(Stock Code:765)
Interim Report 2007
Perfectech International Holdings Limitd
(Incorporated in Bermuda with limited liability)
( 股份代號:765)
二零零七年中期業績報告
威發國際集團有限公司
（於百慕達註冊成立之有限公司）

1
CORPORATE INFORMATION

Board of directors
Executive Directors:
Mr. Poon Siu Chung
(Chairman and Managing Director)
Mr. Leung Ying Wai, Charles
(Deputy Chairman)
Mr. Ip Siu On
Mr. Tsui Yan Lee, Benjamin
Non-executive Director:
Mr. Tong Wui Tung
(retired on 31st May, 2007)
Independent Non-executive Directors:
Mr. Ng Siu Yu, Larry
(retired on 31st May, 2007)
Mr. Lam Yat Cheong
Mr. Yip Chi Hung
Mr. Choy Wing Keung, David
(appointed on 31st May, 2007)
Company Secretary
Ms. Pang Siu Yin
Auditors
HLM & Co.
Legal adviser
Cheung, Tong and Rosa
Registered office
Canon’s Court
22 Victoria Street
Hamilton HM12
Bermuda
Head office and principal place of
business
3rd Floor, Perfectech Centre
64 Wong Chuk Hang Road
Aberdeen
Hong Kong
Principal bankers
The Hongkong and Shanghai Banking
Corporation Limited
Standard Chartered Bank (Hong Kong)
Limited
Hang Seng Bank Limited
Chong Hing Bank Limited
Hong Kong share and warrant registrars
and transfer office
Tricor Standard Limited
26th Floor Tesbury Centre
28 Queen’s Road East
Wanchai
Hong Kong

2
CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30TH JUNE, 2007

(Unaudited)
For the six months
ended 30th June,
2007 2006

Notes HK$’000 HK$’000
Revenue 2 & 3 199,917 196,231
Cost of sales (163,202) (166,777)
Gross profit 36,715 29,454
Other income 4 11,275 6,317
Distribution costs (8,830) (9,357)
Administrative expenses (19,572) (20,196)
Impairment loss on goodwill (175) –
Other expenses 5 (997) (1,575)
Finance costs (109) (321)
Profit before tax 6 18,307 4,322
Income tax expenses 7 (2,386) (268)
Profit for the period 15,921 4,054
Attributable to:
Equity holders of the Company 15,070 3,740
Minority interests 851 314
Profit for the period 15,921 4,054
Dividends 8 16,608 4,622
Earnings per share 9
Basic 4.98 cents 1.21 cents
Diluted 4.93 cents N/A

3
CONDENSED CONSOLIDATED BALANCE SHEET
AS AT 30TH JUNE 2007 AND 31ST DECEMBER, 2006

(Unaudited) (Audited)
30th June, 31st December,
2007 2006

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

Property, plant and equipment 10 69,416 73,881
Prepaid lease payments 247 284
Goodwill 3,561 3,561
Deferred tax assets 758 1,412
73,982 79,138
CURRENT ASSETS

Inventories 115,615 74,170
Trade and other receivables 11 97,424 102,762
Prepaid lease payments 75 75
Amount due from a minority
shareholder of a subsidiary – 175
Taxation recoverable – 236
Investments held-for-trading 26,200 11,922
Derivative financial instruments – 715
Pledged bank deposits 49,966 18,813
Bank balances and cash 25,506 63,776
314,786 272,644
CURRENT LIABILITIES

Trade and other payables 12 76,611 49,755
Derivative financial instruments 2,562 3,821
Tax liabilities 4,615 2,725
Bank borrowings – due within one year 13 9,105 –
Bank overdrafts 2,267 –
95,160 56,301
NET CURRENT ASSETS 219,626 216,343
TOTAL ASSETS LESS CURRENT
LIABILITIES 293,608 295,481
NON CURRENT LIABILITIES

Deferred tax liabilities 2,556 2,950
2,556 2,950
NET ASSETS 291,052 292,531
CAPITAL AND RESERVES

Share capital 14 30,246 30,316
Reserves 252,062 254,322
Equity attributable to equity shareholders
of the Company 282,308 284,638
Minority interests 8,744 7,893
TOTAL EQUITY 291,052 292,531

4
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30TH JUNE, 2007

(Unaudited)
Capital Share
Share Share redemption Translation option Retained Minority
capital premium reserve reserve reserve profits Total interests Total
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
At 1st January, 2007 30,316 77,723 3,343 45 2,204 171,007 284,638 7,893 292,531
Dividend – – – – – (16,608) (16,608) – (16,608)
Shares issued at premium 100 508 – – – – 608 – 608
Transfer from share
option reserve – 126 – – (126) – – – –
Repurchase and
cancellation of shares (170) – 170 – – (1,403) (1,403) – (1,403)
Exchange difference
on translation of
overseas operations – – – 3 – – 3 – 3
Net profit for the period – – – – – 15,070 15,070 851 15,921
At 30th June, 2007 30,246 78,357 3,513 48 2,078 168,066 282,308 8,744 291,052
At 1st January, 2006 31,054 77,723 2,605 67 881 149,065 261,395 6,073 267,468
Dividend – – – – – (4,622) (4,622) – (4,622)
Repurchase and
cancellation of shares (391) – 391 – – (2,017) (2,017) – (2,017)
Employee share
option benefits – – – – 1,323 – 1,323 – 1,323
Exchange difference on
translation of
overseas operations – – – (24) – – (24) – (24)
Net profit for the period – – – – – 3,740 3,740 314 4,054
At 30th June, 2006 30,663 77,723 2,996 43 2,204 146,166 259,795 6,387 266,182

