Autohome Inc. - M&A Activity 2008

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you have sold or transferred all your securities in GOLIK HOLDINGS LIMITED, you should at once hand this circular to the purchaser, 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 the transferee.

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

GOLIK HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 1118)

MAJOR TRANSACTION ACQUISITION OF SHAREHOLDING INTEREST IN CHINA ROPE HOLDINGS LIMITED

28th November, 2008

CONTENT

	Page
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
The Sale and Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Information on Target Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Group Structure before and after Completion of the Sale
and Purchase Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Reasons for and benefits of the Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Financial Effects of the Acquisition on the Group . . . . . . . . . . . . . . . . . . . . . . . .	14
Information on the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Listing Rules Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
Appendix I — Financial Information on the Group. . . . . . . . . . . . . . . . . . . . .	16
Appendix II — Accountants’ Report on the China Rope Group. . . . . . . . . . . .	83
Appendix III — Unaudited Pro Forma Financial Information
on the Enlarged Group. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	124
Appendix IV — Additional Financial Information
on the Group and the Target Group. . . . . . . . . . . . . . . . . . .	131
Appendix V — General Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	136

— i —

DEFINITIONS

In this circular, the following expressions shall have the meanings set out below unless the context requires otherwise:

“Acquisition”	the acquisition of 70% of the issued share capital of China
	Rope by the Company from Bridon HK as contemplated under
	the Sale and Purchase Agreement;
“Balance”	the Dividend less the amount used to settle the Group Loans;
“Board”	the Board of Directors;
“Business Day”	a day (other than Saturday or Sunday) on which banks are
	generally open in Hong Kong for normal business;
“Bridon HK”	Bridon Hong Kong Limited, a company incorporated in Hong
	Kong;
“Bridon PLC”	Bridon PLC, a company incorporated in England;
“Bridon Tianjin JV”	Bridon Tianjin Rope Ltd.（布頓（天津）鋼絲繩有限公司）, a
	sino-foreign equity joint venture established in the PRC;
“China Rope”	China Rope Holdings Limited, a company incorporated in
	Hong Kong;
“Company”	Golik Holdings Limited, an exempted company incorporated
	in Bermuda with limited liability, whose shares are listed on
	the Stock Exchange;
“Completion”	completion of the Sale and Purchase Agreement;
“Consideration”	the consideration for the Acquisition;
“Deed of Undertaking”	a deed of undertaking to be executed by China Rope in favour
	of Bridon HK on Completion in consideration of deferral of
	the amounts under the Promissory Notes and in support of
	the security under the Share Mortgage securing such deferred
	partial consideration for the Acquisition;
“Director(s)”	the director(s) of the Company;

— 1 —

DEFINITIONS

“Dividend”	the special dividend payable by Bridon Tianjin JV to China
	Rope in the amount of HK$8,531,500;
“Enlarged Group”	the Group as enlarged by the Acquisition;
“First Promissory Note”	a promissory note to be executed by the Company in favour
	of Bridon HK in the principal amount of HK$12,000,000
	maturing on 31st March, 2009;
“Group”	the Company and its subsidiaries; and members of the Group
	shall be construed accordingly;
“Group Loans”	the sum of (i) HK$1,166,666.76 owed by China Rope to a
	bank; (ii) HK$1,913,493.06 owed by China Rope to Bridon
	HK; and (iii) HK$1,238,672.72 owed by China Rope to Bridon
	International Limited, together with interest accrued thereon
	up to and including the date of settlement;
“Guarantee”	a guarantee in the amount of RMB7,000,000 (equivalent
	to approximately HK$7,910,000) provided by Bridon
	International Limited in favour of a bank in respect of the
	Target Group’s obligations under the loan;
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong;
“Hong Kong”	The Hong Kong Special Administrative Region of the PRC;
“Indemnity”	the deed of indemnity in the amount of HK$10,000,000
	provided by Vendor’s Group to a bank;
“Latest Practicable Date”	26th November, 2008, being the latest practicable date
	prior to the printing of this circular for ascertaining certain
	information contained herein;
“Letters of Credit”	a standby letter of credit in the amount of HK$5,000,000 dated
	23rd May, 2008 issued by a bank at the request of Bridon
	HK and an amended standby letter of credit in the amount of
	HK$7,000,000 dated 30th May, 2008 issued by a bank at the
	request of Bridon HK;

— 2 —

DEFINITIONS

“Licence Agreement”	a trade mark licence agreement to be entered into between
	Bridon PLC as licensor and Bridon Tianjin JV as licensee
	on Completion in relation to the non-exclusive licence to use
	the Trade Marks to manufacture, distribute, market and sell
	elevator ropes in the PRC;
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange;
“Mortgaged Shares”	12,713,998 ordinary shares of HK$1.00 each in the issued
	share capital of China Rope, representing 70% of the issued
	share capital of China Rope;
“Mr. Pang”	Mr. Pang Tak Chung, an executive Director;
“PRC”	The People’s Republic of China, which for the sole purpose
	of this circular excludes Hong Kong, Macau Special
	Administrative Region and Taiwan;
“Promissory Notes”	the First Promissory Note and the Second Promissory Note;
“RMB”	Renminbi, the lawful currency of the PRC;
“Sale and Purchase	the sale and purchase agreement dated 18th November, 2008
Agreement”	entered into between the Company and Bridon HK in relation
	to the Acquisition;
“Second Promissory Note”	a promissory note to be executed by the Company in favour of
	Bridon HK in the principal amount of HK$9,328,750 maturing
	on 31st July, 2009;
“SFO”	Securities and Futures Ordinance (Chapter 571 of the Laws of
	Hong Kong);
“Share(s)”	ordinary share(s) of HK$0.10 each in the issued share capital
	of the Company;
“Share Mortgage”	a share mortgage to be executed by the Company in favour of
	Bridon HK in respect of the Mortgaged Shares on Completion;
“Shareholder(s)”	holder(s) of Share(s);

— 3 —

DEFINITIONS

“Stock Exchange” The Stock Exchange of Hong Kong Limited; “Target Group” or “China China Rope and Bridon Tianjin JV; Rope Group”
“Trade Marks” the word mark of “Bridon” (registration number 3853514) and the logo mark of “Bridon Blue Strand” with a picture (registration number 3853513) owned and registered by Bridon PLC in the PRC;
“US$” United States dollars, the lawful currency of the United States of America; and
“Vendor’s Group” Bridon HK, its subsidiaries and holding companies and subsidiaries of such holding companies from time to time, excluding the Target Group.

— 4 —

LETTER FROM THE BOARD

GOLIK HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 1118)

Executive Directors:

Mr. Pang Tak Chung (Chairman) Mr. Ho Wai Yu, Sammy (Vice Chairman) Mr. John Cyril Fletcher

Registered Office: Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Independent Non-executive Directors:

Mr. Yu Kwok Kan, Stephen Mr. Chan Yat Yan Mr. Lo Yip Tong

Head Office and Principal Place of Business: Suite 5608, Central Plaza 18 Harbour Road Wanchai Hong Kong

28th November, 2008

To the Shareholders

Dear Sir or Madam,

MAJOR TRANSACTION ACQUISITION OF SHAREHOLDING INTEREST IN CHINA ROPE HOLDINGS LIMITED

INTRODUCTION

The Company announced on 18th November, 2008 that the Company entered into the Sale and Purchase Agreement with Bridon HK pursuant to which Bridon HK has agreed to sell and the Company has agreed to acquire 70% of the issued share capital of China Rope at a consideration of HK$29,860,250 less the Group Loans.

Since the relevant percentage ratio (as defined under the Listing Rules) in respect of the Acquisition is more than 25% but less than 100%, the Acquisition constitutes a major transaction for the Company under Chapter 14 of the Listing Rules and is therefore subject to the reporting, announcement and shareholders’ approval requirements in accordance with the Listing Rules.

— 5 —

LETTER FROM THE BOARD

As at the Latest Practicable Date, Mr. Pang and Golik Investments Ltd., a company wholly owned by Mr. Pang, hold 137,404,708 Shares and 195,646,500 Shares respectively, representing an aggregate of approximately 58.70% of the entire issued share capital of the Company. Since none of the Shareholders is required to abstain from voting on the Acquisition, written approval of Mr. Pang and Golik Investments Ltd. has been obtained for the purpose of approving the Acquisition in lieu of an approval from the Shareholders at a shareholders’ meeting pursuant to Rule 14.44 of the Listing Rules.

The purpose of this circular is to provide you with further particulars of the Acquisition.

THE SALE AND PURCHASE AGREEMENT

Date: 18th November, 2008

Parties:

(1) Vendor: Bridon HK
(2) Purchaser: The Company

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, each of Bridon HK and its ultimate beneficial owners is a third party independent of the Company and its connected persons. Bridon HK is a member of the Bridon group of companies, a specialist in the manufacture of steel wire and wire rope solutions, whose ultimate parent company is Melrose PLC which is listed on the London Stock Exchange.

Subject

12,713,998 shares in the issued share capital of China Rope, representing 70% of the issued share capital of China Rope.

Consideration

The Consideration shall be HK$29,860,250 less the Group Loans and shall be payable as follows:

(a) 70% of the Balance (representing Bridon HK’s share of the Balance) shall be payable in cash by China Rope to Bridon HK on Completion;
(b) 30% of the Balance (representing the Company’s share of the Balance) shall be payable in cash by China Rope to Bridon HK on Completion;

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LETTER FROM THE BOARD

(c) HK$12,000,000 shall be satisfied by the issue of the First Promissory Note by the Company on Completion; and
(d) HK$9,328,750 shall be satisfied by the issue of the Second Promissory Note by the Company on Completion.

The Consideration was determined after arm’s length negotiation with reference to the net asset value of China Rope’s principal subsidiary, Bridon Tianjin JV and shall be funded by internal resources of the Group after the Acquisition.

Conditions

The Acquisition is conditional upon:

(a) the passing at a general meeting of the Company of a resolution to approve the Sale and Purchase Agreement and the transactions contemplated thereunder in accordance with the Listing Rules or where applicable, a written approval by Mr. Pang and Golik Investments Ltd., which in aggregate are interested in approximately 58.70% of the issued share capital of the Company as at the Latest Practicable Date, approving the Sale and Purchase Agreement and the transactions contemplated thereunder pursuant to Rule 14.44 of the Listing Rules;
(b) Bridon HK and the Vendor’s Group having been released, at the expense of the Company or Bridon Tianjin JV, from all of their obligations and undertakings under the Guarantee, the Indemnity and the Letters of Credit;
(c) Bridon Tianjin JV having sold and delivered to Bridon HK all crane rope stock held by Bridon Tianjin JV as at 30th September, 2008 which shall be in a condition acceptable to Bridon HK and shall be free of rust and corrosion;
(d) the payment of the Dividend by Bridon Tianjin JV to China Rope; and
(e) the application of such portion of the Dividend as required by China Rope towards full and final settlement of the Group Loans.

Bridon HK may waive conditions (b) to (e) (either in whole or in part) at any time by notice in writing to the Company. Each of the parties shall use reasonable endeavours to procure (so far as it is so able to procure) that the conditions are satisfied on or before 30th November, 2008 or in circumstances where a written approval pursuant to Rule 14.44 of the Listing Rules is not acceptable to the Stock Exchange and a general meeting of the Company has to be convened for the purpose of approving the Sale and Purchase Agreement and the transactions contemplated thereunder, on or before 15th December, 2008 (or such later date as the parties may agree in writing).

— 7 —

LETTER FROM THE BOARD

As at the Latest Practicable Date, all of the conditions precedent have been fulfilled.

Completion

Completion shall take place on the third Business Day after the day on which all the conditions set out above have been fulfilled or, where permitted, waived (or at such other date as Bridon HK and the Company may agree).

Other terms

The Sale and Purchase Agreement contains the following post-completion covenants:

(a) If it is established at any time after Completion that any indebtedness of any kind (whether or not presently payable) was owing at Completion by any member of the Target Group to any member of the Vendor’s Group, then the Company shall procure that that indebtedness is discharged or otherwise eliminated at no cost to the Vendor’s Group;
(b) As soon as practicable after Completion and in any event on or before the maturity date of the Second Promissory Note, the Company shall procure that the Chinese and English names of Bridon Tianjin JV be changed such that the name “布頓” and “Bridon” will not be used in the Chinese and English names of Bridon Tianjin JV, respectively, after the maturity date of the Second Promissory Note. Upon completion of such change of name, the Company shall forthwith provide evidence reasonably satisfactory (including, without limitation, a new business licence of Bridon Tianjin JV) to Bridon HK in respect of such change of name. The Company shall keep Bridon HK informed of the progress of such change of name upon the request of Bridon HK;
(c) Subject to subparagraph (b) set out above and the Licence Agreement, with effect from Completion, the Company shall procure that none of the members of the Target Group:
(i) shall use or display any name, mark or logo (including, without limitation, “Bridon”) which is the same as or similar to, or is likely to be confused or associated with, any name, mark or logo of a member of the Vendor’s Group; or
(ii) shall represent that Bridon HK or any member of the Vendor’s Group retains any connection with the Target Group,

in each case, save with the prior written consent of Bridon HK or the relevant member of the Vendor’s Group;

— 8 —

LETTER FROM THE BOARD

(d) As soon as practicable after Completion and in any event on or before 31st December, 2008, the Company shall procure that the resignation of each of Messrs. Cheung Sui Leung, Stephen John Brimble, Tom McBride and John Jiang as directors of Bridon Tianjin JV be registered with the relevant PRC authority. Upon completion of such registration, the Company shall forthwith provide evidence thereof to Bridon HK and shall take such other actions as are necessary to ensure that the resignation of those individuals as directors is reflected in the official records of Bridon Tianjin JV; and
(e) As soon as practicable after Completion and in any event within 21 days of Completion, the Company shall, at its own cost register the Share Mortgage with the Registrar of Companies in Bermuda and the Companies Registry in Hong Kong and, in each case, forthwith provide evidence of such registration to Bridon HK.

Share Mortgage

The Share Mortgage shall be executed by the Company in favour of Bridon HK on Completion pursuant to which the Company (i) mortgages and agrees to mortgage, by way of first legal mortgage, the Mortgaged Shares in favour of Bridon HK; and (ii) (to the extent that they are not the subject of the mortgage under (i) above) mortgages, charges and assigns and agrees to mortgage, charge and assign, by way of first fixed charge, all its interests in any dividend, interest or other rights, money or property accruing therefrom in favour of Bridon HK as continuing security for the payment and discharge of all present and future obligations and liabilities (whether actual or contingent and whether owed jointly or severally or in any other capacity whatsoever) of:

(a) the Company to Bridon HK under the Sale and Purchase Agreement and the Promissory Notes;
(b) Bridon Tianjin JV to Bridon PLC under the Licence Agreement; and
(c) China Rope to Bridon HK under the Deed of Undertaking.

— 9 —

LETTER FROM THE BOARD

Transfer of Mortgaged Shares

The Company may transfer all or part of the Mortgaged Shares to any member of the Group provided that (i) a new share mortgage shall be executed by the transferee in favour of Bridon HK in respect of the relevant number of shares on terms substantially similar to the Share Mortgage and on no less favourable terms to Bridon HK but with such additional terms in connection with perfection as may be required by Bridon HK; (ii) the new share mortgage shall be registered with the relevant authorities within the timeline as prescribed by the relevant laws and regulations; (iii) the transferee shall transfer the shares to another member of the Group prior to it ceasing to be a member of the Group and that a new share mortgage shall be executed by the new transferee in favour of Bridon HK in respect of the relevant number of shares on terms substantially similar to the Share Mortgage and on no less favourable terms to Bridon HK but with such additional terms in connection with perfection as may be required by Bridon HK and that the new share mortgage shall be registered with the relevant authorities within the timeline as prescribed by the relevant laws and regulations; and (iv) 14 days prior written notice has been provided to Bridon HK.

The Company may transfer all or part of the Mortgaged Shares to any person who is not a member of the Group provided that the transfer shall be at a price not less than the net asset value of each ordinary share in the capital of China Rope as at the date of Completion; and that the transfer shall be conditional on the application of the sale proceeds towards discharge (in whole or in part) of the Share Mortgage; and 14 days prior written notice has been provided to Bridon HK.

Licence Agreement

The Licence Agreement shall be entered into between Bridon PLC as licensor and Bridon Tianjin JV as licensee on Completion in relation to the non-exclusive licence to use the Trade Marks to manufacture, distribute, market and sell (or any of those activities) elevator ropes in the PRC at a licence fee of RMB3,800,000 (equivalent to approximately HK$4,294,000) which shall become payable by Bridon Tianjin JV to Bridon PLC on Completion but payment of such licence fee shall be deferred to after 31st March, 2009 and until the earlier of:

(a) the date which is 14 days after the registration of the Licence Agreement and the receipt of approval from the State Administration for Foreign Exchange in respect of the remittance of such licence fee (provided that if this date occurs prior to 31st March, 2009, payment of licence fee shall be deferred until 1st April, 2009); and
(b) 31st July, 2009.

In any event, the abovementioned licence fee shall not be refundable on termination of the Licence Agreement.

— 10 —

LETTER FROM THE BOARD

The Licence Agreement shall come into effect upon execution and shall terminate on 30th July, 2011. Bridon PLC shall have the right to terminate the Licence Agreement immediately on notice upon occurrence of the following events:

(a) any change (direct or indirect) in the equity holding of Bridon Tianjin JV or in any of its equity holders except where prior written consent of Bridon PLC has been obtained or such change is permissible under the Sale and Purchase Agreement and/or the Share Mortgage;
(b) a material breach of the Share Mortgage; or
(c) the termination of the Sale and Purchase Agreement.

Bridon PLC shall have the right to terminate the Licence Agreement if Bridon Tianjin JV directly or indirectly challenges the validity of the Trade Marks.

Bridon Tianjin JV shall have the right to terminate the Licence Agreement by giving not less than 30 days written notice to Bridon PLC.

Either Bridon PLC or Bridon Tianjin JV shall have the right to terminate the Licence Agreement immediately by written notice to the other:

(a) if the other party is in material or persistent breach of the Licence Agreement and, in the case of any material breach, either that breach is incapable of remedy or the other party shall have failed to remedy that breach within 30 days after receiving written notice requiring it to remedy that breach; or
(b) if the other party being a company is unable to pay its debts or becomes insolvent or an order or an application is made or a resolution passed for the administration, windingup or dissolution of the other party (otherwise than for the purposes of a solvent amalgamation or reconstruction) or an administrative or other receiver, manager, liquidator, administrator, trustee or similar officer is appointed over all or any of the assets of the other party or an application or a winding-up or administration petition presented in relation to it or has documents filed with a court for an administration in relation to it or the other party enters into or proposes any composition or arrangement with its creditors generally or anything analogous to the foregoing occurs in any applicable jurisdiction.

Deed of Undertaking

The Deed of Undertaking shall be executed by China Rope in favour of Bridon HK on Completion in relation to, amongst others, (i) the maintenance of the status and compliance

— 11 —

LETTER FROM THE BOARD

with laws by China Rope; (ii) the punctual filing of tax returns and prompt payment of all taxes and other liabilities; and (iii) the restriction on creating any security interest on any of its assets, disposing of all or any of the assets, changing the general nature or scope of its business, incurring further indebtedness and entering into transactions similar to creating security on the assets or receivables of China Rope for the primary purpose of raising finance or financing the acquisition of an asset, in consideration of deferral of the amounts under the Promissory Notes and in support of the security under the Share Mortgage securing such deferred partial consideration for the Acquisition.

INFORMATION ON TARGET GROUP

China Rope is a company incorporated in Hong Kong. As at the Latest Practicable Date, China Rope is owned as to 70% by Bridon HK and as to 30% by the Company. Upon Completion, China Rope will become a wholly-owned subsidiary of the Company.

Bridon Tianjin JV is a sino-foreign equity joint venture established in the PRC on 11th January, 2002. As at the date of this announcement, the equity interest of Bridon Tianjin JV is held as to 75.5% by China Rope and as to 24.5% by Tianjin Steel Wire and Cable Group Ltd. 天津鋼綫鋼纜集團有限公司 (Now known as Tianjin Metallurgy Steel Wire and Cable Group Ltd. 天津冶金鋼綫鋼纜集團有限公司). The registered capital of Bridon Tianjin JV is US$2,000,000. Bridon Tianjin JV is engaged in the manufacture and sale of steel wire ropes for elevators.

The audited net asset value of the Target Group as at 31st March, 2008 was HK$43,567,000. The audited net asset value of the Target Group as at 30th June, 2008 was HK$48,617,000. The Directors are of the view that there is no material change in financial condition of the Target Group after 31st March, 2008.

The consolidated profit before and after taxation of the Target Group for the two years ended 31st March, 2008 were:

	For the year ended	For the year ended
	31st March, 2007	31st March, 2008
	(Audited)	(Audited)
Profit before taxation	HK$7,727,000	HK$15,000,000
Profit after taxation	HK$7,051,000	HK$13,468,000

The Directors confirm that the reporting accountant has not given any qualified audit opinion in the accountant’s report of the Target Group.

* for identification purpose

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LETTER FROM THE BOARD

GROUP STRUCTURE BEFORE AND AFTER COMPLETION OF THE SALE AND PURCHASE AGREEMENT

Before completion of the Sale and Purchase Agreement:

==> picture [398 x 268] intentionally omitted <==

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

The Company Bridon HK
30% 70%
Tianjin Steel Wire and Cable Group Ltd.
天津鋼綫鋼纜集團有限公司
China Rope (Now known as Tianjin Metallurgy Steel
Wire and Cable Group Ltd.
天津冶金鋼綫鋼纜集團有限公司)
75.5% 24.5%
Bridon Tianjin JV
----- End of picture text -----

After completion of the Sale and Purchase Agreement:

==> picture [313 x 267] intentionally omitted <==

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

The Company
100%
Tianjin Steel Wire and Cable Group Ltd.
天津鋼綫鋼纜集團有限公司
China Rope (Now known as Tianjin Metallurgy Steel
Wire and Cable Group Ltd.
天津冶金鋼綫鋼纜集團有限公司)
75.5% 24.5%
Bridon Tianjin JV
----- End of picture text -----

* for identification purpose

— 13 —

LETTER FROM THE BOARD

REASONS FOR AND BENEFITS OF THE ACQUISITION

The Directors consider that the market segment of China Rope has demonstrated a strong growth trend over the past few years and the manufacture and sale of steel wire ropes for elevators will continue to be a highly profitable industry with high turnover and profit margins. The Directors are of the view that the operating results of China Rope will continue to grow despite the recent slowdown of the overall economic performance in the PRC. Besides, the Directors believe that the Acquisition will provide the Group with opportunities for future expansion and to obtain a greater market share in the industry in the PRC which is in line with the Group’s business strategy and expansion plan in the PRC.

In view of the above potential benefits and synergies, the Directors (including the nonexecutive Directors) consider that the terms and conditions of the Acquisition are fair and reasonable and on normal commercial terms, and are in the interests of the Shareholders as a whole.

FINANCIAL EFFECTS OF THE ACQUISITION ON THE GROUP

Based on the unaudited pro forma statement of adjusted consolidated net assets of the Group as set out in Appendix III to this circular, the unaudited consolidated net assets of the Group prior to the Acquisition were approximately HK$614,878,000, representing approximately HK$0.11 per Share (on the basis of 567,362,500 Shares in issue as at the Latest Practicable Date) and the unaudited pro forma adjusted consolidated net assets of the Enlarged Group after the Acquisition were approximately HK$637,165,000, representing approximately HK$0.11 per Share (on the basis of 567,362,500 Shares in issue as at the Latest Practicable Date). Save as disclosed above, the Acquisition is not expected to have any other material impact on the earnings, assets and liabilities of the Group.

INFORMATION ON THE GROUP

The Group is principally engaged in manufacturing and sales of steel and metal products and construction materials.

LISTING RULES IMPLICATIONS

— 14 —

LETTER FROM THE BOARD

ADDITIONAL INFORMATION

Your attention is drawn to the additional information contained in the appendices to this circular.

Yours faithfully,

For and on behalf of the Board

GOLIK HOLDINGS LIMITED Pang Tak Chung Chairman

— 15 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

1. SUMMARY OF FINANCIAL INFORMATION OF THE GROUP

The table set out below is the summary of the financial information of the Group for the three years ended 31st December, 2005, 31st December, 2006 and 31st December, 2007, and for the six months ended 30th June, 2007 and 30th June, 2008, as extracted from the annual report of the Company for the years ended 31st December, 2006 and 31st December, 2007 and the interim report of the Company for the six months ended 30th June, 2008.

