11 837 Ar

CONTENTS
Page
1 Contents
2 Corporate Information
3 Financial Highlights
4 Chairman’s Statement
6 Management Discussion and Analysis
20 Biography of Directors and Senior Management
25 Corporate Governance Report
31 Report of the Directors
39 Independent Auditor’s Report
41 Consolidated Income Statement
42 Consolidated Statement of Comprehensive Income
43 Consolidated Statement of Financial Position
45 Statement of Financial Position
46 Consolidated Statement of Changes in Equity
47 Consolidated Statement of Cash Flows
49 Notes to the Financial Statements
104 Financial Summary

CORPORATE INFORMATION
EXECUTIVE DIRECTORS PRINCIPAL PLACE OF BUSINESS

Mr. Tan Chuan Hua (Chairman) IN HONG KONG
Mr. Geng Chang Sheng Room 1009, 10/F
Mr. Tan Di Fu Nan Fung Commercial Centre
19 Lam Lok Street
NON-EXECUTIVE DIRECTORS Kowloon Bay, Kowloon
Mr. Tan Cao Hong Kong
Mr. Liu Chang
PRINCIPAL SHARE REGISTRAR AND
INDEPENDENT NON-EXECUTIVE DIRECTORS
TRANSFER OFFICE
Madam Du Xin Li
Butterfield Fulcrum Group (Cayman) Limited
Mr. Yu Ming Yang
Butterfield House
Mr. Chau Kam Wing, Donald
68 Fort Street
P.O. Box 609
MEMBERS OF THE AUDIT COMMITTEE
Grand Cayman KY1-1107
Mr. Chau Kam Wing, Donald (Chairman)
Cayman Islands
Madam Du Xin Li
Mr. Yu Ming Yang
HONG KONG BRANCH SHARE REGISTRAR
MEMBERS OF THE REMUNERATION COMMITTEE AND TRANSFER OFFICE
Mr. Chau Kam Wing, Donald (Chairman) Tricor Investor Services Limited
Madam Du Xin Li 26/F., Tesbury Centre
Mr. Yu Ming Yang 28 Queen’s Road East
Wanchai
MEMBERS OF THE NOMINATION COMMITTEE Hong Kong
Mr. Chau Kam Wing, Donald (Chairman)
Madam Du Xin Li PRINCIPAL BANKERS
Mr. Yu Ming Yang China Construction Bank
No. 14 Datong Street
COMPANY SECRETARY Yuzhong District, Chongqing
Mr. Chan Hon Wan CPA The PRC
AUTHORISED REPRESENTATIVES Agricultural Bank of China

Mr. Geng Chang Sheng Wanzhou Fen Hang Ying Ye Bu
Mr. Chan Hon Wan CPA 222 Taibai Road
Wanzhou, Chongqing
REGISTERED OFFICE The PRC
Cricket Square
Hutchins Drive AUDITOR
PO Box 2681 CCIF CPA Limited
Grand Cayman KY1-1111 34/F, The Lee Gardens
Cayman Islands 33 Hysan Avenue, Causeway Bay
Hong Kong
HEADQUARTERS
43rd Floor STOCK CODE
Future International Building 837
Guanyinqiao
Jiangbei District COMPANY WEBSITE
Chongqing www.ctans.com
The PRC
2 Carpenter Tan Holdings Limited Annual Report 2011

FINANCIAL HIGHLIGHTS
For the year ended 31 December % of

2011 2010 Increase/
RMB’000 RMB’000 (decrease)
Financial Highlights
Turnover 244,001 189,418 28.8%
Cost of sales (77,091) (69,240) 11.3%
Gross profit 166,910 120,178 38.9%
Profit before taxation 131,358 85,592 53.5%
Profit attributable to owners 93,570 66,124 41.5%
Basic earnings per share (RMB cents) 37 26 42.3%
Proposed final dividend per share (HK cents) 22.97 15.71 46.2%
Liquidity and Gearing

Current ratio(1) 8.12 9.39 (13.5)%
Quick ratio(2) 6.58 7.35 (10.5)%
(3)
Gearing ratio N/A N/A N/A
Notes:
(1) Current ratio is calculated as current assets divided by current liabilities.
(2) Quick ratio is calculated as current assets less inventories divided by current liabilities.
(3) Gearing ratio is calculated as interest-bearing bank borrowings divided by shareholders’ fund.
Annual Report 2011 Carpenter Tan Holdings Limited 3

CHAIRMAN’S STATEMENT
Dear Shareholders,
I, on behalf of the board of directors (the “Board”), am pleased to present this annual report of Carpenter Tan Holdings
Limited (the “Company”) and its subsidiaries (the “Group”) for the year ended 31 December 2011 (the “Year”) to the
shareholders for their review.
In 2011, the Group recorded steady and encouraging results. In spite of the combined effects of global financial crisis
and macro-economic control in the PRC, the GDP for the Year increased by 9.2% as compared to the corresponding
period of the previous year. A stable and rational growth has maintained. In 2011, the total retail sales of consumer
goods reached RMB18,122.6 billion, representing an increase of 17.1% as compared to the corresponding period of
the previous year. This reflected that the domestic demand for consumer goods had remained strong, forming a favourable
circumstance for the business growth of the Group. The Group seized the market opportunities brought from the strong
domestic demand by developing different types of shops and electronic sales, improving the management of its information
systems, enhancing its operational efficiency and optimizing its brand establishment. As such, the Group recorded a
historical growth in its business development and financial results.
HISTORICAL GROWTH IN OPERATING RESULTS

During the year under review, due to its sound business development strategies and effective implementation, the
Group recorded turnover of approximately RMB244.0 million for the year ended 31 December 2011, representing an
increase of 28.8% as compared to the corresponding period of the previous year. Of which, turnover of combs was
approximately RMB68.5 million, accounting for 28.1% of total turnover of the Group, turnover of box sets was approximately
RMB159.7 million, accounting for 65.4% of total turnover of the Group, while turnover of mirrors was approximately
RMB2.1 million, accounting for 0.9% of total turnover of the Group. Profit attributable to shareholders was approximately
RMB93.6 million, representing an increase of 41.6% as compared to the corresponding period of the previous year. The
overall gross profit margin increased to 68.4%. Basic earnings per share was RMB37 cents, representing an increase
of 42.3% as compared to the corresponding period of the previous year. the Board believes that the outstanding results
were attributable to the long term support from our shareholders. In order to express its gratitude for the support of our
shareholders, the Board has recommended the payment of a final dividend of HK$22.97 cents per share for the financial
year ended 31 December 2011, representing a total payout ratio of 50% of the profit for the year or 62% of the distributable
profit of the Company (after deducting the non-distributable statutory reserve of RMB18.3 million for the year ended 31
December 2011). The Board believes that the strong financial position and cash flow of the Group are sufficient to
support the long term development of the Company.
RAPID GROWTH OF SALES NETWORK

In 2011, the acceleration of urbanization and the continuous increase of per capita income in the PRC laid a solid
foundation for the Group to rapidly expand its markets and increase its market shares. The Group implemented a
diversified development strategy of sales network. Localized development strategies were adopted in different cities
according to the local situation. In the municipalities directly under the Central Government and provincial capitals, the
Group adopted a development strategy of diversifying marketing channel and expanding the sales network in store-in-
stores such as shops in shopping malls, to extend the distribution network of its franchise shops and to enhance its
brand recognition in first tier cities. In prefecture-level cities and county-level cities, the Group proactively encouraged its
existing franchise shop owners to establish new franchise shops so as to enhance the Group’s brand recognition in
second and third tier cities. Under its efficient management, the number of franchise shops of the Group increased to
1,315 as at 31 December 2011, of which 315 were new shops. Our franchise shops have spanned various affluence
cities with strong growth.
The Group has also strived to expand international market and promote the Chinese traditional handicraft overseas. As
at 31 December 2011, the international markets of the Group included Singapore, South Korea, Japan, Malaysia,
United States, Germany, United Kingdom, Australia and Canada. The number of self-operated retail shops in Hong
Kong increased to seven.

CHAIRMAN’S STATEMENT
EXPANSION OF SALES NETWORK
In respect of the sales network, the Group devoted to develop the store-in-stores market
and successfully and systemically opened store-in-stores in shopping malls, large
supermarkets and department stores during the Year. In order to encourage the owners of
existing franchise shops to set up new store-in-stores, the Group has implemented a
supporting policy which also attracted many quality new entrants.
In respect of the development of modern shops, the Group strategically set up modern
shops in economic developed municipalities directly under the Central Government and
core business zones in provincial capitals, such as Beijing, Shanghai, Guangzhou,
Shenzhen, Tianjin, Nanjing, Suzhou, Wuhan and Shenyang, in 2011, so as to increase
the popularity of the “Carpenter Tan” brandname and facilitate its band establishment.
IMPROVEMENT OF MANAGEMENT
During the Year, the Group devoted to accelerate the construction of information systems.
By optimizing sales systems and service systems of franchise shops, installing information
technology equipment, streamlining ISO management and staff performance assessment
system, the Group has enhanced the management of its franchise shops.
In addition, in order catch up the rapid growth of the e-business market in the PRC, the
Group made a breakthrough in the management of online sales in 2011. The Group set
up an e-business team to explore the huge potential of e-business market. With its effective
assistance in various aspects including product improvement, logistics, services, promotion
and marketing, the Group recorded a historical growth in its online sales. During the Year,
the Group was selected as “the model enterprise in international e-commerce in Chongqing”
by Chongqing Foreign Trade and Economic Relations Commission, demonstrating that
the “Carpenter Tan” brand has successfully entered into such new channel of sales.
OUTLOOK
With the increasing urban per capita income in the PRC, the potential customers of the
Group have expanded. As a well known brand in small wooden products, Carpenter Tan
will devote to develop more market initiatives. In the coming year, the Group will continue
to focus on the market expansion and streamlined management of franchise shops, and
will fur ther increase its domestic market share and its coverage in overseas markets.
Since Carpenter Tan is based on the traditional culture of China, the Group will follow its
objective of promoting Chinese culture and commit to develop “Carpenter Tan” as an
international well known brand.
The achievements of the Group in 2011 were attributable to the dedications of its staff. I
would like to take this opportunity to express my sincere gratitude to all members of the
Board, senior management and all staff. Besides, I would also like to express my gratitude
to the continuous support of all of the shareholders and customers. Under the guidance of
our experienced management, “Carpenter Tan” will become the world’s top brand of wooden
combs. We believe that the Group will maintain its outstanding results and strive for better
returns for all shareholders and investors.
Tan Chuan Hua

Chairman and Chief Executive Officer
Hong Kong, 28 March 2012

MANAGEMENT DISCUSSION AND ANALYSIS
MARKET REVIEW
The global economy was in turmoil in 2011. The global financial crisis triggered by the Greek debt crisis resulted in a
drop of the sovereign ratings for many European countries and the continuous depreciation of US Dollar. The global
economy was unstable and experienced a slow growth. As the economic growth of China slowed down in the second
half of 2011, aiming to maintain the sustainable and sound economic growth, the Chinese government carried out
various austerity measures regarding the reserve requirement and consumption tax as well as the control of overheating
property prices and rising costs in 2011 to tackle external challenges and stimulate domestic demand and thus domestic
consumption. Under the guidance of the Chinese government, Chinese economy maintained its steady growth and the
GDP of China in 2011 increased rapidly by 9.2% over the corresponding period of the previous year, which highest
among the major economies of the world.
Attributable to the rapid growth of retailing and the increasing demand for consumptions, the Group recorded a rapid
growth in the year. The potential opportunities brought by the huge demand in domestic market enhanced the competitive
advantages of the Group in the industry and major markets in 2011. In the year, the Group established a comprehensive
information system to expand its distribution network and refined the sales process system, sales service system and
management process of its franchised outlets. In the face of ever-changing business environment, the Group adhered
to its prudent and positive attitude. Thanks to the efforts of the experienced and efficient senior management, we
achieved remarkable results.

BUSINESS REVIEW
1. Retail outlets
The Group has developed an extensive retail and distribution network mainly by operating the franchise programme
in the PRC and abroad. In addition, the Group has also established directly-operated retail shops in Hong Kong. As
at 31 December 2011, the Group had 1,332 retail outlets, representing a net increase of 239 shops during the year
under review. The following table sets out the number of the Group’s franchised outlets and directly-operated retail
outlets:
No. of shops
For the year ended 31 December
2011 2010
Directly- Directly-
Franchise operated Franchise operated
shops outlets shops outlets
Hong Kong 0 7 0 4
PRC 1,315 0 1,082 0
Other countries and regions 10 0 7 0
Total 1,325 7 1,089 4
2. Sales network
The PRC Market
The number of the Group’s franchise shops in 2011 increased steadily. As at 31 December 2011, the Group had
1,315 franchise shops in PRC, representing an increase of 315 new shops, after deducting the closure of 82 old
shops, there was a net increase of 233 shops as compared with the previous year. The franchise shops have a
wide geographical coverage spanning 30 provinces.
The Group put efforts in establishing modern shops in first tier cities and coastal cities. The Group has established
a total of 71 shops in the year (2010: 33 shops) with a total area of approximately 1,500 square meters in the core
urban commercial areas of major cities, including Beijing, Tianjin, Shanghai, Shenzhen, Kunming, Guangzhou,
Wuhan, Changsha and Chongqing.


As part of its strategies for sales network expansion, the Group adopted specific development strategies in different
cities in China according to the local development situation. In the municipalities directly under the Central
Government and provincial capitals, the Group expanded the sales network in store-in-stores such as shops in
shopping malls, to further expand its distribution network and enhance its brand recognition. In prefecture-level
cities and county-level cities, the Group proactively encouraged its existing franchise shop owners to establish new
franchise shops so as to enhance the Group’s brand recognition in the second and third tier cities.
Through implementing diversified development strategies, the Group introduced and launched innovative sales
model. In response to the rapid development of e-commerce market in China, the Group established e-commerce
team in the year to strengthen the brand building of Carpenter Tan, logistics services, advertisement and products
promotion. The Group achieved a breakthrough in the growth of network sales. The establishment of e-commerce
team represented the innovation of a new sales model and removed the geographical sales barriers, and the
franchise shops developed in line with the network sales.
Overseas market
As the business scale kept growing, the Group established more overseas sales outlets in the year. As at 31
December 2011, the Group established 17 sales outlets in overseas markets, including 7 directly-operated outlets
in Hong Kong, 10 franchise shops including 3 in Singapore, 1 in Malaysia, 1 in Korea, 4 in the United States and 1
in Japan. In addition, the Group expanded its businesses by conducting sales through authorized and general
distribution agency. The products under the brand name “Carpenter Tan” were sold in various overseas countries,
including Germany, Britain, Australia, the United States, Canada and Taiwan.
3. Sales management
The Group has placed emphasis on the update and management of its marketing systems to enhance the
management of franchise shops. In the year, the Group refined its Point of Sale (“POS”) system and conducted
random checks of the POS data uploaded and inventory of franchise shops from time to time. Furthermore, market
researchers of the Group supervised the upload process of franchise shops to ensure a smooth upload. The
adoption of information technology in management enhanced the transparency of franchise shops, facilitating the
management to keep informed of and promptly respond to the market information. It also improved the communication
between the Group and its franchise shops, and the efficiency of employees and management effectiveness were
enhanced.
In order to further refine the operating mechanism of its franchise shops, provincial managers and market supervisors
arranged site inspection for the operations of franchise shops monthly in strict compliance with the ISO Management
Manual and rectified problems timely to ensure the smooth operation of sales system. In addition, the Group
organized online test for employees every month to understand the operation of franchise shops and mobility of
employees timely.

4. Products design and development
The Group has established a strong design and development team comprising staff with extensive experience and
expertise in colouring, inlaying, packaging, product design and graphic design for diversifying product development.
The Group also invited external outstanding designers participating in product design to improve the products
development capacity.
As at 31 December 2011, the Group has launched 621 products, comprising 246 box sets, 228 lockets, 28 mirrors,
85 accessories and 34 limited editions. In 2011, the Group launched 124 new products, comprising 71 box sets, 17
lockets, 15 accessories and 21 limited editions.
The Group has established a technology centre in Wanzhou, which is responsible to study on the stabilisation and
maintenance technology of wood. The Group’s technology centre was granted the status of “Municipal Technology
Centre” designated by Chongqing Municipal Government in 2005. The achievements, honour and research progress
of the Centre were as follows:
• Quality of 5 types of woods was standardized and the product quality was further improved. Number of goods
returned due to poor product quality decreased and cost efficiency improved. Currently, the Group is undergoing
environmental experiment and market experiment for this project with satisfactory progress. All technical
requirement has been fulfilled.
• Functions of the fast growing materials were improved, aiming to replace the materials used by the Group
currently by sustainable materials in order to protect the environment and fulfill the Group’s social responsibility
while expanding business.

• The Group carried out research on and conducted experiments for mildew proof and insect proof technologies
in order to safeguard the inventory and values of its materials. The Group has passed the small batch tests
and will proceed to batch inspections and trial application.
The Group has placed emphasis on the research and development of new products. In the year, the Group carried
out research and development in the following 6 aspects:
• Overall development: Aiming at launching 150 new products and developing two new materials in 2012 for
the promotion of new product design, the Group would formulate plans and make adjustments for the long-
term development of products and packages.
• Theme design: Targeting on developing 5 theme products in 2012, the Group would design new themes for
the future product series.
• Product series refinement: The Group would refine its products and replace products with unsatisfactory
sales according to the analysis of product series.
• Annual design: The Group would design its products with annual or festival features.
• Personalized design: The Group would launch conventional products and innovative products developed by
the designer.
• Market-oriented design: The Group would design products according to market demand and the development
of new technologies in addition to the production plan.

5. Production capacity
The production plant of the Group located in Wanzhou, which mainly produces combs and mirrors, is expected to
be able to support the sales of combs and mirrors in the foreseeable future.
Actual Production (Pieces)

2011 2010
Combs 4,058,200 4,024,900

Mirrors 783,700 664,800
Total 4,841,900 4,689,700
6. Marketing and promotion
The Group adopted proactive marketing and promotion strategies to maintain and enhance its brand recognition.
In the year, the promotion and advertisement activities organized by the Group were mainly held in festivals and
through media.
In the year, the Group placed soft advertisements in “Healthy Lifestyle”（健康生活）

, a lifestyle channel broadcasted
in Beijing, to spread the message of healthy combing among consumers. Such advertisements were welcomed by
franchise shops. In addition, the Group also educated consumers that combing hair is a healthy life-style through
publishing articles in the internet, key word search of search engines, popular presses, online media and blogs.
Furthermore, the Group promoted its products through organizing promotion activities in conventional festivals. In
the year, the Group organized “the history of Carpenter Tan”（譚木匠品牌之路）, a 3-day training camp, in the
head office. The training camp attracted 20 trainees from 10 enterprises in China. The objectives of the training
camp were to promote the corporate culture and concept of the Group through visiting, studying, training and
exchanging activities.
By publishing internal magazine “Carpenter Tan”（譚木匠）, leaflet “Wood to Integrity”（以木立信）and comic

about maintaining a healthy life by combing hair and scraping, the brand image was further enhanced.
7. Awards and accreditation
In the year, the Group ranked 30th among “the Top 100 Innovative Enterprises in China” organized by “Innovative
Enterprises Summit Forum in 2011”（2011 年中國微創新高峰論壇中國企業微創新 100 榜）and was granted the
Cer tificate of Environmental Management System and the Certificate of Occupational Health and Safety
Management System. In addition, the Group also became the “International E-commerce Demonstration Enterprise
of Chongqing”（重慶市國際電子商務示範企業）and was named as “Chongqing Famous Brand” again.

FINANCIAL REVIEW
1. Turnover
The Group recorded turnover of approximately RMB244.0 million for the year ended 31 December 2011, representing
a growth of RMB54.6 million or 28.8% as compared to that of approximately RMB189.4 million of last year. The
growth was attributable to the enhanced competitiveness by grasping opportunities in the recovery of the China
economy, which resulted in an increase in the number of franchise shops and purchase of products. As at 31
December 2011, the Group had 1,325 franchise shops and 7 directly-operated outlets respectively while as at 31
December 2010, the Group had 1,089 franchise shops and 4 directly-operated outlets respectively. The franchise
fee income was approximately RMB1.7 million which was close to that of approximately RMB1.5 million of last
year.

