(Incorporated in Bermuda with limited liability)
ANNUAL REPOR
T 2
006-2007
Annual
Repor
t
2006
2007
ANNUAL REPORT 2006 - 2007EMPEROR ENTERTAINMENT GROUP
| Contents |
| 1 |
| Corporate Information 2 |
| Biographies of Directors and Senior Executives 3-4 |
| Chairperson’s Statement 5-8 |
| Directors’ Report 9-22 |
| Corporate Governance Report 23-27 |
| Independent Auditor’s Report 28-29 |
| Consolidated Income Statement 30 |
| Consolidated Balance Sheet 31-32 |
| Consolidated Statement of Changes in Equity 33 |
| Consolidated Cash Flow Statement 34-35 |
| Notes to the Consolidated Financial Statements 36-75 |
| Financial Summary 76 |
ANNUAL REPORT 2006 - 2007 EMPEROR ENTERTAINMENT GROUP LIMITED
Corporate Information
2
Directors
Luk Siu Man, Semon (Chairperson)
Ng Sui Wan alias Ng Yu
Wong Chi Fai
Fan Man Seung, Vanessa
Wong Ching Yue
Chu Kar Wing
Wong Tak Ming, Gary
Non-executive director
Independent non-executive directors
Company Secretary
Mok Fung Lin, Ivy, LL.B. (Hons.) P.C.LL, MBA
Compliance Officer
Wong Chi Fai, FCCA, AHKSA
Qualified Accountant
Lau Wei Fan, CPA (Aust), AHKSA
Authorised Representatives
Fan Man Seung, Vanessa
Mok Fung Lin, Ivy
Audit Committee
Chu Kar Wing (Chairman)
Wong Ching Yue
Wong Tak Ming, Gary
Remuneration Committee
Wong Chi Fai (Chairman)
Chu Kar Wing
Wong Tak Ming, Gary
Auditors
Deloitte Touche Tohmatsu
Registered Office
Clarendon House
2 Church Street
Hamilton HM11
Bermuda
Principal Office
28th Floor
Emperor Group Centre
288 Hennessy Road
Wanchai
Hong Kong
Registrars (in Bermuda)
Butterfield Fund Services (Bermuda) Limited
Rosebank Centre
11 Bermudiana Road
Pembroke HM08
Bermuda
Registrars (in Hong Kong)
Secretaries Limited
26th Floor
Tesbury Centre
28 Queen’s Road East
Wanchai
Hong Kong
Bankers
The Hongkong and Shanghai Banking
Corporation Limited
Allied Irish Banks plc
Website
http://www.emp8078.com
GEM Stock Code
8078
ANNUAL REPORT 2006 - 2007EMPEROR ENTERTAINMENT GROUP LIMITED
Biographies of Directors and Senior Executives
3
Luk Siu Man, Semon
Non-executive Director and Chairperson
Aged 51, graduated from The University of Toronto with a Bachelor’s Degree in Commerce. She
had worked in the banking industry for almost 10 years. She is also the non-executive director and
chairperson of Emperor International Holdings Limited and Emperor Entertainment Hotel Limited,
the shares of both companies are listed on the Main Board of the Stock Exchange. She joined
Emperor Entertainment Group Limited (the “Company”) in November 2000.
Ng Sui Wan alias Ng Yu
Executive Director
Aged 57, is responsible for the corporate and business strategies, and operations of the Group.
Prior to joining the Company, he was the General Manager of Celestial Pictures Limited, an
associated company of Television Broadcasts Limited (“TVB”), in charge of motion film production.
He had worked for Capital Artists Limited for four years since 1996, holding the position as
General Manager. During that period, he had been involved in record production, publishing and
distribution and talent management. Before, he was the Production Controller of TVB for 20 years,
commanding television programme production and creative teams. He joined the Company in
December 2001.
Wong Chi Fai
Executive Director and Compliance Officer
Aged 51, is an associate of the Hong Kong Institute of Certified Public Accountants and a fellow
of the Association of Chartered Certified Accountants. He is responsible for the overall corporate
and business planning of the Group. He has over 20 years’ experience in finance and management
spanning a diverse range of businesses from manufacturing to property investment and development.
He is also the joint managing director of Emperor International Holdings Limited and a director of
Emperor Entertainment Hotel Limited, the shares of both companies are listed on the Main Board
of the Stock Exchange. He joined the Company in January 1994.
Fan Man Seung, Vanessa
Executive Director
Aged 44, is a lawyer by profession in Hong Kong and a registered accountant. She also holds a
Master’s Degree in Business Administration. She is responsible for the overall corporate and business
planning of the Group. She is also the joint managing director of Emperor International Holdings
Limited and a director of Emperor Entertainment Hotel Limited, the shares of both companies are
listed on the Main Board of the Stock Exchange. She joined the Company in January 1994.
Wong Ching Yue
Independent Non-executive Director
Aged 58, is a senior counsel, barrister-at-law, practising in Hong Kong since 1975. He joined the
Company in November 2000.
ANNUAL REPORT 2006 - 2007 EMPEROR ENTERTAINMENT GROUP LIMITED
Biographies of Directors and Senior Executives
4
Chu Kar Wing
Independent Non-executive Director
Aged 50, holds a Bachelor’s Degree in Social Science majoring in Economics. He has extensive
experience in the banking and finance sector for several well-known corporations. He is also an
independent non-executive director of Oriental Investment Corporation Limited, the shares of
which are listed on the Main Board of the Stock Exchange and New Chinese Medicine Holdings
Limited, the shares of which are listed on the GEM of the Stock Exchange. He joined the Company
in September 2004.
Wong Tak Ming, Gary
Independent Non-executive Director
Aged 31, is a certified public accountant (practising) and a fellow member of both the Association
of Chartered Certified Accountants and The Taxation Institute of Hong Kong. He obtained his
Degree in Applied Accounting (Hons) in the United Kingdom. He has over 10 years’ experience in
the field of auditing and accounting. Mr. Wong is also an independent non-executive director of
Century Legend (Holdings) Limited, the shares of which are listed on the Main Board of the Stock
Exchange. He joined the Company in September 2004.
Mok Fung Lin, Ivy
Company Secretary
Aged 42, is a lawyer by profession in Hong Kong and the United Kingdom, and holds a Master’s
Degree in Business Administration. She is also an executive director of Emperor International
Holdings Limited and Emperor Entertainment Hotel Limited, the shares of both companies are
listed on the Main Board of the Stock Exchange.
Albert Lee
Aged 53, joined the Group as chief executive officer of Emperor Motion Pictures, the film and
television programme production and distribution arm of the Group, in May 2003. He graduated
from the University of Wales, Institute of Science and Technology, with a Bachelor’s Degree in
Science majoring in Economics in 1975. Prior to joining the Group, he has over 20 years’ experience
in the film industry. He is currently a member of the Election Committee for the Performing Arts
sub-sector and has rendered his service in various public bodies in the media, communication and
film sector, including acting as director of Hong Kong Kowloon New Territories Motion Picture
Industry Association Ltd (MPIA), Independent Film and Television Alliance (IFTA), honorary advisor
to the Hong Kong Asia Film Financing Forum (HAF) and a member of the Hong Kong Trade
Development Council’s Entertainment Industry Advisory Committee.
Fok Man Hei, Mani
Aged 34, is the director of artiste management division of the Group and is responsible for
overseeing the operations of the artiste management division of the Group in all aspects including
artistes’ albums, film production, television commercials, concerts etc. and providing guidance to
certain artistes on personal and career developments. She has over 10 years’ experience in the
artiste management industry. Prior to joining the Group in 1993, she worked in the modeling and
advertising industries. She possesses a detailed knowledge of and has a successful track record in
the promotion of artistes like Nicholas Tse, Joey Yung and Twins in the industry.
ANNUAL REPORT 2006 - 2007EMPEROR ENTERTAINMENT GROUP LIMITED
Chairperson’s Statement
5
For the financial year ended 31st March, 2007, the Company and its subsidiaries (collectively
referred to as the “Group”) reported a net profit of approximately HK$17.3 million, a turnaround
from a loss of HK$32.5 million in the previous year. Turnover of the Group reached approximately
HK$183.9 million as compared with approximately HK$196.9 million in the previous year. During
the year, the film and television production and distribution sector saw substantial improvement in
its performance.
OPERATION REVIEW
Music Production and Distribution
The operation recorded a turnover of approximately HK$63.1 million for the year, compared with
HK$62.1 million in the previous year. Despite keen competition and piracy problems such as free
Internet download, the segment saw a cut in segment loss to approximately HK$6.1 million, as
against a HK$8.5 million loss in the previous year.
To survive from cut-throat competition, the Group focused on making quality music records and
exploring new revenue streams. Licence income jumped 44% to approximately HK$32.3 million,
from HK$22.5 million previously. Album sales contributed approximately HK$23.5 million, as against
HK$33.4 million in the previous year.
Income from multimedia offerings climbed 18% to HK$7.3 million during the year. The division
provides idols-based mobile entertainment services including connecting tone, content download
and mobile games to mobile subscribers in Hong Kong. The management expects the income from
multimedia offerings to increase steadily in future.
During the year, the Group released 74 music albums (2006: 77) including 68 for its own artistes
and 6 for external artistes. The Group had received 145 awards (2006: 157) in various musical
functions and presentations up to the date of this report, including 9 IFPI Hong Kong Top Sales
Music Awards.
Film and Television Programme Production and Distribution
This business sector contributed approximately HK$75.7 million (2006: HK$75.4 million) to the
Group’s turnover and recorded a turnaround with profit of approximately HK$8.7 million for the
year under review, compared with a loss of HK$53.1 million in the previous year. The profit was
mainly attributable to distribution income and licensing of films.
Distribution
During the year, the Group received handsome contribution from distribution of films produced by
JCE Movies. In particular, Rob-B-Hood, starring Jackie Chan, Louis Koo, Michael Hui and directed
by long-time collaborator Benny Chan, was one of the top box-office performers of the year and
the Group continued to enjoy satisfactory distribution income from The Myth.
ANNUAL REPORT 2006 - 2007 EMPEROR ENTERTAINMENT GROUP LIMITED
Chairperson’s Statement
6
OPERATION REVIEW (Continued)
Film and Television Programme Production and Distribution (Continued)
Distribution (Continued)
Throughout the year, Emperor Motion Pictures (“EMP”) had participated in major international
film festivals and markets, including Cannes, Venice, the American Film Market in Los Angeles, as
well as the Hong Kong FilMart, and achieved significant sales results.
Production
Two feature films were completed and released during this year: namely The Knot, a co-production
with the China Film Group and Taiwan’s Long Shong International, and Twins Mission, a co-
production with Sundream Motion Pictures, a subsidiary of i-Cable Communications Limited. A
third, a thriller entitled The Deserted Inn, starring Kenny Kwan and co-produced with Beijing’s
PolyBona Film Publishing Co., was also completed.
During this year, the Group had also completed three television series co-produced with mainland
Chinese partners. It includes a documentary series celebrating the 10th anniversary of the Hong
Kong SAR entitled Films – the Story Between Two Cities.
Artiste Management
The Group managed singers under the label of Emperor Entertainment Group, as well as artistes
for film and television programme production.
Income from artiste management for the year increased by 11% to approximately HK$37.8 million
(2006: HK$34.1 million). Profit totalled at HK$18.2 million, compared with HK$18.3 million
previously.
During the year, the Group had recruited 16 artistes, including Jeff Chang Hsin Che and Cheung
Ka-fai with renowned reputation in Greater China region. The newly-joined artistes also included 3
from the “EEG Singing Contest 2006” co-organised with Television Broadcasts Limited.
As at the end of the year, the Group managed a total of 54 artistes (2006: 47).
Event Production
The segment recorded income of HK$7.3 million (2006: $25.3 million) and profit of HK$3.0 million
(2006: $15.5 million) for the year under review.
The Group had organised a total of 22 concerts during the year, featuring the Group’s artistes and
through co-operation with third parties. These include Joey Yung with well-known violinist Yao
Jue and Moravian Philharmonic Orchestra, Paul Anka, Connie Francis, Liu Jia Chang, Wang Lee
Hom, Jolin Choi, Grasshopper, Elaine Paige in Hong Kong and Rolling Stones in Shanghai.
