Da Sen Holdings Group Limited - Proxy Solicitation & Information Statement 2004

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 your licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or otherwise transferred all your shares in Asia Tele-Net and Technology Corporation Limited , you should at once hand this circular and the accompanying form of proxy to the purchaser(s) or transferee(s) or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or transferee(s).

Neither The Stock Exchange of Hong Kong Limited, the Hong Kong Securities Clearing Company Limited nor the Securities and Futures Commission of Hong Kong takes any responsibility for the contents of this circular and the accompanying form of proxy, makes any 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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(Incorporated in Bermuda with limited liability) (listing stock code 679)

PROPOSED ISSUE OF CONVERTIBLE NOTE, APPLICATION FOR WHITEWASH WAIVER BY KT, CAPITAL REORGANISATION, AMENDMENT TO BYE-LAWS, IML SHARE PLACING, SHARE SUBSCRIPTION AND INCENTIVE OPTION SCHEME

Joint Independent Financial Advisers to the Independent Board Committee of Asia Tele-Net and Technology Corporation Limited

CSC Asia Limited

A letter from the ATNT Independent Board Committee is set out on pages 32 of this circular. A letter from Barits Securities (Hong Kong) Limited and CSC Asia Limited containing their advice to the independent committee of the board of directors of ATNT is set out on pages 33 to 53 of this circular.

A notice convening the special general meeting of Asia Tele-Net and Technology Corporation Limited to be held at 11 Dai Hei Street, Tai Po Industrial Estates, New Territories, Hong Kong at 3 p.m. on Friday, 23 April 2004 is set out on pages 143 to 154 of this document. A form of proxy for the special general meeting is enclosed. Whether or not you are able to attend and vote at the special general meeting, you are requested to complete and return the forms of proxy in accordance with the instructions printed thereon as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the special general meeting. Completion and delivery of a form of proxy will not preclude you from attending and voting in person at the special general meeting or any adjourned meetings should you so desire.

31 March 2004

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Expected timetable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
The CN Subscription Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Takeovers Code Implication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18
Capital Reorganisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	19
Amendments to Bye-Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	22
IML Share Placing and Share Subscription . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	23
Share Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	25
The Incentive Option Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	27
Shareholding changes in IML . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	28
Changes of Accounting Year End Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	30
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	30
SGM of ATNT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	31
Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	31
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	31
Letter from the ATNT Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	32
Letter of advice from Barits and CSC Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	33
Appendix I – Financial information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	54
Appendix II – Property valuation of the ATNT Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	121
Appendix III – General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	134
Notice of the SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	143

DEFINITIONS

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

“Announcement”

The announcement dated 6 February 2004 made jointly by ATNT and KT regarding, inter alia, the proposed issue of Convertible Note by ATNT, application for Whitewash Waiver by KT, Capital Reorganisation, amendment to bye-laws, the IML Share Placing, the Share Subscription, the Share Sale, the Incentive Option Scheme and change of accounting year end date of ATNT

“Associate(s)”

has the meaning ascribed thereto under the Listing Rules

“ATNT”

Asia Tele-Net and Technology Corporation Limited, a company incorporated in Bermuda, the shares of which are listed on the Stock Exchange

“ATNT Group”

ATNT and its subsidiaries

“ATNT Independent Board Committee”

Mr. Cheung Kin Wai and Mr. Kwan Wang Wai, Alan which has been appointed to form the independent board committee to advise the ATNT Independent Shareholders in relation to the CN Subscription Agreement, the Whitewash Waiver, the IML Share Placing, the Share Subscription and the Incentive Option Scheme

“ATNT Shareholders”

holders of the Shares or holders of the New Shares after completion of the Capital Reorganisation (as the context may require)

“Barits”

Barits Securities (Hong Kong) Limited, a corporation deemed licensed under the SFO to carry out types 1 and 6 regulated activities (dealing in securities and advising on corporate finance), which is not a connected person (as defined in the Listing Rules) of ATNT and which is one of the joint independent financial advisers to the ATNT Independent Board Committee and with office at Room 3406, 34/F., Edinburgh Tower, the Landmark, 15 Queen’s Road Central, Hong Kong

“Board”

the board of directors of ATNT from time to time

“CCASS”

The Central Clearing and Settlement System established and operated by HKSCC.

“Capital Reorganisation”

the Capital Reduction, the Share Consolidation and the Share Premium Cancellation

“Capital Reduction”

the proposed reduction of paid up capital of the issued Consolidated Shares from HK$0.20 to HK$0.01 paid up on each issued Consolidated Share

DEFINITIONS

“CN Subscription”	the subscription of the Convertible Note by the Subscriber under
	the terms of the CN Subscription Agreement
“CN Subscription Agreement”	the conditional subscription agreement dated 6 February 2004 and
	entered into between ATNT and the Subscriber in relation to the
	CN Subscription
“Companies Act”	Companies Act 1981 of Bermuda
“Completion”	completion of the CN Subscription Agreement
“Consolidated Shares”	the issued shares of HK$0.20 each in the capital of ATNT
	immediately after the Share Consolidation but before the Capital
	Reduction
“Consolidation”	the proposed consolidation of all the issued Shares in the capital
	of ATNT on the basis of 20 issued Shares into one Consolidated
	Shares
“Convertible Note”	a convertible note to be issued by ATNT to the Subscriber in
	principal amount of HK$30,000,000
“Conversion Shares”	any Shares falling to be issued upon exercise of the conversion
	rights under the Convertible Note
“CSC Asia”	CSC Asia Limited, a deemed licensed corporation to carry on
	business in Types 4 (advising on securities), 6 (advising on
	corporate finance) and 9 (asset management) regulated activities
	under the Securities and Futures Ordinance (Chapter 571 of the
	Laws of Hong Kong)
“Deloitte”	Deloitte Touche Tohmatsu, certified public accountants with office
	at 26/F, Wing On Centre, 111 Connaught Road Central, Hong
	Kong
“Effective Date”	the date upon which the Capital Reorganisation becomes effective
“Executive”	the Executive Director of the Corporate Finance Division of the
	SFC or any delegate of the Executive Director
“FPD”	flat panel display
“GPAL”	Beijing Golden PAL Plating Equipment Company Limited, a 52%
	owned subsidiary of ATNT
“HKSCC”	Hong Kong Securities Clearing Company Limited

DEFINITIONS

“Hong Kong” the Hong Kong Special Administrative Region of the PRC
“IML” Intech Machines Company Limited, the shares of which are listed on the Taiwan Stock Exchange Corporation and a 50.02% owned subsidiary of ATNT
“IML Capital Reduction” the capital reduction of the issued share capital of IML pursuant to which the number of IML Shares will be reduced from 44,740,000 to 30,660,000
“IML Shares” shares of NT$7.5 (equivalent to about HK$1.79) each in the capital of IML
“IML Share Placing” the placing of 13,400,000 new IML Shares by IML at a subscription price of NT$7.5 (equivalent to about HK$1.79) per IML Share
“IML Share Sale Agreement”
the agreement dated 27 January 2004 entered into between ATNT and the Share Purchasers in relation to the sale and purchase of IML Shares
“Incentive Option Scheme” the option scheme to be adopted by ATNT in relation to the granting of call options to certain employees of IML to acquire IML Shares as held by ATNT
“Independent ATNT Shareholders” the ATNT Shareholders other than Optimist, Mr. Lam Kwok Yan, Mr. Lam Kwok Hing, their respective associates, parties acting in concert with any of them and anyone interested or involved in the issuance of Convertible Note
“Independent KT Shareholders”
the KT Shareholders other than J&A Investment Limited, Mr. Lam Kwok Hing, their respective associates and parties acting in concert with them
“KT”
Karl Thomson Holdings Limited, a company incorporated in Bermuda, the shares of which are listed on the Stock Exchange
“KT Group”

KT and its subsidiaries

“KT Shareholders”
shareholders of KT
“KT Shares”
ordinary share(s) of HK$0.10 each in the capital of KT
“Latest Practicable Date”
29 March 2004, being the latest practicable date prior to the printing of this document for ascertaining certain information contained herein
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DEFINITIONS

“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“Optimist”	Optimist International Limited, a company incorporated in the
	British Virgin Islands, which is beneficially owned by Mr. Lam
	Kwok Yan, the chairman and executive director of ATNT, as to
	50% and Mr. Lam Kwok Hing, deputy chairman, managing director
	and executive director of ATNT, as to 50%
“New Shares”	shares of HK$0.01 each in the share capital of ATNT following
	the Capital Reorganisation
“PAIL”	Process Automation International Ltd, a wholly owned subsidiary
	of ATNT
“PAL Shenzhen”	Process Automation (Shenzhen) Ltd, a wholly owned subsidiary
	of ATNT
“PCB”	printed circuit board
“PRC”	the People’s Republic of China
“Relevant Period”	the period between 30 June 2003, being the date six calendar
	months prior to the day trading in the Shares was suspended
	pending the issue of the Announcement, and ending on the Latest
	Practicable Date
“SFC”	the Securities and Futures Commission
“SFO”	the Securities and Futures Ordinances (Chapter 571 of the Laws
	of Hong Kong)
“SGM of ATNT”	the special general meeting of ATNT to be held on 23 April 2004
	to consider and approve, among others, the transactions
	contemplated under the CN Subscription Agreement, the
	Whitewash Waiver and the Capital Reorganisation, amendment to
	the Bye-Laws, IML Share Placing, the Share Subscription and the
	Incentive Option Scheme.
“SGM of KT”	the special general meeting of KT held on 23 March 2004 to
	approve, among others, the transactions contemplated under the
	CN Subscription Agreement
“Share(s)”	ordinary share(s) of HK$0.01 each in the capital of ATNT
“Share Consolidation”	the consolidation of all the issued Shares in the capital of ATNT
	on the basis of 20 issued Shares into one Consolidated Share

DEFINITIONS

“Share Option Scheme”	share option scheme adopted by ATNT on 1 January 2001
“Share Premium Cancellation”	the proposed cancellation of the entire amount standing to the
	credit of the share premium account of ATNT on the Effective
	Date by the transfer of such amount to the contributed surplus
	account of ATNT
“Share Purchasers”	Wise Chance International Limited, a company incorporated in
	the British Virgin Islands and Money Net Investments Limited, a
	company incorporated in the British Virgin Islands, which are and
	whose ultimate beneficial shareholders are independent third
	parties not connected to ATNT, its directors, chief executive,
	substantial shareholders and their respective Associates
“Share Sale”	the sale of IML Shares as contemplated under the IML Share Sale
	Agreement
“Share Subscription”	the subscription of IML Shares by ATNT under the IML Share
	Placing at an aggregate subscription price of not more than
	NT$75.0 million (equivalent to about HK$18.0 million)
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Subscriber”	Karfun Investments Limited, a company incorporated in Hong
	Kong and a wholly-owned subsidiary of KT
“Takeovers Code”	the Hong Kong Code on Takeovers and Mergers
“TFT-LCD”	thin-film-transistor liquid crystal display
“Whitewash Waiver”	a waiver by the Executive from the obligation of the Subscriber
	and parties acting in concert with it to make a general offer under
	Rule 26 of the Takeovers Code for all the issued Shares (other
	than those already owned by them) pursuant to Note 1 on
	dispensations from Rule 26 of the Takeovers Code
“HK$”	Hong Kong dollar(s), the lawful currency in Hong Kong

For illustrative purpose of this circular, NT$4.2 = HK$1, except where historical financial data was quoted, the exchange rate as at such balance sheet dates were used in accordance with the Statements of Standard Accounting Practice issued by the Hong Kong Society of Accountants.

EXPECTED TIMETABLE

The following expected timetable is indicative only and is subject to change. Further announcement will be made if there is a material change in the expected timetable.

2004

Despatch of circular with notice of the SGM of ATNT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 March Record date for SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 April Latest time for lodging proxy forms for the SGM of ATNT . . . . . . . . . . . . . . . . . . . . . . . 3:00 p.m. 21 April Expected time and date of the SGM of ATNT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3:00 p.m. 23 April Effective time and date of the Capital Reorganisation . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:00 a.m. 26 April First day of free exchange of existing Shares certificates for New Share certificates commences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:30 a.m. 26 April Temporary counter for trading in New Shares in board lots of 500 New Shares (in the form of existing Shares certificate(s) for existing Shares) opens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:30 a.m. 26 April Designated broker starts to stand in the market to provide matching service . . . . . . . . . . . . . . . . . 26 April Original counter for trading in board lots of 10,000 existing Shares closes . . . . . . . . . 9:30 a.m. 26 April Original counter for trading in board lots of 10,000 Consolidated Shares (in the form of New Share certificate(s) for New Shares) reopens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:30 a.m. 10 May Parallel trading in New Shares commences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:30 a.m. 10 May Temporary counter for trading in board lots of 500 New Shares (in the form of existing Shares certificate(s) for existing Shares) closes . . . . . . . . . . . . 4:00 p.m. 1 June Parallel trading in New Shares ends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. 1 June Designated broker ceases to stand in the market to provide matching service for odd lots arrangement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. 1 June Last day for free exchange of existing Share certificate(s) for new certificate(s) for New Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 June

LETTER FROM THE BOARD

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(Incorporated in Bermuda with limited liability)

Executive Directors: Lam Kwok Yan (Chairman) Lam Kwok Hing (Deputy Chairman & Managing Director)

Non-executive Director: Kwan Wang Wai, Alan

Independent non-executive Directors: Ng Chi Kin, David Cheung Kin Wai

Registered office: Clarendon House Church Street Hamilton HM11 Bermuda

Head office and principle place of business: 11 Dai Hei Street Tai Po Industrial Estate Tai Po, New Territories Hong Kong

31 March 2004

To the ATNT Shareholders

Dear Sir or Madam,

PROPOSED ISSUE OF CONVERTIBLE NOTE, APPLICATION FOR WHITEWASH WAIVER BY KT, CAPITAL REORGANISATION, AMENDMENT TO BYE-LAWS, IML SHARE PLACING, SHARE SUBSCRIPTION AND INCENTIVE OPTION SCHEME

INTRODUCTION

It was announced on 6 February 2004 that ATNT entered into the CN Subscription Agreement with the Subscriber, a wholly-owned subsidiary of KT, in relation to the issue of the Convertible Note to the Subscriber for a consideration of HK$30,000,000, payable in cash upon Completion.

The Directors also intend to propose at the SGM of ATNT to effect the Whitewash Waiver and the Capital Reorganisation, amendments to Bye-Laws, the IML Share Placing, the Share Subscription and the Incentive Option Scheme. Under the Takeovers Code, the Whitewash Waiver is subject to, among others, approval by the Independent ATNT Shareholders at the SGM of ATNT by way of a poll.

LETTER FROM THE BOARD

Among the Directors, Mr. Lam Kwok Yan and Mr. Lam Kwok Hing, all executive Directors, are salaried directors of ATNT. Both of them are considered to be parties acting in concert with KT. In particular, Mr. Lam Kwok Hing is the Chairman and Executive Director of KT. Mr. Ng Chi Kin, David, an independent non-executive director, has been the independent non-executive director of KT and is a partner of a firm that has provided financial consultant services to companies in the ATNT Group. Accordingly, none of them is considered to be independent so far as the CN Subscription and the Whitewash Waiver are concerned and therefore none of them have participated in formulating a recommendation to the Independent ATNT Shareholders so as to avoid any conflict of interest which may arise. Consequently, the independent board committee of ATNT, comprising Mr. Cheung Kin Wai and Mr. Kwan Wang Wai, Alan only, has been formed to consider the CN Subscription Agreement, the Whitewash Waiver, the IML Share Placing, the Share Subscription and the Incentive Option Scheme. Barits Securities (Hong Kong) Limited and CSC Asia Limited have been appointed as the joint independent financial advisers to advise the independent board committee of ATNT in this respect.

The purpose of this document is to provide you with, among others, further information on the CN Subscription Agreement, the Whitewash Waiver, the Capital Reorganisation, amendments to Bye-Laws, the IML Share Placing, the Share Subscription and the Incentive Option Scheme, and to set out the letter of recommendation from the ATNT Independent Board Committee containing its advice to the ATNT Shareholders in respect of the CN Subscription Agreement, the Whitewash Waiver, the IML Share Placing, the Share Subscription and the Incentive Option Scheme.

THE CN SUBSCRIPTION AGREEMENT

Pursuant to the CN Subscription Agreement, ATNT will issue the Convertible Note to the Subscriber, a wholly-owned subsidiary of KT, for a consideration of HK$30,000,000, payable in cash upon Completion. The CN Subscription by the Subscriber will be financed by KT by its internal resources.

KT is beneficially owned as to about 67.76% by J&A Investment Limited, which is beneficially owned as to 80% by Mr. Lam Kwok Hing, the deputy chairman, managing director, executive director and controlling shareholder of ATNT and chairman and executive director of KT and 20% by Mr. Nam Kwok Lun, the deputy chairman, managing director and executive director of KT. ATNT is beneficially owned as to about 35.10%, 1.26% and 1.26% by Optimist (which is beneficially and equally owned by Mr. Lam Kwok Yan, the chairman and executive director of ATNT, and Mr. Lam Kwok Hing), Mr. Lam Kwok Yan and Mr. Lam Kwok Hing, respectively. Hence, ATNT is an Associate of the controlling shareholder and executive director of KT and KT is an Associate of the controlling shareholder and executive director of ATNT.

Accordingly, the CN Subscription constitutes a connected transaction for ATNT and a discloseable and connected transaction for KT under the Listing Rules and the CN Subscription is subject to, among other things, approval by the Independent ATNT Shareholders and the Independent KT Shareholders. J&A Investment Limited, Mr. Lam Kwok Hing, their respective associates and parties acting in concert with them will abstain from voting on the resolutions proposed at the SGM of KT in respect of the CN Subscription Agreement.

LETTER FROM THE BOARD

Principal terms of the CN	Subscription Agreement:
Date:	6 February 2004
Issuer:	ATNT
Principal amount:	HK$30,000,000
Term:	2 years from the date of issue of the Convertible Note
Conversion price:	The conversion price will be the lower of (a) the initial conversion price
	or (b) the alternative conversion price as determined on the date of
	Completion. The Conversion Price will be subject to adjustment for,
	amongst other things, subdivision or consolidation of Shares, bonus
	issues, rights issues and other dilution events.
Initial conversion	HK$0.012 per Share
price:
Alternative	HK$0.010 per Share if the average of any 7 closing prices for 25
conversion price:	consecutive trading days prior to the date of Completion is below the
	initial conversion price of HK$0.012 per Share
Interest:	No interest is payable except in the case of the redemption of the
	Convertible Note by ATNT
Redemption at	At maturity, any outstanding Convertible Note will be redeemed by ATNT
maturity:	at a rate of return equal to 5% over the prime lending rate as quoted by
	The Hongkong and Shanghai Banking Corporation Limited per annum.
Redemption option	ATNT will have the right at any time to redeem in whole or in part the
of ATNT:	outstanding unconverted Convertible Note at a rate of 5% over the prime
	lending rate as quoted by The Hongkong and Shanghai Banking
	Corporation Limited per annum provided if consent is given by the
	Subscriber
Conversion restriction:	(a) During the 30-day period following the issue of the Convertible
	Note, the Subscriber shall not be entitled to convert any of the
	Convertible Note
	(b) In any event, KT shall not exercise its rights under the Convertible
	Note if, upon such conversion of the Shares then held by KT and/
	or its Associate(s), the attributable value of such Shares or the net
	tangible asset value of ATNT as shown in the latest published

LETTER FROM THE BOARD

results of ATNT attributable to such Shares would represent 50% or more of the net tangible asset value of KT as shown in the latest published results of KT, unless the approval of the shareholders of KT as required under the Listing Rules has been obtained.

Transfer:

The Convertible Note may not be assigned or transferred without the prior written consent of ATNT. If the Convertible Note is to be assigned or transferred to a wholly-owned subsidiary of the holders of the Convertible Note, ATNT shall not unreasonably withhold its consent to such assignment or transfer. The Convertible Note or any part(s) thereof shall not be transferred to any company or other person which is a connected person (as defined in the Listing Rules) of ATNT or any if its subsidiaries.

Listing:

ATNT will apply to the Stock Exchange for the listing of the Conversion Shares. Such Conversion Shares will rank pari passu in all respects with all Shares in issue or to be issued.

The initial conversion price of HK$0.012 per Share represents:

(i) a discount of about 20.0% to the closing price of HK$0.015 per Share quoted on the Stock Exchange on 29 December 2003, being the last trading day immediately prior to the suspension of trading;
(ii) a discount of about 20.0% to the average closing price of approximately HK$0.015 per Share over the 5 trading days up to and including 29 December 2003, being the last trading day immediately prior to the suspension of trading;
(iii) a discount of about 17.8% to the average closing price of approximately HK$0.0146 per Share over the 10 trading days up to and including 29 December 2003, being the last trading day immediately prior to the suspension of trading;
(iv) a discount of about 47.8% to the published net asset value of approximately HK$0.023 per Share as at 30 September 2003; and
(v) a discount of about 14.3% to the closing price of HK$0.014 per Share quoted on the Stock Exchange on the Latest Practicable Date.

The alternative conversion price of HK$0.010 per Share represents:

(i) a discount of about 33.3% to the closing price of HK$0.015 per Share quoted on the Stock Exchange on 29 December 2003, being the last trading date immediately prior to the suspension of trading;
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LETTER FROM THE BOARD

(ii) a discount of about 33.3% to the average closing price of approximately HK$0.015 per Share over the 5 trading days up to and including 29 December 2003, being the last trading day immediately prior to the suspension of trading;
(iii) a discount of about 31.5% to the average closing price of approximately HK$0.0146 per Share over the 10 trading days up to and including 29 December 2003, being the last trading day immediately prior to the suspension of trading;
(iv) a discount of about 56.5 % to the published net asset value of approximately HK$0.023 per Share as at 30 September 2003; and
(v) a discount of about 28.6% to the closing price of HK$0.014 per Share quoted on the Stock Exchange on the Latest Practicable Date.

Upon full conversion of the Convertible Note at the initial conversion price of HK$0.012 per Share, a total of 2,500,000,000 Shares will be issued, which represent approximately 45.21% of the existing issued share capital of ATNT and approximately 31.14% of the issued share capital of ATNT as enlarged by the issue of the Conversion Shares upon full conversion of the Convertible Note at the initial conversion price of HK$0.012 per Share.

Upon full conversion of the Convertible Note at the alternative conversion price of HK$0.010 per Share, a total of 3,000,000,000 Shares will be issued, which represent approximately 54.26% of the existing issued share capital of ATNT and approximately 35.17% of the issued share capital of ATNT as enlarged by the issue of the Conversion Shares upon full conversion of the Convertible Note at the alternative conversion price of HK$0.010 per Share. Save as the CN Subscription Agreement as disclosed in this Circular, there is no other outstanding debt securities which are convertible into Shares.

Conditions of the CN Subscription Agreement

Completion of the CN Subscription is conditional upon the following conditions being fulfilled:

(a) the Listing Committee of the Stock Exchange having granted (either unconditionally or subject only to conditions to which ATNT and the Subscriber have no reasonable objection) listing of and permission to deal in the Conversion Shares;
(b) the Independent ATNT Shareholders having approved the transactions contemplated under the CN Subscription Agreement, the issue of the Convertible Note, the issue and allotment of the Conversion Shares and the Whitewash Waiver by way of poll at a special general meeting of such shareholders;
(c) the Independent KT Shareholders having approved the transactions contemplated under the CN Subscription Agreement at a special general meeting of such shareholders;
(d) if required, the Bermuda Monetary Authority having approved the issue of the Convertible Note and the Conversion Shares and the transferability of the Convertible Note and the Conversion Shares;
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(e) the Executive granting the Whitewash Waiver; and
(f) there being no event existing or having occurred and no condition being in existence which would be (after the issue of the Convertible Note) an event of default under the conditions of the Convertible Note and no event or act having occurred which, with the giving of notices, or the lapse of time, or both, would (after the issue of the Convertible Note), constitute such an event of default.

If the Whitewash Waiver is not granted by the Executive, the CN Subscription Agreement will lapse.

The Subscriber shall be entitled to waive condition (f) above.

If all of the above conditions are not fulfilled or waived by the Subscriber in its absolute discretion on or before 31 March 2004 (or such later date as may be agreed in writing between the Subscriber and ATNT), the CN Subscription Agreement shall lapse and become null and void and the parties shall be released from all obligations under the CN Subscription Agreement, save for any liability arising out of any antecedent breaches.

Completion

Completion will take place on the third business day after fulfillment or waiver (as the case may be) of the last of the conditions of the CN Subscription Agreement. Completion is expected to take place before 31 March 2004.

Application for listing

ATNT will apply to the Listing Committee of the Stock Exchange for the listing of and permission to deal in, the Conversion Shares.

Reasons for the CN Subscription Agreement and use of proceeds

ATNT is experiencing an audited net loss before tax and minority interest of about HK$308.8 million in total for the past two consecutive years, being HK$145.5 million for the year ended 31 March 2002 and HK$163.3 million for the year ended 31 March 2003. This is mainly caused by impairment losses for certain investments in Hong Kong in the aggregate amount of about HK$101.9 million. The contraction in the PCB industry also contributed about HK$108.0 million to the losses. The cashflow generated from operating activities of ATNT was negative for the financial year ended 31 March 2003, details of which have been disclosed in the annual report of ATNT for the financial year ended 31 March 2003. The directors of ATNT consider that the CN Subscription could strengthen the working capital of the ATNT Group and believe that the CN Subscription would put the ATNT Group in a better position to encounter the additional capital requirement caused by the strong recovery of PCB industry as seen in last quarter of 2003.

The estimated net proceeds from the CN Subscription are about HK$29.0 million.

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If the proposed Share Sale is not successful, the said net proceeds of about HK$29.0 million will be applied in the following manner: (a) as to about HK$2.0 million for expanding the production capacity of PAL Shenzhen; (b) as to about HK$5.0 million for setting up a new factory for local sales in PRC market; (c) as to about HK$18.0 million for the Share Subscription and (d) as to the balance of about HK$4.0 million for general working capital requirement of ATNT in preparation of the uprising orders.

If the proposed Share Sale is successful, an amount of about HK$18.0 million out of the said net proceeds of HK$29.0 million will not be applied for the Share Subscription as set out above and instead, an amount of about HK$22.0 million will be applied for general working capital requirement of ATNT in the preparation of the uprising orders.

Since the new MCP-PAL machine is well received in the electroplating equipment market and the surface finishing sales is gradually increasing, an additional assembly area will be built in the existing factory to expand the production capacity of PAL Shenzhen and a new block of factory was rented for local sales in the PRC market. At present, PAL Shenzhen is restricted to operate export sales only. A new company with a separate manufacturing facility is required to operate local sales in the PRC. To reduce the initial capital investment, the directors of ATNT have decided to rent a factory instead of constructing one. Apart from these two investments, in view of the uprising orders, the directors of ATNT believe additional working capital requirement for PAIL and PAL Shenzhen is needed to sustain a higher stock and receivable levels.

In November 2003, IML proposed to carry out the IML Share Placing (details of which are set out in the section headed “IML Share Placing and Share Subscription” of this document), by issuing new shares in the amount of NT$100.5 million (equivalent to about HK$24 million) subject to the passing of a resolution by the shareholders of IML and the approval by the Securities and Futures Commission, Ministry of Finance of Taiwan. The net proceeds from the issue of new IML Shares will be used principally for working capital of IML. Such resolution was passed in a general meeting of IML held on 19 December 2003. ATNT currently holds approximately 50.02% interest in IML and it is intended that ATNT or its subsidiary will subscribe the IML Shares for an aggregate subscription consideration of not more than NT$75.0 million (equivalent to about HK$18.0 million). As such, approximately HK$18.0 million of the net proceeds from the CN Subscription are intended to be used to subscribe for the IML Shares pursuant to the Share Subscription, subject to the approval of the ATNT Shareholders, the Securities and Futures Commission, Ministry of Finance of Taiwan and the Investment Commission, Ministry of Economic of Taiwan.

Reasons for the Share Subscription are set out in the section headed “IML Share Placing and Share Subscription” in this document. In order to further improve the liquidity level in ATNT, ATNT has entered into the IML Share Sale Agreement as set out in the section headed “Share Sale” of this document. If the Share Sale is completed, the funding requirement for ATNT to subscribe the IML Shares will be reduced. Therefore, net proceeds of up to about HK$18.0 million from the CN Subscription will be reallocated from the Share Subscription to be used for working capital and future expansion of the ATNT Group.

The directors of KT consider that the CN Subscription is within the ordinary course of business of KT which is in line with its business in the provision of financial services and equity investments. As the Convertible Note gives the Subscriber the flexibility to convert if the price of the Shares increases, and

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the Subscriber is also entitled to the redemption of the Convertible Note at a rate of 5% over the prime lending rate as quoted by The Hongkong and Shanghai Banking Corporation Limited in respect of any outstanding amount (a) upon the maturity of the Convertible Note, or (b) at any time prior to the maturity of the Convertible Note at the request of ATNT and with the consent of the Subscriber, the directors of KT are of the view that the CN Subscription will contribute a reasonable redemption premium income (if the Convertible Note is redeemed at maturity) and potential equity holding if the Convertible Note is converted. In addition, the directors of KT are also orally informed by the management of ATNT that the custom built electroplating equipment industry has recovered and evidence of orders on hand had been provided. Therefore, the directors are optimistic about the future prospect and the share price of ATNT and consider that the rights to convert the Convertible Note into Shares at the initial or alternative conversion price serves as an additional return on its investment. Besides, the directors of ATNT believe that the future development of ATNT in both the PRC and Taiwan markets has potential future business prospect and will hence benefit KT.

Shareholding structure of ATNT

Set out below is a table showing the existing shareholding structure of ATNT.

Subscriber and parties in concert with it – Optimist_(Note 1) – Lam Kwok Yan – director of ATNT – Lam Kwok Hing – director of ATNT – Subscriber(Note 2)_ Sub-total for Subscriber and parties in concert with it Public Total	Existing No. of shares 1,940,826,660 69,503,340 69,493,340 – 2,079,823,340 3,449,444,660 5,529,268,000	% 35.10 1.26 1.26 –
		37.62 62.38
		100.00

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Set out below is a table showing the shareholding structure of ATNT upon conversion of the Convertible Note.

Subscriber and parties in concert with it – Optimist_(Note 1) – Lam Kwok Yan – director of ATNT – Lam Kwok Hing – director of ATNT – the Subscriber(Note 2)_ Sub-total for Subscriber and parties in concert with it Public Total	Upon Completion and after the conversion of the Convertible Note in full (conversion price at HK$0.012) No. of shares % 1,940,826,660 24.17 69,503,340 0.87 69,493,340 0.87 2,500,000,000 31.13 4,579,823,340 57.04 3,449,444,660 42.96 8,029,268,000 100.00	Upon Completion and after the conversion of the Convertible Note in full (conversion price at HK$0.01) No. of shares % 1,940,826,660 22.75 69,503,340 0.82 69,493,340 0.82 3,000,000,000 35.17 5,079,823,340 59.56 3,449,444,660 40.44 8,529,268,000 100.00	Upon Completion and after the conversion of the Convertible Note in full (conversion price at HK$0.01) No. of shares % 1,940,826,660 22.75 69,503,340 0.82 69,493,340 0.82 3,000,000,000 35.17 5,079,823,340 59.56 3,449,444,660 40.44 8,529,268,000 100.00
			59.56 40.44
			100.00

Note 1: Optimist is beneficially owned by Mr. Lam Kwok Yan, the chairman and executive director of ATNT, as to 50% and Mr. Lam Kwok Hing, the deputy chairman, managing director and executive director of ATNT, as to 50%.
Note 2: The Subscriber is a wholly-owned subsidiary of KT. KT is beneficially owned as to about 67.76% by J&A Investment Limited, which is beneficially owned as to 80% by Mr. Lam Kwok Hing, deputy chairman, managing director, executive director and controlling shareholder of ATNT and chairman and executive director and controlling shareholding of KT and 20% by Mr. Nam Kwok Lun, the deputy chairman, managing director and an executive director of KT.

Information on the ATNT Group

ATNT is incorporated in Bermuda with limited liability and the Shares of which are listed on the Stock Exchange. ATNT is an investment holding company. Its subsidiaries are principally engaged in the design, manufacture, and worldwide sale of custom built electroplating equipment, horizontal wet processing equipment and other automation machinery; entertainment production services; money lending and investment holding in properties.

The audited consolidated net loss before and after taxation and extraordinary items of ATNT were approximately HK$163.3 million and approximately HK$163.8 million respectively for the financial year ended 31 March 2003. The audited consolidated net loss before and after taxation and extraordinary items of ATNT were approximately HK$145.5 million and HK$144.2 million respectively for the financial year ended 31 March 2002. The impairment loss made for the year ended 31 March 2002 and 2003 were approximately HK$49.8 million and approximately HK$52.5 million respectively.

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As at 31 March 2003, the audited consolidated net tangible asset value of ATNT was approximately HK$165.6 million or approximately HK$0.03 per Share based on 5,529,268,000 Shares in issue as of the Latest Practicable Date. As at 30 September 2003, the unaudited consolidated net tangible asset value of ATNT was approximately HK$125.8 million or approximately HK$0.023 per Share based on 5,529,268,000 Shares in issue as of the Latest Practicable Date.

ATNT has not conducted any fund raising exercise during the past 12 months from the date of this Circular or 14 months from the date of the Announcement.

Information on IML

IML is incorporated in Taiwan with limited liability and the shares of which are listed on the Stock Exchange of Taiwan. IML is a subsidiary of ATNT and are principally engaged in the design, manufacture, and sale of custom built horizontal wet processing equipment and other automation machinery.

The audited consolidated net loss before and after taxation and extraordinary items of IML for the year ended 31 March 2002 were approximately NT$102 million (equivalent to about HK$24.2 million) and NT$105.1 million (equivalent to about HK$24.9 million) respectively. The audited consolidated net loss before and after taxation and extraordinary items of IML both were both approximately NT$68.6 million (equivalent to about HK$15.3 million) for the year ended 31 March 2003. The audited net tangible assets value of IML for the year ended 31 March 2002 were approximately NT$388.3 million (equivalent to about HK$92.0 million) or approximately NT$8.68 per IML Share (equivalent to about HK$2.06 per IML Share). The audited net tangible assets value of IML for the year ended 31 March 2003 were approximately NT$319.6 million (equivalent to about HK$71.6 million) or approximately NT$7.14 per IML Share (equivalent to about HK$1.60 per IML Share). The unaudited consolidated net tangible assets value of IML for the six-months ended 30 September 2003 was NT$296.3 million (equivalent to about HK$66.4 million) or about NT$6.62 per IML Share (equivalent to about HK$1.48 per IML Share). All net tangible assets value per IML Shares were calculated based on 44,740,000 IML Shares in issue as of the Latest Practicable Date.

ATNT currently holds approximately 50.02% interest in IML and accounts for the interest in IML as subsidiary in its financial statements.

Information on KT and the Subscriber

KT is incorporated in Bermuda with limited liability and the shares of which are listed on the Stock Exchange. KT is an investment holding company and the subsidiaries of which are principally engaged in the business of providing financial services, including securities broking, futures and options broking, mutual funds and insurance-linked investment plans and products broking, securities margin financing services, private and public placement of shares, arrangement of debt and equity securities and corporate finance advisory services in Hong Kong. The Subscriber is incorporated in Hong Kong on 9 October 1987 and is a wholly-owned subsidiary of KT.

The audited consolidated net loss before and after taxation and extraordinary items of KT were approximately HK$61.1 million and HK$61.0 million respectively for the financial year ended 31 March 2003. The audited consolidated net loss before and after taxation and extraordinary items of KT were both approximately HK$118.7 million for the financial year ended 31 March 2002. As at 31 March 2003,

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the audited consolidated net tangible asset value of KT was approximately HK$108.1 million or approximately HK$0.24 per share. The unaudited consolidated net profit before and after taxation and extraordinary items of KT were both approximately HK$1.4 million respectively for the six month ended 30 September 2003. As at 30 September 2003, the unaudited consolidated net tangible asset value of KT was approximately HK$109.4 million or approximately HK$0.24 per share. All net tangible assets value per share were calculated based on 460,000,000 KT Shares in issue as of the Latest Practicable Date.

Intention of KT on the ATNT Group

Following Completion and after conversion of Conversion Note, KT intends that the ATNT Group will remain as an investment holding company with its subsidiaries and retain their principal businesses in the area of design, manufacture and worldwide sale of custom built electroplating equipment, horizontal wet processing equipment and other automation machinery; entertainment production services; money lending and investment holding in properties.

There is no plan for KT to inject any of its existing assets or businesses into nor to redeploy the fixed assets of the ATNT Group. KT intends to retain the services of the existing management and employees of the ATNT Group to continue to manage the core business of the ATNT Group. KT does not intend to appoint anyone on the board of directors of ATNT upon completion of the CN Subscription Agreement. Each of ATNT and KT has confirmed that none of the existing directors of ATNT will be required to resign from the board of directors of ATNT by reason of the issue of the Convertible Note pursuant to the CN Subscription Agreement.

