Transcription

1 Annual Report 年報 * 僅供識別 2014

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4 30 Eagle Nice (International) Holdings Limited Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY the Cayman Islands 70 B Maples Fund Services (Cayman) Limited P.O. Box 1093, Boundary Hall Cricket Square, Grand Cayman KY the Cayman Islands

5 Annual Report ,484 1, ,556 1, ,012 1, ,446 1,444 1,

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8 34 Eagle Nice (International) Holdings Limited 2.8% 1,483,800,0001,444,000, % 4.2% 13.1% 5.1% 3.6% 1.5%

9 Annual Report

10 36 Eagle Nice (International) Holdings Limited 31.8%22.9% 31.3% 22.9% 14.7% 21.5% 31.8% 17.4% 10% 8.4%10.2% (MSI)

11 Annual Report %

12 Eagle Nice (International) Holdings Limited % 2.8% 1,483,800,000 1,444,000, % 194,700,000249,600, % 4.2% 13.1% 45% 48% 13% 5,900,000 4,800,000 1,300,000 1,200, % 57,400, % 6,200, % 22.8%18.5% 41.3% 25% 21,900,000 73,000, %5.1% 3.6% 1.5% % 75% 276,600, ,400, ,000,000666,000, ,000, ,000, ,600, ,000, ,600, ,600, ,000, ,600,000

13 Annual Report % 7.7% 122 2,091 2,120 1, , ,724 2,401 6,550 38,610 38,610 7,811 46,421 38, ,000,000316,000, ,396,000155,966,000 73,560,000 75,267,000 9,40010, ,300, ,800,000

14 Eagle Nice (International) Holdings Limited

15 Annual Report World Friendship Company Limited

16 42 Eagle Nice (International) Holdings Limited ,483,774 1,443,994 1,445,968 1,164,762 1,061,179 37,232 94, , , ,920 (15,362) (21,568) (32,148) (27,633) (29,396) 21,870 73, , , , , , , , , , , , , ,928 (526,636) (607,638) (632,731) (185,764) (151,255) 172, , , , ,673 (16,999) (16,528) (21,592) (21,907) (17,192) 1,011,917 1,015,482 1,022, , ,747

17 Annual Report ,975,000633,975, ,674, %45.7% 40.7%16.8% 5%

18 44 Eagle Nice (International) Holdings Limited 87(1) 40 41

19 Annual Report XV XV ,650, , ,328, ,450, Time Easy Investment Holdings LimitedTime EasyTime Easy

20 46 Eagle Nice (International) Holdings Limited XV Time Easy 72,650, ,000, Wealthplus Holdings Limited Wealthplus 192,000, ,000, Pou Hing Industrial Co. Ltd. Pou Hing 192,000, Great Pacific Investments Limited Great Pacific 192,000, Delta Lloyd Asset Management NV 39,986, Time Easy ,000,000Great PacificPou HingGreat PacificPou HingWealthplus Win Fortune Investment Ltd. Win Fortune46.89% 3.09%Wealthplus Win FortunePou Hing Wealthplus Win Fortune Great Pacific192,000,

21 Annual Report % Din Tsun Holding Co., Ltd. Din Tsun2 Faith Year Investments Limited Faith Year2 Pro Kingtex Industrial Co., (HK) Ltd. Pro Kingtex Din Tsun Din Tsun Faith Year70% 30%Faith YearPro Kingtex Din TsunDin Tsun Pro KingtexDin TsunDin Tsun Din Tsun Faith Year Pro Kingtex Din TsunPro KingtexDin Tsun Din Tsun Pro Kingtex Ding TsunPro Kingtex

22 48 Eagle Nice (International) Holdings Limited 14

23 Annual Report a. 6/6 1/1 5/6 1/1 5/6 1/1 5/6 1/1 4/6 1/1 5/6 1/1 4/6 0/1 b A A.6.7

24 50 Eagle Nice (International) Holdings Limited 1. c. d. A.2.1 e. f. 10 g. h.

25 Annual Report h. A,C A,C A,C A,C A,B,C A,C A,C A B C i. j k.

26 52 Eagle Nice (International) Holdings Limited 2. a. 1/1 1/1 1/1 b. i) ii) iii)

27 Annual Report b. 4/4 4/4 4/4 c. (i) (ii) (iii) 1/1 1/1 1/1 3. a. 55

28 54 Eagle Nice (International) Holdings Limited 3. b. c. 2, , a. 58 b. c. 5.

29 Annual Report

30 56 Eagle Nice (International) Holdings Limited Consolidated Income Statement (Year ended 31 March 2014) Notes (restated) REVENUE 5 1,483,774 1,443,994 Cost of sales (1,289,041) (1,194,374) Gross profit 194, ,620 Other income 5 4,452 4,607 Selling and distribution expenses (21,526) (16,692) Administrative expenses (135,425) (136,690) Finance costs 6 (5,002) (6,239) PROFIT BEFORE TAX 7 37,232 94,606 Income tax expense 10 (15,362) (21,568) PROFIT FOR THE YEAR ATTRIBUTABLE TO OWNERS OF THE COMPANY 11 21,870 73,038 HK cents HK cents EARNINGS PER SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY 13 Basic Diluted Details of dividends are disclosed in note 12 to the financial statements. 12

31 Annual Report Consolidated Statement of Comprehensive Income (Year ended 31 March 2014) (restated) PROFIT FOR THE YEAR 21,870 73,038 OTHER COMPREHENSIVE INCOME/(EXPENSE) Other comprehensive income/(expense) not to be reclassified to profit or loss in subsequent periods: Actuarial gain/(loss) on defined benefit plan 1,130 (169) Other comprehensive income/(expense) may be reclassified to profit or loss in subsequent periods: Exchange differences on translation of foreign operations 13,409 (10,300) OTHER COMPREHENSIVE INCOME/(EXPENSE) FOR THE YEAR, NET OF TAX 14,539 (10,469) TOTAL COMPREHENSIVE INCOME FOR THE YEAR AND ATTRIBUTABLE TO OWNERS OF THE COMPANY 36,409 62,569

32 58 Eagle Nice (International) Holdings Limited Consolidated Statement of Financial Position Notes 31 March March April 2012 (restated) (restated) NON-CURRENT ASSETS Property, plant and equipment , , ,898 Prepaid land lease payments 15 74,678 76,129 78,470 Deposits 10,679 Goodwill 17 26,112 26,112 26,112 Total non-current assets 856, , ,159 CURRENT ASSETS Inventories , , ,961 Accounts and bills receivables , , ,955 Prepayments, deposits and other receivables 16 27,862 22,317 34,131 Cash and cash equivalents , , ,986 Total current assets 698, , ,033 CURRENT LIABILITIES Accounts and bills payables 22 96, , ,364 Accrued liabilities and other payables 24 81,366 96,469 80,845 Interest-bearing bank borrowings , , ,896 Tax payable 9,538 14,703 29,626 Total current liabilities 526, , ,731 NET CURRENT ASSETS 172, , ,302 TOTAL ASSETS LESS CURRENT LIABILITIES 1,028,916 1,032,010 1,044,461 NON-CURRENT LIABILITIES Pension scheme obligation 26 2,425 2, Deferred tax liabilities 27 14,574 13,950 21,061 Total non-current liabilities 16,999 16,528 21,592 Net assets 1,011,917 1,015,482 1,022,869 EQUITY Equity attributable to owners of the Company Issued capital 28 4,997 4,997 4,997 Reserves 30 1,006,920 1,010,485 1,017,872 Total equity 1,011,917 1,015,482 1,022,869 CHUNG YUK SING Director CHEN HSIAO YING Director

33 Annual Report Consolidated Statement of Changes in Equity (Year ended 31 March 2014) Notes Issued capital Share premium account Capital reserve Statutory surplus reserve Exchange fluctuation reserve Asset revaluation reserve Retained profits Total (Note 30) (Note 30) At 1 April 2012 As previously reported 4, ,586 (229) 17, ,148 46, ,304 1,068,862 Prior year adjustment 2.2 (3,860) (46,521) 4,388 (45,993) As restated 4, ,586* (229)* 17,535* 108,288* * 419,692* 1,022,869 Profit for the year (restated) 73,038 73,038 Other comprehensive income for the year: Actuarial loss on defined benefit plan (restated) (169) (169) Exchange differences on translation of foreign operations (restated) (10,300) (10,300) Total comprehensive income for the year (restated) (10,300) 72,869 62,569 Transfer to reserve 16,213 (16,213) Final 2012 dividend declared 12 (34,978) (34,978) Interim 2013 dividend 12 (34,978) (34,978) At 31 March , ,586* (229)* 33,748* 97,988* * 406,392* 1,015,482 At 1 April 2013 As previously reported 4, ,586 (229) 33, , , ,099 1,142,479 Prior year adjustment 2.2 (4,154) (127,136) 4,293 (126,997) As restated 4, ,586 (229) 33,748 97, ,392 1,015,482 Profit for the year 21,870 21,870 Other comprehensive income for the year: Actuarial gain on defined benefit plan 1,130 1,130 Exchange differences on translation of foreign operations 13,409 13,409 Total comprehensive income for the year 13,409 23,000 36,409 Transfer to reserve 3,980 (3,980) Final 2013 dividend declared 12 (19,987) (19,987) Interim 2014 dividend 12 (19,987) (19,987) At 31 March , ,586* (229)* 37,728* 111,397* * 385,438* 1,011,917 * These reserve accounts comprise the consolidated reserves of HK$1,006,920,000 (31 March 2013: HK$1,010,485,000 (restated) and 1 April 2012: HK$1,017,872,000 (restated)) in the consolidated statement of financial position. * 1,006,920,000 1,010,485,000 1,017,872,000

34 60 Eagle Nice (International) Holdings Limited Consolidated Statement of Cash Flows (Year ended 31 March 2014) Notes (restated) CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax 37,232 94,606 Adjustments for: Finance costs 6 5,002 6,239 Bank interest income 5 (1,417) (2,897) Write-off of items of property, plant and equipment 7 2,458 Depreciation 7 61,856 59,910 Amortisation of prepaid land lease payments 7 2,368 2, , ,185 Decrease/(increase) in inventories (30,545) 15,231 Decrease/(increase) in accounts and bills receivables Decrease/(increase) in prepayments, deposits and other receivables Increase/(decrease) in accounts and bills payables Increase/(decrease) in accrued liabilities and other payables 49,741 (42,049) (5,519) 11,828 (12,708) 5,456 (15,103) 15,624 Increase in pension scheme liabilities 1,363 1,849 Cash generated from operations 94, ,124 Interest paid (5,002) (6,239) Dividends paid (39,974) (69,956) Hong Kong profits tax paid (12,303) (27,753) Overseas tax paid (7,711) (15,849) Net cash flows from operating activities 29,738 48,327 CASH FLOWS USED IN INVESTING ACTIVITIES Proceeds from disposal of items of property, plant and equipment, net Purchases of items of property, plant and equipment Decrease in non-pledged deposits with original maturity of over three months when acquired 454 (20,509) (79,637) 30,162 Interest received 1,417 2,897 Net cash flows used in investing activities (18,638) (46,578)

35 Annual Report Consolidated Statement of Cash Flows (Continued) (Year ended 31 March 2014) Notes (restated) CASH FLOWS USED IN FINANCING ACTIVITY Repayment of bank loans (48,026) (31,250) Net cash flows used in financing activity (48,026) (31,250) NET DECREASE IN CASH AND CASH EQUIVALENTS (36,926) (29,501) Cash and cash equivalents at beginning of year 309, ,824 Effect of foreign exchange rate changes, net 4,139 (2,971) CASH AND CASH EQUIVALENTS AT END OF YEAR 276, ,352 ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS Cash and bank balances , ,282 Non-pledged time deposits with original maturity of less than three months when acquired 21 1,249 10,070 Cash and cash equivalents 276, ,352