2011 2010
(RMB ’000) % (RMB ’000) %
Sales
– Combs 68,518 28.1 57,207 30.2
– Mirrors 2,062 0.9 1,930 1.0
– Box sets 159,670 65.4 117,660 62.1
– Other accessories* 12,006 4.9 11,135 5.9
Franchise fee income 1,745 0.7 1,486 0.8
Total 244,001 100.0 189,418 100.0
* Other accessories include small home accessories as well as furniture.
2. Cost of Sales
The cost of sales of the Group was approximately RMB77.1 million for the year ended 31 December 2011,
representing an increase of RMB7.9 million or 11.4% as compared to that of approximately RMB69.2 million of last
year, which was basically consistent with the growth of our turnover.
3. Gross Profit and Gross Profit Margin
As at 31 December 2011, gross profit of the Group was approximately RMB166.9 million, representing an increase
of RMB46.7 million or 38.9% as compared to that of approximately RMB120.2 million of last year. The gross profit
margin rose from 63.4% in 2010 to 68.4% in 2011. The increase in gross profit margin was mainly due to the
adjustment of sales mix of the Group and growing market demands for some products with a higher profit margin.
Besides, the Group has committed to develop innovative products with high added values and increased its
investments in promotion and marketing to strengthen its long term competitive edges.

4. Other Revenue and Other Net Income
Other revenue was approximately RMB20.4 million for the year ended 31 December 2011, representing a decrease
of RMB3.3 milion or 13.9% as compared to that of approximately RMB23.7 million of last year. Other revenue is
mainly comprised of PRC VAT refunds of approximately RMB12.6 million, rental income of approximately RMB2.6
million, interest income of approximately RMB2.3 million and fair value change of Investment property of RMB1.0
million respectively (2010 : PRC VAT refunds of approximately RMB12.0 million, rental income of approximately
RMB1.9 million, interest income of approximately RMB0.6 million and fair value change of investment property of
RMB7.2 million respectively).
5. Selling and Distribution Expenses
The selling and distribution expenses amounted to approximately RMB23.9 million for the year ended 31 December
2011, which was close to that of approximately RMB24.0 million in 2010. The selling and distribution expenses
mainly including advertising and market expansion expenses of RMB2.5 million, delivery charges of RMB3.2
million, rental expenses of RMB5.3 million, salaries and benefits of RMB6.3 million and travelling expenses of
RMB2.0 million respectively ( 2010 : advertising and market expansion expenses of RMB2.8 million, delivery
charges of RMB2.5 million, rental expenses of RMB6.9 million salaries and benefits of RMB5.6 million and travelling
expenses of RMB1.8 million respectively).
6. Administrative Expenses
The administrative expenses of the Group was approximately RMB24.7 million for the year ended 31 December
2011, representing a slight increase of RMB0.5 million or 2.1% as compared to that of approximately RMB24.2
million of last year. The administrative expenses is mainly comprised of salaries and benefits of RMB11.3 million,
legal and professional fee of RMB1.8 million, consultancy fee of RMB1.4 million, depreciation charges of RMB0.9
million and audit fee of RMB1.1 million respectively ( 2010 : salaries and benefits of RMB8.1 million, legal and
professional fee of RMB2.1 million, consultancy fee of RMB2.4 million, depreciation charges of RMB0.8 million
and audit fee of RMB0.9 million respectively).
7. Other Operating Expenses
Other operating expenses of the Group was approximately RMB7.3 million for the year ended 31 December 2011,
representing a decrease of RMB0.3 million or 3.9% as compared to that of approximately RMB7.6 million for the
year ended 31 December 2010. The decrease was primarily attributable to a decrease in loss on disposal of fixed
assets of RMB1.9 million which was partly off-set by the increase in sales and other tax as a result of the increase
in our Group’s turnover and operation.
8. Finance Costs
For the year ended 31 December 2011, finance costs amounted to approximately RMB0.1 million, decreased by
approximately RMB2.3 million or 95.8% when compared to approximately RMB2.4 million for the year ended 31
December 2010. The decrease was mainly due to the decrease in interest on bank borrowing as a result of the
decrease in the average bank borrowings. The average bank borrowings decreased from RMB25 million as at 31
December 2010 to nil as at 31 December 2011.

9. Income Tax
For the year ended 31 December 2011, income tax expenses for the Group amounted to approximately RMB37.8
million, increased by approximately RMB18.3 million or 93.8% when compared to approximately RMB19.5 million
for the year ended 31 December 2010. This increase was mainly due to an increase in profit before taxation and a
rise in the actual tax rate.
The effective tax rate for the year ended 31 December 2011 was 28.7% when compared to 22.7% for the year
ended 31 December 2010.
10. Profit for the Year
The Profit for the year ended 31 December 2011 was approximately RMB93.6 million, representing an increase of
RMB27.5 million or 41.6% as compared to that of approximately RMB66.1 million in 2010. The increase was
mainly due to the growth of our turnover as well as profit margin for the year under review.
ANALYSIS OF MAJOR BALANCE SHEET ITEMS
1. Property, Plant and Equipment
The Group’s property, plant and equipment consists of building, leasehold improvements, plant and machinery,
furniture and equipment, motor vehicles and construction in progress. As at 31 December 2011, the net book
value of property, plant and equipment amounted to approximately RMB32.5 million, representing a slight decrease
of RMB0.6 million or 1.8%, as compared with the previous year of approximately RMB33.1 million. The decrease
was mainly attributable to the depreciation charges of approximately RMB2.8 million for the year ended 31 December
2011.
2. Inventories
The Group’s inventories as at 31 December 2011 increased by approximately RMB7.5 million or 14.1% from
approximately RMB53.2 million as at 31 December 2010 to approximately RMB60.7 million as at 31 December
2011, primarily due to the stocking of raw materials for coming year’s production as the Group anticipated that
there would be an increase in sales demand in 2012.
3. Trade Receivables
Generally, franchisees are required to settle the payments for the products prior to delivery. The Group’s trade
receivables consist of credit sales of products to be paid by some of the Group’s franchisees who had better sales
performance. The Group’s trade receivables increased slightly by RMB0.1 million from RMB1.2 million as at
31December 2010 to RMB1.3 million as at 31 December 2011, increase in trade receivables was mainly due to
the increase in credit sales to some of the Group’s franchisees with whom the Group have long- term relationship.

4. Other Receivables, Deposits and Prepayments
The Group’s other receivables, deposits and prepayments decreased by approximately RMB0.8 million from
approximately RMB8.4 million as at 31 December 2010 to approximately RMB7.6 million as at 31 December 2011.
Decrease in other receivables, deposits and prepayments was mainly due to a decrease in other receivables of
approximately RMB0.7 million when compared to last year.
5. Trade Payables
As at 31 December 2011, the Group’s trade payables was approximately RMB2.0 million, representing a decrease
of approximately RMB1.0 million as compared with approximately RMB3.0 million as at 31 December 2010.
6. Other Payables and Accruals
The balance consists of other payables, accruals, trade deposits received, provision for sales return, VAT and
other non-income tax payables. The Group’s payables and accruals as at 31 December 2011 increased by
approximately RMB1.2 million or 6.6% from approximately RMB18.1 million as at 31 December 2010 to approximately
RMB19.3 million as at 31 December 2011, primarily due to an increase in other tax payable of approximately
RMB1.6 million as a result of the growth in our business for the year under review.
CASH FLOW
The Group’s cash is primarily used to meet the demand of financing its working capital requirement, repaying interest
and principal due on its indebtedness and providing funds for capital expenditures and growth of the Group’s operations.
1. Net cash generated from operating activities
The Group’s cash inflow from operations primarily derives from payments for the sale of the Group’s products. For
the year ended 31 December 2011, the Group’s net cash generated from operating activities amounted to
approximately RMB107.5 million, representing an increase of net cash generated from operating activities of
approximately RMB42.2 million from approximately RMB65.3 million for the year ended 31 December 2010. The
increase was primarily due to the continued growth of the Group’s turnover and operations.
2. Net cash used in investing activities
For the year ended 31 December 2011, the Group’s net cash outflow used in investing activities amounted to
approximately RMB2.2 million, representing a decrease of approximately RMB0.7 million as compared with the
cash outflow of approximately RMB2.9 million for the year ended 31 December 2010. The decrease is mainly due
to the reduction in payment for purchasing fixed assets during the year under review.
3. Net cash used in financing activities
For the year ended 31 December 2011, the Group’s net cash used in financing activities amounted to approximately
RMB35.1 million, representing a decrease of approximately RMB39.9 million as compared with approximately
RMB75.0 million for the year ended 31December 2010. The decrease was primarily due to a one-off repayment of
bank borrowings of RMB50 million in last year which was not occurred during the year under review.

CAPITAL STRUCTURE
1. Indebtedness
As at 31 December 2011 and during the year under review, the Group did not have any bank borrowings.
2. Gearing ratio
As at 31 December 2011 and 2010, the Group did not have any bank borrowings. The calculation of gearing ratio
was not meaningful.
3. Pledge of assets
As at 31 December 2011, the Group did not have any assets pledged to the banks (31 December 2010 : nil).
4. Capital expenditure
The capital expenditures of the Group primarily included purchases of plant and equipment, leasehold improvements
and purchases of motor vehicles. The Group’s capital expenditures amounted to approximately RMB2.3 million
and approximately RMB3.2 million for the year ended 31 December 2011 and 2010 respectively.
5. Foreign exchange risk
The major business of the Group has used RMB and HK$ as the functional and operational currencies. The Group
expects that RMB will maintain a stable development. The Group has no major risks in changes in other currency
exchange.
LIQUIDITY AND CAPITAL RESOURCES
The Group has met its working capital needs mainly through cash generated from operations and various short term
bank borrowings when required. For the year ended 31 December 2011, the Group did not have any bank borrowings.
Taking into account the cash flow generated from operation and the bank borrowing facilities available to the Group, the
directors of the Company are of the view that the Group has sufficient working capital to meet its current liquidity
demand and the liquidity demand within at least twelve months from the date of this report.
As at 31 December 2011, the Group had cash and cash equivalents of approximately RMB250.8 million mainly generated
from operations of the Group and funds raised by the Company in 2009.

FUTURE OUTLOOK
According to the Twelfth Five-Year Plan, the Chinese government stressed to expand the domestic demand and promote
cultural development. Benefitting from the policies of the Chinese government, the GDP of China maintained steady
growth. The continuous increase in per capita income has boosted domestic consumption, driving the demand for the
Chinese traditional crafts to grow. In 2011, as the domestic demand for small wooden decoration kept increasing, the
sales networks of the Group further penetrated to the second and third tier cities as well as overseas markets and the
Group achieved satisfactory results in 2011. The Group will continuously put efforts in building its brand and strengthen
research and development in order to improve the quality of its products and the production efficiency. Grasping the
opportunities in the market and leveraging on its advantages in the industry, the Group aims to achieve better results in
the future.
Looking forward, the Group will expand its sales network prudently and actively in 2012 and plans to establish 200 new
franchise shops. As the domestic purchasing power in China will continue to grow, the Group plans to open 30 modern
shops (demo shops) and store-in-stores in key markets and well-known chain shopping malls in municipalities directly
under the Central Government and provincial capitals, including Beijing, Shanghai, Guangzhou, Shenzhen, Tianjin,
Hangzhou, Nanjing, Suzhou, Wuhan, Shenyuang, Chengdu and Dalian, in 2012 to consolidate the sales network of the
Group.
For the development in overseas markets, the Group will focus on developing the general distribution and existing
franchise shops in Singapore, the United States and Australia to improve their profitability. The Group will expand its
customer bases in Europe and other new markets through participating overseas exhibitions and the online platform.
The Group intends to establish 7 new franchise shops through regional distributors in overseas markets in 2012 in order
to further increase the share of its products in international market.
In addition to the market expansion, the Group will also improve its information management and POS system to
strengthen the communication between the Group and franchise shops and the supervision of the franchise shops.
Through upgrading and refining the functions of POS system, the Group will enhance the supervision and management
of the operating data and improve the working efficiency of franchise shops, laying a solid foundation for the delicacy
management of the shops.
Besides, according to the development needs of all departments, the Group will organize different training programmes
for its employees, including video training, online test, seminar, exhibition and outdoor training, to strengthen the training
for employees and encourage employees to achieve self-improvement and upgrade their technology level and professional
knowledge.
For e-commerce, the Group will continue to strengthen its e-commerce team in terms of products modification, logistics
services, products promotion and advertisement so as to further develop the e-commerce market.
Looking ahead, the Group will further expand its domestic and oversea market share and strengthen and consolidate
its leading position in the industry with a sound financial system and practical marketing strategies. While developing
the business of the Group, the Group will endeavor to fulfill its corporate social responsibilities and improve staff welfare
to promote the corporate value of “Honesty, Work and Happiness” and the long-lasting brand image of Carpenter Tan in
China and overseas. The Group will strive to achieve better results in order to bring great returns to investors.

Corporate Social Responsibilities
The Company insists on shouldering its social responsibilities and caring its staff and investors as the core values apart
from expanding its businesses. The Group encourages the recruitment of the disabled and provides them with more job
opportunities. During the year, the Group employed 355 disabled staff in total and provided them with suitable training.
They have made significant contribution to the Group. The Group has been recognized as a social welfare enterprise in
China.
The Group also expressed its care to the society through taking part in other charity activities. One of the events was a
year-round activity at which 9 caring groups formed by our staff. Care and assistance work visited homes for the elderly,
the Hope Schools, rehabilitation centers and the underprivileged every month.
Moreover, the Group launched various green activities to promote environmental protection.
HUMAN RESOURCES AND TRAINING
As at 31 December 2011, the Group had a total of 985 employees in Mainland China, Hong Kong and overseas. Its total
staff cost was approximately RMB39.1 million for the year ended 31 December 2011 (2010: RMB31.2 million).
In addition to providing job opportunities to the disabled, the Group has attached high emphasis on the self-upgrade of
its staff. By holding various themed exhibitions, workshops, seminars and staff training, the working skills of the staff as
well as their sense of belonging to the Group were further enhanced. In 2011, the Group held a skill contest and a
singing contest in order to develop positive, optimistic and harmonic cultures of the staff. The Group also provided
various on-job training to the staff such as classes, examinations, data sharing and CD playing for the development
have team spirits, courtesy, production management and accounting practice in order to consolidate and spread the
corporate culture of Carpenter Tan.

BIOGRAPHY OF DIRECTORS AND SENIOR MANAGEMENT
DIRECTORS
Executive Directors
Mr. Tan Chuan Hua ( 譚傳華 ), aged 54, is an Executive Director, the co-founder of the Group, the chairman and the
chief executive officer of the Company. He is responsible for the overall strategic planning, formulation of the corporate
policies, the corporate development and also the day-to-day management of the Group. Mr. Tan has over 15 years of
experience in the industry of manufacturing small size wooden handicrafts. Mr. Tan has been appointed as the Chairman
of Chong Qing Art and Handicraft Association ( 重慶工藝美術行業協會 ) since 2004. He has been a member of the
Third Political Consultative Conference Chong Qing Committee (重慶市第三屆政協委員) since January 2008 and was
a member of the Second Political Consultative Conference Chong Qing Committee ( 重慶市第二屆政協委員 ) from
January2003 to December 2007. Mr. Tan was awarded by the Ministry of Personnel ( 人事部 ) of the PRC and China
Disabled Persons’ Federation ( 中國殘疾人聯合會 ) as a Country Self-motivated Model ( 全國自強模範 ) in 2003. He
was also awarded as 2005 China Outstanding Franchise Executive (2005 中國特許企業優秀管理者 ) by China Chain
Store and Franchise Association ( 中國連鎖經營協會 ). He is the director of Lead Charm Investments Limited (“Lead
Charm”), the Company’s controlling shareholder and Global Craft Collection Association (國際手工藝術集藏協會). He
is the spouse of Madam Fan Cheng Qin and father of Mr. Tan Di Fu, the elder brother of both Madam Tan Yao and Mr.
Tan Cao, and the uncle of Mr. Tan Xiao Chuan. Mr. Tan was appointed as the Director on 20 June 2006.
Mr. Geng Chang Sheng (耿長生), aged 63, is an Executive Director and deputy general manager of the Group and he
is responsible for the Group’s financial function including reviewing the Group’s financial position and responsible for the
strategic investment planning and corporate finance activities of the Group. Mr. Geng has 9 years of management
experience in the transportation industry during the period from 1987 to 1996 when he was a deputy general manager
of a motor company in Chongqing and over 3 years of management experience in the property development industry
during the period from 1999 to 2002 when he was a deputy general manager of a property company in the PRC. He
studied Mechanics and graduated from Sichuan Broadcasting TV University (四川廣播電視大學 ). Mr. Geng joined the
Group in August 2002 as the assistant general manager of Chongqong Carpenter Tan Handicrafts Company Limited
( 重慶譚木匠工藝品有限公司 ) and has been responsible for the general administration and human resources function
since August 2002. Mr. Geng was appointed as a director of Chongqong Carpenter Tan Handicrafts Company Limited
( 重慶譚木匠工藝品有限公司 ) in August 2003 and the Executive Director of the Company on 30 August 2006.
Mr. Tan Di Fu ( 譚棣夫 ), aged 26, is responsible for assisting the formulation of the business development strategy of
the Group. He enrolled in Sichuan International Studies University ( 四川外語學院 ) in professional English language
and literature (英語語言文化專業). He joined the Group in 2005 and has worked for various functional departments of
the Group to obtain basic management training including production and human resources. He was subsequently
promoted to the head of Wan Zhou Factory in 2007 and is responsible for its day-to-day operational management.
Currently he is the General Manager of Chongqing Carpenter Tan Handicrafts Company Limited and is responsible for
the day-to-day management of the Company. Mr. Tan Di Fu is the son of Mr. Tan Chuan Hua and Madam Fan Cheng
Qin, the nephew of Mr. Tan Cao and Madam Tan Yao.

Non-executive Directors
Mr. Tan Cao ( 譚操 ), aged 48, is a Non-executive Director responsible for the corporate financial activity and legal
matters of the Group. He is currently the director of Kau Luk Investment Company Limited (歌樂投資有限公司) of which
the principal business is investment. He is also the director of Chongqing Rui Feng Agricultural Integrated Exploitation
Co., Ltd. ( 重慶瑞豐農業綜合開發有限公司 ). He has over 20 years of management experience in the government and
property management industry. He holds a bachelor’s degree in Law from the Southwest University of Political Science
and Law ( 西南政法大學 ). He is the younger brother of Mr. Tan Chuan Hua, the younger brother-in-law of Madam Fan
Cheng Qin, the elder brother of Madam Tan Yao, and the uncle of Mr. Tan Xiao Chuan and Mr. Tan Di Fu. He joined the
Group in August 2003 and was appointed as the Director on 30 August 2006.
Mr. Liu Chang (劉暢), aged 38, is a Non-executive Director responsible for the corporate financial activity and management
of the Group. He worked for Beijing Anxintaifu Trading Company Limited ( 北京安信泰富商貿有限公司 ) of which
the then principal business was trading of furniture in the PRC and was responsible for the overall strategic planning,
corporate development and day-to-day management of this company. He has over 7 years of experience in investment
banking. He holds a bachelor’s degree in Law from the China Youth University for Political Sciences (中國青年政治學院
). Mr. Liu joined the Group in September 2004 and was appointed as the Director on 30 August 2006.

Independent non-executive Directors
Madam Du Xin Li ( 杜新麗 ), aged 55, is an Independent Non-executive Director. Madam Du obtained a doctorate
degree in China University of Political Science and Law in 2004. She is currently the professor of law in China University
of Political Science and Law. She is also an arbitrator of China International Economic and Trade Arbitration Commission
(中國國際經濟貿易仲裁委員會) and an attorney at law in Beacon Law Firm, the PRC. She has extensive experience in
international trade law, international investment law and international commerce law. She was appointed as the
Independent Non-executive Director on 4 September 2007.
Mr. Yu Ming Yang (余明陽), aged 47, is an Independent Non-executive Director. Mr. Yu graduated from Fudan University
(復旦大學) with a doctorate degree in management. He is currently the professor of Shanghai Jiao Tong University (上
海交通大學). He is also an independent director of Shandong Haodanjia Ocean Development Company Limited (山東
好當家海洋發展有限公司), the shares of which are listed on the Shanghai Stock Exchange. He is also an independent
non-executive director of Noble Jewelery Holdings Limited, the shares of which are listed on the Main Board of the
Stock Exchange. He has extensive experience in branding strategy and management. He was appointed as
theIndependent Non-executive Director on 4 September 2007.
Mr. Chau Kam Wing, Donald ( 周錦榮 ), aged 49, has over 20 years of experience in auditing, taxation and financial
management and had been appointed as financial controller of a number of companies listed in Hong Kong. Mr. Chau
obtained a master degree in business administration from the University of San Francisco, US in 2000. He is also a
fellow member of The Association of Chartered Certified Accountants and a practicing member of the Hong Kong
Institute of Certified Public Accountants. Mr. Chau is the finance director of Winox Holdings Limited, he is also an
independent non-executive director of China Water Affairs Group Limited and Zhejiang Shibao Company Limited, which
are all listed on the Main Board of the Stock Exchange. Mr. Chau is also an independent non-executive director of Eco-
Tek Holdings Limited which is listed on the Growth Enterprise Market of the Stock Exchange. Mr. Chau has been
appointed as an independent non-executive director of the Company since 17 November 2009.

