E-STATION GREEN TECHNOLOGY GROUP CO., LIMITED - Proxy Solicitation & Information Statement 2009

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Finet Group Limited, you should at once hand this circular together with the accompanying form of proxy to the purchaser(s) or transferees or to the licensed securities dealer or registered institution in securities or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or transferees.

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

==> picture [119 x 56] intentionally omitted <==

FINET GROUP LIMITED 財華社集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8317)

PROPOSED OPEN OFFER ON THE BASIS OF ONE OFFER SHARE FOR EVERY TWO EXISTING SHARES HELD ON THE RECORD DATE WITH BONUS ISSUE OF WARRANTS ON THE BASIS OF THREE BONUS WARRANTS FOR EVERY TEN OFFER SHARES ISSUED AND ALLOTTED UNDER THE OPEN OFFER;

APPLICATION FOR WHITEWASH WAIVER;

AND

PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL

Financial adviser to the Company

==> picture [75 x 35] intentionally omitted <==

Independent Financial Adviser to the Independent Board Committee and Independent Shareholders

Underwriter to the Open Offer

Opulent Oriental International Limited

A letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders is set out on pages 30 to 46 of this circular. The recommendation of the Independent Board Committee to the Independent Shareholders are set out on pages 28 to 29 of this circular.

A notice convening the EGM to be held at Suite 505–506, 5th Floor, Low Block, Grand Millennium Plaza, 181 Queen’s Road Central, Hong Kong at 10: 00 a.m. on Friday, 3 July 2009 is set out on pages 158 to 162 of this circular. A form of proxy for use at the EGM is enclosed. Whether or not you intend to attend the EGM, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the Registrars at Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the EGM or any adjournment thereof (as the case may be). Completion and return of the form of proxy shall not preclude you from attending and voting in person at the EGM or any adjournment thereof (as the case may be) should you so desire and in such event, the instrument appointing a proxy shall be deemed to be revoked.

The Open Offer is conditional, inter alia, upon the fulfillment of the conditions set out under the section headed ‘‘Conditions of the Open Offer’’ on pages 17 to 18 of this circular. In particular, the Open Offer is conditional upon the Whitewash Waiver having been granted by the Executive and the approval of the Open Offer and the Whitewash Waiver by the Independent Shareholders at the EGM by way of poll. The Underwriter is entitled under the Underwriting Agreement to terminate the Underwriting Agreement on the occurrence of certain events, including but not limited to force majeure, as more particularly described in the section headed ‘‘Termination of the Underwriting Agreement’’ on pages 18 to 20 of this circular. The Open Offer is therefore also subject to the Underwriter not terminating the Underwriting Agreement. Accordingly, the Open Offer may or may not proceed.

9 June 2009

CHARACTERISTICS OF GEM

GEM has been positioned as a market designed to accommodate companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors.

Given the emerging nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board of the Stock Exchange and no assurance is given that there will be a liquid market in the securities traded on GEM.

– i –

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Expected Timetable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	28
Letter from Somerley . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	30
Appendix I — Summary of the terms of the Bonus Warrants . . . . . . . . . . . . . . . . . . . . .	47
Appendix II — Financial Information on the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	57
Appendix III — Unaudited Pro Forma Financial Information . . . . . . . . . . . . . . . . . . . . . . .	130
Appendix IV — Profit Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	135
Appendix V — General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	140
Notice of EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	158

– ii –

DEFINITIONS

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

‘‘acting in concert’’
has the meanings ascribed to it in the Takeovers Code
‘‘Announcement’’
the announcement of the Company dated 5 May 2009 in relation to the Open Offer, the Bonus Issue of Warrants, the Authorised Share Capital Increase and the Whitewash Waiver
‘‘Application Form(s)’’ the form(s) of application in respect of the Open Offer to be issued to the Qualifying Shareholders
‘‘April Announcement’’ the announcement of the Company dated 8 April 2009 in relation to the profit warning of the Company
‘‘associate(s)’’
has the same meanings ascribed to it in the GEM Listing Rules
‘‘Authorised Share the proposed increase in the authorised share capital of the Capital Increase’’ Company from HK$10,000,000 divided into 1,000,000,000 Shares to HK$20,000,000 divided into 2,000,000,000 Shares by the creation of an additional 1,000,000,000 Shares
‘‘Board’’ the board of Directors
‘‘Bonus Issue of the proposed issue of the Bonus Warrants on the basis of three Warrants’’ Bonus Warrants for every ten Offer Shares issued and allotted by the Company under the Open Offer, subject to, inter alia, the approval of the Shareholders at the EGM
‘‘Bonus Warrant(s)’’ the warrant(s) to be issued by the Company by way of capitalisation issue entitling the holder(s) thereof to subscribe, at any time between the date of issue and the date immediately preceding the date falling on the second anniversary of the date of issue of such warrants (both dates inclusive), for fully paid Shares at the initial subscription price of HK$0.10, subject to adjustments
‘‘Business Day’’ any day (other than a Saturday or Sunday) on which banks in Hong Kong are generally open for business
‘‘CCASS’’
The Central Clearing and Settlement System established and operated by HKSCC
‘‘Companies Ordinance’’
Companies Ordinance (Chapter 32 of the Laws of Hong Kong)
‘‘Company’’
Finet Group Limited, a company incorporated in the Cayman Islands with limited liability, the Shares of which are listed on GEM

– 1 –

DEFINITIONS

‘‘Concert Party Group’’ Opulent and Dr. Yu, and the parties acting in concert with any of them
‘‘controlling has the meanings ascribed to it in the GEM Listing Rules shareholder’’
‘‘Conversion Shares’’ new Shares to be allotted and issued on the exercise of the subscription rights attaching to the Bonus Warrants
‘‘Director(s)’’ director(s) of the Company
‘‘Dr. Yu’’ Dr. Yu Gang, George, the Chairman of the Company and an executive Director and the beneficial owner of the entire issued share capital of the Underwriter
‘‘EAF(s)’’ the excess application form(s) to be issued in connection with the Open Offer for use by the Qualifying Shareholders to apply for excess Offer Shares
‘‘EGM’’ the extraordinary general meeting of the Company to be held at Suite 505–506, 5th Floor, Low Block, Grand Millennium Plaza, 181 Queen’s Road Central, Hong Kong at 10: 00 a.m. on Friday, 3 July 2009 at which resolutions will be proposed to consider, and if thought fit, to approve, among others, the Open Offer and the Whitewash Waiver by the Independent Shareholders, the Bonus Issue of Warrants and the Authorised Share Capital Increase by the Shareholders
‘‘Excluded the Overseas Shareholders whom the Directors, having made Shareholder(s)’’ enquiry regarding the legal restrictions under the laws of relevant place or the requirements of the relevant regulatory body or stock exchange in that place, consider it necessary or expedient not to offer the Offer Shares and/or the Bonus Warrants to such Shareholders on account either of legal restrictions under the laws of relevant place or the requirements of the relevant regulatory body or stock exchange in that place
‘‘Executive’’ the Executive Director of the Corporate Finance Division of the SFC or any delegate of the Executive Director
‘‘GEM’’
The Growth Enterprises Market of the Stock Exchange
‘‘GEM Listing Rules’’ the Rules Governing the Listing of Securities on GEM
‘‘Group’’ the Company and its subsidiaries
‘‘HKSCC’’ Hong Kong Securities Clearing Company Limited

– 2 –

DEFINITIONS

‘‘Hong Kong’’
the Hong Kong Special Administrative Region of the PRC
‘‘Independent Board Committee’’
an independent committee of the Board comprising all the independent non-executive Directors namely Dr. Lam Lee G., Mr. Wu Tak Lung and Mr. William Hay established to advise the Independent Shareholders in relation to the Open Offer and the Whitewash Waiver
‘‘Independent Financial Somerley Limited, a licensed corporation authorized to conduct Adviser’’ or Type 1 (dealing in securities), Type 4 (advising on securities), ‘‘Somerley’’ Type 6 (advising on corporate finance) and Type 9 (asset management) of the regulated activities under the SFO, the independent financial adviser engaged by the Company to advise the Independent Board Committee and the Independent Shareholders in relation to the Open Offer and the Whitewash Waiver
‘‘Independent Shareholders other than (i) the Concert Party Group; (ii) the Shareholders’’ independent non-executive Directors namely Dr. Lam Lee G. and Mr. Wu Tak Lung; and (iii) Shareholders who are involved in, or interested in the Underwriting Agreement, the Open Offer and/or the Whitewash Waiver
‘‘Independent Third any person(s) or company(ies) and their respective ultimate Party(ies)’’ beneficial owner(s), to the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, are third parties independent of and not connected with any director, chief executive or substantial shareholders of the Company and its subsidiaries or any of their respective associates
‘‘Irrevocable the Irrevocable Undertakings dated 29 April 2009 under which Undertakings’’ Dr. Yu has irrevocably undertaken to the Underwriter and the Company that he will not exercise his subscription rights attaching to 12,126,000 Share Options held by him from the date of such undertaking up to and including the Record Date
‘‘Last Trading Date’’ 29 April 2009, being the last trading day which was immediately prior to the suspension of trading in the Shares on 30 April 2009 on GEM
‘‘Latest Practicable Date’’
5 June 2009, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained in this circular
‘‘Latest Time for 4: 00 p.m. on Monday, 27 July 2009 or such other date or time as Acceptance’’ may be agreed by the Company and the Underwriter in writing, being the latest time for application of the Offer Shares

– 3 –

DEFINITIONS

‘‘Latest Time for Termination’’
4: 00 p.m. on Thursday, 30 July 2009 or such later time to be agreed in writing between the Company and the Underwriter, being the latest time for the Underwriter to terminate the Underwriting Agreement
‘‘Offer Share(s)’’
not less than 299,685,000 new Shares and not more than 303,387,500 new Shares, proposed to be offered to the Qualifying Shareholders for subscription on the terms and subject to the conditions set out in the Underwriting Agreement and in the Prospectus Documents
‘‘Open Offer’’
the proposed offer for subscription at the Subscription Price to be made by the Company to the Qualifying Shareholders in the proportion of one Offer Share for every two existing Shares held on the Record Date by way of open offer upon the terms and conditions mentioned herein and more particularly described in the Prospectus Documents
‘‘Optionholders’’
holders of the Share Options other than Dr. Yu
‘‘Opulent’’ or ‘‘Underwriter’’
Opulent Oriental International Limited, a company incorporated in the British Virgin Islands and the underwriter to the Open Offer. Opulent is wholly-owned by Dr. Yu, and is the controlling shareholder of the Company holding approximately 30.59% of the entire issued share capital of the Company as at the Latest Practicable Date
‘‘Overseas Shareholders’’
Shareholders with registered addresses (as shown in the register of members of the Company as at the close of business on the Record Date) which are outside Hong Kong
‘‘PRC’’
the People’s Republic of China
‘‘Prospectus’’
the prospectus to be issued by the Company in relation to the Open Offer and, if applicable, the Bonus Issue of Warrants
‘‘Prospectus Documents’’
the Prospectus, the Application Form and the EAF
‘‘Prospectus Posting Date’’
Thursday, 9 July 2009, the date of despatch of the Prospectus Documents, or such other date as the Underwriter may agree in writing with the Company for the despatch of the Prospectus Documents
‘‘Qualifying Shareholders whose names appear on the register of members of Shareholders’’ the Company as at the close of business on the Record Date, other than the Excluded Shareholders

– 4 –

DEFINITIONS

‘‘Record Date’’ Friday, 3 July 2009, or such other date as may be agreed between the Company and the Underwriter for the determination of the entitlements under the Open Offer
‘‘Registrars’’
Computershare Hong Kong Investor Services Limited at Rooms 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong, the Hong Kong branch share registrars of the Company
‘‘Relevant Period’’ the period beginning six months prior to the date of the Announcement and ending on the Latest Practicable Date
‘‘SFC’’ the Securities and Futures Commission of Hong Kong
‘‘SFO’’ the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
‘‘Share(s)’’ the existing share(s) of HK$0.01 each in the share capital of the Company
‘‘Share Options’’ comprising options to subscribe for an aggregate of 19,931,000 Shares at the exercise prices ranging from HK$0.150 to HK$0.668 per Share (subject to adjustment) granted under the Share Option Schemes
‘‘Share Option the share option schemes adopted by the Company on 23 July Schemes’’ 2004 and 16 December 2004
‘‘Shareholder(s)’’ the holder(s) of the Shares of the Company
‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited
‘‘Subscription Price’’ subscription price of HK$0.05 per Offer Share pursuant to the Open Offer
‘‘Takeovers Code’’ The Codes on Takeovers and Mergers
‘‘Underwriting the conditional underwriting agreement dated 29 April 2009 Agreement’’ entered into between the Company and the Underwriter in relation to the Open Offer
‘‘Underwritten Shares’’ not less than 208,016,272 Offer Shares and not more than 211,718,772 Offer Shares, being all Offer Shares (including the Offer Shares to which the Excluded Shareholder(s) would otherwise have been entitled) to be issued pursuant to the Open Offer less those Offer Shares which Opulent has undertaken to take up under the Open Offer

– 5 –

DEFINITIONS

‘‘Whitewash Waiver’’ a waiver from the Executive pursuant to note 1 of the Notes on dispensations from Rule 26 of the Takeovers Code in respect of the obligations of the Underwriter to make a mandatory offer for all the securities of the Company not already owned by the Concert Party Group which would otherwise arise as a result of the Underwriter taking up of the Underwritten Shares under the Open Offer and the exercise of the subscription rights attaching to any of the Bonus Warrants held by the Underwriter ‘‘HK$’’ Hong Kong dollar, the lawful currency of Hong Kong ‘‘RMB’’ renminbi, the lawful currency of PRC ‘‘%’’ per cent.

– 6 –

EXPECTED TIMETABLE

2009

Last day of dealings in the Shares on a cum-entitlement basis . . . . . . Thursday, 25 June Commencement of dealings in the Shares on an ex-entitlement basis . . . Friday, 26 June

Latest time for lodging transfers of the Shares with the Registrars in order to be qualified
for the Open Offer . . . . . . . . . . . . . . . . . . . . . . . . . 4: 30 p.m. on Monday, 29 June
Register of members closes to determine entitlements under the Open Offer
(both dates inclusive) . . . . . . . . . . . . . . . . . . . . . . Tuesday, 30 June to Friday, 3 July

Latest time for return of form of proxy for the EGM . . . . . . . . . . . . . . . . . . . . . . 10: 00 a.m. on Wednesday, 1 July (Note) Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 3 July EGM to be held . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10: 00 a.m. Friday, 3 July Announcement of the results of the EGM . . . . . . . . . . . . . Not later than 11: 00 p.m. on Friday, 3 July Register of members re-opens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 6 July Prospectus Posting Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 9 July Latest time for Acceptance and payment for, the Offer Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4: 00 p.m. on Monday, 27 July The Underwriting Agreement becomes unconditional . . . 4: 00 p.m. on Thursday, 30 July Announcement of results of the Open Offer to be published . . . . . . . . . . . . . . . . . . . Not later than 11: 00 p.m. Thursday, 30 July Refund cheques for wholly and partially unsuccessful excess applications to be posted . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 3 August Certificates for the Offer Shares and the Bonus Warrants expected to be despatched on or before . . . . . . . . . . . . . . . . . . . . Monday, 3 August Dealings in the Offer Shares commence on . . . . . . . . . . . . . . . . . Wednesday, 5 August Note: Wednesday, 1 July 2009 is a public holiday.

– 7 –

EXPECTED TIMETABLE

EFFECT OF BAD WEATHER ON THE LATEST TIME FOR ACCEPTANCE OF AND PAYMENT FOR THE OFFER SHARES

All times in this circular refer to Hong Kong time. If there is a ‘‘black’’ rainstorm warning or a tropical cyclone warning signal number 8 or above in force in Hong Kong on Monday, 27 July 2009:

(i) at any time before 12: 00 noon and no longer in force after 12: 00 noon, the Latest Time for Acceptance will be postponed to 5: 00 p.m. on the same Business Day; or
(ii) at any time between 12: 00 noon and 4: 00 p.m., the Latest Time for Acceptance will be postponed to 4: 00 p.m. on the next Business Day which does not have either of those warnings in force in Hong Kong at any time between 9: 00 a.m. and 4: 00 p.m.

Under such circumstances, the dates mentioned in the expected timetable above (including, without limitation, the Latest Time for Termination) may be affected.

Dates or deadlines stated in this circular for events in the timetable are indicative only and may be extended or varied between the Company and the Underwriter. Any changes to the expected timetable for the Open Offer will be announced as appropriate.

– 8 –

LETTER FROM THE BOARD

==> picture [119 x 55] intentionally omitted <==

FINET GROUP LIMITED 財華社集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8317)

Executive Director: Registered office: Yu Gang, George (Chairman) Cricket Square, Hutchins Drive, PO Box 2681, Independent non-executive Directors: Grand Cayman KY1-1111, Lam Lee G. Cayman Islands Wu Tak Lung William Hay Head office and Principal Place of Business in Hong Kong: Suite 505–506, 5th Floor, Low Block, Grand Millennium Plaza, 181 Queen’s Road Central, Hong Kong

9 June 2009

To the Shareholders and, for information only, the Optionholders

Dear Sir or Madam,

APPLICATION FOR WHITEWASH WAIVER;

AND

PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL

INTRODUCTION

The Company announced on 5 May 2009 that the Company had entered into the Underwriting Agreement with the Underwriter on 29 April 2009 in relation to the Open Offer.

– 9 –

LETTER FROM THE BOARD

The purpose of this circular is to provide you with further details regarding, among other things, (i) the Open Offer; (ii) the Bonus Issue of Warrants; (iii) the Authorised Share Capital Increase; and (iv) the Whitewash Waiver and containing (i) a letter from the Independent Board Committee to the Independent Shareholders setting out their recommendation in relation to the Open Offer and the Whitewash Waiver; (ii) a letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in relation to the Open Offer and the Whitewash Waiver together with (iii) a notice of the EGM.

PROPOSED OPEN OFFER

Issue statistics

Basis of the Open Offer

: One Offer Share for every two existing Shares held on the Record Date and payable in full upon application with three Bonus Warrants for every ten Offer Shares issued and allotted

Number of Shares in issue

Minimum number of Offer Shares assuming that none of the Share Options is exercised on or before the Record Date

: 599,370,000 Shares as at the Latest Practicable Date
: 299,685,000 Offer Shares

Maximum number of Offer Shares assuming that the Share Options (other than those held by Dr. Yu and the 400,000 Share Options granted to an employee of the Company which are exercisable from 5 November 2009) are exercised in full on or before the Record Date

: 303,387,500 Offer Shares

Subscription Price

: HK$0.05 per Offer Share payable in full upon application

Minimum number of Shares in issue as enlarged upon completion of the Open Offer assuming that none of the Share Options is exercised on or before the Record Date

: 899,055,000 Shares

Maximum number of Shares in issue as enlarged upon completion of the Open Offer assuming that the Share Options (other than those held by Dr. Yu and the 400,000 Share Options granted to an employee of the Company which are exercisable from 5 November 2009) are exercised in full on or before the Record Date

: 910,162,500 Shares

– 10 –

LETTER FROM THE BOARD

As at the Latest Practicable Date, there were an aggregate of 19,931,000 outstanding Share Options. Among these Share Options, 400,000 Share Options granted to an employee of the Company are exercisable from 5 November 2009. Accordingly, there are 19,531,000 Share Options eligible for exercise on or before the Record Date to subscribe for an aggregate of 19,531,000 Shares at the exercise prices ranging from HK$0.150 to HK$0.668 per Share (subject to adjustment). The Share Options consist of (i) Share Options granted to Dr. Yu to subscribe for 12,126,000 Shares; (ii) Share Options granted to the independent non-executive Directors to subscribe for an aggregate of 2,000,000 Shares; and (iii) Share Options granted to employees of the Company to subscribe for an aggregate of 5,805,000 Shares. Dr. Yu has irrevocably undertaken, among other things, not to exercise the subscription rights attaching to 12,126,000 Share Options held by him prior to the Record Date on the terms of the Irrevocable Undertakings.

Save for the Share Options, the Company has no other outstanding options, warrants, derivatives or convertible securities in issue which confer any rights to subscribe for, convert or exchange into the Shares as at the Latest Practicable Date.

Subscription Price

The Subscription Price of HK$0.05 per Offer Share is payable in full upon application of the relevant assured allotment of Offer Shares and, where applicable, application for excess Offer Shares under the Open Offer. The Subscription Price represents:

(i) a discount of approximately 26.47% to the closing price per Share of HK$0.068 as quoted on the Stock Exchange on the Last Trading Date;
(ii) a discount of approximately 31.51% to the average of the closing prices per Share of approximately HK$0.073 for the last 5 trading days as quoted on the Stock Exchange up to and including the Last Trading Date;
(iii) a discount of approximately 32.43% to the average of the closing prices per Share of approximately HK$0.074 for the last 10 trading days as quoted on the Stock Exchange up to and including the Last Trading Date;
(iv) a discount of approximately 19.35% to the theoretical ex-entitlement price of approximately HK$0.062 per Share calculated based on the closing price per Share of HK$0.068 as quoted on the Stock Exchange on the Last Trading Date; and
(v) a discount of approximately 60.63% to the closing price per Share of HK$0.127 as quoted on the Stock Exchange on the Latest Practicable Date.

The Subscription Price was determined after negotiations between the Independent Board Committee and the Underwriter with reference to the current market price of the Shares. As Dr. Yu, the sole executive Director, is also the sole shareholder and director of the Underwriter, the Independent Board Committee has been, on behalf of the Company,

– 11 –

LETTER FROM THE BOARD

involved in the negotiation of the Subscription Price. The Company believes that the terms of the Underwriting Agreement are in aggregate no less favourable to the Company than terms available from other alternative financing resources.

Basis of assured allotment

The basis of the assured allotment shall be one Offer Share for every two existing Shares held by the Qualifying Shareholders on the Record Date. Application for all or any part of a Qualifying Shareholder’s assured allotment should be made by completing the Application Form and lodging the same with the remittance for the Offer Shares being applied for.

Fractions of the Offer Shares

Entitlement to Offer Shares will be rounded down to the nearest whole number. Fractional entitlements to the Offer Shares will not be issued but will be aggregated and taken up by the Underwriter.

Bonus Issue of Warrants

Subject to the satisfaction of the conditions of the Open Offer, the Bonus Warrants will be issued to the registered holders of the Offer Shares on the basis of three Bonus Warrants for every ten Offer Shares issued and allotted under the Open Offer.

On the basis of not less than 299,685,000 Offer Shares and not more than 303,387,500 Offer Shares to be issued under the Open Offer, not less than 89,905,500 Bonus Warrants and not more than 91,016,250 Bonus Warrants entitling the holders thereof to subscribe for not less than 89,905,500 Conversion Shares and not more than 91,016,250 Conversion Shares (representing 10% of the total number of the then issued Shares at the time the Bonus Warrants are issued) respectively, will be issued. The Bonus Issue of Warrants is subject to and conditional upon:

(i) the Open Offer becoming unconditional;
(ii) the passing of ordinary resolutions by the Shareholders approving the Bonus Issue of Warrants, the issue and allotment of the Conversion Shares and the Authorised Share Capital Increase at the EGM; and
(iii) the Stock Exchange granting the listing of and permission to deal in the Conversion Shares.

Subscription price of the Bonus Warrants

The Bonus Warrants will entitle the holders thereof to subscribe for new Shares at the initial subscription price of HK$0.10 per Share in cash, subject to adjustment(s) upon occurrence of usual adjustment events arising as a result of changes in the share capital of

– 12 –

LETTER FROM THE BOARD

the Company including consolidation or sub-division of Shares, capitalisation of profits or reserves, capital distributions in cash or specie or subsequent issue of securities in the Company.

The initial subscription price of the Bonus Warrants represents:

(i) a premium of approximately 47.06% over the closing price per Share of HK$0.068 as quoted on the Stock Exchange on the Last Trading Date;
(ii) a premium of approximately 36.99% over the average of the closing prices per Share of approximately HK$0.073 for the last 5 trading days as quoted on the Stock Exchange up to and including the Last Trading Date;
(iii) a premium of approximately 35.14% over the average of the closing prices per Share of approximately HK$0.074 for the last 10 trading days as quoted on the Stock Exchange up to and including the Last Trading Date;
(iv) a premium of approximately 61.29% over the theoretical ex-entitlement price of HK$0.062 per Share calculated based on the closing price per Share of HK$0.068 as quoted on the Stock Exchange on the Last Trading Date; and
(v) a discount of approximately 21.26% to the closing price per Share of HK$0.127 as quoted on the Stock Exchange on the Latest Practicable Date.

Subscription period

The Bonus Warrants may be exercised at any time between the date of issue and the date immediately preceding the date falling on the second anniversary of the date of issue of the Bonus Warrants (both dates inclusive).

Fractional entitlements to the Bonus Warrants

Entitlement to Bonus Warrants will be rounded down to the nearest whole number. Fractional entitlements to the Bonus Warrants (if any) will not be issued to the holders of the Offer Shares.

Status of the Offer Shares and the Conversion Shares

Save that the Offer Shares will be entitled to the Bonus Warrants, the Offer Shares, when allotted and fully paid, will rank pari passu in all respects with the Shares then in issue. Holders of fully-paid Offer Shares will be entitled to receive all future dividends and distributions which are declared, made or paid on or after the date of allotment of the Offer Shares.

The Conversion Shares, when allotted and fully paid, will rank pari passu in all respects with the Shares then in issue. Holders of fully-paid Conversion Shares will be entitled to receive all future dividends and distributions which are declared, made or paid on or after the date of allotment of the Conversion Shares. The subscription rights attached to the Bonus Warrants shall be transferable in whole amounts or integral multiples of the

– 13 –

LETTER FROM THE BOARD

subscription price of the Bonus Warrants (or such other sum as the Directors shall from time to time determine) by instrument of transfer in any usual or common form or in any other form as may be approved by the Directors. The Company will maintain a register of holders of the Bonus Warrants and Computershare Hong Kong Investor Services Limited will be appointed by the Company as the transfer agent for the Bonus Warrants. The transfer of Bonus Warrants will be subject to the payment of stamp duty in Hong Kong with the addition of document stamp of HK$5.00 for each transfer.

Application for listing

The Company will apply to the Listing Committee of the Stock Exchange for the listing of and permission to deal in the Offer Shares and the Conversion Shares. No application will be made for the listing of the Bonus Warrants on the Stock Exchange or any other stock exchange.

Subject to the granting of listing of, and permission to deal in, the Offer Shares and the Conversion Shares on the Stock Exchange, the Offer Shares and the Conversion 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 Offer Shares and the Conversion 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. Investors should seek the advice of their stockbroker or other professional adviser for details of those settlement arrangement and how such arrangements will affect their rights and interests.

No part of the share capital of the Company is listed or dealt in or of which listing or permission to deal is being or is proposed to be sought on any other stock exchange.

Dealings in the Offer Shares and the Conversion Shares in board lots of 10,000, which are registered in the branch register of members of the Company in Hong Kong will be subject to the payment of stamp duty in Hong Kong.

Qualifying Shareholders

The Company will send the Prospectus Documents to the Qualifying Shareholders only. For the Excluded Shareholders, the Company will send copies of the Prospectus to them for their information only, but the Company will not send any Application Form and EAF to the Excluded Shareholders.

To qualify for the Open Offer, a Shareholder must be registered as a member of the Company at the close of business on the Record Date and must be a Qualifying Shareholder. In order to be registered as members of the Company at the close of business on the Record Date, Shareholders must lodge any transfers of Shares (together with the relevant share certificates) with the Registrars for registration no later than 4: 30 p.m. on Monday, 29 June 2009.

– 14 –

LETTER FROM THE BOARD

Closure of register of members

The register of members of the Company is expected to be closed from Tuesday, 30 June 2009 to Friday, 3 July 2009, both dates inclusive. No transfers of Shares will be registered during the book closure period.

Certificates of the Offer Shares and the Bonus Warrants and refund cheques

Subject to the fulfillment of the conditions of the Open Offer, share certificates for the Offer Shares and certificates for the Bonus Warrants and, if any, refund cheques in respect of wholly or partially unsuccessful applications for excess Offer Shares are expected to be posted by Monday, 3 August 2009 to those Shareholders entitled thereto by ordinary post at their own risks.

Rights of Excluded Shareholders

As at the Latest Practicable Date, the Company had three Overseas Shareholders with registered addresses in the United Kingdom and the United States. Pursuant to Rule 17.41(1) of the GEM Listing Rules, the Company has made enquiries regarding the feasibility of extending the Open Offer and the Bonus Issue of Warrants to the Overseas Shareholders.

Based on the legal opinion provided by the United Kingdom legal advisers, under United Kingdom Law, the Open Offer and the issue of Bonus Warrants, which entitle the holders to subscribe for Shares, would amount to an offer of shares to the public in the United Kingdom. Subject to certain exceptions, it is unlawful for shares to be offered to the public in the United Kingdom unless a prospectus containing prescribed information has been made available to the public in the United Kingdom before the offer is made. After taking into consideration the advice of the United Kingdom legal advisors, the Directors have decided to extend the Open Offer and the Bonus Issue of Warrants to the Overseas Shareholders with registered addresses in the United Kingdom, as the Open Offer and the Bonus Issue of Warrants come within one of the exemptions from the requirement to produce a prospectus when shares are offered to the public in the United Kingdom. Accordingly, Overseas Shareholders with registered addresses in the United Kingdom are considered to be Qualified Shareholders.

Based on the legal opinion provided by the United States legal advisors, in general, a Hong Kong listed issuer would be permitted to make an open offer of shares and to issue bonus warrants to its shareholders based in the United States subject to compliance with applicable United States federal securities laws and the securities laws of the various states in which its shareholders are resident. However, under United States federal securities laws there are registration requirements and related disclosure requirements. Furthermore, if the Open Offer and Bonus Issue of Warrants were extended to Shareholders resident in the United States, the Open Offer and Bonus Issue of Warrants would also be subject to federal and state anti-fraud and related rules that affect disclosures to Shareholders resident in the United States.

– 15 –

LETTER FROM THE BOARD

After taking into consideration the advice of the United States legal advisors, the Directors consider it necessary and expedient not to extend the Open Offer and Bonus Issue of Warrants to the Overseas Shareholders with registered addressed in the United States as a result of the legal restrictions and the requirements of the relevant regulatory body in this place. Accordingly, the Overseas Shareholders with registered addresses in the United States are considered to be Excluded Shareholders.

Application for excess Offer Shares

Qualifying Shareholders may apply, by way of excess application, for any assured allotments of Offer Shares under the Open Offer which have not been applied for by other Qualifying Shareholders and those Offer Shares to which the Excluded Shareholder(s) would otherwise have been entitled.

Applications for excess Offer Shares may be made by completing the EAF and lodging the same with a separate remittance for the excess Offer Shares being applied for. The Directors will allocate the excess Offer Shares at their sole discretion on a fair and equitable basis, in proportion to the number of excess Offer Shares being applied for under each application, except that preference will be given to applications for less than a board lot of Offer Shares where it appears to the Directors that such applications are made to round up odd-lot holdings to whole-lot holdings.

Shareholders whose Shares are held by nominee companies should note that the Board will regard a nominee company as a single Shareholder according to the register of members of the Company. Accordingly, Shareholders whose Shares are registered in the name of a nominee company should note that the aforesaid arrangement in relation to the allocation of excess Offer Shares will not be extended to them individually. Shareholders with their Shares held by nominee companies are advised to consider whether they would like to arrange for registration of the relevant Shares in the name of the beneficial owner(s) prior to the Record Date.

For Shareholders whose Shares are held by their nominee(s) and would like to have their names registered on the register of members of the Company, they must complete the relevant registration with the Registrars by 4: 30 p.m. on Monday, 29 June 2009.

UNDERWRITING ARRANGEMENT AND UNDERTAKINGS

The Underwriting Agreement

Date : 29 April 2009 Underwriter : Opulent. Opulent is the controlling shareholder of the Company holding an aggregate of 183,337,456 Shares (representing approximately 30.59% of the issued share capital of the Company) as at the Latest Practicable Date. Opulent is an investment holding company whose ordinary course of business does not involve underwriting of securities and is wholly-owned by Dr. Yu.

– 16 –

LETTER FROM THE BOARD

Number of	:	Not less than 208,016,272 Offer Shares and not more than
Underwritten Shares		211,718,772 Offer Shares (being all Offer Shares (including
		the Offer Shares to which the Excluded Shareholder(s)
		would otherwise have been entitled) to be issued pursuant to
		the Open Offer less those Offer Shares which Opulent has
		undertaken to take up).
Commission	:	No underwriting commission will be paid by the Company
		to the Underwriter.

The Directors consider that the terms of the Underwriting Agreement are fair and reasonable.

Undertakings from Opulent

As at the Latest Practicable Date, Opulent was interested in 183,337,456 Shares, representing approximately 30.59% of the existing issued share capital of the Company. On 29 April 2009, Opulent has irrevocably undertaken to the Company, among other things, that it will not dispose of the 183,337,456 Shares beneficially owned by it from the date of the undertaking up to the Latest Time for Acceptance, and that it will accept or procure to accept its assured allotments of 91,668,728 Offer Shares under the Open Offer in respect of the 183,337,456 Shares held by it as at the date of the Underwriting Agreement.

Undertakings from Dr. Yu

As at the Latest Practicable Date, Dr. Yu did not hold any Shares (save for the 183,337,456 Shares held through Opulent) but held 12,126,000 Share Options. Pursuant to the Irrevocable Undertakings, Dr. Yu has irrevocably undertaken to the Company and the Underwriter that he will not exercise his 12,126,000 Share Options and that such Share Options will remain registered in the name of and beneficially owned by him from the date of the undertaking up to and including the Record Date.

Conditions of the Open Offer

The Open Offer is conditional, among other things, on each of the following conditions being fulfilled:

(i) the passing of ordinary resolutions by the Independent Shareholders approving the Open Offer and the Whitewash Waiver at the EGM by way of poll;
(ii) the Executive granting the Whitewash Waiver to the Underwriter and the satisfaction of all conditions (if any) attached to the Whitewash Waiver granted;
(iii) the delivery by or on behalf of the Company not later than the Prospectus Posting Date of one copy of each of the Prospectus Documents, duly signed by or on behalf of any two Directors together with any requisite accompanying documents, to the Stock Exchange and the Registrars of Companies in Hong Kong for filing and registration in accordance with the provisions of the Companies Ordinances;

– 17 –

LETTER FROM THE BOARD

(iv) the Listing Committee of the Stock Exchange granting or agreeing to grant (subject to allotment) listing of and permission to deal in all the Offer Shares and not having withdrawn or revoked such listings and permission;
(v) the posting of the Prospectus Documents to Qualifying Shareholders and of the Prospectus, for information purposes only, to the Excluded Shareholders;
(vi) compliance with and performance of all the undertakings and obligations of the Company as provided in the Underwriting Agreement; and
(vii) the obligations of the Underwriter not being terminated by the Underwriter in accordance with the terms of the Underwriting Agreement.

Save for condition (vi) which may be waived by the Underwriter in whole or in part, none of the conditions above can be waived. If the conditions of the Open Offer are not satisfied and/or waived (in respect of condition (vi) only) in whole or in part by the Underwriter by the Latest Time for Termination or such later date or dates as the Underwriter may agree with the Company in writing, the Underwriting Agreement shall terminate and (except in respect of any reasonable legal fees or other reasonably out-ofpocket expenses, if any, of the Underwriter, or the indemnity given to the Underwriter and any rights or obligations which may accrue under the Underwriting Agreement prior to such termination) no party will have any claim against the other party for costs, damages, compensation or otherwise.

If the Underwriting Agreement terminates in accordance with its terms, the Open Offer will not proceed. The Irrevocable Undertakings as described above will lapse.

The Open Offer is not conditional on the approval of the Bonus Issue of Warrants and the Authorised Share Capital Increase.

