CAF DE CORAL HOLDINGS LIMITED

大家樂集團有限公司
(Incorporated in Bermuda with Limited Liability)
Website: http:// www.cafedecoral.com
(Stock Code: 341)

2006/2007 FINAL REPORT TO SHAREHOLDERS

HIGHLIGHTS

◆
Continuous turnover growth for the 20
th
consecutive year with an increase of
1,400% since listing.

◆

A double-digit growth in profits for the 3
rd
consecutive year to historical high of
HK$370 million.

◆
Record-high development expansion in Hong Kong, together with a remarkable
performance growth in Southern China and substantial business improvement in
North America.

◆
Enhanced commitment on food processing infrastructure and the establishment of
an “Executive Development Board” for sustainable corporate growth.

◆
For the 12
th
consecutive year, shareholders’ value was enhanced with another
dividend per share increase.

1

CHAIRMAN’S STATEMENT

Business Performance

For the year ended 31
st
March, 2007, the Group recorded another encouraging growth in terms
of both turnover and profit attributable to shareholders. Profit attributable to shareholders has
for the 3
rd
consecutive year attained a double-digit growth to HK$370 million. As compared
with that of last year, turnover was substantially increased to HK$3.89 billion after
consolidating, for the first time, the full year results of our wholly-owned subsidiary of Manchu
Wok.

To share the joy of our sustainable growth with our shareholders, I would recommend to the
Board to propose a final dividend of 30 HK cents per share. Together with the interim dividend
paid earlier, a total dividend of 42 HK cents per share would have been repatriated to our
shareholders for the whole year, with substantial increase of 20%, representing an
ever-increasing dividend payout ratio of 62%.

Business Review

Over the years, the Group’s business horizon has kept on expanding both in business portfolio,
customer base and geographical coverage, tapping into strategic growth markets here in Hong
Kong as well as in the People’s Republic of China and North America.

In our familiar home territory here in Hong Kong, our core businesses in the quick service and
the specialty restaurant sectors continued to prosper. Our long established brands such as Caf
de Coral and The Spaghetti House, through aggressive marketing campaigns and
2

development program, have gained much solid ground both in market share and brand
preference. It was gratifying to witness the fruit bearing effort of our innovative product
launches and marketing initiatives, which together contribute to the encouraging performance
of our various restaurant brands in Hong Kong both in terms of volume and value.

Indeed, the encouraging performance in the local restaurant sectors in year 2006 were aided by
the buoyant sentiment in the capital and consumer markets. Capitalizing on such improved
business environment, and riding on our own branding power and long-established business
reputation, we further accelerated the pace of our branch development in Hong Kong by
opening a record high of 23 new outlets in the year, maintaining a firm grip of our market
leadership in an ever-increasingly competitive landscape.

On the institutional front, our Luncheon Star has also firmly secured its market leading
position in the school catering sector. Being accredited with “HACCP”, “ISO 9001” and the
strictest “ISO 22000” food safety system, which is the first of its kind in the Hong Kong school
catering industry, Luncheon Star not only has become an established preference among
parents and teachers in the selection of school meal caterers, but has also clearly demonstrated
our commitment to the food safety and corporate responsibility to the local community.

In the PRC, we continued with our proactive expansion initiatives in this market. As of today,
the total number of our operating units in China is well over 133. Encouraged by the
performance of our Caf de Coral in the Southern China region both in the first and second tier
cities, we adhere to our aggressive branch development program by bringing the total number
of stores in the region to 31, where it has now become not only a sizable business growth
platform but has developed as another meaningful profit contributor to the Group.

3

In Eastern China, we are encouraged to witness a significant business improvement in our 50%
owned restaurant chain New Asia Dabao. At the same time, we have also commenced a
development program for Caf de Coral in the region, which at this stage have inevitably
incurred certain one-off pre-opening expenses and development costs. Despite the initial
growing pain, we remained positive and committed to this business platform as it is an
indispensable development strategy for unlocking the vast business potential in the Yangtze
River Delta Region.

Across the ocean, we are pleased to report substantial improvement in our North American
business Manchu Wok. The substantial reduction in loss is a positive signal for us that we are
heading toward the right direction in turning around the business. We have decided to take this
opportunity to further write-off certain assets as we believe that it would be of long term
benefits to all our stakeholders to adopt the most stringent and prudent accounting principle.
The loss sustained by this business has drastically reduced for the year as compared with the
year before. In fact, on the operating level, we have already witnessed an encouraging business
turnaround with a slight profitability. As we are moving in the right direction, we envisage that
our North American business will be a market of great potential for the Group in the years
ahead.