SENIOR MANAGEMENT
Madam Fan Cheng Qin (范成琴) aged 47, is the co-founder and quality controller of the Group. She is responsible for
the quality control of the Group including supervision of the quality control team of the logistic centre. She has over 14
years’ experience in the industry of manufacturing small wooden handicrafts. Madam Fan is the spouse of Mr. Tan
Chuan Hua, the mother of Mr. Tan Di Fu, the elder sister-in-law of both Mr. Tan Cao and Madam Tan Yao.
Madam Tan Yao (譚堯) aged 42, is the deputy general manager of the Group . Madam Tan is responsible for research
and product development, and technology teams. She joined the Group in January 2005. Prior to joining the Group,
she has over 14 years of experience working for the Office for Moral, Ideological, and Political Education (精神文明辦公
室 ) of the government of Chongqing as an officer for the period from August 1988 to March 2002 and was a deputy
general manager of Chongging Three Gorges Gas (Group) Company Limited ( 重慶三峽燃氣（集團）有限公司 ) during
May 2002 to January 2005. Madam Tan is the younger sister of Mr. Tan Chuan Hua and Mr. Tan Cao, the younger sister-
in-law of Madam Fan Cheng Qin, and the aunt of Mr. Tan Di Fu.
Madam Wang Ping ( 王萍 ), aged 47, is the managing director of Chongqing Meiyu Accessories Company Limited ( 重
慶美裕飾品有限公司) ( “CQMY”). Madam Wang is responsible for the overall corporate development, production, sales
and administration functions of CQMY. Madam Wang has 17 years of experience in management of training programmes
and 7 years of experience in property development, in which Madam Wang was the general manager of a construction
development company. She studied Politics and graduated from No. 2 Party School of Communist Party of China (CPC)
Sichuan Municipal Committee ( 中共四川省委第二黨校 ). She joined the Group in March 2005.
Mr. Luo Hong Ping ( 羅洪平 ), aged 43, is the general manager of Ziqiang Muye and is responsible for the operation in
the Wan Zhou Factory. Mr. Luo graduated from Hefei Industrial University (合肥工業大學) in 1989. Mr. Luo has over 14
years in industrial management. Mr. Luo joined the Group in July 2003 and has been responsible for the production
function of the Group since July 2003. Prior to joining the Group, Mr. Luo was the deputy factory manager of a silk
factory and was the assistant of general manager of a electrical company.

Mr. Chan Hon Wan (陳漢雲), aged 51, is the financial controller and company secretary of the Company and joined the
Group in June 2008. Mr. Chan graduated with a Master Degree in Accountancy from the Hong Kong Polytechnic
University and a Bachelor Degree in Economics from Macquarie University in Australia. He is currently an associate
member of The Hong Kong Institute of Certified Public Accountants (HKICPA), and an associate member of The Institute
of Chartered Accountants in Australia. He has over 25 years of extensive experience in accounting and finance fields,
gaining from one of the “Big-4” international accounting firms and various listed corporations. He is responsible for
overseeing the Group’s accounting and finance matters.
Mr. Liu Nian (劉念), aged 38, is a senior accountant and the head of the Group’s accounting and finance department in
the PRC and responsible for PRC related accounting and finance matters. Mr. Liu graduated from Chongqing Jianzhu
University (重慶建築大學) in 1995 with professional qualifications in construction finance and accounting. Mr. Liu joined
the Group in 2003 and had worked as the head of the Group’s date and information centre, deputy finance manager and
was subsequently promoted as finance manager. Mr. Liu has accumulated more than 15 years of experience in financial
management. Prior to joining the Group in 2003, Mr. Liu worked as a finance officer for an industrial equipment installation
company and a finance manager for a real estate and property development company.
Mr. Huang Chao (黃超), aged 35, is the deputy finance manager of the Group’s accounting and finance department in
the PRC and responsible for PRC related accounting and finance matters. Mr. Huang graduated from Sichuan
Broadcasting TV University (四川廣播電視大學) in 1996 with professional qualification in finance, accounts and computer
application. Mr. Huang joined the Group in March 1997 and has accumulated more than 11 years experience in financial
management.
COMPANY SECRETARY
Mr. Chan Hon Wan (陳漢雲) is the company secretary of the Company. He is also the financial controller of the Company.
His biographical details are set out under the paragraph with the heading “Senior Management” above.

CORPORATE GOVERNANCE REPORT
The Group recognizes the value and importance of high corporate governance standards in the enhancement of corporate
performance and accountability.
The Board is committed to creating value and maximizing returns to the shareholders while striving to maintain high
standards of corporate governance. The Board will continue to review and enhance the quality of corporate governance
practices with reference to local and international standards.
The Company since its listing on the Stock Exchange on 29 December 2009 (the “Listing Date”), has adopted and
complied with all applicable code provisions under the Code on Corporate Governance Practices (“CG Code”) as set
forth in Appendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the
“Listing Rules”), except for the deviation from provision A.2.1 of the CG Code.
The CG Code stipulates that the roles of chairman and chief executive officer should be separate and should not be
performed by the same individual.
Currently, Mr. Tan Chuan Hua holds both the positions of the Chairman of the Board and the Chief Executive Officer of
the Company. The Board believes that vesting the role of both positions in Mr. Tan provides the Group with strong and
consistent leadership and allows for more effective planning and execution of long-term business strategies. The Board
also considers that this structure will not impair the balance of power and authority between the Board and the
management of the business of the Group given that there is a strong and independent non-executive element in the
Board. The Board believes that the structure outlined above is beneficial to the Company and its business.
MODEL CODE FOR SECURITIES TRANSACTIONS
The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix
10 to the Listing Rules (the “Model Code”) as its own code governing securities transactions of the Directors. Each of
the Directors has confirmed his or her compliance with the Model Code for the year ended 31 December 2011. The
Company has also adopted written guidelines on no less exacting terms than the Model Code for the relevant employees.
The senior management, who, because of their office in the Company, is likely to be in possession of unpublished price
sensitive information, has been requested to comply with the written guidelines. No incidence of non-compliance of the
employees’ written guidelines by the relevant employees was noted by the Company for the year ended 31 December
2011.
BOARD OF DIRECTORS
The Board is responsible for formulating the Group’s overall strategic policies, setting objectives for the management
and monitoring the performance of the management.
The Board comprises eight Directors, including three Executive Directors, two non-executive Directors (the “Non-executive
Directors”) and three independent non-executive Directors (the “Independent Non-executive Directors”). The Non-executive
Directors and the Independent Non-executive Directors have diverse business and professional backgrounds and have
brought in a wealth of experience and expertise that promote the best interests of the Group and the shareholders.
All the Directors are aware of their collective and individual responsibilities to the shareholders and have exercised their
duties with care, skills and diligence, contributing to the successful performance of the Group.

The Company has appointed three Independent Non-executive Directors that met the requirements of the Listing Rules,
with at least one Independent Non-executive Director possessing the appropriate professional qualifications, or accounting
or related financial management expertise. The Board has received from each of the Independent Non-executive Directors
an annual confirmation of his or her independence and considers that all the Independent Non-executive Directors are
independent under the guidelines set out in Rule 3.13 of the Listing Rules.
Pursuant to the Articles of Association of the Company, one third of the Directors shall retire from office by rotation at
each annual general meeting. According, Mr. Geng Chang Sheng (being an Executive Director), Mr. Liu Chang (being
a Non-executive Director), Mr. Chau Kam Wing, Donald (being an Independent Non-executive Directors) shall retire at
the forthcoming annual general meeting of the Company. The retiring Directors, all being eligible, shall offer themselves
for re-election. None of the Directors for re-election at the forthcoming annual general meeting has a service contract
with any member of the Group which is not determinable by the relevant employer within one year without payment of
compensation other than statutory compensation.
BOARD COMMITTEES
The Board has established two committees, namely the Audit Committee and the Remuneration Committee, to oversee
particular aspects of the Company’s affairs. Both of the committees have been established with written terms of references
in compliance with the CG Code as set out in Appendix 14 to the Listing Rules.
The Committees’ terms of reference are reviewed and updated regularly to ensure they continue to be at the forefront
of best practice and to ensure due compliance with the most updated rules and regulations. Copies of the terms of
reference are available on the website of the Stock Exchange and the website of the Company.
A summary of the membership, duties and responsibilities of each of the committees are set out below:
AUDIT COMMITTEE
The Company established the Audit Committee on 17 November 2009. The Audit Committee has three members
comprising all the Independent Non-executive Directors. Members of the Audit Committee include Madam Du Xin Li,
Mr. Yu Ming Yang and Mr. Chau Kam Wing, Donald, in which Mr. Chau Kam Wing, Donald is the chairman of the Audit
Committee.
Duties and responsibilities Include:
• provide an independent review of the effectiveness of the financial reporting process and the internal control and
risk management systems;
• review and monitor the external auditors’ independence and objectivity, and the effectiveness of the audit process;
• monitor the integrity of the Company’s financial statements, annual report and accounts; and
• review the Group’s financial and accounting policies and practices.
The Audit Committee had reviewed the internal control and annual results of the Group for the year ended 31 December
2011 and the accounting principles and practices adopted by the Group. Our Financial Controller, external auditor and
senior management attended the meetings to answer questions raised by the Audit Committee.

REMUNERATION COMMITTEE
The Company established the Remuneration Committee on 17 November 2009. The Remuneration Committee currently
has three members, namely Madam Du Xin Li, Mr. Yu Ming Yang and Mr. Chau Kam Wing, Donald, all of whom are
Independent Non-executive Directors. Mr. Chau Kam Wing, Donald is the chairman of the Remuneration Committee.
Duties and responsibilities include:
• recommend to the Board on the Company’s policy and structure for all remuneration of the Directors and senior
management and on the establishment of a formal and transparent procedure for developing policy on such
remuneration;
• review and approve performance - based remuneration by reference to corporate goals and objectives;
• review and approve compensation arrangements relating to dismissal or remova of the Directors for misconduct;
and
• consider the granting of share options to the Directors pursuant to any share option scheme adopted by the Company.
The Remuneration Committee had reviewed the policy and structure of the remuneration for Directors and senior
management of the Group for the year ended 31 December 2011.
NOMINATION COMMITTEE
The Company established nomination committee (the “Nomination Committee”) on 28 March 2012. There are 3 members
for the Nomination Committee which includes Madam Du Xin Li, Mr. Yu Ming Yang and Mr. Chau Kam Wing, Donald who
are all independent non-executive directors. The chairman of the Nomination Committee is Mr. Chau Kam Wing, Donald.
Its terms of reference were adopted by the Company from 28 March 2012 in order to comply with the amended Appendix
14 (Corporate Governance Code) of the Listing Rules.
The role and function of the Nomination Committee includes:
• formulate nomination policy for consideration of the Board and implement the nomination policy laid down by
the Board;
• consider the selection criteria of Directors, and develop procedures for the sourcing and selection of members
of the Board to be elected by shareholders of the Company;
• identify and nominate candidates to fill causal vacancies of Directors for the Board’s approval;
• review the structure, size and composition of the Board at least annually, considering inter alia the skills,
knowledge and length of service, the breadth of expertise of the Board as a whole, and make recommendations
on any proposed changes to the Board to complement the Company’s corporate strategy;
• identify individuals suitably qualified to become Board members and select or make recommendations to the
Board on the selection of individuals nominated for directorships;
• assess the independence of independent non-executive Directors; and
• make recommendations to the Board on the appointment or re-appointment of Directors and succession
planning for Directors, in particular the Chairman, and the chief executive.

BOARD MEETINGS AND INDIVIDUAL ATTENDANCES
The Board is scheduled to meet regularly at least four times a year, and the Directors will receive at least 14 days’ prior
written notice of such meetings. For any ad hoc Board meetings, the Directors are given as much notice as is reasonably
practicable in those circumstances.
Details of the Directors’ attendance at the Board meetings and the Board committee meetings held in the financial year
ended 31 December 2011 are set forth in the following table:
Audit Remuneration
Number of meetings held during the year Board Committee Committee
Executive Directors
Mr. Tan Chuan Hua (Chairman) 4/4 — —
Mr. Geng Chang Sheng 4/4 — —
Mr. Tan Di Fu 4/4 — —
Mr. Tan Cao 4/4 — —
Mr. Liu Chang 4/4 — —
Independent Non-Executive Directors

Madam Du Xin Li 4/4 2/2 1/1
Mr. Yu Ming Yang 4/4 2/2 1/1
Mr. Chau Kam Wing, Donald 4/4 2/2 1/1
Note:
As the Nomination Committee was established on 28 March 2012, no meeting was held during the year ended 31 December 2011.

DIRECTORS’ SERVICE CONTRACTS
Each of the Directors (including Executive Directors, Non-executive Directors and Independent Non-executive Directors)
has entered into a service agreement with the Company. The terms and conditions of such service agreements are
briefly described as follows:
(a) Each service agreement in respect of Executive Directors commenced on the Listing Date and is for a term of three
years unless and until terminated by either party thereto giving to the other party not less than three months’ prior
written notice or terminated in accordance with the provisions set out in the respective service agreement after the
first one year.
Each of the Executive Directors is entitled to their respective remuneration and benefits under statutory retirement
scheme which have been agreed with the Company.
In addition, each of the Executive Directors may receive a discretionary bonus as the Board may suggest, the
amount of which shall not exceed 5% of the audited consolidated net profits of the Group for the relevant financial
year. Such amount has to be approved by the remuneration committee of the Board.
(b) Each service agreement in respect of Non-executive Directors commenced on the Listing Date and is for a term of
two years. Either party may terminate the appointment by giving to the other party no less than three months’ prior
written notice. Each of the Non-executive Directors is entitled to their respective remuneration which has been
agreed with the Company.
(c) Each service agreement in respect of the Independent Non-executive Directors commenced on the Listing Date
and is for a term of two years. Either party may terminate the appointment by giving to the other party not less than
three months’ prior written notice. Each of the Independent Non-executive Directors is entitled to their respective
remuneration which has been agreed with the Company.
Save as disclosed herein, none of the Directors has entered into or has proposed to enter into any service agreements
with the Company (other than agreements expiring or determinable by the employer within one year without payment of
compensation other than statutory compensation).
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND EXTERNAL AUDITORS
The Directors are responsible for the preparation of the financial statements, which give a true and fair view of the state
of affairs, results and cash flow of the Group in accordance with relevant law and disclosure requirements under the
Listing Rules. The external auditors are responsible for forming an independent opinion, based on the audit, on the
financial statements prepared by the Directors and report the opinion solely to the shareholders as a body and for no
other purpose.

INTERNAL CONTROL AND INTERNAL COMPLIANCE GUIDELINES
The Board has overall responsibility for maintaining the soundness and effectiveness of the internal control and risk
management systems of the Group. Such systems are designed to meet the Group’s particular needs and address the
risk by which it is exposed. Procedures have been set up for safeguarding the Group’s assets against any unauthorized
use or disposition and ensuring an appropriate maintenance of accounting records and the availability of reliable financial
information for internal or external use.
The Board has engaged an external consultant to conduct a review of the effectiveness of the Group’s internal control
systems, workflows and the management systems which were assessed to be satisfactory and were functioning properly
in compliance with the internal compliance guidelines to safeguard the Group’s assets.
For the year ended 31 December 2011, the Board had, through the Audit Committee’s reviews, reviewed the findings of
the external consultant, reviewed the Group’s internal control procedures and compliance with the internal compliance
guidelines and considered them having been effectively implemented and properly complied with.
EXTERNAL AUDITOR’S REMUNERATION
For the year ended 31 December 2011, the total remuneration for the audit services provided by the external auditor
amounted to RMB991,000 (equivalent to approximately HK$1,193,000).
For the year ended 31 December 2011, the total remuneration for the permissible non-audit services (namely, review of
the Group’s internal control system) provided by the external auditors amounted to RMB100,000 (equivalent to
approximately HK$120,000).
CCIF CPA Limited has been recommended by the Audit Committee and endorsed by the Board and is subject to
approval by the shareholders at the forthcoming annual general meeting.
INVESTOR RELATIONS
The Company believes that effective communications with the investment community are pivotal in enhancing investors’
understanding of the Company’s business and development. To achieve this and to enhance transparency, the Company
maintains a proactive approach in promoting investor relations and communications. As such, the objectives of the
Company’s investor relations policy is to enable investors to have access, on a fair and timely basis, to information
relating to the Group so that they can make informed decisions.
Investors are welcome to share their views with the Board by writing to the Company or sending enquiries to the
Company’s website at www. ctans. com. The website also enables investors and the public to obtain up-to-date corporate
information of the Group.
On behalf of the Board

Carpenter Tan Holdings Limited
Tan Chuan Hua
Chairman

REPORT OF THE DIRECTORS
The Directors have pleasure in presenting the annual report together with the audited consolidated financial statements
of the Company and its subsidiaries ( the “Group”) for the year ended 31 December 2011.
PRINCIPAL ACTIVITIES
The Company is an investment holding company. The Group is principally engaged in (i) the design, manufacture and
distribution of small size wooden accessories which are mainly made of natural wood and designed with traditional
Chinese cultural features and with high artistic qualities; (ii) the operation of a franchise and distribution network primarily
in the PRC; and (iii) the operation of retailing shops for direct sale of its products in Hong Kong. The Group’s products
are mainly classified into four categories, namely (i) wooden or horn combs such as coloured drawing combs, grass-
and-tree dyed wooden combs and carved combs; (ii) pocket-size wooden mirrors such as coloured drawing mirrors and
carved mirrors; (iii) other wooden accessories and adornments such as bead bracelets ( 香珠手鏈 ), pendants ( 鏈墜 ),
barrettes ( 髮夾 ), hair bobs ( 髮簪 ) and massage tools; and (iv) box sets which combine its different products featured
in themes for gift purpose. The Group’s products are mainly sold under the brand name of “Carpenter Tan” ( 譚木匠 ).
RESULTS AND DIVIDENDS
Profit of the Group for the year ended 31 December 2011 and the state of affairs of the Company and the Group at that
date are set out in the financial statements on pages 41 to 45.
To extend the Company’s gratitude for the support of our shareholders, the Board has recommended the distribution of
a final dividend of HK22.97 cents per share for the financial year ended 31 December 2011 to the shareholders whose
names appear on the register of members of the Company on Monday, 28 May 2012, amounting to approximately
HK$57,425,000 subject to the approval of the Company’s annual general meeting to be held on Friday, 18 May 2012.
The dividend payout ratio is 50% of the profit for the year or 62% of the distributable profit of the Company (after
deducting the non-distributable statutory reserves of RMB18.3 million for the year ended 31 December 2011). The
above-mentioned final dividend is expected to be paid on or before Friday, 15 June 2012.
CLOSURE OF THE REGISTER OF MEMBERS
To be eligible to attend and vote in the coming annual general meeting
The register of members of the Company will be closed from Wednesday, 16 May 2012 to Friday, 18 May 2012 (both
days inclusive) during which period no transfer of shares will be registered. To be qualified for attending and voting at the
forthcoming annual general meeting, all share transfer documents must be lodged with the Company’s share registrar
in Hong Kong, Tricor Investors Services Limited, at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong,
for registration on or before 4:30 p.m. on Tuesday, 15 May 2012.
To qualify for the proposed final dividends
The register of members of the Company will be closed from Thursday, 24 May 2012 to Monday, 28 May 2012 (both
days inclusive) during which period no transfer of Shares will be registered. To be qualified for receiving the proposed
final dividend, all share transfer documents must be lodged with the Company’s share registrar, Tricor Investors Services
Limited, at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong, for registration on or before 4:30 p.m.
on Wednesday, 23 May 2012.

