Asia Energy Logistics Group Limited - Proxy Solicitation & Information Statement 2010

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult a licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your securities in ITC Properties Group Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or transferee, or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

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(Incorporated in Bermuda with limited liability)

(Stock Code : 199) (Warrant Code : 490)

MAJOR TRANSACTION

IN RELATION TO THE MAXIMUM FURTHER CONTRIBUTION IN RESPECT OF THE GUIYANG JOINT VENTURE COMPANY

Financial adviser to ITC Properties Group Limited

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A notice convening the special general meeting of ITC Properties Group Limited to be held at Shop B27, Basement, Bank of America Tower, 12 Harcourt Road, Central, Hong Kong at 11:00 a.m. on Wednesday, 10th February, 2010 is set out on pages SGM-1 to SGM-2 of this circular. Whether or not you are able to attend the meeting, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return it to the branch share registrar and transfer office of ITC Properties Group Limited in Hong Kong, Tricor Secretaries Limited at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong, as soon as possible and in any event not later than 48 hours before the time appointed for holding the meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the meeting or any adjournment thereof should you so wish.

25th January, 2010

* For identification purpose only

					Page
Definitions	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			. . . . . . . . . . . . . .	1
Letter from the Board			. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . .	4
Appendix I	–		Financial information on the Group . . . . .	. . . . . . . . . . . . . .	I-1
Appendix II	–		Financial information on the JV Company	. . . . . . . . . . . . . .	II-1
Appendix III	–		Unaudited pro forma financial information
			of the Group . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . .	III-1
Appendix IV	–		General information . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . .	IV-1
Notice of the	SGM	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		. . . . . . . . . . . . . .	SGM-1

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DEFINITIONS

In this circular, unless the context otherwise requires, the following expressions have the following meanings:

“Agreement” the agreement dated 5th November, 2009 entered into between ITC China and Hong Neng in relation to the formation of the JV Company

“associate(s)” has the same meaning ascribed to it under the Listing Rules

“Board” the board of Directors
“Company”
ITC Properties Group Limited, a company incorporated in Bermuda with limited liability, the issued Shares (Stock Code : 199) and warrants (Warrant Code : 490) of which are listed on the Main Board of the Stock Exchange
“connected person(s)” has the same meaning ascribed to it under the Listing Rules
“Director(s)” director(s) of the Company
“First Increase” the increase in the registered capital of the JV Company from RMB100.0 million (equivalent to approximately HK$113.6 million) to RMB200.0 million (equivalent to approximately HK$227.3 million) pursuant to a joint venture agreement in relation to the JV Company dated 23rd December, 2009 entered into between ITC China and Hong Neng
“Group” the Company and its subsidiaries
“Hong Kong” the Hong Kong Special Administrative Region of the PRC
“Hong Neng” 貴州宏能溫泉旅游開發有限公司 (Guizhou Hong Neng Hot Spring Resort Tourism Development Company Limited), a company incorporated in the PRC with limited liability
“Initial Commitment” the total capital commitment of RMB90.0 million (equivalent to approximately HK$102.3 million) as set out in the Agreement, on the part of ITC China
“ITC China” ITC (China) Properties Group Limited, an indirect wholly-owned subsidiary of the Company incorporated in Hong Kong with limited liability

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DEFINITIONS

“JV Company”

“Land”
“Latest Practicable Date”
“Listing Rules”
“Macau”
“Maximum Further Contribution”
“Memorandum”
“PRC”
“Project”
“SFO”

貴州宏德置業有限公司 (Guizhou Hong De Real Estate Co., Ltd.) (formerly known as 貴州宏德商務咨詢有限公司 (Guizhou Hong De Business Consulting Co., Ltd.)), a sino-foreign joint venture company established in the PRC with limited liability pursuant to the Agreement several parcels of land in Wudang District, Guiyang City, Guizhou Province, the PRC with an aggregate site area of approximately 347,054 sq. m. and on which the Project is intended to be situated

Wednesday, 20th January, 2010, being the latest practicable date prior to the printing of this circular for ascertaining certain information referred to in this circular
the Rules Governing the Listing of Securities on the Stock Exchange
the Macau Special Administrative Region of the PRC
the maximum additional capital contribution of RMB135.0 million (equivalent to approximately HK$153.4 million) to the JV Company on the part of ITC China pursuant to the Memorandum
the memorandum of understanding dated 6th January, 2010 entered into between ITC China and Hong Neng in relation to the proposed increase in contributions to the JV Company
the People’s Republic of China, and for the purpose of this circular, excluding Hong Kong, Macau and Taiwan

the hot spring and resort development project currently named “樂灣國際溫泉城建設項目 (Le Bay International Hot Spring City Development Project)” intended to be developed by the JV Company

Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

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DEFINITIONS

“SGM“ the special general meeting of the Company to be convened and held for the Shareholders to consider and, if thought fit, approve the Maximum Further Contribution and the proposed increase in the total investment amount and the registered capital of the JV Company under the Memorandum “Share(s)” ordinary share(s) of HK$0.01 each in the share capital of the Company “Shareholder(s)” holder(s) of Share(s) “Stock Exchange” The Stock Exchange of Hong Kong Limited “HK$” Hong Kong dollars, the lawful currency of Hong Kong “RMB” Renminbi, the lawful currency of the PRC “sq. m.” square meter(s) “%” per cent.

In this circular, amounts in RMB are converted into HK$ on the basis of HK$1 = RMB0.88. The conversion rate is for indication purposes only and should not be taken as a representation that RMB could actually be converted into HK$ at that rate or at all.

For ease of reference, the names of the companies and entities established in the PRC have been included in this circular in both Chinese and English languages and the English names of these companies and entities are either English translation of their respective official Chinese names or English tradenames used by them. In the event of any inconsistency between the English names and their respective official Chinese names, the Chinese names shall prevail.

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LETTER FROM THE BOARD

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(Incorporated in Bermuda with limited liability)

(Stock Code : 199)

(Warrant Code : 490)

Executive Directors: Mr. Cheung Hon Kit (Chairman) Mr. Chan Fut Yan (Managing Director) Mr. Cheung Chi Kit Mr. Lai Tsan Tung, David

Registered office: Clarendon House Church Street Hamilton HM 11 Bermuda

Non-executive Director: Mr. Ma Chi Kong, Karl

Independent non-executive Directors: Mr. Qiao Xiaodong (Vice Chairman) Mr. Wong Chi Keung, Alvin Mr. Kwok Ka Lap, Alva

Principal place of business in Hong Kong: Unit 3102, 31st Floor Bank of America Tower 12 Harcourt Road Central Hong Kong

25th January, 2010

To the Shareholders and, for information only, the holders of warrants and convertible notes of the Company

Dear Sir or Madam,

MAJOR TRANSACTION IN RELATION TO THE MAXIMUM FURTHER CONTRIBUTION IN RESPECT OF THE GUIYANG JOINT VENTURE COMPANY

INTRODUCTION

The Board announced on 6th January, 2010 that after trading hours of the Stock Exchange on the same date, ITC China and Hong Neng entered into the Memorandum in relation to, among other things, the proposed increase in the total investment amount of the JV Company from RMB200.0 million (equivalent to approximately HK$227.3 million) to RMB500.0 million (equivalent to approximately HK$568.2 million). The Maximum Further Contribution under the Memorandum is RMB135.0 million (equivalent to approximately HK$153.4 million).

* For identification purpose only

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LETTER FROM THE BOARD

As the Maximum Further Contribution, when aggregated with the Initial Commitment, exceeds 25% but is less than 100% of the applicable percentage ratios under Rule 14.07 of the Listing Rules, the Maximum Further Contribution constitutes a major transaction for the Company under the Listing Rules and is therefore subject to the approval of the Shareholders by way of poll at the SGM. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, Hong Neng and its ultimate beneficial owners are third parties independent of the Company and its connected persons and no Shareholder has a material interest in the transaction contemplated under the Memorandum which is different from the other Shareholders, as such no Shareholder is required to abstain from voting in respect of the ordinary resolution to be proposed at the SGM to approve, among other things, the Maximum Further Contribution.

The purpose of this circular is to provide you with, among other things, details of the Memorandum, the financial information on the Group and the JV Company, the unaudited pro forma financial information of the Group, the notice of the SGM and other information as required under the Listing Rules.

BACKGROUND

On 5th November, 2009, the Board announced that ITC China and Hong Neng entered into the Agreement for the formation of the JV Company, which would be principally engaged in the development and management of a hot spring and resort project in Guiyang City, Guizhou Province, the PRC. Under the Agreement, the total investment amount of the JV Company is RMB200.0 million (equivalent to approximately HK$227.3 million) and its registered capital is RMB100.0 million (equivalent to approximately HK$113.6 million). ITC China and Hong Neng would contribute RMB45.0 million (equivalent to approximately HK$51.1 million) and RMB55.0 million (equivalent to approximately HK$62.5 million) respectively, in proportion to their respective equity interests of 45% and 55%, to the registered capital of the JV Company. It was agreed that the difference between the total investment amount and the registered capital would be contributed by ITC China and Hong Neng by way of shareholders’ loans in proportion to their respective equity interests in the JV Company or, if both parties agree, would be funded by external financing. Accordingly, the Initial Commitment in respect of the JV Company amounted to RMB90.0 million (equivalent to approximately HK$102.3 million) under the Agreement.

As disclosed in the announcement of the Company dated 5th November, 2009 in relation to the formation of the JV Company, it was intended that the capital contributions from ITC China and Hong Neng would be used to fund the acquisition of the Land through public listing and bidding process for the development of the Project.

INFORMATION ON THE JV COMPANY

The JV Company was incorporated in the PRC on 18th November, 2009. In compliance with the provisions of the Agreement, ITC China and Hong Neng has paid up their required contributions of RMB45.0 million (equivalent to approximately HK$51.1 million) and RMB55.0 million (equivalent to approximately HK$62.5 million) respectively to the registered capital of the JV Company. The board of the JV Company comprises five directors. ITC China and Hong

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LETTER FROM THE BOARD

Neng have the right to nominate two directors and three directors respectively. The chairman of the JV Company is appointed by Hong Neng. Hong Neng mainly assists the JV Company in the acquisition of land for the development of the Project and the Group mainly shares with the JV Company its expertise in design, construction and operation of the Project. The Group does not have prior working experience with Hong Neng.

On 4th December, 2009, the JV Company succeeded in the bidding of the Land. The land premium payable amounts to approximately RMB104.5 million (equivalent to approximately HK$118.8 million). The Land is situated in the southern part of Dong Feng County, Wudang District, Guiyang City, Guizhou Province, the PRC (中國貴州省貴陽巿烏當區東風鎮), about 15 kilometers from Guiyang City, which can be developed for residential, commercial, cultural, recreational and resort uses. The maximum plot ratio is approximately in the range of 1.0 to 1.5. Pursuant to the agreement dated 11th December, 2009 entered into between the JV Company and the local government of Guiyang City in relation to the sale and purchase of the Land, the JV Company will not own the legal title of the land use rights of the Land unless the demolition and resettlement works on the Land are satisfactorily completed before 11th December, 2010. As such, as at the Latest Practicable Date, the JV Company does not own the legal title of the Land or any other properties.

As the initial paid-up capital of RMB100.0 million (equivalent to approximately HK$113.6 million) in the JV Company has been utilised for the payment of the land premium of the Land, instead of further contribution in the form of shareholders’ loans as originally envisaged under the Agreement, ITC China and Hong Neng entered into a new joint venture agreement in relation to the JV Company on 23rd December, 2009 to, among other things, increase the registered capital of the JV Company from RMB100.0 million (equivalent to approximately HK$113.6 million) to RMB200.0 million (equivalent to approximately HK$227.3 million). The First Increase shall be contributed by ITC China and Hong Neng in accordance with their respective equity interests in the JV Company, i.e. RMB45.0 million (equivalent to approximately HK$51.1 million) by ITC China and RMB55.0 million (equivalent to approximately HK$62.5 million) by Hong Neng, 20% of which is payable on the filing and registration of the First Increase with the relevant PRC authorities and the balance is payable within two years of the issue of the new business licence of the JV Company reflecting the First Increase. The First Increase has been approved by the relevant PRC government authorities and the new business licence of the JV Company is expected to be issued in late January 2010. Under the new joint venture agreement, the total investment amount of the JV Company remains at RMB200.0 million (equivalent to approximately HK$227.3 million).

In order to cater for the future development of the Project by the JV Company including but not limited to the development of the Project on the Land and possible acquisition(s) of further parcels of land adjacent to the Land, after trading hours of the Stock Exchange on 6th January, 2010, ITC China and Hong Neng entered into the Memorandum for the proposed increase in the total investment amount and further increase in the registered capital of the JV Company. Details of the Memorandum are set out below.

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LETTER FROM THE BOARD

THE MEMORANDUM

Date

6th January, 2010

Parties

(i) Hong Neng, a company incorporated in the PRC with limited liability which is engaged in investment holding; and
(ii) ITC China, an indirect wholly-owned subsidiary of the Company, which is incorporated in Hong Kong with limited liability.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, except for being a joint venture partner to the Group in the JV Company and the borrower of a short-term loan of RMB20.0 million (equivalent to approximately HK$22.7 million) provided by the Group pursuant to a loan agreement dated 26th November, 2009, Hong Neng and its ultimate beneficial owners are third parties independent of the Company and its connected persons and are not connected persons of the Company.

Proposed increase in contributions

(i) Total investment amount

The total investment amount of the JV Company is to be increased from RMB200.0 million (equivalent to approximately HK$227.3 million) to RMB500.0 million (equivalent to approximately HK$568.2 million).

(ii) Registered capital

The registered capital of the JV Company is to be further increased from RMB200.0 million (equivalent to approximately HK$227.3 million) to RMB400.0 million (equivalent to approximately HK$454.5 million).

The increase in the registered capital of RMB200.0 million (equivalent to approximately HK$227.3 million) is to be contributed in cash by ITC China and Hong Neng, in proportion to their respective equity interests of 45% and 55% in the JV Company, in the amount of RMB90.0 million (equivalent to approximately HK$102.3 million) and RMB110.0 million (equivalent to approximately HK$125.0 million) respectively, 20% of which is payable upon the filing and registration of the proposed increases in total investment amount and registered capital with the relevant PRC authorities and the balance is payable within two years from the date of the issue of a new business licence of the JV Company reflecting the aforesaid increases.

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LETTER FROM THE BOARD

(iii) Difference between total investment amount and registered capital

The Memorandum provides that the difference between the new total investment amount of RMB500.0 million (equivalent to approximately HK$568.2 million) and the new registered capital of RMB400.0 million (equivalent to approximately HK$454.5 million) is to be made up in such manner and at such time as ITC China and Hong Neng shall agree, and may be by way of external financing. It was further provided in the Memorandum that if external financing is not available or is not available on terms acceptable to both ITC China and Hong Neng within four years from the date of the issue of the new business licence of the JV Company, then unless the parties otherwise agree, the difference shall be contributed by ITC China and Hong Neng in the form of shareholders’ loans in proportion to their respective equity interests in the JV Company, in which case such shareholders’ loans shall be interest-free, unsecured and have no fixed terms of repayment.

Apart from the proposed contribution to the increase in the registered capital and possible shareholders’ loans as set out above, there are no other commitments by the parties to the Memorandum as at the Latest Practicable Date to make any further capital contribution to the JV Company.

Conditions precedent

The proposed increases in the total investment amount and the registered capital of the JV Company under the Memorandum are conditional upon all necessary PRC governmental approvals for the same having been obtained, the First Increase having been approved by the relevant PRC government authorities, and the approval of the aforesaid increases by the Shareholders having been obtained by way of poll at the SGM.

If the above conditions have not been fulfilled within six months from the signing of the Memorandum (or such other date as the parties to the Memorandum may agree in writing), the rights and obligations of the parties under the Memorandum shall lapse and be of no further effect and neither party shall have any claim against the other thereon but ITC China and Hong Neng shall further discuss other alternative means of financing available to the JV Company.

REASONS FOR AND BENEFITS OF THE MEMORANDUM

The Company is an investment holding company and its subsidiaries are principally engaged in property development and investment in Macau, the PRC and Hong Kong. The Group is also engaged in golf resort and leisure operations in the PRC, securities investment and loan financing services.

The Directors expect that the robust economic growth and increasing consumer spending in the PRC will continue to drive the growth of the property market and leisure business sector in the PRC and are keen to expand the Group’s property, resort and leisure businesses in the PRC beyond Sanya and Guangzhou. Following the announcement of the overall city development plan by local government of Guiyang City in early 2009 which involves the development of Wudang District into a popular vacation spot in the PRC, the Group has been

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LETTER FROM THE BOARD

exploring investment opportunities in Guiyang. With its natural hot springs and beautiful scenery, the Board believes that Guiyang has significant potential to be developed into one of the famous tourist attractions in the PRC.

As disclosed in the announcement of the Company dated 5th November, 2009 in relation to the formation of the JV Company and the announcement of the Company dated 6th January, 2010 in relation to the Maximum Further Contribution in respect of the JV Company, it is the intention of the Group to develop the Land and its adjacent areas into a multi-purpose complex with residential units, hotel, commercial, spa, sports and resort facilities. The acquisition of the Land is the first step for the JV Company to commence the Project. The JV Company informed ITC China that the master planning and design work for the initial phase of the Project is in progress and construction is anticipated to commence in or around May 2010. It is expected that the JV Company will commence the construction of the residential units first and the pre-sale of the initial phase of the Project of approximately 200,000 sq. m. will be scheduled around the end of 2010. The initial phase of the Project is expected to be completed around mid 2011. The proposed increase in the capital contributions by ITC China and Hong Neng will be used to reimburse Hong Neng the expenditure in relation to the preliminary work of the Project incurred thereby up to a maximum amount of RMB100.0 million (equivalent to approximately HK$113.6 million). The remaining capital contributions by ITC China and Hong Neng will provide the JV Company with adequate fund in a timely manner to develop the Project and to acquire further parcels of land adjacent to the Land if suitable opportunities arise to scale up the Project. The JV Company will participate in the next land auction with a view to acquiring further parcels of land adjacent to the Land for the Project.

In view of the above, the Board considers that the entering into of the Memorandum (including the Maximum Further Contribution contemplated thereunder) is in the interests of the Company and the Shareholders as a whole and the terms of the Memorandum are fair and reasonable.

The Maximum Further Contribution of RMB135.0 million (equivalent to approximately HK$153.4 million) is intended to be financed by internal resources of the Group and/or bank borrowings, if required.

FINANCIAL EFFECTS

The Group is currently interested in 45% equity interest in the JV Company. Following the further contribution to be made by ITC China and Hong Neng under the First Increase and the proposed contribution under the Memorandum, the Group will remain interested in 45% equity interest in the JV Company. The results, assets and liabilities of the JV Company would be equity accounted for in the financial results of the Group.

Your attention is drawn to the unaudited pro forma financial information regarding the assets and liabilities of the Group as a result of the proposed contribution under the Memorandum as set out in Appendix III to this circular.

Earnings

Since the JV Company was only incorporated in November 2009, there will be little effect on the earnings of the Group for the financial year ending 31st March, 2010.

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LETTER FROM THE BOARD

Net assets

As the Maximum Further Contribution will be financed by internal resources of the Group and/or bank borrowings, (if required), there will not be any impact on the Group’s net assets.

Gearing

As extracted from the interim report of the Company for the six months ended 30th September, 2009, the gearing ratio of the Group, calculated with reference to the bank and other borrowings of HK$391.7 million and the fair value of the liability component of convertible note payables of HK$1,380.9 million, offsetting with the pledged bank deposits and the bank balances and cash of HK$187.9 million, and the Group’s shareholders’ funds of HK$2,135.0 million, was 0.74 as at 30th September, 2009.

As set out in Appendix III to this circular, assuming the implementation of the Maximum Further Contribution had taken place on 30th September, 2009, the gearing ratio of the Group, calculated with reference to the contribution payable of HK$7.7 million, the bank and other borrowings of HK$391.7 million and the fair value of the liability component of convertible note payables of HK$1,380.9 million, offsetting with the pledged bank deposits of HK$42.2 million, and shareholders’ funds of the Group of HK$2,135.0 million, was 0.81.

THE SGM

The SGM, the notice of which is set out on pages SGM-1 to SGM-2 of this circular, will be held at Shop B27, Basement, Bank of America Tower, 12 Harcourt Road, Central, Hong Kong, at 11:00 a.m. on Wednesday, 10th February, 2010, to consider and, if thought fit, approve the Maximum Further Contribution and the proposed increases in the total investment amount and the registered capital of the JV Company under the Memorandum by ordinary resolution. The voting on the ordinary resolution will be taken by way of poll.

Whether or not you are able to attend the SGM, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return it to Tricor Secretaries Limited as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the SGM or any adjournment thereof.

Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjournment thereof should you so wish.

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LETTER FROM THE BOARD

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, no Shareholder has any material interest in the Memorandum and the transactions contemplated thereunder as at the Latest Practicable Date. On such basis, no Shareholder is required to abstain from voting on the proposed resolution approving the Maximum Further Contribution and the proposed increases in the total investment amount and the registered capital of the JV Company under the Memorandum at the SGM.

RECOMMENDATION

The Directors consider that the terms of the Memorandum and the transactions contemplated thereunder (including the Maximum Further Contribution) are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend the Shareholders to vote in favour of the ordinary resolution to be proposed at the SGM to approve the Maximum Further Contribution and the proposed increases in the total investment amount and the registered capital of the JV Company under the Memorandum.

ADDITIONAL INFORMATION

Your attention is also drawn to the information set out in the appendices to this circular and the notice of the SGM.

Yours faithfully, For and on behalf of the Board ITC Properties Group Limited Cheung Hon Kit Chairman

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APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

1. FINANCIAL SUMMARY

Set out below is a summary of the audited financial information on the Group for the three years ended 31st March, 2007, 2008 and 2009 extracted from the Company’s relevant annual reports, and the unaudited financial information on the Group for the six months ended 30th September, 2008 and 2009 extracted from the Company’s relevant interim reports, restated as appropriate:

RESULTS

RESULTS
Continuing operations Gross proceeds Revenue Property sale and rental income Golf and leisure income Cost of sales Gross profit Income from loan financing Net gain (loss) on financial instruments Other income Increase in fair value of investment properties Reversal of write-down on properties held for sale Impairment loss recognised on advance to a jointly controlled entity Administrative expenses Finance costs Impairment losses on property interests Impairment losses on prepaid lease payments of leasehold land and premium on prepaid lease payments of leasehold land Loss on disposal of an associate Loss on disposal of subsidiaries Compensation for cancellation of call options for acquisition of additional interest in an associate Share of results of associates Share of result of a jointly controlled entity Profit (loss) before taxation Taxation	For 2007 HK$’000 (Note) 411,676 93,389	the year ended 31st March, 2008 2009 HK$’000 HK$’000 600,844 145,121 181,944 92,670		For the six months ended 30th September, 2008 2009 HK$’000 HK$’000 100,213 92,396 51,834 68,688 21,878 4,317 16,367 14,933 38,245 19,250 (18,907) (4,751) 19,338 14,499 11,784 7,833 (44,533) 96,553 16,802 10,936 – 31,758 – 92,591 – (10,700) (67,123) (65,516) (53,673) (60,561) – – – – – – – – – – (1,507) (2,894) (212) – 119,124 114,499 342 342
	5,251 52,367 57,618 (14,073) 43,545 21,036 28,623 105,616 – – – (85,400) (97,009) – – – – 23,370 40,916 – 80,697 (10,004)	81,792 62,622 144,414 (67,511) 76,903 31,789 76,382 73,206 – – – (141,959) (109,933) – (45,000) (39,486) (19,073) – (25,047) – (122,218) (3,475)	25,751 44,058 69,809 (25,726) 44,083 21,772 (169,337) 33,995 – – – (133,113) (108,357) (146,712) – – – – (4,404) (212) (462,285) 469	21,878 16,367 38,245 (18,907) 19,338 11,784 (44,533) 16,802 – – – (67,123) (53,673) – – – – – (1,507) (212) 119,124 342	4,317 14,933
					19,250 (4,751
					14,499 7,833 96,553 10,936 31,758 92,591 (10,700 (65,516 (60,561 – – – – – (2,894 –
					114,499 342

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APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

For 2007 HK$’000 (Note) 70,693 3,408 74,101	the year ended 31st March, 2008 2009 HK$’000 HK$’000 (125,693) (461,816) (18,665) – (144,358) (461,816)	the year ended 31st March, 2008 2009 HK$’000 HK$’000 (125,693) (461,816) (18,665) – (144,358) (461,816)	For the six months ended 30th September, 2008 2009 HK$’000 HK$’000 (118,782) 114,841 – – (118,782) 114,841	For the six months ended 30th September, 2008 2009 HK$’000 HK$’000 (118,782) 114,841 – – (118,782) 114,841
				114,841

79,091 (4,990)	(141,853) (2,505)	(461,816) –	(118,782) –	114,841 –
74,101 0.57 0.54 0.55 0.53	(144,358) (0.74) (0.74) (0.64) (0.64)	(461,816) (1.20) (1.20) (1.20) (1.20)	(118,782) (0.41) (0.41) (0.41) (0.41)	114,841

				0.24 0.23

				0.24 0.23

Note: As stated in note 46 to the audited consolidated financial statements for the year ended 31st March, 2008 contained in the annual report of the Company, the Group disposed of its entire interests in Tung Fong Hung Investment Limited (“TFH”) on 31st July, 2007 and King-Tech International Holdings Limited (“King-Tech”) on 31st March, 2008. In this respect, comparative figures have been reclassified to conform with the current presentation that TFH and King-Tech are shown as discontinued operations. For the year ended 31st March, 2008, revenue included net gain on disposal of investments held-for-trading and excluded interest on unsecured loan due from an associate whereas revenue for year ended 31st March, 2007 as previously reported included gross proceeds from disposal of investments held-for-trading of HK$328.7 million and interest on unsecured loan due from an associate of HK$56.2 million.

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APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

ASSETS AND LIABILITIES

At 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 279,956 178,543 186,224 96,772 20,808 20,822 131,527 114,294 111,558 – – – 430 – – 130,036 94,570 37,892 93,879 135,503 134,809 – 14,745 44,759 – – – 1,234,443 1,077,690 1,073,982 – 51,120 36,320 – 4,865 – – 240,853 189,000 41,466 47,275 47,275 90,675 – 47,244 27,125 – – 9,634 – –	At 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 279,956 178,543 186,224 96,772 20,808 20,822 131,527 114,294 111,558 – – – 430 – – 130,036 94,570 37,892 93,879 135,503 134,809 – 14,745 44,759 – – – 1,234,443 1,077,690 1,073,982 – 51,120 36,320 – 4,865 – – 240,853 189,000 41,466 47,275 47,275 90,675 – 47,244 27,125 – – 9,634 – –	At 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 279,956 178,543 186,224 96,772 20,808 20,822 131,527 114,294 111,558 – – – 430 – – 130,036 94,570 37,892 93,879 135,503 134,809 – 14,745 44,759 – – – 1,234,443 1,077,690 1,073,982 – 51,120 36,320 – 4,865 – – 240,853 189,000 41,466 47,275 47,275 90,675 – 47,244 27,125 – – 9,634 – –	At 30th September, 2008 2009 HK$’000 HK$’000 189,993 183,958 21,088 20,557 112,926 110,190 – 221,000 – – 59,073 51,568 135,376 212,210 34,035 51,771 – 1,300 1,076,312 993,687 33,947 38,984 – – 242,261 – 47,275 47,275 – – – – – 3,852	At 30th September, 2008 2009 HK$’000 HK$’000 189,993 183,958 21,088 20,557 112,926 110,190 – 221,000 – – 59,073 51,568 135,376 212,210 34,035 51,771 – 1,300 1,076,312 993,687 33,947 38,984 – – 242,261 – 47,275 47,275 – – – – – 3,852
2,135,943 76,919 58,536 11,296 66,725 – – 473,160 205,495 2,480 68 54,567 1,506 40,783 254,622 1,246,157	1,980,266 2,161 252,903 – 11,957 – – 514,795 243,133 517 2,154 58,251 – 51,818 243,038 1,380,727	1,929,885 3,143 539,388 – 176,552 – 727 503,148 208,727 530 2,172 48,437 – 44,626 124,035 1,651,485	1,952,286 2,596 340,131 – 168,681 20,477 284 501,150 308,970 530 2,097 60,105 – 46,689 533,967 1,985,677	1,936,352
				2,545 948,380 – 189,522 – 1,179 560,613 173,014 530 2,426 49,841 – 42,200 145,730
				2,115,980

– I-3 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

At 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 158,947 70,392 72,047 1,884 890 395 2,354 – – 12,340 13,252 11,856 4,515 – – 1,616 – – 7,945 7,284 7,174 24 49 90 111,439 113,996 82,830	At 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 158,947 70,392 72,047 1,884 890 395 2,354 – – 12,340 13,252 11,856 4,515 – – 1,616 – – 7,945 7,284 7,174 24 49 90 111,439 113,996 82,830	At 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 158,947 70,392 72,047 1,884 890 395 2,354 – – 12,340 13,252 11,856 4,515 – – 1,616 – – 7,945 7,284 7,174 24 49 90 111,439 113,996 82,830	At 30th September, 2008 2009 HK$’000 HK$’000 111,549 97,769 921 256 – – 13,552 11,626 – – – – 2,655 513,795 62 83 105,902 12,729	At 30th September, 2008 2009 HK$’000 HK$’000 111,549 97,769 921 256 – – 13,552 11,626 – – – – 2,655 513,795 62 83 105,902 12,729
301,064 945,093 3,081,036 1,360,455 71 8,081 40,609 1,409,216	205,863 1,174,864 3,155,130 1,236,559 173 39,647 28,574 1,304,953	174,392 1,477,093 3,406,978 1,328,913 282 40,658 27,889 1,397,742	234,641 1,751,036 3,703,322 1,281,993 191 33,583 28,232 1,343,999	636,258
				1,479,722
				3,416,074
				867,097 200 378,999 27,547
				1,273,843
1,671,820	1,850,177	2,009,236	2,359,323	2,142,231

23,123 1,598,516 1,621,639 50,181	30,955 1,812,043 1,842,998 7,179	4,709 1,997,342 2,002,051 7,185	119,943 2,232,201 2,352,144 7,179	4,709 2,130,337
				2,135,046 7,185
1,671,820	1,850,177	2,009,236	2,359,323	2,142,231

– I-4 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

2. AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP

The following is a reproduction of the audited consolidated financial statements of the Group for the financial years ended 31st March, 2008 and 2009 together with the relevant notes to the consolidated financial statements, contained on pages 46 to 154 of the annual report of the Company for the year ended 31st March, 2009. The auditor’s reports as set out in the annual reports of the Company for the years ended 31st March, 2008 and 2009 were unqualified.

