THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

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

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HANTEC INVESTMENT HOLDINGS LIMITED 亨達國際控股有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 111)

GROUP REORGANISATION

Independent financial adviser to the independent board committee of Hantec Investment Holdings Limited

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A letter from the Independent Board Committee containing its recommendation to the Independent Shareholders in connection with the Group Reorganisation is set out on pages 38 to 39 of this circular. A letter from Access Capital Limited containing its advice and recommendation to the Independent Board Committee and the Independent Shareholders is set out on pages 40 to 60 of this circular.

A notice convening a special general meeting of Hantec Investment Holdings Limited to be held at 45th Floor, COSCO Tower, 183 Queen’s Road Central, Hong Kong at 2: 30 p.m. on Monday, 17 November 2008 is set out on pages 268 to 269 of this circular. A form of proxy for use at the meeting is enclosed. Whether or not you intend to attend the meeting, you are requested to complete the accompanying form of proxy and return it in accordance with the instructions printed thereon as soon as possible to Hantec Investment Holdings Limited’s branch share registrar in Hong Kong, Tricor Secretaries Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong, and in any event not less than 48 hours before the time appointed for the holding of the meeting or any adjourned meeting. Completion and return of the form of proxy will not preclude you from attending and voting in person at the meeting or any adjourned meeting should you so wish.

For identification purpose only

31 October 2008

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Expected timetable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	38
Letter from Access Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	40
Appendix I — Financial information of the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	61
Appendix II — Unaudited pro forma financial information of the Retained Group
upon completion of the Group Reorganisation . . . . . . . . . . . . . . . . . . . .	152
Appendix III — Accountants’ Report on the HPL Group . . . . . . . . . . . . . . . . . . . . . . . . . . .	165
Appendix IV — Unaudited pro forma financial information of the HPL Group
upon completion of the Group Reorganisation . . . . . . . . . . . . . . . . . . . .	237
Appendix V — Summary of the proposed new Articles of Association of HPL . . . . .	244
Appendix VI — General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	260
Notice of SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	268

– i –

DEFINITIONS

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

‘‘acting in concert’’

has the meanings ascribed to it in the Takeovers Code

‘‘Agreement’’ the sale and purchase agreement dated 13 August 2008 between HHL, the Purchasers and Mr. Tang relating to the sale and purchase of the Sale Shares
‘‘Announcement’’ the joint announcement dated 3 September 2008 of the Company, HHL and Sinoday in respect of, among other things, (i) the Group Reorganisation; (ii) the HPL Offer; and (iii) the Hantec Offers
‘‘associate’’ has the meaning as defined in the Listing Rules
‘‘Board’’ the board of Directors
‘‘Business Day’’
a day (excluding Saturday and any day on which a tropical cyclone warning no. 8 or above is hoisted or remains hoisted between 9: 00 a.m. and 12: 00 noon is not lowered at or before 12: 00 noon or on which a ‘‘Black’’ rainstorm is hoisted or remains in effect between 9: 00 a.m. and 12: 00 noon and is not discontinued at or before 12: 00 noon) on which licensed banks in Hong Kong are open for business during their normal business hours
‘‘BVI’’ the British Virgin Islands
‘‘CCBI’’ CCB International Capital Limited, a licensed corporation under the SFO permitted to carry out type 1 and type 6 regulated activities for the purposes of the SFO and the financial adviser to Sinoday
‘‘Company’’ Hantec Investment Holdings Limited, a company incorporated in Bermuda with limited liability and the shares of which are listed on the Main Board of the Stock Exchange (stock code: 111)
‘‘Completion’’ completion of the Agreement
‘‘Completion Date’’ the date of Completion
‘‘Director(s)’’ the director(s) of the Company
‘‘Distributed Business’’
all business other than the Retained Business which will be carried on by the HPL Group upon completion of the Group Reorganisation

– 1 –

DEFINITIONS

‘‘Distribution in Specie’’ the distribution in specie of the entire issued share capital of HPL pursuant to the Group Reorganisation ‘‘Executive’’ the Executive Director of the Corporate Finance Division of the SFC and any delegate of the Executive Director ‘‘Group’’ the Company and its subsidiaries ‘‘Group Reorganisation’’ the proposed reorganisation of the Group which, if approved and implemented, will result in (i) the Company continuing as a public listed company concentrating on the Retained Business; (ii) HPL concentrating on the Distributed Business; and (iii) the Shareholders receiving HPL Shares by way of Distribution in Specie on the basis of one HPL Share for every Share held on the Record Date ‘‘Hantec Offers’’ the Share Offer and the Option Offer ‘‘HHL’’ Hantec Holdings Limited, a company incorporated in Hong Kong with limited liability ‘‘HHL Concert Group’’ HHL, Mr. Tang, Madam Ng, Convenient Way Limited, Mr. Yeung Sai Hong, Alpha Elite Assets Limited, Ms. Ho Yuet Ying and Mr. Man Kong Yui ‘‘Hong Kong’’ the Hong Kong Special Administrative Region of the PRC ‘‘HPL’’ Hantec Pacific Limited, a company incorporated in the BVI with limited liability ‘‘HPL Group’’ HPL and its subsidiaries upon completion of the Group Reorganisation ‘‘HPL Offer’’ the possible voluntary offer to be made by Optima Capital on behalf of HHL to acquire all the HPL Shares not already held by the HHL Concert Group and parties acting in concert with its members ‘‘HPL Share(s)’’ ordinary share(s) in the share capital of HPL ‘‘Independent Board the independent committee of the Board comprising all the Committee’’ non-executive Directors, namely Mr. Fong Wo, Felix, Mr. Yu Man Woon, Mr. Yu Hon To, David, Mr. Cheng Wing Chi and Prof. Nyaw Mee Kau, formed to give recommendations to the Independent Shareholders on the Group Reorganisation

– 2 –

DEFINITIONS

‘‘Independent Financial Adviser’’ or ‘‘Access Capital’’
Access Capital Limited, a licensed corporation under the SFO permitted to carry out types 1, 4, 6 and 9 regulated activities under the SFO and the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Group Reorganisation
‘‘Independent Shareholders’’
(i) in the case of the Group Reorganisation and the HPL Offer, Shareholders other than members of the HHL Concert Group, their respective associates and parties acting in concert with any of them; and (ii) in the case of the Hantec Offers, Shareholders other than the Sinoday Concert Group
‘‘Last Trading Day’’
13 August 2008, being the last day on which the Shares were traded on the Stock Exchange prior to the suspension in trading of the Shares pending the publication of the Announcement
‘‘Latest Practicable Date’’ 29 October 2008, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information for inclusion in this circular
‘‘Listing Rules’’ the Rules Governing the Listing of Securities on the Stock Exchange
‘‘Long Stop Date’’ 31 December 2008 (or such other date as the parties to the Agreement may from time to time agree in writing)
‘‘Madam Ng’’ Madam Ng Chiu Mui, the spouse of Mr. Tang and an executive Director
‘‘Mr. Tang’’
Mr. Tang Yu Lap, the Chairman of the Company and an executive Director
‘‘Optima Capital’’
Optima Capital Limited, a licensed corporation under the SFO permitted to carry out types 1, 4 and 6 regulated activities for the purposes of the SFO and the financial adviser to HHL
‘‘Option(s)’’
the outstanding option(s) granted under the Share Option Scheme
‘‘Optionholder(s)’’

the holder(s) of the Option(s)

‘‘Option Offer’’
the possible mandatory cash offer to be made by CCBI on behalf of Sinoday to cancel all the Options
‘‘PRC’’ the People’s Republic of China
‘‘Purchasers’’ Sinoday and the SG Purchaser

– 3 –

DEFINITIONS

‘‘Record Date’’ the record date to determine entitlements to the Distribution in Specie, being 17 November 2008 subject to any change to be announced by the Company

‘‘relevant securities’’ has the meanings ascribed to it under Note 4 to Rule 22 of the Takeovers Code

‘‘Retained Business’’ the business to be remained in the Retained Group upon completion of the Group Reorganisation, including all the regulated activities currently undertaken by the Group in Hong Kong under the SFO
‘‘Retained Group’’ the Company and its subsidiaries other than the members of the HPL Group upon completion of the Group Reorganisation
‘‘Sale Shares’’ the WK Sale Shares and the SG Sale Shares
‘‘SFC’’ the Securities and Futures Commission
‘‘SFO’’ the Securities and Futures Ordinance, Chapter 571 of the Laws of Hong Kong
‘‘SGM’’ the special general meeting of the Company to be convened to consider the Group Reorganisation
‘‘SG Purchaser’’ Silver Grant International Securities Investment Limited, a company incorporated in Hong Kong with limited liability and an indirect wholly-owned subsidiary of Silver Grant
‘‘SG Sale Shares’’ 40,022,000 Shares agreed to be acquired by SG Purchaser under the Agreement
‘‘Share(s)’’ ordinary share(s) of HK$0.10 each in the share capital of the Company
‘‘Shareholder(s)’’ holder(s) of the Share(s)
‘‘Share Offer’’ the possible mandatory cash offer to be made by CCBI on behalf of Sinoday to acquire all the Shares not already held or agreed to be acquired by the Sinoday Concert Group at a price of HK$0.934 per Share in cash, ex-entitlement to the Distribution in Specie

‘‘Share Option Scheme’’ the share option scheme adopted by the Company on 29 May 2006

– 4 –

DEFINITIONS

‘‘Silver Grant’’	Silver Grant International Industries Limited, a company
	incorporated in Hong Kong whose shares are listed on the
	Main Board of the Stock Exchange (stock code: 171), and is
	ultimately owned as to approximately 22.08% by China Cinda
	Asset Management Corporation
‘‘Sinoday’’	Sinoday Limited, a company incorporated in the BVI with
	limited liability and a wholly-owned subsidiary of Well Kent
‘‘Sinoday Concert Group’’	Sinoday, SG Purchaser, China Cinda Asset Management
	Corporation, Well Kent and parties acting in concert with
	any of them
‘‘Stock Exchange’’	The Stock Exchange of Hong Kong Limited
‘‘Takeovers Code’’	the Hong Kong Code on Takeovers and Mergers
‘‘US’’	the United States of America
‘‘Well Kent’’	Well Kent International Investment Company Limited, a
	wholly-owned subsidiary of China Cinda Asset Management
	Corporation, the holding company of Sinoday and an indirect
	substantial shareholder of Silver Grant
‘‘WK Sale Shares’’	218,650,000 Shares agreed to be acquired by Sinoday under
	the Agreement
‘‘HK$’’	Hong Kong dollar(s), the lawful currency of Hong Kong
‘‘NT$’’	New Taiwan dollar(s), the lawful currency of Taiwan
‘‘RMB’’	Renminbi, the lawful currency of the PRC
‘‘%’’	percent

– 5 –

EXPECTED TIMETABLE

Set out below is the expected timetable for the Group Reorganisation:

2008

Last day of dealings in the Shares
on a cum entitlement basis to the Distribution in Specie . . . . . Monday, 10 November
Commencement of dealings in the Shares
on an ex-entitlement basis to the Distribution in Specie . . . . . Tuesday, 11 November
Latest time for lodging transfers of the Shares
for entitlements to the Distribution in Specie . . . . . . . . . . . . . . . . . . . . 4: 30 p.m. on
Wednesday, 12 November
Closure of the register of members of the Company
for determining entitlements to
the Distributions in Specie (both dates inclusive) . . . . . . . . . Thursday, 13 November
to Monday, 17 November
Latest time for return of form of proxy for the SGM . . . . . . . . . . . . . . . 2: 30 p.m. on
Saturday, 15 November
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 17 November
SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2: 30 p.m. on
Monday, 17 November
Publication of an announcement
regarding the voting results of the SGM . . . . . . . . . . . . . . . . Monday, 17 November
Register of members re-opens . . . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 18 November

– 6 –

LETTER FROM THE BOARD

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HANTEC INVESTMENT HOLDINGS LIMITED 亨達國際控股有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 111)

Executive Directors: Mr. Tang Yu Lap (Chairman) Mr. Lam Ngok Fung (Deputy Chairman) Ms. Ng Chiu Mui Mr. Law Kai Yee Ms. Hwang Wei Ming, Ellen Mr. Lau Mun Chung

Non-executive Director: Mr. Fong Wo, Felix

Registered office: Clarendon House 2 Church Street Hamilton, HM11 Bermuda

Principal place of business in Hong Kong: 45th Floor, COSCO Tower 183 Queen’s Road Central Hong Kong

Independent Non-executive Directors:

Mr. Yu Man Woon Mr. Yu Hon To, David Mr. Cheng Wing Chi Prof. Nyaw Mee Kau

31 October 2008

To the Shareholders and, for information only, the Optionholders

Dear Sir or Madam,

GROUP REORGANISATION

INTRODUCTION

On 3 September 2008, the Company, HHL and Sinoday jointly announced, among others, that:

the Board has been requested by HHL to place before the Shareholders the Group Reorganisation which, if approved and implemented, will result in the Shareholders receiving HPL Shares on the basis of one HPL Share for every Share held on the Record Date;

For identification purpose only

– 7 –

LETTER FROM THE BOARD

subject to completion of the Group Reorganisation and the Agreement, Optima Capital will, on behalf of HHL, make the HPL Offer to shareholders of HPL to acquire all the HPL Shares, other than those then owned or agreed to be acquired by the HHL Concert Group and parties acting in concert with its members on the basis of HK$0.3 in cash for every HPL Share;
the Board has been informed by HHL that HHL entered into the Agreement with Mr. Tang and the Purchasers on 13 August 2008, pursuant to which and subject to, among other things, the implementation of the Group Reorganisation in full, Sinoday and the SG Purchaser agreed to acquire 218,650,000 Shares (representing approximately 52.32% of the existing issued share capital of the Company) and 40,022,000 Shares (representing approximately 9.58% of the existing issued share capital of the Company) respectively from HHL for an aggregate consideration of HK$241,398,000, equivalent to approximately HK$0.934 per Share; and
subject to Completion, CCBI will, on behalf of Sinoday, make a mandatory cash offer to acquire all the Shares, other than those held by the Sinoday Concert Group, on the basis of HK$0.934 in cash per Share, which Shares will be acquired ex-entitlement to the Distribution in Specie. An appropriate offer will also be made to the Optionholders to cancel all Options upon Completion.

The Group Reorganisation will be conditional upon, among others, the passing of the necessary resolution approving the Group Reorganisation by the Independent Shareholders. The Independent Board Committee comprising all the non-executive Directors has been formed to make recommendation to the Independent Shareholders on the Group Reorganisation. Access Capital has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in connection with the Group Reorganisation. The appointment of Access Capital has been approved by the Independent Board Committee. The purpose of this circular is to provide you with information in relation to the Group Reorganisation, to set out the letter of advice from Access Capital containing its advice to the Independent Board Committee and the Independent Shareholders in respect of the Group Reorganisation and the letter from the Independent Board Committee containing its recommendation to the Independent Shareholders in respect of the Group Reorganisation, as well as to give you notice of the SGM.

THE GROUP REORGANISATION

As at the date of the Agreement and the Latest Practicable Date, HHL was interested in 258,672,000 Shares, representing approximately 61.90% of the Company’s entire issued share capital. At the request of HHL, the Board proposes to place before the Independent Shareholders a proposal for the Group Reorganisation. Pursuant to the Group Reorganisation, the Company will continue to be a public listed company on the Main Board of the Stock Exchange with its subsidiaries concentrating on the business of regulated activities under the SFO in Hong Kong, which includes leveraged foreign exchange trading, securities brokering and margin financing services, commodities and futures brokering, financial planning, asset management and corporate finance services in

– 8 –

LETTER FROM THE BOARD

Hong Kong (being the Retained Business). All other subsidiaries of the Group carrying on non-regulated activities under the SFO such as trading and brokering of precious metal contracts, provision of financial related services outside Hong Kong and investment in water plant business (being the Distributed Business) will be held by HPL. Following the injection of the Distributed Business into HPL, the HPL Shares will be distributed in specie to the Shareholders whose names appear on the register of members of the Company on the Record Date on the basis of one HPL Share for every Share then held.

HHL and Mr. Tang hold non-voting deferred shares in certain subsidiaries of the Company. With a view to tidy up the shareholding structure of these subsidiaries to prepare for the Group Reorganisation, HHL and Mr. Tang will transfer, before completion of the Group Reorganisation, these non-voting deferred shares to the Retained Group at nominal value.

In conjunction with the Group Reorganisation, certain intellectual property rights (which were accounted for as fixed assets in the books of the Group) and trademarks will be assigned by the Retained Group to the HPL Group at their original costs. In addition, Ringus Solution Enterprise Limited, a member of the HPL Group upon completion of the Group Reorganisation, will continue to provide information technology services to the Retained Group after completion of the Group Reorganisation and the Agreement. The Company will comply with the relevant provisions of the Listing Rules in respect of the provision of information technology services (which will be continuing connected transactions after the Group Reorganisation) and further announcement will be made by the Company as and when appropriate.

Mechanics of the Group Reorganisation

The Group Reorganisation will be effected by HPL acquiring a number of subsidiaries and associated companies involved in the Distributed Business from the Retained Group. As part of the Group Reorganisation, certain inter-group balances between members of the Retained Group and members of the HPL Group will be assigned or settled in cash and HPL will increase its capital base to finance the operation of the HPL Group before completion of the Group Reorganisation.

For each Share held . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . one HPL Share

The Distribution in Specie will be effected by distribution from the retained earnings and contributed surplus account of the Company of an amount equivalent to the carrying value of the HPL Group, which will be ascertained immediately prior to completion of the Group Reorganisation.

– 9 –

LETTER FROM THE BOARD

If the HPL Offer proceeds, the certificates of the HPL Shares will only be posted to the Independent Shareholders who do not accept the HPL Offer after the close of the HPL Offer in order to avoid confusion and to enhance efficiency. Details of the HPL Offer are set out under the section headed ‘‘Possible voluntary offer for the HPL Shares’’ below. Details of the procedures for acceptance of the HPL Offer will be set out in the composite offer and response document to be issued in relation to the HPL Offer.

The HPL Shares will rank pari passu in all respects with each other. Presently there is no intention to apply for the listing of the HPL Shares on the Stock Exchange or any other stock exchange.

Conditions of the Group Reorganisation

The Group Reorganisation will be conditional upon:

(i) the passing of the necessary resolution approving the Group Reorganisation by the Independent Shareholders;
(ii) the discharge and release by the Group’s bankers and other creditors, if required, of guarantees by the Company and any members of the Retained Group on the obligations of HPL or its subsidiaries following the implementation of the Group Reorganisation;
(iii) the grant of any other third party consents or approvals, including all regulatory consents, required to give effect to the Group Reorganisation; and
(iv) all the conditions precedent to completion of the Agreement (other than those relating to the completion and implementation of the Group Reorganisation) having been fulfilled or waived.

As at the Latest Practicable Date, apart from the 258,672,000 Shares held by HHL, Mr. Tang and his family members, Mr. Man Kong Yui and Ms. Ho Yuet Ying and her family members also held 4,022,000 Shares, 500,000 Shares and 3,120,000 Shares respectively, and Madam Ng held Options entitling her to subscribe for 390,000 new Shares at an exercise price of HK$0.88 per Share. The HHL Concert Group, its associates and their respective parties acting in concert with them will abstain from voting at the SGM on the resolution approving the Group Reorganisation. As at the Latest Practicable Date, none of the Purchasers or their respective associates owns or controls (directly or indirectly) any Shares. In the event that the Purchasers or their respective associates acquire any Shares prior to the SGM, the Purchasers and their respective associates will abstain from voting at the SGM on the resolution approving the Group Reorganisation. Save for the aforesaid, to the best of the knowledge, information and belief of the Directors and having made all reasonable enquiries, no other Shareholder is required to abstain from voting at the SGM on the resolution approving the Group Reorganisation. Voting on the resolution to consider and approve the Group Reorganisation will be taken by poll.

– 10 –

LETTER FROM THE BOARD

Group structure before and after the Group Reorganisation

The chart below shows in summary the principal members of the Group and shareholding structure of the Company as at the Latest Practicable Date and immediately before the implementation of the Group Reorganisation (assuming no other changes since the Latest Practicable Date):

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– 11 –

LETTER FROM THE BOARD

The chart below shows in summary the principal members of the Group and shareholding structure of the Company and HPL immediately after the implementation of the Group Reorganisation and Completion (assuming no other changes since then):

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The HPL Group

HPL will acquire the following assets pursuant to the Group Reorganisation:

100% interest of Hantec Canada Investments Limited, which owns 8.1% interest of HS Hantec Holdings Limited;
100% interest of Hantec (UK) Incorporated;
75% interest of Ringus Solution Enterprise Limited;
100% interest of Hantec Taiwan Investments Limited, which owns 100% interest of 俊森實業有限公司 and 亨達證劵投資顧問股份有限公司;
100% interest of Hantec Financial Services Limited, which owns 20% interest in 元太外匯經紀股份有限公司;

– 12 –

LETTER FROM THE BOARD

100% interest of Hantec Bullion Limited, which owns 100% interest of Cosmos Hantec Investment (NZ) Limited, Hantec Markets (Australia) Pty Limited, Hantec (New Zealand) Investment Company Limited, Cosmos Hantec International Investments Limited, Hantec Business Consultant Limited, 北京康景商業顧問有限公司, HT (Overseas) Limited, Hantec Investimentos Do Brasil Limitada, 北京亨達投資諮詢顧問有限公司 and Hantec Nominees Limited, and 91% interest of 北京國際經濟技術有限責任公司;
100% interest of Hantec International Enterprises Limited, which owns 20% interest of Hantec Jiangdu Riverside Developing Zone Water Industry Limited;
100% interest of Macro Jess Ltd.;
100% interest of Hantec Strategic Plan (HK) Limited, which owns 100% interest of Hantec Financial Services (Suisse) SA; and
100% interest of HT Universal Limited.

Reasons for the Group Reorganisation

As disclosed in the announcement of the Company dated 5 March 2008, HHL informed the Company that it was in discussions with a third party regarding possible disposal of its Shares. After further arm’s length negotiations, Sinoday has conditionally agreed to acquire the controlling stake in the Company from HHL and indicated that it intends that the Group will only concentrate on the business of regulated financial activities in Hong Kong. In order to facilitate implementation of the Agreement, HHL has requested the Board to place before the Independent Shareholders a proposal for the Group Reorganisation. The Board considers that the Group Reorganisation (together with the making of the HPL Offer and the Hantec Offers) offers the Shareholders an opportunity to realise their present investment in the Company and also gives them flexibility to retain part or all of their investment in the Retained Business and the Distributed Business if they so wish. Completion of the Group Reorganisation is one of the conditions precedent to each of the Agreement (and, as a result, the making of the Hantec Offers) and the HPL Offer.

The Company has not attempted to locate potential buyers for the Distributed Business as it expects that it will take a long time to locate a ready buyer and negotiate the terms and conditions, by which time Sinoday may have lost interest in acquiring the controlling stake of the Company and the Shareholders would miss the opportunity to realise their investments in the Shares. The HPL Offer, which will be made subject to completion of the Group Reorganisation and the Agreement, will provide alternatives to the Independent Shareholders to continue to directly invest in the Distributed Business or realise such investment in cash through the HPL Offer. If the Company were to dispose of the Distributed Business to HHL instead of implementing the Group Reorganisation, the Independent Shareholders will not be given the flexibility to realise or retain their investments in the Distributed Business to be undertaken by the HPL Group.

– 13 –

LETTER FROM THE BOARD

The Directors (including all non-executive Directors) consider that the Group Reorganisation, the HPL Offer and the Hantec Offers together provide alternatives for the Shareholders either to divest all their investments in the Company at a premium over the market price of the Shares or to retain some or all of their investments through holding interests in the Company, HPL or both companies.

Save for the proposed Distribution in Specie, the Company has not formulated any future dividend policy.

FINANCIAL INFORMATION OF THE GROUP AND THE HPL GROUP

The Accountants’ Report of the Group for the three years ended 31 December 2005, 2006 and 2007 and the six months ended 30 June 2008 is set out in section 1 of Appendix I to this circular. A reconciliation of the consolidated financials of the Group contained in the aforesaid Accountants’ Report to those contained in the audited financial statements of the Group for the year ended 31 December 2005 is set out in section 2 of Appendix I to this circular. The statement of adjustments prepared by KPMG in relation to the above is available for public inspection (please refer to the section headed ‘‘Documents available for inspection’’ in Appendix VI to this circular for details).

Pursuant to the Group Reorganisation, the Company will continue to be a public listed company with its subsidiaries concentrating on the business of carrying out regulated activities under the SFO, including leveraged foreign exchange trading, securities brokering and margin financing services, commodities and futures brokering, financial planning, asset management and corporate finance services in Hong Kong. All other subsidiaries of the Group carrying on trading and brokering of precious metal contracts, provision of financial related services outside of Hong Kong and investment in water plant business will be held by HPL. On this basis, the unaudited pro forma financial information of the Retained Group upon completion of the Group Reorganisation, the Accountants’ Report on the HPL Group and the unaudited pro forma financial information of the HPL Group upon completion of the Group Reorganisation have been prepared, details of which are set out in Appendices II, III and IV to this circular respectively.

MANAGEMENT DISCUSSION AND ANALYSIS ON THE RETAINED GROUP

Set out below are the management discussion and analysis on the Retained Group which is primarily based on the unaudited pro forma financial information of the Retained Group as set out in Appendix II to this circular.

Financial and business performance

Pursuant to the Group Reorganisation, the Company will continue to be a public company listed on the Main Board of the Stock Exchange. The Retained Group will concentrate on the business of carrying out regulated activities under the SFO, including leveraged foreign exchange trading, securities brokering and margin financing services, commodities and futures brokering, financial planning, asset management and corporate finance services in Hong Kong.

– 14 –

LETTER FROM THE BOARD

As set out in section (B) of Appendix II to this circular, based on the unaudited pro forma income statement of the Retained Group assuming the Group Reorganisation had taken place at the beginning of the year ended 31 December 2007, the turnover of the Retained Group for the year ended 31 December 2007 would have been approximately HK$173.4 million which would be mainly attributed to the provision of broking services in securities, equity linked products, unit trusts and stock options traded in Hong Kong and selected overseas markets and margin financing services to those brokering clients, and brokering services on savings plans, equity linked products and unit trusts. The profit after taxation of the Retained Group for the year ended 31 December 2007 would be approximately HK$9.4 million.

Liquidity and financial resources

According to the unaudited pro forma assets and liabilities statement of the Retained Group as set out in section (A) of Appendix II to this circular, the Retained Group had a total equity of approximately HK$231.7 million. The net current assets of the Retained Group were approximately HK$215.9 million. Save for the non-current portion of the obligations under finance lease of approximately HK$0.2 million, the Retained Group did not have any long term borrowings as at 30 June 2008.

Pursuant to the Agreement, HHL and Mr. Tang warranted to the Purchasers that as at the Completion Date, the consolidated net tangible assets of the Retained Group (including the trading right of the Retained Group on the Stock Exchange and Hong Kong Futures Exchange Limited) will not be less than HK$230,000,000 and the Retained Group will have cash in hand or at banks or other authorised institutions of not less than HK$130,000,000. It is expected that the financial position of the Retained Group will remain strong upon completion of the Group Reorganisation. All the corporations licensed by the SFC will continue to comply with financial resources requirements of the relevant authorities. It is expected that the Retained Group will continue to finance its operations through internal resources and cash generated from its business activities.

Fluctuation in foreign exchange

Major assets and liabilities of the Retained Group are denominated in either Hong Kong dollars or US dollars. Because of the implementation of its treasury policy and the fact that Hong Kong dollar is pegged with US dollar, the Retained Group does not have significant exposure to fluctuation in foreign exchange rates.

Remuneration and human resources development

The Retained Group has laid down human resources policies to retain staffs and attract new recruits. Fringe benefits including medical subsidies, education allowances, life insurance and training courses are offered to different levels of staffs. The Retained Group regularly reviews the various benefit packages for different levels of staffs. Good performers are rewarded with bonus and other incentives. Bonus and incentives are provided to staff for out performing pre-determined targets. Account executives are provided with appropriate support together with competitive terms.

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LETTER FROM THE BOARD

Charges on assets

As of 30 June 2008, deposits of the Retained Group amounted to approximately HK$11.6 million and approximately HK$4.9 million were pledged to authorised institutions to secure banking facilities for securities brokering and leveraged foreign exchange trading respectively. In addition, assets under finance lease are charged to the lessor. Save as disclosed, no other assets of the Retained Group are under any charges.

Prospects

Recent developments in the worldwide investment market suggest wide fluctuations will continue for some time. It is also estimated that economic growth in Hong Kong and the PRC in 2008 would slow down as a result of the recent global financial turmoil. In this environment, the Retained Group will conduct its business both prudently and conservatively. Currently, the Retained Group is working on strengthening its internal control and information technology systems to ensure that they are capable of taking up new challenges.

MANAGEMENT DISCUSSION AND ANALYSIS ON THE HPL GROUP

Set out below are the management discussion and analysis on the HPL Group which is primarily based on the combined financial information of the HPL Group as set out in Appendix III to this circular.

For the year ended 31 December 2005

Analysis of the HPL Group’s performance

The HPL Group’s turnover for the year ended 31 December 2005 amounted to approximately HK$41.4 million, which mainly comprised income generated from bullion trading of approximately HK$20.7 million, fees and commission of approximately HK$6.9 million and management, subscription and advisory fee of approximately HK$5.4 million.

The HPL Group’s audited combined profit attributable to shareholders for the year ended 31 December 2005 amounted to approximately HK$3.3 million after sharing the profits of associates of approximately HK$3.9 million.

Capital structure, liquidity and financial resources

The HPL Group generally financed its operations through cash generated from its business activities.

The gearing ratio, which is calculated by dividing the outstanding long term debt by equity attributable to the equity holders of HPL, as at 31 December 2005 for the HPL Group was zero as the HPL Group did not have any borrowing or long term debt as at such date.

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LETTER FROM THE BOARD

Capital expenditures, which amounted to approximately HK$2.8 million for the year ended 31 December 2005, were used primarily for the purchase of property, plant and equipment for the financial planning and insurance broking business. The HPL Group’s capital expenditures continued to be funded primarily from either cash generated from operations, cash on hand or a combination of the above as required.

Human resources

The HPL Group had 35 employees as at 31 December 2005.

For the year ended 31 December 2006

Analysis of the HPL Group’s performance

The HPL Group’s turnover for the year ended 31 December 2006 amounted to approximately HK$189.4 million, which mainly comprised income generated from bullion trading of approximately HK$79.6 million, fees and commission of approximately HK$41.4 million and swap interest and foreign exchange trading of approximately HK$33.2 million. The increase in the HPL Group’s turnover of approximately HK$148.0 million for the year ended 31 December 2006 represented an increase of approximately 357.5% compared to the year ended 31 December 2005. The increase was mainly due to the increase in income generated from bullion trading as a result of upgrading the bullion internet trading platform, enhanced marketing, and an increase in interest income during the year ended 31 December 2006.

The HPL Group’s audited combined profit attributable to shareholders for the year ended 31 December 2006 amounted to approximately HK$29.8 million, representing an increase of approximately HK$26.5 million as compared to approximately HK$3.3 million as recorded in the year ended 31 December 2005. The improvement in the performance of the HPL Group was a result of continuous improvement and enhancement in trading platforms, marketing and business expansion and acquisitions, leading to a significant increase in turnover of the HPL Group for the year ended 31 December 2006.

Capital structure, liquidity and financial resources

The HPL Group generally financed its operations through cash generated from its business activities.

The gearing ratio as at 31 December 2006 for the HPL Group was zero as the HPL Group did not have any borrowing or long term debt as at such date.

Capital expenditures, which amounted to approximately HK$2.4 million for the year ended 31 December 2006, were used primarily for the purchase of property, plant and equipment for the precious metal contracts trading and brokering business. The HPL Group’s capital expenditures continued to be funded primarily from either cash generated from operations, cash on hand or a combination of the above as required.

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LETTER FROM THE BOARD

Human resources

The HPL Group had 88 employees as at 31 December 2006.

For the year ended 31 December 2007

Analysis of the HPL Group’s performance

The HPL Group’s turnover for the year ended 31 December 2007 amounted to approximately HK$293.6 million, which mainly comprised income generated from bullion trading of approximately HK$102.8 million, fees and commission of approximately HK$80.1 million and swap interest and foreign exchange trading of approximately HK$63.3 million. The increase in the HPL Group’s turnover of approximately HK$104.2 million for the year ended 31 December 2007 represented an increase of approximately 55.0% over the previous year. The increase was mainly due to the continuous growth of bullion trading as a result of high volatility together with the escalating prices of precious metals, and the increase in trading activities in the bullion market during the year ended 31 December 2007.

The HPL Group’s audited combined profit attributable to shareholders for the year ended 31 December 2007 amounted to approximately HK$30.9 million, representing an increase of approximately HK$1.1 million as compared to approximately HK$29.8 million as recorded in the year ended 31 December 2006. The continuous improvement in turnover did not bring improvement in earnings due to increase in commission expense and increase in operating costs of the HPL Group as a result of inflation. Despite the significant increase in operating costs, the HPL Group was still able to record a profit comparable to the fruitful year ended 31 December 2006.

Capital structure, liquidity and financial resources

The HPL Group generally financed its operations through cash generated from its business activities.

The gearing ratio as at 31 December 2007 for the HPL Group was zero as the HPL Group did not have any borrowing or long term debt as at such date.

Capital expenditures, which amounted to approximately HK$2.0 million for the year ended 31 December 2007, were used primarily for the purchase of property, plant and equipment for the precious metal contracts trading and brokering business. The HPL Group’s capital expenditures continued to be funded primarily from either cash generated from operations, cash on hand or a combination of the above as required.

Human resources

The HPL Group had 109 employees as at 31 December 2007.

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LETTER FROM THE BOARD

For the six months ended 30 June 2008

Analysis of the HPL Group’s performance

The HPL Group’s turnover for the six months ended 30 June 2008 amounted to approximately HK$128.6 million, which mainly comprised income generated from bullion trading of approximately HK$49.0 million, swap interest and foreign exchange trading of approximately HK$31.6 million and fees and commission of approximately HK$30.4 million. The increase in the HPL Group’s turnover of approximately HK$0.9 million for the six months ended 30 June 2008 represented an increase of approximately 0.7% compared to the six months ended 30 June 2007. The sub-prime crisis in the US market had a more serious impact on the global investment market than anticipated. With the effort of the management team and diversification of businesses, the turnover of the HPL Group did not decline with the investment market. Similar to prior years, the income generated from bullion trading business of the HPL Group was the major source of turnover of the HPL Group and the turnover for bullion trading business still experienced an increment as investors had switched to the precious metal market during the six months ended 30 June 2008.

The HPL Group’s audited combined profit attributable to shareholders for the six months ended 30 June 2008 amounted to approximately HK$7.0 million, representing a drop of approximately HK$5.6 million as compared to approximately HK$12.6 million recorded in the six months ended 30 June 2007. The decrease in profit of the HPL Group for the six months ended 30 June 2008 was mainly due to the rise in costs.

Capital structure, liquidity and financial resources

The HPL Group generally financed its operations through cash generated from its business activities.

The gearing ratio as at 30 June 2008 for the HPL Group was approximately 15.0% as the HPL Group had mortgage loans amounted to approximately HK$12.0 million which is payable after one year in relation to the freehold land and building acquired outside Hong Kong during the period.

Capital expenditures, which amounted to approximately HK$21.9 million for the six months ended 30 June 2008, were used primarily for the acquisition of freehold land and building outside Hong Kong. The HPL Group’s capital expenditures were funded primarily from cash generated from operations, cash on hand, banking facilities or a combination of any of the above as required.

Human resources

The HPL Group had 121 employees as at 30 June 2008.

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LETTER FROM THE BOARD

POSSIBLE VOLUNTARY OFFER FOR THE HPL SHARES

Assuming no Shares will be issued after the Latest Practicable Date, upon completion of the Group Reorganisation, the Company will have 417,890,000 Shares in issue and on this basis, 417,890,000 HPL Shares will be distributed to the Shareholders whose names appear on the register of members of the Company on the Record Date. Based on the shareholding structure of the Company as at the Latest Practicable Date and assuming no other changes since the Latest Practicable Date, upon completion of the Group Reorganisation, the HHL Concert Group and parties acting in concert with any of its members will be directly interested in a total of 266,314,000 HPL Shares, which will represent approximately 63.72% of the expected issued share capital of HPL. Assuming 10,930,000 Shares will be issued upon full exercise of the Options prior to the Record Date, upon completion of the Group Reorganisation, the Company will have 428,820,000 Shares in issue and on this basis, 428,820,000 HPL Shares will be distributed to the Shareholders whose names appear on the register of members of the Company on the Record Date. The HHL Concert Group and parties acting in concert with any of its members will be interested in 266,704,000 Shares, representing approximately 62.19% of the enlarged issued share capital of HPL.

Given that the HPL Shares will not be listed on the Stock Exchange or any other stock exchange upon completion of the Group Reorganisation, the directors of HHL consider that it is appropriate to provide the Independent Shareholders with an opportunity to realise their investments in HPL by making the HPL Offer. Subject to completion of the Group Reorganisation and the Agreement, Optima Capital will, on behalf of HHL, make a voluntary offer to the shareholders of HPL to acquire all the HPL Shares, other than those then owned or agreed to be acquired by the HHL Concert Group and parties acting in concert with any of its members, on the terms to be set out in the composite offer and response document in relation to the HPL Offer and the accompanying form of acceptance and transfer on the following basis:

For every HPL Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$0.30 in cash

The offer price of HK$0.30 per HPL Share under the HPL Offer represents a discount of approximately 18.7% to the unaudited pro forma net asset value, calculated on the basis of the unaudited pro forma net asset value of HPL Group as at 30 June 2008 and 417,890,000 HPL Shares expected to be in issue, of approximately HK$0.369 per HPL Share, assuming no further Share is issued up to the Record Date. The unaudited pro forma financial information of the HPL Group is set out in Appendix IV to this circular.

The making of the HPL Offer is a possibility only and may or may not proceed. In the event that the HPL Offer is made, it will be unconditional in all respects.

The HPL Shares subject to the HPL Offer will be acquired by HHL with the right to receive all dividends and distributions declared, paid or made on or after the date of the issue of the HPL Shares and free from all third party rights.

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LETTER FROM THE BOARD

Since 20 August 2008, being the date of incorporation of HPL, and up to the Latest Practicable Date, save for the subscription of one HPL Share by the Company on its incorporation, HPL has not issued any shares, relevant securities, options, derivatives or warrants which are convertible into or which confers rights to require the issue of HPL Shares or any other securities carrying conversion or subscription rights into HPL Shares.

Since HPL is a company incorporated in the BVI and its register of members is located there, no transfer duty is payable on any transfer of the HPL Shares in the BVI.

The offer price for the HPL Shares has been determined after taking into account factors including (i) the estimated combined net asset value of the HPL Group upon completion of the Group Reorganisation with reference to the unaudited combined net asset value of the HPL Group of approximately HK$78.9 million based on the audited consolidated balance sheet of the Group as at 31 December 2007 and the intended settlement or assignment of intergroup balances and the capitalisation of investments by the Retained Group in the HPL Group; (ii) the Share Offer price of HK$0.934 per Share; (iii) the prevailing market prices of the Shares as further described in the section headed ‘‘Comparison of the combined offer price under the HPL Offer and the Share Offer with market price’’ below; and (iv) the closing price of HK$1.22 per Share as quoted on the Stock Exchange on the Last Trading Day.

On the basis that 417,890,000 HPL Shares are expected to be in issue upon completion of the Group Reorganisation and the offer price of HK$0.30 per HPL Share under the HPL Offer, the HPL Offer values the entire issued share capital of HPL at approximately HK$125.4 million. Based on 417,890,000 Shares in issue as at the Latest Practicable Date and assuming there is no change in the shareholding of the Company from the Latest Practicable Date up to the Record Date, the HHL Concert Group and parties acting in concert with its members will be interested in 266,314,000 HPL Shares upon completion of the Group Reorganisation and accordingly, 151,576,000 HPL Shares (representing approximately 36.28% of the share capital of HPL expected to be in issue) will be subject to the HPL Offer. Such HPL Shares are valued at approximately HK$45.5 million based on the offer price of HK$0.30 per HPL Share under the HPL Offer. If all the Options are exercised prior to the Record Date, the HHL Concert Group and parties acting in concert with its members will be interested in 266,704,000 HPL Shares and the total number of HPL Shares subject to the HPL Offer will be 162,116,000 HPL Shares and the HPL Offer will be valued at approximately HK$48.6 million based on the offer price of HK$0.30 per HPL Share.

HHL will finance the consideration required to meet acceptances of the HPL Offer by its internal resources. Optima Capital, the financial adviser to HHL, is satisfied that sufficient financial resources are available to HHL to satisfy full acceptance of the HPL Offer.

HHL intends to avail itself of any compulsory acquisition or redemption provisions under the applicable laws in the BVI and the relevant provisions of the Takeovers Code. In the event that upon the closing of the HPL Offer, the HHL Concert Group and parties acting in concert with any of its members hold 90% or more of the voting rights of HPL, pursuant to section 176 of the BVI Business Companies Act, the HHL Concert Group and parties acting

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LETTER FROM THE BOARD

in concert with any of its members intend to direct HPL to redeem all the HPL Shares not already owned by the HHL Concert Group and parties acting in concert with any of its members.

As at the Latest Practicable Date, the board of directors of HPL comprises Mr. Lam Ngok Fung, Ms. Hwang Wei Ming, Ellen and Mr. Law Kai Yee, all of whom are also executive Directors.

As at the Latest Practicable Date, HPL is wholly owned by the Company and accordingly, the HHL Concert Group and parties acting in concert with its members, through their respective shareholding interests in the Company, are indirectly interested in an aggregate of 63.72% of the issued share capital of HPL. Save for the aforesaid and their entitlements to receive HPL Shares pursuant to the Group Reorganisation, the HHL Concert Group and parties acting in concert with its members do not hold any relevant securities of HPL as at the Latest Practicable Date. Neither the HHL Concert Group nor any parties acting in concert with its members had dealt in the relevant securities of HPL during the six-month period immediately preceding 5 March 2008, being the date of commencement of the offer period as defined in the Takeovers Code, and up to the Latest Practicable Date. As at the Latest Practicable Date, the Sinoday Concert Group did not hold any relevant securities of HPL, and had not dealt in the relevant securities of HPL during the six-month period immediately preceding 5 March 2008 and up to the Latest Practicable Date.

Other arrangements

As at the Latest Practicable Date,

(i) neither the HHL Concert Group nor any person acting in concert with any of its members had received any irrevocable commitment to accept the HPL Offer;
(ii) there was no outstanding derivative in respect of relevant securities in HPL which had been entered into by the HHL Concert Group or any person acting in concert with any of its members;
(iii) there was no arrangement (whether by way of option, indemnity or otherwise) in relation to the shares of HHL or HPL and which might be material to the HPL Offer;
(iv) save for the entering into of the Agreement, there was no agreement or arrangement to which HHL is a party which related to circumstances in which it might or might not invoke or seek to invoke a pre-condition or a condition to the HPL Offer; and
(v) there was no relevant securities in HPL which the HHL Concert Group or any person acting in concert with any of its members had borrowed or lent.

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LETTER FROM THE BOARD

INFORMATION ON HHL

HHL is a company incorporated in Hong Kong and is owned as to 35% by Mr. Tang, 35% by Convenient Way Limited (which is a company controlled by Mr. Yeung Sai Hong), 25% by Alpha Elite Assets Limited (which is a company wholly owned by Ms. Ho Yuet Ying) and 5% by Mr. Man Kong Yui. Its principal activities are investment holding.

INTENTION OF HHL REGARDING HPL

HPL was incorporated in the BVI with limited liability on 20 August 2008 and has not carried on any business since its incorporation. Upon completion of the Group Reorganisation, HPL’s principal activity will be investment holding and its subsidiaries will be principally engaged in the Distributed Business. It is the intention of HHL that the HPL Group will not conduct any business other than the Distributed Business or hold any assets other than those assets related to the Distributed Business and inherited pursuant to the Group Reorganisation, unless prior approval from its shareholders has been obtained. The board of directors of HPL does not intend to dispose of any assets of the HPL Group upon completion of the HPL Offer. It is the intention of HHL that it will not inject any asset into HPL or propose the board of directors of HPL to authorise the disposal of any assets or make changes to the principal activities of the HPL Group.

Interests of the shareholders of HPL will be safeguarded by the proposed new Articles of Association of HPL to be adopted on completion of the Group Reorganisation, which will contain provisions comparable to the rules governing connected transactions and notifiable transactions contained in the Listing Rules, so that certain transactions will be subject to independent shareholders’ approval and independent advice. In particular, (a) any connected transaction falling within the definition of the Listing Rules which requires the approval of independent shareholders must be approved by the disinterested shareholders of HPL by way of ordinary resolution in general meeting, the notice convening which is accompanied by a circular containing the advice of an independent financial adviser; (b) any notifiable transaction falling within the definition of the Listing Rules which requires the approval of shareholders must be approved by the shareholders of HPL by way of ordinary resolution in general meeting; and (c) no HPL Shares will be issued for cash unless they are first offered to all shareholders in proportion to their respective shareholdings in HPL. A summary of the proposed new Articles of Association of HPL is set out in Appendix V to this circular. If HPL remains a public company upon the close of the HPL Offer, it will appoint three independent non-executive directors and it will still be subject to the provisions of the Takeovers Code. Further announcement will be made in this regard as and when appropriate.

No new listing application will be made for the HPL Shares on the Stock Exchange or any other stock exchange.

Details of the financial information of the HPL Group including, among other things, the Accountants’ Report on the HPL Group containing the combined income statements and the combined cash flow statements for the three years ended 31 December 2005, 2006 and

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LETTER FROM THE BOARD

2007 and the six months ended 30 June 2008, the combined balance sheet as at 31 December 2005, 2006 and 2007 and 30 June 2008, together with the respective notes are set out in Appendix III to this circular.

THE AGREEMENT

Date

13 August 2008

Parties

(i) HHL (as vendor);
(ii) Mr. Tang (as vendor guarantor);
(iii) Sinoday (as purchaser for the WK Sale Shares); and
(iv) SG Purchaser (as purchaser for the SG Sale Shares).

Sinoday is a wholly owned subsidiary of Well Kent, which is in turn an indirect substantial shareholder of Silver Grant.

Subject matter of the sale and purchase

(i) WK Sale Shares, being 218,650,000 Shares representing approximately 52.32% of the issued share capital of the Company as at the date of the Agreement, to be acquired by Sinoday; and
(ii) SG Sale Shares, being 40,022,000 Shares representing approximately 9.58% of the issued share capital of the Company as at the date of the Agreement, to be acquired by SG Purchaser.

The Sale Shares will be sold free from any charges, liens, encumbrances, equities, claims and adverse interests whatsoever, together with all rights attaching to the Sale Shares (including the right to receive all dividends and distributions declared, made or paid on or after the date of the Agreement, including but not limited to the interim dividend of the Company for the six months ended 30 June 2008) but excluding the Distribution in Specie.

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LETTER FROM THE BOARD

Consideration

The aggregate cash consideration for the Sale Shares is HK$241,398,000 (HK$204,048,651.20 for the WK Sale Shares and HK$37,349,348.80 for the SG Sale Shares respectively), equivalent to approximately HK$0.934 per Sale Share. The consideration is payable as follows:

(i) a deposit of HK$10,000,000 has been paid to HHL (as to HK$8,452,790.00 by Sinoday and as to HK$1,547,210.00 by SG Purchaser) upon the signing of the Agreement; and
(ii) the remaining balance of HK$231,398,000 will be paid to HHL (as to HK$195,595,861.20 by Sinoday and as to HK$35,802,138.80 by SG Purchaser) on the Completion Date.

The consideration under the Agreement has been arrived at after arm’s length negotiations among the parties, having taken into account the net tangible asset value of the Retained Group as warranted by HHL and Mr. Tang as described in the paragraph headed ‘‘Warranty’’ below and the market performance of the Shares prior to suspension of trading in the Shares on 14 August 2008.

Warranty

HHL and Mr. Tang warranted to the Purchasers that as at the Completion Date, the consolidated net tangible assets of the Retained Group (including the trading right of the Retained Group on the Stock Exchange and Hong Kong Futures Exchange Limited) will not be less than HK$230,000,000 and the Retained Group will have cash in hand or at banks or other authorised institutions of not less than HK$130,000,000. In the event that the net tangible assets of the Retained Group as at the Completion Date is less than HK$230,000,000, HHL shall pay to the Retained Group an amount equal to such shortfall on a dollar for dollar basis. In addition, HHL will be liable to pay damages to the Purchasers if the Retained Group’s cash in hand or at banks or other authorised institutions is less than HK$130,000,000 as at the Completion Date.

Conditions

Completion of the Agreement is subject to and conditional upon the satisfaction of the following conditions:

In respect of the WK Sale Shares

(i) the Shares remaining listed and traded on the Stock Exchange at all times from the date of the Agreement to the Completion Date, except for the suspension for the purpose of clearing the announcement regarding the Agreement or the transactions contemplated thereby or temporary suspension not exceeding 7 consecutive trading days;

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LETTER FROM THE BOARD

(ii) the Stock Exchange not having indicated that the listing of the Shares on the Stock Exchange will be withdrawn following Completion (other than by reason of an inadequate percentage of the issued capital of the Company being in public hands as a result of the Hantec Offers) and the SFC not having indicated that it will object to such listing (other than by reason of contravention of the Takeovers Code by the Purchasers or any party associated with it);
(iii) the passing of the resolution by the Independent Shareholders at the SGM approving the Group Reorganisation and the transactions contemplated thereunder;
(iv) the due and proper implementation and completion of the Group Reorganisation and the transactions contemplated thereunder upon such terms and conditions to the reasonable satisfaction of the Purchasers;
(v) the delivery by HHL to the Purchasers of a legal opinion issued by such a law firm acceptable to the Purchasers confirming the Group Reorganisation and the transactions contemplated thereunder in such form and substance to be agreed between HHL and the Purchasers;
(vi) the SFC granting approval to Sinoday or its nominee becoming a substantial shareholder of the subsidiaries of the Company who are licensed persons (as defined in the SFO), either unconditionally or subject only to conditions to which neither the Company nor Sinoday reasonably objects as a result of the sale and purchase of the WK Sale Shares and the Hantec Offers as contemplated under the Agreement;
(vii) it has not come to the attention of Sinoday that any material adverse change to the financial position, management, business or property of the Retained Group has occurred prior to the Completion Date or are reasonably likely to occur whether before the Completion Date;
(viii) the grant of all authorisation, registration, filings, licences, confirmations, clearances, rulings, decisions, permissions and approvals from (a) the SFC, the Stock Exchange or (b) other authorities (as the case may be) that are necessary or appropriate for or in connection with the transactions contemplated under the Agreement; and
(ix) the provision of evidence by HHL to Sinoday to the reasonable satisfaction of Sinoday that those guarantees given by any member of the Retained Group in favour of or in connection with the HPL Group or any part thereof have been fully and completely discharged and released.

Sinoday may in its absolute discretion at any time waive in writing the conditions (v) and (vii) above (or any part thereof). In the event that the above conditions in respect of WK Sale Shares are not fulfilled or being waived (as the case may be) on or before the Long Stop Date, the Agreement and the transactions contemplated thereunder shall terminate and be null and void and of no further effect and no party to the Agreement shall have any liability to any other party, save with respect to any prior breaches of the Agreement.

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LETTER FROM THE BOARD

In respect of the SG Sale Shares

(x) the fulfillment of all the conditions precedent for the completion of the sale and purchase of the WK Sale Shares as described above;
(xi) the passing of the resolution of the independent shareholders of Silver Grant to approve the Agreement and the transactions contemplated thereunder;
(xii) the SFC granting approval to SG Purchaser or its nominee becoming a substantial shareholder of the subsidiaries of the Company who are licensed persons (as defined in the SFO), either unconditionally or subject only to conditions to which neither the Company nor SG Purchaser reasonably objects as a result of the sale and purchase of the SG Sale Shares as contemplated under the Agreement; and
(xiii) it has not come to the attention of the SG Purchaser that any material adverse change to the financial position, management, business or property of the Retained Group has occurred prior to the Completion Date or are reasonably likely to occur whether before the Completion Date.

SG Purchaser may in its absolute discretion at any time waive in writing the condition (xiii) above. In the event that the above conditions in respect of SG Sale Shares are not fulfilled or being waived (as the case may be) on or before the Long Stop Date, the Agreement and the transactions contemplated thereunder shall be null and void and of no further effect so far as it relates to the SG Purchaser and the SG Purchaser shall not have any liability to any other parties to the Agreement, save with respect to any prior breaches of the Agreement. In such event and unless the non-completion of the purchase of the SG Sale Shares by the SG Purchaser is due to the non-fulfillment of condition (x) above, Sinoday shall replace the SG Purchaser to purchase the SG Sale Shares pursuant to the Agreement.

Completion

Completion for the sale and purchase of the WK Sale Shares and SG Sale Shares shall take place simultaneously within three Business Days after fulfilment or waiver (as the case may be) of the conditions referred to above.

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LETTER FROM THE BOARD

SHAREHOLDING STRUCTURE OF THE COMPANY

The table below depicts the shareholding structure of the Company (i) as at the Latest Practicable Date; (ii) upon completion of the Group Reorganisation and the Agreement and assuming no exercise of the Options prior to the Record Date; and (iii) upon completion of the Group Reorganisation and the Agreement and assuming full exercise of the Options prior to the Record Date, on the basis of public information available to the Company as at the Latest Practicable Date and after the Directors having made reasonable enquiries:

As at the Latest Practicable Date Number of Shares Approximate %	As at the Latest Practicable Date Number of Shares Approximate %	Upon completion of the Group Reorganisation and the Agreement Assuming no exercise of the Options prior to the Record Date Assuming full exercise of the Options prior to the Record Date Number of Shares Approximate % Number of Shares Approximate %	Upon completion of the Group Reorganisation and the Agreement Assuming no exercise of the Options prior to the Record Date Assuming full exercise of the Options prior to the Record Date Number of Shares Approximate % Number of Shares Approximate %	Upon completion of the Group Reorganisation and the Agreement Assuming no exercise of the Options prior to the Record Date Assuming full exercise of the Options prior to the Record Date Number of Shares Approximate % Number of Shares Approximate %	Upon completion of the Group Reorganisation and the Agreement Assuming no exercise of the Options prior to the Record Date Assuming full exercise of the Options prior to the Record Date Number of Shares Approximate % Number of Shares Approximate %
— —	— —	218,650,000 40,022,000	52.32 9.58	218,650,000 40,022,000	50.99 9.33
—	—	258,672,000	61.90	258,672,000	60.32
258,672,000 4,022,000 500,000 3,120,000 —	61.90 0.96 0.11 0.75 —	— 4,022,000 500,000 3,120,000 —	— 0.96 0.11 0.75 —	— 4,022,000 500,000 3,120,000 390,000	— 0.94 0.11 0.73 0.09
266,314,000 1,074,000 800,000 700,000 648,000 269,536,000 148,354,000 417,890,000	63.72 0.26 0.19 0.17 0.15 64.49 35.51 100.00	7,642,000 1,074,000 800,000 700,000 648,000 269,536,000 148,354,000 417,890,000	1.82 0.26 0.19 0.17 0.15 64.49 35.51 100.00	8,032,000 3,174,000 2,900,000 1,900,000 2,048,000 276,726,000 152,094,000 428,820,000	1.87 0.74 0.68 0.44 0.48
					64.53 35.47
					100.00

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LETTER FROM THE BOARD

Notes:

HHL is owned as to 35% by Mr. Tang, 35% by Convenient Way Limited (which is a company controlled by Mr. Yeung Sai Hong), 25% by Alpha Elite Assets Limited (which is a company wholly owned by Ms. Ho Yuet Ying) and 5% by Mr. Man Kong Yui.
Mr. Tang is the Chairman of the Company and an executive Director. Madam Ng is the spouse of Mr. Tang and an executive Director.
Mr. Lam Ngok Fung, Mr. Law Kai Yee, Ms. Hwang Wei Ming, Ellen and Mr. Lau Mun Chung are executive Directors.

POSSIBLE MANDATORY OFFERS FOR THE SHARES AND OPTIONS

Upon Completion, the Sinoday Concert Group will own approximately 61.90% of the existing issued share capital of the Company and under the Takeovers Code, it is required to make mandatory cash offers for all the issued Shares (other than those Shares acquired or agreed to be acquired by the Sinoday Concert Group) and all the Options. It was resolved among the Sinoday Concert Group that Sinoday will make the mandatory cash offers to the Independent Shareholders and the Optionholders upon Completion. As at the Latest Practicable Date, the Company had 417,890,000 Shares in issue and 10,930,000 Options entitling the Optionholders to subscribe for an aggregate of 10,930,000 Shares (representing approximately 2.55% of the issued share capital of the Group as enlarged by the allotment and issue of the Shares upon exercise of all the Options).