ANNUAL REPORT 2006 - 2007EMPEROR ENTERTAINMENT GROUP LIMITED
Chairperson’s Statement
7
CAPITAL STRUCTURE, LIQUIDITY AND FINANCIAL RESOURCES
There is no material change in the Group’s sources of fund to finance its operation and capital
expenditure, as well as capital structure as disclosed in the Group’s annual report for the year
ended 31st March, 2006.
As at 31st March, 2007, current assets and liabilities of the Group were approximately HK$134.5
million and HK$111.6 million respectively and current ratio (expressed as current assets over
current liabilities) was 1.2 times (2006: 1.1 times). Advances from the substantial shareholder,
Surplus Way Profits Limited (“Surplus Way”), were approximately HK$29.6 million, which were
denominated in Hong Kong dollars, unsecured, interest bearing at the Hong Kong prime rate and
had no fixed repayment term.
Other than disclosed above, the Group had no other external borrowings as at the end of the year.
With the borrowings and bank and cash held in hand mainly denominated in U.S. dollars, Hong
Kong dollars and Reminbi, the Group experienced no significant exposure to foreign exchange rate
fluctuation.
As at 31st March, 2007 the Group’s gearing ratio (expressed as a percentage of total borrowings
over net asset value) rose from 23% in the previous year to 33%, which was mainly due to
additional advances from Surplus Way during the year.
Together with the cash flow generated by the operation of the Group in its ordinary course of
business and its existing loan facility, the board of directors (the “Board”) expected the Group to
have sufficient working capital for its operation.
COMMITMENTS
As at 31st March, 2007, the Group had total commitments of approximately HK$45.6 million,
which comprised HK$4.3 million for operating leases, HK$10.4 million for artiste fees, HK$28.3
million for film production costs and HK$2.6 million for broadcasting service.
NUMBER AND REMUNERATION OF EMPLOYEES
The Group’s number of employees as at 31st March, 2007 was 123 (2006: 118) and total staff
costs for the year was approximately HK$43.0 million (2006: HK$42.9 million). All employees are
under the remuneration policy of fixed monthly salary with discretionary bonus. The Company also
has a share option scheme for providing incentive to full-time employees of the Group. No options
were granted or outstanding during the year.
ANNUAL REPORT 2006 - 2007 EMPEROR ENTERTAINMENT GROUP LIMITED
Chairperson’s Statement
8
PROSPECTS
Supported by a strong talent base and solid industry expertise, the management expects the
Group to grow despite the keen competition and increase its market share locally and overseas.
During the year, the Group had launched a television channel – EEG Channel – on TVB’s pay-
television platform. The 24-hour channel broadcasts news, interviews and music videos featuring
the Group’s artistes. Since its launch in November 2006, the channel had been well-received and
was expected to be increasingly popular among audience.
To further expand in the lucrative Mainland market, the Group had established “Emperor
Entertainment Group (China)” (i.e.K / "! ), a wholly-owned subsidiary
to operate artiste management and concert production in the mainland market.
Meanwhile, the Group had also established a joint venture in Shanghai with Shanghai Film Group
Corporation, one of the leading nationwide media conglomerates in China called “SFS Emperor”
(i.e.jjB"! ), which focuses on media content production and nurturing
young artistes.
The Group has scheduled to organise more concerts in Hong Kong in the coming periods. The
management also plans to organise more events and concerts for artistes in Australia, United
States, Canada, China and Southeast Asia to further enrich its income stream. The Group also
expects to strengthen the popularity of artistes through offering mobile data services in Hong
Kong and Mainland China.
In the coming periods, EMP will continue to co-develop a number of feature film projects with
local and regional strategic partners and filmmakers, including the China Film Group, StarTV,
Shanghai Film Studios and Singapore’s Raintree/ Mediacorp.
Planned film productions include Kung Fu Dunk, a co-production with Taiwan’s Chang-Hong
Channel Film & Video and the Shanghai Film Group, starring Jay Chou and Charlene Choi, and The
Sun Also Rises, a much-anticipated film by Chinese auteur Jiang Wen, Home Run, a drama set in
Shanghai starring Chapman To and Fan Bingbing co-produced with IEC Production Limited. EMP
has also planned to produce The Fantastic Water Babes by Jeff Lau on its own starring Gillian
Chung, Stephen Fung, Alex Fong and Chinese Olympian Tian Liang. The management expects the
coming year to be a busy year for its film and television production and distribution sector.
ANNUAL REPORT 2006 - 2007EMPEROR ENTERTAINMENT GROUP LIMITED
Directors’ Report
9
The directors of the Company present their annual report and the audited consolidated financial
statements of the Group for the year ended 31st March, 2007.
PRINCIPAL ACTIVITIES
The Company is an investment holding company. The principal activities of its principal subsidiaries
are set out in note 33 to the consolidated financial statements.
RESULTS AND APPROPRIATIONS
The results of the Group for the year ended 31st March, 2007 are set out in the consolidated
income statement on page 30.
The directors of the Company do not recommend the payment of a dividend.
PROPERTY, PLANT AND EQUIPMENT
Movements in the property, plant and equipment of the Group during the year are set out in note
14 to the consolidated financial statements.
DISTRIBUTABLE RESERVES OF THE COMPANY
As at 31st March, 2007, the Company’s reserves available for distribution consisted of contributed
surplus of HK$3,953,000 (2006: HK$3,953,000) and retained profits of HK$1,425,000 (2006:
HK$1,793,000).
Under the Companies Act 1981 of Bermuda, the contributed surplus account of the Company is
available for distribution. However, the Company cannot declare or pay a dividend, or make a
distribution out of contributed surplus if:
(i) it is, or would after the payment be, unable to pay its liabilities as they become due; or
(ii) the realisable value of its assets would thereby be less than the aggregate of its liabilities
and its issued share capital and share premium accounts.
ANNUAL REPORT 2006 - 2007 EMPEROR ENTERTAINMENT GROUP LIMITED
Directors’ Report
10
DIRECTORS
The directors of the Company during the year and up to the date of this report were:
Non-executive director:
Ms. Luk Siu Man, Semon (Chairperson)
Executive directors:
Mr. Wong Chi Fai
Ms. Fan Man Seung, Vanessa
Mr. Ng Sui Wan (alias Ng Yu)
Independent non-executive directors:
Mr. Wong Ching Yue
Mr. Chu Kar Wing
Mr. Wong Tak Ming, Gary
Subject to the service contracts hereinafter mentioned, the term of office of each director, including
the independent non-executive directors, is the period up to his/her retirement by rotation in
accordance with the Bye-laws of the Company.
In accordance with Bye-laws 87(1) and 87(2) of the Company’s Bye-laws, Mr. Wong Chi Fai, Ms.
Fan Man Seung, Vanessa and Mr. Chu Kar Wing retire at the forthcoming annual general meeting
and, being eligible, offer themselves for re-election.
On 25th October, 2005, Mr. Ng Sui Wan (alias Ng Yu) (“Mr. Ng Yu”) entered into an employment
contract with Emperor Entertainment (Hong Kong) Limited, a wholly owned subsidiary of the
Company, in relation to his service as the director and Chief Executive Officer of the Group in
connection with its businesses, for a term commencing from 10th December, 2005 until terminated
by not less than three months’ notice in writing served by either party on the other or payment in
lieu of notice.
Mr. Ng Yu also entered into another service agreement with the Company to serve as an executive
director of the Company for an initial term of one year commencing from 26th August, 2004, and
will continue thereafter until terminated by not less than three months’ notice in writing served by
either party on the other.
Each of Mr. Wong Chi Fai and Ms. Fan Man Seung, Vanessa, entered into a service agreement
with the Company for an initial term of two years commencing from 30th November, 2000, and
will continue thereafter until terminated by not less than three months’ notice in writing served by
either party on the other.
ANNUAL REPORT 2006 - 2007EMPEROR ENTERTAINMENT GROUP LIMITED
Directors’ Report
11
DIRECTORS (Continued)
Each of the non-executive directors of the Company has entered into a service contract with the
Company for a term of two years commencing on the following dates respectively, with all the
term being renewed automatically for successive term of one year each commencing from the date
next after the expiry of the then current term, unless terminated by not less than three months’
notice in writing served by either party:
Name of director Commencing date
Luk Siu Man, Semon (“Ms. Semon Luk”) 30th November, 2002
Wong Ching Yue 1st April, 2002
Chu Kar Wing 30th September, 2004
Wong Tak Ming, Gary 30th September, 2004
Save as disclosed above, none of the directors has a service agreement with the Company or any
of its subsidiaries which is not determinable by the Group within one year without payment of
compensation (other than statutory compensation).
DIRECTORS’ INTERESTS IN CONTRACTS OF SIGNIFICANCE AND CONNECTED TRANSACTIONS
(a) As announced by the Company on 28th November, 2006, Emperor Motion Picture Limited
(“EMP”), a wholly-owned subsidiary of the Company, entered into a distribution agreement
dated on 15th May, 2006 (the “Distribution Agreement”) with JCE Movies Limited (“JCE”)
pursuant to which EMP was appointed by JCE as the sales agent of a motion picture entitled
“Rob-B-Hood” produced by JCE, for a period from 15th May, 2006 to 31st March, 2009,
subject to (a) renewal at the option of EMP for a period from 1st April, 2009 to 31st March,
2012 and (b) automatic renewal for a period of three years upon expiry of such renewed
term or any subsequent term (as the case may be) unless the Distribution Agreement is
terminated by either party in writing three months in advance prior to the expiry of such
term. Under the Distribution Agreement, JCE granted to EMP the sole and exclusive right to
distribute the licensed rights of the motion picture “Rob-B-Hood” worldwide in all language
versions dubbed and subtitled at the agency fee rates ranging from 2% to 12% of the gross
income from theatrical release or from other forms of media under the Distribution Agreement.
The rates will depend on the type of media, territories and whether EMP is required to
rebate sub-sales agent for the distribution. The directors of the Company consider that the
agency fee rates under the Distribution Agreement are on normal commercial terms after
comparing with other film distribution agreements made by EMP with independent third
parties (as defined in the Rules Governing the Listing of Securities on the GEM of the Stock
Exchange (the “GEM Listing Rules”)). During the year, the Group received agency fee of
approximately HK$9,685,000 from JCE in connection with the Distribution Agreement. JCE
is ultimately beneficially owned as to 50% by The Albert Yeung Discretionary Trust (the
“Trust”), a discretionary trust set up by Mr. Yeung Sau Shing, Albert (“Mr. Albert Yeung”),
a deemed substantial shareholder of the Company, and 50% by other independent third
parties (as defined in the GEM Listing Rules). JCE is therefore an associate of Mr. Albert
Yeung under the GEM Listing Rules and the transaction constitutes a continuing connected
transaction as defined under the GEM Listing Rules. This transaction had been complied with
the disclosure requirements in accordance with Chapter 20 of the GEM Listing Rules.
ANNUAL REPORT 2006 - 2007 EMPEROR ENTERTAINMENT GROUP LIMITED
Directors’ Report
12
DIRECTORS’ INTERESTS IN CONTRACTS OF SIGNIFICANCE AND CONNECTED TRANSACTIONS
(Continued)
(b) EMP entered into a distribution agreement (the “Second Distribution Agreement”) dated 1st
November, 2004 with JCE. Pursuant to the Second Distribution Agreement, EMP was granted
the sole and exclusive rights to distribute the licensed right worldwide and in all languages
of the motion picture “The Myth” produced by JCE, for a period from 1st November, 2004
to 31st March, 2007, subject to (a) renewal at the option of EMP for a period of three years
commencing from 1st April, 2007; and (b) automatic renewal for a period of three years
upon expiry of such renewed term or any subsequent term (as the case may be) unless the
Second Distribution Agreement is terminated by either party in writing three months in
advance prior to the expiry of such term. EMP had exercised the option to renew the Second
Distribution Agreement from 1st April, 2007 to 31st March, 2010. The agency fee rates
ranging from 2% to 12% of the gross income from distribution and any exploitation of the
motion picture. The rates will depend on the type of media, territories and whether EMP is
required to rebate sub-sales agent for the distribution. The directors of the Company consider
that the agency fee rates under the Second Distribution Agreement are on normal commercial
terms after comparing with other film distribution agreements made by EMP with independent
third parties (as defined in the GEM Listing Rules). During the year, the Group received
agency fee of approximately HK$4,371,000 from JCE in connection with the Second
Distribution Agreement. JCE is an associate of Mr. Albert Yeung under the GEM Listing
Rules (as mentioned above) and the transaction constitutes a continuing connected transaction
as defined under the GEM Listing Rules.