Termination of the Underwriting Agreement

The Underwriter shall be entitled by notice in writing to the Company, served prior to the Latest Time for Termination, to terminate the Underwriting Agreement if prior to the Latest Time for Termination:

(i) in the reasonable opinion of the Underwriter acting in good faith, the success of the Open Offer would be materially and adversely affected by:
(a) the introduction of any new law or regulation or any change in existing laws or regulations (or the judicial interpretation thereof) or other occurrence of any nature whatsoever which may materially and adversely affect the business or the financial or trading position or prospects of the Group as a whole; or
(b) the occurrence of any local, national or international event or change, whether or not forming part of a series of events or changes occurring or continuing before, and/or after the date hereof, of a political, financial,

– 18 –

LETTER FROM THE BOARD

economic, currency, market or other nature (whether or not ejusdem generis with any of the foregoing), or in the nature of any local, national or international outbreak or escalation of hostilities or armed conflict, or affecting local securities markets which may materially and adversely affect the business or the financial or trading position or prospects of the Group as a whole; or

(c) any material adverse change in the business or in the financial or trading position or prospectus of the Group as a whole; or
(d) any act of God, war, riot, public disorder, civil commotion, fire, flood, explosion, epidemic, terrorism, strike or lock-out which would materially and adversely affect the business or the financial or trading position or prospects of the Group as a whole; or
(e) there occurs or comes into effect the imposition of any moratorium, suspension or material restriction on trading in the Shares generally on the Stock Exchange due to exceptional financial circumstances or otherwise; or
(f) the commencement by any third party of any litigation or claim against any company in the Group which is or might be material to the Group taken as a whole; or
(ii) any material adverse change in market conditions (including, without limitation, a change in fiscal or monetary policy or foreign exchange or currency markets, suspension or restriction of trading in securities, imposition of economic sanctions on Hong Kong, the PRC or other jurisdiction relevant to any company in the Group and a change in currency conditions includes a change in the system under which the value of the Hong Kong currency is pegged with that of the currency of the United States of America) occurs which makes it inexpedient or inadvisable to proceed with the Open Offer; or
(iii) this circular or the Prospectus when published contain information (either as to business prospects or the condition of the Group or as to its compliance with any laws or the GEM Listing Rules or any applicable regulations) which has not prior to the date hereof been publicly announced or published by the Company and which is material to the Group as a whole and is likely to affect materially and adversely the success of the Open Offer or might cause a prudent investor not to accept the Offer Shares to be allotted to it.

The Underwriter shall be entitled by notice in writing to rescind the Underwriting Agreement if prior to the Latest Time for Termination:

(i) any material breach of any of the warranties or undertakings contained in the relevant clause in the Underwriting Agreement comes to the knowledge of the Underwriter and such material breach materially and adversely affects the success of the Open Offer; or

– 19 –

LETTER FROM THE BOARD

(ii) any event occurring or matter arising on or after the date of the Underwriting Agreement and prior to the Latest Time for Termination which if it had occurred or arisen before the date of the Underwriting Agreement would have rendered any of the warranties contained in the relevant clause in the Underwriting Agreement untrue or incorrect in any material respect comes to the knowledge of the Underwriter and such event materially and adversely affects the success of the Open Offer.

If the Underwriter exercises such right, the Open Offer will not proceed.

WARNING OF THE RISKS OF DEALING IN THE SHARES

The Open Offer is conditional, inter alia, upon the fulfillment of the conditions set out in the section headed ‘‘Conditions of the Open Offer’’. In particular, the Open Offer is conditional upon the Whitewash Waiver having been granted by the Executive, the approval of the Open Offer and the Whitewash Waiver by the Independent Shareholders at the EGM by way of poll, the Underwriting Agreement having become unconditional and the Underwriter not having terminated the Underwriting Agreement in accordance with the terms thereof as set out in the paragraph headed ‘‘Termination of the Underwriting Agreement’’. Accordingly, the Open Offer may or may not proceed.

Shareholders and potential investors of the Company should therefore exercise extreme caution when dealing in the Shares, and if they are in any doubt about their position, they should consult their professional advisers.

SHAREHOLDING STRUCTURE OF THE COMPANY

The shareholding structure of the Company immediately before and after completion of the Open Offer is set out below:

Shareholders Opulent Total holdings of Concert Party Group (Note 2) Lam Lee G. (Note 3) Wu Tak Lung (Note 3) Employees of the Company Total holdings of Optionholders Other public Shareholders Sub total of all public Shareholders Total	As the Latest Pra Number of Shares 183,337,456 183,337,456 — — — — 416,032,544 416,032,544 599,370,000	at cticable Date Approximate % 30.59 30.59 — — — — 69.41 69.41 100.00	Assuming no the Share Options on Nil subscription by public Shareholders Number of Shares Approximate % 483,022,456 53.73 483,022,456 53.73 — — — — — — — — 416,032,544 46.27 416,032,544 46.27 899,055,000 100.00	Upon completion exercise of or before Record Date 100% subscription by public Shareholders Number of Shares Approximate % 275,006,184 30.59 275,006,184 30.59 — — — — — — — — 624,048,816 69.41 624,048,816 69.41 899,055,000 100.00	of the Open Offer Assuming fu the Share Options on or b Nil subscription by public Shareholders Number of Shares Approximate % 486,724,956 53.48 486,724,956 53.48 1,000,000 0.11 1,000,000 0.11 5,405,000 0.59 7,405,000 0.81 416,032,544 45.71 423,437,544 46.52 910,162,500 100.00	ll exercise of efore Record Date (Note 1) 100% subscription by public Shareholders Number of Shares Approximate % 275,006,184 30.22 275,006,184 30.22 1,500,000 0.16 1,500,000 0.16 8,107,500 0.90 11,107,500 1.22 624,048,816 68.56 635,156,316 69.78 910,162,500 100.00	ll exercise of efore Record Date (Note 1) 100% subscription by public Shareholders Number of Shares Approximate % 275,006,184 30.22 275,006,184 30.22 1,500,000 0.16 1,500,000 0.16 8,107,500 0.90 11,107,500 1.22 624,048,816 68.56 635,156,316 69.78 910,162,500 100.00
							30.22
							0.16 0.16 0.90
							1.22
							68.56
							69.78
							100.00

– 20 –

LETTER FROM THE BOARD

Note 1: Exercise of the Share Options (other than the 12,126,000 Shares Options held by Dr. Yu and the 400,000 Share Options granted to an employee of the Company which are exercisable from 5 November 2009) in full on or before the Record Date.
Note 2: Dr. Yu, being a party acting in concert with the Underwriter, did not hold any Shares as at the Latest Practicable Date.
Note 3: Dr. Lam Lee G. and Mr. Wu Tak Lung are independent non-executive Directors.

The following sets out the shareholding structure of the Company upon full conversion of the Bonus Warrants by the Underwriter if none of the Shareholders will take up the Offer Shares on the scenarios that (i) none of the Share Options is exercised by the Optionholders on or before the Record Date; and (ii) all Share Options (other than the 400,000 Share Options granted to an employee of the Company which are exercisable from 5 November 2009) are exercised by the Optionholders in full on or before the Record Date.

Opulent Total holdings of Concert Party Group Lam Lee G. Wu Tak Lung Employees of the Company Total holdings of Optionholders Other public Shareholders Sub total of all public Shareholders Total	As at the Latest Practicable Date Number of Shares Approximate % 183,337,456 30.59 183,337,456 30.59 — — — — — — — — 416,032,544 69.41 416,032,544 69.41 599,370,000 100.00	Nil subscription by public Shareholders and full conversion of Bonus Warrants by the Underwriter Assuming no exercise of the Share Options on or before Record Date Assuming full exercise of the Share Options on or before Record Date Number of Shares Approximate % Number of Shares Approximate % 572,927,956 57.93 577,741,206 57.71 572,927,956 57.93 577,741,206 57.71 — — 1,000,000 0.10 — — 1,000,000 0.10 — — 5,405,000 0.54 — — 7,405,000 0.74 416,032,544 42.07 416,032,544 41.55 416,032,544 42.07 423,437,544 42.29 988,960,500 100.00 1,001,178,750 100.00	Nil subscription by public Shareholders and full conversion of Bonus Warrants by the Underwriter Assuming no exercise of the Share Options on or before Record Date Assuming full exercise of the Share Options on or before Record Date Number of Shares Approximate % Number of Shares Approximate % 572,927,956 57.93 577,741,206 57.71 572,927,956 57.93 577,741,206 57.71 — — 1,000,000 0.10 — — 1,000,000 0.10 — — 5,405,000 0.54 — — 7,405,000 0.74 416,032,544 42.07 416,032,544 41.55 416,032,544 42.07 423,437,544 42.29 988,960,500 100.00 1,001,178,750 100.00
			57.71
			0.10 0.10 0.54
			0.74
			41.55
			42.29
			100.00

Saved for the Shares held by the Underwriter as set out above and the Share Options held by Dr. Yu as disclosed in the paragraph headed ‘‘Undertakings from Dr. Yu’’, the Concert Party Group had no other shares, warrants, securities carrying conversion or subscription rights into any of the Shares and options and derivatives in respect of any of the Shares as at the Latest Practicable Date.

PREVIOUS FUND RAISING EXERCISES OF THE COMPANY

The Company did not have any fund raising exercises in the past twelve months immediately preceding the Latest Practicable Date.

– 21 –

LETTER FROM THE BOARD

REASONS FOR THE OPEN OFFER AND THE BONUS ISSUE OF WARRANTS AND USE OF PROCEEDS

The Company will raise not less than approximately HK$15.0 million and not more than approximately HK$15.2 million before expenses in the Open Offer. Based on 299,685,000 Offer Shares, the estimated net proceeds from the Open Offer will be approximately HK$13.6 million (net of expenses of approximately HK$1.4 million comprising professional fees directly attributable to the Open Offer to be borne by the Company). The Company intends to use the net proceeds for general working capital. The net proceeds from the exercise of the subscription rights attaching to the Bonus Warrants is estimated to be not less than approximately HK$9.0 million and not more than approximately HK$9.1 million.

The Open Offer with the Bonus Issue of Warrants will strengthen the Company’s capital base and enhance its financial position. The Board believes that the Open Offer will provide the Qualifying Shareholders with an opportunity to maintain their respective pro rata shareholdings in the Company and participate in the future growth and development of the Company. In addition, the Bonus Issue of Warrants will be an additional incentive for the Shareholders to take part in the Open Offer. In this regard, the Board considers that the Open Offer and the Bonus Issue of Warrants are in the interests of the Group and the Shareholders as a whole.

ADJUSTMENTS TO EXERCISE PRICES AND NUMBER OF SHARE OPTIONS

Adjustments to the exercise prices and numbers of the outstanding Share Options may be required under the relevant terms of the Share Option Schemes. The auditors of the Company will be appointed to certify the necessary adjustments, if any, to the exercise prices and numbers of the outstanding Share Options. Further announcement will be made by the Company in this regard.

PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL

As at the Latest Practicable Date, the authorised share capital of the Company was HK$10,000,000 divided into 1,000,000,000 Shares, of which 599,370,000 Shares had been allotted and issued and fully paid. In order to accommodate the Bonus Issue of Warrants and also future expansion and growth of the Group, the Board proposes to increase the authorised share capital of the Company from HK$10,000,000 divided into 1,000,000,000 Shares to HK$20,000,000 divided into 2,000,000,000 Shares by the creation of additional 1,000,000,000 Shares.

The Authorised Share Capital Increase is subject to and conditional upon the passing of an ordinary resolution by the Shareholders at the EGM.

– 22 –

LETTER FROM THE BOARD

IMPLICATIONS UNDER THE TAKEOVERS CODE AND THE WHITEWASH WAIVER

Opulent is wholly-owned by Dr. Yu, and is the controlling shareholder of the Company holding an aggregate of 183,337,456 Shares, representing approximately 30.59% of the number of Shares in issue as at the Latest Practicable Date. Dr. Yu is entitled to 12,126,000 Share Options to subscribe for an aggregate of 12,126,000 Shares. As set out in the paragraph headed ‘‘Underwriting Arrangement and Undertakings’’, Opulent has irrevocably undertaken to the Company to subscribe in full for its assured allotments of the Offer Shares under the Open Offer and those Offer Shares not having been subscribed for by the Qualifying Shareholders. Dr. Yu has irrevocably undertaken to the Underwriter and the Company, among other things, that he will not exercise his 12,126,000 Share Options from the date of the undertakings up to and including the Record Date. In the event that none of the Qualifying Shareholders (other than Opulent) takes up any Offer Shares upon completion of the Open Offer, the Underwriter will be required to take up all the Offer Shares that are not subscribed for under the Open Offer. Accordingly, the total number of Shares as held by the Concert Party Group will be increased from 183,337,456 Shares (representing approximately 30.59% of the total number of Shares in issue as at the Latest Practicable Date) to:

(i) 483,022,456 Shares (representing approximately 53.73% of the total number of Shares in issue as enlarged by the Open Offer), assuming that none of the Share Options is exercised on or before the Record Date; and
(ii) 486,724,956 Shares (representing approximately 53.48% of the total number of Shares in issue as enlarged by the Open Offer), assuming that the Share Options (other than the 400,000 Share Options granted to an employee of the Company, which are exercisable from 5 November 2009) are exercised in full by the Optionholders on or before the Record Date.

Accordingly, the taking up of the Underwritten Shares by Opulent will trigger an obligation on the part of Opulent to make a mandatory general offer under Rule 26 of the Takeovers Code for all the Shares not already owned by or agreed to be acquired by the Concert Party Group.

As set out in Note 10 to Rule 26.1 of the Takeovers Code, in general, the acquisition of warrants does not give rise to an obligation under Rule 26 of the Takeovers Code to make a general offer, but the exercise of any subscription rights attaching to such warrants will be considered an acquisition of voting rights for the purpose of Rule 26 of the Takeovers Code. Accordingly, the Bonus Issue of Warrants itself will not result in any Takeovers Code consequences prior to the exercise of the subscription rights attaching to the Bonus Warrants.

In the event that (a) the Concert Party Group holds not less than 30% but not more than 50% of the total number of Shares in issue upon completion of the Open Offer; and (b) the subsequent exercise of the subscription rights attaching to the Bonus Warrants by Opulent results in an increase in the Concert Party Group’s shareholdings in the Company by more than 2% from its lowest percentage holding in the 12-month period ending on the

– 23 –

LETTER FROM THE BOARD

date of such exercise, Opulent would be obliged under Rule 26.1 of the Takeovers Code to make an unconditional cash offer to acquire all the Shares other than those already owned by or agreed to be acquired by the Concert Party Group.

An application has been made by the Underwriter to the Executive for the Whitewash Waiver in connection with the underwriting of the Open Offer by the Underwriter and the exercise of the subscription rights attaching to the Bonus Warrants by Opulent in the above circumstances pursuant to note 1 of the Notes on dispensations from Rule 26 of the Takeovers Code. The Executive has agreed that subject to the approval of the Independent Shareholders at the EGM by way of poll, to waive any obligations of the Underwriter to make a general offer which might result from the subscription of the Underwritten Shares and the exercise of the subscription rights attaching to any of the Bonus Warrants held by the Underwriter.

It is one of the conditions of the Underwriting Agreement that the Whitewash Waiver be granted by the Executive and approved by the Independent Shareholders at the EGM by way of poll. If the Whitewash Waiver is not granted by the Executive or not approved by the Independent Shareholders, the Underwriting Agreement will not become unconditional and the Open Offer will not proceed.

Should the Underwriter, Dr. Yu and parties acting in concert with any of them hold more than 50% of the voting rights of the Company upon completion of the Open Offer, they may further increase their shareholding in the Company without incurring any further obligation under Rule 26 of the Takeovers Code to make a general offer.

INFORMATION ON THE GROUP

The Group is principally engaging in the development, production and provision of financial information services and technology solutions to corporate clients and retail investors in Greater China and to develop and operate online games in Mainland China.

As disclosed in the April Announcement, the earnings of the Group for the year ended 31 March 2009 will be significantly worse than those of the previous year, and the Company is expected to record a loss for the full year. Such expected losses are mainly attributable to the realized and unrealized losses relating to the decrease in fair value of investment properties, an increase in expenses attributable to the Company’s gaming segment and the impairment of the Group’s goodwill arising from the acquisition of East Treasure Limited in 2007 as disclosed in the Company’s circular dated 31 August 2007.

The anticipated loss of the Company for the financial year ended 31 March 2009 as disclosed in the April Announcement and referred to above constitutes a profit forecast under Rule 10 of the Takeovers Code and therefore has been reported on by HLB Hodgson Impey Cheng, the reporting accountants of the Company, and Access Capital Limited, the financial adviser to the Company in accordance with Rule 10 of the Takeovers Code. Please refer to Appendix IV to this circular for the opinions expressed by HLB Hodgson Impey Cheng and Access Capital Limited, respectively.

– 24 –

LETTER FROM THE BOARD

As at the Latest Practicable Date, the Company was still in the process of finalising the results of the Group for the financial year ended 31 March 2009. The information above is only a preliminary assessment by the Company based on the information available to it. The Board is not in a position to quantify the financial position of the Group at this stage. Further details of the results of the Group will be disclosed in the results announcement and annual report of the Company for the financial year ended 31 March 2009, which are expected to be published by the end of June 2009.

Shareholders and potential investors are advised to exercise caution when dealing in the Shares.

INDEPENDENT BOARD COMMITTEE

The Independent Board Committee comprising all the independent non-executive Directors has been established to advise the Independent Shareholders as to whether the Open Offer and the Whitewash Waiver are fair and reasonable and in the interests of the Company and the Shareholders as a whole and to advise the Independent Shareholders on how to vote at the EGM. As at the Latest Practicable Date, two of the independent nonexecutive Directors namely Dr. Lam Lee G. and Mr. Wu Tak Lung were each interested in 1,000,000 Share Options entitling each of them to subscribe for 1,000,000 Shares.

INDEPENDENT FINANCIAL ADVISER

Somerley has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Open Offer and the Whitewash Waiver. Such appointment has been approved by the Independent Board Committee.

GENERAL

The Open Offer is conditional on, among other things, the approval of the Open Offer and the Whitewash Waiver by the Independent Shareholders at the EGM. As at the Latest Practicable Date, Opulent was interested in an aggregate of 183,337,456 Shares, representing approximately 30.59% of the existing issued share capital of the Company. Opulent and parties acting in concert with it, including Dr. Yu, shall abstain from voting in favour of the relevant resolution approving the Open Offer and the Whitewash Waiver. The Bonus Issue of Warrants and the Authorised Share Capital Increase are each conditional on, among other things, the passing of the relevant ordinary resolutions by the Shareholders at the EGM. None of the Shareholders is required to abstain from voting in favour of the relevant resolutions approving the Bonus Issue of Warrants and the Authorised Share Capital Increase.

Subject to the Open Offer and the Whitewash Waiver being approved by the Independent Shareholders at the EGM, the Prospectus Documents (or the Prospectus, where appropriate) containing further information on the Open Offer will be despatched to the Shareholders as soon as practicable. The Prospectus Documents (or the Prospectus, where appropriate) will also contain further information on the Bonus Issue of Warrants, if the Bonus Issue of Warrants is approved by the Shareholders at the EGM.

– 25 –

LETTER FROM THE BOARD

INTENTION OF THE UNDERWRITER

It is the intention of the Underwriter that the Group will continue its current business. The Underwriter has no intention to make any major changes to the business or continued employment of the employees of the Group or to redeploy the fixed assets of the Group.

Opulent has decided to support the Open Offer by acting as the Underwriter to the Open Offer as it believes that the Open Offer would strengthen the Group’s financial position and enlarge its capital base. This would in turn enhance the value of the investments of the Underwriter in the Group in the long run.

EGM

A notice convening the EGM to be held at Suite 505–506, 5th Floor, Low Block, Grand Millennium Plaza, 181 Queen’s Road Central, Hong Kong on 3 July 2009 is set out on pages 158 to 162 of this circular. Whether or not you are able to attend the EGM in person, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon to the Registrars at Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as practicable but in any event not later than 48 hours before the time appointed for the holding of the EGM or the adjourned meeting thereof (as the case may be). Completion and delivery of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjourned meeting thereof (as the case may be) should you so desire and in such event, the instrument appointing the proxy shall be deemed to be revoked.

Resolutions will be proposed as ordinary resolutions to consider and, if thought fit, to approve (i) the Open Offer; (ii) the Whitewash Waiver; (iii) Bonus Issue of Warrants; and (iv) the Authorised Share Capital Increase.

RECOMMENDATION

The Directors believe that the terms of the Open Offer and the Whitewash Waiver are fair and reasonable and are in the interests of the Company and the Shareholders as a whole.

You are advised to read carefully the letter from the Independent Board Committee regarding the Open Offer and the Whitewash Waiver on pages 28 to 29 of this circular. The Independent Board Committee, having taken into account the advice of the Independent Financial Adviser, the text of which is set out on pages 30 to 46 of this circular, considers that the terms of the Open Offer and the Whitewash Waiver respectively are fair and reasonable insofar as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of the resolutions to approve the Open Offer and the Whitewash Waiver respectively at the EGM.

– 26 –

LETTER FROM THE BOARD

FURTHER INFORMATION

Your attention is drawn to the financial and general information set out in the appendices to this circular.

Yours faithfully, For and on behalf of the Board of Finet Group Limited Yu Gang, George Chairman

– 27 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

The following is the text of the letter from the Independent Board Committee setting out its recommendation to the Independent Shareholders in relation to the Open Offer and the Whitewash Waiver.

==> picture [119 x 55] intentionally omitted <==

FINET GROUP LIMITED 財華社集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8317)

9 June 2009

To the Independent Shareholders

Dear Sir or Madam,

APPLICATION FOR WHITEWASH WAIVER;

AND

PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL

We refer to the circular of the Company dated 9 June 2009 (the ‘‘Circular’’) of which this letter forms part. Unless the context specifies otherwise, capitalised terms used herein have the same meanings as defined in the Circular.

We have been appointed by the Board to advise you as to whether the terms of the Open Offer and the Whitewash Waiver are fair and reasonable insofar as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole. Somerley Limited has been appointed as the Independent Financial Adviser to advise you and us in this respect.

– 28 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Having taken into account the principal reasons and factors considered by, and the advice of, the Independent Financial Adviser as set out in its letter of advice to you and us on pages 30 to 46 of the Circular, we are of the opinion that the terms of the Open Offer and the Whitewash Waiver are in the interests of the Company and the Shareholders as a whole and the terms of which are fair and reasonable insofar as the Company and the Independent Shareholders are concerned. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolutions to be proposed at the EGM to approve the Open Offer and the Whitewash Waiver.

Yours faithfully, Independent Board Committee Dr. Lam Lee G. Mr. Wu Tak Lung Mr. William Hay Independent Independent Independent non-executive Director non-executive Director non-executive Director

– 29 –

LETTER FROM SOMERLEY

The following is the letter of advice from the independent financial adviser, Somerley Limited, to the Independent Board Committee and the Independent Shareholders, which has been prepared for the purpose of inclusion in this circular.

SOMERLEY LIMITED

10th Floor The Hong Kong Club Building 3A Chater Road Central Hong Kong

9 June 2009

To: the Independent Board Committee and the Independent Shareholders

Dear Sirs,

PROPOSED OPEN OFFER ON THE BASIS OF ONE OFFER SHARE FOR EVERY TWO EXISTING SHARES HELD ON THE RECORD DATE WITH BONUS ISSUE OF WARRANTS ON THE BASIS OF THREE BONUS WARRANTS FOR EVERY TEN OFFER SHARES ISSUED AND ALLOTTED UNDER THE OPEN OFFER; AND

APPLICATION FOR WHITEWASH WAIVER

INTRODUCTION

We refer to our appointment as the independent financial adviser to the Independent Board Committee in relation to the Open Offer and the Whitewash Waiver, details of which are set out in the letter from the Board contained in the circular (‘‘Circular’’) of the Company dated 9 June 2009 of which this letter forms part. Capitalised terms used in this letter shall have the same meanings as defined in the Circular unless the context requires otherwise.

On 5 May 2009, the Board announced that the Company proposes to raise not less than approximately HK$15.0 million and not more than approximately HK$15.2 million before expenses by issuing not less than 299,685,000 Offer Shares and not more than 303,387,500 Offer Shares at the subscription price of HK$0.05 per Offer Share on the basis of one Offer Share for every two existing Shares held on the Record Date with Bonus Issue of Warrants on the basis of three Bonus Warrants for every ten Offer Shares issued and allotted under the Open Offer.

The Open Offer (other than the Offer Shares which Opulent has undertaken to take up) will be fully underwritten by Opulent, on the terms and subject to the conditions set out in the paragraph headed ‘‘Underwriting Arrangement and Undertakings’’ in the letter from the Board of the Circular.

– 30 –

LETTER FROM SOMERLEY

Opulent was wholly-owned by Dr. Yu, and was the controlling shareholder of the Company holding an aggregate of 183,337,456 Shares (representing approximately 30.59% of the issued share capital of the Company) as at the Latest Practicable Date. As set out under the paragraphs headed ‘‘Underwriting Arrangement and Undertakings’’ in the letter from the Board of the Circular, Opulent has irrevocably undertaken to the Company, among other things, that it will not dispose of the 183,337,456 Shares beneficially owned by it from the date of the undertaking up to the Latest Time for Acceptance, and that it will accept or procure to accept its assured allotments of 91,668,728 Offer Shares under the Open Offer in respect of the 183,337,456 Shares held by it as at the date of the Underwriting Agreement.

As at the Latest Practicable Date, Dr. Yu was entitled to Share Options to subscribe for an aggregate of 12,126,000 Shares. Dr. Yu has irrevocably undertaken to the Underwriter and the Company, among other things, that he will not exercise his Share Options from the date of the undertaking up to and including the Record Date. If none of the Qualifying Shareholders (other than Opulent) takes up any Offer Shares upon completion of the Open Offer, the Underwriter will be required to take up all the Offer Shares that are not subscribed for under the Open Offer. Accordingly, the total number of Shares held by the Concert Party Group will be increased from 183,337,456 Shares (representing approximately 30.59% of the total number of Shares in issue as at the Latest Practicable Date) to:

(i) 483,022,456 Shares (representing approximately 53.73% of the total number of Shares in issue as enlarged by the Open Offer), assuming that none of the Share Options is exercised on or before the Record Date; and
(ii) 486,724,956 Shares (representing approximately 53.48% of the total number of Shares in issue as enlarged by the Open Offer), assuming that the Share Options (other than those held by Dr. Yu and 400,000 Share Options granted to an employee of the Company which are exercisable from 5 November 2009) are exercised in full by the Optionholders on or before the Record Date.

As discussed in details under the section headed ‘‘Implications under the Takeovers Code and the Whitewash Waiver’’ in the letter from the Board of the Circular, the taking up of the Underwritten Shares by Opulent and the exercise of the subscription rights attaching to the Bonus Warrants by Opulent will trigger an obligation on the part of Opulent to make a mandatory general offer under Rule 26 of the Takeovers Code for all Shares not already owned by or agreed to be acquired by the Concert Party Group. An application has been made by the Underwriter to the Executive for the Whitewash Waiver in this connection. The Whitewash Waiver, if granted by the Executive, would be subject to, among other things, the approval of the Open Offer and the Whitewash Waiver by the Independent Shareholders at the EGM by way of poll.

The Independent Board Committee, comprising all of the independent non-executive Directors, namely Dr. Lam Lee G., Mr. Wu Tak Lung and Mr. William Hay, has been established to consider and make a recommendation to the Independent Shareholders in

– 31 –

LETTER FROM SOMERLEY

respect of the Open Offer and the Whitewash Waiver. We, Somerley Limited, have been appointed to advise the Independent Board Committee and the Independent Shareholders in the same regard.

Somerley Limited is not associated with the Company, Opulent, their substantial shareholders, or parties acting in concert with each of them and, accordingly, is considered eligible to give independent advice on the terms of the Open Offer and the Whitewash Waiver. Apart from normal professional fees payable to us in connection with this appointment and other similar appointments, no arrangement exists whereby we will receive any fees or benefits from the Company, Opulent, their substantial shareholders, or parties acting in concert with each of them.

In formulating our opinion, we have reviewed, among other things, the Underwriting Agreement, the annual report of the Company for the year ended 31 March 2008, the interim report of the Company for the six months ended 30 September 2008 (the ‘‘Interim Report’’), the third quarterly report of the Company for the nine months period ended 31 December 2008 (the ‘‘Third Quarterly Report’’) and the April Announcement. We have also discussed with the Company regarding the prospect of the business of the Group.

We have relied on the information and facts supplied, and the opinions expressed, by the Company and have assumed that the information and facts provided and opinions expressed to us are true, accurate and complete in all material aspects at the time they were made and up to the date of the EGM. We have also sought and received confirmation from the Company that no material facts have been omitted from the information supplied and opinions expressed to us. We have relied on such information and consider that the information we have received is sufficient for us to reach an informed view and have no reason to believe that any material information has been withheld, nor doubt the truth or accuracy of the information provided. We have not, however, conducted any independent investigation into the business and affairs of the Group, nor have we carried out any independent verification of the information supplied.

– 32 –

LETTER FROM SOMERLEY

PRINCIPAL FACTORS AND REASONS CONSIDERED

In considering whether the terms of the Open Offer and the Whitewash Waiver are fair and reasonable in so far as the Independent Shareholders are concerned, we have taken into account the principal factors and reasons set out below:

1. Background and financial information of the Group

The Group is principally engaged in the development, production and provision of financial information services and technology solutions to corporate clients and retail investors in Greater China and to develop and operate online games in the PRC.

Tabulated below is a summary of the financial information of the Group as extracted from the Company’s respective latest annual and interim reports:

	For the year ended/	For the year ended/	For the six months ended/	For the six months ended/	For the six months ended/
	As at 31 March		As at 30		September
	2008	2007		2008	2007
	HK$’000	HK$’000	HK$’000		HK$’000
	(audited)	(audited)	(unaudited)		(unaudited)
Revenue	35,829	32,127		17,289	19,219
Gross profit	25,798	20,458		12,228	13,670
Gain on disposal of interests
in subsidiaries	26,970	105		27,537	16,144
Profit/(loss) attributable to
equity holders of the
Company	5,519	(2,589)		10,744	9,546
Net assets	113,933	55,237	131,564		50,261
Cash and cash equivalents	7,556	37,036		1,342	30,320

Set out below are the analyses on the financial performance and financial position of the Group for the year ended 31 March 2008 and the six months ended 30 September 2008.

(i) Financial year ended 31 March 2008

During the financial year ended 31 March 2008, the Group recorded consolidated revenue of approximately HK$35.8 million, representing an increase of approximately 11.5% as compared with approximately HK$32.1 million for the last corresponding year. The net increase was primarily attributable to (1) an increase in online game business; and (2) an increase in financial services and advertising services. The gross profit for the financial year ended 31 March 2008 was approximately HK$25.8 million, representing an increase of approximately 25.9% as compared with approximately HK$20.5 million for the last corresponding year. The Group achieved profit attributable to equity holders of the Company of approximately HK$5.5 million for the year as compared to a loss

– 33 –

LETTER FROM SOMERLEY

of approximately HK$2.6 million in year 2007. However, the profit for 2008 was mainly derived from an one-off gain on the disposal of interest in subsidiaries during the year.

As at 31 March 2008, the consolidated net asset of the Group significantly increased by approximately HK$58.7 million to approximately HK$113.9 million as compared to approximately HK$55.2 million as at 31 March 2007, representing an increase of approximately 106.3%. The increase was mainly due to, amongst other things, the gain on disposals of the 12% and 2.29% equity interest in a subsidiary of the Company. The cash and cash equivalents of the Group decreased from approximately HK$37.0 million as at 31 March 2007 to approximately HK$7.6 million as at 31 March 2008. Such decrease in cash and cash equivalents was primarily due to the operating loss incurred during the year (calculating based on the net profit net of the one-off gain on disposal of interest in subsidiaries during the year (details of such disposal were set out in the announcement of the Company dated 5 June 2007)) and the cash payment made by the Company in relation to the acquisition of interest in a subsidiary, East Treasure Limited, during the year (details of such acquisition were set out in the announcement and circular of the Company dated 16 May 2007 and 31 August 2007 respectively).

(ii) Six months ended 30 September 2008

During the six months ended 30 September 2008, the Group reported a turnover of approximately HK$17.3 million, representing a decrease of approximately 9.9% from approximately HK$19.2 million for the same period in 2007. The gross profit was approximately HK$12.2 million, representing a decrease of 10.9% as compared with approximately HK$13.7 million for the same period in 2007. However, the Group’s unaudited profit attributable to equity holders for the six months ended 30 September 2008 was approximately HK$10.7 million, representing approximately 12.6% increase from approximately HK$9.5 million reported for the six months ended 30 September 2007. The profit for the six months ended 30 September 2008 was mainly derived from the gain on disposal of interest in Hangzhou Tianchang Network Technology Company Limited (杭州天暢網絡科技有限公司) during the period. However, the Group recorded an operating loss of approximately HK$14.2 million for the six months ended 30 September 2008.

As at 30 September 2008, the consolidated net asset of the Group increased to approximately HK$131.6 million as compared to approximately HK$113.9 million as at 31 March 2008, representing an increase of approximately 15.5%. The cash and cash equivalents of the Group further decreased from approximately HK$7.6 million as at 31 March 2008 to approximately HK$1.3 million as at 30 September 2008 mainly due to the operating losses incurred during this six months period.

– 34 –

LETTER FROM SOMERLEY

As disclosed in the Interim Report, the Group experienced a slowdown of sales over the period on financial information services following the breakout of global financial crisis, in particular the collapses of major US investment banks which had changed the outlook of the Group’s financial information business. Also, the corrections of China’s domestic capital markets and the decision by Chinese authorities to postpone without a fixed timetable the official launch of China-wide Hong Kong Stock Market Through-Train Program had dampened Mainland China investor participation in Hong Kong’s financial markets. These have reduced demand for the Group’s products in China, thus negatively impacting the operational results of the Group’s China growth strategy.

The deterioration of market conditions and slowdown in economic activities have been continued during the three months period ended 31 December 2008. It was mentioned in the Third Quarterly Report, among other things, the deepening financial crisis continued to impact the Group’s business development efforts on financial information services and have led to the slowdown in spending by both corporate and individual customers for financial information products and financial information systems enhancements which are within the Group’s scope of services. According to the Third Quarterly Report, the turnover and gross profit of the Group for the nine months ended 31 December 2008 was approximately HK$27.2 million and HK$19.4 million respectively, both representing decrease of approximately 8.4% as compared to the turnover and gross profit for the corresponding period in 2007. The unaudited profit attributable to equity holders for the nine months ended 31 December 2008 was reported as approximately HK$3.4 million, representing a decrease of approximately 67.6% as compared to the corresponding period in 2007. The decrease in the unaudited profit attributable to equity holders for the nine months ended 31 December 2008 was mainly due to the operating loss of approximately HK$21.9 million during the period. As further disclosed in the April Announcement and in the paragraph headed ‘‘Material Change’’ in Appendix II of the Circular, the earnings of the Group for the year ended 31 March 2009 will be significantly worse than the previous year, and the Company is expected to record a loss for the financial year ended 31 March 2009. Such expected losses are mainly attributable to the realized and unrealized losses relating to the decrease in fair value of investment properties, an increase in expenses attributable to the Company’s gaming segment and the impairment of the Group’s goodwill arising from the acquisition of East Treasure Limited in 2007 as disclosed in the Company’s circular dated 31 August 2007. In the circumstances, it is expected that the Group’s financial results, position and working capital would remain relatively weak in the near future.

2. Reasons for and use of proceeds of the Open Offer

As mentioned in the letter from the Board of the Circular, the Company will raise not less than approximately HK$15.0 million and not more than approximately HK$15.2 million before expenses in the Open Offer. Based on 299,685,000 Offer Shares, the estimated net proceeds from the Open Offer will be approximately HK$13.6 million. The Company intends to use the net proceeds for general working capital. The net proceeds from the exercise of the subscription rights attaching to the

– 35 –

LETTER FROM SOMERLEY

Bonus Warrants is estimated to be not less than approximately HK$9.0 million and not more than approximately HK$9.1 million. As stated in the letter from the Board, the Company had not effected any other fund raising exercises during the twelve months immediately preceding the Latest Practicable Date.