5
CONDENSED CASH FLOW STATEMENT

(Unaudited)
For the six months
ended 30th June,
2007 2006

HK$’000 HK$’000
NET CASH FROM (USED IN) OPERATING
ACTIVITIES 11,506 (15,786)
NET CASH USED IN INVESTING

ACTIVITIES (43,748) (12,756)
NET CASH (USED IN) FROM FINANCING
ACTIVITIES (8,298) 14,452
NET DECREASE IN CASH AND CASH

EQUIVALENTS (40,540) (14,090)
CASH AND CASH EQUIVALENTS AT
1ST JANUARY 63,776 32,279

Effect of foreign exchange rate changes 3 (24)
CASH AND CASH EQUIVALENTS AT
30TH JUNE 23,239 18,165
ANALYSIS OF THE BALANCES OF
CASH AND CASH EQUIVALENTS

Bank balances and cash 25,506 18,620
Bank overdrafts (2,267) (455)
23,239 18,165

6
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PREPARATION AND SUMMARY OF PRINCIPAL ACCOUNTING
POLICIES

The unaudited condensed consolidated interim financial statements are prepared in accordance
with the applicable disclosure requirements of Appendix 16 of the Rules Governing the Listing
of Securities on
The condensed consolidated interim financial statements have been prepared on the historical
cost basis except for certain properties and financial instruments, which are measured at fair
values or revalued amounts, as appropriate.
The accounting policies adopted are consistent with those followed in the preparation of the
Group’s annual financial statements for the year ended 31st December, 2006 except as described
below:
In the current period, the Group has applied, for the first time, a number of new Hong Kong
Financial Reporting Standards (HKFRSs), Hong Kong Accounting Standards (HKASs) and
Interpretations (hereinafter collectively referred to as “new HKFRSs”) issued by the HKICPA
that are effective for accounting periods beginning on or after 1 January 2007 as follows:
HKAS 1 (Amendment) Capital Disclosures
1
HKFRS 7 Financial Instruments: Disclosures
1
HK(IFRIC) – INT 7 Applying the Restatement Approach under HKAS 29
Financial Reporting in Hyperinflationary Economics
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
1
Effective for annual periods beginning on or after 1st January, 2007.
2
Effective for annual periods beginning on or after 1st March, 2006.
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
The application of these new HKFRSs has had no significant impact on the Group’s result and
financial position for the current or prior accounting periods. Accordingly, no prior period
adjustment has been recognized.

7
The Group has not early applied the following new standard, revision and interpretations that
have been issued but are not yet effective.
HKAS 23 (Revised) Borrowing Costs
1
HKFRS 8 Operating Segments
1
HK(IFRIC) – INT 11 HKFRS 2: Group and Treasury Share Transactions
2
HK(IFRIC) – INT 12 Service Concession Arrangements
3
1
Effective for annual periods beginning on or after 1st January, 2009.
2
Effective for annual periods beginning on or after 1st March, 2007.
3
Effective for annual periods beginning on or after 1st January, 2008.
The Directors of the Company anticipate that the application of the standard, revision and
interpretations will have no significant impact on the results and the financial position of the
Group.
2. BUSINESS SEGMENTS

For management purposes, the Group’s business is currently divided into four segments, namely
manufacture and sale of novelties and decorations, manufacture and sale of packaging products,
trading of PVC films and plastic materials and manufacture and sale of toys products forming the
basis of the Group’s business segments reporting.
For the six months ended 30th June, 2007 (Unaudited)
PVC
Novelties films and
and Packaging plastic
decorations products materials Toys Eliminations Consolidated
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
REVENUE

External sales 23,153 59,421 44,814 72,529 – 199,917
Inter-segment sales 11 5,309 2,073 710 (8,103) –
Total revenue 23,164 64,730 46,887 73,239 (8,103) 199,917
RESULT

Segment results 1,993 220 836 7,895 (686) 10,258
Income from investments 8,840
Unallocated corporate expenses (682)
Finance costs (109)
Profit before tax 18,307
Income tax expenses (2,386)
Profit for the period 15,921
Inter-segment sales are charged at prevailing market rates.

