1

PERENNIAL INTERNATIONAL LIMITED

(Incorporated in Bermuda with limited liability)
(Stock Code: 725)
INTERIM RESULTS
FOR THE SIX MONTHS ENDED 30TH JUNE 2007
INTERIM RESULTS

The Board of Directors (the “Directors”) of Perennial International Limited (the “Company”) is pleased
to present the interim report and the unaudited condensed consolidated accounts of the Company
and its subsidiaries (collectively the “Group”) for the six months ended 30th June 2007 together with
comparative figures as follows:
CONDENSED CONSOLIDATED PROFIT AND LOSS ACCOUNT (UNAUDITED)
for the six months ended 30th June 2007
Six months ended 30th June
2007 2006

Note HK$’000 HK$’000
Turnover 4 224,156 174,494
Cost of sales (181,212) (140,446)

Gross profit 42,944 34,048
Other gains 5 2,639 190
Distribution expenses (4,909) (4,718)
Administrative expenses (24,152) (20,222)
Other operating expenses (1,715) (1,029)

Operating profit 6 14,807 8,269
Finance costs 8 (3,066) (2,110)

Profit before taxation 11,741 6,159
Taxation 9 (1,023) 243

Profit attributable to shareholders 10,718 6,402

Dividend 10 3,980 1,990

Basic earnings per share (cents) 11 5.4 3.2

Fully diluted earnings per share (cents) 11 5.4 3.2

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CONDENSED CONSOLIDATED BALANCE SHEET

as at 30th June 2007
Unaudited Audited
30th June 31st December
2007 2006

Note HK$’000 HK$’000
ASSETS

Non-current assets
Leasehold land and land use rights 14 29,956 30,349
Property, plant and equipment 12 91,483 89,266
Investment property 13 7,110 4,700
Deposit paid for additions of
land use rights and machinery 8,059 7,133
Deferred tax assets 2,670 2,670

139,278 134,118

Current assets
Inventories 15 61,743 73,492
Trade receivables 16 120,989 109,375
Other receivables, deposits and prepayments 7,740 5,979
Bank balances and cash 17,666 14,049

208,138 202,895

Total assets 347,416 337,013

EQUITY

Share capital 17 19,896 19,896
Other reserves 18 18,986 18,974
Retained earnings
Others 149,240 142,502
Proposed dividend 3,980 5,970

Total equity 192,102 187,342

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3
Unaudited Audited
30th June 31st December
2007 2006

Note HK$’000 HK$’000
LIABILITIES

Non-current liabilities
Long-term bank loans 20 2,467 3,158
Obligations under hire purchase contracts 20 7,805 9,015
Deferred tax liabilities 3,429 3,662

13,701 15,835

Current liabilities
Trade payables 19 38,265 43,550
Other payables and accruals 17,017 15,935
Taxation 1,207 725
Current portion of obligations
under hire purchase contracts 20 2,593 2,879
Current portion of long-term bank loans 20 1,362 2,224
Short-term bank loans 20 6,000 6,000
Trust receipt loans 20 75,169 62,523

141,613 133,836

Total liabilities 155,314 149,671

Total equity and liabilities 347,416 337,013

Net current assets 66,525 69,059

Total assets less current liabilities 205,803 203,177

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4
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
for the six months ended 30th June 2007
Share Other Retained
capital reserves earnings Total
HK$’000 HK$’000 HK$’000 HK$’000
At 1st January 2007 19,896 18,974 148,472 187,342
Profit attributable to shareholders – – 10,718 10,718
Exchange difference arising from translation of
accounts of subsidiaries – 12 – 12
Final dividend paid for 2006 – – (5,970) (5,970)

At 30th June 2007 19,896 18,986 153,220 192,102

Represented by:
Interim dividend proposed for 2007 3,980
Others 149,240

Retained earnings as at 30th June 2007 153,220

Share Other Retained
capital reserves earnings Total
HK$’000 HK$’000 HK$’000 HK$’000
At 1st January 2006 19,896 18,343 126,972 165,211
Profit attributable to shareholders – – 6,402 6,402
Final dividend paid for 2005 – – (5,970) (5,970)

At 30th June 2006 19,896 18,343 127,404 165,643

Represented by:
Interim dividend proposed for 2006 1,990
Others 125,414

Retained earnings as at 30th June 2006
127,404

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5
CONDENSED CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)
for the six months ended 30th June 2007
Six months ended 30th June
2007 2006

