of the share options is determinable by the directors, but may not be less than the highest
of (i) the nominal value of a share; (ii) the Stock Exchange closing price of the Company’s shares on the date
of offer of the share options; and (iii) the average Stock Exchange closing price of the Company’ssharesfor
the five trading days immediately preceding the date of offer.
As at the date of this report, no option has been granted or agreed to be granted pursuant to the Scheme.
80 Notes to Financial Statements
31 March 2007
Annual Report 2007

28. RESERVES
(a) Group
The amounts of the Group’s reserves and the movements therein for the current and prior years are
presented in the consolidated statement of changes in equity on page 40 of this Annual Report.
The Group’s contributed surplus as at 31 March 2007 and 2006 mainly comprised (i) waiver of an
amount of HK$2,046,000 due to a company owned by a controlling shareholder of the Group arising
from the purchases of goods by the Group during the year ended 31 March 2002; and (ii) the
difference of HK$1,836,000 between the nominal value of the shares of the subsidiaries acquired
pursuant to the Group Reorganisation as set out in note 2.1 to the financial statements which
amounted to approximately HK$1,936,000, and the share capital of the Company of HK$100,000; a
transfer of HK$3,875,000 from the share premium account, which arose from the Group
Reorganisation; net off the distribution of a special interim dividend totalling HK$7,013,000 during
the year ended 31 March 2006.
In accordance with the relevant regulations applicable to wholly-foreign-owned enterprises in the PRC,
a portion of the profits of the Company’s subsidiaries which are registered in the PRC has been
transferred to the reserve funds which are restricted as to use.
(b) Company
Issued
capital
Share
premium
account
Contributed
surplus
Proposed
dividends
Retained
profits
Total
equity
Notes HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
At 1 April 2005 —— ————
Profit for the year 82,460 82,460
Issue of shares on acquisition of Bauhaus (BVI) 27 100 ————100
Effect of reorganisation ——143,531 ——143,531
Issue of shares 27 10,465 120,347 ———130,812
Capitalisation of the share premium account 27 24,500 (24,500) ——
Share issue expenses — (18,400) ———(18,400)
Interim 2006 dividend 12 —— (8,766) (8,766)
Special interim 2006 dividend 12 (7,013) ——(7,013)
Proposed final 2006 dividend 12 —— —9,117 (9,117) —
Proposed special 2006 dividend 12 12,799 (12,799) —
At 31 March 2006 and 1 April 2006 35,065 77,447 136,518 21,916 51,778 322,724
Profit for the year —— ——26,177 26,177
Issue of shares 27 880 10,560 —11,440
Share issue expenses — (132) —— (132)
Final 2006 dividend declared —— —(9,117) — (9,117)
Special 2006 dividend declared (12,799) — (12,799)
Interim 2007 dividend 12 —— ——(8,766) (8,766)
Proposed final 2007 dividend 12 —10,783 (10,783) —
Proposed special 2007 dividend 12 —— 19,770 (19,770) —
At 31 March 2007 35,945 87,875 136,518 30,553 38,636 329,527
81 Notes to Financial Statements
31 March 2007
Annual Report 2007

28. RESERVES (Continued)
(b) Company (Continued)
These reserve accounts comprise the reserves of HK$263,029,000 (2006: HK$265,743,000) in the balance
sheet of the Company.
The Company’s contributed surplus comprises the excess of the fair value of the shares of the subsidiary
acquired pursuant to the Group Reorganisation as set out in note 2.1 which amounted to HK$143,631,000
and the nominal value of the Company’s shares issued in exchange of HK$100,000; net of the distribution of
a special interim dividend totalling HK$7,013,000 during the year ended 31 March 2006.
29. CONTINGENT LIABILITIES

At the balance sheet date, contingent liabilities not provided for in the financial statements were as follows:
Group
2007 2006

HK$’000 HK$’000
Bank guarantees given in lieu of utility and property rental deposits 4,907 3,202
30. OPERATING LEASE ARRANGEMENTS

The Group, as lessee, leases its retail shops and certain of its warehouses under operating lease
arrangements with lease terms ranging from one to five and a half years.
At the balance sheet date, the Group had total future minimum lease payments under non-cancellable
operating leases falling due as follows:
2007 2006

HK$’000 HK$’000
Within one year 88,512 69,325
In the second to fifth years, inclusive 59,296 51,524
147,808 120,849