CONSOLIDATED INCOME STATEMENT

(for the year ended 31st March, 2009)

NOTES Continuing operations Turnover – Gross proceeds 50 Revenue 5 Property sale and rental income Golf and leisure income Cost of sales Gross profit Income from loan financing Net (loss) gain on financial instruments 6 Other income 7 Administrative expenses Finance costs 8 Impairment losses on property interests 9 Loss on disposal of an associate 21 Loss on disposal of subsidiaries 42 Share of results of a jointly controlled entity 20 Share of results of associates 21 Loss before taxation Taxation 10	2009 HK$’000 145,121 92,670	2008 HK$’000 600,844 181,944 81,792 62,622 144,414 (67,511) 76,903 31,789 76,382 73,206 (141,959) (109,933) (45,000) (39,486) (19,073) – (25,047) (122,218) (3,475)
	25,751 44,058 69,809 (25,726) 44,083 21,772 (169,337) 33,995 (133,113) (108,357) (146,712) – – (212) (4,404) (462,285) 469	81,792 62,622
		144,414 (67,511
		76,903 31,789 76,382 73,206 (141,959 (109,933 (45,000 (39,486 (19,073 – (25,047
		(122,218 (3,475

– I-5 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

NOTES Loss for the year from continuing operations Discontinued operations Loss for the year from discontinued operations 11 Loss for the year 12 Attributable to: Equity holders of the Company Minority interests Loss per share 14 From continuing and discontinued operations: – Basic and diluted (HK dollars) From continuing operations: – Basic and diluted (HK dollars)	2009 HK$’000 (461,816) – (461,816) (461,816) – (461,816) (1.20) (1.20)	2008 HK$’000 (125,693) (18,665) (144,358) (141,853) (2,505) (144,358) (0.74) (0.64)

– I-6 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

CONSOLIDATED BALANCE SHEET

(at 31st March, 2009)

NOTES Non-current assets Property, plant and equipment 15 Prepaid lease payments of leasehold land 16 Premium on prepaid lease payments of leasehold land 17 Properties under development 18 Available-for-sale investments 19 Interest in a joint venture 20 Interests in associates 21 Unsecured loans and interest due from associates 21 Debt portion of convertible bonds 23 Derivatives embedded in convertible bonds 23 Deposits and expenses paid for acquisition of a land use right 24 Deposits and expenses paid for acquisition of subsidiaries 43 Current assets Inventories 26 Properties held for sale Debt portion of convertible bonds 23 Financial assets at fair value through profit or loss 27 Debtors, deposits and prepayments 28 Other loan receivables 25 Prepaid lease payments of leasehold land 16 Amounts due from associates 22 Unsecured loans and interest due from related companies 29 Pledged bank deposits 30 Bank balances and cash 30	2009 HK$’000 186,224 20,822 111,558 189,000 37,892 44,759 134,809 1,073,982 36,320 – 47,275 47,244	2008 HK$’000 178,543 20,808 114,294 240,853 94,570 14,745 135,503 1,077,690 51,120 4,865 47,275 –
	1,929,885 3,143 539,388 727 176,552 503,148 208,727 530 2,172 48,437 44,626 124,035 1,651,485	1,980,266
		2,161 252,903 – 11,957 514,795 243,133 517 2,154 58,251 51,818 243,038
		1,380,727

– I-7 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

NOTES Current liabilities Creditors, deposits and accrued charges 31 Amounts due to minority shareholders of subsidiaries 32 Tax payable Convertible note payables – due within one year 33 Obligations under finance leases – due within one year 34 Bank borrowings – due within one year 35 Net current assets Total assets less current liabilities Non-current liabilities Convertible note payables – due after one year 33 Obligations under finance leases – due after one year 34 Bank borrowings – due after one year 35 Deferred tax liabilities 36 Capital and reserves Share capital 37 Reserves Equity attributable to the equity holders of the Company Minority interests	2009 HK$’000 72,047 395 11,856 7,174 90 82,830	2008 HK$’000 70,392 890 13,252 7,284 49 113,996
	174,392 1,477,093 3,406,978 1,328,913 282 40,658 27,889 1,397,742	205,863
		1,174,864
		3,155,130
		1,236,559 173 39,647 28,574
		1,304,953
	2,009,236	1,850,177

	4,709 1,997,342 2,002,051 7,185	30,955 1,812,043
		1,842,998 7,179
	2,009,236	1,850,177

– I-8 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(for the year ended 31st March, 2009)

At 1st April, 2007 Exchange differences arising on translation of foreign operations Gain on fair value changes of available-for-sale investments Net income recognised directly in equity Released on disposal of subsidiaries_(note 42)_ Released on disposal of available-for-sale investments Loss for the year Total recognised expenses for the year Conversion of convertible notes Issue of shares Expenses incurred in connection with issue of shares Recognition of equity-settled share-based payments At 31st March, 2008	Attributable to equity holders of the Company
	Share capital Share premium Contributed surplus Capital redemption reserve Convertible loan notes equity reserve Share-based payment reserve Available- for-sale investments reserve Special reserve Revaluation reserve Translation reserve Warrant reserve Retained profits/ (Accumu- lated losses) Total Minority interests Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (Note) 23,123 1,066,055 – 1,124 368,304 3,296 3,481 (8,908) 1,795 10,364 – 153,005 1,621,639 50,181 1,671,820 – – – – – – – – – 18,580 – – 18,580 3,478 22,058 – – – – – – 44,371 – – – – – 44,371 – 44,371 – – – – – – 44,371 – – 18,580 – – 62,951 3,478 66,429 – – – – – – – – (991) (21,472) – – (22,463) (43,975) (66,438) – – – – – – (60,752) – – – – – (60,752) – (60,752) – – – – – – – – – – – (141,853) (141,853) (2,505) (144,358) – – – – – – (16,381) – (991) (2,892) – (141,853) (162,117) (43,002) (205,119) 4,832 268,001 – – (60,585) – – – – – – – 212,248 – 212,248 3,000 165,000 – – – – – – – – – – 168,000 – 168,000 – (5,114) – – – – – – – – – – (5,114) – (5,114) – – – – – 8,342 – – – – – – 8,342 – 8,342 30,955 1,493,942 – 1,124 307,719 11,638 (12,900) (8,908) 804 7,472 – 11,152 1,842,998 7,179 1,850,177

At 1st April, 2007
Exchange differences arising on translation of foreign
operations
Gain on fair value changes of available-for-sale
investments
Net income recognised directly in equity
Released on disposal of subsidiaries_(note 42)_
Released on disposal of available-for-sale investments
Loss for the year
Total recognised expenses for the year
Conversion of convertible notes
Issue of shares
Expenses incurred in connection
with issue of shares
Recognition of equity-settled share-based payments
At 31st March, 2008

Attributable to equity holders of the Company

Share
capital
Share
premium
Contributed
surplus
Capital
redemption
reserve
Convertible
loan notes
equity
reserve
Share-based
payment
reserve
Available-
for-sale
investments
reserve
Special
reserve
Revaluation
reserve
Translation
reserve
Warrant
reserve
Retained
profits/
(Accumu-
lated losses)
Total
Minority
interests
Total
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
(Note)
23,123
1,066,055
–
1,124
368,304
3,296
3,481
(8,908)
1,795
10,364
–
153,005
1,621,639
50,181
1,671,820
–
–
–
–
–
–
–
–
–
18,580
–
–
18,580
3,478
22,058
–
–
–
–
–
–
44,371
–
–
–
–
–
44,371
–
44,371
–
–
–
–
–
–
44,371
–
–
18,580
–
–
62,951
3,478
66,429
–
–
–
–
–
–
–
–
(991)
(21,472)
–
–
(22,463)
(43,975)
(66,438)
–
–
–
–
–
–
(60,752)
–
–
–
–
–
(60,752)
–
(60,752)
–
–
–
–
–
–
–
–
–
–
–
(141,853)
(141,853)
(2,505)
(144,358)
–
–
–
–
–
–
(16,381)
–
(991)
(2,892)
–
(141,853)
(162,117)
(43,002)
(205,119)
4,832
268,001
–
–
(60,585)
–
–
–
–
–
–
–
212,248
–
212,248
3,000
165,000
–
–
–
–
–
–
–
–
–
–
168,000
–
168,000
–
(5,114)
–
–
–
–
–
–
–
–
–
–
(5,114)
–
(5,114)
–
–
–
–
–
8,342
–
–
–
–
–
–
8,342
–
8,342
30,955
1,493,942
–
1,124
307,719
11,638
(12,900)
(8,908)
804
7,472
–
11,152
1,842,998
7,179
1,850,177

– I-9 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

Exchange differences arising on translation of foreign operations Loss on fair value changes of available-for-sale investment Net income and expenses recognised directly in equity Impairment loss on available-for-sale investments Released on disposal of available-for-sale investments Loss for the year Total recognised income and expenses for the year Rights issue with warrants Expenses incurred in connection with rights issue Transfer on lapse of share options Capital injection from minority shareholders on incorporation Recognition of equity-settled share-based payments Repurchase and cancellation of shares Capital reorganisation_(note 37(e))_ At 31st March, 2009	Attributable to equity holders of the Company
	Share capital Share premium Contributed surplus Capital redemption reserve Convertible loan notes equity reserve Share-based payment reserve Available- for-sale investments reserve Special reserve Revaluation reserve Translation reserve Warrant reserve Retained profits/ (Accumu- lated losses) Total Minority interests Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (Note) – – – – – – – – – 2,202 – – 2,202 – 2,202 – – – – – – (44,413) – – – – – (44,413) – (44,413) – – – – – – (44,413) – – 2,202 – – (42,211) – (42,211) – – – – – – 53,037 – – – – – 53,037 – 53,037 – – – – – – 4,299 – – – – – 4,299 – 4,299 – – – – – – – – – – – (461,816) (461,816) – (461,816) – – – – – – 12,923 – – 2,202 – (461,816) (446,691) – (446,691) 92,866 522,622 – – – – – – – – 34,571 – 650,059 – 650,059 – (23,183) – – – – – – – – – – (23,183) – (23,183) – – – – – (4,418) – – – – – 4,418 – – – – – – – – – – – – – – – – 6 6 – – – – – 5,547 – – – – – – 5,547 – 5,547 (6,092) (20,587) – 6,092 – – – – – – – (6,092) (26,679) – (26,679) (113,020) – 113,020 – – – – – – – – – – – –
	4,709 1,972,794 113,020 7,216 307,719 12,767 23 (8,908) 804 9,674 34,571 (452,338) 2,002,051 7,185 2,009,236

Exchange differences arising on translation of foreign
operations
Loss on fair value changes of available-for-sale investment
Net income and expenses recognised directly in equity
Impairment loss on available-for-sale investments
Released on disposal of available-for-sale investments
Loss for the year
Total recognised income and expenses for the year
Rights issue with warrants
Expenses incurred in connection
with rights issue
Transfer on lapse of share options
Capital injection from minority shareholders on
incorporation
Recognition of equity-settled share-based payments
Repurchase and cancellation of shares
Capital reorganisation_(note 37(e))_
At 31st March, 2009

Attributable to equity holders of the Company

Share
capital
Share
premium
Contributed
surplus
Capital
redemption
reserve
Convertible
loan notes
equity
reserve
Share-based
payment
reserve
Available-
for-sale
investments
reserve
Special
reserve
Revaluation
reserve
Translation
reserve
Warrant
reserve
Retained
profits/
(Accumu-
lated losses)
Total
Minority
interests
Total
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
(Note)
–
–
–
–
–
–
–
–
–
2,202
–
–
2,202
–
2,202
–
–
–
–
–
–
(44,413)
–
–
–
–
–
(44,413)
–
(44,413)
–
–
–
–
–
–
(44,413)
–
–
2,202
–
–
(42,211)
–
(42,211)
–
–
–
–
–
–
53,037
–
–
–
–
–
53,037
–
53,037
–
–
–
–
–
–
4,299
–
–
–
–
–
4,299
–
4,299
–
–
–
–
–
–
–
–
–
–
–
(461,816)
(461,816)
–
(461,816)
–
–
–
–
–
–
12,923
–
–
2,202
–
(461,816)
(446,691)
–
(446,691)
92,866
522,622
–
–
–
–
–
–
–
–
34,571
–
650,059
–
650,059
–
(23,183)
–
–
–
–
–
–
–
–
–
–
(23,183)
–
(23,183)
–
–
–
–
–
(4,418)
–
–
–
–
–
4,418
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
6
6
–
–
–
–
–
5,547
–
–
–
–
–
–
5,547
–
5,547
(6,092)
(20,587)
–
6,092
–
–
–
–
–
–
–
(6,092)
(26,679)
–
(26,679)
(113,020)
–
113,020
–
–
–
–
–
–
–
–
–
–
–
–

4,709
1,972,794
113,020
7,216
307,719
12,767
23
(8,908)
804
9,674
34,571
(452,338)
2,002,051
7,185
2,009,236

Note: Special reserve of the Group represents the difference between the nominal value of the share capital of the subsidiaries acquired and the nominal amount of the share capital of the Company issued as consideration under the group reorganisation in 1994.

– I-10 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

CONSOLIDATED CASH FLOW STATEMENT

(for the year ended 31st March, 2009)

OPERATING ACTIVITIES Loss before taxation Adjustments for: Finance costs Share of results of a jointly controlled entity Share of results of associates Bank interest income Interest income on convertible bonds Interest income on unsecured loan due from an associate Depreciation of property, plant and equipment Allowance for inventories Allowance for bad and doubtful debts Release of prepaid lease payments of leasehold land Amortisation of premium on prepaid lease payments of leasehold land Equity-settled share-based payments expense Impairment losses on property interests Loss on disposal of an associate Loss on disposal of property, plant and equipment Loss on disposal of subsidiaries Net loss (gain) on financial instruments Operating cash flows before movements in working capital Decrease in other loan receivables Increase in inventories Increase in properties held for sale Increase in properties under development (Increase) decrease in financial assets at fair value through profit or loss Decrease (increase) in debtors, deposits and prepayments Decrease (increase) in unsecured loans and interest due from related companies (Decrease) increase in creditors, deposits and accrued charges Cash used in operations Hong Kong Profits Tax paid Overseas taxation paid Interest paid NET CASH USED IN OPERATING ACTIVITIES	2009 HK$’000 (462,285) 108,357 212 4,404 (4,676) (5,502) (14,417) 11,507 – 5,313 525 2,736 5,547 146,712 – 171 – 169,456	2008 HK$’000 (140,325) 110,546 – 25,047 (10,259) (3,036) (51,618) 17,569 5,106 1,801 2,293 2,914 8,342 45,000 39,486 127 37,644 (71,772) 18,865 31,682 (27,652) (167,242) (244,128) 62,586 (43,677) (3,684) 48,562 (324,688) (1,568) (203) (22,855) (349,314)
	(31,940) 14,569 (932) (39,691) (2,268) (279,072) 44,008 9,814 (2,761) (288,273) (1,498) – (16,113) (305,884)	18,865 31,682 (27,652 (167,242 (244,128 62,586 (43,677 (3,684 48,562
		(324,688 (1,568 (203 (22,855
		(349,314

– I-11 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

NOTES INVESTING ACTIVITIES Acquisition of subsidiaries (net of cash and cash equivalents acquired) 41 Loan advance to a jointly controlled entity Deposits and expenses paid for acquisition of subsidiaries Purchase of convertible bonds Refundable earnest money paid Loan advance to a joint venture Purchase of property, plant and equipment Purchase of available-for-sale investments Advance to associates Investment in associates Proceeds from redemption/disposal of convertible bonds Proceeds from disposal of available-for-sale investments Refundable earnest money refunded Decrease (increase) in pledged bank deposits Interest received Dividend received Proceeds from disposal of property, plant and equipment Net proceeds from disposal of associates Advances to associates Disposal of subsidiaries (net of cash and cash equivalents disposed) 42 Acquisition of associates Deposit and expenses paid for acquisition of a land use right NET CASH (USED IN) FROM INVESTING ACTIVITIES	2009 HK$’000 (200,837) (58,811) (47,244) (33,750) (32,670) (29,629) (15,635) (5,631) (18) (2) 57,000 17,896 10,000 7,192 5,722 2,501 974 – – – – –	2008 HK’000 – – – – (25,600) – (39,151) (63,258) (2,086) – 44,975 226,428 – (11,035) 9,331 1,131 188 136,607 (81,409) (56,310) (45,507) (5,809) 88,495
	(322,942)	88,495

– I-12 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

FINANCING ACTIVITIES Proceeds from issue of shares New bank and other borrowings raised Repayment to a former shareholder of a subsidiary Repayment of bank and other borrowings Share repurchase and cancellation Expenses paid in connection with issue of shares (Repayment to) advance from minority shareholders of subsidiaries Repayment of obligations under finance leases NET CASH FROM FINANCING ACTIVITIES NET DECREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT 1ST APRIL EFFECT OF FOREIGN EXCHANGE RATE CHANGES CASH AND CASH EQUIVALENTS AT 31ST MARCH, representing bank balances and cash	2009 HK$’000 650,059 20,247 (58,758) (51,327) (26,679) (23,183) (517) (59)	2008 HK’000 168,000 5,741,188 – (5,668,618) – (5,114) 13,493 (23) 248,926 (11,893) 254,622 309 243,038
	509,783 (119,043) 243,038 40	248,926
		(11,893 254,622 309
	124,035

– I-13 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(for the year ended 31st March, 2009)

1. GENERAL

The Company is incorporated in Bermuda as an exempted company with limited liability and its shares are listed on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”). The address of the registered office of the Company is Clarendon House, Church Street, Hamilton HM 11, Bermuda and the principal place of business of the Company is Unit 3102, 31/F., Bank of America Tower, 12 Harcourt Road, Central, Hong Kong.

The consolidated financial statements are prepared in Hong Kong dollars, which is the same as the functional currency of the Company.

The Company is an investment holding company. The principal activities of the Group are property development and investment in Macau, the People’s Republic of China (the “PRC”) and Hong Kong, development and operation of golf resort and hotel in the PRC, securities trading and investment and loan financing services. In prior year, the Group discontinued trading of motorcycles and manufacture and trading of medicine and health products, details of which are set out in note 11. The activities of its principal subsidiaries are set out in note 49.

2. APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS (“HKFRS”)

In the current year, the Group has applied the following amendments and interpretations (“new HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”) which are or have become effective.

HKAS 39 & HKFRS 7 (Amendments) Reclassification of Financial Assets HK(IFRIC)-Int 12 Service Concession Arrangements HK(IFRIC)-Int 14 HKAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction

The adoption of the new HKFRSs had no material effect on how the results and financial position for the current or prior accounting periods have been prepared and presented. Accordingly, no prior period adjustment has been required.

The Group has not early applied the following new and revised standards, amendments or interpretations that have been issued but are not yet effective.

HKFRSs (Amendments) Improvements to HKFRSs[1] HKFRSs (Amendments) Improvements to HKFRSs 2009[2] HKAS 1 (Revised) Presentation of Financial Statements[3] HKAS 23 (Revised) Borrowing Costs[3] HKAS 27 (Revised) Consolidated and Separate Financial Statements[4] HKAS 32 & 1 (Amendments) Puttable Financial Instruments and Obligations Arising on Liquidation[3] HKAS 39 (Amendment) Eligible Hedged Items[4] HKFRS 1 & HKAS 27 (Amendments) Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate[3] HKFRS 2 (Amendment) Vesting Conditions and Cancellations[3] HKFRS 3 (Revised) Business Combinations[4] HKFRS 7 (Amendment) Improving Disclosures about Financial Instruments[3] HKFRS 8 Operating Segments[3] HK(IFRIC) – Int 9 & HKAS 39 Embedded Derivatives[5] (Amendments) HK(IFRIC) – Int 13 Customer Loyalty Programmes[6] HK(IFRIC) – Int 15 Agreements for the Construction of Real Estate[3] HK(IFRIC) – Int 16 Hedges of a Net Investment in a Foreign Operation[7] HK(IFRIC) – Int 17 Distributions of Non-cash Assets to Owners[4] HK(IFRIC) – Int 18 Transfers of Assets from Customers[8]

– I-14 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

1 Effective for annual periods beginning on or after 1st January, 2009 except the amendments to HKFRS 5, effective for annual periods beginning on or after 1st July, 2009
2 Effective for annual periods beginning on or after 1st January, 2009, 1st July, 2009 and 1st January, 2010, as appropriate
3 Effective for annual periods beginning on or after 1st January, 2009
4 Effective for annual periods beginning on or after 1st July, 2009
5 Effective for annual periods ending on or after 30th June, 2009 6 Effective for annual periods beginning on or after 1st July, 2008 7 Effective for annual periods beginning on or after 1st October, 2008 8 Effective for transfers on or after 1st July, 2009

The adoption of HKFRS 3 (Revised) may affect the Group’s accounting for business combination for which the acquisition date is on or after 1st April, 2010. HKAS 27 (Revised) will affect the accounting treatment for changes in the Group’s ownership interest in a subsidiary. The directors of the Company anticipate that the application of other new and revised standards, amendments or interpretations will have no material impact on the results and the financial position of the Group.

3. SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements have been prepared on the historical cost basis except for certain financial instruments, which are measured at fair values, as explained in the accounting policies set out below.

The consolidated financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards issued by the HKICPA. In addition, the consolidated financial statements include applicable disclosures required by the Rules Governing the Listing of Securities on the Stock Exchange and by the Hong Kong Companies Ordinance.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with those used by other members of the Group.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Minority interests in the net assets of consolidated subsidiaries are presented separately from the Group’s equity therein. Minority interests in the net assets consist of the amount of those interests at the date of the original business combination and the minority’s share of changes in equity since the date of the combination. Losses applicable to the minority in excess of the minority’s interest in the subsidiary’s equity are allocated against the interests of the Group except to the extent that the minority has a binding obligation and is able to make an additional investment to cover the losses.

– I-15 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

Business combinations

The acquisition of businesses is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under HKFRS 3 “Business Combinations” are recognised at their fair values at the acquisition date.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If, after reassessment, the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognised immediately in profit or loss.

The interest of minority shareholders in the acquiree is initially measured at the minority’s proportion of the net fair value of the assets, liabilities and contingent liabilities recognised.

Property, plant and equipment

Property, plant and equipment, including building, held for use or supply of goods or services, or for administrative purposes (other than construction in progress) are stated at cost less subsequent accumulated depreciation and accumulated impairment losses.

Depreciation is provided to write off the cost of items of property, plant and equipment other than construction in progress, over their estimated useful lives and after taking into account of their estimated residual value, using the straight-line method.

Construction in progress includes property, plant and equipment in the course of construction for production or for its own use purposes. Construction in progress is carried at cost less any recognised impairment loss. Construction in progress is classified to the appropriate category of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, the term of the relevant lease.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the consolidated income statement in the year in which the item is derecognised.

Prepaid lease payments of leasehold land

Prepaid lease payments of leasehold land, which represent up-front payments to acquire leasehold land interest, are stated at cost and released to profit or loss over the period of the lease on a straight-line basis.

Premium on prepaid lease payments of leasehold land

Premium on prepaid lease payments of leasehold land represents premium on acquisition of prepaid lease payments of land use rights as a result of acquisition of subsidiaries, which are stated at cost and released to profit or loss on the same basis as the related land use rights.

Properties under development

Properties under development for future sale in the ordinary course of business are stated at the lower of cost and net realisable value. It comprises the costs of land use right and development expenditure directly attributable to the development of the properties.

– I-16 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

Joint ventures

Jointly controlled operations

When a group entity undertakes its activities under joint venture arrangements directly, constituted as jointly controlled operations, the assets and liabilities arising from those jointly controlled operations are recognised in the balance sheet of the relevant company on an accrual basis and classified according to the nature of the item. The Group’s share of the income from jointly controlled operations, together with the expenses that it incurs are included in the consolidated income statement when it is probable that the economic benefits associated with the transactions will flow to/from the Group.

Jointly controlled entities

Joint venture arrangements that involve the establishment of a separate entity in which venturers have joint control over the economic activity of the entity are referred to as jointly controlled entities.

The results and assets and liabilities of jointly controlled entities are incorporated in the consolidated financial statements using the equity method of accounting. Under the equity method, investments in jointly controlled entities are carried in the consolidated balance sheet at cost as adjusted for post-acquisition changes in the Group’s share of the net assets of the jointly controlled entities, less any identified impairment loss. When the Group’s share of losses of a jointly controlled entity equals or exceeds its interest in that jointly controlled entity (which includes any long-term interests that, in substance, form part of the Group’s net investment in the jointly controlled entity), the Group discontinues recognising its share of further losses. An additional share of losses is provided for and a liability is recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of that jointly controlled entity.

When a group entity transacts with a jointly controlled entity of the Group, profits or losses are eliminated to the extent of the Group’s interest in the jointly controlled entity.

Interests in associates

An associate is an entity over which the investor has significant influence and that is neither a subsidiary nor an interest in a joint venture.

The results and assets and liabilities of associates are incorporated in these consolidated financial statements using the equity method of accounting. Under the equity method, investments in associates are carried in the consolidated balance sheet at cost as adjusted for post-acquisition changes in the Group’s share of the net assets of the associates, less any identified impairment loss. When the Group’s share of losses of an associate equals or exceeds its interest in that associate (which includes any long-term interests that, in substance, form part of the Group’s net investment in the associate), the Group discontinues recognising its share of further losses. An additional share of losses is provided for and a liability is recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of that associate.

Any excess of the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognised immediately in profit or loss.

Where a group entity transacts with an associate of the Group, profits and losses are eliminated to the extent of the Group’s interest in the relevant associate.

Inventories

Hotel inventories and other inventories are stated at the lower of cost and net realisable value. Cost is calculated using the weighted average method.

Properties held for sale

Properties held for sale are stated at the lower of cost and net realisable value. Net realisable value is determined by reference to professional valuations or directors’ estimates based on prevailing market conditions.

– I-17 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

Financial instruments

Financial assets and financial liabilities are recognised on the consolidated balance sheet when a group entity becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss (“FVTPL”)) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

Financial assets

The Group’s financial assets are classified into financial assets at FVTPL, loans and receivables or available-for-sale financial assets. All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset, or, where appropriate, a shorter period.

Income is recognised on an effective interest basis for debt instruments.

Financial assets at fair value through profit or loss

Financial assets at FVTPL has two subcategories, including financial assets held for trading and those designated as at FVTPL on initial recognition.

A financial asset is classified as held for trading if:

it has been acquired principally for the purpose of selling in the near future; or
it is a part of an identified portfolio of financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or
it is a derivative that is not designated and effective as a hedging instrument.

A financial asset other than a financial asset held for trading may be designated as at FVTPL upon initial recognition if:

such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or
the financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or
it forms part of a contract containing one or more embedded derivatives, and HKAS 39 permits the entire combined contract (asset or liability) to be designated as at FVTPL.

At each balance sheet date subsequent to initial recognition, financial assets at FVTPL are measured at fair value, with changes in fair value recognised directly in profit or loss in the period in which they arise. The net gain or loss recognised in profit or loss excludes any dividend or interest earned on the financial assets.

– I-18 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. At each balance sheet date subsequent to initial recognition, loans and receivables (including debt portion of convertible bonds (see accounting policy below), debtors, other loan receivables, amounts due from associates, unsecured loans and interest due from related companies/associates, pledged bank deposits and bank balances and cash) are carried at amortised cost using the effective interest method, less any identified impairment losses (see accounting policy on impairment loss on financial assets below).

Debt portion of convertible bonds

Convertible bonds held by the Group are separately recognised as a debt portion and derivatives embedded in convertible bonds. On initial recognition, the debt portion of the convertible bond and the embedded derivatives are recognised separately at fair value. The debt portion is subsequently measured at amortised cost using the effective interest method.

Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated or not classified as financial assets at FVTPL, loans and receivables or held-to-maturity investments.

At each balance sheet date subsequent to initial recognition, available-for-sale financial assets are measured at fair value. Changes in fair value are recognised in equity, until the financial asset is disposed of or is determined to be impaired, at which time, the cumulative gain or loss previously recognised in equity is removed from equity and recognised in profit or loss (see accounting policy on impairment loss on financial assets below).

Derivative financial instruments

Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value at each balance sheet date. The resulting gain or loss is recognised in profit or loss immediately.

Embedded derivatives

Derivatives embedded in non-derivative host contracts are treated as separate derivatives when their risks and characteristics are not closely related to those of the host contracts and the host contracts are not measured at fair value with changes in fair value recognised in profit or loss. In all other circumstances, derivatives embedded are not separated and are accounted for together with the host contracts in accordance with appropriate standards.

Impairment of financial assets

Financial assets, other than those at FVTPL, are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the financial assets have been affected.

For an available-for sale equity investment, a significant or prolonged decline in the fair value of that investment below its cost is considered to be objective evidence of impairment.

For all other financial assets, objective evidence of impairment could include:

significant financial difficulty of the issuer or counterparty; or
default or delinquency in interest or principal payments; or
it becoming probable that the borrower will enter bankruptcy or financial re-organisation.

– I-19 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

For certain categories of financial asset, such as debtors and other loan receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Group’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the credit period of 90 days and the repayment date of other loan receivables respectively, and observable changes in national or local economic conditions that correlate with default on receivables.

For financial assets carried at amortised cost, an impairment loss is recognised in profit or loss when there is objective evidence that the asset is impaired, and is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the original effective interest rate.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of debtors and other loan receivables, where the carrying amount is reduced through the use of an allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss. When a debtor or an other loan receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited to profit or loss.

For financial assets measured at amortised cost, if, in a subsequent period, the amount of impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment losses was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

Impairment losses on available-for-sale equity investments will not be reversed in profit or loss in subsequent periods. Any increase in fair value subsequent to impairment loss is recognised directly in equity.

Financial liabilities and equity

Financial liabilities and equity instruments issued by a group entity are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.

An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period.

Interest expense is recognised on an effective interest basis.

Financial liabilities

Financial liabilities including creditors, amounts due to minority shareholders of subsidiaries, and bank borrowings are subsequently measured at amortised cost, using the effective interest method.

Convertible note payables

Convertible note payables issued by the Company that contain both the liability and conversion option components are classified separately into respective items on initial recognition. Conversion option that will be settled by the exchange of a fixed amount of cash or another financial asset for a fixed number of the Company’s own equity instruments is classified as an equity instrument.

– I-20 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

On initial recognition, the fair value of the liability component is determined using the prevailing market interest of similar non-convertible debts. The difference between the gross proceeds of the issue of the convertible note payables and the fair value assigned to the liability component, representing the conversion option for the holder to convert the loan notes into equity, is included in equity (convertible loan notes equity reserve).

In subsequent periods, the liability component of the convertible loan notes is carried at amortised cost using the effective interest method. The equity component, representing the option to convert the liability component into ordinary shares of the Company, will remain in convertible loan notes equity reserve until the embedded option is exercised (in which case the balance stated in convertible loan notes equity reserve will be transferred to share premium. Where the option remains unexercised at the expiry date, the balance stated in convertible loan notes equity reserve will be released to the retained profits (accumulated losses)). No gain or loss is recognised in profit or loss upon conversion or expiration of the option.

Transaction costs that relate to the issue of the convertible note payables are allocated to the liability and equity components in proportion to the allocation of the gross proceeds. Transaction costs relating to the equity component are charged directly to equity. Transaction costs relating to the liability component are included in the carrying amount of the liability portion and amortised over the period of the convertible note payables using the effective interest method.

Equity instruments

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

Upon repurchase of the Company’s own shares, the respective shares are subsequently cancelled upon repurchase and accordingly, the issued share capital of the Company is diminished by the nominal value thereof. The premium paid on repurchase is charged against the Company’s share premium account. An amount equal to the nominal value of the shares repurchased is transferred from retained profits (accumulated losses) to capital redemption reserve.

Warrants

Warrants issued by the Company that will be settled by the exchange of a fixed amount of cash for a fixed number of the Company’s own equity instruments are classified as an equity instrument.

The fair value of warrants on the date of issue is recognised in equity (warrant reserve). The warrant reserve will be transferred to share capital and share premium upon exercise of the warrants. Where the warrants remain unexercised at the expiry date, the amount previously recognised in warrant reserve will be released to the retained profits (accumulated losses).

Derecognition

Financial assets are derecognised when the rights to receive cash flows from the assets expire or, the financial assets are transferred and the Group has transferred substantially all the risks and rewards of ownership of the financial assets. On derecognition of a financial asset, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised directly in equity is recognised in profit or loss.

Financial liabilities are derecognised when the obligation specified in the relevant contract is discharged, cancelled or expires. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.

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 discounts and sales related taxes.

– I-21 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

Sales of goods are recognised when goods are delivered and title has passed.

Revenue in relation to hotel and golf club operations are recognised when the services are provided.

Golf club annual subscription fees are recognised on a straight line basis over the subscription period of one year.

Golf club membership transfer fees are recognised upon approval of the transfer by the management committee of the golf operations.

Building management fee income is recognised on a straight line basis over the relevant period in which the services are rendered.

Sales of securities investments are recognised when the related bought and sold notes are executed.

Sales of completed properties are recognised on the execution of a binding sales agreement.

Interest income from a financial asset is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts the estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount.

Dividend income from investments is recognised when the Group’s rights to receive payment have been established.

Leasing

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

The Group as lessor

Rental income from operating leases is recognised in the consolidated income statement on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised as an expense on a straight-line basis over the lease term.

The Group as lessee

Assets held under finance leases are recognised as assets of the Group at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the consolidated balance sheet as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to profit or loss unless they are directly attributable to qualifying assets in which case they are capitalised in accordance with the Group’s accounting policy on borrowing costs (see below).

Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of the relevant lease. Benefits received and receivable as an incentive to enter into an operating lease are recognised as a reduction of rental expense over the lease on a straight-line basis.

Foreign currencies

In preparing the financial statements of each individual group entity, transactions in currencies other than the functional currency of that entity (foreign currencies) are recorded in the respective functional currency (i.e. the currency of the primary economic environment in which the entity operates) at the rates of exchanges prevailing on the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Non-monetary items carried at fair value was denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

– I-22 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are recognised in profit or loss in the period in which they arise. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period except for exchange differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in equity, in which case, the exchange differences are also recognised directly in equity.

For the purposes of presenting the consolidated financial statements, the assets and liabilities of the Group’s foreign operations are translated into the presentation currency of the Group (i.e. Hong Kong dollars) at the rate of exchange prevailing at the balance sheet date, and their income and expenses are translated at the average exchange rates for the year, unless exchange rates fluctuate significantly during the period, in which case, the exchange rates prevailing at the dates of transactions are used. Exchange differences arising, if any, are recognised as a separate component of equity (the translation reserve). Such exchange differences are recognised in profit or loss in the period in which the foreign operation is disposed of.

Share-based payment transactions

Equity-settled share-based payment transactions

Share options granted to employees and others providing similar services after 1st April, 2005

The fair value of services received determined by reference to the fair value of share options granted at the grant date is expensed on a straight-line basis over the vesting period with a corresponding increase in equity (share-based payment reserve).

At each balance sheet date, the Group revises its estimates of the number of options that are expected to ultimately vest. The impact of the revision of the estimates during the vesting period, if any, is recognised in profit or loss, with a corresponding adjustment to share-based payment reserve.