8
BALANCE SHEET

As at 30th June, 2007 (Unaudited)
PVC
Novelties films and
and Packaging plastic
decorations products materials Toys Consolidated
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
ASSETS

Segment assets 97,113 92,407 44,354 68,714 302,588
Unallocated corporate assets 86,180
Consolidated total assets 388,768
LIABILITIES

Segment liabilities 25,472 27,996 2,960 22,228 78,656
Bank borrowings 9,105
Unallocated corporate liabilities 9,955
Consolidated total liabilities 97,716
OTHER INFORMATION

For the six months ended 30th June, 2007 (Unaudited)
PVC
Novelties films and
and Packaging plastic
decorations products materials Toys Consolidated
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Capital additions 1,123 2,457 5 2,238 5,823
Depreciation of property,
plant and machinery 2,183 3,735 38 2,865 8,821
Release of prepaid lease
payments – – – 37 37

9
For the six months ended 30th June, 2006 (Unaudited)
PVC
Novelties films and
and Packaging plastic
decorations products materials Toys Eliminations Consolidated
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
REVENUE

External sales 27,835 70,778 37,821 59,797 – 196,231
Inter-segment sales 3 8,442 3,745 – (12,190) –
Total revenue 27,838 79,220 41,566 59,797 (12,190) 196,231
RESULT

Segment results 1,219 (3,175) 1,013 5,117 (863) 3,311
Income from investments 2,508
Unallocated corporate expenses (1,176)
Finance costs (321)
Profit before tax 4,322
Income tax expenses (268)
Profit for the period 4,054
Inter-segment sales are charged at prevailing market rates.

10
BALANCE SHEET

As at 31st December, 2006 (Audited)
PVC
Novelties films and
and Packaging plastic
decorations products materials Toys Consolidated
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
ASSETS

Segment assets 86,402 102,505 38,000 77,343 304,250
Unallocated corporate assets 47,532
Consolidated total assets 351,782
LIABILITIES

Segment liabilities 13,708 20,958 1,481 21,682 57,829
Unallocated corporate liabilities 1,422
Consolidated total liabilities 59,251
OTHER INFORMATION

For the six months ended 30th June, 2006 (Unaudited)
PVC
Novelties films and
and Packaging plastic
decorations products materials Toys Consolidated
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Capital additions 1,440 1,148 84 2,067 4,739
Depreciation of property,
plant and machinery 2,594 4,228 32 2,896 9,750
Release of prepaid lease
payments – – – 37 37

11
3. GEOGRAPHICAL SEGMENTS

The following table provides an analysis of the Group’s sales by geographical segments:
(Unaudited)
For the six months
ended 30th June,
2007 2006

HK$’000 HK$’000
Sales revenue by geographical market:
Hong Kong 109,477 114,836
Europe 19,243 28,313
America 25,488 21,287
Asia (other than Hong Kong) 42,460 30,567
Others 3,249 1,228
199,917 196,231

The following is analysis of the carrying amount of segment assets analysed by geographical
areas in which the assets are located:
(Unaudited) (Audited)
30th June, 31st December,
2007 2006

HK$’000 HK$’000
Hong Kong 195,252 193,031
The People’s Republic of China (the “PRC”) 193,516 158,751
388,768 351,782

The following is analysis of the additions to property, plant and equipment analysed by
geographical areas in which the assets are located:
(Unaudited)
For the six months
ended 30th June,
2007 2006

HK$’000 HK$’000
Hong Kong 88 39
The PRC 5,735 4,700
5,823 4,739

12
4. OTHER INCOME

(Unaudited)
For the six months
ended 30th June,
2007 2006

HK$’000 HK$’000
Rental income 62 214
Interest income 1,935 361
Dividend income from investments held-for-trading 127 84
Gain on disposal of investments held-for-trading 5,681 3,999
Change in value of derivative financial instruments 544 –
Exchange gain on financial instruments 1,692 –
Others 1,234 1,659
11,275 6,317
5. OTHER EXPENSES

(Unaudited)
For the six months
ended 30th June,
2007 2006

HK$’000 HK$’000
Decrease in fair value of investments held-for-trading 997 1,575
6. PROFIT BEFORE TAX

(Unaudited)
For the six months
ended 30th June,
2007 2006

HK$’000 HK$’000
Profit before tax has been arrived at after charging:
Depreciation of property, plant and equipment 8,821 9,750
Release of prepaid lease payments 37 37
Loss on disposals of property, plant and equipment 532 –
Share-based payments expenses – 1,323

13
7. INCOME TAX EXPENSES

(Unaudited)
For the six months
ended 30th June,
2007 2006

HK$’000 HK$’000
Tax charge comprises:
Hong Kong Profits tax
Current year 2,126 598
Deferred taxation 260 (330)
2,386 268

Hong Kong Profits Tax is stated at 17.5% (2006: 17.5%) of the estimated assessable profits for
the period.
8. DIVIDENDS

(Unaudited)
For the six months
ended 30th June,
2007 2006

HK$’000 HK$’000
Final paid:
HK5 cents per share for 2006
(2006: HK1.5 cents per share for 2005) 16,608 4,622
The directors have resolved to declare an interim dividend of HK2.5 cents (2006: HK1 cent) per
share.
9. EARNINGS PER SHARE

The calculation of the basic and diluted earnings per share is based on the net profit for the
period of approximately HK$15,070,000 (2006: HK$3,740,000) and the following data:
(Unaudited)
For the six months
ended 30th June,
2007 2006

Weighted average number of ordinary shares for the
purposes of basic earnings per share 302,788,829 308,570,590
Effect of dilutive potential ordinary shares:
Share options 2,955,255 –
Weighted average number of ordinary shares for the
purposes of diluted earnings per share 305,744,084 308,570,590
No diluted earnings per share has been presented because the exercise prices of the Company’s
options were higher than the average market prices of the shares for the six months ended 30th
June, 2006.