(i) Consolidated income statements

Turnover
Cost of sales
Gross profit
Other income
Interest income
Selling and distribution
costs
Administrative
expenses
Gain (loss) on disposal
of property, plant and
equipment, prepaid
lease payments and
assets classified as
held for sale
Increase (decrease)
in fair value on
investment properties
Discount on acquisition
of additional interest
in a subsidiary

Six months ended
Year ended 31st December,
30th June,
2005
2006
2007
2007
2008
(audited)
(audited)
(audited)
(unaudited)
(unaudited)
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
2,278,449
2,053,862
2,728,040
1,151,043
1,804,172
(2,004,502)
(1,787,956)
(2,510,794)
(1,038,965)
(1,628,512)
273,947
265,906
217,246
112,078
175,660
28,310
28,133
27,616
13,964
12,226
1,889
2,905
2,783
1,197
976
(70,286)
(69,824)
(77,079)
(32,773)
(44,071)
(125,777)
(128,905)
(113,087)
(57,321)
(79,395)
(4,578)
(11,906)
4,875
72
6,045
(970)
(500)
2,910
—
—
—
5,696
—
—
—

— 16 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Impairment loss on
goodwill
Finance costs
Gain on disposal of
subsidiaries
Share of results of
jointly controlled
entities
Share of results of
associates
Profit before taxation
Income taxes
Profit for the year/
period
Attributable to:
Equity holders of the
Company
Minority interests
Dividend
Paid
Proposed
Earnings per share
Basic

Six months ended
Year ended 31st December,
30th June,
2005
2006
2007
2007
2008
(audited)
(audited)
(audited)
(unaudited)
(unaudited)
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
(10,184)
(6,500)
(1,500)
(900)
(1,500)
(31,066)
(32,208)
(35,076)
(15,483)
(19,867)
2,406
—
—
—
—
60
244
176
114
15
1,218
1,454
2,150
667
1,968
64,969
54,495
31,014
21,615
52,057
(8,351)
(6,236)
(807)
(1,791)
(5,494)
56,618
48,259
30,207
19,824
46,563
32,399
41,064
27,585
17,561
38,601
24,219
7,195
2,622
2,263
7,962
56,618
48,259
30,207
19,824
46,563
—
11,347
12,482
12,460
6,808
11,347
12,482
6,808
—
—
HK cents
HK cents
HK cents
HK cents
HK cents
5.71
7.24
4.86
3.10
6.80

— 17 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

(ii) Consolidated balance sheet

Non-current Assets Goodwill Investment properties Property, plant and equipment Prepaid lease payments Interests in jointly controlled entities Interests in associates Long-term receivables Rental and other deposits Deposits paid for acquisition of property, plant and equipment Current Assets Inventories Trade and other receivables Amounts due from jointly controlled entities Amount due from an associate Prepaid lease payments Income tax recoverable Derivative financial instruments Pledged bank deposits Bank balances and cash Assets classified as held for sale	31st December, 2005 2006 (audited) (audited) HK$’000 HK$’000 13,494 6,994 26,400 25,900 267,135 239,905 48,987 47,911 1,359 1,603 5,253 6,707 823 155 830 1,091 — — 364,281 330,266 309,368 298,222 424,840 453,074 6,914 6,962 682 494 1,192 1,187 148 141 4 — 23,604 23,707 124,845 143,481 891,597 927,268 — — 891,597 927,268	2007 (audited) HK$’000 5,563 17,310 225,077 33,276 1,779 8,857 2,356 1,368 10,524 306,110 325,489 644,722 7,009 527 837 2,258 — 6,846 163,279 1,150,967 22,484 1,173,451	30th June, 2008 (unaudited) HK$’000 4,063 17,310 245,208 33,769 1,794 10,825 1,113 1,267 6,655
			322,004
			520,733 603,071 7,014 — 859 120 253 72,622 164,726
			1,369,398 —
			1,369,398

— 18 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Current Liabilities Trade and other payables Amounts due to minority shareholders Amount due to an associate Income tax payable Derivate financial instruments Bank borrowings Obligations under finance lease Bank overdrafts — unsecured Net Current Assets Capital and Reserves Share capital Share premium and reserves Equity attributable to equity holders of the Company Minority interests Total Equity Non-current Liabilities Deferred tax liabilities Bank borrowings Obligations under finance leases	31st December, 2005 2006 (audited) (audited) HK$’000 HK$’000 188,488 194,496 4,091 2,791 — — 812 3,561 — 322 500,929 485,150 4,942 3,110 2,905 532 702,167 689,962 189,430 237,306 553,711 567,572 56,736 56,736 369,049 402,801 425,785 459,537 102,833 82,600 528,618 542,137 11,713 11,735 8,768 9,613 4,612 4,087 25,093 25,435 553,711 567,572	2007 (audited) HK$’000 248,232 3,779 — 1,496 13 640,417 2,340 738 897,015 276,436 582,546 56,736 427,063 483,799 79,344 563,143 11,163 5,838 2,402 19,403 582,546	30th June, 2008 (unaudited) HK$’000 264,595 3,360 803 2,649 — 762,974 2,235 7,121
			1,043,737
			325,661
			647,665 56,736 468,781
			525,517 89,361
			614,878
			11,209 20,296 1,282
			32,787
			647,665

— 19 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

2. AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE YEAR ENDED 31ST DECEMBER, 2007

Set out below is the audited consolidated financial statements of the Group for the year ended 31st December, 2007 together with the notes therein, which are extracted from the annual report of the Company for the year ended 31st December, 2007.

Consolidated Income Statement

For the year ended 31st December, 2007

Notes Turnover 5 Cost of sales Gross profit Other income 6 Interest income Selling and distribution costs Administrative expenses Gain (loss) on disposal of property, plant and equipment and prepaid lease payments Increase (decrease) in fair value on investment properties Discount on acquisition of additional interest in a subsidiary Impairment loss on goodwill Finance costs 7 Share of results of jointly controlled entities Share of results of associates Profit before taxation Income taxes 8 Profit for the year 9 Attributable to: Equity holders of the Company Minority interests Dividend 12 Paid Proposed Earnings per share 13 Basic	2007 HK$’000 2,728,040 (2,510,794) 217,246 27,616 2,783 (77,079) (113,087) 4,875 2,910 — (1,500) (35,076) 176 2,150 31,014 (807) 30,207 27,585 2,622 30,207 12,482 6,808 HK cents 4.86	2006 HK$’000 2,053,862 (1,787,956) 265,906 28,133 2,905 (69,824) (128,905) (11,906) (500) 5,696 (6,500) (32,208) 244 1,454 54,495 (6,236) 48,259 41,064 7,195 48,259 11,347 12,482 HK cents 7.24

— 20 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Consolidated Balance Sheet

At 31st December, 2007

Notes Non-current Assets Goodwill 14 Investment properties 15 Property, plant and equipment 16 Prepaid lease payments 17 Interests in jointly controlled entities 18 Interests in associates 19 Long-term receivables 20 Rental and other deposits Deposits paid for acquisition of property, plant and equipment Current Assets Inventories 21 Trade and other receivables 22 Amounts due from jointly controlled entities 23 Amount due from an associate 24 Prepaid lease payments 17 Income tax recoverable Pledged bank deposits 25 Bank balances and cash 26 Assets classified as held for sale 27 Current Liabilities Trade and other payables 28 Amounts due to minority shareholders 29 Income tax payable Derivative financial instruments 30 Bank borrowings 31 Obligations under finance leases 32 Bank overdrafts — unsecured Net Current Assets	2007 HK$’000 5,563 17,310 225,077 33,276 1,779 8,857 2,356 1,368 10,524 306,110 325,489 644,722 7,009 527 837 2,258 6,846 163,279 1,150,967 22,484 1,173,451 248,232 3,779 1,496 13 640,417 2,340 738 897,015 276,436 582,546	2006 HK$’000 6,994 25,900 239,905 47,911 1,603 6,707 155 1,091 —
		330,266
		298,222 453,074 6,962 494 1,187 141 23,707 143,481
		927,268 —
		927,268
		194,496 2,791 3,561 322 485,150 3,110 532
		689,962
		237,306
		567,572

— 21 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Notes Capital and Reserves Share capital 33 Share premium and reserves Equity attributable to equity holders of the Company Minority interests Total Equity Non-current Liabilities Deferred tax liabilities 35 Bank borrowings 31 Obligations under finance leases 32	2007 HK$’000 56,736 427,063 483,799 79,344 563,143 11,163 5,838 2,402 19,403 582,546	2006 HK$’000 56,736 402,801
		459,537 82,600
		542,137
		11,735 9,613 4,087
		25,435
		567,572

— 22 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Consolidated Statement of Changes in Equity

For the year ended 31st December, 2007

Attributable to equity holders	Attributable to equity holders	of the Company	of the Company	Total HK$’000 528,618
Property Share revaluation premium reserve HK$’000 HK$’000 318,118 19,566 — — — — — — — — — — — — — — 318,118 19,566 — — — — — — — — — — — — 318,118 19,566	Exchange reserve HK$’000 2,326 4,035 — 4,035 — — — — 6,361 9,159 — 9,159 — — — 15,520	PRC statutory reserve HK$’000 (note) 1,820 — — — 1,569 — — — 3,389 — — — — — — 3,389	Retained profits HK$’000 27,219 — 41,064 41,064 (1,569) — (11,347) — 55,367 — 27,585 27,585 — (12,482) — 70,470
				5,301 48,259
				53,560
				— (15,944) (11,347) (12,750)
				542,137
				11,200 30,207
				41,407
				(6,900) (12,482) (1,019)
				563,143

Note: People’s Republic of China (the “PRC”) statutory reserve is reserve required by the relevant laws in the PRC applicable to subsidiaries in the PRC for enterprise development purposes.

— 23 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Consolidated Cash Flow Statement

For the year ended 31st December, 2007

OPERATING ACTIVITIES Profit before taxation Adjustments for: Amortisation of prepaid lease payments Change in fair value of derivative financial instruments Write down of inventories Depreciation (Write back of) allowance for bad and doubtful debts Interest income (Gain) loss on disposal of property, plant and equipment and prepaid lease payments (Increase) decrease in fair value of investment properties Discount on acquisition of additional interest in a subsidiary Impairment loss on goodwill Unrealised foreign exchange gain Finance costs Share of results of jointly controlled entities Share of results of associates Operating cash flows before movements in working capital (Increase) decrease in inventories Increase in trade and other receivables Increase in amount due from jointly controlled entities (Increase) decrease in amount due from an associate Increase (decrease) in trade and other payables Cash (used in) generated from operations Hong Kong Profits Tax paid Taxation outside Hong Kong paid Hong Kong Profits Tax refunded NET CASH (USED IN) FROM OPERATING ACTIVITIES	2007 HK$’000 31,014 1,199 (309) 4,080 35,838 (4,634) (2,783) (4,875) (2,910) — 1,500 (2,527) 35,076 (176) (2,150) 88,343 (27,073) (179,247) (47) (33) 49,151 (68,906) (3,515) (2,274) 2 (74,693)	2006 HK$’000 54,495 1,187 326 2,200 35,861 3,630 (2,905) 11,906 500 (5,696) 6,500 (1,990) 32,208 (244) (1,454) 136,524 11,018 (30,417) (48) 188 (754) 116,511 (2,690) (921) 79 112,979

— 24 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

INVESTING ACTIVITIES Purchase of property, plant and equipment Deposits paid for acquisition of property, plant and equipment Decrease in pledged bank deposits Advance of loans Proceeds from disposal of property, plant and equipment and prepaid lease payments Proceeds from disposal of investment properties Repayment of loans advanced Interest received Consideration on acquisition of additional interest in a subsidiary NET CASH FROM (USED IN) INVESTING ACTIVITIES FINANCING ACTIVITIES Bank loans raised Mortgage loans raised Repayment of bank loans Interest paid Dividend paid to minority shareholders of subsidiaries Dividend paid Net borrowing (repayment) of trust receipt loans Repayment of mortgage loans Repayment of obligations under finance leases Advance from (repayment to) minority shareholders NET CASH FROM (USED IN) FINANCING ACTIVITIES NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR EFFECT OF FOREIGN EXCHANGE RATE CHANGES CASH AND CASH EQUIVALENTS AT END OF THE YEAR ANALYSIS OF THE BALANCES OF CASH AND CASH EQUIVALENTS Bank balances and cash Bank overdrafts	2007 HK$’000 (24,336) (10,524) 18,587 (250) 5,543 11,500 1,036 2,758 (1,088) 3,226 180,600 — (182,673) (34,480) (6,900) (12,482) 148,528 (2,217) (3,226) 864 88,014 16,547 142,949 3,045 162,541 163,279 (738) 162,541	2006 HK$’000 (12,491) — 735 — 2,097 — 3,836 2,967 (4,235) (7,091) 184,738 12,000 (204,584) (32,753) (15,944) (11,347) (3,710) (6,475) (7,410) (1,367) (86,852) 19,036 121,940 1,973 142,949 143,481 (532) 142,949

— 25 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Notes to the Consolidated Financial Statements

For the year ended 31st December, 2007

1. GENERAL

The Company was 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 addresses of the registered office and principal place of business of the Company are disclosed in the corporation information to the annual report.

The principal activities of the Group are manufacturing and sales of steel and metal products and construction materials.

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

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

In the current year, the Group has applied, for the first time, the following new standard, amendment and interpretations (“new HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”), which are effective for the Group’s financial year beginning 1st January, 2007.

HKAS 1 (Amendment) Capital Disclosures HKFRS 7 Financial Instruments: Disclosures HK(IFRIC) — Int 7 Applying the Restatement Approach under HKAS 29 Financial Reporting in Hyperinflationary Economies HK(IFRIC) — Int 8 Scope of HKFRS 2 HK(IFRIC) — Int 9 Reassessment of Embedded Derivatives HK(IFRIC) — Int 10 Interim Financial Reporting and Impairment

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 applied the disclosure requirements under HKAS 1 (Amendment) and HKFRS 7 retrospectively. Certain information presented in prior year under the requirements of HKAS 32 has been removed and the relevant comparative information based on the requirements of HKAS 1 (Amendment) and HKFRS 7 has been presented for the first time in the current year.

— 26 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

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

HKAS 1 (Revised) Presentation of Financial Statements1 HKAS 23 (Revised) Borrowing Costs1 HKAS 27 (Revised) Consolidated and Separate Financial Statements2 HKFRS 2 (Amendment) Vesting Conditions and Cancellations1 HKFRS 3 (Revised) Business Combinations2 HKFRS 8 Operating Segments1 HK(IFRIC) — Int 11 HKFRS 2: Group and Treasury Share Transactions3 HK(IFRIC) — Int 12 Service Concession Arranagements4 HK(IFRIC) — Int 13 Customer Loyalty Programmes5 HK(IFRIC) — Int 14 HKAS 19 — The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction4

1 Effective for annual periods beginning on or after 1st January, 2009
2 Effective for annual periods beginning on or after 1st July, 2009

3 Effective for annual periods beginning on or after 1st March, 2007

4 Effective for annual periods beginning on or after 1st January, 2008

5 Effective for annual periods beginning on or after 1st July, 2008

The adoption of HKFRS 3 (revised) may affect the accounting for business combination for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1st July, 2009. HKAS 27 (revised) will affect the accounting treatment for changes in a parent’s ownership interest in a subsidiary that do not result in a loss of control, which will be accounted for as equity transactions. The directors of the Company are in the process of assessing the potential impact and so far concluded that the application of the other new and revised standards, amendment 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 properties and 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) made up to 31st December each year. 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.

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

— 27 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

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.

Acquisition of additional interest in a subsidiary

On acquisition of additional interest in a subsidiary, the excess of the cost of acquisition over the carrying values of the underlying assets, liabilities and contingent liabilities attributable to the additional interest in a subsidiary is debited to goodwill.

Discount arising on the acquisition of additional interest in a subsidiary represents the excess of the carrying value of the net assets attributable to the additional interest in a subsidiary over the cost of the acquisition and is credited to consolidated income statement.

Goodwill

Goodwill arising on acquisitions prior to 1st January, 2005

Goodwill arising on acquisitions of net assets and operations of another entity prior to 1st January, 2001 previously recognised in reserves represents the excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable assets and liabilities of the relevant subsidiary at the date of acquisition has been transferred to the retained profits as at 1st January, 2005.

Previously capitalised goodwill arising on acquisitions after 1st January, 2001, the Group has discontinued amortisation from 1st January, 2005 onwards and such goodwill is tested for impairment annually, and whenever there is an indication that the cash generating unit to which the goodwill relates may be impaired.

Goodwill arising on acquisitions on or after 1st January, 2005

Goodwill arising on an acquisition of a business for which the agreement date is on or after 1st January, 2005 represents the excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable assets, liabilities and contingent liabilities of the relevant business at the date of acquisition. Such goodwill is carried at cost less any accumulated impairment losses.

Capitalised goodwill arising on an acquisition of a business is presented separately in the consolidated balance sheet.

For the purposes of impairment testing, goodwill arising from an acquisition is allocated to each of the relevant cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the acquisition. A cash-generating unit to which goodwill has been allocated is tested for impairment annually, and whenever there is an indication that the unit may be impaired. For goodwill arising on an acquisition in a financial year, the cash-generating unit to which goodwill has been allocated is tested for impairment before the end of that financial year. When the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated to reduce the carrying amount of any goodwill allocated to the unit first, and then to the other assets of the unit pro rata on the basis of the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in the consolidated income statement. An impairment loss for goodwill is not reversed in subsequent periods.

— 28 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

On subsequent disposal of the relevant cash-generating unit, the attributable amount of goodwill capitalised is included in the determination of the amount of profit or loss on disposal.

Investments 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, unrealised profits or losses are eliminated to the extent of the Group’s interest in the associate.

Interests in jointly controlled entities

Joint venture arrangements which involve the establishment of a separate entity in which venturers have 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, unrealised profits or losses are eliminated to the extent of the Group’s interest in the jointly controlled entity, except to the extent that unrealised losses provide evidence of an impairment of the asset transferred, in which case, the full amount of losses is recognised.

Revenue recognition

Revenue is measured at the fair value of consideration received or receivable and represents amounts receivable for goods sold in the normal course of business, net of discounts and sales related taxes.

— 29 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Revenue from sale of goods is recognised when the goods are delivered and title has passed.

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.

Rental income, including rentals invoiced in advance from properties or assets held under operating leases, is recognised on a straight-line basis over the terms of the relevant leases.

Investment properties

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

On initial recognition, investment properties are measured at cost, including any directly attributable expenditure. Subsequent to initial recognition, investment properties are measured at their fair value 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 period in which they arise.

An investment properties is derecognised upon disposal or when the investment property is permanently withdrawn from use or no future economic benefits are expected from its disposals. Any gain or loss arising on derecognition of the assets (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.

Property, plant and equipment

Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet at their revalued amount, being the fair value at the date of revaluation less any subsequent accumulated depreciation and any subsequent accumulated impairment losses. Revaluations are performed with sufficient regularity such that the carrying amount does not differ materially from that which would be determined using fair values at the balance sheet date.

Any revaluation increase arising on revaluation of land and buildings is credited to the revaluation reserve, except to the extent that it reverses a revaluation decrease of the same asset previously recognised as an expense, in which case the increase is credited to the consolidated income statement to the extent of the decrease previously charged. A decrease in net carrying amount arising on revaluation of an asset is dealt with as an expense to the extent that it exceeds the balance, if any, on the revaluation reserve relating to a previous revaluation of that asset. On the subsequent sale or retirement of a revalued asset, the attributable revaluation surplus is transferred to retained profits.

Property, plant and equipment, other than land and buildings, assets under installation and construction in progress, are stated at cost less any subsequent accumulated depreciation and any accumulated impairment losses.

Depreciation is provided to write off the cost or valuation of property, plant and equipment other than assets under installation and construction in progress over their estimated useful lives, using the straight-line method, at the following rates per annum:

Leasehold land and buildings	Over the shorter of the terms of the leases, or 20 to 50 years
Leasehold improvements	Over the shorter of the terms of the leases or 10 years
Furniture and fixtures	10% — 33 1/3%
Motor vehicles	10% — 33 1/3%
Plant and machinery and equipment	5% — 50%

— 30 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Plant and machinery and equipment held under finance leases are depreciated over their expected useful lives on the same basis as assets owned by the Group.

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

Assets under installation and construction in progress are stated at cost less any accumulated impairment losses. No provision for depreciation is made on assets under installation and construction in progress until such time as the relevant assets are completed and ready for their intended use.

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 income statement in the year in which the item is derecognised.

Leasing

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership of the assets concerned to the Group. 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.

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 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.

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 term on a straightline basis.

Leasehold land and building

The land and building elements of a lease of land and building are considered separately for the purpose of lease classification, leasehold land which title is not expected to pass to the lessee by the end of the lease term is classified as an operating lease unless the lease payments cannot be allocated reliably between the land and building elements, in which case, the entire lease is classified as a finance lease.

— 31 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Impairment losses-other than goodwill

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. Impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a revalued amount under another standard, in which case the impairment loss is treated as revalued decrease.

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, unless the relevant asset is carried at a revalued amount under another standard, in which case the reversal of the impairment loss is treated as revalued increase.

Inventories

Inventories are stated at the lower of cost and net realisable value.

Other than the cost of inventories of concrete products and printing materials which are calculated using the weighted average cost method, the cost of all other products of the Group is calculated using the first-in firstout method.

Assets classified as held for sale

Assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its present condition.

Assets classified as held for sale are measured at the lower of the assets’ carrying amount and fair value less costs to sell.

Financial instruments

Financial assets and financial liabilities are recognised on the 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) 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 as loans and receivables.

Loans and receivables (including long-term receivables, trade and other receivables, bank deposits and balances, and amounts due from jointly controlled entities and an associate)

Loans and receivables are non-derivative financial assets with fixed or determinable payment that are not quoted in an active market. At each balance sheet date subsequent to initial recognition, loans and receivables are carried at amortised cost using the effective interest method, less any identified impairment losses.

— 32 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

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.

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

Impairment of loans and receivables

Loans and receivables are assessed for indicators of impairment at each balance sheet date. Loans and receivables are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the estimated future cash flows have been impacted.

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.

Trade receivables 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, observable changes in national or local economic conditions that correlate with default on receivables.

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 carrying amount and the present value of the estimated future cash flows discounted at the original effective interest rate.

The carrying amount is reduced by the impairment loss directly for all loans and receivables with the exception of long-term receivables, trade receivables, amounts due from jointly controlled entities and an associate, 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 trade 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.

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.

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.

— 33 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

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 (including trade and other payables, borrowings and amounts due to minority shareholders)

Financial liabilities are subsequently measured at amortised cost, using the effective interest method.

Equity instruments

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

Derivative financial instruments

Derivative financial instruments that do not qualify for hedge accounting are deemed as financial assets or liabilities held for trading and measured at fair value. Changes in the fair value of such derivatives are recognised in profit or loss as they arise.

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 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 or payable is recognised in profit or loss.

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 its 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 that are 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.

— 34 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Exchange differences arising on the settlement of monetary items, and on the translation 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 differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in equity, in which cases, 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 exchange reserve). Such exchange differences are recognised in profit or loss in the period in which the foreign operation is disposed of.

Retirement benefit costs

Payments to the Mandatory Provident Fund Scheme for staff in Hong Kong and retirement pension schemes for staff in the PRC are charged as an expense when employees have rendered service entitling them to the contribution.

Borrowing costs

All other borrowing costs are recognised as an expense in the period in which they are incurred.

Taxation

Income taxes represent 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 bases 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.

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 profits will be available to allow all or part of the asset to be recovered.

— 35 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

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. Deferred tax is charged or credited in the income statement, 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, which are described in note 3, 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 assumption 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.

Estimated impairment of goodwill

Determining whether goodwill is impaired requires an estimation of the value in use of the cashgenerating units to which goodwill has been allocated. The value in use calculation requires the Group to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate the present value. Where the actual future cash flows are less than expected, a material impairment loss may arise. As at 31st December, 2007, the carrying amount of goodwill is HK$5,563,000 (2006: HK$6,994,000) (net of accumulated impairment loss of HK$28,792,000 (2006: HK$27,294,000)). Details of the recoverable amount calculation are disclosed in note 14.

Income taxes

As at 31st December, 2007, a deferred tax asset of HK$7,737,000 (2006: HK$7,375,000) in relation to unused tax losses has been recognised in the Group’s balance sheet. No deferred tax asset has been recognised on the tax losses of HK$664,217,000 (2006: HK$658,896,000) 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. In cases where the actual future profits generated are more than expected, a material recognition of deferred tax assets may arise, which would be recognised in the consolidated income statement for the period in which such a recognition takes place.

5. TURNOVER AND SEGMENT INFORMATION

Turnover represents the net amounts received and receivable for goods sold by the Group to outside customers, less returns and allowances.

Business segments

For management purposes, the Group is organised into four operating divisions — manufacturing of steel and metal products, sales of steel and metal products, manufacturing of construction materials and sales of construction materials. These principal operating activities are the basis on which the Group reports its primary segment information.

— 36 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Segment information about these businesses is presented below:

2007

Manufacturing Sales of Manufacturing of steel steel of and metal and metal construction products products materials HK$’000 HK$’000 HK$’000 TURNOVER External sales 1,167,631 121,704 291,273 Inter-segment sales 16,018 25,754 542 Total turnover 1,183,649 147,458 291,815 Inter-segment sales are charged at cost or cost plus a percentage profit mark-up. SEGMENT RESULT 38,712 3,833 23,266 Unallocated other income Unallocated corporate expenses Impairment loss on goodwill — — (200) Finance costs Share of results of jointly controlled entities — — — Share of results of associates 2,150 — — Profit before taxation Income taxes Profit for the year	Sales of construction materials HK$’000 951,389 42,235 993,624 3,079 — — —	Other operations HK$’000 196,043 — 196,043 3,567 (1,300) 176 —	Eliminations HK$’000 — (84,549) (84,549) 1,551 — — —	Consolidated HK$’000 2,728,040 —
				2,728,040

				74,008 4,970 (13,714) (1,500) (35,076) 176 2,150
				31,014 (807)
				30,207

— 37 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Consolidated Balance Sheet

Manufacturing Sales of Manufacturing of steel steel of Sales of and metal and metal construction construction Other products products materials materials operations Eliminations HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 ASSETS Segment assets 602,650 49,358 211,449 271,256 114,811 (21,253) Interests in jointly controlled entities — — — — 1,779 — Interests in associates 8,857 — — — — — Amounts due from jointly controlled entities — 1,513 — — 5,496 — Amount due from an associate 527 — — — — — Unallocated corporate assets Consolidated total assets LIABILITIES Segment liabilities 94,826 10,186 65,990 84,483 14,498 (20,844) Unallocated corporate liabilities Consolidated total liabilities	Consolidated HK$’000 1,228,271 1,779 8,857 7,009 527 233,118
	1,479,561

	249,139 667,279
	916,418

Other information

	Manufacturing	Sales of	Manufacturing
	of steel	steel	of	Sales of
	and metal	and metal	construction	construction	Other
	products	products	materials	materials	operations	Unallocated	Consolidated
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Capital expenditures	14,329	62	5,078	243	2,215	1,362	23,289
Depreciation	14,278	461	13,120	56	2,782	5,141	35,838
Amortisation of prepaid
lease payments	536	—	567	—	—	96	1,199
Allowance for (write back
of ) bad and doubtful
debts	561	246	(3,349)	(2,900)	480	328	(4,634)
Write down of (reversal
of write down of )
inventories	(416)	—	700	2,000	1,796	—	4,080
Increase in fair value on
investment properties	—	—	—	—	—	(2,910)	(2,910)
Loss (gain) on disposal
of property, plant and
equipment	128	—	(5)	(4,891)	(16)	(91)	(4,875)

— 38 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

2006

Manufacturing Sales of Manufacturing of steel steel of and metal and metal construction products products materials HK$’000 HK$’000 HK$’000 TURNOVER External sales 1,056,011 88,505 252,423 Inter-segment sales 11,508 14,832 901 Total turnover 1,067,519 103,337 253,324 Inter-segment sales are charged at cost or cost plus a percentage profit mark-up. SEGMENT RESULT 62,780 5,036 5,250 Unallocated other income Unallocated corporate expenses Impairment loss on goodwill — — (500) Finance costs Discount on acquisition of additional interest in a subsidiary 5,696 — — Share of results of jointly controlled entities — — — Share of results of associates 1,454 — — Profit before taxation Income taxes Profit for the year	Sales of construction materials HK$’000 470,961 51,158 522,119 31,629 — — — —	Other operations HK$’000 185,962 — 185,962 6,975 (6,000) — 244 —	Eliminations HK$’000 — (78,399) (78,399) (470) — — — —	Consolidated HK$’000 2,053,862 —
				2,053,862

				111,200 5,212 (30,603) (6,500) (32,208) 5,696 244 1,454
				54,495 (6,236)
				48,259

— 39 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Consolidated Balance Sheet

Manufacturing Sales of Manufacturing of steel steel of Sales of and metal and metal construction construction Other products products materials materials operations Eliminations HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 ASSETS Segment assets 578,534 42,241 194,687 105,773 112,343 (25,579) Interests in jointly controlled entities — — — — 1,603 — Interests in associates 6,707 — — — — — Amounts due from jointly controlled entities — 1,505 — — 5,457 — Amount due from an associate 494 — — — — — Unallocated corporate assets Consolidated total assets LIABILITIES Segment liabilities 116,127 14,271 48,468 29,236 9,674 (24,758) Unallocated corporate liabilities Consolidated total liabilities	Consolidated HK$’000 1,007,999 1,603 6,707 6,962 494 233,769
	1,257,534

	193,018 522,379
	715,397

Other information

	Manufacturing	Sales of	Manufacturing
	of steel	steel	of	Sales of
	and metal	and metal	construction	construction	Other
	products	products	materials	materials	operations	Unallocated	Consolidated
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Capital expenditures	4,073	—	4,245	41	10,783	75	19,217
Depreciation	14,120	1,298	12,552	57	1,872	5,962	35,861
Amortisation of prepaid
lease payments	524	—	567	—	—	96	1,187
Allowance for (write back
of) bad and doubtful
debts	352	47	(610)	3,832	(20)	29	3,630
Write down of inventories	—	—	500	1,200	500	—	2,200
Decrease in fair value on
investment properties	—	—	—	—	—	500	500
(Gain) loss on disposal
of property, plant and
equipment and prepaid
lease payments	(709)	(86)	13	—	(37)	12,725	11,906

— 40 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Geographical segments

The following table provides an analysis of the Group’s sales by geographical market, irrespective of the origin of the goods/services:

Hong Kong Other regions in the PRC Australia Macau Others	Revenue by geographical market 2007 2006 HK$’000 HK$’000 1,582,149 1,401,131 728,823 586,412 66,802 46,290 309,782 6,195 40,484 13,834 2,728,040 2,053,862	Revenue by geographical market 2007 2006 HK$’000 HK$’000 1,582,149 1,401,131 728,823 586,412 66,802 46,290 309,782 6,195 40,484 13,834 2,728,040 2,053,862
		2,053,862

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:

Hong Kong Other regions in the PRC Australia	Carrying amount of segment assets 2007 2006 HK$’000 HK$’000 635,924 491,952 582,746 505,716 9,601 10,331 1,228,271 1,007,999	Additions to property, plant and equipment 2007 2006 HK$’000 HK$’000 5,960 3,130 17,329 16,074 — 13 23,289 19,217	Additions to property, plant and equipment 2007 2006 HK$’000 HK$’000 5,960 3,130 17,329 16,074 — 13 23,289 19,217
			19,217

6. OTHER INCOME

Included in other income are: Gross rental income from investment properties _Less:_direct operating expenses from investment properties that generated rental income during the year Net rental income from investment properties Rental income from property, plant and equipment and prepaid lease payments Change in fair value of derivative financial instruments	2007 HK$’000 651 (61) 590 1,357 1,947 (3,079)	2006 HK$’000 627 (112)
		515 1,442
		1,957
		(1,004)

— 41 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

7. FINANCE COSTS

Interest on: Bank borrowings wholly repayable within five years Finance leases	2007 HK$’000 34,656 420 35,076	2006 HK$’000 31,753 455
		32,208

8. INCOME TAXES

The charge comprises: Current year Hong Kong Outside Hong Kong Overprovision in prior years Hong Kong Outside Hong Kong Deferred tax_(note 35)_ Current year	2007 HK$’000 1,338 1,988 3,326 (1,653) (246) 1,427 (620) 807	2006 HK$’000 4,900 1,950
		6,850 (614) —
		6,236 —
		6,236

Hong Kong Profits Tax is calculated at 17.5% (2006: 17.5%) of the estimated assessable profit for the year.