At the time when the share options are exercised, the amount previously recognised in share-based payment reserve will be transferred to share premium. When the share options are forfeited after the vesting date or are still not exercised at the expiry date, the amount previously recognised in share-based payment reserve will be transferred to retained profits (accumulated losses).

Share options granted to suppliers/consultants

Share options issued in exchange for goods or services are measured at the fair values of the goods or services received, unless that fair value cannot be reliably measured, in which case the goods or services received are measured by reference to the fair value of the share options granted. The fair values of the goods or services received are recognised as expenses immediately. Corresponding adjustment has been made to equity (share-based payment reserve).

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are capitalised as part of the cost of those assets. Capitalisation of such borrowing costs ceases when the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

Impairment losses on tangible assets

At each balance sheet date, the Group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised as income immediately.

– I-23 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

Retirement benefit costs

Payments to the defined contribution retirement benefit plans are charged as expenses when employees have rendered service entitling them to the contributions.

Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the consolidated income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax base used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised. Deferred tax is charged or credited to profit or loss, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

4. KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Group’s accounting policies, the directors of the Company are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. 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.

The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

– I-24 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

Allowance on other loan receivables

As at 31st March, 2009, the carrying amount of other loan receivables, was HK$208,727,000 (2008: HK$243,133,000). The Group performs ongoing credit evaluations of its borrowers and adjusts credit limits based on payment history and the borrowers’ current credit-worthiness, as determined by the review of their current credit information. When there is objective evidence of impairment, impairment loss is determined based on the present value of the estimated future cash flows discounted at the original effective interest rate. If the financial conditions of the borrowers of the Group were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be considered.

Estimated impairment of available-for-sale investments

As at 31st March, 2009, the carrying amount of the available-for-sale equity investments was HK$37,892,000 (2008: HK$94,570,000). The Group determines that available-for-sale equity securities are impaired when there has been a significant or prolonged decline in the fair value below original cost. The determination of when a decline in fair value below original cost is not recoverable within a reasonable time period is judgmental by nature, so profit and loss could be affected by differences in this judgment.

Estimated impairment on properties under development/properties held for sale

As at 31st March, 2009, the carrying amounts of properties under development and properties held for sale are HK$189,000,000 and HK$539,388,000 (2008: HK$240,853,000 and HK$252,903,000) respectively. In determining whether impairment on properties under development/properties held for sale is required, the Group takes into consideration the intention of the properties for use/sale, the current market environment, the estimated market value of the properties and/or the present value of future cash flow expected to receive. Impairment is recognised based on the higher of present value of estimated future cash flow and estimated market value. If the market environment/circumstances changes significantly, resulting in a decrease in the recoverable amount of these properties interest, impairment loss may be required.

Income taxes

As at 31st March, 2009, no deferred tax asset has been recognised on the tax losses of HK$700,389,000 (2008: HK$517,627,000) due to the unpredictability of future profit streams. The realisability of the deferred tax asset mainly depends on whether sufficient future profits or taxable temporary differences will be available in the future.

5. REVENUE

Revenues include revenue from property development and investment, golf and leisure operations, loan financing income, dividend income from investments held-for-trading and net gain on disposal of investments held-for-trading.

– I-25 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

Revenue represents the aggregate of the amounts received and receivable from third parties, net of discounts and sales related taxes for the year. An analysis of the Group’s revenue for the year, for both continuing and discontinued operations, is as follows:

Continuing operations Loan interest income Sales of properties Hotel operations Green fees, practice balls and car rental income Food and beverage sales Rental income Golf club subscription fees and handling fees Pro shop sales Dividend income from financial instruments Net gain on disposal of investments held-for-trading Building management fee income Discontinued operations Sales of medicine and health products Sales of motorcycles	2009 HK$’000 21,772 17,901 14,563 10,738 10,639 7,850 5,993 2,125 970 119 –	2008 HK$’000 31,789 76,619 18,852 19,895 12,698 3,270 8,174 3,198 1,131 4,610 1,708
	92,670 – – –	181,944
		115,741 17,567
		133,308
	92,670	315,252

6. NET (LOSS) GAIN ON FINANCIAL INSTRUMENTS

(Decrease) increase in fair values of: – investments held-for-trading – derivatives embedded in convertible bonds – equity-linked notes Impairment loss on available-for-sales investments (Loss) gain on disposal of available-for-sale investments Gain (loss) on disposal of convertible bonds Dividend income on available-for-sales investments Dividend income on investments held-for-trading Net gain on disposal of investments held-for-trading	Continuing operations 2009 2008 HK$’000 HK$’000 (114,477) 9,608 (3,247) 1,944 – 710 (53,037) – (4,299) 60,752 3,103 (2,373) 1,531 426 970 705 119 4,610 (169,337) 76,382	Continuing operations 2009 2008 HK$’000 HK$’000 (114,477) 9,608 (3,247) 1,944 – 710 (53,037) – (4,299) 60,752 3,103 (2,373) 1,531 426 970 705 119 4,610 (169,337) 76,382
		76,382

– I-26 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

7. OTHER INCOME

Bank interest income Exchange gain, net Interest income on convertible bonds Interest on unsecured loan due from an associate Other interest income (Note) Others	Continuing operations 2009 2008 HK$’000 HK$’000 4,676 10,168 2,841 2,732 5,502 3,036 – 27,942 14,417 23,676 6,559 5,652 33,995 73,206	Discontinued operations 2009 2008 HK$’000 HK$’000 – 91 – – – – – – – – – 876 – 967	Consolidated 2009 2008 HK$’000 HK$’000 4,676 10,259 2,841 2,732 5,502 3,036 – 27,942 14,417 23,676 6,559 6,528 33,995 74,173	Consolidated 2009 2008 HK$’000 HK$’000 4,676 10,259 2,841 2,732 5,502 3,036 – 27,942 14,417 23,676 6,559 6,528 33,995 74,173
				74,173

Note: The interest income is receivable from a shareholder of an associate since HK$281,150,000 of unsecured loans due from an associate was advanced to the associate as the shareholder did not provide its portion of the loans. Details are set out in note 21.

8. FINANCE COSTS

Effective interest on convertible note payables Interest on bank borrowings wholly repayable within five years Interest on obligations under finance leases Interest on unsecured loans from: Minority shareholders of subsidiaries Related companies	Continuing operations 2009 2008 HK$’000 HK$’000 101,414 97,681 6,919 11,416 24 8 – 734 – 94 108,357 109,933	Discontinued operations 2009 2008 HK$’000 HK$’000 – – – 613 – – – – – – – 613	Consolidated 2009 2008 HK$’000 HK$’000 101,414 97,681 6,919 12,029 24 8 – 734 – 94 108,357 110,546	Consolidated 2009 2008 HK$’000 HK$’000 101,414 97,681 6,919 12,029 24 8 – 734 – 94 108,357 110,546
				110,546

9. IMPAIRMENT LOSSES ON PROPERTY INTERESTS

Impairment losses on: – prepaid lease payments of leasehold land and premium on prepaid lease payments of leasehold land (note 16) – properties under development (note 18) – properties held for sale (Note)	Continuing operations 2009 2008 HK$’000 HK$’000 – 45,000 54,121 – 92,591 – 146,712 45,000	Continuing operations 2009 2008 HK$’000 HK$’000 – 45,000 54,121 – 92,591 – 146,712 45,000
		45,000

– I-27 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

Note: During the year, the directors conducted a review of the Group’s properties held for sale and determined that certain of the assets were impaired, due to decrease of open market values based on the valuation report conducted by RHL Appraisal Limited, an independent valuer. Accordingly, impairment losses of HK$92,591,000 have been recognised.

10. TAXATION

Continuing operations 2009 2008 HK$’000 HK$’000 – 1,509 229 833	Continuing operations 2009 2008 HK$’000 HK$’000 – 1,509 229 833	Discontinued operations 2009 2008 HK$’000 HK$’000 – – – 558	Discontinued operations 2009 2008 HK$’000 HK$’000 – – – 558	Consolidated 2009 2008 HK$’000 HK$’000 – 1,509 229 1,391	Consolidated 2009 2008 HK$’000 HK$’000 – 1,509 229 1,391
229 (13) (685)	2,342 – 1,133	– – –	558 – –	229 (13) (685)	2,900
					–
					1,133
(469)	3,475	–	558	(469)	4,033

On 26th June, 2008, the Hong Kong Legislative Council passed the Revenue Bill 2008 which reduced corporate profits tax rate from 17.5% to 16.5% effective from the year of assessment 2008/2009. Therefore, Hong Kong Profits Tax is calculated at 16.5% (2008: 17.5%) of the estimated assessable profits for the year.

No tax is payable on the profit for the year for some of the subsidiaries arising in Hong Kong since the assessable profit is wholly absorbed by tax losses brought forward. Hong Kong tax losses carried forward amount to approximately HK$677,940,000 (2008: HK$511,706,000).

Taxation arising in other jurisdictions is calculated at the rates prevailing in the relevant jurisdictions.

– I-28 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

The newly promulgated Enterprise Income Tax Law (the “New Law”) of the People’s Republic of China (the “PRC”) are effective on 1st January, 2008. In February 2008, the Ministry of Finance and the State Administration of Taxation issued several important tax circular which clarify the implementation of the New Law and have an impact on certain of the Company’s PRC subsidiaries. Under the New Law, the Enterprise Income Tax rate of the Group’s subsidiaries in the PRC was either reduced from 33% to 25% or increased from 15% to 25% progressively from 1st January, 2008 onwards. The relevant tax rates for the Group’s subsidiaries in the PRC ranged from 18% to 25% (2008: 15% to 33%).

The tax (credit) charge for the year can be reconciled to the loss per the consolidated income statement as follows:

Loss before taxation: Continuing operations Discontinued operations Tax at the Hong Kong Profits Tax rate of 16.5% (2008: 17.5%) Tax effect of expenses not deductible for tax purpose Tax effect of income not taxable for tax purpose Tax effect of deductible temporary differences not recognised Utilisation of deductible temporary differences previously not recognised Tax effect of share of results of a jointly controlled entity and associates Effect of different tax rates of subsidiaries operating in other jurisdictions Overprovision in previous year Tax (credit) charge for the year	2009 HK$’000 (462,285) – (462,285)	2008 HK$’000 (122,218) (18,107) (140,325) (24,557) 47,703 (18,601) 7,768 (9,887) 4,383 (2,776) – 4,033
	(76,277) 51,472 (7,107) 32,622 (158) 762 (1,770) (13)	(24,557 47,703 (18,601 7,768 (9,887 4,383 (2,776 –
	(469)

11. DISCONTINUED OPERATIONS

On 27th February, 2007, the Group entered into a sale and purchase agreement to dispose of its entire 100% equity interest in Tung Fong Hung Investment Limited (“TFH”) (together with its subsidiaries, the “TFH Group”), which carried out all of the Group’s business of manufacturing and trading of medicine and health products, together with an assignment of the outstanding loan owing by TFH amounting to HK$99,728,000 to the acquirer. The disposal was completed on 31st July, 2007, on which date the control of the TFH Group was passed to the acquirer.

– I-29 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

On 31st March, 2008, the Group disposed of its entire interest in King-Tech International Holdings Limited (together with its subsidiary, the “King-Tech Group”), which carried out all of the Group’s business of trading of motorcycles to the acquirer. The disposal was completed on 31st March, 2008, on which date the control of the King-Tech Group was passed to the acquirer.

The loss for the year ended 31st March, 2008 from the discontinued operations is analysed as follows:

Loss from discontinued operations:
Profit from manufacturing and trading of medicine and
health products operation
Loss from trading of motorcycles operation
Loss on disposal of discontinued operations:
Loss on disposal of the business of manufacturing and
trading of medicine and health products
Gain on disposal of business of trading of motorcycles
Attributable to:
Equity holders of the Company
Minority interests

2008
HK$’000
1,266
(1,360)
(94)
(18,577)
6
(18,571)
(18,665)
(18,596)
(69)
(18,665)

– I-30 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

The results of businesses of manufacturing and trading of medicine and health products, and trading of motorcycles for the period from 1st April, 2007 to the respective dates of disposals, which have been included in the consolidated income statement, were as follows:

Revenue Cost of sales Gross profit Other income Distribution and selling expenses Administrative expenses Other expenses Finance costs Profit (loss) before taxation Taxation Profit (loss) for the period/year	Medicine and Health Products 1.4.2007 to 31.7.2007 HK$’000 115,741 (77,496) 38,245 967 (25,580) (10,833) (363) (612)	Motorcycles 1.4.2007 to 31.3.2008 HK$’000 17,567 (16,518) 1,049 – – (2,408) – (1)	Total 1.4.2007 to 31.3.2008 HK$’000 133,308 (94,014) 39,294 967 (25,580) (13,241) (363) (613) 464 (558) (94)
	1,824 (558)	(1,360) –	464 (558
	1,266	(1,360)

The cash flows of the discontinued operations contributed to the Group were as follows:

Net cash from operating activities Net cash used in investing activities Net cash from financing activities	2008 HK$’000 29,777 (822) 846 29,801

The carrying amounts of the assets and liabilities of the TFH Group and the King-Tech Group at the dates of disposals are disclosed in note 42.

– I-31 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

12. LOSS FOR THE YEAR

Continuing operations 2009 2008 HK$’000 HK$’000 3,265 3,391 666 138	Continuing operations 2009 2008 HK$’000 HK$’000 3,265 3,391 666 138	Discontinued operations 2009 2008 HK$’000 HK$’000 – 262 – –	Discontinued operations 2009 2008 HK$’000 HK$’000 – 262 – –	Consolidated 2009 2008 HK$’000 HK$’000 3,265 3,653 666 138	Consolidated 2009 2008 HK$’000 HK$’000 3,265 3,653 666 138
3,931 18,222 35,037 1,465 1,699 56,423 – 56,423 107,416 11,507 525 2,736 14,768	3,529 25,212 39,754 2,498 875 68,339 – 68,339 55,690 15,688 2,283 2,914 20,885	– – – – – – – – – – – – –	262 – 16,338 – 893 17,231 (17) 17,214 90,121 1,881 10 – 1,891	3,931 18,222 35,037 1,465 1,699 56,423 – 56,423 107,416 11,507 525 2,736 14,768	3,791
					25,212 56,092 2,498 1,768
					85,570 (17)
					85,553
					145,811 17,569 2,293 2,914
					22,776
– 171 (2,841) 5,313	– 110 (2,732) 1,441	– – – –	5,106 17 25 360	– 171 (2,841) 5,313	5,106 127 (2,707) 1,801

– I-32 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

13. DIRECTORS’ EMOLUMENTS AND HIGHEST PAID INDIVIDUALS

(a) Directors’ emoluments

The emoluments paid or payable to each of the nine (2008: twelve) directors were as follows:

Fees HK$’000 10 10 4 10 240 10 120 120 120 644	Salaries and other benefits HK$’000 2,880 2,640 1,019 1,800 1,762 3,000 – – – 13,101	Other emoluments Discretionary and performance related incentive payments Equity-settled share-based payments expense HK$’000 HK$’000 (Note) – 1,198 – 699 – 188 – 499 – 299 – 899 – 150 – 150 – – – 4,082	Other emoluments Discretionary and performance related incentive payments Equity-settled share-based payments expense HK$’000 HK$’000 (Note) – 1,198 – 699 – 188 – 499 – 299 – 899 – 150 – 150 – – – 4,082	Contributions to retirement benefits schemes HK$’000 12 264 5 90 12 12 – – – 395	Total emoluments HK$’000 4,100 3,613 1,216 2,399 2,313 3,921 270 270 120
					18,222

10 10 10 10 240 8 5 5 120 120 19 102	2,640 2,400 2,002 1,430 1,695 2,516 – – – – – –	2,500 1,750 334 500 250 334 – – – – – –	1,670 978 406 644 357 1,072 72 36 215 179 – 215	12 240 12 72 12 10 – – – – – –	6,832 5,378 2,764 2,656 2,554 3,940 77 41 335 299 19 317
659	12,683	5,668	5,844	358	25,212

Note: The amount included performance related incentive payment which is determined by the performance of the directors for the year ended 31st March, 2008.

No directors waived any emoluments during the current and prior years.

– I-33 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

(b) Highest paid individuals

All five individuals with the highest emoluments in the Group were directors of the Company for both years whose emoluments are included in (a) above.

During both years, no emoluments were paid by the Group to the five highest paid individuals, including directors and employees, as an inducement to join or upon joining the Group or as compensation for loss of office.

14. LOSS PER SHARE

(a) For continuing and discontinued operations

The calculation of the basic and diluted loss per share attributable to the ordinary equity holders of the Company is based on the following data:

Loss: Loss for the year attributable to equity holders of the Company and loss for the purposes of basic and diluted loss per share Number of shares: Weighted average number of ordinary shares for the purposes of basic and diluted loss per share (Note)	2009 HK$’000 (461,816) 2009 383,880,132	2008 HK$’000 (141,853) 2008 192,654,235

Note: The weighted average number of ordinary shares for both years has been adjusted for the effect of the rights issue and capital reorganisation during the year.

(b) From continuing operations

The calculation of the basic and diluted loss per share from continuing operations attributable to the ordinary equity holders of the Company is based on the following data:

Loss is calculated as follows:

Loss for the year attributable to equity holders of the Company Less: Loss for the year from discontinued operations Loss for the purposes of basic and diluted loss per share from continuing operations	2009 HK$’000 (461,816) – (461,816)	2008 HK$’000 (141,853) (18,596) (123,257)

The denominators used are the same as those detailed above for both basic and diluted loss per share.

– I-34 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

(c) From discontinued operations

Basic and diluted loss per share from discontinued operations is HK$0.1 per share for the year ended 31st March, 2008, based on the loss for the year ended 31st March, 2008 from discontinued operations attributable to the equity holders of the Company of HK$18,596,000 and the denominators detailed above for both basic and diluted loss per share.

The calculation of diluted loss per share for both years has not assumed the exercise of the share options and warrants (for the year ended 31st March, 2009) and the conversion of convertible notes as these potential ordinary shares are anti-dilutive during both years.

15. PROPERTY, PLANT AND EQUIPMENT

Buildings HK$’000 208,254 18,981 2,133 (129,599) –	Leasehold improvements HK$’000 51,873 140 400 (51,786) (438)	Plant and machineries HK$’000 27,267 1,706 10,068 (28,315) (1,096)	Furniture, fixtures and equipment HK$’000 8,230 219 2,406 (6,069) (24)	Motor vehicles HK$’000 7,208 217 2,938 (3,916) (233)	Construction in progress HK$’000 37,823 3,849 21,368 – –	Total HK$’000 340,655 25,112 39,313 (219,685) (1,791)
99,769 2,830 5,876 37,751 (725) 145,501 9,353 4,706 11,020 (22,747) – 2,332 417 6,389 (95) 9,043	189 8 4,240 – (35) 4,402 35,642 56 1,114 (36,322) (435) 55 8 1,397 (35) 1,425	9,630 410 940 – – 10,980 11,873 520 2,860 (13,915) (949) 389 173 1,375 – 1,937	4,762 108 1,379 12 (277) 5,984 2,990 88 1,300 (3,230) (22) 1,126 33 1,110 (177) 2,092	6,214 135 20 – (1,161) 5,208 841 67 1,275 (954) (70) 1,159 59 1,236 (746) 1,708	63,040 1,688 3,389 (37,763) – 30,354 – – – – – – – – – –	183,604 5,179 15,844 – (2,198)
						202,429
						60,699 5,437 17,569 (77,168) (1,476)
						5,061 690 11,507 (1,053)
						16,205
136,458 97,437	2,977 134	9,043 9,241	3,892 3,636	3,500 5,055	30,354 63,040	186,224

						178,543

– I-35 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

The above items of property, plant and equipment other than construction in progress are depreciated on a straight-line basis at the following rates per annum:

Buildings	4% or over the remaining term of
	the relevant lease, if shorter
Leasehold improvements	33% or over the term of the relevant leases, if shorter
Plant and machineries	5% – 15%
Furniture, fixtures and equipment	10% – 331∕3%
Motor vehicles	10% – 20%

The carrying values of buildings shown above are located in:

– Hong Kong – PRC	2009 HK$’000 4,454 132,004 136,458	2008 HK$’000 – 97,437
		97,437

At 31st March, 2009, the carrying values of furniture, fixtures and equipment of the Group included an amount of HK$357,000 (2008: HK$215,000) in respect of assets held under finance leases.

16. PREPAID LEASE PAYMENTS OF LEASEHOLD LAND

The Group’s prepaid lease payments of leasehold land comprise:

Land use rights in the PRC on medium-term lease Analysed for reporting purposes as: Current asset Non-current asset	2009 HK$’000 21,352	2008 HK$’000 21,325

	530 20,822	517 20,808
	21,352	21,325

During the year ended 31st March, 2008, the Group disposed of Guangzhou Panyu Lotus Golf & Country Club Co., Ltd. (“Panyu Golf”), a 65% owned subsidiary of the Company, which held a golf course and a piece of land located at Panyu, Guangdong Province in the PRC as set out in note 42. Prior to the disposal of Panyu Golf, the Group assessed the recoverable amount of the land by reference to its fair value and identified and recognised impairment losses of HK$30,681,000 and HK$14,319,000 in respect of the prepaid lease payments of leasehold land and premium on prepaid lease payments of leasehold land, respectively.

17. PREMIUM ON PREPAID LEASE PAYMENTS OF LEASEHOLD LAND

The amount represents the premium on acquisition of prepaid lease payments for the rights to use land situated in the PRC on medium-term lease as a result of acquisition of subsidiaries in previous years, which is amortised on the same basis as the related prepaid lease payments of the relevant land use rights.

– I-36 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

The movement of premium on prepaid lease payments is set out below:

COST At 1st April, 2007 Disposal of subsidiaries (note 42) At 31st March, 2008 and 2009 AMORTISATION AND IMPAIRMENT At 1st April, 2007 Charge for the year Impairment loss recognised (note 16) Disposal of subsidiaries (note 42) At 31st March, 2008 Charge for the year At 31st March, 2009 CARRYING VALUES At 31st March, 2009 At 31st March, 2008	HK$’000 134,029 (14,761) 119,268 2,502 2,914 14,319 (14,761) 4,974 2,736 7,710 111,558 114,294

18. PROPERTIES UNDER DEVELOPMENT

At cost: At 1st April Additions Disposal of subsidiaries (note 42) Impairment loss recognised (note 9) At 31st March	2009 HK$’000 240,853 2,268 – (54,121) 189,000	2008 HK$’000 11,296 244,128 (14,571) – 240,853

During the year, the directors conducted a review of the Group’s properties under development and determined that certain of the assets were impaired, due to decrease of open market value based on the valuation report conducted by RHL Appraisal Limited. Accordingly, an impairment loss of HK$54,121,000 has been recognised.

Management of the Group expects the whole amount of properties under development to be completed and released to market after one year (2008: after two years).

– I-37 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

19. AVAILABLE-FOR-SALE INVESTMENTS

Available-for-sale investments comprise: Equity securities listed in Hong Kong Equity securities listed elsewhere	2009 HK$’000 5,764 32,128 37,892	2008 HK$’000 18,631 75,939
		94,570

20. INTEREST IN A JOINT VENTURE

Jointly controlled entity:

In May 2008, the Group formed and equally owned a jointly controlled entity, Keen Step Corporation Limited (“Keen Step”), together with an independent third party at an investment cost of HK$1. In September 2008, the Group further acquired the remaining 50% equity interest in Keen Step. Therefore, the interest in a jointly controlled entity was derecognised upon date of completion of further acquisition. Details are set out in note 41(a). During the year, the jointly controlled entity has contributed HK$212,000 of share of loss to the Group.

Jointly controlled operation:

Interest in properties held for development Loan to a joint venture	2009 HK$’000 15,130 29,629 44,759	2008 HK$’000 14,745 –
		14,745

In March 2008, the Group disposed of Panyu Golf, a 65% owned subsidiary of the Company, which held a golf resort known as “Guangzhou Lotus Hill Golf Resort” located at Panyu, Guangdong Province in the PRC. As part of the consideration for the disposal, the Group entered into a joint venture agreement to construct and develop certain residential units over a piece of land with a site area of approximately 48,000 sq. m. within the golf resort (the “Development Project”). The Group’s interest in properties held for development represents its entitlement to share 65% of the residual value of the Development Project under the terms of the joint venture agreement.

In addition, the Group is obliged to advance an aggregate of RMB40 million for use in the Development Project, of which approximately RMB26,044,000 (equivalent to HK$29,629,000) was advanced by the Group during the year. The loan is unsecured, bearing interest at a lending interest rate of 5.4% of corresponding period as quoted by the People’s Bank of China and will not be repaid until completion of the Development Project. In the opinion of the directors, the loan will not be repaid within twelve months from the balance sheet date and is therefore classified as non-current asset.

– I-38 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

21. INTERESTS IN ASSOCIATES/UNSECURED LOANS AND INTERESTS DUE FROM ASSOCIATES

Cost of investment in associates, unlisted Share of post-acquisition losses Loans and interests due from associates Less: Loss allocated in excess of cost of investment	2009 HK$’000 169,202 (34,393) 134,809	2008 HK$’000 221,708 (86,205) 135,503 1,077,690 – 1,077,690
	1,130,198 (56,216)	1,077,690 –
	1,073,982

The loans and interests due from associates of HK$1,130,198,000 included an amount of HK$626,850,000 (2008: HK$626,850,000) which is the unsecured, non-interest bearing and advanced to an associate based on its agreed portion of advance stated in the acquisition agreement. The imputed interest rate on this amount of loans was 8% (2008: 8%) per annum.

The remaining balance of approximately HK$281,150,000 (2008: HK$281,150,000) is advanced to the associate as a shareholder did not provide its portion of the loans. The amount carries interest at rates ranging from 5% to 5.25% (2008: ranging from 5.25% to 7.75%) per annum.

In the opinion of the directors, the amount will not be repaid within twelve months of the balance sheet date and was therefore classified as non-current asset.

Before offering any new loan to associate, the Group will assess the associate’s credit quality and the usage of the loan by the associate. The recoverability of the loan is reviewed throughout the year. The whole loans to associates are repayable upon request for repayment, so the balances are neither past due nor impaired and have no loan default history.

Pursuant to the Empresa De Fomento Industrial E Comercial Conco´ rdia, S.A. (“Concordia”) acquisition agreement, one of the subsidiaries of the Group further undertook to advance to Concordia a shareholder’s loan of not more than HK$15,000,000 (2008: HK$15,000,000) after the completion of the Concordia acquisition agreement.

The Group has concentration of credit risk as 85% of the total unsecured loans and interests is due from only one associate which is a private company located in Macau. In order to minimise the credit risk, management of the Group has monitored the repayment ability of the associates continuously.

During the year ended 31st March, 2008, the Group entered into the following transactions regarding the associates:

(a) The Group acquired 8.7% of the registered capital of Concordia, a company incorporated in Macau, which held the leasehold interests of 14 parcels of land situated in Estrade de Seac Pai Van, Macau. Upon completion of the acquisition, the Group’s effective interest in the registered capital of Concordia increased to 35.5%.
(b) The Group disposed of its entire 40% equity interest in More Profit International Limited (“More Profit”) together with the shareholder’s loan due to the Group amounting to HK$260,412,000 at an aggregate consideration amounted to HK$350 million, to Get Nice Holdings Limited (“Get Nice”), a company incorporated in Cayman Islands and listed on the Stock Exchange (the “Disposal”). The Disposal resulted in a loss of the Disposal of approximately HK$39,486,000.

– I-39 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

(c) The Group disposed of its entire 50% equity interest in Jean-Bon Pharmaceutical Technology Company Limited through the disposal of TFH as set out in notes 11 and 42. The carrying value of the interest in this associate is zero upon disposal.

At 31st March, 2009 and 2008, the Group had interests in the following major associates:

					Proportion of
					nominal value
					of issued
	Form of	Place of		Nominal value of	share capital
	business	incorporation/	Class of	issued and fully	indirectly held
Name of associate	structure	operation	shares held	paid share capital	by the Group	Principal activity
			(Note 1)		%
Best Profit Holdings Limited	Incorporated	Hong Kong	Ordinary	HK$1,000	31.5	Investment holding_(Note 2)_
Concordia	Incorporated	Macau	Quota Capital	MOP100,000,000	35.5	Property development
Orient Town Limited	Incorporated	Hong Kong	Ordinary	HK$700	45	Investment holding_(Note 2)_
Orient Town Project Management Limited	Incorporated	Macau	Quota Capital	MOP25,000	45	Property project
						management
San Lun Mang Investimentos, Limitada	Incorporated	Macau	Quota Capital	MOP100,000	31.5	Investment holding_(Note 2)_

Notes:

Quota capital represents the Portuguese equivalence of registered capital as Portuguese is the official language of Macau.
The principal activities of their subsidiaries are mainly property development and property project management.

The above table lists the associates of the Group which, in the opinion of the directors, principally affected the results of the year or form a substantial portion of the net assets of the Group. To give details of other associates would, in the opinion of the directors, result in particulars of excessive length.

The summarised financial information in respect of the Group’s associates is set out below:

Total assets Total liabilities Minority interest Net assets as recorded in the books of the associates Group’s share of net assets of associates (Note)	2009 HK$’000 2,814,636 (2,749,307) (61,130) 4,199 134,809	2008 HK$’000 2,662,736 (2,585,912) (64,384) 12,440 135,503

Note: The Group’s share of net assets of associates include a fair value adjustment for premium for the interest in leasehold land of the associate upon the acquisition of additional interest in the associate in prior year.

– I-40 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

Revenue Loss for the year Group’s share of loss of associates for the year	2009 HK$’000 – (8,241) (4,404)	2008 HK$’000 –

		(54,201)

		(25,047)

The Group has discontinued the recognition of its share of losses of certain associates. The amounts of unrecognised share of losses of these associates, extracted from the relevant management accounts of the associates, both for the year and cumulatively, are as follows:

Unrecognised share of losses of associates for the year Accumulated unrecognised share of losses of associates	2009 HK$’000 – (2,451)	2008 HK$’000 (2,451)

		(2,451)

22. AMOUNTS DUE FROM ASSOCIATES

The amounts are unsecured, interest-free and repayable within one year of the balance sheet dates.

23. DEBT PORTION OF CONVERTIBLE BONDS AND DERIVATIVES EMBEDDED IN CONVERTIBLE BONDS

Debt portion 2009 2008 HK$’000 HK$’000 – 51,120 37,047 – 37,047 51,120	Debt portion 2009 2008 HK$’000 HK$’000 – 51,120 37,047 – 37,047 51,120	Embedded conversion option 2009 2008 HK$’000 HK$’000 – 4,865 – – – 4,865	Embedded conversion option 2009 2008 HK$’000 HK$’000 – 4,865 – – – 4,865
			4,865

727 36,320	– 51,120	– –	– 4,865
37,047	51,120	–	4,865

Notes:

(a) The convertible bonds issued by Get Nice (“Get Nice Bonds”) with the principal amount of HK$100 million was issued to the Group as part of consideration for the disposal of More Profit in September 2007. The Group was entitled to convert the Get Nice Bonds into shares in Get Nice at conversion price of HK$0.901 per share. The maturity date is 20th September, 2010.

During the year ended 31st March, 2008, the Group has disposed of the Get Nice Bonds with principal amount of HK$43 million. During the year ended 31st March, 2009, all the outstanding Get Nice Bonds with principal amount of HK$57 million were redeemed at 100% of the principal amount outstanding together with the accrued interest thereon calculated at 5% per annum, resulting in a gain on redemption (by the issuer) of HK$3,103,000.

– I-41 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

(b) The 2% convertible bonds issued by Wing On Travel (Holdings) Limited (“Wing On”) (“Wing On Bonds”) with an aggregate principal amount of HK$45,000,000 was purchased during the year from an independent third party at total consideration of HK$33,750,000. The Group is entitled to convert the Wing On Bonds into shares of Wing On at an initial conversion price of HK$0.79 per share (subject to adjustments), which was subsequently adjusted to HK$0.339 as a result of rights issue by Wing On on 3rd July, 2008. Unless previously converted or lapsed, Wing On shall redeem the Wing On Bonds on 7th June, 2011 at 110% of their principal amount.
(c) Mr. Cheung Hon Kit, an executive director of the Company is also a director of Wing On.