Since 5 March 2008, being the date of commencement of the offer period as defined in the Takeovers Code, and up to the Latest Practicable Date, the Company had not issued any relevant securities. As at the date of the Agreement and the Latest Practicable Date, the Company had 10,930,000 Options which entitle the Optionholders to subscribe for Shares at an exercise price of HK$0.88 per Share. In accordance with Clause 9 of the Share Option Scheme and the Listing Rules, the exercise price and/or number of Shares comprised in the Options may be subject to adjustment in the event of a distribution in specie. The actual adjustment to the exercise price and/or number of the Shares comprised in the Options will be determined after completion of the Group Reorganisation and further announcement will be made by the Company after the necessary adjustments have been confirmed. Save for the Options, the Company does not have any other outstanding options, derivatives or warrants which are convertible into or which confer rights to require the issue of Shares or other securities carrying conversion rights or subscription rights into Shares.

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LETTER FROM THE BOARD

Principal terms of the Share Offer

Upon Completion, CCBI will, on behalf of Sinoday, make the Share Offer on the following basis:

For each Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$0.934 in cash

An appropriate offer will also be made to the Optionholders to cancel all Options upon Completion.

Comparison of value

The offer price of HK$0.934 per Share is the price paid by Sinoday for each WK Sale Share under the Agreement after being rounded up to the nearest one thousandth cent. The offer price of HK$0.934 per Share represents:

(i) a premium of approximately 1.4% over the audited consolidated net asset value of the Group (after taking into account the 2007 final dividends and the minority interest of approximately HK$335,000) of approximately HK$0.921 per Share as at 31 December 2007;
(ii) a discount of approximately 23.4% to the closing price of HK$1.22 per Share as quoted on the Stock Exchange on the Last Trading Day;
(iii) a discount of approximately 28.0% to the average closing price of approximately HK$1.298 per Share for the five consecutive trading days up to and including the Last Trading Day;
(iv) a discount of approximately 28.6% to the average closing price of approximately HK$1.309 per Share for the thirty consecutive trading days up to and including the Last Trading Day;
(v) a discount of approximately 11.9% to the closing price of HK$1.06 per Share as quoted on the Stock Exchange on the Latest Practicable Date; and
(vi) a premium of approximately 68.6% over the unaudited pro forma net asset value of the Retained Group, calculated on the basis of the unaudited pro forma net asset value of the Retained Group as shown in Appendix II to this circular and 417,890,000 Shares in issue, of approximately HK$0.554 per Share.

It should be noted that the offer price of HK$0.934 per Share only reflects the price to be paid by Sinoday for the acquisition of the Retained Group and that the above closing prices reflect the value of the Group as a whole.

The current exercise price of the Options is HK$0.88 per Share, which represents approximately 17.0% discount to the closing price of HK$1.06 per Share on the Latest Practicable Date. As at the Latest Practicable Date, the Optionholders had not indicated whether or not they would accept the Option Offer.

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LETTER FROM THE BOARD

Total consideration for the Hantec Offers

As at the Latest Practicable Date, there are 417,890,000 Shares in issue and Options to subscribe for 10,930,000 Shares. Based on the offer price under the Share Offer of HK$0.934 for each Share and assuming no Options are exercised, the 159,218,000 Shares subject to the Share Offer are valued at approximately HK$148,709,612 and the entire issued share capital of the Company is valued at approximately HK$390,309,260. Based on the offer price under the Share Offer of HK$0.934 for each Share and assuming all Options are exercised, the 170,148,000 Shares subject to the Share Offer are valued at approximately HK$158,918,232 and the entire issued share capital of the Company is valued at approximately HK$400,517,880.

Financial resources

The funds required for the acquisition of the WK Sale Shares and the full acceptance of the Hantec Offers by Sinoday will be financed by its internal financial resources. CCBI is satisfied that there are sufficient financial resources available to Sinoday to satisfy the funds required for the acquisition of the WK Sale Shares and the full acceptance of the Hantec Offers.

Conditions of the Hantec Offers

The Hantec Offers will only be made if the Agreement is completed and, if made, will be unconditional. Completion of the Agreement is conditional upon the fulfillment of the conditions referred to in the sub-section headed ‘‘Conditions’’ in the section headed ‘‘The Agreement’’ above.

Effect of accepting the Hantec Offers

By accepting the Hantec Offers, (i) the relevant Independent Shareholders will sell their Shares to Sinoday free from all liens, claims and encumbrances and with all rights attached to them as at the date of acceptance, including the rights to receive all dividends and distribution declared, made or paid on or after the date of the Agreement (except the Distribution in Specie); and (ii) the Options held by the relevant Optionholders will be cancelled.

Payment

Payment in cash in respect of acceptance of the Hantec Offers will be made as soon as possible but in any event within 10 days of the date on which the relevant documents of title are received by Sinoday or its agent acting on its behalf to render each such acceptance complete and valid.

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LETTER FROM THE BOARD

Stamp duty

Stamp duty at a rate of HK$1.00 for every HK$1,000 or part thereof of the amount payable in respect of relevant acceptances is payable by the Independent Shareholders who accept the Share Offer and will be deducted from the amount payable by Sinoday to the relevant Independent Shareholders.

Other arrangements

As at the Latest Practicable Date,

(i) the Sinoday Concert Group had not received any irrevocable commitment to accept the Hantec Offers;
(ii) there was no outstanding derivative in respect of relevant securities in the Company which had been entered into by the Sinoday Concert Group;
(iii) there was no arrangement (whether by way of option, indemnity or otherwise) in relation to the shares of the Sinoday Concert Group and the Company and which might be material to the Hantec Offers;
(iv) save for the entering into of the Agreement, there was no agreement or arrangement to which the Sinoday Concert Group was a party which related to circumstances in which it might or might not invoke or seek to invoke a pre-condition or a condition to the Hantec Offers; and
(v) there was no relevant securities in the Company which the Sinoday Concert Group had borrowed or lent.

BACKGROUND OF SINODAY AND ITS INTENTION REGARDING THE COMPANY

Information on Sinoday

Sinoday is an investment holding company incorporated in the BVI with limited liability. The sole beneficial owner of Sinoday is Well Kent, which is principally engaged in securities investment and private equity investment. Well Kent is ultimately owned by China Cinda Asset Management Corporation, which is in turn authorised by the State Council of the PRC to be incorporated with all capital contribution injected from the Ministry of Finance of the PRC. None of Sinoday, its sole beneficial owner and/or parties acting in concert with any of them owns or controls (directly or indirectly) any Shares as at the Latest Practicable Date. None of the members of the Sinoday Concert Group had dealt in any relevant securities in the Company in the period commencing six months prior to 5 March 2008 and up to the Latest Practicable Date.

To the best of the knowledge, information and belief of the Directors and having made all reasonable enquiries, Sinoday and its sole beneficial owners are third parties independent of the Group and its connected persons (as defined in the Listing Rules).

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LETTER FROM THE BOARD

It is the intention of Sinoday to hold the WK Sale Shares on a long term basis and to continue to carry on the business of the Retained Group immediately following Completion. Sinoday has no intention to make any material change to the employees of the Retained Group. The directors of Sinoday confirm that Sinoday currently has no intention to inject or re-deploy or dispose of the major assets of the Retained Group following completion of the Share Offer. As such, the directors of Sinoday consider that there will not be any material change in the general character of the business nature of the Retained Group immediately following completion of the Share Offer and the Retained Group will have sufficient level of operations to warrant the continued listing of the Shares under Rule 13.24 of the Listing Rules. Should there be any proposed material change to the general character or nature of the business of the Retained Group, the Company will comply with Rule 13.24 of the Listing Rules.

Following Completion, Sinoday intends to conduct a review of the financial position and operations of the Retained Group and to explore suitable business opportunities and new investments which are beneficial to the Retained Group. In particular, Sinoday may introduce business or investment opportunities to the Retained Group through the background or connection of its ultimate holding company. However, no such investment or businesses have been identified or are under negotiation at this stage. Any further investments or businesses that might be conducted by the Retained Group will be subject to the constitutional documents, relevant regulatory requirements and approval of the Shareholders if required, and further announcement will be made by the Company where so required and will be in full compliance with the relevant Listing Rules.

Proposed changes in Directors

The Board currently consists of eleven Directors, comprising six executive Directors, one non-executive Director and four independent non-executive Directors. Mr. Tang shall resign as the Chairman of the Company, and it is expected that he and four other executive Directors, namely Messrs. Lam Ngok Fung, Ng Chiu Mui, Law Kai Yee and Hwang Wei Ming, Ellen will resign as Directors (the ‘‘Outgoing Directors’’), all on the earliest date permitted under the Takeovers Code. Each of the Outgoing Directors has entered into a service agreement with the Company which may be terminated by either the Company or the Outgoing Director by three months’ written notice.

Pursuant to such service agreements, if before the expiration of their term, the service agreements are terminated by the Company by reason of the transfer of a substantial part of the Company’s business to another company for the purpose of reconstruction or amalgamation and the Outgoing Directors are offered employment with any concern or undertaking resulting from such reconstruction or amalgamation on terms and conditions which are both in form and substance no less favourable taken as a whole than the provisions of the service agreements, the Outgoing Directors shall have no claim against the Company or any other members of the Group in respect of such termination if there is no change of business activities or control (as defined in the Takeovers Code) resulting from such reconstruction or amalgamation. However, the Outgoing Directors shall be entitled to terminate their service agreements if such reconstruction or amalgamation will result in a

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LETTER FROM THE BOARD

change of business activities or control (as defined in the Takeovers Code). In either case, neither the Company nor the Outgoing Director shall have any claim against each other in respect of such termination.

In light of the aforesaid provisions of the existing service agreements and as part of the Group Reorganisation, the Company, HPL and the Outgoing Directors shall enter into necessary agreement(s) to the effect that (i) the existing service agreements of the Outgoing Directors with the Company shall be terminated, and the Company and the Outgoing Directors shall release each other from all obligations and claims under such service agreements, whereby inter alia, the Outgoing Directors will not require the Company to make payment in lieu of three months’ notice for termination of their employment and the Company will release the Outgoing Directors from their restrictive covenants including, among other things, restriction on being interested in competing business, solicitation of customers and employees for three months/one year after termination of employment with the Company, except that the restriction on disclosing confidential business information of the Group shall survive; and (ii) the Outgoing Directors shall serve as directors of HPL after completion of the Group Reorganisation, and HPL and the Outgoing Directors shall enter into new service agreements on terms which are similar to (but not more favourable than) their existing service agreements.

Sinoday will nominate its representatives to become new Directors on the earliest date permitted under the Takeovers Code. Further announcement will be made as and when there is a change in the composition of the Board. In this connection, it is proposed to increase the maximum number of Directors from 15 to 30 at the SGM.

Maintaining the listing status of the Company

The Stock Exchange has indicated that, if upon closing of the Share Offer, less than 25% of the issued share capital of the Company is held in the hands of the public or if the Stock Exchange believes that (i) a false market exists or may exist in the trading of the Shares; or (ii) there are too few Shares in public hands to maintain an orderly market, then it will consider exercising its discretion to suspend trading in the Shares on the Stock Exchange. Accordingly, it should be noted that upon the close of the Share Offer, there may be insufficient public float for the Shares and therefore trading in the Shares may be suspended until a sufficient level of public float is attained. Shareholders and investors should exercise caution when dealing in the Shares.

The Stock Exchange will also closely monitor all future acquisitions or disposals of assets by the Company. Pursuant to the Listing Rules, the Stock Exchange has the discretion to require the Company to issue a circular to the Shareholders irrespective of the size of any proposed transactions, particularly when such proposed transactions represent a departure from the principal activities of the Company. The Stock Exchange also has the power to aggregate a series of transactions of the Company and any such transactions may result in the Company being treated as if it were new listing applicant and will be subject to the requirements for new listing application as set out in the Listing Rules.

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LETTER FROM THE BOARD

Sinoday intends that the Company will remain listed on the Stock Exchange upon completion of the Hantec Offers. The new Directors to be appointed to the Board will undertake to the Stock Exchange to take appropriate steps to ensure that not less than 25% of the issued Shares will be held by the public as required by the Listing Rules (or such other percentage as may be required from time to time) as soon as possible upon completion of the Hantec Offers.

COMPARISON OF THE COMBINED OFFER PRICE UNDER THE HPL OFFER AND THE SHARE OFFER WITH MARKET PRICE

The combined consideration under the HPL Offer and the Share Offer is equivalent to HK$1.234 per Share and represents:

(i) a premium of approximately 32.0% over the audited consolidated net asset value attributable to the equity holders of the Company of approximately HK$0.935 per Share as at 30 June 2008;
(ii) a premium of approximately 34.0% over the audited consolidated net asset value of the Group (after taking into account the 2007 final dividend and the minority interest of approximately HK$335,000) of approximately HK$0.921 per Share as at 31 December 2007;
(iii) a premium of approximately 1.1% over the closing price of HK$1.22 per Share as quoted on the Stock Exchange on the Last Trading Day;
(iv) a discount of approximately 4.9% to the average closing price of approximately HK$1.298 per Share for the five consecutive trading days up to and including the Last Trading Day;
(v) a discount of approximately 5.7% to the average closing price of approximately HK$1.309 per Share for the thirty consecutive trading days up to and including the Last Trading Day; and
(vi) a premium of approximately 16.4% over the closing price of HK$1.06 per Share as quoted on the Stock Exchange on the Latest Practicable Date.

Rule 8.2 of the Takeovers Code provides that an offer document should normally be posted by or on behalf of the offeror within 21 days of the date of announcement of the offer. Accordingly, the offer documents in relation to the Hantec Offers and the HPL Offer should be posted within 21 days of the date of the Announcement. Pursuant to Note 2 to Rule 8.2 of the Takeovers Code, the Executive’s consent is required if the making of an offer is subject to the prior fulfilment of a pre-condition and the pre-condition cannot be fulfilled within the time period contemplated by Rule 8.2 of the Takeovers Code. As the making of the Hantec Offers and the HPL Offer are subject to completion of the Group Reorganisation and the Agreement, applications have been made by HHL and Sinoday and the Executive’s consent has been given under Rule 8.2 of the Takeovers Code to extend the deadline for the despatch of the relevant offer documents to within seven days of completion of the Group Reorganisation and the Agreement or 7 January 2009, whichever

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LETTER FROM THE BOARD

is the earlier. The composite offer and response document of the Hantec Offers will contain details of such offers (accompanied by the relevant acceptance and transfer forms) and incorporate the letter of recommendation from the Independent Board Committee and the letter of advice from the Independent Financial Adviser on the Hantec Offers. The composite offer and response document of the HPL Offer will contain details of such offer (accompanied by the relevant acceptance and transfer form), information on HHL and incorporate the letter of advice from the Independent Financial Adviser. Completion of the Group Reorganisation will take place simultaneously with completion of the Agreement, after which the Hantec Offers and the HPL Offer will be made at the same time. The expected timetable of the Hantec Offers and the HPL Offer will be included in the relevant composite documents.

WARNING: COMPLETION OF THE GROUP REORGANISATION AND THE AGREEMENT WILL TAKE PLACE SIMULTANEOUSLY, AND ARE SUBJECT TO THE FULFILLMENT OF A NUMBER OF CONDITIONS. THE MAKING OF BOTH THE HPL OFFER AND THE HANTEC OFFERS ARE IN TURN SUBJECT TO COMPLETION OF THE GROUP REORGANISATION AND THE AGREEMENT, AND ARE POSSIBILITIES ONLY. AS SUCH OFFERS MAY OR MAY NOT PROCEED, INVESTORS AND SHAREHOLDERS ARE URGED TO EXERCISE CAUTION WHEN DEALING IN THE SHARES.

SGM

The SGM is convened to consider and, if thought fit, approve the Group Reorganisation and increase in the maximum number of Directors. A notice of the SGM is set out on pages 268 to 269 of this circular.

A form of proxy for use at the SGM is enclosed with this circular. Whether or not you are able to attend the meeting in person, you are requested to complete and return the relevant form of proxy in accordance with the instructions printed thereon and deposit it with the Company’s branch share registrar in Hong Kong, Tricor Secretaries Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong, as soon as possible but in any event not later than 48 hours before the time appointed for the holding of the SGM. Completion and return of the relevant form of proxy will not preclude you from attending and voting in person at the SGM or any adjournment thereof should you so wish and, in such event, the instrument appointing a proxy shall be deemed to be revoked.

RIGHT TO DEMAND A POLL

Bye-law 66 of the Bye-laws of the Company provides that a resolution put to the vote of a meeting shall be decided on a show of hands unless (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 demanded:

(a) by the chairman of such meeting; or

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LETTER FROM THE BOARD

(b) by at least three members present in person (or in the case of a member being a corporation by its duly authorised representative) or by proxy for the time being entitled to vote at the meeting; or
(c) by a member or members present in person (or in the case of a member 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 members having the right to vote at the meeting; or
(d) by a member or members present in person (or in the case of a member being a corporation by its duly authorised representative) or by proxy and holding shares in the Company conferring a right to vote at the 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; and
(e) by a person who is required under the Listing Rules to demand a poll.

RECOMMENDATION

The Board believes that the terms of the Group Reorganisation and the increase in the maximum number of Directors are in the interests of the Company and the Shareholders as a whole and recommends the Independent Shareholders to vote in favour of the resolution to be proposed at the SGM to approve the Group Reorganisation and the increase in the maximum number of Directors.

In addition, your attention is drawn to the letter from the Independent Board Committee set out on pages 38 to 39 of this circular which contains its recommendation to the Independent Shareholders in respect of the Group Reorganisation, based on the advice from Access Capital set out on pages 40 to 60 of this circular which contains its recommendation to the Independent Board Committee and the Independent Shareholders and the principal factors and reasons taken into consideration.

ADDITIONAL INFORMATION

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

Yours faithfully, By order of the Board

HANTEC INVESTMENT HOLDINGS LIMITED Lau Mun Chung Executive Director

– 37 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

==> picture [47 x 51] intentionally omitted <==

HANTEC INVESTMENT HOLDINGS LIMITED 亨達國際控股有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 111)

31 October 2008

To the Independent Shareholders

Dear Sir or Madam,

GROUP REORGANISATION

INTRODUCTION

We refer to the circular dated 31 October 2008 of Hantec Investment Holdings Limited (the ‘‘Circular’’) of which this letter forms part. Terms used in this letter shall have the meanings as defined in the Circular unless the context requires otherwise.

We, being the non-executive Directors, have been appointed to form the Independent Board Committee to advise you as to whether the terms of the Group Reorganisation are fair and reasonable so far as the Independent Shareholders are concerned and whether the Group Reorganisation is in the interests of the Company and the Shareholders as a whole.

Access Capital has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders on the fairness and reasonableness of the terms of the Group Reorganisation.

We wish to draw your attention to the letter from Access Capital set out on pages 40 to 60 of the Circular which contains, among other things, its advice and recommendations to us regarding the terms of the Group Reorganisation and the principal factors and reasons taken into consideration for its advice and recommendations.

For identification purpose only

– 38 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

RECOMMENDATION

Having taken into account the advice and recommendations of Access Capital and the principal factors and reasons taken into consideration by them in arriving at their opinion, we consider that the terms of the Group Reorganisation are fair and reasonable so far as the Independent Shareholders are concerned and the Group Reorganisation is in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the SGM to approve the Group Reorganisation.

Yours faithfully,

For and on behalf of the Independent Board Committee

Mr. Fong Wo, Felix Mr. Yu Man Woon Mr. Yu Hon To, David Non-executive Independent NonIndependent NonDirector executive executive Director Director Mr. Cheng Wing Chi Prof. Nyaw Mee Kau Independent Non-executive Independent Non-executive Director Director

– 39 –

LETTER FROM ACCESS CAPITAL

Set out below is the full text of the letter of advice from Access Capital Limited to the Independent Board Committee and the Independent Shareholders prepared for inclusion in this Circular.

==> picture [100 x 46] intentionally omitted <==

Suite 606, 6th Floor Bank of America Tower 12 Harcourt Road Central Hong Kong

31 October 2008

To the independent board committee and the independent shareholders of Hantec Investment Holdings Limited

Dear Sirs,

GROUP REORGANISATION

I. INTRODUCTION

We refer to our appointment as the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Group Reorganisation, details of which are set out in the letter from the Board (the ‘‘Letter from the Board’’) contained in the circular dated 31 October 2008 issued by the Company to the Shareholders (the ‘‘Circular’’), of which this letter forms part. Unless otherwise stated, terms defined in the Circular have the same meanings in this letter.

On 3 September 2008, the Company announced, among other things, the proposal for the Group Reorganisation which, if approved and implemented, will result in:

(i) the Company continuing to be a public listed company on the Main Board of the Stock Exchange with its subsidiaries carrying on the business of regulated activities under the SFO, including leveraged foreign exchange trading, securities brokering and margin financing services, commodities and futures brokering, financial planning, asset management and corporate finance services, in Hong Kong (i.e. the Retained Business);
(ii) all other subsidiaries of the Group carrying on trading and brokering of precious metal contracts, provision of financial related services outside of Hong Kong and investment in water plant business being grouped under the HPL Group;

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LETTER FROM ACCESS CAPITAL

(iii) the HPL Shares, following the injection of the Distributed Business into HPL, being distributed in specie to the Shareholders whose names appear on the register of members of the Company on the Record Date on the basis of one HPL Share for every Share held;
(iv) subject to completion of the Group Reorganisation and the Agreement, Optima Capital, on behalf of HHL, making the HPL Offer to shareholders of HPL to acquire all the HPL Shares, other than those then owned or agreed to be acquired by the HHL Concert Group and parties acting in concert with its members on the basis of HK$0.3 in cash for every HPL Share; and
(v) subject to completion of the Agreement (pursuant to which Sinoday and SG Purchaser have conditionally agreed to acquire 218,650,000 Shares (representing approximately 52.32% of the existing issued share capital of the Company) and 40,022,000 Shares (representing approximately 9.58% of the existing issued share capital of the Company), respectively, from HHL for an aggregate consideration of HK$241,398,000, equivalent to approximately HK$0.934 per Share), CCBI, on behalf of Sinoday, making a mandatory cash offer to acquire all the Shares, other than those held by the Sinoday Concert Group, on the basis of HK$0.934 in cash per Share, which Shares will be acquired ex-entitlement to the Distribution in Specie.

The Group Reorganisation will be conditional upon, among other things, the approval of the Independent Shareholders. The Independent Board Committee comprising all the non-executive Directors, namely, Mr. Fong Wo, Felix, Mr. Yu Man Woon, Mr. Yu Hon To, David, Mr. Cheng Wing Chi and Prof. Nyaw Mee Kau, has been established to advise the Independent Shareholders as to whether the Group Reorganisation is fair and reasonable and in the interests of the Company. As the independent financial adviser to the Independent Board Committee and the Independent Shareholders, our role is to give an independent opinion to the Independent Board Committee and the Independent Shareholders as to (i) whether or not the Group Reorganisation is in the interests of the Company and the Shareholders as a whole; (ii) whether or not the terms of the Group Reorganisation are fair and reasonable; and (iii) how the Independent Shareholders should vote in favour of the resolutions to approve the Group Reorganisation at the SGM.

Apart from the normal advisory fee payable to us in connection with our appointment as the independent financial adviser to the Independent Board Committee and the Independent Shareholders, no arrangement exists whereby we shall receive any other fees or benefits from the Company. We are independent of the Company for the purposes of Rule 13.84 of the Listing Rules.

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LETTER FROM ACCESS CAPITAL

II. BASIS AND ASSUMPTIONS OF OUR ADVICE

In formulating our advice, we have relied solely on the statements, information, opinions and representations contained in the Circular and the information and representations provided to us by the Company and/or the Directors. We have assumed that all such statements, information, opinions and representations contained or referred to in the Circular or otherwise provided or made or given by the Company and/or its senior management staff and/or the Directors and for which it is/they are solely responsible were true and accurate and valid at the time they were made and given and continue to be true and valid as at the date of the Circular. We have assumed that all the opinions and representations made or provided by the Directors and/or the senior management staff of the Company contained in the Circular have been reasonably made after due and careful enquiry. We have also sought and obtained confirmation from the Company and/or its senior management staff and/or the Directors that no material facts have been omitted from the information provided and referred to in the Circular.

We consider that we have reviewed all information and documents which are made available to us to enable us to reach an informed view and to justify our reliance on the information provided so as to provide a reasonable basis for our advice. We have no reason to doubt the truth, accuracy and completeness of the statements, information, opinions and representations provided to us by the Company and/or its senior management staff and/or the Directors and their respective advisers or to believe that material information has been withheld or omitted from the information provided to us or referred to in the aforesaid documents. We have not, however, carried out any independent verification of the information provided, nor have we conducted any independent investigation into the business and affairs of the Company or any of its subsidiaries.

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LETTER FROM ACCESS CAPITAL

III. PRINCIPAL FACTORS AND REASONS CONSIDERED

In formulating our opinion regarding the Group Reorganisation, we have taken into consideration the following principal factors and reasons:

1. Background information

The Company is an investment holding company and the Group is principally engaged in the provision of leveraged foreign exchange trading and brokering services, securities brokering, commodities and futures brokering, corporate financial advisory services, fund management, financial planning and insurance brokering, and trading and brokering of precious metal contracts. Set out below is a summary of the financial results of the Group extracted from the Company’s annual report for 2007 (the ‘‘Annual Report’’) and interim report for the six months ended 30 June 2008 (the ‘‘Interim Report’’):

Turnover Leveraged foreign exchange trading/brokering Securities brokering Commodities and futures brokering Corporate finance Asset management Financial planning/insurance brokering Precious metal contracts trading/brokering Others Total Other income and gains Selling, general and administrative costs Profit from operations Finance cost Share of profits of associates Income tax Profit for the year/period	For the year ended 31 December 2006 2007 HK$’000 HK$’000 (Audited) (Audited) 135,694 142,379 38,004 82,762 17,008 10,871 4,752 8,446 1,931 558 24,933 30,091 130,247 189,919 2,851 735 355,420 465,761 4,375 7,573 (297,629) (413,479) 62,166 59,855 (3,860) (8,472) 5,802 2,047 (11,839) (13,071) 52,269 40,359	For the six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) (Unaudited) 67,884 50,103 33,435 21,615 5,691 6,473 1,912 2,657 317 52 13,818 13,999 82,701 87,515 409 214 206,167 182,628 3,074 1,883 (184,158) (176,834) 25,083 7,677 (3,968) (1,447) 1,233 1,407 (5,178) (2,785) 17,170 4,852

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			As at
	As at 31 December		30 June
	2006	2007	2008
	HK$’000	HK$’000	HK$’000
	(Audited)	(Audited)	(Unaudited)
Non-current assets	55,727	59,871	71,154
Current assets	723,674	851,816	559,455
Current liabilities	(422,876)	(476,045)	(227,278)
Non-current liabilities	(758)	(43,201)	(12,382)
Net current assets	300,798	375,771	332,177
Net assets	355,767	392,441	390,949

For the year ended 31 December 2007, the Group recorded an audited turnover of approximately HK$465.8 million, representing an increase of around 31.0% from approximately HK$355.4 million for the year ended 31 December 2006. The turnover generated from leveraged foreign exchange trading/brokering and precious metal contracts trading/brokering segments were the main sources of the Group’s revenue and represented about 30.6% and 40.8% respectively of the Group’s total turnover for the year ended 31 December 2007. Compared with the previous financial year, turnover generated from the leveraged foreign exchange trading/brokering increased slightly from approximately HK$135.7 million to approximately HK$142.4 million, while turnover generated from precious metal contracts trading/brokering increased by over 45% from approximately HK$130.2 million to approximately HK$189.9 million.

For the year ended 31 December 2007, the Group’s operating profit fell around 3.7% from approximately HK$62.2 million in the previous financial year to approximately HK$59.9 million. As explained in the Annual Report, the Group experienced a significant decrease in operating profit in leveraged foreign exchange trading/brokering which, in spite of a small increase in turnover, fell by approximately 67.5% from approximately HK$26.6 million for the previous financial year to approximately HK$8.7 million for the year ended 31 December 2007. Increased competition in the leveraged foreign exchange trading/brokering segment (particularly as Internet trading increases in popularity and international foreign exchange traders and financial institutions offer clients narrow price and interest spreads over the Internet) has forced the Group to adopt a low price strategy and higher quality services in order to survive. The overall profit contributions from this segment, which has traditionally been the Group’s main focus, fell from nearly 43% in 2006 to only 15% in 2007. In addition, losses in the financial planning/insurance brokering segment continued to rise and the Group’s asset management business suffered a loss compared to the previous year. Nevertheless, increases in operating profit in precious metals contracts trading/ brokering as well as securities dealings, which were boosted by fervent activity on the equities market, low US dollar rates and high volatility in the price of gold, helped to offset falls in other segments.

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Although the overall operating profit fell by around 3.7%, profit for the year decreased by approximately 22.8% from approximately HK$52.3 million in 2006 to approximately HK$40.4 million for the year ended 31 December 2007. As set out in the Annual Report, the Group was severely impacted by the increase in finance costs which rose by nearly 120% from approximately HK$3.9 million in the previous year to around HK$8.5 million in 2007. As noted in the Annual Report, such significant increase in the finance costs of the Group was mainly due to the fact that the Company had issued loan notes with initial aggregate principal amount of approximately HK$44.9 million to certain overseas and professional investors in 2007. Such loan notes are unsecured, mature on the day falling three years after the issue date of the relevant notes and bear interest of 8.5% per annum on the principal amount.

For the six months ended 30 June 2008, the Group recorded an unaudited turnover of approximately HK$182.6 million, representing a decrease of approximately 11.4% from the unaudited turnover of approximately HK$206.2 million for the corresponding six-month period in 2007. As explained in the Interim Report, such decrease was mainly due to weak trading across most segments and in particular, turnover in the leveraged foreign exchange trading/ brokering segment fell by approximately 26.2% from approximately HK$67.9 million for the six months ended 30 June 2007 to approximately HK$50.1 million for the six months ended 30 June 2008. As stated in the Interim Report, the Group’s businesses were impacted by low market sentiment which kept investors away from the investment markets. In addition, the sub-prime crisis in the US and cooling of the PRC economy suppressed the markets further while inflationary pressures continued to impact margins. As such, profits across the Group’s three largest segments, precious metal contracts trading/brokering, leveraged foreign exchange trading/brokering and securities brokering decreased significantly by approximately 47.2%, 55.5% and 68.6%, respectively, as compared to the corresponding six months period in 2007.

For the six months ended 30 June 2008, the Group’s unaudited profit for the period amounted to approximately HK$4.9 million, representing a decrease of approximately 71.7% from approximately HK$17.2 million for the corresponding six-month period in 2007. For the same period, profit from operations and profit attributable to equity holders of the Company amounted to approximately HK$7.7 million and HK$4.8 million, respectively.

As at 30 June 2008, the Group had unaudited total current assets of approximately HK$559.5 million and unaudited total current liabilities of approximately HK$227.3 million, representing net current assets of approximately HK$332.2 million. In addition, the Group had unsecured bank loan of HK$2.0 million and outstanding unsecured loan notes of approximately HK$17.2 million, both of which were included in the current liabilities of the Group as at 30 June 2008. The unaudited net assets of the Group amounted to approximately HK$390.9 million as at 30 June 2008.

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2. Principal terms of the Group Reorganisation

Pursuant to the Group Reorganisation, the Company will continue to be a public listed company with its subsidiaries carrying on the business of regulated activities under the SFO in Hong Kong, which include leveraged foreign exchange trading, securities brokering and margin financing services, commodities and futures brokering, financial planning, asset management and corporate finance services in Hong Kong (i.e. the Retained Business). All other subsidiaries of the Group carrying on non-regulated activities under SFO such as trading and brokering of precious metal contracts, provision of financial related services outside of Hong Kong and investment in water plant business (i.e. the Distributed Business) will be grouped under the HPL Group. Following the injection of the Distributed Business into HPL, the HPL Shares will be distributed in specie to the Shareholders whose names appear on the register of members of the Company on the Record Date on the basis of one HPL Share for every Share held.

HPL will pay for such acquisition by issuing HPL Shares to the Company so that the total number of HPL Shares in issue immediately prior to the Distribution in Specie will be equal to the number of Shares in issue on the Record Date. The Company will then distribute all the issued HPL Shares in specie to the Shareholders whose names appear on the register of member of the Company on the Record Date on the basis of one HPL Share for each Share held. The Distribution in Specie will be effected by distribution from the retained earnings and contributed surplus account of the Company of an amount equivalent to the carrying value of HPL Group, which will be ascertained immediately prior to completion of the Group Reorganisation. The HPL Shares will rank pari passu in all respect with each other. As set out in the Letter from the Board, there is no intention to apply for the listing of the HPL Shares on the Stock Exchange or any other stock exchange.

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Immediately following completion of the Group Reorganisation, the registered owners of each Share will also own one HPL Share. HPL will own the Distributed Business which is engaged in trading and brokering of precious metal contracts, provision of financial related services outside of Hong Kong and investment in water plant business. In particular, HPL will acquire the following assets pursuant to the Group Reorganisation:

(i) 100% interest of Hantec Canada Investments Limited, which owns 8.1% interest of HS Hantec Holdings Ltd;
(ii) 100% interest of Hantec (UK) Incorporated;
(iii) 75% interest of Ringus Solution Enterprise Limited;
(iv) 100% interest of Hantec Taiwan Investments Limited, which owns 100% interest of 俊森實業有限公司 and 亨達證劵投資顧問股份有限公司;
(v) 100% interest of Hantec Financial Services Limited, which owns 20% interest in 元太外匯經紀股份有限公司;
(vi) 100% interest of Hantec Bullion Limited, which owns 100% interest of Cosmos Hantec Investment (NZ) Limited, Hantec Markets (Australia) Pty Limited, Hantec (New Zealand) Investment Company Limited, Cosmos Hantec International Investments Limited, Hantec Business Consultant Limited, 北京康景商業顧問有限公司, HT (Overseas) Limited, Hantec Investimentos Do Brasil Limitada, 北京亨達投資諮詢顧問有限公司 and Hantec Nominees Limited, and 91% interest of 北京國際經濟技術有限責任公司;
(vii) 100% interest of Hantec International Enterprises Limited, which owns 20% interest of Hantec Jiangdu Riverside Developing Zone Water Industry Limited;
(viii) 100% interest of Macro Jess Ltd.;
(ix) 100% interest of Hantec Strategic Plan (HK) Limited, which owns 100% interest of Hantec Financial Services (Suisse) SA; and
(x) 100% interest of HT Universal Limited.

Following completion of the Group Reorganisation, the Company shall continue to be a public listed company concentrating on the Retained Business, which is engaged in regulated activities under the SFO in Hong Kong and comprises:

(i) 100% interest in Hantec International Limited, a corporation licensed to carry on type 3 (leveraged foreign exchange trading) regulated activity under the SFO;

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(ii) 100% interest in Hantec International Finance Group International Limited, a corporation licensed to carry on type 1 (dealing in securities) regulated activity under the SFO;
(iii) 100% interest in HT Futures Limited, a corporation licensed to carry on type 2 (dealing in futures contracts) regulated activity under the SFO;
(iv) 100% interest in Hantec Asset Management Limited, a corporation licensed to carry on types 4 (advising on securities), 5 (advising on futures contracts) and 9 (asset management) regulated activities under the SFO;
(v) 100% interest in Hantec Capital Limited, a corporation licensed to carry on types 1 (dealing in securities) and 6 (advising on corporate finance) regulated activities under the SFO;
(vi) 100% interest in Hantec Investment Consultant Limited, a corporation licensed to carry on types 4 (advising on securities) and 9 (asset management) regulated activities under the SFO; and
(vii) 100% interest in Hantec Wealth Management Advisor Limited, a corporation permitted by the Hong Kong Confederation of Insurance Brokers to carry on the business in general insurance and long term insurance.

The Group Reorganisation will be conditional upon, among other things, the approval of the Independent Shareholders. As referred to in the Letter from the Board of the Circular, completion of the Group Reorganisation is a condition precedent to the making of each of the HPL Offer and the Share Offer. As a result and upon completion of the Group Reorganisation, each Shareholder will own (i) unlisted HPL Shares which may be retained or is capable of being realised for cash by accepting the HPL Offer; and (ii) listed Shares which are either tradeable in the market or may be realised for cash by accepting the Share Offer.

3. Reasons for the Group Reorganisation

As set out in the Letter from the Board, HHL had informed the Company in March that it was in discussions with a third party regarding possible disposal of its Shares. After further arm’s length negotiations, Sinoday has conditionally agreed to acquire the controlling stake in the Company from HHL and indicated that it intends that the Group will only concentrate on the business of regulated financial activities in Hong Kong. In order to facilitate the implementation of the Agreement, HHL has requested the Board to place before the Independent Shareholders a proposal for the Group Reorganisation. The Board considers that the Group Reorganisation (together with the making of the HPL Offer and the Hantec Offers) offers the Shareholders an opportunity to realise their present investment in the Company and also gives them flexibility to retain part or all of their investment in the Retained Business and the Distributed Business if they so

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wish. Completion of the Group Reorganisation is one of the conditions precedent to each of the Agreement (and, as a result, the making of the Hantec Offers) and the HPL Offer.

As set out in the Letter from the Board, the Company has not attempted to locate potential buyers for the Distributed Business as it expects that it will take a long time to locate a ready buyer and negotiate the terms and conditions, by which time Sinoday may have lost interest in acquiring the controlling stake of the Company and the Shareholders would miss the opportunity to realise their investments in the Shares. The HPL Offer, which will be made subject to completion of the Group Reorganisation and the Agreement, will provide alternatives to the Independent Shareholders to continue to directly invest in the Distributed Business or realise such investment in cash through the HPL Offer. If the Company were to dispose of the Distributed Business to HHL instead of implementing the Group Reorganisation, the Independent Shareholders will not be given the flexibility to realise or retain their investments in the Distributed Business to be undertaken by the HPL Group. The Directors (including all nonexecutive Directors) consider that the Group Reorganisation, the HPL Offer and the Hantec Offers together provide alternatives for the Shareholders either to divest all their investments in the Company at a premium over the market price of the Shares or to retain some or all of their investments through holding interests in the Company, HPL or both companies.

Given the existing market price of the Shares (our analysis on the market price of the Shares is set out in the section headed ‘‘5.1 Evaluation of the Combined Offer Price in terms of historical share price performance’’ below) and the HPL Offer and the Hantec Offers being conditional upon, among other things, the completion of the Group Reorganisation, we concur with the view of the Board that the Group Reorganisation offers the Shareholders an opportunity to realise their present investment in the Company at a premium over the market price of the Shares. We are also of the view that the Group Reorganisation is in the interests of the Company and the Shareholders as a whole after taking into account the following factors:

Certainty offered to the Independent Shareholders in being able to realise their investments in HPL Shares for cash consideration

Upon completion of the Group Reorganisation and as detailed below, Optima Capital will, on behalf of HHL, make the HPL Offer to the shareholders of HPL to acquire all the HPL Shares other than those then owned or agreed to be acquired by HHL Concert Group and parties acting in concert with its members on the basis of HK$0.3 in cash for every HPL Share held. As a result of the HPL Offer, the Independent Shareholders will be given the flexibility in either (i) realising their investments in the Distributed Business by accepting the HPL Offer; or (ii) retaining their investment in the Distributed Business by rejecting the HPL Offer and continuing to hold the HPL Shares. We believe that the HPL Offer provides a cash alternative for the Independent Shareholders and offers certainty

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to the Independent Shareholders in enabling them to realise their holdings of the HPL Shares (which are essentially unlisted securities with no market liquidity) for cash consideration. Accordingly, we are of the view that the Group Reorganisation, to which the making of the HPL Offer is subject, offers the Independent Shareholders with the certainty in being able to realise their entire investments in the HPL Shares by accepting the HPL Offer if they wish to do so.

Certainty offered to the Independent Shareholders in being able to realise their investments in the Shares for cash consideration under difficult market and trading conditions

Immediately upon completion of the Group Reorganisation and the Agreement, the Sinoday Concert Group will own approximately 61.90% of the existing issued share capital of the Company (assuming no exercise of the Options prior to the Record Date) and under the Takeovers Code, they are required to make mandatory cash offers for all the issued Shares (other than those Shares agreed to be acquired by the Sinoday Concert Group) and all the Options. As set out in the Letter from the Board, it was resolved among the Sinoday Concert Group that Sinoday will make mandatory cash offers to all the Independent Shareholders and the Optionholders upon the Completion.

Based on our review of the Annual Report and the Interim Report as well as our discussion with the management of the Company, we note that the Group’s business and operations are fully exposed, both on its top line and bottom line, to the general trading and macroeconomic conditions of the market. As mentioned above, the Group’s two largest segments by revenue are leveraged foreign exchange trading/brokering and bullion and precious metal contract trading. Both segments saw considerable activity in 2007 as the Group benefited from the growth in the equity markets at the beginning and the end of 2007, as well as the unexpectedly high prices of commodities such as crops, grain, minerals and precious metals. In addition, the weak US dollar encouraged trading in alternative foreign currencies and increases in the price of gold which contributed to the Group’s increased turnover. However, these opportunities were somewhat offset by the more challenging factors affecting the global economy, namely, increasing inflation, the low US dollar, strength of other major currencies against the US dollar and the appreciation of the Renminbi. As such, even as the Hong Kong economy grew in 2007, so too did inflationary pressures which impacted the Group’s profit margins for the year ended 31 December 2007.

Conditions in the first half of 2008 have been significantly different to 2007. The voracious appetite for investment in the equity markets in 2007 came to a halt as the sub-prime crisis in the US, the cooling of the Mainland economy and the implementation of austerity measures by the PRC government led to a deterioration in market sentiment. As such, investors have shied away from riskier investments as equities fell along with commodity prices and currencies. As at the Last Trading Date, the Hang Seng Index was down approximately 32.7% from a historical closing price high of 31,638 points on 30 October 2007 to 21,293

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points. In the near-term, it is widely believed that fluctuations in the worldwide investment market are likely to continue, while economic growth in Hong Kong and the Mainland in 2008 is also likely to slow down due to the tighter monetary policies introduced to curb inflationary pressures.

Based on above, we are generally of the view that the existing business of the Group, being inherently dependent upon market cycles and factors affecting the market which are primarily beyond the control of the Company, will be highly exposed to the uncertainty and potential contractions in the global economy. Given also the sub-prime crisis and tight credit conditions which have caused instability and uncertainty in the global stock markets, we concur with the view of the management of the Company that trading conditions will become more difficult in the near future as investors move away from riskier investments such as equities and commodities to safer products such as cash deposits and bonds. The cyclical nature of the financial markets, coupled with the current downturn in the economic environment, suggests that difficulties in the short to medium term may persist. In addition, high costs and inflationary pressures are expected to further dilute profitability as the Group attempts to remain competitive. With increasing competition in leveraged foreign exchange trading, higher operation costs and overheads, management will be facing considerable pressures on margins. All the aforesaid factors are likely to impact the Group’s business model going forward.

Based on the foregoing observations, we are of the view that the Share Offer which is conditional upon the Group Reorganisation offers the Independent Shareholders an opportunity to exit their investment when general global market sentiment towards the economy is low and competition, overall operation costs and overheads continue to increase. Having considered the opportunity provided by the Group Reorganisation to the Shareholders to realise their investments in the Company through the HPL Offer and the Share Offer, we consider that the Group Reorganisation is in the interests of the Company and the Shareholders as a whole.

The Independent Shareholders should be reminded that the making of the HPL Offer and the Share Offer is subject not only to the completion of the Group Reorganisation but also other conditions including but not limited to the completion of the Agreement. Accordingly, the making of the HPL Offer and the Share Offer is a possibility only and may or may not proceed. Nevertheless, as set out in the Letter from the Board, completion of the Group Reorganisation will take place simultaneously with completion of the Agreement.

4. The HPL Offer and the Share Offer

4.1 The HPL Offer

As set out in the Letter from the Board, assuming no Shares will be issued after the Latest Practicable Date, the Company will have 417,890,000 Shares in issue upon completion of the Group Reorganisation and on this basis,

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417,890,000 HPL Shares will be distributed to the Shareholders whose names appear on the register of members of the Company on the Record Date on the basis of one HPL Share for one Share held. Based on the shareholding structure of the Company as at the Latest Practicable Date and assuming no other changes since the Latest Practicable Date, upon completion of the Group Reorganisation, the HHL Concert Group and parties acting in concert with its members will be directly interested in a total of 266,314,000 HPL Shares, which will represent approximately 63.72% of the expected issued share capital of HPL.

Given that the HPL Shares will not be listed on the Stock Exchange or any other stock exchange upon completion of the Group Reorganisation, the directors of HHL consider that it is appropriate to provide the Independent Shareholders with an opportunity to realise their investments in HPL by making the HPL Offer. In this connection and subject to completion of the Group Reorganisation and the Agreement, Optima Capital will, on behalf of HHL, make a voluntary offer to the shareholders of HPL to acquire all the HPL Shares, other than those then owned or agreed to be acquired by the HHL Concert Group and parties acting in concert with any of its members, on the terms to be set out in the composite offer and response document in relation to the HPL Offer and the accompanying form of acceptance and transfer on the basis of HK$0.30 in cash for every HPL Share.

As set out in the Letter from the Board, the offer price for the HPL Shares has been determined after taking into account factors including (i) the estimated combined net asset value of the HPL Group upon completion of the Group Reorganisation with reference to the unaudited combined net asset value of the HPL Group of approximately HK$78.9 million based on the audited consolidated balance sheet of the Group as at 31 December 2007 and the intended settlement or assignment of inter-group balances and the capitalisation of investments by the Retained Group in the HPL Group (based on the unaudited pro forma assets and liabilities of the HPL Group set out in Appendix IV to the Circular, which was prepared on the assumption that the Group Reorganisation had taken place on 30 June 2008, the Company would inject HK$75.0 million as capital contribution to the HPL Group upon completion of the Group Reorganisation); (ii) the Share Offer price of HK$0.934 per Share; (iii) the prevailing market prices of the Shares; and (iv) the closing price of HK$1.22 per Share as quoted on the Stock Exchange on the Last Trading Day.

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acting in concert with its members will be interested in 266,314,000 HPL Shares upon completion of the Group Reorganisation and accordingly, 151,576,000 HPL Shares (representing approximately 36.28% of the share capital of HPL expected to be in issue) will be subject to the HPL Offer. Such HPL Shares are valued at approximately HK$45.5 million based on the offer price of HK$0.30 per HPL Share under the HPL Offer.

4.2 The Share Offer

Upon the completion of the Group Reorganisation and the Agreement, the Sinoday Concert Group will own approximately 61.90% of the existing issued share capital of the Company (assuming no exercise of the Options prior to the Record Date) and under the Takeovers Code, they are required to make mandatory cash offers for all the issued Shares (other than those Shares acquired or agreed to be acquired by the Sinoday Concert Group) and all the Options. As set out in the Letter from the Board, it was resolved among the Sinoday Concert Group that Sinoday will make the mandatory cash offers to the Independent Shareholders and the Optionholders upon the Completion. In this connection and subject to the completion of the Group Reorganisation and the Agreement, CCBI will, on behalf of Sinoday, make the Share Offer principally on the basis of HK$0.934 in cash for each Share.

As at the Latest Practicable Date, there were 417,890,000 Shares in issue and Options to subscribe for 10,930,000 Shares. Based on the offer price under the Share Offer of HK$0.934 for each Share and assuming no Options are exercised, the 159,218,000 Shares subject to the Share Offer are valued at approximately HK$148,709,612 and the entire issued share capital of the Company is valued at approximately HK$390,309,260. Based on the offer price under the Share Offer of HK$0.934 for each Share and assuming all Options are exercised, the 170,148,000 Shares subject to the Share Offer are valued at approximately HK$158,918,232 and the entire issued share capital of the Company is valued at approximately HK$400,517,880.

5. The Combined Offer

Based on the terms of the Group Reorganisation and the Agreement, the making of the HPL Offer and the Share Offer are effectively inter-conditionally to each other. Accordingly, the Independent Shareholders will receive either both the HPL Offer and the Share Offer or none of them, depending on whether or not the Group Reorganisation and the Agreement become unconditional and are successfully implemented. As such, for the purpose of evaluating the potential return that the Independent Shareholders will be able to receive if the Group Reorganisation is completed and the fact that the existing market price of the Shares reflects the investors’ perception of the prevailing value of the HPL Group and the Retained Group as a whole, we consider it appropriate and relevant to analyse the HPL Offer and the Share Offer on a combined basis. The following analysis on the HPL Offer and the Share Offer as the combined offer (the

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‘‘Combined Offer’’) have been conducted on the assumption that the Independent Shareholders will be able to receive a potential aggregate cash consideration of HK$1.234 (the ‘‘Combined Offer Price’’) under the Combined Offer for every Share and HPL Share held by them after the completion of the Group Reorganisation.

5.1 Evaluation of the Combined Offer Price in terms of historical share price performance

The Combined Offer Price of HK$1.234 represents:

(i) a premium of approximately 1.1% over the closing price of HK$1.22 per Share as quoted on the Stock Exchange on the Last Trading Day;
(ii) a discount of approximately 4.9% to the average closing price of approximately HK$1.298 per Share for the five consecutive trading days up to and including the Last Trading Day;
(iii) a discount of approximately 7.5% to the average closing price of approximately HK$1.335 per Share for the one month up to and including the Last Trading Day;
(iv) a discount of approximately 12.5% to the average closing price of approximately HK$1.410 per Share for the three months up to and including the Last Trading Day;
(v) a discount of approximately 5.7% to the average closing price of approximately HK$1.309 per Share for the six months up to and including the Last Trading Day;
(vi) a premium of approximately 14.68% over the average closing price of approximately HK$1.076 per Share for the 12 months up to and including the Last Trading Day; and
(vii) a premium of approximately 16.4% over the closing price of HK$1.06 per Share as quoted on the Stock Exchange on the Latest Practicable Date.

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The following chart sets out the daily closing price of the Shares on the Stock Exchange for the period from 14 August 2007 (being the first trading day of the 12-month period ending on the Last Trading Day) up to and including the Latest Practicable Date.

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2.0
1.5
1.0
0.5
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Source: www.hkex.com.hk (website of the Stock Exchange)

During the period from 14 August 2007 to the Last Trading Day, the highest and lowest trading prices per Share were HK$1.84 (recorded on 4 June 2008) and HK$0.69 (recorded on 22 November 2007), respectively. The Combined Offer Price of HK$1.234 represents a discount of approximately 32.9% to such highest price and a premium of approximately 78.8% over such lowest price. During the period up to February 2008, the Shares had been hovering between HK$0.70 and HK$0.90 per Share for most of the time. The Share price started to climb in March 2008 when the Company issued certain announcements in February and March 2008 regarding the possible disposal of the Shares held by HHL to a third party. Since then the Share prices had been fluctuating with an upward trend and the Share closing price reached its highest at HK$1.84 on 4 June 2008. The Share prices then declined substantially and closed at a level as low as HK$1.07 on 20 June 2008 and fluctuated between the range of about HK$1.20 and HK$1.40 per Share during the period up to the Last Trading Day. The Combined Offer Price represents a premium of approximately 16.4% over the closing price of HK$1.06 per Share as quoted on the Stock Exchange on the Latest Practicable Date.

While the Combined Offer Price represents a discount of approximately 5.7% to the average closing price of approximately HK$1.309 per Share for the thirty consecutive trading days up to and including the Last Trading Day and the closing prices of the Shares seem to be higher than the Combined Offer

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Price for most of the time prior to the Last Trading Day, the Independent Shareholders should be reminded that the closing prices of the Shares were in fact around HK$0.80 immediately before the Company’s announcement of the possible disposal of the Shares by HHL in March 2008. It should also be noted that prior to March 2008, the closing prices of the Shares had always been below HK$1.00 except for a few trading days. While there may be no conclusive reason for the rise in the Share price immediately following the Company’s announcement in March 2008, it could be an indication of the speculation of investors about the possible change of the controlling shareholder of the Company.

In general, we consider that the average of the Share prices over a longer time frame is more indicative of the actual value of the Shares as perceived by the market since the effects of short term fluctuations arising from individual incidents can be levelled off. As seen from the price trend of the Shares during the period prior to March 2008 before the Company issued the announcement regarding the possible change of its controlling shareholder, there is a great uncertainty as to whether the Share prices can sustain recent levels had there not been the possible change of the controlling shareholder and the resulting offers. In light of this, we are therefore of the view that it is more appropriate to consider the historical price performance of the Shares in a longer time frame in assessing the Combined Offer Price. On the basis that the Combined Offer Price of HK$1.234 represents a premium of approximately 14.68% over the average closing price of approximately HK$1.076 per Share for the 12 months up to and including the Last Trading Day, we consider that the Combine Offer Price is fair and reasonable so far as the Independent Shareholders are concerned.

5.2 Evaluation of the Combined Offer Price in terms of PER and PBR

Based on the Company’s audited basic earnings per Share of HK$0.0974 for the year ended 31 December 2007 as disclosed in the Annual Report, the Combined Offer Price of HK$1.234 would represent a price-to-earnings ratio (‘‘PER’’) of approximately 12.7 times. On the other hand, based on the Group’s unaudited net assets of approximately HK$390,949,000 as at 30 June 2008 as disclosed in the Interim Report and 417,890,000 Shares in issue, the unaudited net asset value per Share as at 30 June 2008 was approximately HK$0.936. On this basis, the Combined Offer Price of HK$1.234 would represent a price-to-book ratio (‘‘PBR’’) of approximately 131.8% (i.e. the percentage as represented by the Combined Offer Share over the net asset value per Share).

For the purpose of assessing the fairness and reasonableness of the Combined Offer Price, we have also attempted to compare it with the market statistics of companies which have shares listed on the Stock Exchange of Hong Kong, the principal businesses of which include the provision of financial services and regulated activities under the SFO in Hong Kong and which recorded

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LETTER FROM ACCESS CAPITAL

profitable results in their latest financial year (the ‘‘Comparable Companies’’). Details of our findings on the Comparable Companies are summarised in the table below.

		Earnings
		per share	Net asset
		set out in	value per
		the latest	share based
		published	on the latest
		audited	published
		financial	financial
	Closing	statements	statements
	price as at	available as	available as	PER as at	PBR as at	Market
	the Last	at the Last	at the Last	the Last	the Last	capitalisation
	Trading	Trading	Trading	Trading	Trading	as at the Last
Company (stock code)	Day	Day	Day	Day	Day	Trading Day
	(HK$)	(HK$)	(HK$)	(times)	(%)	(HK$’ million)
CASH Financial Services
Group Limited (510)	2.27	0.123	0.43	18.5	527.9	4,715
China Everbright Limited (165)	12.50	3.17	11.04	3.9	113.2	19,809
Emperor Capital Group
Limited (717)	0.46	0.0739	0.66	6.2	69.7	332
First Shanghai Investments
Limited (227)	1.00	0.2956	2.04	3.4	49.0	1391
Get Nice Holdings Limited (64)	0.495	0.1739	0.95	2.8	52.1	1,569
Hong Kong Chinese Limited
(655)	0.93	0.941	3.49	1.0	26.6	1,253
Karl Thomson Holdings
Limited (7)	1.02	0.0575	0.97	17.7	105.2	605
Quam Limited (952)	0.509	0.1677	0.47	3.0	108.3	339
Rexcapital Financial Holdings
Limited (555)	0.60	0.0219	0.34	27.4	176.5	4,283
Shenyin Wanguo (H.K.)
Limited (218)	3.33	0.4245	1.93	7.8	172.5	1,767
South China Financial
Holdings Limited (619)	0.072	0.0398	0.11	1.8	65.5	362
Sun Hung Kai & Co. Limited
(86)	5.58	1.246	8.35	4.5	66.83	9,373
SW Kingsway Capital Holdings
Limited (188)	0.138	0.064	0.26	2.2	53.1	448
Taifook Securities Group
Limited (665)	2.20	0.7884	2.85	2.8	77.2	1,439
Tanrich Financial Holdings
Limited (812)	0.495	0.034	0.68	14.6	72.8	277
Upbest Group Limited (335)	0.68	0.122	0.71	5.6	95.8	881
Value Convergence Holdings
Limited (821)	1.02	0.1697	1.64	6.0	62.2	378
Average				7.6	111.4	2,895
The Company	1.234	0.0974	0.936	12.7	131.8	510
	(being the
	Combined
	Offer
	Price)

– 57 –

LETTER FROM ACCESS CAPITAL

As shown in the above table, the PERs of the Comparable Companies range from approximately 1.0 time to approximately 27.4 times, with an average of approximately 7.6 times. On this basis, the PER of approximately 12.7 times as represented by the Combined Offer Price falls within such range of the Comparable Companies and is actually the fifth largest among the PERs of the Comparable Companies. In addition, it is significantly higher than the average PER of the Comparable Companies of approximately 7.6 times. As regards the PBRs of the Comparable Companies, we note that they ranged from approximately 26.6% to approximately 527.9% and had an average of approximately 111.4%. The equivalent PBR of approximately 131.8% as represented by the Combined Offer Price over the unaudited net asset value per Share as at 30 June 2008 falls within such range of the Comparable Companies and is the fourth largest among the PBRs of the Comparable Companies. In addition, it is higher than the average PBR of approximately 111.4% of the Comparable Companies.

Based on the above analysis on the Combined Offer Price in terms of PER and PBR which shows that the relevant ratios are within those ranges of the Comparable Companies and substantially higher than their average ratios, we are of the view that the Combined Offer Price of HK$1.234 is fair and reasonable.