14
10. PROPERTY, PLANT AND EQUIPMENT

During the period, the Group acquired property, plant and equipment for an amount of
approximately HK$5,823,000 (2006: HK$4,739,000).
11. TRADE AND OTHER RECEIVABLES

The Group allows an average credit period of 60 days to its trade customers.
The following is an aged analysis of the Group’s trade receivables at end of the period:
(Unaudited) (Audited)
30th June, 31st December,
2007 2006

HK$’000 HK$’000
0-60 days 66,593 58,013
61-90 days 13,189 9,966
91-120 days 7,740 13,448
over 120 days 6,020 12,886
93,542 94,313
12. TRADE AND OTHER PAYABLES

The following is an aged analysis of the Group’s trade payables at end of the period:
(Unaudited) (Audited)
30th June, 31st December,
2007 2006

HK$’000 HK$’000
0-60 days 34,648 21,888
61-90 days 6,094 4,724
91-120 days 3,995 1,084
over 120 days 1,360 953
46,097 28,649

13. BANK BORROWINGS – DUE WITHIN ONE YEAR
(Unaudited) (Audited)
30th June, 31st December,
2007 2006

HK$’000 HK$’000
Trust receipt loans 9,105 –
The amounts are unsecured and bear interest at prevailing market rates.

15
14. SHARE CAPITAL

(Unaudited)
Authorised Issued and fully paid
For the six months ended 30th June,
2007 2006 2007 2006

HK$’000 HK$’000 HK$’000 HK$’000
Ordinary shares of HK$ 0.1 each
At beginning of the period 70,000 70,000 30,316 31,054
Issue of shares on exercise of options – – 100 –
Share repurchased and cancelled – – (170) (391)
At end of the period 70,000 70,000 30,246 30,663
15. COMMITMENTS

(a) Capital commitments for property, plant and equipment
(Unaudited) (Audited)
30th June, 31st December,
2007 2006

HK$’000 HK$’000
Contracted but not provided for 166 392
Authorised but not contracted for 411 –
577 392

(b) Operating lease commitments
At end of the period, the Group had commitments for future minimum lease payments
under non-cancelable operating leases in respect of rented premises which fall due as follows:
(Unaudited) (Audited)
30th June, 31st December,
2007 2006

HK$’000 HK$’000
Within one year 6,291 7,748
Over 1 year but within 5 years 9,513 14,367
Over five years 34,875 37,666
50,679 59,781

Operating lease payments represent rental payable by the Group for certain of its office and
factory properties. Leases are negotiated for a term from 2 years to 38 years.

16
16. OTHER COMMITMENTS

At 30th June, 2007, the Group carried outstanding forward contracts which entitled commitments
for purchase of listed securities of approximately HK$174,280,000 (31st December, 2006:
HK$36,267,000). In the opinion of the directors, the commitments will be settled monthly with
an amount ranging from HK$13 million to HK$18 million. All acquired listed securities are held
for trading purposes and will be disposed shortly and the proceeds of which will be mainly used
to finance the purchase of listed securities being committed in accordance with the forward
contracts. Hence, the commitments are not expected to have a material impact on the overall
cash flow of the Group.
17. CONTINGENT LIABILITIES

(a) Contingent liability in respect of legal claim
A subsidiary of the Group (the “Subsidiary”) has served a writ and claimed against three
former employees of the Subsidiary (the “Defendants”). The claim related to the misconduct
of the Defendants during their employment with the Subsidiary. The Defendants have filed
a defence and counterclaim against the Subsidiary for wages and other payments allegedly
payable upon their termination of employment with the Subsidiary amounting to
approximately HK$419,000 together with interests and costs. The Directors of the Company
take the views that the amount of their claims against the Defendants will exceed the
Defendants’ claims, and accordingly, no provision for any liabilities that may result has
been made in the financial statements of the Group.
(b) Financial guarantees issued
As at the balance sheet date, the Company has issued the following guarantees:
A corporate guarantee to banks in respect of banking facilities granted to its subsidiaries.
The Company is also one of the entities covered by a cross guarantee arrangement issued by
the Company and its subsidiaries to banks in respect of banking facilities granted to the
Group which remains in force so long as the Group has drawn down under the banking
facilities. Under the guarantee, the Company and all the subsidiaries that are a party to the
guarantee are jointly and severally liable for all and any of the borrowings of each of them
from the bank which is the beneficiary of the guarantee.
As at the balance sheet date, the Directors do not consider it probable that a claim will be
made against the Company under any of the guarantees as the probability of default payment
for the loans of approximately HK$11,372,000 (31st December, 2006 : nil) drawn down by
the subsidiaries is remote.
The Company has not recognised any deferred income in respect of the corporate guarantee
as its fair value cannot be reliably measured and its transaction price was nil.

17
18. RELATED PARTY TRANSACTIONS

During the period, the Group entered into the following significant transactions with related
parties who are not members of the Group:
(Unaudited)
For the six months
ended 30th June,
2007 2006

HK$’000 HK$’000
Rental expenses paid to:
Nice Step Investment Limited (Note) 562 585
Mr. Poon Siu Chung 84 84
Notes: Mr. Leung Ying Wai, Charles, a director of the Company, has beneficial interest in Nice
Step Investment Limited.
The above transactions were determined by the directors by reference to the relevant estimated
market values.

