Emperor Capital Group Ltd. - Proxy Solicitation & Information Statement 2009

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

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

This circular is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities of the Company.

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.

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(Incorporated in Bermuda with limited liability)

(Stock Code: 717)

(1) CONNECTED TRANSACTION – SUBSCRIPTION OF SHARES BY A CONNECTED PERSON AND (2) WHITEWASH WAIVER

Financial Adviser to the Company

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Independent Financial Adviser to the Independent Board Committee and Independent Shareholders

Pelican Securities Limited

A letter from the Independent Board Committee is set out on page 13 of this circular.

A letter from Pelican Securities Limited, the independent financial adviser, containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 14 to 26 of this circular.

A notice convening the SGM to be held at 28th Floor, Emperor Group Centre, 288 Hennessy Road, Wanchai, Hong Kong, on Tuesday, 22 September 2009 at 10:30 a.m. is set out on pages 98 to 99 of this circular. A form of proxy is also enclosed with this circular.

Whether or not you are able to attend the SGM of the Company, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return it to the Company’s branch share registrar in Hong Kong, Tricor Secretaries Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the SGM. Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjourned meeting (as the case may be) should you so wish.

for identification purposes only

4 September 2009

	Pages
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
The Subscription Agreement dated 5 August 2009 and
the Supplemental Subscription Agreement dated 19 August 2009 . . . . . . . . . . . . . . . . . . .	7
Use of proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Reasons for the Total Subscription . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Effect on shareholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Intention of Win Move regarding the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Whitewash Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Listing Rules implication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Letter from the Independent Board Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Letter from Pelican Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Appendix I – Financial Information of the Group. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	27
Appendix II – General Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	87
Notice of SGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	98

DEFINITIONS

In this circular, unless otherwise defined, terms used herein shall have the following meaning:

“acting in concert”

has the meaning ascribed thereto in the Takeovers Code

“AY Trust” The Albert Yeung Discretionary Trust, a discretionary trust of which Dr. Yeung Sau Shing, Albert is the founder and Ms. Daisy Yeung (Managing Director) is one of the eligible beneficiaries

“Board” the board of directors of the Company

“Company” Emperor Capital Group Limited, a company incorporated in Bermuda with limited liability, the securities of which are listed on the Stock Exchange

“connected person(s)” has the meaning ascribed to it in the Listing Rules
“Director(s)” director(s) of the Company

“Executive” the Executive Director of the Corporate Finance Division of the SFC or any delegate of the Executive Director

“First Announcement” the announcement dated 7 August 2009 made by the Company in relation to, among other things, the Subscription and the Whitewash Waiver in relation to the Subscription

“Group”

the Company and its subsidiaries

“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 to advise the Independent Shareholders on the Subscription Agreement, the Supplemental Subscription Agreement and the Whitewash Waiver
“Independent Shareholders” Shareholders other than (i) Win Move, its associates and/ or parties acting in concert with it, and (ii) those who are involved in or interested in the Subscription Agreement, the Supplemental Subscription Agreement and the Whitewash Waiver
“Last Trading Day” 5 August 2009, being the last trading day immediately before the signing of the Subscription Agreement

DEFINITIONS

“Latest Practicable Date” 1 September 2009, being the latest practicable date prior to the printing of this circular for ascertaining certain information in this circular “Listing Rules” Rules Governing the Listing of Securities on the Stock Exchange “Pelican Securities” or “Independent Pelican Securities Limited, a corporation licensed to carry out Financial Adviser” type 1 (dealing in securities), type 4 (advising on securities) and type 6 (advising on corporate finance) regulated activities under the SFO, being the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Subscription Agreement, the Supplemental Subscription Agreement and the Whitewash Waiver “Placing Agent” Emperor Securities Limited “Placing Shares” 72,150,000 existing Shares placed pursuant to the Placing “Placing” the placing of the Placing Shares pursuant to the Placing Agreement “Placing Agreement” the placing agreement dated 5 August 2009 entered into between Win Move and the Placing Agent in relation to the placing of 72,150,000 existing Shares at a placing price of HK$0.42 per Share “PRC” The People’s Republic of China “Second Announcement” the announcement dated 19 August 2009 made by the Company in relation to the Supplemental Subscription Agreement and the Whitewash Waiver “SFC” The Securities and Futures Commission of Hong Kong “SFO” Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SGM” a special general meeting of the Company to be convened to approve (i) the Subscription Agreement, the Supplemental Subscription Agreement and the transactions contemplated thereunder including the grant of the Specific Mandate and the issue of the Total Subscription Shares and (ii) the Whitewash Waiver

“Shares” ordinary shares of HK$0.01 each of the Company

DEFINITIONS

“Shareholder(s)”

shareholder(s) of the Company

“Stock Exchange”

The Stock Exchange of Hong Kong Limited

“Subscription” the subscription of 72,150,000 new Shares by Win Move pursuant to the Subscription Agreement
“Subscription Agreement” the subscription agreement dated 5 August 2009 entered into between Win Move and the Company for the subscription of 72,150,000 new Shares by Win Move
“Subscription Price” HK$0.42 for each Total Subscription Share “Subscription Shares” the 72,150,000 new Shares to be issued to Win Move pursuant to the Subscription Agreement
“Supplemental Subscription the supplemental subscription agreement dated 19 August Agreement” 2009 entered into between Win Move and the Company for the subscription of 72,150,000 new Shares by Win Move in addition to the Subscription Shares
“Specific Mandate” the specific mandate to be sought by the Directors at the SGM to issue the new Shares pursuant to the Subscription Agreement and the Supplemental Subscription Agreement
“Takeovers Code” The Hong Kong Code on Takeovers and Mergers issued by the SFC
“Top-Up Subscription Agreement” the subscription agreement dated 5 August 2009 entered into between the Company and Win Move pursuant to which Win Move will subscribe up to 72,150,000 Top-Up Shares
“Top-Up Subscription” the conditional subscription by Win Move of the Top-Up Shares pursuant to the Top-Up Subscription Agreement
“Top-Up Shares” up to 72,150,000 new Shares to be issued to Win Move pursuant to the Top-Up Subscription Agreement
“Top-Up Waiver” a waiver pursuant to Note 6 on dispensations from Rule 26 of the Takeovers Code of the obligation of Win Move and persons acting in concert with it arising as a result of the Top-Up Subscription to make a mandatory offer for all the Shares not already owned or agreed to be subscribed by them

DEFINITIONS

“Total Subscription” the subscription of a total of 144,300,000 new Shares by Win Move pursuant to the Subscription Agreement and Supplemental Subscription Agreement “Total Subscription Share(s)” the 144,300,000 new Shares to be issued to Win Move pursuant to the Subscription Agreement and the Supplemental Subscription Agreement “Whitewash Waiver” a waiver pursuant to Note 1 on Dispensations from Rule 26 of the Takeovers Code of the obligation of Win Move and persons acting in concert with it to make a mandatory offer for all the Shares not already owned or agreed to be subscribed by them as a result of the Total Subscription

“Win Move” Win Move Group Limited, a company indirectly wholly owned by the AY Trust
“HK$” Hong Kong dollars “%” per cent.

LETTER FROM THE BOARD

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(Incorporated in Bermuda with limited liability) (Stock Code: 717)

Directors: Yeung, Daisy (Managing Director) Chan Pak Lam, Tom Choi Suk Hing, Louisa Fung Chi Kin Kwok Chi Sun, Vincent Cheng Wing Keung, Raymond*

Independent Non-executive Directors

Registered office: Clarendon House Church Street Hamilton HM11 Bermuda

Principal Office: 24th Floor Emperor Group Centre 288 Hennessy Road Wanchai Hong Kong

4 September 2009

To the Shareholders

Dear Sir/Madam,

(1) CONNECTED TRANSACTION – SUBSCRIPTION OF SHARES BY A CONNECTED PERSON AND (2) WHITEWASH WAIVER

INTRODUCTION

On 7 August 2009, the Directors announced that Win Move, the controlling shareholder of the Company, entered into the Placing Agreement on 5 August 2009 and agreed to place, through the Placing Agent, 72,150,000 Shares to independent investors at a price of HK$0.42 per Share. On 5 August 2009, Win Move also entered into the Top-Up Subscription Agreement with the Company pursuant to which Win Move would subscribe for and the Company would allot to Win Move 72,150,000 new Shares at the price of HK$0.42 per Share.

for identification purposes only

LETTER FROM THE BOARD

The Directors also announced in the First Announcement that Win Move entered into the Subscription Agreement on 5 August 2009 with the Company pursuant to which the Company agreed to allot and issue and Win Move agreed to subscribe for 72,150,000 new Shares at a price of HK$0.42 per new Share. The Subscription Shares amount to approximately 10% of the issued share capital of the Company of 721,511,272 Shares as at the date of the First Announcement.

The Placing was completed on 12 August 2009 but the Top-Up Subscription was lapsed on 19 August 2009 as the Top-Up Waiver, being one of the conditions of the Top-Up Subscription Agreement, was not obtained before the long stop date of the Top-Up Subscription Agreement, i.e. 19 August 2009. The Company decided not to extend the long stop date and not to proceed further with the application of Top-Up Waiver, and entered into a Supplemental Subscription Agreement with Win Move on 19 August 2009 pursuant to which Win Move agreed to subscribe for and the Company agreed to issue and allot to Win Move 72,150,000 new Shares in addition to the 72,150,000 Subscription Shares to be allotted under the Subscription Agreement. As such, a total of 144,300,000 new Shares will be allotted to Win Move upon completion of the Subscription Agreement and the Supplemental Subscription Agreement.

An application has been made by Win Move and parties acting in concert with it to the Executive for the Whitewash Waiver pursuant to Note 1 on Dispensations from Rule 26 of the Takeovers Code and the Executive has indicated that the Whitewash Waiver will be granted. The Whitewash Waiver, if granted by the Executive, would be subject to, among other things, the approval of the Independent Shareholders at the SGM by way of poll.

If the Whitewash Waiver is not obtained, the Total Subscription will lapse and will not proceed. Shareholders and potential investors of the Company should exercise caution when dealing in the Shares.

Pelican Securities has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Subscription Agreement, the Supplemental Subscription Agreement and the Whitewash Waiver. The letter from Pelican Securities setting out its advice and recommendations to the Independent Board Committee and the Independent Shareholders on the Subscription Agreement, the Supplemental Subscription Agreement and the Whitewash Waiver is set out on pages 14 to 26 of this circular.

The purpose of this circular is to provide Shareholders with details of the Total Subscription and the Whitewash Waiver, and a notice convening the SGM.

LETTER FROM THE BOARD

CONNECTED TRANSACTION

THE SUBSCRIPTION AGREEMENT DATED 5 AUGUST 2009 AND THE SUPPLEMENTAL SUBSCRIPTION AGREEMENT DATED 19 AUGUST 2009

Parties

Issuer: The Company

Subscriber: Win Move

As at the date of the First Announcement, Win Move was beneficially interested in 325,322,302 Shares, representing approximately 45.09% of the issued share capital of the Company. The shareholding of Win Move in the Company decreased to 253,172,302 Shares, representing approximately 35.09% upon completion of the Placing on 12 August 2009. On 19 August 2009, the Company announced in the Second Announcement that the Top-Up Subscription has lapsed and the Company entered into a Supplemental Subscription Agreement with Win Move on 19 August 2009 pursuant to which Win Move agreed to subscribe for and the Company agreed to issue and allot to Win Move 72,150,000 new Shares in addition to the 72,150,000 Subscription Shares to be allotted under the Subscription Agreement. As such, a total of 144,300,000 new Shares will be allotted to Win Move upon completion of the Subscription Agreement and the Supplemental Subscription Agreement. Win Move is a substantial shareholder of the Company and therefore a connected person of the Company within the meaning of the Listing Rules. Win Move is indirectly wholly owned by AY Trust, a discretionary trust of which Dr. Yeung Sau Shing, Albert is the founder and Ms. Daisy Yeung (Managing Director) is one of the eligible beneficiaries.

Number of Total Subscription Shares

The Total Subscription Shares comprise of 144,300,000 new Shares which represent approximately 20.00% of the existing issued share capital of the Company of 721,511,272 Shares and approximately 16.67% of the share capital of 865,811,272 Shares as enlarged by the Total Subscription. No agreement, arrangement or understanding has been entered by Win Move to transfer, charge or pledge the Total Subscription Shares to any person.

Subscription Price

The subscription price of HK$0.42:

(i) represents a discount of approximately 4.55% to the closing price of HK$0.44 per Share as quoted on the Stock Exchange on 5 August 2009, being the Last Trading Day;
(ii) represents a discount of approximately 6.87% to the average of the closing price of the Shares of HK$0.451 per Share quoted on the Stock Exchange for the five trading days up to and including the Last Trading Day;
(iii) is equivalent to the closing price of HK$0.42 per Share as quoted on the Stock Exchange on 19 August 2009, being the last trading day prior to the Second Announcement;

LETTER FROM THE BOARD

(iv) represents a discount of 2.55% to the average of the closing price of the Shares of HK$0.431 per Share quoted on the Stock Exchange for the five trading days up to and including 19 August 2009; and
(v) is equivalent to the closing price of HK$0.42 per Share as quoted on the Stock Exchange as at the Latest Practicable Date.

The aggregate subscription monies will be payable by Win Move in cash upon completion of the Total Subscription. The Company will bear all cost and expenses incurred in connection with the Total Subscription. The Subscription Price was arrived at after arm’s length negotiation between the Company and Win Move. The Directors considered the Subscription Price is fair and reasonable as far as the Company is concerned.

Mandate to issue new Shares

The Total Subscription Shares will be issued and allotted under the Specific Mandate to be obtained at the SGM.

Ranking of new Shares

The Total Subscription Shares when fully paid, will rank pari passu with the existing Shares in issue.

Conditions of the Total Subscription

The conditions for the Subscription Agreement and the Supplemental Subscription Agreement are:

(i) the approval of the Subscription Agreement, the Supplemental Subscription Agreement and the grant of the Specific Mandate to issue and allot the Total Subscription Shares and the Whitewash Waiver by the Independent Shareholders at the SGM;
(ii) the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, all of the Total Subscription Shares;
(iii) the granting of the Whitewash Waiver by the Executive; and
(iv) all other necessary consents and approvals which may be required to be obtained on the part of the Company in respect of the Subscription Agreement, the Supplemental Subscription Agreement and the transactions contemplated therein.

None of the above conditions can be waived. If any of the above conditions precedent is not fulfilled on or before the long stop date of 31 October 2009 (or such other date as the parties may mutually agree), the Subscription Agreement and the Supplemental Subscription Agreement shall lapse and become null and void and both the Company and Win Move will be released from all obligations under the Subscription Agreement and the Supplemental Subscription Agreement (save for liabilities for any antecedent breaches thereof). As at the Latest Practicable Date, none of the above conditions has been fulfilled.

LETTER FROM THE BOARD

Completion

Completion of the Subscription Agreement and the Supplemental Subscription Agreement shall take place simultaneously within two business days (or such other date as the Company and Win Move may agree) after fulfilment of all the above conditions precedent.

Application for listing

An application will be made by the Company to the Listing Committee of the Stock Exchange for granting of the listing of, and permission to deal in, the Total Subscription Shares.

USE OF PROCEEDS

The aggregate gross proceeds of the Total Subscription will be approximately HK$60.61 million and the net proceeds will be approximately HK$60.10 million after deducting all related expenses (including the brokerage fee under the Placing, professional advisors fees and printing costs). The Company intends to apply the net proceeds as general working capital and future business development of the Group. The net price to be raised per Share from the Total Subscription will be approximately HK$0.42 per Share.

REASONS FOR THE TOTAL SUBSCRIPTION

The Company is an investment company and its subsidiaries are principally engaged in the provision of financial services in Hong Kong, including (i) brokerage services for securities, futures and options, (ii) providing margin and initial public offering financings as well as loans and advances to its clients, and (iii) corporate finance advisory and wealth management services. The Group has been actively expanding its business and improving the quality of its services by exploring new products and opening new service centre. In order to maintain the dynamic development of the Group and at the same time enhance its existing business, additional working capital is required. The Directors consider that the Total Subscription will strengthen the financial position of the Company. As the Top-Up Subscription has lapsed, the Company entered into the Supplemental Subscription Agreement so as to maintain the amount of fund to be raised. The Directors consider that the terms of the Subscription Agreement and the Supplemental Subscription Agreement fair and reasonable and are in the interests of the Company and its Shareholders as a whole.

No fund raising exercise was carried out during the twelve months period immediately preceding the date of the First Announcement and the Second Announcement.

LETTER FROM THE BOARD

EFFECT ON SHAREHOLDING

The effect on the shareholding structure of the Company before and after the Placing and the Total Subscription is set out below:

Win Move and parties acting in concert with it_(Note 1) Placees(Note 2)_ Public Shareholders Total	As at the date of the First Announcement Number of Shares % 325,322,302 45.09 – – 396,188,970 54.91 721,511,272 100.00	Existing (Placing completed) Number of Shares % 253,172,302 35.09 72,150,000 10.00 396,188,970 54.91 721,511,272 100.00	Immediately after the Total Subscription Number of Shares % 397,472,302 45.91 72,150,000 8.33 396,188,970 45.76 865,811,272 100.00	Immediately after the Total Subscription Number of Shares % 397,472,302 45.91 72,150,000 8.33 396,188,970 45.76 865,811,272 100.00
				100.00

Notes:

(1) The Shares are beneficially held by Win Move, the entire issued share capital of which is indirectly held by STC International Limited, being the trustee of the AY Trust, a trust of which Dr. Yeung Sau Shing, Albert is the founder.
(2) Assuming none of the Placees disposes of any Placing Shares.