Business Strategies

Throughout the years, we have never let go of our relentless effort to explore the opportunities
presented to us and create value to our customers in various segments of the catering industry,
at home and abroad. Our strategies are aimed to enlarge our market share in the catering
industry as a whole and to establish a balanced business portfolio against waves of fierce
competition.
4

We remain committed to sustainable growth in our group of business and adhere to our core
competence in the restaurant business to tap into the growing catering industry in Hong Kong
and abroad. The Group’s recent acquisition of a strategic stake in the “Tao Heung”, a leading
Chinese restaurant group here in Hong Kong and Southern China, exemplifies our continuing
effort in this regard.

As encouraged by the business performance both in Hong Kong and in Southern China, we
decide to devote more resources on our back up infrastructures for our rapid development in
the region. In addition to the aggressive branch development program which has already been
in place, we are fully aware of the need to expand on our 17 years old central food processing
plant, in order to satisfy the ever-growing market demand for our business in the region. To this
end, we are rigorously looking for suitable site to establish a new central food processing plants
both in Hong Kong and in the Pearl River Delta Region. We believe that these much-needed
infrastructures would enhance our competitive edge in the short run and our market dominance
in the longer term.

In June, 2007, the Group has acquired approximately 6,500 sq. feet property in Admiralty
Centre, Hong Kong at a total consideration of HK$60 million. The Group aims to continue its
policy of securing sites at strategic location on a self-owned basis. The acquisition not only
opens up another stream of rental revenue to the Group but also alleviates us from the soaring
rental escalation which we would anticipate at this strategic location.
5

Business Governance

Maintaining high standard of corporate governance is one of the key elements to success for
any business enterprise. The Group will continue to promote a committed culture of corporate
governance so as to reflect the fundamental values underlying the principles of accountability,
transparency and independency. I would like to draw your attention to the section “Corporate
Governance and Corporate Responsibility Report” of the Company’s 2007 Annual Report for
details about the Group’s attainment on corporate governance during the year.

As always, people are key to deliver excellence in business. We have set up an independent
“Executive Development Board” for purpose of succession planning and for selecting and
equipping our people with the skill-sets and business perspective for a sustainable development
growth in our various global business platforms.

To conclude, I would like to express my heartfelt gratitude to every member of our staff and
management. Without their commitment and perseverance during the past year, it is not
possible for the Group to achieve another milestone in our business performance.

Chan Yue Kwong, Michael
Chairman
Hong Kong, 10
th
July, 2007
6

RESULTS

The board of directors is pleased to announce the audited consolidated results of Caf de Coral
Holdings Limited (the “Company”) and its subsidiaries (collectively the “Group”) for the year
ended 31st March, 2007, together with the comparative figures for the previous year, as
follows:

CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31ST MARCH, 2007

Note 2007 2006
HK$’000 HK$’000
As restated
Revenue 4 3,885,151 3,440,493

Cost of sales (3,234,421) (2,903,642)
───────── ─────────
Gross profit 650,730 536,851

Other gains, net 5 10,385 14,254
Administrative expenses (238,804) (160,021)
───────── ─────────
Operating profit 422,311 391,084
Finance income 7 34,859 31,695
Finance costs 7 (3,676) (4,695)
Share of profit of associates 2,269 2,663
Share of loss of jointly controlled entities (2,857) (27,863)
───────── ─────────
Profit before income tax 452,906 392,884

Income tax expense 8 (82,839) (73,031)
───────── ─────────
Profit attributable to equity holders of the
Company 370,067 319,853
═════════ ═════════

Dividends 9 230,181 298,926
═════════ ═════════

Earnings per share for profit attributable to the
equity holders of the Company during the year
- Basic 10 67.95 HK cents 59.24 HK cents
═════════ ═════════

- Diluted 10 66.95 HK cents 58.47 HK cents
═════════ ═════════

7

CONSOLIDATED BALANCE SHEET
AS AT 31ST MARCH, 2007

Note 2007 2006
HK$’000 HK$’000
As restated
ASSETS

Non-current assets
Leasehold land and land use rights 308,788 338,976
Property, plant and equipment 491,978 468,396
Investment properties 155,200 122,450
Intangible assets 213,068 223,427
Investments in associates 4,357 4,188
Investments in jointly controlled entities 32,195 30,260
Available-for-sale financial assets 267,398 173,106
Held-to-maturity investments 8,837 5,466
Deferred income tax assets 12,647 13,224
Non-current deposits 107,079 99,723
Retirement benefit assets 31,736 12,243
──────── ────────
1,633,283 1,491,459
-------------- --------------

Current assets
Inventories 74,413 69,008
Trade and other receivables 11 44,145 48,110
Prepayments, deposits and other current assets 87,811 52,213
Financial assets at fair value through profit or loss 98,720 93,011
Cash and cash equivalents 546,655 559,506
──────── ────────
851,744 821,848
-------------- --------------

Total assets 2,485,027 2,313,307
════════ ════════

LIABILITIES

Non-current liabilities
Deferred income tax liabilities 65,121 64,158
Provision for long service payments 4,377 4,102
──────── ────────
69,498 68,260
-------------- --------------