18
MANAGEMENT DISCUSSION AND ANALYSIS
INTERIM DIVIDEND

The directors have resolved to declare an interim dividend for the six months ended 30th
June, 2007 of HK2.5 cents per share (2006: HK1 cent) payable on or about 17th October,
2007 to shareholders on the register of members of the Company (the “Register of
Members”) on 5th October, 2007.
CLOSURE OF REGISTER OF MEMBERS

The Register of Members will be closed from 4th October, 2007 to 5th October, 2007,
both days inclusive, during which period no share transfer will be registered. In order to
qualify for the proposed interim dividend, all transfer accompanied by the relevant share
certificates must be lodged with the Company’s Hong Kong Share Registrar, Tricor Standard
Limited, 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong not later
than 4:00 p.m. on 3rd October, 2007.
BUSINESS REVIEW

During the period under review, the total revenue of the Group as a whole remained quite
stable at approximately HK$199,917,000 (2006: HK$196,231,000), representing a very
slight increase of not more than 2%, while the profit attributable to equity shareholders
increased substantially to approximately HK$15,070,000 (2006: HK$3,740,000),
representing a growth of more than 3 times as expected and stated in the Company’s last
Annual Report to share a more fruitful results of the Group with its shareholders in 2007.
The substantial growth in results in the first half of the year of the Group was mainly due
to the improvements in the performance in three out of the four business segments of the
Group as a result of global economic recovery together with the efforts made in the
enhancement of profit margins of the Group’s products. Besides, the Group efficiently
utilized its available funds on hand to invest in various types of yield enhancing products,
especially in the Hong Kong listed securities, together with some in equity linked high
yield deposits and other financial instruments such as hedging for Reminbi and US Dollars.
The gross investment income for the period amounted to approximately HK$8,840,000
(2006: HK$2,508,000) representing a growth of more than 2.5 times. Details of the
investment held by the Group will be discussed further below.
Novelties and decorations
The revenue of the novelties and decorations segment decreased by about 17% amounting
to approximately HK$23,153,000, while the contribution of the segment stood at
approximately HK$1,993,000, representing a growth of about 63%. It is the present practice
of the customers to delay their shipment date more closer to the date of the festivals, such
as Halloween and Christmas, as such the revenue of the segment continued to drop in the
first half of the year. However, it is optimistic that the revenue for the whole year will
keep stable while a reasonable level of profit margin is maintained.

19
Packaging products
The revenue in the packaging segment decreased by about 16% amounting to
HK$59,421,000, and recorded a small contribution of approximately HK$220,000, while
the segment results were negative for the past two years. As stated in previous financial
reports of the Company, certain old business lines/products, especially the sales and
manufacture of PVC-film packaging products, were no longer profitable and the Group
has terminated the business line at the end of 2006, and led to the loss of certain customers
in other related products, such as PVC folding box, as a result, the revenue dropped as
stated above. Nevertheless, the segment has started to resume a break-even position, after
the implementation of the process of repositioning the product mix.
Trading activities
The revenue of the segment increased by about 18% to approximately HK$44,814,000, but
the results of the segment dropped by about 17% to approximately HK$836,000. Faced
with keen competition in the business together with the fluctuations of the price of oil and
petroleum, the profit margin of the segment became thinner and thinner. Nevertheless,
since the materials are the major components of the Group’s products, maintaining the
business is strategically beneficial to the Group as a whole.
Toy products
Continuing the growth in the second half of the year 2006, both the revenue and contribution
of the segment continued to increase and stood at approximately HK$72,529,000 and
HK$7,895,000 respectively, representing growth of about 21% and 54% respectively. Since
the final acquisition of the segment in mid-2005, the benefits of synergy effects completely
reflect in the segment results from the second half of 2006. Both sub-divisions of the
segment, businesses of toys products and moulding products grow steadily and profitably.
Investments
To better utilize the available cash on hand, the Group has invested in the listed securities
of Hong Kong and related derivative products, including but not limited to equity linked
deposits, together with the financial instruments for hedging foreign exchanges. During
the period, the gross investment income from aforesaid transactions amounted to
approximately HK$8,840,000 (2006: HK$2,508,000) representing a growth of more than
2.5 times as a result of the booming stock market conditions.
Investment held for trading is usually held for short-term purposes for capital gain in the
value of the assets held. As at the balance sheet date, the market value of investment in
securities was approximately HK$10,600,000 (31st December, 2006: HK$4,198,000), while
the remaining HK$15,600,000 (31st December, 2006: HK$7,724,000) were held as equity
linked deposits.