6. Possible financial effects of the Group Reorganisation

6.1 Income effect

Following completion of the Group Reorganisation, those existing subsidiaries of Group carrying on the Distributed Business (i.e. those businesses such as trading and brokering of precious metal contracts, provision of financial related services outside of Hong Kong and investment in water plant business) will no longer be members of the Group as they will become subsidiaries of HPL. Accordingly, their financial results will not be consolidated into the Group in the future. Based on the unaudited pro forma income statement of the Retained Group set out in Appendix II to the Circular (which was prepared on the assumption that the Group Reorganisation had taken place at the beginning of the year ended 31 December 2007), the turnover of the Group for the year would decrease by approximately HK$292.4 million from approximately HK$465.8 million to approximately HK$173.4 million as a result of the de-consolidation of the HPL Group from the Group. On the same basis, profit attributable to Shareholders would decrease from approximately HK$40.4 million to approximately HK$9.4 million. Such decreases in the Group’s turnover and net profit are principally due to the elimination of income, other revenues and operating costs of the HPL Group as adjustments reflecting the de-consolidation effect consequent upon completion of the Group Reorganisation.

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LETTER FROM ACCESS CAPITAL

6.2 Liquidity and financial resources

Based on the audited consolidated balance sheet of the Group as at 30 June 2008 set out in Appendix I to the Circular, the Group had current assets of approximately HK$559.5 million and current liabilities of approximately HK$227.3 million, representing a net-current-assets position of approximately HK$332.2 million and a current ratio at approximately 2.46. Besides, the Group’s gearing ratio as at 30 June 2008 was approximately 8.4%, calculated on the basis of the Group’s total bank and other borrowings of approximately HK$32,668,000 divided by equity attributable to the Shareholders of approximately HK$390,530,000.

Based on the unaudited pro forma assets and liabilities statement of the Retained Group set out in Appendix II to the Circular (which was prepared on the assumption that the Group Reorganisation had taken place on 30 June 2008), de-consolidation of the HPL Group from the Group would reduce its net current assets from approximately HK$332.2 million to approximately HK$215.9 million. Nevertheless, the current ratio of the Group would increase to approximately 3.49 as a result of the exclusion of the current liabilities which were originated from the HPL Group. On the other hand, the gearing ratio of the Retained Group would be maintained at about 8.6%, which is not substantially different from the position prior to the implementation of the Group Reorganisation.

Pursuant to the Agreement, HHL and Mr. Tang warranted to the Purchasers that as at the Completion Date, the consolidated net tangible assets of the Retained Group (including the trading rights of the Retained Group on the Stock Exchange and Hong Kong Futures Exchange Limited) will not be less than HK$230,000,000 and the Retained Group will have cash in hand or at banks or other authorised institutions of not less than HK$130,000,000. As set out in Appendix I to the Circular, the Directors are of the opinion that, taking into account the effect of the Group Reorganisation, the present available banking facilities and the internal resources, the Group will have sufficient working capital for its present requirements and for the next twelve months from the date of the Circular. In view of the existing financial position of the Group as well as the availability of the bank facilities, we do not consider that the Group Reorganisation will have any immediate impact on the working capital requirements of the Retained Group.

6.3 Equity attributable to the Shareholders

Based on the audited consolidated balance sheet of the Group as at 30 June 2008 set out in Appendix I to the Circular, the equity attributable to the Shareholders as at 30 June 2008 was approximately HK$390.5 million. Based on the unaudited pro forma assets and liabilities of the Retained Group set out in Appendix II to the Circular (which was prepared on the assumption that the Group Reorganisation had taken place on 30 June 2008), the equity

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LETTER FROM ACCESS CAPITAL

attributable to the Shareholders would decrease by approximately HK$158.5 million to approximately HK$232.0 million as a result of the deconsolidation of the HPL Group from the Group.

The reduction in the net assets of the Retained Group as a result of the Group Reorganisation is reasonably expected given that the net assets associated with the Distributed Business are no longer held by the Group following the Completion. Notwithstanding that the net assets of the Group will reduce as a result of the successful implementation of the Group Reorganisation, all Shareholders will at the same time receive HPL Shares under the Distribution in Specie, the net asset value of which is not expected to differ materially from the decrease in the net asset value of the Retained Group. In this connection, we have reviewed the unaudited pro forma assets and liabilities of the HPL Group set out in Appendix IV to the Circular (which was prepared on the assumption that the Group Reorganisation had taken place on 30 June 2008) and noted that the equity attributable to the Shareholders would amount to approximately HK$153.9 million immediately upon completion of the Group Reorganisation. Such net asset value of the HPL Group as at 30 June 2008 represents substantially the reduction in the net asset value of the Retained Group of approximately HK$158.5 million as mentioned above. From the perspective of the Shareholders, their interests in the net worth of the existing Group are not expected to be adversely affected since the net assets of the existing Group will be split between that of the Retained Group and the HPL Group upon the Completion and the Shareholders will hold both the Shares and the HPL Shares. As such, we are of the view that the expected reduction in the Group’s net asset value due to the Group Reorganisation is acceptable so far as the Independent Shareholders are concerned.

IV. RECOMMENDATION

Having considered the above principal factors and reasons, we are of the opinion that the Group Reorganisation is in the interests of the Company and the Shareholders as a whole; and that the terms of the Group Reorganisation are fair and reasonable. Therefore, we would advise the Independent Board Committee and the Independent Shareholders that the Independent Shareholders should vote for the relevant resolutions to approve the Group Reorganisation at the SGM.

Yours faithfully, For and on behalf of Access Capital Limited Alexander Tai Principal Director

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APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

1. ACCOUNTANTS’ REPORT ON THE FINANCIAL INFORMATION OF THE GROUP

Set out below is the text of the Accountants’ Report on the financial information of the Group from KPMG which is prepared for inclusion in this circular:

8th Floor Prince’s Building 10 Chater Road Central Hong Kong

31 October 2008

The Board of Directors Hantec Investment Holdings Limited 45th Floor, COSCO Tower 183 Queen’s Road Central Hong Kong

Dear Sirs

Introduction

We set out below our report on the financial information relating to Hantec Investment Holdings Limited (the ‘‘Company’’) and its subsidiaries (collectively the ‘‘Group’’) in Section 1 of Appendix I of the Company’s circular dated 31 October 2008 (the ‘‘Circular’’), including the consolidated balance sheets of the Group as at 31 December 2005, 2006 and 2007, and 30 June 2008, balance sheets of the Company as at 31 December 2005, 2006 and 2007, and 30 June 2008, and consolidated income statements, consolidated statements of changes in equity and consolidated statements of cash flows of the Group for each of the years ended 31 December 2005, 2006 and 2007 and the six months ended 30 June 2008 (the ‘‘Relevant Periods’’) and the explanatory notes thereto (collectively the ‘‘Financial Information’’) for inclusion in the Circular in connection with the proposed Group Reorganisation of the Group as set out in the ‘‘Letter from the Board’’ contained in the Circular.

The Company was incorporated in Bermuda on 19 April 2000 with limited liability. The Company prepared its financial statements throughout the Relevant Periods in accordance with Hong Kong Financial Reporting Standards (HKFRSs) and the disclosures requirements of Hong Kong Companies Ordinance. The Company’s financial statements for the year ended 31 December 2005 were audited by PricewaterhouseCoopers, Certified Public Accountants in Hong Kong. The Company’s financial statements for the years ended 31 December 2006 and 2007 and the six months ended 30 June 2008 were audited by us. Certain subsidiaries and associates prepared audited statutory financial statements throughout the Relevant Periods, details of the statutory auditors of these subsidiaries and associates are set out in notes 14 and 15 to the Financial Information respectively.

No financial statements of the Group and its subsidiaries and associates have been prepared and audited subsequent to 30 June 2008.

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APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Basis of preparation

The Financial Information has been prepared by the Directors of the Company in accordance with HKFRSs, which collective term includes all applicable individual Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards and Interpretations issued by the Hong Kong Institute of Certified Public Accountants (HKICPA), accounting principles generally accepted in Hong Kong and the disclosure requirements of the Hong Kong Companies Ordinance. The Financial Information also complies with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited. Adjustments have been made, for the purpose of this report, to restate the financial statements of the Group in accordance with the basis set out in note 2 to the Financial Information to conform with HKFRSs.

Responsibility

The Directors are responsible for preparing the Financial Information which gives a true and fair view. In preparing the Financial Information which gives a true and fair view it is fundamental that appropriate accounting policies are selected and applied consistently, that judgements and estimates are made which are prudent and reasonable and that the reasons for any significant departure from applicable accounting standards are stated.

It is our responsibility to form an independent opinion, based on our audit, on the Financial Information.

Basis of opinion

As a basis for forming an opinion on the Financial Information for the purpose of this report, we have carried out appropriate audit procedures in respect of the audited financial statements of the Group for each of the three years ended 31 December 2005, 2006 and 2007 and for the six months ended 30 June 2008 in accordance with Hong Kong Standards on Auditing issued by the HKICPA and have carried out such additional procedures as we considered necessary in accordance with the Auditing Guideline ‘‘Prospectuses and the Reporting Accountant’’ issued by the HKICPA. We have not audited any financial statements of the Group in respect of any period subsequent to 30 June 2008.

An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the Financial Information. It also includes an assessment of the significant estimates and judgements made by the Directors in the preparation of the Financial Information, and of whether the accounting policies are appropriate to the Group’s circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance as to whether the Financial Information is free from material misstatement. In forming our opinion, we also evaluated the overall adequacy of the presentation of the Financial Information. We believe that our audit provides a reasonable basis for our opinion.

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APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Opinion

In our opinion, for the purpose of this report, all adjustments considered necessary have been made and the Financial Information, on the basis of presentation set out in note 2 to the Financial Information, gives a true and fair view of the state of affairs of the Group as at 31 December 2005, 2006 and 2007, and 30 June 2008, of its consolidated results and consolidated cash flows for each of the three years ended 31 December 2005, 2006 and 2007, and for the six months ended 30 June 2008 and the state of affairs of the Company as at 31 December 2005, 2006 and 2007, and 30 June 2008, and has been properly prepared in accordance with the disclosure requirements of the Hong Kong Companies Ordinance.

Corresponding Financial Information

For the purpose of this report, we have also reviewed the unaudited corresponding interim financial information of the Group comprising the consolidated income statement, the consolidated statement of changes in equity and the consolidated cash flow statement for the six months ended 30 June 2007, together with a summary of significant accounting policies and other explanatory notes thereto (the ‘‘30 June 2007 Corresponding Financial Information’’), for which the directors are responsible, in accordance with Hong Kong Standard on Review Engagements 2410, ‘‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity’’ issued by the HKICPA. Our responsibility is to express a conclusion on the 30 June 2007 Corresponding Financial Information based on our review.

A review 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 on the 30 June 2007 Corresponding Financial Information.

Based on our review, for the purpose of this report, nothing has come to our attention that causes us to believe that the 30 June 2007 Corresponding Financial Information is not prepared, in all material respects, in accordance with the same basis adopted in respect of the Financial Information.

KPMG

Certified Public Accountants 8th Floor, Prince’s Building 10 Chater Road Central Hong Kong

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APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

CONSOLIDATED INCOME STATEMENT

Note Turnover 4 Other revenue 4 Other net (loss)/income 4 Staff costs 5 Commission expenses Operating leases for land and buildings Other operating expenses 6 Total operating expenses Operating profit Finance costs 7 Share of profits of associates 15 Profit before taxation Income tax 8 Profit for the year/period	Year ended 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 215,255 355,420 465,761 812 1,224 1,848 (1,723) 3,151 5,725 214,344 359,795 473,334 ------------ ------------ ------------ 53,244 75,384 88,486 78,936 141,716 226,508 9,346 12,726 16,632 48,838 67,803 81,853 190,364 297,629 413,479 ~~------------~~ ~~------------~~ ~~------------~~ 23,980 62,166 59,855 (2,090) (3,860) (8,472) 21,890 58,306 51,383 3,901 5,802 2,047 25,791 64,108 53,430 701 (11,839) (13,071) 26,492 52,269 40,359	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) 206,167 182,628 930 621 2,144 1,262 209,241 184,511 ------------ ------------ 39,321 41,127 105,692 84,587 6,560 10,394 32,585 40,726 184,158 176,834 ~~------------~~ ~~------------~~ 25,083 7,677 (3,968) (1,447) 21,115 6,230 1,233 1,407 22,348 7,637 (5,178) (2,785) 17,170 4,852

– 64 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Note Attributable to: Equity holders of the Company Minority interests Dividends payable to equity holders of the Company attributable to the year/ period: Interim dividend declared during the year/period 10 Final dividend proposed after the balance sheet date 10 Earnings per share Basic (HK cents) 11(a) Diluted (HK cents) 11(b)	Year ended 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 26,876 52,269 40,357 (384) — 2 26,492 52,269 40,359 — 5,867 6,213 — 6,212 10,393 — 12,079 16,606 6.87 13.29 9.74 6.87 13.28 N/A	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) 17,170 4,768 — 84 17,170 4,852 6,213 — — — 6,213 — 4.15 1.15 N/A 1.14	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) 17,170 4,768 — 84 17,170 4,852 6,213 — — — 6,213 — 4.15 1.15 N/A 1.14
			4,852
			— —
			—
			1.15 1.14

– 65 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

CONSOLIDATED BALANCE SHEET

Note Non-current assets Intangible assets 12 Fixed assets 13 Interests in associates 15 Other assets 16 Available-for-sale financial assets 17 Deferred income tax assets 18 Current assets Financial assets at fair value through profit or loss 19 Taxation recoverable Trade and other receivables 20 Bank balances and cash 21 Current liabilities Trade and other payables 25 Short-term loans and bank overdrafts 26 Current portion of obligations under finance lease 24 Current portion of secured mortgage loan 26 Taxation payable Loan notes 27 Net current assets Total assets less current liabilities	As at 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 1,499 6,472 6,871 9,398 20,015 19,980 15,480 8,949 15,288 3,809 5,202 3,890 12,089 10,236 12,293 5,431 4,853 1,549 47,706 55,727 59,871 ----------- ----------- ----------- 1,305 16,264 5,602 1,186 498 514 196,873 426,295 471,516 162,139 280,617 374,184 361,503 723,674 851,816 ----------- ----------- ----------- 88,103 392,330 454,810 28,727 21,049 16,692 107 154 537 — — — 850 9,343 4,006 — — — 117,787 422,876 476,045 ----------- ----------- ----------- 243,716 300,798 375,771 291,422 356,525 435,642 ----------- ----------- -----------	As at 30 June 2008 HK$’000 6,517 38,624 19,665 3,969 984 1,395
		71,154 ----------- 5,197 2,140 264,917 287,201
		559,455 ----------- 201,821 2,003 513 692 5,073 17,176
		227,278 -----------
		332,177
		403,331 -----------

– 66 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Note Non-current liabilities Obligations under finance lease 24 Secured mortgage loan 26 Deferred income tax liabilities 18 Loan notes 27 NET ASSETS Capital and reserves Share capital 22 Other reserves 23 Retained earnings 23 Total equity attributable to the equity holders of the Company Minority interests TOTAL EQUITY	As at 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 154 105 506 — — — 175 653 170 — — 42,525 329 758 43,201 ----------- ----------- ----------- 291,093 355,767 392,441 39,113 41,413 41,443 192,290 208,262 216,639 59,690 106,092 134,024 291,093 355,767 392,106 — — 335 291,093 355,767 392,441	As at 30 June 2008 HK$’000 245 12,039 98 —
		12,382 -----------
		390,949
		41,789 220,364 128,377
		390,530 419
		390,949

– 67 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

BALANCE SHEET

Note Non-current assets Fixed assets 13 Investment in subsidiaries 14 Current assets Financial assets at fair value through profit or loss 19 Other receivables 20 Amounts due from subsidiaries 14(a) Bank balances and cash 21 Current liabilities Other payables 25 Amounts due to subsidiaries 14(a) Loan notes 27 Net current assets Total assets less current liabilities Non-current liabilities Loan notes 27 NET ASSETS Capital and reserves Share capital 22 Other reserves 23 Retained earnings 23 TOTAL EQUITY	As at 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 775 1,053 221 218,130 218,130 218,286 218,905 219,183 218,507 ----------- ----------- ----------- 733 1,022 1,379 1,128 1,284 8,889 96,097 161,798 152,236 8,397 897 19,193 106,355 165,001 181,697 ----------- ----------- ----------- 773 5,765 10,354 5,069 25,570 28,772 — — — 5,842 31,335 39,126 ----------- ----------- ----------- 100,513 133,666 142,571 319,418 352,849 361,078 ----------- ----------- ----------- — — 42,525 ~~-----------~~ ----------- ----------- 319,418 352,849 318,553 39,113 41,413 41,443 222,886 237,376 237,671 57,419 74,060 39,439 319,418 352,849 318,553	As at 30 June 2008 HK$’000 173 218,286
		218,459 ----------- 1,243 702 166,624 3,129
		171,698 ----------- 1,587 49,876 17,176
		68,639 -----------
		103,059
		321,518 ----------- — ~~-----------~~
		321,518
		41,789 241,068 38,661
		321,518

– 68 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Note Balance at 1 January 2005 Acquisition of a subsidiary 31(b) Surplus on revaluation of available-for-sale financial assets 17 Exchange difference Profit for the year 2004 final dividends paid 23 Balance at 31 December 2005 and 1 January 2006 Shares issued 22, 23 Equity-settled share-based transactions 5 Deficit on revaluation of available-for-sale financial assets 17 Exchange difference Profit for the year 2006 interim dividends paid 10 Balance at 31 December 2006	Attributable to equity holders of the Company Share capital Other reserves Retained earnings HK$’000 HK$’000 HK$’000 39,113 191,627 42,592 — — — — 2,491 — — (1,828) — — — 26,876 — — (9,778) 39,113 192,290 59,690 2,300 14,490 — — 588 — — (1,989) — — 2,883 — — — 52,269 — — (5,867) 41,413 208,262 106,092	Attributable to equity holders of the Company Share capital Other reserves Retained earnings HK$’000 HK$’000 HK$’000 39,113 191,627 42,592 — — — — 2,491 — — (1,828) — — — 26,876 — — (9,778) 39,113 192,290 59,690 2,300 14,490 — — 588 — — (1,989) — — 2,883 — — — 52,269 — — (5,867) 41,413 208,262 106,092	Minority interests HK$’000 3,238 (2,899) — 45 (384) — — — — — — — — —	Total HK$’000 276,570 (2,899) 2,491 (1,783) 26,492 (9,778) 291,093 16,790 588 (1,989) 2,883 52,269 (5,867) 355,767
	Share capital HK$’000 39,113 — — — — — 39,113 2,300 — — — — — 41,413	Other reserves HK$’000 191,627 — 2,491 (1,828) — — 192,290 14,490 588 (1,989) 2,883 — — 208,262

– 69 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Note Balance at 1 January 2007 Capital contribution from minority shareholders Acquisition of a subsidiary 31(b) Shares issued under share option scheme 22, 23 Equity-settled share-based transactions 5 Surplus on revaluation of available-for-sale financial assets 17 Exchange difference Profit for the year 2006 final dividends paid 10 2007 interim dividends paid 10 Balance at 31 December 2007 and 1 January 2008 Shares issued under share option scheme 22, 23 Equity-settled share-based transactions 5 Realised profit on available- for-sale financial assets 17 Deficit on revaluation of available-for-sale financial assets 17 Exchange difference Profit for the period 2007 final dividends paid 10 Balance at 30 June 2008	Attributable to equity holders of the Company Share capital Other reserves Retained earnings HK$’000 HK$’000 HK$’000 41,413 208,262 106,092 — — — — — — 30 234 — — 1,802 — — 2,057 — — 4,284 — — — 40,357 — — (6,212) — — (6,213) 41,443 216,639 134,024 346 2,698 — — 367 — — (2,558) — — (1) — — 3,219 — — — 4,768 — — (10,415) 41,789 220,364 128,377	Attributable to equity holders of the Company Share capital Other reserves Retained earnings HK$’000 HK$’000 HK$’000 41,413 208,262 106,092 — — — — — — 30 234 — — 1,802 — — 2,057 — — 4,284 — — — 40,357 — — (6,212) — — (6,213) 41,443 216,639 134,024 346 2,698 — — 367 — — (2,558) — — (1) — — 3,219 — — — 4,768 — — (10,415) 41,789 220,364 128,377	Minority interests HK$’000 — 310 23 — — — — 2 — — 335 — — — — — 84 — 419	Total HK$’000 355,767 310 23 264 1,802 2,057 4,284 40,359 (6,212) (6,213) 392,441 3,044 367 (2,558) (1) 3,219 4,852 (10,415) 390,949
	Share capital HK$’000 41,413 — — 30 — — — — — — 41,443 346 — — — — — — 41,789	Other reserves HK$’000 208,262 — — 234 1,802 2,057 4,284 — — — 216,639 2,698 367 (2,558) (1) 3,219 — — 220,364

– 70 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Note Balance at 1 January 2007 Equity-settled share-based transactions 5 Surplus on revaluation of available-for-sale financial assets Exchange difference Profit for the period 2006 final dividends paid 10 Balance at 30 June 2007	Attributable to equity holders of the Company Share capital Other reserves Retained earnings HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) 41,413 208,262 106,092 — 1,354 — — 937 — — 3,101 — — — 17,170 — — (6,212) 41,413 213,654 117,050	Attributable to equity holders of the Company Share capital Other reserves Retained earnings HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) 41,413 208,262 106,092 — 1,354 — — 937 — — 3,101 — — — 17,170 — — (6,212) 41,413 213,654 117,050	Minority interests HK$’000 (Unaudited) — — — — — — —	Total HK$’000 (Unaudited) 355,767 1,354 937 3,101 17,170 (6,212) 372,117
	Share capital HK$’000 (Unaudited) 41,413 — — — — — 41,413	Other reserves HK$’000 (Unaudited) 208,262 1,354 937 3,101 — — 213,654

Included in the consolidated retained earnings at 31 December 2005, 2006 and 2007, and 30 June 2007 and 2008 are statutory provisions of HK$Nil, HK$59,128, HK$203,506, HK$193,326 and HK$433,048 which are required to be held in respect of certain overseas subsidiaries of the Group.

– 71 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

CONSOLIDATED CASH FLOW STATEMENT

Note Net cash inflow/(outflow) from operating activities 31(a) Investing activities Purchase of fixed assets Sale of fixed assets Sale of available-for-sales financial assets Sale of financial assets at fair value through profit or loss Dividends received from listed securities Dividends received from available-for-sale financial assets Dividends received from an associate 15 Purchase of financial assets at fair value through profit or loss Purchase of available-for-sale financial assets 17 Purchase of associates 15 Loan to an associate 15 Purchase of subsidiaries, net of cash and cash equivalents acquired 31(c) Net cash inflow/(outflow) from investing activities	Year ended 31 December 2005 2006 2007 HK$’000 HK$’000 Hk$’000 54,042 112,034 62,044 ------------ ------------ ------------ (5,475) (11,467) (7,279) 186 8 8 — — — 38,687 17,941 13,364 33 173 479 — 149 138 549 1,673 1,637 (22,714) (6,584) (2,769) (6,331) (136) — — — (1,171) — — (5,000) (2,975) 30,575 (322) 1,960 32,332 (915) ------------ ------------ ------------	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) (64,594) (48,844) ------------ ------------ (2,981) (22,213) — 7 — 12,670 1,922 679 341 96 138 — 1,637 1,719 (1,830) (1,445) — — (2) — — (5,000) — (51) (775) (13,538) ------------ ------------

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APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Note Financing activities Dividend paid 23 Interest paid Proceeds from capital contribution by minority shareholders Proceeds from shares issued under share option scheme 22 Issue of loan notes Repayment of loan notes Advance from mortgage loan Advance from finance lease Repayments under finance leases Net cash (outflow)/inflow from financing activities Increase/(decrease) in cash and cash equivalents Cash and cash equivalents at 1 January Effect of foreign exchange rate changes Cash and cash equivalents at 31 December/30 June 21 Analysis of balances of cash and cash equivalents Bank balances – general accounts and cash 21 Bank overdrafts 21 Bank loans – unsecured 21	Year ended 31 December 2005 2006 2007 HK$’000 HK$’000 Hk$’000 (9,778) (5,867) (12,425) (2,069) (3,860) (8,472) — — 310 — — 264 — — 44,865 — — (2,340) — — — 329 123 1,365 (68) (125) (581) (11,586) (9,729) 22,986 ~~------------~~ ~~------------~~ ~~------------~~ 44,416 134,637 84,115 66,777 110,330 246,879 (863) 1,912 3,578 110,330 246,879 334,572 139,057 267,928 351,264 (18,727) (11,049) (4,692) (10,000) (10,000) (12,000) 110,330 246,879 334,572	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) (6,212) (10,415) (3,968) (1,447) — — — 3,044 44,865 — — (25,349) — 12,731 1,365 — (286) (285) 35,764 (21,721) ~~------------~~ ~~------------~~ (29,605) (84,103) 246,879 334,572 3,387 2,583 220,661 253,052 266,279 255,055 (33,618) (3) (12,000) (2,000) 220,661 253,052

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APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

NOTES TO THE FINANCIAL INFORMATION

1 GENERAL INFORMATION

The principal activity of Hantec Investment Holdings Limited (‘‘the Company’’) is investment holding. The principal activities and other particulars of the subsidiaries are set out in note 14 to the financial information.

The Company is a limited liability company incorporated in Bermuda. The address of its registered office is Clarendon House, 2 Church Street, Hamilton, HM 11, Bermuda.

The Company has its primary listing on The Stock Exchange of Hong Kong Limited.

This consolidated financial information is presented in thousands of units of Hong Kong Dollars (HK$’000) unless otherwise stated.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1 Statement of compliance

This financial information has been prepared in accordance with all applicable Hong Kong Financial Reporting Standards (‘‘HKFRSs’’), which collective term includes all applicable individual Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards (‘‘HKASs’’) and Interpretations issued by the Hong Kong Institute of Certified Public Accountants (‘‘HKICPA’’), accounting principles generally accepted in Hong Kong and the disclosure requirements of the Hong Kong Companies Ordinance. This financial information also complies with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

The HKICPA has issued certain new and revised HKFRSs that are effective or available for early adoption for the period ended 30 June 2008. For the purpose of preparing this Financial Information, the Group has adopted all HKFRSs that are first applicable for adoption for the accounting period beginning 1 January 2008, throughout the Relevant Periods. The Group did not adopt HKFRSs that are not yet effective for the accounting period ended 30 June 2008.

2.2 Basis of preparation

The measurement basis used in the preparation of the financial information is the historical cost basis except that the following assets are stated at their fair value as explained in the accounting policies set out below:

financial instruments classified as available-for-sale or as financial assets at fair value through profit or loss (see note 2.9)

The preparation of financial information in conformity with HKFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

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APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

2.3 Consolidation

The consolidated financial information includes the financial information of the Company and all its subsidiaries (together referred to as ‘‘the Group’’) and the Group’s associates made up to 31 December 2005, 2006, 2007 and 30 June 2008 (‘‘the Relevant Periods’’).

(a) Subsidiaries and minority interests

Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement.

Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Minority interests represent the portion of the net assets of subsidiaries attributable to interests that are not owned by the Company, whether directly or indirectly through subsidiaries, and in respect of which the Group has not agreed any additional terms with the holders of those interests which would result in the Group as a whole having a contractual obligation in respect of those interests that meets the definition of a financial liability. Minority interests are presented in the consolidated balance sheet within equity, separately from equity attributable to the equity holders of the Company. Minority interests in the results of the Group are presented on the face of the consolidated income statement as an allocation of the total profit or loss for the year between minority interests and the equity holders of the Company.

Where losses applicable to the minority exceed the minority’s interest in the equity of a subsidiary, the excess, and any further losses applicable to the minority, are charged against the Group’s interest except to the extent that the minority has a binding obligation to, and is able to, make additional investment to cover the losses. If the subsidiary subsequently reports profits, the Group’s interest is allocated all such profits until the minority’s share of losses previously absorbed by the Group has been recovered.

In the Company’s balance sheet, the investments in subsidiaries are stated at cost less provision for impairment losses. The results of subsidiaries are accounted by the Company on the basis of dividends received and receivable.

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APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

(b) Associates

Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for by the equity method of accounting and are initially recognised at cost. The Group’s investment in associates includes goodwill (net of any accumulated impairment loss) identified on acquisition (see note 2.7(a)).

The Group’s share of its associates’ post-acquisition profits or losses is recognised in the consolidated income statement, and its share of post-acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group.

In the Company’s balance sheet the investments in associates are stated at cost less provision for impairment losses. The results of associates are accounted for by the Company on the basis of dividends received and receivable.

2.4 Segment reporting

A business segment is a group of assets and operations engaged in providing services that are subject to risks and returns that are different from those of other business segments. A geographical segment is engaged in providing services within a particular economic environment that are subject to risks and returns that are different from those of segments operating in other economic environments.

In accordance with the Group’s internal financial reporting, the Group has determined that business segments are presented as the primary reporting format and geographical segments as the secondary reporting format.

In respect of geographical segment reporting, analysis on consolidated turnover is based on the country in which the customer is located. Total assets and capital expenditure are where the assets are located.

2.5 Foreign currency translation

(a) Functional and presentation currency

Items included in the financial information of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘‘the functional currency’’). The consolidated financial information is presented in Hong Kong dollars (‘‘HK dollars’’), which is the Company’s functional and presentation currency.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

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APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the foreign exchange rates ruling at the transaction dates. Nonmonetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated using the foreign exchange rates ruling at the dates the fair value was determined.

(c) Group companies

The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

(i) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
(ii) income and expenses for each income statement are translated at average exchange rates (unless the average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and
(iii) all resulting exchange differences are recognised as a separate component of equity.

On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and of borrowings and other currency instruments designated as hedges of such investments, are taken to shareholders’ equity. When a foreign operation is sold, such exchange differences are recognised in the income statement as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

2.6 Fixed assets

Fixed assets are stated at historical cost less accumulated depreciation and impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are expensed in the income statement during the financial period in which they are incurred.

Depreciation of fixed assets is calculated using the straight-line method to allocate cost or revalued amounts to their residual values over their estimated useful lives, as follows:

Freehold land	not depreciated
Buildings	over the unexpired term of lease or estimated useful life
Leasehold improvements	over the lease periods
Furniture and fixtures	20%
Office and computer equipment	20%
Motor vehicles	25%

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (see note 2.8).

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APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

2.7 Intangible assets

(a) Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary or associates at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisition of associates is included in investments in associates. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to cash generating units for the purpose of impairment testing.

(b) Trading rights

Trading rights held in The Stock Exchange of Hong Kong Limited and Hong Kong Futures Exchange Limited (the ‘‘Stock Exchange trading rights’’ and ‘‘Futures Exchange trading right’’ respectively) are classified as intangible assets. Trading rights have an indefinite useful life and are carried at cost less accumulated impairment losses.

(c) Membership

The membership of The Chinese Gold & Silver Exchange Society is recognised as an intangible asset on the balance sheet. The membership has an indefinite useful life and is carried at cost less accumulated impairment losses.

2.8 Impairment of assets

Assets that have an indefinite useful life are not subject to amortisation, are at least tested annually for impairment and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Assets that are subject to amortisation are reviewed for impairment wherever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of time value of money and the risks specific to the asset. Where an asset does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the smallest group of assets that generates cash inflows independently (i.e. a cash-generating unit).

2.9 Investments

The Group classifies its investments in the following categories: financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, and available-for-sale financial assets. The classification depends on the purpose for which the investments are acquired. Management determines the classification of its investments at initial recognition and re-evaluates this designation at every reporting date.

(a) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss represents financial assets held for trading. A financial asset is classified as held for trading if acquired principally for the purpose of selling in the short term. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets held for trading are classified as current assets.

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APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

(b) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Group provides money, goods or services directly to a debtor with no intention of trading the receivable. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non-current assets. Loans and receivables are included in trade and other receivables in the balance sheet (see note 2.10).

(c) Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Group’s management has the positive intention and ability to hold to maturity. During the Relevant Periods, the Group did not hold any investments in this category.

(d) Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the balance sheet date.

Purchases and sales of investments are recognised on the trade-date – the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Investments are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest method. Realised and unrealised gains and losses arising from changes in the fair value of the ‘‘financial assets at fair value through profit or loss’’ category are included in the income statement in the period in which they arise. Unrealised gains and losses arising from changes in the fair value of non-monetary securities classified as available-for-sale are recognised in equity. When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments are included in the income statement as gains or losses from investment securities.

The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active and for unlisted securities, the Group establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and option pricing models refined to reflect the issuer’s specific circumstances.

The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of equity securities classified as availablefor-sale, a significant or prolonged decline in the fair value of the security below its cost is considered in determining whether the securities are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in the income statement – is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement on equity instruments are not reversed through the income statement. Any subsequent increase in the fair value of such assets is recognised directly in equity.

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APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

2.10 Trade and other receivables

Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment, except where the receivables are interest-free loans made to related companies without any fixed repayment terms or the effect of discounting would be immaterial. A provision for impairment of trade and other receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in the income statement.

2.11 Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.

2.12 Trade and other payables

Trade and other payables are initially recognised at fair value. Except for financial guarantee liabilities measured in accordance with note 2.17, trade and other payables are subsequently stated at amortised cost unless the effect of discounting would be immaterial, in which case they are stated at cost.

2.13 Share capital

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

Where any Group company purchases the Company’s equity share capital, the consideration paid, including any directly attributable incremental costs (net of income taxes), is deducted from equity attributable to the Company’s equity holders until the shares are cancelled, reissued or disposed of. Where such shares are subsequently sold or reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company’s equity holders.

2.14 Income tax

Income tax for the year comprises current tax and movements in deferred tax assets and liabilities. Current tax and movements in deferred tax assets and liabilities are recognised in the income statement except to the extent that they relate to items recognised directly in equity, in which case they are recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax assets and liabilities arise from deductible and taxable temporary differences respectively, being the differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases. Deferred tax assets also arise from unused tax losses and unused tax credits.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

deductible temporary differences include those that will arise from the reversal of existing taxable temporary differences, provided those differences relate to the same taxation authority and the same taxable entity, and are expected to reverse either in the same period as the expected reversal of the deductible temporary difference or in periods into which a tax loss arising from the deferred tax asset can be carried back or forward. The same criteria are adopted when determining whether existing taxable temporary differences support the recognition of deferred tax assets arising from unused tax losses and credits, that is, those differences are taken into account if they relate to the same taxation authority and the same taxable entity, and are expected to reverse in a period, or periods, in which the tax loss or credit can be utilised.

The limited exceptions to recognition of deferred tax assets and liabilities are those temporary differences arising from goodwill not deductible for tax purposes, the initial recognition of assets or liabilities that affect neither accounting nor taxable profit (provided they are not part of a business combination), and temporary differences relating to investments in subsidiaries to the extent that, in the case of taxable differences, the Group controls the timing of the reversal and it is probable that the differences will not reverse in the foreseeable future, or in the case of deductible differences, unless it is probable that they will reverse in the future.

The amount of deferred tax recognised is measured based on the expected manner of realisation or settlement of the carrying amount of the assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. Deferred tax assets and liabilities are not discounted.

The carrying amount of a deferred tax asset is reviewed at each balance sheet date and is reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow the related tax benefit to be utilised. Any such reduction is reversed to the extent that it becomes probable that sufficient taxable profits will be available.

Additional income taxes that arise from the distribution of dividends are recognised when the liability to pay the related dividends is recognised.

Current tax balances and deferred tax balances, and movements therein, are presented separately from each other and are not offset. Current tax assets are offset against current tax liabilities, and deferred tax assets against deferred tax liabilities, if the Company or the Group has the legally enforceable right to set off current tax assets against current tax liabilities and the following additional conditions are met:

in the case of current tax assets and liabilities, the Company or the Group intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously; or
in the case of deferred tax assets and liabilities, if they relate to income taxes levied by the same taxation authority on either:
the same taxable entity; or
different taxable entities, which, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered, intend to realise the current tax assets and settle the current tax liabilities on a net basis or realise and settle simultaneously.

2.15 Employee benefits

(a) Employee leave entitlements

Employee entitlement to annual leave is recognised when it accrues to employees. An accrual is made for the estimated liability for annual leave as a result of services rendered by employees up to the balance sheet date.

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APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Employee entitlements to sick leave and maternity or paternity leave are not recognised until the time of leave.

(b) Profit sharing and bonus plan

The expected cost of profit sharing and bonus payments are recognised as a liability when the Group has a present legal or constructive obligation as a result of services rendered by employees and a reliable estimate of the obligation can be made.

Liabilities for profit sharing and bonus plans are expected to be settled within 12 months and are measured at the amounts expected to be paid when they are settled.

(c) Pension obligations

The Group contributes to the mandatory provident fund (‘‘MPF Scheme’’), a defined contribution plan in Hong Kong, which is available to all employees. The assets of the MPF Scheme are held separately from the Group in an independently administered fund.

The Group’s contribution to the MPF Scheme is based on 5% of the monthly relevant income of each employee up to a maximum monthly relevant income of HK$20,000 in accordance with the Mandatory Provident Fund Schemes Ordinance. The contributions are recognised as employee benefit expenses when they are due and are reduced by contributions forfeited by those employees who leave the scheme prior to vesting fully in the contributions.

(d) Share based payments

The fair value of share options granted to employees and directors is recognised as an employee cost with a corresponding increase in a capital reserve within equity. The fair value is measured at grant date using the Black-Scholes model, taking into account the terms and conditions upon which the options were granted. Where the grantees have to meet vesting conditions before becoming unconditionally entitled to the options, the total estimated fair value of the options is spread over the vesting period, taking into account the probability that the options will vest.

During the vesting period, the number of share options that is expected to vest is reviewed. Any adjustment to the cumulative fair value recognised in prior years is charged/credited to the profit or loss for the year of the review, unless the original employee expenses qualify for recognition as an asset, with a corresponding adjustment to the capital reserve. On vesting date, the amount recognised as an expense is adjusted to reflect the actual number of options that vest (with a corresponding adjustment to the capital reserve) except where forfeiture is only due to not achieving vesting conditions that relate to the market price of the Company’s shares. The equity amount is recognised in the capital reserve until either the option is exercised (when it is transferred to the share premium account) or the option expires (when it is released directly to retained profits).

2.16 Provisions, contingent liabilities and contingent assets

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Where the Group expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

A contingent liability is a possible obligation that arises from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. It can also be a present obligation arising from past events that is not recognised because it is not probable that outflow of economic resources will be required or the amount of obligation cannot be measured reliably.

A contingent liability is not recognised but is disclosed in the notes to the financial information. When a change in the probability of an outflow occurs so that outflow is probable, it will then be recognised as a provision.

A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain events not wholly within the control of the Group.

A contingent asset is not recognised but is disclosed in the notes to the financial information when an inflow of economic benefits is probable. When inflow is virtually certain, an asset is recognised.

2.17 Financial guarantees issued

Financial guarantees are contracts that require the issuer (i.e. the guarantor) to make specified payments to reimburse the beneficiary of the guarantee (the ‘‘holder’’) for a loss the holder incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument.

Where the Group issues a financial guarantee, the fair value of the guarantee (being the transaction price, unless the fair value can otherwise be reliably estimated) is initially recognised as deferred income within trade and other payables. Where consideration is received or receivable for the issuance of the guarantee, the consideration is recognised in accordance with the Group’s policies applicable to that category of asset. Where no such consideration is received or receivable, an immediate expense is recognised in profit or loss on initial recognition of any deferred income. (see note 32.2)

The amount of the guarantee initially recognised as deferred income is amortised in profit or loss over the term of the guarantee as income from financial guarantees issued. In addition, provisions are recognised in accordance with note 2.16 if and when (i) it becomes probable that the holder of the guarantee will call upon the Group under the guarantee, and (ii) the amount of that claim on the Group is expected to exceed the amount currently carried in trade and other payables in respect of that guarantee i.e. the amount initially recognised, less accumulated amortisation.

2.18 Revenue recognition

Brokerage commission income arising from leveraged foreign exchange transactions, securities broking, precious metal contracts and commodities and futures broking are recognised and accounted for on a trade date basis.

Brokerage commission income arising from the brokerage of mutual funds and insurance products is recognised when services are rendered. An amount, based on a certain percentage of the commission income and expenses and based on the historical statistics on the occurrence of the clawback of the brokerage commission income, has been provided for the possible clawback that may be claimed against the Group.

Net revenue from foreign exchange options trading and broking includes both realised and unrealised gains less losses from the foreign currency option contracts. Open option contracts are carried at fair value, with related unrealised gains or losses recognised in the income statement. The open option contracts are valued using pricing models that consider, among other factors, contractual and market prices, time value and volatility factors.

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APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

All transactions related to precious metal contracts dealings are recorded in the financial information based on trade dates. Accordingly, only those transactions which trade dates fall within the accounting year have been taken into account.

Swap interest and foreign exchange trading revenue include both realised and unrealised gains less losses. The swap interest and foreign exchange spread in relation to open positions arising from leveraged foreign exchange transactions are recognised on an accrual basis. The net residual positions of each foreign currency resulting from broking and trading foreign currencies are carried at fair value, with related unrealised gains or losses recognised in the income statement.

Underwriting commissions are recognised when the relevant work or service has been rendered.

Revenue from corporate finance services is recognised in accordance with the terms of agreement for the underlying transactions.

Management fee and subscription fee on asset management are recognised on an accrual basis.

Interest income is recognised on a time proportion basis using the effective interest method.

Dividend income is recognised when the right to receive payment is established.

2.19 Leases

An arrangement, comprising a transaction or a series of transactions, is or contains a lease if the Group determines that the arrangement conveys a right to use a specific asset or assets for an agreed period of time in return for a payment or a series of payments. Such a determination is made based on an evaluation of the substance of the arrangement and is regardless of whether the arrangement takes the legal form of a lease.

(a) Operating lease

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are expensed in the income statement on a straight-line basis over the period of the lease.

(b) Finance lease

Leases of assets where the Group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease’s commencement at the lower of the fair value of the leased property and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in current and non-current borrowings. The interest element of the finance cost is recognised in the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

2.20 Dividend distribution

Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s financial information in the period in which the dividends are approved by the Company’s shareholders.

– 84 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

2.21 Related Parties

For the purposes of this financial information, a party is considered to be related to the Group if:

(i) The party has the ability, directly or indirectly through one or more intermediaries, to control the Group or exercise significant influence over the Group in making financial and operating policy decisions, or has joint control over the Group;
(ii) The Group and the party are subject to common control;
(iii) The party is an associate of the Group;
(iv) The party is a member of key management personnel of the Group, or a close family member of such an individual, or is an entity under the control, joint control or significant influence of such individuals;
(v) The party is a close family member of a party referred to in (i) or is an entity under the control, joint control or significant influence of such individuals; or
(vi) The party is a post-employment benefit plan which is for the benefit of employees of the Group or of any entity that is a related party of the Group.

Close family members of an individual are those family members who may be expected to influence, or be influenced by, that individual in their dealings with the entity.

2.22 Finance costs

Finance costs are charged to the income statement in the year/period in which they are incurred.

2.23 Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal of a financial asset or financial liability, including fees and commissions paid to agents, advisors, brokers and dealers, levies by regulatory agencies and securities exchanges, and transfer taxes and duties. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.

2.24 Trust accounts

Trust accounts maintained by the subsidiaries of the Company to hold clients’ monies are not recognised as an asset in the financial information.

2.25 Off-balance sheet financial instruments

Off-balance sheet financial instruments arising from the leveraged foreign exchange trading and option transactions are marked to market and the gain or loss thereof is recognised in the income statement as foreign exchange trading revenue or net premium income from foreign currency option.

– 85 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstance.

3.1 Estimated impairment of goodwill

The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of estimates.

3.2 Income taxes

The Group is subject to income taxes in several jurisdictions. Significant judgment is required in determining the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

3.3 Estimate of fair value of financial instruments

The best evidence of fair value is current prices in an active market for listed equity securities. In the absence of such information, the Group determines the amount within a range of reasonable fair value estimates. The Group establishes fair value by using share of net asset value or valuation techniques for unlisted securities. Valuation techniques include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and option pricing models refined to reflect the issuer’s specific circumstances.

3.4 Litigation

The Group considers each case involving litigation individually to assess the probability of any outflow of resources. If in the opinion of the directors, an outflow of resources embodying economic benefits will be required to settle the litigation, a provision will be made to the extent of the probable outflow. In other cases, unless the possibility of an outflow of resources embodying economic benefits is remote, a contingent liability will be disclosed.

– 86 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

4 TURNOVER, OTHER REVENUE, OTHER NET INCOME AND SEGMENT INFORMATION

The Company is an investment holding company. The Group is principally engaged in the provision of leveraged foreign exchange trading and broking services, securities broking, commodities and futures broking, provision of corporate financial advisory services, fund management, financial planning and insurance broking, and trading and broking of precious metal contracts. Total revenue recognised during the Relevant Periods is as follows:

Turnover Fees and commission Net revenue from — foreign currency option trading — bullion trading Net premium income from insurance broking Swap interest and foreign exchange trading revenue Interest income Underwriting commission Management, subscription and advisory fee income Other revenue Dividend income from listed securities Dividend income from available- for-sale financial assets Other income Other net (loss)/income Net exchange (losses)/gains Net realised gains/(losses) on financial assets at fair value through profit or loss Net unrealised gains/(losses) on financial assets at fair value through profit or loss Profit on disposal of available-for- sale financial assets	Year ended 31 December 2005 2006 2007 HK$’000 HK$’000 Hk$’000 91,564 121,213 198,948 2,796 2,569 6,500 20,701 79,638 102,804 450 589 626 77,536 99,088 94,789 13,514 44,540 58,123 1,592 1,006 1,598 7,102 6,777 2,373 215,255 355,420 465,761 ------------ ------------ ------------ 33 173 479 — 149 138 779 902 1,231 812 1,224 1,848 ------------ ------------ ------------ (2,746) 4,402 6,808 939 (1,557) 2,346 84 306 (3,429) — — — (1,723) 3,151 5,725 ~~------------~~ ~~------------~~ ~~------------~~ 214,344 359,795 473,334	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) 86,262 68,494 7,417 5,955 40,075 48,969 303 203 38,127 37,503 32,268 20,538 478 54 1,237 912 206,167 182,628 ------------ ------------ 341 96 138 — 451 525 930 621 ------------ ------------ 1,273 (642) 469 55 402 (1,223) — 3,072 2,144 1,262 ~~------------~~ ~~------------~~ 209,241 184,511

– 87 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Primary reporting format — Business segments

The business of the Group was organised into the following segments during the year:

Leveraged foreign exchange trading/broking — provision of dealing and broking in leveraged forex trading services on the world’s major currencies.
Securities broking — provision of broking services in securities, equity linked products, unit trusts and stock options traded in Hong Kong and selected overseas markets and margin financing services to those broking clients.
Commodities and futures broking — provision of broking services in commodities and futures contracts traded in Hong Kong and selected overseas markets.
Corporate finance — provision of corporate finance and advisory services to companies listed in Hong Kong.
Asset management — managing private funds and acting as an investment manager for investment companies.
Financial planning and insurance broking — acting as an agent for the sale of savings plans, unit trusts, general and life insurance and providing advisory services on securities investment and discretionary fund management.
Precious metal contracts trading/broking — provision of dealing and broking trading services on selected precious metals.

There were no significant transactions between the business segments.

Secondary reporting format — Geographical segments

Based on the geographical location of the clients, the Group’s business is divided into seven main geographical areas, namely Hong Kong, Greater China (excluding Hong Kong), Oceania, Switzerland, the United States, United Kingdom and other countries.

There were no significant transactions between the geographical segments.

– 88 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Primary reporting format — Business segments Year ended 31 December 2005

Turnover from external customers Inter-segment turnover Total Segment results Operating profit Finance costs Share of profits of associates Profit before taxation Income tax Profit after taxation Minority interests Profit attributable to equity holders of the Company Segment assets Interests in associates Unallocated assets Total assets Segment liabilities Unallocated liabilities Total liabilities Capital expenditure Depreciation Impairment loss charged on goodwill Other non-cash expenses	Leveraged foreign exchange trading/broking 2005 HK$’000 114,362 118 114,480 18,127 (25) 1,560 157,373 6,730 14,032 1,400 874 — 235	Securities broking 2005 HK$’000 24,579 101 24,680 4,332 (2,060) — 113,902 — 57,901 179 1,288 — 71	Commodities and futures broking 2005 HK$’000 15,986 — 15,986 1,236 — — 25,619 — 15,365 21 37 — 23	Corporate finance 2005 HK$’000 7,718 450 8,168 1,329 (1) — 10,067 — 240 — 9 — 5	Asset Management 2005 HK$’000 3,185 2,588 5,773 959 (1) — 6,767 — 545 — 3 — —	Financial planning/ insurance broking 2005 HK$’000 21,012 — 21,012 (4,836) (1) — 23,905 — 5,475 1,989 523 861 93	Precious metal contracts trading/ broking 2005 HK$’000 28,323 — 28,323 5,574 (2) — 15,041 — 3,528 50 21 — 28	Unallocated 2005 HK$’000 90 7,159 7,249 (2,741) — 2,341 34,438 8,750 20,005 1,988 1,296 — 137	Inter- segment elimination 2005 HK$’000 — (10,416) (10,416) — — — — — — — — — —	Total 2005 HK$’000 215,255 —
										215,255
										23,980
										23,980 (2,090)
										21,890 3,901
										25,791 701
										26,492 384
										26,876
										387,112 15,480 6,617
										409,209
										117,091 1,025
										118,116
										5,627 4,051 861 592

– 89 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Primary reporting format — Business segments Year ended 31 December 2006

Turnover from external customers Inter-segment turnover Total Segment results Operating profit Finance costs Share of profits of associates Profit before taxation Income tax Profit after taxation Minority interests Profit attributable to equity holders of the Company Segment assets Interests in associates Unallocated assets Total assets Segment liabilities Unallocated liabilities Total liabilities Capital expenditure Depreciation Impairment loss charged on trade and other receivables Other non-cash expenses	Leveraged foreign exchange trading/broking 2006 HK$’000 135,694 256 135,950 26,634 (30) 3,463 336,167 — 203,536 4,489 1,255 1,682 645	Securities broking 2006 HK$’000 38,004 280 38,284 9,902 (3,795) — 161,982 — 97,082 1,041 751 — 7	Commodities and futures broking 2006 HK$’000 17,008 (172) 16,836 1,093 — — 79,637 — 58,649 1,549 30 — —	Corporate finance 2006 HK$’000 4,752 1,500 6,252 (350) — — 11,151 — 77 293 12 40 —	Asset Management 2006 HK$’000 1,931 — 1,931 198 — — 5,953 — 70 57 3 — —	Financial planning/ insurance broking 2006 HK$’000 24,933 — 24,933 (5,792) — — 38,253 — 4,268 575 822 — 70	Precious metal contracts trading/ broking 2006 HK$’000 130,247 (3) 130,244 32,131 (10) — 103,787 — 42,732 1,158 77 329 122	Unallocated 2006 HK$’000 2,851 9,373 12,224 (1,650) (25) 2,339 28,171 8,949 7,224 3,820 1,743 — 98	Inter- segment elimination 2006 HK$’000 — (11,234) (11,234) — — — — — — — — — —	Total 2006 HK$’000 355,420 —
										355,420
										62,166
										62,166 (3,860)
										58,306 5,802
										64,108 (11,839)
										52,269 —
										52,269
										765,101 8,949 5,351
										779,401
										413,638 9,996
										423,634
										12,982 4,693 2,051 942

– 90 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Primary reporting format — Business segments Year ended 31 December 2007

Turnover from external customers Inter-segment turnover Total Segment results Operating profit Finance costs Share of profits of associates Profit before taxation Income tax Profit after taxation Minority interests Profit attributable to equity holders of the Company Segment assets Interests in associates Unallocated assets Total assets Segment liabilities Unallocated liabilities Total liabilities Capital expenditure Depreciation Impairment loss charged on trade and other receivables Other non-cash expenses	Leveraged foreign exchange trading/broking 2007 HK$’000 142,379 14 142,393 8,662 (4) — 292,722 — 261,734 1,700 2,332 765 58	Securities broking 2007 HK$’000 82,762 310 83,072 21,330 (4,849) — 210,721 — 110,301 735 395 — —	Commodities and futures broking 2007 HK$’000 10,871 — 10,871 414 (1) — 33,545 — 10,649 198 75 — —	Corporate finance 2007 HK$’000 8,446 604 9,050 967 (1) — 13,567 — 264 458 156 — —	Asset management 2007 HK$’000 558 — 558 (987) — — 5,982 — 64 85 29 — —	Financial planning/ insurance broking 2007 HK$’000 30,091 — 30,091 (6,120) (3) — 30,645 — 5,884 534 1,066 — 104	Precious metal contracts trading/ broking 2007 HK$’000 189,919 — 189,919 41,028 (55) — 241,547 — 68,233 1,081 632 146 —	Unallocated 2007 HK$’000 735 15,010 15,745 (5,439) (3,559) 2,047 65,607 15,288 57,941 2,686 2,242 — 732	Inter- segment elimination 2007 HK$’000 — (15,938) (15,938) — — — — — — — — — —	Total 2007 HK$’000 465,761 —
										465,761
										59,855
										59,855 (8,472)
										51,383 2,047
										53,430 (13,071)
										40,359 (2)
										40,357
										894,336 15,288 2,063
										911,687
										515,070 4,176
										519,246
										7,477 6,927 911 894

– 91 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Primary reporting format — Business segments Six months ended 30 June 2007 (Unaudited)

Turnover from external customers Inter-segment turnover Total Segment results Operating profit Finance costs Share of profits of associates Profit before taxation Income tax Profit after taxation Minority interests Profit attributable to equity holders of the Company Segment assets Interests in associates Unallocated assets Total assets Segment liabilities Unallocated liabilities Total liabilities Capital expenditure Depreciation Impairment loss charged on trade and other receivables Other non-cash expenses	Leveraged foreign exchange trading/broking 2007 HK$’000 67,884 14 67,898 5,756 (6) — 230,525 — 169,362 407 1,051 418 58	Securities broking 2007 HK$’000 33,435 215 33,650 8,557 (2,302) — 220,871 — 147,666 120 158 — —	Commodities and futures broking 2007 HK$’000 5,691 — 5,691 100 (1) — 27,256 — 6,303 50 28 — —	Corporate finance 2007 HK$’000 1,912 301 2,213 (430) — — 10,707 — 30 175 46 — —	Asset management 2007 HK$’000 317 — 317 (273) — — 5,599 — 40 29 8 — —	Financial planning/ insurance broking 2007 HK$’000 13,818 — 13,818 (2,788) (2) — 33,352 — 5,240 192 495 — 33	Precious metal contracts trading/ broking 2007 HK$’000 82,701 — 82,701 16,768 (27) — 198,031 — 52,292 219 241 119 —	Unallocated 2007 HK$’000 409 5,511 5,920 (2,607) (1,630) 1,233 76,271 8,144 5,473 1,789 1,149 — 44	Inter- segment elimination 2007 HK$’000 — (6,041) (6,041) — — — — — — — — — —	Total 2007 HK$’000 206,167 —
										206,167
										25,083
										25,083 (3,968)
										21,115 1,233
										22,348 (5,178)
										17,170 —
										17,170
										802,612 8,144 4,554
										815,310
										386,406 56,786
										443,192
										2,981 3,176 537 135

– 92 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Primary reporting format — Business segments Six months ended 30 June 2008

Turnover from external customers Inter-segment turnover Total Segment results Operating profit Finance costs Share of profits of associates Profit before taxation Income tax Profit after taxation Minority interests Profit attributable to equity holders of the Company Segment assets Interests in associates Unallocated assets Total assets Segment liabilities Unallocated liabilities Total liabilities Capital expenditure Depreciation Impairment loss charged on goodwill Impairment loss charged on trade and other receivables Other non-cash expenses	Leveraged foreign exchange trading/broking 2008 HK$’000 50,103 794 50,897 2,563 (2) — 214,109 — 102,635 10 1,269 — 118 35	Securities broking 2008 HK$’000 21,615 21 21,636 2,686 (564) — 168,553 — 50,911 52 236 — — —	Commodities and futures broking 2008 HK$’000 6,473 — 6,473 487 (2) — 32,326 — 8,647 — 44 — — —	Corporate finance 2008 HK$’000 2,657 300 2,957 (1,054) — — 10,754 — 262 — 110 — — —	Asset management 2008 HK$’000 52 — 52 (618) — — 5,107 — 53 — 21 — — —	Financial planning/ insurance broking 2008 HK$’000 13,999 — 13,999 (3,407) (2) — 32,812 — 8,352 1 536 — 132 28	Precious metal contracts trading/ broking 2008 HK$’000 87,515 111 87,626 8,854 (20) — 89,153 — 30,366 8 411 — 538 —	Unallocated 2008 HK$’000 214 13,413 13,627 (1,834) (857) 1,407 54,595 19,665 33,263 22,142 1,119 399 — 17	Inter- segment elimination 2008 HK$’000 — (14,639) (14,639) — — — — — — — — — — —	Total 2008 HK$’000 182,628 —
										182,628
										7,677
										7,677 (1,447)
										6,230 1,407
										7,637 (2,785)
										4,852 (84)
										4,768
										607,409 19,665 3,535
										630,609
										234,489 5,171
										239,660
										22,213 3,746 399 788 80

Unallocated costs represent corporate expenses. Segment assets consist primarily of intangible assets, fixed assets, receivables and operating cash, and mainly exclude interests in associates, current and deferred tax assets. Segment liabilities comprise operating liabilities and exclude current and deferred tax liabilities. Capital expenditure comprises additions to intangible assets and fixed assets, including additions resulting from acquisitions of subsidiaries.