We have reviewed the financial results and position of the Group as detailed in the section headed ‘‘Background and financial information of the Group’’ above and discussed with the Company its future working capital and financing needs for its operations and business development. In light of, amongst other things, the recent breakout of global financial crisis and the present cash position of the Group, the Open Offer, which is made on a fully underwritten basis, provides the Company an opportunity to raise required working capital for its operations, and to enhance the Group’s financial position. It is also stated in the letter from the Board of the Circular that the Open Offer with the Bonus Issue of Warrants will strengthen the Company’s capital base and enhance its financial position. The Board also believes that the Open Offer will provide the Qualifying Shareholders with an opportunity to maintain their respective pro rata shareholdings in the Company and participate in the future growth and development of the Company. In addition, the Bonus Issue of Warrants will provide the Shareholders with an additional incentive to participate in the Open Offer.

Having considered the above, we concur with the Director’s view that the Open Offer and the Bonus Issue of Warrants are in the interests of the Group and the Shareholders as a whole.

3. Financing alternatives available to the Group

As advised by the Directors, the Company has considered other alternative means of financing, including debt financing and other forms of equity financing. However, the Directors consider that as compared to bank borrowing which will create additional finance cost on the Group, equity financing is a prudent way to finance the Group’s future business development. In particular, taking into account the sluggish market and the gloomy economic outlook and given the Group’s operating losses for the year ended 31 March 2008 (calculating based on the net profit net of the one-off gain on disposal of interest in subsidiaries during the year) and for the six months ended 30 September 2008, the Directors believe that it would be difficult for the Group to obtain additional borrowings with favourable terms. Furthermore, the Company has considered other forms of equity fundraising options. However, share placement to third parties will result in dilution to interests of the existing Shareholders. After due and careful consideration of the various alternatives, in particular, an open offer will allow the Qualifying Shareholders an equal opportunity to participate in the enlargement of the capital base and the future development of the Group while maintaining their proportionate interest in the Company, the Directors consider open offer to be the most appropriate fund raising method for the Company in the current market conditions.

– 36 –

LETTER FROM SOMERLEY

Having considered that (i) the Open Offer would strengthen the Group’s capital base; (ii) all the Qualifying Shareholders will be offered an equal opportunity to participate in the Open Offer; and (iii) the Open Offer is considered more preferable than other financing alternatives as explained above, we concur with the Directors’ view that the Open Offer is in the interest of the Company and the Shareholders as a whole.

4. Terms of the Open Offer

(i) Issue statistics

Details of the issue statistics are set out in the letter from the Board of the Circular.

The Subscription Price of HK$0.05 per Offer Share represents:

(i) a discount of approximately 26.47% to the closing price per Share of HK$0.068 as quoted on the Stock Exchange on the Last Trading Date;
(ii) a discount of approximately 31.51% to the average of the closing prices per Share of HK$0.073 for the last 5 trading days as quoted on the Stock Exchange up to and including the Last Trading Date;
(iii) a discount of approximately 32.43% to the average of the closing prices per Share of HK$0.074 for the last 10 trading days as quoted on the Stock Exchange up to and including the Last Trading Date;
(iv) a discount of approximately 19.35% to the theoretical ex-entitlement price of approximately HK$0.062 per Share calculated based on the closing price per Share of HK$0.068 as quoted on the Stock Exchange on the Last Trading Date;
(v) a discount of approximately 60.63% to the closing price per Share of HK$0.127 on the Latest Practicable Date;
(vi) a discount of approximately 50.50% to the theoretical ex-entitlement price of approximately HK$0.101 per Share calculated based on the closing price per Share of HK$0.127 on the Latest Practicable Date; and
(vii) a discount of approximately 73.68% to the unaudited consolidated net asset value attributable to Shareholders as at 30 September 2008 of approximately HK$0.19 per Share.

As stated in the letter from the Board of the Circular, the Subscription Price was determined after negotiations between the Independent Board Committee and the Underwriter with reference to the current market price of the Shares. As Dr. Yu, the sole executive Director, is also the sole shareholder and director of the Underwriter, the Independent Board Committee has been, on behalf of the

– 37 –

LETTER FROM SOMERLEY

Company, involved in the negotiation of the Subscription Price. As the Offer Shares are offered to all Qualifying Shareholders, the Directors considered that the discount represented by the Subscription Price as compared to the prevailing market price of the Shares would encourage the Qualifying Shareholders to participate in the Open Offer. The Open Offer also offers each Qualifying Shareholder an option to maintain their respective pro rata shareholding interests in the Company as well as an opportunity to increase their investments in the Company through applications for excess Offer Shares (if they so wish). The Directors consider the terms of the Open Offer, including the Subscription Price, fair and reasonable and in the interests of the Company and the Shareholders as a whole.

(ii) Analysis of the Subscription Price

In order to assess the fairness and reasonableness of the Subscription Price, we have taken the following analysis:

Historical Share price performance

The graph of (i) the daily closing price of the Shares; and (ii) the daily turnover of the Shares as quoted on the Stock Exchange in the period commencing from 1 May 2008 up to and including the Latest Practicable Date (the ‘‘Review Period’’) are shown as follows:

==> picture [353 x 255] intentionally omitted <==

Source: website of the Stock Exchange

– 38 –

LETTER FROM SOMERLEY

During the Review Period, the price of the Shares showed a downward trend in general with range from the highest of HK$0.355 (recorded on 8 May 2008) to the lowest of HK$0.063 per Share (recorded on 5 March 2009). The Subscription Price represents a discount of 20.6% to the lowest price and a discount of 85.9% to the highest closing price during the Review Period. Following the date of the Announcement and up to the Latest Practicable Date, the closing price of the Shares traded between HK$0.075 to HK$0.129. The average daily turnover of the Shares for each month during the Review Period remained thin with an average of approximately 1,444,613 Shares, representing less than 0.35% of the number of share of public float of 416,032,544 Shares as at the Latest Practicable Date (i.e. calculated based on the number of total issued share capital of the Company of 599,370,000 Shares, less the number of Shares being held by Opulent of 183,337,456 Shares).

– 39 –

LETTER FROM SOMERLEY

Comparison with recent open offers

In assessing the Subscription Price, we have, based on information available from the website of the Stock Exchange, reviewed other open offers (the ‘‘Open Offer Comparables’’) identified based on the criteria including that (i) they were announced under the prevailing market conditions during the period from 1 January 2009 up to the Latest Practicable Date (the ‘‘Period’’); and (ii) they were open offers conducted by small cap listed companies on the Stock Exchange (save for those listed companies the trading in shares of which are under prolonged suspension) which had market capitalizations of less than HK$300 million as at the date of their respective announcements. It should be noted that the pricing of an open offer may vary widely due to many reasons, including but not limited to, arm’s length commercial negotiation between the companies and the underwriters, the then prevailing market conditions, the share price performance, financial positions and business performances of the companies. Though there was no other listed company which engaged in similar industry of the Company has conducted an open offer during the Period, and the financial position of each of those listed companies in the Open Offer Comparables is considered unique, we consider that the comparison of all open offers announced recently by the small cap listed companies could provide a general market reference for the pricing of the Open Offer under the prevailing market condition. The terms of the Open Offer Comparables are summarised as below:

					(Discount)/
					premium of the
					effective
					subscription price	(Discount)/
					(to)/over the	premium of the
					closing price per	effective
					share on the last	subscription price		Market
					trading day prior	(to)/over the		Capitalisation
					to the	theoretical		as at
Company name	Date of		Offer ratio (Offer		announcement of	ex-entitlement	Under-writing	the date of
(stock code)	announcement	Principal business	shares: shares held)		the open offer	price	commission	announcement
					(Note 1)	(Notes 1 & 2)		(HK$’ million)
Hanny Holdings	7 Jan 09	Trading of securities, holding of	3: 1	(with 4 bonus	(74.64%)	(42.39%)	2.5%	138.4
Limited (275)		vessels for sand mining,		warrants for 15 offer
		industrial water supply business		shares taken up)
		and other strategic investments
Royale Furniture	15 Jan 09	Design, manufacture and sale of a	1: 2		(20.60%)	(14.80%)	2.5%	105.8
Holdings		wide range of home furniture
Limited (1198)
Hembly	21 Jan 09	Provision of supply chain services	1: 2		(13.00%)	(9.10%)	2.5%	97.6
International		for its supply of apparel and
Holdings		accessories to international
Limited (3989)		brand apparel makers,
		distribution and retailing of
		apparel and footwear

– 40 –

LETTER FROM SOMERLEY

					(Discount)/
					premium of the
					effective
					subscription price	(Discount)/
					(to)/over the	premium of the
					closing price per	effective
					share on the last	subscription price		Market
					trading day prior	(to)/over the		Capitalisation
					to the	theoretical		as at
Company name	Date of		Offer ratio (Offer		announcement of	ex-entitlement	Under-writing	the date of
(stock code)	announcement	Principal business	shares: shares held)		the open offer	price	commission	announcement
					(Note 1)	(Notes 1 & 2)		(HK$’ million)
Garron	5 Feb 09	Investment holding in Hong Kong	2: 1		(20.67%)	(8.00%)	0.0%	21.2
International		and the Mainland China
Limited (1226)
Wang On Group	13 Feb 09	Property development and	3: 1	(with 2 bonus shares	(90.00%)	(60.00%)	2.5%	226.6
Limited (1222)		investment, management and		for 3 offer shares
		sub-licensing of Chinese wet		taken up)
		markets, shopping centres and
		car parks, retailing of pork, and
		wholesaling of agricultural
		products
China Star	17 Feb 09	Distribution of films, sub-licensing	1: 2		(2.91%)	(1.96%)	Not stated	44.7
Investment		of film rights, sales of financial
Holdings		assets and property investment
Limited (764)
Tidetime Sun	20 Feb 09	Production of broadcasting	1: 2		(17.72%)	(12.16%)	Not stated	43.9
(Group)		programmes and trade of
Limited (307)		multimedia products
Sun Innovation	24 Mar 09	Property investment, provision of	5: 1		(79.73%)	(40.00%)	2.0%	54.4
Holdings		telecommunication,
Limited (547)		entertainment media and
		financial services
Computech	8 Apr 09	Provision of IT services, including	1: 2		(57.14%)	(47.00%)	3.0%	36.7
Holdings		consultancy, technical support,
Limited (8081)		systems integration,
		development and sales of
		relevant hardware and software
		products
Xpress Group	9 Apr 09	Investment holding, property	1: 5		(27.50%)	(24.10%)	1.5%	126.8
Limited (185)		investment travel related
		services, hotel operations,
		securities investments, treasury
		investment and credit card
		business
Golife Concepts	23 Apr 09	Design, development and sales of	8: 1		(54.75%)	(11.50%)	1.0%	12.8
Holdings Ltd		location-based technology
(8172)		devices and applications, and
		distribution of high-end apparel
		and accessories
RBI Holdings	27 Apr 09	Manufacture, design and sale of	4: 1		(86.11%)	(55.36%)	2.5%	114.4
Limited (566)		children’s toys

– 41 –

LETTER FROM SOMERLEY

==> picture [455 x 266] intentionally omitted <==

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

(Discount)/
premium of the
effective
subscription price (Discount)/
(to)/over the premium of the
closing price per effective
share on the last subscription price Market
trading day prior (to)/over the Capitalisation
to the theoretical as at
Company name Date of Offer ratio (Offer announcement of ex-entitlement Under-writing the date of
(stock code) announcement Principal business shares: shares held) the open offer price commission announcement
(Note 1) (Notes 1 & 2) (HK$’ million)
Wang Sing 2 Jun 09 Manufacture and distribution of 2: 1 (56.50%) (28.60%) 1.25% 121.9
International power tools, air tools and hand
Holdings tools
Group Limited
(2389)
Mean (46.25%) (27.31%) 1.93%
Median (54.75%) (24.10%) 2.50%
High (2.91%) (1.96%) 3.00%
Low (90.00%) (60.00%) 0.00%
The Open Offer 1: 2 (with 3 bonus (26.47%) (19.35%) 0.0% 40.8
warrants for 10 offer
shares taken up)
----- End of picture text -----

Source: website of the Stock Exchange

Notes:

Effective subscription price is calculated after adjusting for the effect of bonus share in the open offer.
The discount to ex-entitlement price ignores the effect of bonus warrants for the open offer shares.

As shown in the table above, the subscription price of the Open Offer Comparables ranged from a discount of approximately 1.96% to approximately 60.00% to their respective theoretical ex-entitlement prices. The discount of the Subscription Price as compared to the theoretical exentitlement price of the Shares falls within the range of the Open Offer Comparables and is slightly smaller than the average of the Open Offer Comparables.

Considering, in particular, that (i) there was a downward trend of the average closing price and a thin trading volume of the Shares during the Review Period; (ii) it is the normal market practice to offer discounts to enhance the attractiveness of an open offer; and (iii) all Qualifying Shareholders are offered an equal opportunity to participate in the Open Offer and to take up their entitlements in full at the same price to maintain their respective shareholdings in the Company, we are of the opinion that the Subscription Price is fair and reasonable so far as the Independent Shareholders are concerned.

– 42 –

LETTER FROM SOMERLEY

(iii) The Bonus Issue of Warrants

The initial subscription price of the Bonus Warrants

The Company proposed an issue of three Bonus Warrants for every ten Offer Shares subscribed for by the Qualifying Shareholders. The initial subscription price of the Bonus Warrants is HK$0.10 per Conversion Share (subject to adjustment) (the ‘‘Exercise Price’’). Based on the letter from the Board of the Circular, the Exercise Price represents:

(i) a premium of approximately 47.06% to the closing price per Share of HK$0.068 as quoted on the Stock Exchange on the Last Trading Date;
(ii) a premium of approximately 36.99% to the average of the closing prices per Share of HK$0.073 for the last 5 trading days as quoted on the Stock Exchange up to and including the Last Trading Date;
(iii) a premium of approximately 35.14% to the average of the closing prices per Share of HK$0.074 for the last 10 trading days as quoted on the Stock Exchange up to and including the Last Trading Date;
(iv) a premium of approximately 61.29% to the theoretical exentitlement price of approximately HK$0.062 per Share calculated based on the closing price per Share of HK$0.068 as quoted on the Stock Exchange on the Last Trading Date;
(v) a discount of approximately 21.26% to the closing price per Share of HK$0.127 on the Latest Practicable Date; and
(vi) a discount of approximately 47.37% to the unaudited consolidated net asset value attributable to Shareholders as at 30 September 2008 of approximately HK$0.19 per Share.

The Bonus Warrants will entitle the holders thereof to subscribe for new Shares at the Exercise Price of HK$0.10 per Share in cash, subject to adjustment(s) upon occurrence of usual adjustment events arising as a result of changes in the share capital of the Company including consolidation or sub-division of Shares, capitalisation of profits or reserves, capital distributions in cash or specie or subsequent issue of securities in the Company. Details of adjustment terms to the price of the Bonus Warrants are set out in the Appendix I of the Circular.

It would be practically difficult to define the value of the Bonus Warrants given that the Bonus Warrants are non-listed and the trading volume of the underlying Shares is relatively thin. We, however, consider the Bonus Issue of Warrants serves as an additional incentive for Shareholders to subscribe for the Offer Shares.

– 43 –

LETTER FROM SOMERLEY

On the basis that (i) the Bonus Issue of Warrants serves as an additional incentive of the Open Offer to the Shareholders; (ii) the Open Offer will allow all the Qualified Shareholders to maintain their proportionate interests in the Company; (iii) the Qualified Shareholders have full discretion on whether or not to subscribe for the Conversion Shares under the Bonus Issue of Warrants in full or not; and (iv) the Bonus Issue of Warrants may raise additional working capital to further improve the financial position of the Group, we consider the Bonus Issue of Warrants for those Qualifying Shareholders who accept the Open Offer is in the interests of the Group and the Independent Shareholders as a whole, and fair and reasonable so far as the Independent Shareholders are concerned.

5. Dilution effect on the shareholding interest of the Shareholders

For those Qualifying Shareholders who do not exercise their rights to subscribe for the Offer Shares in full, depending on the extent that they accept their entitlements, the shareholding interests of the existing Independent Shareholders in the Company will be diluted from approximately 69.41% to the maximum extent of (i) approximately 46.27% (assuming that none of the Share Options is exercised on or before the Record Date); or (ii) approximately 45.71% (assuming that the Share Options (other than those held by Dr. Yu and 400,000 Share Options granted to an employee of the Company which are exercisable from 5 November 2009) are exercised in full by the Optionholders on or before the Record Date); or (iii) approximately 41.55% (assuming that the Share Options (other than those held by Dr. Yu and 400,000 Share Options granted to an employee of the Company which are exercisable from 5 November 2009) are exercised in full by the Optionholders on or before the Record Date and the Bonus Warrants are exercised in full by the Underwriter).

Meanwhile, Qualifying Shareholders who wish to increase their shareholding interests in the Company through the Open Offer may apply for the excess Offer Shares, details of which are set out in the section headed ‘‘Application for excess Offer Shares’’ in the letter from the Board of the Circular.

Having considered, amongst others, that the Open Offer allows the Qualifying Shareholders to maintain their proportionate interests in the Company should they wish to do so, while provides the Qualifying Shareholders with equal opportunity to participate in the future growth and development of the Group, we consider that the potential dilution effect of the Open Offer is acceptable and fair and reasonable so far as the Company and the Shareholders as a whole are concerned.

6. Financial effects of the Open Offer

Based on the unaudited pro forma financial information as set out in Appendix III of the Circular, the unaudited adjusted consolidated net tangible assets of the Group as at 30 September 2008 was approximately HK$53.025 million, representing approximately HK$0.088 per Share (based on 599,370,000 Shares in issue as at the Latest Practicable Date and immediately before completion of the Open Offer) (the ‘‘30 September 2008 NTAV Per Share’’). The unaudited pro forma adjusted consolidated

– 44 –

LETTER FROM SOMERLEY

net tangible asset value (the ‘‘Proforma NTAV’’) of the Group was approximately HK$66.625 million, which represents (i) approximately HK$0.074 per Share (based on the minimum enlarged issued share capital of 899,055,000 Shares upon completion of the Open Offer assuming that none of the Share Options is exercised on or before the Record Date), representing a decrease of approximately 15.9% as compared to the 30 September 2008 NTAV Per Share; and (ii) approximately HK$0.073 per Share (based on the maximum enlarged issued share capital of 910,162,500 Shares upon completion of the Open Offer assuming that the Share Options (other than those held by Dr. Yu and 400,000 Share Options granted to an employee of the Company which are exercisable from 5 November 2009) are exercised in full on or before the Record Date), representing a decrease of approximately 17.0% as compared to the 30 September 2008 NTAV Per Share.

Given that the Open Offer will enlarge the capital base of the Group for its future business development and that the discount of the Subscription Price to the Proforma NTAV per Share of the Group may help increase the attractiveness of the Open Offer to the Qualifying Shareholders under the current market conditions, we are of the view that the dilution in the Proforma NTAV per Share of the Group to be acceptable and fair and reasonable so far as the Company and the Shareholders as a whole are concerned.

As at 30 September 2008, the Group had total cash and cash equivalents of approximately HK$1.3 million. Based on 299,685,000 Offer Shares, the estimated net proceeds from the Open Offer receivable by the Company will be approximately HK$13.6 million. In addition, upon full exercise of the maximum number of the Bonus Warrants, the Company will receive gross proceeds of not less than approximately HK$9.0 million and not more than approximately HK$9.1 million (subject to adjustment to the Exercise Price). The Open Offer will strengthen the Group’s working capital position without adversely impact on the Group’s borrowing level. In light of the foregoing, there will be positive impact on the Group’s liquidity as a result of the Open Offer.

7. Whitewash Waiver

As stated in the Letter from the Board of the Circular, it is one of the conditions of the Underwriting Agreement that the Whitewash Waiver be granted by the Executive and approved by the Independent Shareholders at the EGM by way of poll. If the Whitewash Waiver is not granted by the Executive or not approved by the Independent Shareholders, the Underwriting Agreement will not become unconditional and the Open Offer will not proceed. As a result, the Company will lose all the benefits to be brought by the Open Offer as detailed above and in the letter from the Board of the Circular, including but not limited to, the availability of the new capital to be raised from the Open Offer for strengthening of the Group’s financial position and future development.

– 45 –

LETTER FROM SOMERLEY

Based on our analysis of the terms of the Open Offer as discussed above, we consider that the Open Offer is in the interests of the Company and the Shareholders as a whole. We are of the view that for the purpose of implementing the Open Offer, the Whitewash Waiver is in the interests of the Company and the Shareholders as a whole.

RECOMMENDATION

Having considered the principal factors and reasons discussed above, we consider that the Open Offer is in the interests of the Company and the Shareholders as a whole, and their respective terms together with those of the Underwriting Agreement are based on normal commercial terms, and are fair and reasonable so far as the Company and the Independent Shareholders are concerned.

Accordingly, we advise the Independent Shareholders, and the Independent Board Committee to recommend the Independent Shareholders, to vote in favour of the relevant resolutions to be proposed at the EGM to approve the Open Offer and the Whitewash Waiver.

Yours faithfully, for and on behalf of SOMERLEY LIMITED Kenneth Chow Director — Corporate Finance

– 46 –

APPENDIX I

SUMMARY OF THE TERMS OF THE BONUS WARRANTS

In this Appendix, the following words and expressions shall have the following meaning unless the context otherwise requires:

‘‘Exercise Moneys’’
in relation to any Bonus Warrant, the amount stated on the face of the Bonus Warrant certificate issued in respect of such Bonus Warrant as the amount in cash which the Warrantholder of such Bonus Warrant is entitled to subscribe upon the exercise of the Subscription Rights represented thereby;
‘‘Instrument’’
the instrument constituting the Bonus Warrants (as from time to time modified in accordance with the terms thereof) and includes any instrument supplemental thereto which is executed in accordance with the provisions of such instrument (as from time to time modified as aforesaid);
‘‘Maximum Warrant the maximum aggregate amount of the Bonus Warrants, being Amount’’ the total number of Bonus Warrants to be issued by the Company on the basis of three Bonus Warrants for every ten Offer Shares issued and allotted to the Qualifying Shareholders under the Open Offer multiplied by the Warrant Subscription Price;
‘‘Registrars’’ in the case of the register of Warrantholders maintained in the Cayman Islands, Butterfield Fulcrum Group (Cayman) Limited and, in the case of the branch register of Warrantholders maintained in Hong Kong, Computershare Hong Kong Investor Services Limited, or such other person, firm or company as for the time being maintains in the Cayman Islands the register of members of the Company or maintains in Hong Kong the branch register of the members of the Company, as the case may be (and/or such of the place as may be determined by the Directors);
‘‘Subscription Period’’ the period from the date of issue of the Bonus Warrants to 4: 00 p.m. on the date immediately preceding the date falling on the second anniversary of the date of issue of the Bonus Warrants (or the last business day before such date if such date is not a business day) (both dates inclusive);
‘‘Subscription Rights’’ the rights of the Warrantholders represented by the Bonus Warrants to subscribe in aggregate up to the Maximum Warrant Amount for Shares pursuant to the Bonus Warrants and, in relation to each Bonus Warrant, means the right of the relevant Warrantholder to subscribe the Exercise Moneys at the Warrant Subscription Price for Shares upon and subject to the terms and conditions of the Bonus Warrants;

– 47 –

APPENDIX I

SUMMARY OF THE TERMS OF THE BONUS WARRANTS

‘‘Warrant Subscription the sum payable in respect of each Share to which the registered Price’’ holder of each Bonus Warrant will be entitled upon exercise of the Subscription Rights represented thereby, being the initial sum of HK$0.10, as adjusted from time to time in accordance with the terms of the Instrument; and ‘‘Warrantholder(s)’’ in relation to any Bonus Warrant, the person or persons who is or are for the time being registered in the register of Warrantholders required to be maintained pursuant to the terms and conditions of the Bonus Warrants as the holder or joint holders of that Bonus Warrant.

The Bonus Warrants will be issued in registered form subject to and with the benefit of a separate Instrument by way of deed poll.

The Bonus Warrants will confer rights to subscribe up to the Maximum Warrant Amount for Shares, at the Warrant Subscription Price (subject to adjustment).

Upon the Bonus Issue of Warrants becoming unconditional, the Bonus Warrants represent direct obligations of the Company to Warrantholders as described in the Instrument. The following is a summary of the major provisions of the Instrument and the principal terms and conditions of the Bonus Warrants as set out on the Bonus Warrant certificates. Warrantholders will be entitled to the benefit of, be bound by, and be deemed to have notice of all such terms and conditions and the provisions of the Instrument, copies of which will be available at the head office and principal place of business of the Company in Hong Kong.

1. SUBSCRIPTION RIGHTS

(a) The Warrantholder will have the right to subscribe up to the Maximum Warrant Amount for Shares at the Warrant Subscription Price (subject to the adjustments referred to below). The Subscription Rights attaching to the Bonus Warrants may be exercised in whole or in part at any time during the Subscription Period. After the Subscription Period, any Subscription Rights which have not been exercised shall lapse and the Bonus Warrants will cease to be valid for any purpose.
(b) Each Bonus Warrant certificate contains a subscription form. In order to exercise his Subscription Rights, the Warrantholder must complete and sign the subscription form (which will be irrevocable) and deliver the Bonus Warrant certificate (and, if the subscription form used is not the form endorsed on the Bonus Warrant certificate, a separate subscription form) to the Registrars, together with a remittance for the Exercise Moneys (or, in the case of partial exercise, the relevant portion of the Exercise Moneys). In each case compliance must also be made with any exchange control, fiscal or other laws or regulations for the time being applicable. Unless otherwise agreed by the Directors, subscription forms must be submitted to the Registrars in Hong Kong.

– 48 –

SUMMARY OF THE TERMS OF THE BONUS WARRANTS

APPENDIX I

(c) No fraction of a Share will be allotted and any balance of the Exercise Moneys paid on exercise of the Subscription Rights represented by the Bonus Warrant certificate will be retained by the Company for its benefit.
(d) The Shares to be issued upon the exercise of the Subscription Rights represented by the Bonus Warrant will rank pari passu with the fully-paid Shares in issue on the relevant subscription date and accordingly will entitle the Warrantholders to participate in all dividends or other distributions declared, paid or made on or after the relevant subscription date, unless adjustment therefor has been made as provided in the terms and conditions of the Bonus Warrants and other than any dividend or other distribution previously declared, recommended or resolved to be paid or made if the record date therefor shall be on or before the relevant subscription date and notice of the amount and record date therefor shall have been given to the Stock Exchange prior to the relevant subscription date.
(e) As soon as practicable after the relevant allotment and issue of Shares (and not later than 21 days after the subscription date or, if the subscription date falls at a time when an adjustment to the Warrant Subscription Price and/or the Exercise Moneys is to be made (in accordance with the terms and conditions of the Instrument) which has not become unconditional within such 21 day period, within 14 days of such adjustment becoming unconditional), there will be issued free of charge to the Warrantholders:
(i) a certificate (or certificates) for the relevant Shares in the name(s) of such Warrantholder(s); and
(ii) (if applicable) a balancing Bonus Warrant certificate in registered form in the name(s) of such Warrantholder(s) in respect of any Subscription Rights remaining unexercised.

The certificate(s) for Shares arising on the exercise of Subscription Rights and the balancing Bonus Warrant certificate (if any) will be sent by post at the risk of such Warrantholder(s) to the address of such Warrantholder(s) or (in the case of a joint holding) to that one of them whose name stands first in the register of Warrantholders. If the Company agrees, such certificates may by prior arrangement be retained by the Registrars to await collection by the relevant Warrantholder(s).

2. ADJUSTMENTS OF WARRANT SUBSCRIPTION PRICE

The Instrument contains detailed provisions relating to the adjustment of the Warrant Subscription Price. The following is a summary of and is subject to, the adjustment provisions of the Instrument:

(a) The Warrant Subscription Price will (except as mentioned in sub-paragraphs (b) and (c) below) in each of the following cases be adjusted as provided in the Instrument (but the Warrant Subscription Price shall however not be adjusted

– 49 –

APPENDIX I

SUMMARY OF THE TERMS OF THE BONUS WARRANTS

below the nominal value of the Shares until the Subscription Right Reserve (as defined in the Instrument) is maintained pursuant to the terms and conditions of the Instrument):

(i) an alteration of the nominal amount of the Shares by reason of any consolidation or subdivision;
(ii) an issue (other than in lieu of a cash dividend) by the Company of Shares credited as fully-paid by way of capitalisation of profits or reserves (including any share premium account or capital redemption reserve fund);
(iii) a Capital Distribution (as defined in the Instrument) being made by the Company, whether on a reduction of capital or otherwise except pursuant to any purchase by the Company of its own Shares which is permitted by the GEM Listing Rules and is in accordance with the provisions of the laws of the Cayman Islands and the Company’s memorandum of association and the articles of association, to Shareholders in their capacity as such;
(iv) an offer or grant being made by the Company to Shareholders of any new Shares by way of rights or options, or warrants to subscribe for Shares at a price which is less than 90% of the market price (calculated as provided in the Instrument); provided however that no adjustment shall be made if the Company shall make a like offer or grant (as the case may be) at the same time to each Warrantholder (subject to such exclusion or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or having regard to any restrictions or obligations under the laws or requirements of any recognised regulatory body or any stock exchange) as if he had exercised the Subscription Right represented by his Bonus Warrant certificate(s) in full on the day immediately preceding the record date for such offer or grant;
(v) an issue wholly for cash being made by the Company or any other company of securities convertible into or exchangeable for or carrying rights of subscription for new Shares, if in any case the total Effective Consideration (as defined in the Instrument) per Share is less than 90% of the market price (calculated as provided in the Instrument), or the terms of any such issue being altered so that the said total Effective Consideration is less than 90% of the market price;
(vi) an issue being made wholly for cash of Shares other than pursuant to an Share Option Scheme (as defined in the Instrument) at a price less than 90% of the market price (calculated as provided in the Instrument); and
(vii) a purchase by the Company of any of its Shares or securities convertible into Shares or any rights to acquire Shares (excluding any such purchase made on the Stock Exchange or any stock exchange recognized by the SFC and the Stock Exchange) in circumstances where the Directors consider that it may be appropriate to make an adjustment to the Warrant Subscription Price.

– 50 –

APPENDIX I

SUMMARY OF THE TERMS OF THE BONUS WARRANTS

(b) Except as mentioned in sub-paragraph (c) below, no such adjustment as is referred to in sub-paragraph (a) above will be made in respect of:
(i) an issue of fully-paid Shares upon the exercise of any conversion rights attached to securities wholly or partly convertible into Shares or upon the exercise of any rights (including the subscription rights) to acquire Shares;
(ii) an issue of Shares or other securities of the Company or any subsidiary wholly or partly convertible into or carrying rights to acquire Shares pursuant to a Share Option Scheme;
(iii) an issue by the Company of Shares or by the Company or any subsidiary of securities wholly or partly convertible into or carrying rights to acquire Shares, in any such case in consideration or part consideration for the acquisition of any other securities, assets or business;
(iv) an issue of fully-paid Shares by way of capitalisation of all or part of the Subscription Right Reserve to be established in certain circumstances pursuant to the terms and conditions contained in the Instrument (or any similar reserve which has been or may be established pursuant to the terms of any other securities wholly or partly convertible into or carrying rights to acquire Shares); or
(v) an issue of Shares pursuant to a scrip dividend scheme in lieu of a cash dividend where an amount not less than the nominal amount of the Shares so issued is capitalised.
(c) Notwithstanding the provisions referred to in sub-paragraphs (a) and (b) above, in any circumstances where the Directors consider that an adjustment to the Warrant Subscription Price provided for under the said provisions should not be made, or should be calculated on a different basis, or that an adjustment to the Warrant Subscription Price should be made notwithstanding that no such adjustment is required under the said provisions, or that an adjustment should take effect on a different time or at a different date from that provided for, the Company may appoint the Auditors (as defined in the Instrument) or an approved merchant bank (as defined in the Instrument) or an approved financial adviser (as defined in the Instrument) to consider whether for any reason whatever the adjustment to be made (or in the absence of adjustment) would not or might not fairly and appropriately reflect the relative interests of the persons affected thereby and, if such Auditors or such approved merchant bank or such approved financial adviser shall consider this to be the case, the adjustment will be modified or nullified or an adjustment made instead of no adjustment in such manner (including, without limitation, making an adjustment calculated on a different basis and/or the adjustment shall take effect from such other time and/or date) as is certified by the Auditors or such approved merchant bank or such approved financial adviser to be in its option appropriate.

– 51 –

APPENDIX I

SUMMARY OF THE TERMS OF THE BONUS WARRANTS

(d) Any adjustment to the Warrant Subscription Price will be made to the nearest HK$0.001 so that any amount under HK$0.0005 will be rounded down and any amount of HK$0.0005 or more will be rounded up. No adjustment will be made to the Warrant Subscription Price in any case in which the amount by which the same would be reduced would be less than HK$0.001 and any adjustment which would otherwise then be required will not be carried forward. No adjustment may be made (except on a consolidation of shares) which would increase the Subscription Price.
(e) Every adjustment to the Warrant Subscription Price will be certified to be fair and appropriate by the Auditors or an approved merchant bank or an approved financial adviser. Notice of each adjustment to the Warrant Subscription Price will be given to the Warrantholders setting out the relevant particulars. Any such certificates of the Auditors and/or approved merchant bank and/or approved financial adviser will be available at the principal place of business of the Company in Hong Kong, where copies may be obtained. In giving any certificate or making any adjustments thereunder, the Auditors or the approved merchant bank or the approved financial adviser shall be deemed to be acting as experts and not as arbitrators and in the absence of manifest error, the decision shall be conclusive and binding on the Company and the Warrantholders and all persons claiming through or under them.

3. REGISTERED WARRANTS

The Bonus Warrants will be issued in registered form. The Company will be entitled to treat the registered Warrantholder as the absolute owner thereof and accordingly will not, except as ordered by a court of competent jurisdiction or required by law, be bound to recognize any equitable right or other claim to or interest in such Bonus Warrant on the part of any other person, whether or not it shall have express or other notice thereof.

4. REGISTER, TRANSFER AND TRANSMISSION

The Subscription Rights represented by the Bonus Warrant certificate are transferable, in whole amounts or integral multiples of the Warrant Subscription Price (or such other sum as the Directors shall from time to time determine) of Subscription Rights, by instrument of transfer in any usual or common form or in any other form which may be approved by the Directors. Where the transferor or the transferee is HKSCC Nominees Limited or its successor thereto (or such other company as may be approved by the Directors for this purpose) the transfer may be executed on behalf of HKSCC Nominee Limited under the hands of authorised person(s) or by machine imprinted signature(s) on its behalf or of such person(s), as the case may be. For this purpose, the Company shall maintain a register of Warrantholders and the provisions of the articles of association for the time being relating to the registration, transfer and transmission of Shares shall apply, mutatis mutandis, to the registration, transfer and transmission of the Bonus Warrants and shall have full effect as if the same had been incorporated herein. Unless the Directors otherwise agree all transfers and other documents of title to the Bonus Warrants must be lodged for registration with, and registered by, the Registrars in Hong Kong.

– 52 –

APPENDIX I

SUMMARY OF THE TERMS OF THE BONUS WARRANTS

5. PURCHASE AND CANCELLATION

The Company or any of its subsidiaries may at any time purchase Bonus Warrants:

(a) in the open market or by tender (available to all Warrantholders alike) at any price; or
(b) by private treaty at any price, exclusive of expenses,

but not otherwise. All Bonus Warrants purchased as aforesaid will be cancelled forthwith and may not be re-issued or re-sold.

6. MEETINGS OF WARRANTHOLDERS AND MODIFICATION OF RIGHTS

(a) The Instrument contains provisions for convening meetings of Warrantholders to consider any matter affecting their interests, including the modification by Special Resolution (as defined in the Instrument) of the provisions of the Instrument and/ or of the terms and conditions endorsed on the Bonus Warrant certificates. A Special Resolution duly passed at any such meeting will be binding on the Warrantholders, whether present or not.
(b) All or any of the rights for the time being attached to the Bonus Warrants (including any of the provisions of the Instrument) may from time to time (whether or not the Company is being wound up) be altered or abrogated (including but without prejudice to that generality by waiving compliance with, or by waiving or authorising any past or proposed breach of, any of the provisions of the terms and conditions endorsed on the Bonus Warrant certificates and/or the Instrument) and the sanction of a Special Resolution shall be necessary and sufficient to effect such alteration or abrogation and any modification to the Instrument may be effected by deed poll executed by the Company and expressed to be supplemental to the Instrument.