The Group classified the debt portion of the convertible bonds as loans and receivables and the embedded conversion option is deemed as held for trading and classified as financial assets at fair value through profit or loss on initial recognition. The fair values of the embedded conversion option on initial recognition are determined by the directors of the Company with reference to the valuation performed by Greater China Appraisal Limited, a firm of independent professional valuer using Black-Scholes Option Pricing Model. Details of the assumptions used in the Black-Scholes Option Pricing Model in the valuation of the conversion option embedded in convertible bonds as at the following dates are as follows:

		Redemption
		date
	31st March,	12th August,
	2008	2008
Get Nice Bonds
Closing price at date of valuation	HK$0.59	HK$0.495
Conversion price	HK$0.901	HK$0.901
Expected volatility (note a)	53.43%	46.25%
Expected annual dividend yield	4.39%	8.081%
Risk-free interest rate (note b)	1.385%	2.1%
	Purchase date
	7th August,	31st March,
	2008	2009
Wing On Bonds
Closing price at date of valuation	HK$0.055	HK$0.025
Conversion price	HK$0.339	HK$0.339
Expected volatility (note c)	66.342%	88.677%
Expected annual dividend yield	2.405%	N/A
Risk-free interest rate (note b)	2.712%	0.762%

Notes:

(a) Expected volatility was determined by using the historical volatility of the price return of the ordinary shares of Get Nice over 910 days from the valuation date.
(b) The risk-free rate interest was based on the yield of Exchange Fund Note.
(c) Expected volatility was determined by using the historical volatility of the price return of the ordinary shares of Wing On over 569 days from the valuation date.

On initial recognition, the fair value of the debt portion of the convertible bonds was determined using the prevailing market interest rate of similar non-convertible debts. The effective interest rate to the debt component of Wing On Bonds is 17.51% (2008: 9% to the debt component of Get Nice Bonds).

As at 31st March, 2009, the Group has concentration of credit risk as all of the convertible bonds held by the Group was due from Wing On, which shares are listed on the Stock Exchange and a related party of which Mr. Cheung Hon Kit, an executive director of the Company is also a director. As at 31st March, 2008, all of the convertible bonds were due from an independent third party.

– I-42 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

24. DEPOSITS AND EXPENSES PAID FOR ACQUISITION OF A LAND USE RIGHT

The amounts represent deposits and expenses paid for the acquisition of a land use right in the PRC for a total cash consideration of RMB50,964,000 (equivalent to HK$57,980,000) under an acquisition agreement dated 22nd March, 2007.

25. OTHER LOAN RECEIVABLES

Fixed-rate loan receivables Variable-rate loan receivables	2009 HK$’000 13,133 195,594 208,727	2008 HK$’000 13,133 230,000
		243,133

The whole amounts are repayable on demand or within one year.

The following is an analysis of the ageing of other loan receivables at the balance sheet dates:

Within one year More than one year, but not exceeding two years More than two years, but not exceeding three years	2009 HK$’000 68,317 30,776 109,634 208,727	2008 HK$’000 93,500 144,998 4,635
		243,133

At 31st March, 2009, the Group’s fixed-rate loan receivables of HK$8,498,000 (2008: HK$8,498,000) carried interest at 8% per annum and were secured by 40,000,000 shares of a private limited company incorporated in Malaysia, with a nominal value of RM0.25 (equivalent to HK$0.53) per share. The remaining fixed-rate loan receivables of HK$4,635,000 (2008: HK$4,635,000) were denominated in United States dollars (“USD”), which is not the functional currencies of the relevant group entities, carried interest at 3% and were unsecured. All the fixed-rate loan receivables are due within one year.

At 31st March, 2009, all variable-rate loans were unsecured, carried interest at Hong Kong Prime Rate, Hong Kong Prime Rate plus 1% or 2% per annum and are repayable within one year. The effective interest rates are ranging from 5% to 7.25% per annum (2008: 7.25% to 9.75% per annum).

Before offering any new loans, the director will assess the potential borrower’s credit quality and defines credit limits by the borrower. The director will continuously assess the recoverability of other loan receivables. The whole amount of other loan receivables are repayable upon request for repayment, so the balances are neither past due nor impaired and in the opinion of the directors they have no history of loan default.

The Group’s has concentration of credit risk in the above loans as five borrowers accounted for 76% (2008: 95%) of the total other loan receivables as at 31st March, 2009.

The borrowers mainly consist of one listed company in Hong Kong and several private companies. In order to minimise the credit risk, management of the Group monitors the repayment ability of the borrowers continuously.

– I-43 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

26. INVENTORIES

Finished goods Consumables	2009 HK$’000 906 2,237 3,143	2008 HK$’000 341 1,820
		2,161

27. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

Investments held-for-trading: Equity securities listed in Hong Kong Equity securities listed elsewhere Financial assets designated at fair value through profit or loss: Equity-linked notes	2009 HK$’000 174,897 1,655	2008 HK$’000 9,245 1,756
	176,552 –	11,001 956
	176,552	11,957

At the balance sheet date, all financial assets at fair value through profit or loss are stated at fair value. The fair values of listed securities are determined based on the bid prices quoted in active markets and those of the equity-linked notes are based on fair values quoted by the respective issuing banks or financial institutions.

The Group’s financial assets at fair value through profit or loss that are denominated in currency other than functional currency of the relevant group entity are set out below:

Japanese Yen USD 28. DEBTORS, DEPOSITS AND PREPAYMENTS Trade debtors Less: Allowance for doubtful debts Refundable earnest money (note a) Other receivable (note b) Other debtors, deposits and prepayments	2009 HK$’000 1,116 539 2009 HK$’000 10,748 (5,336)	2008 HK$’000 1,756 956

		2008 HK$’000 27,685 –
	5,412 388,461 19,120 90,155	27,685 365,791 23,659 97,660
	503,148	514,795

– I-44 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

The Group allows credit period of 90 days to its trade customers.

The following is an analysis of the ageing of debtors net of allowance for doubtful debts at the balance sheet date:

0 – 60 days 61 – 90 days Over 90 days	2009 HK$’000 864 431 4,117 5,412	2008 HK$’000 16,977 124 10,584
		27,685

Before accepting any new customer, the Group will assess the potential customer’s credit quality and define credit limits by customer. Limits attributed to customers are reviewed twice a year. 16% (2008: 61%) of the trade debtors that are neither past due nor impaired have the best credit rating.

Included in the Group’s trade debtors is an aggregate carrying amount of HK$4,117,000 (2008: HK$10,584,000) which are past due at the balance sheet date for which the Group has not provided for impairment loss. The Group does not hold any collateral over these balances. The average age of trade debtors is 135 days (2008: 120 days). The ageing of trade debtors which are past due but not impaired is as follows:

			2009	2008
			HK$’000	HK$’000
Over	90	days	4,117	10,584

The Group has provided fully for general trade debtors due over 2 years because historical experience is such that these receivables that are past due beyond 2 years are generally not recoverable.

Movement in the allowance for doubtful debts is as follows:

Balance at beginning of the year Exchange realignment Impairment losses recognised on debtors Amount written off as uncollectible Eliminated on disposal of subsidiaries Balance at end of the year	2009 HK$’000 – 23 5,313 – – 5,336	2008 HK$’000 3,315 305 1,801 (992) (4,429)
		–

Notes:

(a) (i) In June 2005, a wholly-owned subsidiary of the Company and an independent third party (“Vendor A”) signed a non-binding letter of intent with a view of negotiating a possible acquisition from Vendor A of 50% of its ownership and interest in certain land located in Macau which was initially intended for redevelopment purposes, at an initial consideration of HK$495,000,000. Upon signing of the letter of intent, an amount of HK$10,000,000 (2008: HK$10,000,000) was paid by the Group as refundable earnest money.

– I-45 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

(ii) On 28th December, 2006, 21st March, 2007 and 17th February, 2009, further amounts of refundable earnest money of approximately HK$170,000,000, HK$160,191,000 and HK$12,000,000, respectively, were paid by the Group through Wing On, a company whose shares are listed on the Stock Exchange for the negotiation of possible acquisition of ownership and interest in properties located in the PRC. Wing On undertakes to refund the earnest money to the Group in full upon request of the Group. Up to the date of this report, the negotiations have not yet been concluded.
(iii) On 18th January, 2008, the Company entered into a memorandum of understanding with an independent thirty party with a view of negotiating a possible acquisition of the entire issued share capital of a company which is proposed to hold and develop a land in Vietnam. Upon signing of the memorandum of understanding, an amount of HK$15,600,000 was paid by the Group as refundable earnest money. A further amount of HK$20,670,000 was paid by the Group during the year ended 31st March, 2009.
(iv) On 29th October, 2007, a wholly-owned subsidiary of the Company paid HK$10,000,000 to vendor with a view of negotiating a possible acquisition of ownership and interest in properties located in Hong Kong. The amount was fully refunded to the Group during the year ended 31st March, 2009.

The refundable earnest money mainly concentrated on vendors of 3 projects and over 80% of total refundable earnest money are in relation to one project. The Company has continuously assessed the recoverability of the money invested and the progress of the project and the vendors have no history of loan default.

No formal agreements in respect of the above possible acquisitions have been entered into up to the date of this report. In the opinion of the directors of the Company, the possible acquisitions may or may not materialise and are fully refundable, therefore, the above refundable earnest money is classified as current asset accordingly.

(b) The other receivable represented an amount due from the vendors in respect of tax indemnity given by the vendors pursuant to the sales and purchase agreements for acquisition of subsidiaries in 2006 and 2007.

29. UNSECURED LOANS AND INTEREST DUE FROM RELATED COMPANIES

The amount represented loan to a subsidiary of Wing On (2008: Wing On and one of its subsidiaries). The principal amount of HK$40,000,000 (2008: HK$51,000,000) is unsecured, carries interest at Hong Kong Prime Rate plus 2% and repayable within one year (2008: within one year) from balance sheet date. The effective interest rate is 7.0% (2008: 7.2%) per annum.

The Group has concentration of credit risk as all (2008: all) of the unsecured loans were mainly due from one (2008: two) related company.

30. PLEDGED BANK DEPOSITS/BANK BALANCES AND CASH

The pledged bank deposits represents deposits pledged to banks to secure general banking facilities granted to the Group. The deposits carry fixed interest at rates ranging from 0.35% to 4.78% (2008: 2.9% to 4.78%) per annum.

The bank balances carry interest at prevailing market rates ranging from 0.001% to 2.2% (2008: 0.01% to 4.5%) per annum.

The Group’s pledged bank deposits and bank balances and cash that are denominated in currency other than functional currency of the relevant group entities are set out below:

	2009	2008
	HK$’000	HK$’000
USD	26,226	31,975

– I-46 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

31. CREDITORS, DEPOSITS AND ACCRUED CHARGES

The following is an analysis of creditors, deposits and accrued charges at the balance sheet date:

Trade creditors aged: 0 – 60 days 61 – 90 days Over 90 days Other creditors, deposits and accrued charges (Note)	2009 HK$’000 763 447 799	2008 HK$’000 1,420 355 360
	2,009 70,038	2,135 68,257
	72,047	70,392

The average credit period on purchases of goods is 60 days. The Group has financial risk management policies to ensure that all payables are within the credit timeframe.

Note: Under the agreement in connection with the disposal of Panyu Golf, the Group agreed to assume certain assets and liabilities of Panyu Golf with the net carrying amount of HK$14,924,000 (2008: HK$30,423,000) which has been included in other creditors at 31st March, 2009.

32. AMOUNTS DUE TO MINORITY SHAREHOLDERS OF SUBSIDIARIES

The amounts are unsecured, interest-free and repayable on demand.

33. CONVERTIBLE NOTE PAYABLES

(a) On 11th August, 2005, the Company has issued HK$1,000 million unsecured zero coupon convertible notes due 2010 (the “First 2010 Convertible Notes”) at an initial conversion price of HK$0.44 per ordinary share, which was subsequently adjusted to HK$5.675 as a result of the Company’s rights issue and capital reorganisation as detailed in notes 37(c) and 37(e) respectively. The First 2010 Convertible Notes is non-interest bearing and will mature on 11th August, 2010. The holders of the convertible note payables have the right to convert the First 2010 Convertible Notes into shares of HK$0.01 each of the Company at any time during the period from 11th August, 2005 to 11th August, 2010.

The First 2010 Convertible Notes, unless converted prior to the maturity under the conditions specified in the relevant notes documents, will be redeemed at 110% of their principal amounts.

During the year ended 31st March, 2008, HK$111 million of the First 2010 Convertible Notes was converted into 252,272,723 ordinary shares of HK$0.01 each in the share capital of the Company at the conversion price of HK$0.44 per ordinary share as set out in note 37(a). As at 31st March, 2009, HK$471 million (2008: HK$471 million) of the First 2010 Convertible Notes was outstanding.

Upon full conversion of the outstanding First 2010 Convertible Notes at 31st March, 2009 at the adjusted conversion price of HK$5.675 per ordinary share of HK$0.01 each in the share capital of the Company, a total of 83,004,399 new ordinary shares, which would fall to be issued by the Company upon the exercise of the conversion rights attached to the First 2010 Convertible Notes, would be issued.

– I-47 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

(b) On 8th June, 2006, the Company issued HK$60 million unsecured zero coupon convertible notes due 2010 (the “Second 2010 Convertible Notes”) at an initial conversion price of HK$0.44 per ordinary share, which was subsequently adjusted to HK$5.675 as a result of the Company’s rights issue and capital reorganisation as detailed in notes 37(c) and 37(e) respectively. The Second 2010 Convertible Notes is non-interest bearing and will mature on 11th August, 2010. The holders of the convertible note payables have the right to convert the Second 2010 Convertible Notes into shares of HK$0.01 each of the Company at any time during the period from 8th June, 2006 to 11th August, 2010.

Unless previously converted, the Company will redeem the convertible note payables on the maturity date at the redemption amount of 108.3% of the principal amount of the convertible notes then outstanding.

During the year ended 31st March, 2008, HK$42.5 million of the Second 2010 Convertible Notes was converted into 96,645,052 ordinary shares of HK$0.01 each in the share capital of the Company at the initial conversion price of HK$0.44 per share as set out in note 37(a). As at 31st March, 2009, HK$17.5 million (2008: HK$17.5 million) of the Second 2010 Convertible Notes was outstanding.

Upon full conversion of the outstanding Second 2010 Convertible Notes at 31st March, 2009 at the adjusted conversion price of HK$5.675 per ordinary share of HK$0.01 each in the share capital of the Company, a total of 3,079,502 new ordinary shares, which would fall to be issued by the Company upon the exercise of the conversion rights attached to the Second 2010 Convertible Notes, would be issued.

(c) On 15th June, 2006, the Company issued HK$1,000 million unsecured 1% convertible notes due 2011 (the “2011 Convertible Notes”) at an initial conversion price of HK$0.70 per ordinary shares, which was subsequently adjusted to HK$9.025 as a result of the Company’s rights issue and capital reorganisation as detailed in notes 37(c) and 37(e) respectively. The 2011 Convertible Notes bear interest at 1% per annum and will mature on 19th June, 2011. The holders of the convertible note payables have the right to convert the 2011 Convertible Notes into shares of HK$0.01 each of the Company at any time during the period from 15th June, 2006 to 19th June, 2011.

Unless previously converted, the Company will redeem the convertible note payables on the maturity date at the redemption amount of 110% of the principal amount of the convertible notes then outstanding.

During the year ended 31st March, 2008, HK$94 million of 2011 Convertible Notes was converted into 134,285,714 ordinary shares of HK$0.01 each in the share capital of the Company at the initial conversion price of HK$0.70 per original share as set out in note 37(a). As at 31st March, 2009, HK$906 million (2008: HK$906 million) of the 2011 Convertible Notes was outstanding.

Upon full conversion of the outstanding 2011 Convertible Notes at 31st March, 2009 at the adjusted conversion price of HK$9.025 per ordinary share of HK$0.01 each in the share capital of the Company, a total of 100,387,795 new ordinary shares, which would fall to be issued by the Company upon the exercise of the conversion rights attached to the 2011 Convertible Notes, would be issued.

Each of the convertible note payables contain two components, liability and equity elements. The equity element is presented in equity under the heading of “convertible loan notes equity reserve”. The effective interest rates of the convertible note payables are ranging from 5.85% to 9.16% (2008: 5.85% to 9.16%) per annum.

– I-48 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

The movement of the liability component of the convertible note payables for the year is set out below:

Liability component at the beginning of the year Conversion during the year Effective interest charged (note 8) Interest paid Liability component at the end of the year Analysed for reporting purposes as: Current liability Non-current liability	2009 HK$’000 1,243,843 – 101,414 (9,170) 1,336,087	2008 HK$’000 1,368,400 (212,248) 97,681 (9,990) 1,243,843 7,284 1,236,559 1,243,843
	7,174 1,328,913	7,284 1,236,559
	1,336,087

34. OBLIGATIONS UNDER FINANCE LEASES

Minimum lease payments 2009 2008 HK$’000 HK$’000 120 67 327 202	Minimum lease payments 2009 2008 HK$’000 HK$’000 120 67 327 202	Present value of minimum lease payments 2009 2008 HK$’000 HK$’000 90 49 282 173 372 222 – – 372 222 (90) (49) 282 173	Present value of minimum lease payments 2009 2008 HK$’000 HK$’000 90 49 282 173 372 222 – – 372 222 (90) (49) 282 173
447 (75)	269 (47)	372 –	222 –
372	222	372
		(90)	(49
		282

It is the Group’s policy to lease certain furniture, fixtures and equipment under finance leases. The average lease term is approximately five years. Interest rates underlying all obligations under finance leases are fixed at respective contract dates ranging from 9.11% to 9.18% (2008: 9.15% to 9.16%) per annum.

The Group’s obligations under finance leases are secured by the lessors’ charge over the leased assets.

– I-49 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

35. BANK BORROWINGS

Bank loans, secured The maturity profile of the above loans and borrowings is as follows: Within one year or on demand More than one year, but not exceeding two years More than two years, but not exceeding three years More than three years but not exceeding four years More than four years but not exceeding five years Less: Amount due within one year shown under current liabilities Amount due after one year	2009 HK$’000 123,488 82,830 26,485 13,073 1,100 – 123,488 (82,830) 40,658	2008 HK$’000 153,643 113,996 12,433 12,837 13,254 1,123 153,643 (113,996) 39,647

– I-50 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

Bank borrowings comprise Maturity date Contractual interest rate Variable-rate borrowings: HIBOR plus 1% secured HK$ bank loan (note) Revolving HIBOR + 1% HIBOR plus 1.55% secured HK$ bank loan (note) 30th April, 2012 HIBOR + 1.55% Hong Kong Prime Rate minus 0.5% secured HK$ bank loan (note) 26th July, 2009 P – 0.5% Fixed-rate borrowings: 5.67% secured bank loan of RMB12,000,000 25th November, 2010 5.67% 5.31% secured bank loan of RMB18,000,000 10th September, 2009 5.31% 7.47% secured bank loan of RMB12,000,000 22nd December, 2008 7.47% 7.02% secured bank loan of RMB18,000,000 9th September, 2008 7.02%	Carrying amount 2009 2008 HK$’000 HK$’000 1,898 1,844 39,605 51,690 47,856 66,850	Carrying amount 2009 2008 HK$’000 HK$’000 1,898 1,844 39,605 51,690 47,856 66,850
	89,359 13,651 20,478 – – 34,129	120,384
		– – 13,304 19,955
		33,259
	123,488	153,643

Note: Interest will be repriced when HIBOR or Hong Kong Prime Rate change. At the balance sheet date, the Group has the following undrawn borrowing facilities:

Floating rate – expiring within one year – expiring beyond one year	2009 HK$’000 2,190 13,702 15,892	2008 HK$’000 17,150 222,406
		239,556

The effective interest rates of bank borrowings are ranging from 1.35% to 7.20% (2008: 4.75% to 8.06%) per annum.

– I-51 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

36. DEFERRED TAXATION

The following is the major deferred tax liabilities recognised and movements thereon during the current and prior years:

At 1st April, 2007 (Credit) charge to income for the year Exchange realignment Released on disposal of subsidiaries (note 42) At 31st March, 2008 Credit to income for the year At 31st March, 2009	Accelerated tax depreciation HK$’000 42,469 (646) 1,067 (14,316)	Deferred development costs HK$’000 75 – – (75)	Tax losses HK$’000 (1,935) 1,779 81 75	Total HK$’000 40,609 1,133 1,148 (14,316)
	28,574 (685)	– –	– –	28,574 (685)
	27,889	–	–	27,889

At 31st March, 2009, the Group has unused tax losses of HK$700,389,000 (2008: HK$517,627,000) available for offset against future profits. At the balance sheet date, no deferred tax asset has been recognised in respect of such losses. Tax losses of HK$677,940,000 (2008: HK$511,706,000) may be carried forward indefinitely under current tax regulation in Hong Kong and the remaining tax losses of HK$22,449,000 (2008: HK$5,921,000) will expire from 2009 to 2013.

37. SHARE CAPITAL

At HK$0.01 each: Authorised: At 1st April, 2007, 31st March, 2008 and 31st March, 2009 Issued and fully paid: At 1st April, 2007 Conversion of convertible notes (note a) Placement of shares (note b) At 31st March, 2008 Rights issue (note c) Share repurchased and cancelled (note d) Share consolidation (note e(i)) Capital reduction (note e(iii)) At 31st March, 2009	Number of shares 40,000,000,000	Amount HK$’000 400,000

	2,312,314,541 483,203,485 300,000,000 3,095,518,026 9,286,554,078 (609,135,000) (11,302,019,620) –	23,123 4,832 3,000
		30,955 92,866 (6,092) – (113,020)
	470,917,484	4,709

Notes:

(a) During the year ended 31st March, 2008, the First 2010 Convertible Notes, the Second 2010 Convertible Notes and the 2011 Convertible Notes with aggregate principal amounts of HK$111,000,000, HK$42,500,000 and HK$94,000,000 were converted into 252,272,723, 96,645,052 and 134,285,710 ordinary shares of HK$0.01 each in the Company at the conversion prices (before adjustment of Rights Issue and Capital Reorganisation) of HK$0.44, HK$0.44 and HK$0.70 per share, respectively.

– I-52 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

(b) On 18th May, 2007, the Company entered into a share placing agreement with a placing agent for a placing of 300,000,000 new ordinary shares of HK$0.01 each in the Company at an issue price of HK$0.56 per share (before adjustment of Rights Issues and Capital Reorganisation). The placement was approved by shareholders in a special general meeting held on 1st June, 2008. The net proceeds of approximately HK$163 million would be used to finance the expansion of the property portfolio and the existing property development projects of the Group. The new shares rank pari passu with all the other shares in issue in all respects.
(c) In August 2008, the Company has issued and allotted 9,286,554,078 ordinary shares of HK$0.01 each to the existing qualifying shareholders pursuant to the rights issue on the basis of three rights shares (with warrants in the proportion of four warrants for every fifteen rights shares subscribed) for every share currently held (the “Rights Issue”) at a subscription price of HK$0.07 per share. The net proceeds of approximately HK$627 million were used as general working capital of the Group. The new shares rank pari passu with the existing shares in all respects. Details of the Rights Issue were set out in a circular of the Company dated 11th July, 2008.
(d) During the year ended 31st March, 2009, the Company repurchased a total of 609,135,000 ordinary shares of HK$0.01 each in the Company through the Stock Exchange at an aggregate consideration of approximately HK$27 million (including transaction costs), details of which are as follows:

Month of repurchase September 2008 October 2008 February 2009	No. of ordinary shares of HK$0.01 each Price per share Highest Lowest HK$ HK$ 387,805,000 0.054 0.037 78,330,000 0.058 0.033 143,000,000 0.034 0.034 609,135,000	Aggregate consideration paid HK$’000 17,506 4,282 4,891
		26,679

All of the above shares were cancelled upon repurchase. The nominal value of the cancelled shares was credited to the capital redemption reserve and the aggregate consideration was paid out of the reserves of the Company.

None of the Company’s subsidiaries purchased, sold and redeemed any of the Company’s listed securities during both years.

(e) On 30th January, 2009, the Company proposed reorganisation of the share capital (“Capital Reorganisation”). The Capital Reorganisation became effective on 16th March, 2009 after approval by the shareholders. The Capital Reorganisation involved the following:
(i) every twenty-five issued shares of HK$0.01 each were consolidated into one share of HK$0.25 (“Share Consolidation”).
(ii) the total number of the consolidated shares in the issued share capital of the Company following the Share Consolidation was rounded down to a whole number by cancelling the fractional consolidated share arising from the Share Consolidation;
(iii) the paid-up capital of each consolidated share was reduced from HK$0.25 to HK$0.01 by cancelling HK$0.24 so as to form a reorganised share of HK$0.01 (“Capital Reduction”); and
(iv) the credit arising in the accounts of the Company from the Capital Reduction was credited to the contributed surplus account of the Company and the directors were authorised to apply such amount in any manner permitted by the laws of Bermuda and the Bye-laws and to make a distribution to the shareholders from time to time, without further authorisation from the shareholders.

– I-53 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

Warrants

Pursuant to the Rights Issue as detailed in note (c), the Company has issued 2,476,414,328 warrants to the subscribers of the rights shares conferring the rights to the holders thereof to subscribe in cash for 2,476,414,328 warrant shares of the Company of HK$0.01 each at an initial exercise price of HK$0.105 per warrant share (subject to adjustments) at any time during the period from 5th August, 2008 to 4th February, 2010. A total of 2,476,414,420 warrants (of which 92 warrants with fractional entitlement were not issued to the subscribers but have been issued and retained for the benefit of the Company) and the exercise price of HK$0.105 per warrant share were subsequently adjusted to 99,056,576 warrants and HK$2.625 per share, respectively, as a result of the Capital Reorganisation.

At 31st March, 2009, the Company had outstanding 99,056,576 warrants (after adjustment of the Capital Reorganisation), which if exercise in full would result in the issue of 99,056,576 ordinary shares of HK$0.01 each.

The subscription rights attaching to the warrants are measured at fair value of approximately HK$34,571,000 on initial recognition and are recognised in equity in the warrant reserve.

The fair value of the warrants issued during the year was calculated using the Binominal option pricing model. The inputs into the model were as follows:

Date of issue	5th August, 2008
Share price	HK$0.064
Exercise price	HK$0.105
Time to maturity	1.5 years
Expected volatility	75.58%
Expected dividend yield	Nil
Risk free rate	1.981%
Fair value per warrant	HK$0.0140

The variables and assumptions used in computing the fair value of the warrants are based on management’s best estimate.

38. SHARE-BASED PAYMENT TRANSACTIONS

Scheme adopted on 26th August, 2002 (the “Scheme”)

Following the termination of the scheme adopted on 28th February, 1994, in August 2002, the Scheme was adopted pursuant to a resolution passed on 26th August, 2002 for the primary purpose of providing incentives to eligible persons and will expire on 25th August, 2012. Under the Scheme, the directors of the Company may grant share options to the following eligible persons to subscribe for shares in the Company:

(i) employees including executive directors of the Company, its subsidiaries and any companies in which the Company holds any equity interest; or
(ii) non-executive directors of the Company, its subsidiaries and any companies in which the Company holds any equity interest; or
(iii) suppliers or customers; or
(iv) consultants, advisers or agents.

Share options granted should be accepted within 28 days of the date of grant, upon payment of HK$1 per each grant of share options. The exercise price is determined at the highest of: (i) the closing price of the shares on the date of grant of the share option; or (ii) the average closing price of shares on the five trading days immediately preceding the date of grant; or (iii) the nominal value of shares on the date of grant.

– I-54 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

There is no specific requirement that an option must be held for any minimum period before it can be exercised but the directors are empowered to impose at their discretion any such minimum period at the time of grant of any particular option. The period during which an option may be exercised will be determined by the directors at their absolute discretion, save that no option may be exercised more than 10 years from the date of grant.

The maximum number of shares in respect of which share options under the Scheme may be granted when aggregated with the maximum number of shares in respect of which options may be granted under all the other schemes (the “Scheme Limit”) is 10% of shares in issue on the adoption date of the Scheme. The Scheme Limit may be refreshed by a resolution in shareholders’ meeting such that the total number of shares which may be issued upon exercise of all options to be granted under the Scheme and any other schemes shall not exceed 10% of the shares in issue as at the date of such shareholders’ approval. However, the Scheme Limit and any increase in the Scheme Limit shall not result in the number of shares which may be issued upon exercise of all outstanding share options granted under the Scheme and other schemes exceed 30% of the shares in issue from time to time. No person shall be granted a share option, within 12-month period of the date of grant, exceeds 1% of the shares in issue as at the date of grant.

The following table discloses details of the Company’s share options held by directors and employees and other participants, and movements in such holdings during the current and prior years:

Date of grant
Vesting
proportion
Exercisable period
Adjusted
exercise
price per
share
(Note 1)
HK$
Employees and other participants:
15.8.2006
50%
15.8.2006 – 14.8.2008
0.315
50%
15.8.2007 – 14.8.2008
0.315
27.7.2007
50%
27.7.2008 – 26.7.2011
10.55
50%
27.7.2009 – 26.7.2011
10.55
Former directors_(Note 2):_
15.8.2006
50%
15.8.2006 – 14.8.2008
0.315
50%
15.8.2007 – 14.8.2008
0.315
27.7.2007
50%
27.7.2008 – 26.7.2011
10.55
50%
27.7.2009 – 26.7.2011
10.55

Number of share options

Outstanding
at 1.4.2007
Granted
during
the year
Forfeited
during
the year
Outstanding
at 1.4.2008
Adjustment
during
the year
Expired
during the
year
Forfeited
during
the year
Outstanding
at 31.3.2009
(Note 1)
1,900,000
–
–
1,900,000
1,113,400
(3,013,400)
–
–
1,900,000
–
–
1,900,000
1,113,400
(3,013,400)
–
–
–
10,100,000
–
10,100,000
(6,636,764)
–
(2,946,200)
517,036
–
10,100,000
–
10,100,000
(6,636,764)
–
(2,946,200)
517,036
4,000,000
–
(2,250,000)
1,750,000
586,000
(1,586,000)
(750,000)
–
4,000,000
–
(2,250,000)
1,750,000
586,000
(1,586,000)
(750,000)
–
–
2,250,000
–
2,250,000
(1,404,840)
–
(750,000)
95,160
–
2,250,000
–
2,250,000
(1,404,840)
–
(750,000)
95,160

– I-55 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

			Number of share options	Number of share options
Outstanding at 1.4.2007 9,750,000 9,750,000 – –	Granted during the year – – 19,500,000 19,500,000	Forfeited during the year – – – –	Outstanding at 1.4.2008 9,750,000 9,750,000 19,500,000 19,500,000	Adjustment during the year (Note 1) 5,713,500 5,713,500 (18,262,920) (18,262,920)	Expired during the year (15,463,500) (15,463,500) – –	Forfeited during the year – – – –	Outstanding at 31.3.2009 – – 1,237,080 1,237,080
31,300,000 0.315	63,700,000 10.55	(4,500,000) 0.315	90,500,000 26,800,000 9,758	(37,783,248) N/A	(40,125,800) 0.315	(8,892,400) 10,099	3,698,552

							1,849,276

							10.55

Notes:

The exercise price and the number of share options outstanding at 31st March, 2009 have been adjusted to reflect the effect of the Rights Issue and Capital Reorganisation.
All former directors are no longer employees of the Group.

The closing price of the Company’s shares immediately before 27th July, 2007, the date of grant of the options, was HK$0.67 (before adjustment of Rights Issue and Capital Reorganisation), and the estimated fair value of the options granted was approximately HK$15,269,000 at the date of grant.

The fair values of the share options granted during the year ended 31st March, 2008 were calculated using the Binomial option pricing model. The inputs into the model were as follows:

Date of grant	27th July, 2007
Closing share price at the date of grant	HK$0.63
Initial exercise price (before adjustment of	HK$0.67
Rights Issue and Capital Reorganisation)
Expected life of options	1 to 2 years
Expected volatility	59.03%
Expected dividend yield	Nil
Risk free rate	4.28%
Fair value per option (before adjustment of	HK$0.2206 &
Rights Issue and Capital Reorganisation)	HK$0.2588

The total estimated fair value of the options granted was approximately HK$15,269,000 at the date of grant.

– I-56 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

Expected volatility was determined by using the historical volatility of the Company’s share price over five years. The expected life used in the model has been estimated, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioral considerations.

As the fair value of the services to be performed by other eligible participants cannot be estimated reliably because it is not possible to measure the fair value of the total remuneration package, the fair value of such services is also measured with reference to the fair value of share options granted using the Binomial option pricing model.

The Group recognised the total expense of HK$5,547,000 for the year (2008: HK$8,342,000) in relation to the share options granted by the Company, of which HK$1,465,000 (2008: HK$2,498,000) was related to options granted to the Group’s employees which has been included in staff costs as set out in note 12, and the remaining balance of HK$4,082,000 (2008: HK$5,844,000) was related to options granted to directors which has been included in directors’ emoluments as set out in note 13(a).

The Binomial option pricing model has been used to estimate the fair value of the options. The variables and assumptions used in computing the fair value of the share options are based on management’ best estimate. The value of an option varies with different variables of certain subjective assumptions.

39. CAPITAL RISK 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 shareholders through the optimisation of the debt and equity balance. The Group’s overall strategy remains unchanged from prior year.

The capital structure of the Group consists of debt, which includes the convertible note payables and borrowings disclosed in notes 33 and 35 respectively, net of cash and cash equivalents and equity attributable to equity holders of the Company, comprising issued share capital and reserves.

