The Code on Corporate Governance Practices
The Company is dedicated to maintaining and ensuring high standards of corporate governance practices. The corporate governance principles of the Company emphasize accountability and transparency and are adopted in the best interest of the Company and its shareholders. The Board reviews its corporate governance practices from time to time in order to meet the rising expectations of shareholders and to fulfill its commitment to excellence in corporate governance.

The Group has complied with the applicable code provisions set out in the Code of Corporate Governance Practices (the "Code") contained in Appendix 14 to the Rules Governing the Listing of Securities (the "Listing Rules") on The Stock Exchange of Hong Kong Limited (the "Stock Exchange") for the year ended March 31, 2011 except for Code Provision A.2.1, of which details are disclosed below.

Board of Directors
The Board is charged with providing effective and responsible leadership for the Company. The Board takes responsibility to oversee all major matters of the Company, including the formulation and approval of the Group’soverall objectives and strategies, internal control and risk management systems, monitoring its operating and financial performance, and evaluating the performance of the senior management. The Directors, individually and collectively, have to make decisions objectively in the best interests of the Company and its shareholders

The Board currently consists of eleven Directors, of whom six are executive Directors, one is a non-executive Director and four are independent non-executive Directors. All six executive Directors are responsible for implementating the business strategies and managing the business of the Group in accordance with all applicable rules and regulations, including, but not limited to, the Listing Rules. All Directors (including the nonexecutive Director and independent non-executive Directors) have been consulted on all major and material matters of the Group. The Company maintains appropriate directors’ and officers’ liabilities insurance.

The role of the Board includes convening shareholders' meetings and reporting their work to the shareholders' meetings, implementing the resolutions of the shareholders' meetings, determining the Group's business plans and investment plans, formulating the Group's annual budget and final accounts, formulating proposals for dividend and bonus distributions and for the increase or reduction of registered or share capital, formulating proposals for share repurchase in accordance with any repurchase mandate granted by the shareholders' meeting as well as exercising other powers, functions and duties as conferred by the articles of association of the Company. In discharging its responsibilities, the Board meets regularly and acts in good faith, with due diligence and care.

During the financial year ended March 31, 2011, the Board convened a total of four Board meetings based on the needs of the operation and business development of the Group. The composition of the Board and their respective attendance at the Board meetings and other committee meetings convened during the financial year ended March 31, 2011 are as follows:

	No. of meetings attended/held
	Board Meeting	Audit Committee Meeting	Remuneration Committee Meeting
Executive Directors
Gao Dekang (Chairman of the Board of Directors)	4/4	N/A	1/1
Mei Dong	4/4	N/A	N/A
Kong Shengyuan	4/4	N/A	N/A
Gao Miaoqin	4/4	N/A	N/A
Huang Qiaolian	4/4	N/A	N/A
Wang Yunlei	4/4	N/A	N/A
Non-Executive Director
Shen Jingwu	4/4	N/A	1/1
Independent Non-Executive Directors
Dong Binggen	4/4	2/2	1/1
Jiang Hengjie	4/4	2/2	1/1
Wang Yao	4/4	N/A	1/1
Ngai Wai Fung	4/4	2/2	N/A

The number of independent non-executive Directors has met the requirements under the Listing Rules and Mr.Ngai Wai Fung has appropriate accounting professional qualifications. The independent non-executive Directors bring a variety of experience and expertise to the Company. Each of the independent non-executive Directors has confirmed in writing of his independence pursuant to Rule 3.13 of the Listing Rules.

All the appointments of non-executive Director and independent non-executive Directors may be terminated by the Company at any time and subject to retirement by rotation and re-election at the annual general meeting of the Company in accordance with the articles of association of the Company. The Directors are of the view that all independent non-executive Directors meet the independence guidelines set out in Rule 3.13 of the Listing Rules.

Minutes of the Board meetings are being kept by the company secretary of the Company and are available for inspection by the Directors and auditors of the Company.