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

Pursuant to the relevant laws and regulations in the PRC, certain of the Group’s subsidiaries operating in the PRC are exempted from PRC income tax for two years starting from their first profit-making year, followed by a 50% reduction for the next three years.

On 16th March, 2007, the People’s Republic of China promulgated the Law of the People’s Republic of China on Enterprise Income Tax (the “New Law”) by Order No. 63 of the President of the People’s Republic of China. On 6th December, 2007, the State Council of the PRC issued Implementation Regulations of the New Law. The New Law and Implementation Regulations will change the tax rate from 33% to 25% for certain subsidiaries from 1st January, 2008. According to the Circular of the State Council on the Implementation of Transitional Preferential Policies for Enterprise Income Tax (Guofa [2007] No. 39), the tax exemption and deduction for the foreign investment enterprises is still applicable until the end of the five-year transitional period under the New Law.

— 42 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

The taxation for the year can be reconciled from taxation based on profit per the consolidated income statement as follows:

Profit before taxation Domestic income tax rate Tax at the domestic income tax rate Tax effect of share of results of jointly controlled entities and associates Tax effect of expenses not deductible for tax purpose Tax effect of income not taxable for tax purpose Tax effect of offshore manufacturing profits on 50:50 apportionment basis Tax effect of tax losses not recognised Tax effect of utilisation of tax loss previously not recognised Tax effect of other deductible temporary difference not recognised Tax effect of utilisation of other deductible temporary difference previously not recognised Effect of tax exemption granted to PRC subsidiaries Decrease in opening deferred tax liability resulting from a decrease in applicable tax rate Others Overprovision in prior years Income taxes for the year	Hong Kong 2007 2006 HK$’000 HK$’000 27,202 51,346 17.5% 17.5% 4,760 8,986 (407) (297) 431 1,349 (1,343) (402) (1,894) (5,344) 5,255 4,764 (5,461) (7,105) — 683 (508) — — — — — (114) 2,223 (1,653) (571) (934) 4,286	PRC and others 2007 2006 HK$’000 HK$’000 3,812 3,149 33% 33% 1,258 1,039 — — 251 50 (218) (1) — — 3,400 2,472 (1,299) (998) — 324 — — (472) (357) (170) — (763) (579) (246) — 1,741 1,950	Total 2007 2006 HK$’000 HK$’000 31,014 54,495 6,018 10,025 (407) (297) 682 1,399 (1,561) (403) (1,894) (5,344) 8,655 7,236 (6,760) (8,103) — 1,007 (508) — (472) (357) (170) — (877) 1,644 (1,899) (571) 807 6,236

Details of deferred taxation are set out in note 35.

— 43 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

9. PROFIT FOR THE YEAR

Profit for the year has been arrived at after charging (crediting): Amortisation of prepaid lease payments Auditor’s remuneration Current year Underprovision in prior years Cost of inventories recognised as expense including write down of inventories of HK$4,080,000 (2006: HK$2,200,000) Depreciation Minimum lease payments for operating leases in respect of Land and buildings Plant and machinery Net exchange loss Staff costs including directors’ emoluments and contributions to retirement benefits scheme (Write back of ) allowance for bad and doubtful debts, net	2007 HK$’000 1,199 2,993 378 2,510,794 35,838 16,178 1,440 17,618 116 98,527 (4,634)	2006 HK$’000 1,187 3,053 625 1,787,956 35,861 14,790 1,440
		16,230
		1,522 99,565 3,630

Minimum lease payments for operating leases in respect of a director’s accommodation amounting to HK$2,072,000 (2006: HK$2,381,000) are included under staff costs.

Of the consolidation profit for the year of HK$30,207,000 (2006: HK$48,259,000), a profit of HK$2,927,000 (2006: a loss of HK$13,663,000) has been dealt with in the financial statements of the Company.

10. DIRECTORS’ EMOLUMENTS

The emoluments paid or payable to each of the directors are as follows:

	Pang	Ho	John	Robert	Yu
	Tak	Wai Yu,	Cyril	Keith	Kwok Kan,	Chan	Lo	2007
	Chung	Sammy	Fletcher	Davies	Stephen	Yat Yan	Yip Tong	Total
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Fees	—	—	—	83	105	105	105	398
Other emoluments
Salaries and
other benefits	4,136	2,508	1,300	—	—	—	—	7,944
Contributions
to retirement
benefits
schemes	163	137	46	—	—	—	—	346
	4,299	2,645	1,346	83	105	105	105	8,688

— 44 —

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

	Pang	Ho	John	Robert	Yu
	Tak	Wai Yu,	Cyril	Keith	Kwok Kan,	Chan	Lo	2006
	Chung	Sammy	Fletcher	Davies	Stephen	Yat Yan	Yip Tong	Total
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Fees	—	—	—	85	105	105	105	400
Other emoluments
Salaries and
other benefits	3,927	2,288	1,606	—	—	—	—	7,821
Contributions
to retirement
benefits
schemes	153	127	55	—	—	—	—	335
	4,080	2,415	1,661	85	105	105	105	8,556

No director waived any emoluments for the two years ended 31st December, 2007.

11. EMPLOYEES’ EMOLUMENTS

The five highest paid individuals included two directors (2006: three directors), details of whose emoluments are set out in note 10 above. The emoluments of the remaining three individuals (2006: two individuals) are as follows:

Salaries and other benefits Contributions to retirement benefits scheme Their emoluments were within the following bands: HK$1,000,001 — HK$1,500,000 HK$1,500,001 — HK$2,000,000 HK$2,000,001 — HK$2,500,000 HK$2,500,001 — HK$3,000,000	2007 HK$’000 4,789 36 4,825 2007 Number of employees 2 — 1 — 3	2006 HK$’000 4,344 24
		4,368

		2006 Number of employees — 1 — 1
		2

— 45 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

12. DIVIDEND

Dividend paid: Final dividend in respect of 2006, approved and paid — 2.2 HK cents per ordinary share Dividend proposed: Final dividend proposed for the year — 1.2 HK cents (2006: 2.2 HK cents) per ordinary share	2007 HK$’000 12,482 6,808	2006 HK$’000 11,347

		12,482

The directors recommend the payment of a final dividend of 1.2 HK cents per share for the year ended 31st December, 2007 and is subject to approval by the shareholders in the annual general meeting.

13. EARNINGS PER SHARE

The calculation of the basic earnings per share is based on the profit attributable to the equity holders of the Company for the year and on the 567,362,500 (2006: 567,362,500) ordinary shares in issue.

14. GOODWILL

COST At 1st January, 2006 and at 31st December, 2006 Acquired on acquisition of additional interest in a subsidiary Eliminated on deregistration of a subsidiary At 31st December, 2007 IMPAIRMENT At 1st January, 2006 Impairment loss recognised At 31st December, 2006 Impairment loss recognised Eliminated on deregistration of a subsidiary At 31st December, 2007 CARRYING AMOUNT At 31st December, 2007 At 31st December, 2006	HK$’000 34,288 69 (2)
	34,355
	20,794 6,500
	27,294 1,500 (2)
	28,792
	5,563

	6,994

For the purposes of impairment testing, goodwill is allocated to two individual cash generating units (CGUs) that are expected to benefit from that business combination. The carrying amounts of goodwill had been allocated to a subsidiary of manufacturing of construction materials segment (Unit A) and certain subsidiaries in other operations segment (Unit B) of HK$1,098,000 (2006: HK$1,298,000) and HK$4,465,000 (2006: HK$5,696,000) respectively.

— 46 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

During the year ended 31st December, 2007, the Group recognised an impairment loss of HK$200,000 (2006: HK$500,000) for Unit A and HK$1,300,000 (2006: HK$6,000,000) for Unit B due to increased competition in the business.

The basis of the recoverable amounts of the above CGUs and their major underlying assumptions are summarised below:

Unit A

The recoverable amount of this unit has been determined based on a value in use calculation. That calculation uses the estimation of the cash flow projections based on financial budgets approved by management covering a 5-year period and extrapolate the budgets using a steady growth rate of 3% for the subsequent 5 years, and a discount rate of 7% (2006: 9%). Another key assumption for the value in use calculations is the budgeted gross margin, which is determined based on the unit’s past performance and management’s expectations for the market development. Management believes that any reasonably possible change in any of these assumptions would not cause the aggregate carrying amount to exceed the aggregate recoverable amount.

Unit B

The recoverable amount of this unit has been determined based on a value in use calculation. That calculation uses cash flow projections based on financial budgets approved by management covering a 5-year period, and a discount rate of 7% (2006: 9%). Another key assumption for the value in use calculations is the budgeted gross margin, which is determined based on the unit’s past performance and management’s expectations for the market development. Management believes that any reasonably possible change in any of these assumptions would not cause the aggregate carrying amount to exceed the aggregate recoverable amount.

15. INVESTMENT PROPERTIES

FAIR VALUE At beginning of the year Disposal Increase (decrease) in fair value At end of the year The Group’s investment properties comprise: Properties held under medium-term leases: In Hong Kong Other regions in the PRC Properties held under long leases in Hong Kong	2007 HK$’000 25,900 (11,500) 2,910 17,310 2007 HK$’000 14,660 2,650 — 17,310	2006 HK$’000 26,400 — (500) 25,900 2006 HK$’000 11,900 2,500 11,500 25,900

— 47 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

The fair value of the Group’s investment properties as at 31st December, 2007 and 31st December, 2006 have been arrived at on the basis of a valuation carried out on that date by LCH (Asia-Pacific) Surveyors Limited, Chartered Surveyors, independent qualified professional valuers not connected with the Group. LCH (Asia- Pacific) Surveyors Limited, Chartered Surveyors are members of the Institute of Valuers, and have appropriate qualifications and recent experiences in the valuation of similar properties in the relevant locations. The valuation, which conforms to International Valuation Standards, was arrived at by reference to market evidence of transaction prices for similar properties.

The investment properties of the Group which are held under operating leases are measured using the fair value model and are classified and accounted for as investment properties.

16. PROPERTY, PLANT AND EQUIPMENT

COST OR VALUATION At 1st January, 2006 Exchange differences Additions Disposals Reclassification At 31st December, 2006 Exchange differences Additions Disposals Reclassification Transfer to assets classified as held for sale At 31st December, 2007 Comprising: At cost At valuation-2004 DEPRECIATION AND IMPAIRMENT At 1st January, 2006 Exchange differences Provided for the year Eliminated on disposals At 31st December, 2006 Exchange differences Provided for the year Eliminated on disposals Transfer to assets classified as held for sale At 31st December, 2007 CARRYING VALUES At 31st December, 2007 At 31st December, 2006	Leasehold Buildings improvements HK$’000 HK$’000 94,042 22,873 449 37 225 36 — — — — 94,716 22,946 969 80 1,748 1,143 (261) (492) — 87 (9,370) (264) 87,802 23,500 2,392 23,500 85,410 — 87,802 23,500 7,324 17,588 45 7 7,349 1,120 — — 14,718 18,715 161 23 7,628 1,090 (261) (472) (1,670) (264) 20,576 19,092 67,226 4,408 79,998 4,231	Furniture and fixtures HK$’000 15,922 101 763 (403) — 16,383 227 1,011 (379) — — 17,242 17,242 — 17,242 13,392 68 972 (376) 14,056 166 952 (368) — 14,806 2,436 2,327	Motor vehicles HK$’000 50,348 1,141 6,371 (1,260) — 56,600 2,688 4,294 (1,817) — — 61,765 61,765 — 61,765 29,650 662 5,620 (799) 35,133 1,645 5,773 (1,195) — 41,356 20,409 21,467	Plant and machinery and equipment HK$’000 294,010 3,543 11,333 (18,063) 1,547 292,370 7,983 9,002 (723) 1,532 — 310,164 310,164 — 310,164 143,636 1,501 20,800 (4,922) 161,015 3,902 20,395 (708) — 184,604 125,560 131,355	Assets under Construction installation in progress HK$’000 HK$’000 12 4,156 1 54 318 171 — — (113) (1,434) 218 2,947 16 23 5,108 983 — — (1,454) (165) — — 3,888 3,788 3,888 3,788 — — 3,888 3,788 — 2,638 — — — — — — — 2,638 — — — — — — — — — 2,638 3,888 1,150 218 309	Total HK$’000 481,363 5,326 19,217 (19,726) —
						486,180 11,986 23,289 (3,672) — (9,634)
						508,149
						422,739 85,410
						508,149
						214,228 2,283 35,861 (6,097)
						246,275 5,897 35,838 (3,004) (1,934)
						283,072
						225,077

						239,905

— 48 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

The carrying values of motor vehicles, plant and machinery and equipment of the Group include an amount of HK$783,000 (2006: HK$523,000) and HK$7,428,000 (2006: HK$10,400,000) respectively in respect of assets held under finance leases.

Land and buildings were revalued as at 31st December, 2004 by LCH (Asia-Pacific) Surveyors Limited, Chartered Surveyors, an independent firm of professional valuer, on an open market existing use basis. Messrs. LCH (Asia- Pacific) Surveyors Limited are not connected to the Group.

As at 31st December, 2007, the director considered that the fair values of the buildings do not differ materially from the respective carrying amounts.

At 31st December, 2007, if land and buildings of the Group had not been revalued, they would have been included in these financial statements at historical cost less accumulated depreciation and accumulated impairment losses of approximately HK$59,214,000 (2006: HK$70,429,000).

17. PREPAID LEASE PAYMENTS

The Group’s prepaid lease payments comprise: Leasehold land in Hong Kong under medium-term lease Land use right in the PRC under medium-term lease Analysed for reporting purposes as: Current asset Non-current asset	2007 HK$’000 17,402 16,711 34,113 837 33,276 34,113	2006 HK$’000 32,995 16,103
		49,098

		1,187 47,911
		49,098

Prepaid lease payments with carrying values of HK$14,784,000 (2006: nil) have been transferred to assets classified as held for sale.

18. INTERESTS IN JOINTLY CONTROLLED ENTITIES

Cost of investments (unlisted) Share of post-acquisition profits	2007 HK$’000 1,257 522 1,779	2006 HK$’000 1,257 346
		1,603

— 49 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Particulars of the jointly controlled entities as at 31st December, 2007 and 2006 are as follows:

		Place of		Percentage
	Form of	incorporation/		of ownership
	business	registration/	Class	attributable
Name of company	structure	operation	of shares	to the Group	Principal activities
Kunshan Rosathal	Equity joint	PRC	Registered capital	33.25%	Manufacturing and
Printing Ink Limited	venture				sales of printing
					ink
Hi-Net Business Limited	Incorporated	British Virgin	Ordinary shares	50%	Investment holding
		Islands

The summarised financial information in respect of the Group’s interests in jointly controlled entities is set out below:

Non-current assets Current assets Current liabilities Income Expenses Profit for the year 19. INTERESTS IN ASSOCIATES	2007 HK$’000 1,915 4,480 (3,804) 2,591 4,747 (4,571) 176	2006 HK$’000 2,027 4,264 (3,942) 2,349 4,830 (4,586) 244

Cost of investments (unlisted) Share of net post-acquisition profits _Less:_Unrealised gain on disposal of a subsidiary in prior years	2007 HK$’000 5,449 4,822 (1,414) 8,857	2006 HK$’000 5,449 2,672 (1,414) 6,707

Particulars of the associates as at 31st December, 2007 and 2006 are as follows:

Proportion of Place of nominal value Form of incorporation/ of issued capital/ business registration/ registered capital Name of company structure operation held by the Group Nature of business China Rope Holdings Incorporated Hong Kong 30% Investment holding Limited Bridon Tianjin Rope Equity joint PRC 22.65% Manufacturing and Ltd. venture sales of steel wire ropes for elevators

— 50 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

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

Non-current assets Current assets Current liabilities Non-current liabilities Income Expenses Income taxes Profit for the year 20. LONG-TERM RECEIVABLES Building mortgage loan_(note a) Other loans(note b) Trade and other receivables(note c) _Less:_amounts due within one year shown under trade and other receivables Amounts due after one year _Notes:	2007 HK$’000 25,679 73,830 (55,346) (1,050) 43,113 184,202 (173,574) (1,122) 9,506 2007 HK$’000 170 2,089 3,812 6,071 (3,715) 2,356	2006 HK$’000 21,316 53,630 (42,202) (1,750) 30,994 103,213 (96,082) (697) 6,434 2006 HK$’000 256 2,788 231 3,275 (3,120) 155

(a) The building mortgage loan bear interest at 3% (2006: 3%) above the Hong Kong Prime Rate per annum and are repayable by monthly instalments up to year 2009. The effective interest rate for the year is 11% (2006: 11%).
(b) Other loans are unsecured, bear fixed interest at 5% to 7% (2006: 4% to 6%) per annum. All are repayable within one year.
(c) The amounts are unsecured, interest free which aged over 120 days and are repayable by monthly instalments up to 2009.

— 51 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

21. INVENTORIES

Raw materials Work in progress Finished goods Supplies	2007 HK$’000 158,664 11,328 154,555 942 325,489	2006 HK$’000 161,027 10,291 125,374 1,530
		298,222

22. TRADE AND OTHER RECEIVABLES

Other than the cash sales, the Group allows credit periods ranging from 30 to 90 days to its customers.

Included in trade and other receivables are trade receivables with an aged analysis (by invoice date) as follows:

0 — 30 days 31 — 60 days 61 — 90 days 91 — 120 days More than 120 days	2007 HK$’000 262,918 158,038 80,271 42,258 32,362 575,847	2006 HK$’000 160,004 115,961 73,042 29,337 22,894
		401,238

Before accepting any new customer, the Group has assessed the potential customer’s credit quality and defined credit rating limits for each customers. Limits attributed to customers are reviewed once a year.

Included in the Group’s trade receivable balance are debtors with aggregate carrying amount of HK$216,633,000 (2006: HK$169,637,000) which are past due at the reporting date for which the Group has not provided for impairment loss, as there has not been a significant change in credit quality and the amounts are still considered recoverable based on historical experience. The Group does not hold any collateral over these balances.

Ageing of trade receivables (by due date) which are past due but not impaired:

1 — 30 days 31 — 60 days Over 60 days Total	2007 HK$’000 121,832 54,312 40,489 216,633	2006 HK$’000 99,439 38,276 31,922
		169,637

— 52 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Movement in the allowance for doubtful debts:

Balance at beginning of the year Exchange realignment Impairment losses recognised Impairment losses reversed Amounts written off during the year Balance at end of the year	2007 HK$’000 41,970 483 3,028 (7,662) (12,895) 24,924	2006 HK$’000 39,367 268 6,375 (2,745) (1,295) 41,970

Included in the allowance for doubtful debts are individually impaired trade receivables with an aggregate balance of HK$24,924,000 (2006: HK$41,970,000) which are either been placed under liquidation or in financial difficulties in repaying the outstanding balances. The Group does not hold any collateral over these balances.

In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date.

23. AMOUNTS DUE FROM JOINTLY CONTROLLED ENTITIES

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

24. AMOUNT DUE FROM AN ASSOCIATE

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

25. PLEDGED BANK DEPOSITS

The amount represents deposits pledged to banks to secure bank overdrafts, bank loans repayable within one year and import loan facilities. Accordingly, the pledged bank deposits are classified as current assets. The deposits carry fixed interest rate at 0.72% (2006: 1.73% to 2.7%) per annum.

26. BANK BALANCES AND CASH

The amount included deposits with an original maturity of three months or less which carry fixed interest rate of 3.1% (2006: 3.8%) per annum.

27. ASSETS CLASSIFIED AS HELD FOR SALE

On 25th April, 2007, Golik Concrete Limited, a wholly owned subsidiary of the Company entered into an agreement with an independent third party for the disposal of the Group’s leasehold land and building (the “Property”) located in Hong Kong under the medium term lease, which are expected to be sold within the next twelve months from the balance sheet date. The consideration for the disposal of the Property to be paid by the independent third party is approximately HK$29,000,000. The proceeds of disposal are expected to exceed the net carrying amount of the Property and, accordingly, no impairment loss has been recognised on reclassification of the Property as held for sale.

— 53 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

28. TRADE AND OTHER PAYABLES

Included in trade and other payables are trade payables with an aged analysis as follows:

0 — 30 days 31 — 60 days 61 — 90 days 91 — 120 days More than 120 days	2007 HK$’000 95,259 17,602 23,275 8,895 22,737 167,768	2006 HK$’000 75,934 11,652 4,512 1,512 26,124
		119,734

29. AMOUNTS DUE TO MINORITY SHAREHOLDERS

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

30. DERIVATIVE FINANCIAL INSTRUMENTS

At 31st December, 2007, the notional amount of outstanding foreign exchange forward contracts to which the Group is committed ranging from US$15,600,000 to US$31,200,000 (2006: US$31,300,000 to US$62,600,000) with the forward exchange rates to sell HK$ and buy US$ at 7.698 to 7.726 (2006: 7.724 to 7.741) based on predetermined formula. The maturity date of the contracts is ranging from May 2008 to February 2009.

At 31st December, 2007, the fair value of the Group’s foreign currency forward contracts is estimated to be a financial liability of approximately HK$13,000 (2006: HK$322,000). These amounts are based on market prices quoted by banks at the balance sheet date. The gain on change in fair value of the foreign currency forward contracts amounting to HK$3,079,000 (2006: HK$1,004,000) has been recognised in consolidated income statement.

31. BANK BORROWINGS

Bank loans Mortgage loans Trust receipt loans Analysed as: Secured Unsecured	2007 HK$’000 128,540 8,220 509,495 646,255 21,570 624,685 646,255	2006 HK$’000 123,359 10,437 360,967
		494,763

		85,436 409,327
		494,763

— 54 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

The bank borrowings are repayable as follows:

On demand or within one year 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:_amounts due within one year shown under current liabilities Amounts due after one year	2007 HK$’000 640,417 2,510 2,645 683 — 646,255 (640,417) 5,838	2006 HK$’000 485,150 3,745 2,507 2,668 693
		494,763 (485,150)
		9,613

The average effective borrowing rates are ranging from 4.0% to 7.0% (2006: 5.2% to 8.8%) per annum.

The carrying amounts of the Group’s borrowings are analysed as follows:

Denominated in Interest rate per annum Hong Kong dollars Hong Kong Interbank Offered Rate (“HIBOR”) plus 1% to 2.5% United States dollars London Interbank Offered (note) Rate (“LIBOR”) plus 1% to 2.5% Renminbi 0% to 20% mark up from People’s Bank of China (“PBOC”) lending rate Fixed Rate 5.6% to 7.6% Others_(note)_ HIBOR plus 2.5%	2007 HK$’000 500,350 29,492 101,453 15,698 — 646,993	2006 HK$’000 360,466 34,585 49,771 49,821 652
		495,295

Note: These borrowings are denominated in currencies other than functional currencies of the relevant group entities.

— 55 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

32. OBLIGATIONS UNDER FINANCE LEASES

Within one year In the second to fifth year inclusive _Less:_future finance charges Present value of lease obligations _Less:_amounts due within one year shown under current liabilities Amounts due after one year	Minimum lease payments 2007 2006 HK$’000 HK$’000 2,536 3,500 2,489 4,370 5,025 7,870 (283) (673) 4,742 7,197	Present value of minimum lease payments 2007 2006 HK$’000 HK$’000 2,340 3,110 2,402 4,087 4,742 7,197 (2,340) (3,110) 2,402 4,087	Present value of minimum lease payments 2007 2006 HK$’000 HK$’000 2,340 3,110 2,402 4,087 4,742 7,197 (2,340) (3,110) 2,402 4,087
			7,197 (3,110)
			4,087

It is the Group’s policy to lease certain of its motor vehicles and plant and machinery and equipment under finance leases. The lease terms are ranging from 1 to 5 years. For the year ended 31st December, 2007, the average effective borrowing rates range from 3.6% to 10% (2006: 4.65% to 10%) per annum. All leases are on a fixed repayment basis.