– 93 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Secondary reporting format — Geographical segments

Turnover

Hong Kong Greater China (excluding Hong Kong) Oceania Switzerland United States United Kingdom Other countries	Year ended 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 149,057 188,487 172,514 27,389 93,920 281,825 26,571 45,369 886 (615) 259 1,280 1 1 1,089 (763) 4,756 1,799 13,615 22,628 6,368 215,255 355,420 465,761	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) 107,937 115,335 85,447 61,171 204 245 4,338 559 443 86 3,160 976 4,638 4,256 206,167 182,628	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) 107,937 115,335 85,447 61,171 204 245 4,338 559 443 86 3,160 976 4,638 4,256 206,167 182,628
			182,628

The following is an analysis of the carrying amount of segment assets, capital expenditure, analyzed by the geographical area in which the assets are located:

Carrying amount of segment assets

Hong Kong Greater China (excluding Hong Kong) Oceania Switzerland United States United Kingdom Other countries Interests in associates Unallocated assets Total assets	As at 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 256,459 501,745 552,786 23,314 75,831 59,191 — 60,691 13,252 24,194 33,218 89,314 — 36,782 55,084 27,031 1,911 87,199 56,114 54,923 37,510 387,112 765,101 894,336 15,480 8,949 15,288 6,617 5,351 2,063 409,209 779,401 911,687	As at 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) 487,944 388,126 110,790 82,246 15,443 18,259 34,107 65,475 72,787 3,922 22,775 26,952 58,766 22,429 802,612 607,409 8,144 19,665 4,554 3,535 815,310 630,609	As at 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) 487,944 388,126 110,790 82,246 15,443 18,259 34,107 65,475 72,787 3,922 22,775 26,952 58,766 22,429 802,612 607,409 8,144 19,665 4,554 3,535 815,310 630,609
			607,409 19,665 3,535
			630,609

– 94 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Capital expenditure

Hong Kong Greater China (excluding Hong Kong) Oceania Switzerland United States United Kingdom Other countries	Year ended 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 1,999 11,697 6,365 2,889 935 999 — 73 48 735 277 38 — — — — — — 4 — 27 5,627 12,982 7,477	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) 2,512 930 460 21,101 1 182 8 — — — — — — — 2,981 22,213	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) 2,512 930 460 21,101 1 182 8 — — — — — — — 2,981 22,213
			22,213

In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of customers. Segment assets and capital expenditures are based on the geographical location of the assets.

The total assets in other countries mainly represent margin and other deposits placed with overseas brokers and financial institutions.

5 STAFF COSTS

Salaries and allowances Equity-settled share-based transactions (Note 23) Defined contribution plans (Note 28)	Year ended 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 51,769 72,942 84,575 — 588 1,802 1,475 1,854 2,109 53,244 75,384 88,486	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) 37,034 39,652 1,354 367 933 1,108 39,321 41,127	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) 37,034 39,652 1,354 367 933 1,108 39,321 41,127
			41,127

Staff costs include directors’ emoluments as set out in Note 29.

– 95 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

6 OTHER OPERATING EXPENSES

Advertising and promotion Auditors’ remuneration Bad debts written off Bank charges Communication expenses Consultancy fee Depreciation Entertainment Equipment rental expenses Impairment of goodwill Impairment loss on trade and other receivables Insurance Legal and professional fee Loss on disposal of fixed assets Miscellaneous expenses Printing and stationery Repairs and maintenance Staff welfare Traveling expenses Computer expenses Exhibition and seminars Postage Water and electricity	Year ended 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 3,541 8,748 5,858 1,771 3,722 4,877 280 — — 312 636 1,353 1,880 3,332 4,813 2,395 7,887 11,600 4,051 4,693 6,927 1,988 2,204 3,128 5,991 5,721 5,811 861 — — — 2,051 911 1,618 2,186 2,349 3,773 3,530 7,273 392 138 793 5,652 5,459 8,477 1,368 2,104 1,995 1,859 1,755 1,172 1,523 1,387 2,331 6,733 8,999 6,936 569 1,062 908 830 542 2,483 862 903 979 589 744 879 48,838 67,803 81,853	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) 2,686 3,519 1,913 1,913 — 10 580 446 2,287 2,107 4,024 5,771 3,176 3,746 1,257 1,623 3,029 3,131 — 399 537 788 692 486 1,417 3,648 102 55 3,090 5,071 1,107 1,028 539 474 1,284 1,333 2,814 3,303 157 374 931 664 529 397 434 440 32,585 40,726	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) 2,686 3,519 1,913 1,913 — 10 580 446 2,287 2,107 4,024 5,771 3,176 3,746 1,257 1,623 3,029 3,131 — 399 537 788 692 486 1,417 3,648 102 55 3,090 5,071 1,107 1,028 539 474 1,284 1,333 2,814 3,303 157 374 931 664 529 397 434 440 32,585 40,726
			40,726

7 FINANCE COSTS

Interest on bank overdrafts Interest on bank loans Interest on other loans Interest on obligation under finance leases	Year ended 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 976 678 725 1,101 3,140 4,102 — 24 3,558 13 18 87 2,090 3,860 8,472	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) 367 95 1,923 530 1,630 793 48 29 3,968 1,447	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) 367 95 1,923 530 1,630 793 48 29 3,968 1,447
			1,447

8 INCOME TAX

Hong Kong profits tax for the six months ended 30 June 2008 has been provided at the rate of 16.5% (2005, 2006 and 2007: 17.5%) on the estimated assessable profit for the period. Taxation on overseas profits has been calculated on the estimated assessable profit for the Relevant Periods at the rates of taxation prevailing in the countries in which the Group operates.

– 96 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The amount of taxation charged to the consolidated income statement:

Current taxation: — Hong Kong profits tax — Overseas taxation — Under/(over) provision in respect of prior years Deferred taxation relating to the origination and reversal of temporary differences (Note 18) Effect of decrease in tax rate on deferred tax balances at 1 January (Note 18) Taxation (credit)/expenses	Year ended 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 3,281 7,834 7,243 390 2,789 2,646 37 160 361 (4,409) 1,056 2,821 — — — (701) 11,839 13,071	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) 3,350 1,626 1,940 850 (587) 227 475 35 — 47 5,178 2,785	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) 3,350 1,626 1,940 850 (587) 227 475 35 — 47 5,178 2,785
			2,785

Reconciliation between tax (credit)/expense and accounting profit at applicable tax rates:

Profit before taxation (excluding share of profits of associates) Notional tax on profit before taxation, calculated at the rate applicable to profits in the countries concerned Tax effect of income not subject to taxation Tax effect of expenses not deductible for taxation purposes Utilisation of previously unrecognised tax losses Effect on opening deferred tax balances resulting from a decrease in tax rate during the period Tax losses for which no deferred income tax assets were recognised Under/(over)-provision in prior years Taxation (credit)/expenses	Year ended 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 21,890 58,306 51,383 3,617 10,414 9,456 (1,124) (2,308) (1,945) 412 1,139 1,031 (5,542) (82) (73) — — — 1,899 2,516 4,241 37 160 361 (701) 11,839 13,071	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) 21,115 6,230 3,593 834 (1,191) (842) 849 235 — (431) — 47 2,514 2,715 (587) 227 5,178 2,785	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) 21,115 6,230 3,593 834 (1,191) (842) 849 235 — (431) — 47 2,514 2,715 (587) 227 5,178 2,785
			834 (842) 235 (431) 47 2,715 227
			2,785

– 97 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

9 PROFIT/(LOSS) ATTRIBUTABLE TO SHAREHOLDERS

The profit/(loss) attributable to shareholders is dealt with in the financial information of the Company as follows:

Profit/(loss) for the year/period	Year ended 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 43,083 22,508 (22,196)	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (4,227) 9,637

10 DIVIDENDS

Dividends payable to equity holders of the Company attributable to the year/period:

Interim dividend paid Final dividend proposed Interim dividend per share Final dividend per share	Year ended 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 — 5,867 6,213 — 6,212 10,393 — 12,079 16,606 n/a 1.5 cents 1.5 cents n/a 1.5 cents 2.5 cents	Six months ended 30 June 2007 2008 HK$’000 HK$’000 6,213 — — — 6,213 — 1.5 cents n/a n/a n/a	Six months ended 30 June 2007 2008 HK$’000 HK$’000 6,213 — — — 6,213 — 1.5 cents n/a n/a n/a
			—
			n/a n/a

The final dividend proposed after the balance sheet date has not been recognised as a liability at the balance sheet date.

11 EARNINGS PER SHARE

(a) Basic earnings per share

The calculation of basic earnings per share for the Relevant Periods are based on the Group’s profit attributable to equity holders and the weighted average number ordinary shares in issue during the year/period respectively as follows:

Profit attributable to equity holders (HK$’000) Weighted average number of ordinary shares	Year ended 31 December 2005 2006 2007 26,876 52,269 40,357 391,130,000 393,209,452 414,173,835	Six months ended 30 June 2007 2008 17,170 4,768 414,130,000 415,490,054	Six months ended 30 June 2007 2008 17,170 4,768 414,130,000 415,490,054
			415,490,054

– 98 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

(b) Diluted earnings per share

The diluted earnings per share for the Relevant Periods are calculated based on the adjusted following weighted average number of ordinary shares which is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares in respect of share options.

Adjusted weighted average number of ordinary shares	Year ended 31 December 2005 2006 2007 391,309,385 393,565,890 N/A	Six months ended 30 June 2007 2008 N/A 419,212,105

The calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Company’s shares) based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options.

Diluted earnings per share for the six months ended 30 June 2007 and year ended 31 December 2007 have not been disclosed as the outstanding share options have no dilutive effects on the basic earnings per share as their exercise prices were above the average market price of the shares during the period/year.

– 99 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

12 INTANGIBLE ASSETS

		Group
Stock Exchange trading rights HK$’000 913 — 913 — 913 — 913 — 913 — — — — — 913 913 913 913	Futures Exchange trading right HK$’000 406 — 406 — 406 — 406 — 406 — — — — — 406 406 406 406	Membership of The Chinese Gold & Silver Exchange Society HK$’000 180 — 180 — 180 — 180 — 180 — — — — — 180 180 180 180	Goodwill on acquisition of subsidiaries HK$’000 785 76 861 4,973 5,834 399 6,233 45 6,278 — 861 861 399 1,260 — 4,973 5,372 5,018	Total HK$’000 2,284 76
				2,360 4,973
				7,333 399
				7,732 45
				7,777
				— 861
				861 399
				1,260
				1,499
				6,472
				6,871
				6,517

– 100 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

13 FIXED ASSETS

Cost At 1 January 2005 Additions Disposals Exchange difference At 31 December 2005 and 1 January 2006 Additions through acquisition of a subsidiary Additions Disposals Reclassification Exchange difference At 31 December 2006 and 1 January 2007 Additions through acquisition of a subsidiary Additions Disposals Exchange difference At 31 December 2007 and 1 January 2008 Additions Write-off Exchange difference At 30 June 2008	Freehold land and buildings HK$’000 — — — — — 2,157 — — — 168 2,325 — — — 200 2,525 21,057 — 108 23,690	Leasehold improvements HK$’000 1,639 2,284 (222) (3) 3,698 — 3,282 (880) — (9) 6,091 — 3,631 (1,219) 20 8,523 291 — 138 8,952	Group Furniture & fixtures Office & computer equipment HK$’000 HK$’000 1,507 14,886 941 2,187 (16) (2,088) — (13) 2,432 14,972 1,270 2,435 492 5,665 (45) (5,394) (66) 66 138 194 4,221 17,938 103 — 2,300 1,348 (594) (507) 157 266 6,187 19,045 111 754 (376) (362) 70 107 5,992 19,544	Motor vehicles HK$’000 1,684 63 — — 1,747 117 2,028 — — 18 3,910 — — — 29 3,939 — — 30 3,969	Total HK$’000 19,716 5,475 (2,326) (16) 22,849 5,979 11,467 (6,319) — 509 34,485 103 7,279 (2,320) 672 40,219 22,213 (738) 453 62,147

– 101 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Accumulated depreciation At 1 January 2005 Charge for the year Disposals Exchange difference At 31 December 2005 and 1 January 2006 Additions through acquisition of a subsidiary Charge for the year Disposals Reclassification Exchange difference At 31 December 2006 and 1 January 2007 Additions through acquisition of a subsidiary Charge for the year Disposals Reclassification Exchange difference At 31 December 2007 and 1 January 2008 Charge for the period Write-back Exchange difference At 30 June 2008 Net book value At 31 December 2005 At 31 December 2006 At 31 December 2007 At 30 June 2008	Freehold land and buildings HK$’000 — — — — — 115 9 — — 9 133 — 37 — — 12 182 71 — (1) 252 — 2,192 2,343 23,438	Leasehold improvements HK$’000 753 894 (129) (8) 1,510 — 1,277 (795) — (11) 1,981 — 2,412 (907) — 16 3,502 1,310 — 118 4,930 2,188 4,110 5,021 4,022	Group Furniture & fixtures Office & computer equipment HK$’000 HK$’000 526 8,461 344 2,696 (12) (1,584) (2) — 856 9,573 348 1,814 525 2,460 (29) (5,349) (1) 1 35 140 1,734 8,639 58 — 973 2,888 (309) (304) 1 (1) 66 198 2,523 11,420 591 1,488 (315) (361) 30 57 2,829 12,604 1,576 5,399 2,487 9,299 3,664 7,625 3,163 6,940	Motor vehicles HK$’000 1,396 117 — (1) 1,512 44 422 — — 5 1,983 — 617 — — 12 2,612 286 — 10 2,908 235 1,927 1,327 1,061	Total HK$’000 11,136 4,051 (1,725) (11) 13,451 2,321 4,693 (6,173) — 178 14,470 58 6,927 (1,520) — 304 20,239 3,746 (676) 214 23,523 9,398 20,015 19,980 38,624

The Group’s freehold land and buildings are located outside Hong Kong.

– 102 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Cost At 1 January 2005 Additions Disposals At 31 December 2005 and 1 January 2006 Additions Disposals At 31 December 2006 and 1 January 2007 Additions Disposals At 31 December 2007, 1 January 2008 and 30 June 2008 Accumulated depreciation At 1 January 2005 Charge for the year Disposals At 31 December 2005 and 1 January 2006 Charge for the year Disposals At 31 December 2006 and 1 January 2007 Charge for the year Disposals At 31 December 2007 and 1 January 2008 Charge for the period At 30 June 2008	Leasehold improvements HK$’000 — 597 — 597 629 — 1,226 48 (1,124) 150 — 185 — 185 309 — 494 400 (812) 82 28 110	Company Furniture & fixtures Office & computer equipments HK$’000 HK$’000 154 38 145 177 (4) — 295 215 35 55 (37) (24) 293 246 — 78 (58) (175) 235 149 63 15 44 27 (2) — 105 42 56 45 (23) (7) 138 80 55 53 (32) (63) 161 70 10 10 171 80	Total HK$’000 192 919 (4) 1,107 719 (61) 1,765 126 (1,357) 534 78 256 (2) 332 410 (30) 712 508 (907) 313 48 361

– 103 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Net book value At 31 December 2005 At 31 December 2006 At 31 December 2007 At 30 June 2008	Leasehold improvements HK$’000 412 732 68 40	Company Furniture & fixtures Office & computer equipment HK$’000 HK$’000 190 173 155 166 74 79 64 69	Total HK$’000 775
			1,053
			221
			173

(a) Net book value of office and computer equipment under finance lease for the Group as at 31 December 2005, 2006 and 2007, and 30 June 2008 amounted to HK$285,133, HK$1,472,022, HK$1,312,710 and HK$1,130,955 respectively.

14 INVESTMENT IN SUBSIDIARIES

Investment at cost, unlisted shares	2005 HK$’000 218,130	Company As at 31 December 2006 2007 HK$’000 HK$’000 218,130 218,286	As at 30 June 2008 HK$’000 218,286

(a) The amounts due from/(to) subsidiaries are unsecured, interest free and repayable on demand.
(b) The following is a list of subsidiaries as at 30 June 2008:

				Interest	Interest
	Place of	Principal activities and	Particulars of issued	held	held
Name	incorporation	place of operation	share capital	directly	indirectly
Hantec International	Hong Kong	Leveraged foreign	100 ordinary shares of	—	100%
Limited (‘‘HIL’’)1		exchange trading	HK$1 each, and
		in Hong Kong	100,000,000 non-voting
			deferred shares of
			HK$1 each
Hantec International	Hong Kong	Securities broking	20,000,100 ordinary shares	—	100%
Finance Group		and margin	of HK$1 each, and
Limited (‘‘HIFGL’’)1		financing services	50,000,000 non-voting
		in Hong Kong	deferred shares of
			HK$1 each
HT Futures Limited	Hong Kong	Commodities and	40,000,100 ordinary shares	—	100%
(‘‘HTFL’’)1		futures broking in	of HK$1 each, and
		Hong Kong	10,000,000 non-voting
			deferred shares of
			HK$1 each

– 104 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

				Interest	Interest
	Place of	Principal activities and	Particulars of issued	held	held
Name	incorporation	place of operation	share capital	directly	indirectly
Hantec Investment	Hong Kong	Financial planning in	3,000,100 ordinary shares	—	100%
Consultant Limited		Hong Kong	of HK$1 each, and
(‘‘HICL’’)1			5,500,000 non-voting
			deferred shares of
			HK$1 each
Hantec Bullion	Hong Kong	Trading and broking	7,500,000 ordinary shares	—	100%
Investments Limited		of precious metal	of HK$1 each
(‘‘HBIL’’)1		contracts in Hong
		Kong
Hantec Asset	Hong Kong	Asset management in	7,000,100 ordinary shares	—	100%
Management Limited		Hong Kong	of HK$1 each, and
(‘‘HAML’’)1			2,000,000 non-voting
			deferred shares of
			HK$1 each
Hantec Capital Limited	Hong Kong	Corporate finance	100 ordinary shares of	—	100%
(‘‘HCL’’)1		services in Hong	HK$1 each, and
		Kong	21,000,000 non-voting
			deferred shares of
			HK$1 each
Hantec Financial Services	Hong Kong	Investment holding	100 ordinary shares of	—	100%
Limited (‘‘HFSL’’)1		in Hong Kong	HK$1 each
Hantec Business	Hong Kong	Investment holding	1,000,000 ordinary shares	—	100%
Consultant Limited		in Hong Kong	of HK$1 each
(‘‘HBCL’’)1
Chinacorp Nominees	Hong Kong	Provision of	100 ordinary shares of	—	100%
Limited (‘‘CNL’’)1		administrative	HK$1 each and 10,000
		support services	non-voting deferred
		in Hong Kong	shares of HK$1 each
Hantec Wealth	Hong Kong	Financial planning	500,000 ordinary shares of	—	100%
Management Advisor		and insurance	HK$1 each
Limited (‘‘HWMAL’’)1		broking in Hong
		Kong
Hantec Taiwan	Hong Kong	Investment holding	10,000 ordinary shares of	—	100%
Investments Limited		in Hong Kong	HK$1 each
(‘‘HTIL’’)1
亨達證券投資顧問股份有	Taiwan	Wealth management,	7,000,000 ordinary shares	—	100%
限公司(‘‘亨達證券’’)		investment	of NT$10 each
(formerly named 亨達		advisory and
富林證券投資顧問股份		consultancy
有限公司)1		services in Taiwan

– 105 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

				Interest	Interest
	Place of	Principal activities and	Particulars of issued	held	held
Name	incorporation	place of operation	share capital	directly	indirectly
Hantec Financial Services	Switzerland	Trading and broking	1,000,000 ordinary shares	—	100%
(Suisse) SA (‘‘HFSS’’)1		services in foreign	of CHF1 each
		exchange and
		precious metal
		contracts in
		Switzerland
HT (BVI) Limited	British Virgin	Investment holding	7 ordinary shares of US$1	100%	—
(‘‘HTBVIL’’)1	Islands	in Hong Kong	each
北京康景商業顧問有限公	People’s Republic	Consultation services	US$150,000 registered and	—	100%
司* (‘‘康景’’)2	of China	in the People’s	paid-up capital
		Republic of China
HT (Overseas) Limited	Macau	Provision of	MOP25,000 registered and	—	100%
(‘‘HTOL’’)3		administrative	paid-up capital
		support services
		in Macau
Hantec Strategic (BVI)	British Virgin	Investment holding	50,000 ordinary shares of	100%	—
Holdings Limited	Islands	in Hong Kong	US$1 each
(‘‘HSBVIHL’’)4
Macro Jess Ltd.	British Virgin	Investment holding	1 ordinary share of US$1	100%	—
(‘‘MJL’’)4	Islands	in Hong Kong	each
Hantec Strategic Plan	British Virgin	Investment holding	1 ordinary share of US$1	100%	—
(HK) Limited	Islands	in Hong Kong	each
(‘‘HSPL’’)4
Hantec (New Zealand)	New Zealand	Dormant	10,000 ordinary shares of	—	100%
Investment Company			NZ$1 each
Limited (‘‘HNZICL’’)4
Cosmos Hantec	New Zealand	Trading and broking	1,000,000 ordinary shares	—	100%
Investment (NZ)		services in foreign	of NZ$1 each
Limited (‘‘CHI’’)5		exchange and
		precious metal
		contracts in New
		Zealand
Cosmos Hantec	Macau	Provision of	MOP25,000 registered and	—	100%
International		administrative	paid-up capital
Investments Limited		support services
(‘‘CHII’’)6		in Macau
Hantec International	British Virgin	Investment holding	1 ordinary share of US$1	100%	—
Enterprises Limited	Islands	in Hong Kong	each
(‘‘HIEL’’)7

– 106 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

				Interest	Interest
	Place of	Principal activities and	Particulars of issued	held	held
Name	incorporation	place of operation	share capital	directly	indirectly
Hantec Investimentos Do	Brasil	Dormant	10,000 ordinary shares of	—	100%
Brasil Limitada			R$1 each
(‘‘HIDBL’’)7
Hantec (UK)	British Virgin	Dormant	10,000 ordinary shares of	100%	—
Incorporated	Islands		US$1 each
(‘‘HUKI’’)7
Hantec Canada	British Virgin	Investment holding	10,000 ordinary shares of	100%	—
Investments Limited	Islands	in Hong Kong	US$1 each
(‘‘HCADIL’’)7
Ringus Solution	Hong Kong	IT services	1,240,000 ordinary shares	—	75%
Enterprise Limited			of HK$1 each
(‘‘RSEL’’)7
Hantec Markets	Australia	Leveraged foreign	1,000,000 ordinary shares	—	100%
(Australia) Pty		exchange and	of AU$1 each
Limited7		bullion trading
俊森實業有限公司7	Taiwan	Electronic product	NT$5,000,000 registered	100%	—
		trading and	and paid up capital
		holding of
		properties
北京國際經濟技術有限責	People’s Republic	Business consultancy	RMB700,000 registered	—	91%
任公司* (‘‘經濟公司’’)8	of China		and paid-up capital
Hantec Asset	Cayman Islands	Asset management in	1 ordinary share of US$1	—	100%
Management		Hong Kong	each
(Cayman) Limited
(‘‘HAMCL’’)9
北京亨達投資諮詢顧問	People’s Republic	Business consultancy	HK$4,000,000 registered	—	100%
有限公司* (‘‘北京亨	of China		and paid-up capital
達’’)10

Incorporated in the People’s Republic of China as a Wholly Foreign Owned Enterprises limited liability company.

Notes:

The statutory financial statements of these companies for the year ended 31 December 2005 were audited by PricewaterhouseCoopers. KPMG were auditors of these companies for the years ended 31 December 2006 and 2007.
The statutory financial statements of this company for the years ended 31 December 2005, 2006 and 2007 were audited by Beijing Sen He Guang Certified Public Accountants Co., Ltd.

– 107 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The financial statements of this company have not been audited for the year ended 31 December 2005 as they were newly incorporated in 2005. The financial statements of these companies for the years ended 31 December 2006 and 2007 were audited by HMV & Associates Certified Public Accountants and CSC & Associates respectively.
The financial statements of these companies have not been audited as there is no requirement to prepare audited financial statements under the legislation of their respective jurisdiction of incorporation.
KPMG were statutory auditors of this company for the years ended 31 December 2005, 2006 and 2007.
The financial statements of this company for the years ended 31 December 2005, 2006 and 2007 were audited by Chan Hio Wan, Certified Public Accountant, HMV & Associates Certified Public Accountants and CSC & Associates respectively.
The financial statements of these companies have not been audited as they are newly incorporated.
This company was newly acquired in 2007. The statutory financial statements of this company for the year ended 31 December 2007 were audited by Beijing Sen He Guang Certified Public Accountants Co. Ltd.
The financial statements of this company have not been audited for the year ended 31 December 2005 as it was newly incorporated in 2005. KPMG were auditors of the company for the years ended 31 December 2006 and 2007.
This company was newly incorporated in 2007. The statutory financial statements of this company for the year ended 31 December 2007 were audited by Beijing Sen He Guang Certified Public Accountants Co. Ltd.

– 108 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

15 INTERESTS IN ASSOCIATES

Share of net assets at 1 January Share of associates’ results for the year/period — profit before taxation — taxation — minority interest Acquisition of associates Disposal of an associate Dividend income from an associate Exchange difference Share of net assets at 31 December/30 June Loan to an associate Goodwill on acquisition less impairment Investment at cost, unlisted shares	2005 HK$’000 12,468 ------------- 5,652 (1,741) (10) 3,901 ~~-------------~~ 16,369 — — (549) (888) 14,932 — 548 15,480 7,296	Group As at 31 December 2006 2007 HK$’000 HK$’000 14,932 8,401 ------------- ------------- 8,546 2,947 (2,744) (900) — — 5,802 2,047 ~~-------------~~ ~~-------------~~ 20,734 10,448 — 1,171 (9,988) — (1,673) (1,637) (672) (242) 8,401 9,740 — 5,000 548 548 8,949 15,288 6,000 12,171	As at 30 June 2008 HK$’000 9,740 ------------- 2,043 (636) —
			1,407 ~~-------------~~
			11,147 — (848) (1,719) 537
			9,117 10,000 548
			19,665
			17,171

The loan to an associate is unsecured, interest free and repayable on demand.

The Group’s interests in its principal associates, all of which are unlisted, are as follows:

Name Particulars of issued shares held Country of incorporation 2005 Cosmos Hantec Investment (NZ) Limited (‘‘CHI’’)1 300,000 ordinary shares of NZ$1 each New Zealand 元太外匯經紀股份有限公司 (‘‘元太’’)2 2,400,000 ordinary shares of NT$10 each Taiwan	Assets HK$’000 36,889 10,621	Liabilities HK$’000 30,159 2,419	Revenue HK$’000 40,309 8,782	Profit/ (loss) % of interest held indirectly HK$’000 1,560 30% 2,341 20% 3,901
	47,510	32,578	49,091

– 109 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Assets HK$’000 — 10,622	Liabilities HK$’000 — 2,221	Revenue HK$’000 41,580 9,274
10,622	2,221	50,854
10,357 8,753 848	1,583 8,635 —	9,004 222 —
19,958	10,218	9,226
10,873 11,811	2,346 11,220	5,241 393
22,684	13,566	5,634

From 1 January 2006 to 29 September 2006.

Notes:

KPMG were statutory auditors of this company for the years ended 31 December 2005, 2006 and 2007.
The financial statements of this company for the years ended 31 December 2005, 2006 and 2007 were audited by Dinkam & CO., CPAs.
The financial statements of this company for the year ended 31 December 2007 was audited by Andrew K. C. Lai & Company, CPAs.
The financial statements of these companies have not been audited as they were newly incorporated in 2007.

– 110 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

16 OTHER ASSETS

Group
As at 31 December
2005
2006
2007
HK$’000
HK$’000
HK$’000
Stock Exchange stamp duty deposit
75
150
250
Stock Exchange Fidelity Fund deposit
100
100
100
Stock Exchange Compensation Fund deposit
100
100
100
Guarantee Fund deposits with the Hong
Kong Securities Clearing Company
Limited
100
100
100
Statutory deposits and deposits with the
Hong Kong Futures Exchange Limited
(‘‘HKFE’’)
1,570
3,010
1,500
Statutory deposits with the Hong Kong
Securities and Futures Commission
(‘‘SFC’’)
200
200
200
Reserve fund deposit with the SEHK
Options Clearing House Limited
1,664
1,542
1,640
The Chinese Gold & Silver Exchange Society
— Electronic trading deposit
—
—
—
3,809
5,202
3,890
17
AVAILABLE-FOR-SALE FINANCIAL ASSETS
As at 31 December
2005
2006
2007
HK$’000
HK$’000
HK$’000
Fair value of listed and unlisted securities
held for non-trading purposes
At 1 January
3,267
12,089
10,236
Additions
6,331
136
—
Disposal
Realised profit on available-for-sale
financial assets (Note 23)
—
—
—
Revaluation surplus/(deficit) transferred to
equity (Note 23)
2,491
(1,989)
2,057
At 31 December/30 June
12,089
10,236
12,293
There were no impairment provisions on available-for-sale financial assets.
Available-for-sale financial assets include the following:
As at 31 December
2005
2006
2007
HK$’000
HK$’000
HK$’000
Unlisted securities
12,089
10,236
12,293

As at 30 June
2008
HK$’000
250
100
100
100
1,500
150
1,569
200
3,969
As at 30 June
2008
HK$’000
12,293
848
(9,598)
(2,558)
(1)
984
As at 30 June
2008
HK$’000
984

– 111 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

18 DEFERRED INCOME TAX

Deferred taxation is calculated in full on temporary differences under the liability method using a principal taxation rate of 16.5% (2005, 2006 and 2007: 17.5%).

Deferred tax assets Deferred tax liabilities Deferred tax assets Deferred tax liabilities	2005 HK$’000 (5,431) 175 (5,256) 2005 HK$’000 — — —	Group As at 31 December 2006 2007 HK$’000 HK$’000 (4,853) (1,549) 653 170 (4,200) (1,379) Company As at 31 December 2006 2007 HK$’000 HK$’000 — — — — — —	As at 30 June 2008 HK$’000 (1,395) 98 (1,297) As at 30 June 2008 HK$’000 — — —

The gross movement on the deferred income tax account is as follows:

Beginning of the year/period Effect of change in exchange rate Effect of decrease in tax rate (Note 8) Deferred taxation charged to income statement (Note 8) End of the year/period Beginning of the year/period Deferred taxation charged to income statement End of the year/period	2005 HK$’000 (865) 18 — (4,409) (5,256) 2005 HK$’000 — — —	Group As at 31 December 2006 2007 HK$’000 HK$’000 (5,256) (4,200) — — — — 1,056 2,821 (4,200) (1,379) Company As at 31 December 2006 2007 HK$’000 HK$’000 — — — — — —	As at 30 June 2008 HK$’000 (1,379) — 47 35 (1,297) As at 30 June 2008 HK$’000 — — —

– 112 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

The movement in deferred tax assets and liabilities during the Relevant Periods without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows:

At 1 January 2005 Effect on change in exchange rate Credited to income statement At 31 December 2005 and at 1 January 2006 Charged to income statement At 31 December 2006 and at 1 January 2007 Charged to income statement At 31 December 2007 and at 1 January 2008 Effective decrease in tax rate on deferred tax balances at 1 January Charged to income statement At 30 June 2008 At 1 January 2005 Charged/(credited) to income statement At 31 December 2005 and at 1 January 2006 (Credited)/charged to income statement At 31 December 2006 and at 1 January 2007 (Credited)/charged to income statement At 31 December 2007 and at 1 January 2008 (Credited)/charged to income statement At 30 June 2008	Accelerated tax depreciation HK$’000 931 — (265) 666 708 1,374 5 1,379 (78) (240) 1,061 Accelerated tax depreciation HK$’000 15 3 18 (12) 6 — 6 (6) —	Group Tax losses HK$’000 (1,796) 18 (4,144) (5,922) 348 (5,574) 2,816 (2,758) 125 275 (2,358) Company Tax losses HK$’000 (15) (3) (18) 12 (6) — (6) 6 —	Total HK$’000 (865) 18 (4,409) (5,256) 1,056 (4,200) 2,821 (1,379) 47 35 (1,297) Total HK$’000 — — — — — — — — —

Deferred income tax assets are recognised for tax losses carried forward to the extent that realisation of the related tax benefit through the future taxable profits is probable. As at 31 December 2005, 2006 and 2007, and 30 June 2008, the Group has unrecognised tax losses of HK$21,244,729, HK$31,760,067, HK$47,943,375 and HK$56,778,716 respectively to carry forward against future taxable income. The tax losses do not expire under current tax legislation.

– 113 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

19 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

Listed securities: Equity securities — Hong Kong Market value of listed securities Listed securities: Equity securities — Hong Kong Market value of listed securities		Group As at 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 1,305 16,264 5,602 1,305 16,264 5,602 Company As at 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 733 1,022 1,379 733 1,022 1,379	As at 30 June 2008 HK$’000 5,197
			5,197
		2005 HK$’000 733 733	As at 30 June 2008 HK$’000 1,243
			1,243

Change in fair values of financial assets at fair value through profit or loss is recorded in the income statement.

20 TRADE AND OTHER RECEIVABLES

Trade receivables from clients Less: impairment allowance of trade receivables (Note (b)(i)) Margin and other trade related deposits with brokers and financial institutions (Note (c)) Margin finance loans (Note (d)) Trade receivables from clearing houses Total trade receivables, net Rental and utilities deposits Prepayments and other receivables Less: impairment allowance of other receivable (Note (b)(ii)) Prepayments and other receivables, net Total trade and other receivables	2005 HK$’000 25,973 — 100,264 59,550 28 185,815 ------------ 4,778 ------------ 6,280 — 6,280 ------------ 196,873	Group As at 31 December 2006 2007 HK$’000 HK$’000 99,114 105,741 (1,327) (394) 233,654 247,022 66,619 101,248 6,555 109 404,615 453,726 ------------ ------------ 5,788 6,076 ------------ ------------ 15,892 11,714 — — 15,892 11,714 ------------ ------------ 426,295 471,516	As at 30 June 2008 HK$’000 94,765 (1,044) 94,413 63,589 2
			251,725 ------------ 6,392 ------------ 6,932 (132)
			6,800 ------------
			264,917

– 114 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Rental and utilities deposits Prepayments and other receivables Total other receivables	2005 HK$’000 245 883 1,128	Company As at 31 December 2006 2007 HK$’000 HK$’000 364 529 920 8,360 1,284 8,889	As at 30 June 2008 HK$’000 700 2
			702

The carrying amounts of trade and other receivables approximate their fair values.

(a) As at 31 December 2005, 2006, 2007 and 30 June 2008, the aging analysis of the trade receivables was as follows:

Current 30–60 days Over 60 days	2005 HK$’000 184,717 301 797 185,815	Group As at 31 December 2006 2007 HK$’000 HK$’000 400,447 447,349 193 121 3,975 6,256 404,615 453,726	As at 30 June 2008 HK$’000 241,305 52 10,368
			251,725

(b) (i) The movement in the impairment allowance of trade receivables during the year/period was as follows:

At 1 January Impairment loss charged Uncollectible amounts written off Exchange difference At 31 December	Group As at 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 — — 1,327 — 2,051 911 — (758) (1,924) — 34 80 — 1,327 394	As at 30 June 2008 HK$’000 394 656 — (6
		1,044

(ii) The movement in the impairment allowance of other receivables during the year was as follows:

At 1 January Impairment loss charged Uncollectible amounts written off Exchange difference At 31 December	Group As at 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 — — — — — — — — — — — — — — —	As at 30 June 2008 HK$’000 — 132 — —
		132

– 115 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

(c) The Group undertakes foreign exchange transactions, precious metal contracts and executes client trades on overseas commodities and futures contracts with recognised counterparties, local or overseas brokers as appropriate. A recognised counterparty is a counterparty of a licensed leveraged foreign exchange trader recognised under the Securities and Futures Ordinance which includes authorised institutions under the Hong Kong Banking Ordinance. Trade receivables at the end of the Relevant Periods include margin deposits and floating profits in respect of transactions and open positions in leveraged foreign exchange, precious metal contracts and commodities and futures trading with recognised counterparties and brokers and are considered current. For those cash securities trading clients, it normally takes two to three days to settle after trade execution. These outstanding unsettled trades due from clients are also reported as trade receivables.
(d) The margin clients of the securities broking business are required to pledge their shares to the Group for credit facilities for securities trading. The amount of credit facilities granted to them is determined by the discounted value of shares acceptable by the Group. The fair value of shares accepted as collateral as at 31 December 2005, 2006 and 2007, and 30 June 2008 amounted to HK$185,838,515, HK$194,860,593, HK$332,775,826 and HK$174,627,105 and fair value of collaterals that have been repledged amounted to HK$37,458,800, HK$11,262,720, HK$12,160,000 and HK$2,500,000 respectively.
(e) Credits are extended to other clients on a case-by-case basis in accordance with the financial status of clients such as their financial conditions, trading records, business profile and collateral available to the Group. Clients trading in leveraged foreign exchange contracts, commodities and futures contracts, precious metal contracts and obtaining securities margin financing from the Group are required to observe the Group’s margin policies. For leveraged foreign exchange contracts, commodities and futures contracts and precious metal contracts, initial margins are normally required before trading and thereafter clients are normally required to keep the equity position at a prescribed maintenance margin level.
(f) The Group maintains designated accounts with The SEHK Options Clearing House Limited (‘‘SEOCH’’) and HKFE Clearing Corporation Limited (‘‘HKFECC’’) as a result of its normal business transactions. At 31 December 2005, 2006 and 2007, and 30 June 2008, the designated accounts with SEOCH and HKFECC not otherwise dealt with in this financial information amounted to HK$1,304,984, HK$367,341, HK$277,912, HK$654,325 and HK$10,140,046, HK$14,353,770, HK$30,482,157, HK$22,451,318 respectively.
(g) The Group has no concentration of credit risk with respect to trade receivables and margin loans, as the Group has a large number of customers, widely dispersed. In addition, margin and trade related deposits are deposited with high-credit-quality financial institutions.
(h) The effective interest rates charged on trade receivables and margin loans and margins and other trade related deposits at the balance sheet dates were as follows:

				As at
		As at 31 December		30 June
Group	2005	2006	2007	2008
Trade receivables and margin
loans	7.75%–15.75%	7.75%–15.75%	6.75%–14.75%	5.25%–13.25%
Margins and other related
deposits	1.5%–4.3125%	1.75%–5.125%	1.2%–4.18%	0.1%–2.18%

– 116 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

21 BANK BALANCES AND CASH

Cash in hand Bank balances — pledged — general accounts By maturity: Bank balances — current and savings accounts — fixed deposits (maturing within three months) — fixed deposits (maturing over three months) Cash in hand Bank balances — pledged — general accounts By maturity: Bank balances — current and savings accounts	2005 HK$’000 638 ------------- 23,082 138,419 161,501 ------------- 162,139 116,697 44,804 — 161,501 2005 HK$’000 17 ------------- — 8,380 8,380 ~~-------------~~ 8,397 8,380 8,380	Group As at 31 December 2006 2007 HK$’000 HK$’000 554 422 ------------- ------------- 12,689 15,706 267,374 358,056 280,063 373,762 ------------- ------------- 280,617 374,184 245,752 266,755 34,311 99,793 — 7,214 280,063 373,762 Company As at 31 December 2006 2007 HK$’000 HK$’000 23 30 ------------- ------------- — — 874 19,163 874 19,163 ~~-------------~~ ~~-------------~~ 897 19,193 874 19,163 874 19,163	As at 30 June 2008 HK$’000 150 ------------- 19,084 267,967
			287,051 -------------
			287,201
			159,667 114,322 13,062
			287,051
			As at 30 June 2008 HK$’000 15 ------------- — 3,114
			3,114 ~~-------------~~
			3,129
			3,114
			3,114

As at 31 December 2005, 2006 and 2007, and 30 June 2008, bank deposits amounting to HK$10,762,271, HK$11,143,076, HK$11,546,863 and HK$11,636,768 have been pledged to a bank as security for the provision of a HK$26 million, HK$26 million, HK$22 million and HK$26 million securities broking facility respectively.

In addition, as at 31 December 2005, 2006 and 2007, and 30 June 2008, bank deposits amounting to HK$12,319,973, HK$1,546,202, HK$1,673,659 and HK$4,925,026 respectively have been pledged to a financial institution as security for the provision of leveraged foreign exchange broking.

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APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Also, as at 31 December 2005, 2006 and 2007, and 30 June 2008, bank deposits amounting to HK$nil, HK$nil, HK$2,485,952 and HK$2,522,005 respectively have been pledged to a financial institution as security for the provision of bullion trading facilities.

The subsidiaries of the Group maintained segregated trust accounts with authorised institutions as a result of their respective business activities. As at 31 December 2005, 2006 and 2007, and 30 June 2008, segregated trust accounts not otherwise dealt with in this financial information amounted to HK$226,594,219, HK$349,983,448, HK$255,679,278 and HK$205,068,482 respectively.

Cash and cash equivalents

Note Cash in hand Bank balances — pledged — general accounts Cash and cash equivalents in the consolidated balance sheet Bank balances — pledged — fixed deposits (maturing over three months) Secured bank overdrafts 26 Unsecured bank overdrafts 26 Unsecured short-term bank loans 26 Cash and cash equivalents in the consolidated cash flow statement	2005 HK$’000 638 23,082 138,419 162,139 (23,082) — 139,057 (13,586) (5,141) (10,000) 110,330	Group As at 31 December 2006 2007 HK$’000 HK$’000 554 422 12,689 15,706 267,374 358,056 280,617 374,184 (12,689) (15,706) — (7,214) 267,928 351,264 (4,511) (4,674) (6,538) (18) (10,000) (12,000) 246,879 334,572	As at 30 June 2008 HK$’000 150 19,084 267,967 287,201 (19,084) (13,062) 255,055 — (3) (2,000) 253,052

– 118 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

22 SHARE CAPITAL

At 31 December 2005, 2006 and 2007, and 30 June 2008 At 1 January 2005 and 31 December 2005 Shares issued (note a) At 31 December 2006 Shares issued (note b) At 31 December 2007 Shares issued (note c) At 30 June 2008	Authorised Ordinary shares of HK$0.10 each No. of shares Nominal value ’000 HK$’000 1,000,000 100,000 Issued and fully paid Ordinary shares of HK$0.10 each No. of shares Nominal value ’000 HK$’000 391,130 39,113 23,000 2,300 414,130 41,413 300 30 414,430 41,443 3,460 346 417,890 41,789	Authorised Ordinary shares of HK$0.10 each No. of shares Nominal value ’000 HK$’000 1,000,000 100,000 Issued and fully paid Ordinary shares of HK$0.10 each No. of shares Nominal value ’000 HK$’000 391,130 39,113 23,000 2,300 414,130 41,413 300 30 414,430 41,443 3,460 346 417,890 41,789
		41,413 30
		41,443 346
		41,789

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All ordinary shares rank equally with regard to the Company’s residual assets.

(a) During the year ended 31 December 2006, the Company issued 23,000,000 ordinary shares of HK$0.1 each to the original shareholders of Cosmos Hantec Investment (NZ) Limited (‘‘CHI’’) as part of the purchase consideration of CHI Group. The fair value of the shares issued at the date of exchange, 29 September 2006, amounted to HK$16.79 million (HK$0.73 per share).
(b) During the year ended 31 December 2007, the subscription rights attached to 300,000 share options were exercised at the subscription price of HK$0.88, resulting in the issue of 300,000 shares of HK$0.10 each for a total consideration, before expenses, of HK$264,000. HK$60,600 was transferred from capital reserves to the share premium account.
(c) During the period ended 30 June 2008, the subscription rights attached to 3,460,000 share options were exercised at the subscription price of HK$0.88, resulting in the issue of 3,460,000 shares of HK$0.10 each for a total consideration, before expenses, of HK$3,044,800. HK$698,920 was transferred from capital reserves to the share premium account.

– 119 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Capital management

The Group’s primary objectives when managing capital are to safeguard the Group’s ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders, by pricing products and services commensurately with the level of risk and by securing access to finance at a reasonable cost. In addition, certain subsidiaries of the Group licensed by the SFC are obliged to meet the regulatory liquid capital requirements under the Securities and Futures (Financial Resources) Rules (‘‘SF(FR)R’’) at all times.

The Group actively and regularly reviews and manages its capital structure to maintain a balance between the higher shareholder returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position, and make adjustments to the capital structure in light of changes in economic conditions. For the licensed subsidiaries, the Group ensures each of them maintains liquid capital level adequate to support the activities level with sufficient buffer to accommodate the increase in liquidity requirements arising from potential increases in business activities. SF(FR)R returns are filed to the SFC by the licensed subsidiaries on monthly or bi-annually basis as required. During the Relevant Periods all the licensed subsidiaries complied with the liquid capital requirements under the SF(FR)R at all times.

Consistent with industry practice, the Group monitors its capital structure on the basis of a net debt-toadjusted capital ratio. For this purpose, the Group defines net debt as total debt (which includes interestbearing loans and borrowings, trade and other payables and obligations under finance leases) plus unaccrued proposed dividends, less cash and cash equivalents. Adjusted capital comprises all components of equity, less unaccrued proposed dividends.

During the Relevant Periods, the Group’s strategy was to maintain the net debt-to-adjusted capital ratio below 55%. In order to maintain or adjust the ratio, the Group may adjust the amount of dividends paid to shareholders, issue new shares, raise new debt financing or sell assets to reduce debt.

– 120 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The net debt-to-adjusted capital ratios at 31 December 2005, 2006 and 2007, and 30 June 2008 were as follows:

Note Current liabilities: Trade and other payables 25 Short-term loans and bank overdrafts 26 Obligations under finance leases 24 Secured mortgage loan 26 Loan notes 27 Non-current liabilities: Obligations under finance leases 24 Secured mortgage loan 26 Loan notes 27 Total debts Add: Proposed dividends 10 Less: Cash and cash equivalents 21 Net debts/(assets) Total equity Less: Proposed dividends 10 Adjusted capital Net debt-to-adjusted capital ratio	As at 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 88,103 392,330 454,810 28,727 21,049 16,692 107 154 537 — — — — — — 116,937 413,533 472,039 154 105 506 — — — — — 42,525 117,091 413,638 515,070 — 6,212 10,393 (110,330) (246,879) (334,572) 6,761 172,971 190,891 291,093 355,767 392,441 — (6,212) (10,393) 291,093 349,555 382,048 2.3% 49.5% 50%	As at 30 June 2008 HK$’000 201,821 2,003 513 692 17,176 222,205 245 12,039 — 234,489 — (253,052) (18,563) 390,949 — 390,949 (4.7%)

– 121 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

23 RESERVES

Note Balance at 1 January 2005 Profit for the year 2004 final dividends paid Surplus on revaluation of available-for-sale financial assets 17 Exchange difference Balance at 31 December 2005 Balance at 1 January 2006 Profit for the year 2006 interim dividends paid 10 Shares issued Equity-settled share-based transactions 5 Deficit on revaluation of available-for-sale financial assets 17 Exchange difference Balance at 31 December 2006 Balance at 1 January 2007 Profit for the year 2006 final dividends paid 10 2007 interim dividends paid 10 Shares issued under share option scheme 22 Equity-settled share-based transactions 5 Surplus on revaluation of available-for-sale financial assets 17 Exchange difference At 31 December 2007	Share premium HK$’000 89,785 — — — — 89,785 89,785 — — 14,490 — — — 104,275 104,275 — — — 295 — — — 104,570	Capital reserves HK$’000 100,189 — — — — 100,189 100,189 — — — 588 — — 100,777 100,777 — — — (61) 1,802 — — 102,518	Group Investment revaluation reserve Exchange reserve HK$’000 HK$’000 — 1,653 — — — — 2,491 — — (1,828) 2,491 (175) 2,491 (175) — — — — — — — — (1,989) — — 2,883 502 2,708 502 2,708 — — — — — — — — — — 2,057 — — 4,284 2,559 6,992	Retained earnings HK$’000 42,592 26,876 (9,778) — — 59,690 59,690 52,269 (5,867) — — — — 106,092 106,092 40,357 (6,212) (6,213) — — — — 134,024	Total HK$’000 234,219 26,876 (9,778) 2,491 (1,828)
					251,980
					251,980 52,269 (5,867) 14,490 588 (1,989) 2,883
					314,354
					314,354 40,357 (6,212) (6,213) 234 1,802 2,057 4,284
					350,663

– 122 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Note Balance at 1 January 2008 Shares issued under share option scheme 22 Profit for the period 2007 final dividends paid 10 Deficit on revaluation of available-for-sale financial assets 17 Realised profit on available- for-sale financial assets 17 Equity-settled share-based transactions 5 Exchange difference Balance at 30 June 2008 At 31 December 2005 Company and subsidiaries Associates At 31 December 2006 Company and subsidiaries Associates At 31 December 2007 Company and subsidiaries Associates At 30 June 2008 Company and subsidiaries Associates	Share premium HK$’000 104,570 3,397 — — — — — — 107,967 89,785 — 89,785 104,275 — 104,275 104,570 — 104,570 107,967 — 107,967	Capital reserves HK$’000 102,518 (699) — — — — 367 — 102,186 100,189 — 100,189 100,777 — 100,777 102,518 — 102,518 102,186 — 102,186	Group Investment revaluation reserve Exchange reserve HK$’000 HK$’000 2,559 6,992 — — — — — — (1) — (2,558) — — — — 3,219 — 10,211 2,491 (733) — 558 2,491 (175) 502 3,067 — (359) 502 2,708 2,559 7,593 — (601) 2,559 6,992 — 10,262 — (51) — 10,211	Retained earnings HK$’000 134,024 — 4,768 (10,415) — — — — 128,377 52,064 7,626 59,690 102,784 3,308 106,092 130,306 3,718 134,024 124,662 3,715 128,377	Total HK$’000 350,663 2,698 4,768 (10,415) (1) (2,558) 367 3,219
					348,741
					243,796 8,184
					251,980
					311,405 2,949
					314,354
					347,546 3,117
					350,663
					345,077 3,664
					348,741

– 123 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Note At 1 January 2005 Profit for the year 9 2004 final dividends paid At 31 December 2005 and 1 January 2006 Shares issued 22 Profit for the year 9 2006 interim dividends paid 10 At 31 December 2006 and 1 January 2007 Shares issued under share option scheme 22 Equity-settled share-based transactions 22 Loss for the year 9 2006 final dividends paid 10 2007 interim dividends paid 10 At 31 December 2007 and 1 January 2008 Shares issued under share option scheme 22 Equity-settled share-based transactions 22 Profit for the period 9 2007 final dividends paid 10 At 30 June 2008	Share premium HK$’000 89,785 — — 89,785 14,490 — — 104,275 295 — — — — 104,570 3,397 — — — 107,967	Capital reserves HK$’000 — — — — — — — — (61) 61 — — — — (699) 699 — — —	Company Retained earnings HK$’000 24,114 43,083 (9,778)	Contributed surplus HK$’000 133,101 — — 133,101 — — — 133,101 — — — — — 133,101 — — — — 133,101	Total HK$’000 247,000 43,083 (9,778)
			57,419 — 22,508 (5,867)		280,305 14,490 22,508 (5,867)
			74,060 — — (22,196) (6,212) (6,213)		311,436 234 61 (22,196) (6,212) (6,213)
			39,439 — — 9,637 (10,415)		277,110 2,698 699 9,637 (10,415)
			38,661		279,729

(a) Retained earnings are represented as follows:

Group

Note Representing: Final dividends proposed 10 Others Retained earnings	2005 HK$’000 — 59,690 59,690	As at 31 December 2006 2007 HK$’000 HK$’000 6,212 10,393 99,880 123,631 106,092 134,024	As at 30 June 2008 HK$’000 — 128,377
			128,377

– 124 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Company

Note Representing: Final dividends proposed 10 Others Retained earnings	2005 HK$’000 — 57,419 57,419	As at 31 December 2006 2007 HK$’000 HK$’000 6,212 10,393 67,848 29,046 74,060 39,439	As at 30 June 2008 HK$’000 — 38,661
			38,661

Included in the consolidated retained earnings at 31 December 2005, 2006 and 2007, and 30 June 2008 are retained earnings of HK$nil, HK$59,128, HK$203,506 and HK$433,048 which are required as statutory provisions in certain overseas subsidiaries of the Group.

(b) Capital reserves

The capital reserves of the Group represents the difference between the nominal value of the shares issued by the Company in exchange for the nominal value of the deferred share capital of a subsidiary acquired in 2000 and the fair value of the actual or estimated number of unexercised share options granted to employees of the Company recognised in accordance with the accounting policy adopted for share based payments in note 2.15(d).

(c) Contributed surplus

Contributed surplus arose as a result of the Group’s reorganisation in 2000 and represents the difference between the aggregate net asset value of subsidiaries acquired and the nominal amount of the Company’s shares issued for the acquisition.

(d) Investment revaluation reserve

The investment revaluation reserve of the Group represents the changes in the fair value of available-for-sale financial assets.

(e) Distributable reserves

Under the Company Act 1981 of Bermuda (as amended), the contributed surplus account of the Company is available for distribution. However, the Company cannot declare or pay a dividend, or make a distribution out of the contributed surplus account if:

(i) it is, or would after the payment be, unable to pay its liabilities as they become due; or
(ii) the realisable value of its assets would thereby be less than the aggregate of its liabilities and its issued share capital and share premium accounts.

– 125 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

24 OBLIGATIONS UNDER FINANCE LEASE

At 31 December 2005, 2006 and 2007, and 30 June 2008, the Group’s finance lease liabilities were repayable as follows:

2005 HK$’000 Within one year 121 After one year but within five years 162 283 Future finance charges on finance leases (22) Present value of finance lease liabilities 261 The present value of finance lease liabilities is as follows: 2005 HK$’000 Within one year 107 After one year but within five years 154 261 TRADE AND OTHER PAYABLES Group 2005 HK$’000 Trade payable to securities trading clients 21,606 Margin and other deposits payable to clients 42,294 Trade payable to brokers and clearing houses arising from the ordinary course of business of broking in securities, commodities and futures contracts and leveraged foreign exchange trading 6,434 Total trade payables 70,334 Accruals and other payables 17,769 Total trade and other payables 88,103	As at 31 December 2006 2007 HK$’000 HK$’000 167 586 109 523 276 1,109 (17) (66) 259 1,043 As at 31 December 2006 2007 HK$’000 HK$’000 154 537 105 506 259 1,043 As at 31 December 2006 2007 HK$’000 HK$’000 73,494 83,357 248,926 295,318 33,875 35,595 356,295 414,270 36,035 40,540 392,330 454,810	As at 30 June 2008 HK$’000 546 250 796 (38) 758 As at 30 June 2008 HK$’000 513 245 758 As at 30 June 2008 HK$’000 24,787 117,969 29,329 172,085 29,736 201,821

25 TRADE AND OTHER PAYABLES

– 126 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Company Accruals and other payables Total trade and other payables	2005 HK$’000 773 773	As at 31 December 2006 2007 HK$’000 HK$’000 5,765 10,354 5,765 10,354	As at 30 June 2008 HK$’000 1,587
			1,587

The carrying amounts of trade and other payables approximate their fair values.

The settlement terms of payable to clearing houses and securities trading clients from the ordinary course of business of broking in securities range from two to three days after the trade date of those transactions. Margin deposits received from clients for their trading of leveraged foreign exchange, precious metal contracts, commodities and futures contracts, and the balances were payable within one month.

The balance as at 31 December 2005 included an amount payable to an associate of HK$5,741,000.

The effective interest rates at the balance sheet dates were as follows:

								As at
						As at 31 December		30 June
	Group				2005	2006	2007	2008
	Trade	payables			1.5%–2%	1.75%–4.75%	1.2%–4.9%	0.1%–2.3%
26	BANK	LOANS	AND	OVERDRAFTS

Short-term loans and bank overdrafts

Group Note Secured bank overdrafts 21 Unsecured bank overdrafts 21 Unsecured short-term bank loans 21 Total borrowings	2005 HK$’000 13,586 5,141 10,000 28,727	As at 31 December 2006 2007 HK$’000 HK$’000 4,511 4,674 6,538 18 10,000 12,000 21,049 16,692	As at 30 June 2008 HK$’000 — 3 2,000 2,003

All the borrowings are repayable within one year and classified as current liabilities. The carrying amounts of the borrowings approximate their fair value.

As at 31 December 2005, 2006 and 2007, and 30 June 2008, total borrowings include secured liabilities of HK$13,585,172, HK$4,511,440, HK$4,674,102 and HK$nil respectively for which client assets and a director’s deposit are held as collateral.

– 127 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The exposure of the Group’s borrowings to interest-rate changes and the contractual repricing dates are as follows:

Group At 30 June 2008 Total borrowings At 31 December 2007 Total borrowings At 31 December 2006 Total borrowings At 31 December 2005 Total borrowings	6 months or less HK$’000 2,003 16,692 21,049 28,727	Total HK$’000 2,003
		16,692
		21,049
		28,727

The effective interest rates at the balance sheet dates were as follows:

Group	2005	2006	2007	2008
Secured bank overdrafts	7.3325%–8%	6%–7%	5.93%–6.5%	—
Unsecured bank overdrafts	7.3325%–8%	8%	7%	7.75%–16%
Unsecured short-term bank loans	5.79%	5.66%	5.63%–6.52%	4.49%

The Group’s short-term loans and overdrafts are denominated in Hong Kong Dollars.