HK$’000 HK$’000
Cash flows from operating activities
Cash generated from operations 10,907 2,262
Profits tax paid (775) (452)

Net cash generated from operating activities 10,132 1,810

Cash flows from investing activities
Purchases of property, plant and equipment (6,386) (6,992)
Deposit paid for land use rights and machinery (926) (922)
Sale of property, plant and equipment 133 –
Interest received 91 71

Net cash used in investing activities (7,088) (7,843)

Cash flows from financing activities
Increase in trust receipt loans 12,646 16,529
Repayment of long-term bank loans (1,553) (1,615)
Increase in short-term bank loans – 3,000
Repayment of capital element of
hire purchase contracts (1,496) (716)
Interest of hire purchase contracts (430) (75)
Bank loans interest (2,636) (2,035)
Dividend paid to the Company’s shareholders (5,970) (5,970)

Net cash generated from financing activities 561 9,118

Net increase in cash and cash equivalents 3,605 3,085
Cash and cash equivalents at the beginning of the period 14,049 19,364
Exchange difference on cash and cash equivalents 12 –

Cash and cash equivalents at the end of the period 17,666 22,449

Analysis of balances of cash and cash equivalents:
Bank balances and cash 17,666 22,449

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6
1. GENERAL INFORMATION

The Perennial Group, founded in 1989, manufactures and trades quality power cords, power cord sets, cables and wire,
wire harnesses and plastic resins. The Group’s primary markets are America, Europe, Australia, China, Japan and
Southeast Asia where it sells to prominent multi-national producers of electrical and electronic products.
2. BASIS OF PREPARATION

The unaudited condensed consolidated accounts for the six months ended 30th June 2007 are prepared in accordance
with Hong Kong Accounting Standard (“HKAS”) 34 “Interim Financial Reporting” issued by the Hong Kong Institute of
Certified Public Accountants.
These unaudited condensed consolidated accounts should be read in conjunction with the annual accounts for the year
ended 31st December 2006.
3. ACCOUNTING POLICIES

The accounting policies adopted are consistent with those of the annual accounts ended 31st December 2006.
New standards, amendment and interpretations effective in 2007:
HKAS 1 (Amendment) Amendments to Capital Disclosures
HKFRS 7 Financial Instruments: Disclosures
HK(IFRIC)-Int 7 Applying the Restatement Approach under HKAS 29 “Financial Reporting in
Hyperinflationary Economies”
HK(IFRIC)-Int 8 Scope of HKFRS 2
HK(IFRIC)-Int 9 Reassessment of Embedded Derivatives
HK(IFRIC)-Int 10 Interim Financial Reporting and Impairment
The adoption of these new standards, amendment and interpretations does not have significant impact on the unaudited
condensed consolidated accounts.
4 TURNOVER, REVENUE AND SEGMENT INFORMATION

Turnover recognised during the period are as follows:
Unaudited
Six months ended 30th June
2007 2006

HK$’000 HK$’000
Sale of goods 224,156 174,494

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Analysis of the Group’s turnover and contribution to operating profit by:
Business segment
Unaudited
Six months ended 30th June 2007
Cable and Investment
wire products holdings Group
HK$’000 HK$’000 HK$’000
Turnover 224,156 – 224,156

Segment results 39,594 2,105 41,699

Unallocated costs (26,892)

Operating profit 14,807
Finance costs (3,066)

Profit before taxation 11,741
Taxation (1,023)

Profit attributable to shareholders 10,718

Depreciation and amortisation 4,300 – 4,300

Assets and liabilities by segment as at 30th June 2007 and capital expenditure for the six months ended 30th June 2007
are as follows:
Cable and Investment
wire products holdings Unallocated Group
HK$’000 HK$’000 HK$’000 HK$’000
Assets 308,770 38,646 – 347,416

Liabilities 144,914 10,400 155,314

Capital expenditure
for the six months ended
30th June 2007 6,386 – – 6,386

There are no sales or other transactions between the business segments.
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Unaudited
Six months ended 30th June 2006
Cable and Investment
wire products holdings Group
HK$’000 HK$’000 HK$’000
Turnover 174,494 – 174,494

Segment results 34,048 – 34,048

Unallocated costs (25,779)

Operating profit 8,269
Finance costs (2,110)