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

33. SHARE CAPITAL

Number of shares Ordinary shares of HK$0.10 each Authorised: At 1st January, 2006, 31st December, 2006 and 2007 1,800,000,000 Issued and fully paid: At 1st January, 2006, 31st December, 2006 and 2007 567,362,500	Amount HK$’000 180,000

	56,736

34. SHARE OPTION SCHEME

The share option scheme of the Company was effective on 27th May, 2004 (the “Scheme”).

Summary of the Scheme

a. The primary purpose of the Scheme is to provide incentives or rewards to Participants (see below defined) thereunder for their contribution to the Group and any entity in which the Group holds any equity interest (“Invested Entity”) and/or to enable the Group and an Invested Entity to recruit and retain high-calibre employees and attract human resources that are valuable to the Group or any Invested Entity.

— 56 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

b. The directors may, at their absolute discretion, invite any person belonging to any of the following classes of participants (“Participants”), to take up options to subscribe for shares of HK$0.10 each in the share capital of the Company (“Shares”).
(i) any eligible employee;
(ii) any non-executive director (including independent non-executive directors) of the Company, any of its subsidiaries or any Invested Entity;
(iii) any supplier of goods or services to any member of the Group or any Invested Entity;
(iv) any customer of the Group or any Invested Entity;
(v) any person or entity acting in their capacities as advisers or consultants that provides research, development or other technological support to the Group or any Invested Entity; and
(vi) any shareholder of any member of the Group or any Invested Entity or any holder of any securities issued by any member of the Group or any Invested Entity from time to time determined by the directors having contributed or may contribute to the development and growth of the Group and any Invested Entity.
c. The total number of Shares which may be issued upon exercise of all options (excluding, for this purpose, options which have lapsed in accordance with the terms of the Scheme and any other share option scheme of the Company) to be granted under the Scheme and any other share option scheme of the Group must not in aggregate exceed 10% of the shares in issue as at the date of adoption of the Scheme (i.e. 27th May, 2004). The Company can grant options to subscribe up to 56,736,250 Shares which is 10% of the total issued share capital of the Company as at 31st December, 2007. The maximum number of Shares to be issued upon exercise of all outstanding options granted and yet to be exercised under the Scheme and any other share option scheme of the Company must not in aggregate exceed 30% of the issued share capital of the Company from time to time.
d. The total number of Shares issued and which may fall to be issued upon exercise of the options granted under the Scheme and any other share option scheme of the Company (including both exercised or outstanding options) to each Participant in any 12-month period shall not exceed 1% of the issued share capital of the Company for the time being.
e. An option may be exercised in accordance with the terms of the Scheme at any time during a period to be determined and notified by the directors to each grantee, which period may commence on the date on which the offer for the grant of options is made but shall end in any event not later than 10 years from the date of grant of the option subject to the provisions for early termination thereof.
f. An offer of grant of an option may be accepted by a Participant within 28 days from the date of the offer of grant of the option. A consideration of HK$1 is payable on acceptance of the offer of grant of an option.
g. The subscription price per Share under the Scheme shall be a price determined by the directors, but shall not be lower than the highest of:
(i) the closing price of the Share as stated in the Stock Exchange’s daily quotation sheet on the date of grant, which must be a trading day;

— 57 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

(ii) the average closing price of the Shares as stated in the Stock Exchange’s daily quotations sheet for the five trading days immediately preceding the date of grant; and
(iii) the nominal value of a Share.
h. The Scheme has a life of 10 years and will expire on 26th May, 2014.

No share option was granted since the adoption of the Scheme.

35. DEFERRED TAXATION

The following are the major deferred tax assets (liabilities) recognised and movements thereon during the current and prior years:

Accelerated Revaluation Accelerated accounting on tax depreciation properties depreciation HK$’000 HK$’000 HK$’000 At 1st January, 2006 2,666 (4,348) (20,483) Exchange differences — (22) — Credit (charge) to income for the year 256 — 2,821 At 31st December, 2006 2,922 (4,370) (17,662) Exchange differences — (48) — Credit (charge) to income for the year 269 (942) 732 At 31st December, 2007 3,191 (5,360) (16,930)	Tax losses HK$’000 10,452 — (3,077) 7,375 — 362 7,737	Others HK$’000 — — — — — 199 199	Total HK$’000 (11,713) (22) — (11,735) (48) 620 (11,163)

For the purposes of balance sheet presentation, deferred tax assets and liabilities have been offset and shown under non-current liabilities.

At the balance sheet date, the Group has unused tax losses of HK$708,458,000 (2006: HK$701,046,000) available for offset against future profits. A deferred tax asset has been recognised in respect of HK$44,241,000 (2006: HK$42,150,000) of such losses. No deferred tax asset has been recognised in respect of the remaining HK$664,217,000 (2006: HK$658,896,000) due to the unpredictability of future profit streams. Included in unused tax losses is tax loss of HK$12,830,000 (2006: HK$6,710,000) which will expire within five years.

At the balance sheet date, the Group has deductible temporary differences of HK$30,047,000 (2006: HK$30,740,000) in respect of accelerated accounting depreciation, allowance for doubtful debts and inventories. A deferred tax asset has been recognised in respect of HK$19,370,000 (2006: HK$16,696,000) of such deductible temporary differences. No deferred tax asset has been recognised in respect of the remaining HK$10,677,000 (2006: HK$14,044,000) as it is not probable that taxable profit will be available against which the deductible temporary differences can be utilised.

36. MAJOR NON-CASH TRANSACTIONS

During the year, the Group entered into finance leases in respect of the acquisition of property, plant and equipment with a total capital value at the inception of the leases of HK$771,000 (2006: HK$5,031,000).

— 58 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

37. PLEDGE OF ASSETS

At the balance sheet date, the Group had pledged the following assets to banks as securities against banking facilities granted to the Group:

Investment properties Land and buildings and prepaid lease payments Plant and machinery and equipment Bank deposits	2007 HK$’000 14,660 18,770 11,302 6,846 51,578	2006 HK$’000 23,400 41,605 13,104 23,707
		101,816

38. CONTINGENT LIABILITIES

At the balance sheet date, the Group has provided corporate guarantees to the extent of HK$5,100,000 (2006: HK$4,600,000) to a bank to secure the banking facilities granted to its associates. As at 31st December, 2007, the associates utilised the banking facilities of approximately HK$3,501,000 (2006: HK$3,963,000). Such guarantee will be released by banks upon the expiry of the banking facilities. In the opinion of directors, the fair value of the financial guarantee contracts at the date of inception is not significant.

39. OPERATING LEASE COMMITMENTS

The Group as lessee

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

Land and buildings: Within one year In the second to fifth year inclusive After five years Plant and machinery and equipment: Within one year	2007 HK$’000 12,247 10,955 5,274 28,476 —	2006 HK$’000 11,851 16,680 14,475
		43,006

		720

Operating lease payments represent rentals payable by the Group for certain of its office premises, staff quarters and plant and machinery and equipment. Leases of office premises and staff quarters are negotiated for terms ranging from one to twenty years.

— 59 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

The Group as lessor

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

Land and buildings: Within one year In the second to fifth year inclusive After five years	2007 HK$’000 690 — — 690	2006 HK$’000 1,745 2,090 493
		4,328

All of the properties held have committed tenants for the next one year.

40. CAPITAL COMMITMENTS

	2007	2006
	HK$’000	HK$’000
Capital expenditure in respect of acquisition of property,
plant and equipment contracted for but not provided in
the consolidated financial statements	18,591	3,134

41. RETIREMENT BENEFITS SCHEMES

The Group participates in both a defined contribution scheme which is registered under the Occupational Retirement Scheme Ordinance (the “ORSO Scheme”) and a Mandatory Provident Fund Scheme (the “MPF Scheme”) established under the Mandatory Provident Fund Ordinance in December 2000. The assets of the schemes are held separately from those of the Group, in funds under the control of independent trustees. Employees who were members of the ORSO Scheme prior to the establishment of the MPF Scheme were offered a choice of staying within the ORSO Scheme or switching to the MPF Scheme, whereas all new employees joining the Group on or after 1st December, 2000 are required to join the MPF Scheme.

For members of the MPF Scheme, the Group contributes at 5% of relevant payroll costs or HK$1,000 per month to the Scheme.

Where there are employees who leave the ORSO Scheme prior to vesting fully in the contributions, the contributions payable by the Group are reduced by the amount of forfeited contributions.

Employees located in the PRC are covered by the retirement and pension schemes defined by local practice and regulations and which are essentially defined contribution schemes.

During the year, the Group made retirement benefits scheme contributions of HK$3,688,000 (2006: HK$3,657,000) after forfeited contributions utilised in the Group’s ORSO Scheme of HK$9,000 (2006: HK$94,000).

— 60 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

42. RELATED PARTY TRANSACTIONS

During the year, the Group entered into the following transactions with related parties:

==> picture [370 x 225] intentionally omitted <==

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

Acquisition of Acquisition of Payment
additional interest property, plant on behalf
Trade sales Trade purchases Rental charges in a subsidiary and equipment of the entities
2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
A jointly
controlled
— — — — — — — — — —
entity 5,038 4,805
Associates — 842 — — — — — — — — 27 35
Minority
shareholders
with
significant
influence
over certain
subsidiaries — — — — 155 147 1,088 7,054 2,865 — — —
----- End of picture text -----

Compensation of key management personnel

The Group’s key management personnel are all directors, details of their remuneration are disclosed in note 10.

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

43. 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 net debt, which includes the borrowings disclosed in note 31, net of cash and cash equivalents, and equity attributable to equity holders of the Company, comprising issued share capital, reserves and retained profits. Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.

The directors of the Company review the capital structure periodically. As a part of this review, the directors of the Company consider the cost of capital and the risks associated with each class of capital. Based on recommendations of the management of the Group, 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 repayment of existing debt, if necessary.

— 61 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

44. FINANCIAL INSTRUMENTS

(a) Categories of financial instruments

Financial assets Loans and receivables (including cash and cash equivalents) Financial liabilities At amortised cost Derivative financial instruments	2007 HK$’000 782,144 883,934 13 883,947	2006 HK$’000 597,321

		682,450 322
		682,772

(b) Financial risk management objectives and policies

The Group’s major financial instruments include long-term receivables, trade and other receivables, bank deposits and balances, amounts due from jointly controlled entities and an associate, trade and other payables, borrowings and amounts due to minority shareholders. Details of the financial instruments are disclosed in respective notes.

The management monitors and manages the financial risks relating to the operations of the Group through internal risk assessment which analyses exposures by degree and magnitude of risks. The risks include market risk (including currency risk and interest rate risk), credit risk and liquidity risk. The policies on how to mitigate these risks are set out below. The management manages and monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner.

The Group’s activities expose primarily to the financial risks of changes in foreign currency exchange rates and interest rates. There has been no change to the Company’s exposure to market risks or the manner in which it manages and measures.

(c) Foreign currency risk management

Several subsidiaries of the Company have foreign currency sales and purchases, which expose the Group to foreign currency risk. The Group also have trade and receivables, trade and other payables and borrowings denominated in foreign currency.

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

	Assets		Liabilities
	2007	2006	2007	2006
	HK$’000	HK$’000	HK$’000	HK$’000
Hong Kong dollars	4,733	4,641	—	—
United States dollars	41,798	33,781	54,960	83,319
Renminbi	13,151	11,912	7,339	9,505
Others	243	1,118	126	652

— 62 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Foreign currency sensitivity

The Group is mainly exposed to the currency of Hong Kong dollars, United States dollars and Renminbi.

The following table details the Group’s sensitivity to a 5% increase and decrease in the functional currencies of the relevant group entities against the relevant foreign currencies. 5% is the sensitivity rate used in management’s assessment of the possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the year end for a 5% change in foreign currency rates. A positive (negative) number indicates an increase (decrease) in profit for the year where the functional currencies of the relevant group entities strengthens against the relevant foreign currencies. For a 5% weakening of the functional currencies of the relevant group entities, there would be an equal and opposite impact on the profit for the year.

	Profit for the year	Profit for the year
	2007	2006
	HK$’000	HK$’000
Hong Kong dollars	(237)	(232)
United States dollars	658	2,477
Renminbi	(291)	(120)

In management’s opinion, the sensitivity analysis is unrepresentative of the foreign exchange risk inherent in the financial assets and financial liabilities as the year end exposure does not reflect the exposure during the year.

(d) Interest rate risk management

The Group is exposed to cash flow interest rate risk due to the fluctuation of the prevailing market interest rate on building mortgage loan and variable-rate bank and other borrowings and obligations under finance leases (see notes 31 and 32 for details of these borrowings). It is the Group’s policy to keep its borrowings at floating rate of interests so as to minimise the fair value interest rate risk.

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 HIBOR, LIBOR and PBOC arising from the Group’s borrowings denominated in Hong Kong dollars, United States dollars and Renminbi.

Sensitivity analysis

The sensitivity analyses below have been determined based on the exposure to interest rates for building mortgage loan, variable-rate bank and other borrowings and obligations under finance leases. The analysis is prepared assuming the amount of asset and liability outstanding at the balance sheet date was existed for the whole year. A 50 basis point increase or decrease represents management’s assessment of the reasonably possible change in interest rates.

If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Group’s profit for the year ended 31st December, 2007 would decrease/ increase by HK$3,176,000 (2006: decrease/increase by HK$2,261,000).

— 63 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

(e) Credit risk management

As at 31st December, 2007, 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 and financial guarantees provided by the Group is arising from:

the carrying amount of the respective recognised financial assets as stated in the consolidated balance sheet; and
the amount of contingent liabilities in relation to financial guarantee issued by the Group as disclosed in note 38.

In order to minimise the credit risk, the Group has policies in place 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 trade 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 Group has no significant concentration of credit risk on trade receivables, with exposure spread over a number of counterparties and customers.

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

(f) Liquidity risk management

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.

As at 31st December, 2007, the Group has available unutilised overdraft and short and medium-term bank loan facilities of approximately HK$171,373,000 (2006: HK$306,167,000) respectively.

The following table details the Group’s remaining contractual maturity for its nonderivative 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.

— 64 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

For derivative instruments settle on a net basis, the management consider the risk associated with the derivative instruments has no significant effects on the Group’s cash flows.

Weighted average effective interest rate % 2007 Non-derivative instruments Trade and other payables — Bank and other borrowings — Fixed interest rate 6.63 — Variable interest rate 6.02 Amount due to minority shareholders — Obligations under finance lease — Fixed interest rate 7.02 — Variable interest rate 6.33	0-3 months HK$’000 208,883 2,395 197,414 3,779 67 604 413,142	4-6 months HK$’000 24,177 9,960 383,061 — 67 601 417,866	7-12 months HK$’000 102 3,738 57,146 — 134 1,064 62,184	1-2 year HK$’000 — — 2,720 — 262 1,922 4,904	2-3 years HK$’000 — — 2,740 — 216 65 3,021	3-5 years HK$’000 — — 688 — 23 — 711	Total undiscounted cash flows HK$’000 233,162 16,093 643,769 3,779 769 4,256 901,828	Carrying amount at 31/12/2007 HK$’000 233,162 15,698 631,295 3,779 692 4,050
								888,676

— 65 —

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

Weighted average effective interest rate % 2006 Non-derivative instruments Trade and other payables — Bank and other borrowings — Fixed interest rate 6.82 — Variable interest rate 7.13 Amount due to minority shareholders — Obligations under finance lease — Fixed interest rate 9.68 — Variable interest rate 6.94	0-3 months HK$’000 183,789 25,347 220,012 2,791 99 842 432,880	4-6 months HK$’000 575 9,496 209,238 — 25 842 220,176	7-12 months HK$’000 — 16,208 13,739 — 9 1,683 31,639	1-2 year HK$’000 — — 4,101 — 19 2,305 6,425	2-3 years HK$’000 — — 2,717 — 13 1,957 4,687	3-5 years HK$’000 — — 3,461 — 10 66 3,537	Total undiscounted cash flows HK$’000 184,364 51,051 453,268 2,791 175 7,695 699,344	Carrying amount at 31/12/2006 HK$’000 184,364 49,821 445,474 2,791 162 7,035
								689,647

— 66 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

(g) Fair value of financial instruments

The fair value 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.

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.

45. PARTICULARS OF THE PRINCIPAL SUBSIDIARIES OF THE COMPANY

				Proportion of	Proportion of
		Place of	Issued and	nominal	value of
	Form of	incorporation/	fully paid share	issued capital/
	business	registration/	capital/paid up	registered capital
Name of company	structure	operation	registered capital	held by the Group		Principal activities
				2007	2006
Advance Concord	Incorporated	Hong Kong	HK$1,000,000	100%	100%	Property holding
Development Limited			Ordinary shares
China Metal Technology	Incorporated	Hong Kong	HK$1,000,000	100%	100%	Investment holding and
Holdings Limited			Ordinary shares			trading of steel and
						metal products
Dah Bang Printing Ink	Incorporated	Hong Kong	HK$10,000	95%	95%	Investment holding and
Manufactory Limited			Ordinary shares			sales of printing
			HK$10,100,000			materials, spare
			Non-voting			parts and machines
			deferred shares**
Ding Cheong Limited	Incorporated	Hong Kong	HK$500,000	55%	55%	Investment holding and
			Ordinary shares			sales of construction
						materials
Ding Cheong (Jiangmen)	Wholly foreign	PRC	HK$3,000,000	55%	55%	Manufacturing and
Metal Mfg. Co., Ltd.	owned		Registered capital			sales of metal
	enterprise					products
Fulwealth Metal Factory	Incorporated	Hong Kong	HK$20,000,000	77%	77%	Decoiling centers
Limited *			Ordinary shares
G.F.T.Z. Golik Metal	Wholly foreign	PRC	HK$5,000,000	100%	80%	Sales of steel and metal
Trading Co., Ltd.	owned		Registered capital			products
	enterprise
Golik Concrete Limited	Incorporated	Hong Kong	HK$60,000,000	100%	100%	Investment holding and
			Ordinary shares			operating concrete
						batching plants

— 67 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

				Proportion of	Proportion of
		Place of	Issued and	nominal	value of
	Form of	incorporation/	fully paid share	issued capital/
	business	registration/	capital/paid up	registered capital
Name of company	structure	operation	registered capital	held by the Group		Principal activities
				2007	2006
Golik Godown Limited	Incorporated	Hong Kong	HK$2	100%	100%	Provision of warehouse
			Ordinary shares			services
Golik Metal Company	Incorporated	Hong Kong	HK$750,000,000	100%	100%	Investment and
Limited			Ordinary shares			properties holding
Golik Metal Industrial	Incorporated	Hong Kong	HK$10,000	100%	100%	Investment holding
Company Limited *			Ordinary shares			and sales of metal
			HK$5,135,000			products
			Non-voting
			deferred shares**
Golik Metal	Incorporated	Hong Kong	HK$30,000,000	100%	100%	Manufacturing and
Manufacturing			Ordinary shares			sales of welded wire
Co. Limited						mesh and metal
						products
Golik Properties Limited *	Incorporated	Hong Kong	HK$2	100%	100%	Property investment
			Ordinary shares
Golik Steel Company	Incorporated	Hong Kong	HK$80,000,000	100%	100%	Investment holding and
Limited			Ordinary shares			sales of steel bars
						and metal products
Orient Smart Industrial	Incorporated	Hong Kong	HK$10,000,000	51%	51%	Manufacturing and
Limited			Ordinary shares			sales of PVC plastic
						products
Stahl Trading Pty Ltd.	Incorporated	Australia	AUS$100	100%	100%	Sales of steel and
			Ordinary shares			metal products
The Spacers & Bar Chairs	Incorporated	Hong Kong	HK$800,000	80%	80%	Manufacturing and
Manufacturer Company			Ordinary shares			sales of construction
Limited						materials
Tianjin Golik — The First	Equity joint	PRC	RMB49,000,000	51%	51%	Manufacturing and
PC Steel Strand	venture		Registered capital			sales of pre-stressed
Co., Ltd.						steel wires
Worldlight Group Limited *	Incorporated	British Virgin	US$2	100%	100%	Investment holding
		Islands	Ordinary shares
鶴山恒基鋼絲制品有限公司	Wholly foreign	PRC	US$3,880,000	100%	100%	Manufacturing and
	owned		Registered capital			sales of steel wire
	enterprise					products and steel
						ropes

— 68 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

				Proportion of
		Place of	Issued and	nominal value of
	Form of	incorporation/	fully paid share	issued capital/
	business	registration/	capital/paid up	registered capital
Name of company	structure	operation	registered capital	held by the Group	Principal activities
				2007 2006
廣東水利混凝土有限公司	Wholly foreign	PRC	RMB27,800,000	100% 100%	Operating a concrete
	owned		Registered capital		batching plant
	enterprise
鶴山高力金屬制品有限公司	Wholly foreign	PRC	US$1,973,687	100% 100%	Manufacturing and
	owned		Registered capital		sales of steel wire
	enterprise				mesh and metal
					products

Subsidiaries held directly by the Company
** The deferred shares, which are not held by the Group, practically carry no right to dividend or to receive notice of or to attend or vote at any general meeting of the respective company or to participate in any distribution on winding up.

Note:

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, results in particulars of excessive length.

None of the subsidiaries had any debt security outstanding at the end of the year or at any time during the year.

— 69 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

3. UNAUDITED CONDENSED FINANCIAL STATEMENTS OF THE GROUP FOR THE SIX MONTHS ENDED 30TH JUNE, 2008

Set out below is the unaudited consolidated financial statements of the Group for the six months ended 30th June, 2008 together with the notes therein, which are extracted from the interim report of the Company for the six months ended 30th June, 2008.

Condensed Consolidated Income Statement

For the six months ended 30th June, 2008

Notes
Turnover
4
Cost of sales
Gross profit
Other income
Interest income
Other gains and losses
5
Selling and distribution costs
Administrative expenses
Finance costs
6
Share of results of jointly controlled
entities
Share of results of associates
Profit before taxation
Income taxes
7
Profit for the period
8
Attributable to:
Equity holders of the Company
Minority interests
Dividend paid of 1.2 HK cents
(2007: 2.2 HK cents) per share
9
Earnings per share
10
Basic

Six months ended
30.6.2008
30.6.2007
HK$’000
HK$’000
(unaudited)
(unaudited)
1,804,172
1,151,043
(1,628,512)
(1,038,965)
175,660
112,078
12,226
14,036
976
1,197
(5,076)
1,097
(44,071)
(32,773)
(69,774)
(59,318)
(19,867)
(15,483)
15
114
1,968
667
52,057
21,615
(5,494)
(1,791)
46,563
19,824
38,601
17,561
7,962
2,263
46,563
19,824
6,808
12,460
6.80 HK cents
3.10 HK cents

— 70 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Condensed Consolidated Balance Sheet

At 30th June, 2008

Notes Non-current Assets Goodwill Investment properties 11 Property, plant and equipment 11 Prepaid lease payments Interests in jointly controlled entities Interests in associates Long-term receivables Rental and other deposits Deposits paid for acquisition of property, plant and equipment Current Assets Inventories Trade and other receivables 12 Amounts due from jointly controlled entities Amount due from an associate Prepaid lease payments Income tax recoverable Derivative financial instruments Pledged bank deposits 16 Bank balances and cash Assets classified as held for sale	30.6.2008 HK$’000 (unaudited) 4,063 17,310 245,208 33,769 1,794 10,825 1,113 1,267 6,655 322,004 520,733 603,071 7,014 — 859 120 253 72,622 164,726 1,369,398 — 1,369,398	31.12.2007 HK$’000 (audited) 5,563 17,310 225,077 33,276 1,779 8,857 2,356 1,368 10,524 306,110 325,489 644,722 7,009 527 837 2,258 — 6,846 163,279 1,150,967 22,484 1,173,451

— 71 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Notes Current Liabilities Trade and other payables 13 Amounts due to minority shareholders Amount due to an associate Income tax payable Derivative financial instruments Bank borrowings 14 Obligations under finance leases Bank overdrafts — unsecured Net Current Assets Capital and Reserves Share capital 15 Share premium and reserves Equity attributable to equity holders of the Company Minority interests Total Equity Non-current Liabilities Deferred tax liabilities Bank borrowings 14 Obligations under finance leases	30.6.2008 HK$’000 (unaudited) 264,595 3,360 803 2,649 — 762,974 2,235 7,121 1,043,737 325,661 647,665 56,736 468,781 525,517 89,361 614,878 11,209 20,296 1,282 32,787 647,665	31.12.2007 HK$’000 (audited) 248,232 3,779 — 1,496 13 640,417 2,340 738 897,015 276,436 582,546 56,736 427,063 483,799 79,344 563,143 11,163 5,838 2,402 19,403 582,546

— 72 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Condensed Consolidated Statement of Changes in Equity

For the six months ended 30th June, 2008

		Attributable to equity holders of	Attributable to equity holders of	the Company		Total HK$’000 542,137
Share capital HK$’000 56,736 — — — — — — 56,736 — — — — — 56,736 — — — — 56,736	Share premium HK$’000 318,118 — — — — — — 318,118 — — — — — 318,118 — — — — 318,118	Property revaluation reserve HK$’000 19,566 — — — — — — 19,566 — — — — — 19,566 — — — — 19,566	Exchange reserve HK$’000 6,361 3,520 — 3,520 — — — 9,881 5,639 — 5,639 — — 15,520 9,925 — 9,925 — 25,445	PRC statutory reserve HK$’000 (note) 3,389 — — — — — — 3,389 — — — — — 3,389 — — — — 3,389	Retained profits HK$’000 55,367 — 17,561 17,561 — (12,460) — 60,468 — 10,024 10,024 — (22) 70,470 — 38,601 38,601 (6,808) 102,263
						4,371 19,824
						24,195
						(1,380) (12,460) (1,019)
						551,473
						6,829 10,383
						17,212
						(5,520) (22)
						563,143
						11,980 46,563
						58,543
						(6,808)
						614,878

Note: People’s Republic of China (the “PRC”) statutory reserve is reserve required by the relevant laws in the PRC applicable to subsidiaries in the PRC for enterprise development purposes.