Where the Warrantholder is a recognised clearing house (within the meaning of the SFO) or its nominee(s), it may authorise such person or persons as it thinks fit to act as its representative (or representatives) or proxy (or proxies) at any Warrantholders’ meeting provided that, if more than one person is so authorised, the authorisation or proxy form must specify the number and class of Bonus Warrants in respect of which each such person is so authorised. The person so authorised will be entitled to exercise the same power on behalf of the recognised clearing house as that clearing house or its nominee(s) could exercise as if such person were an individual Warrantholder.

7. REPLACEMENT OF BONUS WARRANT CERTIFICATES

If a Bonus Warrant certificate is mutilated, defaced, lost or destroyed, it may, at the discretion of the Directors, be replaced at the principal office of the Registrars in Hong Kong (unless the Directors otherwise direct) on payment of such costs as may be incurred in connection therewith and on such terms as to evidence, indemnity and/or security as the Directors may require and on payment of such fee not exceeding HK$2.50 (or such higher

– 53 –

APPENDIX I

SUMMARY OF THE TERMS OF THE BONUS WARRANTS

fee as may from time to time be permitted by the Stock Exchange) as the Directors may determine. Mutilated or defaced Bonus Warrant certificates must be surrendered before replacements will be issued.

In the case of lost Bonus Warrant certificates, section 71A of the Companies Ordinance (Chapter 32 of the Laws of Hong Kong) shall apply as if ‘‘shares" referred to therein included Bonus Warrants.

8. PROTECTION OF SUBSCRIPTION RIGHTS

The Instrument contains certain undertakings by and restrictions on the Company designed to protect the Subscription Rights.

9. CALL

If at any time the aggregate amount of the Exercise Moneys attaching to the Bonus Warrants which have not been exercised is less than 10% of the amount of Exercise Moneys attached to all Bonus Warrants issued under the Instrument, the Company may, on giving not less than one month’s notice, require Warrantholders either to exercise their Subscription Rights or to allow them to lapse. On expiry of such notice, all unexercised Bonus Warrants will be cancelled automatically without compensation to the Warrantholders.

10. FURTHER ISSUES

The Company will be at liberty to issue further subscription warrants in such manner and on such terms as it sees fit.

11. UNDERTAKINGS BY THE COMPANY

In addition to the undertakings given by it in relation to the grant and exercise of the Subscription Rights and the protection thereof, the Company has undertaken in the Instrument that:

(a) it will send to each Warrantholder, at the same time as the same are sent to the Shareholders, its audited accounts and all other notices, reports and communications despatched by it to the Shareholders generally;
(b) it will pay all the Cayman Islands and Hong Kong stamp duties, registration fees or similar charges (as applicable) in respect of the execution of the Instrument, the creation and initial issue of the Bonus Warrants in registered form, the exercise of the Subscription Rights and the issue of Shares upon exercise of the Subscription Rights;

– 54 –

APPENDIX I

SUMMARY OF THE TERMS OF THE BONUS WARRANTS

(c) it will use its best efforts to procure that all Shares allotted upon exercise of the Bonus Warrants may, upon allotment or as soon as reasonably practicable thereafter, be dealt in on the Stock Exchange (save that this obligation shall lapse in the event that the listing of the Shares on GEM is withdrawn following an offer for all or any of the Shares where a like offer is extended to the Warrantholders);
(d) it will ensure that all requisite consents which may be required in the Cayman Islands and Hong Kong are in place in relation to the Bonus Warrants and the Shares to be issued pursuant to the Bonus Warrants as described in the Instrument; and
(e) it will keep available for issue sufficient ordinary capital to satisfy in full all outstanding Subscriptions Rights.
NOTICES

The Instrument contains provisions relating to notices to be given to Warrantholders.

13. WINDING-UP OF THE COMPANY

If an effective resolution is passed during the Subscription Period for the voluntary winding-up of the Company, then if such winding-up is for the purpose of reconstruction or amalgamation pursuant to a scheme of arrangement to which the Warrantholders or some persons designated by them for such purpose by Special Resolution will be a party, or in conjunction with which a proposal is made to the Warrantholders and is approved by Special Resolution, the terms of such scheme of arrangement or (as the case may be) proposal will be binding on all the Warrantholders.

In the event a notice is given by the Company to the Shareholders to convene a shareholders’ meeting for the purposes of considering and if thought fit approving a resolution for the voluntary winding up of the Company, the Company shall forthwith give notice thereof to each Warrantholder and thereupon, every Warrantholder shall be entitled by irrevocable surrender of his Bonus Warrant certificate(s) to the Company (such surrender to occur not later than 2 business days prior to the proposed Shareholders’ meeting referred to above) with the subscription form(s) duly completed together with payment of the Exercise Moneys or the relative portion thereof, to exercise the Subscription Rights represented by such Bonus Warrants, and the Company shall as soon as possible and in any event no later than the day immediately prior to the date of the proposed Shareholders’ meeting allot to the Warrantholders such number of Shares which fall to be issued upon the exercise of Subscription Rights attaching to the Bonus Warrants. The Company shall give notice to the Warrantholders of the passing of such resolution within 7 business days of the passing thereof.

Subject to the foregoing, if the Company is wound up, all Subscription Rights which have not been exercised at the commencement of the winding up shall lapse and each Bonus Warrant certificate will cease to be valid for any purpose.

– 55 –

APPENDIX I

SUMMARY OF THE TERMS OF THE BONUS WARRANTS

14. OVERSEAS WARRANTHOLDERS

If a Warrantholder has a registered address in any territory (other than Hong Kong) where, in the opinion of the Directors, the allotment of Shares to such Warrantholder upon exercise of any Subscription Rights would or might, in the absence of compliance with registration or any other special formalities in such territory, be unlawful or impracticable under the laws of such territory, then the Company shall, acting as agent for such Warrantholder, as soon as practicable after an exercise by such Warrantholder of any Subscription Rights, either:

(a) allot the Shares which would otherwise have been allotted to such Warrantholder to one or more third parties selected by the Company; or
(b) allot such Shares to such Warrantholder and then, on his behalf, sell them to one or more third parties selected by the Company,

in each case for the best consideration then reasonably obtainable by the Company. As soon as reasonably practicable following any such allotment or (as the case may be) allotment and sale, the Company shall pay to the relevant Warrantholder an amount equal to the consideration received by the Company therefor (but having deducted therefrom any brokerage, commission, stamp duty, withholding tax and any other payments, charges or taxes incurred by the Company in respect of such payment and, in the case of an allotment and sale as aforesaid, such sale) by posting the relevant remittance, by way of a Hong Kong dollar cheque, to him at his risk. The Company is hereby deemed to be authorised to effect any of the aforesaid transactions pursuant to this condition as agent for such Warrantholder and for this purpose the Company may appoint one or more persons to execute such transfers, renunciations or other documents on behalf of the relevant Warrantholder as may be required to be executed and generally may make all such arrangements as may appear to the Directors to be necessary or appropriate in connection therewith.

15. GOVERNING LAW

The Instrument and the Bonus Warrants are governed by and will be construed in accordance with the laws of Hong Kong.

– 56 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

1. FINANCIAL SUMMARY AND AUDITORS’ REPORTS

A summary of the published results, assets and liabilities of the Group for the three years ended 31 March 2006, 2007 and 2008 as extracted from the respective annual reports of the Company and for the six months ended 30 September 2008 as extracted from the Company’s interim report is set out below. No qualified opinion has been expressed by the auditors of the Company on the audited financial statements for each of the years ended 31 March 2006, 2007 and 2008.

Revenue Cost of sales Gross profit Other income and gains Development costs Selling and marketing expenses General and administrative expenses Other operating expenses Finance costs Share of loss of associates Profit/(Loss) before income tax Gain on disposal of interest in a subsidiary Income tax expense Profit/(Loss) for the year/ period Attributable to: Equity holders of the Company Minority interests Earnings/(Loss) per share for profit/(loss) attributable to the equity holders of the Company during the year/ period — Basic (in HK cent) — Diluted (in HK cent)	For the six months ended 30 September 2008 HK$’000 17,289 (5,061) 12,228 1,527 (3,431) (1,492) (22,943) (121) (86) (5) (14,323) 27,537 — 13,214 10,744 2,470 13,214 1.79 1.75	For the year ended 31 March 2008 2007 2006 HK$’000 HK$’000 HK$’000 35,829 32,127 29,245 (10,031) (11,669) (9,584) 25,798 20,458 19,661 33,284 2,859 1,749 (5,058) — — (6,143) (380) (553) (38,882) (24,939) (21,998) (4,744) (330) (360) (817) (257) (160) (153) — — 3,285 (2,589) (1,661) — — — — — — 3,285 (2,589) (1,661) 5,519 (2,589) (1,661) (2,234) — — 3,285 (2,589) (1,661) 0.98 (0.50) (0.34) 0.91 (0.50) (0.34)

– 57 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

There were no extraordinary or exceptional items for the three years ended 31 March 2006, 2007 and 2008 and the six months ended 30 September 2008.

Information regarding rates of dividend paid or proposed on each class of shares and amounts absorbed thereby has not been disclosed as no dividends were paid or proposed in respect of the three years ended 31 March 2006, 2007 and 2008 and the six months ended 30 September 2008.

Non-current assets Leasehold land and land use rights Property, plant and equipment Investment properties Property under development Intangible assets Investments in associates Available-for-sale financial assets Current assets Financial assets at fair value through profit or loss Amount due from a related company Accounts receivable Prepayments, deposits and other receivables Cash and cash equivalents Total assets Current liabilities Accounts payable Accruals and other payables Deferred income Financial liabilities at fair value through profit or loss Borrowings Net current assets	As at 30 September 2008 HK$’000 — 11,829 17,155 — 63,420 75 1,007 93,486 3 — 4,959 51,543 1,342 57,847 151,333 2,188 8,769 3,914 — 773 15,644 42,203	As at 31 March 2008 2007 2006 HK$’000 HK$’000 HK$’000 — 2,444 2,499 10,374 15,217 9,841 17,155 — — 8,524 — — 70,339 — — 80 — — 1,098 2,165 — 107,570 19,826 12,340 3,056 22 612 — — 25 3,888 2,313 2,387 7,000 4,206 4,408 7,556 37,036 18,632 21,500 43,577 26,064 129,070 63,403 38,404 1,955 1,987 1,539 5,196 1,473 2,803 4,534 1,055 — — 18 346 174 172 159 11,859 4,705 4,847 9,641 38,872 21,217	As at 31 March 2008 2007 2006 HK$’000 HK$’000 HK$’000 — 2,444 2,499 10,374 15,217 9,841 17,155 — — 8,524 — — 70,339 — — 80 — — 1,098 2,165 — 107,570 19,826 12,340 3,056 22 612 — — 25 3,888 2,313 2,387 7,000 4,206 4,408 7,556 37,036 18,632 21,500 43,577 26,064 129,070 63,403 38,404 1,955 1,987 1,539 5,196 1,473 2,803 4,534 1,055 — — 18 346 174 172 159 11,859 4,705 4,847 9,641 38,872 21,217
			12,340
			612 25 2,387 4,408 18,632
			26,064
			38,404 1,539 2,803 — 346 159
			4,847
			21,217

– 58 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX II

Total assets less current liabilities Non-current liabilities Borrowings Net assets Equity Capital and reserves Share capital Reserves Equity attributable to equity holders of the Company Minority interests Total equity	As at 30 September 2008 HK$’000 135,689 4,125 131,564 5,994 110,451 116,445 15,119 131,564	As at 31 March 2008 2007 2006 HK$’000 HK$’000 HK$’000 117,211 58,698 33,557 3,278 3,461 3,635 113,933 55,237 29,922 5,978 5,279 4,980 95,630 49,863 24,942 101,608 55,142 29,922 12,325 95 — 113,933 55,237 29,922	As at 31 March 2008 2007 2006 HK$’000 HK$’000 HK$’000 117,211 58,698 33,557 3,278 3,461 3,635 113,933 55,237 29,922 5,978 5,279 4,980 95,630 49,863 24,942 101,608 55,142 29,922 12,325 95 — 113,933 55,237 29,922
			29,922
			4,980 24,942
			29,922 —
			29,922

– 59 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

2. AUDITED FINANCIAL STATEMENTS

Set out below are the audited financial statements together with the relevant notes thereto as extracted from the annual report of the Company for the year ended 31 March 2008.

Consolidated Income Statement

For the year ended 31 March 2008

Note Revenue 5 Cost of sales Gross profit Other income and gains 6 Development costs Selling and marketing expenses General and administrative expenses Other operating expenses Finance costs 8 Share of loss of associates 22 Profit/(Loss) before income tax 9 Income tax expense 10 Profit/(Loss) for the year Attributable to: Equity holders of the Company 11 Minority interests Earnings/(Loss) per share for profit/(loss) attributable to the equity holders of the Company during the year 12 — Basic (in HK cent) — Diluted (in HK cent)	2008 HK$’000 35,829 (10,031) 25,798 33,284 (5,058) (6,143) (38,882) (4,744) (817) (153) 3,285 — 3,285 5,519 (2,234) 3,285 0.98 0.91	2007 HK$’000 32,127 (11,669) 20,458 2,859 — (380) (24,939) (330) (257) — (2,589) — (2,589) (2,589) — (2,589) (0.50) (0.50)

– 60 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

Consolidated Balance Sheet As at 31 March 2008

Note Non-current assets Leasehold land and land use rights 16 Property, plant and equipment 17 Investment properties 18 Property under development 19 Intangible assets 20 Investments in associates 22 Available-for-sale financial assets 23 Current assets Financial assets at fair value through profit or loss 24 Accounts receivable 25 Prepayments, deposits and other receivables Cash and cash equivalents 26 Total assets Current liabilities Accounts payable 27 Accruals and other payables Deferred income Financial liabilities at fair value through profit or loss 24 Borrowings 28 Net current assets Total assets less current liabilities Non-current liabilities Borrowings 28 Net assets Capital and reserves Share capital 29 Reserves 31 Equity attributable to equity holders of the Company Minority interests Total equity	2008 HK$’000 — 10,374 17,155 8,524 70,339 80 1,098 107,570 3,056 3,888 7,000 7,556 21,500 129,070 1,955 5,196 4,534 — 174 11,859 9,641 117,211 3,278 113,933 5,978 95,630 101,608 12,325 113,933	2007 HK$’000 2,444 15,217 — — — — 2,165
		19,826
		22 2,313 4,206 37,036
		43,577
		63,403
		1,987 1,473 1,055 18 172
		4,705
		38,872
		58,698
		3,461
		55,237
		5,279 49,863
		55,142 95
		55,237

– 61 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

Balance Sheet

As at 31 March 2008

Note Non-current assets Leasehold land and land use rights 16 Property, plant and equipment 17 Investment properties 18 Investments in subsidiaries 21 Available-for-sale financial assets 23 Current assets Financial assets at fair value through profit or loss 24 Amounts due from subsidiaries 21 Prepayments, deposits and other receivables Cash and cash equivalents 26 Total assets Current liabilities Accruals and other payables Amounts due to subsidiaries 21 Financial liabilities at fair value through profit or loss 24 Borrowings 28 Net current assets Total assets less current liabilities Non-current liabilities Borrowings 28 Net assets Capital and reserves Share capital 29 Reserves 31 Total equity	2008 HK$’000 — — 17,155 97,531 1,098 115,784 — 10,519 216 818 11,553 127,337 753 10,414 — 174 11,341 212 115,996 3,278 112,718 5,978 106,740 112,718	2007 HK$’000 2,444 9,792 — 11,000 2,165
		25,401
		22 9,056 219 19,004
		28,301
		53,702
		153 71 18 172
		414
		27,887
		53,288
		3,461
		49,827
		5,279 44,548
		49,827

– 62 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

Consolidated Statement of Changes in Equity For the year ended 31 March 2008

				Reserves					Minority interests HK$’000	Total equity HK$’000
Share capital HK$’000	Share premium HK$’000	Merger reserve HK$’000	Employee compensation reserve HK$’000	Translation reserve HK$’000	Property revaluation reserve HK$’000	Investment revaluation reserve HK$’000	Accumulated losses HK$’000	Total reserves HK$’000
4,980	77,296	4,870	2,958	10	2,384	—	(62,576)	24,942	—	29,922
— — —	— — —	— — —	— — —	— — 131	4,363 — —	— 500 —	— — —	4,363 500 131	— — —	4,363 500 131
— —	— —	— —	— —	131 —	4,363 —	500 —	— (2,589)	4,994 (2,589)	— —	4,994 (2,589)
—	—	—	—	131	4,363	500	(2,589)	2,405	—	2,405
57 242 — — — — —	1,020 20,328 (666) — 308 — —	— - — — — — —	— — — 1,834 (308) (94) —	— — — — — — —	— — — — — — —	— — — — — — —	— — — — — 94 —	1,020 20,328 (666) 1,834 — — —	— — — — — — 95	1,077 20,570 (666) 1,834 — — 95
5,279	98,286	4,870	4,390	141	6,747	500	(65,071)	49,863	95	55,237
— — —	— — —	— — —	— — —	— — 1,702	3,242 — —	— (1,067) —	— — —	3,242 (1,067) 1,702	— — 135	3,242 (1,067) 1,837
— —	— —	— —	— —	1,702 —	3,242 —	(1,067) —	— 5,519	3,877 5,519	135 (2,234)	4,012 3,285
—	—	—	—	1,702	3,242	(1,067)	5,519	9,396	(2,099)	7,297
238 461 — — — — —	3,509 30,874 (359) — 1,859 — —	— — — — — — —	— — — 2,347 (1,859) (203) —	— — — — — — —	— — — — — — —	— — — — — — —	— — — — — 203 —	3,509 30,874 (359) 2,347 — — —	— — — — — — 14,329	3,747 31,335 (359) 2,347 — — 14,329
5,978	134,169	4,870	4,675	1,843	9,989	(567)	(59,349)	95,630	12,325	113,933

– 63 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

The merger reserve represents the difference between the share capital and share premium of the Company and the nominal value of shares of a subsidiary acquired pursuant to the reorganization in connection with the preparation for the initial listing of the shares of the Company on the Growth Enterprise Market of The Stock Exchange of Hong Kong Limited.

Consolidated Cash Flow Statement

For the year ended 31 March 2008

Note Cash flows from operating activities Profit/(Loss) before income tax Adjustments for: — Depreciation of property, plant and equipment — Amortization of leasehold land and land use rights — Amortization of intangible assets — Goodwill impairment charge — Share of loss of associates — Gain on disposal of interests in subsidiaries — Loss on disposal of property, plant and equipment — Fair value gain on investment properties — Interest income — Finance costs — Equity-settled share-based payments Changes in working capital: — Financial assets at fair value through profit or loss — Accounts receivable — Prepayments, deposits and other receivables — Amount due from a related company — Financial liabilities at fair value through profit or loss — Accounts payable — Accruals and other payables — Deferred income Cash (used in)/generated from operations Interest paid Net cash (used in)/generated from operating activities	2008 HK$’000 3,285 2,829 55 33 3,600 153 (26,970) 255 (1,943) (635) 817 2,347 (3,034) (1,575) (427) — (18) (1,394) (7,145) 3,479 (26,288) (817) (27,105)	2007 HK$’000 (2,589) 1,715 55 — — — (105) — — (784) 257 1,834 590 74 202 25 (328) 448 (875) 600 1,119 (257) 862

– 64 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

Note Cash flows from investing activities Acquisition of subsidiaries 33 Purchase of property, plant and equipment 17 Purchase of intangible assets 20 Acquisition of available-for-sale financial assets Proceeds from disposal of property, plant and equipment Disposal of interests in subsidiaries 34 Interest received Net cash used in investing activities Cash flows from financing activities Proceeds from issuance of ordinary shares 29 Share issue costs Repayment of bank loans Net cash generated from financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of the year Effect of foreign exchange rate changes, net Cash and cash equivalents at end of the year 26	2008 HK$’000 (63,680) (4,978) (5) — 835 41,119 635 (26,074) 35,082 (359) (11,975) 22,748 (30,431) 37,036 951 7,556	2007 HK$’000 — (2,728) — (1,665) — 200 784 (3,409) 21,647 (666) (161) 20,820 18,273 18,632 131 37,036

– 65 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

Notes to the Consolidated Financial Statements For the year ended 31 March 2008

1. GENERAL INFORMATION

Finet Group Limited (the ‘‘Company’’) and its subsidiaries (together the ‘‘Group’’) are principally engaged in the development, production and provision of financial information services and technology solutions to corporate clients and retail investors. During the year ended 31 March 2008, the Group has diversified into the development and operations of online games. The principal activity of the Company is investment holding. The principal activities and other particulars of its subsidiaries are set out in Note 21.

The Company was incorporated as an exempted company with limited liability in the Cayman Islands under the Companies Law of the Cayman Islands. The Company’s registered office is situated at Cricket Square, Hutchins Drive, PO Box 2681, Grand Cayman KY1-1111, Cayman Islands. The Company’s principal place of business is situated at Suite 505–506, 5/F, Low Block, Grand Millennium Plaza, 181 Queen’s Road Central, Hong Kong.

The Company’s shares have been listed on the Growth Enterprise Market (‘‘GEM’’) of The Stock Exchange of Hong Kong Limited (the ‘‘Stock Exchange’’) since 7 January 2005.

These consolidated financial statements are presented in thousands of units of Hong Kong dollars (HK$’000) unless otherwise stated. These consolidated financial statements were approved and authorized for issue by the Board of Directors on 30 June 2008.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

2.1 Basis of preparation

The consolidated financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards (‘‘HKFRS’’) issued by the Hong Kong Institute of Certified Public Accountants. In addition, the consolidated financial statements include applicable disclosures required by the Rules Governing the Listing of Securities on the GEM of the Stock Exchange (the ‘‘GEM Listing Rules’’) and by the Hong Kong Companies Ordinance.

The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of buildings, available-for-sale financial assets, financial assets and financial liabilities at fair value through profit or loss and investment properties, which are carried at fair value.

The preparation of financial statements in conformity with HKFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in Note 4.

(a) Standards, amendments and interpretations effective in 2007
. HKFRS 7, ‘‘Financial Instruments: Disclosures’’, and the complementary amendment to HKAS 1, ‘‘Presentation of Financial Statements — Capital Disclosures’’, introduces new disclosures relating to financial instruments and

– 66 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

does not have any impact on the classification and valuation of the Group’s financial instruments, or the disclosures relating to taxation and trade and other payables.

. HK(IFRIC) — Int 8, ‘‘Scope of HKFRS 2’’, requires consideration of transactions involving the issuance of equity instruments, where the identifiable consideration received is less than the fair value of the equity instruments issued in order to establish whether or not they fall within the scope of HKFRS 2. This interpretation does not have any impact on the Group’s financial statements.
. HK(IFRIC) — Int 10, ‘‘Interim Financial Reporting and Impairment’’, prohibits the impairment losses recognized in an interim period on goodwill and investments in equity instruments and in financial assets carried at cost to be reversed at a subsequent balance sheet date. This interpretation does not have any impact on the Group’s financial statements.
. HK(IFRIC) — Int 11, ‘‘HKFRS 2 — Group and Treasury Share Transactions’’ (effective from 1 March 2007). HK(IFRIC) — Int 11 provides guidance on whether share-based transactions involving treasury shares or involving Group entities (for example, options over a parent’s share) should be accounted for as equity-settled or cash-settled share-based payment transactions in the stand-alone accounts of the parent and Group companies. This interpretation does not have an impact on the Group’s financial statements.
(b) Standards, amendments and interpretations effective in 2007 but not relevant

The following standards, amendments and interpretations to published standards are mandatory for accounting periods beginning on or after 1 April 2007 but they are not relevant to the Group’s operations:

. HK(IFRIC) — Int 9, ‘‘Reassessment of Embedded Derivatives’’.
(c) Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the Group

The following standards, amendments and interpretations to existing standards have been published and are mandatory for the Group’s accounting periods beginning on or after 1 April 2008 or later periods, but the Group has not early adopted them:

. HKAS 1 (Revised), ‘‘Presentation of Financial Statements’’ (effective from annual period beginning on or after 1 January 2009). HKAS 1 (Revised) requires all owner changes in equity to be presented in a statement of changes in equity. All comprehensive income is presented in one statement of comprehensive income or in two statements (a separate income statement and a statement of comprehensive income). It requires presenting a statement of financial position as at the beginning of the earliest comparative period in a complete set of financial statements when there are retrospective adjustments or reclassification adjustments. However, it does not change the recognition, measurement or disclosure of specific transactions and other events required by other HKFRS. The Group will apply HKAS 1 (Revised) from 1 April 2009.
. HKAS 23 (Revised), ‘‘Borrowing Costs’’ (effective from annual period beginning on or after 1 January 2009). The amendment requires an entity to capitalize borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset (one that takes a substantial period of time to

– 67 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

get ready for use or sale) as part of the cost of that asset. The option of immediately expensing those borrowing costs will be removed. The Group will apply HKAS 23 (Revised) from 1 April 2009 but is currently not applicable to the Group as there are no qualifying assets.

. HKAS 27 (Revised), ‘‘Consolidated and Separate Financial Statements’’ (effective from annual period beginning on or after 1 July 2009). The amendment requires non-controlling interests (i.e. minority interests) to be presented in the consolidated statement of financial position within equity, separately from the equity of the owners of the parent. Total comprehensive income must be attributed to the owners of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance. Changes in a parent’s ownership interest in a subsidiary that do not result in the loss of control are accounted for within equity. When control of a subsidiary is lost, the assets and liabilities and related equity components of the former subsidiary are derecognized. Any gain or loss is recognized in profit or loss. Any investment retained in the former subsidiary is measured at its fair value at the date when control is lost. The Group will apply HKAS 27 (Revised) from 1 April 2010.
. HKFRS 3 (Revised), ‘‘Business Combination’’ (effective for business combinations with acquisition date on or after the beginning of the first annual reporting period beginning on or after 1 July 2009). The amendment may bring more transactions into acquisition accounting as combinations by contract alone and combinations of mutual entities are brought into the scope of the standard and the definition of a business has been amended slightly. It now states that the elements are ‘capable of being conducted’ rather than ‘are conducted and managed’. It requires considerations (including contingent consideration), each identifiable asset and liability to be measured at its acquisition-date fair value, except leases and insurance contracts, reacquired right, indemnification assets as well as some assets and liabilities required to be measured in accordance with other HKFRS. They are income taxes, employee benefits, share-based payment and non-current assets held for sale and discontinued operations. Any non-controlling interest in an acquiree is measured either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net identifiable assets. The Group will apply HKFRS 3 (Revised) from 1 April 2010.
. HKFRS 8, ‘‘Operating Segments’’ (effective from annual period beginning on or after 1 January 2009). HKFRS 8 replaces HKAS 14 and aligns segment reporting with the requirements of the US standard SFAS 131, ‘‘Disclosures about segments of an enterprise and related information’’. The new standard requires a ‘‘management approach’’, under which segment information is presented on the same basis as that used for internal reporting purposes. The Group will apply HKFRS 8 from 1 April 2009. The expected impact is still being assessed in detail by management, but it appears likely that the number of reportable segments, as well as the manner in which the segments are reported, will change in a manner that is consistent with the internal reporting provided to the chief operating decision-maker. As goodwill is allocated to groups of cash-generating units based on segment level, the change will also require management to reallocate goodwill to the newly identified operating segments. Management does not anticipate that this will result in any material impairment to the goodwill balance.
. HK(IFRIC) — Int 14, ‘‘HKAS 19 — The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction’’ (effective from annual period beginning on or after 1 January 2008). HK(IFRIC) — Int 14 provides guidance on assessing the limit in HKAS 19 on the amount of the surplus that can

– 68 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

be recognized as an asset. It also explains how the pension asset or liability may be affected by a statutory or contractual minimum funding requirement. The Group will apply HK(IFRIC) — Int 14 from 1 April 2008, but it is not expected to have any impact on the Group’s financial statements.

(d) Interpretations to existing standards that are not yet effective and not relevant for the Group’s operations

The following interpretations to existing standards have been published and are mandatory for the Group’s accounting periods beginning on or after 1 April 2008 or later periods but are not relevant for the Group’s operations:

. HK(IFRIC) — Int 12, ‘‘Service Concession Arrangements’’ (effective from annual period beginning on or after 1 January 2008). HK(IFRIC) — Int 12 applies to contractual arrangements whereby a private sector operator participates in the development, financing, operation and maintenance of infrastructure for public sector services. HK(IFRIC) — Int 12 is not relevant to the Group’s operations because none of the Group’s companies provide for public sector services.
. HK(IFRIC) — Int 13, ‘‘Customer Loyalty Programmes’’ (effective from annual period beginning on or after 1 July 2008). HK(IFRIC) — Int 13 clarifies that where goods or services are sold together with a customer loyalty incentive (for example, loyalty points or free products), the arrangement is a multiple-element arrangement and the consideration receivable from the customer is allocated between the components of the arrangement using fair values. HK(IFRIC) — Int 13 is not relevant to the Group’s operations because none of the Group’s companies operate any loyalty programs.

2.2 Consolidation

The consolidated financial statements include the financial statements of the Company and all of its subsidiaries made up to 31 March.

(a) Subsidiaries

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

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

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

– 69 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

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

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

(b) Transactions and minority interests

The Group applies a policy of treating transactions with minority interests as transactions with parties external to the Group. Disposals to minority interests result in gains and losses for the Group that are recorded in the consolidated income statement. Purchases from minority interests result in goodwill, being the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary.

(c) Associates

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

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

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

2.3 Segment reporting

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

– 70 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

2.4 Foreign currency translation

(a) Functional and presentation currency

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

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the income statement, except when deferred in equity as qualifying cash flow hedges or qualifying net investment hedges.

Changes in the fair value of monetary securities denominated in foreign currency classified as available-for-sale are analyzed between translation differences resulting from changes in the amortized cost of the security and other changes in the carrying amount of the security. Translation differences related to changes in the amortized cost are recognized in profit or loss, and other changes in the carrying amount are recognized in equity.

Translation differences on non-monetary financial assets and liabilities are reported as part of the fair value gain or loss. Translation difference on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognized in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary financial assets such as equities classified as available-for-sale are included in the available-for-sale reserve in equity.

(c) Group companies

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

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

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

– 71 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

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

2.5 Property, plant and equipment

Buildings are shown at fair value, based on periodic, but at least triennial, valuations by external independent valuers, less subsequent depreciation for buildings. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. All other property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

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

Increases in the carrying amount arising on revaluation of buildings are credited to the property revaluation reserve in shareholders’ equity. Decreases that offset previous increases of the same asset are charged against other reserves directly in equity; all other decreases are charged to the income statement. Each year the difference between depreciation based on the revalued carrying amount of the asset charged to the income statement and depreciation based on the asset’s original cost is transferred from ‘‘other reserves’’ to ‘‘accumulated losses’’.

Depreciation on property, plant and equipment is calculated using the straight-line method to allocate their costs to their residual values over their estimated useful lives, as follows:

Buildings	Over the remaining lease terms
Leasehold improvements	Over the term of leases
Computer equipment	20%
Office equipment	20%
Furniture and fixtures	20%
Motor vehicle	20%

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

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

2.6 Investment property

Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the companies in the Group, is classified as investment property.

Investment property comprises land held under operating leases and buildings. Land held under operating leases are classified and accounted for as investment property when the rest of the definition of investment property is met.

– 72 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

Investment property is measured initially at its cost, including related transaction costs. After initial recognition, investment property is carried at fair value. Fair value is based on active market prices, adjusted, if necessary, for any difference in the nature, location or condition of the specific asset. These valuations are reviewed annually by external valuers.

The fair value of investment property reflects, among other things, rental income from current leases and assumptions about rental income from future leases in the light of current market conditions.

The fair value also reflects, on a similar basis, any cash outflows that could be expected in respect of the property. Some of those outflows are recognized as a liability, including finance lease liabilities in respect of land classified as investment property; others, including contingent rent payments, are not recognized in the financial statements.

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

Changes in fair values are recognized in the income statement, as part of other income and gains.

Gains or losses on disposal of an investment property are recognized in the income statement in the year of disposal.

If a property occupied by the Group as an owner-occupied property becomes an investment property, the Group accounts for such property in accordance with the policy stated under ‘‘Property, plant and equipment’’ up to the date of change in use, and any difference at the date between the carrying amount and the fair value of the property is accounted for as a revaluation. Increases in the carrying amount arising on revaluation are credited to other reserves in shareholders’ equity. Decreases that offset previous increases of the same asset are charged against other reserves directly in equity; all other decreases are charged to the income statement.

2.7 Properties under development

Properties under development are classified as non-current assets and are stated at cost less accumulated amortization and accumulated impairment loss. Cost comprises acquisition cost relating to the leasehold interests in lands and direct development costs attributable to such properties. Interests in lands are amortized over the expected life and are included as part of cost of properties under development.

2.8 Intangible assets

(a) Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary/associate at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisitions of associates is included in investments in associates and is tested annually for impairment as part of the overall balance. Separately recognized goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

– 73 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose.

(b) Trademarks and licenses

Acquired trademarks and licenses are shown at historical cost. Trademarks and licenses have a finite useful lives, and are carried at cost less accumulated amortization. Amortization is calculated using the straight-line method to allocate the cost of trademarks and licenses over their estimated useful lives (3–5 years).

(c) Computer software

Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortized over their estimated useful lives (5 years).

Costs associated with developing or maintaining computer software programs are recognized as an expense as incurred. Costs that are directly associated with the development of identifiable and unique software products controlled by the Group, and that will probably generate economic benefits exceeding costs beyond one year, are recognized as intangible assets. Costs include the employee costs incurred as a result of developing software and an appropriate portion of relevant overheads.

Computer software development costs recognized as assets are amortized over their estimated useful lives.

2.9 Impairment of investments in subsidiaries, associates and non-financial assets

Assets that have an indefinite useful life or are not yet available for use are not subject to amortization and are tested annually for impairment. Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cashgenerating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

2.10 Financial assets

The Group classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivable and available-for-sale financial assets. The classification depends on the purposes for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

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

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

– 74 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

(b) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as noncurrent assets. Loans and receivables are classified as ‘‘trade and other receivables’’ and ‘‘cash and cash equivalents’’ in the balance sheet.

(c) Available-for-sale financial assets

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

Regular way purchases and sales of financial assets are recognized on the trade-date — the date on which the Group commits to purchase or sell the asset. Investments are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognized at fair value, and transaction costs are expensed in the income statement. Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are carried at amortized cost using the effective interest method.

Gains or losses arising from changes in the fair value of the ‘‘financial assets at fair value through profit or loss’’ category are presented in the income statement in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognized in the income statement as part of other income when the Group’s right to receive payments is established.

Changes in the fair value of monetary securities denominated in a foreign currency and classified as available-for-sale are analyzed between translation differences resulting from changes in amortized cost of the security and other changes in the carrying amount of the security. The translation differences on monetary securities are recognized in profit or loss; translation differences on non-monetary securities are recognized in equity. Changes in the fair value of monetary and nonmonetary securities classified as available for sale are recognized in equity.

When securities classified as available for sale are sold or impaired, the accumulated fair value adjustments recognized in equity are included in the income statement as gains and losses from investment securities.

Interest on available-for-sale securities calculated using the effective interest method is recognized in the income statement as part of other income. Dividends on available-for-sale equity instruments are recognized in the income statement as part of other income when the Group’s right to receive payments is established.

The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Group established fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis and option pricing models, making maximum use of market inputs and relying as little as possible on entity-specific inputs.

– 75 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX II

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

2.11 Trade and other receivables

Trade and other receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment. A provision for impairment of trade and other receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the assets is reduced through the use of an allowance account, and the amount of the loss is recognized in the income statement. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited to the income statement.

2.12 Cash and cash equivalents

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

2.13 Share capital

Ordinary shares are classified as equity.

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

2.14 Trade payables

Trade payables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method.

2.15 Borrowings

Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the income statement over the period of the borrowings using the effective interest method.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

– 76 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

2.16 Development costs

Expenditure incurred on projects to develop new products is charged to income statement as incurred unless the Group can demonstrate the technical feasibility of completing the projects so that the asset generated will be available for use or sale, its intention to complete the projects and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the project and the ability to measure reliably the expenditure during the development. In such case, development expenditure is capitalized and deferred as intangible asset, and is amortized over its estimated useful.