36 62 Eagle Nice (International) Holdings Limited Statement of Financial Position Notes NON-CURRENT ASSETS Investments in subsidiaries 18 43,368 43,368 CURRENT ASSETS Due from subsidiaries 18 1,048,216 1,048,576 Loan to a subsidiary , ,000 Prepayments Cash and cash equivalents ,618 Total current assets 1,267,344 1,293,331 CURRENT LIABILITIES Due to subsidiaries , ,023 Accrued liabilities 24 7 Interest-bearing bank borrowings , ,000 Tax payable 1, Total current liabilities 671, ,926 NET CURRENT ASSETS 595, ,405 Net assets 638, ,773 EQUITY Issued capital 28 4,997 4,997 Reserves , ,776 Total equity 638, ,773 CHUNG YUK SING Director CHEN HSIAO YING Director

37 Annual Report Notes to Financial Statements 1. CORPORATE INFORMATION The Company is a limited liability company incorporated in the Cayman Islands. The registered office address of the Company is Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, the Cayman Islands. The principal place of business of the Company is located at Units and , 9/F, Tower B, Regent Centre, 70 Ta Chuen Ping Street, Kwai Chung, New Territories, Hong Kong. The Group s principal activities are the manufacture and trading of sportswear and garments. 1. Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, the Cayman Islands 70B BASIS OF PREPARATION These financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards ( HKFRSs ) (which include all Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards ( HKASs ) and Interpretations) issued by the Hong Kong Institute of Certified Public Accountants ( HKICPA ), accounting principles generally accepted in Hong Kong and the disclosure requirements of the Hong Kong Companies Ordinance. They have been prepared under the historical cost convention. These financial statements are presented in Hong Kong dollars ( HK$ ) and all values are rounded to the nearest thousand except when otherwise indicated. Basis of consolidation The consolidated financial statements include the financial statements of the Company and its subsidiaries (collectively referred to as the Group ) for the year ended 31 March The financial statements of the subsidiaries are prepared for the same reporting period as the Company, using consistent accounting policies. The results of subsidiaries are consolidated from the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the noncontrolling interests, even if this results in the non-controlling interests having a deficit balance. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control described in the accounting policy for subsidiaries below. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. 2.1

38 64 Eagle Nice (International) Holdings Limited 2.1 BASIS OF PREPARATION (Continued) Basis of consolidation (Continued) If the Group loses control over a subsidiary, it derecognises (i) the assets (including goodwill) and liabilities of the subsidiary, (ii) the carrying amount of any non-controlling interest and (iii) the cumulative translation differences recorded in equity; and recognises (i) the fair value of the consideration received, (ii) the fair value of any investment retained and (iii) any resulting surplus or deficit in profit or loss. The Group s share of components previously recognised in other comprehensive income is reclassified to profit or loss or retained profits, as appropriate, on the same basis as would be required if the Group had directly disposed of the related assets or liabilities. 2.2 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (i) The Group has adopted the following new and revised HKFRSs for the first time for the current year s financial statements. 2.1 (i) (ii) (iii)(i) (ii) (iii) 2.2 (i) HKFRS 1 Amendments HKFRS 7 Amendments HKFRS 10 HKFRS 11 HKFRS 12 HKFRS 10, HKFRS 11 and HKFRS 12 Amendments HKFRS 13 HKAS 1 Amendments HKAS 19 (2011) HKAS 27 (2011) HKAS 28 (2011) HKAS 36 Amendments HK(IFRIC)-Int 20 Annual Improvements Cycle Amendments to HKFRS 1 First-time Adoption of Hong Kong Financial Reporting Standards Government Loans Amendments to HKFRS 7 Financial Instruments: Disclosures Offsetting Financial Assets and Financial Liabilities Consolidated Financial Statements Joint Arrangements Disclosure of Interests in Other Entities Amendments to HKFRS 10, HKFRS 11 and HKFRS 12 Transition Guidance Fair Value Measurement Amendments to HKAS 1 Presentation of Financial Statements Presentation of Items of Other Comprehensive Income Employee Benefits Separate Financial Statements Investments in Associates and Joint Ventures Amendments to HKAS 36 Impairment of Assets Recoverable Amount Disclosures for Non-Financial Assets (early adopted) Stripping Costs in the Production Phase of a Surface Mine Amendments to a number of HKFRSs issued in June (2011) 27 (2011) 28 (2011)

39 Annual Report CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (Continued) (i) (Continued) Other than as further explained below regarding the impact of HKFRS 10, amendment to HKAS 1 and HKAS 19 (2011), the adoption of the new and revised HKFRSs has had no significant financial effect on these financial statements. The principal effects of adopting these new and revised HKFRSs are as follows: 2.2 (i) (2011) (a) HKFRS 10 replaces the portion of HKAS 27 Consolidated and Separate Financial Statements that addresses the accounting for consolidated financial statements and addresses the issues in HK(SIC) Int 12 Consolidation Special Purpose Entities. It establishes a single control model used for determining which entities are consolidated. To meet the definition of control in HKFRS 10, an investor must have (a) power over an investee, (b) exposure, or rights, to variable returns from its involvement with the investee, and (c) the ability to use its power over the investee to affect the amount of the investor s returns. The changes introduced by HKFRS 10 require management of the Group to exercise significant judgement to determine which entities are controlled. (a) (a) (b) (c) 10 As a result of the application of HKFRS 10, the Group has changed the accounting policy with respect to determining which investees are controlled by the Group. The application of HKFRS 10 does not change any of the consolidation conclusions of the Group in respect of its involvement with investees as at 1 April

40 66 Eagle Nice (International) Holdings Limited 2.2 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (Continued) (i) (Continued) (b) The HKAS 1 Amendments change the grouping of items presented in other comprehensive income ( OCI ). Items that could be reclassified (or recycled) to profit or loss at a future point in time (for example, exchange differences on translation of foreign operations, net movement on cash flow hedges and net loss or gain on available-for-sale financial assets) are presented separately from items which will never be reclassified (for example, the revaluation of land and buildings). The amendments have affected the presentation only and have had no impact on the financial position or performance of the Group. In addition, the Group has chosen not to use the new title statement of profit or loss and other comprehensive income as introduced by the amendments in these financial statements. (c) HKAS 19 (2011) changes the accounting for defined benefit plans. The revised standard removes the choice to defer the recognition of actuarial gains and losses. All actuarial gains and losses are required to be recognised immediately in other comprehensive income ( OCI ). The interest cost and expected return on plan assets used in the previous version of HKAS 19 are replaced with a net interest amount under HKAS 19 (2011), which is calculated by applying the discount rate to the net defined benefit liability or asset at the start of each annual reporting period. Prior to the adoption of HKAS 19 (2011), the Group elected to recognise actuarial gains or losses as income or expense over the expected average remaining service periods of the employees participating in the defined benefit plan when the net cumulative unrecognised actuarial gains or losses for the plan at the end of the previous period exceeded 10% of the higher of the present value of the defined benefit obligation and the fair value of plan assets at that date. Upon the adoption of HKAS 19 (2011), all actuarial gains and losses are recognised in OCI immediately. As a result, all deferred actuarial gains and losses as at 1 April 2012 and 31 March 2013 were recognised in OCI and the actuarial losses recognised in the income statement for the year ended 31 March 2013 were adjusted to OCI. In addition, the interest cost and expected return on plan assets recorded in 2013 have been replaced by a net interest amount. 2.2 (i) (b) (c) 1 19 (2011) 19 (2011) (2011) 10% 19 (2011)

41 Annual Report CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (Continued) (i) (Continued) (c) (Continued) Furthermore, upon the adoption of HKAS 19 (2011), all past service costs are recognised at the earlier of when an amendment/curtailment occurs and when the related restructuring or termination costs are recognised. As a result, unvested past service costs can no longer be deferred and recognised over the future vesting period. Since the Group did not have unrecognised service costs as at 1 April 2012 and 31 March 2013, the adoption of HKAS 19 (2011) has had no financial impact on the past services costs. HKAS 19 (2011) also requires more extensive disclosures which are included in note 26 to the financial statements. Other than the changes to the accounting for defined benefit plan, HKAS 19 (2011) also changes the timing of recognition for termination benefits and the classification of short term employee benefits. The revised standard requires termination benefits outside of a wider restructuring to be recognised only when the offer becomes legally binding and cannot be withdrawn. Under the revised standard, the distinction between short term and other long term employee benefits is now based on the expected timing of settlement rather than employee entitlement. As the Group does not have any other significant employee benefits that are expected to be settled for more than twelve months after the reporting period or had no events giving rise to termination benefits, the changes to the accounting for these benefits have had no effect on the financial position or performance of the Group. 2.2 (i) (c) 19 (2011) 19 (2011) 19 (2011) (2011)

42 68 Eagle Nice (International) Holdings Limited 2.2 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (Continued) (i) (Continued) (c) (Continued) The effects of the changes to the accounting for the Group s defined benefit plan are summarised below: Consolidated income statement 2.2 (i) (c) Year ended 31 March 2014 Year ended 31 March 2013 Increase in costs of sales (1,161) (1,508) Increase in administrative expenses (202) (341) Decrease in profit for the year attributable to owners of the Company Decrease in earnings per share attributable to owners of the Company (1,363) (1,849) Basic (HK0.3 cent) (0.3) Diluted (HK0.3 cent) (0.3) (HK0.4 cent) (0.4) (HK0.4 cent) (0.4)

43 Annual Report CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (Continued) (i) (Continued) (c) (Continued) Consolidated statement of comprehensive income 2.2 (i) (c) Year ended 31 March 2014 Year ended 31 March 2013 Decrease in profit for the year (1,363) (1,849) Increase in actuarial gain/(loss) on defined benefit plan Decrease/(increase) in exchange differences on translation of foreign operations Increase/(decrease) in other comprehensive income for the year attributable to owners of the Company Increase/(decrease) in total comprehensive income for the year attributable to owners of the Company 1,130 (169) 386 (29) 1,516 (198) 153 (2,047) Consolidated statement of financial position 31 March March April 2012 Increase in pension scheme liabilities (2,425) (2,578) (531) Decrease/(increase) in exchange fluctuation reserve (357) 29 Decrease in retained profits 2,782 2,

44 70 Eagle Nice (International) Holdings Limited 2.2 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (Continued) (ii) Change in accounting policy for leasehold land and buildings In accordance with HKAS 16 Property, Plant and Equipment, leasehold land and buildings can either be accounted for using the cost model or the revaluation model after their initial recognition. The Group accounted for its leasehold land and buildings using the revaluation model in previous years. Given the fact that most of the leasehold land and buildings held by listed companies in Hong Kong in the manufacturing and retail industries are accounted for using the cost model, during the year, the Group aligned its accounting policy with the industry practice and stated its leasehold land and buildings at cost less accumulated depreciation and any impairment losses. In addition, the Group s leasehold land and buildings are not expected to be sold in the normal course of business, instead, the future economic benefits embodied in the properties will be recovered principally through use in the Group s operation. In the opinion of the directors, this change in the accounting policy enables the Group to provide more relevant information in the financial statements about its performance. 2.2 (ii) 16 Consolidated income statement Year ended 31 March 2014 Year ended 31 March 2013 Decrease in cost of sales 3,522 1,277 Decrease in administrative expenses 2, Increase in profit for the year attributable to owners of the Company 5,865 1,923 Increase in earnings per share attributable to owners of the Company Basic HK1.2 cents 1.2 HK0.4 cent 0.4 Diluted HK1.2 cents 1.2 HK0.4 cent 0.4