The operating lease rentals of certain retail shops are based on the higher of a fixed rental and contingent
rent based on the sales of the retail shops pursuant to the terms and conditions as set out in the respective
rental agreements. As the future sales of these retail shops could not be estimated reliably, the relevant
contingent rent has not been included above and only the minimum lease commitment has been included in
theabovetable.
82 Notes to Financial Statements
31 March 2007
Annual Report 2007

31. RELATED PARTY TRANSACTIONS
(a) In addition to the transactions detailed elsewhere in these financial statements, the Group had the
following transactions with related parties during the year:
2007 2006

Notes HK$’000 HK$’000
Computer system maintenance charges paid to a related
company (i) 1,289 1,275
Purchases of computer equipment from a related company (ii) 1,200 1,079
Rental expenses paid to a related company (iii) 198 —
Rental expenses paid to a key management personnel (iii) 28 81
Notes:
(i) The computer system maintenance charges paid to a related company were determined between the parties
with reference to the actual staff costs incurred.
(ii) The purchases of computer equipment from a related company were made at prices and conditions with
reference to those offered by major suppliers of the Group.
(iii) The rental expenses paid to a related company/key management personnel were determined between the
parties with reference to the prevailing market rent.
The related company referred to in notes (i) and (ii) is a company controlled by a close family member
of a director of the Company. The related company referred to in note (iii) is a company controlled by
certain directors of the Company.
The above related party transactions also constitute continuing connected transactions as defined in
Chapter 14A of the Listing Rules. The transaction with a key management personnel under (iii) above
had been terminated in the current year.
(b) Outstanding balance with a related party:
As disclosed in the consolidated balance sheet, the Group had outstanding advances payable to a
related company of HK$198,000 (2006: HK$180,000) as at the balance sheet date. The balance is
unsecured, interest-free and repayable on demand.
The related company is a company controlled by certain directors of the Company.
(c) All compensation of key management personnel of the Group is included in the notes on directors’
remuneration and the five highest paid employees as respectively set out in notes 8 and 9 to the
financial statements.
83 Notes to Financial Statements
31 March 2007
Annual Report 2007

32. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s principal financial instruments comprise bank loans and bank overdrafts, and cash and time
deposits. The main purpose of these financial instruments is to raise finance for the Group’s operations. The
Group has various other financial assets and liabilities such as trade and bills receivables and trade and bills
payables, which arise directly from its operations.
It is, and has been, throughout the year under review, the Group’s policy that no trading in financial
instruments shall be undertaken.
The main risks arising from the Group’s financial instruments are interest rate risk, foreign currency risk,
credit risk and liquidity risk. The Group does not have any written financial risk management policies and
guidelines. However, the board of directors meets periodically to analyse and formulate measures to manage
the Group’s exposure to these risks. Generally, the Group introduces conservative strategies on its financial
risk management. As the Group’s exposure to these risks is kept to a minimum, the Group has not used any
derivatives and other financial instruments for hedging purposes. The directors review and agree policies for
managing each of these risks and they are summarised as follows:
Interest rate risk
The Group’s earnings are affected by changes in interest rates due to the impact of such changes on interest
income and expenses from bank deposits, available-for-sale financial asset, bank overdrafts and interest-
bearing bank loans. The Group does not use derivative financial instruments to hedge its debt obligations.
Foreign currency risk
The Group has transactional currency exposures. Such exposures arise from sales or purchases by operating
units in currencies other than the units’ functional currency. As transactions denominated in currencies other
than the functional currency are minimal, the exposure to foreign currency risk is not considered significant.
Credit risk
The Group trades only with recognised and creditworthy third parties. It is the Group’s policy that all
customers who wish to trade on credit terms are subject to credit verification procedures. In addition,
receivable balances are monitored on an ongoing basis and the Group’s exposure to bad debts is not
significant.
With respect to the credit risk arising from the other financial assets of the Group, which comprise cash and
cash equivalents and an available-for-sale financial asset, the Group’s exposure to credit risk arises from
default of the counterparty, with a maximum exposure equal to the carrying amounts of these instruments.
Since the Group trades only with recognised and creditworthy third parties, there is no requirement for
collateral.
Liquidity risk
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use
of bank overdrafts and interest-bearing bank loans.
33. APPROVAL OF THE FINANCIAL STATEMENTS

The financial statements were approved and authorised for issue by the board of directors on 16 July 2007.
84 Notes to Financial Statements
31 March 2007
Annual Report 2007