The Stock Exchange will also closely monitor all future acquisitions or disposals of assets by ATNT. The Stock Exchange has the discretion to require ATNT to issue a circular to its shareholders irrespective of the size of any proposed transaction. The Stock Exchange also has the power to aggregate a series of transactions and any such transactions may result in ATNT being treated as if it were a new listing applicant.

Maintaining the listing status of ATNT

It is the intention of KT to maintain the listing of the Shares on the Stock Exchange after completion of the CN Subscription. ATNT and KT will use their best endeavors to take appropriate necessary steps to ensure that the public float of the Shares will not be less than 25% immediately after completion of the CN Subscription.

Financial Resources of KT and change in use of proceeds

Pursuant to KT’s prospectus dated 23 August 2000, KT has raised an amount of approximately HK$63.0 million from its initial public offering and the proceeds net of the relevant listing expenses amounted to about HK$53.9 million. Out of the proceeds of HK$53.9 million, the directors of KT originally intended to use HK$9.0 million for setting up of an additional branch office for brokerage purposes. In view of the poor market condition for opening a new branch office due to the economic downturn since 2001, KT has decided not to open an additional branch office and therefore the directors of KT have re-allocated an amount of HK$9.0 million out of such proceeds for the CN Subscription. Furthermore, the directors of KT intend to finance the balance of HK$21.0 million from KT’s internal resources. As at 30 September 2003, KT has an unaudited net current asset value of HK$99.9 million.

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Save as disclosed above, the net proceeds of KT’s initial public offering have been used in the manner as disclosed in the prospectus and annual reports of KT and as at 31 March 2003, approximately HK$44.5 million has been utilised. The balance of the net proceeds of approximately HK$9.4 million has not been utilised and has been placed as Hong Kong dollar short-term deposits with local financial institutions.

Adjustment of the conversion price of the Convertible Note

Subject to the Share Consolidation (as referred to in the section headed “Capital Reorganisation” of this document) becoming unconditional and effective and on the basis of the adjustment provisions pursuant to the terms of the Convertible Note, the initial conversion price of the Convertible Note will be adjusted from HK$0.012 to HK$0.24 or from the alternative conversion price of HK$0.010 to HK$0.20, with effect from the Effective Date as a result of the Share Consolidation. Such adjustment to the conversion price of the Convertible Note will be confirmed by the auditors of ATNT as giving effect to the relevant provision of the Convertible Note. Upon conversion of the Convertible Note in full, a total of 125,000,000 New Shares or 150,000,000 New Shares will be issued based on the adjusted conversion price of HK$0.24 per New Share or the alternative conversion price of HK$0.20 respectively.

TAKEOVERS CODE IMPLICATION

Upon completion of the CN Subscription Agreement and full conversion of the Convertible Note, a total of 2,500,000,000 Shares or 3,000,000,000 Shares will be issued to the Subscriber at an initial conversion price of HK$0.012 per Share or at an alternative conversion price of HK$0.010 per Share, respectively, representing about 45.21% or about 54.26% of the existing issued share capital of ATNT at the date of this document, respectively. The Subscriber will be interested in an aggregate of 2,500,000,000 Shares or 3,000,000,000 Shares, representing about 31.14% or about 35.17% of the issued share capital of ATNT as enlarged by the issue of the Conversion Shares upon full conversion of the Convertible Note, respectively.

As at the Latest Practicable Date, the Subscriber is not interested in any Shares. The Subscriber is wholly-owned by KT and KT is beneficially owned as to about 67.76% by J&A Investment Limited, which is in turn beneficially owned as to 80% by Mr. Lam Kwok Hing. Mr. Lam Kwok Hing holds 1.26% of ATNT and 50% of Optimist. Optimist holds about 35.10% of ATNT. None of the Subscriber, KT, J&A Investment Limited, Mr. Lam Kwok Hing and Optimist has dealt in any Shares within the six-month period prior to the date of this document and they also undertake not to deal in any Shares until the SGM is held. Upon conversion of the Convertible Note in full at a conversion price of HK$0.010 per Share, the Subscriber and the parties in concert will together hold a maximum of approximately 59.56% interest in ATNT.

Under the Takeovers Code, in the absence of the Whitewash Waiver, the Subscriber and parties acting in concert with it would be obliged to make a mandatory general offer to acquire all the Shares other than those already owned by the Subscriber and parties acting in concert with it upon exercise of the conversion rights attaching to the Convertible Note.

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An application has been made by the Subscriber and parties acting in concert with it to the Executive for the Whitewash Waiver in respect of the issue of Shares upon conversion of the Convertible Note. The Executive has indicated, subject to the approval of the Independent ATNT Shareholders on a vote by way of poll at the SGM, it will waive the obligation to make a general offer as a result of the conversion of the Convertible Note. Completion of the CN Subscription Agreement is conditional upon, inter alia, the granting of the Whitewash Waiver by the Executive. If the Whitewash Waiver is not granted by the Executive, the CN Subscription Agreement will lapse.

The shareholding interest of the Subscriber and the parties acting in concert with it will exceed 50% of the share capital of the Company as enlarged by the issue of the Conversion Shares under the CN Subscription. The Subscriber and parties acting in concert with it can acquire further Shares without incurring any further obligation under Rule 26 of the Takeover Code to make a general offer.

Neither the Subscriber, its Directors and parties acting in concert with it was interested in any Shares, Options, warrants or other securities convertible into or giving rights to subscribe for Shares nor had dealt in the Shares, Options, warrants or other securities convertible into or giving rights to subscribe for Shares during the period beginning six months prior to 6 February 2004 (being the date of the Announcement) and ending on the SGM date.

CAPITAL REORGANISATION

The Share Consolidation and the Capital Reduction

The directors of ATNT proposes to effect the Share Consolidation to consolidate every 20 issued Shares into one Consolidated Share. Upon the Share Consolidation becoming effective, the directors of ATNT propose to effect the Capital Reduction under which the paid-up capital of the issued Consolidated Shares will be reduced from HK$0.20 to HK$0.01 each by the cancellation of HK$0.19 paid up capital on each issued Consolidated Share. As a result of the Capital Reduction, based upon the present number of 5,529,268,000 issued Shares, an amount of approximately HK$52,528,046 from the share capital account of ATNT will be cancelled and will be transferred to the contributed surplus account of the Company.

Based on the number of 5,529,268,000 existing issued Shares and upon the Capital Reorganisation becoming effective, the issued share capital of ATNT will comprise 276,463,400 New Shares.

The Share Premium Cancellation

The directors of ATNT further propose to cancel the entire amount standing to the credit to the share premium account of ATNT as at the Effective Date (which will be not less than HK$353.1 million, being the approximate amount of the share premium account as at the date of this document, and not more than approximately HK$358.1 million, assuming the exercise in full of conversion rights attaching to all the outstanding Convertible Note issued by ATNT) and to transfer the credit arising therefrom to the contributed surplus account of the Company. The amount standing to the credit of the contributed surplus account, which includes the credit arising from the Capital Reduction in the amount of HK$52,528,046, will be applied to set-off against the accumulated loss of ATNT as at the Effective Date in full in accordance with the bye-laws of ATNT and all applicable laws.

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Reasons of the Capital Reorganisation

For the five-month period from 31 July 2003 to 24 December 2003 (being the last trading day prior to the suspension of trading of the Shares on the Stock Exchange), the Shares have been traded in the Stock Exchange in the range of HK$0.011 to HK$0.02 which most of the time just marginally above their nominal value of HK$0.01. The Capital Reorganisation is intended to allow flexibility in pricing for any issue of New Shares in the future so as to facilitate future capital raising or asset acquisition by way of allotment or placement of New Shares. Besides, following the Capital Reorganisation, it is expected that a total of not less than HK$405.6 million arising from (a) the Capital Reduction in the amount of approximately HK$52,528,046 and (b) the Share Premium Cancellation of an amount of not less than HK$353.1 million will be used to set-off the accumulated loss of ATNT as at the Effective Date in full. As at 30 September 2003, the accumulated loss of ATNT amounts to approximately HK$330.7 million.

The directors of ATNT consider that the Capital Reorganisation is in the interests of ATNT and the ATNT Shareholders as a whole. Save as disclosed in this document, the directors of ATNT confirm that there is no other negotiation or proposal relating to future capital raising or asset acquisition by way of allotment or placement of New Shares.

The CN Subscription is not conditional upon the Capital Reorganisation.

Effects of the Capital Reorganisation

(a) Adjustment of the conversion price of the Convertible Note

Subject to the Share Consolidation becoming unconditional and effective and on the basis of the adjustment provisions pursuant to the terms of the Convertible Note, the initial conversion price of the Convertible Note will be adjusted from HK$0.012 to HK$0.24 or from the alternative conversion price of HK$0.010 to HK$0.20, with effect from the Effective Date as a result of the Share Consolidation. Such adjustment to the conversion price of the Convertible Note will be confirmed by the auditors of ATNT as giving effect to the relevant provision of the Convertible Note. Upon conversion of the Convertible Note in full, a total of 125,000,000 New Shares or 150,000,000 New Shares will be issued based on the adjusted conversion price of HK$0.24 per New Share or the alternative conversion price of HK$0.20 respectively.

(b) Adjustment of the exercise price of the outstanding options granted under the Share Option Scheme

Subject to the Share Consolidation becoming unconditional and effective, the exercise price of the outstanding options granted under the Share Option Scheme on 30 August 2001 will be adjusted from HK$0.053 to HK$1.06 with effective from the Effective Date, as a result of the Share Consolidation. Such adjustment to the exercise price of the outstanding options will be confirmed by the auditors of ATNT as giving effect to the relevant provision of the share option scheme of ATNT.

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(c) Effect on the consolidated net assets of ATNT

The Capital Reorganisation will have no effect on the consolidated net assets of the ATNT Group. Other than the expenses to be incurred by ATNT in relation to the Capital Reorganisation, the proposal will not, of itself, alter the underlying assets, business operation, management or financial position of the ATNT Group or the interest of the ATNT Shareholders. The authorised share capital of ATNT will remain unchanged at HK$200.0 million but will be divided into 20,000,000,000 New Shares of HK$0.01 immediately following the Capital Reorganisation.

Conditions of the Capital Reorganisation

The Capital Reorganisation is conditional upon, amongst other things, on

the passing by the ATNT Shareholders of a special resolution at the SGM of ATNT approving the Capital Reorganisation;
compliance with Section 46(2) of the Companies Act 1981 of Bermuda, including publication of a notice in relation to the Capital Reorganisation in Bermuda; and
the Listing Committee of the Stock Exchange granting listing of and permission to deal in the New Shares arising from the Capital Reorganisation.

Application for listing

ATNT will apply to the Listing Committee of the Stock Exchange for the listing of and permission to deal in, the New Shares. As set out in the section headed “The CN Subscription Agreement”, ATNT will also apply to the Stock Exchange for the listing of and permission to deal in, the Conversion Shares. Under the CN Subscription Agreement, the Convertible Note shall be converted into New Shares upon completion of the Capital Reorganisation.

Subject to the granting of listing of and permission to deal in, the New Shares on the Stock Exchange, the New Shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the commencement date of dealings in the New Shares on the Stock Exchange or such other date as determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second trading day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time.

Free exchange of New Share certificates and parallel trading arrangements

Subject to the Capital Reorganisation becoming effective which is expected to be on or around 26 April 2004, the ATNT Shareholders may on or after 26 April 2004 until 4 June 2004 submit certificates of the existing Shares to ATNT’s branch share registrar and transfer office in Hong Kong, Secretaries Limited, at G/F., Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong, for exchange, at the expense of ATNT, for certificates of the New Shares. Thereafter, certificates of the existing Shares will be accepted for exchange only on payment of a fee of HK$2.5 (or such higher

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amount as may from time to time be allowed by the Stock Exchange) for each new certificate issued for the New Shares. Nevertheless, certificates of the existing Shares will continue to be good evidence of legal title and may be exchanged for certificates of the New Shares at any time.

Upon the Capital Reorganisation becoming effective, the arrangement proposed for dealings in the New Shares are expected to be as follows:–

From 26 April 2004, the original counter for trading in the existing Shares in board lots of 10,000 shares will be temporarily closed. A temporary counter will be established for trading in the New Shares in board lots of 500 New Shares. Certificates for the Shares may only be traded at this temporary counter.

With effect from 10 May 2004, the original counter for trading in the Shares will be reopened for trading in the New Shares in board lots of 10,000 New Shares.

From 10 May 2004 to 1 June 2004, both days inclusive, there will be parallel trading at the above two counters.

The temporary counter for trading in the New Shares in board lots of 500 New Shares will be removed after the close of trading on 1 June 2004. Thereafter, trading will be in New Shares only and the existing share certificates for Shares will cease to be marketable and will not be acceptable for dealing and settlement purposes. However, such share certificates will remain effective as documents of title.

Arrangement for the matching service for odd lots

In order to alleviate the difficulties arising from the existence of odd lots of adjustment of New Shares, Karl-Thomson Securities Company Limited has agreed to stand in the market to provide the matching services for the odd lots of New Shares on a best effort basis, during the period from 26 April 2004 to 1 June 2004 (both days inclusive), subject to change. The ATNT Shareholders who wish to take advantage of this matching facility either to dispose of their odd lots of New Shares or top up to board lots of 10,000 New Shares may contact Ms Joey Wong of Karl-Thomson Securities Company Limited at Room 801, Tower One, Lippo Centre, 89 Queensway, Hong Kong at 2877 9266.

AMENDMENTS TO BYE-LAWS

Due to the recent enactment of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) and taking into account of the latest changes to the requirements of the Listing Rules, the board of directors of ATNT also proposes to put forward to the ATNT Shareholders for approval at the SGM of ATNT resolutions to amend the bye-laws of ATNT to, among other things:

(a) allow every proxy appointed by a member which is a clearing house to vote on a show of hands;
(b) to adopt the definition of “clearing house” in the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong);
(c) to allow a member which is a clearing house to appoint multiple corporate representatives;
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LETTER FROM THE BOARD

(d) to allow corporate communications by electronic means and provision of summary financial reports in place of annual reports and accounts;
(e) to require that the minimum seven-day period for lodgment by shareholders of the notice to nominate a director to commence no earlier than the day after the despatch of the notice of the meeting appointed for such election and end no later than seven days before the date of such meeting;
(f) to prohibit directors from voting at and being counted towards the quorum of the board meeting on any matter in which any of his associates has a material interest; and
(g) to exclude the votes cast by a shareholder in contravention of a requirement or restriction under the Listing Rules.

IML SHARE PLACING AND SHARE SUBSCRIPTION

In the special general meeting of IML held on 19 December 2003, the shareholders of IML have approved (a) the IML Capital Reduction whereby the number of IML Shares will be reduced from 44,740,000 to 30,660,000 and (b) a placing of 13,400,000 new IML Shares for an aggregate subscription price of NT$100.5 million (equivalent to about HK$24.0 million) or a subscription price of NT$7.5 (equivalent to about HK$1.79) per IML Share.

The said 13,400,000 IML Shares may be subscribed by ATNT or its subsidiaries, the directors of IML or other associates of IML or other independent third parties which are approved by the Securities and Futures Commission, Ministry of Finance of Taiwan.

The subscription price of NT$7.5 (equivalent to about HK$1.79) per IML Share was determined after taking into account the following factors:–

(a) The average closing price per IML Share for the 30 trading day periods upto and including 12 December 2003, being three business days before the date on which the IML held its special general meeting, were NT$6.55 (equivalent to about HK$1.56) per IML Share respectively;
(b) The audited consolidated net asset value of approximately NT$7.14 (equivalent to about HK$1.6) per IML Share as at 31 March 2003. Net asset value per IML Shares is calculated based on 44,740,000 IML Shares as of the Latest Practicable Date; and
(c) The general positive business outlook of IML and the potential gain to be brought by the possible increasing demands for FPD process equipment.
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LETTER FROM THE BOARD

The subscription price of NT$7.5 (equivalent to about HK$1.79) per IML Share represents:

(a) a discount of about 75.25% to the closing price of NT$30.3 (equivalent to about HK$7.21) per IML Share as quoted on the Taiwan Stock Exchange Corporation on the Latest Practicable Date;
(b) a discount of about 73.61% to the average closing price of approximately NT$28.42 (equivalent to about HK$6.77) per IML Share as quoted on the Taiwan Stock Exchange Corporation over the 5 trading days up to and including the Latest Practicable Date;
(c) a discount of about 73.76% to the average closing price of approximately NT$28.58 (equivalent to about HK$6.8) per IML Share as quoted on the Taiwan Stock Exchange Corporation over the 10 trading days up to and including the Latest Practicable Date; and
(d) a premium of about 5.04% to the published net asset value of approximately NT$7.14 (equivalent to about HK$1.60) per IML Share as at 31 March 2003.

The IML Capital Reduction, the IML Share Placing and the subscription price under the IML Share Placing are subject to approval by the Securities and Futures Commission, Ministry of Finance of Taiwan. Such approval request has already been lodged and is pending approval. In the event that the subscription price of NT$7.5 under the IML Share Placing is not approved, the Securities and Futures Commission, Ministry of Finance of Taiwan may require IML’s directors to increase the subscription price under the IML Share Placing.

It is intended that ATNT or its subsidiary will subscribe IML Shares for not more than 10,000,000 IML Shares for an aggregate subscription price of not more than NT$75.0 million (equivalent to about HK$18.0 million). On the basis that ATNT would subscribe for a maximum of 10,000,000 IML Shares under the IML Share Placing, the remaining 3,400,000 IML Shares would be subscribed by other directors or other Associates of IML or any independent third parties which are approved by the Securities and Futures Commission, Ministry of Finance of Taiwan; and ATNT’s shareholding in IML would increase from about 50.02% of the existing issued share capital of IML to about 57.5% of the enlarged issued share capital of IML upon completion of the issue and allotment of 13,400,000 IML Shares by IML under the IML Share Placing.

As certain directors may subscribe for the IML Shares under the IML Share Placing, the IML Share Placing constitutes a connected transaction for ATNT under the Listing Rules. In addition, if ATNT subscribe less than its proportional shareholding in IML, the IML Share Placing may result in a material dilution of ATNT’s shareholding in IML and therefore constitute a major transaction for ATNT under the Listing Rules.

The IML Share Placing is conditional upon the approval of (a) the ATNT Shareholders; and (b) the Securities and Futures Commission, Ministry of Finance of Taiwan.

The Share Subscription is conditional upon the approval of (a) the ATNT Shareholders; (b) the Investment Commission, Ministry of Economic of Taiwan and (c) the Securities and Futures Commission, Ministry of Finance of Taiwan.

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LETTER FROM THE BOARD

IML, its directors and their respective Associates will abstain from voting in respect of their respective shareholding in ATNT (if any) in relation to the IML Share Placing and the Share Subscription at the SGM of ATNT.

Reasons and benefits

IML was established in Taiwan and is engaged in the design, manufacture and sale of custom built horizontal wet processing equipment and other automation equipment. The net audited loss after taxation and extraordinary items attributable to IML for the year ended 31 March 2002 and 2003 were respectively approximately NT$105.1 million (equivalent to about HK$24.9 million) and NT$68.6 million (equivalent to about HK$15.4 million). The net tangible assets of IML for the year ended 31 March 2002 and 2003 were approximately NT$388.3 million (equivalent to about HK$92 million) and NT$319.6 million (equivalent to about HK$71.6 million), respectively.

The directors of ATNT consider that the additional investment in IML will bring long-term benefits to the ATNT Group. The business prospect of IML looks good for two reasons. Firstly, IML has successfully broke into the FPD process equipment market in the second quarter of 2003. The IML’s factory was qualified as an approved supplier by a couple of renowned TFT-LCD manufacturers and got orders of over NT$150.0 million (equivalent to about HK$35.71 million) already. In order to compete with the Korean market players, some Japanese TFT-LCD manufacturers have formed alliance with Taiwanese manufacturers. The directors of IML believe that this trend will generate local demands for FPD process equipment and hence benefits IML. Secondly, the entrance into this market means IML has diversified into a market other than PCB. This will help to smooth out the cyclical business effect that PCB industry has brought to ATNT in the past.

The Share Subscription constitutes a discloseable transaction for ATNT under the Listing Rules.

As IML is a non-wholly owned subsidiary of ATNT and the aggregate consideration for the Share Subscription may exceed HK$10.0 million, the Share Subscription constitutes a connected transaction between IML and ATNT pursuant to Rule 14.26 of the Listing Rules and is therefore subject to the Independent ATNT Shareholders’ approval. IML, its directors and their respective Associates will abstain from voting in respect of their respective shareholding in ATNT (if any) in relation to the Share Subscription at the SGM of ATNT.

If the ATNT Shareholders do not approve the Share Subscription, the IML Share Placing may or may not proceed depending on the decision of the board of directors of IML. The IML Share Placing may constitute a material dilution of ATNT’s shareholding in IML if ATNT do not subscribe for the IML Shares and IML would issue new IML Shares under the proposed scheme.

SHARE SALE

On 27 January 2004, ATNT entered into the IML Share Sale Agreement with the Share Purchasers in relation to the sale and purchase of 8.6 million existing IML shares held by ATNT at NT$8.5 (equivalent to about HK$2.024) per IML Share within a two-month period.

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LETTER FROM THE BOARD

The sale price of NT$8.5 (equivalent to about HK$2.024) per IML Share represents:

(a) a discount of about 5.56% to the closing price of NT$9.00 (equivalent to about HK$2.143) per IML Share as quoted on the Taiwan Stock Exchange Corporation on 27 January 2004, being the date on which the IML Share Sale Agreement was entered;
(b) a premium of about 6.52% to the average closing price of approximately NT$7.98 (equivalent to about HK$1.9) per IML Share as quoted on the Taiwan Stock Exchange Corporation over the 5 trading days up to and including 27 January 2004, being the date on which the IML Share Sale Agreement was entered;
(c) a premium of about 13.48% to the average closing price of approximately NT$7.49 (equivalent to about HK$1.783) per IML Share as quoted on the Taiwan Stock Exchange Corporation over the 10 trading days up to and including 27 January 2004, being the date on which the IML Share Sale Agreement was entered; and
(d) a premium of about 19.05% to the published net asset value of approximately NT$7.14 (equivalent to about HK$1.6) per Share as at 31 March 2003.

The total consideration amounts to NT$73,100,000 (equivalent to about HK$17.4 million). The Share Purchasers has delivered to ATNT a deposit in the form of post-dated cheque(s) for a sum of HK$968,000 (equivalent to approximately NT$4.1 million) as performance security upon signing of the IML Share Sale Agreement. The Share Purchasers will settle the consideration of NT$73,100,000 (equivalent to about HK$17.4 million) in cash after relevant approvals have been obtained from the Securities and Futures Commission, Ministry of Finance of Taiwan in respect of the transactions contemplated under the IML Share Sale Agreement; and if the Share Purchasers are in default of the IML Share Sale Agreement, ATNT will be entitled to retain the deposit in the amount of HK$968,000 (equivalent to approximately NT$4.1 million).

The IML Share Sale Agreement is conditional upon the approval of (a) the Securities and Futures Commission, Ministry of Finance of Taiwan; and (b) the ATNT Shareholders at the SGM of ATNT.

The Share Purchasers and their respective Associates will abstain from voting in respect of their respective shareholding in ATNT (if any) in relation to the IML Share Sale Agreement and the transactions contemplated thereunder at the SGM of ATNT.

Upon completion of the IML Share Sale Agreement, IML may cease to be a subsidiary of ATNT as ATNT’s holding will be reduced from 22,377,490 IML Shares (representing about 50.02% of the issued share capital of IML) to 13,777,490 IML Shares (representing about 30.8% of the issued share capital of IML).

Reasons

By entering into the IML Share Sale Agreement, ATNT is able to dispose part of its shareholding in IML in the market at a fair market price. ATNT intends to use the net proceeds of NT$73.1 million (equivalent to about HK$17.4 million) from the Share Sale for the Share Subscription.

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LETTER FROM THE BOARD

The Share Sale constitutes a major transaction for ATNT under the Listing Rules.

A separate circular was dispatched on 23 February 2004 and a special general meeting was held on 9 March 2004 to consider, if deemed fit, to approve the IML Share Sale Agreement and the transactions contemplated thereunder. The approval from the Securities and Futures Commission, Ministry of Finance of Taiwan was received on 24 March 2004. ATNT and the Shares Purchasers are now in the process of setting up relevant foreign investment brokerage accounts and bank accounts. Further announcement will be made in due course to advise the completion of the Share Sale.

THE INCENTIVE OPTION SCHEME

The board of directors of ATNT further proposes to put forward to the ATNT Shareholders for approval at the SGM of ATNT the Incentive Option Scheme, pursuant to which the ATNT would grant certain employees of IML (including directors of IML) a call option to acquire up to a maximum of 6,000,000 existing IML Shares as held by ATNT, representing about 13.4% of the issued share capital of IML, within a period of 6 years at an option price of at least NT$7.5 (equivalent to about HK$1.79) per IML Share from time to time depending on the market condition when the option is granted. The said 6 years include the exercise period. The exercise price per option share will be NT$7.5 (equivalent to about HK$1.79) together with interest accrued thereon from the date of grant to the date of exercise of the options calculated at the rate of one per cent. over the prime lending rate as quoted by the Hongkong and Shanghai Banking Corporation Limited from time to time.

The option price of NT$7.5 (equivalent to about HK$1.79) per IML Share was determined after taking into account the audited consolidated net asset value of approximately NT$7.14 (equivalent to about HK$1.6) per IML Share as at 31 March 2003. Net asset value per IML Shares is calculated based on 44,740,000 IML Shares as of the Latest Practicable Date.

The option price of NT$7.5 (equivalent to about HK$1.79) per IML Share represents:

(a) a discount of about 75.25% to the closing price of NT$30.3 (equivalent to about HK$7.21) per IML Share as quoted on the Taiwan Stock Exchange Corporation on the Latest Practicable Date;
(b) a discount of about 73.61% to the average closing price of approximately NT$28.42 (equivalent to about HK$6.77) per IML Share as quoted on the Taiwan Stock Exchange Corporation over the 5 trading days up to and including the Latest Practicable Date;
(c) a discount of about 73.76% to the average closing price of approximately NT$28.58 (equivalent to about HK$6.8) per IML Share as quoted on the Taiwan Stock Exchange Corporation over the 10 trading days up to and including the Latest Practicable Date; and
(d) a premium of about 5.04% to the published net asset value of approximately NT$7.14 (equivalent to about HK$1.6) per IML Share as at 31 March 2003.
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LETTER FROM THE BOARD

The call option would only be granted by the directors of ATNT and at their sole discretion to those qualified grantees who could fulfill certain conditions and performance targets as determined by the directors of ATNT from time to time. No director of ATNT or their associates will be eligible to participate in the said scheme. Such conditions and performance targets shall include but not limited to IML’s net assets growth and profitability attained, level of responsibility and performance of each individual grantee. If the directors of ATNT grant the options in respect of 6,000,000 existing IML Shares in full, IML may cease to be a subsidiary of ATNT.

Reasons, benefits and intended use of sales proceeds

The purpose of the grant of call option is to provide incentive to employees of IML (including directors of IML) and encourage them to work towards enhancing the value of ATNT and its Shares for the benefit of ATNT and the ATNT Shareholders as a whole. Any sales proceed obtained under the Incentive Option Scheme will be used for general working capital of the ATNT Group.

Pursuant to the Listing Rules, as certain directors of IML, a subsidiary of ATNT, will be qualified to receive the call options under the Incentive Option Scheme and the aggregate consideration to be paid by the employees upon the exercise of the call options under the Incentive Option Scheme is expected to exceed HK$10.0 million, the Incentive Option Scheme constitutes a connected transaction of ATNT under the Listing Rules. The Incentive Option Scheme also constitutes a major transaction of ATNT under the Listing Rules and is therefore subject to the ATNT Shareholders’ approval at the SGM of ATNT.

The ultimate shareholding interest of ATNT in IML under different scenario was set out in below section “Shareholding changes in IML”.

The employees of IML (including directors of IML) who are entitled to receive the call options under the Incentive Option Scheme will abstain from voting in respect of their respective shareholding in ATNT (if any) in relation to the Incentive Option Scheme at the SGM of ATNT.

7. SHAREHOLDING CHANGES IN IML

(a) Table A illustrates the circumstances under which IML will cease to be a subsidiary of ATNT and its results will cease to be consolidated in the accounts of ATNT immediately following the completion of such event(s).
(b) Table B illustrates the circumstances under which IML will remain as a subsidiary of ATNT.
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LETTER FROM THE BOARD

Table A

ATNT Liang Mao Sheng (director of IML) Hu Hsin Hwa (director of IML) Huang Pin Chun (director of IML) Share Purchasers Holders of call options under the Incentive Option Scheme Public Total	Existing shareholding structure % 22,377,490 50.02% 149,679 0.33% 845,092 1.89% 80,922 0.18% – 0.00% – 0.00% 21,286,817 47.58% 44,740,000 100.00%	Upon completion of the Share Sale % 13,777,490 30.8% 149,679 0.33% 845,092 1.89% 80,922 0.18% 8,600,000 19.22% – 0.00% 21,286,817 47.58% 44,740,000 100.00%	Upon completion of the Share Sale and R the Capital Reduction % 9,441,615 30.8% 102,574 0.33% 579,135 1.89% 55,455 0.18% 5,893,519 19.22% – 0.00% 14,587,702 47.58% 30,660,000 100.00%	Upon completion of Upon Share Sale, completion Capital of Share Upon Reduction, Subscription, completion Share the Capital of the Subscription Reduction and Upon Share Sale, and the the exercise exercise the Capital exercise of the of the of the eduction and options under options under options under the Share the Incentive the Incentive the Incentive Subscription % Option Scheme % Option Scheme % Option Scheme % 19,441,615 44.12% 13,441,615 30.5% 19,335,133 43.88% 16,377,490 36.61% 102,574 0.23% 102,574 0.23% 102,574 0.23% 149,679 0.33% 579,135 1.31% 579,135 1.31% 579,135 1.31% 845,092 1.89% 55,455 0.13% 55,455 0.13% 55,455 0.13% 80,922 0.18% 5,893,519 13.38% 5,893,519 13.38% – 0.00% – 0.00% – 0.00% 6,000,000 13.62% 6,000,000 13.62% 6,000,000 13.41% 17,987,702 40.83% 17,987,702 40.83% 17,987,703 40.83% 21,286,817 47.58% 44,060,000 100.00% 44,060,000 100.00% 44,060,000 100.00% 44,740,000 100.00%	Upon completion of Upon Share Sale, completion Capital of Share Upon Reduction, Subscription, completion Share the Capital of the Subscription Reduction and Upon Share Sale, and the the exercise exercise the Capital exercise of the of the of the eduction and options under options under options under the Share the Incentive the Incentive the Incentive Subscription % Option Scheme % Option Scheme % Option Scheme % 19,441,615 44.12% 13,441,615 30.5% 19,335,133 43.88% 16,377,490 36.61% 102,574 0.23% 102,574 0.23% 102,574 0.23% 149,679 0.33% 579,135 1.31% 579,135 1.31% 579,135 1.31% 845,092 1.89% 55,455 0.13% 55,455 0.13% 55,455 0.13% 80,922 0.18% 5,893,519 13.38% 5,893,519 13.38% – 0.00% – 0.00% – 0.00% 6,000,000 13.62% 6,000,000 13.62% 6,000,000 13.41% 17,987,702 40.83% 17,987,702 40.83% 17,987,703 40.83% 21,286,817 47.58% 44,060,000 100.00% 44,060,000 100.00% 44,060,000 100.00% 44,740,000 100.00%
					44,740,000 100.00%

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LETTER FROM THE BOARD

Table B

ATNT Liang Mao Sheng (director of IML) Hu Hsin Hwa (director of IML) Huang Pin Chun (director of IML) Share Purchasers Holders of call options under the Incentive Option Scheme Public Total	Existing shareholding structure 22,377,490 149,679 845,092 80,922 – – 21,286,817 44,740,000	% 50.02% 0.33% 1.89% 0.18% 0.00% 0.00% 47.58% 100.00%	Upon completion of the Capital Reduction 15,335,133 102,574 579,135 55,455 – – 14,587,703 30,660,000	Upon completion of the Share Subscription and the Capital % Reduction 50.02% 25,335,133 0.33% 102,574 1.89% 579,135 0.18% 55,455 0.00% – 0.00% – 47.58% 17,987,703 100.00% 44,060,000	% 57.50% 0.23% 1.31% 0.13% 0.00% 0.00% 40.83%
					100.00%

CHANGE OF ACCOUNTING YEAR END DATE

The board of directors of ATNT had resolved to change its accounting year end date from 31 March to 31 December effective from the year of 2003. As a result, the current financial year end date will be changed from 31 March 2004 to 31 December 2003. The directors of ATNT consider that there is no material impact resulting from the change of the accounting year end date.

As a result of the change of accounting year end date, ATNT will issue an audited consolidated financial statements for the period from 1 April 2003 to 31 December 2003 on or before the end of April 2004, within 4 months after the date upon which the financial period ended. Comparative figures of previous period will be 12 months ended 31 March 2003.

GENERAL

KT is beneficially owned as to about 67.76% by J&A Investment Limited, which is beneficially owned as to 80% by Mr. Lam Kwok Hing, deputy chairman, managing director, executive director and controlling shareholder of ATNT and chairman and executive director of KT and 20% by Mr. Nam Kwok Lun, deputy chairman, managing director and executive director of KT. ATNT is beneficially owned as to about 35.10%, 1.26% and 1.26% by Optimist (which is beneficially and equally owned by Mr. Lam Kwok Yan, the chairman and executive director of ATNT, and Mr. Lam Kwok Hing), Mr. Lam Kwok Yan and Mr. Lam Kwok Hing, respectively. Hence, ATNT is an Associate of the controlling shareholder and executive director of KT and KT is an Associate of the controlling shareholder and executive director of ATNT.

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LETTER FROM THE BOARD

SGM OF ATNT

Set out in this Circular is the Notice convening the SGM of ATNT which will be held at 3:00 p.m. on 23 April 2004 at 11 Dai Hei Street, Tai Po Industrial Estate, Tai Po, New Territories, Hong Kong at which resolutions will be proposed to approve the CN Subscription Agreement, the Whitewash Waiver, the Capital Reorganisation, amendments to the Bye-Laws, the IML Share Placing, the Share Subscription and the Incentive Option Scheme.

A form of proxy for use at the SGM of ATNT is enclosed with this Circular. Whether or not you are able to attend the SGM of ATNT in person, you are requested to complete and return the form of proxy in accordance with the instructions printed thereon to ATNT at its principal place of business in Hong Kong at 11 Dai Hei Street, Tai Po Industrial Estate, Tai Po, New Territories, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the SGM of ATNT or any adjournment thereof. Completion of the form of proxy will not preclude you from attending and voting at the SGM of ATNT should you so wish.

RECOMMENDATIONS

Your attentions are drawn to the letter from the ATNT Independent Board Committee set out on page 32 of this circular which contains its recommendation to the ATNT Shareholders as to voting at the SGM of ATNT regarding the CN Subscription Agreement, the Whitewash Waiver, the IML Share Placing, the Share Subscription and the Incentive Option Scheme. Your attentions are also drawn to the letter of advice received from Barits and CSC Asia to the ATNT Independent Board Committee in relation to the CN Subscription Agreement, the Whitewash Waiver, the IML Share Placing, the Share Subscription and the Incentive Option Scheme and the principal factors and reasons considered by it in arriving thereat. The text of the letter of advice from Barits and CSC Asia is set out on page 33 to 53 of this circular.

The Directors note that the ATNT Independent Board Committee is of the opinion that the terms of the CN Subscription Agreement, the Whitewash Waiver, the IML Share Placing, the Share Subscription and the Incentive Option Scheme are fair and reasonable so far as the ATNT Shareholders as a whole are concerned and are in the interests of ATNT and its shareholders. Accordingly, the ATNT Shareholders are recommended to vote in favour of the resolutions to be proposed at the SGM of ATNT .

ADDITIONAL INFORMATION

Your attentions are drawn to the appendices to this circular setting out financial information, property valuation of the ATNT Group and the general information.

For and on behalf of the board of

Asia Tele-Net and Technology Corporation Limited Lam Kwok Hing

Deputy Chairman & Managing Director

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

==> picture [213 x 55] intentionally omitted <==

(Incorporated in Bermuda with limited liability)

31 March 2004

To the ATNT Shareholders

Dear Sir or Madam,

PROPOSED ISSUE OF CONVERTIBLE NOTE, APPLICATION FOR WHITEWASH WAIVER BY KT, IML SHARE PLACING, SHARE SUBSCRIPTION AND INCENTIVE OPTION SCHEME

We refer to the circular (the “Circular”) dated 31 March 2004 issued to the ATNT Shareholders by ATNT, of which this letter forms part. Terms used in the Circular shall have the same meanings in this letter unless the context otherwise requires.

We have been appointed by the Board to consider and advise the ATNT Shareholders in respect of the above transactions, details of which are set out in the letter from the Board contained in the Circular. Barits and CSC Asia have been appointed as the independent financial adviser to advise the Independent Board Committee in this respect.