Profit before taxation 6,159
Taxation 243

Profit attributable to shareholders 6,402

Depreciation and amortisation 3,551 – 3,551

Assets and liabilities by segment as at 31st December 2006 and capital expenditure for the six months ended 30th June
2006 are as follows:
Cable and Investment
wire products holdings Unallocated Group
HK$’000 HK$’000 HK$’000 HK$’000
Assets 300,297 36,716 – 337,013

Liabilities 138,832 4,519 6,320 149,671

Capital expenditure
for the six months ended
30th June 2006 6,992 – – 6,992

There are no sales or other transactions between the business segments.
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Geographical segment
Unaudited
Six months ended 30th June 2007
Segment Capital Total
Turnover results expenditure assets
HK$’000 HK$’000 HK$’000 HK$’000
Hong Kong 112,709 20,088 549 138,769
Mainland China 40,462 5,542 5,837 161,381
Other Asian Countries 16,439 3,543 – 7,655
America 49,940 11,438 37,424
Europe 4,467 1,047 2,187
South Africa 139 41 – –

224,156 41,699 6,386 347,416

There are no sales between the geographical segments.
Audited
Unaudited 31st December
Six months ended 30th June 2006 2006
Segment Capital Total
Turnover results expenditure assets
HK$’000 HK$’000 HK$’000 HK$’000
Hong Kong 79,970 11,464 81 137,684
Mainland China 23,921 3,800 6,911 160,542
Other Asian Countries 12,991 3,043 – 6,425
America 52,156 14,507 30,772
Europe 3,006 550 1,590
South Africa 2,450 684 – –

174,494 34,048 6,992 337,013

There are no sales between the geographical segments.
5 OTHER GAINS

Unaudited
Six months ended 30th June
2007 2006

HK$’000 HK$’000
Revaluation surplus on investment property 2,410 –
Gross rental income from investment property 138 119
Interest income 91 71

2,639 190

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6 OPERATING PROFIT

Expenses included in cost of sales, distribution expenses, administrative expenses and other operating expenses are
analysed as follows:
Unaudited
Six months ended 30th June
2007 2006

HK$’000 HK$’000
Amortisation and depreciation:
Amortisation of leasehold land and land use rights 393 393
Depreciation of owned property, plant and equipment 2,807 2,810
Depreciation of property, plant and equipment
held under hire purchase contracts 1,100 348
Auditor’s remuneration 645 605
Cost of inventories sold 151,690 116,320
Net exchange loss/(gain) 809 (396)
Operating lease rentals in respect of land and buildings 222 229
(Written-back)/provision for slow-moving inventories (163) 944
Impairment of trade receivables 2,065 327
Staff costs (including directors’ emoluments) (Note 7) 24,475 21,013

7 STAFF COSTS (INCLUDING DIRECTORS’ EMOLUMENTS)
Unaudited
Six months ended 30th June
2007 2006

HK$’000 HK$’000
Wages and salaries 23,217 19,553
Termination benefits 35 2
Social security costs 928 1,147
Pension costs – contribution to MPF scheme 225 218
Other benefits 70 93

24,475 21,013

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Included in the employee benefit expenses are remunerations paid to the directors as set out below:
Directors’ emoluments
Unaudited
Six months ended 30th June
2007 2006

HK$’000 HK$’000
Basic salaries, housing allowances,
other allowances and benefits in kind 4,782 4,962
Discretionary bonuses 117 239
Pension costs – contributions to MPF scheme 36 39

4,935 5,240

8 FINANCE COSTS

Unaudited
Six months ended 30th June
2007 2006

HK$’000 HK$’000
Interest on bank loans
Wholly repayable within five years 2,636 1,862
Repayable over five years – 173
Interest of hire purchase contracts 430 75

3,066 2,110

9 TAXATION

Hong Kong profits tax has been provided at the rate 17.5% (2006: 17.5%) on the estimated assessable profit for the
period.
Taxation on overseas profits has been calculated on the estimated assessable profit for the period at the rates of taxation
prevailing in the countries in which the Group operates.
On 16 March 2007, the National People’s Congress of the PRC approved the Corporate Income Tax Law (the “new CIT
Law”). The new CIT Law reduces or increases the corporate income tax rate for domestic enterprises or foreign invested
enterprises from 33% or 24% or 15% to a fixed rate of 25% with effect form 1 January 2008. The new CIT Law provides
that further detailed measures and regulations on the determination of taxable profit, tax incentives and grandfathering
provisions will be issued by the State Council in due course. As and when the State Council announces the additional
regulations, the Group will assess their impact, if any, and this change in accounting estimate will be accounted for
prospectively.
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Unaudited
Six months ended 30th June
2007 2006