INTENTION OF WIN MOVE REGARDING THE GROUP

It is the intention of Win Move that the Group will continue with its existing principal activities. Win Move believes that the Total Subscription will provide further support to the business of the Group as well as providing the Group with additional cash to strengthen its financial position. Win Move has no intention to introduce any major changes to the existing business, or any redeployment of fixed assets of the Group other than in its ordinary course of business, and intends that the employees of the Company and its subsidiaries will continue to be employed by the Group.

WHITEWASH WAIVER

As at the Latest Practicable Date, Win Move is beneficially interested in 253,172,302 Shares, representing approximately 35.09% of the issued share capital of the Company. Upon completion of the Total Subscription, the shareholding of Win Move in the Company will increase to 397,472,302 Shares, representing approximately 45.91% of the issued share capital of the Company as enlarged by the Total Subscription. The subscription of the Total Subscription Shares will trigger an obligation on Win Move and the parties acting in concert with it to make a mandatory general offer for all the issued Shares not already owned or agreed to be subscribed by them.

LETTER FROM THE BOARD

Pursuant to the Takeovers Code, the Placing Agent is presumed to be acting in concert with Win Move for the purpose of the Subscription. Save for (i) non-discretionary dealings in the Shares for and on behalf of its individual clients by the Placing Agent, (ii) the disposal of the Placing Shares by Win Move and (iii) the entering into the Placing Agreement, the Top-Up Subscription Agreement, the Subscription Agreement and the Supplemental Subscription Agreement by Win Move, there has been no dealing of the Shares, derivatives, options, warrants and conversion rights or other similar rights which are convertible or exchangeable into the Shares by Win Move and parties acting in concert with it during the six months period immediately prior to the date of the First Announcement and the Second Announcement and up to the Latest Practicable Date. Consent has been obtained by Win Move and parties acting in concert with it from the Executive for Win Move disposing the Placing Shares under paragraph 3(b) of Schedule VI to the Takeovers Code.

LISTING RULES IMPLICATION

Win Move is the controlling shareholder of the Company and is therefore a connected person of the Company under the Listing Rules. Accordingly, the Total Subscription constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules which require Independent Shareholders’ approval at general meeting by way of poll. The Directors will convene a SGM to seek approval of the Independent Shareholders to approve the Subscription Agreement, the Supplemental Subscription Agreement and the Specific Mandate.

SGM

A SGM will be held to consider and if thought fit, passing the resolutions by Independent Shareholders to approve (i) the Subscription Agreement, the Supplemental Subscription Agreement and the transactions contemplated thereunder (including the grant of the Specific Mandate and the allotment of the Total Subscription Shares) and (ii) the Whitewash Waiver by way of poll. Win Move is interested in and is entitled to exercise control over the voting rights of 253,172,302 Shares, representing approximately 35.09% of the issued share capital of the Company as at the Latest Practicable Date. Win Move and its associates will abstain from voting at the SGM on the resolution in relation to the Subscription Agreement and the Supplemental Subscription Agreement pursuant to the Listing Rules. Win Move and parties acting in concert with it and those who are involved in or interested in the Subscription Agreement, the Supplemental Subscription Agreement and the Whitewash Waiver will abstain from voting at the SGM on the resolution in relation to the Whitewash Waiver pursuant to the Takeovers Code. Moreover, certain placees under the Placing, who are staff of companies related to Win Move and of the parties acting in concert with Win Move, have voluntarily undertaken not to vote at the SGM on the Whitewash Waiver.

LETTER FROM THE BOARD

A form of proxy for use at the SGM is enclosed. Whether or not you are able to attend the SGM, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return it to the Company’s branch share registrar in Hong Kong, Tricor Secretaries Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong, as soon as possible and in any event not less than 48 hours before the time appointed for holding the SGM. Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjourned meeting (as the case may be) should you so wish.

RECOMMENDATION

The Independent Board Committee comprising all the independent non-executive Directors, namely, Mr. Fung Chi Kin, Mr. Kwok Chi Sun, Vincent and Mr. Cheng Wing Keung, Raymond has been established to advise the Independent Shareholders as to the fairness and reasonableness of the terms of the Subscription Agreement, the Supplemental Subscription Agreement and the Whitewash Waiver. Your attention is drawn to the letter of advice of the Independent Board Committee set out on page 13 of this circular. Your attention is also drawn to the letter of advice from Pelican Securities to the Independent Board Committee and the Independent Shareholders set out on pages 14 to 26 of this circular.

The Independent Board Committee, having taken into account the advice of Pelican Securities considers that the terms of the Subscription Agreement, the Supplemental Subscription Agreement and the Whitewash Waiver are fair and reasonable so far as the Independent Shareholders are concerned and recommends the Independent Shareholders to vote in favour of the ordinary resolutions to be proposed for approving the Subscription Agreement, the Supplemental Subscription Agreement and Whitewash Waiver at the SGM.

The Directors are of the view that the terms of the Subscription Agreement, the Supplemental Subscription Agreement and the Whitewash Waiver are fair and reasonable. Having considered the aforesaid factors under the paragraphs headed “Reasons for the Total Subscription”, the Board is of the view that the Total Subscription and the Whitewash Waiver are in the interests of the Company and the Shareholders as a whole.

Your attention is drawn to the letter of advice from the Independent Board Committee and the letter from Pelican Securities as set out on pages 13 and 14 to 26 respectively in this circular.

GENERAL

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

By Order of the Board Emperor Capital Group Limited Daisy Yeung Managing Director

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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(Incorporated in Bermuda with limited liability)

(Stock Code: 717)

4 September 2009

To the Independent Shareholders

Dear Sir or Madam,

(1) CONNECTED TRANSACTION – SUBSCRIPTION OF SHARES BY A CONNECTED PERSON AND (2) WHITEWASH WAIVER

We refer to the circular dated 4 September 2009 (the “Circular”) issued by the Company to its Shareholders of which this letter forms part. Terms defined in the Circular shall have the same meanings herein unless the context otherwise requires.

We have been appointed to form the Independent Board Committee to advise the Independent Shareholders as to whether, in our opinion, the Subscription Agreement and the Supplemental Subscription Agreement are on normal commercial terms and whether the Subscription Agreement, the Supplemental Subscription Agreement and the Whitewash Waiver are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Pelican Securities has been appointed to advise the Independent Board Committee and the Independent Shareholders in respect of (i) the Subscription Agreement, the Supplemental Subscription Agreement and the transactions contemplated therein and (ii) the Whitewash Waiver.

We wish to draw your attention to the letter from the Board, as set out on pages 5 to 12 of this Circular and the text of a letter of advice from Pelican Securities, as set out on pages 14 to 26 of this Circular, both of which provide details of (i) the Subscription Agreement, the Supplemental Subscription Agreement and the transactions contemplated therein and (ii) the Whitewash Waiver.

Having considered the terms of the Subscription Agreement, the Supplemental Subscription Agreement and the Whitewash Waiver, the advice of Pelican Securities and the relevant information contained in the letter from the Board, we are of the opinion that the Subscription Agreement, the Supplemental Subscription Agreement and the transactions contemplated therein, are on normal commercial terms and that the Subscription Agreement, the Supplemental Subscription Agreement and the Whitewash Waiver are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolutions to be proposed at the SGM.

Yours faithfully,

Fung Chi Kin Kwok Chi Sun, Vincent Independent Independent Non-executive Director Non-executive Director

Cheng Wing Keung, Raymond Independent Non-executive Director

for identification purposes only

LETTER FROM PELICAN SECURITIES

The following is the text of a letter of advice from Pelican Securities to the Independent Board Committee and the Independent Shareholders in respect of the terms of the Subscription Agreement, the Supplemental Subscription Agreement and the Whitewash Waiver, which has been prepared for the purpose of inclusion in this circular.

PELICAN SECURITIES LIMITED

Unit 1502 Cosco Tower, 183 Queen’s Road Central, Sheung Wan, Hong Kong

4 September 2009

The Independent Board Committee and the Independent Shareholders

Emperor Capital Group Limited

24th Floor, Emperor Group Centre 288 Hennessy Road, Wanchai Hong Kong

Dear Sirs,

(1) CONNECTED TRANSACTION – SUBSCRIPTION OF SHARES BY A CONNECTED PERSON AND (2)WHITEWASH WAIVER

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the terms of the Subscription Agreement and the Supplemental Subscription Agreement and the Whitewash Waiver. The details are, among other things, set out in the letter from the Board contained in the circular of the Company dated 4 September 2009 (“Circular”) to the Shareholders, of which this letter forms part. Terms used in this letter shall have the same meanings as those defined in the Circular unless the context requires otherwise.

On 5 August 2009, Win Move has agreed to place, through the Placing Agent, 72,150,000 Shares to independent investors at a price of HK$0.42 per Share. On the same day, Win Move entered into the Top-Up Subscription Agreement with the Company pursuant to which Win Move would subscribe for and the Company would allot 72,150,000 new Shares at the price of HK$0.42 per Share. The Placing was completed on 12 August 2009 but the Top-Up Subscription was lapsed on 19 August 2009 as the Top-Up Waiver, being one of the conditions of the Top-Up Subscription Agreement, was not obtained before the long stop date of the Top-Up Subscription Agreement, i.e. 19 August 2009.

Also on 5 August 2009, the Company entered into the Subscription Agreement with Win Move in relation to the subscription of 72,150,000 new Shares at HK$0.42 per Subscription Share.

LETTER FROM PELICAN SECURITIES

On 19 August 2009, the Company entered into the Supplemental Subscription Agreement with Win Move for the subscription of 72,150,000 new Shares in addition to the 72,150,000 Subscription Shares to be allotted under the Subscription Agreement. The net proceeds from the Total Subscription, which will amount to approximately HK$60.10 million, are intended to be used as general working capital and future business development of the Group.

As at the Latest Practicable Date, Win Move was beneficially interested in 253,172,302 Shares, representing approximately 35.09% of the existing issued share capital of the Company. It is a substantial Shareholder and therefore a connected person of the Company under the Listing Rules. On this basis, the Total Subscription constitutes a connected transaction of the Company which is subject to the approval of the Independent Shareholders at the SGM.

As Win Move’s shareholding interest in the Company will increase from approximately 35.09% to approximately 45.91% as a result of the Total Subscription, Win Move will be obliged to make a mandatory offer for all the issued Shares not already owned or agreed to be acquired by Win Move and parties acting in concert with it pursuant to Rule 26 of the Takeovers Code. Application has been made to the Executive for the Whitewash Waiver and the Executive has indicated that the Whitewash Waiver will be granted. Completion of the Subscription Agreement and the Supplemental Subscription Agreement is subject to, among other things, the Whitewash Waiver being granted by the Executive and approved by the Independent Shareholders at the SGM by way of poll in accordance with the Takeovers Code.

The SGM will be convened at which resolutions will be proposed to seek the Independent Shareholders’ approval on the Subscription Agreement, the Supplemental Subscription Agreement and the Whitewash Waiver. Win Move and its associates will abstain from voting on the resolution in relation to the Subscription Agreement and the Supplemental Subscription Agreement pursuant to the Listing Rules. Win Move and parties acting in concert with it and all persons who are connected with Win Move and parties acting in concert with it will abstain from voting on the resolution in relation to the Whitewash Waiver pursuant to the Takeovers Code. Moreover, certain placees under the Placing, who are staff of companies related to Win Move and of the parties acting in concert with Win Move, have voluntarily undertaken not to vote at the SGM on the Whitewash Waiver.

The Independent Board Committee comprising all the independent non-executive Directors, namely Mr. Fung Chi Kin, Mr. Kwok Chi Sun, Vincent, and Mr. Cheng Wing Keung, Raymond, has been established to advise the Independent Shareholders on the Subscription Agreement, the Supplemental Subscription Agreement and the Whitewash Waiver. The appointment of Pelican Securities Limited as the Independent Financial Adviser in respect of the Total Subscription and the Whitewash Waiver has been approved by the Independent Board Committee. As the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders, our role is to give an independent opinion to the Independent Board Committee for it to advise the Independent Shareholders on whether the Subscription Agreement, the Supplemental Subscription Agreement, the Whitewash Waiver, the issue and allotment of the Total Subscription Shares and the implementation of the transactions contemplated under the Subscription Agreement and the Supplemental Subscription Agreement, are on normal commercial terms and are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

LETTER FROM PELICAN SECURITIES

BASIS OF OUR ADVICE

In formulating our opinion to the Independent Board Committee and the Independent Shareholders, we have relied on the statements, information, opinions and representations contained or referred to in the Circular and the information and representations as provided to us by the Directors, the Company and its management. We have assumed that all information and representations that have been provided by the Directors, for which they are solely and wholly responsible, are true and accurate at the time when they were made and continue to be so as at the date of the SGM. We have also assumed that all statements of belief, opinion, expectation and intention made by the Directors in the Circular were reasonably made after due enquiry and careful consideration. We have no reason to suspect that any material facts or information have been withheld or to doubt the truth, accuracy and completeness of the information and facts contained in the Circular, or the reasonableness of the opinions expressed by the Company, its management and/or the Directors, which have been provided to us. We consider that we have taken sufficient and necessary steps on which to form a reasonable basis and an informed view for our opinion.

The Directors jointly and severally accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this circular have been arrived at after due and careful consideration and there are no other facts not contained in this circular, the omission of which would make any statement in this circular misleading.

We consider that we have been provided with sufficient information to reach an informed view and to provide a reasonable basis for our opinion. We have not, however, conducted any independent investigation into the business, financial conditions and affairs or the future prospects of the Group.

Lastly, where information in this letter has been extracted from published or otherwise publicly available sources, the sole responsibility of Pelican Securities is to ensure that such information has been correctly and fairly presented and reproduced from the relevant sources.

PRINCIPAL FACTORS TAKEN INTO CONSIDERATION

In formulating our opinion on the Total Subscription and the Whitewash Waiver, we have taken into consideration the following principal factors and reasons:

1. Background of the Total Subscription

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Also on 5 August 2009, the Company entered into the Subscription Agreement with Win Move in relation to the subscription of 72,150,000 new Shares at HK$0.42 per Subscription Share.

Subject to the fulfillment of the conditions precedent (as detailed under the paragraph headed “Conditions of the Total Subscription” in the letter from the Board in the Circular) pursuant to the Subscription Agreement and the Supplemental Subscription Agreement, completion shall take place simultaneously within two business days (or such other date as the Company and Win Move may agree) after fulfillment of all of the conditions precedent.

2. Financial Performance of the Group

The Group is principally involved in provision of financial services including brokerage services for securities and futures and options traded on the exchanges in Hong Kong, Japan, the United States and the United Kingdom. It also provides margin and IPO financing as well as loans and advances to clients in Hong Kong. Its services further extend to corporate finance advisory and wealth management services. The following are extracts from the second interim report of the Group for the 12 months ended 31 March 2009 and the annual report of the Group for the year ended 31 March 2008.

	For the	For the	For the
	12 months ended	year ended	year ended
	31 March 2009	31 March 2008	31 March 2007
	(unaudited)	(audited)	(audited)
	HK$’000	HK$’000	HK$’000
Revenue	82,099	185,259	123,691
– Broking	49,193	121,759	73,430
– Financing	19,781	51,764	45,808
– Placing and underwriting	9,410	11,386	4,453
– Corporate finance	3,715	350	–
Profit/(Loss) before taxation	(27,162)	55,379	30,010
Profit/(Loss) for the period	(26,551)	45,942	24,096

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	As at	As at	As at
	31 March 2009	31 March 2008	31 March 2007
	(unaudited)	(audited)	(audited)
	HK$’000	HK$’000	HK$’000
Total assets	772,193	731,595	657,272
Total liabilities	322,582	255,433	230,567
Net assets	449,611	476,162	426,705
Gearing ratio	71.75%	53.64%	54.03%

From the above table, we noted that the broking business and the financing business were the Group’s main source of recurring revenue. Revenue from the broking business and the financing business accounted for approximately 84.0%, 93.7% and 96.4% of the total revenue for the 12 months ended 31 March 2009, 2008 and 2007 respectively. Since late 2008, the worsening global financial crisis, frozen credit markets and announcements of declining corporate earnings in the world as well as the Asian markets have posed adverse impact on the market sentiment and trading activities. The Group’s revenue from the broking business and the financing business has decreased substantially from approximately HK$173.5 million for the 12 months ended 31 March 2008 to approximately HK$69.0 million for the year ended 31 March 2009, representing a substantial decrease of approximately 60.3%.

Meanwhile, the Group recorded a net loss of approximately HK$26.6 million for the 12 months ended 31 March 2009 as compared to a net profit of approximately HK$45.9 million for the year ended 31 March 2008. With reference to the second interim report for the 12 months ended 31 March 2009, such loss was primarily attributable to the persistent widespread economic and financial uncertainty globally and in Hong Kong, which resulted in a decrease in turnover and earnings and an increase in the impairment loss on trade receivables of the Group.