Secured mortgage loan

Group Within one year After one year but within five years	2005 HK$’000 — — —	As at 31 December 2006 2007 HK$’000 HK$’000 — — — — — —	As at 30 June 2008 HK$’000 692 12,039
			12,731

The mortgage loan was secured by the Group’s land and building located in Taiwan with a carrying value of $21,125,000. The mortgage loan was denominated in New Taiwan Dollars and had an effective interest rate of 3%.

27 LOAN NOTES

The Company issued loan notes denominated in United States Dollars to certain overseas and professional investors. The loan notes are unsecured, mature on the day falling three years after the issue date of the relevant notes and bear interest of 8.5% per annum on the principal amount. On 25 July 2008, the Company redeemed all outstanding loan notes of an aggregate principle amount of US$2.2 million (approximately HK$17.2 million) as at 30 June 2008.

– 128 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

28 DEFINED CONTRIBUTION PLANS — MPF SCHEME

The aggregate employer’s contributions, net of forfeited contributions, which have been dealt with in the income statement for the year/period amounted to:

Gross employer’s contributions Less: Forfeited contributions utilised to offset employer’s contribution for the year/period Net employer’s contributions charged to income statement	Year ended 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 1,605 1,963 2,121 (130) (109) (12) 1,475 1,854 2,109	Six months ended 30 June 2007 2008 HK$’000 HK$’000 941 1,122 (8) (14) 933 1,108	Six months ended 30 June 2007 2008 HK$’000 HK$’000 941 1,122 (8) (14) 933 1,108
			1,108

29 DIRECTORS’ AND SENIOR MANAGEMENT’S EMOLUMENTS

(a) Directors’ and senior management’s emoluments

The remuneration of the directors for the year ended 31 December 2005 is set out below:

Name of Director Tang Yu Lap Tang Ping Sum Sze Chong Hoi Chan Na Wah (Note 1) Lam Ngok Fung Ng Chiu Mui Poon Wai Ming Law Kai Yee (Note 2) Fong Wo Man Kong Yui (Note 3) Chung Shui Ming, Timpson Yu Man Woon Cheng Wing Chi Nyaw Mee Kau (Note 4)	Fee HK$’000 — — — — — — — — 105 39 189 115 105 89 642	Salary HK$’000 1,200 1,860 1,200 105 780 540 732 86 — — — — — — 6,503	Discretionary bonuses HK$’000 125 227 50 — 113 72 81 60 — — — — — — 728	Other benefits HK$’000 — — — 104 15 — — 8 — — — — — — 127	Shared- based Payment HK$’000 — — — — — — — — — — — — — — —	Employer’s contribution to pension scheme HK$’000 12 12 12 3 12 12 12 — — — — — — — 75	Total HK$’000 1,337 2,099 1,262 212 920 624 825 154 105 39 189 115 105 89
							8,075

Notes:

Chan Na Wah resigned on 28 February 2005.
Law Kai Yee was appointed as Executive Director on 18 November 2005.
Man Kong Yui retired on 20 May 2005
Nyaw Mee Kau was appointed as Independent Non-executive Director on 26 February 2005.

– 129 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

The remuneration of the directors for the year ended 31 December 2006 is set out below:

Name of Director Tang Yu Lap Chung Shui Ming, Timpson (Note 1) Tang Ping Sum (Note 2) Lam Ngok Fung Sze Chong Hoi (Note 2) Ng Chiu Mui Poon Wai Ming (Note 3) Law Kai Yee Fong Wo Yu Man Woon Cheng Wing Chi Nyaw Mee Kau Yu Hon To David (Note 4)	Fee HK$’000 — 113 — — — — — — 110 130 110 110 85 658	Salary HK$’000 1,260 800 1,410 968 231 698 321 759 — — — — — 6,447	Discretionary bonuses HK$’000 1,931 171 155 267 — 794 64 223 — — — — — 3,605	Other benefits HK$’000 — — — — — — — 84 — — — — — 84	Shared- based payment HK$’000 — 106 — 64 — 12 — 64 — — — — — 246	Employer’s contribution to pension scheme HK$’000 12 6 10 12 1 12 5 14 — — — — — 72	Total HK$’000 3,203 1,196 1,575 1,311 232 1,516 390 1,144 110 130 110 110 85
							11,112

Notes:

Chung Shui Ming, Timpson was appointed as Deputy Chairman on 27 July 2006.
Tang Ping Sum and Sze Chong Hoi resigned on 4 October 2006 and 25 January 2006 respectively.
Poon Wai Ming retired on 29 May 2006.
Yu Hon To, David was appointed as Independent Non-executive Director on 27 July 2006.

The remuneration of the directors for the year ended 31 December 2007 is set out below:

Name of Director Tang Yu Lap Chung Shui Ming, Timpson (Note 1) Lam Ngok Fung Ng Chiu Mui Law Kai Yee Hwang Wei Ming, Ellen (Note 2) Lau Mun Chung (Note 2) Fong Wo Yu Man Woon Cheng Wing Chi Nyaw Mee Kau Yu Hon To David	Fee HK$’000 — — — 58 58 — — 123 143 123 123 213 841	Salary HK$’000 1,581 880 1,285 903 913 1,037 759 — — — — — 7,358	Discretionary bonuses HK$’000 840 — 334 178 140 275 154 — — — — — 1,921	Other benefits HK$’000 — — — — — 42 — — — — — — 42	Shared- based Payment HK$’000 — (106) 262 49 262 175 175 — — — — — 817	Employer’s contribution to pension scheme HK$’000 12 5 12 12 12 10 10 — — — — — 73	Total HK$’000 2,433 779 1,893 1,200 1,385 1,539 1,098 123 143 123 123 213
							11,052

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FINANCIAL INFORMATION OF THE GROUP

Notes:

Chung Shui Ming, Timpson resigned on 1 June 2007.
Hwang Wei Ming, Ellen and Lau Mun Chung were appointed as Executive Directors on 3 March 2007.

The remuneration of the directors for the period ended 30 June 2007 is set out below:

Name of Director Tang Yu Lap Chung Shui Ming, Timpson Lam Ngok Fung Ng Chiu Mui Law Kai Yee Hwang Wei Ming, Ellen Lau Mun Chung Fong Wo Yu Man Woon Cheng Wing Chi Nyaw Mee Kau Yu Hon To David	Fee HK$’000 — — — — — — — 58 68 58 58 103 345	Salary HK$’000 738 880 576 420 432 358 295 — — — — — 3,699	Discretionary bonuses HK$’000 — — — — — — — — — — — — —	Other benefits HK$’000 — — — — — 42 — — — — — — 42	Shared- based Payment HK$’000 — (106) 193 36 193 129 129 — — — — — 574	Employer’s contribution to pension scheme HK$’000 6 5 6 6 6 4 4 — — — — — 37	Total HK$’000 744 779 775 462 631 533 428 58 68 58 58 103
							4,697

The remuneration of the directors for the period ended 30 June 2008 is set out below:

Name of Director Tang Yu Lap Lam Ngok Fung Ng Chiu Mui Law Kai Yee Hwang Wei Ming, Ellen Lau Mun Chung Fong Wo Yu Man Woon Cheng Wing Chi Nyaw Mee Kau Yu Hon To David	Fee HK$’000 — — — — — — 65 75 65 65 110 380	Salary HK$’000 923 773 531 522 739 522 — — — — — 4,010	Discretionary bonuses HK$’000 — — — — — — — — — — — —	Other benefits HK$’000 — — — — — — — — — — — —	Shared- based Payment HK$’000 — 55 10 55 37 36 — — — — — 193	Employer’s contribution to pension scheme HK$’000 6 6 6 6 6 6 — — — — — 36	Total HK$’000 929 834 547 583 782 564 65 75 65 65 110
							4,619

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APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

(b) Five highest paid individuals

The five individuals whose emoluments were the highest in the Group for the six months ended 30 June 2008 included five directors (six months ended 30 June 2007: five; year ended 31 December 2007: five; year ended 31 December 2006: four; year ended 31 December 2005: four) whose emoluments are reflected in the analysis presented above. The emoluments payable to the remaining individual during the year/period are as follows:

Basic salaries, other allowances and benefits in kind Bonus Equity-settled share-based transactions Defined contribution plans	Year ended 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 984 1,014 — 63 140 — — 15 — 12 12 — 1,059 1,181 —	Six months ended 30 June 2007 2008 HK$’000 HK$’000 — — — — — — — — — —	Six months ended 30 June 2007 2008 HK$’000 HK$’000 — — — — — — — — — —
			—

The emoluments fell within the following bands:

Emolument bands HK$1,000,001–HK$1,500,000	Number of individuals Year ended 31 December Six months ended 30 June 2005 2006 2007 2007 2008 1 1 — — —

– 132 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

30 EQUITY-SETTLED SHARE-BASED TRANSACTIONS

The Company has adopted a share option scheme whereby the Board of the Company may at its discretion grant to any employees, including executive directors, of the Group options to subscribe for shares of the Company.

(a) The terms and conditions of the grants that existed during the Relevant Periods are as follows:

Options granted to directors — on 2 November 2000 — on 9 May 2001 — on 13 November 2006 Options granted to employees — on 2 November 2000 — on 9 May 2001 — on 13 November 2006 Total share options	Number Year ended 31 2005 2006 2,850,000 — 2,300,000 — — 8,090,000 3,800,000 — 2,650,000 — — 11,300,000 11,600,000 19,390,000	Number Year ended 31 2005 2006 2,850,000 — 2,300,000 — — 8,090,000 3,800,000 — 2,650,000 — — 11,300,000 11,600,000 19,390,000	of instruments Vesting conditions Contractual Life of options December Six months ended 30 June 2007 2008 — — 3 months from date of grant 5 years — — 3 months from date of grant 5 years 7,190,000 7,190,000 40% to be vested on 1 May 2007, 30% to be vested on 1 May 2008, 30% to be vested on 1 May 2009 5 years after vesting — — 3 months from date of grant 5 years — — 3 months from date of grant 5 years 7,900,000 4,240,000 40% to be vested on 1 May 2007, 30% to be vested on 1 May 2008, 30% to be vested on 1 May 2009 5 years after vesting 15,090,000 11,430,000
	11,600,000	19,390,000	15,090,000

(b) The number and weighted average exercise prices of share options are as follows:

Outstanding at the beginning of the period Forfeited during the period Exercised during the period Granted during the period Outstanding at the end of the period Exercisable at the end of the period	Year ended 31 December Six months ended 30 June 2005 2006 2007 2008 Weighted average exercise price Number of options Weighted average exercise price Number of options Weighted average exercise price Number of options Weighted average exercise price Number of options HK$ HK$ HK$ HK$ 0.64 13,950,000 0.64 11,600,000 0.88 19,390,000 0.88 15,090,000 0.63 (2,350,000) 0.64 (11,600,000) 0.88 (4,000,000) 0.88 (200,000 — — — — 0.88 (300,000) 0.88 (3,460,000 — — 0.88 19,390,000 — — — — 0.64 11,600,000 0.88 19,390,000 0.88 15,090,000 0.88 11,430,000 0.64 11,600,000 — — 0.88 5,856,000 0.88 3,457,000	Year ended 31 December Six months ended 30 June 2005 2006 2007 2008 Weighted average exercise price Number of options Weighted average exercise price Number of options Weighted average exercise price Number of options Weighted average exercise price Number of options HK$ HK$ HK$ HK$ 0.64 13,950,000 0.64 11,600,000 0.88 19,390,000 0.88 15,090,000 0.63 (2,350,000) 0.64 (11,600,000) 0.88 (4,000,000) 0.88 (200,000 — — — — 0.88 (300,000) 0.88 (3,460,000 — — 0.88 19,390,000 — — — — 0.64 11,600,000 0.88 19,390,000 0.88 15,090,000 0.88 11,430,000 0.64 11,600,000 — — 0.88 5,856,000 0.88 3,457,000	Year ended 31 December Six months ended 30 June 2005 2006 2007 2008 Weighted average exercise price Number of options Weighted average exercise price Number of options Weighted average exercise price Number of options Weighted average exercise price Number of options HK$ HK$ HK$ HK$ 0.64 13,950,000 0.64 11,600,000 0.88 19,390,000 0.88 15,090,000 0.63 (2,350,000) 0.64 (11,600,000) 0.88 (4,000,000) 0.88 (200,000 — — — — 0.88 (300,000) 0.88 (3,460,000 — — 0.88 19,390,000 — — — — 0.64 11,600,000 0.88 19,390,000 0.88 15,090,000 0.88 11,430,000 0.64 11,600,000 — — 0.88 5,856,000 0.88 3,457,000	Year ended 31 December Six months ended 30 June 2005 2006 2007 2008 Weighted average exercise price Number of options Weighted average exercise price Number of options Weighted average exercise price Number of options Weighted average exercise price Number of options HK$ HK$ HK$ HK$ 0.64 13,950,000 0.64 11,600,000 0.88 19,390,000 0.88 15,090,000 0.63 (2,350,000) 0.64 (11,600,000) 0.88 (4,000,000) 0.88 (200,000 — — — — 0.88 (300,000) 0.88 (3,460,000 — — 0.88 19,390,000 — — — — 0.64 11,600,000 0.88 19,390,000 0.88 15,090,000 0.88 11,430,000 0.64 11,600,000 — — 0.88 5,856,000 0.88 3,457,000	Year ended 31 December Six months ended 30 June 2005 2006 2007 2008 Weighted average exercise price Number of options Weighted average exercise price Number of options Weighted average exercise price Number of options Weighted average exercise price Number of options HK$ HK$ HK$ HK$ 0.64 13,950,000 0.64 11,600,000 0.88 19,390,000 0.88 15,090,000 0.63 (2,350,000) 0.64 (11,600,000) 0.88 (4,000,000) 0.88 (200,000 — — — — 0.88 (300,000) 0.88 (3,460,000 — — 0.88 19,390,000 — — — — 0.64 11,600,000 0.88 19,390,000 0.88 15,090,000 0.88 11,430,000 0.64 11,600,000 — — 0.88 5,856,000 0.88 3,457,000	Year ended 31 December Six months ended 30 June 2005 2006 2007 2008 Weighted average exercise price Number of options Weighted average exercise price Number of options Weighted average exercise price Number of options Weighted average exercise price Number of options HK$ HK$ HK$ HK$ 0.64 13,950,000 0.64 11,600,000 0.88 19,390,000 0.88 15,090,000 0.63 (2,350,000) 0.64 (11,600,000) 0.88 (4,000,000) 0.88 (200,000 — — — — 0.88 (300,000) 0.88 (3,460,000 — — 0.88 19,390,000 — — — — 0.64 11,600,000 0.88 19,390,000 0.88 15,090,000 0.88 11,430,000 0.64 11,600,000 — — 0.88 5,856,000 0.88 3,457,000	Year ended 31 December Six months ended 30 June 2005 2006 2007 2008 Weighted average exercise price Number of options Weighted average exercise price Number of options Weighted average exercise price Number of options Weighted average exercise price Number of options HK$ HK$ HK$ HK$ 0.64 13,950,000 0.64 11,600,000 0.88 19,390,000 0.88 15,090,000 0.63 (2,350,000) 0.64 (11,600,000) 0.88 (4,000,000) 0.88 (200,000 — — — — 0.88 (300,000) 0.88 (3,460,000 — — 0.88 19,390,000 — — — — 0.64 11,600,000 0.88 19,390,000 0.88 15,090,000 0.88 11,430,000 0.64 11,600,000 — — 0.88 5,856,000 0.88 3,457,000	Year ended 31 December Six months ended 30 June 2005 2006 2007 2008 Weighted average exercise price Number of options Weighted average exercise price Number of options Weighted average exercise price Number of options Weighted average exercise price Number of options HK$ HK$ HK$ HK$ 0.64 13,950,000 0.64 11,600,000 0.88 19,390,000 0.88 15,090,000 0.63 (2,350,000) 0.64 (11,600,000) 0.88 (4,000,000) 0.88 (200,000 — — — — 0.88 (300,000) 0.88 (3,460,000 — — 0.88 19,390,000 — — — — 0.64 11,600,000 0.88 19,390,000 0.88 15,090,000 0.88 11,430,000 0.64 11,600,000 — — 0.88 5,856,000 0.88 3,457,000
	0.64	11,600,000	0.88	19,390,000	0.88	15,090,000	0.88	11,430,000
	0.64	11,600,000	—	—	0.88	5,856,000	0.88	3,457,000

– 133 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

The exercise price of outstanding options and weighted average remaining contractual life at the balance sheet date were as follows:

					As at
		As at 31 December			30 June
	2005	2006		2007	2008
Exercise price of outstanding
options at the end of the
Relevant Period (HK$)	0.64	0.6128–0.88		0.88	0.88
Weighted average remaining
contractual life	0.3 year	6.32 years	5.25	years	4.93 years

(c) Fair value of share options and assumptions

The fair value of services received in return for share options granted is measured by reference to the fair value of the share options granted. The estimate of the fair value of the options granted is measured based on the Black Scholes model. The contractual life of the option is used as an input into this model.

Fair value of share options and assumptions on grant date Fair value Share price Exercise price Expected volatility Option life Expected dividends Risk-free interest rate (based on Exchange Fund Notes)	13 November 2006 HK$0.202 HK$0.88 HK$0.88 30.01% 5 years 3.0% 3.754%

The expected volatility is based on the daily stock price return over one year preceding the grant date, adjusted for any expected changes to future volatility based on publicly available information. Expected dividends are based on historical dividends. Changes in the subjective input assumptions could materially affect the fair value estimate.

Share options were granted under a service condition. This condition has not been taken into account in the grant date fair value measurement of the services received. There were no market conditions associated with the share option grants.

No share options were granted subsequent to 13 November 2006.

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APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

31 NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT

(a) Reconciliation of operating profit to net cash inflow from operating activities:

Operating profit before taxation Depreciation (Appreciation)/diminution in value of financial assets at fair value through profit or loss (Profit)/loss on disposal of financial assets at fair value through profit or loss Profit on disposal of available-for- sales financial assets Interest expenses Dividend income from listed securities Dividend income from available- for-sale financial assets Share of profits of associates Loss on disposal of fixed assets Write back of provision for doubtful debt and clawback Provision for clawback Bad debts written off Impairment loss on trade and other receivables Equity-settled share-based transactions Increase in fixed deposit with maturity over three months Impairment charge on goodwill (Increase)/decrease in pledged deposits Operating profit before working capital changes Decrease/(increase) in other assets Decrease/(increase) in trade and other receivables Increase/(decrease) in trade and other payables Cash inflow/(outflow) from operations Hong Kong profits tax (paid)/ refunded Overseas tax paid Net cash inflow/(outflow) from operating activities	Year ended 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 25,791 64,108 53,430 4,051 4,693 6,927 (84) (306) 3,429 (939) 1,557 (2,346) — — — 2,090 3,860 8,472 (33) (173) (479) — (149) (138) (3,901) (5,802) (2,047) 392 138 793 (137) (91) (2) 93 64 104 280 — — — 2,051 911 — 588 1,802 — — (7,214) 861 — — (67) 10,393 (3,017) 28,397 80,931 60,625 241 (1,393) 1,312 4,773 (82,903) (46,057) 28,439 120,452 62,205 61,850 117,087 78,085 (7,715) (2,940) (10,373) (93) (2,113) (5,668) 54,042 112,034 62,044	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) 22,348 7,637 3,176 3,746 (402) 1,223 (469) (55) — (3,072) 3,968 1,447 (341) (96) (138) — (1,233) (1,407) 102 55 (2) (1) 33 25 — 10 537 788 1,354 367 (7,163) (5,848) — 399 (278) (3,378) 21,492 1,840 474 (79) (30,963) 205,806 (52,911) (253,013) (61,908) (45,446) (147) 184 (2,539) (3,582) (64,594) (48,844)

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FINANCIAL INFORMATION OF THE GROUP

(b) Purchase of subsidiaries:

Net assets acquired Fixed assets Financial assets at fair value through profit or loss Trade and other receivables Bank balances and cash — general accounts Trade and other payables Taxation Payable Remaining minority interest of a subsidiary acquired Share of minority interests Goodwill arising on acquisition (Note 12) Total purchase price Satisfied by: Cash Issue of ordinary shares Interests in associate prior to the acquisition	Year ended 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 — 3,658 45 — 25,934 — — 148,571 74 — 42,064 309 — (183,804) (173) — (3,129) — 2,899 — — 2,899 33,294 255 — — (23) 76 4,973 399 2,975 38,267 631 2,975 11,489 631 — 16,790 — — 9,988 — 2,975 38,267 631	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) — — — — — 6 — 1,254 — — — — — — — 1,260 — — — 45 — 1,305 — 1,305 — — — — — 1,305	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) — — — — — 6 — 1,254 — — — — — — — 1,260 — — — 45 — 1,305 — 1,305 — — — — — 1,305
			1,260 — 45
			1,305
			1,305 — —
			1,305

(c) Analysis of the (cash outflow on acquisition)/net cash acquired on acquisition in respect of the purchase of subsidiaries:

Cash consideration Cash and bank balances acquired Cash flow on acquisition net of cash acquired	Year ended 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 (2,975) (11,489) (631) — 42,064 309 (2,975) 30,575 (322)	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) — (1,305) — 1,254 — (51)	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) — (1,305) — 1,254 — (51)
			(51)

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APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

32 CONTINGENT LIABILITIES

32.1 Outstanding litigation cases

(a) The Company received a writ of summons on 28 July 2000, filed by a company named Hantec Investment Limited which is unrelated to the Group. The plaintiff sought for injunction to restrain the Company from using the plaintiff’s alleged trade name and damages.

The Company has commenced a defence action and will continue to defend it. Potential damages, losses, fees, expenses, proceedings and claims which have been and may be incurred by the Group as a result of the action have been covered by a joint and several indemnity, given by the ultimate controlling shareholders and accordingly no provision has been made by the Group as at the end of the Relevant Periods.

(b) An indirect wholly owned subsidiary of the Company, Hantec International Limited (‘‘HIL’’) received a writ of summon dated 28 March 2006 from two clients jointly as plaintiffs claiming for damages against HIL and two of its licensed representatives for an amount of HK$20,600,000 together with costs as a result of a number of transactions of leveraged foreign exchange trading. HIL has commenced defence action and filed a defence. HIL after considering the fact and the information available, and after assessing the opinion provided by the Group’s legal advisors, are of the opinion that no provision is required to be made at this stage. HIL will closely monitor the development of the case and consider appropriate treatment in the financial information should the circumstances became unfavourable to HIL.
(c) A writ of summons dated 11 July 2006 was served to three subsidiaries of the Company as defendants by a former account executive claiming (being the plaintiff) against the three subsidiaries for a total amount of HK$700,000 as his rightful overriding commissions together with interest and/ or alternatively, damages to be assessed. The subsidiaries have instructed their legal advisors to commence defence on the claim. The legal advisors have requested the plaintiff to state clearly his claim but up to the date of this report, the plaintiff has only filed a Notice of Intention to Proceed and has not taken any further action.

32.2 Financial guarantees issued

(a) As at 31 December 2005, 2006, 2007 and 30 June 2008, a subsidiary of the Company engaging in securities broking and providing securities margin financing has secured banking facilities from certain authorised institutions of a total amount of HK$230 million, HK$132 million, HK$334 million and HK$311 million respectively.

As at 31 December 2005, 2006, 2007 and 30 June 2008, the Company has issued corporate guarantees for a total principal amount of HK$338 million, HK$120 million, HK$322 million and HK$389 million for these facilities respectively.

As at 31 December 2005, 2006, 2007 and 30 June 2008, the subsidiary utilised HK$28,724,837, HK$21,048,188, HK$16,678,805 and HK$2,000,000 of these aggregate banking facilities respectively.

(b) The Company also issued corporate guarantees to certain financial institutions for foreign exchange trading and precious metal contracts trading facilities granted to the subsidiaries engaging the leveraged foreign exchange trading and precious metal trading. The maximum liability is the trading loss and related incidental costs, in some cases, subject to an overall cap on the amount of the guarantee.

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FINANCIAL INFORMATION OF THE GROUP

(c) As at the balance sheet date, the directors do not consider it probable that a claim will be made against the Company under any of the guarantees. The Company has not recognised any deferred income in respect of the guarantees as their fair values cannot be reliably measured and the transaction price was nil.

33 LEASE COMMITMENTS

At 31 December 2005, 2006 and 2007, and 30 June 2008, the Group had future aggregate minimum lease payments under non-cancellable operating leases as follows:

Land and buildings

Within one year After one year but within five years	2005 HK$’000 7,956 6,224 14,180	As at 31 December 2006 2007 HK$’000 HK$’000 7,009 14,231 2,128 17,110 9,137 31,341	As at 30 June 2008 HK$’000 16,174 14,932
			31,106

Others

Within one year After one year but within five years	2005 HK$’000 703 667 1,370	As at 31 December 2006 2007 HK$’000 HK$’000 623 447 331 183 954 630	As at 30 June 2008 HK$’000 308 60
			368

34 FINANCIAL RISK MANAGEMENT

34.1 Financial risk factors

The Group’s activities expose it to a variety of financial risks: foreign exchange risk, price risk, credit risk, liquidity risk and interest-rate risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance.

Risk management is carried out by a Risk Management Committee (‘‘RMC’’) under policies approved by the Board of Directors. The RMC identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating units. The RMC also recommends overall risk management policy for the approval of the Board or the Executive Management Committee (‘‘EMC’’) of the Group, covering specific areas, such as foreign exchange risk, interest-rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investing excess liquidity.

The Company is not exposed to significant foreign exchange risk, price risk, credit risk, and interest-rate risk. The Company only has liquidity risk of loan notes repayable that is presented in the maturity profile table of note 34.1(d).

– 138 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

(a) Foreign exchange risk

The Group carries out business in foreign exchange trading and has certain investments overseas and therefore is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the HK dollar. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations.

The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. Currency exposure arises from the net assets of the Group’s foreign operations in China, Taiwan, New Zealand, Japan and Switzerland.

The Group’s net trading positions are denominated in currencies other than its functional currency or presentation currency and are subject to fluctuation in foreign exchange among the different currencies. The treasury function of the Group is responsible for managing the foreign exchange risk under prudent guidelines on position limits and floating loss limits. The RMC reviews the limits from time to time to cope with changes in volatility in the market.

The following table details the Group’s exposure at the balance sheet date to currency risk arising from forecast transactions or recognised assets or liabilities denominated in a currency other than the functional currency of the entity to which they relate.

At 31 December 2005 Trade and other receivables Cash and cash equivalents Available-for-sale financial assets Trade and other payables Net exposure arising from recognised assets and liabilities Notional amounts of leveraged foreign exchange contracts sales Notional amounts of leveraged foreign exchange contracts purchases Notional amounts of foreign exchange option contracts sales Notional amounts of foreign exchange option contracts purchases Net notional amounts of precious metal trading contracts Net exposure arising from forecast transactions Overall net exposure	Japanese Yen HK$’000 5,861 802 12,089 (1) 18,751 - - - - - - - - - - - (541,972) 494,647 (134,966) 134,186 — (48,105) - - - - - - - - - - - (29,354)	United States Dollars HK$’000 98,426 33,095 — (413) 131,108 - - - - - - - - - - - - - — — — — 101,312 101,312 - - - - - - - - - - - - - 232,420	Euro HK$’000 38 1,224 — (62) 1,200 - - - - - - - - - - - (301,720) 303,658 — — — 1,938 - - - - - - - - - - - 3,138	Sterling HK$’000 — — — (1) (1) - - - - - - - - - - - (798,446) 805,917 (214,531) 214,531 — 7,471 - - - - - - - - - - - 7,470	Swiss Franc HK$’000 11,732 23,385 — (28,805) 6,312 - - - - - - - - - - - (51,331) 37,449 — — — (13,882) - - - - - - - - - - - (7,570)	Others HK$’000 2,637 13,130 — (3,471)
						12,296 - - - - - - - - - - - (110,093) 105,750 — — —
						(4,343) - - - - - - - - - - -
						7,953

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APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

At 31 December 2006 Trade and other receivables Cash and cash equivalents Available-for-sale financial assets Trade and other payables Net exposure arising from recognised assets and liabilities Notional amounts of leveraged foreign exchange contracts sales Notional amounts of leveraged foreign exchange contracts purchases Notional amounts of foreign exchange option contracts sales Notional amounts of foreign exchange option contracts purchases Net notional amounts of precious metal trading contracts Net exposure arising from forecast transactions Overall net exposure	Japanese Yen HK$’000 2,628 120 10,100 (2,068) 10,780 - - - - - - - - - - - (3,104,000) 3,022,169 (478,952) 478,952 — (81,831) - - - - - - - - - - - (71,051)	United States Dollars HK$’000 181,298 129,506 — (299,032) 11,772 - - - - - - - - - - - - - — — — — (46,800) (46,800) - - - - - - - - - - - - - (35,028)	Euro HK$’000 128 3,681 — (74) 3,735 - - - - - - - - - - - (292,741) 302,095 — 10,279 — 19,633 - - - - - - - - - - - 23,368	Sterling HK$’000 109 32 — (1,395) (1,254) - - - - - - - - - - - (2,375,117) 2,321,255 (488,617) 503,886 — (38,593) - - - - - - - - - - - (39,847)	Swiss Franc HK$’000 491 3,776 — (13,046) (8,779) - - - - - - - - - - - (2,214,268) 2,218,175 — — — 3,907 - - - - - - - - - - - (4,872)	Others HK$’000 9,247 21,809 — (8,518)
						22,538 - - - - - - - - - - - (62,551) 58,174 — — —
						(4,377) - - - - - - - - - - -
						18,161

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APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

At 31 December 2007 Trade and other receivables Cash and cash equivalents Available-for-sale financial assets Trade and other payables Net exposure arising from recognised assets and liabilities Notional amounts of leveraged foreign exchange contracts sales Notional amounts of leveraged foreign exchange contracts purchases Notional amounts of foreign exchange option contracts sales Notional amounts of foreign exchange option contracts purchases Net notional amounts of precious metal trading contracts Net exposure arising from forecast transactions Overall net exposure	Japanese Yen HK$’000 2,041 1,529 12,157 (24,719) (8,992) - - - - - - - - - - - (695,314) 607,675 — — — (87,639) - - - - - - - - - - - (96,631)	United States Dollars HK$’000 164,353 204,224 — (304,979) 63,598 - - - - - - - - - - - - - — — — — 27,945 27,945 - - - - - - - - - - - - - 91,543	Euro HK$’000 34 7,986 — (854) 7,166 - - - - - - - - - - - (88,160) 178,368 (56,878) 56,878 — 90,208 - - - - - - - - - - - 97,374	Sterling HK$’000 284 34 — (1,034) (716) - - - - - - - - - - - (684,315) 550,039 (154,619) 309,239 — 20,344 - - - - - - - - - - - 19,628	Swiss Franc HK$’000 784 2,384 — (4,661) (1,493) - - - - - - - - - - - (41,605) 73,203 — — — 31,598 - - - - - - - - - - - 30,105	Others HK$’000 21,141 12,148 — (4,872)
						28,417 - - - - - - - - - - - (40,287) 38,455 — — —
						(1,832) - - - - - - - - - - -
						26,585

– 141 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

At 30 June 2008 Trade and other receivables Cash and cash equivalents Trade and other payables Secured mortgage loan Net exposure arising from recognised assets and liabilities Notional amounts of leveraged foreign exchange contracts sales Notional amounts of leveraged foreign exchange contracts purchases Notional amounts of foreign exchange option contracts sales Notional amounts of foreign exchange option contracts purchases Net notional amounts of precious metal trading contracts Net exposure arising from forecast transactions Overall net exposure	Japanese Yen HK$’000 4,394 184 (1) — 4,577 - - - - - - - - - - (167,970) 258,502 (721) 721 — 90,532 ~~- - - - - - - - - -~~ 95,109	United States Dollars HK$’000 137,744 75,115 (121,521) — 91,338 - - - - - - - - - - — — — — 49,939 49,939 ~~- - - - - - - - - -~~ 141,277	Euro HK$’000 132 14,145 (1,536) — 12,741 - - - - - - - - - - (260,794) 270,130 (124,255) 197,960 — 83,041 ~~- - - - - - - - - -~~ 95,782	Sterling HK$’000 1 765 (891) — (125) - - - - - - - - - - (366,583) 398,145 (94,042) 94,045 — 31,565 ~~- - - - - - - - - -~~ 31,440	Swiss Franc HK$’000 915 2,850 (2,798) — 967 - - - - - - - - - - (22,944) 58,961 (48) 48 — 36,017 ~~- - - - - - - - - -~~ 36,984	New Taiwan Dollars HK$’000 — — — (12,731) (12,731) - - - - - - - - - - — — — — — — ~~- - - - - - - - - -~~ (12,731)	Others HK$’000 8,723 29,359 (8,982) —
							29,100 - - - - - - - - - - (34,228) 38,432 (461) 461 —
							4,204 ~~- - - - - - - - - -~~
							33,304

– 142 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Sensitivity analysis

The following table indicates the approximate change in the Group’s profit before tax in response to possible changes in the foreign exchange rates to which the Group has significant exposure at the balance sheet date.

					As at
			As at 31 December		30 June
		2005	2006	2007	2008
	Increase/
	decrease in	Effect	Effect	Effect	Effect
	exchange	on profit	on profit	on profit	on profit
	rates	before tax	before tax	before tax	before tax
		HK$’000	HK$’000	HK$’000	HK$’000
Japanese Yen	+ 5%	(1,468)	(3,553)	(4,832)	4,755
	– 5%	1,468	3,553	4,832	(4,755)
Euro	+ 5%	157	1,168	4,869	4,789
	– 5%	(157)	(1,168)	(4,869)	(4,789)
Sterling	+ 5%	373	(1,992)	981	1,572
	– 5%	(373)	1,992	(981)	(1,572)
Swiss Franc	+ 5%	(378)	(244)	1,505	1,849
	– 5%	378	244	(1,505)	(1,849)
New Taiwan Dollars	+ 5%	—	—	—	(637)
	– 5%	—	—	—	637

The sensitivity analysis has been determined assuming that the change in foreign exchange rates had occurred at the balance sheet date and had been applied to each of the Group entities’ exposure to currency risk for both derivative and non-derivative financial instruments in existence at that date, and that all other variables, in particular interest rates, remain constant.

The stated changes represent management’s assessment of reasonably possible changes in foreign exchange rates over the period until the next annual balance sheet date. In this respect, it is assumed that the pegged rate between the Hong Kong dollar and the United States dollar would be materially unaffected by any changes in movement in value of the United States dollar against other currencies. Results of the analysis as presented in the above table represent and aggregation of the effects on each of the Group entities’ profit before tax and equity measured in the respective functional currencies, translated into Hong Kong dollars at the exchange rate ruling at the balance sheet date for presentation purposes.

– 143 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

(b) Price risk

The Group is exposed to price risk on the net positions on bullion trading and available-for-sale financial assets. The dealing function of bullion trading is responsible for managing the price risk to ensure that the positions and floating loss are within the limits approved by the RMC. The directors are responsible for monitoring the financial performance of the available-for-sale financial assets on a regular basis.

The following table indicates the approximate change in the Group’s before after tax in response to possible changes in bullion price to which the Group have the net positions on bullion trading at the balance sheet date.

					As at
			As at 31 December		30 June
		2005	2006	2007	2008
	Increase/	Effect	Effect	Effect	Effect
	decrease in	on profit	on profit	on profit	on profit
	bullion price	before tax	before tax	before tax	before tax
		HK$’000	HK$’000	HK$’000	HK$’000
Net notional amounts
of precious metal	+ 30%	30,394	(14,040)	8,384	14,982
trading contracts	– 30%	(30,394)	14,040	(8,384)	(14,982)

The following table indicates the approximate change in the Group’s reserve in response to possible changes in fair value in the available-for-sale financial assets at the balance sheet date:

					As at
			As at 31 December		30 June
	Increase/	2005	2006	2007	2008
	decrease in	Effect	Effect	Effect	Effect
	fair value	on reserve	on reserve	on reserve	on reserve
		HK$’000	HK$’000	HK$’000	HK$’000
Available-for-sale	+ 5%	604	505	608	—
financial assets	– 5%	(604)	(505)	(608)	—

(c) Credit risk

The Group’s credit risk is primarily attributable to trade and other receivables. It has policies in place to ensure that credits are granted to customers with an appropriate credit history and/or collateral deposited with the Group. For leveraged foreign exchange trading, futures trading and bullion trading, normally an initial margin will be collected before opening of trading positions. Moreover, the Group has no significant concentration of credit risk as credits are granted to a large population of clients. Derivative counterparties and cash transactions are limited to high-creditquality financial institutions and only brokers having sound credit ratings will be accepted. The Group has maintained relationship with various financial institutions, and has policies that limit the amount of credit exposure to any financial institution. Further quantitative disclosures in respect of the Group’s exposure to credit risk arising from trade receivables are set out in note 20(a).

(d) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, and the ability to close out market positions. Due to the dynamic nature of the underlying businesses, the Group employs a prudent liquidity policy.

– 144 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

The maturity profile of the Group’s financial liabilities as at the balance sheet date, based on the contracted undiscounted payments, was as follows:

At 31 December 2005 Trade and other payables Short-term loan and bank overdrafts Obligations under finance leases At 31 December 2006 Trade and other payables Short-term loan and bank overdrafts Obligations under finance leases At 31 December 2007 Trade and other payables Short-term loan and bank overdrafts Obligations under finance leases Loan notes At 30 June 2008 Trade and other payables Short-term loan and bank overdrafts Obligations under finance leases Loan notes	Carrying amount HK$’000 88,103 28,727 261 117,091 392,330 21,049 259 413,638 455,289 16,692 1,043 42,525 515,549 201,821 2,003 758 17,176 221,758	Total Contractual undiscounted cash flow HK$’000 88,103 28,727 261 117,091 392,330 21,100 276 413,706 455,289 16,867 1,109 52,156 525,421 201,821 2,003 758 17,176 221,758	Within 1 year or on demand HK$’000 88,103 28,727 154 116,984 392,330 21,100 167 413,597 455,289 16,867 586 3,675 476,417 201,821 2,003 513 17,176 221,513	After 1 year but within 5 years HK$’000 — — 107
				107
				— — 109
				109
				— — 523 48,481
				49,004
				— — 245 —
				245

(e) Interest rate risk

The Group charged interest on its clients on the basis of its cost of funding plus a mark-up and paid interest to clients on the basis of the interest the Group earned from financial institutions less a charge. Financial assets such as trade and other receivables, bank balances and cash-deposits with regulatory bodies are primarily at floating rates. Financial liabilities subject to floating interest rates are trade and other payables, bank overdrafts and loans. Obligations under finance lease are subject to fixed interest rate determined by the inception of the relevant lease. The Group’s income and operating cash flows are not subject to significant interest rate risk.

– 145 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

The Interest rate profile of the Group at the balance sheet date.

2005 Effective interest rate % Assets Bank balances 2.40% Margin finance loans 7.75%–15.75% Liabilities Net fixed rate borrowings: Obligations under finance lease 6.61% Mortgage loan — Loan notes — Variable rate borrowings: Short-term loans 5.79% Bank overdrafts 5.75%–7.75% Total borrowings Net fixed rate borrowings as a percentage of total borrowings Sensitivity analysis Assume decrease by 0.5% Profit after tax decrease by	2006 Effective interest rate HK$’000 % 161,501 2.14% 59,550 7.75%–15.75% 221,051 - - - - - - - - - 261 6.60%–7.32% — — 261 - - - - - - - - - 10,000 5.66% 18,727 6.00%–8.00% 28,727 - - - - - - - - - 28,988 0.9% 962	2007 Effective interest rate HK$’000 % 280,063 2.30% 66,619 6.75%–14.75% 346,682 - - - - - - - - - 259 6.32%–7.32% — — 8.50% 259 - - - - - - - - - 10,000 5.63%–6.52% 11,049 5.93%–7% 21,049 - - - - - - - - - 21,308 1.2% 1,628	2008 Effective interest rate HK$’000 % 373,762 0.79% 101,248 5.25%–13.25% 475,010 - - - - - - - - - 1,043 6.23%–7.32% — 3.00% 42,525 8.50% 43,568 - - - - - - - - - 12,000 4.49% 4,692 7.75%–16% 16,692 - - - - - - - - - 60,260 72.3% 2,292	HK$’000 287,051 63,589
				350,640 - - - - - - - - - 758 12,731 17,176
				30,665 - - - - - - - - - 2,000 3
				2,003 - - - - - - - - -
				32,668
				93.9%
				1,743

At 31 December 2005, 2006 and 2007, and 30 June 2008, it is estimated that a general decrease of 50 basis points in interest rates, with all other variables held constant, would decrease the Group’s profit before tax and retained profits by approximately HK$962,000, HK$1,628,000, HK$2,292,000 and HK$1,743,000 respectively.

The sensitivity analysis above has been determined assuming that the change in interest rates had occurred at the balance sheet date and had been applied to the exposure to interest rate risk for both derivative and non-derivative financial instruments in existence at that date. The 50 basis points decrease represents management’s assessment of a reasonably possible change in interest rates over the period until the next annual balance sheet date.

– 146 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

34.2 Fair value estimation

The fair value of financial instruments traded in active markets (such as publicly traded derivatives and trading securities) is based on quoted market prices at the balance sheet date. The quoted market price used for financial assets held by the Group is the current bid price; the appropriate quoted market price for financial liabilities is the current ask price.

The fair value of financial instruments that are not traded in an active market (for example, over-thecounter derivatives and available-for-sale securities) is determined by using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each balance sheet date. Quoted market prices or dealer quotes for similar instruments are used for longterm debt.

The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair values. The carrying values of other financial assets and liabilities approximate their fair values.

35 RELATED PARTY TRANSACTIONS

35.1 Related party transactions

The following is a summary of significant related party transactions which were carried out in the normal course of the Group’s business:

Net premium expenses from foreign currency option trading and broking (note(a)(i)) Commission income received (note(a)(ii)) Miscellaneous expenses (note (b)) Service fee income (note (c)) Commission expenses (note (d))	Year ended 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 (4,400) (1,181) — 7 2 — (127) (142) (225) — 2,648 — — (7,775) —	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) — — — — (139) (65) — — — —

Net premium expenses from foreign currency option trading and broking

(a) In 2005 and 2006, the associate in New Zealand transacted leveraged foreign exchange trading, precious metal trading and securities trading through the subsidiaries of the Group.
(i) For leveraged foreign exchange transactions and precious metal trading transactions, spreads are based on relevant market rates at the time of each transaction available to other customers and counterparties of the Group with comparable standing. The aggregate notional amount of the transactions entered by the associates amounted to HK$104,240 million (2005: HK$139,289 million) for leveraged foreign exchange trading contracts and HK$34,072 million (2005: HK$772 million) for precious metal trading contracts out of the total aggregate

– 147 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

notional amount of the transaction of HK$703,034 million (2005: HK$371,677) and HK$189,367 million (2005: HK$27,050 million) respectively entered by the Group during 2005 and 2006.

(ii) Commission and option premium income were charged to these transactions on normal commercial terms. During 2005 and 2006, the commission of HK$1,690 (2005: HK$6,808) was charged on the transactions and net option premium expenses of HK$1,181,232 (2005: HK$4,400,260) were included in turnover of the Group.
(b) During the Relevant Periods, the Group incurred expense for purchasing Chinese paintings from a company in which the Chairman of the Group held a 70% equity interest. The amount was charged on normal commercial terms.
(c) In 2006, an associate in New Zealand paid a service fee to a subsidiary of the Group in Macau of HK$2,648,373 during the year for supporting and administrative services rendered. The amount was charged at agreed terms.
(d) An associate in New Zealand charged commission to a subsidiary of the Group in Hong Kong. The commission is calculated according to the business volume transacted and is on normal commercial terms.

35.2 Compensation of key management personnel

The remuneration of directors and other members of key management during the year were as follows:

Salaries and other short-term employee benefits Equity-settled share-based transactions	Year ended 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 13,301 18,517 17,696 — 588 1,515 13,301 19,105 19,211	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) 7,645 7,460 1,142 343 8,787 7,803	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) 7,645 7,460 1,142 343 8,787 7,803
			7,803

The remuneration of directors and key executives are reviewed by the Remuneration Committee having regard to the performance of individuals and markets trends.

36 CAPITAL COMMITMENTS

Capital commitments outstanding and not provided for in the financial information were as follows:

Contracted but not provided for	2005 HK$’000 547	As at 31 December 2006 2007 HK$’000 HK$’000 (Unaudited) 3,301 14,807	As at 30 June 2008 HK$’000 —

– 148 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

37 IMMEDIATE AND ULTIMATE HOLDING COMPANY

At 30 June 2008, the directors consider the immediate parent and ultimate controlling party of the Group to be Hantec Holdings Limited (‘‘HHL’’), which is incorporated in Hong Kong. This entity does not produce financial statements available for public use.

38. POST BALANCE EVENTS

After the balance sheet date, the controlling shareholder of the Company, HHL, has requested the Board to place before the shareholders of the Company a proposal for the reorganization of the Group. If approved and implemented, the result of the reorganization will be:

(i) the Company continuing to be a public listed company with its subsidiaries concentrating on the business of carrying out regulated activities under the Securities and Futures Ordinance;
(ii) all other subsidiaries of the Company carrying on trading and broking of precious metal contracts, provision of financial related services outside of Hong Kong and investment in water plant business being grouped under the Hantec Pacific Limited (‘‘HPL’’); and
(iii) the shares of HPL will be distributed in specie to the shareholders of the company upon injection of businesses in HPL.

39 POSSIBLE IMPACT OF AMENDMENTS, NEW STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE FOR THE PERIOD ENDED 30 JUNE 2008

Up to the date of issue of this financial information, the HKICPA has issued a number of amendments, new standards and interpretations which are not yet effective for the period ended 30 June 2008 and which have not been adopted in this financial information.

Of these developments, the following relate to matters that may be relevant to the Group’s operations and financial position:

	Effective for accounting
	period beginning on or after
HKFRS 8, Operating segments	1 January 2009
Revised HKAS 1, Presentation of financial statements	1 January 2009
Amendments to HKFRS 2, Share-based payment — Vesting conditions	1 January 2009
and cancellations
Amendments to HKAS 32, Financial instruments:
Presentation and HKAS 1, Presentation of financial statements —	1 January 2009
Puttable financial instruments and obligations arising on liquidation
Revised HKFRS 3, Business combinations	1 July 2009

The Group is in the process of making an assessment of what the impact of these amendments, new standards and new interpretations is expected to be in the period of initial application.

– 149 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

2. RECONCILIATION STATEMENT

Set out below is the reconciliation of the consolidated results of the Group for the year ended 31 December 2005 and consolidated balance sheets as at 1 January 2005 and 31 December 2005 contained in the Accountants’ Report to the audited financial statements of the Group for the financial year ended 31 December 2005:

Note Per audited financial statements as at 1 January 2005 Adjustment in respect of share of profits of an associated company of the Group 1 Per Accountants’ Report as at 1 January 2005 Per audited financial statements for the year ended 31 December 2005: Net profit attributable to the equity holders of the Company for the year 2004 final dividends paid Adjustment in respect of share of profits of an associated company of the Group 1 Per Accountants’ Report as at 31 December 2005 Note:	Net profit attributable to the equity holders of the Company HK$’000 27,447 — (571) 26,876	Retained earnings HK$’000 42,021 571 42,592 27,447 (9,778) (571) 59,690

The Group’s associated company, Cosmos Hantec Investment (NZ) Limited, valued its open positions in leveraged foreign exchange contracts using mid rates as at 31 December 2004 which is not consistent with the Group’s accounting policy of valuing long positions using bid rates and short positions using ask rates. This adjustment was made to ensure that the Group’s accounting policy for valuing open positions in leveraged foreign exchange contracts was consistently applied throughout the three years ended 31 December 2007 and the six months ended 30 June 2008.

– 150 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

3. STATEMENT OF INDEBTEDNESS

As at the close of business on 30 September 2008, being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this circular, the Group had borrowings amounting to approximately HK$14,434,000 and contingent liabilities and guarantees amounting to approximately HK$389,000,000, details of which are as follows:

Borrowings

The following table illustrates the Group’s bank and other borrowings as at 30 September 2008:

Bank overdrafts Bank borrowings (unsecured) (Note) Obligations under finance leases Mortgage loan (secured)	HK$ 1,000 2,000,000 633,000 11,800,000
	14,434,000

Legal contingencies

As at 30 September 2008, the Group was involved in certain lawsuits. While the outcome of such lawsuits cannot be determined at present, the Directors are of the opinion that no liabilities resulting from these proceedings will have a material adverse effect on the Group’s financial position, liquidity or operating results.

Representation

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

No material adverse change

Save as disclosed herein, the Directors have confirmed that there has not been any material change in the indebtedness and contingent liabilities of the Group since 30 September 2008.

4. WORKING CAPITAL STATEMENT

The Directors are of the opinion that, after taking into account the effect of the Group Reorganisation and the present available internal resources, the Group has sufficient working capital for its present requirement and for the next twelve months from the date of this circular.

– 151 –

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE RETAINED GROUP UPON COMPLETION OF THE GROUP REORGANISATION

(A) UNAUDITED PRO FORMA ASSETS AND LIABILITIES STATEMENT OF THE RETAINED GROUP

Introduction

The unaudited pro forma assets and liabilities statement of the Retained Group has been prepared giving effect to the Group Reorganisation.

The unaudited pro forma assets and liabilities statement of the Retained Group has been prepared in accordance with Rule 4.29 of the Listing Rules for the purpose of illustrating the Group Reorganisation as if the Group Reorganisation had taken place on 30 June 2008.

The unaudited pro forma assets and liabilities statement of the Retained Group is based upon the audited consolidated balance sheet of the Group as at 30 June 2008, which has been extracted from the financial information of Group set out in Appendix I of this circular, after giving effect to the pro forma adjustments to the Group Reorganisation that are (i) directly attributable to the transaction; and (ii) factually supportable, which are summarized in the accompany notes.

The unaudited pro forma assets and liabilities statement of the Retained Group is based on a number of assumptions, estimates and uncertainties. The accompanying unaudited pro forma assets and liabilities statement of the Retained Group does not purport to describe the actual financial position of the Retained Group that would have been attained had the Group Reorganisation been completed on 30 June 2008. The unaudited pro forma assets and liabilities statement of the Retained Group does not purport to predict the future financial position of the Retained Group upon completion of Group Reorganisation.

The unaudited pro forma assets and liabilities statement of the Retained Group should be read in conjunction with the historical information of the Group as set out in the financial information of the Group in Appendix I and other financial information included elsewhere in this circular.

– 152 –

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE RETAINED GROUP UPON COMPLETION OF THE GROUP REORGANISATION

Non-current assets Intangible assets Fixed assets Interests in associates Other assets Available-for-sale financial assets Deferred income tax assets Current assets Financial assets at fair value through profit and loss Taxation recoverable Trade and other receivables Amounts due from related companies Bank balances and cash	The Group as at 30 June 2008 HK$’000 (Note 1) 6,517 38,624 19,665 3,969 984 1,395	Pro forma adjustments Pro forma Retained Group HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (Note 2) (Note 3) (Note 4) (Note 5a) (Note 5b) (Note 5c) (Note 6) (Note 7) (5,198) 1,319 (28,409) 40 (310) 9,945 (19,665) — (200) 3,769 (984) — (402) 993 (54,858) 16,026 - - - - - - - - - - - - - - - - - - - (2,071) 3,126 (1,914) 226 (120,683) 6,993 410 151,637 (50,900) 50,900 — (110,056) 56,269 (75,000) (6,993) (4,340) 600 147,681 (285,624) 302,670 - - - - - - - - - - - - - - - - - - -	Pro forma adjustments Pro forma Retained Group HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (Note 2) (Note 3) (Note 4) (Note 5a) (Note 5b) (Note 5c) (Note 6) (Note 7) (5,198) 1,319 (28,409) 40 (310) 9,945 (19,665) — (200) 3,769 (984) — (402) 993 (54,858) 16,026 - - - - - - - - - - - - - - - - - - - (2,071) 3,126 (1,914) 226 (120,683) 6,993 410 151,637 (50,900) 50,900 — (110,056) 56,269 (75,000) (6,993) (4,340) 600 147,681 (285,624) 302,670 - - - - - - - - - - - - - - - - - - -
	71,154 - - - - - - - - - 5,197 2,140 264,917 — 287,201		16,026 - - - - - - - - - - 3,126 226 151,637 — 147,681
	559,455 - - - - - - - - -		302,670 - - - - - - - - - -

– 153 –

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE RETAINED GROUP UPON COMPLETION OF THE GROUP REORGANISATION

Current liabilities Trade and other payables Short-term loan and bank overdrafts Current portion of obligations under finance lease Current portion of secured mortgage loan Amounts due to related companies Loan notes Taxation payable Net current assets Total assets less current liabilities Non-current liabilities Obligations under finance lease Secured mortgage loan Deferred income tax liabilities Net assets Capital and reserves: Share capital Other reserves Retained earnings Total equity attributable to equity holders of the Company Minority interests Total equity	The Group as at 30 June 2008 HK$’000 (Note 1) 201,821 2,003 513 692 — 17,176 5,073	Pro forma adjustments HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (Note 2) (Note 3) (Note 4) (Note 5a) (Note 5b) (Note 5c) (Note 6) (Note 7) (135,135) 254 (3) — (692) (107,169) 107,169 (4,919) (247,918) - - - - - - - - - (37,706) ~~- - - - - - - - -~~ (92,564) — (12,039) (96) (12,135) - - - - - - - - - (80,429) — (19,772) (75,000) (60,238) 40 156 (4,340) 290 (80,010) (419) (80,429)	Pro forma Retained Group HK$’000 66,940 2,000 513 — — 17,176 154
	227,278 - - - - - - - - - 332,177 ~~- - - - - - - - -~~		86,783 - - - - - - - - - 215,887 ~~- - - - - - - - -~~
	403,331		231,913
	245 12,039 98		245 — 2
	12,382 - - - - - - - - - 390,949		247 - - - - - - - - - 231,666
	41,789 220,364 128,377		41,789 125,592 64,285
	390,530 419		231,666 —
	390,949		231,666

– 154 –

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE RETAINED GROUP UPON COMPLETION OF THE GROUP REORGANISATION

Notes:

The amounts have been extracted without adjustment from the Accountants’ Report on the Group as set out in Appendix I to this circular.
The adjustment reflects the de-consolidation of the assets and liabilities of HPL Group from the Group had the Group Reorganisation been completed on 30 June 2008. The amounts have been extracted without adjustment from the Accountants’ Report on the HPL Group as set out in Appendix III to this circular.
This adjustment reflects the settlement of inter-company balances between the Retained Group and HPL Group upon completion of the Group Reorganisation. As set out in the letter from the Board in this circular, certain inter-group balances between members of the Retained Group and members of the HPL Group will be assigned or settled before completion of the Group Reorganisation in cash. For the purpose of this unaudited assets and liabilities statement, the inter-group balances between members of the Retained Group and members of the HPL Group as at 30 June 2008 will be settled in full by cash upon completion of the Group Reorganisation.
The amount represents capital contribution by the Company to the HPL Group upon completion of the Group Reorganisation. It is assumed that the Company will inject HK$75,000,000 to HPL upon completion of the Group Reorganisation. The capital contribution of HK$75,000,000 will be debited as a reduction in other reserves of the Retained Group upon completion of the Group Reorganisation.
Elimination of balances between Retained Group and HPL Group as at 30 June 2008:
5a. The adjustment reflects the amount of trust money of HK$4,651,000 and HK$2,342,000 placed by two members of the HPL Group, Cosmos Hantec Investment (NZ) Limited (‘‘CHI’’) and Hantec Financial Services (Suisse) SA (‘‘HFS’’) respectively, in segregated bank accounts of Hantec International Limited (‘‘HIL’’), a member of the Retained Group, for forex trading purposes. The amount was included as bank balances in the consolidated balance sheet of the Company. The amounts were not bank balances of the Retained Group and, therefore, were excluded.
5b. The adjustment represents the sale of fixed assets with a net book value of HK$40,000 as at 30 June 2008 developed by Ringus Solution Enterprise Limited, a subsidiary of HPL, to Chinacorp Nominees Limited, a member of Retained Group.
5c. The adjustment represents a deposit of HK$410,000 placed by Chinacorp Nominees Limited in Ringus Solution Enterprise Limited for a project in progress. Ringus Solution Enterprise Limited recognised HK$156,000 of the amount received as income and recorded HK$254,000 as other payables.
The adjustment represents the estimated professional and legal fees and other expenses to be incurred by the Retained Group in relation to the Group Reorganisation.
The adjustment represents the net book value of fixed assets to be sold to a HPL Group subsidiary by a Retained Group subsidiary as part of the Group Reorganisation for a cash consideration of HK$600,000.