2.17 Deferred income tax

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.

Deferred income tax assets are recognized to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

2.18 Employee benefits

(a) Pension obligations

The Group operates a defined contribution Mandatory Provident Fund retirement benefits scheme (the ‘‘MPF Scheme’’) under the Mandatory Provident Fund Schemes Ordinance, for those employees who are eligible to participate in the MPF Scheme. Contributions are made based on a percentage of the employees’ basic salaries and are charged to the income statement as they become payable in accordance with the rules of the MPF Scheme. The assets of the MPF Scheme are held separately from those of the Group in an independently administered fund. The Group’s employer contributions vest fully within the employees when contributed into the MPF Scheme, except for the Group’s employer voluntary contributions, which are refunded to the Group when the employee leaves employment prior to the contributions vesting fully, in accordance with the rules of the MPF Scheme.

The employees of the Group’s subsidiaries which operates in Mainland China are required to participate in a central pension scheme operated by the local municipal government. The subsidiaries are required to contribute a percentage of its payroll costs to the central pension scheme. The contributions are charged to the income statement as they become payable in accordance with the rules of the central pension scheme.

– 77 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

(b) Share-based compensation

The Group operates an equity-settled, share-based compensation plan. The fair value of the employee services received in exchange for the grant of the options is recognized as an expense. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted, excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. At each balance sheet date, the Company revises its estimates of the number of options that are expected to vest. It recognizes the impact of the revision of original estimates, if any, in the income statement, with a corresponding adjustment to equity.

The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised.

(c) Termination benefits

Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognizes termination benefits when it is demonstrably committed to either: terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal; or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after balance sheet date are discounted to present value.

2.19 Provisions

Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognized as interest expense.

2.20 Revenue recognition

Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Group’s activities. Revenue is shown net of valueadded tax, returns, rebates and discounts and after eliminating sales within the Group.

The Group recognizes revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity, on the following bases:

(a) Service income from on-line content information provision is recognized on a timeproportion basis over the service period.
(b) Income from Internet solutions is recognized when the services are rendered.

– 78 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

(c) Online game income is recognized when the in-game premium features are consumed or points for in-game premium features are expired.
(d) Income from advertisements on websites is recognized when the advertisements are placed.
(e) Rental income from property letting is recognized in the period in which the properties are let and on a straight-line basis over the lease terms.
(f) Commission income is recognized when the services are rendered.
(g) Interest income is recognized on a time-proportion basis using the effective interest method. When a receivable is impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loans is recognized using the original effective interest rate.
(h) Dividend income is recognized when the right to receive payment is established.

2.21 Leases

Leases where substantially all the risks and rewards of ownership of assets remain with the lessors are accounted for as operating leases. Leases that substantially transfer to the lessees all the risks and rewards of ownership of assets are accounted for as finance leases.

(a) Where the Group is the lessee (operating leases)

Payments made under operating leases (net of any incentives received from the leasing company) are expensed in the income statement on a straight-line basis over the lease periods.

(b) Where the Group is the lessor (operating leases)

When assets are leased out under an operating lease, the asset is included in the balance sheet based on the nature of the asset.

Lease income is recognized over the term of the lease on a straight-line basis.

2.22 Contingent liabilities and contingent assets

A contingent liability is a possible obligation that arises from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. It can also be a present obligation arising from past events that is not recognized because it is not probable that outflow of economic resources will be required or the amount of obligation cannot be measured reliably. A contingent liability is not recognized but is disclosed in the notes to the financial statements. When a change in the probability of an outflow occurs so that outflow is probable, it will then be recognized as a provision.

A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or nonoccurrence of one or more uncertain events not wholly within the control of the Group. Contingent assets are not recognized but are disclosed in the notes to the financial statements when an inflow of economic benefits is probable. When inflow is virtually certain, an asset is recognized.

– 79 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

2.23 Dividend distribution

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

3. FINANCIAL RISK MANAGEMENT

3.1 Financial risk factors

The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group’s financial performance.

(a) Market risk

(i) Foreign exchange risk

The Group has no significant transactional currency exposures. The Group manages the foreign exchange exposure arising from its normal course of business activities and investments in foreign operations by funding its local operations and investments through cash flows generated from business transactions locally. The Group currently does not have a foreign currency hedging policy. However, the management monitors foreign exchange exposure closely and will consider hedging significant foreign currency exposure should the need arise.

(ii) Price risk

Equity price risk is the risk that the fair values of equity securities decrease as a result of changes in the levels of equity indices and the value of individual securities. The Group is exposed to equity price risk arising from individual equity investments classified as available-for-sale financial assets (Note 23) and financial assets at fair value through profit or loss (Note 24) as at 31 March 2008. The Group’s listed investments are listed on the Osaka Securities Exchange in Japan, the New York Stock Exchange and the NASDAQ in the United States and the Stock Exchange in Hong Kong, and are valued at quoted market prices at the balance sheet date.

– 80 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

The following table demonstrates the sensitivity to every 5% increase/decrease in the fair values of the equity investments with all other variables held constant and before any impact on tax, based on their carrying amounts at the balance sheet date:

	Increase/
	(decrease) in	Increase/
	carrying	(decrease) in
	amount of	profit/(loss)	Increase/
	equity	before	(decrease)
	investments	income tax	in equity
	HK$’000	HK$’000	HK$’000
2008
5% increase in equity price	208	153		208
5% decrease in equity price	(208)	(153)		(208)
2007
5% increase in equity price	108	—		108
5% decrease in equity price	(108)	—		(108)

(iii) Cash flow and fair value interest rate risk

The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s interest-bearing bank borrowings with floating interest rates.

The Group’s policy to manage its interest rate risk is to reduce or maintain its current level of interest-bearing borrowings. As the Group does not expect to significantly increase its level of interest-bearing borrowings, it has not used any interest rate swaps to hedge its exposure to interest rate risk.

The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held constant, of the Group’s profit/(loss) before tax (through the impact on floating rate borrowings) and the Group’s equity.

					Increase/
					(decrease) in
				Increase/	profit/(loss)	Increase/
			(decrease) in		before	(decrease)
			basis points		income tax	in equity
					HK$’000	HK$’000
2008
Hong	Kong	dollar		50	(18)		(18)
Hong	Kong	dollar		(50)	18		18
2007
Hong	Kong	dollar		50	(19)		(19)
Hong	Kong	dollar		(50)	19		19

– 81 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

(b) Credit risk

The Group reviews the recoverability of its trade receivables periodically to ensure that potential credit risk of the counterparty is managed at an early stage and sufficient provision is made for possible defaults. In addition, receivable balances are monitored on an ongoing basis and the Group’s exposure to bad debts is not significant.

The credit risk of the Group’s other financial assets, which comprise cash and cash equivalents, and other receivables, arises from default of the counterparty, with a maximum exposure equal to the carrying amounts of these instruments.

At the balance sheet date, the Group has certain concentrations of credit risk as approximately 53% (2007: 29%) and 72% (2007: 62%) of the Group’s trade receivables were due from the Group’s largest customer and the five largest customers, respectively. Further quantitative data in respect of the Group’s exposure to credit risk arising from trade receivables are disclosed in Note 25 to the consolidated financial statements.

(c) Liquidity risk

Ultimate responsibility for liquidity risk management rests with the board of directors. The Group manages liquidity risk by maintaining adequate reserves and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.

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

		More than
	On demand	1 year but
	or within	less than	Over
	1 year	5 years	5 years	Total
	HK$’000	HK$’000	HK$’000	HK$’000
2008
Accounts payable	1,955	—	—	1,955
Accruals and other payables	5,196	—	—	5,196
Borrowings	174	1,196	2,082	3,452
2007
Accounts payable	1,987	—	—	1,987
Accruals and other payables	1,473	—	—	1,473
Borrowings	172	826	2,635	3,633

– 82 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

3.2 Capital risk management

One of the Group’s subsidiaries is regulated by the Securities and Futures Commission of Hong Kong (the ‘‘SFC’’) and is required to comply with certain minimum capital requirements according to the rules of the SFC. In addition, the Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares.

The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as total borrowings divided by total equity, as shown in the consolidated balance sheet. The gearing ratios at 31 March 2007 and 2008 were as follows:

Total borrowings (Note 28) Total equity Gearing ratio	2008 HK$’000 3,452 113,933 3%	2007 HK$’000 3,633 55,237
		7%

3.3 Fair value estimation

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

The carrying values less impairment provision of trade receivables and payables are a reasonable approximation of their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments.

– 83 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

3.4 Financial instruments by category

The accounting policies for financial instruments have been applied to the line items below:

Financial assets as per consolidated balance sheet 31 March 2008 Available-for-sale financial assets (Note 23) Financial assets at fair value through profit or loss (Note 24) Accounts receivable (Note 25) Deposits and other receivables Cash and cash equivalents (Note 26) Total 31 March 2007 Available-for-sale financial assets (Note 23) Financial assets at fair value through profit or loss (Note 24) Accounts receivable (Note 25) Deposits and other receivables Cash and cash equivalents (Note 26) Total	Loans and receivables HK$’000 — — 3,888 2,668 7,556 14,112 — — 2,313 3,075 37,036 42,424	Financial assets at fair value through profit or loss HK$’000 — 3,056 — — — 3,056 — 22 — — — 22	Available- for-sale financial assets HK$’000 1,098 — — — — 1,098 2,165 — — — — 2,165	Total HK$’000 1,098 3,056 3,888 2,668 7,556
				18,266
				2,165 22 2,313 3,075 37,036
				44,611

– 84 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

Financial liabilities as per consolidated balance sheet 31 March 2008 Accounts payable (Note 27) Accruals and other payables Borrowings (Note 28) Total 31 March 2007 Accounts payable (Note 27) Accruals and other payables Financial liabilities at fair value through profit or loss (Note 24) Borrowings (Note 28) Total	Financial liabilities at fair value through profit or loss HK$’000 — — — — — — 18 — 18	Financial liabilities at amortized cost HK$’000 1,955 5,196 3,452 10,603 1,987 1,473 — 3,633 7,093	Total HK$’000 1,955 5,196 3,452
			10,603
			1,987 1,473 18 3,633
			7,111

4. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

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

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

(a) Estimated impairment of goodwill

The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in Note 2.8. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of estimates.

(b) Estimated fair value of employee share options

The fair values of employee share options granted are calculated using the Binomial model based on the Group management’s significant inputs into calculations, including the impact of vesting period, exit rate of employees, estimated life of share options granted based on exercise restrictions and behavioral consideration, volatility of share price and exercise price of the share options granted. Furthermore, the calculations assume nil future dividends.

– 85 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

(c) Estimated fair values of investment properties

The fair values of investment properties are determined annually by independent qualified valuers on open market value, existing use basis calculated on the net income allowing for reversionary potential. In making the judgment, considerations have been given to assumptions that are mainly based on market conditions existing at the balance sheet date.

5. REVENUE

Revenue, which is also the Group’s turnover, represents total invoiced value of services rendered. Revenue recognized during the year is as follows:

Service income from provision of financial information services Advertising income Online game income OTHER INCOME AND GAINS Fair value gain on investment properties Fair value gain on financial liabilities at fair value through profit or loss Gain on disposal of interests in subsidiaries Dividend income from listed investments in financial assets at fair value through profit or loss Gross rental income from investment properties Commission income Interest income from bank deposits Sundry income	2008 HK$’000 33,503 1,483 843 35,829 2008 HK$’000 1,943 — 26,970 — 91 1 635 3,644 33,284	2007 HK$’000 30,965 1,162 —
		32,127
		2007 HK$’000 — 648 105 16 — 31 784 1,275
		2,859

6. OTHER INCOME AND GAINS

7. SEGMENT INFORMATION

(a) Primary reporting format — business segments

The Group is principally engaged in (i) the development, production and provision of financial information services and technology solutions to corporate clients and retail investors; and (ii) the development and operations of online games. No separate business segment information is presented as over 90% of the Group’s revenue was derived from the business segment of development, production and provision of financial information services and technology solutions to corporate clients and retail investors.

– 86 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX II

(b) Secondary reporting format — geographical segments

The Group mainly operates in Hong Kong and the People’s Republic of China (the ‘‘PRC’’).

Revenue Hong Kong PRC	2008 HK$’000 31,530 4,299 35,829	2007 HK$’000 31,109 1,018
		32,127

Revenue is allocated based on the country in which the customer is located.

Total assets Hong Kong PRC	2008 HK$’000 19,642 109,428 129,070	2007 HK$’000 41,262 22,141
		63,403

Total assets are allocated based on where the assets are located.

Capital expenditure Hong Kong PRC	2008 HK$’000 1,934 88,333 90,267	2007 HK$’000 2,472 256
		2,728

Capital expenditure comprises additions to property, plant and equipment (Note 17), property under development (Note 19) and intangible assets (Note 20), including additions resulting from acquisitions through business combinations.

Capital expenditure is allocated based on where the assets are located.

8. FINANCE COSTS

Interest expense on bank borrowings: — wholly repayable within five years — not wholly repayable within five years	2008 HK$’000 591 226 817	2007 HK$’000 — 257
		257

– 87 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

9. PROFIT/(LOSS) BEFORE INCOME TAX

Profit/(Loss) before income tax is arrived at after charging/(crediting):

Operating lease payments in respect of rented premises Amortization of leasehold land and land use rights Amortization of intangible assets (included in general and administrative expenses) Goodwill impairment charge (included in other operating expenses) Depreciation of property, plant and equipment Development costs (Note) Loss on disposal of property, plant and equipment Net fair value loss on financial assets at fair value through profit or loss Auditors’ remuneration Net foreign exchange (gains)/losses	2008 HK$’000 2,141 55 33 3,600 2,829 5,058 255 487 320 (418)	2007 HK$’000 1,089 55 — — 1,715 — — 330 268 184

Note: Development costs mainly comprise depreciation of property, plant and equipment of approximately HK$122,000 (2007: Nil) and employee benefit expenses of approximately HK$4,318,000 (2007: Nil), which are also included in the total amounts disclosed separately above and in Note 13 for each of these types of expenses.

10. INCOME TAX

The Company was incorporated in the Cayman Islands as an exempted company and is exempted from payment of Cayman Islands income tax.

The Company’s subsidiary established in the British Virgin Islands is exempted from payment of the British Virgin Islands income tax.

The Company’s subsidiary established in the Republic of Seychelles is exempted from payment of the Republic of Seychelles income tax.

Hong Kong profits tax is calculated at the rate of 17.5% (2007: 17.5%) on the estimated assessable profit arising in or derived from Hong Kong for the year. No provision for Hong Kong profits tax has been made in the financial statements as the Group had no assessable profit generated in Hong Kong for the year (2007: Nil).

No provision for PRC income tax has been made in the financial statements as the Group’s PRC subsidiaries had no taxable profit for the year (2007: Nil).

– 88 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

The tax on the Group’s profit/(loss) before income tax differs from the theoretical amount that would arise using the Hong Kong profits tax rate of 17.5% (2007: 17.5%) as follows:

Profit/(Loss) before income tax Tax calculated at Hong Kong profits tax rate Effect of different tax rate of other jurisdictions Income not subject to tax Expenses not deductible for tax purposes Tax effect of temporary differences not recognized Utilization of previously unrecognized tax losses Tax losses for which no deferred income tax asset was recognized	2008 HK$’000 3,285 575 (2,732) (4,200) 5,195 16 (2) 1,148	2007 HK$’000 (2,589) (453) (132) (106) 636 (498) (31) 584

Income tax expense

— —

No deferred tax liabilities are recognized in the financial statements as the Group and the Company did not have material temporary difference arising between the tax bases of assets and liabilities and their carrying amounts as at 31 March 2008 (2007: Nil). The Group’s deferred tax assets and liabilities not recognized in the financial statements are as follows:

Tax losses Accelerated depreciation allowance Revaluation of properties	2008 HK$’000 13,794 (943) (5,144) 7,707	2007 HK$’000 12,195 (329) (2,510) 9,356

Deferred tax assets are recognized for tax losses carried forward to the extent that realization of the related tax benefit through future taxable profit is probable. No deferred tax assets are recognized in the Group’s financial statements as it is uncertain as to whether these tax benefits will be utilized in the foreseeable future. The tax losses arising from subsidiaries operating in Hong Kong are subject to approval by the Inland Revenue Department of Hong Kong.

11. PROFIT/(LOSS) ATTRIBUTABLE TO THE EQUITY HOLDERS OF THE COMPANY

The profit attributable to the equity holders of the Company is dealt with in the financial statements of the Company to the extent of HK$23,646,000 (2007: Loss of HK$2,038,000).

12. EARNINGS/(LOSS) PER SHARE

(a) Basic

The basic earnings/(loss) per share is calculated by dividing the profit attributable to equity holders of the Company for the year ended 31 March 2008 of HK$5,519,000 (2007: Loss of HK$2,589,000) by the weighted average number of 562,948,142 (2007: 517,428,849) ordinary shares in issue during the year.

– 89 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

(b) Diluted

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company has one category of dilutive potential ordinary shares: share options. For the share options, a calculation is made in order to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Company’s share) based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options.

Profit/(Loss) attributable to the equity holders of the Company Weighted average number of ordinary shares in issue (thousands) Adjustments for share options (thousands) Weighted average number of ordinary shares for diluted earnings per share (thousands) Diluted earnings/(loss) per share (HK cent per share)	2008 HK$’000 5,519 562,948 40,708 603,656 0.91	2007 HK$’000 (2,589)
		517,429 —
		517,429
		(0.50)

The computation of diluted loss per share did not assume the exercise of the Company’s share options outstanding during the year ended 31 March 2007 since their exercise would result in a decrease in loss per share.

13. EMPLOYEE BENEFIT EXPENSES

Employee benefit expenses (including directors’ remuneration) during the year are as follows:

Wages and salaries Equity-settled share-based payments Pension costs — defined contribution plans Others	2008 HK$’000 22,917 2,347 355 382 26,001	2007 HK$’000 11,291 1,834 317 31
		13,473

– 90 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

14. DIRECTORS’ REMUNERATION

The remuneration paid to every director of the Company for the years ended 31 March 2007 and 2008 is set out below:

Year ended 31 March 2008 Executive director Yu Gang, George Non-executive directors Kwan Pun Fong, Vincent (Note (f)) Brendan McMahon (Note (d)) Independent non- executive directors Lam Lee G. Wu Tak Lung William Hay	Fees HK$’000 — 60 20 60 60 60 260	Salaries and allowances HK$’000 978 — — — — — 978	Contributions to pension schemes HK$’000 12 — — — — — 12	Share- based payments HK$’000 757 103 32 103 103 107 1,205	Total HK$’000 1,747 163 52 163 163 167
					2,455

– 91 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

Year ended 31 March 2007 Executive directors Yu Gang, George Man Kong Yui, Elton (Note (c)) Au Siu Lun, Allen (Note (b)) Non-executive directors Kwan Pun Fong, Vincent (Note (f)) Brendan McMahon (Note (d)) Independent non- executive directors Ng Ching Wo (Note (a)) Lam Lee G. Wu Tak Lung William Hay (Note (e))	Fees HK$’000 — — — 60 25 5 60 60 55 265	Salaries and allowances HK$’000 792 89 140 — — — — — — 1,021	Contributions to pension schemes HK$’000 12 2 4 — — — — — — 18	Share- based payments HK$’000 800 — 86 46 35 — 46 46 48 1,107	Total HK$’000 1,604 91 230 106 60 5 106 106 103
					2,411

Notes:

(a) Resigned on 30 April 2006
(b) Retired from office on 31 July 2006
(c) Appointed on 1 August 2006 and resigned on 7 October 2006
(d) Appointed on 6 November 2006 and retired from office on 27 July 2007
(e) Appointed on 3 May 2006
(f) Resigned on 10 June 2008

During the year, no emoluments were paid by the Group to the directors as an inducement to join or upon joining the Group or as compensation for loss of office (2007: Nil). None of the directors waived or agreed to waive any remuneration during the year (2007: Nil).

The directors consider that they are the only key management personnel of the Group and details of their compensation have been set out above.

– 92 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

15. FIVE HIGHEST PAID INDIVIDUALS

The five individuals whose emoluments were the highest in the Group for the year included one (2007: one) director whose emolument have been reflected in the analysis presented above. The emoluments payable to the remaining four (2007: four) individuals during the year are as follows:

Basic salaries and allowances Share-based payments Discretionary bonus Contributions to pension schemes The emoluments fell within the following bands: Emolument bands Nil to HK$1,000,000	2008 HK$’000 1,985 659 — 43 2,687 2008 Number of individuals 4	2007 HK$’000 1,937 313 71 47
		2,368
		2007 Number of individuals 4

During the year, no emoluments were paid by the Group to any of the five highest paid individuals as an inducement to join or upon joining the Group, or as compensation for loss of office (2007: Nil).

16. LEASEHOLD LAND AND LAND USE RIGHTS

The Group’s and the Company’s interests in leasehold land and land use rights represent prepaid operating lease payments and their net book value is analyzed as follows:

Opening net book amount Amortization for the year Transfer to investment properties (Note 18) Closing net book amount Outside Hong Kong, held on leases of between 10 to 50 years	Group and 2008 HK$’000 2,444 (55) (2,389) — —	Company 2007 HK$’000 2,499 (55) —
		2,444
		2,444

Bank loans (Note 28) are secured by the above leasehold land and land use rights with carrying amount of approximately HK$2,444,000 as at 31 March 2007.

– 93 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

17. PROPERTY, PLANT AND EQUIPMENT

At 1 April 2006 Cost Valuation Accumulated depreciation Net book amount Year ended 31 March 2007 Opening net book amount Additions Depreciation Revaluation Closing net book amount At 31 March 2007 Cost Valuation Accumulated depreciation Net book amount Year ended 31 March 2008 Opening net book amount Acquisition of subsidiaries (Note 33) Additions Depreciation Disposals Revaluation Transfer to investment properties (Note 18) Exchange difference Closing net book amount At 31 March 2008 Cost Accumulated depreciation Net book amount	Buildings HK$’000 — 5,548 5,548 — 5,548 5,548 — (119) 4,363 9,792 — 9,792 9,792 — 9,792 9,792 — — (211) — 3,242 (12,823) — — — — —	Leasehold improvements HK$’000 795 — 795 (179) 616 616 — (280) — 336 795 — 795 (459) 336 336 — — (280) — — — — 56 795 (739) 56	Computer equipment HK$’000 8,066 — 8,066 (5,077) 2,989 2,989 2,722 (1,157) — 4,554 10,788 — 10,788 (6,234) 4,554 4,554 3,044 3,197 (1,935) — — — 305 9,165 18,566 (9,401) 9,165	Group Furniture and fixtures HK$’000 381 — 381 (47) 334 334 — (76) — 258 381 — 381 (123) 258 258 — 13 (78) — — — — 193 395 (202) 193	Office equipment HK$’000 212 — 212 (31) 181 181 6 (43) — 144 218 — 218 (74) 144 144 172 96 (92) — — — 14 334 583 (249) 334	Motor vehicle HK$’000 200 — 200 (27) 173 173 — (40) — 133 200 — 200 (67) 133 133 123 1,672 (233) (1,091) — — 22 626 888 (262) 626	Total HK$’000 9,654 5,548
							15,202 (5,361)
							9,841
							9,841 2,728 (1,715) 4,363
							15,217
							12,382 9,792
							22,174 (6,957)
							15,217
							15,217 3,339 4,978 (2,829) (1,091) 3,242 (12,823) 341
							10,374
							21,227 (10,853)
							10,374

– 94 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

At 1 April 2006
Cost
Valuation
Accumulated depreciation
Net book amount
Year ended 31 March 2007
Opening net book amount
Depreciation
Revaluation
Closing net book amount
At 31 March 2007
Cost
Valuation
Accumulated depreciation
Net book amount
Year ended 31 March 2008
Opening net book amount
Depreciation
Revaluation
Transfer to investment properties (Note 18)
Closing net book amount
At 31 March 2008
Cost
Valuation
Accumulated depreciation
Net book amount

Company
Buildings
HK$’000
—
5,548
5,548
—
5,548
5,548
(119)
4,363
9,792
—
9,792
9,792
—
9,792
9,792
(211)
3,242
(12,823)
—
—
—
—
—

Bank loans (Note 28) were secured by the above buildings with carrying amount of approximately HK$9,792,000 as at 31 March 2007.

– 95 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

18. INVESTMENT PROPERTIES

Beginning of the year Transfer from property, plant and equipment (Note 17) Transfer from leasehold land and land use rights (Note 16) Fair value gains End of the year	Group and 2008 HK$’000 — 12,823 2,389 1,943 17,155	Company 2007 HK$’000 — — — —
		—

The fair value of the investment properties at 31 March 2008 was arrived at on the basis of a valuation carried out at that date by Dynasty Premium Asset Valuation & Real Estate Consultancy Limited, an independent professional valuer, on open market value, existing use basis calculated on the net income allowing for reversionary potential.

The Group’s interests in investment properties at their net book values are analyzed as follows:

In PRC, held on: Leases of between 10 to 50 years	2008 HK$’000 17,155	2007 HK$’000 —

Bank loans (Note 28) are secured by the above investment properties with carrying amount of approximately HK$17,155,000 as at 31 March 2008.

The future aggregate minimum rentals receivables under non-cancelable operating leases are as follows:

Not later than 1 year Later than 1 year and no later than 5 years	2008 HK$’000 1,092 1,047 2,139	2007 HK$’000 — —
		—

19. PROPERTY UNDER DEVELOPMENT

Arising on acquisition of subsidiaries (Note 33) Amortization of interests in land Capitalization of amortization of interests in land Exchange difference At 31 March 2008	Group Land in the PRC Building HK$’000 HK$’000 7,987 — (134) — 134 — 537 — 8,524 —	Group Land in the PRC Building HK$’000 HK$’000 7,987 — (134) — 134 — 537 — 8,524 —
		—

– 96 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

20. INTANGIBLE ASSETS

	Group
	Trademarks,
	licenses and
	computer
Goodwill	software	Total
HK$’000	HK$’000	HK$’000

At 1 April 2006 and 31 March 2007 Cost Accumulated amortization Net book amount Year ended 31 March 2008 Opening net book amount Exchange difference Acquisition of subsidiaries (Note 33) Additions Impairment charge Amortization charge Closing net book amount At 31 March 2008 Cost Accumulated amortization and impairment Net book amount	— — — — — 73,803 — (3,600) — 70,203 73,803 (3,600) 70,203	— — — — 9 155 5 — (33) 136 172 (36) 136	— —
			—
			— 9 73,958 5 (3,600) (33)
			70,339
			73,975 (3,636)
			70,339

Impairment tests for goodwill

Goodwill is allocated to the Group’s cash-generating units (‘‘CGUs’’) identified according to business segment.

On 18 June 2007, the Group completed the acquisition of East Treasure Limited. East Treasure Limited and its subsidiaries are principally engaged in the development and operations of online games in the PRC. The related goodwill arising from the aforesaid acquisition amounted to approximately HK$73,803,000 (Note 33).

The recoverable amount of a CGU is determined based on value-in-use calculations. These calculations use cash flow projections based on financial budgets approved by management covering a five-year period, and a discount rate of 11.77% which reflects the specific risks relating to the industry and the business segment. Cash flow projections during the budget period for the CGU are based on the expected revenue and expenses during the budget period. Management determined budgeted revenue and expenses based on past performance and its expectations for the market development.

During the year ended 31 March 2008, the Group recognized a goodwill impairment charge of approximately HK$3,600,000 as a result of the above impairment test for goodwill.

– 97 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

21. INVESTMENTS IN SUBSIDIARIES

Unlisted investments, at cost The following is a list of the Company’s subsidiaries at 31 March	Company 2008 2007 HK$’000 HK$’000 97,531 11,000 2008:	Company 2008 2007 HK$’000 HK$’000 97,531 11,000 2008:

	Place of
	incorporation and	Principal activities and	Particulars of issued	Interest
Name	kind of legal entity	place of operations	capital	held
Finet Group (BVI)	British Virgin	Investment holding	1 ordinary share of	100%
Limited	Islands, limited		US$1 each	(Direct)
	liability
	company
Finet Group	PRC, wholly	Provision of financial	Registered capital of	100%
Technology	foreign owned	information services in	HK$11,000,000	(Direct)
(Shenzhen) Limited	enterprise	Mainland China
Finet Holdings	Hong Kong,	Provision of financial	68,990,025 ordinary	100%
Limited	limited liability	information management and	shares of HK$1	(Indirect)
	company	technology solutions, internet	each
		advertising and investment
		holding in Hong Kong
Finet Introducing	Hong Kong,	Provision of securities dealing	1,000,000 ordinary	100%
Broker Limited	limited liability	referral services in Hong Kong	shares of HK$1	(Indirect)
	company		each
Finet News Services	Hong Kong,	Provision of financial	10,000 ordinary	100%
Limited	limited liability	information services in Hong	shares of HK$1	(Indirect)
	company	Kong and Mainland China	each
		and investment holdings
China Game & Digital	Cayman Islands,	Investment holding	1,000,000 ordinary	85.71%
Entertainment	limited liability		share of US$0.01	(Direct)
Limited	company		each
East Treasure Limited	Republic of	Investment holding	50,000 ordinary share	85.71%
	Seychelles,		of US$1 each	(Indirect)
	limited liability
	company
杭州笑傲數碼科技	PRC, wholly	Provision of online game	Registered capital of	85.71%
有限公司	foreign owned	products, computer network	US$5,000,000	(Indirect)
(transliterated as	enterprise	products, technology services
Hangzhou Xiaoao		and technology consultancy
Digital Technology		services in the PRC
Company Limited)
杭州天暢網絡科技有限	PRC, limited	Development and operations of	Registered capital of	85.71%
公司(transliterated	liability	online game products in the	RMB12,500,000	(Indirect)
as Hangzhou	company	PRC
Tianchang Network
Technology
Company Limited)

– 98 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

Amounts due from and due to subsidiaries

The amounts due from and due to subsidiaries as shown on the Company’s balance sheet are unsecured, interest-free and repayable on demand.

22. INVESTMENTS IN ASSOCIATES

Beginning of the year Arising on disposal of interests in a subsidiary (Note 34(a)) Acquisition of subsidiaries (Note 33) Share of loss End of the year	Group 2008 2007 HK$’000 HK$’000 — — 198 — 35 — (153) — 80 —	Group 2008 2007 HK$’000 HK$’000 — — 198 — 35 — (153) — 80 —
		—

The following is a list of the Group’s associates at 31 March 2008:

	Place of
	incorporation and	Principal activities and	Particulars of issued	Interest
Name	kind of legal entity	place of operations	capital	held
China Capital	Hong Kong,	Provision of investment advisory	1,000,098 ordinary	20%
Management	limited liability	services in Hong Kong	shares of HK$1
Limited (Formerly	company		each
shown as ‘‘Finet
Pride Asset
Management
Limited’’)
浙江遂昌凱恩飛石嶺景	PRC, limited	Park and hotel operation in the	Registered capital of	49%
區有限公司	liability	PRC	RMB1,000,000
	company

The summarized financial information of the Group’s associates is as follows:

	Group
	2008
	HK$’000
Assets	851
Liabilities	117
Revenue	764
Loss	779

– 99 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

23. AVAILABLE-FOR-SALE FINANCIAL ASSETS

Beginning of the year Additions Fair value gains/(losses) to equity End of the year	Group and 2008 HK$’000 2,165 — (1,067) 1,098	Company 2007 HK$’000 — 1,665 500
		2,165

There were no disposals or impairment provisions on available-for-sale financial assets in the years ended 31 March 2007 and 2008.

Available-for-sale financial assets include the following:

Equity securities listed in Japan Market value of listed equity securities	2008 HK$’000 1,098 1,098	2007 HK$’000 2,165
		2,165

Available-for-sale financial assets are denominated in Japanese Yen.

24. FINANCIAL ASSETS/LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS

Financial assets Equity securities listed in Hong Kong Equity securities listed in the United States Call options in listed equity securities Market value of listed equity securities Financial liabilities Call options in listed equity securities	Group 2008 2007 HK$’000 HK$’000 1,050 — 2,006 — — 22 3,056 22 3,056 — — 18	Group 2008 2007 HK$’000 HK$’000 1,050 — 2,006 — — 22 3,056 22 3,056 — — 18
		22
		—
		18

– 100 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

Financial assets Call options in listed equity securities Financial liabilities Call options in listed equity securities	Company 2008 2007 HK$’000 HK$’000 — 22 — 18	Company 2008 2007 HK$’000 HK$’000 — 22 — 18
		18

The above financial assets and financial liabilities are classified as held for trading.

The call options in listed equity securities purchased by the Company and classified under financial assets at fair value through profit or loss had an exercise period from 3 October 2005 to 2 October 2007. The call options in listed equity securities sold by the Company and classified under financial liabilities at fair value through profit or loss had an exercise period from 3 October 2005 to 22 September 2007. Both call options lapsed during the year ended 31 March 2008.

The Group determined the fair values of the call options by applying the Binomial model which incorporated all factors that market participants would consider in setting a price and was consistent with generally accepted methodologies for pricing financial instruments. In applying valuation techniques, the Group used estimates and assumptions that were consistent with available information about the estimates and assumptions that market participants would use in setting a price for the financial instruments.

25. ACCOUNTS RECEIVABLE

The credit terms granted by the Group to its customers range from 10 days to 90 days. At 31 March 2008, the ageing analysis of the accounts receivable was as follows:

0–30 days 31–60 days 61–90 days Over 90 days	Group 2008 2007 HK$’000 HK$’000 1,921 1,502 648 306 873 125 446 380 3,888 2,313	Group 2008 2007 HK$’000 HK$’000 1,921 1,502 648 306 873 125 446 380 3,888 2,313
		2,313

As of 31 March 2008, accounts receivable of approximately HK$446,000 (2007: HK$380,000) were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default. The ageing analysis of these accounts receivable is as follows:

Over 90 days	2008 HK$’000 446	2007 HK$’000 380

– 101 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX II

The carrying amounts of the Group’s accounts receivable are denominated in the following currencies:

HK dollars US dollars	2008 HK$’000 3,467 421 3,888	2007 HK$’000 1,934 379
		2,313

The maximum exposure to credit risk at the reporting date is the carrying amount of the trade and other receivables mentioned above. The Group does not hold any collateral as security.

26. CASH AND CASH EQUIVALENTS

Group Cash at banks and in hand Company Cash at banks and in hand	2008 HK$’000 7,556 818	2007 HK$’000 37,036
		19,004

Cash at banks earns interest at floating rates based on daily bank deposit rates. Bank balances are deposited with credit worthy banks with no recent history of default.

At the balance sheet date, the cash and bank balances of the Group denominated in RMB amounted to approximately HK$2,425,000 (2007: HK$9,430,000). RMB is not freely convertible into other currencies, however, under Mainland China’s Foreign Exchange Control Regulations and Administration of Settlement, Sale and Payment of Foreign Exchange Regulations, the Group is permitted to exchange RMB for other currencies through banks authorized to conduct foreign exchange business.

27. ACCOUNTS PAYABLE

At 31 March 2008, the ageing analysis of the accounts payable was as follows:

0–30 days 31–60 days 61–90 days Over 90 days	Group 2008 2007 HK$’000 HK$’000 671 823 131 497 — 150 1,153 517 1,955 1,987	Group 2008 2007 HK$’000 HK$’000 671 823 131 497 — 150 1,153 517 1,955 1,987
		1,987

– 102 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX II

28. BORROWINGS

Secured bank loans — floating rates The maturity of the bank loans is as follows: Within 1 year Between 1 and 2 years Between 2 and 5 years Over 5 years Less: Amount due within one year shown under current liabilities Amount due after one year shown under non-current liabilities	Group and 2008 HK$’000 3,452 174 280 916 2,082 3,452 (174) 3,278	Company 2007 HK$’000 3,633
		172 186 640 2,635
		3,633 (172)
		3,461

All bank loans were secured by the investment properties of the Group at 31 March 2008 (Notes 18).

The effective interest rates (which are also equal to contracted interest rates) on the Group’s floating rate bank loans are the PRC bank’s prime lending rates minus 1.25% per annum.

The carrying amounts of the bank loans approximate their fair values, as the impact of discounting is not significant.

The carrying amounts of the bank loans are denominated in Hong Kong dollars.