45 Annual Report CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (Continued) (ii) Change in accounting policy for leasehold land and buildings (Continued) Consolidated statement of comprehensive income 2.2 (ii) Year ended 31 March 2014 Year ended 31 March 2013 Increase in profit for the year 5,865 1,923 Decrease in revaluation surplus on leasehold land and buildings (98,807) (105,278) Decrease in deferred tax liabilities 24,492 24,663 Increase in exchange differences on translation of foreign operations (1,613) (265) Decrease in other comprehensive income for the year attributable to owners of the Company Decrease in total comprehensive income for the year attributable to owners of the Company (75,928) (80,880) (70,063) (78,957) Consolidated statement of financial position 31 March March April 2012 Decrease in property, plant and equipment (257,695) (163,140) (59,520) Decrease in deferred tax liabilities 63,213 38,721 14,058 Decrease in asset revaluation reserve 201, ,136 46,521 Decrease in exchange fluctuation reserve 5,738 4,125 3,860 Increase in retained profits (12,707) (6,842) (4,919)

46 72 Eagle Nice (International) Holdings Limited 2.3 ISSUED BUT NOT YET EFFECTIVE HONG KONG FINANCIAL REPORTING STANDARDS Other than the early adoption of HKAS 36 Amendments as disclosed in note 2.2, the Group has not applied the following new and revised HKFRSs, that have been issued but are not yet effective, in these financial statements HKFRS 9 Financial Instruments 4 HKFRS 9, HKFRS 7 and HKAS 39 Amendments HKFRS 10, HKFRS 12 and HKAS 27 (2011) Amendments Hedge Accounting and amendments to HKFRS 9, HKFRS 7 and HKAS 39 4 Amendments to HKFRS 10, HKFRS 12 and HKAS 27 (2011) Investment Entities 1 HKFRS 11 Amendments Amendments to HKFRS 11 Accounting for Acquisitions of Interests in Joint Operations 3 HKFRS 14 Regulatory Deferral Accounts 3 HKAS 16 and HKAS 38 Amendments HKAS 19 Amendments HKAS 32 Amendments HKAS 39 Amendments HK(IFRIC)-Int 21 Levies 1 Annual Improvements Cycle Annual Improvements Cycle Amendments to HKAS16 and HKAS38 Clarification of Acceptance Methods of Depreciation and Amortisation 3 Amendments to HKAS 19 Employee Benefits Defined Benefit Plans: Employee Contributions 2 Amendments to HKAS 32 Financial Instruments: Presentation Offsetting Financial Assets and Financial Liabilities 1 Amendments to HKAS 39 Financial Instruments: Recognition and Measurement Novation of Derivatives and Continuation of Hedge Accounting 1 Amendments to a number of HKFRSs issued in January Amendments to a number of HKFRSs issued in January (2011) () ()

47 Annual Report ISSUED BUT NOT YET EFFECTIVE HONG KONG FINANCIAL REPORTING STANDARDS (Continued) 1 Effective for annual periods beginning on or after 1 January Effective for annual periods beginning on or after 1 July Effective for annual periods beginning on or after 1 January No mandatory effective date yet determined but is available for adoption The Group is in the process of making an assessment of the impact of these new and revised HKFRSs upon initial application and is not yet in a position to state whether they would have a significant impact on the Group s results of operations and financial position. 2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Subsidiaries A subsidiary is an entity (including a structured entity), directly or indirectly, controlled by the Company. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee (i.e., existing rights that give the Group the current ability to direct the relevant activities of the investee). When the Company has, directly or indirectly, less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including: 2.4 (a) the contractual arrangement with the other vote holders of the investee; (a) (b) rights arising from other contractual arrangements; and (b) (c) the Group s voting rights and potential voting rights. (c) The results of subsidiaries are included in the Company s income statement to the extent of dividends received and receivable. The Company s investments in subsidiaries that are not classified as held for sale in accordance with HKFRS 5 are stated at cost less any impairment losses. 5

48 74 Eagle Nice (International) Holdings Limited 2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Business combinations and goodwill Business combinations are accounted for using the acquisition method. The consideration transferred is measured at the acquisition date fair value which is the sum of the acquisition date fair values of assets transferred by the Group, liabilities assumed by the Group to the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. For each business combination, the Group elects whether to measure the non-controlling interests in the acquiree that are present ownership interests and entitle their holders to a proportionate share of net assets in the event of liquidation at fair value or at the proportionate share of the acquiree s identifiable net assets. All other components of noncontrolling interests are measured at fair value. Acquisition-related costs are expensed as incurred. 2.4 When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree. If the business combination is achieved in stages, the previously held equity interest is remeasured at its acquisition date fair value and any resulting gain or loss is recognised in profit or loss. Any contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisition date. Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of HKAS 39 is measured at fair value with changes in fair value either recognised in profit or loss or as a change to other comprehensive income. If the contingent consideration is not within the scope of HKAS 39, it is measured in accordance with the appropriate HKFRS. Contingent consideration that is classified as equity is not remeasured and subsequent settlement is accounted for within equity Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred, the amount recognised for non-controlling interests and any fair value of the Group s previously held equity interests in the acquiree over the identifiable net assets acquired and liabilities assumed. If the sum of this consideration and other items is lower than the fair value of the net assets acquired, the difference is, after reassessment, recognised in profit or loss as a gain on bargain purchase.

49 Annual Report SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Business combinations and goodwill (Continued) After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. The Group performs its annual impairment test of goodwill as at 31 March. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group s cashgenerating units, or groups of cash-generating units, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units. Impairment is determined by assessing the recoverable amount of the cash-generating unit (group of cash-generating units) to which the goodwill relates. Where the recoverable amount of the cashgenerating unit (group of cash-generating units) is less than the carrying amount, an impairment loss is recognised. An impairment loss recognised for goodwill is not reversed in a subsequent period. Where goodwill has been allocated to a cash-generating unit (or group of cash-generating units) and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on the disposal. Goodwill disposed of in these circumstances is measured based on the relative value of the disposed operation and the portion of the cash-generating unit retained. Impairment of non-financial assets Where an indication of impairment exists, or when annual impairment testing for an asset is required (other than inventories, financial assets and goodwill), the asset s recoverable amount is estimated. An asset s recoverable amount is the higher of the asset s or cash-generating unit s value in use and its fair value less costs of disposal, and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case the recoverable amount is determined for the cash-generating unit to which the asset belongs. An impairment loss is recognised only if the carrying amount of an asset exceeds its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss is charged to the income statement in the period in which it arises, unless the asset is carried at a revalued amount, in which case the impairment loss is accounted for in accordance with the relevant accounting policy for that revalued asset. 2.4

50 76 Eagle Nice (International) Holdings Limited 2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Impairment of non-financial assets (Continued) An assessment is made at the end of each reporting period as to whether there is an indication that previously recognised impairment losses may no longer exist or may have decreased. If such an indication exists, the recoverable amount is estimated. A previously recognised impairment loss of an asset other than goodwill is reversed only if there has been a change in the estimates used to determine the recoverable amount of that asset, but not to an amount higher than the carrying amount that would have been determined (net of any depreciation/amortisation) had no impairment loss been recognised for the asset in prior years. A reversal of such an impairment loss is credited to the income statement in the period in which it arises, unless the asset is carried at a revalued amount, in which case the reversal of the impairment loss is accounted for in accordance with the relevant accounting policy for that revalued asset. Related parties A party is considered to be related to the Group if: 2.4 (a) the party is a person or a close member of that person s family and that person (a) (i) has control or joint control over the Group; (i) (ii) has significant influence over the Group; or (ii) (iii) is a member of the key management personnel of the Group or of a parent of the Group; (iii) or (b) the party is an entity where any of the following conditions applies: (b) (i) the entity and the Group are members of the same group; (i) (ii) one entity is an associate or joint venture of the other entity (or of a parent, subsidiary or fellow subsidiary of the other entity); (ii) (iii) the entity and the Group are joint ventures of the same third party; (iii) (iv) one entity is a joint venture of a third entity and the other entity is an associate of the third entity; (iv)

51 Annual Report SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Related parties (Continued) (b) (Continued) (v) the entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to the Group; 2.4 (b) (v) (vi) the entity is controlled or jointly controlled by a person identified in (a); and (vi) (a) (vii) a person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity). (vii) (a)(i) Property, plant and equipment and depreciation Property, plant and equipment, other than construction in progress, are stated at cost less accumulated depreciation and any impairment losses. The cost of an item of property, plant and equipment comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Expenditure incurred after items of property, plant and equipment have been put into operation, such as repairs and maintenance, is normally charged to the income statement in the period in which it is incurred. In situations where the recognition criteria are satisfied, the expenditure for a major inspection is capitalised in the carrying amount of the asset as a replacement. Where significant parts of property, plant and equipment are required to be replaced at intervals, the Group recognises such parts as individual assets with specific useful lives and depreciates them accordingly. Depreciation is calculated on the straight-line basis to write off the cost or valuation of each item of property, plant and equipment to its residual value over its estimated useful life. The principal annual rates used for this purpose are as follows: Leasehold land under finance leases Over the lease terms Buildings 2% to 15% Leasehold improvements Over the shorter of the lease terms or 20% Plant and machinery 10% to 20% Furniture, fixtures, equipment and 20% motor vehicles 2% 15% 20% 10% 20% 20%

52 78 Eagle Nice (International) Holdings Limited 2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Property, plant and equipment and depreciation (Continued) Where parts of an item of property, plant and equipment have different useful lives, the cost of that item is allocated on a reasonable basis among the parts and each part is depreciated separately. Residual values, useful lives and the depreciation method are reviewed, and adjusted if appropriate, at least at each financial year end. 2.4 An item of property, plant and equipment including any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on disposal or retirement recognised in the income statement in the year the asset is derecognised is the difference between the net sale proceeds and the carrying amount of the relevant asset. Construction in progress represents a building under construction, which is stated at cost less any impairment losses, and is not depreciated. Cost comprises the direct costs of construction and capitalised borrowing costs on related borrowed funds during the period of construction. Construction in progress is reclassified to the appropriate category of property, plant and equipment when completed and ready for use. Leases Leases that transfer substantially all the rewards and risks of ownership of assets to the Group, other than legal title, are accounted for as finance leases. At the inception of a finance lease, the cost of the leased asset is capitalised at the present value of the minimum lease payments and recorded together with the obligation, excluding the interest element, to reflect the purchase and financing. Assets held under capitalised finance leases, including prepaid land lease payments under finance leases, are included in property, plant and equipment, and depreciated over the shorter of the lease terms and the estimated useful lives of the assets. The finance costs of such leases are charged to the income statement so as to provide a constant periodic rate of charge over the lease terms. ( ) Leases where substantially all the rewards and risks of ownership of assets remain with the lessor are accounted for as operating leases. Where the Group is the lessor, assets leased by the Group under operating leases are included in non-current assets, and rentals receivable under the operating leases are credited to the income statement on the straight-line basis over the lease terms. Where the Group is the lessee, rentals payable under operating leases net of any incentives received from the lessor are charged to the income statement on the straight-line basis over the lease terms. Prepaid land lease payments under operating leases are initially stated at cost and subsequently recognised on the straight-line basis over the lease terms.