As for the financial position of the Group, the total assets of the Group, comprising mainly trade receivables and bank balances and cash, have increased from approximately HK$731.6 million (out of which approximately HK$173,445,000 was clients’ trust money) as at 31 March 2008 to approximately HK$772.2 million (out of which approximately HK$223,581,000 was clients’ trust money) as at 31 March 2009, representing an increase of approximately 5.5%. Such increase was mainly attributable to an increase in trust money held by the Group on trust for clients of approximately HK$50.1 million. Meanwhile, the total liabilities of the Group, comprising mainly trade payables, have increased from approximately HK$255.4 million as at 31 March 2008 to approximately HK$322.6 million as at 31 March 2009, representing a relatively larger increase of approximately 26.3% as compared to the increase in total assets. Such increase was mainly attributable to an increase in trade payables of approximately HK$76.4 million, out of which approximately HK$50.1 million was as a result of the increase in trust money held by the Group on trust for clients. The changes in total assets and total liabilities have resulted in its gearing ratio (being total liabilities/net assets) increased substantially from approximately 53.6% as at 31 March 2008 to approximately 71.7% as at 31 March 2009.

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Despite of the rapidly changing market environment and challenges, the Directors advised us that the Group would continue its dynamic development and seek for opportunities of development in the future. The Group hopes to extend its reach to corporates as well as retail clients in the mainland China and Hong Kong in the offering of brokerage, financing, corporate finance and other services while enhancing its corporate image. In this regard, we are of the view that the Group has a reasonable need to maintain a healthy and stronger financial position to support such growth.

3. Reasons for and benefits of the Total Subscription

As set out in the letter from the Board in the Circular, we understand that the Group has been actively expanding its business and improving the quality of its services by exploring new products and opening new service centres. In order to maintain the dynamic development of the Group and at the same time enhance its existing business, additional working capital is required. As the Company recognised a net loss of approximately HK$26.6 million for the 12 months ended 31 March 2009, the Directors consider that the Total Subscription will strengthen the financial position of the Company. Win Move also believes that the Total Subscription will provide further support to the business of the Group as well as providing the Group with additional cash to strengthen its financial position.

As advised by the Directors, the Group had launched a financial service centre in Mongkok, Kowloon last year so as to be in line with its commitment to offer full-range financial services to customers. The Group is targeting to open more service centres or branches when the opportunity arises. In addition, although the Group had bank balances and cash of approximately HK$534,752,000 (out of which approximately HK$223,581,000 was clients’ trust money) as at 31 March 2009, the Group, being a securities broker in Hong Kong, has to maintain certain level of liquid capital so as to satisfy the Financial Resources Rules. Being one of the leading financial service providers in Hong Kong, the Group also aims to expand its business as the sponsors and/ or underwriters to IPOs in Hong Kong. Looking forward, the Group intends to explore business opportunities in the China market and offer various products and services. Given the above, we concur with the Directors that the Total Subscription will provide further working capital to support the existing business and future growth of the Group as well as providing the Group with additional cash to strengthen its financial position and hence to fulfill its statutory requirement of the Financial Resources Rules.

Moreover, we were advised by the Directors that they had considered various financing alternatives for raising additional fund, including arrangement of new bank loans, placing of new shares, rights issue, open offer and etc. However, taking on additional bank borrowings may increase the Group’s current gearing ratio and it is also difficult to obtain facilities from banks in light of the current financial turmoil and negative market sentiment. On the other hand, rights issue or open offer may take a longer time to complete while the Group intends to complete the Total Subscription in a short timing due to the fluctuation of the Hong Kong stock market. Rights issue or open offer may also incur higher costs to the Group in the form of underwriting commission, as a typical rights issue or open offer would involve engagement of underwriter. The additional cost may not be favourable to the Group and the Independent Shareholders. In addition, we observed that rights issue or open offer often involve a bigger discount to the subscription price, which may have an adverse impact on the Shares. Moreover, although both open offer and rights issue may be feasible in raising capital for the Group without diluting Shareholders’ proportionate shareholding

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in the Company (if fully taken up by Shareholders), they might however not be well received by the existing Shareholders in view of the volatile market. In light of the above and in view that the issue of the Total Subscription Shares will enlarge and strengthen the capital base of the Company, we concur with the Directors that the Total Subscription is the best financing alternative available to the Group at this particular moment to increase the general working capital and to finance the future business development of the Group.

4. Subscription Price

The Subscription Price of HK$0.42 per new Share represents:

(i) a discount of approximately 4.55% to the closing price of HK$0.44 per Share as quoted on the Stock Exchange on the Last Trading Day;
(ii) a discount of approximately 6.87% to the average closing price per Share of approximately HK$0.451 in the last five consecutive trading days immediately prior to and including the Last Trading Day;
(iii) a discount of approximately 6.56% to the average closing price per Share of approximately HK$0.450 in the last ten consecutive trading days immediately prior to and including the Last Trading Day;
(iv) equal to the closing price of HK$0.42 per Share as quoted on the Stock Exchange on 19 August 2009, being the last trading day prior to the Second Announcement;
(v) a discount of approximately 2.55% to the average closing price per Share of approximately HK$0.431 in the last five consecutive trading days immediately prior to and including 19 August 2009;
(vi) a discount of approximately 3.78% to the average closing price per Share of approximately HK$0.437 in the last ten consecutive trading days immediately prior to and including 19 August 2009;
(vii) a premium of approximately 37.00% to the average closing price per Share of approximately HK$0.307 within the period commencing from 1 September 2008 to and including 19 August 2009 (the “Review Period’’);
(viii) equal to the closing price of HK$0.42 per Share as quoted on the Stock Exchange as at the Latest Practicable Date; and
(ix) a discount of approximately 32.60% to the Group’s net assets as extracted from the Group’s second interim report for the 12 months ended 31 March 2009 of approximately HK$0.623 per Share as at 31 March 2009 (based on the unaudited consolidated net asset value of the Group of approximately HK$449,611,000 as at 31 March 2009 and 721,511,272 issued Shares immediately after the Placing).

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In assessing the Subscription Price, we have reviewed the closing price level of the Shares traded on Stock Exchange during the Review Period. The Review Period covers the period following the onset of the financial crisis up to the day where terms of the Subscription Price were finalised. During the Review Period, overall financial market conditions had changed significantly with tighter credit conditions, drop in corporate earnings and decline in equity markets. These events have adversely impacted the financial condition of the Group. We therefore believe that it is appropriate to analyse the Subscription Price relative to the performance of the Shares during the Review Period.

Daily closing prices of the Company

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0.6
Subscription Price of HK$0.42 per Share
0.5
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Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09
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Source: the Stock Exchange website (www.hkex.com.hk)

As shown in the above table, the daily closing price of the Shares had been persistently below or equal to the Subscription Price on every trading day from 1 September 2008 and until 8 May 2009, being 168 trading days out of the total 246 trading days during the Review Period. From 11 May 2009 and onwards, the daily closing price of the Shares fluctuated to the highest level of HK$0.485 per Share on 1 June 2009 but fell back to HK$0.38 per Share on 13 July 2009 and closed at HK$0.44 on the Last Trading Day. Since then, the daily closing price of the Shares fluctuated and closed at HK$0.42 on 19 August 2009, being the last trading day prior to the Second Announcement.

Having considered (i) that the closing prices of the Shares had been persistently below or equal to the Subscription Price for a relatively long period during the Review Period; and (ii) the premiums and minimal discounts as represented by the Subscription Price over/to the closing prices/average closing prices of the Shares for different periods/days during the Review Period as just presented, we are of the view that the Subscription Price is fair and reasonable so far as the Independent Shareholders are concerned.

LETTER FROM PELICAN SECURITIES

The issuance of 144,300,000 new Shares at a discount of approximately 32.60% to the Company’s unaudited condensed consolidated net assets as at 31 March 2009 will dilute the net asset value from HK$0.623 per Shares to HK$0.589 per Share. However, we believe this is acceptable given the benefits of the Total Subscription as discussed in section 3 above.

5. Financial effects of the Total Subscription on the Group

(a) Cashflow

According to the second interim report of the Group for the 12 months ended 31 March 2009, the Group had bank balances and cash and net current assets of approximately HK$534,752,000 (out of which approximately HK$223,581,000 was clients’ trust money) and approximately HK$437,300,000 respectively as at 31 March 2009. Upon completion of the Total Subscription, the liquidity and cash position of the Group will be improved as the Total Subscription will facilitate the Company to raise net proceeds of approximately HK$60.10 million. Upon completion of the Total Subscription, bank balances and cash and the net current assets would be approximately HK$594,852,000 (out of which approximately HK$223,581,000 was clients’ trust money) and approximately HK$497,400,000 respectively subject to all other things remaining unchanged. Accordingly, we are of the view that the cash position and the net current assets of the Company are expected to be improved upon completion of the Total Subscription.

(b) Earnings

Save for the expenses relating to the Total Subscription, we are of the view that the completion of the Total Subscription will not have any immediate material impact on the earnings of the Group. However, as set out in the letter from the Board in the Circular, the net proceeds from the Total Subscription in the amount of approximately HK$60.10 million will be applied as general working capital and future business development of the Group which the Directors are optimistic that this may have a positive impact to the business of the Group.

(c) Net Asset Value

According to the second interim report of the Group for the 12 months ended 31 March 2009, the unaudited condensed consolidated net asset value of the Group as at 31 March 2009 was approximately HK$449,611,000. Upon completion of the Total Subscription, the net asset value of the Company will be improved as the Total Subscription would increase the share capital of the Company. Upon completion of the Total Subscription, the net asset value of the Group would be increased to approximately HK$509,711,000 subject to all other things remaining unchanged. Accordingly, we are of the view that the completion of the Total Subscription will have a positive impact on the net asset value of the Group.

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(d) Gearing

According to the second interim report of the Group for the 12 months ended 31 March 2009, the gearing ratio of the Group as at 31 March 2009 was approximately 71.75%, as derived by dividing the total liabilities of the Group as at 31 March 2009 of approximately HK$322,582,000 by the net assets of approximately HK$449,611,000 as at 31 March 2009.

Upon completion of the Total Subscription, the net assets of the Group would be increased as a result of the Total Subscription whilst the total liabilities of the Group would remain the same, resulting in a drop of gearing ratio of the Group to approximately 63.29% subject to all other things remaining unchanged. Thus, we are of the view that the gearing level of the Group will be improved upon completion of the Total Subscription.

Based on the above, the Total Subscription would have an overall positive effect on the financial position of the Group upon completion of the Total Subscription. On such basis, we are of the view that the Total Subscription is in the interests of the Company and the Shareholders as a whole.

6. Effects on shareholding of existing Shareholders

Upon completion of the Total Subscription, 144,300,000 Total Subscription Shares will be issued. The Total Subscription Shares represent approximately 20.00% of the existing issued share capital and approximately 16.67% of the enlarged share capital of the Company. The shareholding of Win Move, which is currently the single largest shareholding in the Company, will increase from 35.09% to 45.91% upon completion of the Total Subscription. The table below sets out the shareholding structure of the Company as at the Latest Practicable Date and immediately after the issuance of the Total Subscription Shares.

Win Move and parties acting in concert with it_(Note 1) Placees(Note 2)_ Public Shareholders Total	As at the date of the As at the Latest Practicable Date Immediately after the First Announcement (Placing completed) Total Subscription Number Number Number of Shares % of Shares % of Shares % 325,322,302 45.09 253,172,302 35.09 397,472,302 45.91 – – 72,150,000 10.00 72,150,000 8.33 396,188,970 54.91 396,188,970 54.91 396,188,970 45.76 721,511,272 100.00 721,511,272 100.00 865,811,272 100.00	As at the date of the As at the Latest Practicable Date Immediately after the First Announcement (Placing completed) Total Subscription Number Number Number of Shares % of Shares % of Shares % 325,322,302 45.09 253,172,302 35.09 397,472,302 45.91 – – 72,150,000 10.00 72,150,000 8.33 396,188,970 54.91 396,188,970 54.91 396,188,970 45.76 721,511,272 100.00 721,511,272 100.00 865,811,272 100.00
		100.00

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Notes:

(1) The Shares are beneficially held by Win Move, the entire issued share capital of which is indirectly held by STC International Limited, being the trustee of the AY Trust, a trust of which Dr. Yeung Sau Shing, Albert is the founder.
(2) Assuming none of the Placees disposes of any Placing Shares.

As shown above, the shareholding of Win Move, which is currently the single largest shareholding in the Company, will increase from 35.09% (45.09% before Placing) to 45.91% upon completion of the Total Subscription. Meanwhile, the percentage shareholding interests of existing public Shareholders (including the Placees) will be diluted from approximately 64.91% as at the Latest Practicable Date to approximately 54.09% upon issuance of the Total Subscription Shares.

Notwithstanding the dilution, after taking into account the factors discussed in section 3 above, in particular the need for the Group to improve its financial position in this uncertain environment and also the other various financing alternatives might not be well received by the existing Shareholders in view of the volatile market, we are of the opinion that the extent of dilution to the Independent Shareholders is acceptable so far as the Independent Shareholders are concerned.

7. Intention of Win Move and parties acting in concert with it

It is the intention of Win Move that the Group will continue with its existing principal activities of provision of financial services including the brokerage business and the financing business. Win Move believes that the Total Subscription will provide further support to the business of the Group as well as providing the Group with additional cash to strengthen its financial position. Win Move has no intention to introduce any major changes to the existing business, or any redeployment of fixed assets of the Group other than in its ordinary course of business, and intends that the employees of the Company and its subsidiaries will continue to be employed by the Group.

8. Whitewash Waiver

(a) Background

As at the Latest Practicable Date, Win Move was interested in 253,172,302 Shares, representing approximately 35.09% of the issued share capital of the Company. The increase in the interest of Win Move to approximately 45.91% of the issued share capital of the Company upon completion of the Total Subscription will give rise to an obligation under Rule 26 of the Takeovers Code for Win Move to make a mandatory offer for all the issued Shares not already owned or agreed to be acquired by Win Move and parties acting in concert with it.

An application has been made to the Executive by Win Move for the Whitewash Waiver and the Executive has indicated that the Whitewash Waiver will be granted. The Whitewash Waiver, if granted by the Executive, will be subject to the approval of the Independent Shareholders by way of poll at the SGM. Win Move and parties acting in concert with it and all persons who are connected with Win Move and parties acting in

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concert with it will abstain from voting on the resolution in relation to the Whitewash Waiver pursuant to the Takeovers Code. Moreover, certain placees under the Placing, who are staff of companies related to Win Move and of the parties acting in concert with Win Move, have voluntarily undertaken not to vote at the SGM on the Whitewash Waiver.

(b) The Whitewash Waiver as a condition of the Subscription Agreement and the Supplemental Subscription Agreement

As stated in the letter from the Board in the Circular, it is one of the conditions of the Subscription Agreement and the Supplemental Subscription Agreement that the Whitewash Waiver be obtained. If the Whitewash Waiver is not granted by the Executive or not approved by the Independent Shareholders, the Subscription Agreement and the Supplemental Subscription Agreement will not become unconditional and the Total Subscription will not proceed.

(c) Win Move and parties acting in concert with it shall remain as the largest group of Shareholders

As at the Latest Practicable Date, Win Move and parties acting in concert with it are beneficially interested in 253,172,302 Shares, representing approximately 35.09% of the existing issued share capital of the Company. Upon the completion of the Subscription Agreement and the Supplemental Subscription Agreement (assuming that no further Shares are issued by the Company between the Latest Practicable Date and the completion), the beneficial shareholding interest of Win Move and parties acting in concert with it in the Company will increase from approximately 35.09% (45.09% before Placing) to 45.91%. On such basis, Independent Shareholders should note that Win Move is already the largest Shareholder prior to the Total Subscription and shall remain as the largest Shareholder upon completion of the Total Subscription.

RECOMMENDATIONS

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

(i) the Group’s difficulty in obtaining other means of debt financing in the current credit environment;
(ii) the difficulties faced by the Group and the possibility of prohibitively high fees involved in respect of a rights issue or open offer under the current market condition;
(iii) the importance of improving the Group’s financial position so that it can strengthen its financial position and continue to undertake its various business ventures in the future;
(iv) the price trends of the Shares during the Review Period while noting the dilutive effects on net asset value per Share following the Total Subscription;

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(v) overall positive effect on the financial position of the Group in terms of cashflow, earnings, net asset value, and gearing upon completion of the Total Subscription; and
(vi) the shareholding of the public Shareholders (including the Placees) will be diluted from 64.91% (54.91% before Placing) to 54.09% upon completion of the Total Subscription,

on balance, we are of the view that the Total Subscription was entered into on normal commercial terms and the terms of the Subscription Agreement and the Supplemental Subscription Agreement are fair and reasonable so far as the Independent Shareholders are concerned. We also believe they are in the interests of the Company and Shareholders as a whole, having weighed the positive and negative impacts.

We consider the Whitewash Waiver, which is a condition for the Total Subscription to proceed, to be fair and reasonable and in the interest of the Company and the Shareholders as a whole.

Accordingly, we recommend the Independent Board Committee to advise the Independent Shareholders to, and we recommend the Independent Shareholders to, vote in favour of the resolution to approve the Subscription Agreement, the Supplemental Subscription Agreement and the Whitewash Waiver.