29. SHARE CAPITAL

Ordinary shares of HK$0.01 each Authorized: At beginning and end of the year Issued and fully paid: At beginning of the year Issue of shares upon exercise of share options (Notes (a)) Issue of shares (Note (b)) At end of the year	2008 Number of shares Amount (HK$’000) 1,000,000,000 10,000 527,955,000 5,279 23,815,000 238 46,080,000 461 597,850,000 5,978	2007 Number of shares Amount (HK$’000) 1,000,000,000 10,000 498,000,000 4,980 5,755,000 57 24,200,000 242 527,955,000 5,279

Notes:

(a) Share options were exercised by option-holders during the year ended 31 March 2008 to subscribe for a total of 23,815,000 (2007: 5,755,000) shares in the Company by payment of subscription monies of approximately HK$3,747,000 (2007: HK$1,077,000), of which

– 103 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

approximately HK$238,000 (2007: HK$57,000) was credited to share capital and the balance of approximately HK$3,509,000 (2007: HK$1,020,000) was credited to the share premium account.

(b) Pursuant to the subscription agreement dated 20 September 2007, the Company issued and allotted a total of 46,080,000 new shares (the ‘‘Subscription Shares’’) at a subscription price of HK$0.68 per Subscription Share to the subscribers on 8 October 2007 (the ‘‘Subscription’’) following the completion of a placing agreement for the placing of 46,080,000 existing shares (the ‘‘Placing’’). The Company raised a net sum of approximately HK$31 million through the Placing and the Subscription and the funds were used as general working capital for media network and future acquisition of the Group. The Subscription Shares were issued pursuant to the general mandate to allot, issue and deal with shares granted to the directors of the Company by resolution of the shareholders passed at the annual general meeting of the Company held on 27 July 2007.

30. SHARE-BASED EMPLOYEE COMPENSATION

The Company adopted a share option scheme (‘‘Pre-IPO Share Option Scheme’’) on 23 July 2004 for the purpose of providing incentives and recognizing the contributions which the eligible participants have made to the Group.

The Pre-IPO Share Option Scheme terminated on 6 January 2005 being the date immediately preceding the date on which the shares of the Company were listed on GEM. The maximum number of shares issuable under this scheme is limited to 74,076,000 shares. The grant of share options is effective upon receipt of the acceptance of the offer in writing duly signed by the eligible participant together with a payment of a nominal consideration of HK$1 in total.

The provisions of this scheme relating to matters set out in Rule 23.03 of the GEM Listing Rules shall not be altered to the advantage of any grantees or prospective grantees except with the prior sanction of an ordinary resolution of the Company in general meeting. Any alterations to the terms and conditions of this scheme which are of a material nature or any change to the terms of the share options granted prior to such alteration, except where the alterations take effect automatically under the existing terms of this scheme and any change in the authority of the board of directors in relation to any alteration to the terms of this scheme shall be approved by the shareholders of the Company in a general meeting.

The following table discloses movements of the share options granted under the Pre-IPO Share Option Scheme during the year ended 31 March 2007:

Grantee Date of grant Exercise price Exercise period Pre-IPO Share Option Scheme: Directors Yu Gang, George 21 September 2004 HK$0.15 Note 1 Au Siu Lun, Allen 21 September 2004 HK$0.15 Note 1 Sub-total Employees 21 September 2004 HK$0.15 Note 1 Total	Outstanding as at 1 April 2006 27,726,000 3,800,000 31,526,000 22,240,000 53,766,000	Exercised during the year — (1,140,000) (1,140,000) (2,965,000)# (4,105,000)	Lapsed during the year — — — (1,190,000)* (1,190,000)	Reclassified during the year Outstanding as at 31 March 2007 — 27,726,000 (2,660,000) — (2,660,000){ 27,726,000 2,660,000 20,745,000 — 48,471,000	Outstanding as at 31 March 2007 27,726,000 —
					48,471,000

The weighted average share price of the Company during period which the share options were exercised was HK0.968 cents.

– 104 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

The 1,190,000 share options under the Pre-IPO Share Options Scheme lapsed upon the resignation of the employees of the Group.
{ Mr. Au Siu Lun, Allen retired from office on 31 July 2006. Accordingly, the options held by him were reclassified to the pool of employees.

The following table discloses movements of the share options granted under the Pre-IPO Share Option Scheme during the year ended 31 March 2008:

Grantee Date of grant Exercise price Exercise period Pre-IPO Share Option Scheme: Director Yu Gang, George 21 September 2004 HK$0.15 Note 1 Employees 21 September 2004 HK$0.15 Note 1 Total	Outstanding as at 1 April 2007 27,726,000 20,745,000 48,471,000	Exercised during the year (15,600,000) (7,265,000) (22,865,000)	Lapsed during the year — (2,365,000) (2,365,000)	Outstanding as at 31 March 2008 12,126,000 11,115,000
				23,241,000

The weighted average share price of the Company during the period which the share options were exercised was HK0.717 cents.
The 2,365,000 share options under the Pre-IPO Share Options Scheme lapsed upon the resignation of the employees of the Group.

The Company adopted another share option scheme (‘‘Share Option Scheme’’) on 16 December 2004 for the purpose of providing incentives and recognizing the contributions which the eligible participants have made to the Group. The Share Option Scheme unless otherwise altered or terminated, will remain in force for 10 years from the date of adoption.

The maximum number of shares issuable to each eligible participant in the Share Option Scheme within any 12-month period, is limited to 1% of the shares of the Company in issue at any time. Any further grant of share options to any eligible participant in excess of this limit is subject to shareholders’ approval in a general meeting. The total number of shares which may be issued upon exercise of all share options to be granted under this scheme and any other share option scheme of the Company must not, in aggregate, exceed 10% of the shares in issue of the Company (the ‘‘Scheme Mandate Limit’’) as at the date of listing of the Company. The Company may seek approval from its shareholders in a general meeting to refresh the Scheme Mandate Limit at any time in accordance with the GEM Listing Rules.

The maximum number of unexercised share options currently permitted to be granted under this scheme and any other share option scheme of the Company is an amount equivalent, upon their exercise, to 30% of the shares of the Company in issue from time to time.

Share options granted to a director, chief executive, management shareholder or substantial shareholder of the Company, or any of their respective associates, are subject to the approval of the independent non-executive directors (excluding any independent non-executive director who is a grantee of the share options). In addition, any share options granted to a substantial shareholder or an independent non-executive director of the Company, or any of their respective associates, in excess of 0.1% of the shares of the Company in issue at any time or with an aggregate value (based on the closing price of the Company’s shares at the date of the grant) in excess of HK$5 million, within a 12-month period, are subject to the shareholders’ approval in a general meeting in accordance with the GEM Listing Rules.

– 105 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

The grant of share options is effective upon receipt of the acceptance of the offer in writing duly signed by the eligible participant together with a payment of a nominal consideration of HK$1 in total.

The exercise price of the share options is determinable by the directors, but may not be less than the higher of (i) the closing price of the Company’s shares as stated in the Stock Exchange’s daily quotations sheet on the date of grant of the share options, which must be a trading day; (ii) the average closing price of the Company’s shares as stated in the Stock Exchange’s daily quotations sheets for the five trading days immediately preceding the date of grant of the share options; and (iii) the nominal value of the Company’s shares.

The following table discloses movements of the share options granted under the Share Option Scheme during the year ended 31 March 2007:

Grantee Date of grant Exercise price Exercise period Share Option Scheme: Directors Yu Gang, George 6 December 2006 HK$0.668 Note 3(d) Kwan Pun Fong, 29 September 2005 HK$0.365 Note 2(a) Vincent 6 December 2006 HK$0.668 Note 3(d) Lam Lee G. 29 September 2005 HK$0.365 Note 2(a) 6 December 2006 HK$0.668 Note 3(d) Ng Ching Wo 29 September 2005 HK$0.365 Note 2(a) Wu Tak Lung 29 September 2005 HK$0.365 Note 2(a) 6 December 2006 HK$0.668 Note 3(d) Brendan McMahon 6 December 2006 HK$0.668 Note 3(c) William Hay 6 December 2006 HK$0.668 Note 3(b) Man Kong Yui, Elton 24 March 2006 HK$0.830 Note 2(e) Sub-total Employee 5 September 2005 HK$0.280 Note 2(b) Employee 5 September 2005 HK$0.280 Note 2(c) Employee 5 September 2005 HK$0.280 Note 2(d) Employees 6 December 2006 HK$0.668 Note 3(d) Employees 6 December 2006 HK$0.668 Note 3(a) Sub-total Total	Outstanding as at 1 April 2006 — 1,000,000 — 1,000,000 — 1,000,000 1,000,000 — — — 3,000,000 7,000,000 3,000,000 4,300,000 1,200,000 — — 8,500,000 15,500,000	Granted during the year 5,000,000 — 1,000,000 — 1,000,000 — — 1,000,000 1,000,000 1,000,000 — 10,000,000 — — — 6,500,000 4,500,000 11,000,000 21,000,000	Exercise during the year — — — — — — — — — — — — — (1,290,000) (360,000) — — (1,650,000) (1,650,000)#	Lapsed during the year — — — — — (1,000,000) — — — — (3,000,000) (4,000,000) — (3,010,000) (840,000) — — (3,850,000) (7,850,000)*	Outstanding as at 31 March 2007 5,000,000 1,000,000 1,000,000 1,000,000 1,000,000 — 1,000,000 1,000,000 1,000,000 1,000,000 —
					13,000,000
					3,000,000 — — 6,500,000 4,500,000
					14,000,000
					27,000,000

The weighted average share price of the Company during the period which the share options were exercised was HK0.665 cents.

The 7,850,000 share options under the Share Options Scheme lapsed upon the resignation of the employees of the Group.

– 106 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

The following table discloses movements of the share options granted under the Share Option Scheme during the year ended 31 March 2008:

Grantee Date of grant Exercise price Exercise period Share Option Scheme: Directors Yu Gang, George 6 December 2006 HK$0.668 Note 3(d) Kwan Pun Fong, 29 September 2005 HK$0.365 Note 2(a) Vincent 6 December 2006 HK$0.668 Note 3(d) Lam Lee G. 29 September 2005 HK$0.365 Note 2(a) 6 December 2006 HK$0.668 Note 3(d) Wu Tak Lung 29 September 2005 HK$0.365 Note 2(a) 6 December 2006 HK$0.668 Note 3(d) Brendan McMahon 6 December 2006 HK$0.668 Note 3(c) William Hay 6 December 2006 HK$0.668 Note 3(b) Sub-total Employee 5 September 2005 HK$0.280 Note 2(b) Employees 6 December 2006 HK$0.668 Note 3(d) Employees 6 December 2006 HK$0.668 Note 3(a) Employee 6 December 2006 HK$0.668 Note 3(c) Sub-total Total	Outstanding as at 1 April 2007 5,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 13,000,000 3,000,000 6,500,000 4,500,000 — 14,000,000 27,000,000	Granted during the year — — — — — — — — — — — — — — — —	Exercise during the year — (600,000) — — — — — — — (600,000) (350,000) — — — (350,000) (950,000)	Lapsed during the year — — — — — — — — — — — (1,520,000) — — (1,520,000) (1,520,000)	Reclassified during the year Outstanding as at 31 March 2008 — 5,000,000 — 400,000 — 1,000,000 — 1,000,000 — 1,000,000 — 1,000,000 — 1,000,000 (1,000,000){ — — 1,000,000 (1,000,000) 11,400,000 — 2,650,000 — 4,980,000 — 4,500,000 1,000,000 1,000,000 1,000,000 13,130,000 — 24,530,000	Reclassified during the year Outstanding as at 31 March 2008 — 5,000,000 — 400,000 — 1,000,000 — 1,000,000 — 1,000,000 — 1,000,000 — 1,000,000 (1,000,000){ — — 1,000,000 (1,000,000) 11,400,000 — 2,650,000 — 4,980,000 — 4,500,000 1,000,000 1,000,000 1,000,000 13,130,000 — 24,530,000
						11,400,000
						2,650,000 4,980,000 4,500,000 1,000,000
						13,130,000
						24,530,000

The weighted average share price of the Company during the period which the share options were exercised was HK0.592 cents.
The 1,520,000 share options under the Share Options Scheme lapsed upon the resignation of the employees of the Group.
{ Mr. Brendan McMahon retired from office on 27 July 2007. Accordingly, the options held by him were reclassified to the pool of employee.

The exercise price in respect of any share options, shall subject to any adjustments in the event of any alteration in the capital structure of the Company whilst any share option remains exercisable or this scheme remains in effect. The exercise of any share option shall be subject to the shareholders in the general meeting approving any necessary increase in the authorized share capital of the Company.

The vesting period of the share options is from the date of grant until the commencement of the exercise period. All share options granted are exercisable within a period of ten years from the date of grant and subject to a vesting period and becoming exercisable in whole or in part as follows:

Note 1:

	Percentage
	of share
	options
Date of vesting of the options	vested on
(that is, the date when the share options became exercisable)	such dates
7 January 2006	30%
7 January 2007	30%
7 January 2008	40%

– 107 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

Note 2:

Date of vesting of the options (that is, the date when the share options became exercisable)

Percentage of share options vested on such dates

(a)	(b)	(c)	(d)	(e)
7 January 2006	6 April 2006	3 May 2006	24 June 2006	8 November 2006	30%
7 January 2007	6 April 2007	3 May 2007	24 June 2007	8 November 2007	30%
7 January 2008	6 April 2008	3 May 2008	24 June 2008	8 November 2008	40%

Note 3:

				Percentage
				of share
				options
Date of vesting of the options				vested on
(that is, the date	when the share options became exercisable)			such dates
(a)	(b)	(c)	(d)
1 January 2007	2 May 2007	5 November 2007	5 December 2007	30%
1 January 2008	2 May 2008	5 November 2008	5 December 2008	30%
1 January 2009	2 May 2009	5 November 2009	5 December 2009	40%

During the year ended 31 March 2008, employee share-based compensation of approximately HK$2,347,000 (2007: HK$1,834,000) has been included in the consolidated income statement with a corresponding credit to the employee compensation reserve.

At 31 March 2008, the Company had 23,241,000 and 24,530,000 share options outstanding under the Pre-IPO Share Option Scheme and Share Option Scheme respectively. The exercise in full of the remaining share options would, under the present capital structure of the Company, result in the issue of 47,771,000 additional ordinary shares of the Company and additional share capital of approximately HK$478,000 and share premium of approximately HK$17,640,000 (before issue expenses).

31. RESERVES

Group

The amounts of the Group’s reserves and the movements therein for the current and prior years are presented in the consolidated statement of changes in equity.

– 108 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

Balance at 1 April 2006 Fair value gains: — Buildings (Note 17) — Available-for-sale financial assets (Note 23) Net income recognized directly in equity Loss for the year Total recognized income and expense for the year Issue of shares upon exercise of share options (Note 29) Issue of shares (Note 29) Share issue costs Employee share-based compensation Exercise of share options Vested share options lapsed Balance at 31 March 2007 and 1 April 2007 Fair value gains/(losses): — Buildings (Note 17) — Available-for-sale financial assets (Note 23) Net income and expense recognized directly in equity Profit for the year Total recognized income and expense for the year Issue of shares upon exercise of share options (Note 29) Issue of shares (Note 29) Share issue costs Employee share-based compensation Exercise of share options Vested share options lapsed Balance at 31 March 2008	Share premium HK$’000 77,296 — — — — — 1,020 20,328 (666) — 308 — 98,286 — — — — — 3,509 30,874 (359) — 1,859 — 134,169	Employee compensation reserve HK$’000 2,958 — — — — — — — — 1,834 (308) (94) 4,390 — — — — — — — — 2,347 (1,859) (203) 4,675	Company Property revaluation reserve Investment revaluation reserve HK$’000 HK$’000 2,384 — 4,363 — — 500 4,363 500 — — 4,363 500 — — — — — — — — — — — — 6,747 500 3,242 — — (1,067) 3,242 (1,067) — — 3,242 (1,067) — — — — — — — — — — — — 9,989 (567)	Accumulated losses HK$’000 (63,431) — — — (2,038) (2,038) — — — — — 94 (65,375) — — — 23,646 23,646 — — — — — 203 (41,526)	Total reserves HK$’000 19,207 4,363 500
					4,863 (2,038)
					2,825
					1,020 20,328 (666) 1,834 — —
					44,548 3,242 (1,067)
					2,175 23,646
					25,821
					3,509 30,874 (359) 2,347 — —
					106,740

Under the Companies Law (Revised) of the Cayman Islands, the share premium account of the Company is distributable to the shareholders of the Company provided that immediately following the date on which the dividend is proposed to be distributed, the Company will be in a position to pay off its debts as they fall due in the ordinary course of business.

– 109 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

32. OPERATING LEASE COMMITMENTS

The Group leases certain of its office properties under operating lease arrangements. Leases for properties are negotiated for terms ranging from two to three years.

At 31 March 2008, the Group had total future minimum lease payment under non-cancelable operating leases falling due as follows:

No later than 1 year Later than 1 year and no later than 5 years	Group 2008 2007 HK$’000 HK$’000 4,024 1,038 7,478 114 11,502 1,152	Group 2008 2007 HK$’000 HK$’000 4,024 1,038 7,478 114 11,502 1,152
		1,152

The Company had no significant operating lease commitment as at 31 March 2007 and 2008.

33. BUSINESS COMBINATIONS

On 18 June 2007, the Group acquired the entire issued share capital of East Treasure Limited. East Treasure Limited and its subsidiaries are principally engaged in the development and operations of online games in the PRC. The acquired subsidiaries contributed revenues of approximately HK$843,000 and net loss of approximately HK$15,290,000 to the Group for the period from 18 June 2007 to 31 March 2008.

If the acquisition had occurred on 1 April 2007, the Group’s revenue would have been increased by approximately HK$1,849,000 and profit for the year would have been decreased by approximately HK$3,016,000. This pro forma information is for illustrative purposes only and is not necessarily an indication of revenue and results of operations of the Group that actually would have been achieved had the acquisition been completed on 1 April 2007, nor is it intended to be a projection of future results.

Details of net liabilities acquired and goodwill are as follows:

Purchase consideration: — Cash paid — Direct cost relating to the acquisition Total purchase consideration Fair value of net liabilities acquired — shown as below Goodwill (Note 20)	HK$’000 61,880 4,637
	66,517 7,286
	73,803

The goodwill is attributable to the workforce and the anticipated profitability of the acquired subsidiaries.

– 110 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

The assets and liabilities as of 18 June 2007 arising from the acquisition are as follows:

Property, plant and equipment Property under development Intangible assets Investment in an associate Prepayments, deposits and other receivables Cash and cash equivalents Accounts payable Accruals and other payables Borrowings Net liabilities acquired Purchase consideration settled in cash Cash and cash equivalents in subsidiaries acquired Cash outflow on acquisition There were no acquisitions in the year ended 31 March 2007.	Acquiree’s carrying amount and fair value HK$’000 3,339 7,987 155 35 2,385 2,837 (1,362) (10,868) (11,794)
	(7,286)
	66,517 (2,837)
	63,680

34. DISPOSAL OF INTERESTS IN SUBSIDIARIES

(a) Disposal of interests in Finet Pride Asset Management Limited

During the year ended 31 March 2008, the Group disposed of approximately 70.1% equity interest in Finet Pride Asset Management Limited (named changed to ‘‘China Capital Management Limited’’), a then 90.1% owned subsidiary, to an independent third party at a cash consideration of approximately HK$3,090,000. As a result of the aforesaid disposal, the Group’s interests in Finet Pride Asset Management Limited decreased from 90.1% to 20%, and Finet Pride Asset Management Limited was accounted for as an associate as from that date.

Attributable net assets disposed of Gain on disposal of interests in a subsidiary Satisfied by: Cash	2008 HK$’000 693 2,397 3,090 3,090	2007 HK$’000 — —
		—
		—

– 111 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

Analysis of the net cash inflow in respect of the disposal of interests in a subsidiary:

Cash consideration Cash and cash equivalents disposed of Net inflow of cash and cash equivalents in respect of the disposal interests in a subsidiary	2008 HK$’000 3,090 (971) 2,119	2007 HK$’000 — —
		—

(b) Disposal of interests in China Game & Digital Entertainment Limited

During the year ended 31 March 2008, the Company disposed of approximately 14.29% equity interests in China Game & Digital Entertainment Limited, a then wholly owned subsidiary of the Company, to two investment funds at an aggregate cash consideration of US$5,000,000 (equivalent to approximately HK$39,000,000). As a result of the aforesaid disposal, the Company’s interests in China Game & Digital Entertainment Limited decreased from 100% to approximately 85.71% and the Group realized a gain on disposal of interests in China Game & Digital Entertainment Limited of approximately HK$24,573,000.

35. CONTINGENT LIABILITIES

During the year ended 31 March 2008, three libel actions have been brought by a company and an individual against the Group in respect of the publication of words alleged to be defamatory of and concerning the plaintiffs contained in certain articles published at the Group’s website. The Company’s directors believe that the Group has meritorious defense against such claims and accordingly, the directors do not believe that these claims will have any material adverse effect on the Group. Therefore no provisions have been made in the financial statements in respect thereof.

– 112 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

3. INTERIM FINANCIAL INFORMATION

Set out below is the unaudited interim financial information as extracted from the interim report of the Company for the six months ended 30 September 2008:

Unaudited Condensed Consolidated Income Statement

For the three months and six months ended 30 September 2008

Notes Revenue 2 Cost of sales Gross profit Other operating incomes 2 Development costs Selling expenses General and administrative expenses Other operating expenses Operating loss 4 Finance cost 5 Loss before income tax Gain on disposal of interest in a subsidiary Share of loss of associate Income tax expense 6 Profit/(Loss) for the period Attributable to: Equity holders of the Company Minority interests Earnings per share attributable to the equity holders of the Company — Basic (in HK cent) 8(a) — Diluted (in HK cent) 8(b)	For the three months ended 30 September 2008 2007 HK$’000 HK$’000 8,289 11,043 (2,464) (2,809) 5,825 8,234 753 256 (1,748) (1,179) (820) (2,354) (12,490) (8,982) (106) (560) (8,586) (4,585) (50) (261) (8,636) (4,846) 27,537 4,125 35 — — — 18,936 (721) 15,828 374 3,108 (1,095) 18,936 (721) 2.64 0.07 2.64 0.07	For the six months ended 30 September 2008 2007 HK$’000 HK$’000 17,289 19,219 (5,061) (5,549) 12,228 13,670 1,527 638 (3,431) (1,179) (1,492) (2,460) (22,943) (17,380) (121) (800) (14,232) (7,511) (86) (323) (14,318) (7,834) 27,537 16,144 (5) — — — 13,214 8,310 10,744 9,546 2,470 (1,236) 13,214 8,310 1.79 1.80 1.75 1.72

– 113 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

Unaudited Condensed Consolidated Balance Sheet As at 30 September 2008

Notes ASSETS AND LIABILITIES Non-current assets Property, plant and equipment Investment properties Property under development Intangible assets Investment in an associate Available-for-sale financial assets Current assets Financial assets at fair value through profit or loss Accounts receivable 9 Prepayments, deposits and other receivables Cash and cash equivalents Current liabilities Accounts payable 10 Accruals and other payables Deferred income Borrowings 11 Net current assets Total assets less current liabilities Non-current liabilities Borrowings 11 Net assets EQUITY Capital and reserves attributable to equity holders of the Company Share capital 12 Reserves Minority interests	30 September 2008 HK$’000 (Unaudited) 11,829 17,155 — 63,420 75 1,007 93,486 3 4,959 51,543 1,342 57,847 2,188 8,769 3,914 773 15,644 42,203 135,689 4,125 131,564 5,994 110,451 116,445 15,119 131,564	31 March 2008 HK$’000 (Audited) 10,374 17,155 8,524 70,339 80 1,098
		107,570 3,056 3,888 7,000 7,556
		21,500 1,955 5,196 4,534 174
		11,859
		9,641
		117,211
		3,278
		113,933
		5,978 95,630
		101,608 12,325
		113,933

– 114 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

Unaudited Condensed Consolidated Statement of Changes in Equity For the six months ended 30 September 2008

Share capital HK$’000 5,279 — 202 — — — — — —	Share premium HK$’000 98,286 — 2,938 — — 1,734 — — —	Merger reserve HK$’000 4,870 — — — — — — — —	Employee compensation reserve HK$’000 4,390 — — (146) 1,444 (1,734) — — —	Translation reserve HK$’000 141 — — — — — 362 — —	Property revaluation reserve HK$’000 6,747 — — — — — — — —	Investment revaluation reserve HK$’000 500 (500) — — — — — — —	Accumulated losses HK$’000 (65,071) — — 146 — — — — 9,546	Total reserves HK$’000 49,863 (500) 2,938 — 1,444 — 362 — 9,546	Minority interests HK$’000 95 — — — — — — (17,732) (1,236)	Total equity HK$’000 55,237 (500) 3,140 — 1,444 — 362 (17,732) 8,310
5,481	102,958	4,870	3,954	503	6,747	—	(55,379)	63,653	(18,873)	50,261
5,978 — 16 — — — — —	134,169 — 213 — 54 — — —	4,870 — — — — — — —	4,675 — — 677 (54) — — —	1,843 — — — — 394 (245) —	9,989 — — — — — — —	(567) (75) — — — — — —	(59,349) — — — — — 3,113 10,744	95,630 (75) 213 677 — 394 2,868 10,744	12,325 — — — — — 324 2,470	113,933 (75) 229 677 — 394 3,192 13,214
5,994	134,436	4,870	5,298	1,992	9,989	(642)	(45,492)	110,451	15,119	131,564

– 115 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

Unaudited Condensed Consolidated Cash Flow Statement For the six months ended 30 September 2008

Net cash outflow from operating activities Net cash outflow from investing activities Net cash inflow from financing activities Net decrease in cash and cash equivalents Cash and cash equivalents, beginning of period Effect of foreign exchange rate changes, net Cash and cash equivalents, end of period Analysis of balances of cash and cash equivalents: Cash and cash equivalents	For the six months ended 30 September 2008 2007 HK$’000 HK$’000 (790) (7,213) (7,153) (2,921) 1,729 3,056 (6,214) (7,078) 7,556 37,036 — 362 1,342 30,320 1,342 30,320

– 116 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

Notes to the accounts

1. BASIS OF PREPARATION OF THE ACCOUNTS

The unaudited interim consolidated financial statements have been prepared in accordance with Hong Kong Accounting Standards 34 ‘‘Interim Financial Reporting’’ and comply with all applicable Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants and the disclosure requirements of the Rules Governing the Listing of Securities on the GEM of the Stock Exchange (the ‘‘GEM Listing Rules’’).

The principal accounting policies and methods of computation used in the preparation of the interim financial statements are consistent with those adopted in the preparation of the financial statements for the year ended 31 March 2008.

The audit committee has reviewed the unaudited interim consolidated financial statements.

2. REVENUE AND OTHER OPERATING INCOME

Revenue, which is also the Group’s turnover, represents total invoiced value of goods supplied and services rendered. Revenue recognized during the period is as follows:

Revenue Service income from provision of financial information services Advertising income Online games income Other operating incomes Fair value gain on financial assets/ liabilities at fair value through profit or loss Gross rental income from investment property Commission income Interest income Management fee income Sundry income Total incomes	For the three months ended 30 September 2008 2007 HK$’000 HK$’000 7,710 8,614 357 466 222 1,963 8,289 11,043 (6) (62) 402 — — 209 2 109 188 — 167 — 753 256 9,042 11,299	For the six months ended 30 September 2008 2007 HK$’000 HK$’000 16,170 16,540 808 689 311 1,990 17,289 19,219 198 97 741 — — 212 10 329 188 — 390 — 1,527 638 18,816 19,857	For the six months ended 30 September 2008 2007 HK$’000 HK$’000 16,170 16,540 808 689 311 1,990 17,289 19,219 198 97 741 — — 212 10 329 188 — 390 — 1,527 638 18,816 19,857
			19,219
			97 — 212 329 — —
			638
			19,857

– 117 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

3. SEGMENT INFORMATION

(a) Primary reporting format — business segments

(b) Secondary reporting format — geographical segments

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

Unallocated costs represent corporate expenses. Segment assets consist primarily of intangible assets, property, plant and equipment, inventories, receivables and operating cash. Segment liabilities comprise operating liabilities and exclude items such as taxation and certain corporate borrowings. Capital expenditure comprises additions to property, plant and equipment, property under development and intangible assets, including additions resulting from acquisition through business combinations.

For the six months ended 30 September

Turnover Segment results Other revenue Development costs Unallocated costs Operating loss Finance costs Loss before taxation Gain on disposal of interest in a subsidiary Share of loss of associate Income tax expenses Profit for the period	Hong 2008 HK$’000 (Unaudited) 13,404 8,746 — (5)	Kong 2007 HK$’000 (Unaudited) 16,299 10,870 — —	PRC 2008 2007 HK$’000 HK$’000 (Unaudited) (Unaudited) 3,885 2,920 3,482 2,800 (3,431) (1,179) — —	Consolidated 2008 2007 HK$’000 HK$’000 (Unaudited) (Unaudited) 17,289 19,219 12,228 13,670 1,527 638 (3,431) (1,179) (24,556) (20,640) (14,232) (7,511) (86) (323) (14,318) (7,834) 27,537 16,144 (5) — — — 13,214 8,310	Consolidated 2008 2007 HK$’000 HK$’000 (Unaudited) (Unaudited) 17,289 19,219 12,228 13,670 1,527 638 (3,431) (1,179) (24,556) (20,640) (14,232) (7,511) (86) (323) (14,318) (7,834) 27,537 16,144 (5) — — — 13,214 8,310
					13,670 638 (1,179) (20,640)
					(7,511) (323)
					(7,834) 16,144 — —
					8,310

– 118 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

Hong Kong PRC 2008 2007 2008 2007 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Segment assets 12,683 21,312 51,345 50,383 Interest in an associate Unallocated assets Total assets Segment liabilities 4,868 6,353 10,003 4,710 Unallocated liabilities Total liabilities Capital Expenditure 2,509 380 129 2,195 Depreciation of property, plant and equipment 1,020 1,036 752 777 Amortization of leasehold land and land use right — — — 159 Amortization of intangible assets — — 22 12	Consolidated 2008 2007 HK$’000 HK$’000 (Unaudited) (Unaudited) 64,028 71,695 75 35 87,230 128,760 151,333 200,490 14,871 11,063 4,898 139,166 19,769 150,229 2,638 2,575 1,772 1,813 — 159 22 12	Consolidated 2008 2007 HK$’000 HK$’000 (Unaudited) (Unaudited) 64,028 71,695 75 35 87,230 128,760 151,333 200,490 14,871 11,063 4,898 139,166 19,769 150,229 2,638 2,575 1,772 1,813 — 159 22 12
		200,490
		11,063 139,166
		150,229
		2,575 1,813 159 12

4. OPERATING LOSS

Operating loss is arrived at after charging: Operating lease charges — rentals of office premises Amortization of leasehold land and land use rights Amortization of intangible assets Depreciation of property, plant and equipment Staff costs, including directors’ emoluments — salaries and allowances — share option benefits	For the three months ended 30 September 2008 2007 HK$’000 HK$’000 1,626 296 — 93 11 11 908 1,273 6,550 5,749 338 723	For the six months ended 30 September 2008 2007 HK$’000 HK$’000 2,456 633 — 159 22 12 1,772 1,813 12,077 9,343 677 1,444	For the six months ended 30 September 2008 2007 HK$’000 HK$’000 2,456 633 — 159 22 12 1,772 1,813 12,077 9,343 677 1,444
			1,813 9,343 1,444

– 119 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

5. FINANCE COST

Interest on bank loan wholly repayable within five years	For the three months ended 30 September 2008 2007 HK$’000 HK$’000 50 261	For the six months ended 30 September 2008 2007 HK$’000 HK$’000 86 323

6. INCOME TAX EXPENSES

The Company and one of its subsidiaries were incorporated in the Cayman Islands as exempted companies and, accordingly, were exempted from payment of Cayman Islands income tax. The Company’s subsidiary established in the British Virgin Islands was exempted from payment of the British Virgin Islands income tax. The Company’s subsidiary established in the Republic of Seychelles was exempted from payment of the Republic of Seychelles income tax.

No Hong Kong profits tax has been provided for the six months ended 30 September 2008 as the Group had no assessable profit arising in Hong Kong for the period (2007: nil).

No income tax was provided for the six months ended 30 September 2008 (2007: nil) for the subsidiaries of the Company established in the People’s Republic of China as the subsidiaries had no assessable profit for the six months ended 30 September 2008.

7. DIVIDEND

The Board does not recommend the payment of dividend for the six months ended 30 September 2008 (2007: nil).

8. EARNINGS PER SHARE

(a) Basic earnings per share

The calculation of basic earnings per share is based on the profit attributable to equity holders of the Company for the three months and six months ended 30 September 2008 approximately of HK$15,828,000 and HK$10,744,000 respectively (three months and six months ended 30 September 2007: approximately HK$374,000 and HK$9,546,000 respectively) and on the weighted average number of 599,336,557 ordinary shares in issue during the three months and six months ended 30 September 2008 (three months and six months ended 30 September 2007: 531,896,311).

(b) Diluted earnings per share

The calculation of diluted earnings per share for the three months and six months ended 30 September 2008 is based on 599,336,557 ordinary shares in issue plus nil and 13,747,468 ordinary shares deemed to be issued during the three months and six months ended 30 September 2008 if all the outstanding potential ordinary share options were exercised.

The calculation of diluted earnings per share for the three months and six months ended 30 September 2007 is based on 531,896,311 ordinary shares in issue plus the 23,987,291 and 24,318,615 ordinary shares deemed to be issued during the three months and six months ended 30 September 2007 if all the outstanding potential ordinary share options were exercised.

– 120 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

9. ACCOUNTS RECEIVABLE

The credit terms granted by the Group to its customers range from 14 days to 90 days. An aging analysis of accounts receivable as of the balance sheet date is as follows:

0–30 days 31–60 days 61–90 days Over 90 days	30 September 2008 HK$’000 (Unaudited) 2,377 557 370 1,655 4,959	31 March 2008 HK$’000 (Audited) 1,921 648 873 446
		3,888

10. ACCOUNTS PAYABLE

An aging analysis of accounts payable as of the balance sheet date is as follows:

0–30 days 31–60 days 61–90 days Over 90 days BANK BORROWINGS Secured bank loans Less: Amount due within one year shown under current liabilities Amount due after one year shown under non-current liabilities	30 September 2008 HK$’000 (Unaudited) 1,168 64 460 496 2,188 30 September 2008 HK$’000 (Unaudited) 4,898 (773) 4,125	31 March 2008 HK$’000 (Audited) 671 131 — 1,153
		1,955
		31 March 2008 HK$’000 (Audited) 3,452 (174)
		3,278

11. BANK BORROWINGS

The bank loans were secured by the investment properties and some equipment with an aggregate carrying values of approximately HK$18,675,000 as at 30 September 2008.

– 121 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

12. SHARE CAPITAL

Authorized: Ordinary shares of HK$0.01 each Beginning and end of period/year Issued and fully paid: Beginning of period/year Issue of shares under share option scheme (Note) Issue of shares under subscription agreement End of period/year	For the six months ended 30 September 2008 No. of shares HK$’000 (Unaudited) 1,000,000,000 10,000 597,850,000 5,978 1,520,000 16 — — 599,370,000 5,994	For the twelve months ended 31 March 2008 No. of shares HK$’000 (Audited) 1,000,000,000 10,000 527,955,000 5,279 23,815,000 238 46,080,000 461 597,850,000 5,978	For the twelve months ended 31 March 2008 No. of shares HK$’000 (Audited) 1,000,000,000 10,000 527,955,000 5,279 23,815,000 238 46,080,000 461 597,850,000 5,978
			5,279 238 461
			5,978

Note: Share options were exercised by optionholders during the period ended 30 September 2008 to subscribe for a total of 1,520,000 shares in the Company by payment of subscription monies of approximately HK$228,000, of which HK$15,200 was credited to share capital and the balance of HK$212,800 was credited to the share premium account.

– 122 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

4. THIRD QUARTERLY RESULTS

Set out below is the unaudited financial information for the three months and the nine months ended 31 December 2008 as extracted from the third quarterly report for the nine months ended 31 December 2008.