— 73 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Condensed Consolidated Cash Flow Statement

For the six months ended 30th June, 2008

NET CASH USED IN OPERATING
ACTIVITIES
INVESTING ACTIVITIES
Purchase of property, plant and equipment
Deposits paid for acquisition of property,
plant and equipment
(Increase) decrease in pledged bank deposits
Proceeds from disposal of property,
plant and equipment
Proceeds from disposal of assets classified
as held for sale
Proceeds from disposal of investment properties
Others
NET CASH (USED IN) FROM INVESTING
ACTIVITIES
FINANCING ACTIVITIES
Bank loans raised
Repayment of bank loans
Interest paid
Dividend paid to minority shareholders of
subsidiaries
Dividend paid
Net borrowing of trust receipt loans
Repayment of mortgage loans
Others
NET CASH FROM FINANCING ACTIVITIES
NET DECREASE 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
ANALYSIS OF THE BALANCES OF CASH
AND CASH EQUIVALENTS
Bank balances and cash
Bank overdrafts

Six months ended
30.6.2008
30.6.2007
HK$’000
HK$’000
(unaudited)
(unaudited)
(45,125)
(75,156)
(23,358)
(7,582)
(4,425)
—
(65,330)
4,139
42
178
28,594
—
—
11,500
1,456
876
(63,021)
9,111
172,759
94,257
(133,555)
(120,992)
(20,381)
(15,729)
—
(1,380)
(6,808)
(12,460)
91,383
68,364
(1,193)
(1,089)
(1,815)
(1,813)
100,390
9,158
(7,756)
(56,887)
162,541
142,949
2,820
1,303
157,605
87,365
164,726
91,107
(7,121)
(3,742)
157,605
87,365

— 74 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Notes to the Condensed Consolidated Financial Statements

For the six months ended 30th June, 2008

1. GENERAL

The Company was incorporated in Bermuda as an exempted company with limited liability and its shares are listed on The Stock Exchange of Hong Kong Limited.

2. 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 on The Stock Exchange of Hong Kong Limited and with Hong Kong Accounting Standard (“HKAS”) 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”).

3. PRINCIPAL ACCOUNTING POLICIES

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

The accounting policies adopted in the condensed consolidated financial statements are consistent with those followed in the preparation of the annual financial statements of the Company and its subsidiaries (the “Group”) for the year ended 31st December, 2007.

In the current interim period, the Group has applied, for the first time, the following new interpretations (“new Interpretations”) issued by the HKICPA, which are effective for the Group’s financial year beginning on 1st January, 2008.

HK(IFRIC) — Int 11 HKFRS 2: Group and Treasury Share Transactions 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 these new Interpretations had no material effect on the results or financial position of the Group for the current or prior accounting periods. Accordingly, no prior period adjustment has been recognised.

— 75 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

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

HKAS 1 (Revised) Presentation of Financial Statements1 HKAS 23 (Revised) Borrowing Costs1 HKAS 27 (Revised) Consolidated and Separate Financial Statements2 HKAS 32 & 1 (Amendments) Puttable Financial Instruments and Obligations Arising on Liquidation1 HKFRS 2 (Amendment) Vesting Conditions and Cancellations1 HKFRS 3 (Revised) Business Combinations2 HKFRS 8 Operating Segments1 HK(IFRIC) — Int 13 Customer Loyalty Programmes3 HK(IFRIC) — Int 15 Agreements for the Construction of Real Estate1 HK(IFRIC) — Int 16 Hedges of a Net Investment in a Foreign Operation4

1 Effective for annual periods beginning on or after 1st January, 2009

2 Effective for annual periods beginning on or after 1st July, 2009

3 Effective for annual periods beginning on or after 1st July, 2008

4 Effective for annual periods beginning on or after 1st October, 2008

The adoption of HKFRS 3 (Revised) may affect the accounting for business combination for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1st July, 2009. HKAS 27 (Revised) will affect the accounting treatment for changes in a parent’s ownership interest in a subsidiary that do not result in a loss of control, which will be accounted for as equity transactions. The directors of the Company are in the process of assessing the potential impact and so far concluded that the application of the other new or revised standards, amendments or interpretations will have no material impact on the results and the financial position of the Group.

— 76 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

4. TURNOVER AND SEGMENT INFORMATION

The turnover and contributions to profit of the Group for the six months ended 30th June, 2008, analysed by business segments are as follows:

The Group’s primary format for reporting segment information is business segment.

For the six months ended 30th June, 2008

Manufacturing Sales of steel Manufacturing of steel and and metal of construction metal products products materials HK$’000 HK$’000 HK$’000 TURNOVER External sales 691,602 61,127 158,021 Inter-segment sales 13,259 643 4,282 Total turnover 704,861 61,770 162,303 Inter-segment sales are charged at cost or cost plus a percentage profit mark-up. SEGMENT RESULT 45,410 2,022 7,901 Unallocated other income Unallocated corporate expenses Gain on disposal of assets classified as held for sale Impairment loss on goodwill — — (200) Finance costs Share of results of jointly controlled entities — — — Share of results of associates 1,968 — — Profit before taxation Income taxes Profit for the period	Sales of construction materials HK$’000 798,206 24,663 822,869 18,702 — — —	Other operations HK$’000 95,216 — 95,216 (1,143) (1,300) 15 —	Eliminations HK$’000 — (42,847) (42,847) (763) — — —	Consolidated HK$’000 1,804,172 —
				1,804,172

				72,129 2,434 (9,232) 6,110 (1,500) (19,867) 15 1,968
				52,057 (5,494)
				46,563

— 77 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

For the six months ended 30th June, 2007

Manufacturing
Sales of steel
Manufacturing
Sales of
of steel and
and metal
of construction
construction
metal products
products
materials
materials
HK$’000
HK$’000
HK$’000
HK$’000
TURNOVER
External sales
545,924
52,373
154,449
293,834
Inter-segment sales
5,085
14,421
213
31,724
Total turnover
551,009
66,794
154,662
325,558
Inter-segment sales are charged at cost or cost plus a percentage profit mark-up.
SEGMENT RESULT
21,047
3,031
11,907
6,905
Unallocated other
income
Unallocated corporate
expenses
Impairment loss on
goodwill
—
—
(100)
—
Finance costs
Share of results of
jointly controlled
entities
—
—
—
—
Share of results of
associates
667
—
—
—
Profit before taxation
Income taxes
Profit for the period
OTHER GAINS AND LOSSES
Allowance (write back of) for bad and doubtful debts, net
Gain on disposal of assets classified as held for sale_(Note)_
Impairment loss on goodwill

Other
operations
Eliminations
Consolidated
HK$’000
HK$’000
HK$’000
104,463
—
1,151,043
—
(51,443)
—
104,463
(51,443)
1,151,043
446
194
43,530
2,274
(8,587)
(800)
—
(900)
(15,483)
114
—
114
—
—
667
21,615
(1,791)
19,824
Six months ended
30.6.2008
30.6.2007
HK$’000
HK$’000
9,686
(1,997)
(6,110)
—
1,500
900
5,076
(1,097)

5. OTHER GAINS AND LOSSES

Note:

On 25th April, 2007, Golik Concrete Limited, a wholly owned subsidiary of the Company entered into an agreement with an independent third party for the disposal of the Group’s leasehold land and building (the “Property”) located in Hong Kong under the medium term lease. The net proceeds received from disposal of the Property was HK$28,594,000. The disposal was completed on 24th April, 2008, a gain on disposal of HK$6,110,000 has been recognised in condensed consolidated income statement for the current period.

— 78 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

6. FINANCE COSTS

Interest on: Bank borrowings and bank overdrafts wholly repayable within five years Finance leases	Six months ended 30.6.2008 30.6.2007 HK$’000 HK$’000 19,757 15,252 110 231 19,867 15,483	Six months ended 30.6.2008 30.6.2007 HK$’000 HK$’000 19,757 15,252 110 231 19,867 15,483
		15,483

7. INCOME TAXES

Current tax: Hong Kong Other jurisdictions	Six months ended 30.6.2008 30.6.2007 HK$’000 HK$’000 2,591 1,078 2,903 713 5,494 1,791	Six months ended 30.6.2008 30.6.2007 HK$’000 HK$’000 2,591 1,078 2,903 713 5,494 1,791
		1,791

On 26th June, 2008, the Hong Kong Legislative Council passed the Revenue Bill 2008 which includes the reduction in corporate profit tax rate by 1% to 16.5% effective from the year of assessment 2008-2009. The effect of such decrease has been reflected in measuring the current tax for the six months ended 30th June, 2008. The estimated average annual tax rate used is 16.5% (2007: 17.5%) for the six months ended 30th June, 2008.

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

On 16th March, 2007, the PRC promulgated the Law of the PRC on Enterprise Income Tax (the “New Law”) by Order No. 63 of the President of the PRC. On 6th December, 2007, the State Council of the PRC issued Implementation Regulation of the New Law. The New Law and the Implementation Regulation have changed the tax rate from 33% to 25% for the Group’s PRC subsidiaries from 1st January, 2008. According to the Circular of the State Council on the Implementation of Transitional Preferential Policies for Enterprise Income Tax (Guofa [2007] No. 39), the tax exemption and deduction for the foreign investment enterprises is still applicable until the end of the five-year transitional period under the New Law.

— 79 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

8. PROFIT FOR THE PERIOD

	Six months	ended
	30.6.2008	30.6.2007
	HK$’000	HK$’000
Profit for the period has been arrived at after charging
(crediting):
Amortisation of prepaid lease payments	424	596
Depreciation	18,251	17,702
Loss (gain) on disposal of property, plant and equipment	65	(72)
Change in fair value of derivative financial instruments	(1,061)	(3,437)

9. DIVIDEND

On 20th June, 2008, a dividend of 1.2 HK cents per share, amounting to HK$6,808,000, was paid to shareholders as the final dividend for the year ended 31st December, 2007.

The Board of Directors does not recommend the payment of an interim dividend for the six months ended 30th June, 2008.

10. EARNINGS PER SHARE

The calculation of the basic earnings per share is based on the profit for the period attributable to the equity holders of the Company of HK$38,601,000 (2007: HK$17,561,000) and 567,362,500 (2007: 567,362,500) shares in issue during the period.

11. INVESTMENT PROPERTIES, PROPERTY, PLANT AND EQUIPMENT

In the opinion of the directors, there is no material difference between the carrying amount and the fair values of investment properties or revalued amounts of buildings at 30th June, 2008.

During the period, the Group spent approximately HK$32.7 million on the acquisition of assets in order to facilitate its manufacturing capabilities. In addition, the Group disposed of property, plant and equipment with a carrying amount of approximately HK$0.1 million.

12. TRADE AND OTHER RECEIVABLES

Other than the cash sales, the Group allows credit periods ranging from 30 to 90 days to its customers.

The following is an aged analysis of trade receivables at the balance sheet date:

0 — 30 days 31 — 60 days 61 — 90 days 91 — 120 days More than 120 days	30.6.2008 HK$’000 234,939 181,308 65,993 22,109 24,095 528,444	31.12.2007 HK$’000 262,918 158,038 80,271 42,258 32,362
		575,847

— 80 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

13. TRADE AND OTHER PAYABLES

The Group normally receives credit terms of 30 to 90 days from its suppliers.

The following is an aged analysis of trade payables and bill payables at the balance sheet date:

0 — 30 days 31 — 60 days 61 — 90 days 91 — 120 days More than 120 days	30.6.2008 HK$’000 80,002 39,714 30,380 18,238 4,140 172,474	31.12.2007 HK$’000 95,259 17,602 23,275 8,895 22,737
		167,768

14. BANK BORROWINGS

During the period, the Group obtained new bank loans of HK$173 million and repaid bank loans and mortgage loans of HK$134 million and HK$1 million respectively, and net borrowings of trust receipt loans of HK$91 million. The loans bear interest at market rates with an average effective borrowing rates ranging from 1.9% to 3.6% (2007: 2.58% to 3.02%) per annum and are repayable within five years.

15. SHARE CAPITAL

Ordinary shares of HK$0.10 each Authorised: At 31st December, 2007 and 30th June, 2008 Issued and fully paid: At 31st December, 2007 and 30th June, 2008	Number of shares 1,800,000,000 567,362,500	Amount HK$’000 180,000

		56,736

16. PLEDGE OF ASSETS

At 30th June, 2008, the Group has pledged the following assets to financial institutions as securities against credit facilities granted to the Group:

Investment properties Land and buildings and prepaid lease payments Plant and machinery and equipment Bank deposits	30.6.2008 HK$’000 14,660 19,611 10,475 72,622 117,368	31.12.2007 HK$’000 14,660 18,770 11,302 6,846
		51,578

— 81 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

17. CAPITAL COMMITMENTS

	30.6.2008	31.12.2007
	HK$’000	HK$’000
Capital expenditure in respect of acquisition of property,
plant and equipment contracted for but not provided in the
condensed consolidated financial statements	4,009	18,591

18. CONTINGENT LIABILITIES

At 30th June, 2008, the Group has provided corporate guarantees to the extent of HK$5,965,000 (31.12.2007: HK$5,100,000) to banks to secure the banking facilities granted to its associates. Such guarantee will be released by banks upon the expiry of the banking facilities. In the opinion of directors, the fair value of the financial guarantee contracts at the date of inception is not significant.

19. RELATED PARTY TRANSACTIONS

During the period, the Group entered into the following transactions with related parties:

A jointly controlled entity Associates Minority shareholders of subsidiaries	Trade sales Six months ended 30.6.2008 30.6.2007 HK$’000 HK$’000 — — 2,630 — — —	Trade purchases Six months ended 30.6.2008 30.6.2007 HK$’000 HK$’000 1,734 2,783 — — — —	Rental charges Six months ended 30.6.2008 30.6.2007 HK$’000 HK$’000 — — — — 83 76	Acquisition of additional interest in a subsidiary Six months ended 30.6.2008 30.6.2007 HK$’000 HK$’000 — — — — — 1,089	Payment on behalf of the entities Six months ended 30.6.2008 30.6.2007 HK$’000 HK$’000 — — 38 21 — —	Payment on behalf of the entities Six months ended 30.6.2008 30.6.2007 HK$’000 HK$’000 — — 38 21 — —

						21

						—

Compensation of key management personnel

During the period, the Group paid remuneration of HK$5,110,000 (2007: HK$5,226,000) to the directors, the key management personnel of the Group.

— 82 —

ACCOUNTANTS’ REPORT ON THE CHINA ROPE GROUP

APPENDIX II

==> picture [71 x 54] intentionally omitted <==

28th November, 2008

The Directors Golik Holdings Limited

Dear Sirs,

We set out below our report on the financial information (the “Financial Information”) regarding China Rope Holdings Limited (“the Company”) and its subsidiary (hereinafter together with the Company are collectively referred to as the “China Rope Group”) for each of the years ended 31st March, 2006, 2007 and 2008 and the three months ended 30th June, 2008 (the “Relevant Periods”) for inclusion in the circular of Golik Holdings Limited (“GHL”) to its shareholders dated 28th November, 2008 (the “Circular”) in connection with the acquisition of the entire issued capital of the Company constituting a major acquisition of GHL.

The Company is a private limited company incorporated in Hong Kong on 2nd October, 2003 and acts as an investment holding company.

At the date of this report, the particulars of the subsidiary are as follows:

			Attributable
	Place of		equity interest
	registration/	Registered	held by the	Principal
Name of company	operation	capital	Company	activities
Bridon Tianjin Rope Ltd.	People’s Republic of	US$2,000,000	75.5%	Manufacturing
布頓（天津）鋼絲繩	China (“PRC”)			and sales of
有限公司				steel wire
				ropes for
				elevators

The Company adopts 31st March as the financial year end date and its subsidiary, Bridon Tianjin Rope Ltd. (“Bridon Tianjian”) adopts 31st December as the financial year end date. For the purpose of this report, financial year end date of 31st March, which is consistent to the financial year end date of the Company, is adopted to present the financial information of Bridon Tianjin.

— 83 —

APPENDIX II ACCOUNTANTS’ REPORT ON THE CHINA ROPE GROUP

The financial statements of the Company for each of the three years ended 31st March, 2008 prepared under accounting principles generally accepted in Hong Kong were audited by Ernst & Young. The statutory financial statements of Bridon Tianjin for each of the three years ended 31st December, 2007, which were prepared in accordance with the relevant accounting principles and financial regulations applicable to enterprises established in the PRC, were audited by Tianjin Jind Axin Certified Public Accountants（天津金達信有限責任會計師事務所）.

For the purpose of this report, we have undertaken our own independent audit in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”) on the consolidated financial statements for the Relevant Periods of the China Rope Group prepared in accordance with accounting policies in compliance with Hong Kong Financial Reporting Standards (“HKFRS”).

We have examined the audited financial statements or where appropriate, management accounts of the companies comprising the China Rope Group for the Relevant Periods. Our examination was made in accordance with the Auditing Guideline 3.340 “Prospectuses and the Reporting Accountant” as recommended by the HKICPA.

The Financial Information for the Relevant Periods as set out in this report has been prepared from consolidated financial statements of the China Rope Group (the “Underlying Financial Statements”). No adjustments were deemed necessary by us to the Underlying Financial Statements in preparing our report for inclusion in the Circular.

The preparation of the Underlying Financial Statements is the responsibility of the directors of the Company who approved their issue. The directors of GHL 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, based on our examination and review, 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 China Rope Group as at 31st March, 2006, 2007, 2008 and 30th June, 2008 and of the Company as at 31st March, 2006, 2007, 2008 and 30th June, 2008 and of the consolidated results and cash flows of the China Rope Group for each of the three years ended 31st March, 2008 and the three months ended 30th June, 2008.

The comparative consolidated income statement, consolidated statement of changes in equity and consolidated cash flow statement of the China Rope Group for the three months ended 30th June, 2007 together with the notes thereon have been extracted from the China Rope Group’s unaudited consolidated financial information for the same period (the “30th June, 2007 Financial Information”) which was prepared by the directors of the Company solely

— 84 —

APPENDIX II ACCOUNTANTS’ REPORT ON THE CHINA ROPE GROUP

for the purpose of this report. We conducted our review in accordance with the Hong Kong Standards on Review Engagement 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the HKICPA. A review of the 30th June, 2007 Financial Information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Based on our review, nothing has come to our attention that causes us to believe that the 30th June, 2007 Financial Information is not prepared, in all material respects, in accordance with the accounting policies consistent with those used in the preparation of the Financial Information, which conform with HKFRS.

— 85 —

ACCOUNTANTS’ REPORT ON THE CHINA ROPE GROUP

APPENDIX II

A. FINANCIAL INFORMATION ON THE CHINA ROPE GROUP

Consolidated Income Statements

Notes Turnover 5 Cost of sales Gross profit Other income 6 Selling and distribution costs Administrative expenses Finance costs 7 Profit before taxation Income taxes 8 Profit for the year/ period 9 Attributable to: Equity holders of the Company Minority interests	Year ended 31st March, 2006 2007 2008 HK$’000 HK$’000 HK$’000 82,437 115,194 211,444 (60,780) (86,724) (167,569) 21,657 28,470 43,875 178 638 1,179 (7,600) (10,924) (16,338) (6,879) (9,785) (12,672) (376) (672) (1,044) 6,980 7,727 15,000 (584) (676) (1,532) 6,396 7,051 13,468 4,807 5,313 10,160 1,589 1,738 3,308 6,396 7,051 13,468	Three months ended 30th June, 2007 2008 HK$’000 HK$’000 (unaudited) 48,079 73,120 (38,685) (57,586) 9,394 15,534 218 202 (3,000) (5,226) (2,871) (3,285) (160) (459) 3,581 6,766 (353) (1,563) 3,228 5,203 2,445 3,932 783 1,271 3,228 5,203

— 86 —

ACCOUNTANTS’ REPORT ON THE CHINA ROPE GROUP

APPENDIX II

Consolidated Balance Sheets

Notes Non-current Assets Goodwill 12 Property, plant and equipment 13 Current Assets Inventories 15 Trade and other receivables 16 Amounts due from fellow subsidiaries 17 Amounts due from related companies 18 Pledged bank deposits 19 Bank balances and cash 20 Current Liabilities Trade and other payables 21 Amount due to immediate holding company 22 Amounts due to intermediate holding companies 22 Amount due to a shareholder 22 Amount due to a minority shareholder of a subsidiary 22 Amounts due to related companies 18 Income tax payable Bank borrowings 23 Net Current Assets Total Assets less Current Liabilities Capital and Reserves Share capital 24 Reserves Equity attributable to equity holders of the Company Minority interests Total Equity Non-current Liabilities Deferred tax liability 25 Bank borrowings 23	As 2006 HK$’000 3,466 4,353 7,819 11,560 21,640 204 — 332 14,087 47,823 12,222 662 — 202 856 573 182 10,931 25,628 22,195 30,014 18,163 5,347 23,510 6,504 30,014 — — — 30,014	at 31st March, 2007 HK$’000 3,636 21,673 25,309 15,409 31,229 259 279 1,360 12,596 61,132 25,673 864 5,539 15 898 532 60 12,570 46,151 14,981 40,290 18,163 11,948 30,111 8,604 38,715 — 1,575 1,575 40,290	2008 HK$’000 3,977 26,488 30,465 20,595 39,675 281 — — 21,713 82,264 23,887 1,744 1,929 21 559 581 563 18,141 47,425 34,839 65,304 18,163 25,404 43,567 12,872 56,439 — 8,865 8,865 65,304	As at 30th June, 2008 HK$’000 4,074 28,302
				32,376
				28,694 39,498 22 2,624 — 25,995
				96,833
				31,657 2,041 1,931 53 573 595 1,115 19,718
				57,683
				39,150
				71,526

				18,163 30,454
				48,617 14,476
				63,093
				231 8,202
				8,433
				71,526

— 87 —

ACCOUNTANTS’ REPORT ON THE CHINA ROPE GROUP

APPENDIX II

Balance Sheets of the Company

Notes Non-current Asset Investment in a subsidiary 14 Current Assets Other receivables 16 Amount due from a subsidiary 17 Bank balances and cash 20 Current Liabilities Other payables Amount due to immediate holding company 22 Amount due to intermediate holding company 22 Bank borrowings 23 Net Current (Liabilities) Assets Total Assets Less Current Liabilities Capital and Reserves Share capital 24 Reserves 26 Total Equity Non-current Liability Bank borrowings 23	As at 31st March, As at 30th June, 2006 2007 2008 2008 HK$’000 HK$’000 HK$’000 HK$’000 18,635 19,552 21,383 21,908 9 — — — — 8,467 4,282 4,295 11 47 47 47 20 8,514 4,329 4,342 14 17 20 7 93 819 1,676 1,880 — 5,539 1,235 1,233 — 700 700 700 107 7,075 3,631 3,820 (87) 1,439 698 522 18,548 20,991 22,081 22,430 18,163 18,163 18,163 18,163 385 1,253 3,043 3,567 18,548 19,416 21,206 21,730 — 1,575 875 700 18,548 20,991 22,081 22,430	As at 31st March, As at 30th June, 2006 2007 2008 2008 HK$’000 HK$’000 HK$’000 HK$’000 18,635 19,552 21,383 21,908 9 — — — — 8,467 4,282 4,295 11 47 47 47 20 8,514 4,329 4,342 14 17 20 7 93 819 1,676 1,880 — 5,539 1,235 1,233 — 700 700 700 107 7,075 3,631 3,820 (87) 1,439 698 522 18,548 20,991 22,081 22,430 18,163 18,163 18,163 18,163 385 1,253 3,043 3,567 18,548 19,416 21,206 21,730 — 1,575 875 700 18,548 20,991 22,081 22,430
		— 4,295 47
		4,342
		7 1,880 1,233 700
		3,820
		522
		22,430

		18,163 3,567
		21,730 700
		22,430

— 88 —

ACCOUNTANTS’ REPORT ON THE CHINA ROPE GROUP

APPENDIX II

Consolidated Statements of Changes in Equity

Attributable to equity holders of the Company	Attributable to equity holders of the Company	Attributable to equity holders of the Company	Total HK$’000 (4)
Share capital HK$’000 10 — — — — 18,153 — 18,163 — — — — 18,163 — — — — 18,163 — — — — 18,163 18,163 — — — — 18,163	Exchange reserve HK$’000 (Note a) — 554 — 554 — — — 554 1,288 — 1,288 — 1,842 3,296 — 3,296 — 5,138 1,118 — 1,118 — 6,256 1,842 501 — 501 — 2,343	(Accumulated Other loss) retained reserves profits HK$’000 HK$’000 (Note b) — (14) — — — 4,807 — 4,807 — — — — 786 (786) 786 4,007 — — — 5,313 — 5,313 758 (758) 1,544 8,562 — — — 10,160 — 10,160 2,673 (2,673) 4,217 16,049 — — — 3,932 — 3,932 679 (679) 4,896 19,302 1,544 8,562 — — — 2,445 — 2,445 329 (329) 1,873 10,678
			706 6,396
			7,102
			4,763 18,153 —
			30,014
			1,650 7,051
			8,701
			—
			38,715
			4,256 13,468
			17,724
			—
			56,439
			1,451 5,203
			6,654 —
			63,093

			38,715
			645 3,228
			3,873
			—
			42,588

Notes:

(a) The exchange differences arose from translation of assets and liabilities from their functional currency to the presentation currency.
(b) Other reserves comprise statutory surplus reserve and development fund reserve of the subsidiary established in the PRC. The statutory surplus reserve can only be used to make good of previous years’ losses or to increase the capital of the subsidiary upon the approval of relevant authority.