Taking into account the advice and recommendation of Barits and CSC Asia as set out on pages 33 to 53 of the Circular and having considered, among other thing, the factors and reasons considered by them, we consider the terms of all the captioned transactions and the Whitewash Waiver are fair and reasonable as far as the ATNT Shareholders as a whole are concerned and are in the interests of ATNT and its shareholders. Accordingly, we recommend the ATNT Shareholders to vote in favour of the ordinary resolutions including the Whitewash Waiver to be proposed at the SGM of ATNT.

Yours faithfully,

Mr. Cheung Kin Wai Mr. Kwan Wang Wai, Alan Independent non-executive Director Non-executive Director

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LETTER OF ADVICE FROM BARITS AND CSC ASIA

The following is the text of the letter of advice to the ATNT Independent Board Committee from Barits and CSC Asia dated 31 March 2004 for the incorporation in this circular. A copy of this letter is available for inspection as mentioned in appendix III to this circular.

Barits Securities (Hong Kong) Limited

Room 3406, 34/F. Edinburgh Tower, The Landmark 15 Queen’s Road Central Hong Kong

CSC Asia Limited

Unit 3204-07, 32nd Floor, COSCO Tower 183 Queen’s Road Central Hong Kong

31 March 2004

To the ATNT Independent Board Committee

Dear Sir or Madam,

PROPOSED ISSUE OF CONVERTIBLE NOTE, APPLICATION FOR WHITEWASH WAIVER BY KT, IML SHARE PLACING, SHARE SUBSCRIPTION AND INCENTIVE OPTION SCHEME

INTRODUCTION

We refer to our appointment to advise the ATNT Independent Board Committee in respect of the terms of the CN Subscription Agreement, the Whitewash Waiver, the IML Share Placing, the Share Subscription and the Incentive Option Scheme, details of which are set out in this circular, of which this letter forms part. Terms used in this letter have the same meanings as defined in this circular unless the context otherwise requires.

As stated in the letter from the Board, KT is beneficially owned as to about 67.76% by J&A Investment Limited, which is beneficially owned as to 80% by Mr. Lam Kwok Hing, the deputy chairman, managing director, executive director and controlling shareholder of ATNT and chairman and executive director of KT and 20% by Mr. Nam Kwok Lun, the deputy chairman, managing director and executive director of KT. ATNT is beneficially owned as to about 35.10%, 1.26% and 1.26% by Optimist (which is beneficially and equally owned by Mr. Lam Kwok Yan, the chairman and executive director of ATNT, and Mr. Lam Kwok Hing), Mr. Lam Kwok Yan and Mr. Lam Kwok Hing, respectively. Hence, ATNT is an Associate of the controlling shareholder and executive director of KT and KT is an Associate of the controlling shareholder and executive director of ATNT.

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LETTER OF ADVICE FROM BARITS AND CSC ASIA

Upon completion of the CN Subscription Agreement and full conversion of the Convertible Note, a total of 2,500,000,000 Shares or 3,000,000,000 Shares will be issued to the Subscriber at an initial conversion price of HK$0.012 per Share or at an alternative conversion price of HK$0.010 per Share, respectively, representing about 45.21% or about 54.26% of the existing issued share capital of ATNT as at the Latest Practicable Date, respectively. The Subscriber will be interested in an aggregate of 2,500,000,000 Shares or 3,000,000,000 Shares, representing about 31.14% or about 35.17% of the issued share capital of ATNT as enlarged by the issue of the Conversion Shares upon full conversion of the Convertible Note, respectively.

Pursuant to the Takeovers Code, the Whitewash Waiver is required to be approved by Independent ATNT Shareholders by way of a poll at the SGM of ATNT. An application has been made by the Subscriber and parties acting in concert with it to the Executive for the Whitewash Waiver in respect of the issue of Shares upon conversion of the Convertible Note, subject to the approval of the ATNT Shareholders who are not involved or interested in the CN Subscription on a vote by way of poll. The Executive has indicated that it will grant the Whitewash Waiver subject to the approval of the ATNT Independent Shareholders passing at a special general meeting of ATNT of an ordinary resolution approving the Whitewash Waiver by way of a poll. Completion of the CN Subscription Agreement is conditional upon, inter alia, the granting of the Whitewash Waiver by the Executive. If the Whitewash Waiver is not granted by the Executive, the CN Subscription Agreement will lapse.

The CN Subscription also constitutes a connected transaction for ATNT under the Listing Rules and the CN Subscription is subject to, among other things, approval by the Independent ATNT Shareholders.

Under the IML Share Placing, certain directors may subscribe for the IML Shares and thus the IML Share Placing constitutes a connected transaction for ATNT under the Listing Rules. In addition, if ATNT subscribes less than its proportional shareholding in IML, the IML Share Placing may result in a material dilution of ATNT’s shareholding in IML and therefore constitutes a major transaction for ATNT under the Listing Rules.

The IML Share Placing is conditional upon the approval of (a) the ATNT Shareholders; and (b) the Securities and Future Commission, Ministry of Finance of Taiwan.

The Share Subscription is conditional upon the approval of (a) the ATNT Shareholders; (b) the Investment Commission, Ministry of Economic of Taiwan; and (c) the Securities and Futures Commission, Ministry of Finance of Taiwan.

As IML is a non-wholly owned subsidiary of ATNT and the aggregate subscription price may exceed HK$10.0 million, the Share Subscription constitutes a connected transaction between IML and ATNT pursuant to the Listing Rules and is therefore subject to the ATNT Shareholders’ approval. The Share Subscription also constitutes a discloseable transaction for ATNT under the Listing Rules.

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LETTER OF ADVICE FROM BARITS AND CSC ASIA

Among the directors of ATNT (the “Directors”), Mr. Lam Kwok Yan and Mr. Lam Kwok Hing, all executive Directors, are salaried directors of ATNT. Mr. Lam Kwok Hing is a salaried director of KT and holds the position of the chairman and executive director of KT. Mr. Lam Kwok Yan is the elder brother of Mr. Lam Kwok Hing. Both of them are considered to be parties acting in concert with KT. Mr. Ng Chi Kin, David, an independent non-executive Director, is also an independent non-executive director of KT. Mr. Ng Chi Kin, David is one of the partners of CNG & Partners (formerly known as CNG & Co.) and its parties acting in concert had provided professional services to certain group companies of ATNT during the past two years. Accordingly, none of them is considered to be independent so far as the CN Subscription and the Whitewash Waiver are concerned and therefore they have not participated in formulating a recommendation to the Independent ATNT Shareholders so as to avoid any conflict of interest which may arise. Consequently, the independent non-executive Director, Mr. Cheung Kin Wai and the non-executive Director, Mr. Kwan Wang Wai, Alan, have been appointed to advise the Independent ATNT Shareholders in relation to the CN Subscription and the Whitewash Waiver, the IML Share Placing, the Share Subscription and the Incentive Option Scheme.

In formulating our advice and recommendation, we have relied on the accuracy of the information and representations contained in the circular and the information and facts supplied, and the opinions expressed, to us by the ATNT and its Directors and management. We have also assumed that all statements of belief, opinion and intention made by the Directors in this circular were reasonably made after due enquiry. We have assumed that all information and representations made to us by ATNT and its Directors and management or referred to in this circular were true and accurate at the time they were made and continue to be true and accurate at the date of the SGM of ATNT. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the ATNT and its Director and management and have been advised by the Directors that no material facts have been omitted from the information provided and referred to in the circular.

We have reviewed, among other things, the published information on the ATNT Group, including its audited financial statements for the two years ended 31 March 2003 and the interim report for the six months ended 30 September 2003. We have discussed the valuation of the ATNT Group’s property interests with the valuer, Sallmanns (Far East) Limited. The valuation report is set out in Appendix II to this circular. We have also reviewed the past performance of the Shares on the Stock Exchange since 1

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LETTER OF ADVICE FROM BARITS AND CSC ASIA

January 2003. We have also identified and analysed convertibles issues for the period from January 2002 to December 2003 based on published information. For IML, we have reviewed, among other things, the published information including the annual report for the two years ended 31 March 2003. We consider that we have reviewed sufficient information to reach an informed view and to justify reliance on the accuracy of the information contained in this circular and to provide a reasonable basis for our recommendation. We have not, however, conducted an independent investigation into the business affairs, financial position or future prospects of the ATNT Group nor have we carried out any independent verification of the information supplied.

PRINCIPAL FACTORS AND REASONS CONSIDERED

The principal factors and reasons we have taken into account in assessing the CN Subscription Agreement, the Whitewash Waiver, the IML Share Placing, the Share Subscription and the Incentive Option Scheme and in giving our recommendation to the ATNT Independent Board Committee are set out below.

1. The CN Subscription Agreement and the Whitewash Waiver

Reasons for the CN Subscription Agreement

Performance and prospects of the ATNT Group

A summary of the audited consolidated results of the ATNT Group for each of the past two years ended 31 March 2003 and extracts from the audited accounts of the ATNT Group for the year ended 31 March 2003 and the unaudited financial statements for the six months ended 30 September 2003 are contained in Appendix I to this circular.

Based on the ATNT’s annual reports, the ATNT Group’s business was adversely affected by the unfavorable market condition reflected by a significant drop in PBC industry and a shrinking demand of electroplating equipment and wet processing equipment. As a result, the ATNT Group incurred a net loss for two consecutive years from 2002 to 2003.

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LETTER OF ADVICE FROM BARITS AND CSC ASIA

The following table set out the ATNT Group’s turnover analysed by principal activity as extracted from the ATNT’s 2002 annual report.

Revenue from construction contracts in respect of: – design, manufacture and sale of custom-built electroplating machinery and other industrial machinery – stage construction and arts production – arts performance and social functions Sale of goods Interest income from money lending Provision of services – repairs and maintenance – satellite communication	2003 HK$’000 299,945 14,313 16,731 42,233 1,151 8,923 1,932 385,228	2002 HK$’000 263,848 15,088 34,590 9,105 4,555 5,656 2,926
		335,768

For the two years ended 31 March 2003, the turnover of the ATNT Group amounted about HK$335.77 million and HK$385.23 million, respectively, representing an increase of about 14.73%. As stated in the 2003 annual report, the increase of turnover was mainly due to an increase of revenue generated from construction contracts in respect of design, manufacture and sale of custombuilt electroplating machinery and other industrial machinery, being the major source of revenue for the year, from about HK$263.85 million in 2002 to about HK$299.95 million in 2003, representing an increase of about 13.68%. About 77.86% of the ATNT Group’s turnover for the year ended 31 March 2003 was related to construction contracts in respect of design, manufacture and sale of custom-built electroplating machinery and other industrial machinery. Apart from the above, the sale of goods also increased by about 363.56% from about HK$9.11 million in 2002 to about HK$42.23 million in 2003. The income from provisions of repairs and maintenance services also showed an increase of about 57.60% from about HK$5.66 million to HK$8.92 million, which contributed to the increase of turnover for 2003.

The Directors have advised that the PCB market was under a continuous shrinking condition. However, the ATNT Group successfully obtained some sizable contracts and orders in Europe, Tunisia, Taiwan, Thailand and China, which contributed to the increase of turnover in 2003. Besides, the ATNT Group adopted effective cost control measures to reduce overheads as well as effective marketing strategy to broaden product range of electroplating equipment by seeking opportunities to produce equipment under license or joint venture agreements. As a result, the ATNT Group’s results were positively affected.

For the two years ended 31 March 2003, the ATNT Group’s loss from operations was reduced from about HK$181.74 million to about HK$152.60 million. The loss from operations for 2003 included the impairment loss recognised on investment securities of about HK$5.64 million, net unrealised loss on other investments of about HK$29.40 million, net realised loss on other

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LETTER OF ADVICE FROM BARITS AND CSC ASIA

investments of about HK$1.63 million, loss on resumption of properties held for development by government of about HK$2.08 million, impairment loss recognised in respect of property, plant and equipment of about HK$32.70 million, impairment loss recognised in respect of properties held for development of about HK$2.54 million and impairment loss recognised in respect of goodwill arising on acquisition of subsidiaries of about HK$10.66 million. Notwithstanding a decrease in the loss from operations, the ATNT Group’s audited net loss deteriorated by about 19.20% from HK$132.38 million in 2002 to HK$157.80 million in 2003. This was mainly attributable to the non-occurrence of a partial disposal of a subsidiary which recorded a gain of about HK$44.44 million in 2002.

On 30 December 2003, the ATNT Group announced its interim report for the six months ended 30 September 2003. When compare with the same period in year 2002, the turnover of the ATNT Group slightly increased by about 15.96% to about HK$210.53 million. For the same period of time, the unaudited net loss of the ATNT Group narrowed from about HK$94.03 million to about HK$37.99 million. As stated in the interim results for the six months ended 30 September 2003, the improvement in net loss was mainly attributable to the increase in turnover, various cost control measures adopted by the ATNT Group as well as the continuous effort in pushing up the margin. Due to the outbreak of SARS in the first half of 2003, most of the scheduled installation projects were postponed. Until the third quarter of 2003, most of the on-hold projects were resumed which generated a surge of number of orders and thus generated an increase of turnover for the six months ended 30 September 2003 of the ATNT Group.

In view of the tough PCB market was under recovery period, in particular, after the outbreak of SARS in the first half of 2003, the Directors adopted strategies in response to the weak market situation by reducing overheads and numbers of staff. In the meantime, the Directors believe that they were continuously focusing in consolidating the ATNT Group’s business portfolio by termination or disposal of business which cannot generate profit in the long term. As stated in the 2003 annual report, the Directors determined to abandon the satellite communication and stage construction business due to poor market condition, which ceased by July 2003 and September 2003, respectively, which is in line with the direction of consolidating the ATNT Group’s business. As stated in the interim report for the six months ended 30 September 2003, the ATNT Group sold its interest in wind generator in November 2003 and discontinued the rectifier assembly factory in Beijing.

Moreover, the Directors plan to place more effort to broaden PAL’s product range as well as to concentrate more on surface finishing (SF) market sector which has growing potential market. In addition, the ATNT Group intends to place more resources on investment in products development by improving the equipment design and performance. A “New Product Development” group was established to concentrate on new products development. The Product Engineering Group was relocated to Shenzhen and has been engaged in a number of areas of improvement to present designs to reduce cost and increase efficiency of manufacture. In addition, with the signing of the Closer Economic Partnership Agreement (“CEPA”), the Directors believe that it would bring opportunities for ATNT to enter into the PRC market and sell domestically in the PRC without setting up a local company in the PRC which would reduce the costs of establishment.

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LETTER OF ADVICE FROM BARITS AND CSC ASIA

Use of proceeds

As stated in the letter from the Board in this circular, the estimated net proceeds from the CN Subscription are about HK$29.0 million.

On 27 January 2004, ATNT entered into the IML Share Sale Agreement with the Share Purchasers, namely Wise Chance International Limited and Money Net Investments Limited, in relation to the sale and purchase of 8.6 million existing IML Shares held by ATNT at NT$8.5 (equivalent to about HK$2.02) per IML Share within a two-month period for a total consideration of NT$73.1 million (equivalent to about HK$17.4 million).

However, if the above mentioned proposed Share Sale is not successful, the said net proceeds of about HK$29.0 million will be applied in the following manner: (a) as to about HK$2.0 million for expanding the production capacity of PAL Shenzhen; (b) as to about HK$5.0 million for setting up a new factory for local sales in PRC market; (c) as to about HK$18.0 million for the Share Subscription; and (d) as to the balance of about HK$4.0 million for general working capital requirement of ATNT in preparation of the uprising orders.

On the contrary, if the proposed Share Sale is successful, an amount of about HK$18.0 million out of the said net proceeds of HK$29.0 million will not be applied for the Share Subscription as set out above and instead, an amount of about HK$22.0 million will be applied for general working capital requirement of ATNT in the preparation of the uprising orders.

As stated in the letter from the Board in this circular, it is the intention of the ATNT Group to continue focusing on the PCB market which the Directors believe that there is strong recovery in the PCB industry in the coming year. The expansion of production capacity of PAL Shenzhen and the setting up of new factory for local sales in PRC market is in line with the direction of the ATNT Group’s strategy to consolidate its business and further enhance its revenue source.

Principal terms of the CN Subscription Agreement

Details of the terms and conditions of the CN Subscription Agreement are set out in the letter from the Board in this circular.

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LETTER OF ADVICE FROM BARITS AND CSC ASIA

Recent Share prices and trading volume

The following charts illustrate the closing price and trading volume of the Shares on the Stock Exchange and the trading volume of the Shares during the period from 1 January 2003 to the Latest Practicable Date.

==> picture [338 x 178] intentionally omitted <==

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

0.025
0.02
0.015
0.01
0.005
0
Date
Closing price (HK$)
Jan-03 Feb-03 Mar-03 Apr-03 May-03 Jun-03 Jul-03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03 Jan-04 Feb-04 Mar-04 Latest Practicable Date
----- End of picture text -----

Source: Bloomberg

We note that from the above chart, the daily closing prices of the Shares during the period from 1 January 2003 up to and including the date of the Announcement were within the range of HK$0.01 per Share to HK$0.02 per Share. Since the last trading day of the Shares immediately preceding the date of the Announcement and up to and including the Latest Practicable Date, the daily closing prices of the Shares were within the range of HK$0.015 per Share on 5 February 2004 and HK$0.014 per ATNT Share on the Latest Practicable Date. The Shares were traded within a range of HK$0.01 to HK$0.02 within the whole period from 1 January 2003 to the Latest Practicable Date which is close to either the initial subscription price or the alternative subscription price. Our assessment on the fairness and reasonableness of the conversion price is set out in the following section.

The following chart sets out the daily trading volume of the Shares during the period from 1 January 2003 to the Latest Practicable Date:

==> picture [340 x 173] intentionally omitted <==

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

100,000,000
90,000,000
80,000,000
70,000,000
60,000,000
50,000,000
40,000,000
30,000,000
20,000,000
10,000,000
0
Date
Trading volume
Jan-03 Feb-03 Mar-03 Apr-03 May-03 Jun-03 Jul-03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03 Jan-04 Feb-04 Mar-04 Latest Practicable Date
----- End of picture text -----

Source: Bloomberg

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LETTER OF ADVICE FROM BARITS AND CSC ASIA

During the period covered by the above chart, the trading volume of the Shares had been occasionally with some interval of low or nil trading interspersed with periods of more active trading from August to September 2003 and February to March 2004.

The following is a summary of the monthly trading volume of the Shares on the Stock Exchange since 1 January 2003 to the Latest Practicable Date and its percentage to the total number of Shares in public hands as at the Latest Practicable Date:

					Percentage of
					average daily
					trading volume
					for the month
		Total	Number of	Average daily	to total number
	trading volume		trading days	trading volume	of Shares in
Month	for the month		in the month	for the month	public hands
	(in	’000 Shares)		(in ’000 Shares)	(%)
					(Note 2)
2003
January		200	21	9.52	0.0003
February		12,180	19	641.05	0.0186
March		780	21	37.14	0.0011
April		0	20	0	0
May		21,310	20	1,065.50	0.0309
June		88,470	20	4,423.50	0.1282
July		17,570	22	798.64	0.0232
August		497,910	21	23,710.00	0.6874
September		165,520	21	7,881.90	0.2285
October		87,386	22	3,972.09	0.1152
November		70,040	20	3,502.00	0.1015
December		74,119	21	3,529.48	0.1023
2004
January		0	19	0	0
February		305,780	20	15,289.00	0.4432
March_(Note 1)_		160,680	21	7,651.40	0.2218

Source: Bloomberg

Note 1: Up to and including the Latest Practicable Date Note 2: Based on 3,449,444,660 Shares held in public hands as at the Latest Practicable Date

The trading of Shares stayed on a relatively low level and less than about 0.7% of Shares in public hands was traded for the period from 1 January 2003 to the Latest Practicable Date. The liquidity of the Shares was generally low.

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LETTER OF ADVICE FROM BARITS AND CSC ASIA

Conversion price

Under the CN Subscription Agreement, the conversion price will be the lower of (a) the initial conversion price of HK$0.012 per Share or (b) the alternative conversion price as determined on the date of Completion, which is HK$0.010 per Share if the average of any 7 closing prices for 25 consecutive trading days prior to the date of Completion is below the initial conversion price of HK$0.012 per Share. The Conversion Price will be subject to adjustment for, amongst other things, subdivision or consolidation of Shares, bonus issues, rights issues and other dilution events.

The initial conversion price of HK$0.012 per Share represents:

(i) a discount of about 14.3% to the closing price of HK$0.014 per Share quoted on the Stock Exchange on the Latest Practicable Date;
(ii) a discount of about 20.0% to the average closing price of about HK$0.015 per Share over the 5 trading days up to and including 29 December 2003, being the last trading day prior to the suspension of trading in the Shares pending the issue of the Announcement;
(iii) a discount of about 17.8% to the average closing price of about HK$0.0146 per Share over the 10 trading days up to and including 29 December 2003;
(iv) a discount of about 17.2% to the average closing price of about HK$0.0145 per Share over the 30 trading days up to and including 29 December 2003;
(v) a discount of about 18.9% to the average closing price of about HK$0.0148 per Share over the 90 trading days up to and including 29 December 2003;
(vi) a discount of about 4.8% to the average closing price of about HK$0.0126 per Share over the 180 trading days up to and including 29 December 2003;
(vii) no discount or premium to the average closing price of about HK$0.0120 per Share over the 246 trading days up to and including 29 December 2003;
(viii) a discount of about 47.8% to the pro forma unaudited adjusted consolidated net tangible asset value per Share of the ATNT Group of about HK$0.023 per Share immediately before completion of the proposed issue of the Convertible Note, the Share Sale and the Share Subscription; and
(ix) a discount of about 40.0% to the pro forma unaudited adjusted consolidated net tangible asset value per Share of the ATNT Group of about HK$0.020 per Share immediately after completion of the proposed issue of the Convertible Note, the Share Sale and the Share Subscription.
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LETTER OF ADVICE FROM BARITS AND CSC ASIA

The alternative conversion price of HK$0.010 per Share represents:

(i) a discount of about 28.6% to the closing price of HK$0.014 per Share quoted on the Stock Exchange on the Latest Practicable Date;
(ii) a discount of about 33.3% to the average closing price of about HK$0.015 per Share over the 5 trading days up to and including 29 December 2003, being the last trading day prior to the suspension of trading in the Shares pending the issue of the Announcement;
(iii) a discount of about 31.5% to the average closing price of about HK$0.0146 per Share over the 10 trading days up to and including 29 December 2003;
(iv) a discount of about 31.0% to the average closing price of about HK$0.0145 per Share over the 30 trading days up to and including 29 December 2003;
(v) a discount of about 32.4% to the average closing price of about HK$0.0148 per Share over the 90 trading days up to and including 29 December 2003;
(vi) a discount of about 20.6% to the average closing price of about HK$0.0126 per Share over the 180 trading days up to and including 29 December 2003;
(vii) a discount of about 16.7% to the average closing price of about HK$0.0120 per Share over the 246 trading days up to and including 29 December 2003;
(viii) a discount of about 56.5% to the pro forma unaudited adjusted consolidated net tangible asset value per Share of the ATNT Group of about HK$0.023 per Share immediately before completion of the proposed issue of the Convertible Note, the Share Sale and the Share Subscription; and
(ix) a discount of about 50.0% to the pro forma unaudited adjusted consolidated net tangible asset value per Share of the ATNT Group of about HK$0.020 per Share immediately after completion of the proposed issue of the Convertible Note, the Share Sale and the Share Subscription.

As the CN Subscription involves an acquisition of controlling interests in ATNT from the Subscriber, we consider that the assessment of the fairness and reasonableness of the subscription price should take a look on the price movement of the share price for a longer time span in order to eliminate the short term volatility of the share price. We have considered the average closing price over the period of 246 trading days up to and including 29 December 2003. The initial conversion price and the alternative conversion price consistently represent a discount to average closing price ranged from nil to 33.3% under different situations as stated above.

In order to assess the reasonableness of either the initial conversion price or the alternative conversion price, we have conducted a comparison of the terms and conditions and conversion price under the CN Subscription Agreement with that of, so far as we are aware based on publicly available information, 10 convertibles issued with similar maturity ranging from 1 to 3 years, and announced during the period from January 2002 to December 2003. We aware that the conversion

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LETTER OF ADVICE FROM BARITS AND CSC ASIA

price of a convertible note may vary under different stock market condition as well as financial or business performance of comparable. The above comparison would provide a general reference for the reasonableness of the conversion price under the CN Subscription Agreement.

Among the 10 convertibles issued and announced, the sizes of the convertibles ranged from HK$9 million to HK$200 million, and with conversion prices ranged from HK$0.01 to HK$0.80, representing a maximum discount of about 33.33% to a maximum premium of 167.00% between the conversion prices and the closing prices per share prior to announcement. As the initial and alternative conversion price falls within the range of the discount/premium of the 10 convertibles as mentioned above, we consider that the initial and alternative conversion price of the Convertible Note is fair and reasonable.

Maturity

The Convertible Note has a term of 2 years from the date of issue of the Convertible Note.

Coupon

No interest is payable except in the case of the redemption of the Convertible Note by ATNT.

Redemption

At maturity, any outstanding Convertible Note will be redeemed by ATNT at a rate of return equal to 5% over the prime lending rate as quoted by The Hongkong and Shanghai Banking Corporation Limited per annum.

Besides, ATNT will have the right at any time to redeem in whole or in part the outstanding unconverted Convertible Note at a rate of 5% over the prime lending rate as quoted by The Hongkong and Shanghai Banking Corporation Limited per annum provided if consent is given by the Subscriber.

We consider that the right for ATNT to redeem the Convertible Note provides flexibility for ATNT to choose to either to redeem the Convertible Note or allow the holder thereof to convert the Convertible Note into Shares after considering the effect of redemption on the then financial position of the ATNT Group, and is in the interests of ATNT.

Conclusion

Taking into account the above factors, we consider that the terms of the Convertible Note including the conversion price are fair and reasonable.

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Financial effects of the CN Subscription Agreement

Net tangible asset value

As shown in the paragraph headed “Statement of pro forma unaudited adjusted consolidated net tangible assets of the ATNT Group” in appendix I to this circular, the unaudited consolidated net tangible assets of the ATNT Group as at 30 September, 2003 were about HK$125.81 million, or about HK$0.023 per Share on the basis of the 5,529,268,000 Shares currently in issue. The pro forma adjusted unaudited consolidated net tangible assets of the ATNT Group will increase to HK$160.99 million immediately after the completion of the proposed issue of the Convertible Note, the Share Sale and the Share Subscription. The unaudited consolidated net tangible assets per Share of the ATNT Group immediately after the completion of the proposed issue of Convertible Note, Share Sale and Share Subscription will be HK$0.020.

Liquidity and cash position

As stated in the 2003 annual report, the gearing ratio of ATNT as at 31 March 2003 was about 57.97%. As at 31 March 2003, ATNT had bank balances and cash of about HK$10.92 million, which accounted for about 3.77% of the ATNT Group’s total current assets of $289.83 million as at the same date. The audited net current assets of the ATNT Group as at 31 March 2003 were about HK$289.83 million. On the basis of the financial position of the ATNT Group as at 31 March 2003, upon completion of the CN Subscription, the cash balance of the ATNT Group will increase by about HK$29.0 million and the total current assets of the ATNT Group will increase to about HK$318.83 million. The ATNT Group will then have net current assets of about HK$46.84 million. The current ratio of the ATNT Group will increase from about 1.07 times as at 31 March 2003 to about 1.17 times upon the Completion. Thus, the Directors believe that the CN Subscription will slightly improve the liquidity position of the ATNT Group.

Earnings

As stated in the section headed “Reasons for the CN Subscription Agreement and use of proceeds” in the letter from the Board in this circular, the estimated net proceeds from the CN Subscription are about HK$29.0 million which will be applied for expanding the production capacity of PAL Shenzhen, setting up a new factory for local sales in PRC market, the Share Subscription and general working capital requirement of ATNT in preparation of the uprising orders. If the proposed Share Sale is successful, the net proceed will be used for expanding the production capacity of PAL Shenzhen, setting up a new factory for local sales in PRC market and for general working capital requirement of ATNT in the preparation of the uprising orders. As the expansion of production capacity and setting up for new factory are long-term investments, it is not possible for us to predict the expected return on such investments to be made by the ATNT Group with the proceeds of the CN Subscription and accordingly the effect on the earnings of the ATNT Group.

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LETTER OF ADVICE FROM BARITS AND CSC ASIA

Dilution on the shareholding of the Independent Shareholders

The following table sets out the ATNT’s (i) existing shareholding structure; (ii) shareholding structure after the Completion and conversion of the Convertible Note in full at an initial conversion price of HK$0.012; and (iii) shareholding structure after the Completion and conversion of the Convertible Note in full at an alternative conversion price of HK$0.010

Optimist_(Note 1) Lam Kwok Yan Lam Kwok Hing Subscriber(Note 2)_ Subscriber and the parties acting in concert with it Public Total	Existing Shares % 1,940,826,660 35.10 69,503,340 1.26 69,493,340 1.26 – – 2,079,823,340 37.62 3,449,444,660 62.38 5,529,268,000 100.00	After Completion and conversion of the Convertible Note in full at an initial conversion price of HK$0.012 Shares % 1,940,826,660 24.17 69,503,340 0.87 69,493,340 0.87 2,500,000,000 31.13 4,579,823,340 57.04 3,449,444,660 42.96 8,029,268,000 100.00	After Completion and conversion of the Convertible Note in full at an alternative conversion price of HK$0.010 Shares % 1,940,826,660 22.75 69,503,340 0.82 69,493,340 0.82 3,000,000,000 35.17 5,079,823,340 59.56 3,449,444,660 40.44 8,529,268,000 100.00	After Completion and conversion of the Convertible Note in full at an alternative conversion price of HK$0.010 Shares % 1,940,826,660 22.75 69,503,340 0.82 69,493,340 0.82 3,000,000,000 35.17 5,079,823,340 59.56 3,449,444,660 40.44 8,529,268,000 100.00
				59.56 40.44
				100.00

Note 1: Optimist is beneficially owned by Mr. Lam Kwok Yan, the chairman and executive director of ATNT, as to 50% and Mr. Lam Kwok Hing, the deputy chairman, managing director and executive director of ATNT, as to 50%.
Note 2: The Subscriber is a wholly-owned subsidiary of KT. KT is beneficially owned as to about 67.76% by J&A Investment Limited, which is beneficially owned as to 80% by Mr. Lam Kwok Hing, the deputy chairman, managing director, executive director and controlling shareholder of ATNT and the chairman and executive director and controlling shareholding of KT and 20% by Mr. Nam Kwok Lun, the deputy chairman, managing director and an executive director of KT.

Optimist currently holds 35.10% of the issued share capital of ATNT. After the Completion and full conversion of the Convertible Note, this percentage will be reduced to about 24.17% at the initial conversion price of HK$0.012 or to about 22.75% at alternative conversion price at HK$0.010. The Subscriber, a wholly-owned subsidiary of KT, will become the controlling shareholder of ATNT interested in about 31.13% or about 35.17% of the issued share capital of ATNT as enlarged by the CN Subscription and the issue of the new Shares upon conversion of the Convertible Note at initial or alternative price, respectively. The Subscriber and the parties acting in concert with it in aggregate will be interested in about 57.04% or about 59.56% of the issued share capital of ATNT as enlarged by the CN Subscription and the issue of new Shares upon conversion of the Convertible Note at initial or alternative price, respectively. For the Independent ATNT Shareholders,

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LETTER OF ADVICE FROM BARITS AND CSC ASIA

their interest will be diluted from about 62.38% to about 42.96% at the initial conversion price of HK$0.012 or to about 40.44% at the alternative conversion price at HK$0.010 after Completion and conversion of the Convertible Note in full. We are of the view that the conversion price was determined under arm’s length negotiation and the dilution effect was applied to all ATNT Shareholders. The Directors believe that the net proceeds of about HK$29.0 million from the CN Subscription would immediately improve the financial position of ATNT. For this same reason, since all ATNT Shareholders suffer alike in the interest of ATNT, the conversion price is considered to be fair and reasonable to all ATNT Shareholders.

The Whitewash Waiver

Upon the Completion and full conversion of the Convertible Note, a total of 2,500,000,000 Shares or 3,000,000,000 Shares will be issued to the Subscriber at an initial conversion price of HK$0.012 per Share or at an alternative conversion price of HK$0.010 per Share, respectively, representing about 45.21% or about 54.26% of the existing issued share capital of ATNT at the Latest Practicable Date, respectively. The Subscriber will be interested in an aggregate of 2,500,000,000 Shares or 3,000,000,000 Shares, representing about 31.13% or about 35.17% of the issued share capital of ATNT as enlarged by the issue of the Conversion Shares upon full conversion of the Convertible Note, respectively. The Subscriber and the parties acting in concert with it in aggregate will be interested in about 57.04% or about 59.56% of the issued share capital of ATNT as enlarged by the CN Subscription and the issue of new Shares upon conversion of the Convertible Note at initial or alternative price, respectively.

As at the Latest Practicable Date, the Subscriber is not interested in any Shares. The Subscriber is wholly-owned by KT and KT is beneficially owned as to about 67.76% by J&A Investment Limited, which is in turn beneficially owned as to 80% by Mr. Lam Kwok Hing. Mr. Lam Kwok Hing holds 1.26% of ATNT and 50% of Optimist. Optimist holds about 35.10% of ATNT. None of the Subscriber, KT, J&A Investment Limited, Mr. Lam Kwok Hing and Optimist had dealt in any Shares within the six-month period prior to the date of the Announcement and up to the Latest Practicable Date. Upon conversion of the Convertible Note in full at a conversion price of HK$0.010 per Share, the Subscriber will hold about 35.17% interest in ATNT.

Pursuant to the Takeovers Code, the Whitewash Waiver is required to be approved by the Independent ATNT Shareholders by way of a poll at the SGM of ATNT. An application has been made by the Subscriber and parties acting in concert with it to the Executive for the Whitewash Waiver in respect of the issue of Shares upon conversion of the Convertible Note, subject to the approval of the ATNT Shareholders who are not involved or interested in the CN Subscription on a vote by way of poll. The Executive has indicated that it will grant the Whitewash Waiver subject to the approval of the ATNT Independent Shareholders passing at a special general meeting of ATNT of an ordinary resolution approving the Whitewash Waiver by way of a poll. Completion of the CN Subscription Agreement is conditional upon, inter alia, the granting of the Whitewash Waiver by

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LETTER OF ADVICE FROM BARITS AND CSC ASIA

the Executive. If the Whitewash Waiver is not granted by the Executive, the CN Subscription Agreement will lapse. As mentioned above, we are of the opinion that the CN Subscription is in the interests of the ATNT and its shareholders as a whole, it would be in the interests of the Independent ATNT Shareholders to vote in favour of the grant of the Whitewash Waiver.

Recommendation

Having considered the abovementioned principal factors and reasons summarised as follow:

(i) as discussed in the section headed “Principal terms of the CN Subscription Agreement” above, the recent market price of the Shares is close to either the initial subscription price or the alternative subscription price within the whole period from 1 January 2003 to the Latest Practicable Date;
(ii) the benefits expected to be derived from the business development as discussed in the section headed “Reasons for the CN Subscription Agreement” above. In summary, it is expected that the performance of the ATNT Group’s existing business would be improved while the ATNT Group would expand the production capacity of PAL Shenzhen as well as set up a new factory for local sales in the PRC market which is in line with the direction of the ATNT Group’s strategy and as a consequence, benefiting the ATNT Shareholders as a whole; and
(iii) under the prevailing market condition and recent Share price, it would be difficult for the ATNT Group in the near term to have another fund raising exercise with a size similar to that of the CN Subscription;

we consider that the terms of the CN Subscription Agreement are fair and reasonable so far as the ATNT Shareholders as a whole are concerned and are in the interests of ATNT and its shareholders. Given that the Whitewash Waiver is a condition precedent to the CN Subscription which will not proceed if the Whitewash Waiver is rejected, we consider that the grant of the Whitewash Waiver is in the interests of ATNT and its shareholders and is fair and reasonable. Accordingly, we recommend the ATNT Independent Board Committee to advise the ATNT Shareholders to vote in favour of those resolutions in relation to the CN Subscription Agreement and the Whitewash Waiver to be proposed in the SGM of ATNT.

2. The IML Share Placing, the Share Subscription and the Share Sale

Background

Under the IML Share Placing, IML will place 13,400,000 new IML Shares for an aggregate subscription price of NT$100.5 million (equivalent to about HK$24.0 million) or at a subscription price of NT$7.5 (equivalent to about HK$1.79) per IML Share. Under the Share Subscription, ATNT intends to subscribe for a maximum of 10,000,000 new IML Shares and the remaining 3,400,000 new IML Shares would be subscribed by other directors or other Associates of IML or any independent third parties which are approved by the Securities and Futures Commission, Ministry of Finance of Taiwan. The subscription price would be NT$7.5 (equivalent to about

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LETTER OF ADVICE FROM BARITS AND CSC ASIA

HK$1.79) per IML Share or at an aggregate subscription price of not more than NT$75.0 million (equivalent to about HK$18.0 million). ATNT’s shareholding in IML would increase from about 50.02% of the existing issued share capital of IML to about 57.5% of the enlarged issued share capital of IML assuming upon the completion of the issue and allotment of 13,400,000 IML Shares by IML under the IML Share Placing.