There were no extraordinary or exceptional items for the three months ended 31 December 2008.

Revenue Cost of sales Gross profit Other operating income Development costs Selling expenses General and administrative expenses Other operating expenses Operating loss Finance costs Loss before income tax Gain on disposal of interest in a subsidiary Loss on disposal of an associate Share of loss of an associate Income tax expenses (Loss)/Profit for the period Attributable to: Equity holders of the Company Minority interests (Loss)/Earnings per share attributable to the equity holders of the Company — Basic (in HK cent) — Diluted (in HK cent)	For the three months ended 31 December 2008 2007 HK$’000 HK$’000 9,863 10,417 (2,712) (2,936) 7,151 7,481 541 1,444 (1,558) (1,912) (2,083) (2,862) (11,725) (11,666) (38) (214) (7,712) (7,729) (192) (263) (7,904) (7,992) — 9,079 (56) — — (111) — — (7,960) 976 (7,341) 969 (619) 7 (7,960) 976 (1.225) 0.164 N/A 0.158	For the nine months ended 31 December 2008 2007 HK$’000 HK$’000 27,152 29,636 (7,773) (8,485) 19,379 21,151 2,068 2,082 (4,989) (4,705) (3,575) (5,322) (34,668) (27,432) (159) (1,014) (21,944) (15,240) (278) (586) (22,222) (15,826) 27,537 25,223 (56) — (5) (111) — — 5,254 9,286 3,403 10,515 1,851 (1,229) 5,254 9,286 0.568 1.906 0.552 1.829

– 123 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

Notes to the accounts:

1. BASIS OF PREPARATION OF THE ACCOUNTS

The unaudited consolidated results have been prepared in accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants and the disclosure requirements of the GEM Listing Rules.

The principal accounting policies and methods of computation used in the preparation of these accounts are consistent with those adopted in the preparation of the annual accounts for the year ended 31 March 2008.

The unaudited consolidated results for the three months and nine months ended 31 December 2008 have been reviewed by the audit committee.

2. REVENUE AND OTHER OPERATING INCOME

Revenue, which is also the Group’s turnover, represents total invoiced value of goods supplied and services rendered. Revenue recognized during the period is as follows:

Revenue Service income from provision of financial information services Advertising income Online games income Other operating income Fair value gain/(loss) on financial assets/liabilities at fair value through profit or loss Gross rental income from investment property Commission income Interest income Management fee income Sundry income Total incomes	For the three months ended 31 December 2008 2007 HK$’000 HK$’000 7,470 8,597 312 880 2,081 940 9,863 10,417 (32) 625 401 — — 106 4 269 168 444 — — 541 1,444 10,404 11,861	For the nine months ended 31 December 2008 2007 HK$’000 HK$’000 23,640 25,137 1,120 1,569 2,392 2,930 27,152 29,636 166 722 1,142 — — 318 14 598 356 444 390 — 2,068 2,082 29,220 31,718	For the nine months ended 31 December 2008 2007 HK$’000 HK$’000 23,640 25,137 1,120 1,569 2,392 2,930 27,152 29,636 166 722 1,142 — — 318 14 598 356 444 390 — 2,068 2,082 29,220 31,718
			29,636
			722 — 318 598 444 —
			2,082
			31,718

– 124 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

3. INCOME TAX EXPENSES

No Hong Kong profits tax has been provided for the nine months ended 31 December 2008 as the Group had no assessable profits arising in Hong Kong for the period (2007: nil).

No income tax was provided for the nine months ended 31 December 2008 (2007: nil) for the subsidiaries of the Company established in the People’s Republic of China as the subsidiaries had no assessable profits for the nine months ended 31 December 2008.

4. DIVIDEND

The Board does not recommend the payment of a dividend for the nine months ended 31 December 2008 (2007: nil).

5. (LOSS)/EARNINGS PER SHARE

(a) Basic (loss)/earnings per share

The calculation of basic (loss)/earnings per share is based on the (loss) and profit attributable to equity holders of the Company for the three months and nine months ended 31 December 2008 approximately of (HK$7,341,000) and HK$3,403,000 respectively (three months and nine months ended 31 December 2007 profit attributable to equity holders approximately of HK$969,000 and HK$10,515,000 respectively), and on the weighted average number of 590,347,745 and 599,347,745 ordinary shares in issue during the three months and nine months ended 31 December 2008 respectively (three months and nine months ended 31 December 2007: 590,880,652 and 551,629,255 respectively).

(b) Diluted (loss)/earning per share

Diluted loss per share for the three months ended 31 December 2008 have not been disclosed as the share options outstanding have an anti-dilutive effect on the basic loss per share.

The calculation of diluted earnings per share for the nine months ended 31 December 2008 is based on the weighted average number of 599,347,745 ordinary shares in issue plus the 17,266,296 ordinary shares deemed to be issued during the nine months ended 31 December 2008 if all the outstanding potential ordinary shares were exercised.

The calculation of diluted earnings per share for the three months and nine months ended 31 December 2007 is based on the weighted average number of 590,880,652 and 551,629,255 ordinary shares in issue plus the 22,527,841 and 23,130,033 ordinary shares deemed to be issued during the three months and nine months ended 31 December 2007 if all the outstanding potential ordinary shares were exercised.

– 125 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

6. MOVEMENT OF RESERVES

Share capital HK$’000 5,279 — 461 208 — — — — — —	Share premium HK$’000 98,286 — 30,515 3,024 — — 1,762 — — —	Merger reserve HK$’000 4,870 — — — — — — — — —	Employee compensation reserve HK$’000 4,390 — — — (146) 2,123 (1,762) — — —	Translation reserve HK$’000 141 — — — — — — 862 — —	Property revaluation reserve HK$’000 6,747 — — — — — — — — —	Investment revaluation reserve HK$’000 500 (500) — — — — — — — —	Accumulated losses HK$’000 (65,071) — — — 146 — — — — 10,515	Total reserve HK$’000 49,863 (500) 30,515 3,024 — 2,123 — 862 — 10,515	Minority interests HK$’000 95 — — — — — — 106 (1,849) (1,229)	Total equity HK$’000 55,237 (500) 30,976 3,232 — 2,123 — 968 (1,849) 9,286
5,948	133,587	4,870	4,605	1,003	6,747	—	(54,410)	96,402	(2,877)	99,473
5,978 — 16 — — — — —	134,169 — 213 — 54 — — —	4,870 — — — — — — —	4,675 — — 977 (54) — — —	1,843 — — — — 239 (245) —	9,989 — — — — — — —	(567) (68) — — — — — —	(59,349) — — — — — 3,113 3,403	95,630 (68) 213 977 — 239 2,868 3,403	12,325 — — — — (22) 324 1,851	113,933 (68) 229 977 — 217 3,192 5,254
5,994	134,436	4,870	5,598	1,837	9,989	(635)	(52,833)	103,262	14,478	123,734

5. INDEBTEDNESS

At the close of business on 30 April 2009, being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this circular, the Group had outstanding indebtedness of approximately HK$4,414,000, comprising secured bank loans of approximately HK$3,214,000 which were secured by legal charges over the Group’s investment properties and obligations under finance leases of approximately HK$1,200,000.

During the year ended 31 March 2008, three libel actions were brought by a company and an individual against the Group in respect of the publication of words alleged to be defamatory of and concerning the plaintiffs contained in certain articles published at the Group’s website. The Directors believed that the Group had meritorious defense against such claims and accordingly, the Directors did not believe that these claims would have any material adverse effect on the Group. Therefore no provisions had been made in the financial statements in respect thereof.

Save as disclosed above and apart from intra-group liabilities and normal trade payables, the Group did not have at the close of business on 30 April 2009 any outstanding loan capital issued or agreed to be issued, bank overdrafts, loans, debt securities or other

– 126 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

similar indebtedness, liabilities under acceptance or acceptance credits, debentures, mortgages, charges, finance leases or hire purchase commitments, guarantees or other material contingent liabilities.

There has been no material change in the indebtedness or contingent liabilities of the Group since 30 April 2009.

6. WORKING CAPITAL

The Directors are of the opinion that after taking into account the present internal financial resources of the Group, the presently available banking facilities and the estimated net proceeds of the Open Offer, and in the absence of unforeseen circumstances the Group has sufficient working capital for its present requirements (that is, for at least the next twelve months from the date of this circular).

7. MATERIAL CHANGE

Save as disclosed, the Directors are not aware of any material change in the financial or trading position or outlook of the Group since 31 March 2008 (being the date to which the latest published audited financial statements of the Group were made up) up to and including the Latest Practicable Date.

– 127 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

8. FINANCIAL AND TRADING PROSPECTS OF THE GROUP

Operations Review

During the third quarter of 2008/2009, the Group witnessed one of the worst market sell-offs worldwide, led by a sharp deterioration of market conditions and slowdown in economic activities. Despite chaotic market conditions following the collapse of Lehman Brothers in September 2008, the Group continued to focus its two business lines in Greater China for the three months ended 31 December 2008: financial information services in Greater China, mainly through sales to corporations and financial institutions and launching the Group’s self-developed online games in Mainland China.

With the relatively counter-cyclical nature of the online game industry in China, the Group’s online game business, China Game, continued to build momentum in the third quarter of 2008/2009. On 16 December 2008, ‘‘Warage’’ unveiled its official version with a significant upgrade of its virtual items and equipments and the addition of two large-scale systems, leading to a breakthrough of both user spending and user number in the game. China Game also began to increase its operation and marketing partners across the nation to jointly operate ‘‘Warage’’ in different regions.

In the third quarter, China Game made two major initiatives to continue its strategic focus on self-development and strengthening its product pipeline. In midNovember 2008, China Game made the first alpha-testing of its second game, ‘‘Swordsman-Plus’’, another self-developed 3D MMORPG that is based on a wellestablished martial arts story line. China Game also decided to set up a team to venture into the web game business, which is expected to be commercialized in six months’ time. However, given the increasing competition in China’s online games industry including higher labor costs and higher marketing costs, China Game is increasingly under threat to compete with established industry heavyweights with strong funding and games already in operations.

On financial information services, the deepening financial crisis continued to impact the Group’s business development efforts. During the quarter ended 31 December 2008, both Hong Kong’s and China’s financial markets were experiencing higher volatilities, sharp price drops and less market turnover. This led to slowdown in spending by both corporate and individual customers for financial information products, and for financial information system enhancements within the Group’s scope of services.

The Group’s financial information business will certainly be negatively affected as long as global market conditions remain adverse. Despite the tremendous stimulus efforts by governments worldwide, we believe market conditions will be difficult for the next few quarters or even for the next few years, and that will likely result in industry shakeout and market opportunities. Because of that, the Group has examined the ways to reduce costs and improve operational efficiency in the deteriorating business environment. The Group is also reviewing its existing business strategies

– 128 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

compared to the latest industry developments, and plans new initiatives to enhance the Group’s business scope, value-added product lines and financial positions to create shareholder value.

Financial Review

The Group reported a turnover of approximately HK$27,152,000 for the nine months ended 31 December 2008, representing a decrease of 8% from approximately HK$29,636,000 for the same period in 2007.

During the nine months ended 31 December 2008, the Group recorded cost of sales amounting to approximately HK$7,773,000, representing a decrease of 8% from the same period in 2007.

Development costs of the Group for the nine months ended 31 December 2008 was approximately HK$4,989,000 (2007: HK$4,705,000), which mainly included the depreciation of property, plant and equipment; and employment benefit expenses of the research and development team.

Selling expenses of the Group for the nine months ended 31 December 2008 was decreased to approximately HK$3,575,000 compared with approximately HK$5,322,000 in 2007.

General and administrative expenses of the Group for the nine months ended 31 December 2008 was approximately HK$34,668,000 (2007: HK$27,432,000). The increase mainly resulted from increases in staff costs as the workforce was expanded in the PRC for the financial information services and online game businesses.

The Group’s unaudited consolidated profit attributable to equity holders of the Company for the nine months ended 31 December 2008 was approximately HK$3,403,000 (2007: HK$10,515,000). The profit for the period was mainly derived from the gain on disposal of interest in the Hangzhou Tianchang Network Technology Company Limited during the period.

– 129 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION

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

The following is the unaudited pro forma statement of adjusted consolidated net tangible assets (the ‘‘Unaudited Pro Forma Financial Information’’) of the Group which has been prepared in accordance with paragraph 7.31 of the GEM Listing Rules to illustrate the effects of the Open Offer on the unaudited consolidated net tangible assets of the Group as if the Open Offer had been completed on 30 September 2008.

The Unaudited Pro Forma Financial Information has been prepared for illustrative purposes only, based on the judgements and assumptions of the directors of the Company, and because of its hypothetical nature, does not provide any assurance or indication that any event will take place in the future and may not be indicative of: (i) the financial position of the Group as at 30 September 2008 or any future date; or (ii) the consolidated net tangible assets per share of the Group as at 30 September 2008 or any future date.

Unaudited adjusted consolidated net tangible assets of the Group as at 30 September 2008 (Unaudited) HK$’000 (Note 1) 53,025	Add: Estimated net proceeds from the Open Offer (Unaudited) HK$’000 (Note 2) 13,600	Unaudited pro forma adjusted consolidated net tangible assets of the Group (Unaudited) HK$’000 66,625

Unaudited adjusted consolidated net tangible assets per Share based on 599,370,000 Shares in issue as at the Latest Practicable Date and immediately before completion of the Open Offer (Note 3) Unaudited pro forma adjusted consolidated net tangible assets per Share based on the minimum enlarged issued share capital of 899,055,000 Shares upon completion of the Open Offer assuming that none of the Share Options is exercised on or before the Record Date (Note 4)

HK$0.088

HK$0.074

– 130 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION

Unaudited

adjusted Unaudited pro consolidated net Add: forma adjusted tangible assets of Estimated net consolidated the Group as proceeds net tangible at 30 September from the assets of 2008 Open Offer the Group (Unaudited) (Unaudited) (Unaudited) HK$’000 HK$’000 HK$’000 (Note 1) (Note 2)

Unaudited pro forma adjusted consolidated net tangible assets per Share based on the maximum enlarged issued share capital of 910,162,500 Shares upon completion of the Open Offer assuming that the Share Options (other than those held by Dr. Yu and the 400,000 Share Options granted to an employee of the Company which are exercisable from 5 November 2009) are exercised in full on or before the Record Date (Note 5)

HK$0.073

Notes:

The unaudited adjusted consolidated net tangible assets of the Group attributable to the equity holders of the Company as at 30 September 2008 of approximately HK$53,025,000 is arrived at based on the capital and reserves attributable to the equity holders of the Company of approximately HK$116,445,000 as adjusted to exclude the intangible assets of approximately HK$63,420,000 as shown on the unaudited condensed consolidated balance sheet of the Group as at 30 September 2008 as extracted from the published interim report of the Company for the six months ended 30 September 2008 as set out in Appendix II to the circular.
The estimated net proceeds from the Open Offer of approximately HK$13.6 million are based on the proceeds of approximately HK$15.0 million from the issue of 299,685,000 Offer Shares at the Subscription Price of HK$0.05 per Offer Share payable in full upon application, less estimated share issue expenses of approximately HK$1.4 million.
Based on 599,370,000 Shares in issue as at the Latest Practicable Date and immediately before completion of the Open Offer.

– 131 –

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION

Based on the minimum enlarged issued share capital of 899,055,000 Shares upon completion of the Open Offer (comprising 599,370,000 Shares in issue and 299,685,000 Offer Shares to be issued under the Open Offer), assuming that none of the Share Options is exercised on or before the Record Date.
Based on the maximum enlarged issued share capital of 910,162,500 Shares upon completion of the Open Offer (comprising 599,370,000 Shares in issue and 303,387,500 Offer Shares to be issued under the Open Offer), assuming that the Share Options (other than those held by Dr. Yu and the 400,000 Share Options granted to an employee of the Company which are exercisable from 5 November 2009) are exercised in full on or before the Record Date.
No adjustment has been made to reflect any trading results or other transactions of the Group entered into subsequent to 30 September 2008. As set out in the Company’s announcement dated 8 April 2009, the Board informed the Shareholders and potential investors that the earnings of the Group for the year ended 31 March 2009 would be significantly worse than those of the previous year, and the Company was expected to record a loss for the full year.

– 132 –

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION

B. REPORT ON THE UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS OF THE GROUP

The following is the text of a report received from the auditors of the Company, HLB Hodgson Impey Cheng, Chartered Accountants, Certified Public Accountants, Hong Kong, addressed to the directors of the Company and prepared for the sole purpose of inclusion in this circular.

==> picture [212 x 79] intentionally omitted <==

31/F, Gloucester Tower The Landmark 11 Pedder Street Central Hong Kong

9 June 2009

The Directors Finet Group Limited

Dear Sirs,

REPORT ON THE UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS OF THE GROUP

Introduction

We report on the unaudited pro forma statement of adjusted consolidated net tangible assets (the ‘‘Unaudited Pro Forma Financial Information’’) of Finet Group Limited (the ‘‘Company’’) and its subsidiaries (hereinafter collectively referred to as the ‘‘Group’’), which has been prepared by the directors of the Company for illustrative purposes only, to provide information about how the Open Offer (as defined in the Circular) might have affected the financial information presented, for inclusion in the Company’s circular dated 9 June 2009 (the ‘‘Circular’’). The basis of preparation of the Unaudited Pro Forma Financial Information is set out in Section A of Appendix III of the Circular.

Respective responsibilities of the directors of the Company and reporting accountants

It is the responsibility solely of the directors of the Company to prepare the Unaudited Pro Forma Financial Information in accordance with paragraph 7.31 of the Rules Governing the Listing of Securities on the Growth Enterprise Market of The Stock Exchange of Hong Kong Limited (the ‘‘GEM Listing Rules’’) and with reference to Accounting Guideline 7 ‘‘Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars’’ issued by the Hong Kong Institute of Certified Public Accountants.

It is our responsibility to form an opinion, as required by paragraph 7.31(7) of the GEM Listing Rules, on the Unaudited Pro Forma Financial Information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us

– 133 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION

on any financial information used in the compilation of the Unaudited Pro Forma Financial Information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

Basis of opinion

We conducted our engagement in accordance with Hong Kong Standard on Investment Circular Reporting Engagements (HKSIR) 300 ‘‘Accountants’ Reports on Pro Forma Financial Information in Investment Circulars’’ issued by the Hong Kong Institute of Certified Public Accountants. Our work consisted primarily of comparing the unadjusted financial information with source documents, considering the evidence supporting the adjustments and discussing the Unaudited Pro Forma Financial Information with the directors of the Company. This engagement did not involve independent examination of any of the underlying financial information.

We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the Unaudited Pro Forma Financial Information has been properly compiled by the directors of the Company on the basis stated, that such basis is consistent with the accounting policies of the Group and that the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information as disclosed pursuant to paragraph 7.31 (1) of the GEM Listing Rules.

The Unaudited Pro Forma Financial Information is for illustrative purposes only, based on the judgements and assumptions of the directors of the Company, and because of its hypothetical nature, does not provide any assurance or indication that any event will take place in the future and may not be indicative of: (i) the financial position of the Group as at 30 September 2008 or any future date; or (ii) the consolidated net tangible assets per share of the Group as at 30 September 2008 or any future date.

Opinion

In our opinion:

a. the Unaudited Pro Forma Financial Information has been properly compiled by the directors of the Company on the basis stated;
b. such basis is consistent with the accounting policies of the Group; and
c. the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information as disclosed pursuant to paragraph 7.31(1) of the GEM Listing Rules.

Yours faithfully,

HLB Hodgson Impey Cheng Chartered Accountants Certified Public Accountants Hong Kong

– 134 –

PROFIT FORECAST

APPENDIX IV

The statement in relation to the Company’s anticipated loss for the financial year ended 31 March 2009 as compared with the financial year ended 31 March 2008 as disclosed in the April Announcement and referred to in this circular, which constitute a profit forecast of the Company for the purpose of Rule 10 of the Takeovers Code, is set out in the section headed ‘‘Information on the Group’’ in this circular.

1. BASES AND ASSUMPTIONS

The Directors have arrived at such statement in the April Announcement based on:

(a) the unaudited consolidated management accounts of the Group for the eleven months ended 28 February 2009 and a forecast of the consolidated results of the Group for the remaining one month ended 31 March 2009, which have been prepared on the basis of accounting policies consistent in all material respects with those adopted in the preparation of the audited consolidated financial statements of the Group for the financial year ended 31 March 2008 as set out in Appendix II to this circular; and
(b) the Group’s principal businesses in the provision of financial information services and operation of online games and that its operations are principally in Hong Kong and the PRC. The demand for the Group’s financial information services depends on market sentiments as well as activities in the financial sector, mainly the stock markets. On the other hand, the on-line games business relies on the Group’s ability in the development of a diversified game portfolio to capture the growing needs of online gamers. In arriving at the statement in the April Announcement, the Directors have taken into account the impact of the global financial crisis on its financial information services as well as the rapid changing needs of online gamers and the capabilities of the Group to meet the changes in technologies. The Directors have based on the assumptions that:
i. during March 2009, there were:
- . no material change in the market sentiment of the stock markets in Hong Kong and the PRC;
- . no material change in the product pricing charged by the Group’s suppliers;
- . no material change in the popularity of the online games developed by the Group in the PRC;
- . no material change in the market conditions of the financial information services industry in Hong Kong and the PRC and the online gaming industry in the PRC;
- . no material change in technologies on the internet and online games;
- . no material change in relevant tax laws of jurisdictions in which the Group operated;

– 135 –

APPENDIX IV

PROFIT FORECAST

. no material changes in existing political, legal and fiscal conditions in Hong Kong and the PRC;
. no significant fluctuation of RMB currency exchange rates against HK$;
. no material changes in interest rates;
. no significant inflation; and
. no force majeure events or unforeseeable factors or any unforeseeable reasons beyond the control of the Directors which might materially affect or interrupt the Group’s operations; and
ii. there would be a charge to the consolidated income statement of the Company in respect of the realized and unrealized losses relating to the decrease in fair value of investment properties in the sum of approximately HK$3 million, an increase in expenses attributable to the Company’s gaming segment and the impairment of the Group’s goodwill arising from the acquisition of East Treasure Limited in 2007 as disclosed in the Company’s circular dated 31 August 2007. As a result, the earnings of the Group for the year ended 31 March 2009 will be significantly worse than those of the previous year, and the Company is expected to record a loss for the full year.

– 136 –

APPENDIX IV

PROFIT FORECAST

2. ACCOUNTANTS’ REPORT ON THE PROFIT FORECAST

==> picture [212 x 79] intentionally omitted <==

31/F, Gloucester Tower The Landmark 11 Pedder Street Central Hong Kong 9 June 2009

The Directors Finet Group Limited

Dear Sirs,

ACCOUNTANTS’ REPORT ON THE PROFIT FORECAST

In connection with the following statement as set out in the announcement of Finet Group Limited (the ‘‘Company’’) in respect of the profit warning made by the board of directors of the Company on 8 April 2009 (the ‘‘Profit Warning Statement’’):

‘‘The Board wishes to inform the shareholders of the Company and potential investors that the earnings of the Group for the year ended 31 March 2009 will be significantly worse than those of the previous corresponding year, and the Company is expected to record a loss for the full year.’’

We have been advised by the directors of the Company that the Profit Warning Statement is based on the preliminary assessment by the management of the Company and its subsidiaries (hereinafter collectively referred to as the ‘‘Group’’) of a forecast of the consolidated results attributable to the equity holders of the Company for the year ended 31 March 2009 (the ‘‘Profit Forecast’’) which has been prepared based on the unaudited management accounts of the Group for the eleven months ended 28 February 2009 and a forecast of the consolidated results of the Group for the remaining one month ended 31 March 2009.

In accordance with the instructions of the directors of the Company, we have reviewed the accounting policies adopted and calculations made in arriving at the Profit Forecast, for which the directors of the Company are solely responsible.

In our opinion, so far as the accounting policies and calculations are concerned, the Profit Forecast has been properly compiled in accordance with the basis and assumptions adopted by the directors of the Company as set out in the section headed ‘‘Bases and

– 137 –

APPENDIX IV

PROFIT FORECAST

Assumptions’’ in Appendix IV to the circular dated 9 June 2009 issued by the Company (the ‘‘Circular’’) and is presented on a basis consistent in all material respects with the accounting policies normally adopted by the Group as set out in the audited consolidated financial statements for the year ended 31 March 2008 in Appendix II to the Circular.

Yours faithfully, HLB Hodgson Impey Cheng Chartered Accountants Certified Public Accountants Hong Kong

– 138 –

APPENDIX IV

PROFIT FORECAST

3. FINANCIAL ADVISER’S REPORT ON THE PROFIT FORECAST

The following is the text of a report received from the financial adviser to the Company, Access Capital Limited, addressed to the Directors and prepared for the sole purpose of inclusion in this circular.

==> picture [120 x 55] intentionally omitted <==

9 June 2009

The Board of Directors Finet Group Limited Suite 505–506, 5th Floor, Low Block Grand Millennium Plaza 181 Queen’s Road Central Hong Kong

Dear Sirs,

We have reviewed the accounting policies adopted and calculations made in arriving at the anticipated loss for the financial year ended 31 March 2009 of the Company (the ‘‘Profit Forecast’’) as set out in the section headed ‘‘Profit Forecast’’ in the Company’s circular dated 9 June 2009 (the ‘‘Circular’’), for which you as directors of the Company (the ‘‘Directors’’) are solely responsible. The Profit Forecast has been prepared by the Directors based on the unaudited management accounts of the Group for the eleven months ended 28 February 2009 and a forecast of the consolidated results of the Group for the remaining one month ended 31 March 2009.

We have discussed with you the bases and assumptions upon which the Profit Forecast has been made. We have also considered the letter dated 9 June 2009 addressed to you from HLB Hodgson Impey Cheng (‘‘HLB’’) regarding the accounting policies and calculations upon which the Profit Forecast has been made.

On the basis of the foregoing and on the bases and assumptions made by you and the accounting policies adopted and calculations made by you and reviewed by HLB, we have formed the opinion that the Profit Forecast, for which you as Directors are solely responsible, has been made with due care and consideration.

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

– 139 –

APPENDIX V

GENERAL INFORMATION

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the GEM Listing Rules and the Takeovers Code for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that, to the best of their knowledge and belief: (i) the information contained in this circular is accurate and complete in all material respects and not misleading; (ii) there are no other matters the omission of which would make any statement in this circular misleading; and (iii) all opinions expressed in this circular have been arrived at after due and careful consideration and are founded on bases and assumptions that are fair and reasonable.

2. SHARE CAPITAL

The authorised and issued share capital of the Company as at the Latest Practicable Date were as follows:

Share capital

(a) Share capital as at the Latest Practicable Date

(b)	Authorised: HK$ 1,000,000,000 10,000,000 Issued and fully paid: 597,850,000 As at 31 March 2008 5,978,500 1,520,000 Issue of Shares upon exercise of Share Options since 31 March 2008 15,200 599,370,000 As at the Latest Practicable Date 5,993,700 Share capital upon completion of the Open Offer assuming all Share Options (other than those held by Dr. Yu and the 400,000 Share Options granted to an employee of the Company which are exercisable from 5 November 2009) are exercised on or before the Record Date Authorised: HK$ 1,000,000,000 10,000,000 Issued and fully paid: 599,370,000 Shares as at the Latest Practicable Date 5,993,700 7,405,000 Shares to be issued upon exercise of the Share Options 74,050 303,387,500 Offer Shares to be issued pursuant to the Open Offer 3,033,875 910,162,500 Shares upon completion of the Open Offer 9,101,625	HK$ 10,000,000
		5,978,500 15,200 5,993,700
		5,993,700 74,050 3,033,875
		9,101,625

– 140 –

APPENDIX V

GENERAL INFORMATION

All the issued Shares rank pari passu with each other in all respects including the rights to voting, dividends and return of capital. Save that the Offer Shares will be entitled to the Bonus Warrants, the Offer Shares to be allotted and issued will, when issued and fully paid, rank pari passu in all respects with the existing Shares.

Share Options

As at the Latest Practicable Date, the Company had the following outstanding Share Options under the Share Option Schemes:

	Exercise price	No. of Shares which may fall to be issued
Date of grant	per Share	upon exercise of the Share Options
	(HK$)
21 September 2004	0.150	13,881,000
5 September 2005	0.280	2,650,000
29 September 2005	0.365	2,400,000
6 December 2006	0.668	1,000,000

Save as disclosed above, the Company did not have any other options, warrants and other convertible securities or rights affecting the Shares as at the Latest Practicable Date.

3. MARKET PRICES

The table below shows the closing prices of the Shares as recorded on the Stock Exchange on (i) the Last Trading Date; (ii) the last trading day of each of the six calendar months before the date of the Announcement and ending on the Latest Practicable Date; and (iii) the Latest Practicable Date.

Date	Share price
	HK$
31 October 2008	0.080
28 November 2008	0.068
31 December 2008	0.125
30 January 2009	0.110
27 February 2009	0.081
31 March 2009	0.069
Last Trading Date	0.068
30 April 2009	Suspended
29 May 2009	0.119
Latest Practicable Date	0.127

– 141 –

APPENDIX V

GENERAL INFORMATION

The highest and lowest closing prices of the Shares as quoted on the Stock Exchange during the period commencing six months prior to the date of the Announcement up to and including the Latest Practicable Date were HK$0.14 on 15 January 2009 and HK$0.063 on 5 March 2009 respectively.

4. DISCLOSURE OF INTEREST UNDER THE SFO

(a) Directors’ and chief executive’s interests and short positions in the Shares, underlying shares and debentures of the Company and associated corporations

As at the Latest Practicable Date, the interests and short positions of the Directors and the chief executive of the Company in the Shares, underlying shares and debentures of the Company or any of its associated corporations which (a) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO; or (b) were required, pursuant to section 352 of the SFO, to be entered into the register referred to therein; or (c) were required, pursuant to Rules 5.46 to 5.67 of the GEM Listing Rules relating to securities transactions by Directors to be notified to the Company and the Stock Exchange; or (d) were required to be disclosed in this circular pursuant to the requirements of the Takeovers Code, were as follows:

(i) Aggregate long positions in the Shares and underlying shares of the Company

				No. of underlying	No. of underlying
	No. of	Shares		Shares
		Interest	of		Interest	of
	Personal	controlled		Personal	controlled				% of Shares
Name of director	interest	corporation		interest	corporation		Note	Total	in issue
Executive Director:
Dr. Yu	—	486,724,956		12,126,000	91,016,247		1	589,867,203	98.41%
Independent Non-executive Directors:
Lam Lee G.	—		—	1,000,000		—	—	1,000,000	0.17%
Wu Tak Lung	—		—	1,000,000		—	—	1,000,000	0.17%

(ii) Aggregate long positions in the shares of associated corporation

		No. of	shares
Name of			Interest of		% of
associated	Name of	Personal	controlled		shares
corporation	Director	interest	corporation	Note	in issue
Opulent	Dr. Yu	100	—	1	100%

– 142 –

APPENDIX V

GENERAL INFORMATION

Note:

Dr. Yu was deemed (by virtue of the SFO) to be interested in 589,867,203 Shares. These Shares were held in the following capacity:
(a) 486,724,956 Shares and 91,016,247 underlying Shares were held by Opulent. Dr. Yu is interested in the entire issued share capital of Opulent. Therefore, the interest of Dr. Yu in these 486,724,956 Shares and 91,016,247 underlying Shares duplicates with the interest of Opulent in the same lots of 486,724,956 Shares and 91,016,247 underlying Shares; and
(b) Dr. Yu is entitled to Share Options to subscribe for an aggregate of 12,126,000 Shares.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors and the chief executive of the Company had any interests or short positions in the Shares, underlying shares and debentures of the Company or any of its associated corporations which (a) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (b) were required, pursuant to section 352 of the SFO, to be entered into the register referred to therein; or (c) were required, pursuant to Rules 5.46 to 5.67 of the GEM Listing Rules relating to securities transactions by Directors to be notified to the Company and the Stock Exchange; or (d) were required to be disclosed in this circular pursuant to the requirements of the Takeovers Code.

(b) Substantial shareholders’ interests and short positions in the Shares

As at the Latest Practicable Date, so far as the Directors were aware, persons other than the Directors or the chief executive of the Company who had interests or short positions in the Shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of the SFO, or, who were expected, directly or indirectly, to be interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group, were as follows:

(i) the Company

					Number of
					underlying
	Number	of	Shares		Shares
			Interest	of
	Personal		controlled					% of Shares
Name	interest		corporation		Personal interest	Notes	Total	in issue
substantial	shareholder:
Opulent	486,724,956			—	91,016,247	1	577,741,203	96.39%

– 143 –

APPENDIX V

GENERAL INFORMATION

(ii) China Game and Digital Entertainment Limited

	Number of shares	Number of shares
		Interest of
	Personal	controlled			% of shares
Name of substantial shareholder	interest	corporation	Notes	Total	in issue
The Pride of Treasure Fund	120,000	—	2	120,000	12%

Notes:

Opulent was deemed (by virtue of the SFO) to be interested 577,741,203 Shares as beneficial owner. The interest of Opulent in these 577,741,203 Shares duplicates with the interest of Dr. Yu in the same lot of 577,741,203 Shares. Such 577,741,203 Shares comprise:
(a) 183,337,456 Shares held by Opulent as at the Latest Practicable Date;
(b) 91,668,728 Offer Shares to be issued to Opulent in respect of the 183,337,456 Shares held by it which Opulent has undertaken to take up under the Open Offer;
(c) 27,500,616 underlying Shares falling to be issued to Opulent upon the exercise of the subscription rights attaching to the 27,500,616 Bonus Warrants to be issued to Opulent under the Bonus Issue of Warrants in respect of the 91,668,728 Offer Shares;
(d) 211,718,772 Offer Shares underwritten by Opulent pursuant to the Underwriting Agreement, assuming that all the outstanding Share Options (other than those held by Dr. Yu and the 400,000 Share Options granted to an employee of the Company exercisable only from 5 November 2009) are exercised on or before the Record Date; and
(e) 63,515,631 underlying Shares falling to be issued to Opulent upon the exercise of the subscription rights attaching to the 63,515,631 Bonus Warrants to be issued to Opulent under the Bonus Issue of Warrants in respect of the 211,718,772 Offer Shares.
As at the Latest Practicable Date, the issue share capital of China Game and Digital Entertainment Limited was US$10,000 divided into 1,000,000 shares of US$0.01 each, in which the Company held 85.71% equity interest.

Save as disclosed above, as at the Latest Practicable Date, the Directors were not aware of any persons other than the Directors or the chief executive of the Company who had interests or short positions in the Shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of the SFO, or, who were expected, directly or indirectly, to be interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group.

None of the Directors had any direct or indirect interest in any assets which have been, since 31 March 2008 (being the date to which the latest published audited consolidated financial statements of the Group were made up) and up to the Latest Practicable Date, 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. As at the Latest Practicable Date, none of the Directors was materially interested in any contract or arrangement entered into by any member of the Group and subsisting at the date of this circular which is significant in relation to the business of the Group.