The Roles of the Chairman and Chief Executive Officer
The Directors is of the opinion that as at March 31, 2011, the Company had complied with the Code except for Code provision A.2.1, which provides that the roles of chairman and chief executive officer ("CEO") should be separate and should not be performed by the same individual. The Board will also continue to review and monitor the practices of the Company for the purpose of complying with the Code and maintaining a high standard of corporate governance practices of the Company.

Mr. Gao Dekang is the Chairman of the Board of Directors and CEO of the Company and the founder of the Group. The Board believes that it is necessary to vest the roles of Chairman of the Board of Directors and CEO in the same person due to its unique role, Mr. Gao Dekang's experience and well-established reputation in China's down apparel industry, and the importance of Mr. Gao Dekang in the strategic development of the Company. This dual role provides strong and consistent market leadership and is critical for efficient business planning and decisions of the Company. As all major decisions are made in consultation with members of the Board and relevant Board committees, and there are four independent non-executive Directors on the Board offering independent perspectives, the Board is therefore of the view that there are adequate safeguards in place to ensure sufficient balance of powers within the Board.

Model Code for Directors' Securities Transactions
The Company has adopted the Model Code for Directors’ Securities Transactions (the 'Model Code') as set out in Appendix 10 of the Listing Rules as its code of conduct regarding directors’ securities transactions. Directors are reminded of their obligations under the Model Code on a regular basis. Following specific enquiry by the Company, all Directors have confirmed that they had complied with the required standard set out in the Mode Code throughout the year ended March 31, 2011 and up to the date of this report.

Audit Committee
The audit committee of the Company (the 'Audit Committee') has been established by the Company on September 15, 2007 with written terms of reference pursuant to Rule 3.21 of the Listing Rules and paragraph C3 of the Code, whose primary duties are to review and supervise the financial reporting process and internal control procedures of the Group, nominate and monitor external auditors, and perform other duties and responsibilities as assigned by the Board. The audited consolidated financial statements for the year ended March 31, 2011 have been reviewed by the Audit Committee and agreed by KPMG, the Company's external auditors. As at the date of this report, the Audit Committee comprised three independent non-executive Directors, namely, Mr. Ngai Wai Fung (Chairman), Mr. Dong Binggen and Mr. Jiang Hengjie.

Major work performed by the Audit Committee during the year is summarized as follows:

• review of and recommendation for the Board’s approval of the 2009/2010 annual report, interim financial information and annual financial statements with a focus on compliance with accounting standards, the Listing Rules and other requirements in relation to financial reporting;
• review of the accounting policies adopted by the Group and issues related to accounting practice;
• review of the nature and scope of audit;
• discussion with the external auditor and the management on possible accounting risks;
• assisting the Board to evaluate on the effectiveness of financial reporting procedure and internal control system;
• approval of the audit fees and terms of engagement of the external auditor; and
• review external auditor's qualifications, independence and performance, and recommendation for the Board’s re-appointment of the external auditor

During the meetings, the Audit Committee has considered the interim and annual results of the Group as well as the report prepared by the external auditor relating to accounting matters and other major findings identified during the course of interim review and annual audit.

Remuneration Committee
The remuneration committee of the Company (the "Remuneration Committee") has been established by the Company on September 15, 2007 with written terms of reference pursuant to paragraph B1 of the Code, whose primary duties are to evaluate the performance and make recommendations on the remuneration packages of the Directors and senior management, and evaluate and make recommendations on the retirement scheme, performance assessment system, bonus and commission policies. As at the date of this report, the Remuneration Committee consisted of five members, comprising one executive Director, one non-executive Director and three independent non-executive Directors (namely Mr. Gao Dekang (Chairman), Mr. Shen Jingwu, Mr. Dong Binggen, Mr. Jiang Hengjie and Mr. Wang Yao).

During the year under review, the Remuneration Committee held one meeting and reviewed the Group’s policy on remuneration of all the Directors and senior management.