20
As at 30th June, 2007, the Group carried outstanding forward contracts which entailed a
commitment for purchase of listed securities of notional amount of approximately
HK$174,280,000 (31st December, 2006: HK$36,267,000). The commitment will be settled
monthly with an amount ranging from approximately HK$13 million to HK$18 million.
Usually the securities acquired will be disposed of shortly, and thus the commitment is not
expected to have a material adverse impact on cash flow.
FUTURE PLAN AND PROSPECT

As usual the Group will adopt a prudent policy in the expansion of existing businesses
where reasonable profitability is expected, and the Group will continue to search for other
investment opportunities for further growth and expansion of the Group as a whole.
In view of the efforts made by the Group in improving the performance of the various
segments of the Group and the results achieved in the first half of the year 2007, even
though contributions form the segment of trading activities dropped while other 3 segments
showed a substantial improvement in contributions made as expected, further growth in
the toys segment and seasonal improvement in the performance of the novelty and festival
decoration segment are expected in the second half of the year. The Directors are optimistic
and confident that the results of the Group for the whole year of 2007 will be satisfactory
to its shareholders.
Liquidity and financial resources
As at 30th June, 2007, the Group had no long-term finance lease obligations and bank
borrowings (31st December, 2006: nil), while the short-term bank borrowings were
approximately HK$9,105,000 (31st December, 2006: nil), and none of the Group’s plant
and machinery (31st December, 2006: nil) was held under a finance lease. The gearing
ratio of the Group, measured by total bank and other borrowings divided by equity, was
approximately 4.03% (31st December, 2006: nil).
Finance costs
The Group’s finance cost amounted to approximately HK$109,000 (2006: HK$321,000).
Pledge of Assets
At 30th June, 2007, the following assets were pledged to secure the margin loan facilities
granted to the Group:
(i) Investments held-for-trading with a carrying value of approximately of HK$18,400,000
(31st December, 2006: HK$11,922,000); and
(ii) Bank balances and cash of approximately HK$49,966,000 (31st December, 2006:
HK$18,813,000).
No margin loan facilities was utilised by the Group at the balance sheet date. The margin
loan facilities were charged at interest rate of Hong Kong Prime Rate plus 1%.

21
Employees and remuneration policies
As at 30th June, 2007, the Group employed approximately 4,300 full time employees. The
Group remunerates its employees by reference to the prevailing industry practice as well
as individual merits. The Group has also established a share option scheme for its full time
employees.
Foreign currency exposure
The Group’s sales and purchases are mainly denominated in Hong Kong Dollar and US
Dollar. While all the Group’s factories are located in the PRC, expenses incurred there are
denominated in Renminbi.
At the balance sheet date, the Group has entered into several financial instruments with its
major bankers for the hedging of exposure in US Dollars and Renminbi, especially for the
gradual and continuous appreciation of the latter since recent years.
SHARE OPTION SCHEME

A share option scheme (the “Scheme”) was adopted pursuant to the Annual General Meeting
held on 17th May, 2002 and will expire on 16th May, 2012. The primary purpose of the
Scheme is to recognise and motivate the contribution of employees and other persons who
may have a contribution to the Group and to provide incentives and help the Company in
retaining its existing employees and recruiting additional employees and to provide them
with a direct economic interest in attaining the long term business objectives of the
Company.
Under the Scheme, the board of directors of the Company may offer to any employees,
including full time or part time employees, of the Company and/or its subsidiaries including
any executive and non-executive director or proposed executive and non-executive director
of the Company or any subsidiary options to subscribe for shares in the Company in
accordance with the terms of the Scheme for the consideration of HK$1 for each lot of
share options granted.
At the date of this report, the number of shares in respect of which options had been
granted and remained outstanding under the Scheme was 16,000,000, representing
approximately 5.29% of the shares of the Company in issue at that date.
The total number of shares in respect of which options may be granted under the Scheme
is not permitted to exceed 10% of the shares of the Company in issue. In addition, the
maximum number of shares which may be issued upon exercise of all outstanding options
granted and yet to be exercised under the Scheme and any other share option schemes of
the Company shall not exceed 30% (or such higher percentage as may be allowed under
the Listing Rules) of the total number of shares in issue from time to time. The number of
shares in respect of which options may be granted to any individual in any one year is not
permitted to exceed 1% of shares of the Company in issue, at any point at time, without
prior approval from the Company’s shareholder.

22
Options granted must remain open for acceptance until 5:00 p.m. on the 5th business day
following the offer date provided that no such offer shall be open for acceptance after the
tenth anniversary of the adoption date or after the Scheme has been terminated. Options
may be exercised during the period as the board of directors of the Company may in its
absolute discretion determine, save that such period shall not be more than 10 years from
the date of the grant of the options and the board of directors may provide restrictions on
the exercise of an option during the period an option may be exercised. The exercise price
is determined by the board of directors of the Company and will be at least the highest of
the followings:
a) the closing price of shares at the date of grant of a share option;
b) the average closing price of the shares for the five business days immediately preceding
the date of grant; and
c) the nominal value of a share.
Details of the movements in the Company’s share options during the year are as follows:
Number of
shares
Number of issued
Number of options and exercise Number of
options granted of options options Exercise
outstanding during the during the outstanding Date price per
at 1/1/2007 period period at 30/6/2007 granted share Exercisable Period
HK$
Directors
– Ip Siu On 3,000,000 – – 3,000,000 02-Feb-05 0.608 02-May-05 to 31-Dec-14
– Tsui Yan Lee, 3,000,000 – 1,000,000 2,000,000 02-Feb-05 0.608 02-May-05 to 31-Dec-14
Benjamin
Employees 9,000,000 – – 9,000,000 24-Mar-06 0.540 24-Apr-06 to 31-Dec-14
15,000,000 – 1,000,000 14,000,000
Others 1,000,000 – – 1,000,000 05-Jun-02 0.664 05-Jul-02 to 17-May-12
1,000,000 – – 1,000,000 02-Feb-05 0.608 02-May-05 to 31-Dec-14
2,000,000 – – 2,000,000
Grand Total 17,000,000 – 1,000,000 16,000,000
The closing price of the Company’s shares on 5th June, 2002, 2nd February, 2005 and
24th March, 2006, the dates of grant of the options, were HK$0.64, HK$0.60 and HK$0.52
respectively.