– 155 –

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE RETAINED GROUP UPON COMPLETION OF THE GROUP REORGANISATION

(B) UNAUDITED PRO FORMA INCOME STATEMENT OF THE RETAINED GROUP

The unaudited pro forma income statement of the Retained Group has been prepared giving effect to the Group Reorganisation.

The unaudited pro forma income statement of the Retained Group has been prepared in accordance with Rule 4.29 of the Listing Rules for the purpose of illustrating the Group Reorganisation as if the Group Reorganisation had taken place on 1 January 2007.

The unaudited pro forma income statement of the Retained Group is based upon the audited consolidated income statement of the Group for the year ended 31 December 2007, which has been extracted from the financial information of the Group set out in Appendix I to this circular, after giving effect to the pro forma adjustment of the Group Reorganisation that are (i) directly attributable to the transaction; (ii) expected to have a continuing impact on the Retained Group; and (iii) factually supportable, are summarised in the accompanying notes. The unaudited pro forma income statement of the Retained Group is based on a number of assumptions, estimates and uncertainties. Accordingly, the accompanying unaudited pro forma income statement of the Retained Group does not purport to describe the actual result of the Retained Group that would have been attained had the Group Reorganisation been completed on 1 January 2007 or to predict the future result of the Retained Group.

The unaudited pro forma income statement of the Group should be read in conjunction with the financial information of the Group as set out in Appendix I and other financial information included elsewhere in this circular.

– 156 –

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE RETAINED GROUP UPON COMPLETION OF THE GROUP REORGANISATION

Turnover Other revenue Other net income Staff costs Commission expenses Operating leases for land and buildings Other operating expenses Total operating expenses Operating profit Finance costs Share of profits of associated companies Profit before taxation Income taxation Profit for the year	Group 2007 HK$’000 (Note 1) 465,761 1,848 5,725 473,334 ---------- 88,486 226,508 16,632 81,853 413,479 ~~----------~~ 59,855 (8,472) 51,383 2,047 53,430 (13,071) 40,359	Pro forma adjustment HK$’000 HK$’000 (Note 2) (Note 3) (293,637) 1,244 (808) 9,314 (6,118) 2,513 (300,563) ---------- (47,422) (157,092) 575 (6,247) 2,304 (50,492) 10,192 (261,253) ~~----------~~ (39,310) 55 (39,255) (2,047) (41,302) 10,388 (30,914)	Pro forma Retained Group 2007 HK$’000 173,368 10,354 2,120 185,842 ---------- 41,064 69,991 12,689 41,553 165,297 ~~----------~~ 20,545 (8,417) 12,128 — 12,128 (2,683) 9,445

– 157 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE RETAINED GROUP UPON COMPLETION OF THE GROUP REORGANISATION

APPENDIX II

Notes:

The amounts have been extracted without adjustment from the Accountants’ Report on the Group as set out in Appendix I to this circular.
The adjustment reflects the de-consolidation of the results of HPL Group from the Group had the Group Reorganisation been completed on 1 January 2007. The amounts have been extracted from the Accountants’ Report on the HPL Group as set out in Appendix III to this circular.
The adjustment reflects the elimination of intra-company management fee, trading profit/loss and other expenses between the Retained Group and HPL Group.
(C) UNAUDITED PRO FORMA CASH FLOW STATEMENT OF THE RETAINED GROUP

Introduction

The unaudited pro forma cash flow statement of the Retained Group has been prepared giving effect to the Group Reorganisation.

The unaudited pro forma cash flow statement of the Retained Group has been prepared in accordance with Rule 4.29 of the Listing Rules for the purpose of illustrating the Group Reorganisation as if the Group Reorganisation had taken place on 1 January 2007.

The unaudited pro forma cash flow statement of the Retained Group is based upon the audited consolidated cash flow statement of the Group for the year ended 31 December 2007, which have been extracted from the financial information of the Group set out in Appendix I to this circular, after giving effect to the pro forma adjustment of the Group Reorganisation that are (i) directly attributable to the transaction; (ii) expected to have a continuing impact on the Retained Group; and (iii) factually supportable, are summarised in the accompanying notes. The unaudited pro forma cash flow statement of the Retained Group is based on a number of assumptions, estimates and uncertainties. Accordingly, the accompanying unaudited pro forma cash flow statement of the Retained Group does not purport to describe the actual cash flow of the Retained Group that would have been attained had the Group Reorganisation been completed on 1 January 2007 or to predict the future cash flow of the Retained Group.

The unaudited pro forma cash flow statement of the Group should be read in conjunction with the financial information of the Group as set out in Appendix I and other financial information included elsewhere in this circular.

– 158 –

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE RETAINED GROUP UPON COMPLETION OF THE GROUP REORGANISATION

Operating activities Profit before taxation Adjustments for: Depreciation Diminution/(appreciation) in value of financial assets at fair value through profit or loss Interest expenses Dividend income from listed securities Dividend income from available-for-sale financial assets Share of profits of associates Loss on disposal of fixed assets Profit on disposal of financial assets at fair value through profit or loss Impairment loss on trade and other receivables Write back of provision for doubtful debts and clawback Provision for clawback Equity-settled share-based transactions Increase in fixed deposit with maturity over three months Increase in pledged deposits Operating profit before working capital changes Decrease in other assets (Decrease)/increase in trade and other receivables Increase/(decrease) in trade and other payables Cash inflow from operations Hong Kong profits tax paid Overseas tax paid Net cash inflow from operating activities	Group 2007 Pro forma adjustment HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (Note 1) (Note 2) (Note 3a) (Note 3b) (Note 4) (Note 5) (Note 6) (Note 7) 53,430 (41,302) 6,927 (2,444) 3,429 (3,908) 8,472 (55) (479) 420 (138) 138 (2,047) 2,047 793 (248) (2,346) 1,642 911 (911) (2) — 104 — 1,802 (888) (7,214) 7,214 (3,017) 2,486 60,625 (35,809) 1,312 — (46,057) 14,658 61,650 62,205 (74,942) 78,085 (96,093) (10,373) 9,842 (5,668) 5,668 62,044 (80,583) - - - - - - - - - - - - - - - - - - - -	Pro forma Retained Group 2007 HK$’000 12,128 4,483 (479) 8,417 (59) — — 545 (704) — (2) 104 914 — (531)
		24,816 1,312 30,251 (12,737)
	78,085 (10,373) (5,668)	43,642 (531) —
	62,044 - - - - - - - - - -	43,111 - - - - - - - - - -

– 159 –

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE RETAINED GROUP UPON COMPLETION OF THE GROUP REORGANISATION

Investing activities Purchase of fixed assets Sale of fixed assets Sale of financial assets at fair value through profit or loss Dividends received from listed securities Dividends received from available-for-sale financial assets Dividends received from an associate Purchase of financial assets at fair value through profit or loss Purchase of associates Loan to an associate Purchase of subsidiaries, net of cash and cash equivalents acquired Net cash outflow from investing activities Financing activities Advance from finance lease Repayments under finance lease Issue of loan notes Capital contribution from controlling shareholder Repayment of loan notes Interest paid Proceeds from capital contribution by minority shareholders Proceeds from shares issued under share option scheme Dividends paid Net cash inflow from financing activities Increase in cash and cash equivalents Cash and cash equivalents at 1 January Effect of foreign exchange rate changes Cash and cash equivalents at 31 December Analysis of the balances of cash and cash equivalents Bank balances — general accounts and cash Bank overdrafts Bank loans — unsecured	Group 2007 Pro forma adjustment HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (Note 1) (Note 2) (Note 3a) (Note 3b) (Note 4) (Note 5) (Note 6) (Note 7) (7,279) 2,046 8 — 13,364 (10,565) 479 (420) 138 (138) 1,637 (1,637) (2,769) 544 (1,171) 1,171 (5,000) 5,000 (322) 322 (915) (3,677) - - - - - - - - - - - - - - - - - - - - 1,365 — (581) — 44,865 — — (1,086) (2,340) — (8,472) 55 310 (310) 264 — (12,425) — 22,986 (1,341) - - - - - - - - - - - - - - - - - - - - 84,115 (85,601) 246,879 (116,508) (72,029) 89,928 (11,000) (4,340) 600 3,578 (3,516) 334,572 (205,625) 351,264 (205,638) (72,029) 61,650 89,928 (11,000) (4,340) 600 (4,692) 13 (12,000) — 334,572 (205,625)	Pro forma Retained Group 2007 HK$’000 (5,233) 8 2,799 59 — — (2,225) — — —
		(4,592) - - - - - - - - - - 1,365 (581) 44,865 (1,086) (2,340) (8,417) — 264 (12,425)
	22,986 - - - - - - - - - - 84,115 246,879 3,578	21,645 - - - - - - - - - - 60,164 133,530 62
	334,572	193,756
	351,264 (4,692) (12,000)	210,435 (4,679) (12,000)
	334,572	193,756

– 160 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE RETAINED GROUP UPON COMPLETION OF THE GROUP REORGANISATION

APPENDIX II

Notes:

The amounts have been extracted without adjustment from the Accountants’ Report on the Group as set out in Appendix I to this circular.
The adjustment reflects the de-consolidation of the cash flows of HPL Group from the Group had the Group Reorganisation been completed on 1 January 2007. The amounts have been extracted from the Accountants’ Report on the HPL Group as set out in Appendix III to this circular.
3a. The adjustment reflects the amount of trust money of HK$70,729,000 and HK$1,300,000 placed by two members of the HPL Group, CHI and HFS respectively, in segregated bank accounts of HIL, a member of the Retained Group, for forex trading purpose. The amounts were included as bank balances in the consolidated balance sheet of HIHL as at 1 January 2007. The amounts were not bank balances of the Retained Group and, therefore, were excluded.
3b. The amount represented the movement in trust money of a decrease of HK$68,211,000 and an increase of HK$6,561,000 placed by the two members of the HPL Group, CHI and HFS, respectively in segregated bank accounts of HIL, a member of the Retained Group, during the year ended 31 December 2007. The amounts were not bank balances of the Retained Group and, therefore, excluded.
This adjustment reflects the settlement of inter-company balances between the Retained Group and HPL group upon completion of the Group Reorganisation. As set out in the letter from the Board in HIHL’s circular dated 31 October 2008, certain inter-group balances between members of the Retained Group and members of the HPL Group will be assigned or settled before completion of the Group Reorganisation in cash. For the purpose of this unaudited pro forma cash flow statement, the inter-group balances between members of the Retained Group and members of the HPL Group as at 1 January 2007 had been settled in full by cash upon completion of the Group Reorganisation.
The amount represents capital contribution by HIHL to the HPL Group upon completion of the Group Reorganisation. It is assumed that HIHL had injected HK$11,000,000 to HPL upon completion of the Group Reorganisation.
This adjustment represents the estimated legal and professional fees to be incurred by the Retained Group in relation to the Group Reorganisation.
The adjustment represents the cash to be received on disposal of fixed assets from a Retained Group subsidiary to a HPL Group subsidiary.

– 161 –

APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE RETAINED GROUP UPON COMPLETION OF THE GROUP REORGANISATION

(D) ACCOUNTANTS’ REPORT ON PRO FORMA FINANCIAL INFORMATION OF THE RETAINED GROUP

8th Floor Prince’s Building 10 Chater Road Central Hong Kong

31 October 2008

The Board of Directors Hantec Investment Holdings Limited 45th Floor COSCO Tower 183 Queen’s Road Central Hong Kong

Dear Sirs

We report on the unaudited pro forma assets and liabilities statement as at 30 June 2008 and the unaudited pro forma income statement and cash flow statement for the year ended 31 December 2007 (collectively ‘‘the unaudited pro forma financial information’’) of Hantec Investment Holdings Limited (‘‘the Company’’) and its subsidiaries (collectively the ‘‘Group’’) set out in sections in (A) to (C) of Appendix II to the circular of the Company dated 31 October 2008 (the ‘‘Circular’’), which has been prepared by the directors of the Company, solely for illustrative purposes, to provide information about how the proposed group re-organisation as defined in the Circular (the ‘‘Proposed Re-organisation’’) might have affected the assets and liabilities of the Group on a pro forma basis as at 30 June 2008, and the result and cash flow of the Group on a pro forma basis for the year ended 31 December 2007.

The unaudited pro forma financial information is derived from the audited historical financial information of the Group as set out in section 1 of Appendix I to the Circular. The basis of preparation of the unaudited pro forma financial information is set out in the introduction and notes to the unaudited pro forma financial information of the Group in sections (A) to (C) of Appendix II to the Circular.

Respective Responsibilities of Directors and 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 (‘‘HKICPA’’).

– 162 –

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE RETAINED GROUP UPON COMPLETION OF THE GROUP REORGANISATION

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

Basis of opinion

We conducted our engagement in accordance with Hong Kong Standard on Investment Circular Reporting Engagements 300 ‘‘Accountants’ Reports on Pro Forma Financial Information in Investment Circulars’’ issued by HKICPA. Our work consisted primarily of comparing the unadjusted financial information with the 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.

Our work did not constitute an audit or review made in accordance with Hong Kong Standards on Auditing issued by the HKICPA, and accordingly, we do not express any such audit or review assurance on the unaudited pro form 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 adjustment 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.

The unaudited pro forma financial information is for illustrative purposes only, based on the judgements and assumptions of the directors of the Company, and because of its nature, it does not provide any assurance or indication that any event will take place in the future and may not be indicative of:

. the financial position of the Group as at 30 June 2008 or any future date; or
. the results and cash flows of the Group for the year ended 31 December 2007 or any future year/period.

– 163 –

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE RETAINED GROUP UPON COMPLETION OF THE GROUP REORGANISATION

Opinion

In our opinion:

(a) the unaudited pro forma financial information has been properly compiled 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.

KPMG

Certified Public Accountants

8th Floor, Prince’s Building 10 Chater Road

Central, Hong Kong

– 164 –

ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

Set out below is the text of the Accountants’ Report on the financial information of HPL Group from KPMG which is prepared for inclusion in this circular:

8th Floor Prince’s Building 10 Chater Road Central Hong Kong

31 October 2008

The Board of Directors Hantec Investment Holdings Limited 45th Floor, COSCO Tower 183 Queen’s Road Central Hong Kong

Dear Sirs

Introduction

We set out below our report on the financial information relating to Hantec Pacific Limited (‘‘HPL’’ or the ‘‘Company’’) and its subsidiaries (collectively ‘‘HPL Group’’) in Appendix III of the circular of Hantec Investment Holdings Limited (‘‘HIHL’’) dated 31 October 2008 (the ‘‘Circular’’), including the combined balance sheets of HPL Group as at 31 December 2005, 2006 and 2007, and 30 June 2008 and combined income statements, combined statements of changes in equity and combined statements of cash flows of HPL Group for each of the years ended 31 December 2005, 2006 and 2007 and the six months ended 30 June 2008 (the ‘‘Relevant Periods’’) and the explanatory notes thereto (collectively the ‘‘Financial Information’’) for inclusion in the Circular in connection with the proposed Group Reorganisation of HIHL and its subsidiaries (the ‘‘Group’’) as set out in the ‘‘Letter from the Board’’ contained in the Circular.

HPL was incorporated in the British Virgin Islands on 20 August 2008 with limited liability. In accordance with the Group Reorganisation of HIHL, HPL will become a holding company of the entities set out in notes 12 and 13 to the Financial Information (‘‘HPL Group entities’’) upon completion of the Group Reorganisation. No audited financial statements have been prepared for HPL since its date of incorporation as it was newly incorporated and has not been involved in any significant business transactions.

Certain HPL Group entities prepared audited statutory financial statements throughout the Relevant Periods. Details of the statutory auditors of HPL Group entities are set out in notes 12 and 13 to the Financial Information respectively.

No financial statements of HPL and HPL Group entities have been prepared and audited subsequent to 30 June 2008.

– 165 –

ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

Basis of preparation

The Financial Information has been prepared by the Directors of HIHL in accordance with Hong Kong Financial Reporting Standards (HKFRSs), which collective term includes all applicable individual Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards and Interpretations issued by the Hong Kong Institute of Certified Public Accountants (HKICPA), accounting principles generally accepted in Hong Kong based on the audited financial statements, or where appropriate, unaudited financial statements of HPL and HPL Group entities.

The combined balance sheets of HPL Group as at 31 December 2005, 2006 and 2007, and 30 June 2008 have been prepared to present the assets and liabilities of HPL Group entities as if the HPL group structure had been in existence at those dates. The combined income statements and combined cash flow statements have been prepared to include the results and cash flows of HPL Group entities as if the HPL group structure had been in existence throughout the Relevant Periods, or since their respective dates of incorporation/ establishment or acquisition or up to the date of disposal. Adjustments have been made, for the purpose of this report, to restate the financial statements of HPL and HPL Group entities in accordance with the basis set out in note 1 to the Financial Information to conform with HKFRSs and the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

Responsibility

It is our responsibility to form an independent opinion, based on our audit, on the Financial Information.

Basis of opinion

As a basis for forming an opinion on the Financial Information for the purpose of this report, we have carried out appropriate audit procedures in respect of the audited financial statements, or where appropriate, the unaudited financial statements of HPL and HPL Group entities for each of the three years ended 31 December 2005, 2006 and 2007 and for the six months ended 30 June 2008 in accordance with Hong Kong Standards on Auditing issued by the HKICPA and have carried out such additional procedures as we considered necessary in accordance with the Auditing Guideline ‘‘Prospectuses and the Reporting Accountant’’ issued by the HKICPA. We have not audited any financial statements of HPL Group and HPL Group entities in respect of any period subsequent to 30 June 2008.

– 166 –

ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the Financial Information. It also includes an assessment of the significant estimates and judgements made by the Directors in the preparation of the Financial Information, and of whether the accounting policies are appropriate to HPL Group’s circumstances, consistently applied and adequately disclosed.

Opinion

In our opinion, for the purpose of this report, all adjustments considered necessary have been made and the Financial Information, on the basis of presentation set out in note 1 to the Financial Information, gives a true and fair view of the state of affairs of HPL Group as at 31 December 2005, 2006 and 2007, and 30 June 2008, of its combined results and combined cash flows for each of the three years ended 31 December 2005, 2006 and 2007, and for the six months ended 30 June 2008.

Corresponding Financial Information

For the purpose of this report, we have also reviewed the unaudited corresponding interim financial information of the HPL Group comprising the combined income statement, the combined statement of changes in equity and the combined cash flow statement for the six months ended 30 June 2007, together with a summary of significant accounting policies and other explanatory notes thereto (the ‘‘30 June 2007 Corresponding Financial Information’’), for which the directors are responsible, in accordance with Hong Kong Standard on Review Engagements 2410, ‘‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity’’ issued by the HKICPA. Our responsibility is to express a conclusion on the 30 June 2007 Corresponding Financial Information based on our review.

– 167 –

ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

KPMG

Certified Public Accountants 8th Floor, Prince’s Building 10 Chater Road Central Hong Kong

– 168 –

ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

COMBINED INCOME STATEMENT

Note Turnover 4 Other revenue 4 Other net (loss)/income 4 Staff costs 5 Commission expenses Operating leases for land and buildings Other operating expenses 6 Total operating expenses Operating profit Finance costs 7 Share of profits of associates 13 Profit before taxation Income tax 8 Profit for the year/period Attributable to: Equity holders of the Company Minority interests Dividends attributable to the year/period: Special dividend declared during the year/period 9 Final dividend proposed after the balance date	Year ended 31 December 2005 2006 2007 HK$’000 HK$’000 Hk$’000 41,416 189,447 293,637 2 345 808 (621) 1,217 6,118 40,797 191,009 300,563 ------------ ------------ ------------ 10,438 31,968 47,422 12,090 87,891 157,092 1,909 3,317 6,247 15,750 36,052 50,492 40,187 159,228 261,253 ~~------------~~ ~~------------~~ ~~------------~~ 610 31,781 39,310 (21) (58) (55) 589 31,723 39,255 3,901 5,802 2,047 4,490 37,525 41,302 (1,607) (7,716) (10,388) 2,883 29,809 30,914 3,267 29,809 30,912 (384) — 2 2,883 29,809 30,914 3,500 — — — — — 3,500 — —	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) 127,732 128,636 478 73 1,596 517 129,806 129,226 ------------ ------------ 19,373 24,810 73,664 63,089 2,153 4,915 19,434 27,929 114,624 120,743 ~~------------~~ ~~------------~~ 15,182 8,483 (27) (84) 15,155 8,399 1,233 1,407 16,388 9,806 (3,745) (2,711) 12,643 7,095 12,643 7,011 — 84 12,643 7,095 — — — 15,000 — 15,000

– 169 –

ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

COMBINED BALANCE SHEET

Note Non-current assets Intangible assets 10 Fixed assets 11 Interests in associates 13 Other assets 14 Available-for-sale financial assets 15 Deferred income tax assets 16 Current assets Financial assets at fair value through profit or loss 17 Taxation recoverable Trade and other receivables 18 Amounts due from related companies 19 Bank balances and cash 20 Current liabilities Trade and other payables 23 Short-term loans and bank overdrafts 24 Amounts due to related companies 19 Current portion of secured mortgage loan 24 Taxation payable Net current (liabilities)/assets Total assets less current liabilities	As at 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 180 5,153 5,552 2,914 7,997 7,765 15,480 8,949 15,288 — — — 12,089 10,236 12,293 383 954 564 31,046 33,289 41,462 ---------- ---------- ---------- — 12,858 1,588 — — — 23,941 228,455 242,124 58 27,085 27,237 42,829 116,509 215,338 66,828 384,907 486,287 ---------- ---------- ---------- 34,827 243,877 330,514 1 1 13 44,827 117,013 105,491 — — — 720 8,972 3,905 80,375 369,863 439,923 ---------- ---------- ---------- (13,547) 15,044 46,364 17,499 48,333 87,826 ---------- ---------- ----------	As at 30 June 2008 HK$’000 5,198 28,409 19,665 200 984 402
		54,858 ---------- 2,071 1,914 120,683 50,900 110,056
		285,624 ---------- 135,135 3 107,169 692 4,919
		247,918 ----------
		37,706
		92,564 ----------

– 170 –

ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

Note Non-current liabilities Secured mortgage loan 24 Deferred income tax liabilities 16 NET ASSETS Capital and reserves Share capital 21 Other reserves 22 Retained earnings 22 Total equity attributable to the equity holders of the Company 21 Minority interests TOTAL EQUITY	As at 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 — — — 9 99 94 9 99 94 ---------- ---------- ---------- 17,490 48,234 87,732 — — — 9,984 10,919 19,170 7,506 37,315 68,227 17,490 48,234 87,397 — — 335 17,490 48,234 87,732	As at 30 June 2008 HK$’000 12,039 96
		12,135 ----------
		80,429
		— 19,772 60,238
		80,010 419
		80,429

– 171 –

ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

COMBINED STATEMENT OF CHANGES IN EQUITY

Note Balance at 1 January 2005 Acquisition of a subsidiary 28(b) Surplus on revaluation of available- for-sale financial assets 15 Exchange difference Profit for the year 2005 special dividends paid 9 Balance at 31 December 2005 and 1 January 2006 Equity-settled share-based transactions 5 Deficit on revaluation of available- for-sale financial assets 15 Exchange difference Profit for the year Balance at 31 December 2006 and 1 January 2007 Equity-settled share-based transactions 5 Capital contribution from controlling shareholder Capital contribution from minority shareholders Acquisition of a subsidiary 28(b) Surplus on revaluation of available- for-sale financial assets 15 Exchange difference Profit for the year Balance at 31 December 2007	Attributable to equity holders of the Company Share capital Other reserves Retained earnings HK$’000 HK$’000 HK$’000 — 9,164 7,739 — — — — 2,491 — (1,671) — — 3,267 — — (3,500) — 9,984 7,506 — 200 — — (1,989) — — 2,724 — — — 29,809 — 10,919 37,315 — 888 — — 1,086 — — — — — — — — 2,057 — — 4,220 — — — 30,912 — 19,170 68,227	Attributable to equity holders of the Company Share capital Other reserves Retained earnings HK$’000 HK$’000 HK$’000 — 9,164 7,739 — — — — 2,491 — (1,671) — — 3,267 — — (3,500) — 9,984 7,506 — 200 — — (1,989) — — 2,724 — — — 29,809 — 10,919 37,315 — 888 — — 1,086 — — — — — — — — 2,057 — — 4,220 — — — 30,912 — 19,170 68,227	Minority interests HK$’000 3,238 (2,899) — 45 (384) — — — — — — — — — 310 23 — — 2 335	Total HK$’000 20,141 (2,899) 2,491 (1,626) 2,883 (3,500) 17,490 200 (1,989) 2,724 29,809 48,234 888 1,086 310 23 2,057 4,220 30,914 87,732
	Share capital HK$’000 — — — — — — — — — — — — — — — — — — —	Other reserves HK$’000 9,164 — 2,491 (1,671) — — 9,984 200 (1,989) 2,724 — 10,919 888 1,086 — — 2,057 4,220 — 19,170

– 172 –

APPENDIX III

ACCOUNTANTS’ REPORT ON THE HPL GROUP

Note Balance at 1 January 2008 Equity-settled share-based transactions 5 Realised profit on available-for-sale financial assets 15 Deficit on revaluation of available- for-sale financial asset 15 Exchange difference Profit for the year 2007 final dividends paid 9 Balance at 30 June 2008 Balance at 1 January 2007 Equity-settled share-based transaction 5 Surplus on revaluation of available- for-sale financial assets Exchange difference Profit for the period Balance at 30 June 2007	Attributable to equity holders of the Company Share capital Other reserves Retained earnings HK$’000 HK$’000 HK$’000 — 19,170 68,227 — (36) — — (2,558) — — (1) — — 3,197 — — — 7,011 — — (15,000) — 19,772 60,238 — 10,919 37,315 — 633 — — 937 — — 3,105 — — — 12,643 — 15,594 49,958	Attributable to equity holders of the Company Share capital Other reserves Retained earnings HK$’000 HK$’000 HK$’000 — 19,170 68,227 — (36) — — (2,558) — — (1) — — 3,197 — — — 7,011 — — (15,000) — 19,772 60,238 — 10,919 37,315 — 633 — — 937 — — 3,105 — — — 12,643 — 15,594 49,958	Minority interests HK$’000 335 — — — — 84 — 419 — — — — — —	Total HK$’000 87,732 (36) (2,558) (1) 3,197 7,095 (15,000) 80,429 48,234 633 937 3,105 12,643 65,552
	Share capital HK$’000 — — — — — — — — — — — — — —	Other reserves HK$’000 19,170 (36) (2,558) (1) 3,197 — — 19,772 10,919 633 937 3,105 — 15,594

Included in the combined retained earnings at 31 December 2005, 2006 and 2007, and 30 June 2007 and 2008, are statutory provisions of HK$Nil, HK$59,128, HK$203,506, HK$193,326, HK$433,048 which are required to be held in respect of certain overseas subsidiaries of the Group.

– 173 –

ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

COMBINED CASH FLOW STATEMENT

Note Net cash inflow/(outflow) from operating activities 28(a) Investing activities Purchase of fixed assets Sale of fixed assets Sale of available-for-sales financial assets Sale of financial assets at fair value through profit or loss Dividends received from listed securities Dividends received from available-for-sale financial assets Dividends received from an associate 13 Purchase of financial assets at fair value through profit or loss Purchase of available-for-sale financial assets 15 Purchase of associates 13 Loan to an associate 13 Purchase of subsidiaries, net of cash and cash equivalents acquired 28(c) Net cash (outflow)/inflow from investing activities	Year ended 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 40,592 30,338 80,583 ----------- ----------- ----------- (2,755) (2,422) (2,046) 195 7 — — — — 3,297 14,879 10,565 — 133 420 — 150 138 549 1,673 1,637 (3,066) (3,213) (544) (6,331) (136) — — — (1,171) — — (5,000) (2,975) 30,575 (322) (11,086) 41,646 3,677 ----------- ----------- -----------	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) (6,652) (97,809) ------------ ----------- (412) (21,859) — 7 — 12,670 36 179 313 48 138 — 1,637 1,719 (239) (1,266) — — (2) — — (5,000) — (51) 1,471 (13,553) ------------ -----------

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Note Financing activities Dividend paid 9 Interest paid Proceeds from capital contribution by minority shareholders Capital contribution from controlling shareholder 22 Advance from mortgage loan Net cash (outflow)/inflow from financing activities Increase in cash and cash equivalents Cash and cash equivalents at 1 January Effect of foreign exchange rate changes Cash and cash equivalents at 31 December 20 Analysis of balances of cash and cash equivalents Bank balances — general accounts and cash 20 Bank overdrafts 24	Year ended 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 (3,500) — — (21) (58) (55) — — 310 — — 1,086 — — — (3,521) (58) 1,341 ~~-----------~~ ~~-----------~~ ~~-----------~~ 25,985 71,926 85,601 17,568 42,828 116,508 (725) 1,754 3,516 42,828 116,508 205,625 42,829 116,509 205,638 (1) (1) (13) 42,828 116,508 205,625	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) — (15,000) (27) (84) — — — — — 12,731 (27) (2,353) ~~------------~~ ~~-----------~~ (5,208) (113,715) 116,508 205,625 3,390 2,559 114,690 94,469 114,691 94,472 (1) (3) 114,690 94,469

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NOTES TO THE FINANCIAL INFORMATION

1 GENERAL INFORMATION AND BASIS OF PRESENTATION OF FINANCIAL INFORMATION

Hantec Pacific Limited (‘‘HPL’’ or the ‘‘Company’’) is a limited company incorporated in the British Virgin Islands on 20 August 2008 as a wholly-owned subsidiary of Hantec Investment Holdings Limited (‘‘HIHL’’). The address of its registered office is Romasco Place, Wickhams Cay 1, P.O. Box 3140, Road Town, Tortola, British Virgin Islands, VG1110. Its principal activity is investment holding.

In accordance with the proposed group reorganisation of HIHL as set out in its circular dated 31 October 2008 (the ‘‘Group Reorganisation’’), HPL will become a holding company of the subsidiaries and associates as set out in notes 12 and 13 upon completion of the Group Reorganisation (‘‘HPL Group entities’’). The shares of HPL will be distributed in specie to the shareholders of HIHL on completion of the Group Reorganisation.

The combined balance sheets of HPL and HPL Group entities (the ‘‘HPL Group’’ or the ‘‘Group’’) as at 31 December 2005, 2006 and 2007, and 30 June 2008 have been prepared to present the assets and liabilities of HPL Group entities as if the HPL group structure had been in existence at those dates. The combined income statements, combined cash flow statements and combined statement of changes in equity for the year ended 31 December 2005, 2006 and 2007 and six months ended 30 June 2008 (the ‘‘Relevant Periods’’) have been prepared to include the results and cash flows of HPL Group entities as if the HPL group structure had been in existence throughout the Relevant Periods, or since their respective dates of incorporation/establishment or acquisition or up to the date of disposal.

The combined financial information is presented in thousands of units of Hong Kong Dollars (HK$’000) unless otherwise stated.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Statement of compliance

The HKICPA has issued certain new and revised HKFRSs that are effective or available for early adoption for the period ended 30 June 2008. For the purpose of preparing this Financial Information, the HPL Group has adopted all HKFRSs that are first applicable for adoption for the accounting period beginning 1 January 2008, throughout the Relevant Periods. The Group did not adopt HKFRSs that are not yet effective for the accounting period ended 30 June 2008.

2.2 Basis of preparation

financial instruments classified as available-for-sale or as financial assets at fair value through profit or loss (see note 2.9)

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2.3 Basis of combination

(a) Acquisition from entities under common control

Business combinations arising from transfers of interests in entities that are under the control of the shareholder that controls the Group are accounted for as if the acquisition had occurred at the beginning of the earliest comparative period presented or, if later, at the date that common control was established. The assets and liabilities acquired are recognised at the carrying amounts recognised previously in the Group’s controlling shareholder’s combined financial statements.

(b) Subsidiaries and minority interests

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

Minority interests represents the portion of the net assets of subsidiaries attributable to interests that are not owned by the Company, whether directly or indirectly through subsidiaries, and in respect of which the Group has not agreed any additional terms with the holders of those interests which would result in the Group as a whole having a contractual obligation in respect of those interests that meets the definition of a financial liability. Minority interests are presented in the consolidated balance sheet within equity, separately from equity attributable to the equity holders of

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the Company. Minority interests in the results of the Group are presented on the face of the consolidated income statement as an allocation of the total profit or loss for the year between minority interests and the equity holders of the Company.

(c) Associates

The Group’s share of its associates’ post-acquisition profits or losses is recognised in the income statement, and its share of post-acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

2.4 Segment reporting

In accordance with the Group’s internal financial reporting, the Group has determined that business segments be presented as the primary reporting format and geographical segments as the secondary reporting format.

2.5 Foreign currency translation

(a) Functional and presentation currency

Items included in the financial information of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘‘the functional currency’’). The consolidated financial information is presented in Hong Kong Dollars (‘‘HK Dollars’’), which is the Company’s functional and presentation currency.

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(b) Transactions and balances

(c) Group companies

(i) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
(ii) income and expenses for each income statement are translated at average exchange rates (unless the average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and
(iii) all resulting exchange differences are recognised as a separate component of equity.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

2.6 Fixed assets

Fixed assets are stated at historical cost less accumulated depreciation and impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Depreciation of fixed assets is calculated using the straight-line method to allocate cost or revalued amounts to their residual values over their estimated useful lives, as follows:

Freehold land	not depreciated
Buildings	over the unexpired term of lease or estimated useful life
Leasehold improvements	over the lease periods
Furniture and fixtures	20%
Office and computer equipment	20%
Motor vehicles	25%

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The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (see Note 2.8).

2.7 Intangible assets

(a) Goodwill

Goodwill is allocated to cash generating units for the purpose of impairment testing.

(b) Membership

2.8 Impairment of assets

2.9 Investments

(a) Financial assets at fair value through profit or loss

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(b) Loans and receivables

(c) Held-to-maturity investments

(d) Available-for-sale financial assets

Purchases and sales of investments are recognised on the trade-date — the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Investments are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest method. Realised and unrealised gains and losses arising from changes in the fair value of the ‘‘financial assets at fair value through profit or loss’’ category are included in the income statement in the period in which they arise. Unrealised gains and losses arising from changes in the fair value of non-monetary securities classified as available-for-sale are recognised in equity. When securities classified as availablefor-sale are sold or impaired, the accumulated fair value adjustments are included in the income statement as gains or losses from investment securities.

The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered in determining whether the securities are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss — measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in the income statement — is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement on equity instruments are not reversed through the income statement. Any subsequent increase in the fair value of such assets is recognised directly in equity.

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2.10 Trade and other receivables

Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade and other receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in the income statement.

2.11 Cash and cash equivalents

2.12 Trade and other payables

Trade and other payables are initially recognised at fair value and are subsequently stated at amortised cost unless the effect of discounting would be immaterial, in which case they are stated at cost.

2.13 Share capital

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

2.14 Income tax

Apart from certain limited exceptions, all deferred tax liabilities, and all deferred tax assets to the extent that it is probable that future taxable profits will be available against which the asset can be utilised, are recognised. Future taxable profits that may support the recognition of deferred tax assets arising from deductible temporary differences include those that will arise from the reversal of existing taxable temporary differences, provided those differences relate to the same taxation authority and the same

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taxable entity, and are expected to reverse either in the same period as the expected reversal of the deductible temporary difference or in periods into which a tax loss arising from the deferred tax asset can be carried back or forward. The same criteria are adopted when determining whether existing taxable temporary differences support the recognition of deferred tax assets arising from unused tax losses and credits, that is, those differences are taken into account if they relate to the same taxation authority and the same taxable entity, and are expected to reverse in a period, or periods, in which the tax loss or credit can be utilised.

Additional income taxes that arise from the distribution of dividends are recognised when the liability to pay the related dividends is recognised.

in the case of current tax assets and liabilities, the Company or the Group intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously; or
in the case of deferred tax assets and liabilities, if they relate to income taxes levied by the same taxation authority on either:
the same taxable entity; or
different taxable entities, which, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered, intend to realise the current tax assets and settle the current tax liabilities on a net basis or realise and settle simultaneously.

2.15 Employee benefits

(a) Employee leave entitlements

Employee entitlements to sick leave and maternity or paternity leave are not recognised until the time of leave.

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(b) Profit sharing and bonus plan

Liabilities for profit sharing and bonus plans are expected to be settled within 12 months and are measured at the amounts expected to be paid when they are settled.

(c) Pension obligations

(d) Share based payments

The fair value of share options granted by HIHL to employees and directors of the Group is recognised as an employee cost with a corresponding increase in a capital reserve within equity. The fair value is measured at grant date using the Black-Scholes model, taking into account the terms and conditions upon which the options were granted. Where the grantees have to meet vesting conditions before becoming unconditionally entitled to the options, the total estimated fair value of the options is spread over the vesting period, taking into account the probability that the options will vest.

During the vesting period, the number of share options that is expected to vest is reviewed. Any adjustment to the cumulative fair value recognised in prior years is charged/credited to the profit or loss for the year of the review, unless the original employee expenses qualify for recognition as an asset, with a corresponding adjustment to the capital reserve. On vesting date, the amount recognised as an expense is adjusted to reflect the actual number of options that vest (with a corresponding adjustment to the capital reserve) except where forfeiture is only due to not achieving vesting conditions that relate to the market price of the HIHL’s shares. The equity amount is recognised in the capital reserve until either the option is exercised (when it is transferred to the share premium account) or the option expires (when it is released directly to retained profits).

2.16 Provisions, contingent liabilities and contingent assets

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2.17 Revenue recognition

Brokerage commission income arising from leveraged foreign exchange transactions, and precious metal contracts are recognised and accounted for on a trade date basis.

All transactions related to precious metal contracts dealings are recorded in the financial information based on trade dates. Accordingly, only those transactions with trade dates falling within the accounting year have been taken into account.

Management, subscription and advisory fee income are recognised on an accrual basis.

Interest income is recognised on a time proportion basis using the effective interest method.

Dividend income is recognised when the right to receive payment is established.

2.18 Leases

(a) Operating lease

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(b) Finance lease

2.19 Dividend distribution

Dividend distribution is recognised as a liability in the Group’s financial information in the period in which the dividends are approved.

2.20 Related parties

For the purposes of this financial information, a party is considered to be related to the Group if:

(i) The party has the ability, directly or indirectly through one or more intermediaries, to control the Group or exercise significant influence over the Group in making financial and operating policy decisions, or has joint control over the Group;
(ii) The Group and the party are subject to common control;
(iii) The party is an associate of the Group;
(iv) The party is a member of key management personnel of the Group, or a close family member of such an individual, or is an entity under the control, joint control or significant influence of such individuals;
(v) The party is a close family member of a party referred to in (i) or is an entity under the control, joint control or significant influence of such individuals; or
(vi) The party is a post-employment benefit plan which is for the benefit of employees of the Group or of any entity that is a related party of the Group.

Close family members of an individual are those family members who may be expected to influence, or be influenced by, that individual in their dealings with the entity.

2.21 Finance costs

Finance costs are charged to the income statement in the year/period in which they are incurred.

2.22 Borrowings

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2.23 Trust accounts

Trust accounts maintained by the subsidiaries of the Company to hold clients’ monies securities are not recognised as an asset in the financial information.

2.24 Off-balance sheet financial instruments

3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

3.1 Estimated impairment of goodwill

3.2 Income taxes

3.3 Estimate of fair value of financial instruments

The best evidence of fair value is current prices in an active market for listed equity securities. In the absence of such information, the Group determines the amount within a range of reasonable fair value estimates. The Group establishes fair value by using valuation techniques for unlisted securities. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and option pricing models refined to reflect the issuer’s specific circumstances.

3.4 Litigation

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4 TURNOVER, OTHER REVENUE, OTHER NET INCOME AND SEGMENT INFORMATION

The Company is an investment holding company. The Group is principally engaged in the trading and brokering of precious metal contracts in Hong Kong and out of Hong Kong, provision of leveraged foreign exchange trading and brokering services outside Hong Kong, provision of financial related services outside Hong Kong and investment in a water plant business through an associate. Total revenue recognised during the Relevant Periods is as follows:

Turnover Fees and commission Net revenue from — foreign currency option trading — bullion trading Swap interest and foreign exchange trading revenue Interest income Management, subscription and advisory fee income Other revenue Dividend income from listed securities Dividend income from available-for-sale financial assets Other income Other net (loss)/income Net exchange (losses)/gains Net realised gains/(losses) on financial assets at fair value through profit or loss Net unrealised (losses)/gains on financial assets at fair value through profit or loss Profit on disposal of available-for-sale financial assets	Year ended 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 6,930 41,413 80,073 1,179 2,892 7,070 20,701 79,638 102,804 4,680 33,172 63,300 2,477 26,532 37,740 5,449 5,800 2,650 41,416 189,447 293,637 ---------- ---------- ---------- — 133 420 — 150 138 2 62 250 2 345 808 ---------- ---------- ---------- (852) 4,258 8,384 231 (2,308) 1,642 — (733) (3,908) — — — (621) 1,217 6,118 ~~----------~~ ~~----------~~ ~~----------~~ 40,797 191,009 300,563	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) 35,733 30,350 7,636 732 40,075 48,969 20,196 31,579 22,751 15,761 1,341 1,245 127,732 128,636 ------------ ------------ 313 48 138 — 27 25 478 73 ------------ ------------ 1,421 (1,955) 13 3 162 (603) — 3,072 1,596 517 ~~------------~~ ~~------------~~ 129,806 129,226

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Primary reporting format — Business segments

The business of the Group was organised into the following segments during the Relevant Periods:

Leveraged foreign exchange trading/broking — provision of dealing and brokering in leveraged forex trading services on the world’s major currencies.
Financial planning and related services — acting as an agent for the sale of savings plans, unit trusts, and providing advisory services on securities investment and discretionary fund management.
Precious metal contracts trading/brokering — provision of dealing and brokering trading services on selected precious metals.

There were no significant transactions between the business segments.

Secondary reporting format — Geographical segments

There were no significant transactions between the geographical segments.

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Primary reporting format — Business segments Year ended 31 December 2005

Turnover from external customers Segment results Operating profit Finance costs Share of profits of associates Profit before taxation Income tax Profit after taxation Minority interests Profit attributable to equity holders of the Company Segment assets Interests in associates Unallocated assets Total assets Segment liabilities Unallocated liabilities Total liabilities Capital expenditure Depreciation Impairment charge on goodwill Other non-cash expenses	Leveraged foreign exchange trading/ brokering 2005 HK$’000 7,599 1,151 (18) 1,560 35,849 6,730 28,703 735 78 — —	Financial planning and related services 2005 HK$’000 3,994 (5,723) — — 15,619 — 2,932 1,970 511 861 —	Precious metal contracts trading/ brokering 2005 HK$’000 28,323 5,574 (3) — 15,041 — 4,235 50 21 — 28	Unallocated 2005 HK$’000 1,500 (392) — 2,341 15,502 8,750 43,785 — 36 — 1	Total 2005 HK$’000 41,416 610 610 (21) 589 3,901 4,490 (1,607) 2,883 384 3,267 82,011 15,480 383 97,874 79,655 729 80,384 2,755 646 861 29

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Primary reporting format — Business segments Year ended 31 December 2006

Turnover from external customers Inter-segment turnover Total Segment results Operating profit Finance costs Share of profits of associates Profit before taxation Income tax Profit after taxation Minority interests Profit attributable to equity holders of the Company Segment assets Interests in associates Unallocated assets Total assets Segment liabilities Unallocated liabilities Total liabilities Capital expenditure Depreciation Impairment loss charged on trade receivables Other non-cash expenses	Leveraged foreign exchange trading/ brokering 2006 HK$’000 51,652 — 51,652 6,133 (20) 3,463 227,731 — 200,617 329 290 1,636 —	Financial planning and related services 2006 HK$’000 5,032 — 5,032 (7,267) — — 22,293 — 1,281 260 805 — —	Precious metal contracts trading/ brokering 2006 HK$’000 130,244 — 130,244 32,131 (13) — 142,696 — 101,798 1,158 77 330 —	Unallocated 2006 HK$’000 2,519 2,289 4,808 784 (25) 2,339 15,573 8,949 57,195 675 134 — 17	Inter- segment elimination 2006 HK$’000 — (2,289) (2,289) — — — — — — — — — —	Total 2006 HK$’000 189,447 —
						189,447
						31,781
						31,781 (58)
						31,723 5,802
						37,525 (7,716)
						29,809 —
						29,809
						408,293 8,949 954
						418,196
						360,891 9,071
						369,962
						2,422 1,306 1,966 17

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Primary reporting format — Business segments Year ended 31 December 2007

Turnover from external customers Inter-segment turnover Total Segment results Operating profit Finance costs Share of profits of associates Profit before taxation Income tax Profit after taxation Minority interests Profit attributable to equity holders of the Company Segment assets Interests in associates Unallocated assets Total assets Segment liabilities Unallocated liabilities Total liabilities Capital expenditure Depreciation Impairment loss charged on trade receivables Other non-cash expenses	Leveraged foreign exchange trading/ brokering 2007 HK$’000 100,763 — 100,763 7,676 — — 205,575 — 261,527 65 671 765 1	Financial planning and related services 2007 HK$’000 1,905 — 1,905 (7,596) — — 14,488 — 991 54 892 — —	Precious metal contracts trading/ brokering 2007 HK$’000 189,919 — 189,919 41,028 (55) — 270,838 — 106,916 1,081 633 146 —	Unallocated 2007 HK$’000 1,050 3,128 4,178 (1,798) — 2,047 20,996 15,288 66,584 846 248 — 247	Inter- segment elimination 2007 HK$’000 — (3,128) (3,128) — — — — — — — — — —	Total 2007 HK$’000 293,637 —
						293,637
						39,310
						39,310 (55)
						39,255 2,047
						41,302 (10,388)
						30,914 (2)
						30,912
						511,897 15,288 564
						527,749
						436,018 3,999
						440,017
						2,046 2,444 911 248

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Primary reporting format — Business segments Six months ended 30 June 2007

Turnover from external customers Inter-segment turnover Total Segment results Operating profit Finance costs Share of profits of associates Profit before taxation Income tax Profit after taxation Minority interests Profit attributable to equity holders of the Company Segment assets Interests in associates Unallocated assets Total assets Segment liabilities Unallocated liabilities Total liabilities Capital expenditure Depreciation Impairment loss charged on trade receivables	Leveraged foreign exchange trading/ brokering 2007 HK$’000 (Unaudited) 43,593 — 43,593 2,747 — — 138,008 — 168,444 8 322 418	Financial planning and related services 2007 HK$’000 (Unaudited) 920 — 920 (4,135) — — 17,939 — 1,069 54 444 —	Precious metal contracts trading/ brokering 2007 HK$’000 (Unaudited) 82,701 — 82,701 16,769 (27) — 229,219 — 109,266 219 241 119	Unallocated 2007 HK$’000 (Unaudited) 518 1,555 2,073 (199) — 1,233 23,859 8,144 63,292 131 106 —	Inter- segment elimination 2007 HK$’000 (Unaudited) — (1,555) (1,555) — — — — — — — — —	Total 2007 HK$’000 (Unaudited) 127,732 —
						127,732
						15,182
						15,182 (27)
						15,155 1,233
						16,388 (3,745)
						12,643 —
						12,643
						409,025 8,144 1,502
						418,671
						342,071 11,048
						353,119
						412 1,113 537

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Primary reporting format — Business segments Six months ended 30 June 2008

Turnover from external customers Inter-segment turnover Total Segment results Operating profit Finance costs Share of profits of associates Profit before taxation Income tax Profit after taxation Minority interests Profit attributable to equity holders of the Company Segment assets Interests in associates Unallocated assets Total assets Segment liabilities Unallocated liabilities Total liabilities Capital expenditure Depreciation Impairment loss charged on goodwill Impairment loss charged on trade receivables Other non-cash expenses	Leveraged foreign exchange trading/ brokering 2008 HK$’000 37,943 — 37,943 2,874 — — 144,486 — 101,649 — 344 — 118 —	Financial planning and related services 2008 HK$’000 869 — 869 (4,011) — — 15,413 — 5,061 — 414 — — —	Precious metal contracts trading/ brokering 2008 HK$’000 87,626 — 87,626 8,855 (20) — 120,518 — 61,990 8 411 — 538 —	Unallocated 2008 HK$’000 2,198 3,189 5,387 765 (64) 1,407 38,084 19,665 86,338 21,852 277 399 — 2	Inter- segment elimination 2008 HK$’000 — (3,189) (3,189) — — — — — — — — — — —	Total 2008 HK$’000 128,636 —
						128,636
						8,483
						8,483 (84)
						8,399 1,407
						9,806 (2,711)
						7,095 (84)
						7,011
						318,501 19,665 2,316
						340,482
						255,038 5,015
						260,053
						21,860 1,446 399 656 2

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Secondary reporting format — Geographical segments

Turnover

Hong Kong Greater China (excluding Hong Kong) Oceania Switzerland United States United Kingdom Other countries	Year ended 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 30,021 66,171 3,587 10,434 87,698 278,014 597 32,704 854 136 — 1,280 — — 1,086 164 1,478 1,729 64 1,396 7,087 41,416 189,447 293,637	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) 43,858 64,022 73,145 59,481 163 240 4,262 559 442 86 3,137 72 2,725 4,176 127,732 128,636	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) 43,858 64,022 73,145 59,481 163 240 4,262 559 442 86 3,137 72 2,725 4,176 127,732 128,636
			128,636

The following is an analysis of the carrying amount of segment assets, capital expenditure, analyzed by the geographical area in which the assets were located:

Carrying amount of segment assets

Hong Kong Greater China (excluding Hong Kong) Oceania Switzerland United States United Kingdom Other countries Interests in associates Unallocated assets Total assets	As at 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 25,391 243,651 202,533 16,518 70,330 41,954 — 13,076 13,112 24,194 33,218 89,317 — 36,782 55,084 1,381 1,136 73,296 14,527 10,100 36,601 82,011 408,293 511,897 15,480 8,949 15,288 383 954 564 97,874 418,196 527,749	As at 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) 158,179 120,862 88,446 77,640 13,105 14,518 34,106 65,476 72,787 3,922 19,535 19,105 22,867 16,978 409,025 318,501 8,144 19,665 1,502 2,316 418,671 340,482	As at 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) 158,179 120,862 88,446 77,640 13,105 14,518 34,106 65,476 72,787 3,922 19,535 19,105 22,867 16,978 409,025 318,501 8,144 19,665 1,502 2,316 418,671 340,482
			318,501 19,665 2,316
			340,482

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APPENDIX III

Capital expenditure

Hong Kong Greater China (excluding Hong Kong) Oceania Switzerland United States United Kingdom Other countries	As at 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 50 1,138 1,060 1,970 935 873 — 72 48 735 277 38 — — — — — — — — 27 2,755 2,422 2,046	As at 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) 217 577 186 21,101 1 182 8 — — — — — — — 412 21,860	As at 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) 217 577 186 21,101 1 182 8 — — — — — — — 412 21,860
			21,860

In presenting information on the basis of geographical segments, segment revenue was based on the geographical location of customers. Segment assets and capital expenditures were based on the geographical location of the assets.

The total assets in other countries mainly represent margin and other deposits placed with overseas brokers and financial institutions.

5 STAFF COSTS

Salaries and allowances Equity-settled share-based transactions (Note 22) Defined contribution plans (Note 25)	Year end 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 10,222 31,108 45,565 — 200 888 216 660 969 10,438 31,968 47,422	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) 18,303 24,215 633 (36) 437 631 19,373 24,810	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) 18,303 24,215 633 (36) 437 631 19,373 24,810
			24,810

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ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

6 OTHER OPERATING EXPENSES

Advertising and promotion Auditors’ remuneration Bank charges Communication expenses Consultancy fee Depreciation Entertainment Equipment rental expenses Impairment of goodwill Impairment loss on trade receivables Insurance Legal and professional fee Loss on disposal of fixed assets Miscellaneous expenses Printing and stationery Repairs and maintenance Staff welfare Traveling expenses Computer expenses Exhibition and seminars Postage Water and electricity	Year ended 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 2,300 5,573 4,096 83 1,346 2,683 63 288 980 398 1,875 3,592 372 4,999 9,233 646 1,306 2,444 429 658 1,702 536 1,141 1,561 861 — — — 1,966 911 395 806 984 4,038 1,177 1,948 29 17 248 2,678 7,994 11,726 335 692 883 377 405 566 335 710 1,225 1,354 3,881 3,259 231 651 466 155 273 1,521 40 126 169 95 168 295 15,750 36,052 50,492	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) 2,066 3,141 616 547 451 346 1,707 1,425 3,076 5,133 1,113 1,446 474 1,138 802 888 — 399 537 656 314 361 619 1,853 — 2 4,410 5,346 460 531 223 766 709 857 961 2,048 206 296 502 445 79 119 109 186 19,434 27,929	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) 2,066 3,141 616 547 451 346 1,707 1,425 3,076 5,133 1,113 1,446 474 1,138 802 888 — 399 537 656 314 361 619 1,853 — 2 4,410 5,346 460 531 223 766 709 857 961 2,048 206 296 502 445 79 119 109 186 19,434 27,929
			27,929

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ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

7 FINANCE COSTS

	Year	ended 31 December	ended 31 December	Six months ended 30 June	Six months ended 30 June
	2005	2006	2007	2007	2008
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
				(Unaudited)
Interest on bank overdrafts	18	25	1	—	1
Interest on bank loans	—	—	—	—	63
Interest on other loans	—	24	—	—	—
Interest on obligation under
finance leases	3	9	54	27	20
	21	58	55	27	84

8 INCOME TAX

The amount of taxation charged to the combined income statement:

Current taxation: — Hong Kong profits tax — Overseas taxation — Under/(over) provision in respect of prior years Deferred taxation relating to the origination and reversal of temporary differences (Note 16) Effect of decrease in tax rate on deferred tax balance at 1 January (Note 16) Taxation expenses	Year ended 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 947 5,408 7,000 390 2,789 2,646 — — 357 270 (481) 385 — — — 1,607 7,716 10,388	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) 2,939 1,509 1,940 850 (587) 188 (547) 169 — (5) 3,745 2,711	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) 2,939 1,509 1,940 850 (587) 188 (547) 169 — (5) 3,745 2,711
			2,711

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ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

Reconciliation between tax expense and accounting profit at applicable tax rates:

Profit before taxation (excluding share of profits of associates) Notional tax on profit before taxation, calculated at the rate applicable to profits in the countries concerned Tax effect of income not subject to taxation Tax effect of expenses not deductible for taxation purposes Utilisation of previously unrecognised tax losses Effect on opening deferred tax balances resulting from a decrease in tax rate during the period Tax losses for which no deferred income tax assets were recognised Under/(over)-provision in prior years Taxation expenses 9 DIVIDENDS Special dividend paid Final dividend proposed	Year ended 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 589 31,723 39,255 (111) 5,762 7,333 (8) (303) (697) 273 463 699 (30) (23) (9) — — — 1,483 1,817 2,705 — — 357 1,607 7,716 10,388 Year ended 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 3,500 — — — — — 3,500 — —	Six months ended 30 June 2007 2008 HK$’000 HK$’000 15,155 8,399 2,550 1,192 (370) (610) 447 120 — 166 — (5) 1,705 1,660 (587) 188 3,745 2,711 Six months ended 30 June 2007 2008 HK$’000 HK$’000 — — — 15,000 — 15,000

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ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

10 INTANGIBLE ASSETS

Note Cost At 1 January 2005 Acquisition of a subsidiary 28(b) At 31 December 2005 Acquisition of a subsidiary 28(b) At 31 December 2006 Acquisition of a subsidiary 28(b) At 31 December 2007 Acquisition of a subsidiary 28(b) At 30 June 2008 Accumulated impairment losses At 1 January 2005 Charge for the year At 31 December 2005, 1 January 2006, 31 December 2006, 1 January 2007, 31 December 2007 and 1 January 2008 Charge for the period At 30 June 2008 Carrying amount At 31 December 2005 At 31 December 2006 At 31 December 2007 At 30 June 2008	Membership of The Chinese Gold & Silver Exchange Society HK$’000 180 — 180 — 180 — 180 — 180 — — — — — 180 180 180 180	Goodwill on acquisition of subsidiaries HK$’000 785 76 861 4,973 5,834 399 6,233 45 6,278 — 861 861 399 1,260 — 4,973 5,372 5,018	Total HK$’000 965 76
			1,041 4,973
			6,014 399
			6,413 45
			6,458
			— 861
			861
			399
			1,260
			180
			5,153
			5,552
			5,198

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ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

11 FIXED ASSETS

Cost At 1 January 2005 Additions Disposals Exchange difference At 31 December 2005 and 1 January 2006 Additions through acquisition of a subsidiary Additions Disposals Reclassification Exchange difference At 31 December 2006 and 1 January 2007 Additions through acquisition of a subsidiary Additions Disposals Exchange difference At 31 December 2007 and 1 January 2008 Additions Write-off Exchange difference At 30 June 2008	Freehold land and buildings HK$’000 — — — — — 2,157 — — — 168 2,325 — — — 200 2,525 21,057 — 108 23,690	Leasehold improvements HK$’000 225 1,688 (222) (3) 1,688 — 925 — — (10) 2,603 — 1,162 — 19 3,784 209 — 139 4,132	Furniture& fixtures HK$’000 12 518 — — 530 1,270 440 — (66) 138 2,312 103 694 (344) 157 2,922 116 (13) 70 3,095	Office & computer equipment HK$’000 1,007 486 (179) (14) 1,300 2,435 878 (81) 66 194 4,792 — 190 (13) 267 5,236 477 (30) 107 5,790	Motor vehicles HK$’000 — 63 — — 63 117 179 — — 18 377 — — — 29 406 — — 30 436	Total HK$’000 1,244 2,755 (401) (17) 3,581 5,979 2,422 (81) — 508 12,409 103 2,046 (357) 672 14,873 21,859 (43) 454 37,143

– 201 –

ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

Accumulated depreciation At 1 January 2005 Charge for the year Disposals Exchange difference At 31 December 2005 and 1 January 2006 Additions through acquisition of a subsidiary Charge for the year Disposals Exchange difference At 31 December 2006 and 1 January 2007 Additions through acquisition of a subsidiary Charge for the year Disposals Reclassification Exchange difference At 31 December 2007 and 1 January 2008 Charge for the period Write-back Exchange difference At 30 June 2008 Net book value At 31 December 2005 At 31 December 2006 At 31 December 2007 At 30 June 2008	Freehold land and buildings HK$’000 — — — — — 115 9 — 9 133 — 37 — — 12 182 71 — (1) 252 ~~----------~~ — 2,192 2,343 23,438	Leasehold improvements HK$’000 75 354 (129) (8) 292 — 634 — (14) 912 — 1,112 — — 16 2,040 633 117 2,790 ~~-------------~~ 1,396 1,691 1,744 1,342	Furniture & fixtures HK$’000 2 56 — (2) 56 348 209 — 36 649 58 486 (98) 1 67 1,163 307 (4) 30 1,496 ~~-----------~~ 474 1,663 1,759 1,599	Office & computer equipment HK$’000 131 234 (47) (1) 317 1,814 417 (57) 140 2,631 — 712 (11) (1) 196 3,527 381 (30) 57 3,935 ~~-----------~~ 983 2,161 1,709 1,855	Motor vehicles HK$’000 — 2 — — 2 44 37 — 4 87 — 97 — — 12 196 54 — 11 261 ~~----------~~ 61 290 210 175	Total HK$’000 208 646 (176) (11) 667 2,321 1,306 (57) 175 4,412 58 2,444 (109) — 303 7,108 1,446 (34) 214 8,734 ~~----------~~ 2,914 7,997 7,765 28,409

The Group’s freehold land and buildings are located outside Hong Kong.