CONTINGENT LIABILITIES, LEGAL AND POTENTIAL PROCEEDINGS
As at 31 December 2011, the Group did not have any material contingent liabilities, legal proceedings or potential
proceedings.
MATERIAL ACQUISITION AND DISPOSAL BY THE GROUP
For the year ended 31 December 2011, the Group has not made any material acquisition and disposal.
USE OF PROCEEDS FROM THE LISTING OF THE COMPANY
The proceeds from the Company’s issue of new shares at the time of its listing on The Stock Exchange of Hong Kong
Limited on 29 December 2009, after deducting the related issuance expenses, amounted to approximately HK$132.9
million (equivalent to approximately RMB116.8 million). As at 31 December 2011, the Group had used net proceeds of
approximately RMB35.1 million, of which approximately RMB10.5 million had been applied for enhancement of the
Group’s design and product development and enhancement for operational efficiency, approximately RMB12.4 million
for enhancement for sales network and sales support services, construction of production base and approximately
RMB12.2 million as working capital. The remaining net proceeds have been deposited into banks which are intended to
be applied in accordance with the proposed application set forth in the Company’s prospectus dated 15 December
2009 except for the proposed application of approximately RMB19.5 million (HK$24.0 million) for setting up high-end
home accessories shops in the PRC and the application of approximately RMB4.9 million (HK$6.0 million) for setting up
lifestyle handicraft stores. As disclosed in the Company’s 2010 annual report, due to the change in market environment
and the Group’s business strategy, the Group has decided to hold-up the business plan in developing the high-end
home accessories shops and lifestyle handicraft stores. The Board is studying other alternative business development
opportunities, which would generate better investment return to the Group’s shareholders.
CAPITAL COMMITMENT
As at 31 December 2011, the Group had capital commitment amounted to approximately RMB0.2 million ( 31 December
2010: approximately RMB1.5 million).
SHARE OPTION SCHEME
The Company operates a share option scheme (“Share Option Scheme”) for the purpose of providing incentives and
rewards to eligible participants, including Directors, eligible employees, consultants, suppliers, customers, any shareholder
of each member of the Group or associated company or any of their respective associates, who contribute to the
success of the Group. The Share Option Scheme was conditionally approved by a written resolution of the shareholders
of the Company dated 17 November 2009. Details of the Share Option Scheme are set out in the prospectus of the
Company dated 15 December 2009.
As at 31 December 2011, no share option was granted based on the Share Option Scheme.

GOING CONCERN
Based on the current financial position and financing facilities available, the Group has sufficient financial resources for
ongoing operation in the foreseeable future. As such, the financial statements were prepared on a “going concern”
basis.
PUBLIC FLOAT
According to information disclosed publicly and as far as the Directors are aware, for the year ended 31 December 2011
and up to the date of this report, at least 25% issued shares of the Company was held by public shareholders.
PURCHASES, SALE OR REDEMPTION OF THE COMPANY’S LISTED SECURITIES
For the year ended 31 December 2011, neither the Company nor any of its subsidiaries has purchased, sold or redeemed
any of the Company’s listed securities.
RESERVES
Details of the movements in the reserves of the Group and the Company during the year are set out in Consolidated
Statement of Changes in Equity on page 46 and note 32 to the financial statements.
DISTRIBUTABLE RESERVES
As at 31 December 2011, the Company’s reserves, including the share premium account, available for distribution,
calculated in accordance with the Companies Law, Cap 22 (Law 3 of 1961, as consolidated and revised) of the Cayman
Islands (“Companies Law”), amounted to approximately RMB85,444,000, of which approximately RMB46,800,000
(equivalent to approximately HK$57,425,000) has been proposed as a final dividend for the year. Under the Companies
Law, a company may make distribution to its shareholders out of the share premium account under certain circumstances.
CHARITABLE DONATIONS
Charitable donations made by the Group for the year ended 31 December 2011 was approximately RMB25,000 (2010:
approximately RMB16,000).
PROPERTY, PLANT AND EQUIPMENT
Details of the movements in the property, plant and equipment of the Group for the year ended 31 December 2011 are
set forth in note 16 to the financial statements.

INVESTMENT PROPERTIES
The Group’s investment properties were revalued at the year end date. The fair value increase on investment properties
arising on revaluation amounting to approximately RMB1.0 million has been credited to the consolidated income statement.
Details of movements in the investment properties of the Group are set out in note 18 to the consolidated financial
statements of the Company for the year ended 31 December 2011.
PRE-EMPTIVE RIGHTS
There is no provision for pre-emptive rights under the Company’s Articles of Association or the laws of the Cayman
Islands which would oblige the Company to offer new shares on a pro rata basis to the existing shareholders.
SUBSIDIARIES
Details of the Company’s principal subsidiaries as at 31 December 2011 are set out in note 20 to the financial statements.
DIRECTORS
The Directors of the Company during the financial year ended 31 December 2011 and up to the date of this annual
report have been:
Executive Directors
Mr. Tan Chuan Hua (Chairman)
Mr. Geng Chang Sheng
Mr. Tan Di Fu
Mr. Tan Cao
Mr. Liu Chang
Independent Non-Executive Directors

Madam Du Xin Li
Mr. Yu Ming Yang
Mr. Chau Kam Wing, Donald
BIOGRAPHICAL INFORMATION OF DIRECTORS AND SENIOR MANAGEMENT
Brief biographical information of the Directors and senior management of the Company are set out in the “Biography of
Directors and Senior Management” section on pages 20 to 24.
CHANGES IN DIRECTORS’ INFORMATION
The Company’s independent non-executive director, Mr. Chau Kam Wing Donald was appointed on 11 March 2011 as
finance director of Winox Holdings Limited (stock code: 6838) which is a company listed on the main board of The Stock
Exchange of Hong Kong Limited on 20 July 2011. In addition Mr. Chau had been retired from the office of independent
non-executive director of China Nonferrous Metals Company Limited (stock code: 8306) on 5 May 2011.

DIRECTORS’ SERVICE CONTRACTS
Each of the Directors (including Executive Directors, Non-executive Directors and Independent Non-executive Directors)
has entered into a service agreement with the Company. The terms and conditions of such service agreements are
briefly described as follows:
(a) Each service agreement in respect of Executive Directors commenced on the Listing Date and is for a term of
three years unless and until terminated by either party thereto giving to the other party not less than three months’
prior written notice or terminated in accordance with the provisions set out in the respective service agreement
after the first one year.
Each of the Executive Directors is entitled to their respective remuneration and benefits under statutory retirement
scheme which have been agreed with the Company.
In addition, each of the Executive Directors may receive a discretionary bonus as the Board may suggest, the
amount of which shall not exceed 5% of the audited consolidated net profits of the Group for the relevant financial
year. Such amount has to be approved by the remuneration committee of the Board.
(b) Each service agreement in respect of Non-executive Directors commenced on the Listing Date and is for a term of
two years. Either party may terminate the appointment by giving to the other party no less than three months’ prior
written notice. Each of the Non-executive Directors is entitled to their respective remuneration which has been
agreed with the Company.
(c) Each service agreement in respect of the Independent Non-executive Directors commenced on the Listing Date
and is for a term of two years. Either party may terminate the appointment by giving to the other party not less than
three months’ prior written notice. Each of the Independent Non-executive Directors is entitled to their respective
remuneration which has been agreed with the Company.
Save as disclosed herein, none of the Directors has entered into or has proposed to enter into any service agreements
with the Company (other than agreements expiring or determinable by the employer within one year without payment of
compensation other than statutory compensation).
DIRECTORS’ INTERESTS IN COMPETING BUSINESS
During the year ended 31 December 2011, none of the Directors was interested in any business which competes or is
likely to compete, either directly or indirectly, with the business of the Group.

DIRECTORS’ INTERESTS IN SECURITIES
As at 31 December 2011, the interests and short positions of the Directors in the share, underlying shares and debentures
of the Company or any of its associated corporations (within the meaning of Part XV of the Securities and Futures
Ordinance (‘SFO”)) as recorded in the register maintained by the Company under section 352 of the SFO or as notified
to the Company and the Stock Exchange pursuant to the Model Code for Securities Transaction by Directors of Listed
Issuers (“Model Code”) were as below:
Interests in shares of the Company:
Approximate
Number of percentage of
Name of Director Capacity/Nature of interest securities shareholding
Tan Chuan Hua (Note 1) Interest in a controlled 169,700,000 67.88%

Corporation
Geng Chang Sheng Beneficial owner 1,326,597 0.53%
Tan Cao Beneficial owner 3,450,584 1.38%
Note:
1. Tan Chuan Hua is deemed to be interested in 169,700,000 Shares held by Lead Charm Investments Limited (“Lead Charm”) by
virtue of his 51% interest in Lead Charm under Part XV of the SFO.
Interests in the shares of associated corporations:
Approximate
percentage of
shareholding in
Name of associated Capacity/ associated
Name of Directors corporations Nature of interest corporations
Tan Chuan Hua Lead Charm Beneficial owner 51%

SUBSTANTIAL SHAREHOLDERS’ INTERESTS IN SECURITIES
As at 31 December 2011, the interests and long positions of every persons in the shares and underlying shares of the
Company, being 5% or more of the Company’s issued share capital, as recorded in the register maintained and kept by
the Company under section 336 of the SFO were as below:
Interests in the Shares of the Company:
Approximate
Capacity/ Number of percentage of
Name Nature of interest shares Position shareholding
Tan Chuan Hua (Note 1) Interest in a controlled 169,700,000 Long 67.88%

Corporation
Fan Cheng Qin (Note 2) Interest in a controlled 169,700,000 Long 67.88%
Corporation
Lead Charm (Note 3) Beneficial owner 169,700,000 Long 67.88%
Notes:
1. Tan Chuan Hua is deemed to be interested in 169,700,000 Shares held by Lead Charm by virtue of his 51% interest in Lead
Charm under Part XV of the SFO. Mr. Tan is a controlling shareholder within the meaning of the Listing Rules.
2. Fan Cheng Qin is deemed to be interested in 169,700,000 Shares held by Lead Charm by virtue of her 49% Interest in Lead
Charm under Part XV of the SFO. Ms. Fan is a controlling shareholder within the meaning of the Listing Rules.
3. Lead Charm is a controlling shareholder within the meaning or otherwise by virtue of the Listing Rules.
DIRECTORS’ RIGHTS TO ACQUIRE SHARES OR DEBT SECURITIES
Other than as disclosed in the paragraph headed “Share Option Scheme” in this report, at no time during the year was
the Company or any of its subsidiaries a party to any arrangement to enable the Directors or chief executives of the
Company (including their spouses or children under 18 years of age) to have any right to subscribe for securities of the
Company or any of its associated corporations as defined in the SFO or to acquire benefits by means of acquisition of
shares in, or debentures of, the Company or any other body corporate.
DIRECTORS’ INTERESTS IN CONTRACTS
Other than those transactions set out in the paragraph headed “Related Party Transactions”, at the end of the year or at
any time during the year, there was no contract of significance in relation to the Company’s business, to which the
Company or any of its subsidiaries was a party, subsisted, and in which a Director had, whether directly or indirectly, a
material interest.

MANAGEMENT CONTRACTS
No contract concerning the management and administration of the whole or any substantial part of the business of the
Group was entered into or existed during the year under review.
RELATED PARTY TRANSACTIONS
Details of the Group’s related party transactions for the year ended 31 December 2011 are set out in note 35 to the
financial statements.
MAJOR CUSTOMERS AND SUPPLIERS
The aggregate sales to the five largest customers of the Group accounted for approximately 2.5% of the Group’s total
revenue and sales to the largest customer accounted for approximately 0.5% of the Group’s total revenue for the year
ended 31 December 2011. The aggregate purchases from the five largest suppliers of the Group accounted for
approximately 39.2% of the Group’s total purchases and purchases from the largest supplier accounted for approximately
10.7% of the Group’s total purchases for the year ended 31 December 2011.
None of the Directors, their associates, or any shareholder which to the knowledge of the Directors own more than 5%
of the Company’s issued share capital has any interest in the Group’s five largest suppliers or the Group’s five largest
customers.
EMPLOYEE BENEFITS
Details of the employee benefits of the Group for the year ended 31 December 2011 are set out in Note 2(n) to the
Financial Statements. No forfeited contributions (by the Group on behalf of employees who leave the defined contribution
plans prior to vesting fully in such contributions) can be used by the Group to reduce the existing level of contributions.
STATEMENT OF NO CHANGE OF AUDITOR
The Board confirmed that there has been no change of auditor of the Company since its listing on the Stock Exchange
on 29 December 2009.
AUDITOR
The financial statements were audited by CCIF CPA Limited who will retire at the conclusion of the forthcoming annual
general meeting and being eligible, offer themselves for re-appointment. A resolution for the re-appointment of CCIF
CPA Limited as the auditor of the Company is to be proposed at the forthcoming annual general meeting.
On behalf of the Board

Carpenter Tan Holdings Limited
Tan Chuan Hua
Chairman

INDEPENDENT AUDITOR’S REPORT
TO THE SHAREHOLDERS OF
CARPENTER TAN HOLDINGS LIMITED
(Incorporated in the Cayman Islands with limited liability)
We have audited the consolidated financial statements of Carpenter Tan Holdings Limited (“the Company”) and its
subsidiaries (together the “Group”) set out on pages 41 to 103, which comprise the consolidated and company statements
of financial position as at 31 December 2011, and the consolidated income statement, the consolidated statement of
comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows
for the year then ended, and a summary of significant accounting policies and other explanatory information.
DIRECTORS’ RESPONSIBILITY FOR THE CONSOLIDATED FINANCIAL STATEMENTS
The directors of the Company are responsible for the preparation of consolidated financial statements that give a true
and fair view in accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of
Certified Public Accountants (the “HKICPA”) and the disclosure requirements of the Hong Kong Companies Ordinance,
and for such internal control as the directors determine is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
AUDITOR’S RESPONSIBILITY
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. This report is
made solely to you, as a body, and for no other purpose. We do not assume responsibility towards or accept liability to
any other person for the contents of this report.
We conducted our audit in accordance with Hong Kong Standards on Auditing issued by the HKICPA. Those standards
require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated
financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the
risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those
risk assessments, the auditor considers internal control relevant to the entity’s preparation of consolidated financial
statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates
made by the directors, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.

INDEPENDENT AUDITOR’S REPORT
OPINION
In our opinion, the consolidated financial statements give a true and fair view of the state of affairs of the Company and
of the Group as at 31 December 2011, and of the Group’s profit and cash flows for the year then ended in accordance
with Hong Kong Financial Reporting Standards and have been properly prepared in accordance with the disclosure
requirements of the Hong Kong Companies Ordinance.
CCIF CPA Limited

Certified Public Accountants
Betty P.C. Tse

Practising Certificate Number P03024

CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2011
Note 2011 2010

RMB’000 RMB’000
Turnover 5 244,001 189,418

Cost of sales (77,091) (69,240)
Gross profit 166,910 120,178
Other revenue and other net income 6 20,366 23,725

Administrative expenses (24,659) (24,192)
Selling and distribution expenses (23,868) (24,038)
Other operating expenses (7,247) (7,635)
Profit from operations 131,502 88,038
Finance costs 7 (144) (2,446)
Profit before taxation 8 131,358 85,592
Income tax 9 (37,788) (19,468)
Profit for the year 93,570 66,124
Attributable to
Owners of the Company 14 93,570 66,124
Earnings per share 15

Basic and diluted RMB37 cents RMB26 cents
The notes on pages 48 to 103 form part of these financial statements.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
2011 2010
RMB’000 RMB’000
Profit for the year 93,570 66,124
Other comprehensive income for the year (after tax)

Exchange differences on translation of financial
statements of foreign operations (754) (923)
Income tax related to components of other comprehensive income — —
Other comprehensive income for the year (754) (923)
Total comprehensive income for the year 92,816 65,201
Attributable to
Owners of the Company 92,816 65,201

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 2011
Notes 2011 2010

RMB’000 RMB’000
Non-current assets
Property, plant and equipment 16 32,449 33,110
Prepaid lease payments 17 19,363 19,881
Investment properties 18 42,800 41,800
Intangible assets 19 — —
94,612 94,791
Current assets
Prepaid lease payments 17 518 518
Inventories 21 60,697 53,213
Trade receivables 22 1,262 1,171
Other receivables, deposits and prepayments 23 7,576 8,406
Cash and cash equivalents 25 250,790 181,298
320,843 244,606
Current liabilities
Trade payables 27 2,005 3,009
Other payables and accruals 28 19,309 18,089
Income tax payable 24(a) 18,197 4,939
(39,511) (26,037)
Net current assets 281,332 218,569
Total assets less current liabilities 375,944 313,360
Non-current liabilities
Deferred tax liabilities 24(b) 13,964 11,099
Long-term payable 29 — —
Deferred income 30 917 952
(14,881) (12,051)
NET ASSETS 361,063 301,309

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 2011
Notes 2011 2010

RMB’000 RMB’000
CAPITAL AND RESERVES

Share capital 31 2,200 2,200
Share premium and reserves 32 358,863 299,109
TOTAL EQUITY 361,063 301,309
Approved and authorised for issue by the board of directors on 28 March 2012.
Tan Chuan Hua Geng Chang Sheng

STATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 2011
Notes 2011 2010

RMB’000 RMB’000
Non-current assets
Investment in a subsidiary 20 47 47
Current assets
Other receivables, deposits and prepayments 23 — 1,493
Amounts due from subsidiaries 20 84,269 80,587
Cash and cash equivalents 25 6,747 14,990
91,016 97,070
Current liabilities
Amounts due to subsidiaries 26 8,065 8,465
Other payables and accruals 28 1,172 922
(9,237) (9,387)
Net current assets 81,779 87,683
NET ASSETS 81,826 87,730
CAPITAL AND RESERVES

Share capital 31 2,200 2,200
Share premium and reserves 32 79,626 85,530
TOTAL EQUITY 81,826 87,730
Approved and authorised for issue by the board of directors on 28 March 2012.
Tan Chuan Hua Geng Chang Sheng

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to owners of the Company
Property Currency
Share Share Capital Statutory Other revaluation translation Retained
capital premium reserve reserves reserves reserve reserve profits Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2010 2,200 114,674 2,767 65,454 17,738 1,723 304 54,198 259,058
Profit for the year — — — — — — — 66,124 66,124
Exchange differences
on translation of
financial statements
of foreign operations — — — — — — (923) — (923)
Total comprehensive
income for the year — — — — — — (923) 66,124 65,201
Dividends — — — — — — — (22,950) (22,950)

Transfer to reserve — — — 13,652 — — — (13,652) —
At 31 December 2010 2,200 114,674 2,767 79,106 17,738 1,723 (619) 83,720 301,309
At 1 January 2011 2,200 114,674 2,767 79,106 17,738 1,723 (619) 83,720 301,309
Profit for the year — — — — — — — 93,570 93,570
on translation of
of foreign operations — — — — — — (754) — (754)
Total comprehensive
income for the year — — — — — — (754) 93,570 92,816
Dividends — — — — — — — (33,062) (33,062)
Transfer to reserve — — — 18,279 — — — (18,279) —
At 31 December 2011 2,200 114,674 2,767 97,385 17,738 1,723 (1,373) 125,949 361,063

CONSOLIDATED STATEMENT OF CASH FLOWS
Note 2011 2010

RMB’000 RMB’000
Operating activities
Profit before taxation 131,358 85,592
Adjustments for:
Interest expenses 144 2,446
Interest income (2,346) (616)
Change in fair value of investment properties (1,000) (7,150)
(Gain)/loss on disposal of property, plant and equipment (41) 1,913
Depreciation 2,862 3,681
Amortisation of prepaid lease payments 518 518
Amortisation of intangible assets — 125
Provision for sales returns 595 3,687
Impairment on trade receivables 1 4
Impairment on intangible assets — 375
Reversal of impairment loss on other receivables — (520)
Write-down on inventories 1,807 2,275
Reversal of accrued payables — (614)
Government grant released from deferred income (35) (27)
Operating profit before working capital changes 133,863 91,689
Increase in inventories (9,291) (13,447)

Decrease in amounts due from directors — 14
Increase in trade receivables (92) (748)
Decrease in other receivables, deposits and prepayments 830 6,074
Decrease in trade payables (1,004) (236)
Increase/(decrease) in other payables and accruals 2,476 (4,601)
Cash generated from operations 126,782 78,745

Interest received 2,346 616
Interest paid (1) (2,169)
Income tax paid, net (19,942) (11,901)
Withholding tax paid (1,723) —
Net cash generated from operating activities 107,462 65,291
Investing activities
Purchase of property, plant and equipment (2,265) (3,176)
Proceeds from disposal of property, plant and equipment 82 244
Land deposits refunded — 8
Net cash used in investing activities (2,183) (2,924)

CONSOLIDATED STATEMENT OF CASH FLOWS
Note 2011 2010

RMB’000 RMB’000
Financing activities
Dividend paid (33,062) (22,950)
Repayment of bank loans — (50,000)
Repayment of long-term payable (1,994) (2,000)
Net cash used in financing activities (35,056) (74,950)
Net increase/(decrease) in cash and cash equivalents 70,223 (12,583)
Cash and cash equivalents at beginning of year 181,298 194,797
Effect of foreign exchange rate changes, net (731) (916)
Cash and cash equivalents at end of year 25 250,790 181,298
ANALYSIS OF THE BALANCES OF CASH AND

CASH EQUIVALENTS
Bank balances and cash 250,790 181,298

NOTES TO THE FINANCIAL STATEMENTS
1. GENERAL INFORMATION
The Company was incorporated in the Cayman Islands on 20 June 2006 as an exempted company with limited
liability under the Companies Law (Chapter 22, Law 3 of 1961, as consolidated and revised) of the Cayman Islands
and its shares are listed on the Main Board of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).
The addresses of the Company’s registered office and the principal place of business are at Cricket Square,
Hutchins Drive, PO Box 2681, Grand Cayman KY1-1111, Cayman Islands and 43rd Floor, Future International
Building, Guanyinqiao, Jiangbei District, Chongqing, the People’s Republic of China (the “PRC”) respectively.
The functional currencies of the Company and its subsidiaries in Hong Kong, and its subsidiaries in the PRC are
Hong Kong dollars (“HK$”) and Renminbi (“RMB”) respectively. For the purposes of presenting the consolidated
financial statements, the Group adopted RMB as its presentation currency for easy reference for international
investors.
The Company is an investment holding company. The subsidiaries of the Company are principally engaged in (i)
design, manufacture and distribution of small size wooden handicrafts and accessories, including wooden combs,
wooden mirrors, wooden box set and other wooden accessories and adornments, under the brand name of “Carpenter
Tan”; (ii) the operation of a franchise and distribution network primarily in the PRC; and (iii) the operation of retail
shops for direct sale of the Group’s products in Hong Kong.
2. SIGNIFICANT ACCOUNTING POLICIES
a) Statement of compliance
These financial statements have been prepared in accordance with all applicable Hong Kong Financial Reporting
Standards (“HKFRSs”), which collective term includes all applicable individual 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. These financial statements also comply
with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange
of Hong Kong Limited. A summary of the significant accounting policies adopted by the Group is set out below.
The HKICPA has issued certain new and revised HKFRSs that are first effective or available for early adoption
for the current accounting period of the Group and the Company. Note 3 provides information on any changes
in accounting policies resulting from initial application of these developments to the extent that they are relevant
to the Group for the current and prior accounting periods reflected in these financial statements.