— 89 —

ACCOUNTANTS’ REPORT ON THE CHINA ROPE GROUP

APPENDIX II

Consolidated Cash Flow Statements

OPERATING ACTIVITIES Profit before taxation Adjustments for: Depreciation Allowance for bad and doubtful debts Interest income Loss on disposal of property, plant and equipment Unrealised foreign exchange loss Finance costs Operating cash flows before movements in working capital Decrease (increase) in inventories (Increase) decease in trade and other receivables (Increase) decrease in amounts due from fellow subsidiaries (Increase) decrease in amounts due from related companies Increase (decrease) in trade and other payables Decrease in amounts due to related companies Cash generated from (used in) operations Taxation outside Hong Kong paid NET CASH FROM (USED IN) OPERATING ACTIVITIES INVESTING ACTIVITIES Acquisition of a subsidiary_(Note 28)_ Purchase of property, plant and equipment (Increase) decrease in pledged bank deposits Proceeds from disposal of property, plant and equipment Interest received NET CASH USED IN INVESTING ACTIVITIES FINANCING ACTIVITIES Bank loans raised Issue of shares Repayment of bank loans Interest paid (Repayment to) advances from a shareholder Advance from immediate holding company Advance from (repayment to) intermediate holding companies (Repayment to) advance from a minority shareholder Repayment to a related company NET CASH FROM FINANCING ACTIVITIES NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR/PERIOD Effect of foreign exchange rate changes CASH AND CASH EQUIVALENTS AT END OF THE YEAR/PERIOD, represented by Bank balances and cash	Year 2006 HK$’000 6,980 399 — (50) 2 889 376 8,596 493 (8,566) 229 — 5,240 (1,359) 4,633 (407) 4,226 (2,175) (2,283) (332) 1 50 (4,739) 25,435 18,153 (27,074) (376) (71) 662 — (602) (1,527) 14,600 14,087 — — 14,087	ended 31st March, 2007 2008 HK$’000 HK$’000 7,727 15,000 838 1,673 — 379 (58) (111) — 43 165 693 672 1,044 9,344 18,721 (3,280) (3,743) (8,524) (5,900) (44) 3 (279) 306 12,849 (4,191) (70) (1) 9,996 5,195 (824) (1,106) 9,172 4,089 — — (17,945) (4,501) (1,028) 1,360 — 3 58 111 (18,915) (3,027) 29,870 41,629 — — (27,194) (30,093) (672) (1,044) (197) 6 197 803 5,539 (4,129) (1) (424) — — 7,542 6,748 (2,201) 7,810 14,087 12,596 710 1,307 12,596 21,713	Three months ended 30th June, 2007 2008 HK$’000 HK$’000 (unaudited) 3,581 6,766 373 562 — — (24) (28) — 16 29 84 160 459 4,119 7,859 10 (7,593) (8,821) 1,152 154 266 (103) (2,624) 2,250 7,183 (1) (1) (2,392) 6,242 (150) (813) (2,542) 5,429 — — (2,142) (1,748) 1,360 — — 6 24 28 (758) (1,714) 24,449 35,694 — — (24,331) (35,442) (160) (459) 21 31 256 255 (24) (46) 278 — — — 489 33 (2,811) 3,748 12,596 21,713 223 534 10,008 25,995	Three months ended 30th June, 2007 2008 HK$’000 HK$’000 (unaudited) 3,581 6,766 373 562 — — (24) (28) — 16 29 84 160 459 4,119 7,859 10 (7,593) (8,821) 1,152 154 266 (103) (2,624) 2,250 7,183 (1) (1) (2,392) 6,242 (150) (813) (2,542) 5,429 — — (2,142) (1,748) 1,360 — — 6 24 28 (758) (1,714) 24,449 35,694 — — (24,331) (35,442) (160) (459) 21 31 256 255 (24) (46) 278 — — — 489 33 (2,811) 3,748 12,596 21,713 223 534 10,008 25,995
				7,859 (7,593) 1,152 266 (2,624) 7,183 (1)
				6,242 (813)
				5,429
				— (1,748) — 6 28
				(1,714)
				35,694 — (35,442) (459) 31 255 (46) — —
				33
				3,748 21,713 534
				25,995

— 90 —

APPENDIX II ACCOUNTANTS’ REPORT ON THE CHINA ROPE GROUP

1. GENERAL

The Company is a private limited company incorporated in Hong Kong. Its immediate holding company is Bridon Hong Kong Limited, a company incorporated in Hong Kong. The directors of the Company consider that its ultimate holding company for the three years ended 31st March, 2006, 2007 and 2008 is FKI plc; and Melrose plc as at 30th June, 2008, both companies are incorporated in the United Kingdom and their shares are listed on the London Stock Exchange.

The Company acts as an investment holding company. The principal activity of its subsidiary is manufacturing and sales of steel wire ropes for elevators in the PRC.

The financial information is presented in Hong Kong dollars, which is different from the functional currency of the Company, i.e. Renminbi (“RMB”), as the Company is a private limited company incorporated in Hong Kong and its shareholders are located in Hong Kong and therefore, the directors consider that Hong Kong dollars is preferable in presenting the operating result and financial position of the China Rope Group.

The address of the registered office and principal place of business of the Company is located at 8/F, Gloucester Tower, The Landmark, 15 Queen’s Road, Central, Hong Kong.

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

For the purposes of preparing and presenting the Financial Information for the Relevant Periods, the China Rope Group has consistently adopted Hong Kong Financial Reporting Standards (“HKFRS”), Hong Kong Accounting Standards (“HKAS”), amendments and interpretations which are effective for the China Rope Group’s financial year beginning on 1st April, 2008 issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”).

At the date of this report, the HKICPA has issued the following new and revised standards and interpretations which are not yet effective in respect of the Relevant Periods. The China Rope Group has not early adopted these new and revised standards and interpretations in the Financial Information for the Relevant Periods.

HKFRSs (Amendments)	Improvements to HKFRSs 1
HKAS 1 (Revised)	Presentation of Financial Statements		2
HKAS 23 (Revised)	Borrowing Costs 2
HKAS 27 (Revised)	Consolidated and Separate Financial		Statements		3
HKAS 32 & 1 (Amendments)	Puttable Financial Instruments and	Obligations		Arising
	on Liquidation 2
HKAS 39 (Amendment)	Eligible Hedged Items 3
HKAS 39 & HKFRS 7 (Amendments)	Reclassification of Financial Assets	4
HKFRS 1 & HKAS 27 (Amendment)	Cost of an Investment in a Subsidiary, Jointly Controlled
	Entity or Associate 2
HKFRS 2 (Revised)	Share-based Payment — Vesting Conditions and
	Cancellations 2
HKFRS 3 (Revised)	Business Combinations 3
HKFRS 8	Operating Segments 2
HK(IFRIC) — Int 13	Customer Loyalty Programmes 5
HK(IFRIC) — Int 15	Agreements for the Construction of	Real Estate		2
HK(IFRIC) — Int 16	Hedges of a Net Investment in a Foreign Operation					6

— 91 —

APPENDIX II ACCOUNTANTS’ REPORT ON THE CHINA ROPE GROUP

1 Effective for financial period 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 financial period beginning on or after 1st January, 2009 3 Effective for financial period beginning on or after 1st July, 2009 4 Effective from 1st July, 2008 5 Effective for financial period beginning on or after 1st July, 2008 6 Effective for financial period beginning on or after 1st October, 2008

3. SIGNIFICANT ACCOUNTING POLICIES

The Financial Information has been prepared on the historical cost basis and in accordance with the accounting policies which conform with Hong Kong Financial Reporting Standards issued by the HKICPA. In addition, the Financial Information includes applicable disclosures required by the Hong Kong Companies Ordinance.

Basis of consolidation

The Financial Information incorporate the financial statements of the Company and entity controlled by the Company (its subsidiary). 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 subsidiary acquired or disposed of during the Relevant Periods are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.

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 China Rope 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 China Rope Group except to the extent that the minority has a binding obligation and is able to make an additional investment to cover the losses.

Investment in a subsidiary

A subsidiary is an entity controlled by the Company. 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.

Investment in a subsidiary is included in the Company’s balance sheet at cost less any identified impairment loss. The result of the subsidiary is accounted by the Company on the basis of dividends received and receivable during the year.

— 92 —

APPENDIX II ACCOUNTANTS’ REPORT ON THE CHINA ROPE 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 China Rope 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 China Rope Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If, after reassessment, the China Rope 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.

Goodwill

Goodwill arising on an acquisition of a business represents the excess of the cost of acquisition over the China Rope Group’s interest in the fair value of the identifiable assets, liabilities and contingent liabilities of the relevant business at the date of acquisition. Such goodwill is carried at cost less any accumulated impairment losses.

Capitalised goodwill arising on an acquisition of a business is presented separately in the consolidated balance sheet.

On subsequent disposal of the relevant cash-generating unit, the attributable amount of goodwill capitalised is included in the determination of the amount of profit or loss on disposal.

Revenue recognition

Revenue from sale of goods is recognised when the goods are delivered and title has passed.

— 93 —

APPENDIX II ACCOUNTANTS’ REPORT ON THE CHINA ROPE GROUP

Property, plant and equipment

Property, plant and equipment, other than assets under installation, are stated at cost less any subsequent accumulated depreciation and any accumulated impairment losses.

Depreciation is provided to write off the cost of items of property, plant and equipment other than assets under installation over their estimated useful lives, using the straight-line method.

Assets under installation include property, plant and equipment in the course of construction for production or for its own use purposes. Assets under installation are carried at cost less any recognised impairment loss. Assets under installation are 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.

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/period in which the item is derecognised.

Leasing

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

Impairment losses — other than goodwill

At each balance sheet date, the China Rope 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. Impairment loss is recognised as an expense immediately.

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is calculated using the weighted average method. The costs of inventory comprise all costs of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less all estimated costs of completion and costs necessary to make the sale.

— 94 —

APPENDIX II ACCOUNTANTS’ REPORT ON THE CHINA ROPE 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 are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.

Financial assets

Loans and receivables (including trade and other receivables, pledged bank deposits, bank balances and cash, and amounts due from a subsidiary, fellow subsidiaries and related companies)

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 and 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.

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

Impairment of loans and receivables

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.

Trade receivables 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 China Rope Group’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio, observable changes in national or local economic conditions that correlate with default on receivables.

— 95 —

ACCOUNTANTS’ REPORT ON THE CHINA ROPE GROUP

APPENDIX II

The carrying amount is reduced by the impairment loss directly for all loans and receivables with the exception of trade 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 trade 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.

Financial liabilities and equity

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

Interest expense is recognised on an effective interest basis.

Financial liabilities (including trade and other payables, bank borrowings, amounts due to immediate holding company, intermediate holding companies, a shareholder, a minority shareholder of a subsidiary and related companies)

Financial liabilities are subsequently measured at amortised cost, using the effective interest method.

Equity instruments

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

Derecognition

Financial assets are derecognised when the rights to receive cash flows from the assets expire or, the financial assets are transferred and the China Rope 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 consideration received is recognised in profit or loss.

— 96 —

APPENDIX II ACCOUNTANTS’ REPORT ON THE CHINA ROPE GROUP

Foreign currencies

Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are recognised in profit or loss in the period in which they arise.

For the purposes of presenting the consolidated financial statements, the assets and liabilities of the China Rope Group are translated into the presentation currency of the China Rope 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/period, unless exchange rates fluctuate significantly during the year/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 exchange reserve). Such exchange differences are recognised in profit or loss in the period in which the foreign operation is disposed of.

Retirement benefit costs

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, if any, 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 as an expense in the period in which they are incurred.

Taxation

Income taxes represent the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year/period. 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 China Rope Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

— 97 —

APPENDIX II ACCOUNTANTS’ REPORT ON THE CHINA ROPE GROUP

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 investment in a subsidiary, except where the China Rope 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.

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. 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 China Rope Group’s accounting policies, which are described in note 3, 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 following is the key assumption concerning the future, and other key sources of estimation uncertainty at each balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets within the next financial year.

Estimated impairment of goodwill

Determining whether goodwill is impaired requires an estimation of the value in use of the cashgenerating unit to which goodwill has been allocated. The value in use calculation requires the China Rope Group to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate the present value. Where the actual future cash flows are less than expected, a material impairment loss may arise. The carrying amount of goodwill is HK$3,466,000, HK$3,636,000, HK$3,977,000 and HK$4,074,000 at 31st March, 2006, 2007, 2008 and 30th June, 2008 respectively as set out in note 12. Details of the recoverable amount calculation are disclosed in note 12.

5. TURNOVER AND SEGMENTAL INFORMATION

Turnover represents the net amounts and receivable for goods sold by the China Rope Group to outside customers, less returns and allowances.

— 98 —

APPENDIX II ACCOUNTANTS’ REPORT ON THE CHINA ROPE GROUP

Business segment

No business segment information is presented for the Relevant Periods as the China Rope Group was engaged solely in the manufacturing and sales of steel wire ropes for elevators during the Relevant Periods.

Geographical segment

More than 90% of the China Rope Group’s turnover, profit before taxation, assets and liabilities were derived from and located in the PRC and therefore no geographical segments are presented.

6. OTHER INCOME

Interest on bank deposits Sales of scrap metals	Year ended 31st March, 2006 2007 2008 HK$’000 HK$’000 HK$’000 50 58 111 128 580 1,068 178 638 1,179	Three months ended 30th June, 2007 2008 HK$’000 HK$’000 (unaudited) 24 28 194 174 218 202	Three months ended 30th June, 2007 2008 HK$’000 HK$’000 (unaudited) 24 28 194 174 218 202
			202

7. FINANCE COSTS

Finance costs represent the interest on bank borrowings wholly repayable within five years.

8. INCOME TAXES

Current tax — PRC Deferred tax_(note 25)_	Year ended 31st March, 2006 2007 2008 HK$’000 HK$’000 HK$’000 584 676 1,532 — — — 584 676 1,532	Three months ended 30th June, 2007 2008 HK$’000 HK$’000 (unaudited) 353 1,332 — 231 353 1,563	Three months ended 30th June, 2007 2008 HK$’000 HK$’000 (unaudited) 353 1,332 — 231 353 1,563
			1,563

Hong Kong Profits Tax is calculated at 17.5% of the estimated assessable profit for the years ended 31st March, 2006, 2007 and 2008 and the three months ended 30th June, 2007.

No provision for Hong Kong Profits Tax has been made in the Financial Information as the income of the China Rope Group neither arise in, nor is derived from, Hong Kong.

— 99 —

ACCOUNTANTS’ REPORT ON THE CHINA ROPE GROUP

APPENDIX II

Profits tax arising in the PRC is calculated based on the applicable tax rates on assessable profits.

The subsidiary operating in the PRC is exempted from income tax for two years starting from 2003 to 2004, followed by a 50% reduction from 2005 to 2007. This subsidiary operating in the PRC which is regarded as advanced technology enterprises has also been granted tax concessions by the local tax bureau and is entitled to PRC income tax at concessionary rate of 15%.

On 16th March, 2007, the PRC promulgated the Law of the People’s Republic of China on Enterprise Income Tax (the “New Law”) by Order No. 63 of the President of the People’s Republic of China. On 6th December, 2007, the State Council of the PRC issued Implementation Regulations of the New Law. The New Law and Implementation Regulations has changed the enterprise income tax rate from 15% to 18% for the subsidiary from 1st January, 2008. The new tax rate is progressively increasing to 25% over five years as grandfathering provision. According to the Circular of the State Council on the Implementation of Transitional Preferential Policies for Enterprise Income Tax (Guofa [2007] No. 39), the tax exemption and deduction for the foreign investment enterprises is still applicable until the end of the five-year transitional period under the New Law.

The taxation for the Relevant Periods can be reconciled from taxation based on profit before taxation per the consolidated income statement as follows:

Profit before taxation Tax at the applicable tax rate of 15% (Year ended 31st March, 2008 and three months 30th June, 2008: 18%) Tax effect of expenses not deductible for tax purpose Effect of tax relief Withholding tax on retained profits to be distributed_(note)_ Others Income taxes for the year/period	Year ended 31st March, 2006 2007 2008 HK$’000 HK$’000 HK$’000 6,980 7,727 15,000 1,047 1,159 2,700 143 216 120 (595) (687) (1,311) — — — (11) (12) 23 584 676 1,532	Three months ended 30th June, 2007 2008 HK$’000 HK$’000 (unaudited) 3,581 6,766 537 1,218 29 55 (283) — — 231 70 59 353 1,563	Three months ended 30th June, 2007 2008 HK$’000 HK$’000 (unaudited) 3,581 6,766 537 1,218 29 55 (283) — — 231 70 59 353 1,563

			1,218 55 — 231 59
			1,563

— 100 —

ACCOUNTANTS’ REPORT ON THE CHINA ROPE GROUP

APPENDIX II

Note:

In accordance to PRC tax circular (Guoshuihan [2008] 112) effective from 1st January, 2008, PRC withholding income tax at the rate of 10% is applicable to dividends to “non-resident” investors who do not have an establishment or place of business in the PRC. According to the “Arrangement between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income” and Guoshuihan [2008] 112, where the Hong Kong resident company directly owns at least 25% of the capital of the PRC company, 5% dividend withholding tax rate is applicable. The amount represents the withholding income tax provided on the profits arisen during the three months ended 30th June, 2008 of the PRC subsidiary, which are available for distribution to the Company.

Details of the deferred taxation are set out in note 25.

9. PROFIT FOR THE YEAR/PERIOD

Profit for the year/period has been arrived at after charging: Auditors’ remuneration Depreciation Minimum lease payments for operating leases in respect of land and buildings Staff costs Directors’ emoluments Other staff — Salaries and other benefits — Retirement benefits scheme contribution Loss on disposal of property, plant and equipment Allowance for bad and doubtful debts Exchange loss, net	Year ended 31st March, 2006 2007 2008 HK$’000 HK$’000 HK$’000 130 41 145 399 838 1,673 1,648 1,795 2,433 — — — 7,101 11,223 16,565 1,814 2,602 3,138 8,915 13,825 19,703 2 — 43 — — 379 19 87 210	Three months ended 30th June, 2007 2008 HK$’000 HK$’000 (unaudited) 12 48 373 562 491 564 — — 3,849 5,276 1,489 888 5,338 6,164 — 16 — — 52 12	Three months ended 30th June, 2007 2008 HK$’000 HK$’000 (unaudited) 12 48 373 562 491 564 — — 3,849 5,276 1,489 888 5,338 6,164 — 16 — — 52 12
			6,164
			16 — 12

— 101 —

APPENDIX II ACCOUNTANTS’ REPORT ON THE CHINA ROPE GROUP

10. DIRECTORS’ AND EMPLOYEES’ EMOLUMENTS

(a) Directors’ emoluments

During the Relevant Periods, no amounts were paid in respect of directors’ emoluments.

(b) Employees’ emoluments

The emoluments of the five highest paid individuals were as follows:

Salaries and other benefits Contributions to retirement benefits scheme	Year ended 31st March, 2006 2007 2008 HK$’000 HK$’000 HK$’000 253 294 539 38 57 57 291 351 596	Three months ended 30th June, 2007 2008 HK$’000 HK$’000 (unaudited) 95 192 14 17 109 209	Three months ended 30th June, 2007 2008 HK$’000 HK$’000 (unaudited) 95 192 14 17 109 209
			209

The emoluments of each five highest paid individuals were below HK$1,000,000 for the Relevant Periods and the three months ended 30th June, 2007.

During the Relevant Periods and the three months ended 30th June, 2007, no emoluments were paid by the China Rope Group to the directors or the five highest paid individuals as an inducement to join or upon joining the China Rope Group or as compensation for loss of office. None of the directors has waived any emoluments during the Relevant Periods and the three months ended 30th June, 2007.

11. EARNINGS PER SHARE

Earnings per share of the China Rope Group are not presented herein as such information is not considered meaningful in the context of this report.

— 102 —

ACCOUNTANTS’ REPORT ON THE CHINA ROPE GROUP

APPENDIX II

12. GOODWILL

COST AND CARRYING AMOUNT At 1st April, 2005 Acquired on acquisition of a subsidiary Exchange adjustments At 31st March, 2006 Exchange adjustments At 31st March, 2007 Exchange adjustments At 31st March, 2008 Exchange adjustments At 30th June, 2008	HK$’000 — 3,373 93
	3,466 170
	3,636 341
	3,977 97
	4,074

The goodwill was arisen on acquisition of a subsidiary engaged in manufacturing and sales of steel wire ropes for elevators. The China Rope Group determined that the goodwill allocated to the one single cash generating unit (“CGU”) was not impaired by comparing the carrying amount of the CGU including the goodwill, with its recoverable amount.

The recoverable amount of the CGU has been determined based on a value in use calculation. That calculation uses the estimation of the cash flow projections based on financial budgets approved by management covering a 5-year period and extrapolate the budgets using a zero growth rate for the subsequent 5 years, and a discount rate of approximately 8%. Another key assumption for the value in use calculations is the budgeted gross margin, which is determined based on the unit’s past performance and management’s expectations for the market development. Management believes that any reasonably possible change in any of these assumptions would not cause the aggregate carrying amount to exceed the aggregate recoverable amount.

— 103 —

ACCOUNTANTS’ REPORT ON THE CHINA ROPE GROUP

APPENDIX II

13. PROPERTY, PLANT AND EQUIPMENT

2006 AT COST At 1st April, 2005 Exchange differences Additions On acquisition of a subsidiary Disposals Reclassification At 31st March, 2006 DEPRECIATION At 1st April, 2005 Provided for the year Eliminated on disposals At 31st March, 2006 CARRYING VALUE At 31st March, 2006 2007 AT COST At 1st April, 2006 Exchange differences Additions Disposals Reclassification At 31st March, 2007 DEPRECIATION At 1st April, 2006 Exchange differences Provided for the year Eliminated on disposals At 31st March, 2007 CARRYING VALUE At 31st March, 2007	Furniture and fixtures HK$’000 — 8 350 291 (9) — 640 — 115 (6) 109 531 640 31 117 (4) — 784 109 6 163 (4) 274 510	Plant and machinery and equipment HK$’000 — 44 — 1,624 — 1,180 2,848 — 231 — 231 2,617 2,848 140 — — 7,825 10,813 231 11 583 — 825 9,988	Assets Motor under vehicles installation HK$’000 HK$’000 — — 12 2 331 1,602 426 65 — — — (1,180) 769 489 — — 53 — — — 53 — 716 489 769 489 38 24 305 17,523 — — — (7,825) 1,112 10,211 53 — 3 — 92 — — — 148 — 964 10,211	Total HK$’000 — 66 2,283 2,406 (9) — 4,746 — 399 (6) 393 4,353 4,746 233 17,945 (4) — 22,920 393 20 838 (4) 1,247 21,673

— 104 —

ACCOUNTANTS’ REPORT ON THE CHINA ROPE GROUP

APPENDIX II

2008 AT COST At 1st April, 2007 Exchange differences Additions Disposals Reclassification At 31st March, 2008 DEPRECIATION At 1st April, 2007 Exchange differences Provided for the year Eliminated on disposals At 31st March, 2008 CARRYING VALUE At 31st March, 2008 2008 AT COST At 1st April, 2008 Exchange differences Additions Disposals Reclassification At 30th June, 2008 DEPRECIATION At 1st April, 2008 Exchange differences Provided for the period Eliminated on disposals At 30th June, 2008 CARRYING VALUE At 30th June, 2008	Furniture and fixtures HK$’000 784 76 134 (18) — 976 274 25 176 (17) 458 518 976 24 24 (5) — 1,019 458 11 43 (5) 507 512	Plant and machinery and equipment HK$’000 10,813 1,013 — (90) 3,452 15,188 825 77 1,379 (45) 2,236 12,952 15,188 373 — (26) 14,080 29,615 2,236 55 489 (4) 2,776 26,839	Assets Motor under vehicles installation HK$’000 HK$’000 1,112 10,211 104 956 — 4,367 — — — (3,452) 1,216 12,082 148 — 14 — 118 — — — 280 — 936 12,082 1,216 12,082 29 297 — 1,724 — — — (14,080) 1,245 23 280 — 7 — 30 — — — 317 — 928 23	Total HK$’000 22,920 2,149 4,501 (108) — 29,462 1,247 116 1,673 (62) 2,974 26,488 29,462 723 1,748 (31) — 31,902 2,974 73 562 (9) 3,600 28,302

— 105 —

ACCOUNTANTS’ REPORT ON THE CHINA ROPE GROUP

APPENDIX II

The property, plant and equipment other than assets under installation are depreciated, using the straight-line method, at the following rates per annum:

Furniture and fixtures	18% — 20%
Plant and machinery and equipment	9%
Motor vehicles	9%

14. INVESTMENT IN A SUBSIDIARY

UNLISTED INVESTMENT, AT COST At 1st April, 2005 On acquisition of a subsidiary Exchange adjustments At 31st March, 2006 Exchange adjustments At 31st March, 2007 Exchange adjustments At 31st March, 2008 Exchange adjustments At 30th June, 2008	HK$’000 — 18,139 496
	18,635 917
	19,552 1,831
	21,383 525
	21,908

15. INVENTORIES

Raw materials Work in progress Finished goods	As 2006 HK$’000 621 6,676 4,263 11,560	at 31st March, 2007 HK$’000 1,796 6,911 6,702 15,409	2008 HK$’000 3,304 8,658 8,633 20,595	As at 30th June, 2008 HK$’000 4,871 14,857 8,966
				28,694

— 106 —

APPENDIX II ACCOUNTANTS’ REPORT ON THE CHINA ROPE GROUP

16. TRADE AND OTHER RECEIVABLES

The Company

At 31st March, 2006, the other receivables represent prepayment of expenses.

The China Rope Group

Trade receivable Other receivables	As 2006 HK$’000 17,002 4,638 21,640	at 31st March, 2007 HK$’000 26,223 5,006 31,229	2008 HK$’000 36,477 3,198 39,675	As at 30th June, 2008 HK$’000 36,916 2,582
				39,498

Other than the cash sales, the China Rope Group generally allows credit periods ranging from 30 to 90 days to its trade customers.

Before accepting any new customer, the China Rope Group has assessed the potential customer’s credit quality and defined credit rating limits for each customers. Limits attributed to customers are reviewed once a year.

Included in the China Rope Group’s trade receivables balance are debtors with aggregate carrying amount of HK$7,389,000, HK$7,242,000, HK$9,613,000 and HK$4,545,000 at 31st March, 2006, 2007, 2008 and 30th June, 2008 respectively which are past due for which the China Rope Group has not provided for impairment loss, as there has not been a significant change in credit quality and the amounts are still considered recoverable based on historical experience. The China Rope Group does not hold any collateral over these balances.

Ageing of trade receivable (by due date):

Past due but not impaired 1 — 30 days 31 — 60 days Over 60 days Not yet due	As 2006 HK$’000 3,570 2,598 1,221 7,389 9,613 17,002	at 31st March, 2007 HK$’000 3,674 1,264 2,304 7,242 18,981 26,223	2008 HK$’000 6,458 2,206 949 9,613 26,864 36,477	As at 30th June, 2008 HK$’000 3,796 248 501
				4,545 32,371
				36,916

— 107 —

APPENDIX II ACCOUNTANTS’ REPORT ON THE CHINA ROPE GROUP

Movement in the allowance for doubtful debts:

Balance at beginning of the year/ period Amounts written off during the year/ period Impairment losses recognised Exchange realignment Balance at end of the year/period	Year ended 31st March, 2006 2007 2008 HK$’000 HK$’000 HK$’000 508 522 548 — — (572) — — 379 14 26 42 522 548 397	Three months ended 30th June, 2008 HK$’000 397 — — 10
		407

Included in the allowance for doubtful debts are individually impaired trade receivables with an aggregate balance of HK$522,000, HK$548,000, HK$397,000 and HK$407,000 at 31st March, 2006, 2007, 2008 and 30th June, 2008 respectively which are either been placed under liquidation or have been long outstanding without settlement nor business relationship with the China Rope Group. The China Rope Group does not hold any collateral over these balances.

In determining the recoverability of a trade receivable, the China Rope Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date.

17. AMOUNTS DUE FROM A SUBSIDIARY/FELLOW SUBSIDIARIES

The amounts due from a subsidiary/fellow subsidiaries are unsecured, interest-free and repayable on demand.

The average credit period on sales of goods granted to fellow subsidiaries is 60 days. The China Rope Group has financial risk management policies in place to ensure that allowance for doubtful debts are provided for based on estimated irrecoverable amounts from the sales of goods. The outstanding balances at each balance sheet date are neither past due nor impaired.