The directors of the Company review the capital structure on a regular basis. As part of this review, the directors consider the cost of capital and the risks associated with each class of capital. The Group will balance its overall capital structure through the payment of dividends, new share issues and share buy-backs as well as the issue of new debt or the redemption of existing debt.

40. FINANCIAL INSTRUMENTS

(a) Categories of financial instruments

	2009	2008
	HK$’000	HK$’000
Financial assets
Available-for-sale investments	37,892	94,570
Fair value through profit or loss
Investments held-for-trading	176,552	11,001
Equity-linked notes	–	956
Derivatives embedded in convertible bonds	–	4,865
Loans and receivables (including cash and
cash equivalents)	1,995,950	2,202,185
Financial liabilities
Amortised cost	1,503,432	1,449,570

– I-57 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

(b) Financial risk management objectives and policies

The Group’s major financial instruments include equity and debt investments, debtors, other loan receivables, amounts due from associates, unsecured loans and interest due from associates/related companies, pledged bank deposits, bank balances and cash, creditors, convertible note payables, obligations under finance leases, amounts due to minority shareholders of subsidiaries and bank borrowings. Details of these financial instruments are disclosed in respective notes. The risks associated with these financial instruments and the policies on how to mitigate these risks are set out below.

Market risk

(i) Currency risk

Several subsidiaries of the Company have foreign currency bank balances, which expose the Group to foreign currency risk. Management has closely monitored foreign exchange exposure and will undertake procedures should necessary to mitigate the currency risk.

The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at the reporting date are as follows:

	Assets		Liabilities	Liabilities
	2009	2008	2009	2008
	HK$’000	HK$’000	HK$’000	HK$’000
USD	26,226	31,975	–	–

The functional currency of the respective group entities is Hong Kong dollars. The Group’s exposure to the currency risk of USD is limited because Hong Kong dollars are pegged to USD.

(ii) Interest rate risk

The Group is exposed to fair value interest rate risk in relation to loan to a joint venture, unsecured loans from associates, debt portion of convertible bonds, fixed-rate other loan receivables, fixed-rate bank deposits, convertible note payables and bank borrowings as set out in notes 20, 21, 23, 25, 30, 33 and 35 respectively.

The Group is also exposed to cash flow interest rate risk in relation to variable-rate other loan receivables, unsecured loans due from related companies and bank borrowings as set out in notes 25, 29 and 35 respectively.

The Group’s exposures to interest rates on financial liabilities are detailed in the liquidity risk management section of this note. The Group’s cash flow interest rate risk is mainly concentrated on the fluctuation of Hong Kong Prime Rate and HIBOR.

Sensitivity analysis

The sensitivity analyses below have been determined based on the exposure to interest rates for non-derivative instruments at the balance sheet date. For variable-rate other loan receivables, unsecured loans from related companies and bank borrowings, the analysis is prepared assuming the amount of asset and liability outstanding at the balance sheet date was outstanding for the whole year. A 100 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

– I-58 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

If interest rates had been 100 basis point higher/lower and all other variables were held constant, the Group’s loss for the year ended 31st March, 2009 would decrease/increase by HK$1,221,000 (2008: HK$1,325,000). This is mainly attributable to the Group’s exposure to interest rates on its variable-rate other loan receivables and bank borrowings.

(iii) Other price risk

The Group is exposed to equity price risk arising from available-for-sale investments, derivatives embedded in convertible bonds and investments held-for-trading. Management manages this exposure by maintaining a portfolio of investments with different risks. The Group’s equity price risk is mainly concentrated on listed equity investments quoted on the Stock Exchange. In addition, the Group has appointed a special team to monitor the price risk and will consider hedging the risk exposure should the need arise.

Sensitivity analysis

The sensitivity analyses below have been determined based on the exposure to equity price risks at the reporting date. The exposure of the Group to other price risk from the derivatives embedded in convertible bonds (note 23) is limited because the amount at the balance sheet date is insignificant.

If the prices of the respective equity instruments had been 10% higher/lower:

loss for the year ended 31st March, 2009 would decrease/increase by HK$14,742,000 (2008: HK$2,008,000) as a result of the changes in fair value of investments held-for-trading;
available-for-sale investment reserve would increase by HK$3,789,000/loss would increase by HK$3,789,000 for further impairment as a result of the changes in fair value of available-for-sale investments for the year ended 31st March, 2009; and
available-for-sale investment reserve would increase/decrease by HK$9,457,000 as a result of charges in fair value of available-for-sale investments for the year ended 31st March, 2008.

Credit risk

As at 31st March, 2009 and 2008, 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 is arising from the carrying amount of the respective recognised financial assets as stated in the consolidated balance sheet and financial guarantees provided by the Group (note 45).

In order to minimise the credit risk, management of the Group has delegated a team responsible for determination of credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Group reviews the recoverable amount of each individual debt at each balance sheet date to ensure that adequate impairment losses are made for irrecoverable amounts. In this regard, the directors of the Company consider that the Group’s credit risk is significantly reduced.

The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by international credit-rating agencies.

The Group’s concentration of credit risk by geographical locations is mainly in PRC, which accounted for 95% (2008: 75%) of the total debtors as at 31st March, 2009.

– I-59 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

The Group does not have any other significant concentration of credit risk, other than concentration of credit risk on liquid funds which are deposited with several banks with high credit ratings, and the unsecured loans and interests due from associates as set in note 21, the debt portion of convertible bonds and derivatives embedded in convertible bonds as set out in note 23, deposits paid for acquisition of subsidiaries as set out in note 43, other loan receivables as set out in note 25, debtors as disclosed above, refundable earnest money as set out in note 28(a) and unsecured loans and interest due from related companies as set out in note 29.

Liquidity risk

In the management of the liquidity risk, the Group monitors and maintains a level of cash and cash equivalents deemed adequate by the management to finance the Group’s operations and mitigate the effects of fluctuations in cash flows. The management monitors the utilisation of bank borrowings and ensures compliance with loan covenants.

The Group relies on bank borrowings as a significant source of liquidity. As at 31st March, 2009, the Group has available unutilised bank loan facilities of approximately HK$15,892,000 (2008: HK$239,556,000), details of which are set out in note 35.

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.

Liquidity and interest risk tables

Weighted average effective interest rate % 2009 Non-derivative financial liabilities Creditors – Amount due to minority shareholders of subsidiaries – Obligations under finance leases 9.15 Bank borrowings – fixed rate 5.45 – variable rate 3.23 Convertible note payables 0.62	Less than 3 months HK$’000 43,462 395 30 465 5,748 9,060 59,160	3 months to 1 year HK$’000 – – 90 21,243 57,927 – 79,260	1-5 years Total undiscounted cash flows HK$’000 HK$’000 – 43,462 – 395 327 447 14,158 35,866 27,467 91,142 1,551,802 1,560,862 1,593,754 1,732,174	Carrying amount at 31.3.2009 HK$’000 43,462 395 372 34,129 89,359 1,336,087
				1,503,804

– I-60 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

Weighted average effective interest rate % 2008 Non-derivative financial liabilities Creditors – Amount due to minority shareholders of subsidiaries – Obligations under finance leases 9.15 Bank borrowings – fixed rate 7.20 – variable rate 4.05 Convertible note payables 0.62	Less than 3 months HK$’000 51,194 890 17 598 6,065 9,171 67,935	3 months to 1 year HK$’000 – – 51 34,007 77,311 – 111,369	1-5 years Total undiscounted cash flows HK$’000 HK$’000 – 51,194 – 890 201 269 – 34,605 42,112 125,488 1,560,862 1,570,033 1,603,175 1,782,479	Carrying amount at 31.3.2008 HK$’000 51,194 890 222 33,259 120,384 1,243,843
				1,449,792

(c) Fair value

The fair value of financial assets and financial liabilities are determined as follows:

the fair value of financial assets and financial liabilities (excluding derivative instruments) with standard terms and conditions and traded on active liquid markets are determined with reference to quoted market bid prices and ask prices respectively; and
the fair value of other financial assets and financial liabilities (including derivative instruments) are determined in accordance with generally accepted pricing models based on discounted cash flow analysis using prices or rates from observable current market transactions as input. For an option-based derivative, the fair value is estimated using option pricing model (for example, the Binomial option pricing model and the Black-Scholes option pricing model).

The directors consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the consolidated financial statements approximate their fair values.

41. ACQUISITION OF ASSETS THROUGH ACQUISITION OF SUBSIDIARIES

During the year, the Group completed two acquisitions, being the acquisition on 2nd September, 2008 (“1st Acquisition”) and the acquisition on 16th December, 2008 (“2nd Acquisition”). Both acquisitions have been accounted for as acquisition of assets and liabilities as the subsidiaries acquired do not constitute businesses.

– I-61 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

1st Acquisition (note a) HK$’000 97,743 20,477 73 (936) (58,599) – (58,758)	2nd Acquisition (note b) HK$’000 209,088 12,077 290 (278) – (20,340) (199,006)	Total HK$’000 306,831 32,554 363 (1,214) (58,599) (20,340) (257,764) 1,831 20,340 199,006 221,177 200,837 20,340 221,177 199,006 1,831 200,837
– – –	1,831 20,340 199,006	1,831 20,340 199,006
–	221,177
– –	200,837 20,340	200,837 20,340
–	221,177
– –	199,006 1,831	199,006 1,831
–	200,837

Notes:

(a) On 2nd September, 2008, the Group acquired the remaining 50% equity interest in Keen Step, which was previously formed between, and owned equally by, a wholly-owned subsidiary of the Company and an independent third party in May 2008 for the purpose of the acquisition and holding of properties and was accounted for as a jointly controlled entity of the Group (note 20) using equity accounting prior to the 1st Acquisition, at a consideration of HK$1.
(b) On 16th December, 2008, the Group acquired the entire issued capital of Pine Cheer Limited (“Pine Cheer”) for a consideration of approximately HK$199,006,000 and incurred transaction costs of HK$1,831,000.

The subsidiaries acquired contributed HK$810,000 to the Group’s revenue and had a loss of HK$92,391,000 included in the Group’s loss for the period from the date of acquisition to 31st March, 2009.

– I-62 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

42. DISPOSAL OF SUBSIDIARIES

As detailed to in note 11, the Group discontinued its businesses of manufacturing and trading of medicine and health products and trading of motorcycles through disposal of its subsidiaries, the TFH Group and the King-Tech Group on 31st July, 2007 and 31st March, 2008, respectively.

In addition, the Group entered into several conditional agreements on 28th November, 2007, to dispose of its entire 65%, 64.83% and 65% interest in Panyu Golf, Guangzhou Wei Di Si Golf Property Company Limited (“Wei Di Si”) and Guangzhou Lian Chui Property Management Company Limited (“Lian Chui”), respectively, which are engaged in development and operation of golf resort and hotel in the PRC to the acquirer. The disposal was completed on 6th March, 2008, on which date the control of these subsidiaries was passed to the acquirer.

The aggregate net assets of the disposed subsidiaries at the dates of disposals were as follows:

Continuing operations Discontinued operations HK$’000 HK$’000 111,501 31,016 52,947 1,405 – 430 – 30,314 68 96,153 14,571 – – 1,138 5,534 39,834 – 2,500 – 2,045 3,862 81,629 (6,389) (128,765) (2,665) – (521) – (14,115) (980) (621) – – (12) (17,573) (25,457) – (270) (14,316) –	Continuing operations Discontinued operations HK$’000 HK$’000 111,501 31,016 52,947 1,405 – 430 – 30,314 68 96,153 14,571 – – 1,138 5,534 39,834 – 2,500 – 2,045 3,862 81,629 (6,389) (128,765) (2,665) – (521) – (14,115) (980) (621) – – (12) (17,573) (25,457) – (270) (14,316) –	Total HK$’000 142,517 54,352 430 30,314 96,221 14,571 1,138 45,368 2,500 2,045 85,491 (135,154) (2,665) (521) (15,095) (621) (12) (43,030) (270) (14,316) 263,263 (43,975) (21,472) (991) 196,825 (37,644) 159,181
132,283 (43,471) (17,671) (991) 70,150 (19,073)	130,980 (504) (3,801) – 126,675 (18,571)	263,263 (43,975 (21,472 (991
		196,825 (37,644
51,077	108,104

– I-63 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

Continuing operations Discontinued operations HK$’000 HK$’000 22,173 20,000 14,669 – – 90,000 14,745 – (510) (1,896) 51,077 108,104	Continuing operations Discontinued operations HK$’000 HK$’000 22,173 20,000 14,669 – – 90,000 14,745 – (510) (1,896) 51,077 108,104	Total HK$’000 42,173 14,669 90,000 14,745 (2,406
		159,181

22,173 (14,448) (510)	20,000 (81,629) (1,896)	42,173 (96,077 (2,406
7,215	(63,525)	(56,310

The impacts of the disposed subsidiaries of discontinued operation on the Group’s results and cash flows in the current and prior periods are disclosed in note 11.

43. CAPITAL AND OTHER COMMITMENTS

Capital expenditure contracted for but not provided in the consolidated financial statements in respect of: – acquisition of property, plant and equipment Other commitments: – acquisition of subsidiaries (Note) – acquisition of a land use right (note 24) – loan to an associate (note 21) – loan to a joint venture	2009 HK$’000 27,807	2008 HK$’000 31,292

	210,400 5,000 15,000 15,880 246,280	– 5,000 15,000 –
		20,000
	274,087	51,292

Note: On 30th December, 2008, a subsidiary of the Company entered into a conditional agreement with Vincent Asset Holdings Limited (“Vincent Asset”), an independent third party to acquire 100% equity interest in Charm Noble Group Limited (“Charm Noble”), Favor Gain Group Limited (“Favor Gain”) and Adventura International Limited (“Adventura”), for a consideration of an aggregate amount of HK$10 million and face value of the entire amount of the shareholder’s loans owed by Charm Noble, Favor Gain and Adventura to Vincent Asset on the completion date of the acquisition on a dollar-to-dollar basis. As of 31st March, 2009, deposits and expenses amounted to HK$47,244,000 had been paid by the Group. The Group has concentration of credit risk as the whole balance was due from an independent third party. The aforesaid acquisition was completed in June 2009. Details of the acquisition were set out in a circular of the Company dated 18th February, 2009.

– I-64 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

44. OPERATING LEASE COMMITMENTS

The Group as lessee

Property rentals paid by the Group during the year in respect of: Minimum lease payments Contingent rents	2009 HK$’000 14,222 – 14,222	2008 HK$’000 13,662 3,167
		16,829

At the balance sheet date, the Group had commitments for future minimum lease payments under non-cancellable operating leases which fall due as follows:

Within one year In the second to fifth year inclusive Over five years	2009 HK$’000 13,731 15,020 11,404 40,155	2008 HK$’000 2,474 1,524 10,302
		14,300

Operating lease payments represent rentals payable by the Group for certain of its office premises and golf course. Leases are negotiated for an average term of three years and rentals are either fixed or, in addition to the fixed rentals, determined based on a fixed percentage of the monthly gross turnover of the outlets, for an average term of three years.

The Group as lessor

The property rental income earned during the year was HK$7,850,000 (2008: HK$3,270,000). The properties which are leased out as at 31st March, 2009 have rental yield of approximately 4% and with committed tenants with the longest tenure within 2 years from the balance sheet date.

At the balance sheet date, the Group had contracted with tenants for the following future minimum lease payments:

Within one year In the second to fifth year inclusive	2009 HK$’000 6,821 7,063 13,884	2008 HK$’000 805 –
		805

– I-65 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

45. PLEDGE OF ASSETS

At 31st March, 2009, the Group’s bank borrowings and credit facilities from financial institutions were secured by the following:

(a) bank deposits of HK$44,626,000 (2008: HK$41,268,000);
(b) legal charges over the Group’s properties held for sale with a carrying value of HK$223,476,000 (2008: HK$231,818,000);
(c) financial assets at fair value through profit or loss of HK$1,116,000 (2008: HK$1,756,000).

In addition, at 31st March, 2008, the Group had bank deposits of approximately of HK$10,550,000 pledged to banks in respect of banking facilities granted to third parties.

46. RETIREMENT BENEFITS SCHEMES

The Group operates a defined contribution retirement benefits scheme which is registered under the Occupational Retirement Scheme Ordinance (the “ORSO Scheme”) for eligible employees. The assets of the scheme are separately held in funds under the control of trustees.

The cost charged to the consolidated income statement represents contributions paid or payable to the fund by the Group at rates specified in the rules of the scheme. Where there are employees who leave the scheme prior to vesting fully in the contributions, the contributions payable by the Group are reduced by the amount of forfeited contributions.

At the balance sheet date, the Group had no significant forfeited contributions, which arose upon employees leaving the retirement benefits scheme and which are available to reduce the contributions payable by the Group in future years.

With effect from 1st December, 2000, the Group has also joined the MPF Scheme for employees in Hong Kong. The MPF Scheme is registered with the Mandatory Provident Fund Scheme Authority under the Mandatory Provident Fund Scheme Ordinance. The assets of the MPF Scheme are held separately from those of the Group in funds under the control of an independent trustee.

Under the rule of the MPF Scheme, the employer and its employees are each required to make contributions to the scheme at rate specified in the rules. The only obligation of the Group with respect to the MPF Scheme is to make the required contributions under the scheme. The contributions to the MPF Scheme charged to the consolidated income statement represent contributions paid or payable to the funds by the Group at rates specified in the rules of the scheme. No forfeited contribution is available to reduce the contribution payable in future years.

The employees of the subsidiaries in the PRC are members of state-managed retirement benefits schemes operated by the PRC government. The subsidiaries are required to contribute a certain percentage of their payroll to the retirement benefits schemes to fund the benefits. The only obligation of the Group with respect to the retirement benefits schemes are to make the required contributions under the schemes.

The total cost charged to consolidated income statement of HK$2,094,000 (2008: HK$2,126,000) represents contributions paid or payable to the schemes by the Group during the year.

– I-66 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

47. RELATED AND CONNECTED PARTY TRANSACTIONS AND BALANCES

Related party transactions

(a) During the year, the Group had the following transactions with related parties:

			2009	2008
			HK$’000	HK$’000
		Nature of
Related parties	Note	transactions
Associates:
Orient Town Limited		Interest income	14,417	51,618
Concordia		Management fee	152	910
		paid
Orient Town Project		Management fee	120	250
Management Limited		received
Other related companies:
Great Intelligence Holdings	(i)	Rental expenses	2,917	–
Limited (“Great		and management
Intelligence”)		fee paid
Wing On		Interest income	3,660	4,677

Note:

(i) Mr. Chan Fut Yan, an executive director of the Company is also a director of Great Intelligence.

Details of the outstanding balances with related parties are set out in the consolidated balance sheet and in notes 21, 22, 23 and 29.

(b) Compensation of key management personnel

The remuneration of directors during the year was as follows:

Short-term benefits Post-employment benefits Share-based payments	2009 HK$’000 13,745 395 4,082 18,222	2008 HK$’000 19,010 358 5,844
		25,212

The remuneration of directors is determined by the remuneration committee having regard to the performance of individuals and market trends.

– I-67 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

Connected party transactions

(a) During the year ended 31st March, 2008, Donson (International) Development Limited (“Donson”), an indirectly wholly-owned subsidiary of the Company, entered into several agreements in relation to:
(i) disposal by Donson of its entire interest in Panyu Golf, Wei Di Si and Lian Chui to 廣州市番禺協誠實業有限公司 (“番禺協誠”), a company incorporated in the PRC with limited liability, which is an investment holding company controlled by the Panyu Municipal Government, the PRC, for an aggregate cash consideration of RMB20 million (equivalent to approximately HK$22.8 million) as set out in note 42;
(ii) the co-operation between Panyu Golf and Donson in the Development Project in which the Group will have the right to share 65% of its residual value. Under the terms of the Development Project Agreement, the Group will provide a loan of RMB40 million (equivalent to approximately HK$45.5 million) to Panyu Golf for use in the Development Project as set out in note 20; and
(iii) the lease of Guangzhou Lotus Hill Golf Resort (“Lease Agreement”) which comprises golf course and golf clubhouse within Panyu, Guangzhou, Guangdong Province, the PRC to Guangzhou Donson Hotel Management Limited (“Donson Hotel Management”), a subsidiary of the Company, for three years commencing from the date of the Lease Agreement entered into between Donson Hotel Management as lessee and Panyu Golf as lessor for the lease of the Guangzhou Lotus Hill Golf Resort on 16th April, 2008 at an annual rental of RMB5 million (equivalent to approximately HK$5.7 million) renewable at the option of Donson Hotel Management at successive terms of 3 years up to 20 years.

By virtue of the fact that 番禺協誠 is controlled by the Panyu Municipal Government and 廣州市番禺旅游總公司 (“番禺旅游”), a company established in the PRC which is a substantial shareholder of Panyu Golf, Wei Di Si and Lian Chui, is also controlled by the Panyu Municipal Government, 番禺協誠 and 番禺旅游 are therefore connected persons of the Company. Further details of the transactions are set out in the announcement dated 7th December, 2007. The disposal was completed on 6th March, 2008.

During the year ended 31st March, 2009, lease rental of HK$4,837,000 was paid to Panyu Golf. The rentals were charged in accordance with the Lease Agreement.

(b) During the year ended 31st March, 2009, subsidiaries of the Company entered into tenancy agreements with a subsidiary of a substantial shareholder of the Company and a minority shareholder of subsidiaries. The rental expense paid to the subsidiary of a substantial shareholder of the Company and minority shareholders of subsidiaries were HK$3,721,000 (2008: Nil) and HK$247,000 (2008: HK$231,000), respectively for the year ended 31st March, 2009. The rentals were charged in accordance with the relevant tenancy agreements.
(c) During the year ended 31st March, 2008, Kopola Investment Company Limited (“Kopola”) had converted HK$50 million of the convertible note due 2010 issued by the Company into 113,636,363 ordinary shares of HK$0.01 each in the share capital of the Company at a conversion price of HK$0.44 per share. Each of Mr. Ho Hau Chong, Norman (a former non-executive director of the Company who retired on 12th September, 2007), and his brother, Mr. Ho Hau Hay, Hamilton owned 50% interest in Kopola, the conversion of the convertible notes constituted a connected transaction of the Company under the Listing Rules.

– I-68 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

48. BALANCE SHEET OF THE COMPANY

The balance sheet of the Company at 31st March, 2009 is as follows:

Note Assets Liabilities Capital and reserves Share capital Reserves (a) Note:	2009 HK$’000 3,883,915 1,373,451 2,510,464	2008 HK$’000 3,186,076 1,279,538
		1,906,538

	4,709 2,505,755	30,955 1,875,583
	2,510,464	1,906,538

(a) Reserves

THE COMPANY At 31st March, 2007 Conversion of convertible notes Issue of shares Expenses incurred in connection with issue of shares Recognition of equity-settled share-based payments Profit for the year At 31st March, 2008 Profit for the year Rights issue with warrants Transfer upon lapse and forfeiture of share options Recognition of equity-settled share-based payments Repurchase and cancellation of shares Capital Reorganisation_(note 37(e)(iv))_ Expenses incurred in connection with rights issue At 31st March, 2009	Share premium Contributed surplus Capital redemption reserve Convertible loan notes equity reserve HK$’000 HK$’000 HK$’000 HK$’000 (Note) 1,066,055 – 1,124 355,304 268,001 – – (47,585) 165,000 – – – (5,114) – – – – – – – – – – –	Share premium Contributed surplus Capital redemption reserve Convertible loan notes equity reserve HK$’000 HK$’000 HK$’000 HK$’000 (Note) 1,066,055 – 1,124 355,304 268,001 – – (47,585) 165,000 – – – (5,114) – – – – – – – – – – –	Share premium Contributed surplus Capital redemption reserve Convertible loan notes equity reserve HK$’000 HK$’000 HK$’000 HK$’000 (Note) 1,066,055 – 1,124 355,304 268,001 – – (47,585) 165,000 – – – (5,114) – – – – – – – – – – –	Share premium Contributed surplus Capital redemption reserve Convertible loan notes equity reserve HK$’000 HK$’000 HK$’000 HK$’000 (Note) 1,066,055 – 1,124 355,304 268,001 – – (47,585) 165,000 – – – (5,114) – – – – – – – – – – –	Share- based payment reserve HK$’000 3,296 – – – 8,342 –	Warrant reserve HK$’000 – – – – – –	Retained profits HK$’000 28,938 – – – – 32,222	Total HK$’000 1,454,717 220,416 165,000 (5,114) 8,342 32,222
	1,493,942 – 522,622 – – (20,587) – (23,183)	– – – – – – 113,020 –	1,124 – – – – 6,092 – –	307,719 – – – – – – –	11,638 – – (4,418) 5,547 – – –	– – 34,571 – – – – –	61,160 1,517 – 1,083 – (6,092) – –	1,875,583 1,517 557,193 (3,335) 5,547 (20,587) 113,020 (23,183)
	1,972,794	113,020	7,216	307,719	12,767	34,571	57,668	2,505,755

Note: The contributed surplus of the Company represents the credit arising from Capital Reduction pursuant to the Capital Reorganisation on 13th March, 2009.

– I-69 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

49. SUBSIDIARIES

Particulars of the Company’s principal subsidiaries at 31st March, 2009 are as follows:

	Place of
	incorporation	Issued and	Percentage of issued share/
	or registration/	fully paid share/		registered capital			Principal
Name of subsidiary	operations	registered capital		held by the	Company		activities
			Directly		Indirectly
			2009	2008	2009	2008
			%	%	%	%
Advance Tech Limited	Hong Kong	HK$1	–	–	100	100	Securities
		ordinary share					investment
Castle Win International Limited	Hong Kong	HK$1	–	–	100	100	Properties
		ordinary share					development
Donson	Hong Kong	HK$85,297,692	–	–	100	100	Investment
		ordinary shares					holding
Hayton Limited	Hong Kong	HK$1	–	–	100	100	Property
		ordinary share					investment
ITC Properties Management Limited	Hong Kong	HK$2,000	–	–	100	100	Securities
		ordinary shares					investment
							and
							investment
							holding
		HK$500,000	–	–	–	–
		non-voting
		deferred shares
		(note a)
Keen Step	Hong Kong	HK$2	–	–	100	–	Property
		ordinary shares					investment
Linktop Limited	British Virgin	US$1	–	–	100	100	Investment
	Islands	ordinary share					holding
Macau Prime (B.V.I.) Limited	British Virgin	US$50,000	100	100	–	–	Investment
	Islands	ordinary shares					holding
Macau Prime Finance Limited	Hong Kong	HK$2	–	–	100	100	Money
		ordinary shares					lending
Macau Prime Property (Hong Kong)	British Virgin	US$1	–	–	100	100	Investment
Limited	Islands	ordinary share					holding
Macau Prime Property (Macau)	British Virgin	US$1	–	–	100	100	Investment
Limited	Islands	ordinary share					holding
Master Super Development Limited	Hong Kong	HK$100	–	–	100	100	Property
		ordinary shares					investment
Million Orient Limited	Hong Kong	HK$1	–	–	100	100	Investment
		ordinary share					holding
New Smarten Limited	Hong Kong	HK$1	–	–	100	100	Investment
		ordinary share					holding

– I-70 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

	Place of
	incorporation	Issued and	Percentage of issued share/
	or registration/	fully paid share/		registered capital			Principal
Name of subsidiary	operations	registered capital		held by the	Company		activities
			Directly		Indirectly
			2009	2008	2009	2008
			%	%	%	%
Oriental Mind Limited	British Virgin	US$1	–	–	100	100	Investment
	Islands	ordinary share					holding
Pine Cheer	Hong Kong	HK$100	–	–	100	–	Property
		ordinary shares					investment
Smarteam Limited	Hong Kong	HK$1	–	–	100	100	Property
		ordinary share					investment
South Step Limited	Hong Kong	HK$1	–	–	100	100	Property
		ordinary share					investment
							and
							development
Teamate Limited	British Virgin	US$1	–	–	100	100	Investment
	Islands	ordinary share					holding
Top Century International Limited	British Virgin	US$1	–	–	100	100	Investment
	Islands	ordinary share					holding
Well Cycle Limited	Hong Kong	HK$2	–	–	100	100	Letting of
		ordinary shares					motor
							vehicles
三亞亞龍灣風景高爾夫文化公園	PRC	RMB35,000,000	–	–	80	80	Development
有限公司	(note b)						and
							operation of
							hotel and
							golf resort
三亞亞龍灣紅峽谷度假酒店有限公司	PRC	HK$30,000,000	–	–	96	96	Development
	(note b)						and
							operation of
							hotel
廣州市東迅酒店管理有限公司	PRC	HK$5,000,000	–	–	100	100	Development
	(note b)						and
							operation of
							hotel

Notes:

(a) The non-voting deferred shares, which are not held by the Group, practically carry no rights to dividends or to receive notice of or to attend or vote at any general meeting of the respective companies nor to participate in any distribution on winding up.
(b) The subsidiaries were established in the PRC as a sino-foreign equity joint venture companies.

None of the subsidiaries had any debt securities outstanding at the balance sheet date or at any time during the year.

The above table lists the subsidiaries of the Company which, in the opinion of the directors, principally affected the results or assets of the Group. To give details of other subsidiaries would, in the opinion of the directors, result in particulars of excessive length.

– I-71 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

50. SEGMENT INFORMATION

Business segments

For management purposes, the Group is currently organised into five operating divisions. These divisions are the basis on which the Group reports its primary segment information.

Principal activities are as follows:

Property development – development of property Property investment – trading of properties Golf and leisure – development and operation of golf resort and hotel Securities investment – trading and investment of securities Finance – loan financing services

The Group was also involved in trading of motorcycles and manufacturing and trading of medicine and health products previously. These operations were discontinued in prior year as set out in note 11.

Segment information about these businesses is presented below. Gross proceeds included in turnover as set out below comprise revenue from property development and investment, golf and leisure operations, loan financing income, dividend income from investments held-for-trading and gross proceeds from disposal of investments held-for-trading.

2009

Property development HK$’000 CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2009 TURNOVER – Gross proceeds 706 REVENUE External sales 706 Inter-segment sales_(Note)_ – Total 706 SEGMENT RESULTS (68,512) Unallocated corporate income Unallocated corporate expenses Finance costs Share of result of a jointly-controlled entity (212) Share of results of associates (4,404) Loss before taxation Taxation Loss for the year	Property investment HK$’000 25,045	Golf and leisure HK$’000 44,058	Securities investment HK$’000 53,540	Finance HK$’000 21,772	Segment total EliminationConsolidated HK$’000 HK$’000 HK$’000 145,121 – 145,121	Segment total EliminationConsolidated HK$’000 HK$’000 HK$’000 145,121 – 145,121	Segment total EliminationConsolidated HK$’000 HK$’000 HK$’000 145,121 – 145,121

706 –	25,045 –	44,058 –	1,089 –	21,772 26,107	92,670 26,107	– (26,107)	92,670 –
706 (68,512) (212) (4,404)	25,045 (91,817) – –	44,058 (5,833) – –	1,089 (169,794) – –	47,879 20,338	118,777 (315,618)	(26,107)	92,670

							(315,618
				– –	29,955 (63,649) (108,357) (212) (4,404) (462,285) 469		29,955 (63,649 (108,357 (212 (4,404
							(462,285 469
					(461,816)		(461,816

Note: Inter-segment sales were charged at terms determined and agreed between group companies.