53 Annual Report SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Investments and other financial assets Initial recognition and measurement Financial assets are classified, at initial recognition, as financial assets at fair value through profit or loss, loans and receivables and availablefor-sale financial investments, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. When financial assets are recognised initially, they are measured at fair value plus transaction costs that are attributable to the acquisition of the financial assets, except in the case of financial assets recorded at fair value through profit or loss. 2.4 All regular way purchases and sales of financial assets are recognised on the trade date, that is, the date that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace. The Group s financial assets include cash and cash equivalents, accounts and bills receivables and other receivables which are classified and accounted for as loans and receivables. Subsequent measurement loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such assets are subsequently measured at amortised cost using the effective interest rate method less any allowance for impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and includes fees or costs that are an integral part of the effective interest rate. The effective interest rate amortisation is included in other income in the income statement. The loss arising from impairment is recognised in the income statement in finance costs for loans. Derecognition of financial assets A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e., removed from the Group s consolidated statement of financial position) when: the rights to receive cash flows from the asset have expired; or the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a pass-through arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. (a) (b)

54 80 Eagle Nice (International) Holdings Limited 2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Derecognition of financial assets (Continued) When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risk and rewards of ownership of the asset. When it has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the Group continues to recognise the transferred asset to the extent of the Group s continuing involvement. In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained. Impairment of financial assets The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired. An impairment exists if one or more events that occurred after the initial recognition of the asset have an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that a debtor or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and observable data indicating that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. Financial assets carried at amortised cost For financial assets carried at amortised cost, the Group first assesses whether impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognised are not included in a collective assessment of impairment. The amount of any impairment loss identified is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset s original effective interest rate (i.e., the effective interest rate computed at initial recognition). 2.4

55 Annual Report SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Impairment of financial assets (Continued) Financial assets carried at amortised cost (Continued) The carrying amount of the asset is reduced through the use of an allowance account and the loss is recognised in the income statement. Interest income continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. Loans and receivables together with any associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realised or has been transferred to the Group. 2.4 If, in a subsequent period, the amount of the estimated loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance account. If a write-off is later recovered, the recovery is credited to the income statement. Financial liabilities Initial recognition and measurement Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings, net of directly attributable transaction costs. The Group s financial liabilities include accounts and bills payables, other payables, interest-bearing bank borrowings which are classified and accounted for as loans and borrowings. Subsequent measurement loans and borrowings After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost, using the effective interest rate method unless the effect of discounting would be immaterial, in which case they are stated at cost. Gains and losses are recognised in the income statement when the liabilities are derecognised as well as through the effective interest rate amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The effective interest rate amortisation is included in finance costs in the income statement.

56 82 Eagle Nice (International) Holdings Limited 2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Derecognition of financial liabilities A financial liability is derecognised when the obligation under the liability is discharged or cancelled, or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and a recognition of a new liability, and the difference between the respective carrying amounts is recognised in the income statement. Offsetting of financial instruments Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously. Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined on the first-in, first-out basis and, in the case of work in progress and finished goods, comprises direct materials, direct labour and an appropriate proportion of overheads. Net realisable value is based on estimated selling prices less any estimated costs to be incurred to completion and disposal. Cash and cash equivalents For the purpose of the consolidated statement of cash flows, cash and cash equivalents comprise cash on hand and demand deposits, and short term highly liquid investments that are readily convertible into known amounts of cash, are subject to an insignificant risk of changes in value, and have a short maturity of generally within three months when acquired, less bank overdrafts which are repayable on demand and form an integral part of the Group s cash management. For the purpose of the statement of financial position, cash and cash equivalents comprise cash on hand and at banks, including term deposits, which are not restricted as to use. 2.4

57 Annual Report SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Provisions A provision is recognised when a present obligation (legal or constructive) has arisen as a result of a past event and it is probable that a future outflow of resources will be required to settle the obligation, provided that a reliable estimate can be made of the amount of the obligation. 2.4 When the effect of discounting is material, the amount recognised for a provision is the present value at the end of the reporting period of the future expenditures expected to be required to settle the obligation. The increase in the discounted present value amount arising from the passage of time is included in finance costs in the income statement. Income tax Income tax comprises current and deferred tax. Income tax relating to items recognised outside profit or loss is recognised outside profit or loss, either in other comprehensive income or directly in equity. Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period, taking into consideration interpretations and practices prevailing in the countries in which the Group operates. Deferred tax is provided, using the liability method, on all temporary differences at the end of the reporting period between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax liabilities are recognised for all taxable temporary differences, except: when the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and in respect of taxable temporary differences associated with investments in subsidiaries, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

58 84 Eagle Nice (International) Holdings Limited 2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Income tax (Continued) Deferred tax assets are recognised for all deductible temporary differences, the carryforward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, the carryforward of unused tax credits and unused tax losses can be utilised, except: when the deferred tax asset relating to the deductible temporary differences arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and in respect of deductible temporary differences associated with investments in subsidiaries, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised. 2.4 The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at the end of each reporting period and are recognised to the extent that it has become probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority. Government grants Government grants, including a subsidy for the expenditure incurred in the construction cost of an infrastructure project, are recognised at their fair value where there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the costs, which it is intended to compensate, are expensed. Where the grant relates to an asset, the fair value is deducted from the carrying amount of the asset and released to the income statement by way of a reduced depreciation charge.

59 Annual Report SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Revenue recognition Revenue is recognised when it is probable that the economic benefits will flow to the Group and when the revenue can be measured reliably, on the following bases: 2.4 (i) from the sale of goods and samples, when the significant risks and rewards of ownership have been transferred to the buyer, provided that the Group maintains neither managerial involvement to the degree usually associated with ownership, nor effective control over the goods sold; and (i) (ii) interest income, on an accrual basis using the effective interest method by applying the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, when appropriate, to the net carrying amount of the financial asset. (ii) Employee benefits Defined contribution plan The Group operates a defined contribution Mandatory Provident Fund retirement benefit scheme (the MPF Scheme ) under the Mandatory Provident Fund Schemes Ordinance for those employees who are eligible to participate in the MPF Scheme. Contributions are made based on a percentage of the employees basic salaries and are charged to the income statement as they become payable in accordance with the rules of the MPF Scheme. The assets of the MPF Scheme are held separately from those of the Group in an independently administered fund. The Group s employer contributions vest fully with the employees when contributed into the MPF Scheme. In addition, the Group operates a defined contribution retirement benefit scheme (the Retirement Scheme ) for those employees who are eligible to participate in the Retirement Scheme. Contributions to the Retirement Scheme are charged to the income statement as incurred. The Retirement Scheme operates in a similar way to the MPF Scheme, except that when an employee leaves the Retirement Scheme before his/her interest in the Group s employer contributions vests fully, the ongoing contributions payable by the Group are reduced by the relevant amount of the forfeited employer contributions. The employees of the Group s subsidiaries which operate in Mainland China are required to participate in a central pension scheme operated by the local municipal government. These subsidiaries are required to contribute a certain percentage of their payroll costs to the central pension scheme for their employees who are registered as permanent residents in Mainland China. The contributions are charged to the income statement as they become payable in accordance with the rules of the central pension scheme.

60 86 Eagle Nice (International) Holdings Limited 2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Employee benefits (Continued) Defined benefit plan The cost of providing benefits under the defined benefit plan is determined using the projected unit credit actuarial valuation method. 2.4 Remeasurements arising from a defined benefit pension plan, comprising actuarial gains and losses, the effect of the asset ceiling (excluding net interest) and the return on plan assets (excluding net interest), are recognised immediately in the consolidated statement of financial position with a corresponding debit or credit to retained profits through other comprehensive income in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods. Past service costs are recognised in profit or loss at the earlier of: the date of the plan amendment or curtailment; and the date that the Group recognises restructuring-related costs Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Group recognises the following changes in the net defined benefit obligation under cost of sales and administrative expenses in the income statement by function: service costs comprising current service costs, past-service costs, gains and losses on curtailments and non-routine settlements net interest expense or income Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, i.e., assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets. The capitalisation of such borrowing costs ceases when the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs capitalised. All other borrowing costs are expensed in the period in which they are incurred. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

61 Annual Report SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Foreign currencies These financial statements are presented in Hong Kong dollars, which is the Company s functional and presentation currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Foreign currency transactions recorded by the entities in the Group are initially recorded using their respective functional currency rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rates of exchange ruling at the end of the reporting period. Differences arising on settlement or translation of monetary items are recognised in the income statement. 2.4 Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was measured. The gain or loss arising on retranslation of a non-monetary item measured at fair value is treated in line with the recognition of the gain or loss on change in fair value of the item (i.e., translation difference on the item whose fair value gain or loss is recognised in other comprehensive income or income statement is also recognised in other comprehensive income or income statement, respectively). The functional currencies of certain overseas subsidiaries are currencies other than the Hong Kong dollar. As at the end of the reporting period, the assets and liabilities of these entities are translated into the presentation currency of the Company at the exchange rates prevailing at the end of the reporting period and their income statements are translated into Hong Kong dollars at the weighted average exchange rates for the year. The resulting exchange differences are recognised in other comprehensive income and accumulated in the exchange fluctuation reserve. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in the income statement. For the purpose of the consolidated statement of cash flows, the cash flows of overseas subsidiaries are translated into Hong Kong dollars at the exchange rates ruling at the dates of the cash flows. Frequently recurring cash flows of overseas subsidiaries which arise throughout the year are translated into Hong Kong dollars at the weighted average exchange rates for the year.

62 88 Eagle Nice (International) Holdings Limited 3. SIGNIFICANT ACCOUNTING JUDGEMENT AND ESTIMATES The preparation of the Group s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, their accompanying disclosures and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amounts of the assets or liabilities affected in the future. Judgement In the process of applying the Group s accounting policies, management has made the following judgement, apart from those involving estimations, which has the most significant effect on the amounts recognised in the financial statements: Impairment of assets In determining whether an asset is impaired or whether the event previously causing the impairment no longer exists, the Group has to exercise judgement in the area of asset impairment, particularly in assessing: (1) whether an event has occurred that may affect the asset value, or such an event affecting the asset value has not been in existence; (2) whether the carrying value of an asset can be supported by the net present value of future cash flows, which are estimated based upon the continued use of the asset; and (3) the appropriate key assumptions to be applied in preparing cash flow projections including whether these cash flow projections are discounted using an appropriate rate. Changing the assumptions selected by management to determine the level of impairment, including the discount rates or the growth rate assumptions in the cash flow projections, could have a material effect on the net present value used in the impairment test. Estimation uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. 3. (1) (2) (3)

63 Annual Report SIGNIFICANT ACCOUNTING JUDGEMENT AND ESTIMATES (Continued) Estimation uncertainty (Continued) Useful lives and residual values of items of property, plant and equipment In determining the useful lives and residual values of items of property, plant and equipment, the Group has to consider various factors, such as technical or commercial obsolescence arising from changes or improvements in production, or from a change in the market demand for the product or service output of the asset, expected usage of the asset, expected physical wear and tear, the care and maintenance of the asset, and legal or similar limits on the use of the asset. The estimation of the useful life of the asset is based on the experience of the Group with similar assets that are used in a similar way. Additional depreciation is made if the estimated useful lives and/or the residual values of items of property, plant and equipment are different from previous estimation. Useful lives and residual values are reviewed at each financial year end date based on changes in circumstances. Impairment of goodwill The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value in use of the cash-generating units to which the goodwill is allocated. Estimating the value in use requires the Group to make an estimate of the expected future cash flows from the cash-generating units and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amount of goodwill at 31 March 2014 was HK$26,112,000 (2013: HK$26,112,000). Further details are given in note 17. Impairment allowance for doubtful debts The Group makes impairment allowance for doubtful debts based on an assessment of the recoverability of accounts and bills receivables. Allowances are applied to accounts and bills receivables where events or changes in circumstances indicate that the balances may not be collectible. The identification of doubtful debts requires the use of judgement and estimates. Where the actual outcome or expectation in future is different from the original estimate, such differences will have an impact on the carrying value of the receivables and doubtful debt expenses/write-back in the period in which such estimate has been changed ,112,000 26,112,000 17

64 90 Eagle Nice (International) Holdings Limited 4. OPERATING SEGMENT INFORMATION For management purposes, the Group determines that there are five reportable operating segments, based on location of customers (the destination of sales), including Mainland China, the United States of America (the USA ), Europe, Japan and others. These segments are managed separately as each segment is subject to risks and returns that are different from each other. Management monitors the results of the Group s operating segments separately for the purpose of making decisions about resources allocation and performance assessment. Segment performance is evaluated based on reportable segment profit, which is a measure of adjusted profit before tax. The adjusted profit before tax is measured consistently with the Group s profit before tax except that interest income and other unallocated income, and unallocated expenses are excluded from such measurement. Segment assets exclude unallocated assets as these assets are managed on a group basis. Segment liabilities exclude unallocated liabilities as these liabilities are managed on a group basis. 4.