HK$’000 HK$’000
Hong Kong profits tax 300 153
Overseas taxation 723 396
Under-provision in prior years – 13
Deferred taxation – (805)

1,023 (243)

10 DIVIDEND

Unaudited
Six months ended 30th June
2007 2006

HK$’000 HK$’000
Interim, proposed, of HK$0.02
(2006: HK$0.01) per ordinary share 3,980 1,990

At a meeting held on 3rd September 2007, the Directors declared an interim dividend of HK$0.02 per ordinary share for
the six months ended 30th June 2007. This proposed dividend is not reflected as a dividend payable in these unaudited
condensed consolidated accounts, but will be reflected as an appropriation of retained earnings for the year ending 31st
December 2007.
11 EARNINGS PER SHARE

The calculation of basic earnings per share is based on the Group’s profit attributable to shareholders for the six months
ended 30th June 2007 of HK$10,718,000 (Six months ended 30th June 2006: HK$6,402,000) and the number of
198,958,000 (30th June 2006: 198,958,000) ordinary shares in issue during the period.
Diluted earnings per share equals basic earnings per share as there is no potential dilutive ordinary share during the
period.
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12 PROPERTY, PLANT AND EQUIPMENT

Unaudited
Buildings
Inside Outside Leasehold Plant and Furniture Office Motor Pleasure Construction
HK HK improvements machinery and fixtures equipment vehicles boat in progress Total
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Net book value at 1st January 2007 9,223 33,213 1,720 16,710 1,063 4,201 3,657 14,324 5,155 89,266
Additions – 66 35 917 12 309 567 102 4,378 6,386
Disposals – – (14) (41) (32) (45) (130) – – (262)
Depreciation (114) (413) (167) (1,634) (106) (405) (364) (704) – (3,907)

Net book value at 30th June 2007 9,109 32,866 1,574 15,952 937 4,060 3,730 13,722 9,533 91,483

At 30th June 2007
At cost – 66 3,498 69,027 4,881 8,421 6,963 14,667 9,533 117,056
At valuation 9,340 33,560 – – – – – – – 42,900
Accumulated depreciation (231) (760) (1,924) (53,075) (3,944) (4,361) (3,233) (945) – (68,473)

Net book value 9,109 32,866 1,574 15,952 937 4,060 3,730 13,722 9,533 91,483

Audited
Buildings
Inside Outside Leasehold Plant and Furniture Office Motor Pleasure Construction
HK HK improvements machinery and fixtures equipment vehicles boat in progress Total
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Net book value at 1st January 2006 9,362 30,022 1,758 18,380 1,225 4,154 2,812 68 – 67,781
Additions – 6,230 238 995 – 894 1,618 14,565 5,155 29,695
Disposals – – – (106) (29) (195) (264) (62) – (656)
Depreciation (233) (811) (316) (3,321) (216) (784) (553) (247) – (6,481)
Revaluation 94 (2,228) – – – – – – – (2,134)
Exchange differences – – 40 762 83 132 44 – – 1,061

Net book value at 31st December 2006 9,223 33,213 1,720 16,710 1,063 4,201 3,657 14,324 5,155 89,266

At 31st December 2006
At cost – – 3,561 68,212 5,064 8,242 6,946 14,565 5,155 111,745
At valuation 9,340 33,560 – – – – – – – 42,900
Accumulated depreciation (117) (347) (1,841) (51,502) (4,001) (4,041) (3,289) (241) – (65,379)

Net book value 9,223 33,213 1,720 16,710 1,063 4,201 3,657 14,324 5,155 89,266

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13 INVESTMENT PROPERTY

Unaudited Audited
30th June 31st December
2007 2006

HK$’000 HK$’000
At the beginning of the period/year 4,700 3,100
Revaluation surplus credited to the condensed consolidated profit and loss account 2,410 1,600

At the end of the period/year 7,110 4,700

14 LEASEHOLD LAND AND LAND USE RIGHTS

The Group’s interests in leasehold land and land use rights represented prepaid operating lease payments and their net
book values are analysed as follows:
Unaudited Audited
30th June 31st December
2007 2006