(c) EMP entered into a marketing agreement (the “Marketing Agreement”) dated 1st May,
2006 with JCE. Pursuant to the Marketing Agreement, EMP was to provide marketing and
public relation services to promote the motion picture “Rob-B-Hood” in Hong Kong for a fee
of HK$30,000 plus a flexible rate ranging from 5% to 10% of the gross/net media publication
charge or cash received from sponsors, depending on the nature of income from sponsors
and promotional charge. The directors of the Company consider that the fee is on normal
commercial terms. During the year, the Group received income of approximately HK$1,119,000
from JCE in connection with the Marketing Agreement. JCE is an associate of Mr. Albert
Yeung under the GEM Listing Rules (as mentioned above) and the transaction constitutes a
connected transaction as defined under the GEM Listing Rules.
ANNUAL REPORT 2006 - 2007EMPEROR ENTERTAINMENT GROUP LIMITED
Directors’ Report
13
DIRECTORS’ INTERESTS IN CONTRACTS OF SIGNIFICANCE AND CONNECTED TRANSACTIONS
(Continued)
(d) During the year, the Group had the following transactions with connected persons as defined
in the GEM Listing Rules:
Amount for
Name of Nature of the year ended
counterparty transaction Terms 31st March, 2007
HK$’000
Very Sound Operating lease 1st April, 2005 to 539
Investments rentals paid 31st March, 2008
Limited at a monthly rental
(Note (1)) of HK$51,270
(exclusive of rates,
management fees and
other outgoing charges)
From 6th February, 2006,
the monthly rental
decreased to HK$45,750
(exclusive of rates,
management fees and
other outgoing charges)
Management 1st April, 2005 to 170
fees paid 31st March, 2008
at a monthly fee
of HK$16,210
(subject to increase)
From 6th February, 2006,
the monthly fee
decreased to HK$14,469
(subject to increase)
Operating lease 1st April, 2005 to 1,454
rentals paid 31st March, 2008
at a monthly rental
of HK$121,200
(exclusive of rates,
management fees and
other outgoing charges)
Management 1st April, 2005 to 460
fees paid 31st March, 2008
at a monthly fee
of HK$38,334.30
(subject to increase)
ANNUAL REPORT 2006 - 2007 EMPEROR ENTERTAINMENT GROUP LIMITED
Directors’ Report
14
DIRECTORS’ INTERESTS IN CONTRACTS OF SIGNIFICANCE AND CONNECTED TRANSACTIONS
(Continued)
(d) During the year, the Group had the following transactions with connected persons as defined
in the GEM Listing Rules: (Continued)
Amount for
Name of Nature of the year ended
counterparty transaction Terms 31st March, 2007
HK$’000
Active Pace Car park From 1st February, 2005 43
Investment rentals paid and can be terminated
Limited by either party by giving
(Note (1)) one month’s prior written
notice at a monthly fee
of HK$3,600
(subject to increase)
Car park From 1st April, 2005 46
rentals paid and can be terminated
by either party by giving
one month’s prior written
notice at a monthly fee
of HK$3,800
(subject to increase)
Car park From 1st April, 2005 58
rentals paid and can be terminated
by either party by giving
one month’s prior written
notice at a monthly fee
of HK$4,800
(subject to increase)
Car park From 4th August, 2005 41
rentals paid and can be terminated
by either party by giving
one month’s prior written
notice at a monthly fee
of HK$3,400
(subject to increase)
ANNUAL REPORT 2006 - 2007EMPEROR ENTERTAINMENT GROUP LIMITED
Directors’ Report
15
DIRECTORS’ INTERESTS IN CONTRACTS OF SIGNIFICANCE AND CONNECTED TRANSACTIONS
(Continued)
(d) During the year, the Group had the following transactions with connected persons as defined
in the GEM Listing Rules: (Continued)
Amount for
Name of Nature of the year ended
counterparty transaction Terms 31st March, 2007
HK$’000
Profit Noble Advertising 1st April, 2005 to 206
Holdings fees paid 31st March, 2008
Limited based on the advertising
(“Profit Noble”) expenses projection
(Note (2)) prepared by the
management of the
Company that will
be not more than
HK$500,000 for each
of the financial years up
to 31st March, 2008
Notes:
(1) The counterparties are all indirect wholly-owned subsidiaries of Emperor International Holdings Limited
(“Emperor International”). Emperor International is a listed company, 57.55% of the shares of which were
registered in the name of and beneficially owned by Charron Holdings Limited (“Charron”) as at 31st
March, 2007. The entire issued share capital of Charron was held by Jumbo Wealth Limited (“Jumbo
Wealth”) on trust for The A&A Unit Trust under the Trust. Mr. Albert Yeung, as founder of the Trust, was
deemed to be interested in the shares held by Charron in Emperor International. By virtue of the aforesaid
interests of Mr. Albert Yeung, Ms. Semon Luk (spouse of Mr. Albert Yeung and director of the Company)
was also deemed to be interested in the issued share capital held by Charron in Emperor International.
(2) Emperor International entered into an advertising services agreement dated 8th August, 2005 with the
Company to provide advertising services to the Company by some of its subsidiaries (“Subsidiaries”).
Emperor International disposed the Subsidiaries to Profit Noble with completion on 1st April, 2006. Profit
Noble, a company indirectly owned by Perpetual Wealth Investments Limited (“Perpetual Wealth”), a
trustee of The A&S Unit Trust under the Trust. Mr. Albert Yeung, as founder of the Trust, was deemed to
be interested in the shares held by Perpetual Wealth in Profit Noble. By virture of the aforesaid interests of
Mr. Albert Yeung, Ms. Semon Luk (spouse of Mr. Albert Yeung and director of the Company) was also
deemed to be interested in the issued share capital held by Profit Noble.
ANNUAL REPORT 2006 - 2007 EMPEROR ENTERTAINMENT GROUP LIMITED
Directors’ Report
16
DIRECTORS’ INTERESTS IN CONTRACTS OF SIGNIFICANCE AND CONNECTED TRANSACTIONS
(Continued)
(d) During the year, the Group had the following transactions with connected persons as defined
in the GEM Listing Rules: (Continued)
As announced by the Company on 19th August, 2005, (i) Emperor Connection Limited, an
indirect wholly-owned subsidiary of the Company, entered into two tenancy agreements and
four licence agreements with two connected persons (as defined in the GEM Listing Rules) in
relation to the tenancy and car parking spaces; (ii) the Company entered into an agreement
with Emperor International (a connected person as defined in the GEM Listing Rules) for the
provision of advertising services to the Group in the publications operated by certain
subsidiaries of Emperor International (collectively the “Continuing Connected Transactions”).
The terms of the tenancy agreements and the licence agreements are arrived at after arm’s
length negotiation which are on normal commercial terms and the rental/licence fees thereof
were determined by reference to open market rent as at 31st March, 2005 as valued by
Chesterton Petty Limited, an independent valuer.
The engagement of the advertising services are in the normal ordinary course of business of
the Company. The advertising charges will be determined by reference to open market
advertising charges charged by the subsidiaries of Profit Noble for similar advertising services
and will be no less favorable than those charged to other independent third parties engaging
similar advertising service.
The directors of the Company considered that (1) the renting of the office premises and car
parking spaces mentioned in sub-paragraph (i) above would consolidate the operations of
the Group into the same premises which would enhance the efficiency of management of
the Group; (2) the publications mentioned in sub-paragraph (ii) above are ones among the
leading publications in Hong Kong and that the advertising expenditure proposed was in the
ordinary course of business of the Group.
In accordance with Rule 20.34 of the GEM Listing Rules, based on the calculations of the
percentage ratios (other than the profits ratio) and since the total amount of the annual fees
to be received under the Continuing Connected Transactions for each of the years ended/
ending 31st March, 2007 and 2008 is expected to be less than HK$10,000,000, the Continuing
Connected Transactions will only be subject to the reporting and announcement requirements
set out in Rules 20.45 to 20.47 of the GEM Listing Rules and will be exempted from the
independent shareholders’ approval requirements.
ANNUAL REPORT 2006 - 2007EMPEROR ENTERTAINMENT GROUP LIMITED
Directors’ Report
17
DIRECTORS’ INTERESTS IN CONTRACTS OF SIGNIFICANCE AND CONNECTED TRANSACTIONS
(Continued)
Save as disclosed above, no contracts of significance to which the Company, or any of its holding
companies, fellow subsidiaries and subsidiaries was a party and in which a director of the Company
had a material interest, whether directly or indirectly, subsisted at the end of the year or at any
time during the year.
Pursuant to Rule 20.38 of the GEM Listing Rules, the Board engaged the auditors of the Company
to perform certain agreed upon procedures in respect of the continuing connected transactions of
the Group. The auditors have reported their factual findings on these procedures to the Board. The
independent non-executive directors have reviewed the continuing connected transactions and the
report of the auditors and have confirmed that the transactions have been entered into by the
Company in the ordinary and usual course of its business, on normal commercial terms, and in
accordance with the terms of the agreement governing such transactions that are fair and reasonable
and in the interests of the shareholders of the Company as a whole.
DIRECTORS’ AND CHIEF EXECUTIVES’ INTERESTS AND SHORT POSITIONS IN SECURITIES
As at 31st March, 2007, the interests and short positions of the directors and chief executives of
the Company in the shares, underlying shares and debentures of the Company or any of its
associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance
(“SFO”)) as recorded in the register maintained by the Company pursuant to Section 352 of the
SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the required
standard of dealings by the directors of the Company as referred to in Rule 5.46 of the GEM
Listing Rules were as follows:
(a) Long position in shares of the Company
Number Approximate
Nature of ordinary percentage
Name of director of interests shares held holding
Ms. Semon Luk (Note) Family 203,054,000 78.09%
Note: The shares were registered in the name of Surplus Way. The entire issued share capital of Surplus Way was
held by Jumbo Wealth on trust for The A&A Unit Trust. The A&A Unit Trust was a unit trust under the
Trust, a discretionary trust set up by Mr. Albert Yeung. Mr. Albert Yeung, as founder of the Trust, was
deemed to be interested in the 203,054,000 shares held by Surplus Way. By virtue of the aforesaid
interests of Mr. Albert Yeung, Ms. Semon Luk (spouse of Mr. Albert Yeung and director of the Company)
was also deemed to be interested in the above 203,054,000 shares held by Surplus Way.
ANNUAL REPORT 2006 - 2007 EMPEROR ENTERTAINMENT GROUP LIMITED
Directors’ Report
18
DIRECTORS’ AND CHIEF EXECUTIVES’ INTERESTS AND SHORT POSITIONS IN SECURITIES (Continued)
(b) Long positions in shares of associated corporations
Number Approximate
Name of Nature of ordinary percentage
Name of director associated corporation of interests share(s) held holding
Ms. Semon Luk Surplus Way (Note (1)) Family 1 100%
Ms. Semon Luk Jumbo Wealth (Note (1)) Family 1 100%
Ms. Semon Luk Charron (Note (2)) Family 1 100%
Ms. Semon Luk Emperor International Family 813,301,411 57.55%
(Note (2))
Mr. Wong Chi Fai Emperor International Beneficial 10,000,000 0.71%
(Note (3))
Ms. Fan Man Seung, Emperor International Beneficial 10,000,000 0.71%
Vanessa (Note (3))
Notes:
(1) Surplus Way was the registered owner of 203,054,000 shares, representing 78.09% of the issued share
capital of the Company. The entire issued share capital of Surplus Way was held by Jumbo Wealth on trust
for The A&A Unit Trust. The A&A Unit Trust was a unit trust under the Trust, a discretionary trust set up by
Mr. Albert Yeung. Mr. Albert Yeung, as founder of the Trust, was deemed to be interested in the share
capital of Surplus Way. By virtue of the aforesaid interests of Mr. Albert Yeung, Ms. Semon Luk (spouse of
Mr. Albert Yeung and director of the Company) was also deemed to be interested in the share capital of
Surplus Way and Jumbo Wealth respectively.