65 Annual Report OPERATING SEGMENT INFORMATION (Continued) Group USA Mainland China Europe Japan Others Consolidated Segment revenue: Sales to external customers 464, , , , ,070 1,483,774 Segment results 43,402 29,774 15,914 7,920 21, ,796 Interest and other unallocated income 4,452 Unallocated expenses (86,016) Profit before tax 37,232 Income tax expense (15,362) Profit for the year attributable to owners of the Company 21,870 Segment assets 394, , , , ,010 1,211,391 Unallocated assets 344,161 1,555,552 Segment liabilities 53,936 43,981 32,570 11,903 35, ,562 Unallocated liabilities 366, ,635 Other segment information: Depreciation and amortisation 16,180 8,919 5,996 3,814 8,863 43,772 Unallocated amounts 20,452 Capital expenditure * * 8,502 3,894 2,227 1,172 3,550 19,345 64,224 Unallocated amounts 1,164 20,509 * Capital expenditure represents additions to property, plant and equipment. *

66 92 Eagle Nice (International) Holdings Limited 4. OPERATING SEGMENT INFORMATION (Continued) Group 2013 (restated) 4. USA Mainland China Europe Japan Others Consolidated Segment revenue: Sales to external customers 309, , , , ,964 1,443,994 Segment results 42,832 47,623 29,747 14,449 35, ,241 Interest and other unallocated income 4,607 Unallocated expenses (80,242) Profit before tax 94,606 Income tax expense (21,568) Profit for the year attributable to owners of the Company 73,038 Segment assets 293, , ,108 81, ,515 1,249,671 Unallocated assets 389,977 1,639,648 Segment liabilities 41,302 82,945 26,076 7,076 31, ,913 Unallocated liabilities 435, ,166 Other segment information: Depreciation and amortisation 11,224 11,182 7,859 3,015 8,905 42,185 Unallocated amounts 20,052 62,237 Capital expenditure * * 21,132 22,262 15,217 6,156 17,480 82,247 Unallocated amounts 8,069 90,316 * Capital expenditure represents additions to property, plant and equipment. *

67 Annual Report OPERATING SEGMENT INFORMATION (Continued) Geographical information non-current assets (restated) Hong Kong 18,201 20,905 Mainland China 695, ,621 Indonesia 143, , , ,245 The non-current asset information above is based on the locations of the assets. Information about major customers Revenue of HK$677,915,000 (2013: HK$750,198,000) and HK$403,117,000 (2013: HK$371,238,000) were derived from sales to the largest customer and the second largest customer of the Group, respectively. The above amounts include sales to group of entities which are known to be under common control with these customers. 677,915, ,198, ,117, ,238, REVENUE AND OTHER INCOME Revenue, which is also the Group s turnover, represents the net invoiced value of goods sold, after allowances for returns and trade discounts. All significant intra-group transactions have been eliminated on consolidation. An analysis of the Group s revenue and other income is as follows: Revenue Sale of goods 1,483,774 1,443,994 Other income Bank interest income 1,417 2,897 Others 3,035 1,710 4,452 4,607

68 94 Eagle Nice (International) Holdings Limited 6. FINANCE COSTS Interest on bank loans wholly repayable within five years 5,002 6, PROFIT BEFORE TAX The Group s profit before tax is arrived at after charging/(crediting): (restated) Cost of inventories sold 1,289,041 1,194,374 Auditors remuneration 2,506 2,223 Depreciation (Note 14)* 14 * 61,856 59,910 Amortisation of prepaid land lease payments (Note 15)* 15 * 2,368 2,327 Employee benefits expenses (excluding directors remuneration Note 8): 8 Wages and salaries 380, ,539 Pension contributions, including a pension cost for defined benefit plan of HK$1,363,000 (Note 26) (2013: HK$1,849,000 (restated)) 1,363, ,849,000 54,815 37,223 Less: Forfeited contributions (872) (321) Net pension contributions 53,943 36,902 Total employee benefits expenses* * 434, ,441 Minimum lease payments under operating leases in respect of land and buildings* * 3,418 3,331 Foreign exchange differences, net 4,270 1,964 Write-off of items of property, plant and equipment 2,458 * Included in the respective balances are the following amounts which are also included in the cost of inventories sold disclosed above: * (restated) Depreciation 41,877 40,317 Amortisation of prepaid land lease payments 1,896 1,867 Employee benefits expenses 372, ,193 Minimum lease payments under operating leases in respect of land and buildings 3,418 3,331

69 Annual Report DIRECTORS AND CHIEF EXECUTIVE S REMUNERATION Directors and chief executive s remuneration for the year, disclosed pursuant to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the Listing Rules ) and Section 161 of the Hong Kong Companies Ordinance, is as follows: Group Fees Other emoluments: Salaries, allowances and benefits in kind 4,708 3,261 Discretionary bonuses 4,291 Pension scheme contributions ,226 7,998 5,586 8,358 (a) Independent non-executive directors The fees paid to independent non-executive directors during the year were as follows: (a) Mr. Chan Cheuk Ho Mr. Li Chi Chung (resigned on 28 February 2013) 110 Mr. Cheng Yung Hui, Tony Mr. Lu Chi Chant (appointed on 28 February 2013) There were no other emoluments payable to the independent non-executive directors during the year (2013: Nil).

70 96 Eagle Nice (International) Holdings Limited 8. DIRECTORS AND CHIEF EXECUTIVE S REMUNERATION (Continued) (b) Executive directors 8. (b) Fees Salaries, allowances and benefits in kind Discretionary bonuses Pension scheme contributions Total remuneration 2014 Executive directors: Mr. Chung Yuk Sing* * 1, ,894 Mr. Chen Hsiao Ying** ** 1, ,805 Mr. Kuo Tai Yu Ms. Chen Fang Mei, Christina 1, , , ,226 Executive directors: Mr. Chung Yuk Sing* * 1,664 1, ,853 Mr. Chen Hsiao Ying** ** 1,597 1, ,673 Mr. Kuo Tai Yu Ms. Chen Fang Mei, Christina ,261 4, ,998 There was no arrangement under which a director waived or agreed to waive any remuneration during the year. The directors remuneration shown above does not include the estimated monetary value of the Group s owned premises provided rent-free to an executive director, Mr. Chung Yuk Sing ( Mr. Chung ), during the year. The estimated rental value of such accommodation was HK$129,000 (2013: HK$126,000) for the year ended 31 March ,000126,000 * Mr. Chung Yuk Sing was appointed as the chief executive officer of the Company on 30 June ** Mr. Chen Hsiao Ying resigned as the chief executive officer of the Company with effect on 30 June 2013 and was appointed as the vice chairman on 6 August * **

71 Annual Report FIVE HIGHEST PAID EMPLOYEES The five highest paid employees during the year included three (2013: two) directors, details of whose remuneration are set out in note 8 above. Details of the remuneration of the remaining two (2013: three) non-director, highest paid employees for the year ended 31 March 2014 are set out below: 9. 8 Group Salaries, allowances and benefits in kind 3,645 3,900 Discretionary bonuses Pension scheme contributions ,283 5,040 The number of non-director, highest paid employees whose remuneration fell within the following bands is as follows: Number of employees HK$1,000,001 to HK$1,500,000 1,000,0011,500,000 1 HK$1,500,001 to HK$2,000,000 1,500,0012,000, HK$2,000,001 to HK$2,500,000 2,000,0012,500,000 HK$2,500,001 to HK$3,000,000 2,500,0013,000,

72 98 Eagle Nice (International) Holdings Limited 10. INCOME TAX Hong Kong profits tax has been provided at the rate of 16.5% (2013: 16.5%) on the estimated assessable profits arising in Hong Kong during the year. Taxes on profits assessable elsewhere have been calculated at the rates of tax prevailing in the countries in which the Group operates. Pursuant to the Corporate Income Tax Law of the PRC being effective on 1 January 2008, the corporate income tax rate for all enterprises in Mainland China is 25%. ( Maitex PRC ) is entitled to be exempted from corporate income tax in the People s Republic of China (the PRC ) for the first two profit-making years and a 50% reduction in corporate income tax for the succeeding three years. Moreover, under the relevant tax laws and regulations in Mainland China, this company may set off losses incurred by it in a financial year against profits made by it in the succeeding financial year or years, subject to a maximum of five financial years. According to the confirmation obtained by the Group from the PRC tax bureau, the first profit-making year of Maitex PRC was the year ended 31 December % 16.5% 25% 50% Group Current tax charge for the year: Hong Kong 9,520 19,132 Elsewhere 6,506 11,998 Overprovision of current tax in respect of prior years (1,177) (7,371) Deferred (Note 27) (2,191) Total tax charge for the year 15,362 21,568

73 Annual Report INCOME TAX (Continued) A reconciliation of the tax expense applicable to profit before tax using the statutory rates for the tax jurisdictions in which the Company and majority of its subsidiaries are domiciled to the tax expense at the effective tax rate is as follows: 10. Group (restated) Profit before tax 37,232 94,606 Tax at the applicable rates to profit in the tax jurisdictions concerned 6,654 15,439 Lower tax rate due to tax holiday (854) Adjustments in respect of current tax of previous years (1,177) (7,371) Income not subject to tax (1,820) (1,014) Expenses not deductible for tax 2,589 2,341 Effect of withholding tax at 5% on the distributable profits of the Group s PRC subsidiaries 5% 513 (2,191) Tax losses not recognised 8,603 15,100 Others 118 Tax charge at the Group s effective rate 15,362 21, PROFIT FOR THE YEAR ATTRIBUTABLE TO OWNERS OF THE COMPANY The consolidated profit attributable to owners of the Company for the year ended 31 March 2014 includes a loss of HK$3,210,000 (2013: HK$5,383,000) dealt with in the financial statements of the Company (Note 30) ,210,000 5,383,000 30