HK$’000 HK$’000
In Hong Kong held on:
– Leases of between 10 to 50 years 21,670 21,947
Outside Hong Kong held on:
– Leases of between 10 to 50 years 8,286 8,402

29,956 30,349

15 INVENTORIES

Unaudited Audited
30th June 31st December
2007 2006

HK$’000 HK$’000
Raw materials 31,203 33,111
Work in progress 12,206 14,788
Finished goods 20,585 28,007

63,994 75,906

Provision for slow moving inventories (2,251) (2,414)

61,743 73,492

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15
16 TRADE RECEIVABLES

Unaudited Audited
30th June 31st December
2007 2006

HK$’000 HK$’000
Trade receivables 124,442 111,581
Less: Provision for bad and doubtful debts (3,453) (2,206)

120,989 109,375

The carrying amounts of trade receivables approximate to their fair values as at balance sheet date.
At 30th June 2007, the ageing analysis of trade receivables is as follows:
Unaudited Audited
30th June 31st December
2007 2006

HK$’000 HK$’000
Current – 3 months 106,859 99,586
4 – 6 months 15,712 10,834
Over 6 months 1,871 1,161

124,442 111,581

Provision for bad and doubtful debts (3,453) (2,206)

120,989 109,375

The average credit allowed to customers is 60 to 90 days after invoice date. New customers are charged in cash on
delivery.
17 SHARE CAPITAL

Unaudited Audited
30th June 31st December
2007 2006

HK$’000 HK$’000
Authorised:
Ordinary shares of HK$0.10 each 50,000 50,000

Issued and fully paid:
Ordinary shares of HK$0.10 each 19,896 19,896

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16
18 RESERVES

Unaudited
Exchange Building Capital Total
Share fluctuation revaluation redemption other
premium reserve reserve reserve reserves
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
At 1st January 2007 15,885 2,891 94 104 18,974
Exchange differences arising from translation
of accounts of subsidiaries – 12 – – 12

At 30th June 2007 15,885 2,903 94 104 18,986

19 TRADE PAYABLES

The carrying amounts of trade payables approximate to their fair values as at balance sheet date.
At 30th June 2007, the ageing analysis of trade payables is as follow:
Unaudited Audited
30th June 31st December
2007 2006

HK$’000 HK$’000
Current – 3 months 35,040 39,753
4 – 6 months 3,117 3,241
Over 6 months 108 556

38,265 43,550

20 BORROWINGS

Unaudited Audited
30th June 31st December
2007 2006

HK$’000 HK$’000
Non-current
Long-term bank loans 2,467 3,158
Obligations under hire purchase contracts 7,805 9,015

10,272 12,173

Current
Current portion of long-term bank loans 1,362 2,224
Current portion of obligations under hire purchase contracts 2,593 2,879
Short-term bank loans 6,000 6,000
Trust receipt loans 75,169 62,523

85,124 73,626

Total borrowings 95,396 85,799

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Total borrowings include secured liabilities of HK$73,169,000 (31st December 2006: HK$59,856,000), which are
secured by leasehold land, land use rights, buildings and investment property of the Group.
The maturity of borrowings is as follows:
Obligations under
Long term Short-term Trust hire purchase
bank loans bank loans receipt loans contracts
30th 31st 30th 31st 30th 31st 30th 31st
June December June December June December June December
Unaudited Audited Unaudited Audited Unaudited Audited Unaudited Audited
2007 2006 2007 2006 2007 2006 2007 2006

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Within 1 year 1,362 2,224 6,000 6,000 75,169 62,523 2,593 2,879
Between 1 and 2 years 1,450 1,405 – – – – 2,343 2,377
Between 2 and 5 years 1,017 1,753 – – – – 5,462 6,638

Wholly repayable within 5 years 3,829 5,382 6,000 6,000 75,169 62,523 10,398 11,894
Over 5 years – – – – – – – –

Total borrowings 3,829 5,382 6,000 6,000 75,169 62,523 10,398 11,894

21 BANKING FACILITIES

At 30th June 2007, the Group’s banking facilities amounting to approximately HK$108,830,000 (31st December 2006:
HK$120,384,000) were secured by the following:
(a) legal charges over certain leasehold land, land use rights, buildings and investment property of the Group with a
total net book value of HK$37,889,000 (31st December 2006: HK$35,870,000);
(b) a deed of guarantee executed by the Company amounting to HK$66,000,000 (31st December 2006:
HK$81,000,000).
22 RELATED PARTY TRANSACTIONS