(2) Charron was the registered owner of 813,301,411 shares in Emperor International. The entire issued share
capital of Charron was held by Jumbo Wealth on trust for The A&A Unit Trust. By virtue of the interests of
The A&A Unit Trust in Surplus Way and Charron, both Charron and Emperor International were associated
corporations of the Company. Mr. Albert Yeung, as founder of the Trust, was deemed to be interested in
the share capital of Charron and Emperor International respectively. By virtue of the aforesaid interests of
Mr. Albert Yeung, Ms. Semon Luk (spouse of Mr. Albert Yeung and director of the Company) was also
deemed to be interested in the share capital of Charron and Emperor International respectively.
(3) Share options were granted to directors under the share option scheme of Emperor International.
Save as disclosed above, as at 31st March, 2007, none of the directors or chief executives of the
Company had any interests or short positions in shares, underlying shares or debentures of the
Company or any of its associated corporations (within the meaning of Part XV of the SFO) as
recorded in the register required to be kept under Section 352 of the SFO or as otherwise notified
to the Company and the Stock Exchange pursuant to the required standard of dealings by the
directors of the Company as referred to in Rule 5.46 of the GEM Listing Rules.
ANNUAL REPORT 2006 - 2007EMPEROR ENTERTAINMENT GROUP LIMITED
Directors’ Report
19
SHARE OPTION SCHEME AND DIRECTORS’ AND CHIEF EXECUTIVES’ RIGHTS TO ACQUIRE SHARES
OR DEBENTURES
At the annual general meeting of the Company held on 26th August, 2004, the shareholders of
the Company approved the adoption of a new share option scheme which became effective from
11th November, 2004. Details of the share option scheme are set out in note 31 to the consolidated
financial statements.
The Company has not granted any option under the share option scheme since its adoption. The
total number of shares available for issue under the share option scheme as at the date of this
report is 26,000,000, representing 10% of the issued share capital of the Company as at that
date.
Save as disclosed above, at no time during the year was the Company or any of its subsidiaries,
holding companies or fellow subsidiaries a party to any arrangements to enable any director or
chief executive of the Company or their spouse or children under 18 years of age to acquire
benefits by means of the acquisition of shares in, or debt securities (including debentures) of, the
Company or any other body corporate.
INTERESTS AND SHORT POSITIONS OF SUBSTANTIAL SHAREHOLDERS
So far as known to the directors of the Company, as at 31st March, 2007, the persons or
corporations (other than the directors or chief executives of the Company) who had interests and
short positions in the shares, underlying shares and debentures of the Company as recorded in the
register required to be kept under Section 336 of the SFO or as otherwise notified to the Company
were as follows:
Long positions in shares of the Company
Number Approximate
Capacity/ of ordinary percentage
Name Nature of interests shares held holding
Surplus Way (Note) Beneficial 203,054,000 78.09%
Jumbo Wealth (Note) Trustee 203,054,000 78.09%
GZ Trust Corporation Trustee 203,054,000 78.09%
(“GZ Trust”) (Note)
Mr. Albert Yeung (Note) Founder of the Trust 203,054,000 78.09%
South China Finance and Beneficial 18,198,000 6.99%
Management Limited
South China Brokerage Interest in a controlled 18,198,000 6.99%
Company Limited corporation
ANNUAL REPORT 2006 - 2007 EMPEROR ENTERTAINMENT GROUP LIMITED
Directors’ Report
20
INTERESTS AND SHORT POSITIONS OF SUBSTANTIAL SHAREHOLDERS (Continued)
Long positions in shares of the Company (Continued)
Number Approximate
Capacity/ of ordinary percentage
Name Nature of interests shares held holding
East Hill Development Limited Interest in a controlled 18,198,000 6.99%
corporation
Tek Lee Finance and Investment Interest in a controlled 18,198,000 6.99%
Corporation Limited corporation
South China (BVI) Limited Interest in a controlled 18,198,000 6.99%
corporation
South China Holdings Limited Interest in a controlled 18,198,000 6.99%
corporation
Bannock Investment Limited Interest in a controlled 18,198,000 6.99%
corporation
Earntrade Investments Limited Interest in a controlled 18,198,000 6.99%
corporation
Parkfield Holdings Limited Interest in a controlled 18,198,000 6.99%
corporation
Ronastar Investments Limited Interest in a controlled 18,198,000 6.99%
corporation
Fung Shing Group Limited Interest in a controlled 18,198,000 6.99%
corporation
Ms. Cheung Choi Ngor Persons acting in concert 18,198,000 6.99%
Mr. Richard Howard Gorges Persons acting in concert 18,198,000 6.99%
Mr. Ng Hung Sang Persons acting in concert 18,198,000 6.99%
Note: The shares were registered in the name of Surplus Way. The entire issued share capital of Surplus Way was held by
Jumbo Wealth on trust for The A&A Unit Trust. The A&A Unit Trust was a unit trust under the Trust, a discretionary
trust set up by Mr. Albert Yeung. Mr. Albert Yeung, as founder of the Trust, was deemed to be interested in the
203,054,000 shares held by Surplus Way and held the entire issued share capital of Jumbo Wealth on trust for GZ
Trust, the trustee of the Trust. The above shares were the same shares as set out under section (a) of the
paragraph headed “Directors’ and Chief Executives’ Interests and Short Positions in Securities” above.
ANNUAL REPORT 2006 - 2007EMPEROR ENTERTAINMENT GROUP LIMITED
Directors’ Report
21
INTERESTS AND SHORT POSITIONS OF SUBSTANTIAL SHAREHOLDERS (Continued)
Save as disclosed above, as at 31st March, 2007, the directors of the Company were not aware of
any other person or corporation (other than the directors or chief executives of the Company) who
had any interests or short positions in the shares, underlying shares or debentures of the Company
as recorded in the register required to be kept under Section 336 of the SFO or as otherwise
notified to the Company.
MAJOR CUSTOMERS AND SUPPLIERS
During the year, the five largest customers of the Group accounted for approximately 37% of the
revenue of the Group and the largest customer accounted for approximately 9% of the Group’s
revenue.
The five largest suppliers contributed to less than 30% of the Group’s total purchases and services
received for the year.
None of the directors, their associates and shareholders of the Company (which to the knowledge
of the directors of the Company owns more than 5% of the issued capital of the Company) had
any interest in any of the five largest customers of the Group for the year ended 31st March,
2007.
DONATIONS
During the year, the Group made donations amounting to approximately HK$880,000.
PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SECURITIES
During the year, neither the Company nor any of its subsidiaries purchased, sold or redeemed any
of the Company’s listed securities.
EMOLUMENT POLICY
The emolument policy of the employees of the Group is set up on the basis of their merit,
qualifications and competence.
The emoluments of the directors of the Company are decided by the remuneration committee,
having regard to the Company’s operating results, individual performance and comparable market
statistics.
The Company has adopted a share option scheme as an incentive to directors and eligible employees,
details of the scheme is set out in note 31 to the consolidated financial statements.
ANNUAL REPORT 2006 - 2007 EMPEROR ENTERTAINMENT GROUP LIMITED
Directors’ Report
22
PRE-EMPTIVE RIGHTS
There are no provisions for pre-emptive rights under the Company’s Bye-laws or the laws of
Bermuda, which would oblige the Company to offer new shares on a pro-rata basis to existing
shareholders.
SUFFICIENCY OF PUBLIC FLOAT
Based on the information publicly available to the Company and within the knowledge of the
directors of the Company as at the date of this annual report, the Company maintained the
prescribed public float under the GEM Listing Rules.
COMPETING INTERESTS
The Trust, a discretionary trust set up by Mr. Albert Yeung, a management shareholder of the
Company (as defined in the GEM Listing Rules), indirectly held 50% of the shareholding of JCE, a
company engaged in the production and distribution of movies. The Trust also indirectly held
100% interest in Prime Time (International) Entertainment Limited (“Prime Time”), a company
engaged in the business of television programme production and artiste management. The businesses
of JCE and Prime Time may constitute competition with the businesses of the Group. By virtue of
the Trust’s interest in the aforesaid businesses, Ms. Semon Luk, spouse of Mr. Albert Yeung, is also
deemed to be interested in the businesses. The directors of the Company consider that since Ms.
Semon Luk is a non-executive director of the Company and will not exert management control
over the Group, her aforesaid deemed interest in the businesses of JCE and Prime Time will not
materially affect the Group’s business.
Save as disclosed above, the directors of the Company believe that none of the directors or the
management shareholders of the Company (as defined in the GEM Listing Rules) had any interest
in a business which causes or may cause significant competition with the business of the Group.
AUDITORS
A resolution will be submitted to the annual general meeting of the Company to re-appoint
Messrs. Deloitte Touche Tohmatsu as auditors of the Company.
On behalf of the Board
Luk Siu Man, Semon
Chairperson
Hong Kong, 21st June, 2007
ANNUAL REPORT 2006 - 2007EMPEROR ENTERTAINMENT GROUP LIMITED
Corporate Governance Report
23
The Board strives to attain and maintain a solid, transparent and sensible framework of corporate
governance. The Company has fully compliant with all the provisions of the Code on Corporate
Governance Practice (the “Code”) as set out in Appendix 15 to the GEM Listing Rules throughout
the financial year ended 31st March, 2007.
THE BOARD
The Board is responsible to lead and control the business operations of the Group. It formulates
strategic directions, oversees the operations and monitors the financial performance of the Group.
The management manages the businesses of the Group within the delegated power and authority
by the Board.
As at 31st March, 2007, the Board comprised seven directors, with one non-executive director
who is also the Chairperson of the Company, three executive directors and three independent
non-executive directors. The biographies of the directors are set out on pages 3 to 4 of this report
under the “Biographies of Directors and Senior Executives” section.
The Company has received a confirmation of independence from each of the independent
non-executive directors. The Board considers each of them to be independent by reference to
the factors stated in the GEM Listing Rules. The independent non-executive directors have been
expressly identified as such in all corporate communications of the Company that disclose the
names of directors.
The Board, led by the Chairperson, Ms. Semon Luk since November 2000. The Chairperson, with
the support of the Company Secretary, ensures all Board members work effectively and discharge
his/her responsibility by providing timely, reliable and sufficient information on issues to be discussed
at Board meetings. The Chairperson is responsible to set the agenda for each Board meeting,
taking into account any matters proposed by the directors. The Board members are properly
briefed of the issues discussed and the meeting material is dispatched to the directors before the
meetings. The independent non-executive directors who bring in strong expertise, contributing a
more impartial view and making independent judgement on issues to be discussed at Board
meetings.
The experienced management team implements the decisions from the Board and proposes
management and investment proposals for the Board to approve. The team assumes full
accountability to the Board for all operations of the Group.
The Board sets up the Audit Committee and Remuneration Committee on 30th September, 2004
and 20th June, 2005 respectively. The Committees consist of mainly independent non-executive
directors. Clear written terms of reference are given to these two Committees and details of these
two Committees are set out in the paragraphs “Audit Committee” and “Remuneration Committee”
below.
ANNUAL REPORT 2006 - 2007 EMPEROR ENTERTAINMENT GROUP LIMITED
Corporate Governance Report
24
THE BOARD (Continued)
The non-executive directors are appointed for a term of two years, with all the terms being
renewed automatically for successive terms of one year each commencing from the date next after
the expiry of the then current terms, unless terminated by not less than three months’ notice in
writing served by either party. Pursuant to the Bye-laws of the Company, every director shall be
subject to retirement by rotation at least once every three years in order to comply with the
requirement of the Code.
The Company has not established a nomination committee. During the financial year ended 31st
March, 2007, there is no appointment of new directors to the Board. The Board would consider a
number of criterion, including the past experience, qualifications and overall integrity of any
recommended candidates for directorship.