Current liabilities
Trade payables 12 94,741 78,977
Other creditors and accrued liabilities 300,463 258,036
Current income tax liabilities 23,858 24,641
──────── ────────
419,062 361,654
-------------- --------------

Total liabilities 488,560 429,914
-------------- --------------

8

CONSOLIDATED BALANCE SHEET (Continued)
AS AT 31ST MARCH, 2007

Note 2007 2006
HK$’000 HK$’000
As restated

EQUITY

Capital and reserves attributable to the equity
holders of the Company
Share capital 54,593 54,081
Other reserves 13 354,008 312,821
Retained earnings 13
- Proposed dividends 164,791 244,899
- Others 1,423,075 1,271,592
──────── ────────
Total equity 1,996,467 1,883,393
-------------- --------------

Total equity and liabilities 2,485,027 2,313,307
════════ ════════

Net current assets 432,682 460,194
════════ ════════

Total assets less current liabilities 2,065,965 1,951,653
════════ ════════








9

Notes:-

1 BASIS OF PREPARATION

The consolidated financial statements of Caf de Coral Holdings Limited have been
prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRS”). The
consolidated financial statements have been prepared under the historical cost convention,
as modified by the revaluation of investment properties, available-for-sale financial
assets, financial assets and financial liabilities at fair value through profit or loss, which
are carried at fair values.

The preparation of financial statements in conformity with HKFRS requires the use of
certain critical accounting estimates. It also requires management to exercise its
judgement in the process of applying the Group’s accounting policies.

2 ACCOUNTING POLICIES

(a) Amendments and interpretations to published standards effective from accounting
periods beginning on 1st April, 2006 and are relevant to the Group’s operations

The following amendments and interpretations are mandatory for accounting
periods beginning on or after 1st January, 2006 and are relevant to the Group’s
operations:

• HKAS 19 Amendment – Employee Benefits. The adoption of HKAS 19
Amendment provides an option of recognising actuarial gains and losses in
full in the year in which they occur, outside profit and loss account, in
reserves. The Group has elected to take the option to recognise all actuarial
gains and losses, including those actuarial gains and losses previously
included as part of the transitional unrecognised liabilities on initial
adoption of HKAS 19, Employee Benefits. In prior years, cumulative
unrecognised actuarial gains and losses, to the extent of the amount in
excess of 10% of the greater of the present value of the plan obligations and
the fair value of plan assets, were recognised in the income statement over
the average remaining service lives of employees. The change in accounting
policy has been applied retrospectively.
10

2 ACCOUNTING POLICIES (CONTINUED)

The effect of adopting the HKAS 19 Amendment on the financial
statements as at 31st March, 2007 and 31st March, 2006 and for the year
then ended are shown below:
2007 2006

HK$’000 HK$’000

Decrease in retirement benefits obligations (39,185) (24,697)
Increase in deferred income tax liabilities 7,002 4,467
Increase in retained earnings 32,183 20,230
══════ ══════

• Amendment to HKAS 39 and HKFRS 4, Amendment “Financial Guarantee
Contracts” (effective for annual periods beginning on or after 1st January,
2006). This amendment requires issued financial guarantees, other than
those previously asserted by the entity to be insurance contracts, to be
initially recognised at their fair value, and subsequently measured at the
higher of (i) the unamortised balance of the related fees received and
deferred, and (ii) the expenditure required to settle the commitment at the
balance sheet date. The adoption of this amendment does not have a
significant impact on these consolidated financial statements.

• HK(IFRIC)-Int 4 “Determining Whether an Arrangement Contains a
Lease” (effective for annual periods beginning on or after 1st January, 2006).
It requires the determination of whether an arrangement is or contains a
lease to be based on the substance of the arrangement. It requires an
assessment of whether: (i) fulfillment of the arrangement is dependent on
the use of a specific asset or assets (the asset); and (ii) the arrangement
conveys a right to use the asset. The adoption of this interpretation does not
have a significant impact on the Group’s financial statements.

HKAS 21 Amendment “Net Investment in a Foreign Operation” (effective
for annual periods beginning on or after 1st January, 2006). This
amendment permits inter-company loans denominated in any currency to be
part of a net investment in a foreign operation, and therefore any relating
exchange difference to be treated as equity in the consolidated financial
statements. Previously such loans had to be denominated in the functional
currency of one of the parties to the transactions. The adoption of this
amendment does not have a significant impact on the Group’s financial
statements.
11

2 ACCOUNTING POLICIES (CONTINUED)

(b) New standards and interpretations to existing standards that are not effective
and have not been early adopted by the Group

The following are the new standards and interpretations to existing standards
that have been published and are mandatory for accounting periods beginning
on or after 1st May, 2006 or later periods which have not been early adopted by
the Group:

• HKFRS 7 “Financial Instruments: Disclosures” (effective for annual
periods beginning on or after 1st January, 2007), HKAS 1 “Amendments to
capital disclosures” (effective for annual periods beginning on or after 1st
January, 2007). HKFRS 7 introduces new disclosures relating to financial
instruments. The Group has assessed the impact of HKFRS 7 and the
amendment to HKAS 1 and concluded that the main additional disclosures
will be the sensitivity analysis to market risk and capital disclosures
required by the amendment of HKAS 1. The Group will adopt HKFRS 7
and the amendment to HKAS 1 from annual periods beginning 1st April,
2007.