– 202 –

ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

12 SUBSIDIARIES

The following is a list of subsidiaries included in this combined financial information at 30 June 2008:

				Interest	Interest
	Place of	Principal activities and	Particulars of issued	held	held
Name	incorporation	place of operation	share capital	directly	indirectly
Hantec Bullion Investments	Hong Kong	Trading and broking of	7,500,000 ordinary	—	100%
Limited (‘‘HBIL’’)1		precious metal	shares of HK$1 each
		contracts
		in Hong Kong
Hantec Financial Services	Hong Kong	Investment holding	100 ordinary shares	—	100%
Limited (‘‘HFSL’’)1		in Hong Kong	of HK$1 each
Hantec Business Consultant	Hong Kong	Investment holding	1,000,000 ordinary	—	100%
Limited (‘‘HBCL’’)1		in Hong Kong	shares of HK$1 each
Hantec Taiwan Investments	Hong Kong	Investment holding	10,000 ordinary shares	—	100%
Limited (‘‘HTIL’’)1		in Hong Kong	of HK$1 each
亨達證券投資顧問股份有限公司	Taiwan	Wealth management,	7,000,000 ordinary	—	100%
(‘‘亨達證券’’) (formerly		investment advisory	shares of NT$10
named 亨達富林證券投資		and consultancy	each
顧問股份有限公司)1		services in Taiwan
Hantec Financial Services	Switzerland	Trading and broking	1,000,000 ordinary	—	100%
(Suisse) SA (‘‘HFSS’’)1		services in foreign	shares of CHF1
		exchange and	each
		precious metal
		contracts in
		Switzerland
北京康景商業顧問有限公司*	People’s Republic	Consultation services in	US$150,000 registered	—	100%
(‘‘康景’’)2	of China	the People’s Republic	and paid-up capital
		of China
HT (Overseas) Limited	Macau	Provide administrative	MOP25,000 registered	—	100%
(‘‘HTOL’’)3		support services	and paid-up capital
		in Macau
Macro Jess Ltd. (‘‘MJL’’)4	British Virgin	Investment holding	1 ordinary share	100%	—
	Islands	in Hong Kong	of US$1 each
Hantec Strategic Plan (HK)	British Virgin	Investment holding	1 ordinary share	100%	—
Limited (‘‘HSPL’’)4	Islands	in Hong Kong	of US$1 each
Hantec (New Zealand)	New Zealand	Dormant	10,000 ordinary shares	—	100%
Investment Company			of NZ$1 each
Limited (‘‘HNZICL’’)4

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APPENDIX III

ACCOUNTANTS’ REPORT ON THE HPL GROUP

				Interest	Interest
	Place of	Principal activities and	Particulars of issued	held	held
Name	incorporation	place of operation	share capital	directly	indirectly
Cosmos Hantec Investment	New Zealand	Trading and broking	1,000,000 ordinary	—	100%
(NZ) Limited (‘‘CHI’’)5		services in foreign	shares of NZ$1 each
		exchange and
		precious metal
		contracts
		in New Zealand
Cosmos Hantec International	Macau	Provide administrative	MOP25,000 registered	—	100%
Investments Limited		support services	and paid-up capital
(‘‘CHII’’)6		in Macau
Hantec International	British Virgin	Investment holding	1 ordinary share	100%	—
Enterprises Limited	Islands	in Hong Kong	of US$1 each
(‘‘HIEL’’)7
Hantec Investimentos Do	Brasil	Dormant	10,000 ordinary shares	—	100%
Brasil Limitada (‘‘HIDBL’’)7			of R$1 each
Hantec (UK) Incorporated	British Virgin	Dormant	10,000 ordinary shares	100%	—
(‘‘HUKI’’)7	Islands		of US$1 each
Hantec Canada Investments	British Virgin	Investment holding	10,000 ordinary shares	100%	—
Limited (‘‘HCADIL’’)7	Islands	in Hong Kong	of US$1 each
Ringus Solution Enterprise	Hong Kong	IT services	1,240,000 ordinary	—	75%
Limited (‘‘RSEL’’)7			shares of HK$1 each
Hantec Markets (Australia)	Australia	Leveraged foreign	1,000,000 ordinary		100%
Pty Limited7		exchange and bullion	shares of AU$1 each
		trading
俊森實業有限公司7	Taiwan	Electronic product	NT$5,000,000	100%	—
		trading and holding	registered and
		of properties	paid up capital
北京國際經濟技術有限責任公司*	People’s Republic	Business consultancy	RMB700,000 registered	—	91%
(‘‘經濟公司’’)8	of China		and paid-up capital
北京亨達投資諮詢顧問有限公司*	People’s Republic	Business consultancy	HK$4,000,000	—	100%
(‘‘北京亨達’’)9	of China		registered and
			paid-up capital

Incorporated in the People’s Republic of China as a Wholly Foreign Owned Enterprises limited liability company.

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ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

Notes:

The statutory financial statements of these companies for the year ended 31 December 2005 were audited by PricewaterhouseCoopers. KPMG were statutory auditors of these companies for the years ended 31 December 2006 and 2007.
The statutory financial statements of this company for the years ended 31 December 2005, 2006 and 2007 were audited by Beijing Sen He Guang Certified Public Accountants Co. Ltd.
The financial statements of this company have not been audited for the year ended 31 December 2005 as they were newly incorporated in 2005. The financial statements of this company for the years ended 31 December 2006 and 2007 were audited by HMV & Associates Certified Public Accountants and CSC & Associates respectively.
The financial statements of these companies have not been audited as there is no requirement to prepare audited financial statements under the legislation of their respective jurisdictions of incorporation.
KPMG were statutory auditors of this company for the years ended 31 December 2005, 2006 and 2007.
The financial statements of this company for the years ended 31 December 2005, 2006 and 2007 were audited by Chan Hio Wan, Certified Public Accountant, HMV & Associates Certified Public Accountants and CSC & Associates respectively.
The financial statements of these companies have not been audited as they are newly incorporated.
This company was newly acquired in 2007. The statutory financial statements of this company for the year ended 31 December 2007 were audited by Beijing Sen He Guang Certified Public Accountants Co. Ltd.
This company was newly incorporated in 2007. The statutory financial statements of this company for the year ended 31 December 2007 were audited by Beijing Sen He Guang Certified Public Accountants Co. Ltd.

– 205 –

ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

13 INTERESTS IN ASSOCIATES

Share of net assets at 1 January Share of associates’ results for the year/ period — profit before taxation — taxation — minority interest Acquisition of associates Disposal of an associate Dividend income from an associate Exchange difference Share of net assets at 31 December/30 June Loan to an associate Goodwill on acquisition less impairment Investment at cost, unlisted shares	2005 HK$’000 12,468 ------------- 5,652 (1,741) (10) 3,901 ------------- 16,369 — — (549) (888) 14,932 — 548 15,480 7,296	As at 31 December 2006 2007 HK$’000 HK$’000 14,932 8,401 ------------- ------------- 8,546 2,947 (2,744) (900) — — 5,802 2,047 ------------- ------------- 20,734 10,448 — 1,171 (9,988) — (1,673) (1,637) (672) (242) 8,401 9,740 — 5,000 548 548 8,949 15,288 6,000 12,171	As at 30 June 2008 HK$’000 9,740 ------------- 2,043 (636) —
			1,407 -------------
			11,147 — (848) (1,719) 537
			9,117 10,000 548
			19,665
			17,171

The loan to an associate was unsecured, interest free and repayable on demand.

The Group’s interests in its principal associates, all of which are unlisted, are as follows:

Name Particulars of issued shares held Country of incorporation 2005 Cosmos Hantec Investment (NZ) Limited (‘‘CHI’’)1 300,000 ordinary shares of NZ$1 each New Zealand 元太外匯經紀股份有限公司 (‘‘元太’’)2 2,400,000 ordinary shares of NT$10 each Taiwan	Assets HK$’000 36,889 10,621	Liabilities HK$’000 30,159 2,419	Revenue HK$’000 40,309 8,782	Profit/ (loss) % of interest held indirectly HK$’000 1,560 30% 2,341 20% 3,901
	47,510	32,578	49,091

– 206 –

ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

Assets HK$’000 — 10,622	Liabilities HK$’000 — 2,221	Revenue HK$’000 41,580 9,274
10,622	2,221	50,854
10,357 8,753 848	1,583 8,635 —	9,004 222 —
19,958	10,218	9,226
10,873 11,811	2,346 11,220	5,241 393
22,684	13,566	5,634

From 1 January 2006 to 29 September 2006.

Notes:

KPMG were statutory auditors of this company for the years ended 31 December 2005, 2006 and 2007.
The financial statements of this company for the years ended 31 December 2005, 2006 and 2007 were audited by Dinkam & Co., CPAs.
The financial statements of this company for the year ended 31 December 2007 were audited by Andrew K. C. Lai & Company, CPAs.
The financial statements of these companies have not been audited as they were newly incorporated in 2007.

– 207 –

ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

14 OTHER ASSETS

The Chinese Gold & Silver Exchange Society — Electronic trading deposit	2005 HK$’000 — —	As at 31 December 2006 2007 HK$’000 HK$’000 — — — —	As at 30 June 2008 HK$’000 200
			200

15 AVAILABLE-FOR-SALE FINANCIAL ASSETS

Fair value of listed and unlisted securities held for non-trading purposes At 1 January Additions Disposal Realised profit on available-for-sale financial assets (Note 22) Revaluation surplus/(deficit) transferred to equity (Note 22) At 31 December/30 June	2005 HK$’000 3,267 6,331 — — 2,491 12,089	As at 31 December 2006 2007 HK$’000 HK$’000 12,089 10,236 136 — — — — — (1,989) 2,057 10,236 12,293	As at 30 June 2008 HK$’000 12,293 848 (9,598) (2,558) (1)
			984

There were no impairment provisions on available-for-sale financial assets.

Available-for-sale financial assets include the following:

Unlisted securities	2005 HK$’000 12,089	As at 31 December 2006 2007 HK$’000 HK$’000 10,236 12,293	As at 30 June 2008 HK$’000 984

16 DEFERRED INCOME TAX

Deferred taxation is calculated in full on temporary differences under the liability method using a principal taxation rate of 16.5% (2005, 2006 and 2007: 17.5%).

Deferred tax assets Deferred tax liabilities	2005 HK$’000 (383) 9 (374)	As at 31 December 2006 2007 HK$’000 HK$’000 (954) (564) 99 94 (855) (470)	As at 30 June 2008 HK$’000 (402) 96
			(306)

– 208 –

ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

The gross movement on the deferred income tax account was as follows:

Beginning of the year/period Effect on change in exchange rate Effect of decrease in tax rate (Note 8) Deferred taxation charged to income statement (Note 8) End of the year/period	2005 HK$’000 (661) 17 — 270 (374)	As at 31 December 2006 2007 HK$’000 HK$’000 (374) (855) — — — — (481) 385 (855) (470)	As at 30 June 2008 HK$’000 (470) — (5) 169 (306)

The movement in deferred tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same tax jurisdiction, was as follows:

At 1 January 2005 Charged to income statement At 31 December 2005 and At 1 January 2006 Charged to income statement At 31 December 2006 and At 1 January 2007 Charged to income statement At 31 December 2007 and At 1 January 2008 Effect on change in tax rate Charged to income statement At 30 June 2008	Accelerated tax depreciation HK$’000 9 — 9 90 99 (5) 94 (5) 7 96	Tax losses HK$’000 (671) 288 (383) (571) (954) 390 (564) — 162 (402)	Total HK$’000 (662) 288 (374) (481) (855) 385 (470) (5) 169 (306)

Deferred income tax assets are recognised for tax losses carried forward to the extent that realisation of the related tax benefit through the future taxable profits is probable. As at 31 December 2005, 2006 and 2007, and 30 June 2008, the Group had unrecognised tax losses of HK$4,868,128, HK$11,724,079, HK$20,372,536 and HK$26,324,434 to carry forward against future taxable income.

– 209 –

ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

17 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

Listed securities: Equity securities — Hong Kong Market value of listed securities	2005 HK$’000 — —	As at 31 December 2006 2007 HK$’000 HK$’000 12,858 1,588 12,858 1,588	As at 30 June 2008 HK$’000 2,071
			2,071

Change in fair values of financial assets at fair value through profit or loss are recorded in the income statement.

18 TRADE AND OTHER RECEIVABLES

Trade receivables from clients Less: impairment allowance of trade receivables (Note (b)) Margin and other trade related deposits with brokers and financial institutions (Note (c)) Total trade receivables, net Rental and utilities deposits Prepayments and other receivables Total trade and other receivables	2005 HK$’000 1,174 — 20,201 21,375 342 2,224 23,941	As at 31 December 2006 2007 HK$’000 HK$’000 36,064 25,938 (1,327) (394) 180,642 213,718 215,379 239,262 726 859 12,350 2,003 228,455 242,124	As at 30 June 2008 HK$’000 50,298 (1,044) 65,323
			114,577 1,132 4,974
			120,683

The carrying amounts of trade and other receivables approximate their fair value.

(a) As at 31 December 2005, 2006 and 2007, and 30 June 2008, the aging analysis of the trade receivables was as follows:

Current 30–60 days Over 60 days	2005 HK$’000 21,375 — — 21,375	As at 31 December 2006 2007 HK$’000 HK$’000 211,935 232,912 — 62 3,444 6,288 215,379 239,262	As at 30 June 2008 HK$’000 104,488 — 10,089
			114,577

– 210 –

ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

(b) The movement in the impairment allowance during the year was as follows:

At 1 January Impairment loss charged Uncollectible amounts written off Exchange difference At 31 December	2005 HK$’000 — — — — —	As at 31 December 2006 2007 HK$’000 HK$’000 — (1,327) (1,966) (911) 673 1,924 (34) (80) (1,327) (394)	As at 30 June 2008 HK$’000 (394) (656) — 6
			(1,044)

(c) The Group undertakes foreign exchange transactions and precious metal contracts with counterparties, local or overseas brokers as appropriate. Trade receivables include margin deposits and floating profits in respect of transactions and open positions in leveraged foreign exchange, precious metal contracts and commodities and futures trading with recognised counterparties and brokers and are considered current.
(d) Credits are extended to other clients on a case-by-case basis in accordance with the financial status of clients such as their financial conditions, trading records, business profile and collateral available to the Group. Clients trading in leveraged foreign exchange contracts and precious metal contracts are required to observe the Group’s margin policies. For leveraged foreign exchange contracts, and precious metal contracts, initial margins are normally required before trading and thereafter clients are normally required to keep the equity position at a prescribed maintenance margin level.
(e) The Group has no concentration of credit risk with respect to trade receivables and margin loans, as the Group has a large number of customers, widely dispersed. In addition, margin and trade related deposits are deposited with high-credit-quality financial institutions.
(f) The effective interest rates at the balance sheet dates were as follows:

		As at 31 December	As at 31 December	As at 30 June
	2005	2006	2007	2008
Trade receivables and
margin loans	7.75%–15.75%	7.75%–15.75%	6.75%–14.75%	5.25%–13.25%
Margins and other
related deposit	1.5%	1.75%	1.2%	0.1%

19 AMOUNTS DUE FROM/(TO) RELATED COMPANIES

These amounts represented amount due from/(to) subsidiaries of Hantec Investment Holdings Limited. These amounts were unsecured, interest-free and repayable on demand.

– 211 –

ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

20 BANK BALANCES AND CASH

Cash in hand Bank balances — pledged — general accounts By maturity: Bank balances — current and savings accounts — fixed deposits (maturing within three months) — fixed deposits (maturing over three months)	2005 HK$’000 35 ------------- — 42,794 42,794 ------------- 42,829 28,459 14,335 — 42,794	As at 31 December 2006 2007 HK$’000 HK$’000 125 131 ------------- ------------- — 2,486 116,384 212,721 116,384 215,207 ------------- ------------- 116,509 215,338 94,876 121,534 21,508 86,459 — 7,214 116,384 215,207	As at 30 June 2008 HK$’000 83 ------------- 2,522 107,451
			109,973 -------------
			110,056
			48,202 48,709 13,062
			109,973

As at 31 December 2007 and 30 June 2008, bank deposits amounting to HK$2,485,952 and HK$2,522,005 respectively were pledged to a financial institution as security for the provision of bullion trading facilities respectively. There was no pledged deposit as at 31 December 2005 and 2006.

Cash and cash equivalents

Note Cash in hand Bank balances — pledged — general accounts Cash and cash equivalents in the combined balance sheet Bank balances — pledged — fixed deposits (maturing over three months) Unsecured bank overdrafts 24 Cash and cash equivalents in the combined cash flow statement 21	2005 HK$’000 35 — 42,794 42,829 — — 42,829 (1) 42,828	As at 31 December 2006 2007 HK$’000 HK$’000 125 131 — 2,486 116,384 212,721 116,509 215,338 — (2,486) — (7,214) 116,509 205,638 (1) (13) 116,508 205,625	As at 30 June 2008 HK$’000 83 2,522 107,451
			110,056 (2,522) (13,062)
			94,472 (3)
			94,469

– 212 –

ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

21 SHARE CAPITAL

The Company was incorporated on 20 August 2008 and is authorised to issue up to a maximum of 1 billion shares of HK$0.10 each, 1 share of which has been issued.

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at general meetings of the Company. All ordinary shares rank equally with regard to the Company’s residual assets.

Capital management

The HPL Group’s primary objectives when managing capital are to safeguard the HPL Group’s ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders, by pricing products and services commensurately with the level of risk and by securing access to finance at a reasonable cost.

The HPL Group defined ‘‘capital’’ as including all components of equity loans from HPL Group companies with no fixed terms of repayment, less unaccrued proposed dividends. Trading balances that arise as a result of trading transactions with other HPL Group companies are not regarded by the HPL Group as capital. On this basis the amounts of capital employed at 31 December 2005, 2006 and 2007, and 30 June 2008 were HK$17,490,000, HK$48,234,000, HK$72,732,000 and HK$80,429,000 respectively.

The HPL Group actively and regularly reviews and manages its capital structure to maintain a balance between the higher shareholder returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position, and make adjustments to the capital structure in light of changes in economic conditions, to the extent that these do not conflict with the directors’ fiduciary duties towards the HPL Group or the requirements of the Hong Kong Companies Ordinance. The results of the directors’ review of the HPL Group’s capital structure are used as a basis for the determination of the level of dividends, if any, that are declared.

The HPL Group was not subject to externally imposed capital requirement.

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APPENDIX III

22 RESERVES

Note Balance at 1 January 2005 Profit for the year 2005 special dividends paid 9 Surplus on revaluation of available-for-sale financial assets 15 Exchange difference Balance at 31 December 2005 Balance at 1 January 2006 Profit for the year Equity-settled share-based transactions 5 Deficit on revaluation of available-for-sale financial assets 15 Exchange difference Balance at 31 December 2006 Balance at 1 January 2007 Profit for the year Capital contributions from controlling shareholder Equity-settled share-based transactions 5 Surplus on revaluation of available-for-sale financial assets 15 Exchange difference At 31 December 2007 and 1 January 2008	Capital reserves HK$’000 7,510 — — — — 7,510 7,510 — 200 — — 7,710 7,710 — 1,086 888 — — 9,684	Investment revaluation reserve HK$’000 — — — 2,491 — 2,491 2,491 — — (1,989) — 502 502 — — — 2,057 — 2,559	Exchange reserve HK$’000 1,654 — — — (1,671) (17) (17) — — — 2,724 2,707 2,707 — — — — 4,220 6,927	Retained earnings HK$’000 7,739 3,267 (3,500) — — 7,506 7,506 29,809 — — — 37,315 37,315 30,912 — — — — 68,227	Total HK$’000 16,903 3,267 (3,500) 2,491 (1,671)
					17,490
					17,490 29,809 200 (1,989) 2,724
					48,234
					48,234 30,912 1,086 888 2,057 4,220
					87,397

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ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

Note Balance at 1 January 2008 Profit for the period 2007 final dividend paid 9 Realised profit on available-for-sale financial assets 15 Deficit on revaluation of available-for-sale financial asset 15 Equity-settled share-based transactions 5 Exchange difference Balance at 30 June 2008 At 31 December 2005 Company and subsidiaries Associates At 31 December 2006 Company and subsidiaries Associates At 31 December 2007 Company and subsidiaries Associates At 30 June 2008 Company and subsidiaries Associates	Capital reserves HK$’000 9,684 — — — — (36) 9,648 7,510 — 7,510 7,710 — 7,710 9,684 — 9,684 9,648 — 9,648	Investment revaluation reserve HK$’000 2,559 — — (2,558) (1) — — 2,491 — 2,491 502 — 502 2,559 — 2,559 — — —	Exchange reserve HK$’000 6,927 — — — — — 3,197 10,124 (575) 558 (17) 3,066 (359) 2,707 7,528 (601) 6,927 10,175 (51) 10,124	Retained earnings HK$’000 68,227 7,011 (15,000) — — — 60,238 (120) 7,626 7,506 34,007 3,308 37,315 64,509 3,718 68,227 56,523 3,715 60,238	Total HK$’000 87,397 7,011 (15,000) (2,558) (1) (36) 3,197
					80,010
					9,306 8,184
					17,490
					45,285 2,949
					48,234
					84,280 3,117
					87,397
					76,346 3,664
					80,010

(a) Capital reserves

Capital reserves of the Group represent (i) the capital contributions from the controlling shareholder of the Group and (ii) the fair value of the actual or estimated number of unexercised share options granted to employees of the Group under the share option scheme of HIHL in accordance with the accounting policy adopted for share-based payment in note 2.15(d).

(b) Investment revaluation reserve

The investment revaluation reserve of the Group represents the changes in the fair value of available-for-sale financial assets.

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ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

23 TRADE AND OTHER PAYABLES

Margin and other deposits payable to clients Trade payable to brokers and clearing houses arising from the ordinary course of business of broking in leveraged foreign exchange trading Total trade payables Accruals and other payables Total trade and other payables	2005 HK$’000 27,647 — 27,647 7,180 34,827	As at 31 December 2006 2007 HK$’000 HK$’000 190,753 284,940 32,927 27,751 223,680 312,691 20,197 17,823 243,877 330,514	As at 30 June 2008 HK$’000 109,687 7,996
			117,683 17,452
			135,135

The carrying amounts of trade and other payables approximate their fair value.

Margin deposits received from clients for their trading of leveraged foreign exchange and precious metal contracts, and the balances were payable within one month.

The effective interest rates at the balance sheet dates were as follows:

2005 Trade payables 1.5%–2% BANK LOANS AND OVERDRAFTS (a) Bank overdrafts Note Unsecured bank overdrafts 20 Total borrowings	As at 31 December As at 30 June 2006 2007 2008 1.75%–4.75% 1.2%–4.9% 0.1%–2.3% As at 31 December As at 30 June 2005 2006 2007 2008 HK$’000 HK$’000 HK$’000 HK$’000 1 1 13 3 1 1 13 3	As at 31 December As at 30 June 2006 2007 2008 1.75%–4.75% 1.2%–4.9% 0.1%–2.3% As at 31 December As at 30 June 2005 2006 2007 2008 HK$’000 HK$’000 HK$’000 HK$’000 1 1 13 3 1 1 13 3
		3

24 BANK LOANS AND OVERDRAFTS

The effective interest rates at the balance sheet dates were as follows:

				As at 31 December		As at 30 June
			2005	2006	2007	2008
Unsecured	bank	overdrafts	—	7.5%–8.375%	13.5%	7.75%–16%

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ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

(b) Secured Mortgage loan

Within one year After one year but within five years	2005 HK$’000 — — —	As at 31 December 2006 2007 HK$’000 HK$’000 — — — — — —	As at 30 Jun 2008 HK$’000 692 12,039
			12,731

The mortgage loan was secured by the Group’s land and building located in Taiwan of a carrying value of HK$21,125,000. The mortgage loan is denominated in New Taiwan Dollars and had an effective interest rate of 3%.

25 DEFINED CONTRIBUTION PLANS — MPF SCHEME

The aggregate employer’s contributions, net of forfeited contributions, which have been dealt with in the income statement for the year amounted to:

Gross employer’s contributions Less: Forfeited contributions utilised to offset employer’s contribution for the year Net employer’s contributions charged to income statement	Year ended 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 220 710 973 (4) (50) (4) 216 660 969	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) 441 637 (4) (6) 437 631	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) 441 637 (4) (6) 437 631
			631

26 DIRECTORS’ AND SENIOR MANAGEMENTS EMOLUMENTS

(a) Directors’ emoluments

No emolument was paid or payable to directors of the Company during the Relevant Periods.

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ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

(b) Five highest paid individuals

The five individuals whose emoluments were the highest in the Group for the six months ended 30 June 2008, 30 June 2007 and for the year ended 31 December 2007, 31 December 2006 and 31 December 2005 whose emoluments are as follows:

Basic salaries, other allowances and benefits in kind Bonus Equity-settled share-based transactions Defined contribution plans	Year ended 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 1,288 3,677 3,415 213 1,107 1,544 — 52 533 27 35 39 1,528 4,871 5,531	Six months ended 30 June 2007 2008 HK$’000 HK$’000 1,754 2,331 — — 216 165 17 20 1,987 2,516	Six months ended 30 June 2007 2008 HK$’000 HK$’000 1,754 2,331 — — 216 165 17 20 1,987 2,516
			2,516

The emoluments fell within the following bands:

Emolument bands HK$Nil–HK$1,000,000 HK$1,000,001–HK$1,500,000 HK$1,500,001–HK$2,000,000	Number of individuals Year ended 31 December Six months ended 30 June 2005 2006 2007 2007 2008 5 3 3 5 5 — 1 1 — — — 1 1 — — 5 5 5 5 5	Number of individuals Year ended 31 December Six months ended 30 June 2005 2006 2007 2007 2008 5 3 3 5 5 — 1 1 — — — 1 1 — — 5 5 5 5 5
		5

27 EQUITY-SETTLED SHARE-BASED TRANSACTIONS

HIHL has adopted a share option scheme whereby the Board of HIHL may at its discretion grant to any employees, including executive directors, of HIHL Group (including employees of the HPL Group) options to subscribe for shares of HIHL.

(a) The terms and conditions of the grants awarded to employees of the HPL Group that existed during the Relevant Periods were as follows:

Options granted to employees — on 13 November 2006 Total share options	Year 2005 —	Number of instruments Vesting conditions Contractual Life of options ended 31 December Six months ended 30 June 2006 2007 2008 500,000 500,000 150,000 40% to be vested on 1 May 2007, 30% to be vested on 1 May 2008, 30% to be vested on 1 May 2009 5 years after vesting 500,000 500,000 150,000	Number of instruments Vesting conditions Contractual Life of options ended 31 December Six months ended 30 June 2006 2007 2008 500,000 500,000 150,000 40% to be vested on 1 May 2007, 30% to be vested on 1 May 2008, 30% to be vested on 1 May 2009 5 years after vesting 500,000 500,000 150,000
	—	500,000	500,000

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ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

(b) The number and weighted average exercise prices of share options were as follows:

Outstanding at the beginning of the period Forfeited during the period Exercised during the period Granted during the period Outstanding at the end of the period Exercisable at the end of the period	Year ended 31 December 2005 2006 Weighted average exercise price Number of options Weighted average exercise price Number of options HK$ HK$ — — — — — — — — — — — — — — 0.88 500,000 — — 0.88 500,000 — — — —	Year ended 31 December 2005 2006 Weighted average exercise price Number of options Weighted average exercise price Number of options HK$ HK$ — — — — — — — — — — — — — — 0.88 500,000 — — 0.88 500,000 — — — —	Year ended 31 December 2005 2006 Weighted average exercise price Number of options Weighted average exercise price Number of options HK$ HK$ — — — — — — — — — — — — — — 0.88 500,000 — — 0.88 500,000 — — — —	Year ended 31 December 2005 2006 Weighted average exercise price Number of options Weighted average exercise price Number of options HK$ HK$ — — — — — — — — — — — — — — 0.88 500,000 — — 0.88 500,000 — — — —	2007 Weighted average exercise price Number of options HK$ 0.88 500,000 — — — — — — 0.88 500,000 0.88 200,000	2007 Weighted average exercise price Number of options HK$ 0.88 500,000 — — — — — — 0.88 500,000 0.88 200,000	Six months ended 30 June 2008 Weighted average exercise price Number of options HK$ 0.88 500,000 — — 0.88 (350,000) — — 0.88 150,000 — —	Six months ended 30 June 2008 Weighted average exercise price Number of options HK$ 0.88 500,000 — — 0.88 (350,000) — — 0.88 150,000 — —
	—	—	0.88	500,000	0.88	500,000	0.88	150,000
	—	—	—	—	0.88	200,000	—	—

The exercise price of outstanding options and weighted average remaining contractual life at the balance sheet date were as follows:

					As at
		As at 31 December			30 June
	2005	2006		2007	2008
Exercise price of outstanding
options of the end of the
Relevant Period (HK$)	—	0.88		0.88	0.88
Weighted average remaining
contractual life	—	6.23 years	5.23	years	5.83 years

(c) Fair value of share options and assumptions

Fair value of share options and assumptions on grant date Fair value Share price Exercise price Expected volatility Option life Expected dividends Risk-free interest rate (based on Exchange Fund Notes)	13 November 2006 HK$0.202 HK$0.88 HK$0.88 30.01% 5 years 3.0% 3.754%

– 219 –

ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

No share options have been granted subsequent to 13 November 2006.

– 220 –

ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

28 NOTES TO THE COMBINED CASH FLOW STATEMENT

(a) Reconciliation of operating profit to net cash inflow from operating activities:

Operating profit before taxation Depreciation Diminution/(appreciation) in value of financial assets at fair value through profit or loss (Profit)/loss on disposal of financial assets at fair value through profit or loss Profit on disposal of available-for- sales financial assets Interest expenses Dividend income from listed securities Dividend income from available- for-sale financial assets Share of profits of associates Loss on disposal of fixed assets Impairment loss for trade and other receivables Equity-settled share-based transactions Increase in fixed deposit with maturity over three months Impairment charge on goodwill Increase in pledged deposits Operating profit before working capital changes Increase in other assets (Increase)/decrease in trade and other receivables (Increase)/decrease in amounts due from related companies Increase/(decrease) in trade and other payables Increase/(decrease) in amounts due to related companies Cash inflow/(outflow) from operations Hong Kong profits tax paid Overseas tax paid Net cash inflow/(outflow) from operating activities	Year ended 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 4,490 37,525 41,302 646 1,306 2,444 — 733 3,908 (231) 2,308 (1,642) — — — 21 58 55 — (133) (420) — (150) (138) (3,901) (5,802) (2,047) 29 17 248 — 1,966 911 — 200 888 — — (7,214) 861 — — — — (2,486) 1,915 38,028 35,809 — — — (18,488) (57,909) (14,506) (58) (27,027) (152) 33,127 25,246 86,464 25,356 55,396 (11,522) 41,852 33,734 96,093 (1,260) (1,284) (9,842) — (2,112) (5,668) 40,592 30,338 80,583	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) 16,388 9,806 1,113 1,446 (162) 603 (13) (3) — (3,072) 27 84 (313) (48) (138) — (1,233) (1,407) — 2 537 656 633 (36) (7,163) (5,848) — 399 — (36) 9,676 2,546 — (200) 5,016 120,791 21 (23,663) (22,938) (195,379) 4,118 1,678 (4,107) (94,227) (7) — (2,538) (3,582) (6,652) (97,809)

– 221 –

ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

(b) Purchase of subsidiaries:

Net assets acquired Fixed assets Financial assets at fair value through profit or loss Trade and other receivables Bank balances and cash — general accounts Trade and other payables Taxation payable Remaining minority interest of a subsidiary acquired Share of minority interests Goodwill arising on acquisition (Note 10) Total purchase price Satisfied by: Cash Amounts due to related companies Interests in associate prior to the acquisition	Year ended 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 — 3,658 45 — 25,934 — — 148,571 74 — 42,064 309 — (183,804) (173) — (3,129) — 2,899 — — 2,899 33,294 255 — (23) 76 4,973 399 2,975 38,267 631 2,975 11,489 631 — 16,790 — — 9,988 — 2,975 38,267 631	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) — — — — — 6 — 1,254 — — — — — — — 1,260 — — — 45 — 1,305 — 1,305 — — — — — 1,305	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) — — — — — 6 — 1,254 — — — — — — — 1,260 — — — 45 — 1,305 — 1,305 — — — — — 1,305
			1,260 — 45
			1,305
			1,305 — —
			1,305

(c) Analysis of the (cash outflow on acquisition)/net cash acquired on acquisition in respect of the purchase of subsidiaries:

Cash consideration Cash and bank balances acquired Cash flow on acquisition net of cash acquired	Year ended 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 (2,975) (11,489) (631) — 42,064 309 (2,975) 30,575 (322)	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) — (1,305) — 1,254 — (51)	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) — (1,305) — 1,254 — (51)
			(51)

– 222 –

ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

29 CONTINGENT LIABILITIES

Outstanding litigation cases

A writ of summons dated 11 July 2006 was served on a subsidiary of the Company and two other subsidiaries of HIHL as defendants by a former account executive claiming (being the plaintiff) against the companies for a total amount of HK$700,000 as his rightful overriding commissions together with interest and/or alternatively, damages to be assessed. The subsidiaries have instructed their legal advisors to commence defence on the claim. The legal advisors have requested the plaintiff to state clearly his claim but the plaintiff has indicated to the court that he would not answer the same and as such the legal advisors opine that it is not clear whether the plaintiff will aggressively press ahead with his claim or he will keep the case in abeyance. Up to the date of this report, there has been no further development.

30 LEASE COMMITMENTS

At 31 December 2005, 2006 and 2007, and 30 June 2008, the Group had future aggregate minimum lease payments under non-cancellable operating leases as follows:

Land and buildings

Within one year After one year but within five years Others	2005 HK$’000 1,597 2,290 3,887	As at 31 December 2006 2007 HK$’000 HK$’000 2,729 2,999 1,618 1,102 4,347 4,101	As at 30 June 2008 HK$’000 4,719 3,989
			8,708

Within one year After one year but within five years	2005 HK$’000 25 33 58	As at 31 December 2006 2007 HK$’000 HK$’000 46 33 34 30 80 63	As at 30 June 2008 HK$’000 25 19
			44

– 223 –

ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

31 FINANCIAL RISK MANAGEMENT

31.1 Financial risk factors

(a) Foreign exchange risk

The Group carries out business in foreign exchange trading and has certain investments overseas and therefore is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to Hong Kong dollar. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations.

– 224 –

ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

At 31 December 2005 Trade and other receivables Cash and cash equivalents Available-for-sale financial assets Trade and other payables Net exposure arising from recognised assets and liabilities Notional amounts of leveraged foreign exchange contracts sales Notional amounts of leveraged foreign exchange contracts purchases Net notional amounts of precious metal trading contracts Net exposure arising from forecast transactions Overall net exposure	Japanese Yen HK$’000 — — 12,089 291 12,380 - - - - - - - - - - - (192,381) 220,119 — 27,738 - - - - - - - - - - - 40,118	United States Dollars HK$’000 8,576 61 — (58) 8,579 - - - - - - - - - - - — — 101,312 101,312 - - - - - - - - - - - 109,891	Euro HK$’000 — — — — — - - - - - - - - - - - (87,221) 87,221 — — - - - - - - - - - - - —	Sterling HK$’000 — — — — — - - - - - - - - - - - (214,531) 217,213 — 2,682 - - - - - - - - - - - 2,682	Swiss Franc HK$’000 11,732 23,385 — (28,805) 6,312 - - - - - - - - - - - — — — — - - - - - - - - - - - 6,312	Others HK$’000 2,305 11,933 — (3,261) 10,977 - - - - - - - - - - - — — — — - - - - - - - - - - - 10,977

– 225 –

ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

At 31 December 2006 Trade and other receivables Cash and cash equivalents Available-for-sale financial assets Trade and other payables Net exposure arising from recognised assets and liabilities Notional amounts of leveraged foreign exchange contracts sales Notional amounts of leveraged foreign exchange contracts purchases Notional amounts of foreign exchange option contracts sales Notional amounts of foreign exchange option contracts purchases Net notional amounts of precious metal trading contracts Net exposure arising from forecast transactions Overall net exposure	Japanese Yen HK$’000 1 (2,429) 10,100 (949) 6,723 - - - - - - - - - - - (1,705,554) 1,691,001 (478,952) 478,952 — (14,553) - - - - - - - - - - - (7,830)	United States Dollars HK$’000 130,032 78,323 — (236,044) (27,689) - - - - - - - - - - - — — — — (46,800) (46,800) - - - - - - - - - - - (74,489)	Euro HK$’000 — 4,821 — — 4,821 - - - - - - - - - - - (139,278) 168,573 — 10,279 — 39,574 - - - - - - - - - - - 44,395	Sterling HK$’000 107 32 — (1,394) (1,255) - - - - - - - - - - - (1,750,852) 1,674,773 (488,617) 503,886 — (60,810) - - - - - - - - - - - (62,065)	Swiss Franc HK$’000 491 3,776 — (13,046) (8,779) - - - - - - - - - - - (1,221,870) 1,215,166 — — — (6,704) - - - - - - - - - - - (15,483)	Others HK$’000 8,782 21,364 — (7,760) 22,386 - - - - - - - - - - - (50,061) 28,076 — — — (21,985) - - - - - - - - - - - 401

– 226 –

ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

At 31 December 2007 Trade and other receivables Cash and cash equivalents Available-for-sale financial assets Trade and other payables Net exposure arising from recognised assets and liabilities Notional amounts of leveraged foreign exchange contracts sales Notional amounts of leveraged foreign exchange contracts purchases Net notional amounts of precious metal trading contracts Net exposure arising from forecast transactions Overall net exposure	Japanese Yen HK$’000 — 609 12,157 (24,443) (11,677) - - - - - - - - - - - (611,506) 502,499 — (109,007) - - - - - - - - - - - (120,684)	United States Dollars HK$’000 129,900 170,383 — (287,090) 13,193 - - - - - - - - - - - — — 27,945 27,945 - - - - - - - - - - - 41,138	Euro HK$’000 — 1,632 — (775) 857 - - - - - - - - - - - (45,161) 71,097 — 25,936 - - - - - - - - - - - 26,793	Sterling HK$’000 284 34 — (1,034) (716) - - - - - - - - - - - (609,200) 395,130 — (214,070) - - - - - - - - - - - (214,786)	Swiss Franc HK$’000 784 2,384 — (4,661) (1,493) - - - - - - - - - - - (31,421) 33,059 — 1,638 - - - - - - - - - - - 145	Others HK$’000 12,312 11,647 — (5,231) 18,728 - - - - - - - - - - - (15,404) 6,363 — (9,041) - - - - - - - - - - - 9,687

– 227 –

APPENDIX III

ACCOUNTANTS’ REPORT ON THE HPL GROUP

At 30 June 2008 Trade and other receivables Cash and cash equivalents Trade and other payables Secured mortgage loan Net exposure arising from recognised assets and liabilities Notional amounts of leveraged foreign exchange contracts sales Notional amounts of leveraged foreign exchange contracts purchases Notional amounts of foreign exchange option contracts sales Notional amounts of foreign exchange option contracts purchases Net notional amounts of precious metal trading contracts Net exposure arising from forecast transactions Overall net exposure	Japanese Yen HK$’000 2,018 53 (1) — 2,070 - - - - - - - - - - (129,971) 211,703 (721) 721 — 81,732 - - - - - - - - - - 83,802	United States Dollars HK$’000 103,883 54,916 (121,275) — 37,524 - - - - - - - - - - — — — — 49,939 49,939 - - - - - - - - - - 87,463	Euro HK$’000 — 3,249 (1,474) — 1,775 - - - - - - - - - - (243,105) 149,622 (1,413) 1,413 — (93,483) - - - - - - - - - - (91,708)	Sterling HK$’000 1 765 (891) — (125) - - - - - - - - - - (354,749) 373,172 (760) 763 — 18,426 - - - - - - - - - - 18,301	Swiss Franc HK$’000 915 2,850 (2,798) — 967 - - - - - - - - - - (19,599) 33,405 (48) 48 — 13,806 - - - - - - - - - - 14,773	New Taiwan Dollars HK$’000 — — — (12,731) (12,731) - - - - - - - - - - — — — — — — - - - - - - - - - - (12,731)	Others HK$’000 7,889 29,059 (8,957) —
							27,991 - - - - - - - - - - (10,784) 11,668 (461) 461 —
							884 - - - - - - - - - -
							28,875

– 228 –

ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

Sensitivity analysis

The following table indicates the approximate change in the Group’s profit before tax in response to possible changes in the foreign exchange rates to which the Group had significant exposure at the balance sheet date:

					As at
			As at 31 December		30 June
		2005	2006	2007	2008
	Increase/	Effect on	Effect on	Effect on	Effect on
	decrease in	profit	profit	profit	profit
	exchange rates	before tax	before tax	before tax	before tax
		HK$’000	HK$’000	HK$’000	HK$’000
Japanese Yen	+ 5%	2,006	(392)	(6,034)	4,190
	– 5%	(2,006)	392	6,034	(4,190)
Euro	+ 5%	—	2,220	1,340	(4,585)
	– 5%	—	(2,220)	(1,340)	4,585
Sterling	+ 5%	134	(3,103)	(10,739)	915
	– 5%	(134)	3,103	10,739	(915)
Swiss Franc	+ 5%	316	(774)	7	739
	– 5%	(316)	774	(7)	(739)
New Taiwan Dollars	+ 5%	—	—	—	(637)
	– 5%	—	—	—	637

The stated changes represent management’s assessment of reasonably possible changes in foreign exchange rates over the period until the next annual balance sheet date. In this respect, it is assumed that the pegged rate between Hong Kong dollar and the United States dollar would be materially unaffected by any changes in movement in value of the United States dollar against other currencies. Results of the analysis as presented in the above table represent and aggregation of the effects on each of the Group entities’ profit before tax and equity measured in the respective functional currencies, translated into Hong Kong dollars at the exchange rate ruling at the balance sheet date for presentation purposes. The analysis is performed on the same basis for 2006.

– 229 –

ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

(b) Price risk

The Group is exposed to price risk on the net positions on bullion trading and available-for-sale financial assets. The dealing function of bullion trading is responsible for managing the price risk to ensure that the positions and floating loss are within the limits approved by the RMC. The directors are responsible for monitoring financial performance of the available-for-sale financial assets on a regular basis.

The following table indicates the approximate change in the Group’s profit before tax in response to possible changes in bullion price to which the Group had net positions on bullion trading at the balance sheet date:

					As at
			As at 31 December		30 June
	Increase/	2005	2006	2007	2008
	decrease in	Effect on	Effect on	Effect on	Effect on
	exchange	profit	profit before	profit before	profit before
	rates	before tax	tax	tax	tax
		HK$’000	HK$’000	HK$’000	HK$’000
Net notional amounts
of precious metal	+ 30%	30,394	(14,040)	8,383	14,982
trading contracts	– 30%	(30,394)	14,040	(8,383)	(14,982)

The following table indicates the approximate change in the Group’s reserve in response to possible changes in fair value in the available-for-sale financial assets at the balance sheet date:

					As at
			As at 31 December		30 June
	Increase/	2005	2006	2007	2008
	decrease in	Effect	Effect	Effect	Effect
	fair value	on reserve	on reserve	on reserve	on reserve
		HK$’000	HK$’000	HK$’000	HK$’000
Available-for-sale	+ 5%	604	505	608	—
financial assets	– 5%	(604)	(505)	(608)	—

(c) Credit risk

(d) Liquidity risk

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ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

The maturity profile of the Group’s financial liabilities as at the balance sheet date, based on the contracted undiscounted payments, was as follows:

At 31 December 2005 Trade and other payables Short-term loan and bank overdrafts At 31 December 2006 Trade and other payables Short-term loan and bank overdrafts At 31 December 2007 Trade and other payables Short-term loan and bank overdrafts At 30 June 2008 Trade and other payables Short-term loan and bank overdrafts Mortgage loan	Carrying amount HK$’000 34,827 1 34,828 243,877 1 243,878 330,514 13 330,527 135,135 3 — 135,138	Total contractual undiscounted cash flow HK$’000 34,827 1 34,828 243,877 1 243,878 330,514 13 330,527 135,135 3 12,731 147,869	Within 1 year or on demand HK$’000 34,827 1 34,828 243,877 1 243,878 330,514 13 330,527 135,135 3 692 135,830	After 1 year but within 5 years HK$’000 — —
				—
				— —
				—
				— —
				—
				— — 12,039
				12,039

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ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

(e) Interest rate risk

The interest rate profile of the Group at the balance sheet dates was as follows:

	2005	2005	2006	2006	2007	2007	2008	2008
	Effective		Effective		Effective		Effective
	interest		interest		interest		interest
	rate		rate		rate		rate
	%	HK$’000	%	HK$’000	%	HK$’000	%	HK$’000
Assets
Bank balances	0.73%	42,794	1.12%	116,384	1.94%	215,207	1.19%	109,973
		42,794		116,384		215,207		109,973
		- - - - - - - - - -		- - - - - - - - - -		- - - - - - - - - -		- - - - - - - - - -
Liabilities
Mortgage loan		—		—		—	3.00%	12,731
		—		—		—		12,731
		- - - - - - - - - -		- - - - - - - - - -		- - - - - - - - - -		- - - - - - - - - -
Sensitivity analysis
Assume decreased
by 0.5%
Profit after tax
decreased by		214		582		1,076		486

As at 31 December 2005, 2006 and 2007, and 30 June 2008, it is estimated that a general decrease of 50 basis points in interest rate, with all other variable held constant, would decrease the Group’s profit before tax and retained profits by approximately HK$214,000, HK$582,000, HK$1,076,000 and HK$486,000 respectively.

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ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

31.2 Fair value estimation

32 RELATED PARTY TRANSACTIONS

32.1 Related party transactions

The following is a summary of significant related party transactions which were carried out in the normal course of the HPL Group’s business:

Net premium expenses from foreign currency option trading and brokering from an associate (Note (a )(i)) Net premium income from foreign currency option trading and brokering from a fellow subsidiary (Note (a)(ii)) Service fee income (Note (b)) Consultancy fee income (Note (c)) Operating leases for land and buildings (Note (d)) Management fee (Note (e)) Professional fee (Note (f))	Year ended 31st December 2005 2006 2007 HK$’000 HK$’000 HK$’000 — (1,181) — 1,158 494 — — 2,648 — 1,482 820 742 (346) (452) (2,297) (1,334) (5,981) (8,018) (2,340) — —	Six months ended 30th June 2007 2008 HK$’000 HK$’000 — — — 1,550 — — 371 370 (347) (1,944) (3,085) (1,440) — —

– 233 –

ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

Commission income received

(a)(i) In 2005 and 2006, an associate in New Zealand transacted leveraged foreign exchange trading, previous metal trading and securities trading through the subsidiaries of the HPL Group.

For leveraged foreign exchange transactions and precious metal trading transactions, spreads are based on relevant market rates at the time of each transaction available to other customers and counterparties of the Group with comparable standing. The aggregate notional amount of the transactions entered into by the associate amounted to HK$12,058 million (2005: HK$1,715 million) for leveraged foreign exchange trading contracts and HK$33,924 million (2005: HK$772 million) for precious metal trading contracts out of the total aggregate notional amount of transactions of HK$29,206 million (2005: HK$23,263) and HK$189,367 million (2005: HK$27,050 million) respectively entered into by the HPL Group during 2005 and 2006.

Option premiums were charged on these transactions on normal commercial terms. During 2005 and 2006, net option premium expenses of HK$1,181,232 (2005: HK$ nil) were included in turnover of the HPL Group.

(a)(ii) During the year/period, a fellow subsidiary, Hantec International Limited transacted leveraged foreign exchange trading through the subsidiaries of the HPL Group.

For leveraged foreign exchange transactions, spreads were based on relevant market rates at the time of each transaction available for other customers and counterparties of Hantec International Limited with comparable standing. The aggregate notional amount of the transactions entered by the HPL Group for the years ended 31 December 2005, 2006, 2007 and the six months ended 30 June 2008 amounted to HK$139,429 million, HK$131,663 million, HK$58,862 million and HK$3,574 million respectively (30 June 2007: HK$44,881 million). The total aggregate notional amount of the transactions of Hantec International Limited amounted to HK$331,127 million, HK$226,348 million, HK$113,681 million and HK$16,062 million respectively (30 June 2007: HK$76,368 million).

During the years ended 31 December 2005, 2006, 2007 and the six months ended 2008, net option premium expenses of HK$1,158,306, HK$814,354, HK$nil and HK$1,549,631 respectively (30 June 2007: HK$nil) were included in the turnover of the Group.

Service Fee income

(b) In 2006, an associate in New Zealand paid a service fee to a subsidiary of the Group in Macau of HK$2,648,373 during the year for supporting and administrative services rendered. The amount was charged at agreed terms.

Consultancy fee income

(c) The HPL Group received consultancy fee income for the years ended 31 December 2005, 2006, 2007 and the six months ended 30 June 2008 were HK$1,481,830, HK$820,046, HK$742,064 and HK$370,023 respectively (30 June 2007: HK$371,213) for providing consultation services to Hantec International Limited in the People’s Republic of China.

Operating leases for land and buildings

(d) Operating leases for land and buildings represented amounts recharged by Chinacorp Nominees Limited for using the rental premises. The amounts paid by the HPL Group for the years ended 31 December 2005, 2006, 2007 and the six months ended 30 June 2008 were HK$345,827, HK$451,970, HK$2,297,339 and HK$1,943,590 respectively (30 June 2007: HK$346,689).

– 234 –

ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

Management fee

(e) The management fee was charged by Hantec Investment Holdings Limited for the use of representative offices. During the years ended 31 December 2005, 2006, 2007 and the six months ended 30 June 2008, the amounts paid by the HPL Group were HK$1,334,164, HK$5,981,084, HK$8,017,674 and HK$1,440,327 respectively (30 June 2007: HK$3,085,452).

Professional fee

(f) Professional fee is paid to a fellow subsidiary, Hantec Asset Management Limited, for providing financial services to HPL Group. The service fee is charged on normal commercial terms.

32.2 Compensation of key management personnel

The remuneration of directors and other members of key management during the year were as follows:

Salaries and other short-term employee benefits Equity-settled share-based transactions	Year ended 31 December 2005 2006 2007 HK$’000 HK$’000 HK$’000 1,736 7,274 7,741 — 166 717 1,736 7,440 8,458	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) 2,710 3,300 516 103 3,226 3,403	Six months ended 30 June 2007 2008 HK$’000 HK$’000 (Unaudited) 2,710 3,300 516 103 3,226 3,403
			3,403

The remuneration of directors and key executives are reviewed by the Remuneration Committee having regard to the performance of individuals and markets trends.

– 235 –

ACCOUNTANTS’ REPORT ON THE HPL GROUP

APPENDIX III

33 POSSIBLE IMPACT OF AMENDMENTS, NEW STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE FOR THE PERIOD ENDED 30 JUNE 2008

Of these developments, the following relate to matters that may be relevant to the Group’s operations and financial position:

	Effective for accounting
	period beginning on or after
HKFRS 8, Operating segments	1 January 2009
Revised HKAS 1, Presentation of financial statements	1 January 2009
Amendments to HKFRS 2, Share-based payment — Vesting conditions	1 January 2009
and cancellations
Amendments to HKAS 32, Financial instruments:
Presentation and HKAS 1, Presentation of financial statements —	1 January 2009
Puttable financial instruments and obligations arising on liquidation
Revised HKFRS 3, Business combinations	1 July 2009

The Group is in the process of making an assessment of what the impact of these amendments, new standards and new interpretations is expected to be in the period of initial application.

– 236 –

APPENDIX IV UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE HPL GROUP UPON COMPLETION OF THE GROUP REORGANISATION

1. UNAUDITED PRO FORMA ASSETS AND LIABILITIES STATEMENT OF THE HPL GROUP UPON COMPLETION OF GROUP REORGANISATION

(A) Unaudited pro forma assets and liabilities statement of the HPL Group

Introduction

The unaudited pro forma assets and liabilities statement of the HPL Group has been prepared giving effect to the Group Reorganisation.

The unaudited pro forma assets and liabilities statement of the HPL Group has been prepared in accordance with Rule 4.29 of the Listing Rules for the purpose of illustrating the Group Reorganisation as if the Group Reorganisation had taken place on 30 June 2008.

The unaudited pro forma assets and liabilities statement of the HPL Group is based upon the audited consolidated balance sheet of the HPL Group as at 30 June 2008, which has been extracted from the Accountants’ Report of HPL Group set out in the Appendix III of this circular, after giving effect to the pro forma adjustments of the Group Reorganisation that are (i) directly attributable to the transaction; and (ii) factually supportable, are summarized in the accompany notes.

The unaudited pro forma assets and liabilities statement of the HPL Group is based on a number of assumptions, estimates, and uncertainties. The accompanying unaudited pro forma assets and liabilities statement of the HPL Group does not purport to describe the actual financial position of the HPL Group that would have been attained had the Group Reorganisation been completed on 30 June 2008 or to predict the future financial position of the HPL Group upon completion of Group Reorganisation.

The unaudited pro forma assets and liabilities statement of the HPL Group should be read in conjunction with the historical information of the HPL Group as set out in the Accountants’ Report of the HPL Group in Appendix III and other financial information included elsewhere in this circular.

– 237 –

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE HPL GROUP UPON COMPLETION OF THE GROUP REORGANISATION

Non-current assets Intangible assets Fixed assets Interests in associates Other assets Available-for-sale financial assets Deferred income tax assets Current assets Financial assets at fair value through profit or loss Taxation recoverable Trade and other receivables Amounts due from related companies Bank balances and cash Current liabilities Trade and other payables Short-term loans and bank overdrafts Current portion of secured mortgage loan Amounts due to related companies Taxation payable Net current assets Total assets less current liabilities	30 June 2008 Pro forma adjustments HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (Note 1) (Note 2) (Note 3) (Note 4) (Note 5) (Note 6) 5,198 28,409 600 19,665 200 984 402 54,858 ---------- 2,071 1,914 120,683 50,900 (50,900) 110,056 75,000 (56,269) (1,063) (600) 285,624 ---------- 135,135 3 692 107,169 (107,169) 4,919 247,918 ~~----------~~ 37,706 ~~----------~~ 92,564 ----------	Pro forma HPL Group HK$’000 5,198 29,009 19,665 200 984 402
		55,458 ---------- 2,071 1,914 120,683 — 127,124
		251,792 ---------- 135,135 3 692 — 4,919
		140,749 ~~----------~~
		111,043 ~~----------~~
		166,501 ----------

– 238 –

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE HPL GROUP UPON COMPLETION OF THE GROUP REORGANISATION

Non-current liabilities Secured mortgage loan Deferred income tax liabilities Net assets Capital and reserves Share capital Other reserves Retained earnings Equity attributable to equity holders of the Company Minority interests Total equity	30 June 2008 Pro forma adjustments HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (Note 1) (Note 2) (Note 3) (Note 4) (Note 5) (Note 6) 12,039 96 12,135 ---------- 80,429 — 41,789 19,772 75,000 (41,789) 60,238 (1,063) 80,010 419 80,429	Pro forma HPL Group HK$’000 12,039 96
		12,135 ---------- 154,366
		41,789 52,983 59,175
		153,947 419
		154,366

Notes:

The amounts have been extracted without adjustment from the Accountants’ Report on the HPL Group as set out in Appendix III to this circular.
The amount represents capital contribution by the Company to the HPL Group upon completion of the Group Reorganisation. It is assumed that the Company will inject HK$75,000,000 to HPL upon completion of the Group Reorganisation.
The adjustment to share capital represents the issuance of 417,890,000 HPL Shares to HIHL at HK$0.1 each in consideration for the net assets of the entities injected into HPL upon completion of the Group Reorganisation. The issued HPL Shares will then be distributed in specie by HIHL to the Shareholders whose names appear on the register of members of the Company on the Record Date on the basis of one HPL share for every Share then held.