2. SIGNIFICANT ACCOUNTING POLICIES – continued
b) Basis of preparation of the financial statements
The consolidated financial statements for the year ended 31 December 2011 comprise the Company and its
subsidiaries (together referred to as the “Group”).
Items included in the financial statements of each entity in the Group are measured using the currency that
best reflects the economic substance of the underlying events and circumstances relevant to the entity. These
financial statements are presented in RMB, rounded to the nearest thousand except for per share data.
The measurement basis used in the preparation of the financial statements is the historical cost basis except
that the investment properties are stated at their fair value as explained in the accounting policies set out
below.
The preparation of financial statements in conformity with HKFRSs requires management to make judgements,
estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities,
income and expenses. The estimates and associated assumptions are based on historical experience and
various other factors believed to be reasonable under the circumstances, the results of which form the basis of
making the judgements about carrying amounts of assets and liabilities not readily apparent from other sources.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimate is revised if the revision affects only that period, or in the
period of the revision and future periods if the revision affects both current and future periods.
Judgements made by management in the application of HKFRSs that have a significant effect on the financial
statements and estimates with a significant risk of material adjustment in the next year are discussed in note 4.
c) Subsidiaries
Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the
financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control,
potential voting rights that presently are exercisable are taken into account.
An investment in a subsidiary is consolidated into the consolidated financial statements from the date that
control commences until the date that control ceases. Intra-group balances and transactions and any unrealised
profits arising from intra-group transactions are eliminated in full in preparing the consolidated financial
statements. Unrealised losses resulting from intra-group transactions are eliminated in the same way as
unrealised gains but only to the extent that there is no evidence of impairment.
In the Company’s statement of financial position, an investment in a subsidiary is stated at cost less impairment
losses (see note 2(h)).

d) Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment
losses (see note 2(h)).
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Group and the
cost of the item can be measured reliably. All other repairs and maintenance are expensed in profit or loss
during the period in which they are incurred.
Depreciation is calculated to write off the cost or valuation of items of property, plant and equipment, less their
estimated residual value, if any, using the straight-line method over their estimated useful lives as follows:
Buildings Over the unexpired lease terms

Leasehold improvements Over the unexpired lease terms but not exceeding 5 years
Plant and machinery 5 to 10 years
Furniture and equipment 5 to 6 years
Motor vehicles 5 to 6 years
Construction in progress represents buildings or leasehold improvements (or plant and equipment) on which
construction work has not been completed. It is carried at cost which includes construction expenditures and
other direct costs less any impairment losses. On completion, construction in progress is transferred to the
appropriate categories of property, plant and equipment at cost less accumulated impairment losses. No
depreciation is provided for construction in progress until they are completed and available for use.
If an item of property, plant and equipment becomes an investment property because its use has changed as
evidenced by the end of owner-occupation, any difference between the carrying amount and the fair value of
that item at the date of transfer is recognised in property revaluation reserve. On the subsequent sale or
retirement of the asset, the relevant revaluation reserve will be transferred directly to profit or loss.
Gains or losses arising from the retirement or disposal of an item of property, plant and equipment are determined
as the difference between the net disposal proceeds and the carrying amount of the item and are recognised
in profit or loss on the date of retirement or disposal.

e) Leased assets
An arrangement, comprising a transaction or a series of transactions, is or contains a lease if the Group

determines that the arrangement conveys a right to use a specific asset or assets for an agreed period of time
in return for a payment or a series of payments. Such a determination is made based on an evaluation of the
substance of the arrangement and is regardless of whether the arrangement takes the legal form of a lease.
i) Classification of assets leased to the Group
Assets that are held by Group under leases which transfer to the Group substantially all the risks and
rewards of ownership are classified as being held under finance leases. Leases which do not transfer
substantially all the risks and rewards of ownership to the Group are classified as operating leases, with
the following exceptions:
— property held under operating leases that would otherwise meet the definition of an investment property
is classified as an investment property on a property-by-property basis and, if classified as investment
property, is accounted for as if held under a finance lease (see note 2(f)); and
— land held for own use under an operating lease, the fair value of which cannot be measured separately
from the fair value of a building situated thereon at the inception of the lease, is accounted for as being
held under a finance lease, unless the building is also clearly held under an operating lease. For these
purposes, the inception of the lease is the time that the lease was first entered into by the Group, or
taken over from the previous lessee.
ii) Assets acquired under finance leases
Where the Group acquires the use of assets under finance leases, the amounts representing the fair value
of the leased asset or, if lower, the present value of the minimum lease payments of such assets are
included in fixed assets and the corresponding liabilities, net of finance charges, are recorded as obligations
under finance leases. Depreciation is provided at rates which write off the cost or valuation of the assets
over the term of the relevant lease or, where it is likely the Group will obtain ownership of the asset, the life
of the asset, as set out in note 2(d). Impairment losses are accounted for in accordance with the accounting
policy as set out in note 2(h). Finance charges implicit in the lease payments are charged to profit or loss
over the period of the leases so as to produce an approximately constant periodic rate of charge on the
remaining balance of the obligations for each accounting period. Contingent rentals are charged to profit
or loss in the accounting period in which they are incurred.

e) Leased assets – continued
iii) Operating lease charges
Where the Group has the use of assets under operating leases, payments made under the leases are
charged to profit or loss in equal instalments over the accounting periods covered by the lease term,
except where an alternative basis is more representative of the pattern of benefits to be derived from the
leased asset. Lease incentives received are recognised in profit or loss as an integral part of the aggregate
net lease payments made. Contingent rentals are charged to profit or loss in the accounting period in
which they are incurred.
The cost of acquiring land held under an operating lease is amortised on a straight-line basis over the
period of the lease term except where the property is classified as an investment property (see note 2(f)).
f) Investment property
Investment properties are land and/or buildings which are owned or held under a leasehold interest (see note
2(e)) to earn rental income and/or for capital appreciation. These include land held for a currently undetermined
future use and property that is being constructed or developed for future use as investment property.
Investment properties are carried at fair value. Any gain or loss arising from a change in fair value or from the
retirement or disposal of an investment property is recognised in profit or loss. Rental income from investment
properties is accounted for as described in note 2(q)(iv).
When the Group holds a property interest under an operating lease to earn rental income and/or for capital
appreciation, the interest is classified and accounted for as an investment property on a property-by-property
basis. Any such property interest which has been classified as an investment property is accounted for as if it
were held under a finance lease (see note 2(e)), and the same accounting policies are applied to that interest
as are applied to other investment properties leased under finance leases. Lease payments are accounted for
as described in note 2(e)).
g) Intangible assets
Intangible assets with finite useful lives acquired by the Group are stated at cost less accumulated amortisation
and impairment losses (see note 2(h)). Expenditure on internally generated goodwill and brands is recognised
as an expense in the period in which it is incurred.
Amortisation of intangible assets with finite useful lives is charged to profit or loss on a straight-line basis over
the assets’ estimated useful life. Both the period and method of amortisation are reviewed annually.
Gains or losses arising from derecognition of an intangible asset are measured at the difference between the
net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss in the period
when the asset is derecognised.

h) Impairment of assets
i) Impairment of receivables
Current and non-current receivables that are stated at cost or amortised cost are reviewed at the end of
each reporting period to determine whether there is objective evidence of impairment. Objective evidence
of impairment includes observable data that comes to the attention of the Group about one or more of the
following loss events:
— significant financial difficulty of the debtor;
— a breach of contract, such as a default or delinquency in interest or principal payments;
— it becoming probable that the debtor will enter bankruptcy or other financial reorganisation;
— significant changes in the technological, market, economic or legal environment that have an adverse
effect on the debtor; and
If any such evidence exists, any impairment loss is determined and recognised as follows:
— For trade and other receivables, the impairment loss is measured as the difference between the asset’s
carrying amount and the present value of estimated future cash flows, discounted at the financial
asset’s original effective interest rate (i.e., the effective interest rate computed at initial recognition of
these assets), where the effect of discounting is material. This assessment is made collectively where
financial assets share similar risk characteristics, such as similar past due status, and have not been
individually assessed as impaired. Future cash flows for financial assets which are assessed for
impairment collectively are based on historical loss experience for assets with credit risk characteristics
similar to the collective group.
If in a subsequent period the amount of an impairment loss decreases and the decrease can be linked
objectively to an event occurring after the impairment loss was recognised, the impairment loss is
reversed through profit or loss. A reversal of an impairment loss shall not result in the asset’s carrying
amount exceeding that which would have been determined had no impairment loss been recognised
in prior years.
Impairment losses are written off against the corresponding assets directly, except for impairment losses
recognised in respect of trade debtors included within trade and other receivables, whose recovery is
considered doubtful but not remote. In this case, the impairment losses for doubtful debts are recorded
using an allowance account. When the Group is satisfied that recovery is remote, the amount considered
irrecoverable is written off against trade debtors directly and any amounts held in the allowance account
relating to that debt are reversed. Subsequent recoveries of amounts previously charged to the allowance
account are reversed against the allowance account. Other changes in the allowance account and
subsequent recoveries of amounts previously written off directly are recognised in profit or loss.

h) Impairment of assets – continued
ii) Impairment of other assets
Internal and external sources of information are reviewed at the end of each reporting period to identify
indications that the following assets may be impaired or, except in the case of goodwill, an impairment loss
previously recognised no longer exists or may have decreased:
— property, plant and equipment;
— pre-paid interests in leasehold land classified as being held under operating lease;
— intangible assets; and
— investments in subsidiaries.
If any such indication exists, the asset’s recoverable amount is estimated.
— Calculation of recoverable amount
The recoverable amount of an asset is the greater of its fair value less costs to sell and value-in-use.
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. Where an asset does not generate cash inflows largely independent of
those from other assets, the recoverable amount is determined for the smallest group of assets that
generates cash inflows independently (i.e., a cash-generating unit).
— Recognition of impairment losses
An impairment loss is recognised in profit or loss if the carrying amount of an asset, or the cash-
generating unit to which it belongs, exceeds its recoverable amount. Impairment losses recognised in
respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill
allocated to the cash-generating unit (or group of units) and then, to reduce the carrying amount of the
other assets in the unit (or group of units) on a pro rata basis, except that the carrying value of an asset
will not be reduced below its individual fair value less costs to sell, or value in use, if determinable.
— Reversals of impairment losses
In respect of assets other than goodwill, an impairment loss is reversed if there has been a favourable
change in the estimates used to determine the recoverable amount.
A reversal of an impairment loss is limited to the asset’s carrying amount that would have been
determined had no impairment loss been recognised in prior years. Reversals of impairment losses
are credited to profit or loss in the year in which the reversals are recognised.

i) Inventories
Inventories are carried at the lower of cost and net realisable value.
Cost is calculated using the weighted average cost formula and comprises all costs of purchase, costs of
conversion and other costs incurred in bringing the inventories to their present location and condition.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of
completion and the estimated costs necessary to make the sale.
When inventories are sold, the carrying amount of those inventories is recognised as an expense in the period
in which the related revenue is recognised. The amount of any write-down of inventories to net realisable value
and all losses of inventories are recognised as an expense in the period the write-down or loss occurs. The
amount of any reversal of any write-down of inventories is recognised as a reduction in the amount of inventories
recognised as an expense in the period in which the reversal occurs.
j) Trade and other receivables
Trade and other receivables are initially recognised at fair value and thereafter stated at amortised cost using
the effective interest method, less allowance for impairment of doubtful debts, except where the receivables
are interest-free loans made to related parties without any fixed repayment terms or the effect of discounting
would be immaterial. In such cases, the receivables are carried at cost less allowance for impairment of doubtful
debts (see note 2(h)).
k) Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent
to initial recognition, interest-bearing borrowings are stated at amortised cost with any difference between the
amount initially recognised and redemption value being recognised in profit or loss over the period of the
borrowings, together with any interest and fees payable, using the effective interest method.
l) Trade and other payables
Trade and other payables are initially recognised at fair value and are subsequently stated at amortised cost
unless the effect of discounting would be immaterial, in which case they are stated at cost.
m) Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and on hand, demand deposits with banks and other
financial institutions, and short-term, highly liquid investments readily convertible into known amounts of cash
and which are subject to an insignificant risk of changes in value, having been within three months of maturity
at acquisition. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash
management are also included as a component of cash and cash equivalents for the purpose of the consolidated
statement of cash flows.

n) Employee benefits
(i) Short-term employee benefits and contributions to defined contribution retirement plans
Salaries, annual bonuses, paid annual leave, contributions to defined contribution plans and the cost of
non-monetary benefits are accrued in the year in which the associated services are rendered by employees.
Where payment or settlement is deferred and the effect would be material, these amounts are carried at
their present values.
(ii) Termination benefits
Termination benefits are recognised when, and only when, the Group demonstrably commits itself to
terminate employment or to provide benefits as a result of voluntary redundancy by having a detailed
formal plan which is without realistic possibility of withdrawal.
o) Income tax
Income tax for the year comprises current tax and movements in deferred tax assets and liabilities. Current tax
and movements in deferred tax assets and liabilities are recognised in profit or loss except to the extent that
they relate to items recognised directly in equity, in which case they are recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively
enacted at the end of the reporting period, and any adjustment to tax payable in respect of previous years.
Deferred tax assets and liabilities arise from deductible and taxable temporary differences respectively, being
the differences between the carrying amounts of assets and liabilities for financial reporting purposes and their
tax bases. Deferred tax assets also arise from unused tax losses and unused tax credits.
Apart from certain limited exceptions, all deferred tax liabilities, and all deferred tax assets to the extent that it
is probable that future taxable profits will be available against which the asset can be utilised, are recognised.
Future taxable profits that may support the recognition of deferred tax assets arising from deductible temporary
differences include those that will arise from the reversal of existing taxable temporary differences, provided
those differences relate to the same taxation authority and the same taxable entity, and are expected to reverse
either in the same period as the expected reversal of the deductible temporary differences or in periods into
which a tax loss arising from the deferred tax asset can be carried back or forward. The same criteria are
adopted when determining whether existing taxable temporary differences support the recognition of deferred
tax assets arising from unused tax losses and credits, that is, those differences are taken into account if they
relate to the same taxation authority and the same taxable entity, and are expected to reverse in a period, or
periods, in which the tax loss or credit can be utilised.

o) Income tax – continued
The limited exceptions to recognition of deferred tax assets and liabilities are those temporary differences
arising from the initial recognition of assets or liabilities that affect neither accounting nor taxable profit (provided
they are not part of a business combination), and temporary differences relating to investments in subsidiaries
to the extent that, in the case of taxable differences, the Group controls the timing of the reversal and it is
probable that the differences will not reverse in the foreseeable future, or in the case of deductible differences,
unless it is probable that they will reverse in the future.
The amount of deferred tax recognised is measured based on the expected manner of realisation or settlement
of the carrying amount of the assets and liabilities, using tax rates enacted or substantively enacted at the end
of the reporting period. Deferred tax assets and liabilities are not discounted.
The carrying amount of a deferred tax asset is reviewed at the end of each reporting period and is reduced to
the extent that it is no longer probable that sufficient taxable profits will be available to allow the related tax
benefit to be utilised. Any such reduction is reversed to the extent that it becomes probable that sufficient
taxable profits will be available.
Additional income taxes that arise from the distribution of dividends are recognised when the liability to pay the
related dividends is recognised.
Current tax balances and deferred tax balances, and movements therein, are presented separately from each
other and are not offset. Current tax assets are offset against current tax liabilities, and deferred tax assets
against deferred tax liabilities, if the Company or the Group has the legally enforceable right to set off current
tax assets against current tax liabilities and the following additional conditions are met:
— in the case of current tax assets and liabilities, the Company or the Group intends either to settle on a net
basis, or to realise the asset and settle the liability simultaneously; or
— in the case of deferred tax assets and liabilities, if they relate to income taxes levied by the same taxation
authority on either;
— the same taxable entity; or
— different taxable entities, which, in each future period in which significant amounts of deferred tax liabilities
or assets are expected to be settled or recovered, intend to realise the current tax assets and settle the
current tax liabilities on a net basis or realise and settle simultaneously.

p) Other provisions and contingent liabilities
Provisions are recognised for other liabilities of uncertain timing or amount when the Group or the Company
has a legal or constructive obligation arising as a result of a past event, it is probable that an outflow of
economic benefits will be required to settle the obligation and a reliable estimate can be made. Where the time
value of money is material, provisions are stated at the present value of the expenditure expected to settle the
obligation.
Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated
reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits
is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of
one or more future events are also disclosed as contingent liabilities unless the probability of outflow of economic
benefits is remote.
q) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and represents amounts
receivable for goods sold and services provided in the normal course of business, net of discount, provision for
sales returns, value-added tax and sale tax. Value-added tax expense and refund are accounted for on an
accrual basis.
(i) Revenue from sales of goods is recognised when the products are delivered to the customer, the customer
has accepted the goods, the related risks and rewards of ownership and collectibility of the related receivables
is reasonably assured.
(ii) Franchise fee income is recognised when the franchise agreements are entered into with franchise shops.
(iii) Interest income is recognised on a time-apportioned basis, taking into account the principal outstanding
and at the effective rate applicable.
(iv) Rental income is recognised on a straight-line basis over the period of the relevant leases.

r) Translation of foreign currencies
Foreign currency transactions during the year are translated at the foreign exchange rates ruling at the transaction
dates. Monetary assets and liabilities denominated in foreign currencies are translated at the foreign exchange
rates ruling at the end of the reporting period. Exchange gains and losses are recognised in profit or loss.
Non-monetary assets and liabilities measured in terms of historical cost in a foreign currency are translated
using the foreign exchange rates ruling at the transaction dates. Non-monetary assets and liabilities denominated
in foreign currencies that are stated at fair value are translated using the foreign exchange rates ruling at the
dates the fair value was determined.
The results of foreign operations are translated into Renminbi at the exchange rates approximating the foreign
exchange rates ruling at the dates of the transactions. Items in the statement of financial position are translated
into Renminbi at the foreign exchange rates ruling at the end of the reporting period. The resulting exchange
differences are recognised in other comprehensive income and accumulated separately in the currency
translation reserve.
s) Borrowing costs
Borrowing costs are expensed in the period in which they are incurred, except to the extent that they are
capitalised as being directly attributable to the acquisition, construction or production of an asset which
necessarily takes a substantial period of time to get ready for its intended use or sale.
The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for
the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the
asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases
when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are
interrupted or complete.
t) Government grants
Government grants are recognised as income over the periods necessary to match them with the related
costs. Grants related to depreciable assets are presented as deferred income and are released to income over
the useful lives of the assets. Grants related to expense items are recognised in the same period as those
expenses are charged to profit or loss and are reported separately as other income. Government grants shall
not be recognised until there is reasonable assurance that the entity will comply with the conditions attaching
to them.

u) Related parties
(a) A person, or a close member of that person’s family, is related to the Group if that person:
(i) has control or joint control over the Group;
(ii) has significant influence over the Group; or
(iii) is a member of the key management personnel of the Group or the Group’s parent.
(b) An entity is related to the Group if any of the following conditions applies:
(i) The entity and the Group are members of the same group (which means that each parent, subsidiary
and fellow subsidiary is related to the others).
(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a
member of a group of which the other entity is a member).
(iii) Both entities are joint ventures of the same third party.
(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity.
(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.
(vi) The entity is controlled or jointly controlled by a person identified in (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).
Close members of the family of a person are those family members who may be expected to influence, or
be influenced by, that person in their dealings with the entity.
v) Segment reporting
Operating segments, and the amounts of each segment item reported in the financial statements, are identified
from the financial information provided regularly to the board of directors, which is the Group’s chief operative
decision maker (“CODM”), for the purposes of allocating resources to, and assessing the performance of, the
Group’s various lines of business and geographical locations.
Individually material operating segments are not aggregated for financial reporting purposes unless the segments
have similar economic characteristics and are similar in respect of the nature of products and services, the
nature of production processes, the type or class of customers, the methods used to distribute the products or
provide the services, and the nature of the regulatory environment. Operating segments which are not individually
material may be aggregated if they share a majority of these criteria.