• HKFRS 8 “Operating Segments” (effective for accounting periods
beginning on or after 1st January, 2009). HKFRS 8 supersedes HKAS 14,
“Segment Reporting”, which requires segments to be reported based on the
Group’s internal reporting pattern as they represent components of the
Group regularly reviewed by management. Management considers the
adoption of HKFRS 8 will have no significant impact on the segment
disclosures of the Group. The Group will apply HKFRS 8 from 1st April,
2009.

• HK(IFRIC)-Int 8 “Scope of HKFRS 2” (effective for annual periods
beginning on or after 1st May, 2006). HK(IFRIC)-Int 8 requires
consideration of transactions involving the issuance of equity instruments –
where the identifiable consideration received is less than the fair value of
the equity instruments issued – to establish whether or not they fall within
the scope of HKFRS 2. The Group will apply HK(IFRIC)-Int 8 from 1st
April, 2007, but it is not expected to have any significant impact on the
Group’s consolidated financial statements.

12

2 ACCOUNTING POLICIES (CONTINUED)

• HK(IFRIC)-Int 9 “Reassessment of Embedded Derivatives” (effective for
annual periods beginning on or after 1st June, 2006). Management believes
that this interpretation should not have significant impact on the Group’s
accounting polices as the Group has already assessed whether embedded
derivatives should be separated using principles consistent with
HK(IFRIC)-Int 9. The Group will apply HK(IFRIC)-Int 9 from 1st April,
2007.

• HK(IFRIC)-Int 10 “Interim Financial Reporting and Impairment” (effective
for annual periods beginning on or after 1st November, 2006).
HK(IFRIC)-Int 10 prohibits the impairment losses recognised in an interim
period on goodwill, investments in equity instruments and investments in
financial assets carried at cost to be reversed at a subsequent balance sheet
date. The Group will apply HK(IFRIC)-Int 10 from 1st April, 2007, but it is
not expected to have any significant impact on the Group’s financial
statements.

• HK(IFRIC)-Int 11 “HKFRS 2 – Group and Treasury Share Transfer”
(effective for annual periods beginning on or after 1st April, 2007). This
interpretation addresses how certain share-based payment arrangements
between group companies should be accounted for in the financial
statements. The Group will apply HK(IFRIC)-Int 11 from 1st April, 2007
but it is not expected to have any significant impact on the Group’s financial
statements.

(c) Interpretations to existing standards that are not yet effective and not relevant to
the Group’s operations

The following interpretation to existing standard has been published that is
mandatory for the accounting period beginning on or after 1st January, 2008 and
is not relevant for the Group’s operations:
13

2 ACCOUNTING POLICIES (CONTINUED)

• HK(IFRIC)-Int 12 “Service Concession Arrangements” (effective for
annual accounting periods beginning on or after 1st January, 2008). This
interpretation sets out general principles on recognising and measuring the
obligation and related rights in service concession arrangements. The
Group has no service concession arrangements and management considers
the interpretation is not relevant to the Group.

(d) Standards, amendments and interpretations effective from accounting periods
beginning on 1st April, 2006 but not relevant to the Group’s operations

The following standards, amendment and interpretations are mandatory for
accounting periods beginning on or after 1st January, 2006 but are not relevant
to the Group’s operations:

• HKAS 39 Amendment – Cash Flow Hedge Accounting of Forecast
Intragroup Transactions.
• HKFRS 1 Amendment – First-time adoption of Hong Kong Financial
Reporting Standards.
• HK(IFRIC)-Int 5 – Rights to Interests arising from Decommissioning,
Restoration and Environmental Rehabilitation Funds.
• HK(IFRIC)-Int 6 – Liabilities arising from Participating in a Specific
Market – Waste Electrical and Electronic Equipment.
• HK(IFRIC)-Int 7 – Applying the Restatement Approach under HKAS 29,
Financial Reporting in Hyperinflationary Economics.

14

3 SEGMENT INFORMATION

(a) Primary reporting format – geographical segments

At 31st March, 2007, the Group’s business activities are conducted predominantly in
Hong Kong, Mainland China and North America.