The Board held five meetings during the financial year 2006-2007 with the attendance of each
directors as follows:
Number of Board
Name of director meeting attended Attendance rate
Non-executive director
Luk Siu Man, Semon
(Non-executive director & Chairperson) 5/5 100%
Executive directors:
Wong Chi Fai 5/5 100%
Fan Man Seung, Vanessa 4/5 80%
Ng Sui Wan 5/5 100%
Independent non-executive directors:
Wong Ching Yue 3/5 60%
Chu Kar Wing 5/5 100%
Wong Tak Ming, Gary 5/5 100%
The Board meeting notice was sent to the directors at least 14 days prior to the regular meeting.
The directors also have access to the advice and services of the Company Secretary and key
officers of the Company Secretarial team regarding the Board procedures, and all applicable rules
and regulations are followed. Draft and final versions of the minutes of Board meetings and Board
committee meetings, drafted in sufficient details by the secretary of the meetings, were circulated
to the directors for their comment and record respectively. An original copy of such minutes, being
kept by the Company Secretary, is open for inspection at any reasonable time on reasonable
notice by any directors. A procedure has been approved by the Board to enable the directors to
seek independent professional advice at the Company’s expenses in appropriate circumstances.
The Company has adopted a code of conduct regarding securities transactions by directors and
senior executives on no less terms than the required standard of dealings set out in Rules 5.48 to
Rules 5.67 of the GEM Listing Rules. Having made specific enquiry to all directors of the Company,
all the directors confirmed that they have complied with the required standard of dealings and the
code of conduct.
ANNUAL REPORT 2006 - 2007EMPEROR ENTERTAINMENT GROUP LIMITED
Corporate Governance Report
25
REMUNERATION OF DIRECTORS AND SENIOR MANAGEMENT
Remuneration Committee
The Remuneration Committee consists of three members. It is chaired by the executive director,
Mr. Wong Chi Fai with two independent non-executive directors, Mr. Chu Kar Wing and Mr.
Wong Tak Ming, Gary. The major responsibility of the Remuneration Committee is assisting the
Board to attract, retain and motivate the high calibre executives, and making recommendations on
the establishment of a formal and transparent procedure for developing remuneration policy.
Details of the remuneration of each of the directors for the year ended 31st March, 2007 are set
out in note 11(a) to the consolidated financial statements. The specific written terms of reference
of the Remuneration Committee are available in the Company’s website: www.emp8078.com.
The Remuneration Committee has convened a meeting in September 2006, which was attended by
all Committee members. The task performed by the Remuneration Committee including (i) reviewed
and endorsed the remuneration structure of the directors; (ii) reviewed the market data of directors’
remuneration; and (iii) recommended to the Board the annual directors’ fees.
ACCOUNTABILITY AND AUDIT
The directors acknowledge that it is their responsibility to prepare the accounts of the Group and
other financial disclosures required under the GEM Listing Rules.
The management has provided information and explanation to the Board to enable it to make an
informed assessment of the financial and other Board decisions.
Audit Committee
The Audit Committee consists of three independent non-executive directors, namely Messrs. Chu
Kar Wing, Wong Ching Yue and Wong Tak Ming, Gary. They possess accounting, banking and
other professional expertise. The Board has adopted a revised terms of reference on 9th November,
2006, which is updated to reflect the current requirements of the GEM Listing Rules. The revised
terms of reference has been set out in the Company’s website: www.emp8078.com. The Audit
Committee is primarily responsible for making recommendations to the Board on the appointment
and removal of the external auditors, to approve the remuneration and terms of engagement of
external auditor, review financial information and oversight of the financial reporting system and
internal control procedures.
The Audit Committee convened six meetings during the financial year ended 31st March, 2007
with the attendance as follows:-
Number of
Name of Committee member meeting attended Attendance rate
Chu Kar Wing 6/6 100%
Wong Ching Yue 6/6 100%
Wong Tak Ming, Gary 6/6 100%
ANNUAL REPORT 2006 - 2007 EMPEROR ENTERTAINMENT GROUP LIMITED
Corporate Governance Report
26
ACCOUNTABILITY AND AUDIT (Continued)
Audit Committee (Continued)
All Committee members attend the meetings. Draft and final versions of minutes were circulated
to Committee members for their review and record respectively. The summary of work performed
by the Audit Committee during the financial year ended 31st March 2007 is set out below:
i. Reviewed with the external auditors and senior management of the audit plans for the
financial years ended 31st March, 2006 and 2007;
ii. Reviewed with the senior management and/or the external auditors the accounting principles
and practices adopted by the Group, the accuracy and fairness of the annual, interim and
quarterly financial statements for the financial year ended 31st March, 2007;
iii. Reviewed the impact to the Group in respect of the amendments to the accounting principles
with the external auditors;
iv. Reviewed the revised terms of reference of audit committee and recommended to the Board
for adoption;
v. Approved the scope of internal control;
vi. Determined the external auditor’s independence and reviewed the effectiveness of the audit
process ;
vii. Approved the audit fees for the financial year 2005-2006; and
viii. Meeting with the external auditors and review their work and findings relating to the annual
audit
Internal Control
The Board is responsible for maintaining and reviewing the effectiveness of the Group’s internal
control system. The internal control system is implemented to minimise the risks to which the
Group is exposed and used as a management tool for the day-to-day operation of business. The
system can only provide reasonable but not absolute assurance against misstatements or losses.
The internal control system has been implemented by the Company since 2000. During the financial
year ended 31st March 2007, the Company has formulated an internal self-assessment process of
all material controls including financial, operational and compliance controls and risk management
functions and the Audit Committee is charged with the task to evaluate the effectiveness of the
system.
During the financial year ended 31st March 2007, the management has analysed the control
environment and risk assessment, assessed the various controls implemented and agreed with the
Audit Committee on the scope of review. The approach of the review includes conducting interviews
with relevant management and staff members, reviewing relevant documentation of the internal
control system and evaluating findings on any deficiencies in the design of the internal controls
and developing recommendations for improvement, where appropriate.
ANNUAL REPORT 2006 - 2007EMPEROR ENTERTAINMENT GROUP LIMITED
Corporate Governance Report
27
ACCOUNTABILITY AND AUDIT (Continued)
Internal Control (Continued)
The management has reported the results of the review to the Audit Committee for its evaluation
of effectiveness of the system.
COMMUNICATION WITH SHAREHOLDERS
The Company communicated with the shareholders in the following ways: (i) the holding of annual
general meeting which provide an opportunity for the shareholders to raise questions to the Board
on the business of the Group, if any and the issuance of annual report and/or circular as required
under the GEM Listing Rules providing up-dated information of the Group; and (ii) the shareholders
and investors are welcome to visit our website for the latest information of the Group Separate
resolutions are proposed at the annual general meeting on each substantial separate issues, including
the election of individual directors as required under the GEM Listing Rules.
The Chairperson and the chairmen of the committees, was available at the annual general meeting
held on 24th August, 2006 to answer questions from the shareholders.
Voting by Poll
The rights to demand a poll were set out in the circular dispatched to the shareholders during the
year. The chairperson of the annual general meeting held on 24th August, 2006 had explained the
rights and procedures to demand a poll.
AUDITOR’S REMUNERATION
During the year under review, the remuneration paid to the Company’s auditors, Messrs Deloitte
Touche Tohmatsu, is set out as follows:-
Service rendered fee paid/payable
HK$’000
Audit services 2,258
ANNUAL REPORT 2006 - 2007 EMPEROR ENTERTAINMENT GROUP LIMITED
Independent Auditor’s Report
28
TO THE SHAREHOLDERS OF
EMPEROR ENTERTAINMENT GROUP LIMITED
(incorporated in Bermuda with limited liability)
We have audited the consolidated financial statements of Emperor Entertainment Group Limited
(the “Company”) and its subsidiaries (collectively referred to as the “Group”) set out on pages 30
to 75, which comprise the consolidated balance sheet as at 31st March, 2007, and the consolidated
income statement, the consolidated statement of changes in equity and the consolidated cash
flow statement for the year then ended, and a summary of significant accounting policies and
other explanatory notes.
DIRECTORS’ RESPONSIBILITY FOR THE CONSOLIDATED FINANCIAL STATEMENTS
The directors of the Company are responsible for the preparation and the true and fair presentation
of these consolidated financial statements in accordance with Hong Kong Financial Reporting
Standards issued by the Hong Kong Institute of Certified Public Accountants and the disclosure
requirements of Hong Kong Companies Ordinance. This responsibility includes designing,
implementing and maintaining internal control relevant to the preparation and the true and fair
presentation of the consolidated financial statements that are free from material misstatement,
whether due to fraud or error; selecting and applying appropriate accounting policies; and making
accounting estimates that are reasonable in the circumstances.
AUDITOR’S RESPONSIBILITY
Our responsibility is to express an opinion on these consolidated financial statements based on our
audit and to report our opinion solely to you, as a body, in accordance with section 90 of the
Bermuda Companies Act and for no other purpose. We do not assume responsibility towards or
accept liability to any other person for the contents of this report. 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 consolidated financial
statements are free from material misstatement.
ANNUAL REPORT 2006 - 2007EMPEROR ENTERTAINMENT GROUP LIMITED
Independent Auditor’s Report
29
AUDITOR’S RESPONSIBILITY (Continued)
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the consolidated financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error. In making those risk assessments, the auditor considers
internal control relevant to the entity’s preparation and true and fair presentation of the consolidated
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 consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
OPINION
In our opinion, the consolidated financial statements give a true and fair view of the state of
affairs of the Group as at 31st 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.