74 100 Eagle Nice (International) Holdings Limited 12. DIVIDENDS Dividends paid during the year: Final in respect of the financial year ended 31 March 2013 HK4 cents per ordinary share (2013: final dividend of HK7 cents per ordinary share, in respect of the financial year ended 31 March 2012) Interim HK4 cents (2013: HK7 cents) per ordinary share ,987 34, ,987 34,978 39,974 69,956 Proposed final dividend Nil (2013: HK4 cents) per ordinary share 4 19,987 The board of directors does not recommend the payment of a final dividend for the year ended 31 March The proposed final dividend for the year ended 31 March 2013 was subject to the approval of the Company s shareholders at the annual general meeting. These financial statements did not reflect the dividend payable as at 31 March EARNINGS PER SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY The calculation of basic earnings per share is based on the profit for the year attributable to owners of the Company for the year of HK$21,870,000 (2013: HK$73,038,000 (restated)), and 499,680,000 (2013: 499,680,000) ordinary shares in issue during the year. No adjustment has been made to the basic earnings per share amounts presented for the years ended 31 March 2014 and 2013 as the Group had no potentially dilutive ordinary shares in issue during those years ,870,000 73,038, ,680,000499,680,000

75 Annual Report PROPERTY, PLANT AND EQUIPMENT Group 31 March Leasehold land and buildings Leasehold improvements Plant and machinery Furniture, fixtures, equipment and motor vehicles Total Cost: At beginning of year As previously reported 818, , ,120 73,259 1,216,780 Prior year adjustment (103,683) (103,683) As restated 714, , ,120 73,259 1,113,097 Additions ,851 6,162 1,164 20,509 Disposals (1,420) (1,420) Write-off (9,268) (26) (9,294) Exchange realignment 6,478 1,189 1, ,349 At 31 March , , ,409 73,532 1,132,241 Accumulated depreciation: At beginning of year As previously reported 83, ,404 50, ,636 Prior year adjustment 59,457 59,457 As restated 59,457 83, ,404 50, ,093 Provided during the year 24,276 12,049 17,958 7,573 61,856 Disposals (966) (966) Write-off (6,836) (6,836) Exchange realignment (110) 308 1,297 At 31 March ,027 89, ,252 57, ,444 Net book value: At 31 March ,663 26,347 76,157 15, ,797

76 102 Eagle Nice (International) Holdings Limited 14. PROPERTY, PLANT AND EQUIPMENT (Continued) Group 31 March Leasehold land and buildings Leasehold improvements Plant and machinery Furniture, fixtures, equipment and motor vehicles Construction in progress Total Cost: At beginning of year As previously reported 290, , ,265 61, ,971 1,053,901 Prior year adjustment (23,425) (23,425) As restated 267, , ,265 61, ,971 1,030,476 Additions 20,900 3,041 16,516 9,271 40,588 90,316 Transfers 429,496 2,191 2,814 (434,501) Exchange realignment (restated) (2,614) (10) (852) (161) (4,058) (7,695) At 31 March , , ,120 73,259 1,113,097 Accumulated depreciation: At beginning of year As previously reported 71, ,377 43, ,483 Prior year adjustment 36,095 36,095 As restated 36,095 71, ,377 43, ,578 Provided during the year (restated) 23,608 11,446 17,148 7,708 59,910 Exchange realignment (restated) (246) (4) (121) (24) (395) At 31 March ,457 83, ,404 50, ,093 Net book value: At 31 March ,423 27,593 86,716 22, ,004

77 Annual Report PROPERTY, PLANT AND EQUIPMENT (Continued) An analysis of the carrying amount of the land and buildings of the Group at the end of the reporting period is as follows: (restated) Land and buildings held on medium term leases in Hong Kong Land and buildings held on medium term leases outside Hong Kong Buildings held on long term leases outside Hong Kong 16,069 16, , ,791 1,065 1,089 Total carrying amount 637, ,423 At 31 March 2014, the Group has undertaken not to charge one of the Group s buildings with a net carrying amount of HK$73,560,000 (2013: HK$75,267,000 (restated)). 73,560,000 75,267, PREPAID LAND LEASE PAYMENTS 15. Group Carrying amount at beginning of year 78,438 80,765 Amortisation recognised during the year (Note 7) 7 (2,368) (2,327) Exchange realignment 943 Carrying amount at 31 March 77,013 78,438 Current portion included in prepayments, deposits and other receivables (Note 16) 16 (2,335) (2,309) Non-current portion 74,678 76,129

78 104 Eagle Nice (International) Holdings Limited 15. PREPAID LAND LEASE PAYMENTS (Continued) An analysis of the carrying amounts of prepaid land lease payments of the Group at the end of the reporting period is as follows: Long term leases outside Hong Kong 3,216 3,289 Medium term leases outside Hong Kong 73,797 75,149 77,013 78,438 One of the Group s prepaid land lease payments with a net book value of HK$1,597,000 (2013: HK$1,608,000), together with the leasehold buildings which had been fully depreciated at 31 March 2014 and 2013 has been provided as rent-free accommodation to Mr. Chung, an executive director of the Company during the year. 1,597,000 1,608, PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES 16. Group Company Note Prepaid land lease payments 15 2,335 2,309 Prepayments 11,595 7, Deposits and other receivables 13,932 12,864 27,862 22, None of the financial assets included in the above balances is either past due or impaired. The financial assets included in the above balances relate to receivables for which there was no recent history of default.

79 Annual Report GOODWILL Cost and carrying amount: At beginning and end of year 26,112 26,112 The Group s goodwill was wholly allocated to a cash-generating unit engaged in the manufacture and trading of sportswear and garments (the Unit ). The recoverable amount of the Unit has been determined from the value in use, which is calculated with reference to cash flow projections based on a five-year period financial budget approved by senior management. The financial budgets are prepared reflecting actual and prior year performance and development expectations. The key assumptions for the cash flow projections are the budgeted gross margin which is the average gross profit margin achieved in the year immediately before budgeted years and the discount rate of 14%, which is before tax and reflects specific risks relating to the Unit. The cash flow projections are prepared based on the assumption that the cash-generating unit will have revenue based on the actual sales order amount and revenue forecasted by the head of the sales department for the first year, and then maintain a 5% growth rate thereafter. The directors believe that any reasonably possible change in any of these assumptions would not cause the aggregate carrying amount of the Unit to exceed the aggregate recoverable amount. Since the recoverable amount of the Unit is higher than its carrying amount, the directors consider there was no impairment of the goodwill at the end of the reporting period. 14% 5%

80 106 Eagle Nice (International) Holdings Limited 18. INVESTMENTS IN SUBSIDIARIES 18. Company Unlisted investments, at cost 43,368 43,368 The amounts due from/to subsidiaries are unsecured, interest-free and repayable on demand. The loan to a subsidiary included in the Company s current assets is unsecured, interest-bearing at the rate of 1.9% (2013: 2.2%) per annum and repayable on demand or within one year. The table below lists the subsidiaries of the Company which, in the opinion of the directors, principally affected the results for the year or formed a substantial portion of the net assets of the Group. To give details of other subsidiaries, would, in the opinion of the directors, result in particulars of excessive length. Particulars of the principal subsidiaries are as follows: 1.9% 2.2% Name Place of incorporation/ registration and business Issued share/ paid-up registered capital Percentage of equity attributable to the Company Principal activities Eagle Nice (EAG) Limited Hong Kong Ordinary HK$2; Non-voting deferred HK$10,000 (Note (a)) (2013: Ordinary HK$2; Non-voting deferred HK$10,000) 2 10,000(a) 2 10, Investment holding

81 Annual Report INVESTMENTS IN SUBSIDIARIES (Continued) 18. Name Place of incorporation/ registration and business Issued share/ paid-up registered capital Percentage of equity attributable to the Company Principal activities ( YM (Shantou) ) (Notes (b) and (c)) (b) (c) PRC/Mainland China US$23,500,000 (2013: US$23,500,000) 23,500,000 23,500, Manufacture and trading of sportswear and garments ( YY (Shantou) ) (Notes (b) and (c)) (b) (c) PRC/Mainland China HK$15,000,000 (2013: HK$15,000,000) 15,000,000 15,000, Manufacture and trading of sportswear and garments Eagle Nice Development Limited Hong Kong HK$1 (2013: HK$1) Manufacture and trading of sportswear and garments Yue Mei (HK) Garment Limited Hong Kong HK$1 (2013: HK$1) Manufacture and trading of sportswear and garments Maitex (EAG) Limited Hong Kong HK$1,000 (2013: HK$1,000) 1,000 1, Manufacture and trading of sportswear and garments ( Maitex PRC ) (Notes (b) and (c)) (b) (c) PRC/Mainland China HK$40,000,000 (2013: HK$40,000,000) 40,000,000 40,000, Manufacture and trading of sportswear and garments King Eagle (EAG) Limited Hong Kong HK$1 (2013: HK$1) Manufacture and trading of sportswear and garments () ( KE (Shantou) ) (Notes (b), (c) and (d)) (b) (c) (d) PRC/Mainland China US$2,680,000 (2013: US$2,680,000) 2,680,000 2,680, Manufacture and trading of sportswear and garments ("Hung Eagle Garment") (Notes (b) and (c)) (b) (c) PRC/Mainland China US$4,000,000 (2013: US$4,000,000) 4,000,000 4,000, Manufacture and trading of sportswear and garments

82 108 Eagle Nice (International) Holdings Limited 18. INVESTMENTS IN SUBSIDIARIES (Continued) 18. Name Place of incorporation/ registration and business Issued share/ paid-up registered capital Percentage of equity attributable to the Company Principal activities Eagle Nice (Indonesia) Holdings Limited Hong Kong HK$1 (2013: HK$1) Investment holding P.T. Eagle Nice Indonesia ( EN Indonesia ) Indonesia US$27,000,000 (2013: US$27,000,000) 27,000,000 27,000, Manufacture and trading of sportswear and garments Eagle Nice (Jiangxi) Garment Limited Hong Kong HK$10,000 (2013: HK$10,000) 10,000 10, Investment holding ( EN (Yifeng) ) (Notes (b) and (c)) (b) (c) PRC/ Mainland China US$25,000,000 (2013: US$25,000,000) 25,000,000 25,000, Manufacture and trading of sportswear and garments Notes: (a) The non-voting deferred shares carry no rights to dividends, no rights to attend or vote at general meetings and no rights to receive any surplus assets in a return of capital in a winding-up (other than the nominal amount paid up or credited as paid-up on such shares, after the sum of HK$100,000,000,000,000 per ordinary share has been distributed to the holders of the ordinary shares of the company in such winding-up). (a) 100,000,000,000,000 (b) YM (Shantou), YY (Shantou), Maitex PRC, KE (Shantou), Hung Eagle Garment and EN (Yifeng) are registered as wholly-foreign-owned enterprises under PRC law. (b) (c) The statutory financial statements of these entities are not audited by Ernst & Young, Hong Kong or another member firm of the Ernst & Young global network. (c) (d) KE (Shantou) was under deregistration as at year end and up to the date of approval of these financial statements. (d) All of the above subsidiaries are indirectly held by the Company.