(a) Transactions with the related party
(i) Name and relationship with the related party
l96y"!(“PIEL”) is wholly-owned by Mr. Zhou Jing Zhuan, a member of senior
management of the Group. PIEL is thus a related party of the Group.
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(ii) Details of the transactions
During the period, the Group entered into the following significant transactions in the ordinary course of
business with PIEL:
Unaudited
Six months ended 30th June
2007 2006

HK$’000 HK$’000
Sales of goods 3,004 –

These transactions were entered into on normal commercial terms or, if there are no sufficient comparable
transactions, on terms no less favourable to the Group than terms available to or from independent third
parties.
(b) Compensation of key management personnel
Unaudited
Six months ended 30th June
2007 2006

HK$’000 HK$’000
Basic salaries, housing allowances, other allowances and benefits in kind 6,169 6,149
Discretionary bonuses 128 343
Pension costs – contributions to MPF scheme 48 58

6,345 6,550

23 COMMITMENTS

(a) Capital commitments
As 30th June 2007, the Group had the following capital commitment for construction project:
Unaudited Audited
30th June 31st December
2007 2006

HK$’000 HK$’000
Contracted but not provided for 4,065 5,213

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(b) Commitments under operating leases
At 30th June 2007, the Group had future aggregate minimum lease payments under non-cancelable operating leases
as follows:
Unaudited Audited
30th June 31st December
2007 2006

HK$’000 HK$’000
Not later than one year 50 17

MANAGEMENT DISCUSSION AND ANALYSIS
FINANCIAL REVIEW

Results
The Group’s turnover for the six months ended 30th June 2007 was HK$224,156,000 (2006:
HK$174,494,000). Unaudited consolidated profit attributable to shareholders was HK$10,718,000 (2006:
HK$6,402,000) up 67.4%. Earnings per share were HK$0.054 (2006: HK$0.032)
INTERIM DIVIDEND

The Board of Directors of the Company declared an interim dividend of HK$0.02 per share (2006:
HK$0.01 per share). The register of members of the Company will be closed from 2nd October 2007
to 5th October 2007, both days inclusive, during which period no transfer of shares will be effected.
In order to qualify for the interim dividend, payable on or before 15th October 2007, all transfers
accompanied by the relevant share certificates must be lodged with the Company’s branch share
registrars, Hong Kong Registrars Limited at Room 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s
Road East, Wanchai, Hong Kong, no later than 4:30 p.m. on 28th September 2007.
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Liquidity and Financial Resources
As at 30th June 2007, the Group’s bank balances and cash was HK$17,666,000. The consolidated
indebtedness of the Group, including short-term borrowings of HK$85,124,000, was HK$95,396,000.
The borrowings are denominated in Hong Kong dollars and Renminbi and bear interest at floating rates.
The amount of the Group’s current working capital was HK$66,525,000 (31st December 2006:
HK$69,059,000). The current ratio was 1.47. The Group’s trade receivables were HK$120,989,000,
representing 53.98% of the period’s turnover of HK$224,156,000.
Capital structure
The equity of the Group was HK$192,102,000, an increase of 16.0% over that of the last corresponding
period. The gearing ratio, calculated by dividing total liabilities by shareholders’ equity, was
approximately 80.85%.
Pledge of Assets
As at 30th June 2007, the Group’s banking facilities amounting to approximately HK$108,830,000 (31st
December 2006: HK$120,384,000) were secured by legal charges over certain leasehold land, land use
rights, buildings and investment property of the Group with a total net book value of HK$37,889,000
(31st December 2006: HK$35,870,000), and corporate guarantee given by the Company.
BUSINESS REVIEW