Deloitte Touche Tohmatsu
Certified Public Accountants
Hong Kong
21st June, 2007
ANNUAL REPORT 2006 - 2007 EMPEROR ENTERTAINMENT GROUP LIMITED
Consolidated Income Statement
30
For the year ended 31st March, 2007
Notes 2007 2006
HK$’000 HK$’000
Revenue 6 & 7 183,915 196,917
Other income 5,929 10,133
Cost of music production and distribution (46,046) (48,909)
Cost of film and television programme production
and distribution (47,554) (98,343)
Cost of provision of event production services (1,193) (2,544)
Distribution costs (13,547) (24,858)
Administrative expenses (61,131) (62,256)
Finance costs 8 (750) (2,218)
Gain on disposal of a subsidiary 9 822 –
Share of results of a jointly controlled entity (377) –
Profit (loss) before taxation 10 20,068 (32,078)
Taxation 12 (2,976) (2,383)
Profit (loss) for the year 17,092 (34,461)
Attributable to:
Equity holders of the Company 17,280 (32,549)
Minority interests (188) (1,912)
17,092 (34,461)
HK cents HK cents
Earnings (loss) per share – basic 13 6.65 (12.52)
ANNUAL REPORT 2006 - 2007EMPEROR ENTERTAINMENT GROUP LIMITED
At 31st March, 2007
Consolidated Balance Sheet
31
Notes 2007 2006
HK$’000 HK$’000
Non-current assets
Property, plant and equipment 14 2,708 2,102
Interests in a jointly controlled entity 15 2,084 –
Prepayments and other receivables 16 11,928 9,244
Film rights 17 55,124 55,335
71,844 66,681
Current assets
Inventories and record masters 18 2,430 2,335
Trade receivables 19 30,022 21,648
Prepayments and other receivables 16 31,947 37,871
Taxation recoverable 125 –
Bank balances and cash 20 69,951 68,551
134,475 130,405
Assets classified as held for sale 9 – 3,181
134,475 133,586
Current liabilities
Trade payables 21 14,697 8,354
Other payables and accrued charges 22 64,283 84,871
Amount due to ultimate holding company 23 29,643 16,050
Amount due to a related company 24 – 8,999
Loan from a minority shareholder of a subsidiary 25 2,000 2,000
Taxation payable 939 611
111,562 120,885
Liabilities directly associated with assets classified as
held for sale 9 – 1,266
111,562 122,151
Net current assets 22,913 11,435
94,757 78,116
ANNUAL REPORT 2006 - 2007 EMPEROR ENTERTAINMENT GROUP LIMITED
Consolidated Balance Sheet
32
At 31st March, 2007
2007 2006
Note HK$’000 HK$’000
Capital and reserves
Share capital 26 2,600 2,600
Reserves 93,845 76,230
Equity attributable to equity holders of the Company 96,445 78,830
Minority interests (1,688) (714)
Total equity 94,757 78,116
The consolidated financial statements on pages 30 to 75 were approved and authorised for issue
by the Board of Directors on 21st June, 2007 and are signed on its behalf by:
Wong Chi Fai Fan Man Seung, Vanessa
Director Director
ANNUAL REPORT 2006 - 2007EMPEROR ENTERTAINMENT GROUP LIMITED
For the year ended 31st March, 2007
Consolidated Statement of Changes in Equity
33
Attributable to equity holders of the Company
Share Share Contributed Special Translation Accumulated Minority Total
capital premium surplus reserve reserve losses Total interests equity
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
(Note 27(a)) (Note 27(b))
At 1st April, 2005 2,600 105,614 91,063 75,000 (528 ) (154,919 ) 118,830 1,136 119,966
Exchange differences on
translation of foreign
operations – – – – (171 ) – (171 ) 62 (109 )
Loss for the year – – – – – (32,549 ) (32,549 ) (1,912 ) (34,461 )
Total recognised expense
for the year – – – – (171 ) (32,549 ) (32,720 ) (1,850 ) (34,570 )
Dividend paid for 2005 – – (7,280 ) – – – (7,280 ) – (7,280 )
At 31st March, 2006
and 1st April, 2006 2,600 105,614 83,783 75,000 (699 ) (187,468 ) 78,830 (714 ) 78,116
Exchange differences on
translation of foreign
operations – – – – 393 – 393 22 415
Share of changes in equity
of a jointly controlled
entity – – – – (39 ) – (39 ) – (39 )
Net income recognised
directly in equity – – – – 354 – 354 22 376
Profit (loss) for the year – – – – – 17,280 17,280 (188 ) 17,092
Transfer to profit or loss on
disposal of a subsidiary – – – – (19 ) – (19 ) (808 ) (827 )
Total recognised
income (expense)
for the year – – – – 335 17,280 17,615 (974 ) 16,641
At 31st March, 2007 2,600 105,614 83,783 75,000 (364) (170,188) 96,445 (1,688) 94,757
ANNUAL REPORT 2006 - 2007 EMPEROR ENTERTAINMENT GROUP LIMITED
Consolidated Cash Flow Statement
34
For the year ended 31st March, 2007
Note 2007 2006
HK$’000 HK$’000
Cash flows from operating activities
Profit (loss) before taxation 20,068 (32,078)
Adjustments for:
Allowance for bad and doubtful debts 34 904
Amortisation of film rights 43,112 85,318
Depreciation of property, plant and equipment 1,714 1,805
Finance costs 750 2,218
Impairment loss on film rights recognised 2,969 12,260
Imputed interest included in distribution costs 1,807 957
Interest income (1,719) (2,215)
Gain on disposal of a subsidiary (822) –
Loss on disposal of property, plant and equipment 191 2
Share of loss of a jointly controlled entity 377 –
Write-off of property, plant and equipment – 368
Operating cash flows before movements in working capital 68,481 69,539
(Increase) decrease in inventories and record masters (95) 1,985
(Increase) decrease in trade receivables (8,374) 38,166
Decrease in prepayments and other receivables 2,267 13,635
Increase (decrease) in trade payables 6,343 (9,029)
Decrease in other payables and accrued charges (20,564) (840)
(Decrease) increase in amount due to a related company (8,999) 8,999
Cash generated from operations 39,059 122,455
Hong Kong Profits Tax paid (2,773) (4,855)
Net cash from operating activities 36,286 117,600
Cash flows from investing activities
Additional costs incurred in film rights (45,870) (15,955)
Purchase of property, plant and equipment (2,510) (1,545)
Capital contribution to a jointly controlled entity (2,500) –
Interest received 1,344 681
Disposal of a subsidiary, net of cash and cash
equivalents disposed of 9 845 –
Proceeds from disposal of property, plant and equipment 17 1
Net cash used in investing activities (48,674) (16,818)
ANNUAL REPORT 2006 - 2007EMPEROR ENTERTAINMENT GROUP LIMITED
For the year ended 31st March, 2007
Consolidated Cash Flow Statement
35
2007 2006
HK$’000 HK$’000
Cash flows from financing activities
Advances from ultimate holding company 110,600 139,266
Repayment of advances to ultimate holding company (97,007) (212,253)
Interest paid (750) (2,218)
Repayment to a minority shareholder of a subsidiary – (264)
Dividend paid – (7,280)
Net cash from (used in) financing activities 12,843 (82,749)
Net increase in cash and cash equivalents 455 18,033
Cash and cash equivalents at beginning of the year 69,496 51,463
Cash and cash equivalents at end of the year 69,951 69,496
Analysis of the balances of cash and cash equivalents
Bank balances and cash 69,951 68,551
Bank balances and cash included in assets classified as
held for sale – 945
69,951 69,496
ANNUAL REPORT 2006 - 2007 EMPEROR ENTERTAINMENT GROUP LIMITED
Notes to the Consolidated Financial Statements
36
For the year ended 31st March, 2007
1. GENERAL
The Company is incorporated as an exempted company with limited liability in Bermuda
under the Bermuda Companies Act. Its shares are listed on the Growth Enterprise Market
(“GEM”) of The Company’s
immediate and ultimate holding company is Surplus Way Profits Limited (“Surplus Way”), a
company which is incorporated in the British Virgin Islands. The address of the registered
office of the Company is Clarendon House, 2 Church Street, Hamilton HM11, Bermuda and
its principal place of business is 28/F, Emperor Group Centre, 288 Hennessy Road, Wanchai,
Hong Kong.
The Company is an investment holding company. The consolidated financial statements are
presented in Hong Kong dollars, which is the same as the functional currency of the Company.
The principal activities of its principal subsidiaries are set out in note 33.
2. APPLICATION OF HONG KONG FINANCIAL REPORTING STANDARDS
In the current year, the Group has applied, for the first time, a number of new Hong Kong
Financial Reporting Standards (“HKFRS”), Hong Kong Accounting Standards (“HKAS”) and
Interpretations (“INT”) (hereinafter collectively referred to as “new HKFRSs”) issued by the
Hong Kong Institute of Certified Public Accountants (the “HKICPA”), which are effective for
the Group’s financial year beginning 1st April, 2006. The adoption of the new HKFRSs had
no material effect on how the results and financial position for the current or prior accounting
periods have been prepared and presented. Accordingly, no prior period adjustment has
been required.
The Group has not early applied the following new standards, amendment or interpretations
that have been issued but are not yet effective. The directors of the Company anticipate that
the application of these new standards, amendment or interpretations will have no material
impact on the results and the financial position of the Group.
HKAS 1 (Amendment) Capital Disclosures
1
HKFRS 7 Financial Instruments: Disclosures
1
HKFRS 8 Operating Segments
2
HK(IFRIC) – INT 8 Scope of HKFRS 2
3
HK(IFRIC) – INT 9 Reassessment of Embedded Derivatives
4
HK(IFRIC) – INT 10 Interim Financial Reporting and Impairment
5
HK(IFRIC) – INT 11 HKFRS 2 – Group and Treasury Share Transactions
6
HK(IFRIC) – INT 12 Service Concession Arrangements
7
1
Effective for annual periods beginning on or after 1st January, 2007.
2
Effective for annual periods beginning on or after 1st January, 2009.
3
Effective for annual periods beginning on or after 1st May, 2006.
4
Effective for annual periods beginning on or after 1st June, 2006.
5
Effective for annual periods beginning on or after 1st November, 2006.
6
Effective for annual periods beginning on or after 1st March, 2007.
7
Effective for annual periods beginning on or after 1st January, 2008.
ANNUAL REPORT 2006 - 2007EMPEROR ENTERTAINMENT GROUP LIMITED
For the year ended 31st March, 2007
Notes to the Consolidated Financial Statements
37
3. SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements have been prepared under the historical cost convention,
except for certain financial instruments which are measured at fair value on initial recognition,
as explained in the accounting policies set out below.
The consolidated financial statements have been prepared in accordance with HKFRSs and
include applicable disclosures required by the Rules Governing the Listing of Securities on
the GEM of the Stock Exchange and by the Hong Kong Companies Ordinance.
Certain comparative figures have been reclassified to conform with the current year’s
presentation.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company
and its subsidiaries made up to 31st March each year. Control is achieved where the Company
has the power to govern the financial and operating policies of an entity so as to obtain
benefits from its activities.
The results of subsidiaries acquired or disposed of during the year are included in the
consolidated income statement from the effective date of acquisition or up to the effective
date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring
their accounting policies into line with those used by other members of the Group.
All intra-group transactions, balances, income and expenses are eliminated on consolidation.
Minority interests in the net assets of consolidated subsidiaries are presented separately
from the Group’s equity therein. Minority interests in the net assets consist of the amount of
those interests at the date of the original business combination and the minority’s share of
changes in equity since the date of the combination. Losses applicable to the minority in
excess of the minority’s interest in the subsidiary’s equity are allocated against the interests
of the Group except to the extent that the minority has a binding obligation and is able to
make an additional investment to cover the losses.
ANNUAL REPORT 2006 - 2007 EMPEROR ENTERTAINMENT GROUP LIMITED
Notes to the Consolidated Financial Statements
38
For the year ended 31st March, 2007
3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Jointly controlled entities
Joint venture arrangements that involve the establishment of a separate entity in which
ventures have joint control over the economic activity of the entity are referred to as jointly
controlled entities.
The results and assets and liabilities of jointly controlled entities are incorporated in the
consolidated financial statements using the equity method of accounting. Under the equity
method, investments in jointly controlled entities are carried in the consolidated balance
sheet at cost as adjusted for post-acquisition changes in the Group’s share of the net asset
of the jointly controlled entities, less any identified impairment loss. When the Group’s share
of losses of a jointly controlled entity equals or exceeds its interest in that jointly controlled
entity (which includes any long-term interests that, in substance, form part of the Group’s
net investment in the jointly controlled entity), the Group discontinues recognising its share
of further losses. An additional share of losses is provided for and a liability is recognised
only to the extent that the Group has incurred legal or constructive obligations or made
payments on behalf of that jointly controlled entity.
Revenue
Revenue represents the aggregate of amounts received and receivable from albums sold,
musical works licensed, production and distribution of films and television programmes,
licensing of distribution rights over films and television programmes, event production
completed and services provided, net of sales returns during the year.
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable in the
normal course of business, net of discounts and sales related taxes.
Sales of albums are recognised when the albums are delivered and the title has passed.
Income from licensing of musical works is recognised when the Group’s entitlement to such
payments has been established which is upon the delivery of the master copy or materials to
the customers.
Income from the production and distribution of films and television programmes is recognised
when the production is complete and released and the amount can be measured reliably.
Income from the licensing of the distribution rights over films and television programmes is
recognised when the Group’s entitlement to such payments has been established which is
upon the delivery of the master copy or materials to the customers or when the notice of
delivery is served on the customers.
ANNUAL REPORT 2006 - 2007EMPEROR ENTERTAINMENT GROUP LIMITED
For the year ended 31st March, 2007
Notes to the Consolidated Financial Statements
39
3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenue recognition (Continued)
Income from event production is recognised when the events are complete or the services
are provided and the amount can be measured reliably.
Artiste management fee income is recognised when the services are provided.
Dividend income from investments is recognised when the rights to receive payment have
been established.
Interest income is accrued on a time basis, by reference to the principal outstanding and at
the effective interest rate applicable, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial asset to that asset’s net
carrying amount.
Rental income is recognised on a straight line basis over the lease terms.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any
accumulated impairment loss.
Depreciation is provided to write off the cost of property, plant and equipment over their
estimated useful lives and after taking into account their estimated residual value, using the
straight line method.
The gain or loss arising on the disposal or retirement of an asset is determined as the
difference between the sale proceeds and the carrying amount of the asset and is recognised
in the consolidated income statement.
Disposal company held for sale
Disposal company is classified as held for sale if its carrying amount will be recovered
through a sale transaction rather than through continuing use. This condition is regarded as
met only when the sale is highly probable and the disposal company is available for immediate
sale in its present condition. Management must be committed to the sale, which should be
expected to qualify for recognition as a completed sale within one year from the date of
classification.
Disposal company classified as held for sale are measured at the lower of the assets’ previous
carrying amount and fair value less costs to sell.