The IML Capital Reduction, the IML Share Placing and the subscription price under the IML Share Placing are subject to approval by the Securities and Futures Commission, Ministry of Finance of Taiwan. Such approval request has already been lodged and is pending approval. In the event that the subscription price of NT$7.5 (equivalent to about HK$1.79) under the IML Share Placing is not approved, the Securities and Futures Commission, Ministry of Finance of Taiwan may require IML’s directors to increase the subscription price under the IML Share Placing.

Rationale of the IML Share Placing, the Share Subscription and the Share Sale

Facing a sluggish economic situation as well as the tense relationship between the United State and Middle East, the Directors believe that the PCB market undergoes a contraction. As stated in the letter from the Board, the audited consolidated net losses after taxation and extraordinary items attributable to IML for the two years ended 31 March 2003 were about NT$105.1 million (equivalent to about HK$24.9 million) and NT$68.6 million (equivalent to about HK$15.3 million), respectively. The net tangible assets of IML as at 31 March 2002 were about NT$388.3 million (equivalent to about HK$92.0 million) or about NT$8.68 per IML Share (equivalent to about HK$2.06 per IML Share). The net tangible assets of IML for the year ended 31 March 2003 were about NT$319.6 million (equivalent to about HK$71.6 million) or about NT$7.14 per IML Share (equivalent to about HK$1.60 per IML Share). The unaudited consolidated net tangible assets value as at 30 September 2003 was NT$296.3 million (equivalent to about HK$66.4 million) or about NT$6.62 per IML Share (equivalent to about HK$1.48 per IML Share).

As stated in the 2003 annual report, IML is qualified as an approved supplier by a couple of renowned TFT-LCD manufacturers and got orders of over NT$150.0 million (equivalent to about HK$35.71 million). Due to the drive to produce low cost Flat Panel Display (“FPD”), global manufacturers have shifted their production bases gradually from Japan and Korea to Taiwan. The Directors have advised that there are only 6 to 7 major players in the FPD market and among them, IML has been selling to the top three, which represent almost 50% of Taiwan capacity. So, the Directors believe that the potential market for FPD will benefit to the ATNT Group by diversifying its business and also generate another core income streams for IML and ATNT Group. The Directors consider that by entering into the IML Share Sale Agreement, ATNT is able to realise part of its investment in IML. However, upon the completion of the Share Sale, ATNT will use the net proceeds of NT$73.01 million (equivalent to about HK$17.4 million) from the Share Sale for the Share Subscription.

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LETTER OF ADVICE FROM BARITS AND CSC ASIA

Valuation and consideration

The subscription price of NT$7.5 (equivalent to about HK$1.79) per IML Share was determined based on arms-length commercial negotiations between the parties with reference to the par value of existing IML Shares of about NT$6.8 per IML Share (equivalent to about HK$1.62) assuming upon the completion of the IML Capital Reduction. Such subscription price represents a premium of about 10.29% over the par value of the existing IML Shares assuming immediately after completion of the IML Capital Reduction.

The subscription price at NT$7.5 (equivalent to about HK$1.79) per IML Share represents:

(i) a premium of about 2.04% over the closing price of NT$7.35 (equivalent to about HK$1.75) per IML Share as quoted on the Taiwan Stock Exchange Corporation on 19 December 2003, being the date of the special general meeting of IML;
(ii) a premium of about 7.14% over the closing price of NT$7.00 (equivalent to about HK$1.67) per IML Share as quoted on the Taiwan Stock Exchange Corporation for the last 10 trading days up to and including 19 December 2003;
(iii) a discount of about 43.18% to the closing price of NT$13.2 (equivalent to about HK$3.14) per IML Share as quoted on the Taiwan Stock Exchange Corporation on 6 February 2004, being the date of the Announcement; and
(iv) a discount of about 75.25% to the closing price of NT$30.3 (equivalent to about HK$7.21) per IML Share as quoted on the Taiwan Stock Exchange Corporation on the Latest Practicable Date.

Based on the view that the subscription price is the price at which the investor market values the IML Shares, and it is a price at which IML is able to attract new capital funding to strengthen its capital base and to sustain its operations, we believe the subscription price is fair and reasonable. Assuming that the IML Share Sale Agreement is completed, ATNT’s shareholding in IML would reduce from about 50.02% to 30.8%. Upon the completion of the IML Share Placing and the Share Subscription, ATNT’s shareholding in IML would increase from about 50.02% of the existing issued share capital of IML to about 57.5% of the enlarged issued share capital of IML. Besides, the Directors have advised that they are confident that given the potential market for FPD would benefit to ATNT Group and enhance income source for IML and ATNT Group as a whole, the connected transaction could create synergistic effect among ATNT and IML.

Assuming that the IML Share Sale Agreement is completed, IML will cease to be a subsidiary of ATNT as ATNT’s holding would be reduced from 22,377,490 IML Shares (representing about 50.02% of the issued share capital of IML) to 13,777,490 IML Shares (representing about 30.8% of the issued share capital of IML). The Share Sale constitutes a major transaction for ATNT under the Listing Rules. A separate circular addressing the details of the Share Sale and major transaction constituted for ATNT was dispatched to the ATNT Shareholders on 20 February 2004.

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LETTER OF ADVICE FROM BARITS AND CSC ASIA

Financial effects

Based on the “Statement of pro forma unaudited adjusted consolidated net tangible assets of the ATNT Group” as set out appendix I of this circular, the unaudited consolidated net tangible asset of the ATNT Group as at 30 September 2003 is about HK$125.81 million which is expected to increase to about HK$130.44 million solely due to completion of the Share Sale.

Assuming that the IML Share Sale Agreement is completed, IML will cease to be a subsidiary of ATNT as ATNT’s holding will be reduced from 22,337,490 IML Shares (representing about 50.02% of the issued share capital of IML) to 13,777,490 IML Shares (representing about 30.8% of the issued share capital of IML) and its results will cease to be consolidated in the accounts of ATNT immediately following the completion of the transaction.

As stated above, assuming that the IML Share Sale Agreement is completed, the Share Subscription will result in the ATNT Group increasing its shareholding interests and its attributable interest in the PCB and FPD business of IML through its about 44.12% of the enlarged issued share capital of IML.

In this regard, we have reviewed the annual report of IML for the past two years ended 2002 and noted that shareholders suffered attributable losses since 2001. Given the abovementioned track record of IML, the ATNT shareholders should note that there is no guarantee as to whether ATNT will benefit from such an increase in the interest in the PCB and FPD business of IML.

Recommendation

Having considered the abovementioned principal factors and reasons, in particular,

the potential business opportunities in FPD market; and
the alleviation of loss making effect of ATNT through diversification of business and creation of new core income source,

we conclude that the terms of the IML Share Placing and the Share Subscription are fair and reasonable so far as the ATNT Shareholders as a whole are concerned and are in the interests of ATNT and its shareholders. Accordingly, we recommend the ATNT Independent Board Committee to advise the ATNT Shareholders to vote in favour of those resolution(s) in relation to the connected transaction to be proposed in the SGM of ATNT.

3. The Incentive Option Scheme

Background

As stated in the letter from the Board, the board of Directors proposes to put forward to the ATNT Shareholders for approval at the SGM of ATNT the Incentive Option Scheme, pursuant to which the ATNT would grant certain employees of IML (including directors of IML) a call option to acquire up to a maximum of 6,000,000 existing IML Shares as held by ATNT, representing

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LETTER OF ADVICE FROM BARITS AND CSC ASIA

about 13.4% of the issued share capital of IML, within a period of 6 years at an option price of at least NT$7.5 (equivalent to about HK$1.79) per IML Share from time to time depending on the market condition when the option is granted. The said 6 years include the exercise period. The exercise price per option share will be NT$7.5 (equivalent to about HK$1.79) together with interest accrued thereon from the date of grant to the date of exercise of the options calculated at the rate of one per cent. over the prime lending rate as quoted by the Hongkong and Shanghai Banking Corporation Limited from time to time.

Rationale of the Incentive Option Scheme

The Directors believe that the grant of call option would provide an incentive to employees of IML (including directors of IML) and encourage them to work towards enhancing the value of ATNT and its Shares for the benefit of ATNT and the ATNT Shareholders as a whole, and we concur with the view of the Directors that the Incentive Option Scheme is a normal commercial practice and is in the interests of the ATNT Shareholders as a whole.

Valuation and consideration

The Directors have advised that the option price of NT$7.5 (equivalent to about HK$1.79) per IML Share was determined after taking into account the audited consolidated net asset value of approximately NT$7.14 (equivalent to about HK$1.6) per IML Share as at 31 March 2003.

The option price of NT$7.5 (equivalent to about HK$1.79) per IML Share represents:

(i) a premium of about 2.04% over the closing price of NT$7.35 (equivalent to about HK$1.75) per IML Share as quoted on the Taiwan Stock Exchange Corporation on 19 December 2003, being the date of the special general meeting of IML;
(ii) a premium of about 7.14% over the closing price of NT$7.00 (equivalent to about HK$1.67) per IML Share as quoted on the Taiwan Stock Exchange Corporation for the last 10 trading days up to and including 19 December 2003;
(iii) a discount of about 43.18% to the closing price of NT$13.20 (equivalent to about HK$3.14) per IML Share as quoted on the Taiwan Stock Exchange Corporation on 6 February 2004, being the date of the Announcement.; and
(iv) a discount of about 75.25% o the closing price of NT$30.30 (equivalent to about HK$7.21) per IML Share as quoted on the Taiwan Stock Exchange Corporation on the Latest Practicable Date.

Having considered the basis of determination of option price and the terms of the Incentive Option Scheme as set out above under the paragraph headed “Valuation and consideration” in the section headed “The Incentive Option Scheme” above, the option price is considered to be fair and reasonable.

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LETTER OF ADVICE FROM BARITS AND CSC ASIA

Financial effects

The Directors have advised that the unaudited consolidated net tangible asset of the ATNT Group as at 30 September 2003 is about HK$125.81 million which is expected to decrease to about HK$124.76 million solely due to the fully exercise of the option share.

As advised by the Directors, and assuming completion of the IML Share Sale Agreement and Share Subscription and fully exercise of option share, the shareholding of ATNT in IML would be decreased to 36.61% thus the sharing of profit or loss of IML by ATNT will be decrease accordingly.

Recommendation

Having considered that the terms of the Incentive Option Scheme, we conclude that the terms of the Incentive Option Scheme are fair and reasonable so far as the ATNT Shareholders as a whole are concerned and are in the interests of ATNT and its shareholders. Accordingly, we recommend the ATNT Independent Board Committee to advise the ATNT Shareholders to vote in favour of those resolution(s) in relation to the connected transaction to be proposed in the SGM of ATNT.

Yours faithfully, For and on behalf of Barits Securities (Hong Kong) Limited Terence Hong/Alfred Wong Executive Director/Director

Yours faithfully, For and on behalf of CSC Asia Limited Andrew Chiu

Managing Director and Head of Investment Banking

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FINANCIAL INFORMATION

APPENDIX I

A. SHARE CAPITAL

The authorized and issued share capital of ATNT as at the Latest Practicable Date were as follows:

Share of HK$0.01 each

Authorised: 20,000,000,000 Shares Issued and fully paid: 5,529,268,000 Shares	HK$ 200,000,000

	55,292,680

No Shares have been issued since the end of the last financial year.

Subject to the fulfillment of all the conditions as outlined in the section heading “The CN Subscription Agreement” in the Letter from the Board, the issued share capital of ATNT immediately after the issue of the Conversion Shares (based on the number of Shares in issue as at the Latest Practicable Date) will be as follows:

(A) Issued and fully paid at initial conversion price of HK$0.012 per shares:

5,529,268,000 existing shares 2,500,000,000 Conversion Shares (B) Issued and fully paid at alternative price of HK$0.010 per shares: 5,529,268,000 existing shares 3,000,000,000 Conversion Shares	HK$ 55,292,680 25,000,000
	80,292,680

	55,292,680 30,000,000
	85,292,680

All of the Shares currently in issue rank pari passu in all respects with each other, including in particular, as to dividends, voting rights and return of capital in a winding-up of ATNT. The Conversion Shares will rank pari passu in all respects with the existing Shares, including the rights to receive all dividends and distributions declared, paid or made after the date of the Subscription Agreement.

As at the Latest Practicable Dated, ATNT had outstanding Options entitling holders thereof under the Share Option Scheme to subscribe for 262,140,000 Shares at HK$0.053 each on or before 6th September, 2004 and had no outstanding other options, warrants and conversion rights affecting Shares apart from the CN Subscription Agreement as disclosed herein.

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FINANCIAL INFORMATION

APPENDIX I

B. FINANCIAL SUMMARY

Set out below is a summary of audited financial results of the ATNT Group for each of the five financial periods ended 31 March 1999, 2000, 2001, 2002 and 2003.

2003 HK$’000 Turnover 385,228 (Loss) profit before taxation, exceptional items and minority interests (61,799) Exceptional items:– Allowance for bad and doubtful debts (15,642) Impairment loss recognised on investment securities (5,640) Net unrealised (loss) gain on other investments (29,397) Net realised (loss) gain on other investments (1,633) Loss on resumption of properties held for development by government (2,081) Impairment loss recognised in respect of property, plant & equipment (32,700) Impairment loss recognised in respect of properties held for development (2,540) Impairment loss recognised in respect of goodwill arising on acquisition of subsidiaries (10,659) Gain on partial disposal of a subsidiary – Loss on disposal of discontinuing operations (1,171) Loss on disposal/deemed disposal/liquidation of subsidiaries – Goodwill of an associate written off – (Loss) profit before taxation and minority interests (163,262) Taxation charge/(credit) 495 (Loss) profit before minority interests (163,757) Minority interests 5,961 Net (loss) profit for the year (157,796) Dividends – (Loss) Earnings per share (Basic) (2.85)cents *(Loss) Earnings per share (Diluted ) N/A Dividend per share** –	2002 HK$’000 335,769 (108,909) (32,448) (500) 1,329 (156) – (27,300) – (22,000) 44,441 – – – (145,543) (1,391) (144,152) 11,775 (132,377) – (2.45)cents N/A –	2001 HK$’000 (restated) 720,396 (448) (3,579) (128,100) (12,373) (16,146) – – – – 5,271 – (22,336) (10,363) (188,074) 5,306 (193,380) (5,276) (198,656) – (3.88)cents N/A –	2000 HK$’000 (restated) 581,188 16,341 – (618) – 12,289 – – – – – – (75) – 27,937 3,593 24,344 (1,057) 23,287 127 (Note) 0.52 cents 0.50 cents –	1999 HK$’000 (restated) 780,266 81,978 – – – – – – – – 1,776 – (365) – 83,389 12,362 71,027 (7,553) 63,474 7,848 1.43 cents 1.26 cents 0.18 cents

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FINANCIAL INFORMATION

APPENDIX I

There is no extraordinary item for the five years ended 31 March 2003 in accordance with the definition of Hong Kong SSAP 2.

Note: being under-provision of final dividend in the prior year

The calculation of the diluted earnings per share is based on the following data:

Earnings for the purposes of basic earnings per share Interest on convertible notes Earnings for the purposes of diluted earnings per share Weighted average number of shares for the purposes of basic earnings per share Effect of dilutive potential shares: Options Convertible notes Warrants Weighted average number of shares for the purposes of diluted earnings per share	2000 HK$’000 23,287 – 23,287 4,498,210,625 1,928,313 – 182,721,112 4,682,860,050	1999 HK$’000 63,474 2,128
		65,602

		4,446,390,780 1,809,840 753,792,470 –
		5,201,993,090

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FINANCIAL INFORMATION

APPENDIX I

C. FINANCIAL INFORMATION FOR THE YEAR ENDED 31 MARCH 2003

Set out below is extracted from the audited financial statement of the ATNT Group as contained in the ATNT Group’s annual report for the year ended 31 March 2003.

Consolidated Income Statement

For the year ended 31st March, 2003

Notes Turnover 4 Cost of sales Gross profit Other operating income Distribution costs Administrative expenses Other operating expenses Allowance for bad and doubtful debts Impairment loss recognised on investment securities Net unrealised (loss) gain on other investments Net realised loss on other investments Loss on resumption of properties held for development by government Impairment loss recognised in respect of property, plant and equipment Impairment loss recognised in respect of properties held for development Impairment loss recognised in respect of goodwill arising on acquisition of subsidiaries Loss from operations 7 Finance costs 9 Impairment loss recognised in respect of goodwill arising on acquisition of an associate Gain on partial disposal of a subsidiary Loss on deemed disposal of a subsidiary Share of results of an associate Loss on disposal of discontinuing operations 6 Loss before taxation Taxation charge (credit) 10 Loss after taxation Minority interests Net loss for the year Loss per share 11 Basic	2003 HK$ 385,227,931 (285,837,140) 99,390,791 1,945,994 (35,036,553) (113,184,380) (5,428,135) (15,641,838) (5,640,000) (29,396,772) (1,633,399) (2,080,512) (32,700,255) (2,540,000) (10,659,088) (152,604,147) (5,686,608) (557,000) – – (3,243,027) (1,170,958) (163,261,740) 495,178 (163,756,918) 5,960,828 (157,796,090) (2.85)cents	2002 HK$ 335,768,672 (262,967,065) 72,801,607 4,404,071 (32,348,444) (143,359,233) (2,164,424) (32,448,168) (500,000) 1,328,645 (155,942) – (27,300,000) – (22,000,000) (181,741,888) (7,119,651) – 44,441,301 (37,700) (1,085,186) – (145,543,124) (1,390,621) (144,152,503) 11,775,528 (132,376,975) (2.45)cents

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FINANCIAL INFORMATION

APPENDIX I

Consolidated Balance Sheet

At 31st March, 2003

Notes Non-current assets Property, plant and equipment 12 Properties held for development 13 Goodwill 14 Intangible assets 15 Interests in associates 17 Investments in securities 18 Other assets 19 Current assets Inventories 21 Amounts due from customers for contract work 22 Loans receivable 23 Debtors, deposits and prepayments 24 Investments in securities 18 Taxation recoverable Pledged bank deposits 38 Bank balances and cash Current liabilities Creditors, bills payable and accrued charges 25 Amounts due to customers for contract work 22 Loan from a director 26 Amount due to a minority shareholder of a subsidiary Retirement benefit obligations 39 Taxation payable Borrowings due within one year 31 Obligations under finance leases due within one year 33 Net current assets	2003 HK$ 204,822,549 13,895,761 2,000,000 95,629 – 2,900,178 5,601,911 229,316,028 62,350,246 33,851,875 9,334,167 140,244,081 30,233,864 2,557,826 336,000 10,922,852 289,830,911 178,291,013 1,068,860 7,000,000 15,597,407 983,000 508,634 68,059,273 483,660 271,991,847 17,839,064 247,155,092	2002 HK$ 256,189,381 19,613,373 15,317,845 129,208 3,874,291 8,548,703 2,185,555
		305,858,356
		69,335,989 34,527,433 28,828,756 117,239,715 63,384,450 3,818,321 3,642,122 24,357,649
		345,134,435
		149,627,590 1,064,972 – 14,583,614 – 631,827 54,969,476 857,001
		221,734,480
		123,399,955
		429,258,311

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FINANCIAL INFORMATION

APPENDIX I

Notes Capital and reserves Share capital 28 Reserves 30 Minority interests Non-current liabilities Borrowings due after one year 31 Deferred taxation liability 32 Obligations under finance leases due after one year 33	2003 HK$ 55,292,680 112,369,501 167,662,181 50,627,658 28,386,185 195,000 284,068 28,865,253 247,155,092	2002 HK$ 55,292,680 273,746,306
		329,038,986
		59,292,091
		39,849,558 357,000 720,676
		40,927,234
		429,258,311

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FINANCIAL INFORMATION

APPENDIX I

Balance Sheet

At 31st March, 2003

Notes Non-current assets Interests in subsidiaries 16 Current assets Amounts due from subsidiaries 20 Debtors, deposits and prepayments Taxation recoverable Bank balances Current liabilities Creditors and accrued charges Amounts due to subsidiaries 27 Net current (liabilities) assets Capital and reserves Share capital 28 Reserves 30	2003 HK$ 133,988,897 80,661,194 405,120 104,282 69,852 81,240,448 3,122,480 102,327,779 105,450,259 (24,209,811) 109,779,086 55,292,680 54,486,406 109,779,086	2002 HK$ 150,088,897
		184,723,079 1,083,923 104,282 209,674
		186,120,958
		1,832,205 96,261,440
		98,093,645
		88,027,313
		238,116,210

		55,292,680 182,823,530
		238,116,210

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FINANCIAL INFORMATION

APPENDIX I

Consolidated Statement of Changes in Equity

For the year ended 31st March, 2003

At 1st April, 2001
Exchange difference arising on translation of operations of overseas
subsidiaries and loss not recognised in the consolidated income statement
Currency translation reserve realised to the consolidated income
statement upon deemed disposal of a subsidiary
Shares issued at premium
Shares repurchased and cancelled at premium
Net loss for the year
At 31st March, 2002
Exchange difference arising on translation of operations of overseas
subsidiaries and loss not recognised in the consolidated income statement
Net loss for the year
At 31st March, 2003

Total equity
HK$
430,921,347
(369,375)
23,831
35,008,120
(4,167,962)
(132,376,975)
329,038,986
(3,580,715)
(157,796,090)
167,662,181

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FINANCIAL INFORMATION

APPENDIX I

Consolidated Cash Flow Statement

For the year ended 31st March, 2003

OPERATING ACTIVITIES Loss before taxation Adjustments for: Share of results of an associate Interest income, other than interest income from money lending Interest expense Dividend income Depreciation and amortisation Allowance for slow moving inventories Allowance for bad and doubtful debts Gain on disposal of property, plant and equipment Write off of intangible assets Gain on disposal of investment securities Net unrealised loss (gain) on other investments Loss on resumption of properties held for development by government Loss on deemed disposal of a subsidiary Gain on partial disposal of a subsidiary Impairment loss recognised in respect of goodwill arising on acquisition of an associate Impairment loss recognised in respect of goodwill arising on acquisition of subsidiaries Impairment loss recognised on property, plant and equipment Impairment loss recognised in respect of properties held for development Impairment loss recognised on investment securities Operating cash flows before movements in working capital Decrease in other investments Decrease in non-current receivable Decrease in inventories Decrease in amounts due from customers for contract work Decrease in loans receivable (Increase) decrease in debtors, deposits and prepayments Increase (decrease) in creditors, bills payable and accrued charges Increase (decrease) in amounts due to customers for contract work Increase in retirement benefit obligations Effect of foreign exchange rate changes Cash (used in) generated from operations Hong Kong and overseas profits tax paid Overseas profits tax refunded Interest paid NET CASH (USED IN) GENERATED FROM OPERATING ACTIVITIES	2003 HK$ (163,261,740) 3,243,027 (171,382) 5,686,608 (8,403) 17,551,912 4,421,459 23,201,310 (1,233,975) 25,076 – 29,396,772 2,080,512 – – 557,000 10,659,088 32,700,255 2,540,000 5,640,000 (26,972,481) 3,753,814 – 2,564,284 675,558 3,403,255 (33,530,698) 28,663,423 3,888 983,000 (467,899) (20,923,856) (1,165,186) 1,542,684 (527,249) (21,073,607)	2002 HK$ (145,543,124) 1,085,186 (996,168) 7,119,651 (197,215) 21,784,158 1,611,875 32,448,168 (164,238) – (501,437) (1,328,645) – 37,700 (44,441,301) – 22,000,000 27,300,000 – 500,000 (79,285,390) 26,699,618 78,000 30,247,265 2,792,780 27,754,415 68,539,355 (55,577,933) (2,801,663) – (329,546) 18,116,901 (592,933) – (832,889) 16,691,079

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APPENDIX I

Note INVESTING ACTIVITIES Interest received Dividend income Purchase of property, plant and equipment Purchase of intangible assets Proceeds on disposal of investment securities Proceeds on disposal of property, plant and equipment Proceeds on resumption of properties held for development by government Decrease in pledged bank deposits Acquisition of a subsidiary (net of cash and cash equivalents acquired) 34 NET CASH GENERATED FROM (USED IN) INVESTING ACTIVITIES FINANCING ACTIVITIES Dividends paid to minority shareholders of subsidiaries Interest paid Loan from a director Repayment of borrowings Repurchase of own shares Repayment of obligations under finance leases New borrowings raised, other than bank overdrafts Capital contributed by minority shareholders Exercise of warrants NET CASH GENERATED FROM (USED IN) IN FINANCING ACTIVITIES DECREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS AT END OF THE YEAR ANALYSIS OF THE BALANCES OF CASH AND CASH EQUIVALENTS Bank balances and cash Bank overdrafts	2003 HK$ 171,382 8,403 (1,530,172) – – 1,487,699 1,097,100 3,306,122 – 4,540,534 (104,531) (4,543,038) 7,000,000 (75,624,906) – (880,931) 77,948,044 352 – 3,794,990 (12,738,083) 23,220,663 10,482,580 10,922,852 (440,272) 10,482,580	2002 HK$ 996,168 197,215 (20,712,939) (4,268) 2,329,263 1,356,359 – 451,215 517 (15,386,470) (586,363) (8,249,344) – (99,744,613) (4,167,962) (1,035,296) 72,764,007 663,600 8,120 (40,347,851) (39,043,242) 62,263,905 23,220,663 24,357,649 (1,136,986) 23,220,663

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APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31st March, 2003

1. GENERAL

The Company is incorporated in Bermuda under The Companies Act 1981 of Bermuda as an exempted company and its shares are listed on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).

The Company is an investment holding company. The principal activities of its subsidiaries are set out in note 16.

In March 2003, the directors determined to abandon the Group’s satellite communication and stage construction businesses. Details of the discontinuing operations are set out in note 6.

2. ADOPTION OF STATEMENTS OF STANDARD ACCOUNTING PRACTICE

In the current year, the Group has adopted, for the first time, a number of new and revised Statements of Standard Accounting Practice (“SSAP(s)”) issued by the Hong Kong Society of Accountants. The adoption of these SSAPs has resulted in a change in the format of presentation of the cash flow statement and the statement of changes in equity, but has had no material effect on the results for the current or prior accounting years. Accordingly, no prior year adjustment has been required.

Foreign currencies

The revisions to SSAP 11 “Foreign currency transaction” have eliminated the choice of translating the income statements of overseas subsidiaries/associates at the closing rate for the year, the policy previously followed by the Group. They are now required to be translated at an average rate. This change in accounting policy has not had any material effect on the results for the current or prior accounting periods.

Cash flow statements

In the current year, the Group has adopted SSAP 15 (Revised) “Cash flow statements”. Under SSAP 15 (Revised), cash flows are classified under three headings – operating, investing and financing, rather than the previous five headings. Interest paid, interest and dividends received, and dividend paid, which were previously presented under a separate heading, are classified as operating or financing, investing and financing cash flows respectively. Cash flows arising from taxes on income are classified as operating activities, unless they can be separately identified with investing or financing activities.

Employee benefits

In the current year, the Group has adopted SSAP 34 “Employee benefits”, which introduces measurement rules for employee benefits, including retirement benefit schemes. The principal effect of the implementation of SSAP 34 is in connection with the recognition of costs for the Group’s defined benefit retirement benefit scheme. In prior years, actuarial valuations were carried out every three years. Actuarial gains and losses and past service cost were spread systematically over the expected remaining working lives of existing employees, irrespective of the dates of vesting.

Under SSAP 34, actuarial valuations are being carried out annually. Actuarial gains and losses which exceed 10 per cent. of the greater of the present value of the Group’s pension obligations and the fair value of scheme assets are amortised over the expected average remaining working lives of the employees participating in the scheme. Past service cost is recognised immediately to the extent that the benefits are already vested, and otherwise is amortised on a straight-line basis over the average period until the amended benefits become vested.

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The adoption of SSAP 34 has not had any material impact on the financial statements.

Discontinuing operations

SSAP 33 “Discontinuing operations” is concerned with the presentation of financial information regarding discontinuing operations and replaces the requirements previously included in SSAP 2 “Net profit or loss for the period, fundamental errors and changes in accounting policies”. Under SSAP 33, financial statement amounts relating to the discontinuing operation are disclosed separately from the point at which either a binding sale agreement is entered into or a detailed plan for the discontinuance is announced. The adoption of SSAP 33 has resulted in the identification of the Group’s satellite communication and stage construction businesses as discontinuing operations in the current year, details of which are disclosed at note 6.

3. SIGNIFICANT ACCOUNTING POLICIES

The financial statements have been prepared under the historical cost convention, as modified for the revaluation of certain properties and investments in securities.

The financial statements have been prepared in accordance with accounting principles generally accepted in Hong Kong. The principal accounting policies adopted are set out as follows:

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries made up to 31st March each year.

The results of subsidiaries and associates acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used in line with those used by other members of the Company.

On acquisition, the assets and liabilities of the relevant subsidiary and associate are measured at their fair values at the date of acquisition.

All significant inter-company transactions and balances within the Group have been eliminated on consolidation.

Goodwill

Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable assets and liabilities of a subsidiary or an associate at the date of acquisition.

Goodwill is capitalised and amortised on a straight-line basis over its useful economic life. Goodwill arising on the acquisition of an associate is included within the carrying amount of the associate. Goodwill arising on the acquisition of subsidiaries is presented separately in the balance sheet.

On disposal of a business, including a subsidiary or an associate, the attributable amount of unamortised goodwill is included in the determination of the profit or loss on disposal of the business.

Investments in subsidiaries

Investments in subsidiaries are included in the Company’s balance sheet at cost less any identified impairment loss.

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APPENDIX I

Interests in associates

The consolidated income statement includes the Group’s share of the post-acquisition results of its associates for the year. In the consolidated balance sheet, interests in associates are stated at the Group’s share of the net assets of the associates plus goodwill arising from acquisition of associates in so far as it has not already been amortised, less any identified impairment loss.

Properties held for development

Properties held for development with the intention for holding for long-term purposes when completed, or where no decision has yet been made on their purposes, are included in the balance sheet as non-current assets and stated at cost, less any identified impairment loss.

Intangible assets

The cost of patents is amortised on a straight line basis over the shorter of the periods in respect of which the related benefits are expected to be received or 20 years. The carrying value is reviewed annually.

The cost of technical know-how is amortised on a straight line basis over its expected useful life.

Investments in securities

Investments in securities are recognised on a trade date basis and are initially measured at cost.

At subsequent reporting dates, debt securities that the Group has the expressed intention and ability to hold to maturity (held-to-maturity debt securities) are measured at amortised cost, less any impairment loss recognised to reflect irrecoverable amounts. The annual amortisation of any discount or premium arising on the acquisition of a held-to-maturity security is aggregated with other investment income receivable over the term of the instrument so that the revenue recognised in each period represents a constant yield on the investment.

Investments other than held-to-maturity debt securities are classified as investment securities and other investments.

Investment securities, which are securities held for an identified long-term strategic purpose, are measured at subsequent reporting dates at cost, as reduced by any impairment loss that is other than temporary.

Other investments are measured at fair value, with unrealised gains and losses included in net profit or loss for the year.

Construction contracts

When the outcome of a construction contract can be estimated reliably, contract costs are charged to the income statement by reference to the stage of completion of the contract activity at the balance sheet date, as measured by the proportion that costs incurred to date bear to estimated total costs for the contract.

When the outcome of a construction contract cannot be estimated reliably, contract costs are recognised as an expense in the period in which they are incurred.

When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

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When a contract covers a number of assets, the construction of each asset is treated as a separate contract when separate proposals have been submitted for each asset, each asset has been separately negotiated and the costs and revenues of each asset can be separately identified. A group of contracts, performed concurrently or in a continuous sequence, is treated as a single construction contract when they were negotiated as a single package and are so closely inter-related that they constitute a single project with an overall profit margin.

Where contract costs incurred to date plus recognised profits less recognised losses exceed progress billings, the surplus is shown as amounts due from customers for contract work. For contracts where progress billings exceed contract costs incurred to date plus recognised profits less recognised losses, the surplus is shown as amounts due to customers for contract work. Amounts received before the contract work is performed are included in the balance sheet as a liability, as advances received. Amounts billed for work performed, but not yet paid by the customer, are included in the balance sheet within trade and other receivables.

Inventories

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

Property, plant and equipment

Property, plant and equipment other than construction in progress are stated at cost or valuation less depreciation or amortisation and accumulated impairment losses.

The gain or loss arising from disposal or retirement of an asset is determined as the difference between the sale proceeds and the carrying amount of the asset and is recognised in the income statement.

Advantage has been taken of the transitional relief provided by paragraph 80 of SSAP 17 “Property, plant and equipment” from the requirement to make revaluation on a regular basis of the Group’s land and buildings which had been carried at revalued amounts prior to 30th September, 1995 and accordingly, no further revaluation of land and buildings is carried out. On the subsequent sale of assets, the attributable revaluation surplus not yet transferred to retained profits in prior years is transferred to retained profits.

The cost or valuation of freehold land is not amortised.

The cost or valuation of leasehold land is amortised over the term of the lease.

The cost or valuation of buildings is depreciated over their estimated useful lives of 8 to 60 years using the straight line method.

Construction in progress are carried at cost less impairment loss, if any. Cost includes professional fees and borrowing costs capitalised in accordance with the Group’s accounting policy. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.

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Depreciation is provided to write off the cost of other plant and equipment over their estimated useful lives and after taking into account their estimated residual values, using straight-line method, at the following rates per annum:

Furniture and fixtures 25% Leasehold improvements 25% Plant, machinery and equipment 12[1] /2% to 33[1] /3% Motor vehicles 33[1] /3% Audio equipment 12[1] /2% Lighting equipment 12[1] /2% Antenna and antenna control equipment 10% to 12[1] /2%

Assets held under finance leases are depreciated over their estimated useful lives on the same basis as owned assets.

Impairment

At each balance sheet date, the Group reviews the carrying amounts of its assets to determine whether there is any indication that those assets have suffered an impairment loss. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. Impairment losses are recognised as an expense immediately, unless the relevant asset is carried at a revalued amount under another SSAP, in which case the impairment loss is treated as revaluation decrease under that SSAP.

Where an impairment loss subsequently reverse, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, such that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised as income immediately, unless the relevant asset is carried at a revalued amount under another SSAP, in which case the reversal of the impairment loss is treated as a revaluation increase under that SSAP.

Leases

Leases are classified as finance leases when the terms of the lease transfer substantially all the risk and rewards of ownership of the assets concern to the Group. Assets held under finance leases are capitalised at their fair value at the dates of acquisition. The corresponding liability to the lessor is included in the balance sheet as obligations under finance leases. The finance costs, which represent the difference between the total finance leases commitments and the fair value of the assets acquired, are charged to the income statement over the term of the relevant lease so as to produce a constant periodic rate of charge on the remaining balance of the obligations for each accounting period.

All other leases are classified as operating leases and the rentals are charged to the income statement on a straight-line basis over the relevant lease term.

Revenue recognition

When the outcome of a construction contract can be estimated reliably, revenue from fixed price construction contracts is recognised on the percentage of completion method, measured by reference to the proportion that costs incurred to date bear to estimated total costs for each contract. Variations in contract work, claims and incentive payments are included to the extent that they have been agreed with the customers. When the outcome of a construction contract cannot be estimated reliably, revenue is recognised only to the extent of contract costs incurred that it is probable will be recoverable.

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APPENDIX I

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

Revenue from services rendered is recognised when the services are rendered, the revenue can be reliably estimated and it is probable that the revenue will be received.

Interest income from loans is recognised in the income statement as it accrues except in the case of receivables which are deemed to be doubtful at which stage interest accrual ceases.

Interest income from bank deposits is recognised on a time proportion basis, by reference to the principal outstanding and at the interest rates applicable.

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

Foreign currencies

Transactions in foreign currencies are initially recorded at the rates of exchange prevailing on the dates of the transactions or at the contracted settlement rate, if applicable. Monetary assets and liabilities denominated in foreign currencies are re-translated at the rates prevailing on the balance sheet date. Profits and losses arising on exchange are included in net profit or loss for the year.

On consolidation, the assets and liabilities of the Group’s overseas operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the year. Exchange differences arising, if any, are classified as equity and transferred to the Group’s translation reserve. Such translation differences are recognised as income or as expenses in the period in which the operation is disposed of.

Taxation

The charge for taxation is based on the results for the year as adjusted for items which are non-assessable or disallowed. Timing differences arise from the recognition for tax purposes of certain items of income and expense in a different accounting period from that in which they are recognised in the financial statements. The tax effect of timing differences, computed using the liability method, is recognised as deferred taxation in the financial statements to the extent that it is probable that a liability or an asset will crystallise in the foreseeable future.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are capitalised as part of the cost of those assets. Capitalisation of such borrowing costs ceases when the assets are substantially ready for their intended use or sale.