The Group is principally engaged in the manufacturing and trading of quality power cord, power cord
sets, cables and wires, wire harnesses and plastic resins.
During the period under review, our sales in power cord and power cord sets, cables and wires, wire
harnesses and plastic resins accounted for 70%, 17%, 12% and 1% of the Group’s total turnover,
respectively.
On marketing strategy front, we focus on development of sound returns and high growth products. As
such, we have progressively increased the manufacturing of wire harness, environmentally proof halogen-
free products during the period under review.
An experienced local sales executive was hired in Japan for expansion of our market there.
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Future Prospects
Statutory inspection of our newly constructed facilities is in progress. We plan to move in and commence
production by early next year as soon as we obtain the statutory licenses in China.
The Group is strongly committed to providing a safe working environment. The employees are provided
with continuous on job training, fair pay and fringe benefits.
We aim to maintain our cost efficiency by prudent financial management and by regular optimizing,
standardizing and rationalizing our production. We will increase our production efficiency of our plastic
manufacturing by reinforcing semi-automation.
We continue to invest our resources in research and developing environmentally-sound products.
We shall promote the sales of our green products with a primary focus of expansion in the wire harness
business. China, the United States of America and Europe are still our primary sales markets.
The outlook of appreciation of Renminbi is positive as per the financial market. We plan to offload some
of the burden through continuous hedging of certain needs.
EMPLOYEES AND REMUNERATION POLICIES

As at 30th June 2007, the Group employed approximately 1,900 full time management, administrative
and production staff in Hong Kong and the mainland china. The Group follows market practice on
remuneration packages. Employees’ remuneration is reviewed and determined by senior management
annually depending on the employee’s performance, experience and industry practice. The Group invests
in its human capital. In addition to, on-job training, the Group encourages employees to further their
study in extramural courses.
THE AUDIT COMMITTEE

The Audit Committee has reviewed with the management the accounting principles and practices adopted
by the Group and discussed internal controls and financial reporting matters, including a review of the
unaudited condensed consolidated accounts for the six months ended 30th June 2007 with the Directors.
CORPORATE GOVERNANCE

The Group is committed to safeguarding shareholders’ rights and enhancing corporate governance
standard. As a result, we establish the Compliance Committee, Audit Committee, Remuneration
Committee and Nomination Committee to adhere to the best practice.
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SOCIAL RESPONSIBILITY

Being a responsible corporate citizen is the Group’s strong belief. We will continue to participate in and
support community activities in both Hong Kong and the mainland china.
COMPLIANCE WITH THE CODE ON CORPORATE GOVERNANCE PRACTICES

With effect from 1st January 2005, the Company has applied the principles and complied with the
requirements of the Code on Corporate Governance Practices (the “Code”) as set out in Appendix 14
of the Rules Governing the Listing of Securities (the “Listing Rules”) on
The Directors confirm that, for six months ended 30th June 2007, the Company has fully complied with
the code provision in the Code.
COMPLIANCE WITH THE MODEL CODE FOR SECURITIES TRANSACTIONS BY
DIRECTORS

The Company had adopted the Model Code for Securities Transactions by Directors of Listed Issuers as
set out in Appendix 10 of the Listing Rules as its own code of conduct regarding securities transactions
by the Company (the “Code”). Having made specific enquiry of the Directors of the Company, all
Directors of the Company had complied with the required standards as set out in the Code during the
period from 1st January 2007 to 30th June 2007 (both dates inclusive).
PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES

The Company has not redeemed any of its shares during the six months ended 30th June 2007. Neither
the Company nor its subsidiaries has purchased, redeemed or sold any of the Company’s shares during the
six months ended 30th June 2007.
PUBLICATION OF INFORMATION ON THE WEBSITE OF THE STOCK EXCHANGE OF
HONG KONG LIMITED AND THE COMPANY

The information required by paragraphs 46(1) to 46(9) of Appendix 16 to the Listing Rules has been
published on the website http://www.hkex.com.hk of The Stock Exchange of Hong Kong Limited and the
Company’s website http://www.equitynet.com.hk/0725 in due course.
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VOTE OF THANKS

On behalf of the Board of Directors, my sincere thanks to our shareholders, partners and customers for
their continuous support and to our staff for their dedication.
By order of the board
KOO Di An, Louise
Chairman
Hong Kong, 3rd September 2007
As at the date of this report, the Executive Directors are Mr. Mon Chung Hung, Ms. Li Man Wai, Mr. Siu
Yuk Shing, Marco, Ms. Mon Wai Ki, Vicky and Ms. Mon Tiffany, the Non-Executive Director is Ms. Koo Di
An, Louise and the Independent Non-Executive Directors are Mr. Lau Chun Kay, Mr. Liao Zhixiong and
Mr. Ma Chun Hon, Richard.

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