– I-72 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

	Property	Property	Property	Property	Property	Golf and	Securities
	development			investment		leisure	investment	Finance		Consolidated
	HK$’000				HK$’000	HK$’000	HK$’000	HK$’000			HK$’000
CONSOLIDATED
BALANCE SHEET
AT 31ST MARCH, 2009
ASSETS
Segment assets	306,108				544,820	306,337	251,491		320,702		1,729,458
Interest in a joint venture	44,759				–	–	–		–		44,759
Interest in associates	134,809				–	–	–		–		134,809
Unsecured loans and interest
due from associates	1,073,982				–	–	–		–		1,073,982
Unallocated corporate assets											598,362
Consolidated total assets											3,581,370

LIABILITIES
Segment liabilities		1,202			5,045	41,071	820		20		48,158
Unallocated corporate liabilities											1,523,976
Consolidated total liabilities											1,572,134

	Property		Property		Golf and	Securities		Segment
	development		investment		leisure	investment	Finance	total	Unallocated		Consolidated
	HK$’000			HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000		HK$’000
OTHER INFORMATION
Depreciation of property, plant and
equipment	429			170	8,898	–	–	9,497	2,010		11,507
Amortisation of prepaid lease payments
of leasehold land	–			–	525	–	–	525		–	525
Amortisation of premium on prepaid lease
payments of leasehold land	–			–	2,736	–	–	2,736		–	2,736
Loss on disposal of property, plant and
equipment	–			–	27	–	–	27		144	171
Allowance for bad and doubtful debts	56			4,440	817	–	–	5,313		–	5,313
Decrease in fair value of financial assets at
fair value through profit or loss	–			–	–	114,477	–	114,477		–	114,477
Decrease in fair value of derivatives
embedded in convertible bonds	–			–	–	–	–	–	3,247		3,247
Capital additions	2,553			4,624	3,979	–	–	11,156	4,688		15,844
Equity-settled share-based payment
expenses	–			–	–	–	–	–	5,547		5,547
Impairment loss on available-for-sales
investment	–			–	–	53,037	–	–		–	53,037
Impairment loss on property interests	54,121			92,591	–	–	–	146,712		–	146,712
Loss on disposal of available-for-sales
investment	–			–	–	4,299	–	–		–	4,299
Dividend income on available-for-sales
investment	–			–	–	970	–	–		–	970

– I-73 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

2008

					Continuing operations	Continuing operations				Discontinued operations	Discontinued operations	Discontinued operations
											Medicine
				Golf							and
		Property	Property	and	Securities		Segment				health		Consoli-
	development		investment	leisure	investment	Finance	total	Elimination	Total	Motorcycles	products	Total	dated
		HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED
31ST MARCH, 2008
TURNOVER
– Gross proceeds		2,500	79,292	62,622	424,641	31,789	600,844	–	600,844	17,567	115,741	133,308	734,152

REVENUE
External sales		2,500	79,292	62,622	5,741	31,789	181,944	–	181,944	17,567	115,741	133,308	315,252
Inter-segment sales_(Note)_		–	–	–	–	25,842	25,842	(25,842)	–	–	–	–	–
Total		2,500	79,292	62,622	5,741	57,631	207,786	(25,842)	181,944	17,567	115,741	133,308	315,252

SEGMENT RESULTS		(2,136)	27,906	(56,461)	59,141	7,469	35,919		35,919	(1,359)	1,747	388	36,307

Unallocated corporate income							39,018		39,018	–	689	689	39,707
Unallocated corporate expenses							(58,762)		(58,762)	–	–	–	(58,762)
Unallocated finance costs							(54,787)		(54,787)			(613)	(55,400)
Loss on disposal of an associate		–	(39,486)	–	–	–	(39,486)		(39,486)	–	–	–	(39,486)
Loss on disposal of subsidiaries		–	–	(19,073)	–	–	(19,073)		(19,073)	–	–	–	(19,073)
Share of results of associates		(30,047)	5,000	–	–	–	(25,047)		(25,047)	–	–	–	(25,047)
Loss before taxation and gain (loss) on
disposal of discontinued operations							(122,218)		(122,218)			464	(121,754)
Taxation							(3,475)		(3,475)			(558)	(4,033)
Gain (loss) on disposal of discontinued
operations							–		–	6	(18,577)	(18,571)	(18,571)
Loss for the year							(125,693)		(125,693)			(18,665)	(144,358)

Note: Inter-segment sales were charged at terms determined and agreed between group companies.

– I-74 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

2008

Continuing operations		Discontinued operations
Property velopment Property investment Golf and leisure Securities investment Finance HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 322,814 274,111 320,619 162,513 322,178 14,745 – – – – 135,503 – – – – 1,077,690 – – – –	Total HK$’000 1,402,235 14,745 135,503 1,077,690 730,820	Motor- cycles Medicine and health products Total HK$’000 HK$’000 HK$’000 – – – – – – – – –	Consoli- dated HK$’000 1,402,235 14,745 135,503 1,077,690 730,820
	3,360,993		3,360,993

	65,259 1,445,557	– – –	65,259 1,445,557
	1,510,816		1,510,816

2008

Continuing operations
Property
development
Property
investment
Golf
and
leisure
Securities
investment
Finance
Segment
total Unallocated
Total
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
OTHER INFORMATION
Depreciation of property, plant and equipment
20
–
14,882
–
–
14,902
786
15,688
Amortisation of prepaid lease payments of
leasehold land
–
–
2,283
–
–
2,283
–
2,283
Amortisation of premium on prepaid lease
payments of leasehold land
–
–
2,914
–
–
2,914
–
2,914
Allowance for inventories
–
–
–
–
–
–
–
–
Loss on disposal of property, plant and
equipment
–
–
77
–
–
77
33
110
Allowance for bad and doubtful debts
–
–
1,441
–
–
1,441
–
1,441
Increase in fair value of financial assets at fair
value through profit or loss
–
–
10,318
–
–
10,318
–
10,318
Increase in fair value of derivatives embedded
in convertible bonds
–
–
–
–
–
–
1,944
1,944
Capital additions
958
–
36,727
–
–
37,685
918
38,603
Equity-settled share-based payment expenses
–
–
–
–
–
–
8,342
8,342
Gain on disposal of available-for-sales
investments
–
–
–
60,752
–
–
–
60,752
Dividend income on available-for-sales
investments
–
–
–
426
–
–
–
426

Discontinued operations
Motor
-cycles
Medicine
and
health
products
Total
Consoli-
dated
HK$’000
HK$’000
HK$’000
HK$’000
–
1,881
1,881
17,569
–
10
10
2,293
–
–
–
2,914
–
5,106
5,106
5,106
–
17
17
127
–
360
360
1,801
–
–
–
10,318
–
–
–
1,944
–
710
710
39,313
–
–
–
8,342
–
–
–
60,752
–
–
–
426

– I-75 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

Geographical segments

The Group’s operations are principally located in Macau, Hong Kong and the PRC. The Group’s administrative functions are carried out in Macau, Hong Kong and the PRC.

The following table provides an analysis of the Group’s revenue by geographical market, based on location of customers, irrespective of the origin of the goods:

Hong Kong PRC Macau Others**	Revenue by geographical market 2009 2008 HK$’000 HK$’000 24,605 188,549 49,459 89,657 11,356 15,260 7,250 21,786 92,670 315,252	Revenue by geographical market 2009 2008 HK$’000 HK$’000 24,605 188,549 49,459 89,657 11,356 15,260 7,250 21,786 92,670 315,252
		315,252

** No single location included in this category constituted 10% or above of total revenue from sales to all external customers.

The following is an analysis of the carrying amount of segment assets, and additions to property, plant and equipment analysed by the geographical area in which the assets are located:

Segment assets Macau Hong Kong PRC Others Other corporate assets	Carrying amount of segment assets 2009 2008 HK$’000 HK$’000 1,308,034 1,375,889 1,001,926 607,606 376,827 374,277 78,386 122,153	Carrying amount of segment assets 2009 2008 HK$’000 HK$’000 1,308,034 1,375,889 1,001,926 607,606 376,827 374,277 78,386 122,153	Additions to property, plant and equipment 2009 2008 HK$’000 HK$’000 – – 4,624 710 6,532 37,685 – –	Additions to property, plant and equipment 2009 2008 HK$’000 HK$’000 – – 4,624 710 6,532 37,685 – –
	2,765,173 816,197	2,479,925 881,068	11,156 4,688	38,395 918
	3,581,370	3,360,993	15,844	39,313

– I-76 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

3. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP

The following is the reproduction of the unaudited condensed consolidated financial statements of the Group for the six months ended 30th September, 2009 together with the relevant notes to the condensed consolidated financial statements, contained on pages 6 to 32 of the interim report of the Company for the six months ended 30th September, 2009.

CONDENSED CONSOLIDATED INCOME STATEMENT

(For the six months ended 30th September, 2009)

NOTES Turnover – Gross proceeds 3 Revenue 3 Property sales and rental income Golf and leisure income Cost of sales Gross profit Income from loan financing Net gain (loss) on financial instruments 4 Other income Increase in fair value of investment properties Reversal of write-down on properties held for sale 5 Impairment loss recognised on advance to a jointly controlled entity 13 Administrative expenses Share of results of associates Share of result of a jointly controlled entity Finance costs 6 Profit (loss) before taxation Taxation 7 Profit (loss) for the period 8 Profit (loss) for the period attributable to: Owners of the Company Minority interests Earnings (loss) per share 10 – Basic (HK dollars) – Diluted (HK dollars)	Six months ended 30th September 2009 2008 (unaudited) (unaudited) HK$’000 HK$’000 92,396 100,213 68,688 51,834 4,317 21,878 14,933 16,367 19,250 38,245 (4,751) (18,907) 14,499 19,338 7,833 11,784 96,553 (44,533) 10,936 16,802 31,758 – 92,591 – (10,700) – (65,516) (67,123) (2,894) (1,507) – (212) (60,561) (53,673) 114,499 (119,124) 342 342 114,841 (118,782) 114,841 (118,782) – – 114,841 (118,782) 0.24 (0.41) 0.23 (0.41)	Six months ended 30th September 2009 2008 (unaudited) (unaudited) HK$’000 HK$’000 92,396 100,213 68,688 51,834 4,317 21,878 14,933 16,367 19,250 38,245 (4,751) (18,907) 14,499 19,338 7,833 11,784 96,553 (44,533) 10,936 16,802 31,758 – 92,591 – (10,700) – (65,516) (67,123) (2,894) (1,507) – (212) (60,561) (53,673) 114,499 (119,124) 342 342 114,841 (118,782) 114,841 (118,782) – – 114,841 (118,782) 0.24 (0.41) 0.23 (0.41)
	4,317 14,933 19,250 (4,751) 14,499 7,833 96,553 10,936 31,758 92,591 (10,700) (65,516) (2,894) – (60,561) 114,499 342	21,878 16,367
		38,245 (18,907
		19,338 11,784 (44,533 16,802 – – – (67,123 (1,507 (212 (53,673
		(119,124 342
	114,841
	114,841 –	(118,782 –
	114,841 0.24 0.23

– I-77 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(For the six months ended 30th September, 2009)

Profit (loss) for the period Other comprehensive income Net gain (loss) on fair value changes of available-for-sale investments Reclassification adjustments on: – impairment losses recognised on available-for-sale investments – disposal of available-for-sale investments Exchange difference arising on translation of foreign operations Other comprehensive income for the period Total comprehensive income (expense) for the period Total comprehensive income (expense) for the period attributable to: Owners of the Company Minority interests	Six months ended 30th September 2009 2008 (unaudited) (unaudited) HK$’000 HK$’000 114,841 (118,782) 19,223 (23,232) – 31,171 (2,038) 4,299 (239) 2,321 16,946 14,559 131,787 (104,223) 131,787 (104,223) – – 131,787 (104,223)	Six months ended 30th September 2009 2008 (unaudited) (unaudited) HK$’000 HK$’000 114,841 (118,782) 19,223 (23,232) – 31,171 (2,038) 4,299 (239) 2,321 16,946 14,559 131,787 (104,223) 131,787 (104,223) – – 131,787 (104,223)
	19,223 – (2,038) (239) 16,946	(23,232 31,171 4,299 2,321
		14,559
	131,787
	131,787 –	(104,223 –
	131,787

– I-78 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(At 30th September, 2009)

NOTES Non-current assets Property, plant and equipment 11 Prepaid lease payments of leasehold land Premium on prepaid lease payments of leasehold land Investment properties 12 Properties under development 12 Available-for-sale investments Interests in joint ventures 13 Advance to a jointly controlled entity 13 Interests in associates 14 Unsecured loans and interest due from associates 14 Debt portion of convertible bonds Deposits and expenses paid for acquisition of a land use right Deposits and expenses paid for acquisition of subsidiaries Other loan receivables Current assets Inventories Properties held for sale Debt portion of convertible bonds Financial assets at fair value through profit or loss Debtors, deposits and prepayments 15 Other loan receivables Prepaid lease payments of leasehold land Amounts due from associates Unsecured loans and interest due from a related company Pledged bank deposits Bank balances and cash	30.9.2009 (unaudited) HK$’000 183,958 20,557 110,190 221,000 – 51,568 51,771 1,300 212,210 993,687 38,984 47,275 – 3,852	31.3.2009 (audited) HK$’000 186,224 20,822 111,558 – 189,000 37,892 44,759 – 134,809 1,073,982 36,320 47,275 47,244 –
	1,936,352 2,545 948,380 1,179 189,522 560,613 173,014 530 2,426 49,841 42,200 145,730 2,115,980	1,929,885
		3,143 539,388 727 176,552 503,148 208,727 530 2,172 48,437 44,626 124,035
		1,651,485

– I-79 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

NOTES Current liabilities Creditors, deposits and accrued charges 16 Amount due to a minority shareholder of a subsidiary Tax payable Convertible note payables – due within one year Obligations under finance leases – due within one year Bank and other borrowings – due within one year 17 Net current assets Total assets less current liabilities Non-current liabilities Convertible note payables – due after one year Obligations under finance leases – due after one year Bank and other borrowings – due after one year 17 Deferred tax liabilities Capital and reserves Share capital 18 Reserves Equity attributable to owners of the Company Minority interests	30.9.2009 (unaudited) HK$’000 97,769 256 11,626 513,795 83 12,729	31.3.2009 (audited) HK$’000 72,047 395 11,856 7,174 90 82,830
	636,258 1,479,722 3,416,074 867,097 200 378,999 27,547 1,273,843	174,392
		1,477,093
		3,406,978
		1,328,913 282 40,658 27,889
		1,397,742
	2,142,231	2,009,236

	4,709 2,130,337 2,135,046 7,185	4,709 1,997,342
		2,002,051 7,185
	2,142,231	2,009,236

– I-80 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(For the six months ended 30th September, 2009)

At 1st April, 2008 (audited) Total comprehensive income (expense) for the period Rights issue with warrants Expenses incurred in connection with issue of shares Recognition of equity-settled share-based payments Transfer on lapse of share options Repurchase and cancellation of shares At 30th September, 2008 (unaudited) At 1st April, 2009 (audited) Total comprehensive income (expense) for the period Recognition of equity-settled share-based payments At 30th September, 2009 (unaudited)	Attributable to owners of the Company
	Share capital Share premium Contribu- tion surplus Capital redemption reserve Convertible loan notes equity reserve Share- based payment reserve Available- for-sale invest- ments reserve Special reserve Revalua- tion reserve Translation reserve Warrant reserve Accumulated profits (losses) Total Minority interests Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (note) 30,955 1,493,942 – 1,124 307,719 11,638 (12,900) (8,908) 804 7,472 – 11,152 1,842,998 7,179 1,850,177 – – – – – – 12,238 – – 2,321 – (118,782) (104,223) – (104,223 92,866 522,622 – – – – – – – – 34,571 – 650,059 – 650,059 – (23,183) – – – – – – – – – – (23,183) – (23,183 – – – – – 3,999 – – – – – – 3,999 – 3,999 – – – – – (4,242) – – – – – 4,242 – – – (3,878) (13,628) – 3,878 – – – – – – – (3,878) (17,506) – (17,506
	119,943 1,979,753 – 5,002 307,719 11,395 (662) (8,908) 804 9,793 34,571 (107,266) 2,352,144 7,179 2,359,323
	4,709 1,972,794 113,020 7,216 307,719 12,767 23 (8,908) 804 9,674 34,571 (452,338) 2,002,051 7,185 2,009,236 – – – – – – 17,185 – – (239) – 114,841 131,787 – 131,787 – – – – – 1,208 – – – – – – 1,208 – 1,208
	4,709 1,972,794 113,020 7,216 307,719 13,975 17,208 (8,908) 804 9,435 34,571 (337,497) 2,135,046 7,185 2,142,231

– I-81 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(For the six months ended 30th September, 2009)

NOTE Operating cash flows before movements in working capital Decrease (increase) in financial assets at fair value through profit or loss Decrease (increase) in other loan receivables (Increase) decrease in debtors, deposits and prepayments (Increase) decrease in properties held for sale Other operating cash flows Net cash from (used in) operating activities Net cash used in investing activities Refundable earnest monies paid Acquisition of subsidiaries (net of cash and cash equivalents acquired) 19 Advance to a jointly controlled entity Loan advance to a joint venture Purchase of available-for-sale investments Proceeds from redemption of convertible bonds Other investing cash flows Net cash from financing activities New bank and other borrowings raised Repayment of bank and other borrowings Proceeds from issue of shares Repayment to a former joint venturer Expenses paid in connection with issue of shares Share repurchase and cancellation Other financing cash flows Net increase in cash and cash equivalents Cash and cash equivalents at beginning of the period Effect of foreign exchange rate changes Cash and cash equivalents at end of the period, representing bank balances and cash	Six months ended 30th September 2009 2008 (unaudited) (unaudited) HK$’000 HK$’000 (33,692) (4,561) 64,877 (167,448) 31,861 (65,837) (1,622) 26,977 (353) 10,515 3,344 (11,663) 64,415 (212,017) (47,800) (20,670) (36,035) – (12,000) (58,577) (7,012) (18,905) (581) (5,633) – 57,000 21,509 14,786 (81,919) (31,999) 200,145 20,247 (160,783) (35,202) – 650,059 – (58,758) – (23,183) – (17,506) (229) (28) 39,133 535,629 21,629 291,613 124,035 243,038 66 (684) 145,730 533,967	Six months ended 30th September 2009 2008 (unaudited) (unaudited) HK$’000 HK$’000 (33,692) (4,561) 64,877 (167,448) 31,861 (65,837) (1,622) 26,977 (353) 10,515 3,344 (11,663) 64,415 (212,017) (47,800) (20,670) (36,035) – (12,000) (58,577) (7,012) (18,905) (581) (5,633) – 57,000 21,509 14,786 (81,919) (31,999) 200,145 20,247 (160,783) (35,202) – 650,059 – (58,758) – (23,183) – (17,506) (229) (28) 39,133 535,629 21,629 291,613 124,035 243,038 66 (684) 145,730 533,967
	64,415 (47,800) (36,035) (12,000) (7,012) (581) – 21,509 (81,919) 200,145 (160,783) – – – – (229) 39,133 21,629 124,035 66	(212,017
		(20,670 – (58,577 (18,905 (5,633 57,000 14,786
		(31,999
		20,247 (35,202 650,059 (58,758 (23,183 (17,506 (28
		535,629
		291,613 243,038 (684
	145,730

– I-82 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(For the six months ended 30th September, 2009)

1. BASIS OF PREPARATION

The condensed consolidated financial statements have been prepared in accordance with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities (the “Listing Rules”) on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) and with Hong Kong Accounting Standard 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”).

2. PRINCIPAL ACCOUNTING POLICIES

The condensed consolidated financial statements have been prepared on the historical cost basis, except for investment properties and certain financial instruments which are measured at fair values.

The accounting policies used in the condensed consolidated financial statements are consistent with those followed in the preparation of the Group’s annual financial statements for the year ended 31st March, 2009.

Adoption of new and revised Hong Kong Financial Reporting Standards effective in current period

In the current interim period, the Group has applied, for the first time, a number of new and revised standards, amendments and interpretations (“new and revised HKFRSs”) issued by the HKICPA.

Except as disclosed below, the adoption of these new and revised HKFRSs had no material effect on the condensed consolidated financial statements of the Group for the current or prior accounting periods.

HKAS 1 (Revised 2007) Presentation of Financial Statements

HKAS 1 (Revised 2007) has introduced a number of terminology changes, including revised titles for the condensed consolidated financial statements, and has resulted in a number of changes in presentation and disclosure.

HKFRS 8 Operating Segments

HKFRS 8 is a disclosure Standard that requires the identification of operating segments to be performed on the same basis as financial information that is reported internally for the purpose of allocating resources between segments and assessing their performance. The predecessor Standard, HKAS 14 Segment Reporting , required the identification of two sets of segments (business and geographical) using a risks and returns approach. In the past, the Group’s primary reporting format was business segments. The application of HKFRS 8 has resulted in a redesignation of the Group’s reportable segments as compared with the primary reportable segments determined in accordance with HKAS 14 (see note 3).

HKAS 40 Investment Property

HKAS 40 Investment Property has been amended to include within its scope properties under construction or development for future use as investment properties and to require such properties to be measured at fair value (where the fair value is reliably determinable). In the past, the leasehold land and building element of properties under construction were accounted for separately. The leasehold land element was accounted for as an operating lease and the building element was carried at cost less accumulated impairment losses. The Group has applied the amendment to HKAS 40 prospectively from 1st April, 2009 in accordance with the relevant transitional provision. As a result of the application of the amendment, the Group’s properties under construction for future use as investment properties that include the leasehold land and building element have been classified as investment properties and measured at fair values as at 30th September, 2009, with the fair value gain being recognised in profit or loss for the six months ended 30th September, 2009. The carrying amount of the properties under development as at 1st April, 2009 approximates to its fair value on that date.

– I-83 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

In addition, the Group has applied the following accounting policy during the current interim period for its investment properties:

Investment properties

Investment properties are properties held to earn rentals and/or for capital appreciation.

On initial recognition, investment properties are measured at cost, including any directly attributable expenses. Subsequent to initial recognition, investment properties are measured at their fair values using the fair value model. Gains or losses arising from changes in the fair value of investment property are included in profit or loss for the year in which they arise.

The investment properties are derecognised upon disposal or when the investment properties are permanently withdrawn from use or no future economic benefits are expected from their disposals. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the condensed consolidated income statement in the period in which the item is derecognised.

New and revised HKFRSs issued but not yet effective

The Group has not early applied any new or revised standards, amendments or interpretations that have been issued but are not yet effective. The adoption of HKFRS 3 (Revised) may affect the Group’s accounting for business combinations for which the acquisition dates are on or after 1st April, 2010. HKAS 27 (Revised) will affect the accounting treatment for changes in the Group’s ownership interest in a subsidiary. The directors of the Company (the “Directors”) anticipate that the application of the other new and revised standards, amendments or interpretations will have no material impact on the condensed consolidated financial statements of the Group.

3. SEGMENT INFORMATION

The Group has adopted HKFRS 8 Operating Segments with effect from 1st April, 2009. HKFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker (“CODM”) in order to allocate resources to segments and to assess their performance. In contrast, the predecessor Standard (HKAS 14 Segment Reporting ) required an entity to identify two sets of segments (business and geographical) using a risks and returns approach, with the entity’s “system of internal financial reporting to key management personnel” serving only as the starting point for the identification of such segments. The application of HKFRS 8 has resulted in redesignation of the Group’s reportable segments as compared with the primary reportable segments determined in accordance with HKAS 14.

In previous year, the Group’s primary reporting format was business segments and was organised into five operating divisions, namely property development, property investment, golf and leisure, securities investment and finance. However, for the property operations, the CODM (i.e. the executive directors and certain senior management) reviews the financial information of the property development and investment projects altogether. Therefore, the property operations are disclosed as one reportable segment. The principal locations of the Group’s property projects as at 30th September, 2009 are Hong Kong and Macau.

The Group’s reportable segments under HKFRS 8 are therefore as follows:

Property	–	development of and investment in properties
Golf and leisure	–	development and operation of golf resort and hotel
Securities investment	–	trading and investment of securities
Finance	–	loan financing services

The CODM assesses the performance of the operating segments based on the profit (loss) before taxation of the group entities engaged in the respective segment activities which represents the segment result. Financial information provided to the CODM is measured in a manner consistent with the accounting policies adopted in the preparation of the condensed consolidated financial statements.

Information regarding these segments is reported below. Amounts reported for the prior period have been restated to conform to the requirements of HKFRS 8.

– I-84 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

For the six months ended 30th September, 2009

Turnover HK$’000 (Note 1)	Revenue HK$’000 (Note 2)	Operating profit (loss) HK$’000	Share of results of associates HK$’000	Share of result of a jointly controlled entity HK$’000	Finance costs HK$’000	Profit (loss) before taxation HK$’000 (8,802) 120,116 111,314 (20,401) 96,158 10,820 197,891 (83,392) 114,499
– 1,134	– 1,134	(4,068) 124,080	(2,894) –	– –	(1,840) (3,964)	(8,802) 120,116
1,134 18,116 65,313 7,833	1,134 18,116 41,605 7,833	120,012 (19,568) 96,160 10,820	(2,894) – – –	– – – –	(5,804) (833) (2) –
92,396 –	68,688 –	207,424 (29,470)	(2,894) –	– –	(6,639) (53,922)	197,891 (83,392
92,396	68,688	177,954	(2,894)	–	(60,561)

For the six months ended 30th September, 2008

Turnover HK$’000 (Note 1)	Revenue HK$’000 (Note 2)	Operating profit (loss) HK$’000	Share of results of associates HK$’000	Share of result of a jointly controlled entity HK$’000	Finance costs HK$’000	Profit (loss) before taxation HK$’000 5,187 2,828 8,015 (8,559) (44,485) 13,970 (31,059) (88,065) (119,124)
11,356 7,944	11,356 7,944	9,226 3,065	(1,507) –	– (212)	(2,532) (25)	5,187 2,828
19,300 18,945 50,184 11,784	19,300 18,945 1,805 11,784	12,291 (7,445) (44,471) 13,970	(1,507) – – –	(212) – – –	(2,557) (1,114) (14) –
100,213 –	51,834 –	(25,655) (38,077)	(1,507) –	(212) –	(3,685) (49,988)	(31,059 (88,065
100,213	51,834	(63,732)	(1,507)	(212)	(53,673)

– I-85 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

Notes:

(1) Turnover as set out above comprise rental income and sales proceeds of properties, revenue from golf and leisure operations, loan financing income, dividend income from investments held-for-trading and gross proceeds from disposal of investments held-for-trading.
(2) Revenue as set out above comprise rental income and sales proceeds of properties, revenue from golf and leisure operations, loan financing income, dividend income from investments held-for-trading and net gain from disposal of investments held-for-trading.
(3) Turnover and revenue of golf and leisure segment as set out above comprise rental income and other revenue from golf and leisure operations.

4. NET GAIN (LOSS) ON FINANCIAL INSTRUMENTS

Increase (decrease) in fair values of:
– investments held-for-trading
– derivatives embedded in convertible bonds
Dividend income on
– available-for-sale investments
– investments held-for-trading
Gain (loss) on disposal of available-for-sale investments
Net gain on disposal of investments held-for-trading
Gain on disposal of convertible bonds
Impairment losses on available-for-sale investments

Six months ended
30th September
2009
2008
HK$’000
HK$’000
36,482
(10,724)
–
(3,247)
16,426
1,533
242
272
2,040
(4,299)
41,363
–
–
3,103
–
(31,171)
96,553
(44,533)

5. REVERSAL OF WRITE-DOWN ON PROPERTIES HELD FOR SALE

During the period, the directors conducted a review of the Group’s properties held for sale and determined that the carrying amount of the asset should be increased back to the original cost of the asset, due to increase of market values based on the valuation report conducted by RHL Appraisal Limited, an independent professional valuer. The valuation was arrived at by reference to market evidence of transaction prices for similar properties in the same locations and conditions and have taken into account the cost expended and to be expended to complete the development. Accordingly, a reversal of impairment losses of HK$92,591,000 have been recognised as income immediately.

– I-86 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

6. FINANCE COSTS

Interest on: Bank and other borrowings wholly repayable within five years Obligations under finance leases Effective interest on convertible note payables	Six months ended 30th September 2009 2008 HK$’000 HK$’000 6,707 3,685 14 12 53,840 49,976 60,561 53,673	Six months ended 30th September 2009 2008 HK$’000 HK$’000 6,707 3,685 14 12 53,840 49,976 60,561 53,673
		53,673

7. TAXATION

The tax credit represents deferred tax credit on accelerated tax depreciation for both periods. No provision for Hong Kong Profits Tax has been made in the condensed consolidated financial statements for both periods as the Company’s subsidiaries either incurred tax losses or utilised the tax losses brought forward to offset the assessable profits.

Hong Kong Profits Tax is calculated at 16.5% (2008: 16.5%) of the estimated assessable profits for the six months ended 30th September, 2009.

Taxation arising in other jurisdictions is calculated at rates prevailing in the relevant jurisdictions.

8. PROFIT (LOSS) FOR THE PERIOD

	Six months ended	Six months ended
	30th September
	2009	2008
	HK$’000	HK$’000
Profit (loss) for the period has been arrived at
after charging (crediting):
Depreciation of property, plant and equipment	6,029	5,439
Release of prepaid lease payments of leasehold land	262	262
Amortisation of premium on prepaid lease payments of
leasehold land	1,368	1,368
Equity-settled share-based payments expenses	1,208	3,999
Loss on disposal of property, plant and equipment	73	117
Interest income	(18,217)	(25,073)

9. DIVIDENDS

No dividends were paid, declared or proposed during both periods.

The directors do not recommend the payment of an interim dividend in respect of the six months ended 30th September, 2009 (1.4.2008 to 30.9.2008: Nil).

– I-87 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

10. EARNINGS (LOSS) PER SHARE

The calculation of the basic and diluted earnings (loss) per share attributable to the owners of the Company is based on the following data:

Earnings (loss): Earnings (loss) for the purpose of basic earnings (loss) per share – profit (loss) for the period attributable to the owners of the Company Effect of dilutive potential ordinary shares – interest on convertible note payables Earnings (loss) for the purpose of diluted earnings (loss) per share Number of shares: Weighted average number of ordinary shares for the purpose of basic earnings (loss) per share Effect of dilutive potential ordinary shares – convertible note payables Weighted average number of ordinary shares for the purpose of diluted earnings (loss) per share	Six months ended 30th September 2009 2008 HK$’000 HK$’000 114,841 (118,782) 14,516 – 129,357 (118,782) 470,917,484 293,239,510 86,083,901 – 557,001,385 293,239,510	Six months ended 30th September 2009 2008 HK$’000 HK$’000 114,841 (118,782) 14,516 – 129,357 (118,782) 470,917,484 293,239,510 86,083,901 – 557,001,385 293,239,510
	470,917,484 86,083,901	293,239,510 –
	557,001,385

Note: The weighted average number of ordinary shares for the purpose of basic and diluted loss per share for the prior period has been adjusted for the effect of capital reorganisation effective on 16th March, 2009.

The calculation of diluted earnings (loss) per share for the six months ended 30th September, 2009 and 2008 has not assumed the exercise of the share options and warrants as the exercise prices of those options and warrants are higher than the average market price for shares during both periods.

The calculation of diluted loss per share for the six months ended 30th September, 2008 has not assumed the conversion of the Company’s convertible note payables as these potential ordinary shares are anti-dilutive during that period.

11. PROPERTY, PLANT AND EQUIPMENT

During the period, the Group spent approximately HK$3,951,000 (1.4.2008 to 30.9.2008: HK$12,517,000) on acquisition of property, plant and equipment.

In addition, the Group disposed of certain property, plant and equipment with a carrying amount of HK$159,000 (1.4.2008 to 30.9.2008: HK$242,000) for proceeds of HK$86,000 (1.4.2008 to 30.9.2008: HK$125,000), resulting in a loss on disposal of HK$73,000 (1.4.2008 to 30.9.2008: HK$117,000).

– I-88 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

12. INVESTMENT PROPERTIES/PROPERTIES UNDER DEVELOPMENT

As detailed in note 2, as a result of the adoption of amendments to HKAS 40 Investment Property, the Group’s properties under development has been reclassified to investment properties at 1st April, 2009.

The fair value of the Group’s investment properties at 30th September, 2009 and 1st April, 2009 have been arrived at on a basis of valuations carried out on that date by RHL Appraisal Limited, an independent professional valuer. The valuation was arrived at by reference to market evidence of transaction prices for similar properties in the same locations and conditions and have taken into account the cost expended and to be expended to complete the development. The resulting increase in fair value of investment properties of HK$31,758,000 has been recognised directly in profit or loss for the six months ended 30th September, 2009 (2008: Nil).

13. INTEREST IN JOINT VENTURES

Jointly controlled entity:

During the period, Surplus Win Enterprises Limited (“Surplus Win”), a jointly controlled entity of the Group, entered into a sale and purchase agreement with a third party to acquire 80% of share capital in Double Diamond International Limited (“Double Diamond”) at a consideration of HK$24 million. Double Diamond is a company incorporated in the British Virgin Islands and its principal activity is operating a pier located in Macau.

The Group has advanced HK$12 million to Surplus Win to finance the acquisition of Double Diamond. The advance was unsecured and interest free. In the opinion of the directors, the amount will not be repaid within twelve months from the end of the reporting period and is therefore classified as non-current asset. As the recoverable amount of the advance to Surplus Win is expected to be less than its carrying value, an impairment loss of approximately HK$10,700,000 was recognised for the period. The recoverable amount of this advance is determined based on the net cash flows from operations estimated by management for the coming five years.

Jointly controlled operation:

Interest in properties held for development Loan to a joint venture	30.9.2009 HK$’000 15,130 36,641 51,771	31.3.2009 HK$’000 15,130 29,629
		44,759

The loan is unsecured, interest bearing at prevailing market rate in the People’s Republic of the China (the “PRC”) with an effective interest rate of 5.4% (31.3.2009: 5.4%) per annum and will not be repaid until completion of the development project. In the opinion of the directors, the loan will not be repaid within twelve months from the end of the reporting period and is therefore classified as non-current asset.

– I-89 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

14. INTERESTS IN ASSOCIATES/UNSECURED LOANS AND INTEREST DUE FROM ASSOCIATES

Cost of investment in associates, unlisted Share of post-acquisition losses, net of dividend received Loans and interests due from associates Less: Loss allocated in excess of cost of investment	30.9.2009 HK$’000 249,497 (37,287) 212,210	31.3.2009 HK$’000 169,202 (34,393
		134,809

	1,049,903 (56,216)	1,130,198 (56,216
	993,687	1,073,982

The loans to associates are unsecured, have no fixed repayment terms and are non-interest bearing except for an amount of approximately HK$281,150,000 (31.3.2009: HK$281,150,000) which carries interest at 5% (31.3.2009: 5% to 5.25%) per annum. The effective interest rate on the interest-free amounts was 5% (31.3.2009: 8%) per annum. In the opinion of the directors, the amounts will not be repaid within twelve months from the end of the reporting period and are therefore classified as non-current asset.