Yours faithfully, For and on behalf of Pelican Securities Limited Charles Li Director and CEO

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. SUMMARY OF FINANCIAL INFORMATION

The following is the summary of the financial information of the Group for the three financial years ended 31 March 2008, for the six months ended 30 September 2008 and for the twelve months ended 31 March 2009.

The Company was incorporated on 27 June 2006 and its Shares were listed on the Stock Exchange on 24 April 2007. Under the group reorganization scheme to rationalize the structure of the Group in preparation for the listing of the Shares on the Stock Exchange (“Group Reorganisation”), the Company became the holding company of the Group on 2 April 2007. The Group resulting from the Group Reorganisation is regarded as a continuing entity. The financial statements of the Group for the two financial years ended 31 March 2007 have been prepared on a combined basis as if the group structure under the Group Reorganisation had been in existence throughout those financial years.

The financial information of the Group for the two financial years ended 31 March 2006 and 31 March 2007 was extracted from the Group’s 2006/2007 Annual Report. The financial information of the Group for the financial year ended 31 March 2008, for the six months ended 30 September 2008 and for the twelve months ended 31 March 2009 was extracted from the Group’s 2007/2008 Annual Report, 2008/2009 Interim Report and 2008/2009 Second Interim Report respectively.

Due to the change of the financial year end date from 31 March to 30 September as announced by the Company on 25 March 2009, the current financial period will cover a eighteen months period from 1 April 2008 to 30 September 2009. As such, the 2008/2009 Second Interim Report covers a twelve-month period from 1 April 2008 to 31 March 2009.

No qualified opinion was being given in the auditors’ report in respect of each of the three financial years ended 31 March 2008.

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

RESULTS

For the year ended 31 2006 2007 (audited) (audited) HK$’000 HK$’000 Revenue 95,026 123,691 Profit/(loss) before taxation 31,000 30,010 Taxation (5,010) (5,914) Profit/(loss) for the year/period 25,990 24,096 Dividends_(Note 1) – – Earnings/(loss) per share Basic HK9.20 cents HK8.53 cents Diluted N/A N/A ASSETS AND LIABILITIES As at 31 March 2006 2007 (audited) (audited) _HK$’000 HK$’000 Total assets 575,965 657,272 Total liabilities (173,356) (230,567) Net assets 402,609 426,705	For the 6 months ended March 30 September 2008 2008 (audited) (unaudited) HK$’000 HK$’000 185,259 52,731 55,379 (23,732) (9,437) – 45,942 (23,732) 7,215 – HK7.39 cents (HK3.29 cents) N/A N/A As at 30 September 2008 2008 (audited) (unaudited) HK$’000 HK$’000 731,595 618,038 (255,433) (165,608) 476,162 452,430	For the 12 months ended 31 March 2009 (unaudited) HK$’000 82,099 (27,162) 611 (26,551) – (HK3.68 cents) N/A As at 31 March 2009 (unaudited) HK$’000 772,193 (322,582) 449,611

Notes:

(1) The Company declared payment of an interim dividend of HK$0.01 per Share for the financial year ended 31 March 2008, amounted to approximately HK$7.2 million. Moreover, during the financial year ended 31 March 2008, special dividends of HK$178.5 million and HK$38.5 million were paid by Emperor Securities Limited and Emperor Futures Limited respectively to their shareholders prior to the Group Reorganisation. Save as the aforesaid, no other final dividend or interim dividend was declared by the Company during the three financial years ended 31 March 2008, for the six months ended 30 September 2008 and for the twelve months ended 31 March 2009.
(2) There is no exceptional item or extraordinary item for each of the three financial years ended 31 March 2006, 2007 and 2008, for the six months ended 30 September 2008 and for the twelve months ended 31 March 2009.
(3) There is no minority interest for each of the three financial years ended 31 March 2006, 2007 and 2008, for the six months ended 30 September 2008 and for the twelve months ended 31 March 2009.

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

2. AUDITED FINANCIAL STATEMENTS OF THE GROUP FOR THE YEAR ENDED 31 MARCH 2008

Set out below are the audited consolidated financial statements of the Group for the year ended 31 March 2008 together with the comparative figures for the year ended 31 March 2007 and accompanying notes as extracted from the Group’s Annual Report 2007/2008.

Consolidated Income Statement

For the year ended 31 March 2008

Notes Revenue 9 Other operating income Staff costs 10 Commission expenses Other expenses Depreciation and amortisation Finance costs 11 Gain on disposal of intangible assets Share of loss of an associate Profit before taxation 14 Taxation 15 Profit for the year Dividends 16 Earnings per share 17 Basic Diluted	2008 HK$’000 185,259 3,188 (29,697) (40,004) (28,748) (1,322) (33,627) 701 (371) 55,379 (9,437) 45,942 7,215 HK7.39 cents N/A	2007 HK$’000 123,691 2,162 (13,624) (32,853) (21,048) (1,447) (26,871) – – 30,010 (5,914) 24,096 – HK8.53 cents N/A

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Consolidated Balance Sheet

At 31 March 2008

Notes Non-current assets Investment in an associate 20 Property and equipment 18 Intangible assets 19 Other assets 21 Amount due from an associate 20 Available-for-sale financial assets 23 Current assets Trade receivables 24 Loans and advances 22 Other debtors, deposits and prepayments 30 Amount due from a former fellow subsidiary 30 Investments held for trading 25 Tax recoverable Bank balances and cash – trust 26 Bank balances and cash – general 26 Current liabilities Trade payables 27 Other creditors and accrued charges 30 Tax liabilities Short-term bank borrowings 28 Net current assets Total assets less current liabilities Capital and reserves Share capital 29 Reserves Total capital and reserves Non-current liability Deferred taxation 15	2008 HK$’000 – 3,413 317 4,229 1,001 136 9,096 290,812 – 5,479 – 2,163 376 173,445 250,224 722,499 233,844 17,392 3,909 – 255,145 467,354 476,450 7,215 468,947 476,162 288 476,450	2007 HK$’000 – 2,124 771 4,448 – 136
		7,479
		161,520 19,000 7,122 272,756 – – 119,367 70,028
		649,793
		162,968 12,145 989 54,400
		230,502
		419,291
		426,770

		127,000 299,705
		426,705 65
		426,770

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Consolidated Statement of Changes in Equity

For the year ended 31 March 2008

At 1 April 2006 Profit for the year Total recognised income and expenses for the year At 31 March 2007 Profit for the year Total recognised income and expenses for the year Arising from Group Reorganisation Issue of shares for acquisition of a subsidiary pursuant to Group Reorganisation Issue of shares by way of preferential and public offers Listing expenses Issue of shares to controlling shareholder Transaction costs attributable to issue of shares to controlling shareholder Recognition of equity-settled share based payments Dividend paid by subsidiaries prior to Group Reorganisation Dividend recognised as distribution At 31 March 2008	Share capital HK$’000 127,000 – – 127,000 – – (127,000) 2,826 3,187 – 1,202 – – – – 7,215	Share premium HK$’000 – – – – – – – – 117,895 (10,405) 115,431 (1,625) – – – 221,296	Capital Special contribution reserve reserve HK$’000 HK$’000 – 2,004 – – – – – 2,004 – – – – 127,000 – (2,826) – – – – – – – – – – – – – – – 124,174 2,004	Retained Share option profits reserve HK$’000 HK$’000 273,605 – 24,096 – 24,096 – 297,701 – 45,942 – 45,942 – – – – – – – – – – – – – – 2,045 (217,000) – (7,215) – 119,428 2,045	Total HK$’000 402,609
					24,096
					24,096
					426,705
					45,942
					45,942
					– – 121,082 (10,405) 116,633 (1,625) 2,045 (217,000) (7,215)
					476,162

Special reserve represents the difference between the nominal value of the ordinary shares of the subsidiaries of the Company in issue and the nominal value of the shares issued by the Company for acquisition of a subsidiary pursuant to Group Reorganisation on 2 April 2007.

Capital contribution reserve represents the contribution from a fellow subsidiary for waiver of certain amount of management fee in previous years.

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Cash Flow Statement

For the year ended 31 March 2008

Notes OPERATING ACTIVITIES Profit before taxation Adjustments for: Interest expenses Depreciation of property and equipment Amortisation of intangible assets Share-based payment expenses Provision (write back) for bad and doubtful debts Share of loss of an associate Gain on disposal of intangible assets Operating cash flows before movements in working capital (Increase) decrease in trade receivables Decrease (increase) in other assets Decrease in loans and advances Increase in investments held for trading Decrease (increase) in other debtors, deposits and prepayments Increase in bank balances and cash – trust accounts Increase (decrease) in trade payables Increase in other creditors and accrued charges Cash (used in) generated from operations Hong Kong Profits Tax paid Interest paid NET CASH (USED IN) FROM OPERATING ACTIVITIES INVESTING ACTIVITIES Purchase of property and equipment Proceeds on disposal of intangible assets Purchase of available-for-sale financial asset Decrease (increase) in amount due from a former fellow subsidiary Acquisition of subsidiaries 33 Acquisition of an associate Increase in amount due from an associate NET CASH FROM (USED IN) INVESTING ACTIVITIES	2008 HK$’000 55,379 33,627 967 355 2,045 533 371 (701) 92,576 (128,117) 319 19,000 (2,163) 1,698 (54,078) 59,765 5,190 (5,810) (6,670) (33,627) (46,107) (2,121) 800 – 272,756 9,170 (1) (1,371) 279,233	2007 HK$’000 30,010 26,871 1,061 386 – (187) – – 58,141 3,709 (140) 78,596 – (3,331) (21,522) (3,543) 5,400 117,310 (4,602) (26,871) 85,837 (135) – (136) (103,951) – – – (104,222)

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Cash Flow Statement

For the year ended 31 March 2008

FINANCING ACTIVITIES Drawdown on bank borrowings Repayment of bank borrowings Advance of subordinated loan from a former fellow subsidiary Repayment of subordinated loan from a former fellow subsidiary Advance from a controlling shareholder company Repayment to a controlling shareholder company Proceeds from issue of shares by way of preferential and public offers Proceeds from issue of shares Listing expenses Expenses on issue of shares Dividend paid to equity holders of the Company Dividend paid by subsidiaries NET CASH (USED IN) FROM FINANCING ACTIVITIES NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AS AT THE BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS AS AT THE END OF THE YEAR ANALYSIS OF THE BALANCES OF CASH AND CASH EQUIVALENTS Bank balances – general accounts and cash	2008 HK$’000 31,052,064 (31,106,464) – – 483,679 (483,679) 121,082 116,633 (10,405) (1,625) (7,215) (217,000) (52,930) 180,196 70,028 250,224 250,224	2007 HK$’000 54,400 – 550,000 (550,000) – – – – – – – – 54,400 36,015 34,013 70,028 70,028

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Consolidated Financial Statements

For the year ended 31 March 2008

1. GENERAL

The Company is incorporated and registered as an exempted company with limited liability on 27 June 2006 under the Companies Act 1981 of Bermuda (as amended) and acts as an investment holding company. Its controlling shareholder is Charron Holdings Limited (“Charron”), a limited company incorporated in the British Virgin Islands.

Its shares have been listed on the Main Board of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) on 24 April 2007. The addresses of the registered office and principal place of business of the Company are disclosed in the “Corporate Information” section of the annual report.

The Company acts as an investment holding company. The principal activities of the Company’s subsidiaries are set out in note 36.

The consolidated financial statements are presented in Hong Kong dollars (“HK$”), which is the same as the functional currency of the Company.

2. GROUP REORGANISATION AND BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS

Under the group reorganisation scheme to rationalise the structure of the Group in preparation for the listing of the Company’s shares on the Stock Exchange (the “Group Reorganisation”), the Company has become the holding company of the Group on 2 April 2007. Details of the reorganisation were set out in the paragraph headed “Statutory and General Information – Reorganisation” in Appendix V to the prospectus dated 11 April 2007 issued by the Company (the “Prospectus”).

The Group resulting from the above mentioned reorganisation is regarded as a continuing entity. Accordingly, the consolidated financial statements of the Group have been prepared using the principles of merger accounting in accordance with Accounting Guideline 5 “Merger Accounting for Common Control Combinations” as if the group structure under the Group Reorganisation had been in existence throughout the two years ended 31 March 2008.

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

In the current year, the Group has applied, for the first time, the following new standard, amendment and interpretations (“new HKFRSs”) issued by HKICPA, which are effective for the Group’s financial year beginning 1 April 2007.

HKAS 1 (Amendment) Capital disclosures HKFRS 7 Financial instruments: Disclosures HK(IFRIC) – Int 7 Applying the restatement approach under HKAS 29 Financial Reporting in Hyperinflationary Economies HK(IFRIC) – Int 8 Scope of HKFRS 2 HK(IFRIC) – Int 9 Reassessment of embedded derivatives HK(IFRIC) – Int 10 Interim financial reporting and impairment HK(IFRIC) – Int 11 HKFRS 2: Group and treasury share transactions

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

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

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

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

HKAS 1 (Revised) Presentation of financial statements[1] HKAS 23 (Revised) Borrowing costs[1] HKAS 27 (Revised) Consolidated and separate financial statements[2] HKAS 32 & 1 (Amendments) Puttable financial instruments and obligations arising on liquidation[1] HKFRS 2 (Amendment) Vesting conditions and cancellations[1] HKFRS 3 (Revised) Business combinations[2] HKFRS 8 Operating segments[1] HK(IFRIC) – Int 12 Service concession arrangements[3] HK(IFRIC) – Int 13 Customer loyalty programmes[4] HK(IFRIC) – Int 14 HKAS 19 – The limit on a defined benefit asset, minimum funding requirements and their interaction[3]

1 Effective for annual periods beginning on or after 1 January 2009.

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

3 Effective for annual periods beginning on or after 1 January 2008.

4 Effective for annual periods beginning on or after 1 July 2008.

The Directors of the Company anticipate that the application of these standards, amendment or interpretations will have no material impact on the results and the financial position of the Group except for the adoption of HKFRS 3 (Revised) Business Combinations and HKAS 27 (Revised) Consolidated and Separate Financial Statements. HKFRS 3 (Revised) may affect the accounting for business combination for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 July 2009. HKAS 27 (Revised) will affect the accounting treatment on changes in parent’s ownership interest in a subsidiary that do not result in a loss of control, which will be accounted for as equity transactions.

4. SIGNIFICANT ACCOUNTING POLICIES

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

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

Basis of consolidation

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

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

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

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

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Business combination

Common control combinations

The business combinations under common control are accounted for in accordance with merger accounting. In applying merger accounting, the consolidated financial statements incorporate the financial statement items of the combining entities or businesses in which the common control combination occurs as if they had been combined from the date when the combining entities or businesses first came under the control of the controlling party.

The net assets of the combining entities or businesses are combined using the existing book values from the controlling parties’ perspective. No amount is recognised in respect of goodwill or excess of acquirer’s interest in the net fair value of acquiree’s identifiable assets, liabilities and contingent liabilities over cost at the time of common control combination, to the extent of the continuation of the controlling party’s interest.

The consolidated income statements includes the results of each of the combining entities or businesses from the earliest date presented or since the date when the combining entities or businesses first came under the common control, where this is a shorter period, regardless of the date of the common control combination.

The comparative amounts in the consolidated financial statements are presented as if the entities or businesses had been combined at the previous balance sheet date or when they first come under common control, which is the shorter.

Business combinations other than common control combinations

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

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

Interests in associates

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

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

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable arising from financial services and is recognised on the following basis:

Commission income for broking business of securities, futures and option dealing is recorded as income on a trade-date basis.
Insurance brokerage commission is recognised when the services are rendered or on straight-line basis over the claw back period.
Advisory and other corporate finance services fee income are recognised when the services are rendered.
Underwriting commission income, sub-underwriting income and placing commission are recognised when the services are rendered.
Interest income from a financial asset is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts the estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount.

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

Property and equipment

Property and equipment are stated at cost less subsequent accumulated depreciation and accumulated impairment losses.

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

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

Leasing

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

The Group as lessee

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

Foreign currencies

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

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are recognised in profit or loss in the period in which they arise. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in consolidated income statement for the period.

Share-based payment transactions

Equity-settled share-based payment transactions

Share options granted to directors, employees and others providing similar services

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

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

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

Retirement benefit costs

Payments to the Group’s retirement benefits scheme which are defined contribution plans are charged as an expense when employees have rendered service entitling them to the contributions.

Borrowing costs

All borrowing costs are recognised as and included in finance costs in the consolidated income statement in the period in which they are incurred.

Taxation

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

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

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

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

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

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Intangible assets

Intangible assets represent the trading rights, with which the holders have the rights to trade on the Stock Exchange and Hong Kong Futures Exchange Limited (“HKFE”). On initial recognition, intangible assets acquired separately are recognised at cost. After initial recognition, intangible assets with finite useful lives are carried at costs less accumulated amortisation and any accumulated impairment losses. Amortisation for intangible assets with finite useful lives is provided on a straight-line basis over their estimated useful lives.

Gains or losses arising from derecognition of an intangible asset are measured at the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the income statement when the asset is derecognised.

Financial instruments

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

Financial assets

The Group’s financial assets are classified into one of the three categories, including financial assets at fair value through profit or loss (“FVTPL”), loans and receivables and available-for-sale financial assets. All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the market place. The accounting policies adopted in respect of each category of financial assets are set out below.