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

Retirement benefit costs

Payments to defined contribution retirement benefit scheme/state-managed retirement benefit schemes/the Mandatory Provident Fund Scheme are charged as an expense as they fall due.

For defined benefit retirement benefit scheme, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses which exceed 10 per cent. of the greater of the present value of the Group’s defined benefit

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APPENDIX I

obligation and the fair value of scheme assets are amortised over the expected average remaining working lives of the participating employees. Past service cost is recognised immediately to the extent that the benefits are already vested, and otherwise is amortised on a straight-line basis over the average period until the amended benefits become vested.

The amount recognised in the balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognised actuarial gains and losses and unrecognised past service cost, and as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to unrecognised actuarial losses and past service cost, plus the present value of available refunds and reductions in future contributions.

4. TURNOVER

The Group’s turnover for the year ended 31st March, 2003 analysed by principal activity are as follows:

Revenue from construction contracts in respect of: – design, manufacture and sale of custom-built electroplating machinery and other industrial machinery – stage construction and arts production – arts performance and social functions Sale of goods Interest income from money lending Provision of services – repairs and maintenance – satellite communication	2003 HK$ 299,944,961 14,313,200 16,730,671 42,232,591 1,150,962 8,923,156 1,932,390 385,227,931	2002 HK$ 263,847,777 15,087,762 34,589,862 9,105,118 4,555,353 5,656,316 2,926,484
		335,768,672

5. BUSINESS AND GEOGRAPHICAL SEGMENTS

Business segments

The Group is mainly engaged in electroplating equipment business, wet processing equipment business, entertainment production business, timber trading and satellite communication business, and operate under five divisions. These divisions are the basis on which the Group reports its primary segment information.

Principal activities are as follows:

Electroplating equipment	–	design, manufacturing and sale of electroplating equipment
Wet processing equipment	–	design, manufacturing and sale of custom-built horizontal wet
		processing and automation machinery
Entertainment production	–	provision of stage construction and arts productions
Timber trading	–	trading of logged timber
Satellite communication	–	provision of satellite communication services

The Group is in the process of discontinuing its satellite communication and stage construction operations.

Segment information about these businesses is presented below.

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APPENDIX I

INCOME STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2003

Electroplating equipment HK$ TURNOVER External sales 185,242,321 Inter-segment sales 18,610 Total 185,260,931 Inter-segment sales are charged at prevailing market rates. RESULTS Segment results (12,229,975) Unallocated corporate income Unallocated corporate expenses Impairment loss recognised on investment securities Net unrealised loss on other investments Net realised loss on other investments Finance costs Impairment loss recognised in respect of goodwill arising on acquisition of an associate Share of results of an associate Loss before taxation Taxation charge Loss after taxation Minority interests Net loss for the year	Wet processing Satellite Entertainment equipment communication production HK$ HK$ HK$ 133,342,460 1,932,390 32,867,371 958,516 – – 134,300,976 1,932,390 32,867,371 (12,218,877) (35,267,666) (8,300,492)	Timber trading HK$ 30,228,318 – 30,228,318 (10,905,512)	Other operations HK$ 1,615,071 – 1,615,071 (26,293,549)	Elimination HK$ – (977,126) (977,126) 8,441,846	Consolidated HK$ 385,227,931 – 385,227,931 (96,774,225) 84,229 (20,414,938) (5,640,000) (29,396,772) (1,633,399) (5,686,608) (557,000) (3,243,027) (163,261,740) 495,178 (163,756,918) 5,960,828 (157,796,090)

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OTHER INFORMATION FOR THE YEAR ENDED 31ST MARCH, 2003

		Wet
Electroplating		processing	Satellite	Entertainment	Timber	Other
	equipment	equipment	communication	production	trading	operations	Consolidated
	HK$	HK$	HK$	HK$	HK$	HK$	HK$
Allowance for bad
and doubtful debts	2,499,971	646,098	–	–	–	20,055,241	23,201,310
Bad debts recovered	7,559,472	–	–	–	–	–	7,559,472
Capital additions	1,021,444	57,674	869,996	13,004	–	36,508	1,998,626
Depreciation and
amortisation	5,102,610	5,253,024	1,273,356	2,690,553	2,160,929	1,071,440	17,551,912
Loss on disposal
of discontinuing
operations	–	–	584,023	586,935	–	–	1,170,958
Loss on resumption
of properties held
for development
by government	–	–	–	–	–	2,080,512	2,080,512
Impairment loss
recognised in
respect of property,
plant and equipment	1,907,324	–	30,792,931	–	–	–	32,700,255
Impairment loss
recognised in respect
of properties held
for development	–	–	–	–	–	2,540,000	2,540,000
Impairment loss
recognised in respect
of goodwill arising
on acquisition
of subsidiaries	–	–	–	1,492,883	9,166,205	–	10,659,088

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APPENDIX I

BALANCE SHEET AT 31ST MARCH, 2003

Wet Electroplating processing Satellite Entertainment Timber Other equipment equipment communication production trading operations HK$ HK$ HK$ HK$ HK$ HK$ ASSETS Segment assets 212,565,478 212,712,242 14,757,327 14,899,567 2,004,773 26,515,684 Unallocated corporate assets Consolidated total assets LIABILITIES Segment liabilities 97,173,042 74,043,630 16,342,045 4,127,379 403,162 10,851,022 Unallocated corporate liabilities Consolidated total liabilities	Consolidated HK$ 483,455,071 35,691,868
	519,146,939

	202,940,280 97,916,820
	300,857,100

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APPENDIX I

INCOME STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2002

Electroplating equipment HK$ TURNOVER External sales 163,319,846 Inter-segment sales 4,009 Total 163,323,855 Inter-segment sales are charged at prevailing market rates. RESULTS Segment results (77,042,275) Unallocated corporate income Unallocated corporate expenses Impairment loss recognised on investment securities Net unrealised gain on other investments Net realised loss on other investments Finance costs Gain on partial disposal of a subsidiary Loss on deemed disposal of a subsidiary Share of results of an associate Loss before taxation Taxation credit Loss after taxation Minority interests Net loss for the year	Wet processing Satellite Entertainment equipment communication production HK$ HK$ HK$ 111,300,876 2,926,484 52,382,774 314,589 – 6,830 111,615,465 2,926,484 52,389,604 (19,311,992) (34,640,355) 1,514,637	Timber trading HK$ 886,348 – 886,348 (26,695,496)	Other operations HK$ 4,952,344 – 4,952,344 (8,977,741)	Elimination HK$ – (325,428) (325,428) 7,417,948	Consolidated HK$ 335,768,672 – 335,768,672 (157,735,274) 345,142 (25,024,459) (500,000) 1,328,645 (155,942) (7,119,651) 44,441,301 (37,700) (1,085,186) (145,543,124) (1,390,621) (144,152,503) 11,775,528 (132,376,975)

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OTHER INFORMATION FOR THE YEAR ENDED 31ST MARCH, 2002

Wet Electroplating processing Satellite Entertainment equipment equipment communication production HK$ HK$ HK$ HK$ Allowance for bad and doubtful debts 18,301,069 3,634,867 – – Capital additions 4,736,279 12,197,908 4,583,594 162,892 Depreciation and amortisation 6,442,619 5,243,666 1,598,550 2,708,877 Impairment loss recognised in respect of property, plant and equipment – – 27,300,000 – Impairment loss recognised in respect of goodwill arising on acquisition of a subsidiary – – – – BALANCE SHEET AT 31ST MARCH, 2002 Wet Electroplating processing Satellite Entertainment equipment equipment communication production HK$ HK$ HK$ HK$ ASSETS Segment assets 223,075,032 203,189,244 50,086,633 24,323,732 Interests in associates Unallocated corporate assets Consolidated total assets LIABILITIES Segment liabilities 90,127,086 42,749,636 15,658,888 5,920,698 Unallocated corporate liabilities Consolidated total liabilities	Timber trading HK$ – – 4,773,748 – 22,000,000 Timber trading HK$ 4,773 403,162	Other operations HK$ 10,512,232 1,405,023 1,016,698 – – Other operations HK$ 70,687,612 10,416,706	Consolidated HK$ 32,448,168 23,085,696 21,784,158 27,300,000 22,000,000

			Consolidated HK$ 571,367,026 3,874,291 75,751,474
			650,992,791

			165,276,176 97,385,538
			262,661,714

Geographical segments

The Group’s operations are mainly located in Hong Kong, the People’s Republic of China (the “PRC”), Taiwan, Europe, North America and other Asia countries.

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APPENDIX I

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

Hong Kong PRC Taiwan Europe North America South East Asia (other than Korea) Japan and Korea Others	2003 HK$ 54,835,079 100,567,099 87,278,694 19,920,666 23,847,404 55,780,074 23,806,934 19,191,981 385,227,931	2002 HK$ 65,023,853 80,029,244 66,898,173 24,301,562 21,315,280 30,875,591 32,586,440 14,738,529
		335,768,672

Revenues from the Group’s discontinuing satellite communication and stage construction operations were derived principally from Hong Kong in both years.

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

Hong Kong PRC Taiwan Others	Carrying amount of segment assets At At 31.3.2003 31.3.2002 HK$ HK$ 191,762,140 296,649,635 99,759,678 121,440,111 214,695,693 205,050,096 12,929,428 27,852,949 519,146,939 650,992,791	Additions to property, plant and equipment and intangible assets Year ended Year ended 31.3.2003 31.3.2002 HK$ HK$ 1,014,405 8,373,553 704,831 2,179,356 57,674 12,197,908 221,716 334,879 1,998,626 23,085,696	Additions to property, plant and equipment and intangible assets Year ended Year ended 31.3.2003 31.3.2002 HK$ HK$ 1,014,405 8,373,553 704,831 2,179,356 57,674 12,197,908 221,716 334,879 1,998,626 23,085,696
			23,085,696

The assets of the Group’s discontinuing satellite communication and stage construction operations were located in Hong Kong in both years.

6. DISCONTINUING OPERATIONS

In March 2003, the directors determined to abandon the Group’s satellite communication and stage construction businesses. The satellite communication operation is anticipated to cease operation by July 2003 and it is anticipated that the stage construction operation will be permanently ceased by September 2003.

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APPENDIX I

The results of the satellite communication and the stage construction businesses for the year were as follows:

Turnover Cost of sales Gross (loss) profit Other operating income Distribution costs Administrative expenses Other operating expenses Impairment loss recognised in respect of property, plant and equipment (Loss) profit from operations Finance costs Loss on disposal of discontinuing operations (Loss) profit before taxation Taxation charge Net (loss) profit after taxation Minority interests	Satellite communication 2003 2002 HK$ HK$ 1,932,390 2,926,484 (2,885,280) (3,937,765) (952,890) (1,011,281) 1,151,891 465,692 (216) (34,668) (1,995,212) (5,697,980) (222,361) (60,718) (30,792,931) (27,300,000) (32,811,719) (33,638,955) (1,013,793) (54,787) (584,023) – (34,409,535) (33,693,742) – – (34,409,535) (33,693,742) – – (34,409,535) (33,693,742)	Stage construction 2003 2002 HK$ HK$ 14,313,200 15,087,762 (6,725,889) (6,753,220) 7,587,311 8,334,542 6,288 74,553 (161,276) (194,770) (6,625,883) (7,358,760) – – – – 806,440 855,565 (21) (23,403) (586,935) – 219,484 832,162 (97,053) (258,652) 122,431 573,510 259,692 532,233 (137,261) 41,277	Stage construction 2003 2002 HK$ HK$ 14,313,200 15,087,762 (6,725,889) (6,753,220) 7,587,311 8,334,542 6,288 74,553 (161,276) (194,770) (6,625,883) (7,358,760) – – – – 806,440 855,565 (21) (23,403) (586,935) – 219,484 832,162 (97,053) (258,652) 122,431 573,510 259,692 532,233 (137,261) 41,277
			8,334,542 74,553 (194,770) (7,358,760) – –
			855,565 (23,403) –
			832,162 (258,652)
			573,510 532,233
			41,277

The carrying amounts of the assets and liabilities of the discontinuing satellite communication and stage construction operations are as follows:

Total assets Total liabilities	Satellite communication 2003 2002 HK$ HK$ 14,757,327 50,086,633 23,566,795 26,496,013	Stage construction 2003 2002 HK$ HK$ 11,810,639 12,711,216 3,172,254 4,722,061	Stage construction 2003 2002 HK$ HK$ 11,810,639 12,711,216 3,172,254 4,722,061

			4,722,061

During the year, the satellite communication operation utilised HK$3,355,429 (2002: HK$5,611,473) of the Group’s net operating cash flows, received HK$3,191,141 (2002: paid HK$3,753,216) in respect of investing activities and paid HK$3,612,375 (2002: HK$3,612,375) in respect of financing activities.

The loss arising from the discontinuing satellite communication operation amounted to HK$584,023. No tax charge or credit arose from the transaction.

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APPENDIX I

During the year, the stage construction operation contributed HK$789,166 (2002: HK$2,600,309) to the Group’s net operating cash flows, received HK$87,541 (2002: paid HK$70,655) in respect of investing activities. During the year ended 31st March, 2002, the stage construction operation paid HK$710,008 in respect of financing activities.

The loss arising from the discontinuing of the stage construction operation amounted to HK$586,935. No tax charge or credit arose from the transaction.

7. LOSS FROM OPERATIONS

LOSS FROM OPERATIONS	LOSS FROM OPERATIONS
2003 HK$ Loss from operations has been arrived at after charging and (crediting): Auditors’ remuneration 1,365,356 Depreciation and amortisation Depreciation and amortisation of property, plant and equipment on: Owned assets 13,739,811 Assets held under finance leases 1,080,562 Amortisation of goodwill arising on acquisitions of subsidiaries (included in administrative expenses) 2,658,757 Amortisation of intangible assets (included in administrative expenses) 10,893 Amortisation of goodwill on acquisition of an associate (included in administrative expenses) 61,889 17,551,912 Write off of intangible assets (included in administrative expenses) 25,076 Operating lease payments in respect of: Rented premises 1,397,909 Plant and machinery 470,660 Allowance for slow moving inventories 4,421,459 Net exchange loss (gain) 408,806 Staff costs: Directors’ remuneration_(note 8)_ 8,067,264 Salaries and allowances 96,062,196 Contributions to retirement benefit schemes 3,251,930 107,381,390 Interest earned on bank deposits (94,966) Other interest income (76,416) Dividend income – Listed (8,403) – Unlisted – Gain on disposal of property, plant and equipment (1,233,975) Gain on disposal of investment securities –		2002 HK$ 1,573,225
	13,739,811 1,080,562 2,658,757 10,893 61,889		15,192,534 1,168,482 5,334,543 26,710 61,889
		21,784,158 – 1,937,096 920,022 1,611,875 (920,345)
	8,067,264 96,062,196 3,251,930		8,249,264 117,478,294 3,552,477
		129,280,035 (787,606) (208,562) (183,207) (14,008) (164,238) (501,437)

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APPENDIX I

8. DIRECTORS’ AND EMPLOYEES’ EMOLUMENTS

Directors Directors’ fees: Executive Non-executive Other emoluments to executive directors: Salaries and other benefits Contributions to retirement benefit schemes	2003 HK$ – 180,000 7,863,264 24,000 8,067,264	2002 HK$ – 180,000 8,043,264 26,000
		8,249,264

No compensation was paid to any directors of the Company during the year for the loss of office as directors of the Company and its subsidiaries. None of the directors of the Company has waived any emoluments during the year.

Emoluments of the directors were within the following bands:

	Number of directors
	2003	2002
Nil – HK$1,000,000	3	3
HK$3,500,001 – HK$4,000,000	2	–
HK$4,000,001 – HK$4,500,000	–	2

Employees

Of the five individuals with the highest emoluments in the Group, two (2002: two) were directors of the Company whose emoluments are included in the disclosures above. The emoluments of the remaining three (2002: three) individuals were as follows:

Salaries and other benefits Contributions to retirement benefit schemes	2003 HK$ 3,245,522 36,000 3,281,522	2002 HK$ 4,206,322 208,918
		4,415,240

Their emoluments were within the following bands:

	Number of employees
	2003	2002
Nil – HK$1,000,000	1	–
HK$1,000,001 – HK$1,500,000	2	1
HK$1,500,001 – HK$2,000,000	–	2

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APPENDIX I

9. FINANCE COSTS

Interest on: Bank borrowings wholly repayable within five years Bank borrowings with instalments repayable beyond five years Finance leases Other loan Loan from a director Less: Interest capitalised to construction in progress 10. TAXATION CHARGE (CREDIT) The taxation charge (credit) comprises: Hong Kong Profits Tax Charge for the year Overprovision in prior years Overseas taxation Charge for the year Credit for the year Under (over) provision in prior years Deferred taxation_(note 32)_	2003 HK$ 2,637,357 1,835,916 105,416 1,438,268 67,123 6,084,080 (397,472) 5,686,608 2003 HK$ 249,000 (128,133) 120,867 528,322 – 7,989 536,311 (162,000) 495,178	2002 HK$ 4,229,362 2,598,147 120,856 884,743 – 7,833,108 (713,457) 7,119,651 2002 HK$ 612,000 (123,636) 488,364 604,572 (1,533,675) (19,979) (949,082) (929,903) (1,390,621)

Hong Kong Profits Tax is calculated at 16% (2002: 16%) of the estimated assessable profit for the year. Overseas taxation is calculated at the rates prevailing in the relevant jurisdictions.

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11. LOSS PER SHARE

The calculation of the basic loss per share is based on the following data:

Loss for the purposes of basic loss per share Number/weighted average number of shares for the purposes of basic loss per share	2003 HK$ (157,796,090) 5,529,268,000	2002 HK$ (132,376,975) 5,397,944,493

No diluted loss per share has been presented because the exercise price of the Company’s options was higher than the market price of shares for both years.

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APPENDIX I

12. PROPERTY, PLANT AND EQUIPMENT

Construction in progress HK$ 54,761,477 – 397,472 –	Plant, Furniture Leasehold machinery Land and and improve- and Motor Audio buildings fixtures ments equipment vehicles equipment HK$ HK$ HK$ HK$ HK$ HK$ 191,180,900 12,720,352 3,465,445 68,522,581 12,000,363 7,766,486 (4,977,056 ) (255,621 ) 64,253 (1,102,933 ) (78,335 ) – 291,920 209,996 65,270 499,416 62,028 – – (91,406 ) (150,561 ) (1,081,451 ) (437,423 ) – 186,495,764 12,583,321 3,444,407 66,837,613 11,546,633 7,766,486 101,995,764 12,583,321 3,444,407 66,837,613 11,546,633 7,766,486 43,000,000 – – – – – 41,500,000 – – – – – 186,495,764 12,583,321 3,444,407 66,837,613 11,546,633 7,766,486 19,545,661 8,105,304 2,471,711 43,819,559 8,882,805 4,368,648 (202,573 ) (138,533 ) – (343,200 ) (74,280 ) – 3,761,945 968,588 100,434 5,759,387 1,063,916 1,132,612 – 522,818 840,619 746,850 61,061 – – (86,743) (84,691) (935,586) (400,097) – 23,105,033 9,371,434 3,328,073 49,047,010 9,533,405 5,501,260 163,390,731 3,211,887 116,334 17,790,603 2,013,228 2,265,226 171,635,239 4,615,048 993,734 24,703,022 3,117,558 3,397,838	Plant, Furniture Leasehold machinery Land and and improve- and Motor Audio buildings fixtures ments equipment vehicles equipment HK$ HK$ HK$ HK$ HK$ HK$ 191,180,900 12,720,352 3,465,445 68,522,581 12,000,363 7,766,486 (4,977,056 ) (255,621 ) 64,253 (1,102,933 ) (78,335 ) – 291,920 209,996 65,270 499,416 62,028 – – (91,406 ) (150,561 ) (1,081,451 ) (437,423 ) – 186,495,764 12,583,321 3,444,407 66,837,613 11,546,633 7,766,486 101,995,764 12,583,321 3,444,407 66,837,613 11,546,633 7,766,486 43,000,000 – – – – – 41,500,000 – – – – – 186,495,764 12,583,321 3,444,407 66,837,613 11,546,633 7,766,486 19,545,661 8,105,304 2,471,711 43,819,559 8,882,805 4,368,648 (202,573 ) (138,533 ) – (343,200 ) (74,280 ) – 3,761,945 968,588 100,434 5,759,387 1,063,916 1,132,612 – 522,818 840,619 746,850 61,061 – – (86,743) (84,691) (935,586) (400,097) – 23,105,033 9,371,434 3,328,073 49,047,010 9,533,405 5,501,260 163,390,731 3,211,887 116,334 17,790,603 2,013,228 2,265,226 171,635,239 4,615,048 993,734 24,703,022 3,117,558 3,397,838	Plant, Furniture Leasehold machinery Land and and improve- and Motor Audio buildings fixtures ments equipment vehicles equipment HK$ HK$ HK$ HK$ HK$ HK$ 191,180,900 12,720,352 3,465,445 68,522,581 12,000,363 7,766,486 (4,977,056 ) (255,621 ) 64,253 (1,102,933 ) (78,335 ) – 291,920 209,996 65,270 499,416 62,028 – – (91,406 ) (150,561 ) (1,081,451 ) (437,423 ) – 186,495,764 12,583,321 3,444,407 66,837,613 11,546,633 7,766,486 101,995,764 12,583,321 3,444,407 66,837,613 11,546,633 7,766,486 43,000,000 – – – – – 41,500,000 – – – – – 186,495,764 12,583,321 3,444,407 66,837,613 11,546,633 7,766,486 19,545,661 8,105,304 2,471,711 43,819,559 8,882,805 4,368,648 (202,573 ) (138,533 ) – (343,200 ) (74,280 ) – 3,761,945 968,588 100,434 5,759,387 1,063,916 1,132,612 – 522,818 840,619 746,850 61,061 – – (86,743) (84,691) (935,586) (400,097) – 23,105,033 9,371,434 3,328,073 49,047,010 9,533,405 5,501,260 163,390,731 3,211,887 116,334 17,790,603 2,013,228 2,265,226 171,635,239 4,615,048 993,734 24,703,022 3,117,558 3,397,838	Plant, Furniture Leasehold machinery Land and and improve- and Motor Audio buildings fixtures ments equipment vehicles equipment HK$ HK$ HK$ HK$ HK$ HK$ 191,180,900 12,720,352 3,465,445 68,522,581 12,000,363 7,766,486 (4,977,056 ) (255,621 ) 64,253 (1,102,933 ) (78,335 ) – 291,920 209,996 65,270 499,416 62,028 – – (91,406 ) (150,561 ) (1,081,451 ) (437,423 ) – 186,495,764 12,583,321 3,444,407 66,837,613 11,546,633 7,766,486 101,995,764 12,583,321 3,444,407 66,837,613 11,546,633 7,766,486 43,000,000 – – – – – 41,500,000 – – – – – 186,495,764 12,583,321 3,444,407 66,837,613 11,546,633 7,766,486 19,545,661 8,105,304 2,471,711 43,819,559 8,882,805 4,368,648 (202,573 ) (138,533 ) – (343,200 ) (74,280 ) – 3,761,945 968,588 100,434 5,759,387 1,063,916 1,132,612 – 522,818 840,619 746,850 61,061 – – (86,743) (84,691) (935,586) (400,097) – 23,105,033 9,371,434 3,328,073 49,047,010 9,533,405 5,501,260 163,390,731 3,211,887 116,334 17,790,603 2,013,228 2,265,226 171,635,239 4,615,048 993,734 24,703,022 3,117,558 3,397,838	Plant, Furniture Leasehold machinery Land and and improve- and Motor Audio buildings fixtures ments equipment vehicles equipment HK$ HK$ HK$ HK$ HK$ HK$ 191,180,900 12,720,352 3,465,445 68,522,581 12,000,363 7,766,486 (4,977,056 ) (255,621 ) 64,253 (1,102,933 ) (78,335 ) – 291,920 209,996 65,270 499,416 62,028 – – (91,406 ) (150,561 ) (1,081,451 ) (437,423 ) – 186,495,764 12,583,321 3,444,407 66,837,613 11,546,633 7,766,486 101,995,764 12,583,321 3,444,407 66,837,613 11,546,633 7,766,486 43,000,000 – – – – – 41,500,000 – – – – – 186,495,764 12,583,321 3,444,407 66,837,613 11,546,633 7,766,486 19,545,661 8,105,304 2,471,711 43,819,559 8,882,805 4,368,648 (202,573 ) (138,533 ) – (343,200 ) (74,280 ) – 3,761,945 968,588 100,434 5,759,387 1,063,916 1,132,612 – 522,818 840,619 746,850 61,061 – – (86,743) (84,691) (935,586) (400,097) – 23,105,033 9,371,434 3,328,073 49,047,010 9,533,405 5,501,260 163,390,731 3,211,887 116,334 17,790,603 2,013,228 2,265,226 171,635,239 4,615,048 993,734 24,703,022 3,117,558 3,397,838	Lighting equipment HK$ 6,879,067 – – –	Antenna and antenna control equipment Total HK$ HK$ 20,000,400 377,297,071 – (6,349,692 ) 472,524 1,998,626 (3,757,194 ) (5,518,035 ) 16,715,730 367,427,970 16,715,730 282,927,970 – 43,000,000 – 41,500,000 16,715,730 367,427,970 2,329,778 121,107,690 – (758,586 ) 1,168,544 14,820,373 16,974,602 32,700,255 (3,757,194) (5,264,311 ) 16,715,730 162,605,421 – 204,822,549 17,670,622 256,189,381
55,158,949	12,583,321	3,444,407	66,837,613	11,546,633	7,766,486	6,879,067	16,715,730
55,158,949 – –	12,583,321 – –	3,444,407 – –	66,837,613 – –	11,546,633 – –	7,766,486 – –	6,879,067 – –	16,715,730 – –
55,158,949	12,583,321	3,444,407	66,837,613	11,546,633	7,766,486	6,879,067	16,715,730
27,300,000 – – 13,554,305 –						4,284,224 – 864,947 – –
40,854,305	9,371,434	3,328,073	49,047,010	9,533,405	5,501,260	5,149,171	16,715,730
14,304,644	3,211,887	116,334	17,790,603	2,013,228	2,265,226	1,729,896	–

27,461,477	4,615,048	993,734	24,703,022	3,117,558	3,397,838	2,594,843	17,670,622

During the year, due to the stagnant development of the satellite telecommunication business, the directors reassessed the recoverable amount of the major assets of its satellite communication business with reference to the net selling price at the date of reassessment. Based on this reassessment, the directors considered impairment was required to be recognised. The impairment loss recognised for the year of approximately HK$32.7 million was mainly related to the satellite telecommunication business.

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APPENDIX I

The net book value of land and buildings and construction in progress shown above comprises:

Medium-term leasehold land and buildings in Hong Kong Freehold land and buildings in: Taiwan United Kingdom Medium-term leasehold land in the PRC	Land and buildings 2003 2002 HK$ HK$ 34,791,870 35,582,596 77,967,460 84,199,603 2,806,000 2,836,500 47,825,401 49,016,540 163,390,731 171,635,239	Construction in progress(Note) 2003 2002 HK$ HK$ 14,304,644 27,461,477 – – – – – – 14,304,644 27,461,477	Construction in progress(Note) 2003 2002 HK$ HK$ 14,304,644 27,461,477 – – – – – – 14,304,644 27,461,477
			27,461,477

Note: Construction in progress represented the site under construction for the Group’s satellite communication business. At 31st March, 2003, interest expenses capitalised in construction in progress amounted to approximately HK$3,646,000 (2002: HK$3,249,000). Subsequent to the balance sheet date, the entire site was surrendered to the lessor of the site as a consequence of abandonment of the Group’s satellite communication business.

The net book value of property, plant and equipment includes an amount of HK$705,485 (2002: HK$1,715,064) in respect of assets held under finance leases.

Had the land and buildings been carried at cost less accumulated depreciation and amortisation, the carrying value of the land and buildings would have been stated at HK$135,855,704 (2002: HK$138,949,000).

13. PROPERTIES HELD FOR DEVELOPMENT

Properties held for development, at cost Less: Impairment loss recognised	THE GROUP 2003 2002 HK$ HK$ 16,435,761 19,613,373 (2,540,000) – 13,895,761 19,613,373	THE GROUP 2003 2002 HK$ HK$ 16,435,761 19,613,373 (2,540,000) – 13,895,761 19,613,373
		19,613,373

During the year, the directors of the Group conducted a review of the Group’s land held for development and determined that the land was impaired as a consequence of persistent sluggish property market. Accordingly, impairment loss of HK$2,540,000 (2002: nil) has been recognised in respect of land held for development. The land has been written down to its estimated recoverable amount, being the anticipated net sales proceeds from the development of the land.

The land is situated in Hong Kong and is held under a medium-term lease.

No interest expense was capitalised in the cost of land held for development up to the balance sheet date.

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14. GOODWILL

COST At 1st April, 2002 and 31st March, 2003 AMORTISATION AND IMPAIRMENT LOSS At 1st April, 2002 Charge for the year Impairment loss recognised for the year At 31st March, 2003 NET BOOK VALUES At 31st March, 2003 At 31st March, 2002	THE GROUP HK$ 45,707,438
	30,389,593 2,658,757 10,659,088
	43,707,438
	2,000,000

	15,317,845

The amortisation period adopted for goodwill is from 7 to 10 years.

As a consequence of a change to the original business plan, the Group reassessed the recoverable amount of its investment in the timber trading business based on the present value of the expected future revenue arising from trading of timber, which was derived from discounting the projected cash flows by an implicit rate of return of 5.5%. Based on this reassessment, the directors consider an aggregate impairment of approximately HK$9.2 million is required to be recognised for the goodwill arising from the acquisition of the subsidiary engaged in the timber trading business.

As detailed in note 6, the directors determined to abandon the stage construction operation. Consequently, the directors consider the carrying amount of goodwill, of approximately HK$1.5 million, arising from the acquisition of the subsidiary engaged in the stage construction business are entirely impaired and is required to be charged to the income statement.

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APPENDIX I

15. INTANGIBLE ASSETS

THE GROUP COST At 1st April, 2002 Currency realignment Written off At 31st March, 2003 AMORTISATION At 1st April, 2002 Currency realignment Provided for the year Eliminated on written off At 31st March, 2003 NET BOOK VALUES At 31st March, 2003 At 31st March, 2002	Patents HK$ 217,866 – – 217,866 111,344 – 10,893 – 122,237 95,629 106,522	Technical know-how HK$ 79,105 8,334 (87,439) – 56,419 5,944 – (62,363) – – 22,686	Total HK$ 296,971 8,334 (87,439)
			217,866
			167,763 5,944 10,893 (62,363)
			122,237
			95,629

			129,208

The amortisation periods adopted for patents and technical know-how are 20 and 5 years, respectively.

16. INTERESTS IN SUBSIDIARIES

THE COMPANY Quoted shares, at cost_(note (i)) Unlisted shares, at cost less impairment loss Unlisted shares(note (ii))_ Loan to a subsidiary Market value of quoted shares	2003 HK$ 19,702,937 2,000,008 47,285,952 65,000,000 133,988,897 32,832,253	2002 HK$ 19,702,937 18,100,008 47,285,952 65,000,000
		150,088,897

		65,498,134

The loan to a subsidiary is unsecured, non-interest bearing and in the opinion of the directors, will not be repaid within the next twelve months.

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APPENDIX I

Notes:

(i) The cost of the quoted shares represents the investment cost of one of the Company’s subsidiaries, Intech Machines Company, Limited, which were admitted for trading on the Taiwan Over-TheCounter Securities Exchange.
(ii) The carrying value of the unlisted shares is based on the values of the underlying net assets of the subsidiaries attributable to the Group as at the date on which the Company became the ultimate holding company of the Group under the group reorganisation in 1991, less dividends subsequently distributed from pre-reorganisation reserves of the subsidiaries.

Details of the Company’s subsidiaries as at 31st March, 2003 are as follows:

		Issued and	Proportion of	Proportion of
		fully paid	nominal	value
	Place of	up ordinary	of issued capital/
	incorporation/	share capital/	registered	capital
Name of subsidiary	registration	registered capital	held by the	Company	Principal activities
			Directly	Indirectly
			%	%
Asia Nice Art	Hong Kong	HK$10,000	–	60	Stage construction and arts
Production Limited					production
Asia Vigour (Holdings)	British Virgin	US$1	–	100	Investment holding
Limited	Islands
Asia Vigour Productions	Hong Kong	HK$2	–	100	Organise arts performance, sale
Limited					of video productions and
					equipment leasing
ATNT Global Investments	Hong Kong	HK$2	–	100	Securities trading
Company Limited
ATNT Group Management	Hong Kong	HK$2	–	100	Management services
Limited
Beijing Golden PAL	PRC	US$1,291,500	–	52	Design, manufacture and sale of
Plating Equipment					electroplating machines and
Company Limited					other automated equipment
(Sino-foreign equity
joint venture)
Beijing Haoyuan Power	PRC	US$500,000	–	52	Design, manufacture and sale of
Equipment Company					rectifiers and other equipment
Limited (Sino-Foreign
equity joint venture)
Fairway Int’l Limited	British Virgin	US$1	–	100	Investment holding
	Islands

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APPENDIX I

			Issued and	Proportion of	Proportion of
			fully paid	nominal	value
	Place of		up ordinary	of issued capital/
	incorporation/		share capital/	registered	capital
Name of subsidiary	registration	registered capital		held by the	Company	Principal activities
				Directly	Indirectly
				%	%
Gold Beat Investments	Hong Kong		HK$2	–	100	Property investment
Limited
Golden Rainbow	British Virgin		US$1	–	100	Property investment
Investments Limited	Islands
Happy Treasure Limited	Hong Kong		HK$2	–	100	Timber trading
Happy Win Resources	British Virgin		US$1	100	–	Investment holding
Limited	Islands
Hovington Agents	British Virgin		US$1	–	100	Investment holding
Limited	Islands
Intech Enterprise (BVI)	British Virgin		US$50,000	–	100	Investment holding
Company, Limited	Islands
Intech Machines	Taiwan	NT$447,400,000		51	–	Design, manufacture and sale of
Company, Limited						wet processing equipment
(“IML”)
Intech Machines (BVI)	British Virgin		US$2,500,000	–	100	Investment holding
Company, Limited	Islands
PAL Europe Limited	Hong Kong		HK$2	–	100	Investment holding
(formerly known
as Asia Tele-Net
Investments Limited)
PAL Finance Limited	Hong Kong		HK$2	–	100	Money lending
PAL Properties	British Virgin		US$1	–	100	Investment holding
Investment Limited	Islands
PAL Sales, Inc.	Connecticut,		US$1,000	–	51	Sale of electroplating machines
	The United States
	of America
PAL (Sea) Sdn. Bhd.	Malaysia		MYR300,000	–	60	Sale of electroplating machines
PAL Sea Services Limited	Hong Kong		HK$100	–	60	Investment holding
(formerly known as
World Pride Technology
Limited)

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APPENDIX I

		Issued and	Proportion of	Proportion of
		fully paid	nominal	value
	Place of	up ordinary	of issued capital/
	incorporation/	share capital/	registered	capital
Name of subsidiary	registration	registered capital	held by the	Company	Principal activities
			Directly	Indirectly
			%	%
PAL Service Sdn. Bhd.	Malaysia	MYR50,002	–	60	Sale of electroplating machines
					and spare parts
Process Automation	British Virgin	HK$110,000	100	–	Investment holding
(BVI) Limited	Islands
Process Automation	The United	GBP1	–	100	Sale of electroplating machines
(Europe) Limited	Kingdom
Process Automation	Hong Kong	HK$2	–	100	Design, manufacture and sale of
International Limited		(note)			electroplating machines
(“PAIL”)
Process Automation	PRC	HK$18,000,000	–	100	Design, manufacture and sale
(Shenzhen) Limited					of electroplating machines
(Wholly owned
foreign enterprise
(“WOFE”))
Process Automation	The United	GBP2	–	100	Sale of electroplating machines
(UK) Limited	Kingdom
Prosmart Developments	Hong Kong	HK$2	–	100	Property investment
Limited
Rich Town Properties	British Virgin	US$2	–	100	Property investment
Limited	Islands
Sky Citi-Link ATNT	British Virgin	US$1	–	82	Investment holding
(Holdings) Limited	Islands
Sky Citi-Link	Hong Kong	HK$2	–	82	Provision of telecommunication
International					services
Telecom Limited
Sky Citi-Link (Great	Hong Kong	HK$10,000	–	82	Provision of telecommunication
China) Communication					services
Limited
Sky Citi-Link Teleport	British Virgin	US$1	–	82	Property holding
Limited	Islands
Strength Hope Limited	British Virgin	US$1	100	–	Investment holding
	Islands

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FINANCIAL INFORMATION

APPENDIX I

		Issued and	Proportion of
		fully paid	nominal value
	Place of	up ordinary	of issued capital/
	incorporation/	share capital/	registered capital
Name of subsidiary	registration	registered capital	held by the Company		Principal activities
			Directly Indirectly
			%	%
Vigour Entertainment	Hong Kong	HK$2	– 100		Organising art performances,
Company Limited					social functions and sales
					of video products
亞智科技（深圳）	PRC	US$600,000	– 100		Design, manufacture and sale of
有限公司(WOFE)					wet processing equipment

All active subsidiaries operate in their places of incorporation.