The segment results for the year ended 31st March, 2007 are as follows:

Hong Kong
Mainland
China
North
America
Group

HK$’000 HK$’000 HK$’000 HK$’000
Segment revenues

Total segment revenue
3,310,270 314,580 320,067 3,944,917

Inter-segment revenue (1,919) (57,847) - (59,766)
─────── ─────── ─────── ───────
Revenue 3,308,351 256,733 320,067 3,885,151
═══════ ═══════ ═══════ ═══════

Segment result 409,131 36,793 (23,613) 422,311
═══════ ═══════ ═══════

Finance income 33,404 1,224 231 34,859
Finance costs (3,093) (583) - (3,676)
Share of profit of
associates 2,269 - - 2,269
Share of loss of jointly
controlled entities - (2,857) - (2,857)
───────
Profit before income tax 452,906
Income tax expense (82,839)
───────

Profit attributable to the
equity holders of the
Company
370,067

═══════

Other segment items included in the consolidated income statement are as follows:

Year ended 31st March, 2007
Hong Kong
Mainland
China
North
America
Group
HK$’000 HK$’000 HK$’000 HK$’000

Depreciation 126,148 13,506 12,964 152,618

Amortisation of intangible
assets 2,703 - 7,656 10,359

Amortisation of leasehold
land and land use rights 5,016 1,688 - 6,704

Impairment of property,
plant and equipment - - 7,790 7,790

Loss on disposal of
property, plant and
equipment 2,390 - 5,374 7,764
══════ ══════ ══════ ══════

15

3 SEGMENT INFORMATION (CONTINUED)

(a) Primary reporting format – geographical segments (Continued)

The segment assets and liabilities at 31st March, 2007 and capital expenditure for the
year then ended are as follows:

Hong Kong
Mainland
China
North
America Group
HK$’000 HK$’000 HK$’000 HK$’000

Segment assets 1,518,550 258,964 283,359 2,060,873
Associated companies 4,357 - - 4,357
Jointly controlled entities - 32,195 - 32,195
────── ────── ────── ──────
1,522,907 291,159 283,359 2,097,425

══════ ══════ ══════

Unallocated assets 387,602
──────
Total assets 2,485,027
══════
Segment liabilities 321,040 38,472 40,069 399,581
══════ ══════ ══════
Unallocated liabilities 88,979
──────
Total liabilities 488,560
══════
Capital expenditure 151,123 31,079 6,172 188,374
══════ ══════ ══════ ══════

16

3 SEGMENT INFORMATION (CONTINUED)

(a) Primary reporting format – geographical segments (Continued)

The segment results for the year ended 31st March, 2006 are as follows:

Hong Kong
Mainland
China
North
America Group
HK$’000 HK$’000 HK$’000 HK$’000
Segment revenues
Total segment revenue 3,120,159 258,995 134,884 3,514,038
Inter-segment revenue (1,651) (71,894) - (73,545)
─────── ─────── ─────── ───────
Revenue 3,118,508 187,101 134,884 3,440,493
═══════ ═══════ ═══════ ═══════

Segment result 367,779 24,638 (1,333) 391,084
═══════ ═══════ ═══════

Finance income 31,366 329 - 31,695
Finance costs (1,938) (112) (2,645) (4,695)
Share of profit of
associates 2,663 - - 2,663
Share of loss of jointly
controlled entities - (5,138) (22,725) (27,863)
───────
Profit before income tax 392,884
Income tax expense (73,031)
───────
Profit attributable to the
equity holders of the
Company 319,853
═══════

Other segment items included in the consolidated income statement are as follows:

Year ended 31st March, 2006

Hong Kong
Mainland
China
North
America Group
HK$’000 HK$’000 HK$’000 HK$’000

Depreciation 120,764 11,524 5,148 137,436
Amortisation of intangible
assets 2,703 - 3,190 5,893
Amortisation of leasehold
land and land use rights 5,399 1,554 - 6,953
Impairment of property,
plant and equipment 445 - - 445
Loss on disposal of
property, plant and
equipment 4,834 - - 4,834

══════ ══════ ══════ ══════
17

3 SEGMENT INFORMATION (CONTINUED)

(a) Primary reporting format – geographical segments

The segment assets and liabilities at 31st March, 2006 and capital expenditure for the
year then ended are as follows:

Hong Kong
Mainland
China
North
America Group
HK$’000 HK$’000 HK$’000 HK$’000

Segment assets 1,497,041 213,446 283,565 1,994,052
Associated companies 4,188 - - 4,188
Jointly controlled entities - 30,260 - 30,260
────── ────── ────── ──────
1,501,229 243,706 283,565 2,028,500

══════ ══════ ══════

Unallocated assets 284,807
──────
Total assets 2,313,307
══════
Segment liabilities 287,351 23,477 30,287 341,115
══════ ══════ ══════
Unallocated liabilities 88,799
──────
Total liabilities 429,914
══════
Capital expenditure 111,837 24,148 272,879 408,864
══════ ══════ ══════ ══════

Segment assets consist primarily of leasehold land and land use rights, property, plant and
equipment, intangible assets, investments in associates and jointly controlled entities,
inventories, receivables, cash and cash equivalents and other operating assets.
Unallocated assets comprise deferred taxation, available-for-sale financial assets,
held-to-maturity investments and financial assets at fair value through profit or loss.