Effective interest method

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

Income is recognised on an effective interest basis for loans and receivables.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. At each balance sheet date subsequent to initial recognition, loans and receivables (including trade receivables, loans and advances, other debtors, deposits, amount due from a former fellow subsidiary and bank balances and cash) are carried at amortised cost using the effective interest method, less any identified impairment losses (see accounting policy on impairment loss on financial assets below).

Financial assets at fair value through profit or loss

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

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

A financial asset is classified as held for trading if:

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

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

Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated or not classified as financial assets of FVTPL and loans and receivables.

For available-for-sale equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured, are measured at cost less any identified impairment losses at each balance sheet date subsequent to initial recognition (see accounting policy on impairment loss on financial assets below).

Impairment of financial assets

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

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

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

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

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

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

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

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

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Financial liabilities and equity

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

An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. The accounting policies adopted in respect of financial liabilities and equity instruments are set out below.

Effective interest method

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

Interest expense is recognised on an effective interest basis.

Financial liabilities

Financial liabilities including trade payables, other creditors and short-term bank borrowings are subsequently measured at amortised cost, using the effective interest method.

Equity instruments

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

Derecognition

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

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

Impairment losses on tangible and intangible assets

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

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

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

5. KEY SOURCES OF ESTIMATION UNCERTAINTY

The following are the key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the amounts recognised in the consolidated financial statements within the next financial year.

Estimated impairment of trade receivable

When there is objective evidence of impairment loss, the Group takes into consideration the estimation of future cash flows. The amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition). Where the actual future cash flows are less than expected, a material impairment loss may arise.

6. CAPITAL RISK MANAGEMENT

The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to shareholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of debt, which include short-term bank borrowings, capital and reserves, which include issued share capital and reserves as set out on the consolidated balance sheet, consolidated statement of changes in equity and respective notes. The Group’s overall strategy remains unchanged throughout the year.

The management reviews the capital structure by considering the cost of capital and the risks associated with each class of capital. In view of this, the Group manages its overall capital structure through the drawdown and repayment of bank borrowings, payment of dividends and issuance of share capital.

Several subsidiaries of the Group (the “Regulated Subsidiaries”) are licensed with Securities and Futures Commission (“SFC”) for the business they operate in. The Regulated Subsidiaries are subject to liquid capital requirements under Securities and Futures (Financial Resources) Rules (“SF(FR)R”) adopted by the SFC. Under the SF(FR)R, the Regulated Subsidiaries must maintain their liquid capital (assets and liabilities adjusted as determined by SF(FR)R) in excess of HK$3 million or 5% of their total adjusted liabilities, whichever is higher. The required information is filed with the SFC on a monthly basis.

Another subsidiary of the Group is a member of the Professional Insurance Brokers Association Limited and is required to maintain a minimum net asset value of HK$100,000 at all times.

During the year, there was an exceptional incidence of non-compliance by Emperor Securities Limited, a subsidiary of the Group, for the liquid capital requirements imposed by SF(FR)R. The non-compliance was reported to the SFC and was rectified immediately within two business days. The directors of Emperor Securities Limited have taken immediate remedial actions and improved the internal control system in order to prevent any non-compliance of the aforesaid requirement in the future. Except for the above, the Regulated Subsidiaries have no non-compliance of the liquid capital requirements imposed by SF(FR)R during the year.

7. FINANCIAL INSTRUMENTS

Categories of financial instruments

Financial assets Available-for-sale financial assets Investments held for trading Loans and receivables (including cash and cash equivalents) Financial liabilities Amortised cost	2008 HK$’000 136 2,163 720,612 245,197	2007 HK$’000 136 – 647,832

		222,907

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Financial risk management objectives and policies

The Group’s major financial instruments include investments held for trading, other deposits, trade receivables, loans and advances, amount due from a former fellow subsidiary and an associate, bank balances and cash, trade payables, other creditors and short-term bank borrowings. Details of these financial instruments are disclosed in respective notes. The risks associated with these financial instruments and the policies on how to mitigate these risks are set out below. The management manages and monitors these exposures to ensure appropriate measures are implemented in a timely and effective manner.

Market risk

Currency risk

Currency risk is the risk of loss due to adverse movements in foreign exchange rates relating to receivables from and payable to foreign brokers and foreign currency deposits with banks. The management monitors foreign exchange exposure and will consider hedging significant foreign exchange exposure should the need arises.

It is the Group’s policy for each operating entity to operate in local currencies as far as possible to minimise currency risks. Most of the Group’s principal businesses are conducted and recorded in Hong Kong dollars, the functional currency of respective group entities, with some receivables from and payable to foreign brokers and bank deposits are denominated in United States Dollars and Japanese Yen. The Directors of the Company considered that the effect is insignificant as minimal exposure in Japanese Yen and the linked exchange rate system of Hong Kong Dollars against United States Dollars, no sensitivity analysis foreign currency exposure has been carried out by the management.

Interest rate risk

The Group is exposed to cash flow interest rate risk in relation to variable-rate trade receivables, bank balances, trade payables and short-term bank borrowings (see notes 24, 26, 27 and 28 for details of these financial instruments). The Group is also exposed to fair value interest rate risk in relation to fixed-rate loan receivables as at 31 March 2007 (see note 22 for details).

The Group’s cash flow interest rate risk is mainly relating to the fluctuation of HIBOR or best lending rate arising from the Group’s interest bearing financial instruments. The Group’s exposure to interest rates on financial assets and financial liabilities are detailed below.

Financial instruments with variable interest-bearing in nature

	2008	2007
	HK$’000	HK$’000
Assets
Trade receivables	219,710	61,152
Bank balances	269,191	148,044
Liability
Trade payables	142,317	102,117
Short term bank borrowing	–	54,400

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Interest rate sensitivity

The sensitivity analysis below has been determined based on the exposure to interest rates at the balance sheet date and it is assumed that the amount of the above assets and liabilities at the balance sheet date was in existence for the whole year and all other variables were held constant throughout the respective year. A 100 basis point change represents management’s assessment of the possible change in interest rates.

		2008		2007
	Change in basis points		Change in basis points
	+100	–100	+100	–100
	HK$’000	HK$’000	HK$’000	HK$’000
Increase (decrease) in profit for the year	3,331	(3,331)	694	(694)

Equity price risk

The Group is exposed to equity price risk through its investments in equity securities and investment funds. The Directors of the Company manage the exposure by closely monitoring the portfolio of equity investments.

Equity price sensitivity

The sensitivity analysis below have been determined based on the exposure to equity price risks at the reporting date. A 10 percent change represents management’s assessment of the reasonably possible change in equity price.

For the year ended 31 March 2008, if the market price of the unlisted investments had been 10 percent higher/lower, the Group’s profit for the year would increase/decrease by HK$178,000 (2007: nil). This is mainly attributable to the changes in fair values of the unlisted fund investments, classified as investments held for trading.

In management’s opinion, the sensitivity analysis is unrepresentative of the inherent equity price risk as the year end exposure does not reflect the exposure during the year. During the year, the portfolio of the equity investments fluctuated.

Credit risk

The Group’s maximum exposure to credit risk in the event of the counterparties failure to perform their obligations as at 31 March 2008 in relation to each class of recognised financial assets is the carrying amount of those assets as stated in the consolidated balance sheet. In order to minimise the credit risk, the management of the Group has a delegated team to compile the credit and risk management policies, to approve credit limits and to determine any debt recovery action on those delinquent receivables. In addition, the Group reviews the recoverable amount of each individual receivables at each balance sheet date to ensure that adequate impairment losses are made for irrecoverable amounts. In this regard, the Directors of the Company consider that the Group’s credit risk is significantly reduced.

The Group’s concentration of credit risk by geographical locations is mainly in Hong Kong. The Group has no significant concentration of credit risk by any single debtor, with exposure spread over a number of clients and brokers.

Bank balances are placed in various authorised institutions and the Directors of the Company consider the credit risk for such is minimal.

Liquidity risk

Internally generated cash flow and bank borrowings are the sources of funds to finance the operations of the Group. Majority of the Group’s banking facilities are subject to floating rate and are renewable annually. The Group’s liquidity risk management includes making available standby banking facilities and diversifying the funding sources. The Group regularly reviews the major funding positions to ensure adequate financial resources are available to meet their respective financial obligations.

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

As at 31 March 2008, the Group has available unutilised banking facilities of approximately HK$100 million (2007: HK$150 million).

No analysis of maturity profile on financial liabilities is prepared. The Group’s financial liabilities are repayable on demand by virtue of its nature, except for the short-term bank borrowings of HK$54,400,000 as at 31 March 2007, which borne variable interest at HIBOR plus a spread, which was due within one month and fully repaid on 2 April 2007.

Fair value

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

the fair value of financial assets with standard terms and conditions and traded on active liquid markets are determined with reference to quoted market bid prices; and
the fair value of other financial assets and financial liabilities are determined in accordance with generally accepted pricing models based on discounted cash flow analysis using prices or rates from observable current market transactions as input.

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

8. BUSINESS AND GEOGRAPHICAL SEGMENTS

Business segments

The Group is principally engaged in four main operating divisions, namely, broking, financing, placing and underwriting and corporate finance. These divisions are the basis on which the Group reports its primary segment information.

Principal activities are as follows:

Broking	–	Provision of securities, options, futures, insurance and other wealth
		management products broking services
Financing	–	Provision of margin financing and money lending services
Placing and underwriting	–	Provision of placing and underwriting services
Corporate finance	–	Provision of corporate finance advisory

All of the activities of the Group are based in Hong Kong and all of the Group’s revenue is derived from Hong Kong. Accordingly, no analysis by geographical segments is presented.

For the year ended 31 March 2008

REVENUE Segment revenue Inter-segment sales	Broking HK$’000 121,759 95 121,854	Placing and Financing underwriting HK$’000 HK$’000 51,764 11,386 2,660 2,333 54,424 13,719	Corporate finance HK$’000 350 50 400	Elimination Consolidated HK$’000 HK$’000 – 185,259 (5,138) – (5,138) 185,259	Elimination Consolidated HK$’000 HK$’000 – 185,259 (5,138) – (5,138) 185,259
					185,259

Inter-segment sales are charged at prevailing market rate.

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

RESULTS Segment results Unallocated other operating income Unallocated corporate expenses Share of loss of an associate Profit before taxation Taxation Profit for the year	Broking HK$’000 69,476	Placing and Financing underwriting HK$’000 HK$’000 18,809 5,321	Corporate finance Consolidated HK$’000 HK$’000 314 93,920 833 (39,003) (371) 55,379 (9,437) 45,942	Corporate finance Consolidated HK$’000 HK$’000 314 93,920 833 (39,003) (371) 55,379 (9,437) 45,942
				55,379 (9,437)
				45,942

As at 31 March 2008

ASSETS Segment assets Unallocated corporate assets Consolidated total assets LIABILITIES Segment liabilities Unallocated corporate liabilities Consolidated total liabilities Other information Additions to property and equipment Amortisation of intangible assets Depreciation of property and equipment Gain on disposal of intangible assets	Broking HK$’000 241,272 224,628 Broking HK$’000 2,121 355 965 701	Placing and Financing underwriting HK$’000 HK$’000 219,710 – – – Placing and Financing underwriting HK$’000 HK$’000 – – – – – – – –	Corporate finance Consolidated HK$’000 HK$’000 11,234 472,216 259,379 731,595 11,000 235,628 19,805 255,433 Corporate finance Consolidated HK$’000 HK$’000 – 2,121 – 355 2 967 – 701

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

For the year ended 31 March 2007

REVENUE Revenue No inter-segment sales during the year. RESULTS Segment results Unallocated other operating income Unallocated corporate expenses Profit before taxation Taxation Profit for the year As at 31 March 2007 ASSETS Segment assets Unallocated corporate assets Consolidated total assets LIABILITIES Segment liabilities Unallocated corporate liabilities Consolidated total liabilities Other information Additions to property and equipment Amortisation of intangible assets Depreciation of property and equipment	Broking HK$’000 73,430 35,709 Broking HK$’000 233,243 163,740 Broking HK$’000 135 386 1,061	Financing HK$’000 45,808 18,938 Financing HK$’000 73,987 54,400 Financing HK$’000 – – –	Placing and underwriting HK$’000 4,453 1,508 Placing and underwriting HK$’000 – – Placing and underwriting HK$’000 – – –	Consolidated HK$’000 123,691 56,155 1,065 (27,210) 30,010 (5,914) 24,096 Consolidated HK$’000 307,230 350,042 657,272 218,140 12,427 230,567 Consolidated HK$’000 135 386 1,061

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

9. REVENUE

Commission and brokerage fees on securities and equity options dealing Commission and brokerage fees on dealing in futures and options contracts Commission from insurance brokerage and wealth management Corporate finance advisory services fee income Placing and underwriting commission Interest income from: Margin and initial public offer financing Loans and advances Bank deposits Others 10. STAFF COSTS Staff costs represent the amounts paid and payable to the directors and employees and comprises: Salaries, bonus, allowances and commission Contributions to retirement benefits scheme Share-based payment 11. FINANCE COSTS Interest on: Bank overdrafts and loans wholly repayable within five years Amount due to a controlling shareholder company Subordinated loan from a former fellow subsidiary Others	2008 HK$’000 99,559 14,237 871 350 11,386 51,534 230 6,960 132 185,259 2008 HK$’000 26,708 944 2,045 29,697 2008 HK$’000 31,645 1,310 – 672 33,627	2007 HK$’000 44,272 25,836 – – 4,453 35,918 9,890 3,173 149
		123,691

		2007 HK$’000 13,024 600 –
		13,624

		2007 HK$’000 23,065 – 3,227 579
		26,871

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

12. DIRECTORS’ REMUNERATION

The remuneration paid or payable to each of the directors were as follows:

For the year ended 31 March 2008

Fees Other remuneration Salaries, allowances and benefits in kind Discretionary bonus_(note 1) Contributions to retirement benefits scheme Commission Share-based payment(note 2)_ Total remuneration	Yeung, Daisy HK$’000 109 1,080 500 17 – 1,023 2,729	Chan Pak Lam, Tom HK$’000 109 876 600 61 – 1,022 2,668	Yeung Kun Lee, Sunny HK$’000 109 156 101 – – – 366	Choi Cheung Suk Hing, Wing Keung, Louisa Raymond HK$’000 HK$’000 – 135 40 – – – 3 – – – – – 43 135	Fung Chi Kin HK$’000 135 – – – – – 135	Kwok Chi Sun, Vincent HK$’000 135 – – – – – 135	2008 Total HK$’000 732 2,152 1,201 81 – 2,045
							6,211

Notes:

Discretionary bonus are determined as regard to the Company’s operating results, individual performance and comparable market statistics.
Share-based payment is equivalent to the fair values of share options granted to two directors of the Company even though no actual cash payment is made to them by the Company.

For the year ended 31 March 2007

Fees Other remuneration Salaries, allowances and benefits in kind Discretionary bonus_(note)_ Contributions to retirement benefits scheme Commission Total remuneration	Yeung, Daisy HK$’000 – 654 300 17 598 1,569	Chan Pak Lam, Tom HK$’000 – 729 – 30 – 759	Yeung Kun Lee, Sunny HK$’000 – 165 – – 61 226	2007 Total HK$’000 – 1,548 300 47 659
				2,554

Note: Discretionary bonus are determined as regard to the Company’s operating results, individual performance and comparable market statistics.

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Prior to 30 September 2006, a director of the Company was employed by Emperor International Holdings Limited (“EIHL”), a former intermediate holding company of the Company, and its subsidiaries other than the Group (hereinafter referred to as “EIHL Group”) and served both the Group and EIHL Group. Prior to 30 September 2006, EIHL Group paid the following amounts to this executive director of the Company for his services provided to the Group (the “Payment”) and such amount was recharged through management fee to a fellow subsidiary. Details of the Payment are as follows:

	2008	2007
	HK$’000	HK$’000
Salaries and other benefits
Executive director	–	123

13. EMPLOYEES’ REMUNERATION

The five individuals with the highest emoluments in the Group, included two directors of the Company for the both year ended 31 March 2008 and 31 March 2007, details of whose emolument is included in the disclosures in note 12 above. The emoluments of the remaining individuals for the years were as follows:

Salaries, allowances and benefits in kind Contributions to retirement benefits scheme Commission Their remuneration were within the following bands: Nil to HK$1,000,000 HK$1,000,001 to HK$1,500,000	2008 2007 HK$’000 HK$’000 6,035 951 30 55 – 1,652 6,065 2,658 Number of employees 2008 2007 – 2 3 1	2007 HK$’000 951 55 1,652
		2,658

During the years, no remuneration has been paid by the Group to any of the directors or the five highest paid individuals as an inducement to join or upon joining the Group or as compensation for loss of office. None of the directors waived any remuneration during the years.