The corresponding adjustment to other reserves comprises of (i) creation of a share premium reserve of HK$38,640,000 (Cr), being the difference between the book value of net assets of companies injected to HPL (HK$80,429,000) and the nominal value of HPL shares issued (HK$41,789,000) and (ii) adjustment of HK$80,429,000 to other reserves of the injected companies in relation to HPL’s investment cost in the injected companies of HK$80,429,000.

This adjustment reflects the settlement of inter-company balances between the Retained Group and HPL Group upon completion of the Group Reorganisation. As set out in the letter from the Board in this circular, certain inter-group balances between members of the Retained Group and members of the HPL Group will be assigned or settled before completion of the Group Reorganisation in cash. For the purpose

– 239 –

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE HPL GROUP UPON COMPLETION OF THE GROUP REORGANISATION

of this unaudited assets and liabilities statement, the inter-company balances between members of the Retained Group and members of the HPL Group as at 30 June 2008 will be settled in full by cash upon completion of the Group Reorganisation.

The adjustment represents the estimated professional and legal fees and other expenses to be incurred by HPL Group in relation to the Group Reorganisation.
The adjustment represents the cost of fixed assets to be purchased by a HPL Group subsidiary from a Retained Group subsidiary as part of the Group Reorganisation.

– 240 –

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE HPL GROUP UPON COMPLETION OF THE GROUP REORGANISATION

(B) ACCOUNTANTS’ REPORT ON PRO FORMA ASSETS AND LIABILITIES STATEMENT OF THE HPL GROUP

8th Floor Prince’s Building 10 Chater Road Central Hong Kong

31 October 2008

The Board of Directors Hantec Investment Holdings Limited 45th Floor COSCO Tower 183 Queen’s Road Central Hong Kong

Dear Sirs

We report on the unaudited pro forma assets and liabilities statement of Hantec Pacific Limited (‘‘HPL’’) and its subsidiaries (collectively the ‘‘HPL Group’’) set out on section (A) of Appendix IV to the circular of Hantec Investment Holdings Limited (‘‘the Company’’) dated 31 October 2008 (the ‘‘Circular’’), which has been prepared by the directors of the Company, solely for illustrative purposes, to provide information about how the proposed group re-organisation as defined in the Circular (the ‘‘Proposed Re-organisation’’) might have affected the assets and liabilities of the HPL Group on a pro forma basis as at 30 June 2008.

The unaudited pro forma assets and liabilities statement is derived from the audited historical financial information of the HPL Group as set out in Appendix III to the Circular. The basis of preparation of the unaudited pro forma assets and liabilities statement is set out in the introduction and notes to the unaudited pro forma assets and liabilities statements of the HPL Group in section (A) of Appendix IV to the Circular.

Respective Responsibilities of Directors and the Company and Reporting Accountants

It is the responsibility solely of the directors of the Company to prepare the unaudited pro forma assets and liabilities statement 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 (HKICPA).

– 241 –

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE HPL GROUP UPON COMPLETION OF THE GROUP REORGANISATION

It is our responsibility to form an opinion, as required by the Listing Rules, on the unaudited pro forma assets and liabilities statement 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 assets and liabilities statements beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

Basis of opinion

We conducted our engagement in accordance with Hong Kong Standard on Investment Circular Reporting Engagements 300 ‘‘Accountants’ Reports on Pro Forma Financial Information in Investment Circulars’’ issued by HKICPA. Our work consisted primarily of comparing the unadjusted financial information with the source documents, considering the evidence supporting the adjustments and discussing the unaudited pro forma assets and liabilities statement 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 assets and liabilities statement 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 adjustment are appropriate for the purposes of the unaudited pro forma assets and liabilities statement as disclosed pursuant to Paragraph 29(1) of Chapter 4 of the Listing Rules.

The unaudited pro forma assets and liabilities statement is for illustrative purposes only, is based on the judgements and assumptions of the directors of the Company, and because of its nature, it does not provide any assurance or indication that any event will take place in the future and may not be indicative of the financial position of the HPL Group as at 30 June 2008 or any future date.

– 242 –

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE HPL GROUP UPON COMPLETION OF THE GROUP REORGANISATION

Opinion

In our opinion:

(a) the unaudited pro forma assets and liabilities statement has been properly compiled on the basis stated;
(b) such basis is consistent with the accounting policies of the HPL Group; and
(c) the adjustments are appropriate for the purposes of the unaudited pro forma assets and liabilities statement as disclosed pursuant to Paragraph 29(1) of Chapter 4 of the Listing Rules.

KPMG

Certified Public Accountants

8th Floor, Prince’s Building 10 Chater Road

Central, Hong Kong

– 243 –

APPENDIX V

SUMMARY OF THE PROPOSED NEW ARTICLES OF ASSOCIATION OF HPL

Set out below is a summary of certain provisions of the Articles of Association (the ‘‘Articles’’) of HPL (referred to as the ‘‘Company’’ for the purpose of the summary below) to be adopted immediately before the Distribution in Specie.

(a) DIRECTORS

(i) Power to allot and issue shares and warrants

Subject to the provisions of the BVI Business Companies Act (the ‘‘Act’’) and the Articles and to any special rights conferred on the holders of any shares or class of shares, any share may be issued with or have attached thereto such rights, or such restrictions, whether with regard to dividend, voting, return of capital, or otherwise, as the Company may by ordinary resolution determine (or, in the absence of any such determination or so far as the same may not make specific provision, as the board may determine). Subject to the Act, the memorandum of association of the Company and the Articles, any share may be issued on terms that, at the option of the Company or the holder thereof, they are liable to be redeemed.

The board may issue warrants conferring the right upon the holders thereof to subscribe for any class of shares or securities in the capital of the Company on such terms as it may from time to time determine.

Subject to the provisions of the Act and the Articles and any direction that may be given by the Company in general meeting and without prejudice to any special rights or restrictions for the time being attached to any shares or any class of shares, all unissued shares in the Company shall be at the disposal of the board, which may offer, allot, grant options over or otherwise dispose of them to such persons, at such times, for such consideration and on such terms and conditions as it in its absolute discretion thinks fit, but so that no shares shall be issued at a discount.

Neither the Company nor the board shall be obliged, when making or granting any allotment of, offer of, option over or disposal of shares, to make, or make available, any such allotment, offer, option or shares to members or others with registered addresses in any particular territory or territories being a territory or territories where, in the absence of a registration statement or other special formalities, this would or might, in the opinion of the board, be unlawful or impracticable. Members affected as a result of the foregoing sentence shall not be, or be deemed to be, a separate class of members for any purpose whatsoever.

(ii) Power to dispose of the assets of the Company or any subsidiary

There are provisions in the Articles relating to the disposal of the assets of the Company or any of its subsidiaries and requirements for approval of members in certain circumstances disclosed in paragraph (r) below. The Directors may also sell, transfer, secure, exchange or otherwise dispose of the assets of the Company

– 244 –

APPENDIX V

SUMMARY OF THE PROPOSED NEW ARTICLES OF ASSOCIATION OF HPL

without authorisation by the Members pursuant to section 175 of the Act. The Directors may otherwise exercise all powers and do all acts and things which may be exercised or done or approved by the Company and which are not required by the Articles or the Act to be exercised or done by the Company in general meeting.

(iii) Compensation or payments for loss of office

Pursuant to the Articles, payments to any Director or past Director of any sum by way of compensation for loss of office or as consideration for or in connection with his retirement from office (not being a payment to which the Director is contractually entitled) must be approved by the Company in general meeting.

(iv) Loans and provision of security for loans to Directors

There are provisions in the Articles prohibiting the making of loans to Directors.

(v) Disclosure of interests in contracts with the Company or any of its subsidiaries

A Director may hold any other office or place of profit with the Company (except that of the auditors of the Company) in conjunction with his office of Director for such period and, subject to the Articles, upon such terms as the board may determine, and may be paid such extra remuneration therefor (whether by way of salary, commission, participation in profits or otherwise) in addition to any remuneration provided for by or pursuant to any other Articles. A Director may be or become a director or other officer of, or otherwise interested in, any company promoted by the Company or any other company in which the Company may be interested, and shall not be liable to account to the Company or the members for any remuneration, profits or other benefits received by him as a director, officer or member of, or from his interest in, such other company.

Subject as otherwise provided by the Articles, the board may also cause the voting power conferred by the shares in any other company held or owned by the Company to be exercised in such manner in all respects as it thinks fit, including the exercise thereof in favour of any resolution appointing the Directors or any of them to be directors or officers of such other company, or voting or providing for the payment of remuneration to the directors or officers of such other company.

Subject to the Act and the Articles, no Director or proposed or intended Director shall be disqualified by his office from contracting with the Company, either with regard to his tenure of any office or place of profit or as vendor, purchaser or in any other manner whatsoever, nor shall any such contract or any other contract or arrangement in which any Director is in any way interested be liable to be avoided, nor shall any Director so contracting or being so interested be liable to account to the Company or the members for any remuneration, profit or other benefits realised by any such contract or arrangement by reason of such Director holding that office or the fiduciary relationship thereby established. A Director who to his knowledge is in any way, whether directly or indirectly, interested in a

– 245 –

APPENDIX V

SUMMARY OF THE PROPOSED NEW ARTICLES OF ASSOCIATION OF HPL

contract or arrangement or proposed contract or arrangement with the Company shall declare the nature of his interest at the meeting of the board at which the question of entering into the contract or arrangement is first taken into consideration, if he knows his interest then exists, or in any other case, at the first meeting of the board after he knows that he is or has become so interested.

A Director shall not vote (nor be counted in the quorum) on any resolution of the board in respect of any contract or arrangement or other proposal in which he is to his knowledge materially interested but this prohibition shall not apply to any of the following matters, namely:

(aa) any contract, transactions, arrangement or proposal for giving of any security or indemnity to the Director in respect of money lent or obligations incurred or undertaken by him at the request of or for the benefit of the Company or any of its subsidiaries;
(bb) any contract, transaction, arrangement or proposal for the giving by the Company of any security or indemnity to a third party in respect of a debt or obligation of the Company or any of its subsidiaries for which the Director has himself assumed responsibility in whole or in part whether alone or jointly under a guarantee or indemnity or by the giving of security;
(cc) any contract, transaction, arrangement or proposal concerning an offer of shares or debentures or other securities of or by the Company or any other company which the Company may promote or be interested in for subscription or purchase, where the Director is or is to be interested as a participant in the underwriting or sub-underwriting of the offer;
(dd) any contract, transaction, arrangement or proposal in which the Director is interested in the same manner as other holders of shares or debentures or other securities of the Company or any of its subsidiaries by virtue only of his interest in shares or debentures or other securities of the Company;
(ee) any contract, transaction, arrangement or proposal concerning any other company in which he is interested only, whether directly or indirectly, as an officer or executive or a shareholder other than a company in which the Director together with any of his associates is beneficially interested in 5 percent. or more of the issued shares or of the voting rights of any class of shares of such company (or of any third company through which his interest is derived); or
(ff) any proposal concerning the adoption, modification or operation of a share option scheme, a pension fund or retirement, death, or disability benefits scheme or other arrangement which relates both to Directors and employees of the Company or of any of its subsidiaries and does not provide in respect of any Director as such any privilege or advantage not accorded to the employees to which such scheme or fund relates.

– 246 –

APPENDIX V

SUMMARY OF THE PROPOSED NEW ARTICLES OF ASSOCIATION OF HPL

(vi) Remuneration

The ordinary remuneration of the Directors shall from time to time be determined by the Directors and shall be divided amongst the Directors in such proportions and in such manner as the board may agree or, failing agreement, equally, except that any Director holding office for part only of the period in respect of which the remuneration is payable shall only rank in such division in proportion to the time during such period for which he held office. Any material variation of such remuneration shall be subject to the approval of the independent Members (as defined in the Articles) in general meeting.

The Directors shall also be entitled to be prepaid or repaid all travelling, hotel and incidental expenses reasonably expected to be incurred or incurred by them in attending any board meetings, committee meetings or general meetings or separate meetings of any class of shares or of debentures of the Company or otherwise in connection with the discharge of their duties as Directors.

Any Director who, by request, goes or resides abroad for any purpose of the Company or who performs services which in the opinion of the board go beyond the ordinary duties of a Director may be paid such extra remuneration (whether by way of salary, commission, participation in profits or otherwise) as the board may determine and such extra remuneration shall be in addition to or in substitution for any ordinary remuneration as a Director. An executive Director appointed to be a managing director, joint managing director, deputy managing director or other executive officer shall receive such remuneration (whether by way of salary, commission or participation in profits or otherwise or by all or any of those modes) and such other benefits (including pension and/or gratuity and/or other benefits on retirement) and allowances as the board may from time to time decide. Such remuneration may be either in addition to or in lieu of his remuneration as a Director.

The board may establish or concur or join with other companies (being subsidiary companies of the Company or companies with which it is associated in business) in establishing and making contributions out of the Company’s monies to any schemes or funds for providing pensions, sickness or compassionate allowances, life assurance or other benefits for employees (which expression as used in this and the following paragraph shall include any Director or ex-Director who may hold or have held any executive office or any office of profit with the Company or any of its subsidiaries) and ex-employees of the Company and their dependents or any class or classes of such persons.

The board may pay, enter into agreements to pay or make grants of revocable or irrevocable, and either subject or not subject to any terms or conditions, pensions or other benefits to employees and ex-employees and their dependents, or to any of such persons, including pensions or benefits additional to those, if any, to which such employees or ex-employees or their dependents are or may become

– 247 –

APPENDIX V

SUMMARY OF THE PROPOSED NEW ARTICLES OF ASSOCIATION OF HPL

entitled under any such scheme or fund as is mentioned in the previous paragraph. Any such pension or benefit may, as the board considers desirable, be granted to an employee either before and in anticipation of, or upon or at any time after, his actual retirement.

(vii) Retirement, appointment and removal

At each annual general meeting, one third of the Directors for the time being (or if their number is not a multiple of three, then the number nearest to but not greater than one third) will retire from office by rotation provided that no Director holding office as chairman and/or managing director shall be subject to retirement by rotation, or be taken into account in determining the number of Directors to retire. The Directors to retire in every year will be those who have been longest in office since their last re-election or appointment but as between persons who became or were last re-elected Directors on the same day those to retire will (unless they otherwise agree among themselves) be determined by lot. There are no provisions relating to retirement of Directors upon reaching any age limit.

The Directors shall have the power from time to time and at any time to appoint any person as a Director either to fill a casual vacancy on the board or as an addition to the existing board. Any Director so appointed shall hold office only until the next following annual general meeting of the Company and shall then be eligible for re-election. Neither a Director nor an alternate Director is required to hold any shares in the Company by way of qualification.

A Director may be removed by an ordinary resolution of the Company before the expiration of his period of office (but without prejudice to any claim which such Director may have for damages for any breach of any contract between him and the Company) and the Company may by ordinary resolution appoint another in his place. Unless otherwise determined by the Company in general meeting, the number of Directors shall not be less than two. There is no maximum number of Directors.

The office or director shall be vacated:

(aa) if he resigns his office by notice in writing delivered to the Company at the registered office of the Company for the time being or tendered at a meeting of the board whereupon the board resolves to accept such resignation;
(bb) becomes of unsound mind or dies;
(cc) if, without special leave, he is absent from meetings of the board (unless an alternate director appointed by him attends) for six (6) consecutive months, and the board resolves that his office is vacated;
(dd) if he becomes bankrupt or has a receiving order made against him or suspends payment or compounds with his creditors;

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(ee) if he is prohibited from being a director by law;
(ff) if he ceases to be a director by virtue of any provision of law or is removed from office pursuant to the Articles.

The board may from time to time appoint one or more of its body to be managing director, joint managing director, or deputy managing director or to hold any other employment or executive office with the Company for such period and upon such terms as the board may determine and the board may revoke or terminate any of such appointments. The board may delegate any of its powers, authorities and discretions to committees consisting of such Director or Directors and other persons as the board thinks fit, and it may from time to time revoke such delegation or revoke the appointment of and discharge any such committees either wholly or in part, and either as to persons or purposes, but every committee so formed shall, in the exercise of the powers, authorities and discretions so delegated, conform to any regulations that may from time to time be imposed upon it by the board.

(viii) Borrowing powers

The board may exercise all the powers of the Company to raise or borrow money, to mortgage or charge all or any part of the undertaking, property and assets (present and future) and uncalled capital of the Company and, subject to the Act, to issue debentures, bonds and other securities of the Company, whether outright or as collateral security for any debt, liability or obligation of the Company or of any third party.

(ix) Proceedings of the Board

The board may meet for the despatch of business, adjourn and otherwise regulate their meetings as they think fit. Questions arising at any meeting shall be determined by a majority of votes. In the case of an equality of votes, the chairman of the meeting shall have an additional or casting vote.

(x) Register of Directors and Officers

The Articles provide that the Company will maintain at its registered office a register of directors and officers which is not available for inspection by the public.

(b) ALTERATIONS TO CONSTITUTIONAL DOCUMENTS

The Articles may be rescinded, altered or amended by the Company in general meeting by special resolution. The Articles state that a special resolution shall be required to alter the provisions of the memorandum of association of the Company (save for an

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SUMMARY OF THE PROPOSED NEW ARTICLES OF ASSOCIATION OF HPL

amendment for purposes of altering the capital as described in (c) below which shall require an ordinary resolution only), to amend the Articles or to change the name of the Company.

(c) ALTERATION OF CAPITAL

The Company may from time to time by ordinary resolution amend its memorandum of association to:

(i) divide its shares into several classes and without prejudice to any special rights previously conferred on the holders of existing shares attach thereto respectively any preferential, deferred, qualified or special rights, privileges, conditions or restrictions as the Company in general meeting or as the Directors may determine; or
(ii) combine its shares, including issued shares, into a smaller number of shares.

(d) VARIATION OF RIGHTS OF EXISTING SHARES OR CLASSES OF SHARES

Subject to the Act, all or any of the special rights attached to the shares or any class of shares may (unless otherwise provided for by the terms of issue of that class) be varied, modified or abrogated either with the consent in writing of the holders of not less than three fourths in nominal value of the issued shares of that class or with the sanction of a special resolution passed at a separate general meeting of the holders of the shares of that class. To every such separate general meeting the provisions of the Articles relating to general meetings will mutatis mutandis apply, but so that the necessary quorum (other than at an adjourned meeting) shall be two persons holding or representing by proxy not less than one third in nominal value of the issued shares of that class and at any adjourned meeting two holders present in person or by proxy whatever the number of shares held by them shall be a quorum. Every holder of shares of the class shall be entitled on a poll to one vote for every such share held by him, and any holder of shares of the class present in person or by proxy may demand a poll.

The special rights conferred upon the holders of any shares or class of shares shall not, unless otherwise expressly provided in the rights attaching to the terms of issue of such shares, be deemed to be varied by the creation or issue of further shares ranking pari passu therewith.

(e) SPECIAL RESOLUTION-MAJORITY REQUIRED

Pursuant to the Articles, a special resolution of the Company must be passed by a majority of not less than three-fourths of the votes cast by such members as, being entitled so to do, vote in person or, in the case of such members as are corporations, by their duly authorised representatives or, where proxies are allowed, by proxy at a general meeting of which not less than twenty-one (21) clear days’ notice, specifying the intention to propose the resolution as a special resolution, has been duly given. Provided that, except in the case of an annual general meeting, if it is so agreed by a

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SUMMARY OF THE PROPOSED NEW ARTICLES OF ASSOCIATION OF HPL

majority in number of the members having a right to attend and vote at such meeting, being a majority together holding not less than ninety-five (95) per cent. in nominal value of the shares giving that right and, in the case of an annual general meeting, if so agreed by all members entitled to attend and vote thereat, a resolution may be proposed and passed as a special resolution at a meeting of which less than twenty-one (21) clear days’ notice has been given.

An ordinary resolution is defined in the Articles to mean a resolution passed by a simple majority of the votes of such members of the Company as, being entitled to do so, vote in person or, in the case of corporations, by their duly authorised representatives or, where proxies are allowed, by proxy at a general meeting held in accordance with the Articles.

(f) VOTING RIGHTS (GENERALLY AND ON A POLL) AND RIGHT TO DEMAND A POLL

Subject to any special rights or restrictions as to voting for the time being attached to any shares by or in accordance with the Articles, at any general meeting on a show of hands, every member who is present in person or by proxy or being a corporation, is present by a representative duly authorised shall have one vote and on a poll every member present in person or by proxy or, in the case of a member being a corporation, by its duly authorised representative shall have one vote for every fully paid share of which he is the holder but so that no amount paid up or credited as paid up on a share in advance of calls or installments is treated for the foregoing purposes as paid up on the share. On a poll, a member entitled to more than one vote need not use all his votes or cast all the votes he uses in the same way.

At any general meeting a resolution put to the vote of the meeting is to be decided on a show of hands unless (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 demanded by (i) the chairman of the meeting or (ii) at least three members present in person or, in the case of a member being a corporation, by its duly authorised representative or by proxy for the time being entitled to vote at the meeting or (iii) any member or members present in person or, in the case of a member 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 the members having the right to vote at the meeting or (iv) a member or members present in person or, in the case of a member being a corporation, by its duly authorised representative or by proxy and holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid equal to not less than one-tenth of the total sum paid up on all the shares conferring that right.

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SUMMARY OF THE PROPOSED NEW ARTICLES OF ASSOCIATION OF HPL

(g) REQUIREMENTS FOR ANNUAL GENERAL MEETINGS

An annual general meeting of the Company must be held in each year, other than the year of incorporation (within a period of not more than 15 months after the holding of the last preceding annual general meeting or a period of 18 months from the date of incorporation unless otherwise resolved by the members at a general meeting at such time and place as may be determined by the board.

(h) ACCOUNTS AND AUDIT

The board shall cause true accounts to be kept of the sums of money received and expended by the Company, and the matters in respect of which such receipt and expenditure take place, and of the property, assets, credits and liabilities of the Company and of all other matters required by the Act and in accordance with the generally accepted accounting principles and practices in Hong Kong or necessary to give a true and fair view of the Company’s affairs and to explain its transactions.

The accounting records shall be kept at the registered office or at such other place or places as the board decides and shall always be open to inspection by any Director. No member (other than a Director) shall have any right to inspect any accounting record or book or document of the Company except as conferred by law or authorised by the board or the Company in general meeting.

A copy of every balance sheet and profit and loss account (including the notes thereto and every document required by law to be annexed thereto), prepared in accordance with the generally accepted accounting principles in Hong Kong, which is to be laid before the Company at its general meeting, together with a printed copy of the Directors’ report and a copy of the auditors’ report, shall be sent to every person entitled thereto within the time prescribed under the Listing Rules (as defined in the Articles); however, subject to compliance with all applicable laws, the Company may instead send to such persons a summary financial statement derived from the Company’s annual accounts and the Directors’ report instead provided that any such person may by notice in writing served on the Company, demand that the Company sends to him, in addition to a summary financial statement, a complete printed copy of the Company’s annual financial statements and the Directors’ report thereon.

Auditors shall be appointed and the terms and tenure of such appointment and their duties at all times regulated in accordance with the provisions of the Articles. The remuneration of the auditors shall be fixed by the Company in general meeting or in such manner as the members may determine.

The financial statements of the Company shall be audited by the auditor in accordance with generally accepted auditing standards. The auditor shall make a written report thereon in accordance with generally accepted auditing standards applicable in Hong Kong and the report of the auditors shall be sent to the members within the time prescribed under the Listing Rules (as defined in the Articles).

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SUMMARY OF THE PROPOSED NEW ARTICLES OF ASSOCIATION OF HPL

There are no provisions relating to preparation of interim financial reports.

(i) NOTICES OF MEETINGS AND BUSINESS TO BE CONDUCTED THEREAT

An annual general meeting and any extraordinary general meeting at which it is proposed to pass a special resolution shall (save as set out in sub-paragraph (e) above) be called by at least twenty-one (21) clear days’ notice in writing, and any other extraordinary general meeting shall be called by at least fourteen (14) clear days’ notice (in each case exclusive of the day on which the notice is served or deemed to be served and of the day for which it is given). The notice must specify the time and place of the meeting and, in the case of special business, the general nature of that business. In addition notice of every general meeting shall be given to all members of the Company other than such as, under the provisions of the Articles or the terms of issue of the shares they hold, are not entitled to receive such notices from the Company, and also to the auditors for the time being of the Company.

Notwithstanding that a meeting of the Company is called by shorter notice than that mentioned above, it shall be deemed to have been duly called if it is so agreed:

(i) in the case of a meeting called as an annual general meeting, by all members of the Company entitled to attend and vote thereat; and
(ii) in the case of any other meeting, by a majority in number of the members having a right to attend and vote at the meeting, being a majority together holding not less than ninety-five (95) per cent in nominal value of the issued shares giving that right.

All business shall be deemed special that is transacted at an extraordinary general meeting and also all business shall be deemed special that is transacted at an annual general meeting with the exception of the following, which shall be deemed ordinary business:

(aa) the declaration and sanctioning of dividends;
(bb) the consideration and adoption of the accounts and balance sheet and the reports of the directors and the auditors;
(cc) the election of directors in place of those retiring;
(dd) the appointment of auditors and other officers; and
(ee) the fixing of the remuneration of the directors and of the auditors.

(j) TRANSFER OF SHARES

All transfers of shares may be effected by an instrument of transfer in the usual or common form or in such other form as the board may approve and which may be under hand or by machine imprinted signature or by such other manner of execution as

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SUMMARY OF THE PROPOSED NEW ARTICLES OF ASSOCIATION OF HPL

the board may approve from time to time. The instrument of transfer shall be executed by or on behalf of the transferor and the transferee provided that the board may dispense with the execution of the instrument of transfer by the transferee in any case in which it thinks fit, in its discretion, to do so and the transferor shall be deemed to remain the holder of the share until the name of the transferee is entered in the register of members in respect thereof. The board may also resolve either generally or in any particular case, upon request by either the transferor or the transferee, to accept mechanically executed transfers.

The board in so far as permitted by any applicable law may, in its absolute discretion, at any time and from time to time transfer any share upon the principal register to any branch register or any share on any branch register to the principal register or any other branch register.

Unless the board otherwise agrees, no shares on the principal register shall be transferred to any branch register nor may shares on any branch register be transferred to the principal register or any other branch register. All transfers and other documents of title shall be lodged for registration and registered, in the case of shares on a branch register, at the relevant registration office and, in the case of shares on the principal register, at the registered office in the British Virgin Islands or such other place at which the principal register is kept in accordance with the Act.

The board may, in its absolute discretion, and without assigning any reason, refuse to register a transfer of any share issued under any share incentive scheme for employees upon which a restriction on transfer imposed thereby still subsists, and it may also refuse to register a transfer of any share to more than four joint holders or any transfer of any share issued for a promissory note or other binding obligation to contribute money or property or a contribution thereof to the Company on which the Company has a lien.

The board may decline to recognise any instrument of transfer unless the instrument of transfer is in respect of only one class of share, the instrument of transfer is lodged at the relevant registration office or registered office or such other place at which the principal register is kept accompanied by the relevant share certificate(s) and such other evidence as the board may reasonably require to show the right of the transferor to make the transfer (and if the instrument of transfer is executed by some other person on his behalf, the authority of that person so to do) or, if applicable, the instrument of transfer is duly and properly stamped.

The registration of transfers may be suspended and the register closed on giving notice by advertisement in the appointed newspaper or by other means as set out in the Articles, at such times and for such periods as the board may determine and either generally or in respect of any class of shares. The register of members shall not be closed for periods exceeding in the whole thirty (30) days in any year.

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APPENDIX V

SUMMARY OF THE PROPOSED NEW ARTICLES OF ASSOCIATION OF HPL

(k) POWER FOR THE COMPANY TO PURCHASE ITS OWN SHARES

Subject to the Act, the memorandum of association of the Company and the Articles, the Company shall have all the powers conferred upon it by the Act to purchase or otherwise acquire its own shares and such power shall be exercisable by the board in such manner, upon such terms and subject to such conditions as it thinks fit, including but not limited to, the purchase of shares at a price less than fair value.

Shares that the Company purchases, redeems or otherwise acquires pursuant to the Articles may be cancelled or held as treasury shares provided that the number of shares purchased, redeemed or otherwise acquired when aggregated with shares already held as treasury shares may not exceed 50% of the shares of that class previously issued (excluding shares that have been cancelled).

(l) POWER FOR ANY SUBSIDIARY OF THE COMPANY TO OWN SHARES IN THE COMPANY

There are no provisions in the Articles relating to ownership of shares in the Company by a subsidiary.

(m) DIVIDENDS AND OTHER METHODS OF DISTRIBUTION

Subject to the Act the Directors may declare and pay to all members on a pro rata basis in respect of each financial year a dividend or a distribution in such amount as they think fit if they are satisfied on reasonable grounds that immediately after payment the value of the Company’s assets exceeds its liabilities and the Company is able to pay its debts as they fall due.

Except in so far as the rights attaching to, or the terms of issue of, any Share otherwise provide, all dividends shall be apportioned and paid pro rata according to the amounts paid up on the shares during any portion or portions of the period in respect of which the dividend is paid.

Whenever the board has resolved that a dividend be paid or declared on the share capital of the Company, the board may further resolve either (a) that such dividend be satisfied wholly or in part in the form of an allotment of shares credited as fully paid up, provided that the shareholders entitled thereto will be entitled to elect to receive such dividend (or part thereof) in cash in lieu of such allotment, or (b) that shareholders entitled to such dividend will be entitled to elect to receive an allotment of shares credited as fully paid up in lieu of the whole or such part of the dividend as the board may think fit. The Company may also upon the recommendation of the board by an ordinary resolution resolve in respect of any one particular dividend of the Company that it may be satisfied wholly in the form of an allotment of shares credited as fully paid up without offering any right to shareholders to elect to receive such dividend in cash in lieu of such allotment.

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APPENDIX V

SUMMARY OF THE PROPOSED NEW ARTICLES OF ASSOCIATION OF HPL

Any dividend, interest or other sum payable in cash to the holder of shares may be paid by cheque or warrant sent through the post addressed to the holder at his registered address, or in the case of joint holders, addressed to the holder whose name stands first in the register of the Company in respect of the shares at his address as appearing in the register or addressed to such person and at such addresses as the holder or joint holders may in writing direct. Every such cheque or warrant shall, unless the holder or joint holders otherwise direct, be made payable to the order of the holder or, in the case of joint holders, to the order of the holder whose name stands first on the register in respect of such shares, and shall be sent at his or their risk and payment of the cheque or warrant by the bank on which it is drawn shall constitute a good discharge to the Company. Any one of two or more joint holders may give effectual receipts for any dividends or other moneys payable or property distributable in respect of the shares held by such joint holders.

Whenever the board has resolved that a dividend be paid or declared the board may further resolve that such dividend be satisfied wholly or in part by the distribution of specific assets of any kind.

All dividends or bonuses unclaimed for one year after having been declared may be invested or otherwise made use of by the board for the benefit of the Company until claimed and the Company shall not be constituted a trustee in respect thereof. All dividends or bonuses unclaimed for six years after having been declared may be forfeited by the board and shall revert to the Company.

No dividend or other monies payable by the Company on or in respect of any share shall bear interest against the Company.

(n) PROXIES

Any member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint another person as his proxy to attend and vote instead of him. A member who is the holder of two or more shares may appoint more than one proxy to represent him and vote on his behalf at a general meeting of the Company or at a class meeting. A proxy need not be a member of the Company and shall be entitled to exercise the same powers on behalf of a member who is an individual and for whom he acts as proxy as such member could exercise. In addition, a proxy shall be entitled to exercise the same powers on behalf of a member which is a corporation and for which he acts as proxy as such member could exercise if it were an individual member. On a poll or on a show of hands, votes may be given either personally (or, in the case of a member being a corporation, by its duly authorised representative) or by proxy.

(o) FORFEITURE OF SHARES

When any Share has been forfeited, notice of the forfeiture shall be served upon the person who was before forfeiture the holder of the share. No forfeiture shall be invalidate by any omission or neglect to give such notice.

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SUMMARY OF THE PROPOSED NEW ARTICLES OF ASSOCIATION OF HPL

The board may accept the surrender of any Share liable to be forfeited and, in such case, references in the Articles to forfeiture will include surrender.

A declaration by a Director or the Secretary that a Share has been forfeited on a specified date shall be conclusive evidence of the facts therein stated as against all persons claiming to be entitled to the share, and such declaration shall (subject to the execution of an instrument of transfer by the Company if necessary) constitute a good title to the Share, and the person to whom the share is disposed of shall be registered as the holder of the share and shall not be bound to see to the application of the consideration (if any), nor shall his title to the share be affected by any irregularity in or invalidity of the proceedings in reference to the forfeiture, sale or disposal of the share. When any share shall have been forfeited, notice of the declaration shall be given to the member in whose name it stood immediately prior to the forfeiture, and an entry of the forfeiture, with the date thereof, shall forthwith be made in the register, but no forfeiture shall be in any manner invalidated by any omission or neglect to give such notice or make any such entry.

Notwithstanding any such forfeiture as aforesaid, the board may at any time, before any shares so forfeited shall have been sold, re allotted or otherwise disposed of, permit the shares forfeited to be bought back upon the terms of payment of all calls and interest due upon and expenses incurred in respect of the share, and upon such further terms (if any) as it thinks fit.

(p) INSPECTION OF SHARE REGISTER

Pursuant to the Articles the register and branch share register shall be open to inspection for at least two (2) hours on every business day by members without charge, or by any other person upon a maximum payment of HK$2.50 or such lesser sum specified by the board, at the registered office or such other place at which the register is kept in accordance with the Act or, upon a maximum payment of HK$1.00 or such lesser sum specified by the board, at the Registration Office (as defined in the Articles), unless the register is closed in accordance with the Articles.

(q) QUORUM FOR MEETINGS AND SEPARATE CLASS MEETINGS

No business shall be transacted at any general meeting unless a quorum is present when the meeting proceeds to business, but the absence of a quorum shall not preclude the appointment of a chairman.

Save as otherwise provided by the Articles the quorum for a general meeting shall be two members present in person (or, in the case of a member being a corporation, by its duly authorised representative) or by proxy and entitled to vote. In respect of a separate class meeting (other than an adjourned meeting) convened to sanction the modification of class rights the necessary quorum shall be two persons holding or representing by proxy not less than one third in nominal value of the issued shares of that class.

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SUMMARY OF THE PROPOSED NEW ARTICLES OF ASSOCIATION OF HPL

A corporation being a member shall be deemed for the purpose of the Articles to be present in person if represented by its duly authorised representative being the person appointed by resolution of the directors or other governing body of such corporation to act as its representative at the relevant general meeting of the Company or at any relevant general meeting of any class of members of the Company.

(r) RESERVED MATTERS

Notwithstanding any provision contained in the Articles, any connected transaction falling within the definition of the Listing Rules as if the Company were a listed issuer which requires the approval of independent shareholders under the Listing Rules shall require the approval by ordinary resolution of the independent Members in general meeting, the notice convening which shall be accompanied by a circular containing the advice of an independent financial adviser to the independent Members in respect of such transaction.

Notwithstanding any provision contained in the Articles, the following transactions shall require the approval by ordinary resolution of shareholders of the Company in general meeting:

(i) any notifiable transaction falling within the definition of the Listing Rules as if the Company were a listed issuer which requires the approval of shareholders under the Listing Rules; and
(ii) any issue of shares of the Company or securities which by their terms are convertible into or exchangeable for or carry rights of subscription for new shares of the Company wholly for cash unless an offer of such shares or securities has first been made to holders of shares on the register of members of the Company on a fixed record date in proportion to their then holdings of such shares (subject to such exclusion or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or having regard to any restrictions or obligations under the laws of, or the requirements of any recognised regulatory body or any stock exchange in any territory outside Hong Kong).

(s) PROCEDURES ON LIQUIDATION

A resolution that the Company be wound up by the court or be wound up voluntarily shall be a special resolution.

Subject to any special rights, privileges or restrictions as to the distribution of available surplus assets on liquidation for the time being attached to any class or classes of shares (i) if the Company shall be wound up and the assets available for distribution amongst the members of the Company shall be more than sufficient to repay the whole of the capital paid up at the commencement of the winding up, the excess shall be distributed pari passu amongst such members in proportion to the amount paid up on the shares held by them respectively and (ii) if the Company shall be wound up and the assets available for distribution amongst the members as such shall be insufficient to repay the whole of the paid-up capital, such assets shall be distributed so that, as

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SUMMARY OF THE PROPOSED NEW ARTICLES OF ASSOCIATION OF HPL

nearly as may be, the losses shall be borne by the members in proportion to the capital paid up, or which ought to have been paid up, at the commencement of the winding up on the shares held by them respectively.

If the Company shall be wound up (whether the liquidation is voluntary or by the court) the liquidator may, with the authority of a special resolution and any other sanction required by the Act divide among the members in specie or kind the whole or any part of the assets of the Company whether the assets shall consist of property of one kind or shall consist of properties of different kinds and the liquidator may, for such purpose, set such value as he deems fair upon any one or more class or classes of properties to be divided as aforesaid and may determine how such division shall be carried out as between the members or different classes of members. The liquidator may, with the like authority, vest any part of the assets in trustees upon such trusts for the benefit of members as the liquidator, with the like authority, shall think fit, but so that no contributory shall be compelled to accept any shares or other property in respect of which there is a liability.

(t) UNTRACEABLE MEMBERS

Pursuant to the Articles, the Company may sell any of the shares of a member who is untraceable if (i) all cheques or warrants (being not less than three in total number) for any sum payable in cash to the holder of such shares have remained uncashed for a period of 12 years; (ii) upon the expiry of the 12 year period, the Company has not during that time received any indication of the existence of the member; and (iii) the Company has given notice to, and caused advertisement in the appointed newspaper to be made of its intention to sell such shares and a period of three (3) months, has elapsed since such advertisement. The net proceeds of any such sale shall belong to the Company and upon receipt by the Company of such net proceeds, it shall become indebted to the former member of the Company for an amount equal to such net proceeds.

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APPENDIX VI

GENERAL INFORMATION

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 (other than that relating to Sinoday, HHL, their respective associates and parties acting in concert with each of Sinoday and HHL) and confirm, having made all reasonable inquiries, that to the best of their knowledge, opinions expressed in this circular (other than those relating to Sinoday, HHL, their respective associates and parties acting in concert with each of Sinoday and HHL) 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.

Information and confirmation relating to Sinoday, its associates and parties acting in concert with it set out in this circular has been duly extracted from the Announcement or provided by Sinoday. Information and confirmation relating to HHL, its associates and parties acting in concert with it set out in this circular has been duly extracted from the Announcement or provided by HHL. The Directors jointly and severally accept responsibility for the correctness and fairness of reproduction or presentation of such information.

DISCLOSURE OF INTERESTS

Interests of Directors

As at the Latest Practicable Date, the interests of the Directors in the share capital of the Company or its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests which they were taken or deemed to have under such provisions of the SFO), or were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers in the Listing Rules, to be notified to the Company and the Stock Exchange were as follows:

(i) Long position in the Shares and underlying Shares:

			Interest in	Approximate
			underlying	percentage of
		Interest in	Shares	issued share
Name	Capacity	Shares	(Options)	capital
Mr. Tang	Interest in	258,672,000	—	61.9
	controlled	(Note)
	corporation
	Beneficial owner	2,034,000	—	0.49
Lam Ngok Fung	Beneficial owner	1,074,000	2,100,000	0.76

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APPENDIX VI

GENERAL INFORMATION

			Interest in	Approximate
			underlying	percentage of
		Interest in	Shares	issued share
Name	Capacity	Shares	(Options)	capital
Hwang Wei Ming,	Beneficial owner	700,000	1,200,000	0.45
Ellen
Madam Ng	Beneficial owner	—	390,000	0.09
Law Kai Yee	Beneficial owner	800,000	2,100,000	0.69
Lau Mun Chung	Beneficial owner	648,000	1,400,000	0.49

Note: These Shares were held by HHL, a company in which Mr. Tang has 35% interest.

(ii) Long position in the shares of HHL:

			Approximate
			percentage of
		Number of	issued share
Name	Capacity	securities	capital
Mr. Tang	Beneficial owner	52,500,000	35

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or any chief executive of the Company had an interest or short position in any shares, underlying shares or debentures of the Company or any associated corporation (within the meaning of Part XV of the SFO) which would have 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 was taken or deemed to have under such provisions of the SFO) or which was required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers in the Listing Rules to be notified to the Company and the Stock Exchange.

– 261 –

APPENDIX VI

GENERAL INFORMATION

Interests of other persons in the share capital of the Company

As at the Latest Practicable Date, so far as is known to the Directors, the following persons (other than a Director or chief executive of the Company) had an interest in the Shares and underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO:

			Approximate
			percentage of
		Number of	issued share
Name	Capacity	Shares	capital
HHL	Beneficial owner	258,672,000	61.90
Convenient Way Limited	Interest through a	258,672,000	61.90
	controlled	(Note 1)
	corporation
Yeung Sai Hong	Interest through a	258,672,000	61.90
	controlled	(Note 1)
	corporation
Chan Yu Suk	Spouse interest	258,672,000	61.90
		(Note 1)
Sinoday	Beneficial Owner	258,672,000	61.90
Well Kent	Interest through a	258,672,000	61.90
	controlled	(Note 2)
	corporation
China Cinda Asset Management	Interest through a	258,672,000	61.90
Corporation	controlled	(Note 2)
	corporation
SG Purchaser	Beneficial Owner	40,022,000	9.58
Silver Grant Securities	Interest through a	40,022,000	9.58
Investment (BVI) Limited	controlled	(Note 3)
	corporation
Silver Grant	Interest through a	40,022,000	9.58
	controlled	(Note 3)
	corporation

– 262 –

APPENDIX VI

GENERAL INFORMATION

Note 1: These Shares were held by HHL. The issued share capital of HHL is owned as to 35% by Convenient Way Limited in which Mr. Yeung Sai Hong has 60% interest. Miss Chan Yu Suk is the wife of Mr. Yeung Sai Hong.
Note 2: The interests in these Shares were held by Sinoday, which was wholly owned by Well Kent, a wholly owned subsidiary of China Cinda Asset Management Corporation.
Note 3: The interests in these Shares were held by SG Purchaser, which was wholly owned by Silver Grant Securities Investment (BVI) Limited, a wholly owned subsidiary of Silver Grant.

Save as disclosed above, as at the Latest Practicable Date, according to the register of interests required to be kept by the Company under section 336 of the SFO, there was no person who had any interest or short position in the Shares or underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

Mr. Tang and Madam Ng, both executive Directors, are also the directors of HHL.

Interests of experts in the Group

None of the experts named in the paragraph headed ‘‘Experts and Consents’’ in this appendix has any shareholding in any company in the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any company in the Group.

Interests in contract or arrangement

None of the Directors has any material interests in contract or arrangement subsisting at the Latest Practicable Date which is significant in relation to the business of the Group taken as a whole.

Interests in assets

None of the Directors or experts named in the paragraph headed ‘‘Experts and Consents’’ in this appendix has any direct or indirect interest in any assets acquired or disposed of by or leased to any member of the Group or is proposed to be acquired or disposed of by or leased to any member of the Group since 30 June 2008, being the date to which the latest published audited accounts of the Company were made up.

Service contracts

There is no existing or proposed service contract between any member of the Group and any Director or proposed Director (excluding contracts expiring or determinable by the Group within one year without payment of compensation (other than statutory compensations)).

Competing business

None of the Directors has any interest in any business which competes or is likely to compete, either directly or indirectly, with the Group’s business.

– 263 –

APPENDIX VI

GENERAL INFORMATION

LITIGATION

(a) The Company received a writ of summons on 28 July 2000 filed by a company named Hantec Investment Limited which is unrelated to the Group. The plaintiff sought for injunction to restrain the Company from using the plaintiff’s alleged trade name and damages.

The Company is defending the actions. Potential damages, losses, fees, expenses, proceedings and claims which have been and may be incurred by the Group as a result of the action have been covered by a joint and several indemnity given by the existing ultimate controlling Shareholders.

(b) An indirect wholly-owned subsidiary of the Company, Hantec International Limited (‘‘HIL’’), received a writ of summon dated 25 March 2006 from two clients jointly as plaintiffs claiming for damages against HIL and two of its licensed representatives for an amount of approximately HK$20,600,000 together with costs and interest as a result of a number of transactions of leveraged foreign exchange trading. HIL is defending the action.
(c) A writ of summons dated 11 July 2006 was served on three subsidiaries of the Company as defendants by a former account executive claiming for commissions of a total amount of HK$700,000 together with interest and/or alternatively, damages to be assessed. The subsidiaries have instructed their legal advisors to defend the claim. The legal advisors have requested the plaintiff to state clearly his claim but up to the Latest Practicable Date, the plaintiff has only filed a Notice of Intention to Proceed and has not taken any further action.

Save as disclosed above, neither the Company nor any of its subsidiaries is engaged in any litigation or arbitration of material importance and no litigation or claim of material importance is known to the Directors to be pending or threatened against the Company or any of its subsidiaries.

– 264 –

APPENDIX VI

GENERAL INFORMATION

EXPERTS AND CONSENTS

The qualifications of the experts who have given opinions in this circular are as follows:

Name

Qualification

Access Capital

a licensed corporation under the SFO permitted to carry out types 1, 4, 6 and 9 regulated activities under the SFO

KPMG

Certified Public Accountants

The experts named above have given and have not withdrawn their respective written consents to the issue of this circular with copies of their reports or letters (as the case may be) and the references to their names included herein in the form and context in which they are respectively included.

MATERIAL CONTRACTS

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

(a) an agreement dated 12 March 2007 between (i) 基泰建設股份有限公司 (Kee Tai Real Estate Co., Ltd.) (as vendor); and (ii) the Company (as purchaser) relating to the sale and purchase of a residential apartment and two car parks located at a construction site at No. 15, Subsection 5, Xin Yi Section, Xin Yi District, Taipei, Taiwan for a cash consideration of NT$82,920,000;
(b) a memorandum of co-operation dated 31 March 2007 between (i) the Company; and (ii) 江蘇宏信商貿股份有限公司 (Jiangsu Horizon Trade Co., Ltd.) relating to the setting up of Hantec Jiangdu Riverside Developing Zone Water Industry Limited (‘‘Hantec Jiangdu’’) and subscription of 20% and 80% of its share capital for HK$5 million and HK$20 million, respectively;
(c) a shareholders’ agreement dated 17 May 2007 between (i) 高峰 (Gao Feng) or his nominee, Fine Loyal International Holdings Limited; and (ii) Hantec International Enterprises Limited, a wholly-owned subsidiary of the Company, in respect of a joint venture relating to Hantec Jiangdu;
(d) an agreement signed on 12 September 2007 between (i) 姜燕 (as vendor); and (ii) Hantec Business Consultant Limited, a wholly-owned subsidiary of the Company, (as purchaser) relating to the sale and purchase of 91% of the registered capital of 北京國際經濟技術有限責任公司 for a cash consideration of RMB600,000;

– 265 –

GENERAL INFORMATION

APPENDIX VI

(e) an agreement dated 21 December 2007 between (i) 吳俊良 (Wu Chun-Liang) and 陳淑燕 (Chen Shu-Yen) (as vendors); and (ii) Hantec Taiwan Investments Limited, a wholly owned subsidiary of the Company, (as purchaser), relating to the sale and purchase of all equity capital in 俊森實業有限公司 for a total cash consideration of NT$5,400,000; and
(f) an agreement dated 6 March 2008 between (i) Macro Jess Ltd., a wholly-owned subsidiary of the Company, (as vendor); and (ii) Mr. Yozo Hasegawa or his nominee(s) (as purchaser) relating to the sale and purchase of 2,160 ordinary shares of Foreland Forex Co., Ltd for a cash consideration of Japanese Yen 162 million.

GENERAL

(a) The secretary and qualified accountant of the Company is Mr. Lau Mun Chung. He graduated from the University of Hong Kong with a degree of Bachelor of Social Science and is a fellow member of the Association of Chartered Certified Accountants, an associate member of the Hong Kong Institute of Certified Public Accountants and a graduate of The Hong Kong Institute of Chartered Secretaries.
(b) The registered office of the Company is situated at Clarendon House, 2 Church Street, Hamilton, HM 11, Bermuda.
(c) The Hong Kong branch share registrar of the Company is Tricor Secretaries Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong.
(d) Tricor Secretaries Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong has been appointed as the transfer agent in Hong Kong to handle splitting and registration of transfer of HPL Shares. The charge for splitting of HPL Share certificates is expected to be HK$2.50 per new certificate issued. The charge for transfer of HPL Shares is expected to be HK$2.50 per old HPL Share certificate cancelled or per new HPL Share certificate issued, whichever is the higher. Both charges shall be borne by the HPL Shareholder or transferee who lodges the request with the transfer agent. New share certificates will be available for collection within 10 Business Days upon surrender of the old share certificates to the transfer agent for splitting or lodgement of the transfer form and related share certificate(s) to the transfer agent for registration of transfer.
(e) The English text of this circular and the accompanying form of proxy shall prevail over the Chinese text in case of any inconsistency.

– 266 –

APPENDIX VI

GENERAL INFORMATION

DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the principal place of business of the Company in Hong Kong at 45th Floor, COSCO Tower, 183 Queen’s Road Central, Hong Kong during normal business hours up to and including 17 November 2008:

(a) the Memorandum of Association and the Bye-laws of the Company;
(b) the Memorandum and Articles of Association of HPL;
(c) draft of the proposed new Articles of Association of HPL, a summary of which is set out in Appendix V to this circular;
(d) the annual reports of the Company for the two years ended 31 December 2007 and the interim report of the Company for the six months ended 30 June 2008;
(e) the letter from the Independent Board Committee as set out on pages 38 and 39 of this circular;
(f) the letter from Access Capital, the texts of which are set out on pages 40 to 60 of this circular;
(g) the Accountants’ Reports on the Group and the HPL Group, the texts of which are set out in Appendices I and III to this circular;
(h) the Statement of Adjustments relating to the Accountants’ Report on the financial information of the Group prepared by KPMG;
(i) the Accountants’ Reports prepared by KPMG in connection with the unaudited pro forma financial information of the Retained Group upon completion of the Group Reorganisation and the unaudited pro forma financial information on the HPL Group upon completion of the Group Reorganisation, the texts of which are set out in Appendices II and IV to this circular;
(j) the material contracts referred to in the paragraph headed ‘‘Material contracts’’ in this appendix; and
(k) the written consents referred to in the paragraph headed ‘‘Experts and consents’’ in this appendix.

– 267 –

NOTICE OF SGM

==> picture [47 x 51] intentionally omitted <==

HANTEC INVESTMENT HOLDINGS LIMITED 亨達國際控股有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 111)

NOTICE IS HEREBY GIVEN that a special general meeting of the abovementioned company (the ‘‘Company’’) will be held at 45th Floor, COSCO Tower, 183 Queen’s Road Central, Hong Kong, on 17 November 2008 at 2: 30 p.m. for the purpose of considering and, if thought fit, passing the following resolution as an ordinary resolution:

ORDINARY RESOLUTION

‘‘THAT conditional on fulfilment of the conditions set out in the sub-section headed ‘‘Conditions of the Group Reorganisation’’ in the section headed ‘‘The Group Reorganisation’’ in a circular of the Company dated 31 October 2008 (the ‘‘Circular’’) (a copy of which has been tabled at the meeting and signed by the Chairman for the purposes of identification):

(a) the group reorganisation described in the Circular (the ‘‘Group Reorganisation’’) be and is hereby approved and that the directors of the Company be and are hereby authorised to implement the same;
(b) upon the recommendation of the directors of the Company, a special dividend for the year ending 31 December 2008 in a sum equal to the net book value of the entire issued share capital of Hantec Pacific Limited (‘‘HPL’’) immediately upon completion of the Group Reorganisation (except the Distribution in Specie as defined in the Circular) as may be determined by the directors of the Company be distributed among the holders of shares in the capital of the Company on the register of members of the Company at the close of business on 17 November 2008 on condition that the same be not paid in cash but be satisfied by the transfer of all the shares of HPL in issue immediately upon completion of the Group Reorganisation (except the Distribution in Specie as defined in the Circular) to such holders (or as they may direct) on the basis set out in the Circular and subject to the terms and conditions set out therein, and the directors of the Company be and are hereby authorised to give effect to such distribution and transfer; and
For identification purpose only

– 268 –

NOTICE OF SGM

(c) the maximum number of directors that may be appointed by the board of directors of the Company shall be increased to 30.’’

By Order of the Board Lau Mun Chung Company Secretary

Dated 31 October 2008

Principal place of business in Hong Kong:

45th Floor COSCO Tower 183 Queen’s Road Central Hong Kong

Notes:

A member entitled to attend and vote at the meeting convened by the above notice is entitled to appoint one or more proxies to attend and, in the event of a poll, vote in his stead. A proxy need not be a member of the Company.
A form of proxy for the meeting is enclosed. In order to be valid, the form of proxy must be deposited at the Company’s branch share registrar in Hong Kong, Tricor Secretaries Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong, together with a power of attorney or other authority, if any, under which it is signed or a certified copy of that power of attorney, not less than 48 hours before the time for holding the meeting or adjourned meeting.

– 269 –

AI assistant

Concord New Energy Group Ltd. — Proxy Solicitation & Information Statement 2008

35804_rns_2008-10-31_b5554cfe-943e-4241-a922-37b5c322713e.pdf

HANTEC INVESTMENT HOLDINGS LIMITED 亨 達 國 際 控 股 有 限 公 司[*]

GROUP REORGANISATION

DEFINITIONS

DEFINITIONS

DEFINITIONS

EXPECTED TIMETABLE

HANTEC INVESTMENT HOLDINGS LIMITED 亨 達 國 際 控 股 有 限 公 司[*]

GROUP REORGANISATION

INTRODUCTION

LETTER FROM THE BOARD

THE GROUP REORGANISATION

LETTER FROM THE BOARD

Mechanics of the Group Reorganisation

LETTER FROM THE BOARD

Conditions of the Group Reorganisation

Group structure before and after the Group Reorganisation

The HPL Group

Reasons for the Group Reorganisation

FINANCIAL INFORMATION OF THE GROUP AND THE HPL GROUP

MANAGEMENT DISCUSSION AND ANALYSIS ON THE RETAINED GROUP

Financial and business performance

LETTER FROM THE BOARD

Liquidity and financial resources

Fluctuation in foreign exchange

Remuneration and human resources development

Charges on assets

Prospects

MANAGEMENT DISCUSSION AND ANALYSIS ON THE HPL GROUP

For the year ended 31 December 2005

LETTER FROM THE BOARD

Human resources

For the year ended 31 December 2006

Analysis of the HPL Group’s performance

Capital structure, liquidity and financial resources

Human resources

For the year ended 31 December 2007

For the six months ended 30 June 2008

Human resources

POSSIBLE VOLUNTARY OFFER FOR THE HPL SHARES

LETTER FROM THE BOARD

Other arrangements

INFORMATION ON HHL

INTENTION OF HHL REGARDING HPL

THE AGREEMENT

Date

Parties

Subject matter of the sale and purchase

Consideration

Warranty

Conditions

In respect of the WK Sale Shares

Completion

SHAREHOLDING STRUCTURE OF THE COMPANY

POSSIBLE MANDATORY OFFERS FOR THE SHARES AND OPTIONS

Principal terms of the Share Offer

Comparison of value

Total consideration for the Hantec Offers

Financial resources

Conditions of the Hantec Offers

Effect of accepting the Hantec Offers

Payment

LETTER FROM THE BOARD

Stamp duty

Other arrangements

BACKGROUND OF SINODAY AND ITS INTENTION REGARDING THE COMPANY

Information on Sinoday

LETTER FROM THE BOARD

Proposed changes in Directors

Maintaining the listing status of the Company

LETTER FROM THE BOARD

COMPARISON OF THE COMBINED OFFER PRICE UNDER THE HPL OFFER AND THE SHARE OFFER WITH MARKET PRICE

LETTER FROM THE BOARD

SGM

RIGHT TO DEMAND A POLL

RECOMMENDATION

ADDITIONAL INFORMATION

HANTEC INVESTMENT HOLDINGS LIMITED 亨 達 國 際 控 股 有 限 公 司[*]

Concord New Energy Group Ltd. Proxy Solicitation & Information Statement 2008

HANTEC INVESTMENT HOLDINGS LIMITED 亨達國際控股有限公司[*]

HANTEC INVESTMENT HOLDINGS LIMITED 亨達國際控股有限公司[*]

HANTEC INVESTMENT HOLDINGS LIMITED 亨達國際控股有限公司[*]