Segment liabilities comprise operating liabilities and borrowing. They exclude items
such as taxation.

Capital expenditure comprises additions to leasehold land and land use rights, property,
plant and equipment, investment properties and intangible assets, including additions
resulting from acquisitions through business combinations.

18

3 SEGMENT INFORMATION (CONTINUED)

(b) Secondary reporting format – business segment

No segment analysis by business segment is presented as the Group principally operates
in one business segment, which is the operation of quick service restaurants, fast casual
dining, institutional catering and specialty restaurant chains.

4 REVENUE

2007 2006

HK$’000 HK$’000

Sales of food and beverages 3,774,598 3,370,946
Rental income 30,729 27,759
Royalty income 43,081 20,090
Management and service fee income 3,459 3,488
Franchise income 3,745 1,340
Sundry income 29,539 16,870
──────── ────────
3,885,151 3,440,493

════════ ════════

5 OTHER GAINS, NET

2007 2006

HK$’000 HK$’000

Fair value gains on financial assets at fair value through
profit or loss 1,990 3,925
Gain/(loss) on disposals of:
- Financial assets at fair value through profit or loss 1,145 4,060
- Available-for-sale financial assets - (5,781)
Fair value gains on investment properties 7,250 12,050
──────── ────────
10,385 14,254

════════ ════════

19

6 EXPENSES BY NATURE

2007 2006

HK$’000 HK$’000

Amortisation of leasehold land and land use rights 6,704 6,953
Amortisation of intangible assets (included in
administrative expense) 10,359 5,893
Depreciation of property, plant and equipment 152,618 137,436
Net loss on disposal of property, plant and equipment 7,764 4,834
Provision for impairment of property, plant and
equipment 7,790 445

════════ ════════

7 FINANCE INCOME AND COSTS
2007 2006

HK$’000 HK$’000

Finance income – interest income 34,859 31,695
Finance cost – interest expense on bank loans and
overdrafts (3,676) (4,695)
─────── ───────
Net finance income 31,183 27,000
═══════ ════════

8 INCOME TAX EXPENSE

The Company is exempted from taxation in Bermuda until 2016. Hong Kong profits
tax has been provided at the rate of 17.5% (2006: 17.5%) on the estimated assessable
profit for the year. Taxation on overseas profits has been calculated on the estimated
assessable profit for the year at the rates of taxation prevailing in the countries in which
the Group operates.

The amount of taxation charged to the consolidated income statement represents:

2007 2006

HK$’000 HK$’000
Current income tax:

- Hong Kong profits tax 71,961 65,043

- Overseas taxation 12,557 6,974

Deferred income tax (credited)/ charged relating to the
origination and reversal of temporary differences (1,033) 814
(Over)/ under-provision in prior years (646) 200
─────── ───────
82,839 73,031

═══════ ═══════
20

9 DIVIDENDS

2007 2006

HK$’000 HK$’000

Interim, paid, of 12 HK cents (2006: 10 HK cents) per
ordinary share 65,390 54,027
Final, proposed, 30 HK cents (2006: 25 HK cents) per
ordinary share 164,791 136,055
Special, proposed, Nil (2006: 20 HK cents) per ordinary
share - 108,844
─────── ───────
230,181 298,926

═══════ ═══════

A final dividend of 30 HK cents per ordinary share in respect of 2006/07, amounting to
a total final dividend of approximately HK$164,791,000 was proposed. The financial
statements do not reflect this dividend payable.

10 EARNINGS PER SHARE

Basic

Basic earnings per share is calculated by dividing the profit attributable to equity holders
of the Company by the weighted average number of ordinary shares in issue during the
year.

2007 2006

As restated
Profit attributable to equity holders of the Company
(HK$’000) 370,067 319,853
═════════ ═════════

Weighted average number of ordinary shares in
issue (‘000) 544,640 539,963
═════════ ═════════

Basic earnings per share (HK cents per share) 67.95 HK cents 59.24 HK cents
═════════ ═════════

Diluted

Diluted earnings per share is calculated adjusting the weighted average number of
ordinary shares outstanding to assume conversion of all dilutive potential ordinary
shares. The Company’s dilutive potential ordinary shares are share options. For the
share options, a calculation is done to determine the number of shares that could have
been acquired at fair value (determined as the average annual market share price of the
Company’s shares) based on the monetary value of the subscription rights attached to
outstanding share options. The number of shares calculated as above is compared with
the number of shares that would have been issued assuming the exercise of the share
options.
21

10 EARNINGS PER SHARE (CONTINUED)

2007 2006

As restated
Profit attributable to equity holders of the Company
(HK$’000) 370,067 319,853
------------------ ------------------

Weighted average number of ordinary shares in issue
(‘000) 544,640 539,963
Adjustments for share options (‘000) 8,113 7,050

───────── ─────────
552,753 547,013
------------------ ------------------

Diluted earnings per share (HK cents per share) 66.95 HK cents 58.47 HK cents

═════════ ═════════

11 TRADE AND OTHER RECEIVABLES

2007 2006

HK$’000 HK$’000

Trade receivables 23,991 30,930
Less: provision for impairment of receivables (3,347) (4,021)
────── ──────
Trade receivables - net 20,644 26,909
Other receivables 23,501 21,201
────── ──────
44,145 48,110

══════ ══════

The Group’s sales to customers are mainly on a cash basis. The Group also grants a
credit period between 30 to 90 days to certain customers for the provision of the Group’s
institutional catering services, sale of merchandise for the Group’s food manufacturing
businesses and its franchisees.