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

14. PROFIT BEFORE TAXATION

	2008	2007
	HK$’000	HK$’000
Profit before taxation has been arrived at after charging (crediting):
Amortisation of intangible assets	355	386
Auditor’s remuneration	1,149	600
Depreciation of property and equipment	967	1,061
Operating lease rentals in respect of
– rented premises	2,594	1,889
– equipment	150	67
Other equipment rental expense	4,495	2,487
Listing expenses	–	5,384
Net exchange (gain) loss	(153)	26
Handling fee income	(2,123)	(1,274)
Provision (write back) of bad and doubtful debts	533	(187)
Fair value change of investments held for trading	(180)	–

15. TAXATION

Current year: Hong Kong Profits Tax – provision for the year – overprovision for prior year Deferred taxation – charge (credit) for the year	2008 HK$’000 9,350 (136) 223 9,437	2007 HK$’000 5,953 (17) (22) 5,914

Hong Kong Profits Tax is calculated at 17.5% on the estimated assessable profits for both years.

The taxation for the year can be reconciled to the profit before taxation per the consolidated income statement as follows:

Profit before taxation Taxation at income tax rate of 17.5% Tax effect of expenses not deductible for tax purpose Tax effect of income not taxable for tax purpose Overprovision in prior year Utilisation of tax losses previously not recognised Tax effect of tax losses not recognised Tax effect of share of loss of an associate Others Taxation for the year	2008 HK$’000 55,379 9,691 1,300 (1,947) (136) (54) 180 65 338 9,437	2007 HK$’000 30,010 5,252 1,165 (556) (17) – – – 70 5,914

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

The following are the major deferred tax liabilities recognised and the movements thereon during the current and prior year:

	Accelerated tax
	depreciation
	HK$’000
At 1 April 2006	87
Credited to income statement	(22)
At 31 March 2007 and 1 April 2007	65
Charged to income statement	223
At 31 March 2008	288

As at 31 March 2008, the Group had unused estimated tax losses of HIK$19,853,000 (2007: HK$292,000) available for offset against future profits. No deferred tax assets has been recognised in respect of such losses due to unpredictability of future profit streams. The unused tax losses can be carried forward indefinitely.

16. DIVIDENDS

	2008
	HK$’000
Recognised as distribution:
2008 interim dividend of HK$0.01 per share	7,215

The Directors do not recommend payment of a final dividend for the year ended 31 March 2008.

During the year, special dividend of HK$178.5 million and HK$38.5 million were paid by Emperor Securities Limited and Emperor Futures Limited respectively to their shareholders prior to the Group Reorganisation.

No dividends have been paid or declared by the Company and its subsidiaries during the years ended 31 March 2007.

17. EARNINGS PER SHARE

The calculation of the basic earnings per share attributable to the equity holders of the Company is based on the following data:

Earnings for the purposes of basic earnings per share, being profit for the year attributable to equity holders of the Company Weighted average number of ordinary shares for the purpose of calculating basic earnings per share	2008 HK$’000 45,942 621,896,913	2007 HK$’000 24,096

		282,635,636

In determining the weighted average number of ordinary shares for the purpose of calculating basic earnings per share, the shares that were in issue immediately prior to the listing of the Company’s shares on the Stock Exchange, which were issued pursuant to the Group Reorganisation, are treated as if they had been in issue throughout the two years ended 31 March 2008.

No diluted earnings per share was presented because the exercise price of the Company’s share options was higher than the average market price for the year ended 31 March 2008, and the Company had no outstanding share options throughout the year ended 31 March 2007.

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

18. PROPERTY AND EQUIPMENT

Leasehold improvements HK$’000 COST At 1 April 2006 2,898 Additions – At 31 March 2007 2,898 Acquired on acquisition of subsidiaries – Additions 530 At 31 March 2008 3,428 ACCUMULATED DEPRECIATION At 1 April 2006 2,135 Provided for the year 262 At 31 March 2007 2,397 Provided for the year 231 At 31 March 2008 2,628 CARRYING VALUES At 31 March 2008 800 At 31 March 2007 501	Furniture and fixtures HK$’000 911 – 911 – 78 989 787 44 831 42 873 116 80	Office equipment HK$’000 2,508 4 2,512 – 287 2,799 2,114 196 2,310 112 2,422 377 202	Motor vehicle HK$’000 – – – 89 – 89 – – – 1 1 88 –	Computer and equipment HK$’000 8,265 131 8,396 46 1,226 9,668 6,591 521 7,112 553 7,665 2,003 1,284	Air- conditioners HK$’000 489 – 489 – – 489 394 38 432 28 460 29 57	Total HK$’000 15,071 135
						15,206 135 2,121
						17,462
						12,021 1,061
						13,082 967
						14,049
						3,413

						2,124

All the above items of property and equipment are depreciated on a straight-line basis at the rate of 20% per annum.

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

19. INTANGIBLE ASSETS

COST At 1 April 2006 and 31 March 2007 Disposal At 31 March 2008 AMORTISATION AND IMPAIRMENT At 1 April 2006 Charged for the year At 31 March 2007 Charged for the year Eliminated on disposal At 31 March 2008 CARRYING VALUES At 31 March 2008 At 31 March 2007	HK$’000 13,000 (3,198)
	9,802
	11,843 386
	12,229 355 (3,099)
	9,485
	317

	771

Trading rights are amortised over 10 years being the period of the trading rights transferable from 6 March 2000, the effective day of the merger of the Stock Exchange, the HKFE and the Hong Kong Securities Clearing Company Limited.

20. INTERESTS IN AN ASSOCIATE

Cost of investment in an unlisted associate acquired during the year Share of post-acquisition losses Amount due from an associate Less: loss allocated in excess of cost of investment	2008 HK$’000 1 (1)
	– 1,371 (370)
	1,001

As at 31 March 2008 and 2007, the Group had interests in the following associate:

				Proportion of
	Form of			nominal value
	business	Place of		of issued capital
Name of entity	structure	incorporation	Class of share held	held by the Group	Principal activity
				2008 2007
Boom High Investments Limited	Incorporated	British Virgin	Ordinary shares	28% –	Trading in securities
(“Boom High”)		Islands

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

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

Total assets Total liabilities Net liabilities Group’s share of net liabilities of the associate Revenue Loss for the year Group’s share of losses of the associate for the year	2008 HK$’000 3,575 (4,901)
	(1,326)

	(371)

	–

	(1,326)

	(371)

The amount due from an associate is unsecured, non-interest bearing and have no fixed term of repayment. The Group has no intention to exercise its right to demand repayment of its advance to Boom High within the next twelve months from the balance sheet date. The directors believe the settlement of the advances to Boom High is not likely to occur in the foreseeable future and hence the advances are, in substance, a part of the Group’s net investment in the associate.

21. OTHER ASSETS

	2008	2007
	HK$’000	HK$’000
Statutory and other deposits	4,229	4,448

Statutory and other deposits represent deposits with various exchanges and clearing houses. They are non-interest bearing.

The fair values of these assets at each balance sheet date approximate their carrying amount.

22. LOANS AND ADVANCES

Fixed-rate loan receivables Carrying amount analysed for reporting purposes: Current assets (receivable within 12 months from the balance sheet date) – Fixed-rate loan receivables	2008 HK$’000 – –	2007 HK$’000 19,000

		19,000

Loans and advances are secured by pledged marketable securities with an aggregate carrying value of approximately HK$103,071,000 at 31 March 2007.

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

The ranges of effective interest rate (which are equal to contractual interest rates) on the Group’s loan receivables are as follows:

	2008	2007
Effective interest rate:
Fixed-rate loan receivables	–	1% per
		month

The fair values of the Group’s loans and advances at each balance sheet date, determined based on the present value of the estimated future cash flows discounted using the prevailing market rates at each of the balance sheet date approximate to the corresponding carrying amount of the receivables.

23. AVAILABLE-FOR-SALE FINANCIAL ASSETS

Unlisted securities – Equity securities of Hong Kong Precious Metals Exchange Limited – Equity securities in the Chinese Gold and Silver Exchange Society Less: Impairment for unlisted securities	2008 HK$’000 136 1,300 (1,300) 136	2007 HK$’000 136 1,300 (1,300) 136

The unlisted securities are measured at cost less impairment at each balance sheet date because the range of reasonable fair value estimates is so significant that the directors of the Company are of the opinion that their fair values cannot be measured reliably.

24. TRADE RECEIVABLES

Trade receivables from the business of dealing in futures contracts: Clearing houses and brokers Trade receivables from the business of dealing in securities: Clearing houses, brokers and cash clients Secured margin loans Less: Impairment allowance on trade receivables from the business of dealing in securities: Cash clients Secured margin loans	2008 HK$’000 20,593 43,673 227,196 (22) (628) 290,812	2007 HK$’000 12,605 34,240 114,792 (25) (92) 161,520

The settlement terms of trade receivables arising from the business of dealing in securities are two days after trade date, and trade receivables arising from the business of dealing in futures contracts are one day after trade date.

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Loans to margin clients are secured by clients’ pledged securities and repayable on demand. Included in trade receivables, HK$219,710,000 (2007: HK$61,152,000) bear variable interest at prime rate with a spread. No aged analysis is disclosed as in the opinion of the directors of the Company, the aged analysis does not give additional value in view of the nature of business of share margin financing.

As at 31 March 2008 and 2007, the total market value of securities pledged as collateral in respect of the loans to margin clients were approximately HK$657,811,000 and HK$415,101,000 respectively, while no collateral pledged from other trade receivables.

As at 31 March 2008, trade receivables denominated in Japanese Yen and United States dollars, were approximately HK$758,000 (as at 31 March 2007: HK$3,097,000) and HK$9,690,000 (as at 31 March 2007: HK$5,600,000) respectively.

Included in the allowance for bad and doubtful debts are individually impaired trade receivables with an aggregate gross balance of HK$23,066,000 (as at 31 March 2007: HK$5,380,000) due to the default or delinquency in interest or principal payments. The Group has policy for allowance of bad and doubtful debts which is based on the evaluation of collectability and age analysis of accounts and on management’s judgement including the current creditworthness, collaterals and the past collection history of each client.

Movement in the allowance for bad and doubtful debts:

Balance at the beginning of the year Charge (write back) for the year Balance at the end of the year	2008 HK$’000 117 533 650	2007 HK$’000 304 (187)
		117

In determining the recoverability of the trade receivable, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited due to the customer base being large and unrelated. Accordingly, the Directors of the Company believe that there is no further credit provision required in excess of the allowance for impairment.

Included in the Group’s trade receivables are debtors, with a carrying amount of HK$1,513,000 (as at 31 March 2007: HK$605,000) which are past due at the reporting date for which the Group has not provided as there has not been a significant change in credit quality. The Group believes that the amounts are considered recoverable and no impairment is made.

The aged analysis of the trade receivables which are past due but not impaired at the balance sheet date, are as follows:

0 – 30 days 31 – 60 days 61 – 90 days Over 90 days	2008 HK$’000 1,052 174 270 17 1,513	2007 HK$’000 434 54 107 10
		605

The trade receivables with a carrying amount of HK$266,883,000 (2007: HK$155,652,000) are neither past due nor impaired at the reporting date for which the Group believes that the amounts are considered recoverable.

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Included in trade receivables from margin clients arising from the business of dealing in securities are amounts due from certain related parties, the details of which are as follows:

			Maximum	Market value
			amount	of pledged
			outstanding	securities at
	Balance at	Balance at	during	fair value at
	1 April	31 March	the year	31 March
	HK$’000	HK$’000	HK$’000	HK$’000
Directors of the Company
Ms. Yeung Daisy and associates_(Note)_
2008	4,752	10,373	47,263	43,552
2007	6,445	4,752	594,103	364,267
Mr. Chan Pak Lam Tom and associates
2008	–	104	468	3,748
2007	–	–	–	–
Mr. Yeung Kun Lee Sunny and associates
2008	–	–	663	–
2007	–	–	607	–

Note: Associates are defined in accordance with the Rules Governing the Listing of Securities on the Stock Exchange.

The above balances are repayable on demand and bear interest at commercial rates which are similar to the rates offered to other clients. In the opinion of directors, all amounts are expected to be recovered within 12 months after balance sheet date.

The fair values of the balances included in the accounts at each balance sheet date approximate the corresponding carrying amounts.

25. INVESTMENTS HELD FOR TRADING

	2008	2007
	HK$’000	HK$’000
Unlisted investment funds	2,163	–

The fair value of the unlisted investment funds is the quoted market price which is readily and regularly available from the fund administrators.

26. BANK BALANCES AND CASH

Bank balances – general accounts and cash – trust accounts_(Note)_	2008 HK$’000 250,224 173,445 423,669	2007 HK$’000 70,028 119,367
		189,395

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Note: The Group receives and holds money deposited by clients and other institutions in the course of the conduct of the regulated activities. These clients’ monies are maintained in one or more trust bank accounts, bear interest at commercial rate with original maturity of three months or less. The Group has recognised the corresponding account payables to respective clients and other institutions. However, the Group does not have a currently enforceable right to offset those payables with the deposits placed.

As at 31 March 2008, bank balances and cash denominated in Japanese Yen and United States dollars, are approximately HK$403,000 (as at 31 March 2007: HK$296,000) and HK$7,522,000 (as at 31 March 2007: HK$7,237,000) respectively.

The general accounts and cash comprise cash held by the Group and bank deposits bear interest at commercial rate with original maturity of three months or less. The fair values of these assets at the balance sheet date approximate their carrying amounts.

27. TRADE PAYABLES

Trade payables from the business of dealing in futures contracts: Margin clients Trade payables from the business of dealing in securities: Margin and cash clients Trade payables from the business of corporate finance	2008 HK$’000 35,089 187,755 11,000 233,844	2007 HK$’000 27,376 135,592 –
		162,968

Trade payables to margin clients arising from the business of dealing in futures contracts are margin deposits received from clients for their trading of these contracts. The excess of the outstanding amounts over the required margin deposits stipulated is non-interest bearing and repayable to clients on demand. Trade payables to certain margin and cash clients arising from the business of dealing in securities bear variable interest at commercial rates, and repayable on demand subsequent to settlement date. As at 31 March 2008, included in the total trade payables, HK$142,317,000 (as at 31 March 2007: HK$102,117,000) were interest bearing whereas HK$91,527,000 (as at 31 March 2007: HK$60,851,000) were non-interest bearing. No aged analysis is disclosed as in the opinion of the Directors, the aged analysis does not give additional value in view of the nature of this business.

The settlement terms of trade payables arising from the business of dealing in securities are two days after trade date.

Included in trade payables amounts of HK$173,445,000 and HK$119,367,000 at 31 March 2008 and 2007 respectively were payable to clients and other institutions in respect of the trust and segregated bank balances received and held for clients and other institutions in the course of the conduct of regulated activities. However, the Group currently does not have an enforceable right to offset these payables with the deposits placed.

As at 31 March 2008, trade payables denominated in Japanese Yen and United States dollars, are approximately HK$483,000 (as at 31 March 2007: HK$3,392,000) and HK$13,187,000 (as at 31 March 2007: HK$12,835,000) respectively.

The fair values of the trade payables at each balance sheet date approximate to the corresponding carrying amounts.

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

28. SHORT-TERM BANK BORROWINGS

The prior year amounts represented short-term bank borrowings of HK$54,400,000 which was secured by a charge over securities subscribed under initial public offering as at 31 March 2007, and was fully repaid during the year ended 31 March 2008.

The bank borrowings carried interest at HIBOR plus a spread and were denominated in Hong Kong dollar.

29. SHARE CAPITAL

The movements in the Company’s authorised and issued share capital during the period from 27 June 2006 (date of incorporation) to 31 March 2008 are as follows:

Notes Authorised: Upon incorporation (a) Increase in authorised share capital (c) As at 31 March 2008 Issued and fully paid: Issue of shares (b) & (d) Issue of shares arising from Group Reorganisation (d) Issue of shares by way of preferential offer to the shareholders of EIHL and public offer (e) Issue of shares (f) As at 31 March 2008	Number of ordinary shares of HK$0.01 each 10,000,000 499,990,000,000 500,000,000,000 10,000,000 272,635,636 318,635,636 120,240,000 721,511,272	Nominal value of ordinary shares HK$’000 100 4,999,900
		5,000,000

		100 2,726 3,187 1,202
		7,215

Notes:

(a) On 27 June 2006, the Company was incorporated in Bermuda with authorised share capital of HK$100,000 divided into 10,000,000 shares of HK$0.01 each.
(b) On 11 July 2006, 10,000,000 unpaid shares of HK$0.01 were issued to EIHL.
(c) Pursuant to resolutions in writing of the sole shareholder of the Company passed on 2 April 2007, the authorised share capital of the Company was increased from HK$100,000 to HK$2,826,356.36 and then to HK$5,000,000,000 divided into 500,000,000,000 shares of a par value of HK$0.01 each by creation of total 499,990,000,000 shares.
(d) On 2 April 2007, the Company allotted and issued 272,635,636 shares of HK$0.01 each, credited as fully paid, to EIHL and credited as fully paid at par the 10,000,000 shares issued nil paid by the Company to EIHL on 11 July 2006 referred in (b) above, in consideration of the transfer by EIHL to the Company of its interest in Profit Ascent Group Limited, a direct wholly owned subsidiary of the Company immediately after the Group Reorganisation.
(e) On 24 April 2007, 318,635,636 shares of HK$0.01 each of the Company were issued at HK$0.38 each by way of preferential offer to the shareholders of EIHL and public offer. On the same date, the Company’s shares were listed on the Main Board of the Stock Exchange.

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(f) Pursuant to a placing agreement dated 16 November 2007 made between Charron, the controlling shareholder of the Company, and Emperor Securities Limited (the “Placing Agent”), the Placing Agent agreed to place to independent private investors 120,240,000 shares of HK$0.01 each in the Company held by Charron at a price of HK$0.97 per share.