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

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

Note: At 31st March, 2003, PAIL had outstanding 11,000,000 non-voting deferred shares of HK$1 each which were held by Process Automation (BVI) Limited. The deferred shares carry no rights to dividends or to receive notice of or to attend or vote at any general meeting of PAIL and practically carry no rights to participate in any distribution on winding up.

17. INTERESTS IN ASSOCIATES

Share of net assets Goodwill on acquisition of an associate	THE GROUP 2003 2002 HK$ HK$ – 3,255,402 – 618,889 – 3,874,291	THE GROUP 2003 2002 HK$ HK$ – 3,255,402 – 618,889 – 3,874,291
		3,874,291

Details of the Group’s associates as at 31st March, 2003 are as follows:

		Proportion of
	Place	nominal value
	of incorporation/	of issued capital
Name of associate	registration	held by the Group	Principal activities
Beijing Wan Dian Company Limited	PRC	50%	Design, manufacture and sale of
(“BJWD”) (Sino-Foreign equity			wind generators
joint venture)
Sparkling Stream	Western Samoa	32.8%	Inactive
International Limited

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FINANCIAL INFORMATION

APPENDIX I

The goodwill on acquisition of associates arose on the acquisition of BJWD in 1998. Movements of goodwill during the year are as follows:

COST At 1st April, 2002 and 31st March, 2003 AMORTISATION At 1st April, 2002 Charge for the year Impairment loss recognised for the year At 31st March, 2003 NET BOOK VALUES At 31st March, 2003 At 31st March, 2002	THE GROUP HK$ 928,333
	309,444 61,889 557,000
	928,333
	–

	618,889

In the light of persistent poor operating results of BJWD and the uncertainty of turn-around of its performance in the future, the directors considered that net book value of goodwill at 31st March, 2003 is irrecoverable and, accordingly, impairment loss of HK$557,000 is recognised in the income statement.

18. INVESTMENTS IN SECURITIES

Investment securities shown as non-current assets: Unlisted shares, at cost less impairment loss recognised Other investments shown as current assets: Listed shares, at market value	THE GROUP 2003 2002 HK$ HK$ 2,900,178 8,548,703 30,233,864 63,384,450	THE GROUP 2003 2002 HK$ HK$ 2,900,178 8,548,703 30,233,864 63,384,450

		63,384,450

Disclosures pursuant to Section 129(2) of the Hong Kong Companies Ordinance in respect of other investments are as follows:

			Proportion of
			nominal value of
	Country	Class of	issued capital held
Name of investment	of incorporation	share held	by the Company
MAE Holdings Limited	Bermuda	Ordinary	3.96%

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FINANCIAL INFORMATION

APPENDIX I

19. OTHER ASSETS

Loans receivable – non-current portion_(Note 23) Trade debtors – non-current portion(Note 24)_ 20. AMOUNTS DUE FROM SUBSIDIARIES Amounts due from subsidiaries Allowance provided	THE GROUP 2003 2002 HK$ HK$ 1,926,446 2,185,555 3,675,465 – 5,601,911 2,185,555 THE COMPANY 2003 2002 HK$ HK$ 201,041,194 184,723,079 (120,380,000) – 80,661,194 184,723,079	THE GROUP 2003 2002 HK$ HK$ 1,926,446 2,185,555 3,675,465 – 5,601,911 2,185,555 THE COMPANY 2003 2002 HK$ HK$ 201,041,194 184,723,079 (120,380,000) – 80,661,194 184,723,079
		184,723,079

The amounts are unsecured and have no fixed terms of repayment. The amounts included approximately HK$60 million (2002: HK$34 million) which bears interest at Hong Kong prime rate and approximately HK$58 million (2002: nil) which bears interest at 4% per annum (2002: nil), the remaining balance is noninterest bearing.

21. INVENTORIES

Raw materials Work in progress Finished goods	THE GROUP 2003 2002 HK$ HK$ 44,585,931 43,338,331 14,561,458 18,892,059 3,202,857 7,105,599 62,350,246 69,335,989	THE GROUP 2003 2002 HK$ HK$ 44,585,931 43,338,331 14,561,458 18,892,059 3,202,857 7,105,599 62,350,246 69,335,989
		69,335,989

At 31st March, 2003, included above are raw materials of HK$9,450,992 (2002: HK$11,721,618) and work in progress of HK$1,190,646 (2002: nil) which are carried at net realisable values.

At 31st March, 2002, finished goods of HK$2,456,437 were carried at net realisable values.

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APPENDIX I

22. AMOUNTS DUE FROM (TO) CUSTOMERS FOR CONTRACT WORK

Contracts in progress at the balance sheet date: Contract costs incurred Recognised profits less recognised losses Progress billings Represented by: Due from customers included in current assets Due to customers included in current liabilities	THE GROUP 2003 2002 HK$ HK$ 55,517,366 46,131,353 5,210,798 4,828,134 60,728,164 50,959,487 (27,945,149) (17,497,026) 32,783,015 33,462,461 33,851,875 34,527,433 (1,068,860) (1,064,972) 32,783,015 33,462,461	THE GROUP 2003 2002 HK$ HK$ 55,517,366 46,131,353 5,210,798 4,828,134 60,728,164 50,959,487 (27,945,149) (17,497,026) 32,783,015 33,462,461 33,851,875 34,527,433 (1,068,860) (1,064,972) 32,783,015 33,462,461
		50,959,487 (17,497,026)
		33,462,461

		34,527,433 (1,064,972)
		33,462,461

At the balance sheet date, there were no retention monies held by customers for contract work performed. At 31st March, 2003, advances received from customers for contract work performed amounted to HK$30,774,566 (2002: HK$23,470,113) which were included in creditors, bills payable and accrued charges.

23. LOANS RECEIVABLE

The following is the maturity profile of loans receivable at balance sheet date:

Repayable within 3 months Repayable after 3 months but within 6 months Repayable after 6 months but within 1 year Repayable after 1 year	THE GROUP 2003 2002 HK$ HK$ 9,141,234 28,592,533 71,206 78,164 121,727 158,059 9,334,167 28,828,756 1,926,446 2,185,555 11,260,613 31,014,311	THE GROUP 2003 2002 HK$ HK$ 9,141,234 28,592,533 71,206 78,164 121,727 158,059 9,334,167 28,828,756 1,926,446 2,185,555 11,260,613 31,014,311
		28,828,756 2,185,555
		31,014,311

The loans receivable which are repayable after one year are included in other assets in note 19. All loans receivable bear interests at commercial rates.

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APPENDIX I

24. DEBTORS, DEPOSITS AND PREPAYMENTS

Trade debtors Bills receivables Other debtors and prepayments Less: Trade debtors – non-current portion	THE GROUP 2003 2002 HK$ HK$ 119,246,227 82,825,012 13,342,969 12,874,542 11,330,350 21,540,161 143,919,546 117,239,715 (3,675,465) – 140,244,081 117,239,715	THE GROUP 2003 2002 HK$ HK$ 119,246,227 82,825,012 13,342,969 12,874,542 11,330,350 21,540,161 143,919,546 117,239,715 (3,675,465) – 140,244,081 117,239,715
		117,239,715 –
		117,239,715

Trade debtors which are repayable after one year are included in other assets in note 19.

The Group allows a general credit period of one month to its trade customers except construction contracts where the Group allows stage payments. In general, credit will only be offered to customers in accordance with their financial creditabilities.

The following is an aged analysis of trade debtors as at the reporting date:

Current Overdue by: 0 – 60 days 61 – 120 days 121 – 180 days > 180 days	2003 HK$ 49,628,277 44,035,900 3,626,483 14,025,854 7,929,713 119,246,227	2002 HK$ 26,778,572 20,999,499 14,079,164 6,397,045 14,570,732
		82,825,012

25. CREDITORS, BILLS PAYABLE AND ACCRUED CHARGES

Trade creditors Bills payable Other creditors and accrued charges	THE GROUP 2003 2002 HK$ HK$ 82,696,850 65,735,442 13,932,568 3,968,102 81,661,595 79,924,046 178,291,013 149,627,590	THE GROUP 2003 2002 HK$ HK$ 82,696,850 65,735,442 13,932,568 3,968,102 81,661,595 79,924,046 178,291,013 149,627,590
		149,627,590

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The following is an aged analysis of trade creditors as at the reporting date:

0 – 60 days 61 – 120 days 121 – 180 days > 180 days	2003 HK$ 33,935,364 17,243,736 23,539,204 7,978,546 82,696,850	2002 HK$ 28,707,262 14,977,555 12,235,675 9,814,950
		65,735,442

26. LOAN FROM A DIRECTOR

The amount of the Group is unsecured, bears interest at Hong Kong prime rate and has been repaid subsequent to the balance sheet date.

27. AMOUNTS DUE TO SUBSIDIARIES

The amounts of the Company are unsecured, non-interest bearing and have no fixed terms of repayment.

28. SHARE CAPITAL

Share of HK$0.01 each Authorised: At 1st April, 2002, 31st March, 2002 and 31st March, 2003 Issued and fully paid: At 1st April, 2001 Exercise of warrants Issue of shares Shares repurchased and cancelled At 31st March, 2002 and 31st March, 2003	Number of shares 20,000,000,000 5,112,908,000 40,000 500,000,000 (83,680,000) 5,529,268,000	Amount HK$ 200,000,000

		51,129,080 400 5,000,000 (836,800)
		55,292,680

29. SHARE OPTIONS SCHEMES

One of the Company’s share options schemes, was adopted on 2nd January, 1991 (the “Original Scheme”) for the purpose of providing incentive to directors and eligible staff. Under the Original Scheme, the directors may grant options to executive directors and employees of the Company or any of its subsidiaries to subscribe for shares of the Company. The subscription price of shares under the Original Scheme shall be calculated at the discretion of the directors at an amount not more than a 20% discount to the average of the closing prices of the shares as stated in the daily quotation sheets of the Stock Exchange for one or more board lots of shares on the five trading days immediately preceding the date of grant of the option provided that in no circumstances shall the subscription price be less than the par value of a share. No consideration is payable on the acceptance of an option. The aggregate number of shares in respect of

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FINANCIAL INFORMATION

APPENDIX I

which options may be granted pursuant to the Original Scheme to any individual shall not exceed 10% of the maximum number of shares in respect of which options may be granted under the Original Scheme and any other schemes. The total number of shares in respect of which options may be granted under the Original Scheme (including shares issued pursuant to options exercised under the Original Scheme and shares in respect of which any options are outstanding) shall at all times when aggregated with any shares subject to other schemes be limited to 10% of the issued share capital of the Company from time to time.

The Original Scheme remained in force for a period of ten years from the date of its adoption and was expired on 1st January, 2001.

Under the rules of the Original Scheme, options are exercisable from the date options are granted to the earlier of the third anniversary of the date of grant and the expiry date of the scheme. Pursuant to an ordinary resolution passed at a special general meeting held on 6th September, 2000 (the “Resolution”), the rule with regard to the exercisable period has amended under which options are exercisable before the third anniversary from the date of options are granted or the later date as the directors may determine but not being later than the tenth anniversary from the date the options are granted.

Pursuant to the revised Original Scheme, the Company had granted options on 14th November, 2000 to the following directors of the Company, exercisable at any time from 17th November, 2000 and during the employment with the Company and its subsidiaries to 16th November, 2003:

		Number of share
		option outstanding
		at 1st April, 2001,
	Exercise	31st March, 2002
Name	price per share	and 31st March, 2003
	HK$	HK$
Lam Kwok Yan	0.056	43,000,000
Lam Kwok Hing	0.056	43,000,000
		86,000,000

Apart from the above, no options had been granted to or exercised by any other directors or employees of the Group during the years ended 31st March, 2002 and 2003 or outstanding at the balance sheet dates.

Pursuant to the Resolution, the Company also adopted a new share options scheme (the “New Scheme”) which became effective on 1st January, 2001. The rules of the New Scheme are the same as the revised Original Scheme and will remain in force for a period of ten years from the date of its adoption.

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FINANCIAL INFORMATION

APPENDIX I

Pursuant to the New Scheme, the Company had granted options on 30th August, 2001 to the following directors of the Company and the employees, exercisable at any time from 7th September, 2001 and during the employment with the Company and its subsidiaries to 6th September, 2004:

Exercise price Name per share HK$ Directors Lam Kwok Yan 0.053 Lam Kwok Hing 0.053 Others Other employees 0.053	Outstanding at 1st April, 2001 – – – –	Number of share options	Number of share options	Number of share options
		Granted during the year ended 31st March, 2002 114,500,000 114,500,000 50,140,000 279,140,000	Outstanding at 31st March, 2002 114,500,000 114,500,000 50,140,000 279,140,000	Lapsed during the year ended 31st March, 2003 – – (10,000,000) (10,000,000)	Outstanding at 31st March, 2003 114,500,000 114,500,000 40,140,000
					269,140,000

No share options were granted or exercised under the New Scheme during the year ended 31st March, 2003.

At 31st March, 2003, the aggregate number of shares in respect of which options had been granted under the revised Original Scheme and New Scheme was 355.14 million, representing 6.4% (2002: 6.6%) of the shares of the Company in issue at that date.

No consideration was received during the year ended 31st March, 2002 from the Company’s directors and employees for taking up the options granted.

No charge is recognised in the income statement in respect of the value of options granted during the year ended 31st March, 2002.

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APPENDIX I

30. RESERVES

THE GROUP Balance at 1st April, 2001 Exchange difference arising on translation of operations of overseas subsidiaries Realised upon the deemed disposal of a subsidiary Share premium cancelled on share repurchased New issue of shares for acquisition of a subsidiary Exercise of warrants Net loss for the year Balance at 1st April, 2002 Exchange difference arising on translation of operations of overseas subsidiaries Net loss for the year Balance at 31st March, 2003	Share premium HK$ 326,385,008 – – (3,331,162) 30,000,000 7,720 – 353,061,566 – – 353,061,566	Property revaluation reserve HK$ 39,144,791 – – – – – – 39,144,791 – – 39,144,791	Legal reserves HK$ 16,225,305 – (29,859) – – – – 16,195,446 – – 16,195,446	Currency translation reserve HK$ (7,499,075) (369,375) 23,831 – – – – (7,844,619) (3,580,715) – (11,425,334)	Retained profit (deficit) HK$ 5,536,238 – 29,859 – – – (132,376,975) (126,810,878) – (157,796,090) (284,606,968)	Total HK$ 379,792,267 (369,375) 23,831 (3,331,162) 30,000,000 7,720 (132,376,975) 273,746,306 (3,580,715) (157,796,090) 112,369,501

At 31st March, 2003, included in the above deficit was a deficit of HK$8,122,699 (2002: HK$4,879,672) representing the Group’s share of post-acquisition deficit of associates.

THE COMPANY Balance at 1st April, 2001 Share premium cancelled on shares repurchased New issue of shares for acquisition of a subsidiary Exercise of warrants Net loss for the year Balance at 1st April, 2002 Net loss for the year Balance at 31st March, 2003	Share premium HK$ 326,385,008 (3,331,162) 30,000,000 7,720 – 353,061,566 – 353,061,566	Contributed surplus HK$ 29,510,207 – – – – 29,510,207 – 29,510,207	Deficit HK$ (128,373,627) – – – (71,374,616) (199,748,243) (128,337,124) (328,085,367)	Total HK$ 227,521,588 (3,331,162) 30,000,000 7,720 (71,374,616) 182,823,530 (128,337,124) 54,486,406

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FINANCIAL INFORMATION

APPENDIX I

The contributed surplus represents the difference between the consolidated shareholders’ funds of the subsidiaries at the date on which they were acquired by the Company, and the nominal amount of the Company’s shares issued for the acquisition, less dividends distributed from pre-reorganisation reserves of the subsidiaries. Under The Companies Act 1981 of Bermuda, the contributed surplus of the Company is available for distribution to shareholders.

The articles of incorporation of IML, a subsidiary of the Company, provide that 10% of its annual net income be set aside as a legal reserve until an amount equal to its paid up capital is reached. No profit was transferred to legal reserves for the years ended 31st March, 2002 and 2003 as IML incurred losses for the years. In prior year, in accordance with statutory requirements in the PRC, a subsidiary registered in the PRC had transferred a certain per cent. of its annual net income from retained profits to legal reserves. No such transfer is required for the years ended 31st March, 2002 and 2003 as that subsidiary incurred losses for the years. These legal reserves are not considered to be distributable.

At 31st March, 2003, the Group’s deficit includes an aggregate amount of HK$37,716,809 (2002: HK$37,716,809) which was capitalised as share capital by IML.

31. BORROWINGS

Borrowings comprise the following:
Bank overdrafts
Trust receipt loans
Other bank loans
Other loan
Secured
Unsecured
The borrowings are repayable within a period:
Not exceeding one year or on demand
More than one year but not exceeding two years
More than two years but not exceeding five years
More than five years
Total
Amount due within one year classified as current liabilities
Balance due after one year

THE GROUP
2003
2002
HK$
HK$
440,272
1,136,986
10,101,191
6,642,419
78,679,245
76,202,504
7,224,750
10,837,125
96,445,458
94,819,034
67,231,220
32,451,386
29,214,238
62,367,648
96,445,458
94,819,034
68,059,273
54,969,476
2,836,298
6,561,234
11,194,635
12,556,647
14,355,252
20,731,677
96,445,458
94,819,034
(68,059,273)
(54,969,476)
28,386,185
39,849,558

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APPENDIX I

32. DEFERRED TAXATION

Balance at beginning of the year Credit to the income statement for the year_(note 10)_ Balance at end of the year	THE GROUP 2003 2002 HK$ HK$ 357,000 1,286,903 (162,000) (929,903) 195,000 357,000	THE GROUP 2003 2002 HK$ HK$ 357,000 1,286,903 (162,000) (929,903) 195,000 357,000
		357,000

The major components of the provision for deferred taxation and the total potential deferred tax liability (asset) unprovided are as follows:

THE GROUP Tax effect of timing differences due to: Excess of tax allowances over depreciation Estimated tax losses Revaluation surplus on properties Unrealised loss on other investments Others	Provided deferred tax liability (asset) 2003 2002 HK$ HK$ 195,000 1,969,000 – (1,557,000) – – – – – (55,000) 195,000 357,000	Unprovided/ unrecognised deferred tax liability (asset) 2003 2002 HK$ HK$ 623,540 2,085,601 (31,227,890) (17,975,318) 6,500,000 6,500,000 (4,182,523) – (4,672,623) (3,041,834) (32,959,496) (12,431,551)	Unprovided/ unrecognised deferred tax liability (asset) 2003 2002 HK$ HK$ 623,540 2,085,601 (31,227,890) (17,975,318) 6,500,000 6,500,000 (4,182,523) – (4,672,623) (3,041,834) (32,959,496) (12,431,551)
			(12,431,551)

The components of the net unrecognised deferred tax credit for the year are as follows:

Tax effect of timing differences due to: Excess of depreciation over tax allowance Tax losses arising Unrealised loss on other investments Others	THE GROUP 2003 2002 HK$ HK$ 1,462,061 534,909 13,252,572 9,787,687 4,182,523 – 1,630,789 3,041,834 20,527,945 13,364,430	THE GROUP 2003 2002 HK$ HK$ 1,462,061 534,909 13,252,572 9,787,687 4,182,523 – 1,630,789 3,041,834 20,527,945 13,364,430
		13,364,430

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FINANCIAL INFORMATION

APPENDIX I

The Group’s properties in the PRC are held as office and factory premises. In the opinion of the Company’s directors, the Group does not have any intention to dispose of these properties in the foreseeable future. Accordingly, no deferred taxation has been provided on the revaluation surplus of these properties.

The surplus arising on revaluation of the Group’s properties in Hong Kong does not constitute a timing difference for taxation purposes as any profits realised on their subsequent disposal would not be subject to taxation.

A deferred tax asset has not been recognised in the financial statements in respect of tax losses and other timing differences available to offset future profits as it is not certain that the tax losses and other timing differences will be utilised in the foreseeable future.

THE COMPANY

The Company did not have any significant unprovided deferred taxation at the balance sheet date.

33. OBLIGATIONS UNDER FINANCE LEASES

THE GROUP

Minimum
lease payments
2003
2002
HK$
HK$
Amounts payable under
finance leases:
Within one year
540,684
961,054
In the second to fifth
year inclusive
320,730
749,597
After five years
–
46,248
861,414
1,756,899
Less: Future finance charges
93,686
179,222
Present value of lease
obligations
767,728
1,577,677
Less: Amount due for
settlement within one year
(shown under current liabilities)
Amount due for settlement
after one year

Present value
of minimum
lease payments
2003
2002
HK$
HK$
483,660
857,001
284,068
675,169
–
45,507
767,728
1,577,677
–
–
767,728
1,577,677
(483,660)
(857,001)
284,068
720,676

It is the Group’s policy to lease certain of its plant and equipment under finance leases. The average lease term is 3 years. For the year ended 31st March, 2003, the average effective borrowing rates was approximately 3% per annum. Interest rate is fixed at the contract date. All leases are on a fixed repayment basis and no arrangement has been entered into for contingent rental payments.

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

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APPENDIX I

34. ACQUISITION OF A SUBSIDIARY

In prior year, the Group acquired 100% of the issued share capital of Strength Hope Limited for a consideration of HK$40,100,000. This acquisition has been accounted for by the acquisition method of accounting. The amount of goodwill arising as a result of the acquisition was HK$40,099,483. The loss after taxation of Strength Hope Limited and its subsidiaries included in the consolidated income statement for the year ended 31st March, 2002 amounted to HK$4,000.

	2003	2002
	HK$	HK$
NET ASSETS ACQUIRED
Bank balances	–	517
Goodwill	–	40,099,483
Total consideration	–	40,100,000

Satisfied by:
Shares allotted	–	35,000,000
Investments in securities – other investments	–	5,100,000
	–	40,100,000

Net cash inflow arising on acquisition:
Bank balances acquired	–	517

MAJOR NON-CASH TRANSACTIONS
During the year, the Group entered into finance lease arrangements in	respect of assets with a total capital
value at the inception of the leases of HK$70,982 (2002: HK$1,655,032).
COMMITMENTS
	THE GROUP
	2003	2002
	HK$	HK$
Capital expenditure contracted for but not
provided in the financial statements in
respect of property, plant and equipment	64,000	467,000

35. MAJOR NON-CASH TRANSACTIONS

36. COMMITMENTS

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FINANCIAL INFORMATION

APPENDIX I

At the balance sheet date, the Group had future minimum payments under non-cancellable operating leases in respect of rented properties which fall due as follows:

Within one year In the second to fifth year inclusive	2003 HK$ 525,096 – 525,096	2002 HK$ 1,041,312 712,596
		1,753,908

Operating lease payments represent rentals payable by the Group for its office premises. Leases are negotiated for a term of one to two years (2002: one to two years) and rentals are fixed for the leased period.

THE COMPANY

The Company did not have any significant capital or operating lease commitments at the balance sheet date.

37. CONTINGENT LIABILITIES

Extent of banking facilities utilised by subsidiaries and guaranteed by the Company	THE GROUP 2003 2002 HK$ HK$ – –	THE COMPANY 2003 2002 HK$ HK$ 12,688,555 10,444,186

38. PLEDGE OF ASSETS

The Group has pledged its land and buildings in the PRC, Taiwan and the United Kingdom with an aggregate net book value of approximately HK$126 million (2002: HK$87 million) and bank deposits of approximately HK$0.3 million (2002: HK$3.6 million) to secure general banking facilities granted to the Group.

39. RETIREMENT BENEFITS SCHEMES

The employees of IML have participated in the Central Pension Scheme operated by the Taiwan government. IML is required to contribute a certain percentage of the relevant part of the payroll to the Central Pension Scheme to fund the benefits. The only obligation of the Group with respect to the Central Pension Scheme is their required contributions under the Central Pension Scheme.

Since 1st December, 2000, the Group has operated pension schemes under the rules and regulations of the Mandatory Provident Fund Scheme Ordinance (“MPF Scheme”) for all qualifying employees in Hong Kong. The assets of the MPF Scheme are held separately in an independently managed fund. The Group has followed the minimum statutory contribution requirements of 5% of eligible employees’ relevant aggregate income. The contributions are charged to the income statement as incurred.

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APPENDIX I

The relevant PRC subsidiaries are required to make contributions to the state-managed schemes in the PRC based on a certain percentage of the monthly salaries of their current employees to fund the benefits. The employees are entitled to retirement pension calculated with reference to their basic salaries on retirement and their length of service in accordance with the relevant government regulations. The PRC government is responsible for the pension liability to these retired staff.

In addition, a subsidiary operates funded defined benefit pension scheme (the “ORSO Scheme”) for all qualifying employees. The assets of the scheme are held separately from those of the Group in funds under the control of trustees.

The most recent actuarial valuation of plan assets and liabilities of the ORSO Scheme was carried out at 31st March, 2003. The main actuarial assumptions used were as follows:

Discount rate	5.5% per annum
Expected return on ORSO Scheme assets	7.0% per annum
Expected salary increase rate	4.5% per annum

Amount recognised in the consolidated income statement in respect of the ORSO Scheme is as follows:

Current service cost Interest cost Expected return on plan assets Transitional liability recognised in 2003 Administrative cost and group life premium deducted from contribution Expense recognised in the consolidated income statement	2003 HK$ 153,000 88,000 (7,000) 2,116,000 11,000 2,361,000	2002 HK$ 822,000 – – – –
		822,000

The charge for the year has been included in staff costs.

The amount included in the consolidated balance sheet arising from the Group’s obligations in respect of the ORSO Scheme is as follows:

Present value of the obligations Fair value of plan assets Unrecognised actuarial gains Unrecognised transitional liability Current liability recognised in the consolidated balance sheet	2003 HK$ 951,000 (25,000) 57,000 – 983,000	2002 HK$ 2,292,000 (176,000) – (2,116,000)
		–

103 -

FINANCIAL INFORMATION

APPENDIX I

Movements in the net liability in the current year were as follows:

Opening net liability Expense as above Contributions paid by employer, including administrative cost and group life premium that are deducted from contribution Closing net liability	2003 HK$ – 2,361,000 (1,378,000) 983,000	2002 HK$ – – –
		–

40. POST BALANCE SHEET EVENT

Subsequent to the balance sheet date, the Group disposed of certain listed investments at a loss of approximately HK$18 million. The aggregate carrying value of these investments at 31st March, 2003 amounted to approximately HK$21 million.

104 -

FINANCIAL INFORMATION

APPENDIX I

D. INTERIM FINANCIAL INFORMATION

Set out below is extracted from the interim report of the ATNT Group for the six months ended 30 September 2002 and 2003 with breakdown of exceptional items.

Turnover
Loss before taxation, exceptional items and minority interests
Exceptional items
Allowance for bad and doubtful debts
Impairment loss recognised on investment securities
Net unrealised gain (loss) on other investments
Net realised loss on other investments
Loss on resumption of properties held for
development by government
Impairment loss recognised in respect of property, plant
& equipment
Impairment loss recognised in respect of properties held
for development
Impairment loss recognised in respect of goodwill arising
on acquisition of subsidiaries
Loss before taxation and minority interests
Taxation charge
Loss before minority interests
Minority interests
Loss attributable to shareholders
Loss per share – Basic

Six months ended
30.9.2003
30.9.2002
(unaudited)
(unaudited)
HK$’000
HK$’000
210,529
181,552
(7,391)
(27,934)
(339)
(3,178)
(2,390)
–
2,330
(23,366)
(18,049)
(1,070)
–
(2,081)
(1,762)
(32,700)
(9,776)
–
(1,182)
(5,500)
(38,559)
(95.829)
(872)
(1,899)
(39,431)
(97,728)
1,443
3,699
(37,988)
(94,029)
0.69 cents
1.70 cents

Note: There is no extraordinary items for the six months ended 30 September 2002 and 2003 in accordance with the definition of Hong Kong SSAP 2.

105 -

FINANCIAL INFORMATION

APPENDIX I

Set out below is full extract of the interim report of the ATNT Group for the six months ended 30 September 2002 and 2003.

CONDENSED CONSOLIDATED INCOME STATEMENT

For the six months ended 30th September 2003

Notes
Turnover
Cost of sales
Gross profit
Bad debts recovered
Other operating income
Distribution costs
Administrative expenses
Other operating expenses
Allowance for bad and doubtful debts
Impairment loss recognised on investments in securities
Net unrealised gain (loss) on other investments
Net realised loss on other investments
Loss on resumption of properties held for
development by government
Impairment loss recognised in respect of property,
plant and equipment
8
Impairment loss recognised in respect of properties
held for development
9
Impairment loss recognised in respect of goodwill
arising on acquisition of a subsidiary
10
Loss from operations
4
Finance costs – interest
Share of results of an associate
Loss before taxation
Taxation charge
5
Loss after taxation
Minority interests
Net loss for the period
Loss per share
7
Basic

Six months ended
30.9.2003
30.9.2002
(unaudited)
(unaudited)
HK$’000
HK$’000
210,529
181,552
(155,941)
(137,196)
54,588
44,356
9,249
5,526
5,187
4,177
(21,658)
(18,771)
(48,602)
(53,432)
(3,374)
(4,400)
(339)
(3,178)
(2,390)
–
2,330
(23,366)
(18,049)
(1,070)
–
(2,081)
(1,762)
(32,700)
(9,776)
–
(1,182)
(5,500)
(35,778)
(90,439)
(2,781)
(3,379)
(38,559)
(93,818)
–
(2,011)
(38,559)
(95,829)
(872)
(1,899)
(39,431)
(97,728)
1,443
3,699
(37,988)
(94,029)
0.69 cents
1.70 cents

106 -

FINANCIAL INFORMATION

APPENDIX I

CONDENSED CONSOLIDATED BALANCE SHEET

At 30th September 2003

Notes Non-current assets Property, plant and equipment 8 Properties held for development 9 Goodwill 10 Intangible assets Investments in securities Loans receivable 11 Other assets 12 Current assets Inventories Amounts due from customers for contract work Loans receivable 11 Debtors, deposits and prepayments 12 Investments in securities Taxation recoverable Pledged bank deposits Bank balances and cash Current liabilities Creditors, bills payable and accrued charges 13 Amounts due to customers for contract work Loan from a director Amount due to minority shareholder of a subsidiary Retirement benefit obligations Taxation payable Borrowings due within one year Obligations under finance leases due within one year Net current assets	30.9.2003 (unaudited) HK$’000 180,855 4,120 624 90 510 1,817 1,120 189,136 55,945 32,749 9,437 134,960 10,336 492 2,430 22,646 268,995 158,933 – – 15,889 983 150 77,246 244 253,445 15,550 204,686	31.3.2003 (audited) (restated) HK$’000 204,822 13,896 2,000 96 2,900 1,927 3,675
		229,316
		62,350 33,852 9,334 140,244 30,234 2,558 336 10,923
		289,831
		178,291 1,069 7,000 15,597 983 509 68,059 484
		271,992
		17,839
		247,155

107 -

FINANCIAL INFORMATION

APPENDIX I

Notes Capital and reserves Share capital 14 Reserves 15 Minority interests Non-current liabilities Borrowings due after one year Obligations under finance leases due after one year Deferred taxation	30.9.2003 (unaudited) HK$’000 55,293 71,228 126,521 49,217 24,735 297 3,916 28,948 204,686	31.3.2003 (audited) (restated) HK$’000 55,293 108,967
		164,260
		50,628
		28,386 284 3,597
		32,267
		247,155

108 -

FINANCIAL INFORMATION

APPENDIX I

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30th September 2003

As 1st April 2002
– as originally stated
– adjustment on adoption of Statement of Standard Accounting Practice
(“SSAP”) 12 (Revised)(Note 2)
– as restated
Exchange difference arising on translation of overseas subsidiaries
not recognised in the consolidated income statement
Net loss for the period
At 30th September 2002
Exchange difference arising on translation of overseas subsidiaries not
recognised in the consolidated income statement
Net loss for the period
At 31st March 2003
Exchange difference arising on translation of overseas subsidiaries not
recognised in the consolidated income statement
Effect of change in tax rate on deferred tax debited to revaluation reserve
Net gain not recognised on the consolidated income statement
Net loss for the period
At 30th September 2003

Total equity
HK$’000
329,039
(3,402)
325,637
170
(94,029)
231,778
(3,751)
(63,767)
164,260

568
(319)

249
(37,988)
126,521

109 -

FINANCIAL INFORMATION

APPENDIX I

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

For the six months ended 30th September 2003

Net cash used in operating activities Net cash from investing activities Net cash used in financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period Analysis of the balances of cash and cash equivalents Bank balances and cash Bank overdrafts	Six months ended 30.9.2003 30.9.2002 (unaudited) (unaudited) HK$’000 HK$’000 (4,786) (6,705) 20,648 3,835 (4,187) (6,749) 11,675 (9,619) 10,483 23,221 22,158 13,602 22,646 13,602 (488) – 22,158 13,602

110 -

FINANCIAL INFORMATION

APPENDIX I

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the six months ended 30th September 2003

1. BASIS OF PREPARATION

The condensed financial statements have been prepared in accordance with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and with SSAP 25 “Interim Financial Reporting” issued by the Hong Kong Society of Accountants.

2. PRINCIPAL ACCOUNTING POLICIES

The condensed financial statements have been prepared under the historical cost convention as modified for the revaluation of certain properties and investments in securities.

The accounting policies adopted are consistent with those followed in the preparation of the Group’s annual financial statements for the year ended 31st March 2003 except as explained below.

Income taxes

In the current interim period, the Group has adopted SSAP 12 (Revised) “Income Taxes”. The principal effect of the implementation of SSAP 12 (Revised) is in relation to deferred tax. SSAP 12 (Revised) requires the adoption of a balance sheet liability method, whereby deferred tax is recognised in respect of all temporary differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis used in the computation of taxable profit, with limited exceptions.

In the absence of any specific transitional requirements in SSAP 12 (Revised), the new accounting policy has been applied retrospectively. Comparative amounts have been restated accordingly. As a result of this change in policy, the balance on the Group’s property revaluation reserve at 1st April 2002 has been decreased by HK$3,402,000 and the Group’s deferred taxation liability at 1st April 2002 has been increased by HK$3,402,000, which is the cumulative effect to the change in financial position for the periods prior to 1st April 2002.

3. SEGMENT INFORMATION

Business segments

The Group is mainly engaged in electroplating equipment business, wet processing equipment business, satellite communication business, entertainment production business and timber trading business. These businesses are the basis on which the Group reports its primary segment information.

Principal activities are as follows:

Electroplating equipment	–	design, manufacture and sale of custom-built electroplating equipment
Wet processing equipment	–	design, manufacture and sale of custom-built horizontal wet processing
		and automation machinery
Satellite communication	–	provision of satellite communication services
Entertainment production	–	provision of concert production
Timber trading	–	trading of logged timber

111 -

FINANCIAL INFORMATION

APPENDIX I

Segment information about these businesses is presented below.

For the six months ended 30th September 2003

Wet Electroplating processing Satellite Entertainment Timber Other equipment equipment communication production trading operations HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (Note) TURNOVER External sales 109,220 63,196 – 19,844 18,195 74 Inter-segment sales – 704 – – – – 109,220 63,900 – 19,844 18,195 74 Inter-segment sales are charged at prevailing market rates RESULTS Segment results 2,245 (3,881 ) (220 ) (1,832 ) (1,210 ) (8,647 ) Unallocated corporate income Unallocated corporate expenses Impairment loss recognised on investments in securities Net unrealised gain on other investments Net realised loss on other investments Loss from operations	Elimination HK$’000 – (704 ) (704 ) 3,553	Consolidated HK$’000 210,529 – 210,529 (9,992 ) 576 (8,253 ) (2,390 ) 2,330 (18,049 ) (35,778 )

112 -

FINANCIAL INFORMATION

APPENDIX I

For the six months ended 30th September 2002

Wet Electroplating processing Satellite Entertainment Timber Other equipment equipment communication production trading operations HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (Note) TURNOVER External sales 86,773 48,076 1,347 21,503 23,063 790 Inter-segment sales – 934 – – – – Total 86,773 49,010 1,347 21,503 23,063 790 Inter-segment sales are charged at prevailing market rates RESULTS Segment results 264 (9,441 ) (35,429 ) (3,963 ) (5,542 ) (4,710 ) Unallocated corporate income Unallocated corporate expenses Net unrealised loss on other investments Net realised loss on other investments Loss from operations	Elimination HK$’000 – (934 ) (934 ) 3,038	Consolidated HK$’000 181,552 – 181,552 (55,783 ) 101 (10,321 ) (23,366 ) (1,070 ) (90,439 )

Note: In March 2003, the directors determined to abandon the Group’s satellite communication. The satellite communication ceased operations in July 2003.