ANNUAL REPORT 2006 - 2007 EMPEROR ENTERTAINMENT GROUP LIMITED
Notes to the Consolidated Financial Statements
40
For the year ended 31st March, 2007
3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Film rights
Film rights are stated at cost less accumulated amortisation and any identified impairment
loss.
Amortisation is charged to the consolidated income statement using a method that reasonably
relates the net carrying amount of film rights to the net revenue expected to be realised.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying
assets are capitalised as part of the cost of those assets. Capitalisation of such borrowing
costs ceases when the assets are substantially ready for their intended use or sale.
All other borrowing costs are recognised as an expense in the period in which they are
incurred.
Inventories
Inventories represent finished goods of audio-visual products and are stated at the lower of
cost and net realisable value. The cost of finished goods is calculated using the first-in, first-
out method.
Record masters
Record masters represent accumulated costs incurred in the production of master tapes of
which the relevant audio-visual products are not yet released as at the balance sheet date
less any expected loss.
Financial instruments
Financial assets and financial liabilities are recognised in the consolidated balance sheet
when the Group becomes a party to the contractual provisions of the instrument. Financial
assets and financial liabilities are initially measured at fair value. All regular way purchases or
sales of financial assets are recognised and derecognised on a trade date basis. Regular way
purchases or sales are purchases or sales of financial assets that require delivery of assets
within the time frame established by regulation or convention in the market place.
ANNUAL REPORT 2006 - 2007EMPEROR ENTERTAINMENT GROUP LIMITED
For the year ended 31st March, 2007
Notes to the Consolidated Financial Statements
41
3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Financial instruments (Continued)
Financial assets
The Group’s financial assets are mainly classified into loans and receivables. The accounting
policies adopted in respect of each category of financial assets are set out below.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments
that are not quoted in active market. At each balance sheet date subsequent to initial
recognition, loans and receivables (including trade receivables, other receivables and bank
balances) are carried at amortised cost using the effective interest rate method, less any
identified impairment loss. An impairment loss is recognised in profit or loss when there is
objective evidence that the asset is impaired, and is measured as the difference between the
assets’ carrying amount and the present value of estimated future cash flows discounted at
the original effective interest rate. Impairment loss is reversed in subsequent periods when
an increase in the asset’s recoverable amount can be related objectively to an event occurring
after the impairment was recognised, subject to a restriction that the carrying amount of the
asset at the date the impairment is reversed does not exceed that the amortised cost would
have been had the impairment not been recognised.
Financial liabilities and equity
Financial liabilities and equity instruments issued by the Group are classified according to the
substance of the contractual arrangements entered into and the definitions of a financial
liability and an equity instrument.
An equity instrument is any contract that evidences a residual interest in the assets of the
Group after deducting all of its liabilities. The accounting policies adopted for specific financial
liabilities and equity instruments are set out below.
Financial liabilities
Financial liabilities including trade payables, other payables, amount due to ultimate holding
company, amount due to a related company and loan from a minority shareholder of a
subsidiary are initially measured at fair value, and are subsequently measured at amortised
cost, using the effective interest method.
Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received, net of
direct issue costs.
ANNUAL REPORT 2006 - 2007 EMPEROR ENTERTAINMENT GROUP LIMITED
Notes to the Consolidated Financial Statements
42
For the year ended 31st March, 2007
3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Financial instruments (Continued)
Derecognition
Financial assets are derecognised when the rights to receive cash flows from the assets
expire or, the financial assets are transferred and the Group has transferred substantially all
the risks and rewards of ownership of the financial assets. On derecognition of a financial
asset, the difference between the asset’s carrying amount and the sum of the consideration
received and receivable and the cumulative gain or loss that had been recognised directly in
equity is recognised in profit or loss.
Financial liabilities are derecognised when the obligation specified in the relevant contract is
discharged, cancelled or expires. The difference between the carrying amount of the financial
liability derecognised and the consideration paid and payable is recognised in profit or loss.
Impairment
At each balance sheet date, the Group reviews the carrying amounts of its assets to determine
whether there is any indication that those assets have suffered an impairment loss. If the
recoverable amount of an asset is estimated to be less than its carrying amount, the carrying
amount of the asset is reduced to its recoverable amount. Impairment loss is recognised as
an expense immediately.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased
to the revised estimate of its recoverable amount, but so that the increased carrying amount
does not exceed the carrying amount that would have been determined had no impairment
loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised
as income immediately.
Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from
profit as reported in the consolidated income statement because it excludes items of income
or expense that are taxable or deductible in other years and it further excludes items that
are never taxable and deductible. The Group’s liability for current tax is calculated using tax
rates that have been enacted or substantively enacted by the balance sheet date.
ANNUAL REPORT 2006 - 2007EMPEROR ENTERTAINMENT GROUP LIMITED
For the year ended 31st March, 2007
Notes to the Consolidated Financial Statements
43
3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Taxation (Continued)
Deferred tax is recognised on differences between the carrying amounts of assets and
liabilities in the consolidated financial statements and the corresponding tax base used in
the computation of taxable profit, and is accounted for using the balance sheet liability
method. Deferred tax liabilities are generally recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that taxable profits
will be available against which deductible temporary differences can be utilised. Such assets
and liabilities are not recognised if the temporary difference arises from the initial recognition
of other assets and liabilities in a transaction that affects neither the taxable profit nor the
accounting profit.
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 profits will be
available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the
liability is settled or the asset is realised. Deferred tax is charged or credited to the consolidated
income statement, except when it relates to items charged or credited directly to equity, in
which case the deferred tax is also dealt with in equity.
Foreign currencies
In preparing the financial statements of each group entity, transactions in currencies other
than the functional currency of that entity (foreign currencies) are recorded at the rates of
exchanges prevailing on the dates of the transactions. At each balance sheet date, monetary
items denominated in foreign currencies are retranslated at the rates prevailing on the
balance sheet date. Non-monetary items that are measured in terms of historical cost in a
foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary items and on the translation of
monetary items are recognised in the consolidated income statement in the period in which
they arise.
For the purposes of presenting the consolidated financial statements, the assets and liabilities
of the Group’s foreign operations are translated into the presentation currency of the Group
(i.e. Hong Kong dollars) at the rate of exchange prevailing at the balance sheet date, and
their income and expenses are translated at the average exchange rates for the year, unless
exchange rates fluctuate significantly during the year, in which case, the exchange rates
prevailing at the dates of transactions are used. Exchange differences arising, if any, are
recognised as a separate component of equity (the translation reserve). Such exchange
differences are recognised in income or loss in the period in which the foreign operation is
disposed of.
ANNUAL REPORT 2006 - 2007 EMPEROR ENTERTAINMENT GROUP LIMITED
Notes to the Consolidated Financial Statements
44
For the year ended 31st March, 2007
3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Retirement benefit costs
Payments to defined contribution retirement benefit schemes are charged as an expense
when employees have rendered service entitling them to the contribution.
Operating leases
Leases are classified as operating leases whenever the terms of the lease do not transfer
substantially all the risks and rewards of ownership to the lessees.
Rentals payable under operating leases are charged to the consolidated income statement
on a straight line basis over the period of the relevant leases. Benefits received and receivable
as an incentive to enter into an operating lease are recognised as a reduction of rental
expense over the lease term on a straight line basis.
Rental income from operating leases is recognised in the consolidated income statement on
a straight line basis over the term of the relevant lease.
4. KEY SOURCES OF ESTIMATION UNCERTAINTY
In the process of applying the Group’s accounting policies which are described in note 3, the
management has made the following estimation that has significant effect on the amount
recognised in the consolidated financial statements. The key assumption concerning the
future, and other key source of estimation uncertainty at the balance sheet date, that has a
significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year, are discussed below.
Amortisation and impairment on film rights
Film rights are amortised using a method that reasonably relates the net carrying amount of
film rights to the net revenue expected to be realised, which was estimated according to
recent market information of the film industry for each of the films. If the actual revenue
differs from the estimated revenue expected to be realised, such difference will impact the
amortisation for the remaining period to be amortised.
5. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s major financial instruments include trade receivables, other receivables, bank
balances and cash, trade payables, other payables, amount due to ultimate holding company,
amount due to a related company and loan from a minority shareholder of a subsidiary.
Details of these financial instruments are disclosed in respective notes. The risks associated
with these financial instruments and the policies on how to mitigate these risks are set out
below. The management manages and monitors these exposures to ensure appropriate
measures are implemented on a timely and effective manner.
ANNUAL REPORT 2006 - 2007EMPEROR ENTERTAINMENT GROUP LIMITED
For the year ended 31st March, 2007
Notes to the Consolidated Financial Statements
45
5. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)
Market risk
Currency risk
Several subsidiaries of the Company have foreign currency sales and production costs, which
expose the Group to foreign currency risk. Certain trade and other receivables, trade and
other payable, and bank balances of the Group are denominated in foreign currencies.
However, such exposure is inmaterial to the Group as the amounts denominated in foreign
currencies are not significant. The Group currently does not have a foreign currency hedging
policy. However, the management monitors foreign exchange exposure and will consider
hedging significant foreign currency exposure should the need arises.
Interest rate risk
The Group is exposed to the cash flow interest rate risk through the impact of rate changes
on interest bearing financial liability which is mainly amount due to ultimate holding company.
Since this interest bearing financial liability is short term in nature, any future variations in
interest rates will not have a significant impact on the results of the Group.
Interest bearing financial assets are mainly bank balances and other receivables carried at
prevailing market rate, that exposed the Group to cash flow interest risk. However, such
exposure is immaterial to the Group as the bank balances are all short-term in nature.
Credit risk
The Group’s maximum exposure to credit risk in the event of the counterparties failure to
perform their obligations as at 31st March, 2007 in relation to each class of recognised
financial assets is the carrying amount of those assets as stated in the consolidated balance
sheet. In order to minimise the credit risk, the management of the Group has delegated a
team responsible for determination of credit limits, credit approvals and other monitoring
procedures to ensure that follow-up action is taken to recover overdue debts. In addition,
the Group reviews the recoverable amount of each individual trade debt at each balance
sheet date to ensure that adequate impairment losses are made for irrecoverable amounts.
In this regard, the directors of the Company consider that the Group’s credit risk is significantly
reduced.
The Group has no significant concentration of credit risk, with exposure spread over a
number of counterparties and customers in diversified geographical locations.
The credit risk on liquid funds is limited because the counterparties are banks with high
credit-ratings assigned by international credit-rating agencies.
ANNUAL REPORT 2006 - 2007 EMPEROR ENTERTAINMENT GROUP LIMITED
Notes to the Consolidated Financial Statements
46
For the year ended 31st March, 2007
6. REVENUE
2007 2006
HK$’000 HK$’000
An analysis of the Group’s revenue is as follows:
Music production and distribution
– sales of albums 23,518 33,399
– licence income 32,271 22,462
– multimedia income 7,346 6,221
63,135 62,082
Film and television programme production, distribution
and licensing
– production of films and television programmes
and licensing of the corresponding rights 58,337 60,225
– distribution of films and television programmes 17,319 15,217
75,656 75,442
Artiste management fee income 37,787 34,072
Event production
– income from jointly organised events 207 20,789
– income from provision of event production services 7,130 4,532
7,337 25,321
183,915 196,917
ANNUAL REPORT 2006 - 2007EMPEROR ENTERTAINMENT GROUP LIMITED
For the year ended 31st March, 2007
Notes to the Consolidated Financial Statements
47
7. SEGMENT INFORMATION
For management purposes, the Group is currently organised into four operating divisions,
namely (a) music production and distribution; (b) film and television programme production,
distribution and licensing; (c) artiste management; and (d) event production. These divisions
are the basis on which the Group reports its primary segment information.