15. DEBTORS, DEPOSITS AND PREPAYMENTS

The Group allows credit period ranging from 0 to 30 days to its trade customers. The following is an analysis of trade debtors by age, presented based on the invoice date:

Trade debtors aged: 0 – 60 days 61 – 90 days Over 90 days Refundable earnest monies Other debtors, deposits and prepayments	30.9.2009 HK$’000 694 111 2,962	31.3.2009 HK$’000 864 431 4,117
	3,767 436,261 120,585	5,412 388,461 109,275
	560,613	503,148

The refundable earnest monies represent monies paid for acquisition of interests in properties located in the PRC, Macau and Vietnam. Included in the balance is an amount of HK$362,191,000 (31.3.2009: HK$342,191,000) paid by the Group for the negotiation of possible acquisition of ownership interest in properties located in the PRC. Subsequent to the end of the reporting period, a sale and purchase agreement has been signed. Details of the acquisition are set out in note 22(ii).

– I-90 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

16. CREDITORS, DEPOSITS AND ACCRUED CHARGES

The following is an analysis of trade creditors by age, presented based on the invoice date:

Trade creditors aged: 0 – 60 days 61 – 90 days Over 90 days Other creditors, deposits and accrued expenses	30.9.2009 HK$’000 921 282 872	31.3.2009 HK$’000 763 447 799
	2,075 95,694	2,009 70,038
	97,769	72,047

17. BANK AND OTHER BORROWINGS

During the period, the Group obtained new bank and other loans amounting to HK$374,753,000 (1.4.2008 to 30.9.2008: HK$20,247,000) of which a loan note of HK$174,608,000 (1.4.2008 to 30.9.2008: Nil) was issued as partial consideration for the acquisition of subsidiaries. The new loans carry interest at variable market rates ranging from 2.14% to 6.00% per annum and are repayable in year 2010 to 2013. The Group repaid bank and other borrowings of HK$160,783,000 during the period (1.4.2008 to 30.9.2008: HK$35,202,000).

18. SHARE CAPITAL

Ordinary shares of HK$0.01 each Authorised: At 1st April, 2009 and 30th September, 2009 Issued and fully paid: At 1st April, 2009 and 30th September, 2009	Number of shares 40,000,000,000 470,917,484	Amount HK$’000 400,000

		4,709

19. ACQUISITION OF ASSETS THROUGH ACQUISITION OF SUBSIDIARIES

On 5th June, 2009, the Group completed the acquisition of the entire share capital and shareholders’ loans of Favor Gain Group Limited, Charm Noble Group Limited and Adventura International Limited at a total consideration of HK$257,887,000 and incurred transaction cost of HK$2,448,000.

– I-91 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

The assets and liabilities acquired are as follows:

Assets and liabilities acquired: Properties held for sale Debtors Creditor, deposits and accrued charge Other loan Loans from shareholders Assignment of loans from shareholders Net assets acquired Total consideration satisfied by: Cash Loan note Deposit paid in prior period Net cash outflow arising on acquisition during the period: Cash consideration paid Expense incurred for the acquisition 20. CAPITAL AND OTHER COMMITMENTS Capital expenditure contracted for but not provided in the condensed consolidated financial statements in respect of acquisition of property, plant and equipment Other commitments: – acquisition of a land use right – acquisition of subsidiaries – loan to an associate – loan to a joint venture	30.9.2009 HK$’000 33,741	HK$’000 316,047 924 (4,814) (54,270) (245,439) 12,448 245,439 257,887 36,035 174,608 47,244 257,887 33,587 2,448 36,035 31.3.2009 HK$’000 27,807 5,000 210,400 15,000 15,880 246,280 274,087
	5,000 – 15,000 8,868 28,868	5,000 210,400 15,000 15,880
		246,280
	62,609

– I-92 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

21. RELATED PARTY DISCLOSURES

(i) Compensation of key management personnel:

The remunerations of directors in respect of the period are as follows:

Short-term benefits Share-based payments	Six months ended 30th September 2009 2008 HK$’000 HK$’000 6,556 7,584 808 2,826 7,364 10,410	Six months ended 30th September 2009 2008 HK$’000 HK$’000 6,556 7,584 808 2,826 7,364 10,410
		10,410

The remunerations of directors were determined by the remuneration committee having regard to the performance of individuals and market trends.

(ii) Related party transactions:

During the period, the Group had the following transactions with related parties:

			Six months	ended
		Nature of	30th September
Related parties		transactions	2009	2008
	Notes		HK$’000	HK$’000
Associates:
Orient Town Limited		Interest income	7,117	7,312
Empresa De Fomento Industrial E		Management fee paid	–	152
Comercial Conco´rdia S.A.
Orient Town Project Management		Management fee	60	60
Limited		received
Other related companies:
Great Intelligence Holdings Limited	(a)	Rental and related	1,577	1,341
(“Great Intelligence”)		building
		management fee
		paid
Wing On Travel (Holdings) Limited	(b)	Interest income	1,404	1,866
(“Wing On”) and its subsidiary

Notes:

(a) The ultimate holding company of Great Intelligence has significant influence on the Group.
(b) Mr. Cheung Hon Kit, an executive director of the Company is also a director of Wing On.

– I-93 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

22. EVENTS AFTER THE END OF THE REPORTING PERIOD

(i) On 5th November, 2009, a subsidiary of the Company entered into an agreement with an independent third party (the “JV partner”) in relation to the formation of a joint venture company (the “JV Company”). It is intended that the JV Company will be principally engaged in the development and management of a hot spring and resort project in Guiyang, the provincial capital of Guizhou, the PRC. The registered capital of the JV Company is RMB100.0 million (equivalent to approximately HK$113.6 million), to which the Group and the JV partner have contributed RMB45.0 million (equivalent to approximately HK$51.1 million) and RMB55.0 million (equivalent to approximately HK$62.5 million) respectively by way of cash in proportion to their respective equity interests of 45% and 55% in the JV Company. Upon the establishment of the JV company, it becomes an associate of the Group. Please refer to the Company’s announcement dated 5th November, 2009 for further details.
(ii) In December 2009, the Group entered into two sale and purchase agreements (the “Agreements”) to acquire a company which owns a parcel of land in Guangzhou, the PRC, for property development purpose. The consideration for the acquisition is approximately HK$960.0 million. Details of the Agreements will be disclosed in an announcement to be released by the Company.

4. FINANCIAL AND TRADING PROSPECTS

With the stable economic growth and the national policy of stimulating internal consumptions, the demand for resorts and leisure hospitality is anticipated to continue to soar in the near future in the PRC. The Board believes it is an opportune time to further invest in the JV Company which engages in the development and management of a hot spring and resort project in Guiyang. Together with the Group’s know-how and solid experience in resorts and leisure business and the continued stable growth of the economy, the management of the Group is confident that this investment will have a positive impact on the earnings and the cashflow of the Group in near future when the opportune time comes.

5. INDEBTEDNESS STATEMENT

(a) Borrowings

At the close of business on 30th November, 2009, being the latest practicable date for the purpose of preparing this indebtedness statement, the Group had the following borrowings:

Secured bank borrowings Obligations under finance leases	HK$’000 514,938 269
	515,207

The secured bank borrowings and obligations under finance leases were secured by the Group’s property, plant and equipment, investment properties, properties held for sale and bank deposits with an aggregate carrying amount of approximately HK$1,138.8 million at 30th November, 2009.

– I-94 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

(b) Debt securities

At the close of business on 30th November, 2009, the Group had the following outstanding convertible notes:

Convertible notes issued on: – 11th August, 2005 – 8th June, 2006 – 15th June, 2006	Principal amount Carrying amount of debt component at 30th November, 2009 Conversion price HK$’000 HK$’000 HK$ 471,050 498,316 5.675 17,476 17,836 5.675 906,000 883,316 9.025 1,394,526 1,399,468

Save as aforesaid and apart from intra-group liabilities and normal trade payables and bills payable, as at the close of business on 30th November, 2009, none of the companies of the Group had any outstanding mortgages, charges, debentures, loan capital, bank loans and overdrafts, debt securities or other similar indebtedness, finance leases or hire purchase commitments, liabilities under acceptances or acceptance credits or any guarantees or other material contingent liabilities.

For the purpose of the above statement of indebtedness, foreign currency amounts have been translated into Hong Kong dollars at the rates of exchange prevailing at the close of business on 30th November, 2009.

6. WORKING CAPITAL

The Directors are of the opinion that, after taking into account of its presently available financial resources and the available banking facilities, the Group will have sufficient working capital for its business for the next twelve months from the date of this circular in the absence of unforeseen circumstances.

– I-95 –

APPENDIX II FINANCIAL INFORMATION ON THE JV COMPANY

1. ACCOUNTANTS’ REPORT ON THE JV COMPANY

The following is the text of a report, prepared for inclusion in this circular, received from Deloitte Touche Tohmatsu, the independent reporting accountants.

==> picture [68 x 51] intentionally omitted <==

香港金鐘道88號 35/F One Pacific Place 太古廣場一座35樓 88 Queensway Hong Kong

25th January, 2010

The Directors

ITC Properties Group Limited

Dear Sirs,

We set out below our report on the financial information (the “Financial Information”) regarding 貴州宏德置業有限公司 (Guizhou Hong De Real Estate Co., Ltd.) (formerly known as 貴州宏德商務咨詢有限公司 (Guizhou Hong De Business Consulting Co., Ltd.)) (the “JV Company”) for the period from 18th November, 2009 (date of establishment) to 31st December, 2009 (the “Relevant Period”) for inclusion in the circular of ITC Properties Group Limited (the “Company”) dated 25th January, 2010 (the “Circular”) issued in connection with the maximum additional capital contribution to the JV Company.

The JV Company is a sino-foreign joint venture company with limited liability established in the People’s Republic of China (the “PRC”) on 18th November, 2009. Its registered office and principal place of business is located at 中國貴州省貴陽市烏當區新添大道310號 and is principally engaged in the development and management of a hot spring and resort project in Guiyang, the PRC.

The joint venture partners of the JV Company are ITC (China) Properties Group Limited (“ITC China”), an indirect wholly-owned subsidiary of the Company, and 貴州宏能溫泉旅游開發有限公司 (Guizhou Hong Neng Hot Spring Resort Tourism Development Company Limited) (“Hong Neng”), a company incorporated in the PRC with limited liability. Hong Neng and ITC China owned 55% and 45% registered capital of the JV Company respectively.

For the purpose of this report, the directors of the JV Company have prepared the financial statements of the JV Company for the Relevant Period (“Underlying Financial Statements”) in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”). We have audited the Underlying Financial Statements in accordance with Hong Kong Standards on Auditing issued by the HKICPA and have examined the Underlying Financial Statements in accordance with the Auditing Guideline 3.340 “Prospectuses and the Reporting Accountant” as recommended by the HKICPA.

– II-1 –

APPENDIX II

FINANCIAL INFORMATION ON THE JV COMPANY

The Financial Information set out in this report has been prepared from the Underlying Financial Statements. No adjustments are considered necessary to adjust the Underlying Financial Statements for the preparation of the Financial Information.

The preparation of the Underlying Financial Statements is the responsibility of the directors of the JV Company. The directors of the Company are responsible for the contents of the Circular in which this report is included. It is our responsibility to compile the Financial Information set out in this report from the Underlying Financial Statements, to form an independent opinion on the Financial Information and to report our opinion to you.

In our opinion, the Financial Information gives, for the purpose of this report, a true and fair view of the state of affairs of the JV Company as at 31st December, 2009 and of its loss and cash flows for the Relevant Period.

A. FINANCIAL INFORMATION

STATEMENT OF COMPREHENSIVE INCOME

FOR THE PERIOD FROM 18TH NOVEMBER, 2009 (DATE OF ESTABLISHMENT) TO 31ST DECEMBER, 2009

NOTE Bank interest income Administrative expenses Loss and total comprehensive expense for the period 7	RMB’000 16 (371) (355)

– II-2 –

APPENDIX II

FINANCIAL INFORMATION ON THE JV COMPANY

STATEMENT OF FINANCIAL POSITION

AS AT 31ST DECEMBER, 2009

NOTES Non-current assets Equipment 9 Prepayment for a land use right 10 Current assets Deposits and prepayments Bank balances and cash Current liabilities Other payables 11 Amount due to a venturer 12 Net current liabilities Capital and reserve Paid-up capital 13 Accumulated loss	RMB’000 14 110,298 110,312 1,214 619 1,833 (11,500) (1,000) (12,500) (10,667) 99,645 100,000 (355) 99,645

– II-3 –

APPENDIX II

FINANCIAL INFORMATION ON THE JV COMPANY

STATEMENT OF CHANGES IN EQUITY

FOR THE PERIOD FROM 18TH NOVEMBER, 2009 (DATE OF ESTABLISHMENT) TO 31ST DECEMBER, 2009

Capital injection upon establishment Loss and total comprehensive expense for the period At 31st December, 2009	Paid-up capital RMB’000 100,000 – 100,000	Accumulated loss RMB’000 – (355) (355)	Total RMB’000 100,000 (355) 99,645

– II-4 –

APPENDIX II

FINANCIAL INFORMATION ON THE JV COMPANY

STATEMENT OF CASH FLOWS

FOR THE PERIOD FROM 18TH NOVEMBER, 2009 (DATE OF ESTABLISHMENT) TO 31ST DECEMBER, 2009

OPERATING ACTIVITIES
Loss for the period
Adjustment for:
Interest income
Operating cash flows before working capital changes
Increase in deposits and prepayments
NET CASH USED IN OPERATING ACTIVITIES
INVESTING ACTIVITIES
Prepayment for a land use right
Purchase of equipment
Interest received
NET CASH USED IN INVESTING ACTIVITIES
FINANCING ACTIVITIES
Proceeds from paid-up capital
Advances from independent third parties
Advance from a venturer
NET CASH FROM FINANCING ACTIVITIES
NET INCREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD,
represented by bank balances and cash

RMB’000
(355)
(16)
(371)
(1,214)
(1,585)
(110,298)
(14)
16
(110,296)
100,000
11,500
1,000
112,500
619
619

– II-5 –

APPENDIX II

FINANCIAL INFORMATION ON THE JV COMPANY

NOTES TO THE FINANCIAL INFORMATION

1. GENERAL INFORMATION

The Financial Information is presented in Renminbi, which is the same as the functional currency of the JV Company.

2. BASIS OF PREPARATION OF FINANCIAL INFORMATION

The Financial Information has been prepared on a going concern basis because the venturers agreed to contribute an additional RMB100.0 million as registered capital of the JV Company pursuant to the Registered Capital Increase (as defined in note 13 below) and the directors of the JV Company considered that external financing can be obtained by pledging the JV Company’s assets (after obtaining the legal title of the land use right) to enable the JV Company to meet in full its financial obligations as they fall due for the foreseeable future. Furthermore, additional funding of RMB300.0 million will be contributed by the venturers to support the operation of the JV Company after the proposed increases in the total investment amount and the registered capital under the memorandum dated 6th January, 2010 (as disclosed in Part B) approved.

3. APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS

The Financial Information has been prepared in accordance with HKFRSs issued by the HKICPA, which are effective for the JV Company’s financial period beginning on 18th November, 2009.

At the date of this report, the HKICPA has issued the following new and revised standards, amendments or interpretations (“new HKFRSs”) that are not yet effective.

HKFRSs (Amendments)	Improvements to HKFRSs issued in 20091
HKAS 24 (Revised)	Related Party Disclosures2
HKAS 32 (Amendment)	Classification of Right Issues3
HKFRS 1 (Amendment)	Additional Exemptions for First-time Adopters1
HKFRS 2 (Amendment)	Group Cash-settled Share-based Payment Transactions1
HKFRS 9	Financial Instruments4
HK(IFRIC) – Int 14 (Amendment)	Prepayment of a Minimum Funding Requirement2
HK(IFRIC) – Int 19	Extinguishing Financial Liabilities with Equity
	Instruments5

1 Effective for annual periods beginning on or after 1st January, 2010

2 Effective for annual periods beginning on or after 1st January, 2011

3 Effective for annual periods beginning on or after 1st February, 2010

4 Effective for annual periods beginning on or after 1st January, 2013

5 Effective for annual periods beginning on or after 1st July, 2010

The JV Company has not early adopted the new HKFRSs in the preparation of the Financial Information. The directors of the JV Company anticipate that the application of the new HKFRSs will have no material effect on the financial statements of the JV Company.

4. SIGNIFICANT ACCOUNTING POLICIES

The Financial Information has been prepared on the historical cost basis as explained in the accounting policies set out below.

Revenue recognition

Equipment

Equipment held for administrative purposes is stated at cost less subsequent accumulated depreciation and accumulated impairment losses.

– II-6 –

APPENDIX II

FINANCIAL INFORMATION ON THE JV COMPANY

Depreciation is provided to write off the cost of items of equipment over their estimated useful lives and after taking into account of their estimated residual value, using the straight-line method.

Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the period. Taxable profit differs from profit as reported in the statement of comprehensive income because it excludes items that are never taxable or deductible. The JV Company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax base used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the JV Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax is recognised in profit or loss, except when it relates to items that are recognised in other comprehensive income or directly to equity, in which case the deferred tax is also recognised in other comprehensive income or directly in equity respectively.

Financial instruments

Financial assets are recognised on the statement of financial position when the JV Company becomes a party to the contractual provisions of the instrument. Financial assets are initially measured at fair value.

Financial assets

The JV Company’s financial asset is bank balances and cash.

Bank balances and cash are carried at amortised cost using the effective interest method.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset, or, where appropriate, a shorter period to the net carrying amount of the asset on initial recognition.

Financial liabilities and equity

Financial liabilities and equity instruments issued by the JV Company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.

An equity instrument is any contract that evidences a residual interest in the assets of the JV Company after deducting all of its liabilities.

The JV Company’s financial liabilities include other payables and amount due to a venturer which are measured at amortised cost.

– II-7 –

APPENDIX II

FINANCIAL INFORMATION ON THE JV COMPANY

Effective interest method

Interest expense is recognised on an effective interest basis.

Equity instruments

Equity instruments issued by the JV Company are recorded at the proceeds received, net of direct issue costs.

5. CAPITAL RISK MANAGEMENT

The JV Company manages its capital to ensure that the JV Company will be able to continue as a going concern while maximising the return to shareholders through the optimisation of the debt and equity balance.

The capital structure of the JV Company consists of its equity, comprising paid-up capital.

Directors of the JV Company review the capital structure on a regular basis. As part of this review, directors of the JV Company consider the cost of capital and the risks associated with the capital. Based on recommendations of the directors, the JV Company will balance its overall capital structure through new capital injection as well as the raise of new debt.

6. FINANCIAL INSTRUMENT

(a) Category of financial instrument

==> picture [371 x 84] intentionally omitted <==

----- Start of picture text -----

RMB’000
Financial assets
Loans and receivables 619
Financial liabilities
Amortised cost 12,500
----- End of picture text -----

(b) Financial risk management objectives and policies

The JV Company’s major financial instruments are bank balances, other payables and amount due to a venturer. The risks associated with this financial instrument and the policies on how to mitigate these risks are set out below.

Market risk

Interest rate risk

The JV Company’s bank balances carry floating-rate interest and expose the JV Company to cash flow interest rate risk due to the fluctuation of the prevailing market interest rates. The directors of the JV Company consider the JV Company’s exposure is not significant.

The JV Company currently does not have any interest rate hedging policy in relation to interest rate risks. The directors monitor the JV Company’s exposure on an ongoing basis and will consider hedging significant interest rate risks should the needs arise.

No sensitivity analysis is presented since in the opinion of the directors, the cash flow interest rate risk arising from floating-rate bank balances only exposes the JV Company to minimal interest rate risk.

– II-8 –

APPENDIX II

FINANCIAL INFORMATION ON THE JV COMPANY

Credit risk

At 31st December, 2009, the JV Company does not have significant exposure to credit risk as the directors of the JV Company consider that the counterparties are banks with high credit rating assigned by international credit-rating agencies.

Liquidity risk

In the management of the liquidity risk, the JV Company monitors and maintains a level of cash and cash equivalents deemed adequate by management to finance the JV Company’s operations and mitigate the effects of fluctuations in cash flows.

The JV Company’s financial liabilities (comprising other payables and amount due to a venturer) are repayable on demand. The undiscounted cash flows of the financial liabilities based on the earliest date on which the JV Company can be required to pay approximate its carrying amount at the end of the reporting period.

(c) Fair value

The fair values of financial assets and financial liabilities are determined in accordance with generally accepted pricing models based on discounted cash flow analysis using prices or rates from observable current market transactions as input.

Directors of the JV Company consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the financial statements approximate their fair value.

7. LOSS FOR THE PERIOD

RMB’000

Loss for the period has been arrived at after charging:

Auditor’s	remuneration	10
Directors’	remuneration	–

8. TAXATION

No provision for PRC Profits Tax has been made in the Financial Information as the JV Company has no assessable profit for the period.

The taxation for the period can be reconciled to the loss for the period per the statement of comprehensive income as follows:

RMB’000

Loss for the period Tax at PRC Enterprise Income Tax rate of 25% Tax effect of income not taxable for tax purpose Tax effect of tax losses not recognised Taxation for the period	(355)

	(89) (4) 93
	–

– II-9 –

FINANCIAL INFORMATION ON THE JV COMPANY

APPENDIX II

9. EQUIPMENT

COST At 18th November, 2009 (date of establishment) Additions At 31st December, 2009 DEPRECIATION At 18th November, 2009 (date of establishment) and 31st December, 2009 CARRYING VALUE At 31st December, 2009	RMB’000 – 14
	14
	–
	14

The above items of equipment are depreciated on a straight-line basis at 18% per annum.

10. PREPAYMENT FOR A LAND USE RIGHT

The amount represents consideration of approximately RMB104.5 million paid to the local government for the acquisition of a land use right in Guiyang, the PRC pursuant to a sale and purchase agreement dated 11th December, 2009 and other directly related expenses. In order to obtain the legal title of the land use right, the JV Company has to complete the demolition of the existing structure on the land and resettlement of the existing occupants before 11th December, 2010. After the satisfactory completion of the demolition and resettlement works, the approval certificate for land development (建設用地批准書) will be granted to the JV Company and the legal title of the land use right will be transferred to the JV Company. The JV Company has commenced the demolition and resettlement works subsequent to 31st December, 2009.

11. OTHER PAYABLES

The amounts, which represent the advances from independent third parties, are unsecured, interest-free and repayable on demand.

12. AMOUNT DUE TO A VENTURER

The amount is unsecured, interest-free and repayable on demand.

13. PAID-UP CAPITAL

The JV Company was established on 18th November, 2009 with a registered and paid-up capital of RMB100,000,000. On 13th January, 2010, approval was obtained from the relevant government authority to increase the registered capital of the JV Company from RMB100,000,000 to RMB200,000,000 (the “Registered Capital Increase”). Up to the latest practicable date prior to the printing of this circular, the paid-up capital was RMB100,000,000 as the additional capital has not yet been injected by the venturers. The Registered Capital Increase shall be contributed by ITC China and Hong Neng in accordance with their respective equity interests in the JV Company, i.e. RMB45.0 million contributed by ITC China and RMB55.0 million contributed by Hong Neng, 20% of which is payable on the filing and registration of the Registered Capital Increase with the relevant PRC authorities and the balance is payable within two years of the issue of the new business licence of the JV Company reflecting the Registered Capital Increase.

14. CAPITAL COMMITMENT

As at 31st December, 2009, capital expenditure in respect of the development of the hot spring and resort development project currently named 樂灣國際溫泉城建設項目 (Le Bay International Hot Spring City Development Project) (the “Project”) contracted for but not provided in the financial statements amounted to approximately RMB4.8 million.

– II-10 –

APPENDIX II FINANCIAL INFORMATION ON THE JV COMPANY

15. OTHER COMMITMENT

The JV Company has agreed to reimburse Hong Neng the expenditure incurred by Hong Neng, subject to verification by ITC China, in relation to the preliminary work of the Project up to a maximum of RMB160.0 million.

B. EVENT AFTER THE REPORTING PERIOD

On 6th January, 2010, a memorandum was entered into by the two venturers to increase the total investment amount of the JV Company to RMB500.0 million and to further increase the registered capital to RMB400.0 million. The increase in the total investment amount and registered capital is conditional upon, amongst others, the approval by the government authority and the shareholders of the Company at its forthcoming special general meeting.

Yours faithfully,

Deloitte Touche Tohmatsu

Certified Public Accountants Hong Kong

– II-11 –

APPENDIX II FINANCIAL INFORMATION ON THE JV COMPANY

2. MANAGEMENT DISCUSSION AND ANALYSIS

Set out below is the management discussion and analysis on the JV Company for the period from 18th November, 2009 (date of incorporation) to 31st December, 2009.

Business review

The sole business of the JV Company is the development of the Project.

On 4th December, 2009, the JV Company succeeded in bidding the Land which is situated in the southern part of Dong Feng County, Wudang District, Guiyang City, Guizhou Province, the PRC. The Land is proposed to be developed for residential, commercial, cultural, recreational and resort uses. As at the Latest Practicable Date, the Project is in the design and planning stage and construction is anticipated to commence in or around May 2010.

Liquidity and capital resources

Financial Position

Since the JV Company was only incorporated on 18th November, 2009, its working capital as at 31st December, 2009 was mainly financed by capital contributions from its equity holders of RMB100.0 million (equivalent to approximately HK$113.6 million).

Securities and Guarantees

As at 31st December, 2009, the JV Company had not made any pledge of or created any security over its assets and had not provided any corporate guarantee.

Contingent Liabilities

As at 31st December, 2009, the JV Company did not have any contingent liability.

Capital Commitment

As at 31st December, 2009, the JV Company had capital expenditure in respect of the Project contracted for but not provided in the financial statements amounted to approximately RMB4.8 million (equivalent to approximately HK$5.5 million).

Other Commitment

The JV Company shall reimburse Hong Neng the expenditure incurred by Hong Neng, subject to verification by ITC China, in relation to the preliminary work of the Project up to a maximum amount of RMB160.0 million (equivalent to approximately HK$181.8 million), of which approximately RMB60.0 million (equivalent to approximately HK$68.2 million) will only be reimbursed to the extent of the refund, set-off or waiver received or enjoyed by the JV Company from the government authorities for the acquisition of the Land.

– II-12 –

APPENDIX II

FINANCIAL INFORMATION ON THE JV COMPANY

Exchange Rate Risk

The sole operations of the JV Company are the development of the Project, which is still in design and planning stage but it is expected that most transactions to be entered into in relation to the development of the Project will be denominated in Renminbi. The JV Company did not have any foreign exchange exposure as at 31st December, 2009 and currently does not have a foreign currency hedging policy.

Credit Risk

The JV Company’s credit risk is primarily attributable to the deposit paid in respect of the agreement for the development of the hot spring under the Project. The JV Company has no significant concentrations of credit risk. As at 31st December, 2009, the JV Company’s rights to the deposit paid are well protected under the relevant agreement and sufficient follow-up actions are taken so as to minimise the credit risk.

Acquisition/Disposal of Subsidiary

During the period under review, there was no acquisition and/or disposal of subsidiary by the JV Company.

Staff and remuneration policy

As at 31st December, 2009, the JV Company did not have any employees.

– II-13 –

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

1. UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

A. INTRODUCTION

On 5th November, 2009, ITC (China) Properties Group Limited (“ITC China”), an indirect wholly-owned subsidiary of the Company, entered into an agreement (the “Agreement”) with Guizhou Hong Neng Hot Spring Resort Tourism Development Company Limited (“Hong Neng”), an independent third party, in respect of the formation of a sino-foreign joint venture company, namely Guizhou Hong De Real Estate Co., Ltd. (formerly known as Guizhou Hong De Business Consulting Co., Ltd.) (the “JV Company”) which would be principally engaged in the development and management of a hot spring and resort project in Guiyang, the People’s Republic of China (the “PRC”). Under the Agreement, the approved total investment amount of the JV Company is RMB200.0 million (equivalent to approximately HK$227.3 million) of which its registered capital is RMB100.0 million (equivalent to approximately HK$113.6 million). ITC China and Hong Neng would contribute RMB45.0 million (equivalent to approximately HK$51.1 million) and RMB55.0 million (equivalent to approximately HK$62.5 million) in cash in proportion to their respective equity interests of 45% and 55% as the registered capital of the JV Company. For ITC China, the total capital commitment is RMB90.0 million (equivalent to approximately HK$102.3 million) of which RMB45.0 million (equivalent to approximately HK$51.1 million) has been paid on 25th November, 2009. The remaining RMB45.0 million which represents the difference between the total investment amount and the registered capital would be contributed by ITC China and Hong Neng by way of shareholders’ loans in proportion to their respective equity interests in the JV Company or, if both parties agree, would be funded by external financing.

On 13th January, 2010, approval was obtained from the relevant government authority to increase the registered capital of the JV Company to RMB200.0 million (equivalent to approximately HK$227.3 million) (the “First Increase”). The First Increase shall be contributed by ITC China and Hong Neng in accordance with their respective equity interests in the JV Company, i.e. RMB45.0 million (equivalent to approximately HK$51.1 million) by ITC China and RMB55.0 million (equivalent to approximately HK$62.5 million) by Hong Neng, 20% of which is payable on the filing and registration of the First Increase with the relevant PRC authorities and the balance is payable within two years of the issue of the new business licence of the JV Company reflecting the First Increase. Up to the latest practicable date prior to the printing of this circular, the commitments under the First Increase has not yet been paid.

On 6th January, 2010, ITC China and Hong Neng entered into a memorandum (the “Memorandum”) proposing to increase the total investment amount of the JV Company from RMB200.0 million (equivalent to approximately HK$227.3 million) to RMB500.0 million (equivalent to approximately HK$568.2 million) (the “Investment Amount Increase”) and to further increase the registered capital of the JV Company from RMB200.0 million (equivalent to approximately HK$227.3 million) to RMB400.0 million (equivalent to approximately HK$454.6 million) (the “Registered Capital Increase”). The Registered

– III-1 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

Capital Increase is to be contributed in cash by ITC China and Hong Neng, in proportion to their respective equity interests of 45% and 55% in the JV Company, in the amount of RMB90.0 million (equivalent to approximately HK$102.3 million) and RMB110.0 million (equivalent to approximately HK$125.0 million), respectively, 20% of which is payable upon the filing and registration of the Registered Capital Increase and the Investment Amount Increase with the relevant PRC authorities and the balance is payable within two years from the date of the issue of a new business licence of the JV Company reflecting the Registered Capital Increase and the Investment Amount Increase. The difference between the new total investment amount and the new increased registered capital is to be made up in such manner and at such time as ITC China and Hong Neng shall agree, and may be by way of external financing. If external financing is not available or is not available on terms acceptable to both ITC China and Hong Neng within four years from the date of the issue of the new business licence of the JV Company, the difference shall be contributed by ITC China and Hong Neng in the form of shareholders’ loans in proportion to their respective equity interests in the JV Company, in which case such shareholders’ loans shall be interest-free, unsecured and have no fixed terms of repayment. The maximum additional capital contribution under the Memorandum on the part of ITC China is RMB135.0 million (equivalent to approximately HK$153.4 million) (the ”Maximum Further Contribution”).

The unaudited pro forma consolidated statement of assets and liabilities of the Group has been prepared based on the unaudited condensed consolidated statement of financial position of the Group as at 30th September, 2009, as extracted from the Company’s interim report for the six months then ended 30th September, 2009, and adjusted in accordance with the pro forma adjustments described in notes thereto as if the Maximum Further Contribution had been completed on 30th September, 2009.

The unaudited pro forma financial information is prepared, based on a number of assumptions, estimates and uncertainties and currently available information, to provide information on the Group as a result of completion of the Maximum Further Contribution. As it is prepared for illustrative purposes only, it does not purport to present the financial position of the Group upon the implementation of the Maximum Further Contribution or at any future date.