– 144 –

APPENDIX V

GENERAL INFORMATION

5. ADDITIONAL DISCLOSURE OF INTERESTS UNDER THE TAKEOVERS CODE

As at the Latest Practicable Date:

(a) The Underwriter held 183,337,456 Shares (representing approximately 30.59% of the issued share capital of the Company). Save for this, the Underwriter was not interested in any shares, convertible securities, warrants, options or derivatives of the Company;
(b) Dr. Yu, the sole shareholder and director of the Underwriter, held Shares Options to subscribe for 12,126,000 Shares, will represent approximately 2.0% of the then enlarged issued share capital of the Company upon full exercise of these Share Options. Save for this, none of the directors of the Underwriter was interested in any shares, convertible securities, warrants, options or derivatives of the Company;
(c) Save for the Underwriting Agreement, there was no other agreement or arrangement to which the Underwriter was a party which related to the circumstances in which it might or might not invoke or seek to invoke a precondition or a condition to the Open Offer other than those mentioned in the section headed ‘‘Conditions of the Open Offer’’ or the Whitewash Waiver;
(d) Save as disclosed under the section headed ‘‘Disclosure of interests under the SFO’’ on page 142 of this Appendix V and except for the Share Options held by Dr. Yu to subscribe for 12,126,000 Shares, none of the parties acting in concert with the Underwriter owned or controlled any shares, convertible securities, warrants, options or derivatives of the Company;
(e) Save for the irrevocable undertakings given by Opulent to take up its assured entitlements pursuant to the Open Offer, the Concert Party Group had not received an irrevocable commitment to accept or reject the Open Offer;
(f) None of the Underwriter and any parties acting in concert with it had borrowed or lent any shares, convertible securities, warrants, options or derivatives of the Company;
(g) There was no arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code between the Underwriter or any party acting in concert with it and any other person;
(h) Saved for the undertakings given by Opulent in respect of its taking up of its entitlements under the Open Offer and the Irrevocable Undertakings from Dr. Yu, details of which were disclosed on page 17 of this circular under the section headed under ‘‘UNDERWRITING ARRANGEMENT AND UNDERTAKINGS’’, no agreement, arrangement or understanding (including any compensation arrangement) existed between the Underwriter or parties acting in concert with it, including Dr. Yu, and any of the Directors, recent Directors, Shareholders or recent Shareholders having any connection with or dependence upon the Open Offer;

– 145 –

APPENDIX V

GENERAL INFORMATION

(i) The Company had no holdings of shares, convertible securities, warrants, options or derivatives of the Underwriter and had not during the Relevant Period dealt for value in the shares, convertible securities, warrants, options or derivatives of the Underwriter;
(j) Dr. Yu, an executive Director, held 12,126,000 Share Options and through the Underwriter, held 183,337,456 Shares. Each of the two independent non-executive Directors namely Dr. Lam Lee G. and Mr. Wu Tak Leung, held 1,000,000 Share Options. Save for these, none of the Directors was interested in or had during the Relevant Period dealt for value in the shares, convertible securities, warrants, options or derivatives of the Company. Dr. Yu, an executive Director, is the sole shareholder of the Underwriter;
(k) None of the subsidiaries of the Company, any pension fund of the Company or any of its subsidiaries, nor any adviser to the Company as specified in class (2) of the definition of associate in the Takeovers Code (excluding exempt principal traders) was interested in or had during the Relevant Period dealt for value in the shares, convertible securities, warrants, options or derivatives of the Company;
(l) None of the director of the Underwriter, the Underwriter and parties acting in concert with it had during the Relevant Period dealt for value in the shares, convertible securities, warrants, options or derivatives of the Company;
(m) No person that had an arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code with the Company or with any person who is an associate of the Company by virtue of classes (1), (2), (3) and (4) of the definition of associate in the Takeovers Code was interested in or had during the Relevant Period dealt for value in the shares, convertible securities, warrants, options or derivatives of the Company;
(n) No fund managers (other than exempt fund managers) managing funds on a discretionary basis which are connected with the Company was interested in or had during the Relevant Period dealt for value in the shares, convertible securities, warrants, options or derivatives of the Company;
(o) Opulent, of which the sole shareholder and director is Dr. Yu, who is the executive Director, had irrevocably undertaken to take up its assured entitlement pursuant to the Open Offer. Save for this, as at the Latest Practicable Date, no Director had irrevocably committed themselves to vote for or against the resolutions to be proposed at the EGM to approve the Open Offer and/or the Whitewash Waiver;
(p) None of the Company nor any Directors had borrowed or lent any shares, convertible securities, warrants, options or derivatives of the Company;
(q) No benefit will be given to any Director as compensation for loss of office in any member of the Group or otherwise in connection with the Open Offer and/or the Whitewash Waiver;

– 146 –

APPENDIX V

GENERAL INFORMATION

(r) There was no agreement or arrangement between any Director and any other person which is conditional on or dependent upon the outcome of the Open Offer and the Whitewash Waiver or otherwise connected with the Open Offer and the Whitewash Waiver; and
(s) Save for the Underwriting Agreement, there was no material contract entered into by the Underwriter in which a Director had a material personal interest.

6. LITIGATION

During the year ended 31 March 2008, three libel actions were brought by a company and an individual against the Group in respect of the publication of words alleged to be defamatory of and concerning the plaintiffs contained in certain articles published at the Group’s website. The Directors believed that the Group had meritorious defence against such claims and accordingly, the Directors did not believe that these claims would have any material adverse effect on the Group.

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

7. DIRECTORS’ INTERESTS IN COMPETING BUSINESS

As at the Latest Practicable Date, none of the Directors nor their respective associates had any business which competes or is likely to compete, either directly or indirectly, with the business of the Group.

8. DIRECTORS’ SERVICE CONTRACTS

The Company and the Directors named below entered into service contracts within the period commencing six months preceding the date of the Announcement and ending on the Latest Practicable Date, particulars of which are as follows:

			Annual
Name	Date of contract	Term of contract	director fee
LAM Lee G.	1 March 2009	1 March 2009 to	HK$60,000
		28 February 2012
WU Tak Lung	1 March 2009	1 March 2009 to	HK$60,000
		28 February 2012
William HAY	1 March 2009	1 March 2009 to	HK$60,000
		28 February 2012

– 147 –

APPENDIX V

GENERAL INFORMATION

Prior to 1 March 2009, the above independent non-executive Directors were not appointed for specific terms but were subject to the retirement by rotation provisions under the articles of association of the Company and hence there is no service contract prior to 1 March 2009.

The Company has entered into a service agreement with Dr. Yu for a term of two years commencing on 7 January 2005 and shall continue thereafter until terminated by either party giving to the other not less than three months’ written notice.

Save as disclosed above, there is no service contract with the Company or any of its subsidiaries or associated companies in force for the Directors (i) which is not expiring or terminable by the Group within one year without payment of compensation (other than statutory compensation); (ii) which (including both continuous and fixed term contracts) has been entered into or amended within 6 months before the date of the Announcement; (iii) which is continuous contract with a notice period of 12 months or more; or (iv) which is fixed term contract with more than 12 months to run irrespective of the notice period.

9. MATERIAL CONTRACTS

The following contracts (not being a contract entered into in the ordinary course of business) have been entered into by members of the Group within two years immediately preceding the date of the Announcement and up to the Latest Practicable Date and is or may be material:

(a) the Underwriting Agreement;
(b) Irrevocable Undertakings;
(c) the agreement dated 24 September 2008 entered into between Huang Shouxiang, a PRC employee of the Group (as vendor) on behalf of the Company, and Guo Yu, Cai Quoping, Liu Xiaoren, 杭州理想投資管理有限公司 (Hangzhou Lixiang Investment Management Limited*) (as purchasers) in relation to the disposal of Hangzhou Tianchang Network Technology Company Limited (杭州天暢網絡科技有限公司), a wholly-owned subsidiary of a non wholly-owned subsidiary of the Company at a consideration of RMB20.0 million (approximately HK$23.0 million). The purchasers are third parties independent of the Group and its connected persons (as defined in the GEM Listing Rules);
(d) the placing agreement dated 20 September 2007 entered into between the Company and SinoPac Securities (Asia) Limited (‘‘Placing Agent’’) in relation to the placing of the 46,080,000 new Shares (‘‘Placing Shares’’) to independent third parties at HK$0.68 per Placing Share. The Placing Agent and its ultimate beneficial owners are third parties independent of the Group and its connected person (as defined in the GEM Listing Rules); and

For identification purpose only

– 148 –

GENERAL INFORMATION

APPENDIX V

(e) the agreement dated 8 May 2007 entered into between the Company (as purchaser) and Graceful Sincere Enterprises Limited and Sun Wishing Technology Limited (as vendors) and Mr. Guo Yu, Ms. Shi Mingping, Mr. Ning Zihai, Ms. Lu Jiangmei, Mr. Tang Xingqin, Mr. Cai Quoping and Ms. Zhang Huidi (as vendors’ guarantors), in relation to the acquisition of East Treasure Limited (‘‘Acquisition Agreement’’) at a consideration of RMB150 million (approximately HK$156.3 million); and the amendment agreement dated 19 December 2007 with the vendors and the vendors’ guarantors to amend certain terms and conditions of the Acquisition Agreement that the consideration has been reduced to RMB59.5 million (approximately HK$63.3 million). The vendors are third parties independent of the Group and its connected persons (as defined in the GEM Listing Rules).

Save as disclosed above, there are no other contracts (not being contracts in the ordinary course of business carried on or intended to be carried on by the Company or any of its subsidiaries) entered into after the date falling two years prior to the date of the Announcement, which are or may be material.

10. EXPERTS AND CONSENTS

(a) The following are the qualifications of the experts who have given their opinions and advice which are included in this circular:

Name

Qualification

Access Capital Limited a licensed corporation to carry on Type 1 (‘‘Access Capital’’) (dealing in securities), Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities under the SFO HLB Hodgson Impey Cheng Chartered Accountants (‘‘HLB’’) Certified Public Accountants Somerley a licensed corporation to carry on Type 1 (dealing in securities), Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities under the SFO

(b) Neither Access Capital, HLB nor Somerley has any shareholding, directly or indirectly, in any member of the Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.
(c) Neither Access Capital, HLB nor Somerley has withdrawn its written consent to the issue of this circular with the inclusion of the references to its name and/or its opinion in the form and context in which they are included.

– 149 –

APPENDIX V

GENERAL INFORMATION

(d) Neither Access Capital, HLB nor Somerley had any direct or indirect interest in any asset which had been acquired, or disposed of by, or leased to any member of the Group, or was proposed to be acquired, or disposed of by, or leased to any member of the Group since 31 March 2008, the date to which the latest published audited financial statements of the Group were made up.

11. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection on any business day from the date of this circular up to and including the date of the EGM during normal business hours from 9: 00 a.m. to 5: 00 p.m. (except Saturdays and public holidays) at the principal office of the Company at Suite 505–506, 5th Floor, Low Block Grand Millennium Plaza 181 Queen’s Road Central, Hong Kong, and will also be available on the websites of the Company at www.finet.hk and the SFC at http://www.sfc.hk:

(a) the memorandum and articles of association of each of the Underwriter and the Company;
(b) the material contracts referred to under the paragraph headed ‘‘MATERIAL CONTRACTS’’ in this Appendix V and the respective circular (if applicable) in relation to the material contracts;
(c) the service contracts referred to under the paragraph headed ‘‘DIRECTORS’ SERVICE CONTRACTS’’ in this Appendix V;
(d) the annual reports of the Company for the two financial years ended 31 March 2008, the interim report of the Company for the six months ended 30 September 2008 and the third quarterly report of the Company for the three months ended 31 December 2008;
(e) the accountants’ report from HLB on the unaudited pro forma financial information of the Group, the text of which is set out in Appendix III to this circular;
(f) the letter of recommendation from the Independent Board Committee, the text of which is set out on pages 28 to 29 of this circular;
(g) the letter of advice from Somerley, the text of which is set out on pages 30 to 46 of this circular;
(h) the consent letters from Access Capital, Somerley and HLB referred to in the paragraph headed ‘‘EXPERTS AND CONSENT’’ in this Appendix V; and
(i) the reports on the profit forecast from Access Capital and HLB, respectively, the text of which are set out in Appendix IV to this circular.

– 150 –

APPENDIX V

GENERAL INFORMATION

12. PARTICULARS OF DIRECTORS AND SENIOR MANAGEMENT

Executive Director

DR. YU GANG, GEORGE, aged 44, serves as the chairman, chief executive officer, and compliance officer of the Group and is responsible for leading the Group’s overall strategic planning and development. Prior to joining the Group in December 1999, Dr. Yu had gathered years of banking experience when he was with Goldman Sachs (Asia) L.L.C. in Hong Kong and J.P. Morgan Securities, Inc. in New York. Dr. Yu later joined the University of Hong Kong as an Assistant Professor of Finance for three years. Dr. Yu graduated with a Ph.D. degree in Finance from the Stern School of Business, New York University in the U.S. in 1993, a master’s degree in Economics from the State University of New York in the U.S. in 1988, and a bachelor’s degree in Mathematics from Sichuan University in the PRC in 1985.

Independent Non-Executive Directors and Audit Committee of the Company

DR. LAM LEE G., aged 49, has been an independent non-executive director of the Group since April 2003. Dr. Lam holds a Bachelor of Science in Mathematics and Sciences, a Master of Science in Systems Science, and a Master of Business Administration, all from the University of Ottawa in Canada, a Post-graduate Diploma in Public Administration from Carleton University in Canada, a Postgraduate Diploma in English and Hong Kong Law and a Bachelor of Law (Hons) from Manchester Metropolitan University in the U.K., a PCLL in law (and has completed the Bar Course) from the City University of Hong Kong, and a Doctor of Philosophy from the University of Hong Kong. Dr. Lam has over 26 years of multinational general management, corporate governance, investment banking, and direct investment experience. He is Chairman of Monte Jade Science and Technology Association of Hong Kong, and serves as an independent or non-executive director of several publicly-listed companies and investment funds in the Asia Pacific region. Having served as a Part-time Member of the Central Policy Unit of the Government of the Hong Kong Special Administrative Region for two terms, Dr. Lam is a Member of the Jilin Province Committee of the Chinese People’s Political Consultative Committee (CPPCC), a Member of the Hong Kong Institute of Bankers, a Board Member of the East-West Center Foundation, a Member of the Young Presidents’ Organization, a Fellow of the Hong Kong Institute of Directors and a Member of its Corporate Governance Committee, a Member of the General Committee and the Corporate Governance Committee of the Chamber of Hong Kong Listed Companies, an Adjunct Professor of the Hong Kong Baptist University School of Business, and a Visiting Professor at the School of Economics & Management of Tsinghua University in Beijing. He is a member of the Company’s audit committee.

MR. WU TAK LUNG, aged 44, an independent non-executive director since February 2004, is currently a director and Head of Investment Banking of CSC Asia Limited. Mr. WU is also an independent non-executive director of China Water Industry Group Limited, Aupu Group Holding Company Limited, Neo-Neon Holdings Limited and iMerchants Limited and RBI Holdings Limited, all of which

– 151 –

GENERAL INFORMATION

APPENDIX V

are listed on the Stock Exchange. Mr. Wu had worked in an international audit firm, Deloitte Touche Tohmatsu for five years, and was then employed by several listed and private companies in Hong Kong as head of corporate finance, chief financial officer and executive director. Mr. Wu obtained a master’s degree in Business Administration jointly awarded by the University of Manchester and the University of Wales. Mr. Wu is a fellow member of the Association of Chartered Certified Accountants (ACCA), Hong Kong Institute of Chartered Secretaries (HKICS) and the Taxation Institute of Hong Kong (TIHK). He is also a full member of the Hong Kong Securities Institute (HKSI) and an associate member of the Hong Kong Institute of Certified Public Accountants (HKICPA). He is the chairman of the Company’s audit committee.

MR. WILLIAM HAY, aged 57, became an independent non-executive director of the Group in May 2006. Mr. Hay is a qualified solicitor in Hong Kong and lawyer in New York State. Mr. Hay was the general counsel of Colony Capital Asia Limited, the general counsel of GE Capital Asia Pacific and a partner of Lovells, one of the world’s largest law firms. Mr. Hay had previously practised corporate and financial law in New York City for 13 years, and has resided in Hong Kong since 1995. Currently, Mr. Hay is the Managing Director Asia Pacific for MGM Mirage Hospitality LLC, a leading global luxury hospitality company. Mr. Hay received a B.A. from the University of California at Berkeley in the U.S. in 1973, an A.M. in East Asian Studies from Harvard University in the U.S. in 1978, and a J.D. from Harvard Law School in 1982. He is a member of the Company’s audit committee.

Senior Management

MR. LIN PENG, BEN, aged 43, is the chief operating officer of the Group and responsible for the Group’s daily operations. Mr. Lin has over 16 years of experience in banking and finance industry. Before joining the Group in January 2009, Mr. Lin had spent 8 years worked with Infocast Limited, a leading financial service provider, as their chief financial officer. Prior to joining Infocast Limited, Mr. Lin had worked for Min Xin Holdings Limited, a banking listed company in Hong Kong, and Vigour Fine Company Limited, an international financial investment company. Mr. Lin has extensive multi-national knowledge and practice in corporate finance, merger and acquisition, portfolio management, syndicated loan and bond issuance as well as financial servicing industry. Mr. Lin was educated both in PRC and North America. Mr. Lin graduated from Ivey School of Business, University of Western Ontario with MBA degree in 2000, and also graduated from Xiamen University in PRC in 1989 with Bachelor degree in Finance.

MS. SIU WING KEI, QUEENIE, aged 34, is the vice president of the Group and the chief executive officer of China Game, the Group’s online game subsidiary. Ms. Siu held various senior management roles in corporate development, investor relations and marketing at the Group from 2005 to 2007. She participated in the Group’s key corporate development activities including strategic planning, M&As and fund-raising. Prior to joining the Group, Ms. Siu spent about three years with Sino-i Technology Limited, a company listed in Hong Kong, as the marketing director and web business director of its China-based information services arm in Beijing. Ms. Siu graduated with

– 152 –

APPENDIX V

GENERAL INFORMATION

a Master’s degree in Commerce (Management of Technology) and a Master’s degree in Logistics Management from the University of Sydney, Australia simultaneously in 2003.

MS. HUANG SHOU XIANG, SHIRLEY, aged 36, is the vice president of the Group, responsible for managing the daily operations of the Group’s financial information business in China. Ms. Huang is responsible for executing the Group’s China growth strategy in financial information business. Since joining the Group in February 2001, Ms. Huang has been assigned various managerial roles in the past eight years including China finance director and China operations director. Prior to joining the Group, she spent about four years with East Dragon Trading (Shenzhen) Limited in China and served as the finance manager. Ms. Huang graduated from Beijing University of Science and Technology with a Bachelor of Science degree in Material Science in 1996.

MS. NGAI FUNG KING, CARRIE, aged 41, is the director of finance and administration and company secretary of the Group, responsible for the Group’s financial control, human resources management and corporate affairs. Ms. Ngai has over 16 years of experience in accounting, financial management and corporate secretarial work. She was with Coopers & Lybrand (now PricewaterhouseCoopers) for three years and worked as group chief accountant in The Swank Shop Limited from 1995 to 1999. Before joining the Group, Ms. Ngai spent two years with Christie’s as the financial controller in Asia. Ms. Ngai received a professional diploma in Accountancy from Hong Kong Polytechnics in 1990. She is a fellow member of The Association of Chartered Certified Accountants.

MR. LI YAN QING, aged 37, is the president of China Game, the Group’s online game subsidiary. Prior to joining China Game, Mr. Li founded T2CN Group, now a brand-name online game company in China, in 2003 and served as its president, where he led the operations and development of a number of reputable online games, including ‘‘Freestyle’’, ‘‘Neosteam’’ and ‘‘House of Flying Daggers’’. Mr. Li joined the online game joint venture of Sina.com and NCSoft Corporation in 2002 as the vice president and marketing director, responsible for the game operations of ‘‘Lineage’’, one of the most popular online games from Korea. He joined Netease.com Inc. as operations director in Shanghai to operate ‘‘Westward Journey II’’, one of the most successful games in China, ‘‘Priston Tale’’ and more other online games. Back in 1999, Mr. Li founded the largest PC game information portal, www.ali213.net. Mr. Li graduated with a bachelor degree in Clinical Medicine from Zhejiang University in 1996.

– 153 –

APPENDIX V

GENERAL INFORMATION

PARTIES INVOLVED IN THE OPEN OFFER AND CORPORATE INFORMATION

Head office and principle place of	Suite 505–506, 5th Floor, Low Block
business in Hong Kong	Grand Millennium Plaza
	181 Queen’s Road Central
	Hong Kong
Registered office	Cricket Square
	Hutchins Drive
	PO Box 2681
	Grand Cayman KY1-1111
	Cayman Islands
Financial Adviser	Access Capital Limited
	Suite 606, 6/F
	Bank of America Tower
	12 Harcourt Road
	Central
	Hong Kong
Independent Financial Adviser	Somerley Limited
	10/F Hong Kong Club Building
	3A Chater Road
	Central
	Hong Kong
Underwriter	Opulent Oriental International Limited
	P.O. Box 957
	Offshore Incorporation Centre
	Road Town
	Tortola
	British Virgin Islands
Legal advisers	On Hong Kong law
	Stephenson Harwood & Lo
	35th Floor, Bank of China Tower
	1 Garden Road
	Central, Hong Kong
	On Cayman Islands law
	Conyers Dill & Pearman
	2901 One Exchange Square
	8 Connaught Place
	Central, Hong Kong

– 154 –

APPENDIX V

GENERAL INFORMATION

Auditors	HLB Hodgson Impey Cheng
	Chartered Accountants
	Certified Public Accountants
	31/F, Gloucester Tower
	The Landmark, 11 Pedder Street
	Central, Hong Kong
Principal banker	The Hongkong and Shanghai Banking
	Corporation Limited
	Level 10, HSBC Main Building
	1 Queen’s Road Central
	Hong Kong
Share registrars and transfer office	Principal share registrar
	Butterfield Fulcrum Group (Cayman) Limited
	Butterfield House
	68 Fort Street, P.O. Box 705
	Grand Cayman KY1-1107
	Cayman Islands
	Hong Kong branch share registrar
	Computershare Hong Kong Investor Services
	Limited
	Rooms 1712–1716, 17th Floor
	Hopewell Centre
	183 Queen’s Road East
	Hong Kong
Authorised representatives	Dr. YU Gang, George
	Ms. NGAI Fung King, Carrie
Company secretary	Ms. NGAI Fung King, Carrie FCCA
Qualified accountant	Ms. NGAI Fung King, Carrie FCCA

– 155 –

APPENDIX V

GENERAL INFORMATION

Particulars of Directors

Name

Dr. YU Gang, George (Executive Director)
Dr. LAM Lee G. (Independent Non-executive Director)
Mr. WU Tak Lung (Independent Non-executive Director)

Mr. William HAY (Independent Non-executive Director)

Correspondence Address

Suite 505–506, 5th Floor, Low Block Grand Millennium Plaza 181 Queen’s Road Central Hong Kong

– 156 –

APPENDIX V

GENERAL INFORMATION

Particulars of Senior Management

Name Correspondence Address Mr. Lin Peng, Ben Suite 505–506, 5th Floor, Low Block Grand Millennium Plaza 181 Queen’s Road Central Hong Kong Ms. Siu Wing Kei, Queenie Suite 505–506, 5th Floor, Low Block Grand Millennium Plaza 181 Queen’s Road Central Hong Kong Ms. Huang Shou Xiang, Shirley Suite 505–506, 5th Floor, Low Block Grand Millennium Plaza 181 Queen’s Road Central Hong Kong Ms. Ngai Fung King, Carrie Suite 505–506, 5th Floor, Low Block Grand Millennium Plaza 181 Queen’s Road Central Hong Kong Mr. Li Yan Qing Suite 505–506, 5th Floor, Low Block Grand Millennium Plaza 181 Queen’s Road Central Hong Kong

14. MISCELLANEOUS

(a) The registered office of the Underwriter is P.O. Box 957, Offshore Incorporation Centre, Road Town, Tortola, British Virgin Islands and its correspondence address is Suite 505–506, 5th Floor, Low Block Grand Millennium Plaza, 181 Queen’s Road Central, Hong Kong. Dr. Yu, who is a party acting in concert with the Underwriter under the Takeovers Code, is the sole shareholder and director of the Underwriter. Dr. Yu’s address is at Suite 505–506, 5th Floor, Low Block, Grand Millennium Plaza, 181 Queen’s Road Central, Hong Kong.
(b) The securities to be acquired by Opulent, Dr. Yu and parties acting in concert with any of them in pursuance of the Open Offer will not be transferred, charged or pledged to any other persons.
(c) The English text of this circular shall prevail over their Chinese text in case of inconsistencies.

– 157 –

NOTICE OF EGM

==> picture [119 x 55] intentionally omitted <==

FINET GROUP LIMITED 財華社集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8317)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the ‘‘EGM’’) of the shareholders (the ‘‘Shareholders’’) of Finet Group Limited (the ‘‘Company’’) will be held at Suite 505–506, 5th Floor, Low Block, Grand Millennium Plaza, 181 Queen’s Road Central, Hong Kong on Friday, 3 July 2009 at 10: 00 a.m. for the purpose of considering and, if thought fit, passing the following resolutions (the ‘‘Resolutions’’) as ordinary resolutions of the Company:

ORDINARY RESOLUTIONS

‘‘THAT subject to and conditional upon (i) the passing of Resolution No. 2 by the Independent Shareholders (as defined in a circular (the ‘‘Circular’’) of the Company dated 9 June 2009 of which this notice forms part, a copy of which is marked ‘‘A’’ and signed by the Chairman of this meeting for the purpose of identification); (ii) the Executive (as defined in the Circular) granting the Whitewash Waiver (as defined in the Circular) to Opulent (as defined in the Circular) and parties acting in concert with it and the satisfaction of any conditions attached to the Whitewash Waiver imposed by the Executive; (iii) the Listing Committee of the Stock Exchange (as defined in the Circular) granting approval for the listing of, and permission to deal in, the Offer Shares (as defined in the Circular); (iv) the filing and registration of all documents relating to the Open Offer (as defined in the Circular) as required by law to be filed or registered with the Registrar of Companies in Hong Kong in accordance with the Companies Ordinance (Chapter 32 of the Laws of Hong Kong); and (v) the obligations of the Underwriter (as defined in the Circular) becoming unconditional and not being terminated in accordance with the terms of the Underwriting Agreement (as defined in the Circular):
(A) the issue by way of open offer of not less than 299,685,000 Offer Shares and not more than 303,387,500 Offer Shares to the Qualifying Shareholders (as defined in the Circular) on the basis of one Offer Share for every two existing Shares (as defined in the Circular) then held on the Record Date (as defined in the Circular) at the Subscription Price (as defined in the Circular) of HK$0.05 per Offer Share payable in full upon application and otherwise on the terms and conditions set out in the Circular be and is hereby approved;

– 158 –

NOTICE OF EGM

(B) the Directors (as defined in the Circular) be and are hereby unconditionally and specifically authorised to allot and issue such number of new Shares (the ‘‘Special Mandate’’) as may be required to be allotted and issued pursuant to or in connection with the Open Offer (notwithstanding the same may be offered, allotted or issued otherwise than pro rata to the Qualifying Shareholders) and in particular, the Directors be and are hereby authorised to make such exclusions or other arrangements in relation to fractional entitlements and/or Excluded Shareholders (as defined in the Circular) as they deem necessary, desirable or expedient having regard to any restrictions or obligations under the articles of association of the Company or the laws of, or the rules and regulations of any recognised regulatory body or any stock exchange in, any territory outside Hong Kong AND THAT the Special Mandate is in addition to, and shall not prejudice or revoke the general mandate to issue Shares granted to the Directors by the Shareholders at the annual general meeting of the Company held on 31 July 2008 or such other general or special mandate(s) to issue Shares which may from time tom time be granted to the Directors prior to the passing of this Resolution;
(C) the Underwriting Agreement and the transactions contemplated thereunder (including but not limited to the arrangements for taking up of the unsubscribed Offer Shares, if any, by the Underwriter) be and are hereby approved, confirmed and ratified;
(D) the arrangements for application for the Offer Shares by the Qualifying Shareholders in excess of their assured entitlements under the Open Offer be and are hereby approved, confirmed and ratified; and
(E) the Directors be and are hereby authorised to do all things and acts and sign all documents which they consider desirable or expedient to implement and/ or give effect to any matter relating to or in connection with the implementation of the Open Offer, the Underwriting Agreement and the transactions contemplated thereunder.’’
‘‘THAT subject to the Executive granting the Whitewash Waiver to Opulent and parties acting in concert with it and the satisfaction of any conditions attached to the Whitewash Waiver imposed by the Executive, the Whitewash Waiver pursuant to Note 1 on dispensations from Rule 26 of the Takeovers Code (as defined in the Circular) waiving any obligations on the part of Opulent and parties acting in concert with it to make a mandatory offer to Shareholders to acquire Shares and other convertible securities of the Company other than those already owned by Opulent and parties acting in concert with it which would otherwise arise under Rule 26.1 of the Takeovers Code as a result of (i) any allotment or issue of Shares pursuant to the fulfilment by Opulent and parties acting in concert with it of the obligations under the Underwriting Agreement and the Irrevocable Undertakings (as defined in the Underwriting Agreement); and (ii) any allotment or issue of Conversion Shares (as defined in the Circular) to Opulent, be and is hereby approved by the Independent Shareholders AND THAT the Directors be and are

– 159 –

NOTICE OF EGM

hereby authorised to do all things and acts and sign all documents which they consider desirable or expedient to implement and/or give effect to any matter relating to or in connection with the Whitewash Waiver.’’

‘‘THAT conditional upon the passing of Resolution No. 1 by the Independent Shareholders, the authorised share capital of the Company be and is hereby increased from HK$10,000,000 divided into 1,000,000,000 Shares to HK$20,000,000 divided into 2,000,000,000 Shares by the creation of additional 1,000,000,000 Shares, such Shares ranking pari passu in all respects with the existing issued and unissued Shares in the capital of the Company except for the entitlements to the Open Offer and the Bonus Issue of Warrants (as defined in the Circular), AND THAT the Directors be and are hereby authorised to do all things and acts and sign all documents which they consider desirable or expedient to implement and/or give effect to any or all of the transactions contemplated in this Resolution.’’
‘‘THAT conditional upon (i) the passing of Resolution No. 1 by the Independent Shareholders; (ii) the passing of Resolution No. 3 by the Shareholders; and (iii) the Listing Committee of the Stock Exchange granting approval for the listing of, and permission to deal in, the Conversion Shares, the Directors be and are hereby authorised:
(A) to create and issue warrants (the ‘‘Bonus Warrants’’) to subscribe for new Shares at any time during the period from the date of issue thereof to the date immediately preceding the date falling on the second anniversary of the date of issue of the Bonus Warrants (both dates inclusive) at the initial subscription price of HK$0.10 per Share, subject to adjustment, upon the terms and conditions of the instrument by way of deed poll constituting the Bonus Warrants (the ‘‘Warrant Instrument’’) (a copy of the draft Warrant Instrument, subject to further modifications, is marked ‘‘B’’ and signed by the Chairman of this meeting for the purpose of identification) by way of bonus issue to the holders of the Offer Shares in the proportion of three Bonus Warrants for every ten Offer Shares issued and allotted under the Open Offer PROVIDED THAT (a) the Bonus Warrants shall not be issued to the Excluded Shareholders; and (b) entitlement to Bonus Warrants shall be rounded down to the nearest whole number and fractional entitlements shall not be allotted but shall be aggregated and sold for the benefit of the Company;
(B) to issue and allot to the holders of the Bonus Warrants the appropriate number of Conversion Shares upon due exercise of the subscription rights attaching thereto; and

– 160 –

NOTICE OF EGM

(C) to do all things and acts and sign all documents which they consider desirable or expedient to implement and/or give effect to any or all of the transactions contemplated in this Resolution.’’

By Order of the Board Yu Gang, George Chairman

Hong Kong, 9 June 2009

Registered office:

Cricket Square Hutchins Drive PO Box 2681 Grand Cayman KY1-1111 Cayman Islands

Head office and principal place of business: Suite 505–506 5th Floor Low Block Grand Millennium Plaza 181 Queen’s Road Central Hong Kong

Notes:

Every Shareholder entitled to attend and vote at the above meeting is entitled to appoint one or, if he is holder of more than one Share, more proxies to attend and vote instead of him. A proxy need not be a Shareholder.
A form of proxy for use at the above meeting is enclosed herewith.
Where there are joint holders of any Shares, any one of such persons may vote at the meeting personally or by proxy or by a duly authorised corporate representative (as defined in the articles of association of the Company), in respect of such Shares as if he was solely entitled thereto provided that if more than one of such joint holders be present at the meeting personally or by proxy or by a duly authorised corporate representative, the person whose name stands first on the register of Shareholders in respect of such Shares shall alone be entitled to vote in respect thereof.
To be valid, the form of proxy together with a power of attorney or other authority (if any) under which it is signed or a certified copy thereof, must be deposited at the Company’s branch share registrar, Computershare Hong Kong Investor Services Limited, at Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof (as the case may be). Completion and return of the form of

– 161 –

NOTICE OF EGM

proxy will not preclude any member from attending and voting in person at the meeting or any adjournment thereof (as the case may be) should he so wishes and in such event, the instrument appointing the proxy shall be deemed to be revoked.

Shareholders are recommended to read the circular of the Company containing information concerning the resolutions proposed in this notice.

– 162 –

AI assistant

E-STATION GREEN TECHNOLOGY GROUP CO., LIMITED — Proxy Solicitation & Information Statement 2009

51463_rns_2009-06-09_ae202513-59c4-4ccd-ad1e-f3ca9c7c68f6.pdf

FINET GROUP LIMITED 財 華 社 集 團 有 限 公 司

Underwriter to the Open Offer

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

EXPECTED TIMETABLE

EFFECT OF BAD WEATHER ON THE LATEST TIME FOR ACCEPTANCE OF AND PAYMENT FOR THE OFFER SHARES

FINET GROUP LIMITED 財 華 社 集 團 有 限 公 司

APPLICATION FOR WHITEWASH WAIVER;

AND

PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL

INTRODUCTION

PROPOSED OPEN OFFER

Issue statistics

LETTER FROM THE BOARD

Subscription Price

Basis of assured allotment

Fractions of the Offer Shares

Bonus Issue of Warrants

Subscription price of the Bonus Warrants

Subscription period

Fractional entitlements to the Bonus Warrants

Status of the Offer Shares and the Conversion Shares

LETTER FROM THE BOARD

Application for listing

Qualifying Shareholders

Closure of register of members

Certificates of the Offer Shares and the Bonus Warrants and refund cheques

Rights of Excluded Shareholders

LETTER FROM THE BOARD

Application for excess Offer Shares

UNDERWRITING ARRANGEMENT AND UNDERTAKINGS

The Underwriting Agreement

LETTER FROM THE BOARD

Undertakings from Opulent

Undertakings from Dr. Yu

Conditions of the Open Offer

Termination of the Underwriting Agreement

LETTER FROM THE BOARD

If the Underwriter exercises such right, the Open Offer will not proceed.

WARNING OF THE RISKS OF DEALING IN THE SHARES

SHAREHOLDING STRUCTURE OF THE COMPANY

PREVIOUS FUND RAISING EXERCISES OF THE COMPANY

REASONS FOR THE OPEN OFFER AND THE BONUS ISSUE OF WARRANTS AND USE OF PROCEEDS

ADJUSTMENTS TO EXERCISE PRICES AND NUMBER OF SHARE OPTIONS

PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL

IMPLICATIONS UNDER THE TAKEOVERS CODE AND THE WHITEWASH WAIVER

INFORMATION ON THE GROUP

LETTER FROM THE BOARD

INDEPENDENT BOARD COMMITTEE

INDEPENDENT FINANCIAL ADVISER

GENERAL

INTENTION OF THE UNDERWRITER

EGM

RECOMMENDATION

FURTHER INFORMATION

FINET GROUP LIMITED 財 華 社 集 團 有 限 公 司

APPLICATION FOR WHITEWASH WAIVER;

AND

PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

SOMERLEY LIMITED

Dear Sirs,

PROPOSED OPEN OFFER ON THE BASIS OF ONE OFFER SHARE FOR EVERY TWO EXISTING SHARES HELD ON THE RECORD DATE WITH BONUS ISSUE OF WARRANTS ON THE BASIS OF THREE BONUS WARRANTS FOR EVERY TEN OFFER SHARES ISSUED AND ALLOTTED UNDER THE OPEN OFFER; AND

APPLICATION FOR WHITEWASH WAIVER

INTRODUCTION

LETTER FROM SOMERLEY

PRINCIPAL FACTORS AND REASONS CONSIDERED

1. Background and financial information of the Group

(i) Financial year ended 31 March 2008

(ii) Six months ended 30 September 2008

LETTER FROM SOMERLEY

2. Reasons for and use of proceeds of the Open Offer

3. Financing alternatives available to the Group

LETTER FROM SOMERLEY

E-STATION GREEN TECHNOLOGY GROUP CO., LIMITED Proxy Solicitation & Information Statement 2009

FINET GROUP LIMITED 財華社集團有限公司

FINET GROUP LIMITED 財華社集團有限公司

FINET GROUP LIMITED 財華社集團有限公司