18. AMOUNTS DUE FROM/TO RELATED COMPANIES

Related companies of the China Rope Group are subsidiaries directly or indirectly held by a shareholder of the Company or the ultimate holding company of a minority shareholder of a subsidiary. The amounts due from/to related companies are unsecured, interest-free and repayable on demand.

The average credit period on purchase of goods granted by the related companies is 60 days. The China Rope Group has financial risk management policies in place to ensure that all payables are paid within the credit time frame. The outstanding balances at each balance sheet date are with an aged 0-60 days.

— 108 —

APPENDIX II ACCOUNTANTS’ REPORT ON THE CHINA ROPE GROUP

19. PLEDGED BANK DEPOSITS

The amount represents deposits pledged to bank as a collateral to contractors for the construction of plant and machinery. The deposits carry fixed interest rate at 2.25% and 2.79% per annum at 31st March, 2006 and 31st March, 2007 respectively.

No deposits were pledged to bank or third party at 31st March, 2008 and 30th June, 2008.

20. BANK BALANCES

Bank balances carry interest at market rates ranging from 0.72% to 1.15% during the Relevant Periods.

21. TRADE AND OTHER PAYABLES

Included in trade and other payables are trade payables with an aged analysis as follows:

0 — 60 days 61 — 90 days 91 — 120 days Over 120 days	As 2006 HK$’000 3,808 994 462 925 6,189	at 31st March, 2007 HK$’000 10,684 4,311 2,057 1,012 18,064	2008 HK$’000 9,377 900 1,099 776 12,152	As at 30th June, 2008 HK$’000 16,266 1,326 894 345
				18,831

22. AMOUNTS DUE TO IMMEDIATE/INTERMEDIATE HOLDING COMPANIES/A SHAREHOLDER/A MINORITY SHAREHOLDER OF A SUBSIDIARY

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

— 109 —

ACCOUNTANTS’ REPORT ON THE CHINA ROPE GROUP

APPENDIX II

23. BANK BORROWINGS

		China	Rope Group			The	Company
				As at				As at
		As at 31st March,		30th June,		As at 31st March,		30th June,
	2006	2007	2008	2008	2006	2007	2008	2008
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
The bank borrowings are
repayable as follows:
On demand or within one year	10,931	12,570	18,141	19,718	—	700	700	700
More than one year, but not
exceeding two years	—	700	3,363	3,428	—	700	700	700
More than two years, but not
exceeding three years	—	700	2,838	2,728	—	700	175	—
More than three years, but not
exceeding four years	—	175	2,664	2,046	—	175	—	—
	10,931	14,145	27,006	27,920	—	2,275	1,575	1,400
Less: amounts due within one
year shown under
current liabilities	10,931	12,570	18,141	19,718	—	700	700	700
Amounts due after one year	—	1,575	8,865	8,202	—	1,575	875	700

Except for the China Rope Group’s borrowings of HK$7,367,000 at 31st March, 2008 is secured by property, plant and equipment pledged to bank (Note 29), the other borrowings of China Rope Group are unsecured and guaranteed by related companies (Note 32).

The effective borrowing rates for the China Rope Group’s borrowings are ranging from 5.8% to 6.24%, 5.27% to 5.58%, 6.08% to 8.4% and 6.08% to 8.55% per annum at 31st March, 2006, 31st March, 2007, 31st March, 2008 and 30th June, 2008, respectively.

All the Company’s borrowings are unsecured and guaranteed by related companies (Note 32). The effective borrowing rates are 6%, 4.5% and 4% per annum at 31st March, 2007, 31st March, 2008 and 30th June, 2008 respectively.

— 110 —

ACCOUNTANTS’ REPORT ON THE CHINA ROPE GROUP

APPENDIX II

The carrying amounts of the borrowings are analysed as follows:

			China Rope	China Rope	Group
						As at
		As	at 31st March,			30th June,
Denominated in	Interest rate per annum	2006	2007		2008	2008
		HK$’000	HK$’000	HK$’000		HK$’000
Hong Kong dollars	Prime rate — 1.5%	—	2,275		1,575	1,400
Renminbi	People’s Bank of China
	(“PBOC”) lending rate	4,835	—		—	—
	PBOC lending rate with 7%
	mark up	—	—		10,651	16,290
	Fixed rate_(Note)_	6,096	11,870		14,780	10,230
		10,931	14,145		27,006	27,920

Note: The fixed rates are ranging from 4.96% to 5.8%, 5.22% to 5.58%, 5.30% to 6.24% and 7.08% to 8.22% per annum at 31st March, 2006, 31st March, 2007, 31st March, 2008 and 30th June, 2008, respectively.

The carrying amounts of the Company’s borrowing are denominated in Hong Kong dollars at 31st March, 2007, 2008 and 30th June, 2008. The borrowings carry interest rate at prime rate less 1.5% per annum at 31st March, 2007, 2008 and 30th June, 2008.

24. SHARE CAPITAL

Authorised: Ordinary shares of HK$1 each Issued and fully paid: At the beginning of the year/period Issue of shares At the end of the year/ period	Number of shares As at 31st March, 2006 2007 2008 18,162,854 18,162,854 18,162,854 10,000 18,162,854 18,162,854 18,152,854 — — 18,162,854 18,162,854 18,162,854	As at 30th June, 2008 18,162,854 18,162,854 — 18,162,854	Amount As at 31st March, 2006 2007 2008 HK$’000 HK$’000 HK$’000 18,163 18,163 18,163 10 18,163 18,163 18,153 — — 18,163 18,163 18,163	As at 30th June, 2008 HK$’000 18,163

				18,163 —
				18,163

Pursuant to an ordinary resolution passed on 6th May, 2005, the authorised share capital of the Company was increased from HK$10,000 to HK$18,162,854 by the creation of 18,152,854 additional shares of HK$1 each, ranking pari passu in all respects with the existing share capital of the Company.

On the same date, the Company issued and allotted a total of 18,152,854 shares of HK$1 each, for cash at par to the shareholders.

— 111 —

APPENDIX II ACCOUNTANTS’ REPORT ON THE CHINA ROPE GROUP

25. DEFERRED TAXATION

The following is the deferred tax liability recognised and movements thereon during the Relevant Periods:

	Withholding
	tax on
	retained
	profits to be
	distributed
	HK$’000
At 1st April, 2005, 31st March, 2006, 31st March,
2007 and 31st March, 2008	—
Charged to income for the period	231
At 30th June, 2008	231

The Group has deductible temporary differences of HK$522,000, HK$548,000, HK$397,000 and HK$407,000 at 31st March, 2006, 2007, 2008 and 30th June, 2008 respectively in respect of allowance for doubtful debts. No deferred tax asset has been recognised due to unpredictability of future profit streams.

26. RESERVES

The Company

At 1st April, 2005 Loss for the year Exchange differences At 31st March, 2006 Loss for the year Exchange differences At 31st March, 2007 Loss for the year Exchange differences At 31st March, 2008 Loss for the period Exchange differences At 30th June, 2008	Exchange reserve Accumulated losses HK$’000 HK$’000 (Note) — (14) — (90) 489 — 489 (104) — (44) 912 — 1,401 (148) — (28) 1,818 — 3,219 (176) — (4) 528 — 3,747 (180)	Total HK$’000 (14) (90) 489
		385 (44) 912
		1,253 (28) 1,818
		3,043 (4) 528
		3,567

Note: The exchange differences arose from translation of assets and liabilities from their financial currency to the presentation currency.

— 112 —

APPENDIX II ACCOUNTANTS’ REPORT ON THE CHINA ROPE GROUP

27. RETIREMENT BENEFIT SCHEMES

PRC

The employees of the China Rope Group in the PRC are members of state-managed retirement benefit schemes operated by the respective local government in the PRC. The China Rope Group is required to contribute a specified percentage of the payroll costs to the retirement benefit schemes to fund the benefits. The only obligation of the China Rope Group with respect to the retirement benefit schemes is to make the specific contributions.

28. ACQUISITION OF A SUBSIDIARY

On 30th April, 2005, the Company acquired 75.5% equity interest in Bridon Tianjin at a consideration of approximately HK$18,139,000. The acquisition has been accounted for using the purchase method. The amount of goodwill arising as a result of the acquisition was approximately HK$3,373,000.

The net assets of the above subsidiary at the date of acquisition were as follows:

Property, plant and equipment
Trade and other receivables
Inventories
Amounts due from fellow subsidiaries
Income tax recoverable
Bank balances and cash
Trade and other payables
Amount due to a shareholder
Amount due to a minority shareholder
Amounts due to related companies
Bank borrowings
Minority interests
Goodwill arising on acquisition_(note 12)_
Total consideration satisfied by
Cash
Net cash outflow arising on acquisition:
Cash consideration
Bank balances and cash acquired

Carrying amount
and fair value
HK$’000
2,406
13,043
12,053
433
3
15,964
(6,968)
(1,714)
(1,523)
(1,932)
(12,236)
19,529
(4,763)
3,373
18,139
18,139
(18,139)
15,964
(2,175)

The subsidiary contributed HK$6,396,000 to the China Rope Group’s profit for the period between the date of acquisition and the balance sheet date at 31st March, 2006.

— 113 —

ACCOUNTANTS’ REPORT ON THE CHINA ROPE GROUP

APPENDIX II

If the acquisition had been completed on 1st April, 2005, the turnover of the China Rope Group for the year ended 31st March, 2006 would have been HK$89,931,000, and profit for the year ended 31st March, 2006 would have been HK$6,977,000.

The pro forma information is for illustrative purposes only and is not necessarily an indication of revenue and results of operations of the China Rope Group that actually would have been achieved had the acquisition been completed on 1st April, 2005, nor is it intended to be a projection of future results.

29. PLEDGE OF ASSETS

At each balance sheet date, the China Rope Group had pledged the following assets to banks and contractors as securities against banking facilities granted to the China Rope Group and collateral for the construction of property, plant and equipment of the China Rope Group:

Plant and machinery and equipment Bank deposits	As 2006 HK$’000 — 332 332	at 31st March, 2007 HK$’000 — 1,360 1,360	2008 HK$’000 9,786 — 9,786	As at 30th June, 2008 HK$’000 — —
				—

The pledge of plant and machinery and equipment has been released on 23rd April, 2008.

The Company did not have any pledge of assets at each balance sheet date.

30. OPERATING LEASES COMMITMENT

At each balance sheet date, the China Rope 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	As 2006 HK$’000 1,487 1,106 2,593	at 31st March, 2007 HK$’000 1,846 981 2,827	2008 HK$’000 749 396 1,145	As at 30th June, 2008 HK$’000 858 378
				1,236

Operating lease payments represent rentals payable by the China Rope Group for its factory premises. Leases are negotiated for an average term of two years.

The Company did not have any operating leases commitment at each balance sheet date.

— 114 —

APPENDIX II ACCOUNTANTS’ REPORT ON THE CHINA ROPE GROUP

31. CAPITAL COMMITMENTS

As at each balance sheet date, the China Rope Group had the following commitments:

				As at
		As at 31st March,		30th June,
	2006	2007	2008	2008
	HK$’000	HK$’000	HK$’000	HK$’000
Capital expenditure in respect of
acquisition of property, plant
and equipment contracted for
but not provided in the Financial
Information	2,480	2,260	174	82

The Company did not have any capital commitments at each balance sheet date.

32. RELATED PARTY TRANSACTIONS

Apart from the balances with related parties set out in the consolidated balance sheet, notes 17, 18 and 22, during the Relevant Periods, the China Rope Group entered into the following significant transactions with its related parties:

				Three months ended	Three months ended
	Year	ended 31st March,		30th June,
	2006	2007	2008	2007	2008
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
				(unaudited)
Immediate holding company
Sales	369	27	60	—	—
Expenses paid on behalf	—	—	325	—	—
Intermediate holding company
Service fee	—	—	660	—	—
Purchase of property, plant and equipment	—	4,463	—	—	—
Fellow subsidiaries
Sales	114	1,074	594	191	19
A minority shareholder of the subsidiary
Rental expenses	1,455	1,430	1,617	390	428
Ultimate holding company of a minority
shareholder of the subsidiary
Rental expenses	—	59	382	92	101
Subsidiaries directly or indirectly held by a
shareholder of the Company
Purchases	—	853	290	—	—
Expenses paid on behalf	—	—	22	—	—
Management fee	334	—	—	—	—

— 115 —

ACCOUNTANTS’ REPORT ON THE CHINA ROPE GROUP

APPENDIX II

In addition to the above, the China Rope Group received the following corporate guarantees from related parties in favour of banks to secure general banking facilities:

				As at
		As at 31st March,		30th June,
	2006	2007	2008	2008
	HK$’000	HK$’000	HK$’000	HK$’000
Guaranteed by:
A shareholder	—	3,000	3,000	3,000
A minority shareholder of the
subsidiary	3,384	5,579	11,095	11,368
Ultimate holding company of a
minority shareholder	—	—	—	11,368
A subsidiary of a shareholder	1,600	1,600	2,100	2,960
Immediate holding company	5,000	5,000	5,000	5,000
Intermediate holding company	—	7,000	7,000	7,000
Ultimate holding company	—	—	11,095	11,368

33. CAPITAL RISK MANAGEMENT

The China Rope Group manages its capital to ensure that entities in the China Rope 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 China Rope Group’s overall strategy remains unchanged during the Relevant Periods.

The capital structure of the China Rope Group consists of net debt, including amounts due to immediate holding company, intermediate holding companies, a shareholder and a minority shareholder of a subsidiary, and borrowings disclosed in note 23, net of cash and cash equivalents, and equity attributable to equity holders of the Company, comprising issued share capital, reserves and retained profits.

The directors of the Company review the capital structure periodically. As a part of this review, the directors of the Company consider the cost of capital and the risks associated with each class of capital. Based on recommendations of the management of the China Rope Group, the China Rope 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 repayment of existing debt, if necessary.

— 116 —

APPENDIX II ACCOUNTANTS’ REPORT ON THE CHINA ROPE GROUP

34. FINANCIAL INSTRUMENTS

(a) Categories of financial instruments

China Rope Group

Financial assets Loans and receivables (including cash and cash equivalents) Financial liabilities At amortised cost *The Company* Financial assets Loans and receivables (including cash and cash equivalents) Financial liabilities At amortised cost	As 2006 HK$’000 31,829 23,070 As 2006 HK$’000 11 107	at 31st March, 2007 HK$’000 40,981 45,259 at 31st March, 2007 HK$’000 8,514 8,651	2008 HK$’000 58,363 51,434 2008 HK$’000 4,329 4,506	As at 30th June, 2008 HK$’000 65,382

				61,277

				As at 30th June, 2008 HK$’000 4,342

				4,520

(b) Financial risk management objectives and policies

The China Rope Group’s and the Company’s major financial instruments include trade and other receivables, pledged bank deposits, bank balances and cash, amounts due from a subsidiary, fellow subsidiaries and related companies, trade and other payables, bank borrowings and amounts due to immediate holding company, intermediate holding company, a shareholder, a minority shareholder of a subsidiary and related companies. Details of the financial instruments are disclosed in respective notes.

The management monitors and manages the financial risks relating to the operations of the China Rope Group and the Company through internal risk assessment which analyses exposures by degree and magnitude of risks. The risks include market risk (including currency risk and interest rate risk), credit risk and liquidity risk. The policies on how to mitigate these risks are set out below. The management manages and monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner.

— 117 —

ACCOUNTANTS’ REPORT ON THE CHINA ROPE GROUP

APPENDIX II

The China Rope Group’s and the Company’s activities expose primarily to the financial risks of changes in foreign currency exchange rates and interest rates. There has been no change to the China Rope Group’s and the Company’s exposure to market risks or the manner in which it manages and measures.

(c) Foreign currency risk management

The subsidiary of the Company has foreign currency sales which expose the China Rope Group to foreign currency risk. The China Rope Group and the Company also have trade and other receivables, trade and other payables and borrowings denominated in foreign currency.

The carrying amounts of the China Rope Group’s and the Company’s foreign currency denominated monetary assets and monetary liabilities at each balance sheet date are as follows:

The China Rope Group

Assets United States dollars Hong Kong dollars Liabilities United States dollars Hong Kong dollars Euro	As 2006 HK$’000 3,226 16 569 869 —	at 31st March, 2007 HK$’000 2,001 52 — 3,640 5,585	2008 HK$’000 1,418 52 762 3,854 1,235	As at 30th June, 2008 HK$’000 937 52

				858 3,928 1,233

The Company

Assets Hong Kong dollars Euro Liabilities Hong Kong dollars Euro	As 2006 HK$’000 11 — 93 —	at 31st March, 2007 HK$’000 2,975 5,539 3,094 5,539	2008 HK$’000 3,094 1,235 3,251 1,235	As at 30th June, 2008 HK$’000 3,109 1,233

				3,280 1,233

Foreign currency sensitivity analysis

The China Rope Group and the Company are mainly exposed to the currency of United States dollars, Hong Kong dollars and Euro.

— 118 —

ACCOUNTANTS’ REPORT ON THE CHINA ROPE GROUP

APPENDIX II

The following table details the China Rope Group’s and the Company’s sensitivity to a 5% increase and decrease in RMB against the relevant foreign currencies. 5% is the sensitivity rate used in management’s assessment of the possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the year/period end for a 5% change in foreign currency rates. A positive (negative) number indicates an increase (decrease) in profit for the year/period where RMB strengthens against the relevant foreign currencies. For a 5% weakening of RMB, there would be an equal and opposite impact on the profit for the year/ period.

The China Rope Group

United States dollars Profit for the year/period Hong Kong dollars Profit for the year/period Euro Profit for the year/period	Three months ended Year ended 31st March, 30th June, 2006 2007 2008 2007 2008 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (unaudited) (133) (100) (33) (25) (1) 43 179 190 46 48 — 279 62 71 15	Three months ended Year ended 31st March, 30th June, 2006 2007 2008 2007 2008 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (unaudited) (133) (100) (33) (25) (1) 43 179 190 46 48 — 279 62 71 15

		48

		15

The Company

Hong Kong dollars Profit for the year/period Euro Profit for the year/period	Three months ended Year ended 31st March, 30th June, 2006 2007 2008 2007 2008 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (unaudited) 4 6 8 2 2 — — — — —	Three months ended Year ended 31st March, 30th June, 2006 2007 2008 2007 2008 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (unaudited) 4 6 8 2 2 — — — — —

		—

In management’s opinion, the sensitivity analysis is unrepresentative of the foreign exchange risk inherent in the financial assets and financial liabilities as the year/period end exposure does not reflect the exposure during the year/period.

(d) Interest rate risk management

The China Rope Group and the Company are exposed to cash flow interest rate risk due to the fluctuation of the prevailing market interest rate on bank balances and bank borrowings (see note 23 for details of these borrowings).

— 119 —

ACCOUNTANTS’ REPORT ON THE CHINA ROPE GROUP

APPENDIX II

The China Rope Group is also exposed to fair value interest rate risk in relation to fixedrate pledged bank deposits (note 19) and fixed-rate bank borrowing (see note 23). The management will take appropriate measures to manage interest rate exposure if interest rate fluctuates significantly.

The China Rope Group’s and the Company’s exposures to interest rates on financial liabilities are detailed in the liquidity risk management section of this note. The China Rope Group’s and the Company’s cash flow interest rate risk are mainly concentrated on the fluctuation of prime rate and PBOC arising from the China Rope Group’s and the Company’s borrowings.

Sensitivity analysis

The sensitivity analyses below have been determined based on the exposure to interest rates for variable-rate bank balances and bank borrowings. The analysis is prepared assuming the amount of liabilities outstanding at each balance sheet date was outstanding for the whole year/period. A 50 basis point increase or decrease represents management’s assessment of the reasonably possible change in interest rates.

The China Rope Group

If interest rates had been 50 basis points higher/lower and all other variables were held constant, the China Rope Group’s profit for the three years ended 31st March, 2006, 2007, 2008 and three months ended 30th June, 2007, 30th June, 2008 would decrease/increase by HK$46,000, HK$52,000, HK$47,000, HK$10,000 and HK$10,000 respectively.

The Company

If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Company’s profit for the two years ended 31st March, 2007, 2008 and three months ended 30th June, 2007, 30th June, 2008 would decrease/increase by HK$11,000, HK$8,000, HK$3,000, HK$2,000 respectively.

(e) Credit risk management

At each of the balance sheet date, the China Rope Group’s maximum exposure to credit risk which will cause a financial loss to the China Rope 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.

In order to minimise the credit risk, the China Rope Group has policies in place 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 China Rope Group reviews the recoverable amount of each individual trade 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 China Rope Group’s credit risk is significantly reduced.

The China Rope Group has no significant concentration of credit risk on trade receivables, with exposure spread over a number of counterparties and customers.

The China Rope Group’s and the Company’s credit risk on liquid funds is limited because the counterparties are banks with high credit ratings and good reputation established in the PRC.

— 120 —

ACCOUNTANTS’ REPORT ON THE CHINA ROPE GROUP

APPENDIX II

(f) Liquidity risk management

In the management of the liquidity risk, the China Rope Group and the Company monitors and maintains a level of cash and cash equivalents deemed adequate by the management to finance the China Rope Group’s and the Company’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 following tables detail the China Rope Group’s and the Company’s remaining contractual maturity for its 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 China Rope Group and the Company can be required to pay. The table includes both interest and principal cash flows.

The China Rope Group

	Weighted-
	average							Total
	effective	0-90	91-180	181-365	1-2	2-3	3-4	undiscounted	Carrying
	interest rate	days	days	days	years	years	years	cash flows	amounts
		HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
As at 31st March, 2006
Non-interest bearing	—	10,752	1,387	—	—	—	—	12,139	12,139
Interest bearing
— Fixed interest rate	6.16%	6,113	—	—	—	—	—	6,113	6,096
— Variable interest rate	5.57%	4,880	—	—	—	—	—	4,880	4,835
		21,745	1,387	—	—	—	—	23,132	23,070

As at 31st March, 2007
Non-interest bearing	—	26,808	3,694	612	—	—	—	31,114	31,114
Interest bearing
— Fixed interest rate	5.43%	11,941	—	—	—	—	—	11,941	11,870
— Variable interest rate	6.00%	208	206	403	775	733	177	2,502	2,275
		38,957	3,900	1,015	775	733	177	45,557	45,259

As at 31st March, 2008
Non-interest bearing	—	22,553	1,875	—	—	—	—	24,428	24,428
Interest bearing
— Fixed interest rate	6.19%	15,112	—	—	—	—	—	15,112	14,780
— Variable interest rate	7.90%	1,072	1,058	2,064	3,938	3,749	3,210	15,091	12,226
		38,737	2,933	2,064	3,938	3,749	3,210	54,631	51,434

As at 30th June, 2008
Non-interest bearing	—	32,118	1,239	—	—	—	—	33,357	33,357
Interest bearing
— Fixed interest rate	6.19%	17,330	187	368	715	—	—	18,600	17,690
— Variable interest rate	8.00%	892	878	1,706	3,244	3,010	2,660	12,390	10,230
		50,340	2,304	2,074	3,959	3,010	2,660	64,347	61,277

— 121 —

ACCOUNTANTS’ REPORT ON THE CHINA ROPE GROUP

APPENDIX II

The Company

	Weighted-
	average							Total
	effective	0-90	91-180	181-365	1-2	2-3	3-4	undiscounted	Carrying
	interest rate	days	days	days	years	years	years	cash flows	amounts
		HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
As at 31st March, 2006
Non-interest bearing	—	107	—	—	—	—	—	107	107

As at 31st March, 2007
Non-interest bearing	—	6,376	—	—	—	—	—	6,376	6,376
Interest bearing
— Variable interest rate	6.00%	208	206	403	775	733	177	2,502	2,275
		6,584	206	403	775	733	177	8,878	8,651

As at 31st March, 2008
Non-interest bearing	—	2,931	—	—	—	—	—	2,931	2,931
Interest bearing
— Variable interest rate	4.50%	192	190	374	725	176	—	1,657	1,575
		3,123	190	374	725	176	—	4,588	4,506

As at 30th June, 2008
Non-interest bearing	—	3,120	—	—	—	—	—	3,120	3,120
Interest bearing
— Variable interest rate	4.00%	188	187	368	715	—	—	1,458	1,400
		3,308	187	368	715	—	—	4,578	4,520

(g) Fair value

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

— 122 —

APPENDIX II ACCOUNTANTS’ REPORT ON THE CHINA ROPE GROUP

B. SUBSEQUENT EVENTS

No significant events took place subsequent to 30th June, 2008.

C. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared by the China Rope Group in respect of any period subsequent to 30th June, 2008.

Yours faithfully, Deloitte Touche Tohmatsu Certified Public Accountants Hong Kong

— 123 —

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP

The following unaudited pro forma statement of assets and liabilities of the Enlarged Group (referred to as the “Unaudited Pro Forma Financial Information”) has been prepared on the basis of the notes set out below for the purpose of illustrating the effect of the acquisition of shareholding interest in China Rope Holdings Limited (the “Acquisition”) as if it had taken place on 30th June, 2008 for the pro forma statement of assets and liabilities.

UNAUDITED PRO FORMA STATEMENT OF ASSETS AND LIABILITIES OF THE ENLARGED GROUP

The unaudited pro forma statement of assets and liabilities of the Enlarged Group is prepared based on (i) the unaudited consolidated balance sheet extracted from the interim report of the Group as at 30th June, 2008; and (ii) the audited consolidated balance sheet of China Rope Group as at 30th June, 2008 as extracted from the accountants’ report thereon set out in Appendix II to this Circular, after making pro forma adjustments relating to the Acquisition that are (i) directly attributable to the transaction; and (ii) factually supportable, as if the Acquisition had been completed on 30th June, 2008.

The unaudited pro forma statement of assets and liabilities of the Enlarged Group has been prepared to provide the unaudited pro forma financial information of the Enlarged Group as if the Acquisition had been completed on 30th June, 2008. As it is prepared for illustrative purposes only and because of its hypothetical nature, it may not give a true picture of the financial position of the Enlarged Group as at 30th June, 2008 or at any future date.