23
Share options were exercised on 22nd June, 2007 and the closing price of the Company’s
shares on that date was HK$1.07.
DIRECTORS’ INTERESTS IN SHARES
At 30th June, 2007, the interests and short positions in the shares, underlying shares and
debentures of the Company and its associated corporations (as defined in Part XV of the
Securities and Futures Ordinance (Cap 571) (“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 of Hong Kong Limited (the “Stock Exchange”) pursuant
to the Model Code for Securities Transactions by Directors of Listed Issuers (“Model
Code”), were as follows:
(A) Long Positions in shares of the Company
% of
issued share
No. of capital of
Directors Capacity shares held Total the Company
Mr. Poon Siu Beneficial owner 22,416,000
Chung Interest of spouse 103,421,630 125,837,630 (a) 41.60
and controlled
corporation
Mr. Leung Ying Interest of spouse 63,097,200 63,097,200 (b) 20.86
Wai, Charles and controlled
corporation
Mr. Ip Siu On Beneficial owner 6,803,600 6,803,600 2.25
Mr. Tsui Yan Lee, Beneficial owner 3,411,000 3,411,000 1.13
Benjamin
Mr. Yip Chi Hung Interest of controlled 1,200,000 1,200,000 (c) 0.40
corporation

24
Notes:
(a) Mr. Poon Siu Chung was the beneficial owner of 22,416,000 shares (“Shares”) of the
Company and he was deemed to be interested in 1,664,000 Shares and 101,757,630 Shares
which were held by his spouse, Ms. Lau Kwai Ngor and through Mime Limited, a limited
company incorporated in Hong Kong and owned as to 55% by Mr. Poon Siu Chung and as
to 45% by his spouse, Ms. Lau Kwai Ngor respectively. Of these shares, 618,200 shares are
held in trust for others.
(b) Mr. Leung Ying Wai, Charles was deemed to be interested in 63,097,200 Shares which were
held through Nielsen Limited, a limited company incorporated in Hong Kong and beneficially
owned by Mr. Leung Ying Wai, Charles, his spouse, Ms. Tai Yee Foon and his family
members.
(c) Mr. Yip Chi Hung was deemed to be interested in 1,200,000 Shares which were held
through First Canton Investment Limited, a company incorporated in the British Virgin
Islands and 100% beneficially owned by Mr. Yip.
(B) Right to acquire shares of the Company
Other than the share options disclosed in the section “Share Option Scheme”, at no
time during the period was the Company or its subsidiaries, a party to any arrangements
to enable the directors of the Company to acquire benefits by the means of the
acquisition of shares in, or debentures of, the Company or any other body corporate,
and neither the directors nor any of their spouses or children under the age of 18, had
any right to subscribe for the securities of the Company, or had exercised any such
right.
(C) Long Position in shares of associated corporations of Company
% of issued
share capital
Name of associated No. of of associated
Directors corporation Capacity shares held Total corporation
Mr. Poon Siu Perfectech International Beneficial owner 200
Chung Limited
Interest of spouse 200 400 (d) 50
Sunflower Garland Beneficial owner 60,800
Manufactory Limited
Interest of spouse 20,800 81,600 (e) 51
Mr. Leung Ying Perfectech International Interest of spouse 400 400 (f) 50
Wai, Charles Limited
Mr. Ip Siu On Sunflower Garland Beneficial owner 28,800 28,800 18
Manufactory Limited
Mr. Tsui Yan Lee, Sunflower Garland Beneficial owner 28,800 28,800 18
Benjamin Manufactory Limited

25
Notes:
(d) Mr. Poon Siu Chung was the beneficial owner of 200 non-voting deferred shares (“Perfectech
Shares”) of HK$100 each in Perfectech International Limited, a subsidiary of the Company
and was deemed to be interested in 200 Perfectech Shares through interests of his spouse,
Ms. Lau Kwai Ngor.
(e) Mr. Poon Siu Chung was the beneficial owner of 60,800 non-voting deferred shares
(“Sunflower Shares”) of HK$1 each in Sunflower Garland Manufactory Limited, a subsidiary
of the Company and was deemed to be interested in 20,800 Sunflower Shares through
interests of his spouse, Ms. Lau Kwai Ngor.
(f) Mr. Leung Ying Wai, Charles was deemed to be interested in 400 Perfectech Shares through
interests of his spouse, Ms. Tai Yee Foon.
Other than as disclosed above and nominee shares in certain subsidiaries held in trust for
the Group, none of the directors, nor their associates, had any interests in any securities of
the Company or any of its associated corporations as defined in the SFO.
SUBSTANTIAL SHAREHOLDERS