2007 2006

HK$’000 HK$’000

0 - 30 days 12,010 13,828
31 - 60 days 4,705 5,892
61 - 90 days 992 1,027
Over 90 days 6,284 10,183
────── ──────
23,991 30,930

══════ ══════

22

12 TRADE PAYABLES

The aging analysis of the trade payables is as follows:

2007 2006

HK$’000 HK$’000

0 - 30 days 83,489 71,924
31 - 60 days 4,441 3,412
61 - 90 days 1,810 892
Over 90 days 5,001 2,749

────── ──────
94,741 78,977

══════ ══════

13 RESERVES

Share
premium
Capital
redemption
reserve
Exchange
translation
reserve
Capital
reserve
Investment
reserve
Share based
compensation
reserve
Contributed
surplus
Revaluation
reserve
Retained
earnings Total
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
At 1st April, 2005, as
previously reported 43,124 152,034 6,864 (2,470) - - 85,197 - 1,338,533 1,623,282
Actuarial gains of
retirement benefit
obligation upon the
adoption of HKAS 19
(Amendment) - - - - - - - - 18,853 18,853
Deferred income tax effect
on actuarial gains of
retirement benefit
obligation upon the
adoption of HKAS 19
(Amendment) - - - - - - - - (3,444) (3,444)
─────── ─────── ─────── ─────── ─────── ─────── ─────── ─────── ──────── ────────
At 1st April, 2005, as
restated 43,124 152,034 6,864 (2,470) - - 85,197 - 1,353,942 1,638,691
Proceeds from shares
issued 14,381 - - - - - - - - 14,381
Acquisition of
subsidiaries - - - 23,549 - - - - - 23,549
Changes in fair value for
available-for-sale
financial assets - - - - (8,875)

- -

- - (8,875)
Actuarial gains of
retirement benefit
obligation - - - - - - - - 5,844 5,844
Deferred income tax effect
on actuarial gains of
retirement benefit
obligation - - - - - - - - (1,023) (1,023)
Employees shares option
scheme –value of
employee services - - - - - 3,449 - - - 3,449
Exchange differences
arising on consolidation - - (4,432) - -

- -

- - (4,432)
Profit attributable to equity
holders of the Company - - - - -

- -

- 319,853 319,853

Dividends - - - - - - - - (162,125) (162,125)
─────── ─────── ─────── ─────── ─────── ─────── ─────── ─────── ──────── ────────
At 31st March, 2006 57,505 152,034 2,432 21,079 (8,875) 3,449 85,197 - 1,516,491 1,829,312
═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ════════ ════════
23

13 RESERVES (CONTINUED)

Share
premium
Capital
redemption
reserve
Exchange
translation
reserve
Capital
reserve
Investment
reserve
Share based
compensation
reserve
Contributed
surplus
Revaluation
reserve
Retained
earnings Total
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
At 1
st
April, 2006 57,505 152,034 2,432 21,079 (8,875) 3,449 85,197 - 1,516,491 1,829,312
Proceeds from shares
issued 20,321 - - - - - - - - 20,321
Changes in fair value for
available-for-sale
financial assets - - - - 7,408

- - - - 7,408

Actuarial gains of
retirement benefit
obligation - - - - - - - - 14,488 14,488
Deferred income tax effect
on actuarial gains of
retirement benefit
obligation - - - - - - - - (2,535) (2,535)
Employees shares option
scheme –value of
employee services - - - - - 7,515 - - - 7,515
Release of share based
compensation reserve to
share premium upon
share option exercised 1,417 - - - - (1,417) - - - -
Exchange differences
arising on consolidation - - 5,763 - -

- - - - 5,763

Changes in fair value for
transfer of properties,
plant and equipment and
leasehold land and land
use rights to investment
properties, net of tax - - - - - - - 180 - 180
Profit attributable to equity
holders of the Company - - - - -

- - - 370,067 370,067

Dividends - - - - - - - - (310,645) (310,645)
─────── ─────── ─────── ─────── ─────── ─────── ─────── ─────── ──────── ────────
At 31st March, 2007 79,243 152,034 8,195 21,079 (1,467) 9,547 85,197 180 1,587,866 1,941,874
═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ════════ ════════

14 COMMITMENTS

Capital commitments

As at 31st March, 2007, the Group had the following capital commitments:

2007 2006

HK$’000 HK$’000

Acquisition of property, plant and equipment
Authorised and contracted for 12,858 10,468
Authorised but not contracted for 118,942 120,717
─────── ───────
131,800 131,185

═══════ ═══════

24

FINAL DIVIDEND

In recognition of the long term support of our shareholders, the Directors recommended a final
dividend of 30 cents (2006: 25 cents) per share, resulting in a total dividend of 42 cents (2006:
55 cents) per share for the year ended 31
st
March, 2007, to those persons registered as
shareholders on 11
th
September, 2007. Subject to shareholders’ approval at the forthcoming
annual general meeting of the Company, the final dividend will be paid on 5
th
October, 2007.