Pursuant to a subscription agreement also dated 16 November 2007 between the Company and Charron, Charron agreed to subscribe for 120,240,000 new shares of HK$0.01 each in the Company at a price of HK$0.97 per share. These new shares were issued under the general mandate granted to the Directors at the annual general meeting of the Company held on 20 September 2007 and rank pari passu with other shares in issue in all respects. The subscription was completed on 30 November 2007.

The amount of share capital at 31 March 2007 of HK$127,000,000 represented the aggregate issued share capital of Emperor Securities Limited, Emperor Securities Nominees Limited, Emperor Futures Limited, Emperor Gold & Silver Company Limited and Famous Winner Holdings Limited as at that date.

30. OTHER FINANCIAL ASSETS AND LIABILITIES

Other debtors, deposits and prepayments

The amounts include rental deposits paid to related companies of HK$680,000 and a former fellow subsidiary HK$577,000 at 31 March 2008 and 2007 respectively.

The fair values of the balances included in the accounts at each balance sheet date approximate to the corresponding carrying amounts.

Amount due from a former fellow subsidiary

The amount is of non-trade nature, non-interest bearing, unsecured and fully settled during the year ended 31 March 2008. The fair value of the balance at each balance sheet date approximates its carrying amount.

Other creditors and accrued charges

The fair values of the balances at each balance sheet date approximate the corresponding carrying amounts.

31. SHARE OPTIONS

The Company adopted a share option scheme (the “Scheme”) which became effective on 20 September 2007 (the “Adoption Date”). The primary purpose of the Scheme is to provide incentives or rewards to the participants including the directors and eligible employees of the Group, for their contribution to the Group and/or to enable the Group to recruit and retain high-calibre employees and attract human resources that were valuable to the Group or any entity in which the Group held an equity interest.

Under the Scheme, the directors of the Company are authorised, at any time within ten years after the Adoption Date, to offer to grant options to any participant to subscribe for shares in the Company at a price not less than the highest of (i) the closing price of the Company’s shares on the date of grant; (ii) the average closing price of the Company’s shares for the five trading days immediately preceding the date of grant; and (iii) the nominal value of a Company’s share. The total number of shares in respect of which options may be granted under the Scheme cannot exceed 10% of the total number of shares in issue on the Adoption Date. The maximum number of shares which may be issued upon exercise of all outstanding options granted and yet to be exercised under the Scheme and any other share option scheme of the Company, if any, cannot exceed 30% of the total number of shares in issue from time to time. The number of shares in respect of which options may be granted to any Participant shall not exceed 1% of the total number of shares in issue in any 12-month period. An option may be exercised at any time within ten years from the date of issue of the relevant options, where the acceptance date should not be later than 28 days from the date of the offer. A nominal consideration of HK$1 is payable on acceptance of the grant of options.

On 28 January 2008, a total of 6,000,000 share options were granted to two directors of the Company at an exercise price of HK$1.2 under the terms of the Scheme.

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

A summary of movements of the outstanding share options, which was granted to the directors of the Company under the Scheme, during the year ended and balance outstanding at 31 March 2008 is as follows:

			Granted on
			28 January 2008
		Exercise price	and outstanding
Date of grant	Exercisable period	per share	at 31 March 2008
		HK$
28 January 2008	28 January 2008 – 27 January 2013	1.2	6,000,000

The fair values of options granted were calculated using the Binomial Option Pricing Model. The inputs into the models are as follows:

Share price at date of grant	:	HK$1.11
Exercise price	:	HK$1.2
Expected volatility	:	60.99%
Expected life in years	:	5
Risk free rate	:	1.97%
Expected dividend yield	:	0.9%
Suboptimal exercise factor	:	1.5

The expected volatility was determined, by using the average historical volatility of four other comparable companies’ share prices over 5 years preceding the grant date, based on management’s best estimation for the similar size and business in the market.

The fair value of each option was HK$0.3408 at the date of grant.

During the year ended 31 March 2008, approximately HK$2,045,000 is recognised in the consolidated income statement in respect of the value of options granted.

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

32. RETIREMENT BENEFITS SCHEME

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

The ORSO Scheme is funded by monthly contributions from both employees and the Group at rates ranging from 5% to 7% of the employee’s basic salary, depending on the length of service with the Group.

For members of the MPF Scheme, the Group contributes 5% of relevant payroll costs to the Scheme, which contribution is matched by the employee.

The retirement benefit cost charged to the consolidated income statement represents contributions payable to the funds by the Group at rates specified in the rules of the schemes. Where there are employees who leave the ORSO Scheme prior to vesting fully in the contributions, the contributions payable by the Group are reduced by the amount of forfeited contributions.

At 31 March 2008 and 2007, no forfeited contributions arose upon employees leaving the ORSO Scheme, are available to reduce the contributions payable in future years.

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

33. ACQUISITIONS OF SUBSIDIARIES

The Group acquired 100% of the issued share capital of Multiple Focus Investments Limited on 27 June 2007 for cash consideration of HK$18,000 from an independent third party. On 14 March 2008, the Group acquired 100% of the issued share capital of Emperor Capital Limited for cash consideration of HK$9,800,000 from a a whollyowned subsidiary of EIHL. These acquisitions have been accounted for using the purchase method. No goodwill and negative goodwill was arisen from the acquisition as the considerations were at the amounts of the net assets acquired.

The aggregate total net assets acquired in the transactions are as follows:

	Acquirees’
	carrying amount
	and fair value
	HK$’000
Net assets acquired:
Property and equipment	135
Other assets	100
Trade receivables	1,708
Other debtors, deposits and prepayments	55
Bank balances and cash – general	18,988
Amount due to a shareholder	(8,817)
Trade payables	(11,111)
Accrued expenses	(57)
	1,001
Amount due to a shareholder assigned to the Group	8,817
	9,818
Total consideration satisfied by:
Cash	9,818
Net cash inflow arising on acquisition:
Cash consideration paid	(9,818)
Bank balances and cash acquired	18,988
	9,170

Multiple Focus Investments Limited and Emperor Capital Limited contributed HK$592,000 to the Group’s profit for the period between the date of acquisition and the balance sheet date.

If the acquisition had been completed on 1 April 2007, total group revenue for the period would increase by HK$2,842,000, and profit for the period would decrease by HK$1,511,000. The 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.

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

34. RELATED PARTY TRANSACTIONS

At each balance sheet date, the balances of the Group with related parties are set out in the balance sheets and notes 11, 12, 20, 24, 30 and 33 to the consolidated financial statements.

During the both years, the Group had the following significant transactions with related parties:

(i) Loan interest to a former fellow subsidiary (ii) Advisory income from a related company (iii) Commission paid to the associates of a director (iv) Management fee to a former fellow subsidiary – computer services – administrative services and staff costs Management fee to a related company – computer services – administrative services and staff costs (v) Operating lease rentals expenses to a related company Operating lease rentals expenses to a former fellow subsidiary (vi) Commission and brokerage income from – a related company – former fellow subsidiaries – directors and their associates (vii) Underwriting and placing commission income from related companies (viii) Client interest income from – former fellow subsidiaries – directors and their associates	2008 HK$’000 – 320 124 – – – 245 1,631 1,876 1,999 – 141 – 3,505 3,560 – 1,072	2007 HK$’000 3,227

		–

		–

		391 979
		1,370

		– –
		–

		–

		1,369

		– 112 1,395

		–

		5 1,932

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

(ix) Interest expenses paid to a controlling shareholder (x) Printing, advertising and promotion expenses to related companies (xi) Trade payables to margin and cash clients arising from business dealing in securities – an associate – related companies – directors and their associates	2008 HK$’000 1,310 1,033 1,313 18 19,965	2007 HK$’000 –

		–

		– – 4,015

Note: The related companies represented subsidiaries owned by a controlling shareholder of the Company.

Compensation of key management personnel

The compensation of key management personnel was disclosed in note 12.

35. OPERATING LEASE COMMITMENTS

At each of the balance sheet dates, the Group had commitments for future minimum lease payments under noncancellable operating leases in respect of office premises and office equipment which fall due as follows:

Within one year In the second to fifth years inclusive	2008 Rental Hired premises equipment HK$’000 HK$’000 1,967 153 230 434 2,197 587	2007 Rental Hired premises equipment HK$’000 HK$’000 2,278 64 1,389 81 3,667 145	2007 Rental Hired premises equipment HK$’000 HK$’000 2,278 64 1,389 81 3,667 145
			145

For office premises and office equipment, leases are mainly negotiated and rentals are fixed for an average term of two years.

36. PRINCIPAL SUBSIDIARIES

Details of the principal subsidiaries of the Company as at 31 March 2008 are as follows:

			Proportion of
			nominal value of
			issued share
	Place and date	Issued and fully	capital held by
Name of subsidiary	of incorporation	paid capital	the Company	Principal activities
			2008
			%
Emperor Capital Limited	Hong Kong	HK$10,000,000	100	Provision of corporate
	28 September 1993			finance advisory services
Emperor China Business	Hong Kong	HK$100,000	100	Provision of promotion and
Development Company	25 May 2007			marketing services in PRC
Limited**

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

==> picture [393 x 404] intentionally omitted <==

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

Proportion of
nominal value of
issued share
Place and date Issued and fully capital held by
Name of subsidiary of incorporation paid capital the Company Principal activities
2008
%
Emperor Credit Limited Hong Kong HK$2 100 Provision of money lending
(formerly known as 2 June 1994 services
Max Finance Group
Limited)
Emperor Futures Limited Hong Kong HK$50,000,000 100 Provision of futures
12 May 1989 brokerage services
Emperor Gold & Silver Hong Kong HK$7,000,000 100 Holding of membership in
Company Limited 3 March 1994 the Hong Kong Precious
Metals Exchange Limited
and The Chinese Gold &
Silver Exchange Society
Emperor Securities Limited Hong Kong HK$170,000,000 100 Provision of securities
6 July 1990 brokerage services and
margin financing services
Emperor Securities Nominees Hong Kong HK$2 100 Provision of securities
Limited 27 August 1996 nominee services
Emperor Wealth Management Hong Kong HK$1,000,000 100 Provision of insurance and
Limited 23 September 2006 other brokerage services
Famous Winner Holdings Hong Kong HK$2 100 Signing agent for tenancy
Limited 10 September 1999 agreement
Profit Ascent Group Limited British Virgin Islands US$5 100 Investment holding
26 July 2006
----- End of picture text -----*

Directly held by the Company.
** Incorporated/established during the year ended 31 March 2008.

The above table lists the subsidiaries of the Company which, in the opinion of the Directors, principally affected the results or net assets of the Group.

To give details of all subsidiaries would, in the opinion of the directors, result in particulars of excessive length.

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

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

3. UNAUDITED FINANCIAL STATEMENTS OF THE GROUP FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2008

Set out below are the unaudited financial statements of the Group for the six months ended 30 September 2008 as extracted from the interim report of the Company 2008/2009.

Condensed Consolidated Income Statement

			Six months ended	Six months ended
			30 September
			2008	2007
			(unaudited)	(unaudited)
	Notes		HK$’000	HK$’000
Revenue	3		52,731	80,891
Other operating income			865	1,783
Staff costs			(13,954)	(9,097)
Commission expenses			(8,045)	(23,741)
Other expenses			(16,344)	(12,501)
Depreciation and amortisation			(972)	(654)
Finance costs			(433)	(12,190)
Impairment on trade receivables	6(c)		(37,350)	–
Share of loss of an associate			(230)	–
(Loss) profit before taxation			(23,732)	24,491
Taxation	4		–	(3,708)
(Loss) profit for the period			(23,732)	20,783

(Loss) earnings per share – basic	5	(HK3.29 cents) HK3.71 cents

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Condensed Consolidated Balance Sheet

Notes Non-current assets Investment in an associate Property and equipment Intangible assets Other assets Amount due from an associate Available-for-sale financial assets Current assets Trade receivables 6 Loans and advances Other debtors, deposits and prepayments Investments held for trading Tax recoverable Bank balances and cash – trust Bank balances and cash – general Current liabilities Trade payables 7 Other creditors and accrued charges Tax liabilities Net current assets Total assets less current liabilities Capital and reserves Share capital Reserves Total capital and reserves Non-current liability Deferred taxation	As at 30 September 31 March 2008 2008 (unaudited) (audited) HK$’000 HK$’000 – – 7,582 3,413 159 317 4,172 4,229 771 1,001 136 136 12,820 9,096 197,965 290,812 27,613 – 5,007 5,479 – 2,163 376 376 120,810 173,445 253,447 250,224 605,218 722,499 148,951 233,844 12,460 17,392 3,909 3,909 165,320 255,145 439,898 467,354 452,718 476,450 7,215 7,215 445,215 468,947 452,430 476,162 288 288 452,718 476,450	As at 30 September 31 March 2008 2008 (unaudited) (audited) HK$’000 HK$’000 – – 7,582 3,413 159 317 4,172 4,229 771 1,001 136 136 12,820 9,096 197,965 290,812 27,613 – 5,007 5,479 – 2,163 376 376 120,810 173,445 253,447 250,224 605,218 722,499 148,951 233,844 12,460 17,392 3,909 3,909 165,320 255,145 439,898 467,354 452,718 476,450 7,215 7,215 445,215 468,947 452,430 476,162 288 288 452,718 476,450
		9,096
		290,812 – 5,479 2,163 376 173,445 250,224
		722,499
		233,844 17,392 3,909
		255,145
		467,354
		476,450

		7,215 468,947
		476,162 288
		476,450

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Condensed Consolidated Statement of Changes in Equity

At 1 April 2007 Arising from group reorganisation Issue of shares for acquisition of a subsidiary pursuant to group reorganisation Issue of shares by way of preferential and public offers Listing Expenses Profit for the period Dividends paid by subsidiaries At 30 September 2007 At 1 April 2008 Loss for the period At 30 September 2008 Notes:	Share capital (unaudited) HK$’000 127,000 (127,000) 2,826 3,187 – – – 6,013 7,215 – 7,215	Share premium (unaudited) HK$’000 – – – 117,895 (10,405) – – 107,490 221,296 – 221,296	Capital Special contribution reserve reserve (Note 1) (Note 2) (unaudited) (unaudited) HK$’000 HK$’000 – 2,004 127,000 – (2,826) – – – – – – – – – 124,174 2,004 124,174 2,004 – – 124,174 2,004	Share option Retained reserve profits unaudited (unaudited) (unaudited) HK$’000 HK$’000 297,701 – – – – – – – – – 20,783 – (217,000) – 101,484 – 119,428 2,045 (23,732) – 95,696 2,045	Total (unaudited) HK$’000 426,705 – – 121,082 (10,405) 20,783 (217,000)
					341,165

					476,162 (23,732)
					452,430

Special reserve represents the difference between the nominal value of the ordinary shares of the subsidiaries of the Company in issue and the nominal value of the shares issued by the Company for acquisition of a subsidiary pursuant to group reorganisation on 2 April 2007.
Capital contribution reserve represents the contribution from a related company of the Company for waiver of certain amount of management fee in previous years.

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Condensed Consolidated Cash Flow Statement

Net cash from (used in) operating activities Net cash (used in) from investing activities Net cash from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period	Six months ended 30 September 2008 2007 (unaudited) (unaudited) HK$’000 HK$’000 8,205 (2,080,160) (4,982) 272,462 – 1,876,276 3,223 68,578 250,224 70,028 253,447 138,606

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Condensed Consolidated Financial Statements

1. BASIS OF PREPARATION AND PRINCIPAL ACCOUNTING POLICIES

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

The accounting policies adopted in the preparation of the unaudited condensed consolidated interim financial statements are consistent with those used in the preparation of the Group’s annual financial statements for the year ended 31 March 2008.

The following new interpretations have been issued and effective for the Group’s financial year beginning 1 April 2008. The adoption of these interpretations had no material effect on the result or financial position of the Group for the current and prior accounting periods.

HK (IFRIC) – Int 12 Service Concession Arrangements HK (IFRIC) – Int 14 HKAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction

The following new standards, amendments to standards and interpretations have been issued by HKICPA but are not effective for the financial year beginning 1 April 2008 and have not been early adopted. The Directors of the Company anticipate that the application of these standards or interpretations will have no material impact on the result or financial position of the Group.

HKAS 1 (Revised) Presentation of Financial Statements HKAS 23 (Revised) Borrowing Costs HKAS 27 (Revised) Consolidated and Separate Financial Statements HKFRS 3 (Revised) Business Combinations HKFRS 8 Operating Segments HK (IFRIC) – INT 13 Customer Loyalty Programmes HK (IFRIC) – INT 15 Agreements for the Construction of Real Estate HK (IFRIC) – INT 16 Hedges of a Net Investment in a Foreign Operation

2. BUSINESS AND GEOGRAPHICAL SEGMENTS

Business segments

The Group is principally engaged in four main operating divisions, namely, broking, financing, placing and underwriting, and corporate finance. These divisions are the basis on which the Group reports its primary segment information.

Principal activities are as follows:

Broking	–	Provision of securities, options, futures,
		insurance and other wealth
		management products broking services
Financing	–	Provision of margin financing and money
		lending services
Placing and underwriting	–	Provision of placing and underwriting services
Corporate finance	–	Provision of corporate finance advisory

All of the activities of the Group are based in Hong Kong and all of the Group’s revenue is derived from Hong Kong. Accordingly, no analysis by geographical segments is presented.