— 124 —

UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP

APPENDIX III

Non-current Assets Goodwill Investment properties Property, plant and equipment Prepaid lease payment Interests in jointly controlled entities Interests in associates Long-term receivables Rental and other deposits Deposits paid for acquisition of property, plant and equipment Current Assets Inventories Trade and other receivables Amounts due from jointly controlled entities Amounts due from fellow subsidiaries Amounts due from related companies Prepaid lease payment Income tax recoverable Derivate financial instruments Pledged bank deposits Bank balances and cash	The Group at 30th June, 2008 China Rope Group at 30th June, 2008 HK$’000 HK$’000 4,063 4,074 17,310 — 245,208 28,302 33,769 — 1,794 — 10,825 — 1,113 — 1,267 — 6,655 — 322,004 32,376 520,733 28,694 603,071 39,498 7,014 — — 22 — 2,624 859 — 120 — 253 — 72,622 — 164,726 25,995 1,369,398 96,833	Unaudited Pro forma adjustments HK$’000 Notes (4,074) 3 — — — — (10,825) 2 — — — (14,899) — 22 7 — (22) 7 (1,451) 8 — — — — (4,319) 4 (4,213) 5 (1,386) 6 (11,369)	Pro forma Enlarged Group Total HK$’000 4,063 17,310 273,510 33,769 1,794 — 1,113 1,267 6,655
			339,481
			549,427 642,591 7,014 — 1,173 859 120 253 72,622 180,803
			1,454,862

— 125 —

UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP

APPENDIX III

Current Liabilities Trade and other payables Amount due to immediate holding company Amounts due to intermediate holding companies Amount due to a shareholder Amounts due to minority shareholders Amount due to an associate Amounts due to related companies Income tax payable Bank borrowings Obligations under finance leases Bank overdrafts — unsecured Net Current Assets Non-current Liabilities Deferred tax liabilities Other payable Bank borrowings Obligations under finance leases NET ASSETS	The Group at 30th June, 2008 China Rope Group at 30th June, 2008 HK$’000 HK$’000 264,595 31,657 — 2,041 — 1,931 — 53 3,360 573 803 — — 595 2,649 1,115 762,974 19,718 2,235 — 7,121 — 1,043,737 57,683 325,661 39,150 11,209 231 — — 20,296 8,202 1,282 — 32,787 8,433 614,878 63,093	Unaudited Pro forma adjustments HK$’000 Notes 820 7 12,000 9 (494) 10 (1,913) 4 (128) 7 (1,239) 4 (692) 7 (53) 8 — (803) 8 (595) 8 — (467) 4 — — 6,436 (17,805) — 9,328 9 (526) 10 (700) 4 — 8,102 (40,806)	Pro forma Enlarged Group Total HK$’000 308,578 — — — 3,933 — — 3,764 782,225 2,235 7,121
			1,107,856
			347,006
			11,440 8,802 27,798 1,282
			49,322
			637,165

— 126 —

UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP

APPENDIX III

Notes:

The consideration of the acquisition by the Group of remaining 70% equity interests in China Rope which is an associate of the Group is of HK$25,541,000. The consideration shall be payable (a) in cash on completion by China Rope to Bridon HK of HK$2,949,000 representing Bridon HK’s share of the dividend and HK$1,264,000 representing the Company’s share of the dividend; (b) HK$12,000,000 shall be satisfied by the issue of the First Promissory Note maturing on 31st March, 2009 by the Company on completion; and (c) HK$9,328,000 shall be satisfied by the issue of the Second Promissory Note maturing on 31st July, 2009 by the Company on completion.

The calculation of the discount on acquisition is set out as follows:

HK$’000 HK$’000

Identifiable assets and liabilities of China Rope Group as at 30th June, 2008 as stated in accountants’ report in Appendix II Property, plant and equipment Inventories Trade and other receivables Amounts due from fellow subsidiaries Amounts due from related companies Bank balances and cash Trade and other payables Amount due to immediate holding company Amounts due to intermediate holding companies Amount due to a shareholder Amount due to a minority shareholder of a subsidiary Amounts due to related companies Income tax payable Bank borrowings Deferred tax liability Minority interests Net assets of China Rope Group as at 30th June, 2008 Less:_Minority interests 70% of net assets of China Rope Group acquired Consideration _Less:_Effect on discounting to present value on consideration payable _Add:_Transaction costs Discount on acquisition(Remark)_	28,302 28,694 39,498 22 2,624 25,995 (31,657) (2,041) (1,931) (53) (573) (595) (1,115) (27,920) (231) (14,476) 44,543 (13,363) 25,541 (1,020) 1,386	31,180 (25,907) 5,273

Remark: The Group’s interest in the net fair value of the China Rope Group’s identifiable assets and liabilities exceeds the cost of business combination, the excess is recognised immediately in profit and loss.

— 127 —

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION

ON THE ENLARGED GROUP

Adjustment to reverse the interest in associates after acquisition of China Rope Group on the assumption that the acquisition had taken place on 30th June, 2008.
Adjustment to reverse the goodwill arising on acquisition of Bridon Tianjin Rope Ltd. by China Rope.
Adjustment to record settlement of (i) HK$1,167,000 owed by China Rope to a bank (ii) HK$1,913,000 owed by China Rope to Bridon Hong Kong Limited (“Bridon HK”); and (iii) HK$1,239,000 owed by China Rope to Bridon International Limited.
Adjustment to record consideration of acquisition paid by China Rope to Bridon HK on completion.
Adjustment to record the payment of transaction costs directly attributable to the Acquisition.
Adjustment to reclassify the amount due from fellow subsidiaries for the sales of goods of China Rope Group to trade and other receivables; and to reclassify amount due to immediate holding company and intermediate holding company for expenses paid on behalf and service fee payable respectively to trade and other payables, which are not the intercompany of the Enlarged Group after acquisition of China Rope Group.
Adjustment to eliminate the intercompany balances of the Enlarged Group after acquisition of China Rope Group. The amount due to an associate of HK$803,000, represented the deposits received in advance for purchase of goods; and amount due to a shareholder and related companies of HK$53,000 and HK$595,000 respectively, represented the expenses paid on behalf by the China Rope Group for related companies.
Adjustment to record the consideration payable on the acquisition of China Rope Group.
Adjustment to record the effect on discounting to present value on consideration payable at discount rate of 5.5% which is determined based on the interest rate of loans with similar terms of the Group.

— 128 —

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP

The following is the text of a report, prepared for inclusion in this circular, from the reporting accountants of Golik Holdings Limited, Deloitte Touche Tohmatsu, Certified Public Accountants, Hong Kong.

==> picture [68 x 52] intentionally omitted <==

ACCOUNTA NTS’ R EPORT ON UNAU DITED PRO FOR M A FINA NCIAL INFORMATION

TO THE DIRECTORS OF GOLIK HOLDINGS LIMITED

We report on the unaudited pro forma financial information of Golik Holdings 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 major transaction in connection with the acquisition of shareholding interest in China Rope Holdings Limited might have affected the financial information presented, for inclusion in Appendix III to the circular dated 28th November, 2008 (the “Circular”). The basis of preparation of the unaudited pro forma financial information is set out on 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.

— 129 —

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP

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 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 Enlarged Group as at 30th June, 2008 or any further 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.

Dated 28th day of November, 2008

Yours faithfully,

Deloitte Touche Tohmatsu

Certified Public Accountants Hong Kong

— 130 —

ADDITIONAL FINANCIAL INFORMATION ON THE GROUP AND THE TARGET GROUP

APPENDIX IV

A. STATEMENT OF INDEBTEDNESS

At the close of business on 30th September, 2008 being the latest practicable date prior to the printing of this circular, the Enlarged Group had outstanding bank borrowings of approximately HK$924,475,000 (of which HK$19,196,000 was secured by fixed charges on certain of the Enlarged Group’s assets, including properties and short-term bank deposits) representing term loans, mortgage loan, bank overdrafts and trust receipt loans. In addition, the Enlarged Group had outstanding at that date obligations under hire purchase contract and finance leases of approximately HK$2,946,000 (which were secured by the lessor’s charge over the leased assets) and amounts due to minority shareholders of approximately HK$2,836,000.

Disclaimer

Save as aforesaid or as otherwise disclosed herein, and apart from intra-group liabilities, the Enlarged Group did not have outstanding at the close of business on 30th September, 2008 any loan capital issued and outstanding or agreed to be issued, bank overdrafts, loans or other similar indebtedness, liabilities under acceptances or acceptable credits, debentures, mortgages, charges, hire purchases commitments, guarantees or other material contingent liabilities.

B. WORKING CAPITAL

As at the Latest Practicable Date, after taking into account of the available credit facilities and the internal resources of the Enlarged Group, the Directors were of the opinion that the Enlarged Group had sufficient working capital for the 12-month period from the date of this circular.

C. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31st December, 2007, being the date to which the latest audited financial statements of the Group were made up.

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ADDITIONAL FINANCIAL INFORMATION ON THE GROUP AND THE TARGET GROUP

APPENDIX IV

D. FINANCIAL AND TRADING PROSPECTS

After the Acquisition, the Enlarged Group will continue its existing principal business of manufacturing and sales of steel and metal products and construction materials, including manufacturing and sales of steel wire ropes for elevators.

As stated in the annual report of the Company for the year ended 31st December, 2007, the Group had already formulated new business strategies which would expand and strengthen the PRC’s domestic market and broaden the operating area, especially in the development of high-value-added high-end products, in face of the rapidly changing investment environments. The Group is confident that the result for the coming years will be maintained through the collective hard work of all the management team and staff.

It is anticipated that the manufacture and sale of steel wire ropes for elevators will continue to be a highly profitable industry with high turnover and profit margins and the demand of steel wire ropes will continue to grow despite the recent slowdown of the overall economic performance in the PRC. Besides, the Group will continue to explore opportunities for future expansion and greater market share in the industry in the PRC.

E. MANAGEMENT DISCUSSION AND ANALYSIS OF THE RESULTS OF THE TARGET GROUP

Set out below is the management discussion and analysis of the operating results and business review of the Target Group for each of the years ended 31st March, 2006, 2007 and 2008 and for the three months ended 30th June, 2008.

1. Liquidity and financial resources

For the year ended 31st March, 2006

For the year ended 31st March, 2006, the Target Group achieved an annual turnover of HK$82,437,000. After deduction of minority interests, the profit after taxation was HK$4,807,000.

There was no significant change in the capital and loan structure of the Target Group for the year ended 31st March, 2006.

As at 31st March, 2006, the Target Group’s cash and bank balance reached HK$14,419,000. As at 31st March, 2006, current ratio (current assets to current liabilities) for the Target Group was 1.87:1. As at 31st March, 2006, total borrowings for the Target Group was HK$10,931,000.

— 132 —

ADDITIONAL FINANCIAL INFORMATION ON THE GROUP AND THE TARGET GROUP

APPENDIX IV

As at 31st March, 2006, consolidated equity attributable to equity holders of the Target Group reached HK$23,510,000. As at 31st March, 2006, net gearing ratio (borrowings minus cash and bank balances to total equity) was (0.12):1.

For the year ended 31st March, 2007

For the year ended 31st March, 2007, the Target Group achieved an annual turnover of HK$115,194,000, an 40% increase compared to last year. After deduction of minority interests, the profit after taxation was HK$5,313,000.

There was no significant change in the capital and loan structure of the Target Group for the year ended 31st March, 2007.

As at 31st March, 2007, the Target Group’s cash and bank balance reached HK$13,956,000. As at 31st March, 2007, current ratio (current assets to current liabilities) for the Target Group was 1.32:1. As at 31st March, 2007, total borrowings for the Target Group was HK$14,145,000.

As at 31st March, 2007, consolidated equity attributable to equity holders of the Target Group reached HK$30,111,000. As at 31st March, 2007, net gearing ratio (borrowings minus cash and bank balances to total equity) was 0.005:1.

For the year ended 31st March, 2008

For the year ended 31st March, 2008, the Target Group achieved an annual turnover of HK$211,444,000, an 84% increase compared to last year. After deduction of minority interests, the profit after taxation was HK$10,160,000.

There was no significant change in the capital and loan structure of the Target Group for the year ended 31st March, 2008.

As at 31st March, 2008, the Target Group’s cash and bank balance reached HK$21,713,000. As at 31st March, 2008, current ratio (current assets to current liabilities) for the Target Group was 1.73:1. As at 31st March, 2008, total borrowings for the Target Group was HK$27,006,000.

As at 31st March, 2008, consolidated equity attributable to equity holders of the Target Group reached HK$43,567,000. As at 31st March, 2008, net gearing ratio (borrowings minus cash and bank balances to total equity) was 0.09:1.

— 133 —

ADDITIONAL FINANCIAL INFORMATION ON THE GROUP AND THE TARGET GROUP

APPENDIX IV

For the three months ended 30th June, 2008

For the three months ended 30th June, 2008, the Target Group achieved a turnover of HK$73,120,000, an increase of 52% over the corresponding period of last year. After deduction of minority interests, the unaudited profit after taxation was HK$3,932,000.

There was no significant change in the capital and loan structure of the Target Group for the three months ended 30th June, 2008.

As at 30th June, 2008, the Target Group’s cash and bank balance reached HK$25,995,000. As at 30th June, 2008, current ratio (current assets to current liabilities) for the Target Group was 1.68:1. As at 30th June, 2008, total borrowings for the Target Group was approximately HK$27,920,000.

As at 30th June, 2008, consolidated equity attributable to equity holders of the Target Group reached HK$48,617,000. As at 30th June, 2008, net gearing ratio (borrowings minus cash and bank balances to total equity) was 0.03:1.

2. Employees

As at 30th June, 2008, the Target Group had 441 employees and the total staff costs incurred during the three months ended 30th June, 2008 was HK$6,164,000. The total number of employees of the Target Group was 321, 387 and 441 as at 31st March, 2006, 31st March, 2007 and 31st March, 2008 respectively. Total staff costs for Target Group was HK$8,915,000, HK$13,825,000 and HK$19,703,000 for each of the years ended 31st March, 2006, 31st March, 2007 and 31st March, 2008 respectively.

Employee remuneration packages were maintained at competitive levels and employees were rewarded on a performance-related basis. Other staff benefits included Retirement benefits scheme contribution.

3. Exposure to fluctuations in exchanges rates

The Target Group’s monetary assets were principally denominated in Hong Kong dollars, Renminbi, United States dollars and Euro. As the exchange rate between Hong Kong dollars and the United States dollars was fixed, the Target Group believed its exposure to exchange risk was not material.

For the fluctuation of exchange rate of Renminbi and Euro, the Target Group continued to monitor foreign exchange exposure of Renminbi and Euro and took prudence measures to minimize the currency risks.

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ADDITIONAL FINANCIAL INFORMATION ON THE GROUP AND THE TARGET GROUP

APPENDIX IV

4. Material acquisitions and disposals of subsidiaries and associated companies

The Target Group did not enter into any transactions in respect of material acquisitions and disposals of subsidiaries and associated companies for each of the years ended 31st March, 2006, 31st March, 2007 and 31st March, 2008 and for the three months ended 30th June, 2008.

5. Significant investments or capital assets

The Target Group had invested HK$1,180,000, HK$7,825,000, HK$3,452,000 and HK$14,080,000 in plant and machinery and equipment for each of the years ended 31st March, 2006, 31st March, 2007 and 31st March, 2008 and for the three months ended 30th June, 2008 respectively.

6. Future plans for material investments or capital assets/Capital commitments

As at 31st March, 2006, 31st March, 2007, 31st March, 2008 and 30th June, 2008, the Target Group had capital commitments amounting to HK$2,480,000, HK$2,260,000, HK$174,000 and HK$82,000 respectively.

7. Contingent liabilities/Pledge of assets

As at 31st March, 2006 and 31st March, 2007, the Target Group had pledged the bank deposits amounting to HK$332,000 and HK$1,360,000 respectively to bank and constructors as securities against banking facilities and collateral for the construction of property, plant and equipment.

As at 31st March, 2008, the Target Group had pledged the plant and machinery and equipment amounting to HK$9,786,000 as securities against banking facilities. As at 30th June, 2008, none of the assets of the Target Group had been pledged.

As at 31st March, 2006, 31st March, 2007, 31st March, 2008 and 30th June, 2008, the Target Group did not have any contingent liabilities.

— 135 —

GENERAL INFORMATION

APPENDIX V

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, opinions expressed in this circular have been arrived at after due and careful consideration and there are no other facts not contained in this circular the omission of which would make any statement herein misleading.

DIRECTORS’ INTERESTS AND SHORT POSITIONS IN THE SHARES, UNDERLYING SHARES AND DEBENTURES OF THE COMPANY OR ASSOCIATED CORPORATION

As at the Latest Practicable Date, the interests and short positions of each Director and chief executive of the Company in the Shares, underlying shares and debentures of the Company or any associated corporation (within the meaning of Part XV of the SFO) which are 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 he is taken or deemed to have under such provisions of SFO); or are required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein; or are required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies to be notified to the Company and the Stock Exchange are as follows:

(a) Long positions in Shares as at the Latest Practicable Date:

Director Mr. Pang Tak Chung (Note) Mr. Ho Wai Yu, Sammy Mr. John Cyril Fletcher	Number of ordinary shares held Personal interests Held by controlled corporation Total Percentage of issued shares 137,404,708 195,646,500 333,051,208 58.70% 2,000 — 2,000 0.00% 150,000 — 150,000 0.03%

Note: The 195,646,500 shares are held by Golik Investments Ltd. which is wholly owned by Mr. Pang Tak Chung.

— 136 —

GENERAL INFORMATION

APPENDIX V

(b) Long positions in shares in associated corporations as at the Latest Practicable Date:

Number of Associated shares or corporations in which amount of shares or equity equity interests Class and/or interests are held or held or description of Director interested interested shares Mr. Pang Tak Chung Golik Metal Industrial 25,850 (Note) Non-voting deferred Company Limited shares

Note: Out of the 25,850 shares, 5,850 shares are held by Mr. Pang Tak Chung personally and 20,000 shares are held by World Producer Limited which is wholly owned by Mr. Pang Tak Chung.

Save as disclosed above, none of the Directors and chief executives of the Company have any interests and short position in the Shares, underlying shares and debentures of the Company or any associated corporation (within the meaning of Part XV of the SFO) which are 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 he is taken or deemed to have under such provisions of SFO); or are required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein; or are required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies to be notified to the Company and the Stock Exchange as at the Latest Practicable Date.

None of the Directors had any direct or indirect interests in any assets which have been since 31st December, 2007 (being the date to which the latest published audited consolidated accounts of the Group was made up) acquired or disposed of by or leased to any members of the Group, or were proposed to be acquired or disposed of by or leased to any member of the Group.

As at the Latest Practicable Date, there is no contract or arrangement subsisting in which a Director was materially interested and which was significant in relation to the business of the Group as a whole.

— 137 —

GENERAL INFORMATION

APPENDIX V

SUBSTANTIAL SHAREHOLDER

As at the Latest Practicable Date, so far as known to the Directors and chief executives of the Company, persons other than the Directors or chief executives of the Company, who has an interest or short position in the Shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who is, directly or indirectly, interested in ten per cent. or more the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any member of the Group are as follows:

Long positions in Shares and underlying shares of equity derivatives of the Company as at the Latest Practicable Date:

			Approximate %
		Number of	of the total issued
		underlying	Shares as at the
		shares of equity	Latest Practicable
Name of Shareholder	Number of Shares	derivatives	Date
Golik Investments Ltd.(Note)	195,646,500	—	34.48%

Note: Golik Investments Ltd. is wholly owned by Mr. Pang Tak Chung.

Save as disclosed above, so far as known to the Directors and chief executives of the Company, there are no other persons other than the Directors or chief executives of the Company, who has an interest or short position in the Shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who is, directly or indirectly, interested in ten per cent. or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any member of the Group as at the Latest Practicable Date.

DIRECTORS’ INTEREST IN SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors has entered or is proposing to enter into a service contract with any member of the Group (excluding contracts expiring or determinable within one year without payment of compensation (other than statutory compensation)).

— 138 —

GENERAL INFORMATION

APPENDIX V

LITIGATION

As at the Latest Practicable Date, so far as the Directors are aware, neither the Company nor any subsidiaries was engaged in any litigation or arbitration of material importance and no litigation or claim of material importance was pending or threatened against the Company or any of its subsidiaries.

MATERIAL CONTRACTS

The following contracts (not being contracts entered into in the ordinary course of business) have been entered into by members of the Group within the two years immediately preceding the date of this circular and are or may be material:

(a) a sale and purchase agreement dated 25th April, 2007 entered into between Golik Concrete Limited and Ever Color Lithographing Factory Limited for the sale and purchase of all those pieces or parcels of ground registered in the Land Registry as Lots Nos. 12, 13, 22, 24, 26 and 75 in Demarcation District No. 84, Ping Che, Fanling, New Territories, Hong Kong together with the messuages erections and buildings thereon (if any) for a consideration of HK$29,000,000;
(b) a sale and purchase agreement dated 10th November, 2007 entered into between Tianjin Golik – The First PC Steel Strand Co., Ltd. and Tianjin Steel Wire and Cable Group Ltd. 天津鋼綫鋼纜集團有限公司 (Now known as Tianjin Metallurgy Steel Wire and Cable Group Ltd. 天津冶金鋼綫鋼纜集團有限公司) for the sale and purchase of OTT Wire Drawing Machine together with its spare parts used by the production of drawing per-stressed concrete steel wires for a consideration of RMB2,780,000; and
(c) the Sale and Purchase Agreement.

EXPERT AND CONSENT

The following is the qualification of the expert who has given reports which are contained in this circular:

Name

Qualification

Deloitte Touche Tohmatsu Certified Public Accountants

As at the Latest Practicable Date, Deloitte Touche Tohmatsu did not have any direct or indirect shareholding interest in any member of the Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for shares in any member of the Group and did not have any interest, direct or indirect, in any assets which

* for identification purpose

— 139 —

GENERAL INFORMATION

APPENDIX V

had been, since 31st December, 2007, acquired or disposed of by or leased to any member of the Group, or were proposed to be acquired or disposed of by or leased to any member of the Group.

Deloitte Touche Tohmatsu has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of its reports and references to its name in the form and context in which they are included.

COMPETING INTEREST

As at the Last Practicable Date, so far as the Directors are aware, none of the Directors or their respective associates (as defined in the Listing Rules) had any interest in a business which competes or likely to compete with the business of the Group.

POLL PROCEDURE

Pursuant to bye-law 66 of the Bye-laws of the Company, a resolution put to vote of a general meeting shall be decided on a show of hands unless a poll is required under the Listing Rules or (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is duly demanded. A poll may be demanded by:

(a) the chairman of a general meeting; or
(b) at least three Shareholders present in person or in the case of a Shareholder being a corporation by its duly authorised representative or by proxy for the time being entitled to vote at a general meeting; or
(c) a Shareholder or Shareholders present in person or in the case of a Shareholder being a corporation by its duly authorised representative or by proxy and representing not less than one-tenth of the total voting rights of all Shareholders having the right to vote at a general meeting; or
(d) a Shareholder or Shareholders present in person or in the case of a Shareholder being a corporation by its duly authorised representative or by proxy and holding Shares conferring a right to vote at a general meeting being Shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all Shares conferring that right; or
(e) any Director or Directors who, individually or collectively, hold proxies in respect of Shares representing 5% or more of the total voting rights of all the Shareholders having the right to vote at a general meeting.

— 140 —

GENERAL INFORMATION

APPENDIX V

MISCELLANEOUS

(a) The registered office of the Company is at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda and the head office and principal place of business of the Company in Hong Kong is at Suite 5608, Central Plaza, 18 Harbour Road, Wanchai, Hong Kong.
(b) The company secretary and qualified accountant of the Company is Mr. Ho Wai Yu, Sammy, who is a fellow member of the Association of Chartered Certified Accountants (“FCCA”), an associate member of the Hong Kong Institute of Certified Public Accountants (“CPA”) and a full member of the Chartered Management Institute in the United Kingdom (“MCMI”).
(c) The English text of this circular shall prevail over the Chinese text in case of any inconsistency.

DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at Suite 5608, Central Plaza, 18 Harbour Road, Wanchai, Hong Kong during the normal business hours from the date of this circular up to and including 15th December, 2008:

(a) the Memorandum of Association and Bye-laws of the Company;
(b) the audited consolidated financial statements of the Group, the text of which is set out in Appendix I to this circular;
(c) the accountants’ report of the Target Group, the text of which is set out in Appendix II to this circular;
(d) the report from Messrs. Deloitte Touche Tohmatsu on the unaudited pro forma financial information of the Enlarged Group, the text of which is set out in Appendix III to this circular;
(e) the annual reports of the Company for the two years ended 31st December, 2006 and 2007;
(f) the written consent given by Messrs. Deloitte Touche Tohmatsu referred to in this Appendix; and
(g) the material contracts referred to in this Appendix.

— 141 —

AI assistant

Autohome Inc. — M&A Activity 2008

50646_rns_2008-11-27_a809bc48-0baf-4bcf-8b67-ba4bb49db02b.pdf

GOLIK HOLDINGS LIMITED

MAJOR TRANSACTION ACQUISITION OF SHAREHOLDING INTEREST IN CHINA ROPE HOLDINGS LIMITED

CONTENT

DEFINITIONS

GOLIK HOLDINGS LIMITED

MAJOR TRANSACTION ACQUISITION OF SHAREHOLDING INTEREST IN CHINA ROPE HOLDINGS LIMITED

INTRODUCTION

THE SALE AND PURCHASE AGREEMENT

Subject

Consideration

Conditions

Completion

Other terms

Share Mortgage

Transfer of Mortgaged Shares

Licence Agreement

Deed of Undertaking

LETTER FROM THE BOARD

INFORMATION ON TARGET GROUP

GROUP STRUCTURE BEFORE AND AFTER COMPLETION OF THE SALE AND PURCHASE AGREEMENT

Before completion of the Sale and Purchase Agreement:

After completion of the Sale and Purchase Agreement:

REASONS FOR AND BENEFITS OF THE ACQUISITION

FINANCIAL EFFECTS OF THE ACQUISITION ON THE GROUP

INFORMATION ON THE GROUP

LISTING RULES IMPLICATIONS

ADDITIONAL INFORMATION

Yours faithfully,

GOLIK HOLDINGS LIMITED Pang Tak Chung Chairman

1. SUMMARY OF FINANCIAL INFORMATION OF THE GROUP

(i) Consolidated income statements

(ii) Consolidated balance sheet

2. AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE YEAR ENDED 31ST DECEMBER, 2007

Consolidated Income Statement

Consolidated Balance Sheet

Consolidated Statement of Changes in Equity

Consolidated Cash Flow Statement

Notes to the Consolidated Financial Statements

1. GENERAL

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

3. SIGNIFICANT ACCOUNTING POLICIES

Basis of consolidation

Acquisition of additional interest in a subsidiary

Goodwill

Goodwill arising on acquisitions prior to 1st January, 2005

Goodwill arising on acquisitions on or after 1st January, 2005

Investments in associates

Interests in jointly controlled entities

Revenue recognition

Investment properties

Property, plant and equipment

Leasing

The Group as lessor

The Group as lessee

Leasehold land and building

Impairment losses-other than goodwill

Inventories

Assets classified as held for sale

Financial instruments

Financial assets

Effective interest method

Impairment of loans and receivables

Financial liabilities and equity

Effective interest method

Equity instruments

Derecognition

Foreign currencies

Retirement benefit costs

Borrowing costs

Taxation

4. KEY SOURCES OF ESTIMATION UNCERTAINTY

Estimated impairment of goodwill

Income taxes

5. TURNOVER AND SEGMENT INFORMATION

Business segments

2007

Consolidated Balance Sheet

Autohome Inc. M&A Activity 2008