3. CHANGES IN ACCOUNTING POLICIES
The HKICPA has issued a number of new and revised accounting standards, amendments and an interpretation to
HKFRSs that are first effective for the current accounting period of the Group and the Company. Of these, the
following developments are relevant to the Group’s financial statements:
• HKAS 24 (revised 2009), Related party disclosures
• Improvements to HKFRSs (2010)
• HK(IFRIC) Int 19, Extinguishing financial liabilities with equity instruments
• Amendments to HK(IFRIC) Int 14, HKAS 19 – The limit on a defined benefit asset, minimum funding requirements
and their interaction – Prepayments of a minimum funding requirement
The Group has not applied any new standard of interpretation that is not yet effective for the current accounting
period.
The amendment to HK(IFRIC) Int 14 have had no material impact on the Group’s financial statements as they were
consistent with policies already adopted by the Group. HK(IFRIC) Int 19 has not yet had a material impact on the
Group’s financial statements as these changes will first be effective as and when the Group enters a relevant
transaction (for example, a debt for equity swap).
The impacts of other developments are discussed below:
• HKAS 24 (revised 2009) revises the definition of a related party. As a result, the Group has re-assessed the
identification of related parties and concluded that the revised definition does not have any material impact on
the Group’s related party disclosures in the current and previous periods. HKAS 24 (revised 2009) also introduces
modified disclosure requirements for government-related entities. This does not impact the Group because no
entity within the Group is a government-related entity.
• Improvements to HKFRSs (2010) omnibus standard introduces a number of amendments to the disclosure
requirements in HKFRS 7, Financial instruments: Disclosures. These amendments do not have any material
impact on the classification, recognition and measurements of the amounts recognised in the financial statements
in the current and previous periods.

4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgements are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will by
definition, seldom equal the related actual results. The estimates and judgements that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are
discussed below.
a) Depreciation and amortisation
The Group reviews the estimated useful lives and residual values of the assets regularly in order to determine
the amount of depreciation and amortisation expenses charge for the year. The useful lives of assets are based
on the Group’s historical experience with similar assets and taking into account anticipated technological
changes. The depreciation and amortisation expenses for future periods are adjusted if there are significant
changes from previous estimates.
b) Impairment on property, plant and equipment and prepaid lease payments
The Group assesses annually whether property, plant and equipment and prepaid lease payments have any
indication of impairment. The recoverable amounts of property, plant and equipment and prepaid lease payments
have been determined based on value-in-use calculations. These calculations require the use of judgements
and estimates.
c) Valuation of investment properties
Investment properties are included in the consolidated statement of financial position at their open market
value, which is assessed by independent qualified valuers, after taking into consideration the net income
allowing for reversionary potential.
The assumptions adopted in the property valuations are based on the market conditions existing at the end of
the reporting period, with reference to current market sales prices and an appropriate capitalisation rate.
d) Write-downs of inventories
Inventories are written down to net realisable value based on an assessment of the realisability of inventories.
Write-downs on inventories are recorded where events or changes in circumstances indicate that the balances
may not be realised. The identification of write-downs requires the use of judgements and estimates. Where
the expectation is different from the original estimate, such difference will impact the carrying value of inventories
and write-downs of inventories in the periods in which such estimate has been changed.

4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS – continued
e) Impairment on trade and other receivables
Impairment losses for trade and other receivables are assessed and provided based on the Group’s regular
review of aging analysis and evaluation of collectibles.
In considering the impairment losses that may be required for current receivables, future cash flows need to be
determined. One of the key assumptions that have to be adopted is about the ability of the debtors to settle the
receivables. Even though the Group has used all available information to make this estimation, inherent
uncertainty exists and actual uncollectible amounts may be higher than the amount estimated.
f) Provision for sales returns
The franchisees of the Group are allowed (after deducting certain administrative charges, if applicable): (i) to
exchange or refund for defective products; (ii) to return products previously purchased upon the termination of
the franchise agreement; and (iii) to exchange or refund for slow-moving products purchased more than six
months but less than one year. The amount of the products exchanged or refunded by a particular franchisee
for a year should not exceed 3% of its total purchase for that year (except those returns resulted from the
termination of the franchise agreements).
The Group makes provision for sales returns based on the Group’s past return experience. As the Group is
continually upgrading its product designs and launching new models, it is possible that the past return experience
is not indicative of future returns. Any increase or decrease in the provision would affect profit or loss.
g) Income tax
Determining income tax provision involves judgement on the future tax treatment of certain transactions. The
directors carefully evaluate tax implications of transactions and tax provisions are set up accordingly. The tax
treatment of such transactions is reconsidered periodically to take into account all changes in tax legislations.
Deferred tax assets are recognised for temporary deductible differences. As those deferred tax assets can only
be recognised to the extent that it is probable that future taxable profit will be available against which the
unused tax credits can be utilised, the directors’ judgement is required to assess the probability of future
taxable profits. The directors’ assessment is constantly reviewed and additional deferred tax assets are recognised
if it becomes probable that future taxable profits will allow the deferred tax asset to be recovered.

5. TURNOVER
Turnover represents the net invoiced value of goods sold to customers, less value added tax and sale tax, returns
and allowances, and franchise fee income. An analysis of the Group’s turnover for the year is as follows:
2011 2010
RMB’000 RMB’000
Sales of goods 242,256 187,932

Franchise fee income 1,745 1,486
244,001 189,418
6. OTHER REVENUE AND OTHER NET INCOME
2011 2010
RMB’000 RMB’000
Other revenue
Government grant 34 86
Government grant released from deferred income (note 30) 35 27
Interest income on financial assets not at fair value
through profit or loss - bank interest income 2,346 616
PRC VAT refunds (note 9(a)(i)) 12,562 12,046
Subcontracting income — 22
Rental income from operating leases 2,613 1,908
Reversal of impairment loss on other receivables (note 23(a)) — 520
Reversal of accrued expenses* — 614
Others 1,735 736
19,325 16,575
Other net income
Gain on disposal of property, plant and equipment 41 —
Change in fair value of investment properties (note 18) 1,000 7,150
20,366 23,725
* The amount represented certain administrative expenses accrued in previous years which were no longer payable and were
written back and recognised as other revenue.

7. FINANCE COSTS
2011 2010
RMB’000 RMB’000
Interest on bank and other borrowings wholly

repayable within five years — 2,169
Imputed interest expense on long-term payable 144 277
Total interest expense on financial liabilities not

at fair value through profit or loss 144 2,446
8. PROFIT BEFORE TAXATION
Profit before taxation is arrived at after charging/(crediting):
2011 2010
RMB’000 RMB’000
a) Staff costs (including directors’ emoluments)
Salaries and other benefits 37,747 30,189

Contributions to retirement scheme 1,321 961
Total staff costs 39,068 31,150
b) Other items
Auditor’s remuneration 991 960

Amortisation of prepaid lease payments (note 17) 518 518
Amortisation of intangible assets (note 19) — 125
Cost of inventories (notes 8(b)(i) and 21) 77,091 69,240
Depreciation (note 16) 2,862 3,681
Impairment for intangible assets (note 19) — 375
Impairment for trade receivables (note 22) 1 4
(Gain)/loss on disposal of property, plant and equipment (41) 1,913
Operating lease rentals in respect of land and buildings 5,553 7,286
Provision for sales returns (note 28(a)) 595 3,687
Write-down of inventories (note 21) 1,807 2,275
Reversal of write-down of inventories (note 21) (695) —
Gross rental income from investment properties (2,613) (1,908)

Less: Direct outgoings 176 186
Net rental income (2,437) (1,722)
Notes:
(i) Cost of inventories includes approximately RMB23,088,000 (2010: RMB19,096,000) relating to staff costs, depreciation
and operating lease rentals, which are included in the respective total amounts disclosed separately above.

9. INCOME TAX
a) Taxation in the consolidated income statements represents:
2011 2010
RMB’000 RMB’000
Current tax
PRC enterprise income tax (notes 9(a)(i), (ii), (iii) and (iv)) 33,195 13,519
Hong Kong profits tax (note 9(a)(vi)) — —
Withholding tax on dividends (note 9(a)(vii)) 1,723 —
34,918 13,519
Underprovision in prior years, net
PRC enterprise income tax 5 992
Deferred tax
Distribution of dividends (note 24(b)) (1,723) —
Current year (note 24(b)) 4,588 4,957
Total 37,788 19,468
Notes:
(i) Chongqing City Wan Zhou Qu Ziqiang Muye Company Limited (“Ziqiang Muye”), a wholly-owned subsidiary of the
Company, is a registered social welfare enterprise since 29 April 2004. Pursuant to the notice on preferential tax policies
to social welfare enterprise issued by the State Administration of Taxation (the “SAT”), Ministry of Finance of the PRC
that with effect from 1 October 2006, Ziqiang Muye is entitled to income tax concessions on a double deduction of
salaries paid to its employees with disabilities, and VAT refund which is equivalent to the number of employees with
disabilities multiplied by a specified annual cap amount as determined by the SAT.
The Group recognised the VAT refund in the Group’s consolidated income statement on an accrual basis. The amounts
of the VAT refunded to the Group during the year are detailed in note 6.
In addition, on 2 November 2006, Ziqiang Muye obtained the SAT’s approval for a concessionary income tax rate
reduction from 33% to 15% for the five years from 1 January 2006 to 31 December 2010 according to the preferential
tax policies granted to companies located in western part of the PRC and involved in national encouraged business
activities.
(ii) On 19 May 2010, Chongqing Carpenter Tan Handicrafts Company Limited (“Carpenter Tan”), a wholly-owned subsidiary
of the Company, obtained the SAT’s approval for a concessionary income tax rate reduction from 25% to 15% for two
years for 1 January 2009 to 31 December 2010 according to the preferential tax policies granted to companies located
in western part of the PRC and involved in national encouraged business activities.

9. INCOME TAX – continued
a) Taxation in the consolidated income statements represents: – continued
Notes:– continued
(iii) Due to the expiry of preferential tax policies from 1 January 2011, the provision for PRC income tax for Ziqiang Muye
and Carpenter Tan is calculated on the statutory income tax rate of 25% on their assessable profits.
The Group is uncertain that Ziqiang Muye and Carpenter Tan will be eligible for income tax rate of 15% under the new
preferential tax policies granted to companies located in western part of the PRC in accordance with Caisui (2011) No.
58, as the list of national encouraged business activities eligible for Caisui (2011) No. 58 is not yet announced as at the
date of this report.
(iv) The provision for PRC income tax is calculated on the assessable profit of the Group’s subsidiaries incorporated in the
PRC at a statutory income tax rate of 25% (2010: 25%) except that for the year ended 31 December 2010, Ziqiang Muye
and Carpenter Tan. Ziqiang Muye and Carpenter Tan were eligible for the income tax concessions according to the tax
preferential policies as stated in notes 9(a)(i) and 9(a)(ii).
(v) The Company is incorporated in the Cayman Islands and is exempted from income tax in the Cayman Islands. The
Company’s subsidiary established in the British Virgin Islands is exempted from income tax in the British Virgin Islands.
(vi) No provision for Hong Kong profits tax has been made for the years ended 31 December 2011 and 2010 as the Group
did not have assessable profits subject to Hong Kong profits tax for these years.
(vii) Under the Corporate Income Tax Law of the PRC that with effect from 1 January 2008 onwards, non-resident enterprises
without an establishment or place of business in the PRC or which have an establishment or place of business but the
relevant income is not effectively connected with the establishment or place of business in the PRC will be subject to
withholding income tax at the rate of 10% on various types of passive income such as dividends derived from sources
in the PRC. Pursuant to the double tax arrangement between the PRC and Hong Kong effective from 1 January 2007,
the withholding income tax rate will be reduced to 5% if the investment by the Hong Kong investor in the investee entities
in the PRC is not less than 25%. On 22 February 2008, the SAT approved Caisui (2008) No. 1, pursuant to which
dividend distributions out of retained earnings of foreign investment enterprises prior to 31 December 2007 will be
exempted from withholding income tax. Deferred tax liabilities of RMB4,338,000 (2010: RMB3,170,000) in respect of
the withholding income tax on dividends has been recognised by the Group for the year ended 31 December 2011.
Withholding tax on dividends represents tax charged by the PRC tax authority on dividends distributed by the Group’s
subsidiaries in Mainland China during the year.

9. INCOME TAX – continued
b) Reconciliation between tax expense and accounting profit at applicable tax rates:
2011 2010
RMB’000 RMB’000
Profits before taxation 131,358 85,592
Notional tax on profit before tax, calculated at the rates

applicable to profits in the relevant tax jurisdiction 35,224 22,773
Tax effect of non-deductible expenses 1,134 780
Tax effect of non-taxable incomes (135) (48)
Effect of tax concessions enjoyed by a subsidiary (note 9(a)(i)) (2,175) (1,726)
Effect of concessionary tax rate enjoyed by
subsidiaries (note 9(a)(i) and (ii)) — (8,899)
Unrecognised temporary differences (602) 588
Unrecognised tax losses 711 1,838
Utilisation of tax losses previously not recognised (325) —
Utilisation of tax losses (387) —
Withholding tax on dividends (note 9(a)(vii)) 4,338 3,170
Underprovision in prior years 5 992
Actual tax expenses 37,788 19,468

10. DIRECTORS’ EMOLUMENTS
Directors’ emoluments disclosed pursuant to section 161 of the Hong Kong Companies Ordinance is as follows:
For the year ended 31 December 2011
Salaries,
allowance Retirement
Directors’ and benefits scheme
Name of director fees -in-kind Bonus contributions Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Executive directors
Tan Chuan Hua — 236 329 55 620
Geng Chang Sheng 80 — — — 80
Tan Di Fu — 207 232 55 494
Independent non-
executive directors
Du Xin Li 80 — — — 80
Yu Ming Yang 80 — — — 80
Chau Kam Wing, Donald 120 — — — 120
Non-executive directors
Tan Cao 80 — — — 80
Liu Chang 80 — — — 80
520 443 561 110 1,634

10. DIRECTORS’ EMOLUMENTS – continued
For the year ended 31 December 2010
Salaries,
allowance Retirement
Directors’ and benefits scheme
Name of director fees -in-kind Bonus contributions Total
Executive directors
Tan Chuan Hua — 331 83 13 427
Geng Chang Sheng — 87 77 — 164
Tan Di Fu (appointed on
18 August 2010) — 239 72 13 324
Independent non-
executive directors
Du Xin Li 80 — — — 80
Yu Ming Yang 80 — — — 80
Chau Kam Wing, Donald 120 — — — 120
Non-executive directors
Tan Cao 80 — — — 80
Liu Chang 80 — — — 80
440 657 232 26 1,355
For the years ended 31 December 2011 and 2010, no emoluments were paid by the Group to the directors as an
inducement to join or upon joining the Company or as compensation for loss of office. None of the directors waived
or agreed to waive any remuneration for the years ended 31 December 2011 and 2010.

11. INDIVIDUALS WITH HIGHEST EMOLUMENTS
The five highest paid individuals of the Group during the year included two directors (2010: two) of the Company
whose emoluments are disclosed in note 10 above. Details of the emoluments paid by the Group to the remaining
three (2010: three) non-director individuals during the year are as follows:
2011 2010
RMB’000 RMB’000
Salaries and other allowances 510 652

Bonus 345 102
Retirement scheme contributions 131 40
986 794
The emoluments fell within the following band:
2011 2010
Number of Number of
individuals individuals
Nil up to HK$1,000,000 3 3
12. SEGMENT REPORTING
Operating segments are identified on the basis of internal reports which provide information about the components
of the Group. This information is reported to and reviewed by the CODM of the Group, for the purpose of resources
allocation and performance assessment.
Over 90% of the Group’s turnover, results and assets are derived from a single business segment which is
manufacture and sales of wooden handicrafts and accessories. No business segment information is presented
accordingly.
The Group’s turnover and results from operations mainly derived from activities in the PRC. Activities outside the
PRC are insignificant. The principal assets of the Group are located in the PRC. Accordingly, no analysis by
geographical segment is provided.
Major customers
No analysis of the Group’s turnover and contribution from operations by major customers has been presented as
there are no transactions with a single external customer equal to or greater than 10% of the Group’s total revenues.

13. DIVIDENDS
During the year, dividend paid and proposed to owners of the Company comprised:
2011 2010
RMB’000 RMB’000
Interim dividends of RMBNil per ordinary share

(2010: RMBNil) declared and paid — —
Final dividend of RMB18.72 cents per ordinary share
(2010: RMB13.22 cents) proposed after the end
of the reporting period 46,800 33,062
46,800 33,062
The directors recommend the payment of a final dividend of RMB18.72 cents per ordinary share, totaling
RMB46,800,000. Such dividend is to be approved by the shareholders of the Company at the Annual General
Meeting scheduled to be held on 18 May 2012. These financial statements do not reflect this recommended dividend.
14. PROFIT ATTRIBUTABLE TO OWNERS OF THE COMPANY
The consolidated profit attributable to owners of the Company includes a profit of approximately RMB30,827,000
(2010: loss of RMB2,950,000) which has been dealt with in the financial statements of the Company.

15. BASIC AND DILUTED EARNINGS PER SHARE
a) Basic earnings per share
The calculation of basic earnings per share is based on the net profit attributable to owners of the Company
and the weighted average number of ordinary shares in issue during the year and is calculated as follows:
(i) Profit attributable to owners of the Company
2011 2010
RMB’000 RMB’000
Earnings used in calculating basic and diluted

earnings per share (profit attributable to
owners of the Company) 93,570 66,124
(ii) Weighted average number of ordinary shares
Number of shares
2011 2010
’000 ’000
Weighted average number of ordinary shares

for the purpose of basic and diluted earnings per share 250,000 250,000
b) Diluted earnings per share
There were no dilutive potential shares in issue during the year. The diluted earnings per share is the same as
the basic earnings per share during the years ended 31 December 2011 and 2010.

16. PROPERTY, PLANT AND EQUIPMENT
The Group
Furniture
Leasehold Plant and and Motor Construction
Buildings improvements machinery equipment vehicles in progress Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(note 16a)
Cost
At 1 January 2010 17,399 10,562 13,345 4,100 3,514 1,420 50,340
Additions — 663 557 653 503 800 3,176
Disposals — (3,395) (29) (589) (628) — (4,641)
Transfer — — 155 243 — (398 ) —
Exchange adjustments — (21) — (2) — — (23)
At 31 December 2010 17,399 7,809 14,028 4,405 3,389 1,822 48,852
At 1 January 2011 17,399 7,809 14,028 4,405 3,389 1,822 48,852

Additions — 806 210 421 436 392 2,265
Disposals — — (256) (138) (140) — (534)
Transfer — — 216 — — (216 ) —
At 31 December 2011 17,399 8,561 14,198 4,684 3,685 1,998 50,525
Accumulated depreciation
At 1 January 2010 1,696 2,175 5,844 2,756 2,090 — 14,561
Charge for the year 390 1,438 1,049 479 325 — 3,681
Written back on disposals — (1,709) (29) (348) (398) — (2,484)
At 31 December 2010 2,086 1,889 6,864 2,886 2,017 — 15,742
At 1 January 2011 2,086 1,889 6,864 2,886 2,017 — 15,742

Charge for the year 389 443 1,117 542 371 — 2,862
Written back on disposals — — (256) (109) (128) — (493)
At 31 December 2011 2,475 2,299 7,725 3,317 2,260 — 18,076
Carrying amount
At 31 December 2011 14,924 6,262 6,473 1,367 1,425 1,998 32,449
At 31 December 2010 15,313 5,920 7,164 1,519 1,372 1,822 33,110
Notes:
a) All buildings are situated on land in the PRC under medium-term leases and are for the Group’s own use.