CLOSURE OF REGISTER OF MEMBERS

The Register of Members of the Company will be closed from Tuesday, 11th September, 2007
to Tuesday, 18th September, 2007 (both days inclusive) during which period no transfers of
shares will be effected. To rank for the aforesaid final dividend, all completed transfer forms,
accompanied by the relevant share certificates, must be lodged with the Company’s Hong
Kong Branch Share Registrars, Computershare Hong Kong Investor Services Limited at
Rooms 1712-1716, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong for
registration not later than 4:30 p.m. on Monday, 10th September, 2007.

FINANCIAL REVIEW

The Group’s financial position, as at 31
st
March, 2007, continues to be very strong, with a net
cash of close to about HK$547 million and available banking facilities of HK$836 million.

As at 31
st
March, 2007, the Group did not have any external borrowing (2006: Nil) and
maintained a healthy gearing (being total borrowings over shareholders’ funds) of Nil
(2006: Nil). There has been no material change in contingent liabilities or charges on assets
since 31
st
March, 2006.

As at 31
st
March, 2007, the Company has given guarantees approximately HK$836,000,000
(2006: HK$836,000,000) to financial institutions in connection with the banking facilities
granted to its subsidiaries.

Regarding foreign exchange fluctuations, the Group earned revenue and incurred costs and
expenses are mainly denominated in Hong Kong dollars, while those of our North America and
PRC subsidiaries and jointly controlled entities are denominated in United States dollars,
Canadian dollars and Renminbi respectively. While foreign currency exposure did not pose
significant risk for the Group, we will continue to take proactive measures and monitor closely
of our exposure to such currency movement.
25

PURCHASE, SALE OR REDEMPTION OF SHARES

There were no purchases, sales or redemptions by the Company or any of its subsidiaries, of the
Company’s listed securities during the year ended 31
st
March, 2007.

CORPORATE GOVERNANCE

The Company has complied with all the code provisions set out in Appendix 14 – Code on
Corporate Governance Practices of the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited for the financial year ended 31
st
March, 2007, except for the
deviation from Code Provision A.2.1.

Code Provision A.2.1
Code Provision A.2.1 provides that the roles of chairman and chief executive officer should be
separate and should not be performed by the same individual.

Mr. Chan Yue Kwong, Michael assumes the roles of Chairman and Chief Executive Officer of
the Group. The Board considers that, given the current corporate structure, there is no
separation between the roles of Chairman and Chief Executive Officer. Although the roles and
responsibilities for Chairman and Chief Executive Officer are vested in one person, all major
decisions are made in consultation with the Board and appropriate Board committees. There
are three independent non-executive directors in the Board with sufficient independent element.
Therefore, the Board is of the view that there are adequate impartiality and safeguards in place.

REVIEW OF THE RESULTS

The Audit Committee has reviewed with directors the accounting principles and the practices
adopted by the Group and discussed internal control and financial reporting matters, including
a review of the annual results, related to the preparation of the 2006/2007 annual report.

The figures in respect of the preliminary announcement of the Group’s results for the year
ended 31st March, 2007 have been agreed by the Group’s auditors, PricewaterhouseCoopers,
to the financial statements set out in the Group’s audited consolidated financial statements for
the year. The work performed by PricewaterhouseCoopers in this respect did not constitute an
assurance engagement in accordance with Hong Kong Standards on Auditing, Hong Kong
Standards on Review Engagements or Hong Kong Standards on Assurance Engagements
issued by the Hong Kong Institute of Certified Public Accountants and consequently no
assurance has been expressed by PricewaterhouseCoopers on the preliminary announcement.

26

As at the date of this announcement, the Board of Directors of the Company comprises Mr. Chan Yue Kwong,
Michael, Mr. Lo Hoi Kwong, Sunny, Ms. Lo Pik Ling, Anita and Mr. Lo Tak Shing, Peter as executive directors; Mr.
Lo Tang Seong, Victor, Mr. Lo Hoi Chun and Mr. Hui Tung Wah, Samuel as non-executive directors; Mr. Choi Ngai
Min, Michael, Mr. Li Kwok Sing, Aubrey and Mr. Kwok Lam Kwong, Larry as independent non-executive
directors.
27