Other than the interests disclosed above in the section “Directors’ Interests in Shares”, as
at 30th June, 2007, the register of substantial shareholders’ interests maintained by the
Company pursuant to Section 336 of the SFO showed that the following shareholders had
notified the Company of the relevant interests in the share capital of the Company as
follows:
Long Positions in shares of the Company
% of issued
No. of share capital
Shareholders Capacity shares held of the Company
Ms. Lau Kwai Ngor Interest of spouse and 125,837,630 (g) 41.60
controlled corporation
Ms. Tai Yee Foon Interest of spouse and 63,097,200 (h) 20.86
controlled corporation
Allianz Interest of controlled 62,034,971 (i) 20.51
Aktiengesellschaft corporation
Dresdner Bank Interest of controlled 62,034,971 (i) 20.51
Aktiengesellschaft corporation
Veer Palthe Voute NV Investment Manager 62,034,971 (i) 20.51

26
Notes:
(g) Under SFO, Ms. Lau Kwai Ngor was the beneficial owner of 1,664,000 Shares and was deemed
to be interested in 124,173,630 Shares of the Company through interests of her spouse, Mr. Poon
Siu Chung (Please refer to Note (a) above).
(h) Under SFO, Ms.Tai Yee Foon was deemed to be interested in 63,097,200 Shares through interests
of her spouse, Mr. Leung Ying Wai, Charles (Please refer to Note (b) above).
(i) Under SFO, Allianz Aktiengesellschaft and Dresdner Bank Aktiengesellschaft were deemed to be
interested in the 62,034,971 shares of the Company held by Veer Palthe Voute NV.
PURCHASE, SALE AND REDEMPTION OF THE COMPANY’S LISTED
SECURITIES

During the period under review, the Company purchased its own shares through the Stock
Exchange as follows:
Aggregate
No. of shares Price per share consideration
of HK$0.10 each Highest Lowest paid
HK$ HK$ HK$
Month of repurchase
March 2007 1,200,000 0.820 0.790 970,480
June 2007 500,000 0.860 – 432,802
1,700,000 1,403,282
CORPORATE GOVERNANCE

Compliance with the Code on Corporate Governance
The Company has adopted the code provisions set out in the Code on Corporate Governance
Practices (“Code Provisions”) contained in Appendix 14 to the Rules Governing the Listing
of Securities (“Listing Rules”) on the Stock Exchange as its own code of corporate
governance.
During the period under review, the Company had complied with the Code Provisions
except for the following deviations:

27
Code A.2.1
Code A.2.1 stipulates that the roles of chairman and chief executive officer should be
separate and should not be performed by the same individual.
While the Company does not have the position of chief executive officer, the responsibilities
normally assumed by such a role is taken by the Managing Director. Mr. Poon Siu Chung
is the Chairman and Managing Director of the Company. The Board considers that this
structure will not impair the balance of power and authority between the Board and the
management of the Company. The balance of power and authority is ensured by the
operations of the Board, which comprises experienced and high caliber individuals who
meet regularly to discuss issues affecting operations of the Company. The Board believes
that this structure is conducive to strong and consistent leadership, enabling the Group to
make and implement decisions promptly and efficiently. The Board has full confidence in
Mr. Poon and believes that having Mr. Poon performing the roles of Chairman and Managing
Director is beneficial to the business prospects of the Company.
Model Code for Securities Transactions by Directors
The Company has adopted a code of conduct regarding Directors’ securities transactions
on terms not less exacting than the required standard set out in Appendix 10 to the Listing
Rules (“Model Code”).
After specific enquiry made by the Company, all of the Directors confirmed that they had
compiled with the required standard set out in the Model Code and the code of conduct
regarding Directors’ securities transactions during the six months ended 30th June, 2007.
Audit Committee
The Company has established an audit committee which comprises all independent non-
executive Directors (“INEDs”), Mr. Choy Wing Keung, David, Mr. Yip Chi Hung and Mr.
Lam Yat Cheong, who is also the chairman of the audit committee.
The audit committee has reviewed with management the accounting principles and practices
adopted by the Group and discussed auditing internal controls and financial reporting
matters including the review of the unaudited condensed consolidated interim financial
statements for the six months ended 30th June, 2007 of the Company now reported on.
Remuneration Committee
The Remuneration Committee makes recommendations to the Board on the Company’s
policy and structure of remuneration for the Directors and senior management.
The Committee comprises Mr. Choy Wing Keung, David, Mr. Lam Yat Cheong, Mr. Yip
Chi Hung, who is also the chairman of the Committee, Mr. Poon Siu Chung as an Executive
Director, and Mr. Yuen Che Wai, Victor, the Financial Controller of the Company.
The Committee is governed by its terms of reference, which are in line with the Code on
Corporate Governance contained in Appendix 14 to the Listing Rules.

28
DIRECTORS OF THE COMPANY

As at the date of this report, Mr. Poon Siu Chung, Mr. Leung Ying Wai, Charles, Mr. Ip
Siu On and Mr. Tsui Yan Lee, Benjamin are the executive directors of the Company, Mr.
Yip Chi Hung, Mr. Lam Yat Cheong and Mr. Choy Wing Keung, David are the independent
non-executive directors of the Company.
On behalf of the Board
Poon Siu Chung
Chairman & Managing Director
Hong Kong, 6th September, 2007