4. LOSS FROM OPERATIONS

Loss from operations has been arrived at after charging (crediting): Depreciation of property, plant and equipment Amortisation of goodwill (included in administrative expenses) Amortisation of intangible assets (included in administrative expenses) Total depreciation and amortisation (Gain) loss on disposal of property, plant and equipment	Six months 30.9.2003 HK$’000 6,140 194 6 6,340 (2,277)	Six months 30.9.2003 HK$’000 6,140 194 6 6,340 (2,277)	Six months 30.9.2003 HK$’000 6,140 194 6 6,340 (2,277)	ended 30.9.2002 HK$’000	ended 30.9.2002 HK$’000
		6,140 194 6			8,114 1,360 13
				9,487 250

113 -

FINANCIAL INFORMATION

APPENDIX I

5. TAXATION CHARGE

The taxation charge comprises: Hong Kong Profits Tax Underprovision in prior years Overseas taxation Charge for the period Underprovision in prior years	Six months ended 30.9.2003 30.9.2002 HK$’000 HK$’000 518 – 354 385 – 1,514 354 1,899 872 1,899	Six months ended 30.9.2003 30.9.2002 HK$’000 HK$’000 518 – 354 385 – 1,514 354 1,899 872 1,899
		385 1,514
		1,899
		1,899

No provision for Hong Kong Profits Tax has been made as the Group incurred tax losses for the period. Overseas taxation is calculated at the rates prevailing in the relevant jurisdictions.

6. DIVIDEND

No dividends were paid during either period. The directors do not recommend the payment of any interim dividend.

7. LOSS PER SHARE

The calculation of the basic loss per share is based on the net loss for the six months ended 30th September 2003 of HK$37,988,000 (six months ended 30.9.2002: HK$94,029,000) and the weighted average number of 5,529,268,000 (six months ended 30.9.2002: 5,529,268,000) shares in issue during the period.

No diluted loss per share has been presented because the exercise price of the Company’s share options was higher than the average market price of shares for both periods.

8. PROPERTY, PLANT AND EQUIPMENT

During the six months ended 30th September 2003, the Group spent HK$1,047,000 (six months ended 30.9.2002: HK$912,000) on acquisition of property, plant and equipment.

Due to the stagnant development of the entertainment production business, the directors reassessed the recoverable amount of the major assets of its entertainment production business with reference to the net recoverable amount at the balance sheet date. Based on this reassessment, the directors consider an impairment of approximately HK$1.8 million is required to be recognised for the current period.

9. PROPERTIES HELD FOR DEVELOPMENT

During the period, the Group reassessed the recoverable amount of its properties held for development by reference to the estimated market value of the land. The directors consider there was an impairment of HK$9,776,000 and accordingly the amount has been charged to the income statement during the six months ended 30th September 2003.

114 -

FINANCIAL INFORMATION

APPENDIX I

10. GOODWILL

As a consequence of a change to the original business plan, the Group reassessed the recoverable amount of its investment in the timber trading business based on the present value of the expected future cash flows arising from trading of timber, which was derived from discounting the projected cash flows by an implicit rate of return of 4.3%. Based on this reassessment, the directors consider a further impairment of approximately HK$1.2 million (six months ended 30.9.2002: HK$5.5 million) is required to be recognised for the goodwill arising from the acquisition of the subsidiary engaged in the timber trading business.

11. LOANS RECEIVABLE

The following is the maturity profile of loans receivable at the reporting date:

Repayable within 3 months Repayable after 3 months but within 6 months Repayable after 6 months but within 1 year Repayable after 1 year Total	30.9.2003 HK$’000 9,265 57 115 9,437 1,817 11,254	31.3.2003 HK$’000 9,141 71 122
		9,334 1,927
		11,261

12. DEBTORS, DEPOSITS AND PREPAYMENTS

Trade debtors Bills receivable Other debtors and prepayments Less: Trade debtors, non-current portion	30.9.2003 HK$’000 109,924 12,080 14,076 136,080 (1,120) 134,960	31.3.2003 HK$’000 119,246 13,343 11,330
		143,919 (3,675)
		140,244

The Group allows a general credit period of one month to its trade customers except construction contracts where the Group allows staged payments. In general, credit will only be offered to customers in accordance with their financial creditabilities and an established payment records.

115 -

FINANCIAL INFORMATION

APPENDIX I

The following is an aged analysis of trade debtors as at the reporting date:

Current Overdue by: 0 – 60 days 61 – 120 days 121 – 180 days Over 180 days	30.9.2003 HK$’000 32,118 42,530 7,225 12,509 15,542 109,924	31.3.2003 HK$’000 49,628 44,036 3,626 14,026 7,930
		119,246

13. CREDITORS, BILLS PAYABLE AND ACCRUED CHARGES

Trade creditors Bills payable Other creditors and accrued charges The following is an aged analysis of trade creditors as at the reporting 0 – 60 days 61 – 120 days 121 – 180 days Over 180 days 14. SHARE CAPITAL	30.9.2003 HK$’000 70,620 6,513 81,800 158,933 date: 30.9.2003 HK$’000 35,625 15,154 13,479 6,362 70,620	31.3.2003 HK$’000 82,697 13,932 81,662
		178,291

		31.3.2003 HK$’000 33,935 17,244 23,539 7,979
		82,697

Shares of HK$0.01 each Authorised Issued and fully paid: At 1st April 2003 and 30th September 2003	Number of shares ’000 20,000,000 5,529,268	Amount HK$’000 200,000

		55,293

116 -

FINANCIAL INFORMATION

APPENDIX I

15. RESERVES

At 1st April 2002 – as originally stated – adjustment on adoption of SSAP 12 (Revised)(Note 2) – as restated Exchange difference arising on translation of operations of overseas subsidiaries Net loss for the period At 30th September 2002 Exchange difference arising on translation of operations of overseas subsidiaries Net loss for the period At 31st March 2003 Exchange difference arising on translation of operations of overseas subsidiaries Effect of change in tax rate on deferred tax debited to revaluation reserve Net loss for the period At 30th September 2003	Share premium HK$’000 353,062 – 353,062 – – 353,062 – – 353,062 – – – 353,062	Property revaluation reserve HK$’000 39,145 (3,402) 35,743 – – 35,743 – – 35,743 – (319) – 35,424	Legal reserves HK$’000 16,195 – 16,195 – – 16,195 – – 16,195 – – – 16,195	Currency translation reserve HK$’000 (7,845) – (7,845) 170 – (7,675) (3,751) – (11,426) 568 – – (10,858)	Deficit HK$’000 (126,811) – (126,811) – (94,029) (220,840) – (63,767) (284,607) – – (37,988) (322,595)	Total HK$’000 273,746 (3,402) 270,344 170 (94,029) 176,485 (3,751) (63,767) 108,967 568 (319) (37,988) 71,228

16. POST BALANCE SHEET EVENTS

(a) On 8th October 2003, the Group entered into an agreement with the minority shareholder of SCL Citi-Link ATNT (Holdings) Limited (“SCL”), a 82% owned subsidiary of the Company, to acquire 20 ordinary shares of SCL, representing approximately 18% of the issued share capital of SCL, and the shareholder’s loan of SCL of approximately HK$14,926,000, for an aggregate cash consideration of HK$100,001.
(b) On 17th November 2003, the Group entered into an agreement with a third party, to dispose of its 50% owned associate, Beijing Wan Dian Company Limited, of which the investment cost had been fully written off in prior years, at a consideration of approximately HK$2,783,000.
(c) Pursuant to a directors’ meeting held on 23rd December 2003, the Company changed its financial year end date from 31st March to 31st December, accordingly, the next financial year end date will be for the nine months period ended 31st December 2003.
117 -

FINANCIAL INFORMATION

APPENDIX I

E. STATEMENT OF PRO FORMA UNAUDITED ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS OF THE ATNT GROUP

The following is a statement of the pro forma unaudited adjusted consolidated net tangible assets of the ATNT Group based on the audited consolidated net tangible assets of the ATNT Group as at 31 March 2003 adjusted to take into account the unaudited consolidated loss attributable to Shareholders and unaudited net decrease in reserves in the ATNT Group for the six months ended 30 September 2003 and to reflect the effect of the proposed issue of Convertible Note, Share Sale and Share Subscription.

Audited consolidated net asset value of the ATNT Group as at 31 March 2003
Less: Unaudited consolidated net loss of the ATNT Group for
the six months ended 30 September 2003
Add: Exchange differences arising from translation of financial
statements of overseas subsidiaries not recognised in the income
statement for the six months ended 30 September 2003
Less: Recognition of the deferred tax liabilities in adoption of
SSAP12 (Revised) “Income Taxes”
Unaudited consolidated net assets of the ATNT Group as at 30 September 2003
Less: Intangible assets of the ATNT Group as at 30 September 2003_(Note 1)
Unaudited consolidated net tangible asset value of
the ATNT Group as at 30 September 2003
Add: Net proceeds from issue of Convertible Note(Note 2)
Add: Net proceeds from Share Sale
Less: Net tangible assets disposed attributable to the Share Sale
Less: Cash consideration to be paid by the ATNT Group for the
Share Subscription(Note 3)
Add: Net tangible assets acquired attributable to the Share Subscription(Note 3)
Pro forma unaudited adjusted consolidated net tangible asset value
of the ATNT Group immediately after the completion of the proposed
issue of Convertible Note, Share Sale and Share Subscription
Unaudited adjusted consolidated net tangible asset value per Share
immediately before the completion of the proposed
issue of Convertible Note, Share Sale and Share Subscription
Unaudited adjusted consolidated net tangible asset value per Share
immediately after the completion of the proposed
issue of Convertible Note, Share Sale and Share Subscription(Note 4)_

HK$’000
167,662
(37,988)
129,674
568
(3,721)
126,521
(714)
125,807
29,000
17,405
(12,770)
(17,857)
19,405
160,990
HKD 0.023
HKD 0.020

118 -

FINANCIAL INFORMATION

APPENDIX I

Notes

The amount represents goodwill on acquisition of subsidiaries and the patent acquired.
The ATNT Group assumes that the Convertible Note would be fully converted into the Shares.
The ATNT Group intends to subscribe 10,000,000 IML Shares under the IML Share Placing.
The ATNT Group assumes that the Convertible Note would be converted into the Shares at an initial conversion price of HK$0.012 per share. Accordingly, an additional 2,500,000,000 Conversion Shares would be issued, which resulted in a total of 8,029,268,000 Shares in issue.
In calculating the effect on the consolidated net tangible assets of the ATNT Group arising from the Share Sale and Share Subscription, financial figures as of 30 September 2003 are used, the date to which the latest published unaudited financial statements of ATNT were made up.

F. STATEMENT OF INDEBTEDNESS AND CONTINGENT LIABILITIES

Borrowings

At the close of business on 29 February, 2004, being the latest practicable date of this indebtedness statement prior to the printing of this circular, the Group had outstanding borrowings of approximately HK$77.3 million comprising bank loans of approximately HK$76.1 million, bank overdrafts of approximately HK$0.9 million and obligations under the finance leases of approximately HK$0.3 million. All outstanding borrowings are not overdue as of the Latest Practicable Date. In addition, the Group had contingent liabilities in respect of bills discounted with recourse of approximately HK$3.2 million. The total unutilised banking facilities as of 29 February, 2004 was HK$90.2 million.

Security for borrowings

Out of the outstanding borrowings of approximately HK$77.3 million, approximately HK$44 million of the bank loans were secured by assets of the ATNT Group. At the close of business on 29 February, 2004, the Group’s banking facilities of approximately HK$52.6 million were secured by a legal charge over the ATNT Group’s leasehold land and buildings with a carrying value of approximately HK$123.1 million and bank deposit of approximately HK$3.8 million. The unutilised banking facilities which were secured by assets of the ATNT Group were therefore approximately HK$8.6 million.

General

Save as aforesaid or as otherwise disclosed herein, and apart from intra-group liabilities and normal trade debts payable, neither the Company nor any companies comprising the Group had outstanding at the close of business on 29 February, 2004 any loan capital issued and outstanding or agreed to be issued, bank overdrafts, loans or other similar indebtedness, liabilities under acceptances or acceptable credits, debentures, mortgages, charges, finance lease commitments, guarantees or other material contingent liabilities.

119 -

FINANCIAL INFORMATION

APPENDIX I

The Directors confirmed that there had been no material change in the indebtedness and contingent liabilities of the Group since 29 February, 2004.

Foreign currency amounts have been translated into Hong Kong dollars at the approximately exchange rates prevailing at the close of business on 29 February, 2004.

G. MATERIAL CHANGE

Save as disclosed in the interim report of ATNT for the six months ended 30 September 2003 enclosed in this Circular from page 105 to page 117 and the section headed “Statement of pro forma unaudited adjusted consolidated net tangible assets of the ATNT Group” and the “Statement of indebtedness and contingent liabilities” in this Circular from page 118 to page 120, the Directors are not aware of any material changes in the financial or trading position or prospects of the ATNT Group since 31st March 2003, the date to which the latest audited financial information of the ATNT Group was made up.

120 -

PROPERTY VALUATION OF THE GROUP

APPENDIX II

The following is the text of property valuation report from Sallmanns dated 31 March 2004 for the incorporation in this circular. A copy of this letter is available for inspection as mentioned in appendix III to this circular.

31 March 2004

The Board of Directors

Asia Tele-Net and Technology Corporation Limited

11 Dai Hei Street Tai Po Industrial Estate Tai Po New Territories Hong Kong

Dear Sirs,

In accordance with your instructions to value the property interests in which Asia Tele-Net and Technology Corporation Limited (the “Company”) and its subsidiaries (hereinafter together referred to as the “Group”) have interests in the People’s Republic of China (the “PRC”), Hong Kong and Republic of China (Taiwan), we confirm that we have carried out inspections, made relevant enquiries and searches and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the value of the property interests as at 16 February 2004 (the “date of valuation”).

Wherever possible, our valuation of the property interests represent the open market value which we would define as intended to mean “an opinion of the best price at which the sale of an interest in properties would have been completed unconditionally for cash consideration on the date of valuation, assuming:–

(a) a willing seller;
(b) that, prior to the date of valuation, there had been a reasonable period (having regard to the nature of the properties and the state of the market) for the proper marketing of the interest, for the agreement of the price and terms and for the completion of the sale;
(c) that the state of the market, level of values and other circumstances were, on any earlier assumed date of exchange of contracts, the same as on the date of valuation;
(d) that no account is taken of any additional bid by a prospective purchaser with a special interest; and
(e) that both parties to the transaction had acted knowledgeably, prudently and without compulsion.”
121 -

PROPERTY VALUATION OF THE GROUP

APPENDIX II

Due to a lack of evidence of comparable transactions in the PRC, our valuation for property interests in Group I is our opinion of the fair market value. Fair market value is defined as the estimated amount at which the subject property in its continued use might be expected to be purchased and sold between a willing buyer and a willing seller, neither being under compulsion, each having a reasonable knowledge of all relevant facts, with equity to both, for continuation of the current operation of the relevant property as part of an on-going business.

Where, due to the nature of the buildings and structures of the property interests in the PRC, there are no market sales comparables readily available, the property interests have been valued on the basis of its depreciated replacement cost.

Depreciated replacement cost is defined as “the aggregate amount of the value of the land for the existing use or a notional replacement site in the same locality, and the gross replacement cost of the buildings and other site works, from which appropriate deductions may then be made to allow for age, condition, economic or functional obsolescence and environmental factors etc; all of these might result in the existing property being worth less to the undertaking in occupation than would a new replacement.” This opinion of value does not necessarily represent the amount that might be realized from the disposal of the subject property in the open market, and this basis has been used due to the lack of an established market upon which to base comparable transactions. However, this approach generally furnishes the most reliable indication of value for property without a known used market.

We have valued the property interests in Group II and III by direct comparison approach assuming sale of the property interests in their existing state with the benefit of immediate vacant possession and by making reference to comparable sale transactions as available in the relevant market.

Our valuations have been made on the assumption that the seller sells the property interests on the open market without the benefit of a deferred term contract, leaseback, joint venture, management agreement or any similar arrangement, which could serve to affect the values of the property interests.

No allowance has been made in our report for any charges, mortgages or amounts owing on any of the property interests valued nor for any expenses or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the properties are free from encumbrances, restrictions and outgoings of an onerous nature, which could affect their values.

In valuing the property interest in Hong Kong held under a Government Lease expiring before 30th June, 1997, we have taken account of the stipulations contained in Annex III of the Joint Declaration of the Government of the United Kingdom and the Government of the People’s Republic of China on the question of Hong Kong and the New Territories Leases (Extension) Ordinance 1988 that such leases have been extended without premium until 30th June, 2047 and that a rent of three per cent of the then rateable value is charged per annum from the date of extension.

We have relied to a very considerable extent on the information given by the Group and have accepted advice given to us on such matters as tenure, planning approvals, statutory notices, easements, particulars of occupancy, letting, and all other relevant matters.

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We have been, in some instances, provided by the Group with extracts of the title documents relating to the properties in the PRC and have caused searches to be made at the Hong Kong Land Registries in respect of Hong Kong properties. However, we have not searched the original documents to verify the existing titles to the property interests in the PRC or any material encumbrances that might be attached to the properties, which may not appear on the copies handed to us. We have relied on the advice given by the Company’s PRC legal adviser – SD & Partners, concerning the validity of the Group’s titles to the property interests in the PRC.

We have not carried out detailed site measurements to verify the correctness of the site areas in respect of the property interests but have assumed that the site areas shown on the documents and official site plans handed to us are correct. Based on our experience of valuation of similar property interests in the PRC, we consider the assumptions so made to be reasonable. All documents and contracts have been used as reference only and all dimensions, measurements and areas are approximations. No on-site measurement has been taken.

We have inspected the exterior and, where possible, the interior of the property interests. However, no structural survey has been made, but in the course of our inspection, we did not note any serious defects. We are not, however, able to report whether the property interests are free of rot, infestation or any other structural defects. No tests were carried out on any of the services.

We have had no reason to doubt the truth and accuracy of the information provided to us by the Group. We have also sought and received confirmation from the Group that no material factors have been omitted from the information supplied. We consider that we have been provided with sufficient information to reach an informed view, and we have no reason to suspect that any material information has been withheld.

Unless otherwise stated, all monetary sums stated in this report are in Hong Kong Dollars.

Our valuations are summarised below and the valuation certificates are attached.

Yours faithfully, for and on behalf of Sallmanns (Far East) Limited Paul L. Brown B.Sc. FRICS FHKIS Director

Note: Paul L. Brown is a Chartered Surveyor who has 21 years’ experience in the valuation of properties in the PRC and 24 years of property valuation experience in Hong Kong, the United Kingdom and the Asia-Pacific region.

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SUMMARY OF VALUES

Group I – Property interests held and occupied by the Group in the PRC

No. Property 1 A parcel of land, various buildings and structures located at Area 8 Baolong Industrial Zone Longhua Town Bao’an District Shenzen Guangdong Province The PRC 2. A parcel of land and buildings located at Majuqiao Town Industrial District Tongxian County Beijing The PRC Sub-total:	Fair Market Value Fair Market Value in existing state Interest Attributable as at attributable to the Group as at 16 February 2004 to the Group 16 February 2004 RMB30,300,000 100% RMB30,300,000 RMB8,300,000 52% RMB4,316,000 RMB38,600,000 RMB34,616,000	Fair Market Value Fair Market Value in existing state Interest Attributable as at attributable to the Group as at 16 February 2004 to the Group 16 February 2004 RMB30,300,000 100% RMB30,300,000 RMB8,300,000 52% RMB4,316,000 RMB38,600,000 RMB34,616,000
		RMB34,616,000

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Group II – Property interests held and occupied by the Group in Hong Kong

No. Property 3. 11 Dai Hei Street Tai Po Industrial Estate New Territories Hong Kong 4. Remaining Portion of Sub-section 1 of Section H of Lot 3719, in DD 104 Yuen Long New Territories Hong Kong Sub-total:	Open Market Value Fair Market Value in existing state Interest Attributable as at attributable to the Group as at 16 February 2004 to the Group 16 February 2004 HK$35,400,000 100% HK$35,400,000 HK$1,380,000 100% HK$1,380,000 HK$36,780,000 HK$36,780,000	Open Market Value Fair Market Value in existing state Interest Attributable as at attributable to the Group as at 16 February 2004 to the Group 16 February 2004 HK$35,400,000 100% HK$35,400,000 HK$1,380,000 100% HK$1,380,000 HK$36,780,000 HK$36,780,000
		HK$36,780,000

Group III – Property interest held and occupied by the Group in Republic of China (Taiwan)

No. Property 5. No. 3 Tzu-chiang 3rd Road Chungli Industrial Park Chungli City Taoyuan County Republic of China (Taiwan) Sub-total:	Open Market Value Fair Market Value in existing state Interest Attributable as at attributable to the Group as at 16 February 2004 to the Group 16 February 2004 NT$245,150,000 50.02% NT$122,624,000 NT$245,150,000 NT$122,624,000	Open Market Value Fair Market Value in existing state Interest Attributable as at attributable to the Group as at 16 February 2004 to the Group 16 February 2004 NT$245,150,000 50.02% NT$122,624,000 NT$245,150,000 NT$122,624,000
		NT$122,624,000

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APPENDIX II

VALUATION CERTIFICATE

Group I – Property interests held and occupied by the Group in the PRC

Property

Description and tenure

Particulars of occupancy

Fair market value in existing state as at 16 February 2004

A parcel of land, The property comprises a parcel of various buildings and land with a site area of approximately structures 17,393.8 sq.m. (187,226.86 sq.ft.) located at Area 8 The property also comprises an Baolong Industrial industrial building and a dormitory Zone building all completed in about 1991. Longhua Town Bao’an District The structures included a transformer Shenzen room, a storage shed, 2 temporary Guangdong Province sheds and a guardhouse. The PRC

The property is RMB30,300,000 currently occupied by the (100% interests Group for attributable to the industrial and Group dormitory RMB30,300,000) purposes.

The property has a total gross floor area of approximately 15,314.4 sq.m. (164,844.2 sq.ft.)

Building Level Factory Level 1 Level 2 Level 3 Sub-total: Dormitory Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 Level 7 Sub-total: Total:	GFA (sq.m.) 8,339.7 1,301.6 1,617.8
	11,259.1 535.7 586.6 586.6 586.6 586.6 586.6 586.6
	4,055.3
	15,314.4

The land use rights of the property were granted for a term of 50 years expiring on 10 June 2041.

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Notes:

Pursuant to a State-owned Land Use Rights Certificate – Shen Fang Zi Di No. 7800004 dated 20 October 1997 issued by the People’s Government of Shenzhen City, the land use rights of a parcel of land with an area of approximately 17,393.8 sq.m. was granted to Process Automation (Shenzhen) Ltd. (寶龍自動機械（深圳）有限公司 ) for a term of 50 years expiring on 10 June 2041 for industrial uses.
Pursuant to 3 Realty Title Certificates – Shen Fang Di Zi Di No. 5000072276, 5000072273 and 5000072274 issued by the People’s Government of Shenzhen City on 16 September 2002 and 17 September 2002, the building ownership title of an industrial building with a total gross floor area of approximately 11,259.1 sq.m. is held by Process Automation (Shenzhen) Ltd.
Pursuant to 7 Realty Title Certificates – Shen Fang Di Zi Di No. 5000073783, 5000073784, 5000073785, 5000073792, 5000073790, 5000073788 and 5000073786, issued by the People’s Government of Shenzhen City on 16 September 2002, the building ownership title of a dormitory building with a total gross floor area of approximately 4,055.3 sq.m. is held by Process Automation (Shenzhen) Ltd.
We have been provided with a legal opinion to the property interest by the Group’s PRC legal adviser, which contains, inter alia, that Process Automation (Shenzhen) Ltd. legally owns the land use rights of the property with a site area of 17,393.8 sq.m. and the building ownership of an industrial building and a dormitory building with gross floor area of 11,259.1 sq.m. and 4,055.3 sq.m. respectively.
Process Automation (Shenzhen) Ltd. is a wholly-owned subsidiary of the Company.
The property is subject to a stamp duty of 0.05% on the transacted price when it is transferred and is estimated to be RMB15,150 based on our valuation figure as at the date of valuation. In normal practice, purchaser shall be responsible for the stamp duty.
The property is also subject to a business tax of 5% and a city construction tax of 0.05%, and they will be based on the difference between the transacted price and original acquisition price. In normal practice, the vendor shall be responsible for the business tax and the city construction tax.
According to the information provided by the Company, the acquisition costs of the land and buildings were RMB9,138,973 and RMB20,731,392.02 respectively.
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VALUATION CERTIFICATE

Property

Description and tenure

Fair market value in existing state Particulars as at of occupancy 16 February 2004

A parcel of land The property comprises a parcel of and buildings land with a site area of approximately located at 11,031.66 sq.m. (118,744.79 sq.ft.) Majuqiao Town Industrial District The property also comprises 4 Tongxian County buildings and various ancillary Beijing structures all completed in various The PRC stages between 1996 and 1997.

The property is RMB8,300,000 currently occupied by the (52% interest Group for attributable to the industrial and Group dormitory RMB4,316,000) purposes.

The buildings include a 2-storey factory building, a 6-storey dormitory building, a 2-storey dormitory with canteen, a transformer room and a boiler room.

The property has a total gross floor area of approximately 6,728.13 sq.m. (72,421.59 sq.ft.)

The land use rights of the property were granted for a term of 50 years expiring on 22 July 2051.

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APPENDIX II

Notes:

Pursuant to a State-owned Land Use Rights Certificate – Jing Tong Guo Yong (2001 Chu) Zi Di No. 103 issued by the People’s Government of Tongzhou District on 21 July 2001, the land use rights of a parcel of land with a site area of approximately 11,031.66 sq.m. was granted to Beijing Golden PAL Plating Equipment Company Limited (北京金朋電鍍器材有限公司 ) for a term of 50 years expiring on 22 July 2051 for industrial uses.
Pursuant to a Buildings Ownership Certificate – Jing Fang Quan Zheng Tong Qi Zi Di No. 00071 issued by the Beijing Land Resources and Housing Bureau on 15 October 2001, the building ownership title of the buildings with a total gross floor area of approximately 6,728.13 are vested in Beijing Golden PAL Plating Equipment Company Limited.
We have been provided with a legal opinion to the property interest by the Group’s PRC legal adviser, which contains, inter alia, that Beijing Golden PAL Plating Equipment Company Limited legally owns the land use rights of the property with a site area of 11,031.66 sq.m. and the building ownership of the buildings with a total gross floor area of 6,728.13 sq.m.
Beijing Golden PAL Plating Equipment Company Limited is a 52% interest owned subsidiary of the Company.
The property is subject to a stamp duty of 0.05% on the transacted price when it is transferred and is estimated to be RMB2,490 based on our valuation figure as at the date of valuation. In normal practice, purchaser shall be responsible for the stamp duty.
According to the information provided by the Company, the acquisition costs of the land and buildings were RMB1,311,648.24 and RMB7,282,077.25 respectively.
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APPENDIX II

VALUATION CERTIFICATE

Group II – Property interests held and occupied by the Group in Hong Kong

Description and tenure

Property

11 Dai Hei Street Tai Po Industrial Estate New Territories Hong Kong

The property comprises a parcel of land with a registered site area of approximately 3,165.64 sq.m. (34,075 sq.ft.) in Tai Po Industrial Estate.

Erected on the land is a 3-storey (Subsection 2 of industrial building plus a mezzanine Section F of Tai Po floor completed in about 1989. The Town Lot gross floor area of the buildings is No. 13) approximately 6,421.87 sq.m. (69,125 sq.ft.).

Particulars of occupancy

The property is currently occupied by the Group for workshop, storage and ancillary office purposes.

Open Market Value in existing state as at 16 February 2004

HK$35,400,000

(100% interests attributable to the Group HK$35,400,000)

The property is held under a New Grant No. 11981 for a term of 99 years commencing from 1 July 1898 and thereafter extended for a further term of 50 years.

By an agreement dated 30 November 1990, the site was leased from The Hong Kong Industrial Estates Corporation by Process Automation International Limited on a term commencing from 30 December 1987 and thereafter extended up to 24 June 2047. In consideration of this lease agreement, a premium of $3,482,204 was paid.

The ground rent payable per annum for the property is equal to 3% of the rateable value for the time being of the property.

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Notes:

According to our recent search at the Land Registry, the registered Lessee is Process Automation International Limited registered vide Memorial No. 336903 dated 30 November 1990.
According to the 2nd Schedule of the Agreement, the permitted use is restricted to “the manufacture of automatic plating machines mainly for the electronics industry”.
Before assigning the premises to a third party, the Lessee must first, by notice, offer to surrender the Lease to the Hong Kong Science and Technology Parks for the lesser of two considerations:–
(i) The first consideration comprises two amounts. The amount for the land is based on 80% of the notional premium paid by the Lessee for the land, times the fraction of years left unexpired on the lease compared to the total term of the lease. The amount for the buildings is to be the calculation of the total replacement cost of the buildings including any fixtures and fittings discounted for depreciation at a rate of 5% per annum from the date of the occupation permit to the date of valuation. The total of these two sums is then reduced by 10%.
(ii) The second consideration is based on the market value of the land, buildings, fixtures and fittings at the date of the Hong Kong Science and Technology Parks’ acceptance of surrender less 10%.

Sallmanns valuation of the consideration payable under (i) is HK$15,000,000 and under (ii) is HK$31,900,000. If the Hong Kong Science and Technology Parks exercises the above option, then the surrender consideration will be HK$15,000,000.

Our valuation is based on the market value of the land, buildings, fixtures and fittings assuming that the premises is assigned to a third party industrial user, discounted to take account of the user restriction, the assumed costs of removing the plant and the costs of renovation.
Process Automation International Limited is a wholly-owned subsidiary of the Company.
The property is subject to a stamp duty based on the transacted price when it is transferred. For reference purposes, the stamp duty of the property is approximately HK$1,327,500 based on our valuation figure as at the date of valuation. In normal practice, purchaser shall be responsible for the stamp duty.
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VALUATION CERTIFICATE

Property Description and tenure 4. Remaining Portion of The property comprises a parcel of Sub-section 1 of land with a site area of approximately Section H 1,530 sq.m. (16,469 sq.ft.) situated off of Lot 3719 in Kam Pok Road, Yuen Long district. DD 104 Yuen Long The site which is of regular shape New Territories comprises an agricultural lot as Hong Kong demised under the Block Government Lease.

Open Market Value in existing state Particulars as at of occupancy 16 February 2004 The property is HK$1,380,000 currently vacant (100% interest attributable to the Group HK$1,380,000)

The property is held under a Block Government Lease for a term of 75 years commencing from 1 July 1898 and thereafter renewed for a further term of 24 years. The said term has been extended to 30 June 2047 under Section 6 of the New Territories Leases (Extension) Ordinance (Cap. 150).

The ground rent payable per annum for the property is equal to 3% of the rateable value for the time being of the property.

Notes:

According to our recent search at the Land Registry, the registered owner is Rich Town Properties Limited registered vide Memorial No. 788374 dated 29 September 1997.
As detailed under the approved Nam Sang Wai Outline Zoning Plan No.S/YL-NSW/4 dated 8th February 2002, the subject property lies in an area designated for “Other Specified Use”. Our valuation assumes a bare site subject to the permitted use under the aforesaid Outline Zoning Plan.
The property is subject to a Deed of Mutual Grant of Rights of Way registered vide Memorial No. 150495 and dated 8th May 1963 which reserved part of the property as a right of way to serve the adjoining lots. The reserved land is approximately 106.8 sq.m. (1,150) sq.ft. Both the site area and the reserved land have been measured from the Lot Index Plan issued by the District Survey Office of the Lands Department.
Rich Town Properties Limited is a wholly-owned subsidiary of the Company.
The property is subject to a stamp duty based on the transacted price when it is transferred. For reference purposes, the stamp duty of the property is approximately HK$10,350 based on our valuation figure as at the date of valuation. In normal practice, purchaser shall be responsible for the stamp duty.
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VALUATION CERTIFICATE

Group III – Property interest held and occupied by the Group in Republic of China (Taiwan)

Open market value in existing state Particulars as at Property Description and tenure of occupancy 16 February 2004 5. No. 3 Tzu-chiang The property comprises a parcel of The property is NT$245,150,000 3rd Road land with a site area of approximately currently Chungli Industrial 1,601.13 ping (56,974.02 sq.ft.) occupied by the (50.02% interests Park Group for attributable to the Chungli City The property also comprises a 4-storey industrial Group Taoyuan County industrial building and a 5-storey purposes. NT$122,624,000) Republic of China industrial building all completed in (Taiwan) various stage between 1999 and 2000.

The property has a total gross floor area of approximately 4,998.94 ping (177,880.44 sq.ft.).

Notes:

According to our recent search at the local land registry, the registered owner of the property is Intech Machines Company, Limited (亞智科技股份有限公司 ).
Pursuant to a Land Title Certificate 86 Li Di Zi Di No. 30462 issued by the Land Administrative Office of Chungli, Taoyuan County on 22 October 1997, the land title of the property is held by Intech Machines Company, Limited.
Pursuant to 2 Building Title Certificates 089Li Jian Dian Zi Di Nos. 004703 and 004114, both issued by the Land Administrative Office of Chungli, Taoyuan County in 2000, the building ownership title of the buildings is held by Intech Machines Company, Limited.
Intech Machines Company, Limited is a 50.02% interest owned subsidiary of the Company.
The property is subject to a property tax of approximately HK$1,302,000 based on our valuation figure as at the date of valuation. In normal practice, purchaser shall be responsible for the property duty.
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GENERAL INFORMATION

APPENDIX III

A. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules and the Takeovers Code for the purpose of giving information with regard to the ATNT Group and IML, KT and the Subscriber.

The information contained herein relating to the ATNT Group and IML has been supplied by the Directors, who jointly and severally accept full responsibility for the accuracy of the information contained in this circular (other than those relating to KT and the Subscriber) and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this document have been arrived at after due and careful consideration and there are no other facts (other than those relating to KT and the Subscriber) not contained in this circular the omission of which would make any statement contained herein misleading.

The information contained herein relating to KT has been supplied by the directors of KT, who jointly and severally accept full responsibility for the accuracy of the information contained in this circular (other than those relating to the ATNT Group, IML and the Subscriber) and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this document have been arrived at after due and careful consideration and there are no other facts (other than those relating to the ATNT Group, IML and the Subscriber) not contained in this circular the omission of which would make any statement contained herein misleading.

The information contained herein relating to the Subscriber has been supplied by the directors of the Subscriber, who jointly and severally accept full responsibility for the accuracy of the information contained in this circular (other than those relating to the ATNT Group, IML and KT) and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this document have been arrived at after due and careful consideration and there are no other facts (other than those relating to the ATNT Group, IML and KT) not contained in this circular the omission of which would make any statement contained herein misleading.

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GENERAL INFORMATION

APPENDIX III

B. MARKET PRICES

The table below shows the closing prices of the ATNT Shares as recorded on the stock Exchange on (i) the last trading day in each of the six calendar months immediately preceding the date of the Announcement; (ii) 29 December 2003, being the last trading day on which trading in the Shares was suspended pending the issue of the Announcement; and (iii) the Latest Practicable Date.

Date	Share price
	HK$
30 June 2003	0.01
31 July 2003	0.014
29 August 2003	0.015
30 September 2003	0.014
31 October 2003	0.015
28 November 2003	0.014
29 December 2003	0.015
Latest Practicable Date	0.014

The highest and lowest closing prices of the Shares as recorded on the Stock Exchange during the period between 30 June 2003, being the date six calendar months prior to the day trading in the Shares was suspended pending the issue of the Announcement, and ending on the Latest Practicable Date (the “Relevant Period”) were HK$0.02 on 18 November 2003 and HK$0.01 on 30 June 2003, respectively.

C. DISCLOSURE OF INTERESTS

(I) Interests of Directors

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

(i) ATNT

			Number of
	Number of Shares held		Shares
	Personal	Corporate	under share
Name of Director	interests	interests	option scheme
Lam Kwok Yan	69,503,340	1,940,826,660_Note (1)_	114,500,000_Note (2)_
Lam Kwok Hing	69,493,340	1,940,826,660_Note (1)_	114,500,000_Note (2)_

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GENERAL INFORMATION

APPENDIX III

Note:

As at the Latest Practicable Date, an aggregate of 1,940,826,660 shares of ATNT were held by Optimist International Limited (“Optimist”) which is beneficially and equally owned by Mr. Lam Kwok Yan and Lam Kwok Hing.
The options were granted on 30th August, 2001 under ATNT’s new executive scheme option adopted on 1st January, 2001, the options are exercisable at HK$0.053 per Share from 7th September, 2001 to 6th September, 2004.
(ii) Asia Nice Art Production Limited*

Name of Director

Number of ordinary Shares (Personal Interest)

Lam Kwok Yan

1,000

Asia Nice Art Production Limited is a subsidiary owned as to 60% by ATNT.

Saved as disclosed herein, as at the Latest Practicable Date, none of the Directors had any interest in the share capital of ATNT or any of its associated corporations (within the meaning of Part XV of the SFO).