83 Annual Report INVENTORIES 19. Group Raw materials 100, ,827 Work in progress 126, ,735 Finished goods 32,343 12, , , ACCOUNTS AND BILLS RECEIVABLES The Group s accounts and bills receivables mainly relate to a few recognised and creditworthy customers. The credit period is generally for a period of 30 to 45 days (2013: 30 to 45 days). The Group seeks to maintain strict control over its outstanding receivables to minimise the credit risk. Overdue balances are regularly reviewed by the management of the Group. The accounts and bills receivables are non-interest-bearing. An aged analysis of the accounts and bills receivables as at the end of the reporting period, based on the invoice date, is as follows: Group Within 30 days 30 81, , to 60 days ,793 45, to 90 days ,193 5,999 Over 90 days 90 8,055 18, , ,004

84 110 Eagle Nice (International) Holdings Limited 20. ACCOUNTS AND BILLS RECEIVABLES (Continued) The aged analysis of the trade receivables that are not individually nor collectively considered to be impaired is as follows: 20. Group Neither past due nor impaired 116, ,004 Less than 3 months past due 18, , ,004 Receivables that are neither past due nor impaired relate to customers for whom there was no recent history of default. Receivables that were past due but not impaired relate to a number of customers that have a good track records with the Group. Based on past experience, the directors of the Company are of the opinion that no provision for impairment is necessary in respect of these balances as there has not been a significant change in credit quality and the balances are still considered fully recoverable. 21. CASH AND CASH EQUIVALENTS 21. Group Company Cash and bank balances 275, , Non-pledged time deposits with original maturity of less than three months 1,249 10,070 10,070 Cash and cash equivalents 276, , ,618

85 Annual Report CASH AND CASH EQUIVALENTS (Continued) At the end of the reporting period, the cash and bank balances of the Group denominated in Renminbi ( RMB ) amounted to HK$161,707,000 (2013: HK$150,197,000). RMB is not freely convertible into other currencies. However, under Mainland China s Foreign Exchange Control Regulations and Administration of Settlement, Sale and Payment of Foreign Exchange Regulations, the Group is permitted to exchange RMB for other currencies through banks authorised to conduct foreign exchange business. Cash at banks earns interest at floating rates based on daily bank deposit rates. Short term time deposits are made for varying periods of between one day and three months depending on the immediate cash requirements of the Group, and earn interest at the respective short term time deposit rates. The bank balances are deposited with creditworthy banks with no recent history of default ,707, ,197, ACCOUNTS AND BILLS PAYABLES An aged analysis of the accounts and bills payables as at the end of the reporting period, based on the invoice date, is as follows: 22. Group Within 90 days 90 89, , to 180 days ,469 1, to 365 days Over 365 days 365 4,858 4,149 96, ,820 The accounts and bills payables are non-interest-bearing and are normally settled on 45-day terms. Included in accounts and bills payables of HK$108,820,000 as at 31 March 2013 was bills payables of HK$2,320,000 which were supported by a corporate guarantee executed by the Company amounting to HK$46,000,000. There were no bill payables as at 31 March ,820,000 2,320,000 46,000, BANKING FACILITIES As at 31 March 2014, the Group s banking facilities were supported by the corporate guarantees executed by the Company and a subsidiary of the Company to the extent of HK$368,000,000 (2013: HK$316,000,000), of which an aggregate amount of HK$122,396,000 was utilised (2013: HK$155,966,000), and an undertaking of the Group not to charge one of the Group s buildings (note 14) ,000,000316,000, ,396, ,966,000 14

86 112 Eagle Nice (International) Holdings Limited 24. ACCRUED LIABILITIES AND OTHER PAYABLES 24. Group Company Deferred income 518 1,130 Other payables 35,155 57,003 Accruals 45,693 38, ,366 96,469 7 Other payables of the Group at 31 March 2014 included a subsidy of HK$3,974,000 (2013: HK$3,403,000) received from the People s Government of Yifeng County, Jiangxi Province, the PRC for the construction cost of basic infrastructure to be incurred by the Group for the development of the Jiangxi Project. During the year, an amount of HK$639,000 (2013: HK$3,243,000) was utilised and has been offset against the construction cost. 3,974,000 3,403, ,0003,243, INTEREST-BEARING BANK BORROWINGS Group 25. Effective Interest rate Maturity (%) (%) (Note) Current Bank loans 1.01% to 1.6% (2013: 1.14% to 2.2%) 1.01% 1.6% 1.14% 2.2% On demand 339, ,646 Company Effective Interest rate Maturity (%) (%) (Note) Current Bank loans 1.01% to 1.6% (2013: 1.14% to 2.2%) 1.01% 1.6% 1.14% 2.2% On demand 217, ,000

87 Annual Report INTEREST-BEARING BANK BORROWINGS (Continued) Note: As at 31 March 2014, HK$122,396,000 (2013: HK$153,646,000) of the bank borrowings of HK$339,620,000 (2013: HK$387,846,000) were supported by corporate guarantees executed by the Company and a subsidiary of the Company and an undertaking of the Group not to charge one of the Group s buildings (note 14) ,620, ,846, ,396,000153,646, Other than the Company s bank borrowings which were denominated in US$, the Group s other bank borrowings were denominated in HK$. Since the Group s and the Company s bank loans contain repayment on-demand clauses, they are included within current interest-bearing bank borrowings and analysed into bank loans repayable on demand. Based on the maturity terms of the bank loans, the amounts repayable in respect of the Group s and the Company s bank loans are analysed as follows: Group Company Analysed into: Within one year 145, ,250 38,790 39,000 In the second year 194,580 31, ,434 In the third to fourth years, inclusive 211, , , , , ,000

88 114 Eagle Nice (International) Holdings Limited 26. PENSION SCHEME OBLIGATION The Group provides benefits for its employees of its subsidiary in Indonesia who achieve the requirement age of 55 years based on the provisions of the Indonesian Labour Law. The plan is exposed to interest rate risk and the risk of changes in the life expectancy The most recent actuarial valuations of the plan assets and the present value of the defined benefit obligations were carried out at 31 March 2014 by Biro Pusat Aktuaria, an independent actuary with a licence from Indonesia Ministry of Finance, using the projected unit credit method. These obligations are not funded by the Group. The principal actuarial assumptions used as at the end of the reporting period are as follows: Biro Pusat Aktuaria Discount rate (%) (%) Expected rate of salary increases (%) (%) A quantitative sensitivity analysis for significant assumptions as at 31 March 2014 is shown below: Increase in rate Increase/ (decrease) in net defined benefit obligation Decrease in rate Increase/ (decrease) in net defined benefit obligation % % Discount rate 1 (475) Future salary increase (237) The sensitivity analysis above has been determined based on a method that extrapolates the impact on net defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period.

89 Annual Report PENSION SCHEME OBLIGATION (Continued) The total expenses recognised in the consolidated income statement in respect of the plan is as follows: (restated) Current service cost 1,235 1,811 Interest cost Net benefit expenses 1,363 1,849 Recognised in cost of sales 1,161 1,508 Recognised in administrative expenses ,363 1,849 The movements in the present value of the defined benefit obligations are as follows: (restated) At 1 April 2, Current service cost 1,235 1,811 Interest cost Actuarial losses/(gains) / (1,130) 169 Exchange differences (386) 29 At 31 March 2,425 2,578

90 116 Eagle Nice (International) Holdings Limited 26. PENSION SCHEME OBLIGATION (Continued) The movements in the defined benefit obligations and the fair value of plan assets are as follows: Pension cost charged to profit or loss Remeasurement (gains)/losses in other comprehensive income Actuarial 1 April 2013 Service cost Net interest Sub-total included in profit or loss changes arising from changes in financial assumptions Experience adjustments Sub-total included in other comprehensive income Exchange differences 31 March 2014 HK 000 Defined benefit obligations 2,578 1, ,363 (1,001) (129) (1,130) (386) 2, Pension cost charged to profit or loss Remeasurement (gains)/losses in other comprehensive income Actuarial 1 April 2012 Service cost Net interest Sub-total included in profit or loss changes arising from changes in financial assumptions Experience adjustments Sub-total included in other comprehensive income Exchange differences 31 March 2013 HK 000 (restated) (restated) (restated) (restated) (restated) (restated) (restated) (restated) (restated) Defined benefit obligations 531 1, , ,578

91 Annual Report PENSION SCHEME OBLIGATION (Continued) The major categories of the fair value of the total plan assets are as follows: Equity instruments N/A N/A Debt instruments N/A N/A Property N/A N/A Expected contributions to be made in the future years out of the defined benefit obligations are as follows: Within the next 12 months Between 2 and 5 years 2 5 Between 5 and 10 years Over 10 years , ,258 Total expected payments 510, ,490 The average duration of the defined benefit obligation at the end of the reporting period is years (2013: years)

92 118 Eagle Nice (International) Holdings Limited 27. DEFERRED TAX LIABILITIES Group 27. Accelerated tax depreciation Asset revaluation Withholding taxes on undistributed profits on PRC subsidiaries Total At 1 April 2012 As previously reported ,764 10,845 35,119 Prior year adjustment (note 2.2(ii)) 2.2(ii) (14,058) (14,058) As restated 510 9,706 10,845 21,061 Deferred tax credited to the consolidated income statement during the year (Note 10) (restated) 10 (2,191) (2,191) Withholding tax on repatriation on earnings from subsidiaries in the PRC (4,920) (4,920) At 31 March 2013 (restated) 510 9,706 3,734 13,950 Accelerated tax depreciation Asset revaluation Withholding taxes on undistributed profits on PRC subsidiaries Total At 1 April 2013 As previously reported ,427 3,734 52,671 Prior year adjustment (note 2.2(ii)) 2.2(ii) (38,721) (38,721) As restated 510 9,706 3,734 13,950 Deferred tax charged/(credited) to the consolidated income statement during the year 10 (Note 10) (330) Exchange realignment At 31 March ,817 4,577 14,574

93 Annual Report DEFERRED TAX LIABILITIES (Continued) Pursuant to the PRC Tax Law, a 10% withholding tax is levied on dividends declared to foreign investors from the foreign investment enterprises established in Mainland China. The requirement is effective from 1 January 2008 and applies to earnings accrued after 31 December A lower withholding tax rate may be applied if there is a tax treaty between Mainland China and the jurisdiction of the foreign investors. For the Group, the applicable rates is 5%. In estimating the withholding taxes on dividends expected to be distributed by those subsidiaries established in Mainland China in respect of earnings generated from 1 January 2008, the directors have made assessment based on the factors which included dividend policy and the level of capital and working capital required for the Group s operations in the foreseeable future % 5% At 31 March 2014, there were no significant unrecognised deferred tax liabilities (2013: Nil) for withholding taxes that would be payable on the unremitted earnings of the Company s subsidiaries expected to be distributed, after considering the above mentioned factors, in the foreseeable future. The Group has tax losses arising in Hong Kong of HK$55,000 (2013: HK$55,000) that are available indefinitely for offsetting against future taxable profits of the company in which the tax losses arose. The Group has estimated tax losses arising in Mainland China and Indonesia of HK$119,890,000 (2013: HK$91,988,000) and HK$41,076,000 (2013: HK$33,549,000 (restated)), respectively, that will expire in five years for offsetting against future taxable profits. Deferred tax assets have not been recognised in respect of those losses as the directors consider that it is uncertain whether sufficient taxable profits will be available against which the tax losses can be utilised. There are no income tax consequences attaching to the payment of dividends by the Company to its shareholders. 55,000 55, ,890,000 91,988,000 41,076,000 33,549,000

94 120 Eagle Nice (International) Holdings Limited 28. ISSUED CAPITAL 28. Company Authorised: 10,000,000,000 ordinary shares of HK$0.01 each 10,000,000, , ,000 Issued and fully paid: 499,680,000 ordinary shares of HK$0.01 each 499,680, ,997 4, SHARE OPTION SCHEME The Company operated a share option scheme (the Scheme ) for the purpose of providing incentives and rewards to eligible participants who contribute to the success of the Group s operations. Eligible participants of the Scheme include the Company s directors, including independent non-executive directors, other employees of the Group, suppliers of goods or services to the Group and customers of the Group. The Scheme became effective on 6 August 2003 and, unless otherwise cancelled or amended, will remain in force for 10 years from that date. The maximum number of unexercised share options currently permitted to be granted under the Scheme is an amount equivalent, upon their exercise, to 10% of the shares of the Company in issue at any time. The maximum number of shares issuable under share options to each eligible participant in the Scheme within any 12-month period is limited to 1% of the shares of the Company in issue at any time. Any further grant of share options in excess of this limit is subject to shareholders approval in a general meeting. Share options granted to a director, chief executive or substantial shareholder of the Company, or to any of their associates, are subject to independent non-executive directors approval in advance. In addition, any share options granted to a substantial shareholder or an independent non-executive director of the Company, or to any of their associates, in excess of 0.1% of the shares of the Company in issue at any time or with an aggregate value (based on the price of the Company s shares at the date of the grant) in excess of HK$5 million, within any 12-month period, are subject to shareholders approval in advance in a general meeting % 1% 0.1% 5,000,000