Principal activities are as follows:
Music production and distribution – sales of albums and licensing of musical works
Film and television programme – production and distribution of films and
production, distribution and television programmes and licensing of
licensing distribution rights over films and television
programmes
Artiste management – provision of management services to artistes
Event production – concert management and organisation, and
provision of event production services
ANNUAL REPORT 2006 - 2007 EMPEROR ENTERTAINMENT GROUP LIMITED
Notes to the Consolidated Financial Statements
48
For the year ended 31st March, 2007
7. SEGMENT INFORMATION (Continued)
(a) By activity
2007 2006
Contribution Contribution
to profit to loss
Revenue for the year Revenue for the year
HK$’000 HK$’000 HK$’000 HK$’000
Music production and distribution 63,135 (6,067) 62,082 (8,518)
Film and television programme
production, distribution and
licensing 75,656 8,671 75,442 (53,070)
Artiste management 37,787 18,164 34,072 18,266
Event production 7,337 2,972 25,321 15,463
183,915 23,740 196,917 (27,859)
Other income not allocated to
principal activities 2,063 2,215
Unallocated corporate expenses (5,430) (4,216)
Finance costs (750) (2,218)
Gain on disposal of a subsidiary 822 –
Share of results of a jointly
controlled entity (note) (377) –
Profit (loss) before taxation 20,068 (32,078)
Taxation (2,976) (2,383)
Profit (loss) for the year 17,092 (34,461)
Note: The share of results of a jointly controlled entity belongs to the segment of film and television
programme production, distribution and licensing.
ANNUAL REPORT 2006 - 2007EMPEROR ENTERTAINMENT GROUP LIMITED
For the year ended 31st March, 2007
Notes to the Consolidated Financial Statements
49
7. SEGMENT INFORMATION (Continued)
(a) By activity (Continued)
Film and
television
programme
Music production,
production distribution
and and Artiste Event
distribution licensing management production Total
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Balance sheet as at
31st March, 2007
ASSETS
Segment assets 32,837 76,855 11,594 10,547 131,833
Interests in a jointly
controlled entity – 2,084 – – 2,084
Unallocated corporate assets 72,402
Consolidated total assets 206,319
LIABILITIES
Segment liabilities 39,010 25,201 5,686 7,511 77,408
Unallocated corporate
liabilities 34,154
Consolidated total liabilities 111,562
ANNUAL REPORT 2006 - 2007 EMPEROR ENTERTAINMENT GROUP LIMITED
Notes to the Consolidated Financial Statements
50
For the year ended 31st March, 2007
7. SEGMENT INFORMATION (Continued)
(a) By activity (Continued)
Film and
television
programme
Music production,
production distribution
and and Artiste Event
distribution licensing management production Total
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Other information
for the year ended
31st March, 2007
Depreciation of property,
plant and equipment 686 245 312 96 1,339
Unallocated depreciation
of property, plant and
equipment 375
1,714
Amortisation of film rights – 43,112 – – 43,112
Impairment loss on film rights – 2,969 – – 2,969
Additions to property,
plant and equipment
and film rights 1,168 45,961 555 56 47,740
Unallocated additions 640
48,380
Allowance for bad and
doubtful debts 34 – – – 34
ANNUAL REPORT 2006 - 2007EMPEROR ENTERTAINMENT GROUP LIMITED
For the year ended 31st March, 2007
Notes to the Consolidated Financial Statements
51
7. SEGMENT INFORMATION (Continued)
(a) By activity (Continued)
Film and
television
programme
Music production,
production distribution
and and Artiste Event
distribution licensing management production Total
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Balance sheet as at
31st March, 2006
ASSETS
Segment assets 33,258 73,419 7,413 12,778 126,868
Unallocated corporate
assets 73,399
Consolidated total assets 200,267
LIABILITIES
Segment liabilities 46,959 39,208 6,675 9,801 102,643
Unallocated corporate
liabilities 19,508
Consolidated total liabilities 122,151
ANNUAL REPORT 2006 - 2007 EMPEROR ENTERTAINMENT GROUP LIMITED
Notes to the Consolidated Financial Statements
52
For the year ended 31st March, 2007
7. SEGMENT INFORMATION (Continued)
(a) By activity (Continued)
Film and
television
programme
Music production,
production distribution
and and Artiste Event
distribution licensing management production Total
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Other information
for the year ended
31st March, 2006
Depreciation of property,
plant and equipment 511 306 482 210 1,509
Unallocated depreciation
of property, plant and
equipment 296
1,805
Amortisation of film rights – 85,318 – – 85,318
Impairment loss on film rights – 12,260 – – 12,260
Additions to property,
plant and equipment
and film rights 243 20,724 335 758 22,060
Unallocated additions 140
22,200
Overprovision in prior years
in respect of cost of
film rights – (4,700) – – (4,700)
17,500
Allowance for bad and
doubtful debts 711 193 – – 904
ANNUAL REPORT 2006 - 2007EMPEROR ENTERTAINMENT GROUP LIMITED
For the year ended 31st March, 2007
Notes to the Consolidated Financial Statements
53
7. SEGMENT INFORMATION (Continued)
(b) By geographical market
Revenue
2007 2006
HK$’000 HK$’000
Greater China
– Hong Kong 75,158 109,489
– Mainland China 52,504 38,848
– Taiwan 1,782 4,816
Japan 2,668 7,630
Other Asian countries 9,489 14,174
North America 18,738 3,692
European countries 9,422 3,403
Other areas 14,154 14,865
183,915 196,917
The following is an analysis of the carrying amount of segment assets, and additions to
property, plant and equipment and film rights, analysed by the geographical area in which
the assets are located.
Additions to property,
Carrying amount plant and equipment
of segment assets and film rights
2007 2006 2007 2006
HK$’000 HK$’000 HK$’000 HK$’000
Greater China
– Hong Kong 95,617 90,847 47,686 21,070
– Mainland China 3,958 6,545 54 990
– Taiwan – 672 – –
Other Asian countries 30,837 4,650 – –
Ireland 1,421 24,154 – –
131,833 126,868 47,740 22,060
8. FINANCE COSTS
Amount represents interest on amount due to ultimate holding company.
ANNUAL REPORT 2006 - 2007 EMPEROR ENTERTAINMENT GROUP LIMITED
Notes to the Consolidated Financial Statements
54
For the year ended 31st March, 2007
9. DISPOSAL OF A SUBSIDIARY
On 30th December, 2005, the Group entered into an agreement with the minority shareholder
of a subsidiary, /"! (“ ”), which was engaged in
provision of management services to artistes and holding company of an artiste training
school, for disposal of its 60% equity interest in to the minority shareholder. Such
disposal was completed on 14th June, 2006 (“Date of Disposal”), on which date control of
5P passed to the minority shareholder. The assets and liabilities of 5P had
been classified as held for sale on 31st March, 2006.
The net assets of at the Date of Disposal and as at 31st March, 2006 were as
follows:
At At
14th June, 31st March,
2006 2006
HK$’000 HK$’000
Loan to a minority shareholder of a subsidiary 60 60
Property, plant and equipment 1,154 1,154
Prepayments and other receivables – non-current portion 276 276
Prepayments and other receivables – current portion 448 544
Trade receivables 202 202
Bank balances and cash 1,076 945
Other payables and accrued charges (1,290) (1,266)
1,926 1,915
Minority interests (808)
Translation reserve realised (19)
Gain on disposal of a subsidiary 822
Total consideration 1,921
Satisfied by:
Cash 1,921
Net cash inflow arising on disposal of a subsidiary:
Cash consideration received 1,921
Cash and cash equivalent disposed of (1,076)
845
ANNUAL REPORT 2006 - 2007EMPEROR ENTERTAINMENT GROUP LIMITED
For the year ended 31st March, 2007
Notes to the Consolidated Financial Statements
55
9. DISPOSAL OF A SUBSIDIARY (Continued)
The impact of the disposal of on the Group’s revenue and results in the period up
to the Date of Disposal and prior year were as follows:
Period Year
ended ended
14th June, 31st March,
2006 2006
HK$’000 HK$’000
Revenue – 323
Other income – 1,823
Distribution costs – (570)
Administrative expenses – (3,541)
Loss for the year – (1,965)
During the period up to the Date of Disposal, 5P had no significant impact on cash
flows of the Group. In the prior year, 5P paid approximately HK$1,434,000 in respect
of the Group’s net operating cash flows, paid approximately HK$232,000 in respect of
investing activities and paid approximately HK$398,000 in respect of financing activities.
ANNUAL REPORT 2006 - 2007 EMPEROR ENTERTAINMENT GROUP LIMITED
Notes to the Consolidated Financial Statements
56
For the year ended 31st March, 2007
10. PROFIT (LOSS) BEFORE TAXATION
2007 2006
HK$’000 HK$’000
Profit (loss) before taxation has been arrived at
after charging:
Directors’ emoluments (note 11(a)) 4,013 3,873
Retirement benefit scheme contributions, net of
forfeited contributions of nil (2006: HK$13,000) 1,273 1,274
Other staff costs 37,699 37,714
Total staff costs 42,985 42,861
Allowance for bad and doubtful debts 34 904
Amortisation of film rights charged to cost of film
and television programme production and distribution 43,112 85,318
Auditors’ remuneration
– current year 1,814 1,318
– underprovision in prior years 444 84
Cost of inventories recognised as expense 23,183 18,402
Depreciation of property, plant and equipment 1,714 1,805
Impairment loss on film rights recognised and included
in cost of film and television programme production
and distribution 2,969 12,260
Loss on disposal of property, plant and equipment 191 2
Operating lease rentals in respect of rented premises 3,490 4,046
Write-off of property, plant and equipment – 368
and after crediting:
Interest on bank deposits 648 292
Imputed interest income on non-current interest-free
loans to artistes and staff 375 1,534
Interest on loans to artistes 696 389
Total interest income 1,719 2,215
Rental income 363 457
ANNUAL REPORT 2006 - 2007EMPEROR ENTERTAINMENT GROUP LIMITED
For the year ended 31st March, 2007
Notes to the Consolidated Financial Statements
57
11. DIRECTORS’ AND EMPLOYEES’ EMOLUMENTS
(a) Directors
The emoluments paid or payable to each of the seven (2006: eight) directors as
follows:
Ms. Fan Man Mr. Ng Ms. Luk Siu Mr. Wong
Mr. Wong Seung, Sui Wan Man, Semon Mr. Wong Mr. Chu Tak Ming, 2007
Chi Fai Vanessa (alias Ng Yu) (Chairperson) Ching Yue Kar Wing Gary Total
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Fees 100 100 100 – 100 100 100 600
Other emoluments
Salaries and other benefits – – 3,000 – – – – 3,000
Contributions to retirement benefit
schemes ––163––––163
Performance related incentive
payment (note (a)) ––250––––250
100 100 3,513 – 100 100 100 4,013
Ms. Fan Man Mr. Ng Ms. Luk Siu Dr. So Mr. Wong
Mr. Wong Seung, Sui Wan Man, Semon Shu Fai Mr. Wong Mr. Chu Tak Ming, 2006
Chi Fai Vanessa (alias Ng Yu) (Chairperson) (Note (b)) Ching Yue Kar Wing Gary Total
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Fees 100 100 100 – 100 100 90 90 680
Other emoluments
Salaries and other benefits – – 2,964 – – – – – 2,964
Contributions to retirement benefit
schemes – – 104 – – – – – 104
Performance related incentive
payment (note (a)) – – 125 – – – – – 125
100 100 3,293 – 100 100 90 90 3,873
Notes:
(a) The performance related incentive payment is determined with reference to the operating results,
individual performance and comparable market statistics during both years.
(b) Dr. So Shu Fai retired on 25th August, 2005.
ANNUAL REPORT 2006 - 2007 EMPEROR ENTERTAINMENT GROUP LIMITED
Notes to the Consolidated Financial Statements
58
For the year ended 31st March, 2007
11. DIRECTORS’ AND EMPLOYEES’ EMOLUMENTS (Continued)
(b) Employees
During the year, the five highest paid individuals included one director (2006: one
director). The total emoluments of the remaining four (2006: four) highest paid
individuals were as follows:
2007 2006
HK$’000 HK$’000
Salaries and other benefits 5,172 5,101
Bonuses 273 268
Retirement benefit scheme contributions 113 111
5,558 5,480
Number of individuals
2007 2006
Emoluments of the employees were within the
following bands:
Nil - HK$1,000,000 – 1
HK$1,000,001 - HK$1,500,000 3 1
HK$1,500,001 - HK$2,000,000 1 2
During the year, no emoluments (2006: nil) were paid by the Group to the five highest paid
individuals of the Group (including directors) as an inducement to join or upon joining the
Group or as compensation for loss of office. No director had waived any emoluments during
both years.
12. TAXATION
2007 2006
HK$’000 HK$’000
The charge com