17. PREPAID LEASE PAYMENTS
The Group
Land use rights Land deposits Total

RMB’000 RMB’000 RMB’000
(Note 17b) (Note 17c)
Cost
At 1 January 2010 22,031 750 22,781
Transfer (note 17c) 742 (742) —
Amount refunded (note 17c) — (8) (8)
At 31 December 2010, 1 January 2011

and 31 December 2011 22,773 — 22,773
Accumulated amoritsation
At 1 January 2010 1,856 — 1,856
Amortisation for the year 518 — 518
At 31 December 2010 2,374 — 2,374
At 1 January 2011 2,374 — 2,374

Amortisation for the year 518 — 518
At 31 December 2011 2,892 — 2,892
Carrying amount
At 31 December 2011 19,881 — 19,881
At 31 December 2010 20,399 — 20,399

17. PREPAID LEASE PAYMENTS– continued
Notes:
a) Analysed for reporting purposes as follows:
2011 2010
RMB’000 RMB’000
Current portion 518 518

Non-current portion 19,363 19,881
19,881 20,399
b) All the Group’s land use rights in the PRC are held under medium-term leases.
c) The land deposits balance of approximately RMB750,000 were for the acquisition of the land use rights in the PRC. The
Group obtained the land use right titles in January 2010 at a cost of RMB742,000 and the balance of RMB8,000 was
returned from the vendor.
d) On 11 May, 2011, 萬州經濟技術開發區土地儲備中心 issued a resumption notice to Chongqing Carpenter Tan Handicrafts
Company Limited (“Carpenter Tan”), a wholly-owned subsidiary of the Company, for the resumption of the land use right of
a piece of land in Chongqing City Wanzhou District (the “Land”) having a carrying amount of RMB7,450,000 as at 31
December 2011. The Group originally intended to erect a production complex on the Land but no construction activity has
commenced up to the date of this report.
On 8 February 2012, Carpenter Tan received another notice from 萬州經濟技術開發區管理委員會 , informing the company
that the Land will be resumed by the government and Carpenter Tan will be compensated by exchanging another piece of
land. The Group is still negotiating with the relevant local authorities for the terms of resumption and agreement has not been
reached up to the date of this report. The management expects that the compensation will not be lower than the carrying
amount of the prepaid land lease. Since the Group has not commenced the development of the production complex on the
Land, there is no adverse and material effect on the trading, business operation, production and financial aspects to the
Group relating to the resumption of land.

18. INVESTMENT PROPERTIES
The Group
RMB’000
Fair value
At 1 January 2010 34,650
Change in fair value 7,150
At 31 December 2010 41,800
At 1 January 2011 41,800

Change in fair value 1,000
At 31 December 2011 42,800
a) The fair value of the Group’s investment properties as at 31 December 2011 was arrived at on the basis of the
valuation carried out on that date by DTZ Debenham Tie Leung Limited, independent qualified professional
valuers not connected with the Group. DTZ Debenham Tie Leung Limited have among its employees members
of the Hong Kong Institute of Surveyors who have appropriate qualifications and recent experiences in the
valuation of similar properties in the relevant locations. The valuation was arrived at by reference to market
evidence of transaction prices for similar properties in the same location and net rental income allowing for
reversionary income potential.
b) The Group’s investment properties were situated in the PRC under the following lease term:
The Group
2011 2010
RMB’000 RMB’000
Medium-term leases 40,400 39,400

Long leases 2,400 2,400
42,800 41,800
c) Investment properties leased out under operating leases
The Group leases out properties under operating leases. The leases typically run for an initial period of one to
three years, with an option to renew the lease after that date at which time all terms are renegotiated. None of
the leases includes contingent rentals.
All of the Group’s property interests held under operating leases to earn rentals are measured using the fair
value model and are classified and accounted for as investment properties.
The Group’s total future minimum lease receivables under non-cancellable operating leases in respect of
investment properties are disclosed in note 34(b)(ii).

19. INTANGIBLE ASSETS
The Group
Licence Trademark Total

RMB’000 RMB’000 RMB’000
(note a) (note b)
Cost
At 1 January 2010 500 1,037 1,537
Addition — — —
At 31 December 2010 500 1,037 1,537
At 1 January 2011 500 1,037 1,537

Eliminated on derecognition (500) — (500)
At 31 December 2011 — 1,037 1,037
Accumulated amortisation and

accumulated impairment
At 1 January 2010 — 1,037 1,037
Amortisation 125 — 125
Impairment 375 — 375
At 31 December 2010 500 1,037 1,537
At 1 January 2011 500 1,037 1,537

Eliminated on derecognition (500) — (500)
At 31 December 2011 — 1,037 1,037
Carrying amount
At 31 December 2011 — — —
At 31 December 2010 — — —
a) The licence represented the franchise fee paid for operating a restaurant in Chongqing, the PRC. Amortisation
expense for 2010 was included in administrative expenses in the consolidated income statement. Due to poor
performance, the restaurant ceased operation in December 2010. The franchise fee paid is not recoverable
and full impairment loss for the then remaining carrying amount was recognised in the year ended 31 December
2010. In 2011, the management decided to discontinue this business and the licence was derecognised in
current year.
b) The trademark represents the trademark previously acquired by the Group and registered in the PRC.
Subsequent expenditure on internally generated trademarks is recognised as an expense in the period in
which it is incurred.

20. INTERESTS IN SUBSIDIARIES
The Company
2011 2010
RMB’000 RMB’000
Investments in unlisted shares at cost 47 47

Amounts due from subsidiaries 84,269 80,587
84,316 80,634
Amounts due from subsidiaries are unsecured, interest-free and repayable on demand.
The following list contains only the particulars of those subsidiaries which principally affect the results, assets and
liabilities of the Group. The class of shares held, unless otherwise-stated, is ordinary.
Issued/
registered
Attributable equity and fully
Name of Place and date interest held by paid-up
subsidiary of incorporation the Company capital Principal activities Legal form
Directly Indirectly
Carpenter Tan British Virgin 100% — USD50,000 Investment holding Private limited
(BVI) Holdings Islands liability company
Group Co., Ltd 2 July 2004
(“CTBVI”)
Hong Kong Hong Kong — 100% HK$1 Investment holding Private limited
Carpenter Tan 10 September 2004 liability company
Company Limited
(“CTHK”)
Carpenter Tan Hong Kong — 100% HK$10,000 Retailing sale of Private limited
Development 18 March 2008 small size liability company
Company Limited wooden handicrafts
(“CT Development”) and accessories
Chongqing Carpenter The PRC — 100% RMB Design, manufacture Wholly foreign-
Tan Handicrafts 6 March 1997 100,000,000 and distribution owned enterprise
Company Limited of small size wooden
(“Carpenter Tan”) handicrafts and
accessories and
the operation of
a franchise
network

20. INTERESTS IN SUBSIDIARIES – continued
Issued/
registered
Attributable equity and fully
Name of Place and date interest held by paid-up
subsidiary of incorporation the Company capital Principal activities Legal form
Directly Indirectly
Chongqing City Wan The PRC — 100% RMB Manufacture of Domestic enterprise
Zhou Qu Ziqiang 26 February 2004 2,000,000 small size wooden
Muye Company handicrafts and
Limited accessories
(“Ziqiang Muye”)
Beijing Carpenter The PRC — 100% RMB Property investment Domestic enterprise
Tan Handicrafts 12 November 2008 10,000,000
Company Limited
(“Beijing Carpenter
Tan”)
* The Group deregistered four subsidiaries during the year ended 31 December 2011. The four deregistered subsidiaries were
Chongqing Carpenter Tan Munan Lifestyle Handicrafts Company Limited, Chongqing Carpenter Tan Chennan Lifestyle
Handicrafts Company Limited, Chongqing Carpenter Tan Xiangnan Lifestyle Handicrafts Company Limited and Chongqing
Hao Yu Handicrafts Company Limited. All these subsidiaries were engaged in selling of high end home accessories and
Chinese style furniture.

21. INVENTORIES
The Group
2011 2010
RMB’000 RMB’000
Raw materials 37,790 35,232

Work-in-progress 7,637 6,846
Finished goods 15,270 11,135
60,697 53,213
The analysis of the amount of inventories recognised as an expense is as follows:
2011 2010
RMB’000 RMB’000
Carrying amount of inventories sold 75,979 66,965

Write-down of inventories 1,807 2,275
Reversal of write-down of inventories (695) —
77,091 69,240
During the year, the Group sold inventories which had been written down in prior years. The written-down of
RMB695,000 made in prior year was therefore reversed in current year.
22. TRADE RECEIVABLES
Customers are generally required to make payments for orders prior to delivery of goods. Credit terms within 30
days are granted to those customers with high credibility. An ageing analysis of the trade receivables is as follows:
The Group
2011 2010
RMB’000 RMB’000
Trade receivables 1,270 1,178

Less: Allowance for doubtful debts (note 22(b)) (8) (7)
1,262 1,171

22. TRADE RECEIVABLES – continued
a) Ageing analysis of trade receivables is as follows:
The Group
2011 2010
RMB’000 RMB’000
0 to 30 days 1,118 865

31 to 60 days 19 197
61 to 90 days 38 40
91 to 180 days 23 34
181 to 365 days 32 21
Over 1 year 40 21
1,270 1,178
b) Movements in the allowance account for doubtful debts
Impairment losses in respect of trade receivables are recorded using an allowance account unless the Group
is satisfied that recovery of the amount is remote, in which case the impairment loss is written off against trade
receivables directly.
The movements in the allowance account for doubtful debts are as follows:
The Group
2011 2010
RMB’000 RMB’000
At 1 January 7 3
Impairment loss recognised 1 4
At 31 December 8 7
Impairment of trade receivables are considered individually by reference to their ageing and their recoverability.
The Group does not hold any collateral over these balances.

22. TRADE RECEIVABLES – continued
c) The ageing analysis of trade receivables that are not impaired
The ageing analysis of trade debtors that are neither individually nor collectively considered to be impaired are
as follows:
The Group
2011 2010
RMB’000 RMB’000
Past due but not impaired

31 to 60 days past due 19 197
More than 1 year past due 32 14
144 306
Neither past due nor impaired 1,118 865
1,262 1,171
Trade receivables that were neither past due nor impaired relate to a wide range of customers for whom there
was no recent history of default.
Trade receivables that were past due but not impaired relate to a number of independent customers that have
a good track record with the Group. Based on past experience, the management of the Group believes that no
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. The Group does not hold any collateral over
these balances.

23. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS
The Group The Company

2011 2010 2011 2010
RMB’000 RMB’000 RMB’000 RMB’000
Other receivables 2,821 3,565 — 1,493

Less: Allowance for doubtful debts
(note 23(a)) — — — —
2,821 3,565 — 1,493

Trade and other deposits 3,428 2,427 — —
Prepayments 306 1,306 — —
VAT and other non-income
tax recoverable 1,021 1,108 — —
7,576 8,406 — 1,493
a) Movements in allowance account for doubtful debts
Impairment loss in respect of other receivables are recorded using an allowance account unless the Group is
satisfied that the recovery of the amount is remote, in which case the impairment loss is written off against
other receivables directly. The allowance made related to long overdue debts and was not expected to be
recovered.
A reversal of approximately RMB520,000 was made in 2010 when the debts which were previously impaired
were recovered during 2010.
The movements in the allowance account for doubtful debts are as follows:
The Group
2011 2010
RMB’000 RMB’000
At 1 January — 520
Reversal of impairment loss recognised in prior year — (520)
At 31 December — —

24. INCOME TAX IN THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
a) Current taxation in the consolidated statement of financial position represents:
The Group
2011 2010
RMB’000 RMB’000
Provision for the year 33,195 13,519

Underprovision in prior years, net 5 992
33,200 14,511
Tax paid (19,942) (11,901)
13,258 2,610
Balance of provision for income tax related to prior years 4,939 2,329
Net income tax payable 18,197 4,939
b) Deferred tax liabilities recognised:
The components of deferred tax liabilities recognised in the consolidated statement of financial position and
the movements during the year are as follows:
The Group
Revaluation Fair value
surplus changes Withholding
of land and in investment tax on
buildings properties dividends Total
RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2010 574 1,896 3,672 6,142

Charge to consolidated
income statement for
the year (note 9(a)) — 1,787 3,170 4,957
At 31 December 2010 574 3,683 6,842 11,099
At 1 January 2011 574 3,683 6,842 11,099

Release upon distribution
of dividends (note 9(a)) — — (1,723) (1,723)
Charge to consolidated
income statement for
the year (note 9(a)) — 250 4,338 4,588
At 31 December 2011 574 3,933 9,457 13,964

24. INCOME TAX IN THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION – continued
c) Deferred tax assets not recognised
The Group has not recognised deferred tax assets in respect of accumulative tax losses of RMB23,547,000
(2010: RMB19,252,000) as it is not probable that future taxable profits against which the losses can be utilised
will be available in the relevant tax jurisdiction and entity. The tax losses will expire in the coming one to five
years, except for an amount of RMB9,203,000 (2010: RMB6,670,000) which do not expire under current tax
legislation.
25. CASH AND CASH EQUIVALENTS

2011 2010 2011 2010
RMB’000 RMB’000 RMB’000 RMB’000
Cash and cash equivalents in

the consolidated statement
of financial position and the
consolidated statement
of cash flows 250,790 181,298 6,747 14,990
Bank balances carry interest at market rates ranging from 0.5% to 3.1% (2010: 0.1% to 1.2%).
As at 31 December 2011, the balances that were placed with banks in PRC amounted to RMB239,351,000 (2010:
RMB162,605,000). Remittance of funds out of the PRC is subject to the exchange controls imposed by the PRC
government.
26. AMOUNTS DUE TO SUBSIDIARIES
The amounts are unsecured, interest-free and repayable on demand.
27. TRADE PAYABLES
The credit terms granted by the suppliers are generally 30 days. Ageing analysis of trade payables is as follows:
The Group
2011 2010
RMB’000 RMB’000
0 to 30 days 1,693 2,227

31 to 60 days 164 251
61 to 90 days 1 74
91 to 180 days 49 9
181 to 365 days 20 374
Over 1 year 78 74
2,005 3,009

28. OTHER PAYABLES AND ACCRUALS

2011 2010 2011 2010
RMB’000 RMB’000 RMB’000 RMB’000
Other payables and accruals 5,642 5,142 1,172 922

Current portion of long-term payable
(note 29) — 1,851 — —
5,642 6,993 1,172 922

Provision for sales returns
(note 28(a)) 4,282 3,687 — —
VAT and other non-income
tax payables 3,413 1,810 — —
Trade deposits received 5,972 5,599 — —
19,309 18,089 1,172 922
(a) A reconciliation of the provision for sales returns is as follows:
2011 2010
RMB’000 RMB’000
At 1 January 3,687 —
Addition during the year 595 3,687
At 31 December 4,282 3,687
The provision for sales returns is estimated based on the expected total sales returns for the year less the
actual sales returns already taken place during the year.
29. LONG-TERM PAYABLE
The Group
2011 2010
RMB’000 RMB’000
Long-term payable — 1,851
Current portion (note 28) — 1,851

Non-current portion — —
— 1,851

29. LONG-TERM PAYABLE– continued
Long-term payable is repayable as follows:
The Group
2011 2010
RMB’000 RMB’000
Within 1 year — 1,851
The long-term payable represents the balance of consideration of RMB15,810,000 payable for the acquisition of
certain building and land use rights by the Group’s subsidiary Carpenter Tan from Wanzhou District Asset Operation
Company （萬州區資產經營公司）(the “Creditor”), an independent third party.
Prior to 21 July 2008, the balance of the consideration was payable between 2002 to 2021 by twenty annual
instalments. On 21 July 2008, Carpenter Tan and the Creditor entered into a supplementary repayment agreement
pursuant to which the then outstanding balance as at 21 July 2008 of approximately RMB7,994,000 was to be
repaid by three equal annual installments of RMB2,000,000 each in 2008, 2009 and 2010 and the balance of
approximately RMB1,994,000 was to be fully settled in 2011.
The long-term payable was unsecured and interest-free and had been discounted to its present value at an effective
interest rate of 7.74%.
30. DEFERRED INCOME
Deferred income represents government grant received by the Group. The grant aimed to subsidise the Group for
purchasing certain property, plant and equipment. Government grant is recognised as income over the useful lives
of the relevant assets. During the year, the entire grant was spent for its intended purpose and the deferred income
of RMB35,000 (2010: RMB27,000) was released to profit or loss.
31. SHARE CAPITAL
The Company
Number Amount
of shares Amount equivalent to
HK$’000 RMB$’000
Ordinary shares of HK$0.01

Authorised:
and 31 December 2011 10,000,000,000 100,000 87,926
Issued and fully paid:

and 31 December 2011 250,000,000 2,500 2,200

31. SHARE CAPITAL – continued
(a) Authorised share capital of the Company
The Company was incorporated on 20 June 2006 with an authorised share capital of HK$380,000 divided into
38,000,000 ordinary shares at a par value of HK$0.01 each. On 17 November 2009, the authorised share
capital of the Company was increased to HK$100,000,000 by the creation of a further 9,962,000,000 ordinary
shares at a par value of HK$0.01 each.
All shares rank pari passu in respect of voting rights, dividends and distribution of net assets.
(b) Capital management
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern
while maximising the return to stakeholders through the optimisation of the debt and equity balance. The
Group’s overall strategy remains unchanged over the year.
The capital structure of the Group consists of (i) debts, comprising long-term payable and proposed final
dividends deducting cash and cash equivalents; and (ii) equity attributable to owners of the Company, comprising
issued share capital, reserves and retained earnings, less proposed final dividends.
The directors of the Company review the capital structure periodically. The Group considers the cost of capital
and risks associated with the capital and will balance its overall capital structure through new share issues of
the Company, repayment of debts as well as the raising of new debts.
Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.
The details of the net debt to equity ratio of the Group are as follows:
2011 2010
RMB’000 RMB’000
Non-current liabilities
Long-term payable — —
Total debt — —
Add: Proposed final dividends 46,800 33,062

Less: Cash and cash equivalents (250,790) (181,298)
Net debt N/A N/A
Total equity 361,063 301,309
Less: Proposed final dividends (46,800) (33,062)
Adjusted equity 314,263 268,247
Net debt to equity ratio N/A N/A

32. RESERVES
The Group

Property Currency
Share Capital Statutory Other revaluation translation Retained
premium reserve reserves reserves reserve reserve profits Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(note a) (note b) (note c) (note d) (note e) (note f)
At 1 January 2010 114,674 2,767 65,454 17,738 1,723 304 54,198 256,858
Profit for the year — — — — — — 66,124 66,124
on translation of
of foreign operations — — — — — (923) — (923)
Total comprehensive
income for the year — — — — — (923) 66,124 65,201
Dividends — — — — — — (22,950) (22,950)
Transfer to reserve — — 13,652 — — — (13,652) —
At 31 December 2010 114,674 2,767 79,106 17,738 1,723 (619) 83,720 299,109
At 1 January 2011 114,674 2,767 79,106 17,738 1,723 (619) 83,720 299,109
Profit for the year — — — — — — 93,570 93,570
on translation of
of foreign operations — — — — — (754) — (754)
Total comprehensive
income for the year — — — — — (754) 93,570 92,816
Dividends — — — — — — (33,062) (33,062)
Transfer to reserve — — 18,279 — — — (18,279) —
At 31 December 2011 114,674 2,767 97,385 17,738 1,723 (1,373) 125,949 358,863

32. RESERVES – continued
The Company

Currency
Share translation Retained
premium reserve profits Total
RMB’000 RMB’000 RMB’000 RMB’000
(note a) (note f)
At 1 January 2010 114,674 1,050 (1,095) 114,629

Loss for the year — — (2,950) (2,950)
Exchange differences on
translation of financial statements
of foreign operations — (3,199) — (3,199)
Total comprehensive income
for the year — (3,199) (2,950) (6,149)
Dividends — — (22,950) (22,950)
At 31 December 2010 114,674 (2,149) (26,995) 85,530
At 1 January 2011 114,674 (2,149) (26,995) 85,530