95 Annual Report SHARE OPTION SCHEME (Continued) The offer of a grant of share options may be accepted within 21 days from the date of the offer upon payment of a nominal consideration of HK$1 in total by the grantee. The exercise period of the share options granted is determinable by the directors, and commences after a certain vesting period and ends on a date which is not later than five years from date of the offer of the share options or the expiry date of the Scheme, if earlier The exercise price of the share options is determinable by the directors, but may not be less than the highest of (i) the closing price of the Company s shares on The Stock Exchange of Hong Kong Limited (the Stock Exchange ) on the date of the offer of the share options; (ii) the average closing price of the Company s shares on the Stock Exchange for the five trading days immediately preceding the date of the offer; and (iii) the nominal value of the Company s shares. (i) (ii) (iii) No share options had been granted under the Scheme as at 31 March The Scheme expired on 5 August Share options do not confer rights on the holders to dividends or to vote at shareholders meetings. 30. RESERVES Group The amounts of the Group s reserves and the movements therein for the current and prior years are presented in the consolidated statement of changes in equity of the financial statements. The capital reserve of the Group represents the difference between the aggregate of the nominal value of the share capitals of the subsidiaries acquired by the Company pursuant to a group reorganisation (the Reorganisation ) in August 2003, and the nominal value of the share capital of the Company issued in exchange therefor and the existing 1,000,000 shares of HK$0.01 each credited as fully paid, at par ,000, In accordance with the relevant PRC regulations, subsidiaries registered in the PRC are required to transfer 10% of their profits after tax, as determined under the PRC accounting regulations, to the statutory surplus reserve, until the balance of the reserve reaches 50% of their respective registered capitals. Subject to certain restrictions as set out in the relevant PRC regulations, the statutory surplus reserve may be used to offset against accumulated losses. 10% 50%

96 122 Eagle Nice (International) Holdings Limited 30. RESERVES (Continued) Company 30. Notes Share premium account Capital reserve Retained profits Total At 1 April 2012 Profit and total comprehensive income for the year Final 2012 dividend Interim 2013 dividend At 31 March 2013 and 1 April 2013 Profit and total comprehensive income for the year Final 2013 dividend Interim 2014 dividend At 31 March ,586 43,088 47, , ,729* 179, (34,978) (34,978) 12 (34,978) (34,978) 472,586 43, , , ,172* 1, (19,987) (19,987) 12 (19,987) (19,987) 472,586 43, , ,974 * The profit of HK$1,172,000 (2013: HK$179,729,000) for the year ended 31 March 2014 included interest income from a subsidiary of HK$4,382,000 (2013: dividend income of HK$180,000,000 and interest income from a subsidiary of HK$5,112,000). * 1,172,000179,729,000 4,382, ,000,000 5,112,000 The capital reserve of the Company represents the excess of the then consolidated net assets of the subsidiaries acquired by the Company pursuant to the Reorganisation over the nominal value of the share capital of the Company issued in exchange thereof. Under the Companies Law of the Cayman Islands, the capital reserve may be distributed to the shareholders of the Company, provided that immediately following the date on which the dividend is proposed to be distributed, the Company will be in a position to pay off its debts as and when they fall due in the ordinary course of business.

97 Annual Report NOTE TO THE CONSOLIDATED STATEMENT OF CASH FLOWS Major non-cash transaction Save as disclosed elsewhere in the financial statements, the Group had the following major non-cash transaction: During the year ended 31 March 2013, deposits for property, plant and equipment of HK$10,679,000 were transferred to property, plant and equipment upon acceptance by and delivery to the Group ,679, CONTINGENT LIABILITIES The Group did not have any significant contingent liabilities not provided for at the end of the reporting period (2013: Nil). As at 31 March 2014, the Company and a subsidiary of the Company has given corporate guarantees to banks to the extent of HK$368,000,000 (2013: HK$316,000,000) for banking facilities granted to certain subsidiaries of the Company, which were utilised to the extent of approximately HK$122,396,000 (2013: HK$155,966,000) at the end of the reporting period (Note 23) ,000,000316,000, ,396,000155,966, OPERATING LEASE ARRANGEMENTS The Group leased certain of its office, factories and staff quarters under operating lease arrangements, with leases negotiated for terms ranging from one to two years. At the end of the reporting period, the Group had total future minimum lease payments under non-cancellable operating leases falling due as follows: Within one year 3,470 In the second to fifth years, inclusive 3,470 The Company did not have any operating lease commitments at the end of the reporting period (2013: Nil).

98 124 Eagle Nice (International) Holdings Limited 34. COMMITMENTS In addition to the operating lease commitments detailed in note 33 above, the Group had the following capital commitments at the end of the reporting period: Contracted, but not provided for: Construction of factories and purchases of machinery and equipment for the Jiangxi Project 122 2,091 Renovation of factories for the investment project in Indonesia (the Indonesia Project ) 2,120 1,529 Purchases of items of property, plant and equipment 101 1,206 Renovation of factories 58 1,724 2,401 6,550 Authorised, but not contracted for: Investment in the Jiangxi Project 38,610 38,610 Investment in the Indonesia Project 7,811 46,421 38,610 The Company did not have any other significant commitments at the end of the reporting period (2013: Nil). 35. RELATED PARTY TRANSACTIONS The directors are the key management personnel of the Group. Details of their remuneration are disclosed in note 8 to the financial statements FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The Group s principal financial instruments comprise interest-bearing bank borrowings and cash and cash equivalents. The main purpose of these financial instruments is to raise finance for the Group s operations. The Group has various other financial assets and liabilities such as accounts and bills receivables, other receivables, accounts and bills payables, accrued liabilities and other payables, which arise directly from its operations. The main risks arising from the Group s financial instruments are interest rate risk, foreign currency risk, liquidity risk and credit risk. The board of directors reviews and agrees policies for managing each of these risks and they are summarised below. 36.

99 Annual Report FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued) Interest rate risk The Group s exposure to the risk of changes in market interest rates relates primarily to the Group s interest-bearing bank borrowings with floating interest rates. The Group regularly reviews and monitors the floating interest rate borrowings in order to manage its interest rate risk. The interestbearing bank borrowings, and cash and cash equivalents are stated at amortised cost and not revalued on a periodic basis. Floating rate interest income and expenses are credited/charged to the income statement as earned/incurred. 36. The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held constant, of the Group s net profit (through the impact on floating rate borrowings). Group Increase in interest rate (basis points) Decrease in net profit , ,876 Company Increase in interest rate (basis points) Decrease in net profit , ,340

100 126 Eagle Nice (International) Holdings Limited 36. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued) Foreign currency risk The Group has transactional currency exposures. Such exposures arise from a substantial portion of sales or purchases by operating units in United States Dollars ( US$ ) and RMB. As the foreign currency risks arising from the sales and purchases can be set off with each other given that the Hong Kong dollars are pegged to US$, the Group believes its exposure to exchange rate risk is minimal. It is the policy of the Group to continue maintaining the balance of its sales and purchases in the same currency. However, as the functional currency of the PRC subsidiaries are RMB and the Group s financial statements are reported in Hong Kong dollars, there will be a translation credit/ (debit) to the exchange fluctuation reserve as a result of RMB appreciation/(depreciation). The majority of the Group s operating assets are located in Mainland China and denominated in RMB. 36. The Group currently does not have a foreign currency hedging policy. However, management monitors the foreign exchange exposures and will consider hedging the significant foreign currency exposures should the need arise. The following table demonstrates the sensitivity at the end of the reporting period to a reasonably possible change in the RMB exchange rate, with all other variables held constant, of the Group s net profit (due to changes in the fair value of monetary assets and liabilities). Increase/ (decrease) in exchange rate Increase/ (decrease) in net profit 2014 If HK$ weakens against RMB 5% 1,729 If HK$ strengthens against RMB (5%) (1,729) 2013 If HK$ weakens against RMB 5% 640 If HK$ strengthens against RMB (5%) (640)

101 Annual Report FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued) Liquidity risk The Group monitors its risk to a shortage of funds using a recurring liquidity planning tool. This tool considers the maturity of both its financial instruments and financial assets (e.g., accounts and bills receivables) and the projected cash flows from operations. The Group maintains a balance between continuity of funding and flexibility through the use of interest-bearing bank borrowings and other banking facilities. The directors have reviewed the Group s working capital and capital expenditure requirements and determined that the Group has no significant liquidity risk. The maturity profile of the Group s financial liabilities as at the end of the reporting period, based on the contractual undiscounted payments, was less than one year. 36. The loan agreements contain repayment on-demand clauses giving the banks the unconditional right to call in the loans at any time and therefore, the bank borrowings are classified as on demand. Notwithstanding the above clause, the directors do not believe that the loans will be called in its entirety within 12 months, and they consider that the loans will be repaid in accordance with the maturity dates as set out in the loan agreements. This evaluation was made considering: the financial position of the Group and the Company at the date of approval of the financial statements; the Group s and the Company s compliance with the loan covenants; the lack of events of default, and the fact that the Group and the Company have made all previously scheduled repayments on time. 12 The maturity profile of the Group s interest-bearing bank borrowings as at the end of the reporting period, based on the contractual undiscounted payments, was as follows: Group Company Analysed into: Within one year 149, ,486 41,480 42,187 In the second year 199,422 34, ,215 3,078 In the third to fourth years, inclusive 217, , , , , ,420

102 128 Eagle Nice (International) Holdings Limited 36. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued) Credit risk The Group trades only with recognised and creditworthy third parties. It is the Group s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis. 36. Since the Group trades only with recognised and creditworthy third parties, there is generally no requirement for collateral. The credit risk of the Group s other financial assets, which comprise cash and cash equivalents, deposits and other receivables and accounts and bills receivables, arises from default of the counterparty, with a maximum exposure equal to the carrying amounts of these instruments. Capital management The primary objectives of the Group s capital management are to safeguard the Group s ability to continue as a going concern and to maintain healthy capital ratios in order to support its business and maximise shareholders value. The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes for managing capital during the years ended 31 March 2014 and The Group monitors capital using a current ratio, which is total current assets divided by total current liabilities. The Group s policy is to keep the current ratio above COMPARATIVE AMOUNTS As further explained in note 2.2 to the financial statements, due to the adoption of new and revised HKFRSs during the current year and the reasons as detailed in note 2.2(ii), the accounting treatment and presentation of certain items and balances in the financial statements have been revised. Accordingly, certain prior year adjustments have been made and certain comparative amounts have been reclassified and restated to conform to the current year s presentation and accounting treatment (ii) 38. APPROVAL OF THE FINANCIAL STATEMENTS The financial statements were approved and authorised for issue by the board of directors of the Company on 27 June

103 Eagle Nice (International) Holdings Limited * (Incorporated in the Cayman Islands with limited liability) Units & th Floor, Tower B Regent Centre 70 Ta Chuen Ping Street Kwai Chung New Territories Hong Kong 70 B *