(a) Save as disclosed herein, there is no contract or arrangement subsisting at the date of this Circular in which any of the Directors is materially interested and which is significant in relation to the business of the Group.
(b) None of the Directors has had any direct or indirect interest in any assets which have since 31st March, 2003 (being the date to which the latest published audited financial statements of the Company were made up) been acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to any member of the Group.
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GENERAL INFORMATION

APPENDIX III

(II) Substantial shareholder’s interest

As at the Latest Practicable Date, according to the register of interests in shares and short positions kept by ATNT pursuant to section 336 of the SFO and so far as is known to, or can be ascertained after reasonable enquires by the Directors, the following person is directly or indirectly interested in 5% or more of the issued share capital of ATNT:–

Name of Percentage of shares ordinary shares or equity interest Mr. Ngo Cheng Long 500,000,000 9.04%

(III) Miscellaneous

As at the Latest Practicable Date, none of the experts named in the paragraph headed “Consents” in this appendix or any other advisors to ATNT as specified in clause (2) of the definition of “associate” under the Takeover Code, any of their respective holding companies, or any of their respective subsidiaries was beneficially interested, directly or indirectly, in any Shares, and none of them had dealt in any Shares during the Relevant Period. None of these experts has any direct or indirect interests in any assets acquired or disposed of by or leased to any members of the ATNT Group, or proposed to be acquired or disposed of by or leased to any member of the ATNT Group within the two years immediately preceding the date of this circular.
No shareholding in ATNT was owned or controlled by a subsidiary of ATNT or by a pension fund of any member of the ATNT Group as at the Latest Practicable Date.
There is no person with whom KT or any person acting in concert with it has any arrangement of the kind referred to in note 8 of Rule 22 of the Takeover Code.
There is no person who has an arrangement of the kind referred to in note 8 of Rule 22 of the Takeover Code with ATNT or with any person who is an associate of ATNT by virtue of classes (1), (2), (3) and (4) of the definition of associate.
No shareholding in ATNT was managed on a discretionary basis by fund managers connected with ATNT at the Latest Practicable Date.
As at the Latest Practicable Date, no benefit (other than statutory compensation) would be given to any Director as compensation for loss of office or otherwise in connection with the CN Subscription.
Save as pursuant to the CN Subscription Agreement, there was no agreement, arrangement or understanding (including any compensation arrangement) exists between KT or any person acting in concert with it and any of the directors, recent directors, shareholders or recent shareholders of ATNT having any connection with or dependence upon the CN Subscription as at the Latest Practicable Date.
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GENERAL INFORMATION

APPENDIX III

There is no agreement or arrangement between any director of ATNT and any other person which is conditional on or dependent upon the outcome of the CN Subscription or otherwise connected with the CN Subscription.
Save for the CN Subscription Agreement, no material contracts have been entered into between the Subscriber and any of the Directors in which the Directors have any material personal interest.
Neither the Subscriber, its Directors and parties acting in concert with it was interested in any Shares, Options, warrants or other securities convertible into or giving rights to subscribe for Shares nor had dealt in the Shares, Options, warrants or other securities convertible into or giving rights to subscribe for Shares during the period beginning six months prior to 6 February 2004 (being the date of the Announcement) and ending on the SGM date.

D. INFORMATION ON THE SUBSCRIBER & KT

The Subscriber is a wholly-owned subsidiary of KT. Mr. Lam Kwok Hing, one of the controlling shareholders of ATNT, is also the controlling shareholder of KT, the parent company of the Subscriber. KT is beneficially owned as to about 67.76% by J&A Investment Ltd which is beneficiary owned as to 80% by Mr. Lam Kwok Hing and 20% by Mr. Nam Kwok Lun, the deputy Chairman, managing director and executive director of KT. Their shareholding interest in KT was disclosed below:–

	Number	of Shares held	Number of Shares
	Personal	Corporate	under share
Name of Director	interests	interests	option scheme
Lam Kwok Hing	Nil	311,718,000_Note (1)_	10,500,000_Note (2)_
Nam Kwok Lun	Nil	311,718,000_Note (1)_	10,500,000_Note (2)_

Notes:

As at the Latest Practicable Date, an aggregate of 311,718,000 shares of KT were held by J&A Investment Limited (“J&A”) which is beneficiary owned as to 80% by Mr. Lam Kwok Hing and 20% by Mr. Nam Kwok Lun.
The options were granted on 30th August, 2001 under KT’s option scheme adopted on 1st January, 2001, the options are exercisable at HK$1.675 per Share from 7th September, 2001 to 6th September, 2004.

The registered office of KT is Cedar House, 41 Cedar Avenue, Hamilton HM12, Bermuda.

The registered office of the Subscriber is Room 801, Lippo Centre, 89 Queensway, Hong Kong.

The registered office of J&A Investment Ltd is Trident Chambers, PO Box 146, Road Town, Tortola, British Virgin Islands.

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APPENDIX III

The address of Mr. Lam Kwok Hing is 147 Hong Lok Road East, Hong Lok Yuen, Tai Po, New Territories.

The address of Mr. Nam Kwok Lun is House No. 10, 5th Street, Hong Lok Yuen, Tai Po, New Territories.

Mr. Lam Kwok Hing, Mr. Nam Kwok Lun, Mr. Ng Chi Kin David and Chen Wei-Ming are all of the directors of KT.

Mr. Lam Kwok Hing and Mr. Nam Kwok Lun are all of the directors of the Subscriber.

As at the Latest Practicable Date, there was no agreement, arrangement or understanding between the Subscriber and any other person for the transfer of the beneficial interest in the Convertible Note or the Conversion Shares acquired by the Subscriber under the CN Subscription and the Whitewash Waiver.

E. DEALINGS IN SECURITIES OF ATNT

During the Relevant Period, save for the entering of the CN Subscription Agreement, the IML Share Placing, the Share Subscription, the Share Sale and the Incentive Option Scheme, none of the Directors had any dealings in the securities of ATNT.

F. ATNT AND ITS DIRECTORS’ INTEREST IN KT & SUBSCRIBER

ATNT does not hold any share in KT nor in the Subscriber.

As disclosed in Section D with heading “INFORMATION ON THE SUBSCRIBER & KT” under this Appendix, Mr. Lam Kwok Hing, the Deputy Chairman and Managing Director of ATNT, is also the Chairman, the Executive Director and the controlling shareholder of KT. KT is the parent company of the Subscriber. KT is beneficially owned as to about 67.76% by J&A Investment Ltd which is beneficiary owned as to 80% by Mr. Lam Kwok Hing.

Mr. Lam Kwok Yan, the Chairman and the Executive Director of ATNT, does not hold any share in KT nor in the Subscriber. He does not have any directorship in KT nor in the Subscriber.

During the period between the date six months preceding the date of the Announcement and ending on the Latest Practicable Date, none of ATNT and its Directors had any dealings in the securities of KT and the Subscriber.

G. SERVICE CONTRACTS FOR DIRECTORS

There is no existing or proposed service contract, excluding contract expiring or terminable by the employer within one year without payment of compensation (other than statutory compensation) and no service contract has been entered into within the six months prior to the Announcement between any companies comprising the ATNT Group and any of the Directors.

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H. WORKING CAPITAL

Taking into account the available facilities and internal resources of the Group, the Directors are of the opinion that the Group has sufficient working capital for its present requirement.

I. QUALIFICATIONS AND CONSENTS

The following are the qualifications of the professional advisors who has given opinion or advice which are contained in this circular:

Name	Qualification
Barits	a corporation deemed licensed under the SFO to carry out types 1 and 6
	regulated activities
CSC Asia	an investment adviser licensed under the SFO to carry out types 4, 6 and
	9 regulated activities
Deloitte	certified public accountants
Sallmanns	Professional property valuers
SD & Partners	PRC solicitors and legal advisor to ATNT

Barits, CSC Asia and Sallmanns have given and have not withdrawn their respective written consents to the issue of this document with the inclusion of their reports and letters, if any, as the case may be, and references to their names in the form and context in which they respectively appear.

J. MATERIAL CONTRACTS

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

a. On 1st May 2002, the ATNT Group entered into an agreement with the minority shareholders of Sky Citi-Link ATNT (Holdings) Ltd (“SCL”) for the disposal of its 80% interest in the issued ordinary shares of SCL together with the shareholder’s loan due from SCL, at the completion of the agreement, the loan was approximately HK$78 million at the date of the agreement, for a consideration of HK$55 million which will be satisfied by certain listed securities. The agreement was terminated on 7th August 2002 as a result of the conditions had not been satisfied.
b. On 6 February 2004, ATNT entered into the conditional subscription agreement with Karfun Investments Ltd (“Karfun”), a wholly owned subsidiary of KT, in relation to the issue of the convertible note to Karfun for a consideration of HK$30 million. Particulars of such subscription agreement was disclosed in the joint announcement of ATNT and KT dated 6 February 2004.
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K. LITIGATION

As at the Latest Practicable Date, none of the members of ATNT is engaged in any litigation or arbitration of material importance and no litigation or claim of material importance is known to the Directors or ATNT to be pending or threatened by or against any member of the ATNT Group.

L. MISCELLANEOUS

a. The English text of this circular shall prevail over the Chinese text.
b. The Secretary of ATNT is Ms. Cheng Yuen Han who is a member of the Hong Kong Institute of Company Secretaries and the Institute of Chartered Secretaries and Administrators in the United Kingdom.
c. The registered office of ATNT is at Clarendon House, Church Street, Hamilton HM11, Bermuda. The principal registrars and transfer office of ATNT is Butterfield Corporate Service Limited at Rosebank Centre, 14 Bermudiana Road, Pembroke, Bermuda. The Hong Kong branch registrars and transfer office is Secretaries Limited at 5th Floor, Wing On Centre, 111 Connaught Road Central, Hong Kong.
d. The address of Barits is Room 3406, 34/F., Edinburgh Tower, The Landmark, 15 Queen’s Road Central, Hong Kong.
e. The address of CSC Asia is Unit 3204-07, 32/F., COSCO Tower, Grand Millennium Plaza, 183 Queen’s Road Central, Hong Kong.
f. The address of SD & Partners is 19-20/F, Block B, The Pavilion, No. 4002, Huaqiang Road North, Shenzhen, PRC.
g. There is no person having irrevocably committed himself to vote for or against the CN Subscription and the Whitewash Waiver. There is no Director, other than Mr. Lam Kwok Hing and Mr. Lam Kwok Yan, who has beneficial holdings in ATNT and therefore not entitle to vote for the CN Subscription and the Whitewash Waiver.

M. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the principal office of ATNT at 11 Dai Hei Street, Tai Po Industrial Estate, New Territories, Hong Kong during normal business hours on any day (except public holidays) until and including the date of the SGM:

the CN Subscription Agreement;
the Share Sale Agreement;
the IML Incentive Option Scheme;
the letter from the ATNT Independent Board Committee, the text of which is set out on page 32 of this circular;
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the letter of advice from Barits and CSC Asia, the text of which is set out in this circular;
the valuation report and valuation certificate prepared by Sallmanns
the letters of consent referred to in the section headed “Qualifications and consents” in this appendix;
any material contracts referred to in the section headed “Material Contracts” in this appendix;
the memorandum of association and bye-laws of the Company and the Subscriber;
the audited consolidated accounts of the Group for the two financial years ended 31 March 2002 and 2003; and
the unaudited interim report of the Group for the six months ended 30 September 2002 and 2003.
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(Incorporated in Bermuda with limited liability)

NOTICE IS HEREBY GIVEN THAT an Special General Meeting of Asia Tele-Net and Technology Corporation Limited (the “Company”) will be held at 11 Dai Hei Street, Tai Po Industrial Estate, Tai Po, New Territories, Hong Kong on 23 April 2004 at 3:00 p.m. for the purpose of considering and, if thought fit, passing, with or without modifications, the following resolutions:

ORDINARY RESOLUTION NO. 1

“ THAT the conditional subscription agreement (the “CN Subscription Agreement”) dated 6 February 2004 entered into between the Company and the Subscriber, a wholly-owned subsidiary of Karl Thomson Holdings Limited (“KT”) (a copy of which marked “A” has been tabled at the meeting and initialed by the Chairman of the meeting for the purpose of identification) pursuant to which the Company has agreed to issue and the Subscriber has agreed to subscribe a series of convertible notes in the aggregate principle amount of HK$30,000,000 each carrying the right of conversion into shares of HK$0.01 each of the Company (the “Shares”) at an initial conversion price of HK$0.012 per Share or at an alternative conversion price of HK$0.01 per Share be and is hereby approved, ratified and confirmed so that this resolution shall for all purpose be an authorization for the Company to issue Shares which may be issuable on conversion of the Notes and subject to the CN Subscription Agreement becoming unconditional in accordance with its terms, the directors of the Company be and are hereby authorized to do all such things and executive all such documents as they in their absolute discretion deem fit or appropriate to give effect to the CN Subscription Agreement, including without limitation, to issue the Notes and to allot and issued shares of the Company in accordance with the terms of the Notes.”

ORDINARY RESOLUTION NO. 2

“ THAT subject to the passing of Resolution No. 1 set out in the notice convening this meeting, the waiver pursuant to Note 1 on dispensations from Rule 26 of the Hong Kong Code on Takeovers and Mergers (the “Takeovers Code”) waiving any obligation on the part of the Subscriber and parties acting in concert with it to make a mandatory offer for all the issued Shares other than those already owned by them which would (but for the waiver) otherwise arise as a result of the allotment and issue of the Shares upon conversion of the Convertible Note under Rule 26 of the Takeovers Code be and is hereby approved.”

ORDINARY RESOLUTION NO. 3

“ THAT conditional on the passing of Ordinary Resolution No. 1 as set out in the notice convening the special general meeting dated 31 March 2004 and that to the extent not covered by the general mandate granted to the Directors of the Company by the shareholders of the Company pursuant to an ordinary resolution passed at the annual general meeting of the Company held on 19 September

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2003, the Directors be and are hereby authorized to issue and allot ordinary shares of HK$0.01 each in the share capital of the Company (“Share”) which fall to be issued upon conversion of the convertible bonds with an aggregate principal amount of up to HK$30,000,000 which the Company has conditionally agreed to issue to the Subscriber pursuant to the CN Subscription Agreement entered on 6 February 2004 in the event that the Subscriber shall exercise the option in accordance with the terms set forth in the CN Subscription Agreement.”

ORDINARY RESOLUTION NO. 4

“ THAT the placing of 13,400,000 new IML Shares by IML (the “IML Share Placing”) for an aggregate subscription price of NT$100.5 million (equivalent to about HK$24 million) or a subscription price of NT$7.5 (equivalent to about HK$1.79) per IML Share following the special general meeting held amongst the shareholders of IML on 19 December 2003 be and is hereby approved, ratified and the directors of the Company be and are hereby authorized to do all such things and executive all such documents as they in their absolute discretion deem fit or appropriate to give effect to such share placing, including without limitation, to seek the approval of the Securities and Futures Commission, Ministry of Finance of Taiwan.”

ORDINARY RESOLUTION NO. 5

“ THAT conditional upon the passing the resolution No. 4 above, the subscription of IML Shares by the Company and its subsidiaries for not more than 10,000,000 IML Shares under the IML Share Placing for an aggregate subscription price of not more than NT$75 million (equivalent to about HK$18 million) be and is hereby approved, and the directors of the Company be and are hereby authorized to do all acts and things and execute all documents as they may consider necessary, expedient or desirable to effect and implement the Share Subscription and all transactions contemplated hereunder.”

ORDINARY RESOLUTION NO. 6

“ THAT the Incentive Option Scheme proposed by the Directors of the Company (a copy of which marked “B” has been tabled at the meeting and initialed by the Chairman of the meeting for the purpose of identification) pursuant to which certain employees (including the directors but excluding directors of the Company) of IML have a right to acquire up to a maximum of 6,000,000 existing IML Shares held by the Company within a period of 6 years from the date of the Scheme at an option price of at least NT$7.5 (equivalent to about HK$1.79) together with interest accrued thereon for the period from the date of grant to the date of exercise of the options calculated at the rate of one percent over the prime lending rate as quoted by the Hongkong and Shanghai Banking Corporation Ltd from time to time is hereby approved and confirmed so that this resolution shall for all purpose be an authorization for the directors of the Company to do all such things and executive all such documents as they in their absolute discretion deem fit or appropriate to give effect to such documents.”

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SPECIAL RESOLUTION NO. 1

“ THAT conditional upon the Listing Committee of The Stock Exchange of Hong Kong Limited approving the listing of, and granting the permission to deal in, shares of HK$0.01 each in the issued share capital of the Company upon the Capital Reorganization (as defined below) becoming effective, with effect from 9:30 a.m. on the next business day (not being a Saturday) following the date on which this resolution is passed (the “Effective Date”):–

(a) every twenty (20) shares of HK$0.01 each in issue on the Effective Date be consolidated (“Share Consolidation”) into one (1) share of HK$0.20 each in the capital of the Company (the “Consolidated Share”);
(b) thereafter, the issued share capital of the Company be reduced by canceling paid up capital to the extent of HK$0.19 on each of the Consolidate Shares of HK$0.20 each in the capital of the Company in issue arising from the Share Consolidation on the Effective Date so as to form fully-paid up shares of HK$0.01 each in the capital of the Company (the “Capital Reduction”);
(c) the entire amount standing to the credit of the share premium account of the Company as at the Effective Date be cancelled (“Share Premium Cancellation”, together with the Share Consolidation and Capital Reduction are collectively referred to as the “Capital Reorganization”);
(d) the credits arising from the Capital Reduction and the Share Premium Cancellation be transferred to the contributed surplus account of the Company following which, the directors of the Company be and are authorized to apply the amount standing to the credit of the contributed surplus account of the Company towards eliminating in full the unaudited accumulated loss of the Company as at the Effective Date; and
(e) the directors of the Company be and are hereby authorized generally to do all such acts, deeds and things as they shall, in their absolute discretion, deem appropriate to effect and implement the foregoing.”

SPECIAL RESOLUTION NO. 2

“ THAT the existing bye-laws of the Company be and hereby amended in the following manner:

A. By adding the following definition after the definition of “Act” and before the definition of “Auditor”
““associate” the meaning attributed to it in the rules of the Designated Stock Exchange.”
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B. By adding the following definition after the definition of “clear days” and before the definition of “Company”:
““clearing house”
such clearing house as recognised by the laws of the jurisdiction in which the shares of the Company are listed or quoted on a stock exchange in such jurisdiction (where applicable).”
C. By adding the following wording into Bye-Law 2(e), after the words “in a visible form”:

“, including in the form of electronic display, provided that both the mode of service of the relevant document or notice and the Members’ election (where applicable) comply with all applicable Statutes, rules and regulations.”

D. By adding the following Bye-Law 2(k) immediately after Bye-Law 2(j)
“(k) references to a document being executed include references to it being executed under hand or under seal or by electronic signature or by any other legally acceptable method and references to a notice or document include a notice or document recorded or stored in any digital, electronic, electrical, magnetic or other retrievable form or medium and information in visible form whether having physical substance or not.”
E. By adding the following sentence at the end of Bye-Law 9:

“Where the Company purchases for redemption a redeemable share, purchases not made through the market or by tender shall be limited to a maximum price as may from time to time be determined by the Company in general meeting, either generally or with regard to specific purchases. If purchases are by tender, tenders shall be available to all Members alike.”

F. By adding the following wordings into Bye-Law 10 (a) immediately after the words “shall be two persons” but before the words “holding or representing by proxy”:

“(or in case of a Member being a corporation, its duly authorised representative)”

G. By deleting the word “and” in Bye-Law 12(1) immediately after the words “Subject to the Act” but before the words “these Bye-Laws” and adding the following wordings immediately after the words “these Bye-Laws,” and before the words “the unissued shares of the Company”:

“any direction that may be given by the Company in general meeting and, where applicable, the rules of any Designated Stock Exchange and without prejudice to any special rights or restrictions for the time being attached to any shares or any class of shares.”

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H. By adding the following wordings into Bye-Law 43(1)(a) immediately after the words “class of shares held by him and” and before the words “the amount paid or agreed to be considered as paid on such shares;”:
“, in respect of any shares that are not fully paid,”
I. By adding the following wordings at the end of Bye-Law 45(a):

“and where applicable, any other newspaper in accordance with the requirements of any Designated Stock Exchange or by any means in such manner as may be accepted by Designated Stock Exchange”

J. By adding the wordings “in a form prescribed by the Designated Stock Exchange” into ByeLaw 46, immediately after the words “in the usual common form or” and before the words “in any other form approved by the Board”
K. By deleting the existing Bye-Law 66 in its entirety and replacing it with the following new Bye-Law 66:
“66. Subject to any special rights or restrictions as to voting for the time being attached to any shares by or in accordance with these Bye-Laws, at any general meeting on a show hands every Member present in person (or being a corporation, is present by a duly authorised representative), or by proxy 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 instalments is treated for the foregoing purposes as paid up on the share. Notwithstanding anything contained in these Bye-Laws, where more than one proxy is appointed by a Member which is a clearing house (or its nominee(s)), each such proxy shall have one vote on a show of hands. 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
- (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
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(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.

A demand by a person as proxy for a Member or in the case of a Member being a corporation by its duly authorised representative shall be deemed to be the same as a demand by a Member.”

L. By adding the following new Bye-Law 76(2) after the existing Bye-Law 76(1):

“Where any Member is, under the rules of the Designated Stock Exchange, required to abstain from voting on any particular resolution or restricted to voting only for or only against any particular resolution, any votes cast by or on behalf of such Member in contravention of such requirement or restriction shall not be counted.”

M. By adding the following wording into Bye-Law 81 after the words “Instruments of proxy shall be in any common form or in such other form as the Board may approve” but before the words “whereby the Member may”:

“(provided that this shall not preclude the use of the two way form)”

N. By adding the following Bye-Laws 84A and 84B immediately after Bye-Law 84:
“84A. If a clearing house (or its nominee(s)), being a corporation, is a Member, it may authorise such persons as it thinks fit to act as its representatives at any meeting of the Company or at any meeting of any class of Members provided that the authorisation shall specify the number and class of shares in respect of which each such representative is so authorised. Each person so authorised under the provisions of this Bye-Law shall be deemed to have been duly authorised without further evidenced of the fact and be entitled to exercise the same rights and powers on behalf of the clearing house (or its nominee(s)) as if such person was the registered holder of the shares of the Company held by the clearing house (or its nominee(s)) including the right to vote individually on a show of hands.
84B. Any reference in these Bye-Laws to a duly authorised representative of a Member being a corporation shall mean a representative authorised under the provisions of these Bye-Laws.”
O. By adding the wordings “at any special general meeting or” into Bye-Law 86(1), immediately after the words “statutory meeting of members and thereafter” and before the words “in accordance with the next following Bye-Law”
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P. By deleting the word “special” in the third line in Bye-Law 86(4) and replacing it with the word “ordinary”.
Q. By deleting the existing Bye-Law 89 in its entirety and replacing with the following new Bye-Law 89.
“89. No person other than a Director retiring at the meeting shall, unless recommended by the Directors for Election, be eligible for election as Director at any general meeting unless a Notice signed by a Member (other than the person to be processed) duly qualified to attend and vote at the meeting for which such notice is given of his intention to propose such person for election and also a Notice signed by the person to be proposed of his willingness to be elected shall have been lodged at the head office or at the Registration Office provided that the minimum length of the period, during which such Notice(s) are given, shall be at least seven (7) days and that the period for lodgement of such Notice(s) shall commence no earlier than the day after the dispatch of the notice of the general meeting appointed for such election and end no later than seven (7) days prior to the date of such general meeting.”
R. By deleting the words “whereupon the Board resolves to accept such resignation” in ByeLaw 90(1).
S. By deleting the existing Bye-Law 104 in its entirety and replacing with the following new Bye-Law 104.
“104. (1) A Director shall not vote (nor be counted in the quorum) on any resolution of the Board approving any contract or arrangement or any other proposal in which he or any of his associate is materially interested, but this prohibition shall not apply to any of the following matters namely:
- (i) any contract or arrangement for giving to such Director or his associate(s) any security or indemnity in respect of money lent by him or any of his associate(s) or obligations undertaken by him or any of his associate(s) at the request of or for the benefit of the Company or any of its subsidiaries;
- (ii) any contract or arrangement for the giving 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 or his associate(s) has himself/ themselves assumed responsibility in whole or in part whether alone or jointly under a guarantee or indemnity or by the giving of security;
- (iii) any contract or arrangement 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 or his associate(s) is/are or is/are to be interested as a participant in the underwriting or sub-underwriting of the offer;
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(iv) any contract or arrangement in which the Director of his associate(s) is/ are interested in the same manner as other holders of shares or debentures of other securities of the Company or any of its subsidiaries by virtue only of his/their interest in shares or debentures or other securities of the Company;
(v) any contract or arrangement concerning any other company in which the Director or his associate(s) is/are interested only, whether directly or indirectly, as an officer or executive or a shareholder other than a company in which the Director and/or his associate(s) is/are beneficially interested in five (5) per cent or more of the issued shares or of the voting rights of any class of shares of such company (or any third company through which his interest or that of any of his associates is derived); or
(vi) 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 or his associates and employees of the Company or of any of its subsidiaries and does not provide in respect of any Director, or his associate(s) as such any privilege or advantage not accorded to the employees to which such scheme or fund relates.
(2) A company shall be deemed to be a company in which a Director and/or his associate(s) owns five (5) per cent. or more if and so long as (but only if and so long as) he and/or his associates (either directly or indirectly) are the holders of the beneficially interested in five (5) per cent. or more of any class of the equity share capital of such company (or of any third company through which his/their interest or that of any of his associates is derived). For the purpose of this paragraph there shall be disregarded any shares held by a Director or his associate(s) as bare or custodian trustee and in which he or any of them has/ have no beneficial interest, any shares comprised in a trust in which the interests of the Director or his associate(s) is/are in reversion or remainder if and so long as some other person is entitled to receive the income thereof, and any shares comprised in an authorised unit trust scheme in which the Director is/ are interested only as a unit holder and any shares which carry no voting right at general meetings and very restrictive dividend and return of capital right.
(3) Where a company in which a Director and/or his associate(s) holds five (5) per cent. or more is/are materially interested in a transaction, then that Director and/or his associate(s) shall also be deemed materially interested in such transaction.
(4) If any question shall arise at any meeting of the Board as to the materiality of the interest of a Director (other than the chairman of the meeting) or his associate(s) or as to the entitlement of any Director (other than such chairman) to vote and such question is not resolved by his voluntarily agreeing to abstain
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  - from voting, such question shall be referred to the chairman of the meeting and his ruling in relation to such other Director shall be final and conclusive except in a case where the nature or extent of the interest of the Director and/or his associate(s) concerned as known to such Director has not been fairly disclosed to the Board. If any question as aforesaid shall arise in respect of the chairman of the meeting such question shall be decided by a resolution of the Board (for which purpose such chairman shall not vote thereon) and such resolution shall be final and conclusive except in a case where the nature or extent of the interest of such chairman as known to such chairman has not been fairly disclosed to the Board.”

T. By adding the number “(1)” immediately in front of words “The Company shall be entitled to destroy the following documents” in Bye-Law 136 and adding the following Bye-Law 136 (2):
“(2) Notwithstanding any provision contained in these Bye-Laws, the Directors may if permitted by applicable law, authorise the destruction of documents set out in subparagraphs (a) to (e) of paragraph (1) of this Bye-Law and any other documents in relation to share registration which have been microfilmed or electronically stored by the Company or by the share registrar on its behalf provided always that this ByeLaw shall only apply to the destruction of a document in good faith and without express notice to the Company and its share registrar that the preservation of such document was relevant to a claim.”
U. By adding the wordings “and Bye-Law 154A” into Bye-Law 154, after the words “Section 88 of the Act” and before the words “, a printed copy of the Director’s report”.
V. By adding the following new Bye-Laws 154A and 154B immediately after Bye-Law 154:
“154A. Subject to due compliance with all applicable Statutes, rules and regulations, including, without limitation, the rules of Designated Stock Exchange, and to obtaining all necessary consents, if any, required thereunder, the requirements of Bye-Law 154 shall be deemed satisfied in relation to any person by sending to the person in any manner not prohibited by the Statutes, a summary financial statement derived from the Company’s annual accounts and the directors’ report which shall be in the form and containing the information required by applicable laws and regulations, provided that any person who is otherwise entitled to the annual financial statements of the Company and the directors’ report thereon may, if he so requires 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 statement and the directors’ report thereon.
154B. The requirement to send to a person referred to in Bye-Law 154 the documents referred to in that Bye-Law or a summary financial report in accordance with ByeLaw 154A shall be deemed satisfied where, in accordance with all applicable Statutes, rules and regulations, including, without limitation, the rules of the Designated Stock Exchange, the Company publishes copies of the documents referred to in Bye-Law
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  - 154 and, if applicable, a summary financial report complying with Bye-Law 154A, on the Company’s computer network or in any other permitted manner (including by sending any form of electronic communication), and that person has agreed or is deemed to have agreed to treat the publication or receipt of such documents in such manner as discharging the Company’s obligation to send to him a copy of such documents.”

W. By deleting the existing Bye-Laws 161, 162 and 163 in its entirety and replacing with the following new Bye-Laws 161, 162 and 163:
“161. Any Notice or document (including any “corporate communication” within the meaning ascribed thereto under the rules of the Designated Stock Exchange), whether or not, to be given or issued under these Bye-Laws from the Company to a Member shall be in writing or by cable, telex or facsimile transmission message or other form of electronic transmission or communication and any such Notice and document may be served or delivered by the Company on or to any Member either personally or by sending it through the post in a prepaid envelope addressed to such Member at his registered address as appearing in the Register or at any other address supplied by him to the Company for the purpose or, as the case may be, by transmitting it to any such address or transmitting it to any telex or facsimile transmission number or electronic number or address or website supplied by him to the Company for the giving of Notice to him or which the person transmitting the notice reasonably and bona fide believes at the relevant time will result in the Notice being duly received by the Member or may also be served by advertisement in appropriate newspapers in accordance with the requirements of the Designated Stock Exchange or, to the extent permitted by the applicable laws, by placing it on the Company’s website and giving to the member a notice stating that the notice or other document is available there (a “notice of availability”). The notice of availability may be given to the Member by any of the means set out above. In the case of joint holders of a share all notices shall be given to that one of the joint holders whose name stands first in the Register and notice so given shall be deemed a sufficient service on or delivery to all the joint holders.
Any Notice or other document:
- (a) if served or delivered by post, shall where appropriate be sent by airmail and shall be deemed to have been served or delivered on the day following that on which the envelope containing the same, properly prepaid and addressed, is put into the post; in proving such service or delivery it shall be sufficient to prove that the envelope or wrapper containing the notice or document was properly addressed and put into the post and a certificate in writing signed by the Secretary or other officer of the Company or other person appointed by the Board that the envelope or wrapper containing the notice or other document was so addressed and put into the post shall be conclusive evidence thereof,
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(b) if sent by electronic communication, shall be deemed to be given on the day on which it is transmitted from the server of the Company or its agent. A notice placed on the Company’s website is deemed given by the Company to a Member on the day following that on which a notice of availability is deemed served on the Member;
(c) if served or delivered in any other manner contemplated by these Bye-Laws, shall be deemed to have been served or delivered at the time of personal service or delivery or, as the case may be, at the time of the relevant despatch or transmission; and in proving such service or delivery a certificate in writing signed by the Secretary or other officer of the Company or other person appointed by the Board as to the act and time of such service, delivery, despatch or transmission shall be conclusive evidence thereof; and
(d) may be given to a Member either in the English language or the Chinese language, subject to due compliance with all applicable Statutes, rules and regulations.
(a) Any Notice or other document delivered or sent by post to or left at the registered address of any Member in pursuance of these Bye-Laws shall, notwithstanding that such Member is then dead or bankrupt or that any other event has occurred, and whether or not the Company has notice of the death or bankruptcy or other event, be deemed to have been duly served or delivered in respect of any share registered in the name of such Member as sole or joint holder unless his name shall, at the time of the service or delivery of the notice or document, have been removed from the Register as the holder of the share, and such service or delivery shall for all purposes be deemed a sufficient service or delivery of such Notice or document on all persons interested (whether jointly with or as claiming through or under him) in the share.
(b) A notice may be given by the Company to the person entitled to a share in consequence of the death, mental disorder or bankruptcy of a Member by sending it through the post in a prepaid letter, envelope or wrapper addressed to him by name, or by the title of representative of the deceased, or trustee of the bankrupt, or by any like description, at the address, if any, supplied for the purpose by the person claiming to be so entitled, or (until such an address has been so supplied) by giving the notice in any manner in which the same might have been given if the death, mental disorder or bankruptcy had not occurred.
(c) Any person who by operation of law, transfer or other means whatsoever shall become entitled to any share shall be bound by every notice in respect of such share which prior to his name and address being entered on the Register shall have been duly given to the person from whom he derives his title to such share.”
153 -

NOTICE OF THE SGM

X. By adding the wordings “or electronic” into Bye-Law 164, immediately after the words “a cable or telex or facsimile” but before the words “transmission message”

By Order of the Board

Lam Kwok Hing

Deputy Chairman & Managing Director

Hong Kong, 31 March 2004

Principal office in Hong Kong:–

11 Dai Hei Street, Tai Po Industrial Estate,

Tai Po, New Territories, Hong Kong

Notes:–

Any member entitled to attend and vote at the meeting shall be entitled to appoint another person as his proxy to attend and vote instead of him. A proxy need not be a member of the Company.
The form of proxy must be lodged at the head office and principal place of business of the Company in Hong Kong not less than 48 hours before the time appointed for the meeting. Completion and return of the proxy will not preclude a member from attending and voting in person.
154 -

AI assistant

Da Sen Holdings Group Limited — Proxy Solicitation & Information Statement 2004

50017_rns_2004-04-01_fe536f8f-74e6-45a7-a37d-174e597143c2.pdf

PROPOSED ISSUE OF CONVERTIBLE NOTE, APPLICATION FOR WHITEWASH WAIVER BY KT, CAPITAL REORGANISATION, AMENDMENT TO BYE-LAWS, IML SHARE PLACING, SHARE SUBSCRIPTION AND INCENTIVE OPTION SCHEME

CSC Asia Limited

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

EXPECTED TIMETABLE

INTRODUCTION

LETTER FROM THE BOARD

THE CN SUBSCRIPTION AGREEMENT

LETTER FROM THE BOARD

Transfer:

Listing:

Conditions of the CN Subscription Agreement

Completion

Application for listing

Reasons for the CN Subscription Agreement and use of proceeds

LETTER FROM THE BOARD

LETTER FROM THE BOARD

Shareholding structure of ATNT

Information on the ATNT Group

LETTER FROM THE BOARD

Information on IML

Information on KT and the Subscriber

LETTER FROM THE BOARD

Intention of KT on the ATNT Group

Maintaining the listing status of ATNT

Financial Resources of KT and change in use of proceeds

LETTER FROM THE BOARD

Adjustment of the conversion price of the Convertible Note

TAKEOVERS CODE IMPLICATION

LETTER FROM THE BOARD

CAPITAL REORGANISATION

The Share Consolidation and the Capital Reduction

The Share Premium Cancellation

Reasons of the Capital Reorganisation

Effects of the Capital Reorganisation

Conditions of the Capital Reorganisation

Application for listing

Free exchange of New Share certificates and parallel trading arrangements

Arrangement for the matching service for odd lots

AMENDMENTS TO BYE-LAWS

IML SHARE PLACING AND SHARE SUBSCRIPTION

LETTER FROM THE BOARD

Reasons and benefits

SHARE SALE

Reasons

THE INCENTIVE OPTION SCHEME

LETTER FROM THE BOARD

Reasons, benefits and intended use of sales proceeds

7. SHAREHOLDING CHANGES IN IML

Table A

Table B

CHANGE OF ACCOUNTING YEAR END DATE

GENERAL

SGM OF ATNT

RECOMMENDATIONS

ADDITIONAL INFORMATION

PROPOSED ISSUE OF CONVERTIBLE NOTE, APPLICATION FOR WHITEWASH WAIVER BY KT, IML SHARE PLACING, SHARE SUBSCRIPTION AND INCENTIVE OPTION SCHEME

Barits Securities (Hong Kong) Limited

CSC Asia Limited

PROPOSED ISSUE OF CONVERTIBLE NOTE, APPLICATION FOR WHITEWASH WAIVER BY KT, IML SHARE PLACING, SHARE SUBSCRIPTION AND INCENTIVE OPTION SCHEME

INTRODUCTION

LETTER OF ADVICE FROM BARITS AND CSC ASIA

PRINCIPAL FACTORS AND REASONS CONSIDERED

1. The CN Subscription Agreement and the Whitewash Waiver

Reasons for the CN Subscription Agreement

Use of proceeds

Principal terms of the CN Subscription Agreement

Conversion price

Maturity

Coupon

Redemption

Conclusion

Financial effects of the CN Subscription Agreement

Da Sen Holdings Group Limited Proxy Solicitation & Information Statement 2004