Nomination Committee
The nomination committee of the Company (the “Nomination Committee”) has been established by the Company on September 15, 2007 with written terms of reference pursuant to paragraph A.4.5 of the Code, whose primary function is to make recommendations to the Board regarding candidates to fill vacancies on the Board. As at the date of this report, the Nomination Committee was consisted of three members, comprising on executive Director and two independent non-executive Directors (namely Mr. Gao Dekang (Chairman), Mr. Dong Binggen and Mr. Jiang Hengjie).

No meeting was held by the Nomination Committee up to the date of this report as no new Director of the Company had been appointed. The Nomination Committee will meet as and when required.

Appointments, Re-election and Removal of Directors
Each of the executive Directors of the Company has entered into a service contract with the Company, and each of the non-executive Director and independent non-executive Directors of the Company has entered into aappointment letter with the Company, on September 15, 2007, for a term of three years. Such term is subject this re-appointment by the Company at an annual general meeting upon retirement and can be automatically renewed upon expiry. The articles of association of the Company provide that any Director appointed by the Board, either to fill a casual vacancy in the Board or as an addition to the existing Board, shall hold office only until the next following annual general meeting of the Company and shall then be eligible for re-election.

Internal Control
The Board has an overall responsibility for maintaining a sound and effective internal control system of the Group. The Company has conducted a review of its system of internal control periodically to ensure the effectiveness and adequacy of the internal control system. The Company convened meetings with the Audit Committee periodically to discuss financial, operational and risk management control. The Directors are of the view that the existing system of internal control is effective and adequate to the Group.

Management Function
The Company’s articles of association set out matters which are specifically reserved to the Board for its decision. The management team meets together regularly to review and discuss with executive Directors on daily operational issues, financial and operating performance as well as to monitor and ensure the management is carrying out the directions and strategies set by the Board properly.

Directors' and Auditor's Responsibility for the Financial Statements
The Directors acknowledge that it is their responsibility to oversee the preparation of the financial statements for each financial period which give a true and fair view of the state of affairs of the Group, and of results and cash flow for the year.

In preparing the financial statements for the year ended March 31, 2011, the Directors have selected suitable accounting policies and applied them consistently, adopted appropriate International Financial Reporting Standards, and made prudent and reasonable judgments and estimates, and have prepared the financial statements on an going concern basis. The Directors also warrant that the Group’s financial statements will be published in a timely manner.

The statement of the auditors of the Group about their reporting responsibilities on the financial statements of the Group is set out in the section headed "Independent Auditor's Report" on page 65 and page 66 of this report.

Auditors' Remuneration
During the year under review, the remuneration charged by the Company's external auditor, KPMG, for statutory audit and non-audit services is set out below:

	RMB' million
Statuory audit services (including interim review)	6.0
Non-audit services	1.9
	7.9

The Audit Committee is responsible for making recommendations to the Board as to the appointment, reappointment and removal of the external auditors, which is subject to the approval by the Board of Directors and at the annual general meetings of the Company by its shareholders.

Certain factors the Audit Committee will take into account of when assessing the external auditors include the audit performance, quality and objectivity and independence of the auditors.

Communications with Shareholders and Investor Relations
In the light of the good faith principle, the Company strictly complies with and implements the Listing Rules to disclose discloseable information on a true, accurate, complete and timely basis and all other information that might have significant impact on the decisions of shareholders and other concerned parties in an active and timely manner. Also, the Company takes effort in ensuring all shareholders with equal access to information. As such, the Company has honestly performed its statutory obligation in respect of information disclosure.

The management believes that effective communication with the investment community is essential. Since the listing of the Company in October 2007, the executive Directors and the chief financial officer of the Compan held regular briefings and results presentation, attended investor forums and responded to investors’ call-in enquiries, arranged store visits and participated in roadshows with institutional investors and financial analysts in the PRC, Hong Kong and overseas countries to keep them abreast of the Company’s business and development as well as operating strategies and prospects. In delivering information to investors, the Company also listens their advice and collects feedback from them, in the interests of developing an interactive and mutually beneficirelationship with the Company's investors.