Profit for the year — — 30,827 30,827
Exchange differences on
translation of financial statements
of foreign operations — (3,669) — (3,669)
Total comprehensive income
for the year — (3,669) 30,827 27,158
Dividends — — (33,062) (33,062)
At 31 December 2011 114,674 (5,818) (29,230) 79,626

32. RESERVES – continued
Notes:
a) Share premium
Under the Companies Law (Revised) of the Cayman Islands, the share premium account of the Company is distributable to
the shareholders of the Company provided that immediately following the date on which a dividend is proposed to be
distributed, the Company will be in a position to pay off its debts as they fall due in the ordinary course of business.
b) Capital reserve
Capital reserve represents the excess of paid-up capital over the registered capital of the companies comprising the Group.
c) Statutory reserves
The statutory reserves include the following reserves in the PRC:
i) Statutory surplus reserve
The PRC subsidiaries of the Group are required to transfer 10% of the profit after tax, as determined under the PRC
accounting rules and according to their articles of associations, to the statutory surplus reserve until the balance reaches
50% of their registered capital. The transfer to this reserve must be made before distributing dividends to shareholders.
The reserve can be used to make up for previous years’ losses, expand the existing operations or convert into additional
capital of the subsidiaries. In 2010, the Company’s wholly-owned subsidiary Chongqing Carpenter Tan Handicrafts
Company Limited (“Carpenter Tan”) increased its registered capital to RMB100,000,000. An additional amount of
RMB11,684,000 (2010: RMB7,606,000), being 10% of Carpenter Tan’s profit before appropriation for the year, was
transferred to this reserve in accordance with the provisions set above. As the other PRC subsidiaries of the Group
either had a loss for the years ended 31 December 2010 and 2011 or their respective statutory surplus reserves have
reached 50% of their respective registered capital, the other PRC subsidiaries did not make any transfer of their profit to
this reserve for the year ended 31 December 2010 and 2011 accordingly.
ii) Enterprise development and staff welfare funds
Pursuant to regulations in the PRC, the Company’s wholly-owned subsidiary Ziqiang Muye, which is registered as a
social welfare enterprise in the PRC, is required to transfer 50% and 20% of its tax concessions of value-added tax, as
further detailed in note 9(a)(i), to the enterprise development fund and staff welfare fund respectively. The transfer to
these funds must be made before distributing dividends to shareholders. The funds can be used for the enterprise
development and the staff welfare only and are not available for distribution to shareholders. The Group transferred
approximately RMB6,595,000 (2010: RMB6,046,000) of its net profit to these funds for the year ended 31 December
2011.
d) Other reserves
Other reserves represent the difference between the consideration for the acquisition of the subsidiaries paid by the Group
and the nominal value of the paid-up capital of the subsidiaries.
e) Property revaluation reserve
Property revaluation reserve has been set up and is dealt with in accordance with the accounting policies adopted for land
and buildings held for own use in notes 2(d) and (f).
f) Currency translation reserve
Currency translation reserve comprises all foreign exchange differences arising from the translation of the financial statements
of foreign operations. The reserve is dealt with in accordance with the accounting policies set out in note 2(r).
g) Distributable reserves
Distributable reserves of the Company as at 31 December 2011 was RMB85,444,000 (2010: RMB87,679,000).

33. FINANCIAL INSTRUMENTS
a) Categories of financial instruments
The Group
2011 2010
RMB’000 RMB’000
Financial assets
Trade receivables 1,262 1,171
Other receivables 2,821 3,565
Bank balances and cash 250,790 181,298
Loans and receivables (including cash and cash equivalents) 254,873 186,034
Financial liabilities
Trade payables 2,005 3,009
Other payables 5,642 6,993
Financial liabilities at amortised cost 7,647 10,002
b) Financial risk management objectives and policies
Details of the Group’s financial instruments as stated in note 33(a) are disclosed in the respective notes. The
risks associated with these financial instruments and the policies on how to mitigate these risks are set out
below. The management manages and monitors these exposures to ensure appropriate measures are
implemented on a timely and effective manner.

33. FINANCIAL INSTRUMENTS – continued
b) Financial risk management objectives and policies – continued
i) Currency risk
Certain subsidiaries of the Group have foreign currency bank balances and cash, trade and other receivables
and payables, which expose the Group to foreign currency risk. The Group currently does not have a
foreign currency hedging policy. However, the management of the Group monitors foreign exchange
exposures and will consider hedging significant foreign currency exposures should the need arise.
The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities
at the end of the respective reporting periods are as follows:
2011 2010
RMB’000 RMB’000
Assets
HK$ 12,220 21,291
US$ 1,638 482
Euro 88 69
13,946 21,842
Liabilities
HK$ 1,449 1,212
US$ — —
Euro — —
1,449 1,212

i) Currency risk – continued
Sensitivity analysis
The Group is mainly exposed to Hong Kong Dollars (“HK$”), United States Dollars (“US$”) and Euro
(“Euro”).
The following table details the Group’s sensitivity to a 5% increase and decrease in RMB against the
relevant foreign currencies. 5% is the sensitivity rate used which represents management’s assessment of
reasonably possible changes in foreign exchange rates. The sensitivity analysis includes only outstanding
foreign currency denominated monetary items and adjusts their translation for a 5% change in foreign
currency rates. A positive number indicates an increase in profit where RMB weaken against the relevant
foreign currencies. For a 5% strengthening of RMB against the relevant foreign currencies, there would be
an equal and opposite impact on the profit and other equity, and the balance below would be negative.
2011 2010
Effect on Effect on Effect on Effect on
profit after tax other profit after tax other
and retained components and retained components
profits of equity profits of equity
RMB’000 RMB’000 RMB’000 RMB’000
HK$ 92 447 115 888

US$ 65 16 7 18
Euro 1 3 1 —
158 466 123 906

ii) Interest rate risk
The Group is exposed to interest rate risk mainly from bank deposits (see note 25) of the Group. Bank
deposits expose the Group to cash flow interest rate risk. The Group currently does not use any derivative
contracts to hedge its exposure to interest rate risk. However, the management of the Group will consider
hedging significant interest rate exposures should the need arise.
Sensitivity analysis
The sensitivity analysis below has been determined based on the exposure to variable interest rates of
bank deposits of the Group. The analysis is prepared assuming the bank balances outstanding at the end
of the reporting period were outstanding for the whole year. A 100 basis point increase or decrease is
used, which represents management’s assessment of reasonably possible changes in interest rates.
If interest rates had been 100 basis point higher and all other variables were held constant, the Group’s
profit after tax and retained profits for the year ended 31 December 2011 would increase by approximately
RMB2,506,000 (2010: RMB1,811,000). An equal and opposite impact on the Group’s profit for the respective
years would result if the interest rates had been 100 basis points lower.
iii) Credit risk
As at 31 December 2011, the Group’s maximum exposure to credit risk which will cause a financial loss to
the Group due to failure to discharge an obligation by the counterparties arising from the carrying amounts
of the respective recognised financial assets as stated in note 33(a).
The management considers the credit risk exposure of the Group’s trade receivables is low as sales are
generally settled before delivery of goods or within 30 days. The directors of the Company review the
recoverable amount of each individual debt regularly to ensure that adequate impairment losses are
recognised for irrecoverable amounts. In this regard, the directors of the Company consider that the Group’s
credit risk is significantly reduced.
The Group has no significant concentration of credit risk of the Group’s trade and other receivables, with
exposure spread over a large number of counterparties and customers. The credit risk in liquid funds is
limited because the counterparties are banks with high credit ratings.

iv) Liquidity risk
The Group’s liquidity position is monitored closely by the directors of the Company. In the management of
the liquidity risk, the Group monitors and maintains a level of cash and cash equivalents adequate by the
management to finance the Group’s operations and mitigate the effects of fluctuations in cash flows. The
management of the Company monitors the utilisation of banking facilities and ensures compliance with
loan covenants. The Group mainly relies on internally generated funds and banking facilities as a significant
source of liquidity.
The following table details the Group’s remaining contractual maturity for its financial liabilities. For non-
derivative financial liabilities, the table has been drawn up based on the undiscounted cash flows of financial
liabilities based on the earliest date on which the Group can be required to pay. The table includes both
interest and principal cash flows.
Weighted
average Total
effective contractual Total
interest Within Over undiscounted carrying
rate 1 year 1-2 years 2-5 years 5 years cash flow amount
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 31 December 2010
Trade payables — 3,009 — — — 3,009 3,009
Other payables
(excluding current
portion on long-
term payable) — 5,142 — — — 5,142 5,142
Long-term payable
(including current
portion on long-
term payable) 7.74% 1,994 — — — 1,994 1,851
10,145 — — — 10,145 10,002

iv) Liquidity risk – continued
Weighted
average Total
effective contractual Total
interest Within Over undiscounted carrying
rate 1 year 1-2 years 2-5 years 5 years cash flow amount
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 31 December 2011
Trade payables — 2,005 — — — 2,005 2,005
Other payables — 5,642 — — — 5,642 5,642
7,647 — — — 7,647 7,647
c) Fair value
The directors of the Company consider that the carrying amounts of financial assets and financial liabilities
approximate their fair values.
34. COMMITMENTS
a) Capital commitments
At 31 December 2011, capital commitments not provided for in the financial statements were as follows:
2011 2010
RMB’000 RMB’000
Contracted but not provided for in respect of

– property, plant and equipment 140 1,496

34. COMMITMENTS – continued
b) Operating lease commitments
i) At 31 December 2011, the total future minimum lease payables under non-cancellable operating leases in
respect of premises are as follows:
2011 2010
RMB’000 RMB’000
Within one year 5,459 3,408

After one year but within five years 7,226 162
12,685 3,570
Operating lease payments represent rentals payable by the Group for certain of its office and retail shops.
Leases are negotiated for terms ranging from 1 to 10 years.
The above lease commitments represent basic rents only and do not include contingent rental payable in
respect of a retail shop leased by the Group. In general, these contingent rents are calculated with reference
to 15% to 20% of the retail shop’s turnover using pre-determined formulae. It is not possible to estimate in
advance the amount of such contingent rental payable. No contingent rent was paid during the year.
(ii) The Group leases out investment properties under operating lease. The leases were negotiated for terms
ranging from 1 to 3 years. None of the lease include contingent rental. At 31 December 2011, the total
future minimum lease receivables under non-cancellable operating leases in respect of premises are as
follows:
2011 2010
RMB’000 RMB’000
Within one year 2,326 1,808

After one year but within five years 1,871 963
4,197 2,771

35. RELATED PARTY TRANSACTIONS
a) Except for those disclosed elsewhere in these financial statements, the Group had balances due from related
parties as at 31 December 2011 as follows:
2011 2010
Balance at Balance at
beginning Balance at beginning Balance at
Trade Non-trade Total of year end of year Trade Non-trade Total of year end of year
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Directors and key

management members
Geng Chang Sheng — — — — — — — — 14 —
Su Jian Ping — — — — — — — — 131 —
Total due from related parties — — — — — — — — 145 —
b) Maximum non-trade outstanding balances due from related parties disclosed pursuant to Section 161B of the
Hong Kong Companies Ordinances are as follows:
2011 2010
RMB’000 RMB’000
Directors and key management members

Geng Chang Sheng — 14
Su Jian Ping — 131
c) Key management compensation
Remuneration for key management personnel of the Group including certain amounts paid to the Company’s
directors as disclosed in note 10 and certain of the highest paid employees as disclosed in note 11, is as
follows:
2011 2010
RMB’000 RMB’000
Short-term employee benefits 2,379 2,083

Retirement scheme contributions 241 66
2,620 2,149
Notes:
i) The transactions were based on the terms mutually agreed between the Group and the related parties. In the opinion of
the Company’s directors, these related party transactions were conducted in the ordinary course of business of the
Group.
ii) The amounts due from related parties were unsecured, interest-free and had no fixed terms of repayment.

36. ULTIMATE HOLDING COMPANY
At 31 December 2011, the directors consider the ultimate holding company of the Company to be Lead Charm
Investments Limited, a company incorporated in the British Virgin Islands. This entity does not produce financial
statements available for public use.
37. POSSIBLE IMPACT OF AMENDMENTS, NEW STANDARDS AND INTERPRETATIONS ISSUED

BUT NOT YET EFFECTIVE FOR THE YEAR ENDED 31 DECEMBER 2011
Up to the date of issue of these financial statements, the HKICPA has issued the following Amendments, new
Standards and Interpretations which are not yet effective for the year ended 31 December 2011.
The Group has not early applied any of the following new and revised Standards, Amendments or Interpretations
that have been issued but are not yet effective.
Amendments to HKFRS 7 Disclosures – Transfers of Financial Assets1

Disclosures – Offsetting Financial Assets and Financial Liabilities2
Mandatory Effective Date of HKFRS 9 and Transition Disclosures3
HKFRS 9 Financial Instruments3
HKFRS 10 Consolidated Financial Statements2
HKFRS 11 Joint Arrangements2
HKFRS 12 Disclosure of Interests in Other Entities2
HKFRS 13 Fair Value Measurement2
Amendments to HKAS 1 Presentation of Items of Other Comprehensive Income5
Amendments to HKAS 12 Deferred Tax – Recovery of Underlying Assets4
HKAS 19 (as revised in 2011) Employee Benefits2
HKAS 27 (as revised in 2011) Separate Financial Statements 2
HKAS 28 (as revised in 2011) Investments in Associates and Joint Ventures2
Amendments to HKAS 32 Offsetting Financial Assets and Financial Liabilities6
HK (IFRIC) - Int 20 Stripping Costs in the Production Phase of a Surface Mine2
1
Effective for annual periods beginning on or after 1 July 2011.
2
Effective for annual periods beginning on or after 1 January 2013.
3
4
5
Effective for annual periods beginning on or after 1 July 2012.
6

37. POSSIBLE IMPACT OF AMENDMENTS, NEW STANDARDS AND INTERPRETATIONS ISSUED

BUT NOT YET EFFECTIVE FOR THE YEAR ENDED 31 DECEMBER 2011 – continued
HKFRS 9 Financial Instruments issued in November 2009 and amended in October 2010 introduces new
requirements for the classification and measurement of financial assets and financial liabilities and for derecognition.
• HKFRS 9 requires all recognised financial assets that are within the scope of HKAS 39 Financial Instruments:
Recognition and Measurement to be subsequently measured at amortised cost or fair value. Specifically, debt
investments that are held within a business model whose objective is to collect the contractual cash flows, and
that have contractual cash flows that are solely payments of principal and interest on the principal outstanding
are generally measured at amortised cost at the end of subsequent accounting periods. All other debt investments
and equity investments are measured at their fair values at the end of subsequent accounting periods.
• The most significant effect of HKFRS 9 regarding the classification and measurement of financial liabilities
relates to the accounting for changes in fair value of a financial liability (designated as at fair value through
profit or loss) attributable to changes in the credit risk of that liability. Specifically, under HKFRS 9, for financial
liabilities that are designated as at fair value through profit or loss, the amount of change in the fair value of the
financial liability that is attributable to changes in the credit risk of that liability is recognised in other comprehensive
income, unless the recognition of the effects of changes in the liability’s credit risk in other comprehensive
income would create or enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to
a financial liability’s credit risk are not subsequently reclassified to profit or loss. Previously, under HKAS 39,
the entire amount of the change in the fair value of the financial liability designated as at fair value through profit
or loss was recognised in profit or loss.
HKFRS 9 is effective for annual periods beginning on or after 1 January 2015, with earlier application permitted.
The directors anticipate that HKFRS 9 will be adopted in the Group’s consolidated financial statements for the
annual period beginning 1 January 2015 and that the application of the new Standard will have a signficant impact
on amounts reported in respect of the Group’s financial assets and financial liabilities. However, it is not practicable
to provide a reasonable estimate of that effect until a detailed review has been completed.
The amendments to HKFRS 7 increase the disclosure requirements for transactions involving transfers of financial
assets. These amendments are intended to provide greater transparency around risk exposures when a financial
asset is transferred but the transferor retains some level of continuing exposure in the asset. The amendments also
require disclosures where transfers of financial assets are not evenly distributed throughout the period.
The directors do not anticipate that these amendments to HKFRS 7 will have a significant effect on the Group’s
disclosures regarding transfers of trade receivables previously effected. However, if the Group enters into other
types of transfers of financial assets in the future, disclosures regarding those transfers may be affected.
The amendments to HKAS 12 titled Deferred Tax: Recovery of Underlying Assets mainly deal with the measurement
of deferred tax for investment properties that are measured using the fair value model in accordance with HKAS 40
Investment Property. Based on the amendments, for the purposes of measuring deferred tax liabilities and deferred
tax assets for investment properties measured using the fair value model, the carrying amounts of the investment
properties are presumed to be recovered through sale, unless the presumption is rebutted in certain circumstances.
The Group is in the process of making an assessment of what the impact of other amendments is expected to be
in the period of initial application. So far it has concluded that the adoption of them is unlikely to have a significant
impact on the Group’s results of operations and financial position.

FINANCIAL SUMMARY
Year ended 31 December

2011 2010 2009 2008 2007
Results
Turnover 244,001 189,418 139,791 108,656 123,169
Profit before taxation 131,358 85,592 57,758 32,185 48,332
Income tax (37,788) (19,468) (11,836) (6,311) (6,866)
Profit for the year 93,570 66,124 45,922 25,874 41,466
Attributable to
Owners of the Company 93,570 66,124 45,922 25,874 41,515
Minority interests — — — — (49)
Assets and liabilities

Total assets 415,455 339,397 343,093 203,167 159,973
Total liabilities (54,392) (38,088) (84,035) (92,541) (46,650)
Minority interests — — — — —
Equity attributable to
owners of the Company 361,063 301,309 259,058 110,626 113,323
Note:
The summary of the results and assets and liabilities for each of the two years ended 31 December 2008 were extracted from the
Company’s prospectus dated 15 December 2009 and prepared on a combined basis as if the current structure of the Group has been
in existence throughout the years.

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CONTENTS

6 Management Discussion and Analysis

20 Biography of Directors and Senior Management

25 Corporate Governance Report

31 Report of the Directors

39 Independent Auditor’s Report

41 Consolidated Income Statement

42 Consolidated Statement of Comprehensive Income

43 Consolidated Statement of Financial Position

45 Statement of Financial Position

46 Consolidated Statement of Changes in Equity

47 Consolidated Statement of Cash Flows

49 Notes to the Financial Statements

104 Financial Summary

EXECUTIVE DIRECTORS PRINCIPAL PLACE OF BUSINESS

AUTHORISED REPRESENTATIVES Agricultural Bank of China

2 Carpenter Tan Holdings Limited Annual Report 2011

For the year ended 31 December % of

Liquidity and Gearing

(1) Current ratio is calculated as current assets divided by current liabilities.

Annual Report 2011 Carpenter Tan Holdings Limited 3

HISTORICAL GROWTH IN OPERATING RESULTS

RAPID GROWTH OF SALES NETWORK

4 Carpenter Tan Holdings Limited Annual Report 2011

EXPANSION OF SALES NETWORK

Tan Chuan Hua

Hong Kong, 28 March 2012

6 Carpenter Tan Holdings Limited Annual Report 2011

Total 1,325 7 1,089 4

The PRC Market

Annual Report 2011 Carpenter Tan Holdings Limited 7

8 Carpenter Tan Holdings Limited Annual Report 2011

Annual Report 2011 Carpenter Tan Holdings Limited 9

4. Products design and development

10 Carpenter Tan Holdings Limited Annual Report 2011

Annual Report 2011 Carpenter Tan Holdings Limited 11

Actual Production (Pieces)

Combs 4,058,200 4,024,900

Total 4,841,900 4,689,700

6. Marketing and promotion

In the year, the Group placed soft advertisements in “Healthy Lifestyle”（健康生活）

By publishing internal magazine “Carpenter Tan”（譚木匠）, leaflet “Wood to Integrity”（以木立信）and comic

7. Awards and accreditation

12 Carpenter Tan Holdings Limited Annual Report 2011

For the year ended 31 December

Total 244,001 100.0 189,418 100.0

* Other accessories include small home accessories as well as furniture.

3. Gross Profit and Gross Profit Margin

Annual Report 2011 Carpenter Tan Holdings Limited 13

4. Other Revenue and Other Net Income

5. Selling and Distribution Expenses

7. Other Operating Expenses

14 Carpenter Tan Holdings Limited Annual Report 2011

10. Profit for the Year

ANALYSIS OF MAJOR BALANCE SHEET ITEMS

1. Property, Plant and Equipment

Annual Report 2011 Carpenter Tan Holdings Limited 15

4. Other Receivables, Deposits and Prepayments