– III-2 –

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

B. UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES OF THE GROUP AS AT 30TH SEPTEMBER, 2009

Non-current assets Property, plant and equipment Prepaid lease payments of leasehold land Premium on prepaid lease payments of leasehold land Investment properties Available-for-sale investments Interests in joint ventures Advance to a jointly controlled entity Interests in associates Unsecured loans and interest due from associates Debt portion of convertible bonds Deposits and expenses paid for acquisition of a land use right Other loan receivables Current assets Inventories Properties held for sale Debt portion of convertible bonds Financial assets at fair value through profit or loss Debtors, deposits and prepayments Other loan receivables Prepaid lease payments of leasehold land Amounts due from associates Unsecured loans and interest due from a related company Pledged bank deposits Bank balances and cash	The Group Pro forma adjustments HK$’000 HK$’000 Notes 183,958 20,557 110,190 221,000 51,568 51,771 1,300 212,210 114,687 1 993,687 38,722 2 38,984 47,275 3,852	The Group HK$’000 183,958 20,557 110,190 221,000 51,568 51,771 1,300 326,897 1,032,409 38,984 47,275 3,852
	1,936,352 2,545 948,380 1,179 189,522 560,613 173,014 530 2,426 49,841 42,200 145,730 (145,730) 1 and 2 2,115,980	2,089,761
		2,545 948,380 1,179 189,522 560,613 173,014 530 2,426 49,841 42,200 –
		1,970,250

– III-3 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

Current liabilities Creditors, deposits and accrued charges Contribution payable Amount due to a minority shareholder of a subsidiary Tax payable Convertible note payables – due within one year Obligations under finance leases – due within one year Bank and other borrowings – due within one year Net current assets Total assets less current liabilities Non-current liabilities Convertible note payables – due after one year Obligations under finance leases – due after one year Bank and other borrowings – due after one year Deferred tax liabilities Net assets	The Group Pro forma adjustments HK$’000 HK$’000 Note 97,769 – 7,679 3 256 11,626 513,795 83 12,729	The Group HK$’000 97,769 7,679 256 11,626 513,795 83 12,729
	636,258 1,479,722 3,416,074 867,097 200 378,999 27,547 1,273,843	643,937
		1,326,313
		3,416,074
		867,097 200 378,999 27,547
		1,273,843
	2,142,231	2,142,231

– III-4 –

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

C. NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

The adjustment reflects (i) the capital contribution of RMB90,000,000 (approximately HK$102,273,000) under the Registered Capital Increase arrangement and (ii) the additional investment cost of RMB10,925,000 (approximately HK$12,414,000) resulted from adjusting the interest-free advance to the JV Company to its fair value at initial recognition (see note 2).
The Memorandum provided that the difference between the new total investment amount of RMB500,000,000 (approximately HK$568,182,000) and the new registered capital of RMB400,000,000 (approximately HK$454,545,000) may be made up by way of external financing. If external financing is not available or is not available on terms acceptable to both ITC China and Hong Neng within four years from the date of the issue of the new business licence of the JV Company, the aforesaid difference shall be contributed by ITC China and Hong Neng in the form of interest-free, unsecured shareholders’ loans in proportion to their respective equity interests in the JV Company.

The adjustment reflects the shareholders’ loan advanced to the JV Company (on the basis that external financing is not available) of a principal amount of RMB45,000,000 (approximately HK$51,136,000) which is interest-free, unsecured and have no fixed terms of repayment. The shareholders’ loan is adjusted to its fair value of RMB34,075,000 (approximately HK$38,722,000) which is estimated by reference to a discount rate of 7.2% and an expected repayment term of four years. The fair value of the shareholders’ loan shall be estimated at initial recognition by reference to the applicable market interest rate and repayment schedule at the date the advance is made and is therefore subject to change.

If external financing is available, ITC China and Hong Neng will not be required to provide shareholders’ loans to the JV Company and this adjustment will not be required then.

Currently, the Group does not have any bank overdraft facility. Therefore, the difference between the Maximum Further Contribution of RMB135,000,000 (approximately HK$153,409,000) and bank balances of HK$145,730,000 is presented as contribution payable for illustrative purpose.

– III-5 –

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

2. ACCOUNTANTS’ REPORT ON UNAUDITED PRO FORMA FINANCIAL INFORMATION

The following is the text of a report, prepared for inclusion in this circular, received from Deloitte Touche Tohmatsu, the independent reporting accountants.

==> picture [64 x 49] intentionally omitted <==

TO THE DIRECTORS OF ITC PROPERTIES GROUP LIMITED

We report on the unaudited pro forma financial information of ITC Properties Group Limited (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”), which has been prepared by the directors of the Company for illustrative purposes only, to provide information about how the maximum additional capital contribution to Guizhou Hong De Real Estate Co., Ltd., a sino-foreign joint venture company established in the People’s Republic of China, might have affected the financial information presented, for inclusion in Appendix III of the circular of the Company dated 25th January, 2010 (the “Circular”). The basis of preparation of the unaudited pro forma financial information is set out on pages III-1 to III-5 of Appendix III to the Circular.

Respective responsibilities of directors of the Company and reporting accountants

It is the responsibility solely of the directors of the Company to prepare the unaudited pro forma financial information in accordance with paragraph 29 of Chapter 4 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and with reference to Accounting Guideline 7 Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars issued by the Hong Kong Institute of Certified Public Accountants.

It is our responsibility to form an opinion, as required by paragraph 29(7) of Chapter 4 of the Listing Rules, on the unaudited pro forma financial information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the unaudited pro forma financial information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

Basis of opinion

We conducted our engagement in accordance with Hong Kong Standard on Investment Circular Reporting Engagements 300 “Accountants’ Reports on Pro Forma Financial Information in Investment Circulars” issued by the Hong Kong Institute of Certified Public Accountants. Our work consisted primarily of comparing the unadjusted financial information with source documents, considering the evidence supporting the

– III-6 –

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

adjustments and discussing the unaudited pro forma financial information with the directors of the Company. This engagement did not involve independent examination of any of the underlying financial information.

We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the unaudited pro forma financial information has been properly compiled by the directors of the Company on the basis stated, that such basis is consistent with the accounting policies of the Group and that the adjustments are appropriate for the purpose of the unaudited pro forma financial information as disclosed pursuant to paragraph 29(1) of Chapter 4 of the Listing Rules.

The unaudited pro forma financial information is for illustrative purpose only, based on the judgments and assumptions of the directors of the Company, and, because of its hypothetical nature, does not provide any assurance or indication that any event will take place in future and may not be indicative of the financial position of the Group as at 30th September, 2009 or any future date.

Opinion

In our opinion:

a) the unaudited pro forma financial information has been properly compiled by the directors of the Company on the basis stated;
b) such basis is consistent with the accounting policies of the Group; and
c) the adjustments are appropriate for the purposes of the unaudited pro forma financial information as disclosed pursuant to paragraph 29(1) of Chapter 4 of the Listing Rules.

Deloitte Touche Tohmatsu

Certified Public Accountants Hong Kong, 25th January, 2010

– III-7 –

APPENDIX IV

GENERAL INFORMATION

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Group. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts the omission of which would make any statement herein misleading.

2. DISCLOSURE OF INTERESTS

(a) Interests of the Directors or chief executive of the Company

As at the Latest Practicable Date, the interests and short positions of the Directors or chief executive of the Company in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO), which (a) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO), or (b) were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or (c) were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) adopted by the Company, to be notified to the Company and the Stock Exchange, were as follows:

(i) Interests in the Shares and underlying Shares under equity derivatives (as defined in Part XV of the SFO)

					Number of
					underlying		Approximate
					Shares		percentage
	Long				(under equity		of the issued
	position/				derivatives		share capital
	Short		Number of		of the	Aggregate	of the
Name of Director	position	Capacity	issued Shares		Company)	interest	Company
							(%)
Mr. Cheung Hon Kit	Long	Beneficial	11,679,000		1,312,000	12,991,000	2.76
(“Mr. Cheung”)	position	owner			(Note 1)
Mr. Lai Tsan Tung, David	Long	Interest of		–	3,079,502	3,079,502	0.65
(“Mr. Lai”)	position	controlled			(Note 2)
		corporation

Notes:

Mr. Cheung, the chairman and an executive director of the Company, was the holder of 1,312,000 warrants of the Company which were issued by the Company on 5th August, 2008 and exercisable from 5th August, 2008 to 4th February, 2010 at the adjusted exercise price of HK$2.625 per warrant share.
Mr. Lai, an executive director of the Company, was deemed to be interested in 3,079,502 underlying Shares in respect of a principal amount of HK$17,476,177 zero coupon convertible notes due 2010 issued by the Company on 8th June, 2006 at the adjusted conversion price of HK$5.675 per share held by Green Label Investments Limited (“Green Label”) by virtue of his beneficial interest in the entire issued share capital of Green Label.

– IV-1 –

APPENDIX IV

GENERAL INFORMATION

(ii) Interests in the share options of the Company

Name of Director
Date of grant
Option period
Adjusted
exercise
price per
Share
HK$
Mr. Cheung
27th July, 2007
27th July, 2007 –
26th July, 2011
10.55
Mr. Chan Fut Yan
(“Mr. Chan”)
27th July, 2007
27th July, 2007 –
26th July, 2011
10.55
Mr. Cheung Chi Kit
27th July, 2007
27th July, 2007 –
26th July, 2011
10.55
Mr. Lai
27th July, 2007
27th July, 2007 –
26th July, 2011
10.55
Mr. Ma Chi Kong, Karl
27th July, 2007
27th July, 2007 –
26th July, 2011
10.55
Mr. Wong Chi Keung, Alvin
27th July, 2007
27th July, 2007 –
26th July, 2011
10.55
Mr. Kwok Ka Lap, Alva
27th July, 2007
27th July, 2007 –
26th July, 2011
10.55

Number of
share
options
Approximate
percentage of
the issued
share
capital of
the Company
(%)
761,280
0.16
444,080
0.09
317,200
0.06
190,320
0.04
570,960
0.12
95,160
0.02
95,160
0.02
2,474,160

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or chief executive of the Company had any interests or short positions in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO), which (a) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO, or (b) were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or (c) were required, pursuant to the Model Code adopted by the Company, to be notified to the Company and the Stock Exchange.

(b) Interests of Shareholders discloseable pursuant to the SFO

As at the Latest Practicable Date, so far as was known to the Directors or chief executive of the Company based on the register maintained by the Company pursuant to Part XV of the SFO, the following persons (other than a Director or chief executive of the Company) had, or were deemed or taken to have, interests or short positions in the shares and underlying shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or, were directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights

– IV-2 –

APPENDIX IV

GENERAL INFORMATION

to vote in all circumstances at general meetings of any other members of the Group or had any option in respect of such capital:

(i) Interests in the Shares

				Approximate
				percentage of
				the issued
	Long			share capital
	position/		Number of	of the
Name of Shareholder	Short position	Capacity	issued Shares	Company
				(%)
Loyal Concept Limited	Long position	Beneficial	76,402,763	16.22
(“Loyal Concept”)		owner	(Note 1)
Hanny Magnetics (B.V.I.)	Long position	Interest of	76,402,763	16.22
Limited (“Hanny		controlled	(Note 1)
Magnetics”)		corporation
Hanny Holdings Limited	Long position	Interest of	76,402,763	16.22
(“Hanny”)		controlled	(Note 1)
		corporation
Famex Investment	Long position	Interest of	76,402,763	16.22
Limited (“Famex”)		controlled	(Note 1)
		corporation
Mankar Assets Limited	Long position	Interest of	76,402,763	16.22
(“Mankar”)		controlled	(Note 1)
		corporation
Selective Choice	Long position	Beneficial	36,593,400	7.77
Investments Limited		owner	(Note 1)
(“Selective Choice”)

– IV-3 –

APPENDIX IV

GENERAL INFORMATION

Name of Shareholder Long position/ Short position Capacity ITC Investment Holdings Limited (“ITC Investment”) Long position Interest of controlled corporations ITC Corporation Limited (“ITC”) Long position Interest of controlled corporations Dr. Chan Kwok Keung, Charles (“Dr. Chan”) Long position Interest of controlled corporations Long position Beneficial owner Ms. Ng Yuen Lan, Macy (“Ms. Ng”) Long position Interest of spouse Stark Master Fund, Ltd. (“Stark Master”) Long position Beneficial owner Stark Investments (UK) Limited (“Stark UK”) Long position Investment manager	Number of issued Shares 112,996,163 (Note 1) 112,996,163 (Note 1) 112,996,163 (Note 1) 6,066,400 (Note 1) 119,062,563 119,062,563 (Note 1) 22,802,210 (Note 2) 30,420,633 (Note 3)	Approximate percentage of the issued share capital of the Company (%) 23.99 23.99 23.99 1.29
		25.28 25.28 4.84 6.46

– IV-4 –

APPENDIX IV

GENERAL INFORMATION

(ii) Interests in the underlying Shares under equity derivatives (as defined in Part XV of the SFO)

Name of Shareholder Long position/ Short position Capacity Loyal Concept Long position Beneficial owner Hanny Magnetics Long position Interest of controlled corporation Hanny Long position Interest of controlled corporation Famex Long position Interest of controlled corporation Mankar Long position Interest of controlled corporation Selective Choice Long position Beneficial owner ITC Investment Long position Interest of controlled corporations ITC Long position Interest of controlled corporations Dr. Chan Long position Interest of controlled corporations Long position Beneficial owner	Number of underlying Shares (under equity derivatives of the Company) 103,347,228 (Note 1) 103,347,228 (Note 1) 103,347,228 (Note 1) 103,347,228 (Note 1) 103,347,228 (Note 1) 9,792,099 (Note 1) 113,139,327 (Note 1) 113,139,327 (Note 1) 113,139,327 (Note 1) 761,920 (Note 1) 113,901,247	Approximate percentage of the issued share capital of the Company (%) 21.95 21.95 21.95 21.95 21.95 2.08 24.03 24.03 24.03 0.16
		24.19

– IV-5 –

APPENDIX IV

GENERAL INFORMATION

			Number of	Approximate
			underlying	percentage of
			Shares (under	the issued
	Long		equity	share capital
	position/		derivatives of	of the
Name of Shareholder	Short position	Capacity	the Company)	Company
				(%)
Ms. Ng	Long position	Interest of	113,901,247	24.19
		spouse	(Note 1)
Stark Master	Long position	Beneficial	23,875,536	5.07
		owner	(Note 2)
Stark UK	Long position	Investment	26,743,137	5.68
		manager	(Note 3)

Notes:

Hanny and Hanny Magnetics were taken to have interest in 179,749,991 Shares (of which 103,347,228 Shares relate to their derivative interests) which were held by Loyal Concept, being a wholly-owned subsidiary of Hanny Magnetics which, in turn, was a wholly-owned subsidiary of Hanny, the issued shares of which are listed on the Stock Exchange. Famex, a wholly-owned subsidiary of Mankar, was the controlling shareholder of Hanny. Mankar was a wholly-owned subsidiary of ITC Investment which, in turn, was a wholly-owned subsidiary of ITC. Famex and Mankar were deemed to be interested in 179,749,991 Shares (of which 103,347,228 Shares relate to their derivative interests) which were held by Loyal Concept. Selective Choice, a wholly-owned subsidiary of ITC Investment which, in turn, was a wholly-owned subsidiary of ITC, owned 46,385,499 Shares (of which 9,792,099 Shares relate to its derivative interest). ITC Investment and ITC were deemed to be interested in 226,135,490 Shares (of which 113,139,327 Shares relate to their derivative interests) which were held by Loyal Concept and Selective Choice. Dr. Chan was the controlling shareholder of ITC. Ms. Ng is the spouse of Dr. Chan. Dr. Chan owned 6,828,320 Shares (of which 761,920 Shares relate to his derivative interest) and was deemed to be interested in 226,135,490 Shares (of which 113,139,327 Shares relate to his derivative interest) which were held by Loyal Concept and Selective Choice. Ms. Ng was deemed to be interested in 232,963,810 Shares (of which 113,901,247 Shares relate to her derivative interest) which were held by Dr. Chan, Loyal Concept and Selective Choice.
Stark Master owned 46,677,746 Shares (as restated taking into account the effects of the rights issue and the capital reorganisation) (of which 23,875,536 Shares relate to its derivative interest).
Stark UK was taken to have an interest as an investment manager in 57,163,770 Shares (of which 26,743,137 Shares relate to its derivative interest).

– IV-6 –

APPENDIX IV

GENERAL INFORMATION

(iii) Other member of the Group

As at the Latest Practicable Date, so far as was known to the Directors or chief executive of the Company, the following persons (not being a Director or chief executive of the Company) were, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of the other member of the Group:

		Approximate
		percentage of the
		existing issued share
	Name of	capital/ registered
Name of subsidiary	shareholder	capital
		(%)
三亞亞龍灣風景高爾夫文化公園有限公司	三亞博后經濟開發	20
(Sanya Yalong Bayview Golf Garden Co., Ltd.)	有限公司
Fame State Investment Limited	Banh Dinh Huy	20
	Chan Siu Chi	10
Forever Fame Corporation Limited	Banh Dinh Huy	20
	Chan Siu Chi	10
Guangdong International Marina Club Limited	Pui Mung Ying	20

Save as disclosed above, as at the Latest Practicable Date, so far as was known to the Directors or chief executive of the Company based on the register maintained by the Company pursuant to Part XV of the SFO, no other persons (not being a Director or chief executive of the Company) had, or deemed to have, any interests or short positions in the shares or underlying shares which were required to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, nor were there any persons, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other members of the Group or held any option in respect of such capital.

(c) Competing interests

As at the Latest Practicable Date, interests of a Director and his respective associates in competing businesses of the Group were as follows:

		Nature of
	Name of	competing	Nature of
Name of Director	company	business	interest
Mr. Cheung	Wing On Travel	Property	As the chairman
	(Holdings)	business and
	Limited and its	hotel operation
	subsidiaries	in Hong Kong
		and the PRC

– IV-7 –

APPENDIX IV

GENERAL INFORMATION

		Nature of
	Name of	competing	Nature of
Name of Director	company	business	interest
Mr. Cheung	China	Property	As a director and
	Development	investment in	shareholder
	Limited	Hong Kong
	Artnos Limited	Property	As a director and
		investment in	shareholder
		Hong Kong
	Co-Forward	Property	As a director and
	Development	investment in	shareholder
	Ltd.	Hong Kong
	Orient Centre	Property	As a shareholder
	Limited	investment in
		Hong Kong
	Super Time	Property	As a director and
	Limited	investment in	shareholder
		Hong Kong
	Asia City	Property	As a director and
	Holdings Ltd.	investment in	shareholder
		Hong Kong
	Supreme Best Ltd.	Property	As a shareholder
		investment in
		Hong Kong
	Orient Holdings	Property	As a director and
	Limited	investment in	shareholder
		Hong Kong
	Link Treasure	Property	As a director and
	International	investment in	shareholder
	Limited	Hong Kong
	Silver City	Property	As a director and
	Limited	investment in	shareholder
		Hong Kong

– IV-8 –

APPENDIX IV

GENERAL INFORMATION

Mr. Cheung is the chairman of the Company who is principally responsible for the Group’s strategic planning and management of the operations of the Board. His role is clearly separated from that of the managing Director, Mr. Chan, who is principally responsible for the Group’s operation and business development.

In addition, any significant business decision of the Group is to be determined by the Board. A Director who has interest in the subject matter being resolved will abstain from voting. In view of the above, the Board considers that the interests of Mr. Cheung in other companies will not prejudice his capacity as Director nor compromise the interests of the Group and the Shareholders.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or their respective associates was interested in any business apart from the Group’s businesses which competes or is likely to compete, either directly or indirectly, with the businesses of the Group.

(d) Other interests

Save as disclosed above, as at the Latest Practicable Date, none of the Directors had any direct or indirect interest in any assets which have been, since 31st March, 2009 (being the date to which the latest published audited accounts of the Company were made up), (i) acquired or disposed of by; or (ii) leased to; or (iii) proposed to be acquired or disposed of by; or (iv) proposed to be leased to, any member of the Group.

Save as disclosed above, none of the Directors was materially interested in any contract or arrangement subsisting at the Latest Practicable Date which is significant in relation to the business of the Group.

3. MATERIAL CONTRACTS

The following are contracts (not being contracts entered into in the ordinary course of business) entered into by the Group within the two years immediately preceding the Latest Practicable Date and which are or may be material:

the termination agreement dated 28th March, 2008 entered into between Mr. Gilbert Bing Mar and Chain Key Limited in relation to the termination of the sale and purchase agreement dated 17th July, 2007 in connection with the acquisition of an effective 25% indirect interest in Shanghai Tianma Country Club Co., Ltd.;
the development project agreement dated 16th April, 2008 entered into between Donson (International) Development Limited and Guangzhou Panyu Lotus Golf and Country Club Co., Ltd. (“Panyu Golf”) in relation to the co-operation arrangement for the development of a parcel of land with a site area of approximately 48,000 sq. m. within Guangzhou Lotus Hill Golf Resort;

– IV-9 –

APPENDIX IV

GENERAL INFORMATION

the lease agreement dated 16th April, 2008 entered into between Guangzhou Donson Hotel Management Limited as lessee and Panyu Golf as lessor in relation to the lease of Guangzhou Lotus Hill Golf Resort for three years at an annual rental of RMB5 million (equivalent to approximately HK$5.2 million) renewable at an option of Guangzhou Donson Hotel Management Limited at the successive terms of three years up to 20 years;
the underwriting agreement dated 2nd June, 2008 entered into between the Company and Kingston Securities Limited in relation to the underwriting and certain other arrangements in respect of the issue of shares by way of rights on the basis of three rights shares (with warrants to be issued in the proportion of four warrants for every fifteen rights shares subscribed) for every share held on the record date at a subscription price of HK$0.07 per rights share;
the shareholders’ agreement entered into among Maxter Limited (“Maxter”), United Sun Investments Limited (“United Sun”) and Keen Step Corporation Limited (“Keen Step”) on 31st July, 2008 in relation to their rights and obligations in Keen Step;
the sale and purchase agreement dated 2nd September, 2008 entered into between Maxter and United Sun in relation to the purchase of 50% interest in Keen Step by Maxter at a cash consideration of HK$1;
the agreement dated 30th October, 2008 entered into between Mr. George Wang and Mandung Limited in relation to the sale and purchase of the entire issued share capital of Pine Cheer Limited and the entire amount of the shareholder’s loan owing by Pine Cheer Limited to Mr. George Wang on the date of completion of the said acquisition (the “Pine Cheer Sale Loan”), at an aggregate consideration of approximately HK$189.8 million (based on the amount of the Pine Cheer Sale Loan as at the date of the agreement);
the agreement dated 30th December, 2008 entered into between Vincent Asset Holdings Limited (“Vincent Asset”) and Macau Prime Property (Hong Kong) Limited (“Macau Prime (HK)”) in relation to the sale and purchase of the entire issued share capital of and shareholder’s loan due by Adventura International Limited;
the agreement dated 30th December, 2008 entered into between Vincent Asset and Macau Prime (HK) in relation to the sale and purchase of the entire issued share capital of and shareholder’s loans owed by Charm Noble Group Limited and Favor Gain Group Limited;
the agreement dated 15th December, 2009 entered into between Macau Prime Property (China) Limited (“Macau Prime (China)”), Bright Sino Profits Limited, the Company and Mr. Tang Chi Ming in relation to the sale and purchase of 92% issued share capital of and (if any) the shareholder’s loan owed by Newskill Investments Limited (“Newskill”);

– IV-10 –

APPENDIX IV

GENERAL INFORMATION

the agreement dated 15th December, 2009 entered into between Macau Prime (China) and Cango Trading Limited in relation to the sale and purchase of 8% issued share capital of and (if any) the shareholder’s loan owed by Newskill;
the Agreement;
the joint venture agreement dated 23rd December, 2009 entered into between ITC China and Hong Neng; and
the Memorandum.

4. CLAIMS AND LITIGATION

As at the Latest Practicable Date, no member of the Group was engaged in any litigation, arbitration or claim of material importance and no litigation, arbitration or claim of material importance was known to the Directors to be pending or threatened against any member of the Group.

5. SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contracts with any member of the Group which does not expire or is not determinable by the Group within one year without payment of compensation (other than statutory compensation).

6. EXPERT AND CONSENT

The following is the qualification of the expert who has been named in this circular or has given opinion or advice which is contained in this circular:

Name Qualification Deloitte Touche Tohmatsu (“DTT”) Certified public accountants

DTT has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of its letter and references to its name in the form and context in which they respectively appear.

As at the Latest Practicable Date, DTT did not have any shareholding, directly or indirectly, in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

As at the Latest Practicable Date, DTT did not have any direct or indirect interests in any assets which have been, since 31st March, 2009 (being the date to which the latest published audited accounts of the Company were made up), (i) acquired or disposed of by; or (ii) leased to; or (iii) proposed to be acquired or disposed of by; or (iv) proposed to be leased to, any member of the Group.

– IV-11 –

APPENDIX IV

GENERAL INFORMATION

7. MATERIAL ADVERSE CHANGE

The Directors are not aware of any material adverse change in the financial and trading position of the Group since 31st March, 2009, being the date to which the latest published audited accounts of the Company were made up.

8. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours at the Company’s principal place of business in Hong Kong at Unit 3102, 31/F., Bank of America Tower, 12 Harcourt Road, Central, Hong Kong, from the date of this circular and up to and including the date of the SGM:

the memorandum of association of the Company and the Bye-laws;
the material contracts referred to in the paragraph headed “Material contracts” in this appendix;
the published annual reports of the Company for each of the two financial years ended 31st March, 2008 and 2009 and the published interim report of the Company for the six months ended 30th September, 2009;
the accountants’ report on the JV Company, the text of which is set out in Appendix II to this circular;
the accountants’ report on the unaudited pro forma financial information of the Group, the text of which is set out in Appendix III to this circular;
the letter of consent referred to in the paragraph headed “Expert and consent” in this appendix; and
a copy of each circular of the Company issued pursuant to the requirements set out in Chapter 14 and/or 14A of the Listing Rules since 31st March, 2009.

9. MISCELLANEOUS

The company secretary of the Company is Ms. Yan Ha Hung, Loucia. She holds a master’s degree in business administration (MBA) . She is an Associate Member (Practitioner’s Endorsement) of both The Hong Kong Institute of Chartered Secretaries (ACS) and The Institute of Chartered Secretaries and Administrators (ACIS) .
The registered office of the Company is at Clarendon House, Church Street, Hamilton HM 11, Bermuda.
The Company’s principal place of business in Hong Kong is situated at Unit 3102, 31st Floor, Bank of America Tower, 12 Harcourt Road, Central, Hong Kong.
The Hong Kong branch share registrar of the Company is Tricor Secretaries Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong.
The English texts of this circular, the notice of the SGM and the accompanying form of proxy prevail over their respective Chinese texts.

– IV-12 –

NOTICE OF THE SGM

==> picture [370 x 49] intentionally omitted <==

(Incorporated in Bermuda with limited liability)

(Stock Code : 199) (Warrant Code : 490)

NOTICE IS HEREBY GIVEN that the special general meeting of ITC Properties Group Limited (the “Company”) will be held at Shop B27, Basement, Bank of America Tower, 12 Harcourt Road, Central, Hong Kong, at 11:00 a.m. on Wednesday, 10th February, 2010 for the purpose of considering and, if thought fit, passing with or without modifications the following resolution as an ordinary resolution of the Company:

ORDINARY RESOLUTION

“ THAT ,

(a) the memorandum of understanding dated 6th January, 2010 (the “Memorandum”) (a copy of which, signed by the Chairman of the meeting for the purpose of identification, has been produced to the meeting marked “A”) entered into between ITC (China) Properties Group Limited (“ITC China”) and 貴州宏能溫泉旅游開發有限公司 (Guizhou Hong Neng Hot Spring Resort Tourism Development Company Limited) pursuant to which the parties agreed to increase the total investment amount and registered capital of 貴州宏德置業有限公司 (Guizhou Hong De Real Estate Co., Ltd.) (formerly known as 貴州宏德商務咨詢有限公司 (Guizhou Hong De Business Consulting Co., Ltd.)) (the “JV Company”) and the maximum capital contribution to the JV Company up to RMB135.0 million on the part of ITC China pursuant to the Memorandum and the execution of the Memorandum be and is hereby approved, confirmed and ratified; and
(b) the board of directors of the Company (the “Board”) be and is hereby authorised to do all such acts and things and execute all such documents and to take such steps as it considers necessary or expedient or desirable in connection with or to give effect to the Memorandum and to implement the transactions contemplated thereunder and to agree to such variation, amendments or waivers of matters relating thereto as are, in the opinion of the Board, in the interest of the Company.”

By order of the Board Yan Ha Hung, Loucia Company Secretary

Hong Kong, 25th January, 2010

* For identification purpose only

– SGM-1 –

NOTICE OF THE SGM

Registered office: Clarendon House Church Street Hamilton HM 11 Bermuda

Principal place of business in Hong Kong: Unit 3102, 31st Floor Bank of America Tower 12 Harcourt Road Central Hong Kong

Notes:

Any shareholder of the Company entitled to attend and vote at the meeting of the Company may appoint another person as his proxy to attend and vote instead of him. A shareholder of the Company who is the holder of two or more shares may appoint more than one proxy to represent him and vote on his behalf at the meeting. A proxy need not be a shareholder of the Company. In addition, a proxy or proxies representing either a shareholder of the Company who is an individual or a shareholder of the Company which is a corporation shall be entitled to exercise the same power on behalf of the shareholder of the Company which he or they represent as such shareholder of the Company could exercise.
The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing or, if the appointor is a corporation, either under its seal or under the hand of an officer, attorney or other person authorised to sign the same. In the case of an instrument of proxy purporting to be signed on behalf of a corporation by an officer thereof, it shall be assumed, unless the contrary appears, that such officer was duly authorised to sign such instrument of proxy on behalf of the corporation without further evidence of the facts.
The instrument appointing a proxy and (if required by the board of directors of the Company) the power of attorney or other authority (if any) under which it is signed, or a certified copy of such power or authority, shall be delivered to the Company’s branch share registrar and transfer office in Hong Kong, Tricor Secretaries Limited at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong, not less than 48 hours before the time appointed for the holding of the meeting or any adjourned meeting thereof at which the person named in the instrument proposes to vote and, in default, the instrument of proxy shall not be treated as valid.
Completion and return of an instrument appointing a proxy shall not preclude a shareholder of the Company from attending and voting in person at the meeting or on the poll concerned and, in such event, the instrument appointing a proxy shall be deemed to have been revoked.
Where there are joint holders of any share of the Company, any one of such joint holders may vote, either in person or by proxy, in respect of such share as if he were solely entitled thereto, but if more than one of such joint holders be present at the meeting the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the register of members of the Company in respect of the joint holding.

As at the date of this notice, the directors of the Company are:

Executive Directors:

Mr. Cheung Hon Kit (Chairman) Mr. Chan Fut Yan (Managing Director) Mr. Cheung Chi Kit Mr. Lai Tsan Tung, David

Non-executive Director: Mr. Ma Chi Kong, Karl

Independent non-executive Directors: Mr. Qiao Xiaodong (Vice Chairman) Mr. Wong Chi Keung, Alvin Mr. Kwok Ka Lap, Alva

– SGM-2 –

AI assistant

Asia Energy Logistics Group Limited — Proxy Solicitation & Information Statement 2010

49149_rns_2010-01-22_8582ffbf-b2df-4bc0-b18c-af58270ac489.pdf

MAJOR TRANSACTION

IN RELATION TO THE MAXIMUM FURTHER CONTRIBUTION IN RESPECT OF THE GUIYANG JOINT VENTURE COMPANY

Financial adviser to ITC Properties Group Limited

CONTENTS

DEFINITIONS

DEFINITIONS

(Stock Code : 199)

MAJOR TRANSACTION IN RELATION TO THE MAXIMUM FURTHER CONTRIBUTION IN RESPECT OF THE GUIYANG JOINT VENTURE COMPANY

INTRODUCTION

BACKGROUND

INFORMATION ON THE JV COMPANY

THE MEMORANDUM

Date

Parties

Proposed increase in contributions

Conditions precedent

REASONS FOR AND BENEFITS OF THE MEMORANDUM

FINANCIAL EFFECTS

Earnings

LETTER FROM THE BOARD

Net assets

Gearing

THE SGM

RECOMMENDATION

ADDITIONAL INFORMATION

1. FINANCIAL SUMMARY

RESULTS

FINANCIAL INFORMATION ON THE GROUP

FINANCIAL INFORMATION ON THE GROUP

ASSETS AND LIABILITIES

FINANCIAL INFORMATION ON THE GROUP

2. AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP

CONSOLIDATED INCOME STATEMENT

CONSOLIDATED BALANCE SHEET

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

CONSOLIDATED CASH FLOW STATEMENT

FINANCIAL INFORMATION ON THE GROUP

FINANCIAL INFORMATION ON THE GROUP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. GENERAL

2. APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS (“HKFRS”)

3. SIGNIFICANT ACCOUNTING POLICIES

Basis of consolidation

Business combinations

Property, plant and equipment

Prepaid lease payments of leasehold land

Premium on prepaid lease payments of leasehold land

Properties under development

Joint ventures

Jointly controlled operations

Jointly controlled entities

Interests in associates

Inventories

Properties held for sale

Financial instruments

Financial assets

Effective interest method

Loans and receivables

Debt portion of convertible bonds

Available-for-sale financial assets

Derivative financial instruments

Embedded derivatives

Impairment of financial assets

Financial liabilities and equity

Effective interest method

Equity instruments

Warrants

Derecognition

Revenue recognition

Leasing

The Group as lessor

Asia Energy Logistics Group Limited Proxy Solicitation & Information Statement 2010