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

For the six months ended 30 September 2008

Placing and
Broking
Financing
underwriting
(unaudited)
(unaudited)
(unaudited)
HK$’000
HK$’000
HK$’000
REVENUE
Revenue
28,363
13,226
9,036
Inter-segment sales
–
186
–
28,363
13,412
9,036
Inter-segment sales are charged at prevailing market rate.
RESULTS
Segment results
14,392
(24,524)
8,339
Unallocated other
operating income
Unallocated corporate
expenses
Share of loss of an
associate
Loss before taxation
Taxation
Loss for the period

Corporate
finance
Elimination
Consolidated
(unaudited)
(unaudited)
(unaudited)
HK$’000
HK$’000
HK$’000
2,106
–
52,731
–
(186)
–
2,106
(186)
52,731
2,078
–
285
11
(23,798)
(230)
(23,732)
–
(23,732)

For the six months ended 30 September 2007

REVENUE Revenue No inter-segment sales during the period. RESULTS Segment results Unallocated other operating income Unallocated corporate expenses Profit before taxation Taxation Profit for the period	Broking (unaudited) HK$’000 60,013 31,363	Placing and Financing underwriting (unaudited) (unaudited) HK$’000 HK$’000 18,768 2,110 6,860 279	Total (unaudited) HK$’000 80,891 38,502 1,377 (15,388) 24,491 (3,708) 20,783

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

3. REVENUE

Commission and brokerage fees on dealing in securities and equity options Commission and brokerage fees on dealing in futures and options contracts Commission from insurance brokerage and wealth management Corporate finance advisory services fee income Placing and underwriting commission Interest income from: Margin and initial public offer financing Loans and advances Bank deposits Others	Six months ended 30 September 2008 2007 (unaudited) (unaudited) HK$’000 HK$’000 21,383 48,701 4,777 6,874 684 – 2,106 – 9,036 2,110 12,511 18,750 715 18 1,508 4,362 11 76 52,731 80,891

4. TAXATION

No Hong Kong Profits Tax is provided as the Group had no assessable profits arising in Hong Kong for the Period (2007: 17.5%).

5. (LOSS) EARNINGS PER SHARE

The calculation of basic loss per share for the six months ended 30 September 2008 is based on the loss for the Period attributable to equity holders of the Company of approximately HK$23,732,000 (2007: profit of HK$20,783,000) and on the weighted average number of 721,511,272 ordinary shares (2007: 559,506,133) in issue during the Period.

No diluted (loss) earnings per share was presented because the exercise price of the Company’s share options was higher than the average market price of the Company’s shares during both periods.

6. TRADE RECEIVABLES

The aged analysis of the trade receivables which were past due but not impaired are as follows:


	30 September	31 March
	2008	2008
	(unaudited)	(audited)
	HK$’000	HK$’000
0 – 30 days	729	1,052
31 – 60 days	74	174
61 – 90 days	18	270
Over 90 days	26	17
	847	1,513
Trade receivables which were neither past nor impaired	194,107	266,883
Gross impaired trade receivables	41,011	23,066
Less: Impairment on trade receivables_(Note c)_	(38,000)	(650)
	197,965	290,812

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes:

(a) No aged analysis for loans to margin clients is disclosed as in the opinion of the Directors of the Company, the aged analysis does not give additional value in view of the nature of business of shares margin financing.
(b) As at 30 September 2008 and 31 March 2008, the total market value of securities pledged as collateral in respect of the loans to margin clients were approximately HK$571,190,000 and HK$657,811,000 respectively.
(c) The movement in the impairment on trade receivables:


	30 September	31 March
	2008	2008
	(unaudited)	(audited)
	HK$’000	HK$’000
Balance at the beginning of the period	650	117
Impairment recognised	37,350	533
Balance at the end of the period	38,000	650

The above impairment represents individually impaired trade receivables of HK$38,000,000 (as at 31 March 2008: HK$650,000) with an aggregate gross balance of HK$41,011,000 (as at 31 March 2008: HK$23,066,000) due to margin clients’ default or delinquency in interest or principal payments.

7. TRADE PAYABLES


	30 September	31 March
	2008	2008
	(unaudited)	(audited)
	HK$’000	HK$’000
Trade payables from the business of dealing in futures contracts:
Margin clients	21,915	35,089
Trade payables from the business of dealing in securities:
Clearing house, brokers, margin and cash clients	127,036	187,755
Trade payables from the business of corporate finance	–	11,000
	148,951	233,844

No aged analysis is disclosed as in the opinion of the Directors, the aged analysis does not give additional value in view of the nature of this business.

Included in trade payables amounts of HK$120,810,000 and HK$173,445,000 at 30 September 2008 and 31 March 2008 respectively were payable to clients and other institutions in respect of the trust and segregated bank balances received and held for clients and other institutions in the course of the conduct of regulated activities.

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

8. RELATED PARTY TRANSACTIONS

During the Period, the Group had the following significant transactions with the related parties:

		Six months ended	Six months ended
		30 September
		2008	2007
		(unaudited)	(unaudited)
		HK$’000	HK$’000
(i)	Management fee expenses to related companies
	– computer services	400	122
	– administrative services and staff cost	320	627
(ii)	Operating lease rentals expenses to related companies	1,958	900
(iii)	Printing expenses paid to a related company	48	–
(iv)	Advertising and promotion expenses paid to related companies	43	–
(v)	Advisory income from related companies	1,263	–
(vi)	Commission and brokerage income from directors and their associates	616	2,004
(vii)	Client interest income from directors and their associates	450	344
(viii)	Interest expenses to a controlling shareholder of the Company	–	235

Note: Certain directors, key management personnel and a substantial shareholder of the Company have significant influence or are deemed to have significant influence in the above related companies.

9. OPERATING LEASE COMMITMENTS

As at 30 September 2008, the Group had total future minimum lease payments under non-cancellable operating leases falling due as follows:

Within one year In the second to fifth years inclusive	As at 30 September 2008 Rental Hired premises equipment (unaudited) (unaudited) HK$’000 HK$’000 1,486 150 2,391 360 3,877 510	31 March 2008 Rental Hired premises equipment (audited) (audited) HK$’000 HK$’000 1,967 153 230 434 2,197 587

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

4. UNAUDITED FINANCIAL STATEMENTS OF THE GROUP FOR THE 12 MONTHS ENDED 31 MARCH 2009

Set out below are the unaudited financial statements of the Group for the twelve months ended 31 March 2009 as extracted from the second interim report of the Company 2008/2009.

Condensed Consolidated Income Statement

Notes
Revenue
3
Other operating income
Staff costs
Commission expenses
Other expenses
Depreciation and amortisation
Finance costs
Impairment on trade receivables
6(c)
Loss on disposal of unlisted investment funds
Gain on disposal of intangible assets
Share of loss of an associate
(Loss) profit before taxation
Taxation
4
(Loss) profit for the period
Dividends
Dividend per share
(Loss) earnings per share
– Basic
5
– Diluted

For the 12 months ended
31 March
2009
2008
(unaudited)
(audited)
HK$’000
HK$’000
82,099
185,259
3,394
3,188
(26,144)
(29,697)
(13,084)
(40,004)
(33,335)
(28,215)
(1,877)
(1,322)
(460)
(33,627)
(37,350)
(533)
(10)
–
–
701
(395)
(371)
(27,162)
55,379
611
(9,437)
(26,551)
45,942
–
7,215
–
HK1.00 cent
(HK3.68 cents)
HK7.39 cents
N/A
N/A

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Condensed Consolidated Balance Sheet

Notes Non-current assets Investment in an associate Property and equipment Intangible assets Other assets Amount due from an associate Available-for-sale financial assets Current assets Trade receivables 6 Loans and advances 7 Other debtors, deposits and prepayments Investments held for trading Tax recoverable Bank balances and cash – trust Bank balances and cash – general Current liabilities Trade payables 8 Other creditors and accrued charges Tax liabilities Net current assets Total assets less current liabilities Capital and reserves Share capital Reserves Total capital and reserves Non-current liability Deferred taxation	As at 31 March 31 March 2009 2008 (unaudited) (audited) HK$’000 HK$’000 – – 7,735 3,413 – 317 4,122 4,229 606 1,001 136 136 12,599 9,096 209,283 290,812 10,000 – 4,942 5,479 – 2,163 617 376 223,581 173,445 311,171 250,224 759,594 722,499 310,244 233,844 12,050 17,392 – 3,909 322,294 255,145 437,300 467,354 449,899 476,450 7,215 7,215 442,396 468,947 449,611 476,162 288 288 449,899 476,450	As at 31 March 31 March 2009 2008 (unaudited) (audited) HK$’000 HK$’000 – – 7,735 3,413 – 317 4,122 4,229 606 1,001 136 136 12,599 9,096 209,283 290,812 10,000 – 4,942 5,479 – 2,163 617 376 223,581 173,445 311,171 250,224 759,594 722,499 310,244 233,844 12,050 17,392 – 3,909 322,294 255,145 437,300 467,354 449,899 476,450 7,215 7,215 442,396 468,947 449,611 476,162 288 288 449,899 476,450
		9,096
		290,812 – 5,479 2,163 376 173,445 250,224
		722,499
		233,844 17,392 3,909
		255,145
		467,354
		476,450

		7,215 468,947
		476,162 288
		476,450

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Condensed Consolidated Statement of Changes in Equity

At 1 April 2007 Arising from group reorganisation Issue of shares for acquisition of a subsidiary pursuant to group reorganisation Issue of shares by way of preferential and public offers Listing expenses Issue of shares to controlling shareholder Transaction costs attributable to issue of shares to controlling shareholder Recognition of equity-settled share based payments Profit for the period Dividend paid by subsidiaries prior to group organisation Dividend recognised as distribution At 31 March 2008 At 1 April 2008 Loss for the period At 31 March 2009	Share capital (audited) HK$’000 127,000 (127,000) 2,826 3,187 – 1,202 – – – – – 7,215 Share capital (unaudited) HK$’000 7,215 – 7,215	Share premium (audited) HK$’000 – – – 117,895 (10,405) 115,431 (1,625) – – – – 221,296 Share premium (unaudited) HK$’000 221,296 – 221,296	Capital Special contribution reserve reserve (audited) (audited) HK$’000 HK$’000 – 2,004 127,000 – (2,826) – – – – – – – – – – – – – – – – – 124,174 2,004 Capital Special contribution reserve reserve (unaudited) (unaudited) HK$’000 HK$’000 124,174 2,004 – – 124,174 2,004	Retained profits (audited) HK$’000 297,701 – – – – – – – 45,942 (217,000) (7,215) 119,428 Retained profits (unaudited) HK$’000 119,428 (26,551) 92,877	Share option reserve (audited) HK$’000 – – – – – – – 2,045 – – – 2,045 Share option reserve (unaudited) HK$’000 2,045 – 2,045	Total (audited) HK$’000 426,705 – – 121,082 (10,405) 116,633 (1,625) 2,045 45,942 (217,000) (7,215)
						476,162

						Total (unaudited) HK$’000 476,162 (26,551)
						449,611

Notes:

Special reserve represents the difference between the nominal value of the ordinary shares of the subsidiaries of the Company in issue and the nominal value of the shares issued by the Company for acquisition of a subsidiary pursuant to group reorganisation on 2 April 2007.
Capital contribution reserve represents the contribution from a related company of the Company for waiver of certain amount of management fee in previous years.

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Condensed Consolidated Cash Flow Statement

Net cash from (used in) operating activities Net cash (used in) from investing activities Net cash used in financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period	For the 12 months ended 31 March 2009 2008 (unaudited) (audited) HK$’000 HK$’000 66,819 (46,107) (5,872) 279,233 – (52,930) 60,947 180,196 250,224 70,028 311,171 250,224

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Condensed Consolidated Financial Statements

1. BASIS OF PREPARATION AND PRINCIPAL ACCOUNTING POLICIES

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

The accounting policies adopted in the preparation of the unaudited condensed consolidated second interim financial statements are consistent with those used in the preparation of the Group’s annual financial statements for the year ended 31 March 2008.

HK (IFRIC) – INT 12 Service Concession Arrangements HK (IFRIC) – INT 14 HKAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction

The following new standards, amendments to standards and interpretations have been issued by HKICPA but are not effective for the financial year beginning 1 April 2008 and have not been early adopted. The Directors anticipate that the application of these standards or interpretations will have no material impact on the results or financial position of the Group.

HKAS 1 (Revised) Presentation of Financial Statements HKAS 23 (Revised) Borrowing Costs HKAS 27 (Revised) Consolidated and Separate Financial Statements HKFRS 1 (Revised) First-time Adoption of Hong Kong Financial Reporting Standards HKFRS 3 (Revised) Business Combinations HKFRS 8 Operating Segments HK (IFRIC) – INT 13 Customer Loyalty Programmes HK (IFRIC) – INT 15 Agreements for the Construction of Real Estate HK (IFRIC) – INT 16 Hedges of a Net Investment in a Foreign Operation HK (IFRIC) – INT 17 Distributions of Non-cash Assets to Owners HK (IFRIC) – INT 18 Transfers of Assets from Customers

HKFRS represents Hong Kong Financial Reporting Standard

IFRIC represents the International Financial Reporting Interpretations Committee

2. BUSINESS AND GEOGRAPHICAL SEGMENTS

Business segments

Principal activities are as follows:

Broking – Provision of securities, options, futures, insurance and other wealth management products broking services Financing – Provision of margin financing and money lending services Placing and underwriting – Provision of placing and underwriting services Corporate finance – Provision of corporate finance advisory services

All of the activities of the Group are based in Hong Kong and all of the Group’s revenue is derived from Hong Kong. Accordingly, no analysis by geographical segments is presented.

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

For the twelve months ended 31 March 2009

REVENUE Revenue Inter-segment sales Inter-segment sales are charged RESULTS Segment results Unallocated other operating income Unallocated corporate expenses Share of loss of an associate Loss before taxation Taxation Loss for the period	Placing and Broking Financing underwriting (unaudited) (unaudited) (unaudited) HK$’000 HK$’000 HK$’000 49,193 19,781 9,410 – 186 – 49,193 19,967 9,410 at prevailing market rate. 22,775 (17,990) 8,701	Corporate finance Elimination Consolidated (unaudited) (unaudited) (unaudited) HK$’000 HK$’000 HK$’000 3,715 – 82,099 – (186) – 3,715 (186) 82,099 776 14,262 2,114 (43,143) (395) (27,162) 611 (26,551)	Corporate finance Elimination Consolidated (unaudited) (unaudited) (unaudited) HK$’000 HK$’000 HK$’000 3,715 – 82,099 – (186) – 3,715 (186) 82,099 776 14,262 2,114 (43,143) (395) (27,162) 611 (26,551)
			82,099

			14,262 2,114 (43,143) (395)
			(27,162) 611
			(26,551)

For the twelve months ended 31 March 2008

Placing and Broking Financing underwriting (audited) (audited) (audited) HK$’000 HK$’000 HK$’000 REVENUE Revenue 121,759 51,764 11,386 Inter-segment sales 95 2,660 2,333 121,854 54,424 13,719 Inter-segment sales are charged at prevailing market rate. RESULTS Segment results 69,476 18,809 5,321 Unallocated other operating income Unallocated corporate expenses Share of loss of an associate Profit before taxation Taxation Profit for the period	Corporate finance Elimination Consolidated (audited) (audited) (audited) HK$’000 HK$’000 HK$’000 350 – 185,259 50 (5,138) – 400 (5,138) 185,259 314 93,920 833 (39,003) (371) 55,379 (9,437) 45,942	Corporate finance Elimination Consolidated (audited) (audited) (audited) HK$’000 HK$’000 HK$’000 350 – 185,259 50 (5,138) – 400 (5,138) 185,259 314 93,920 833 (39,003) (371) 55,379 (9,437) 45,942
		185,259

		93,920 833 (39,003) (371)
		55,379 (9,437)
		45,942

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

3. REVENUE

Commission and brokerage fees on dealing in securities and equity options Commission and brokerage fees on dealing in futures and options contracts Commission from insurance brokerage and wealth management Corporate finance advisory services fee income Placing and underwriting commission Interest income from: Margin and initial public offer financing Loans and advances Bank deposits Others	For the 12 months ended 31 March 2009 2008 (unaudited) (audited) HK$’000 HK$’000 37,311 99,559 8,602 14,237 1,260 871 3,715 350 9,410 11,386 17,733 51,534 2,048 230 1,996 6,960 24 132 82,099 185,259	For the 12 months ended 31 March 2009 2008 (unaudited) (audited) HK$’000 HK$’000 37,311 99,559 8,602 14,237 1,260 871 3,715 350 9,410 11,386 17,733 51,534 2,048 230 1,996 6,960 24 132 82,099 185,259
		185,259

4. TAXATION

No Hong Kong Profits Tax is provided as the Group had no assessable profits arising in Hong Kong for the Period (2008: 16.5%).

5. (LOSS) EARNINGS PER SHARE

The calculation of basic loss per share for the twelve months ended 31 March 2009 is based on the loss for the period attributable to equity holders of the Company of approximately HK$26,551,000 (2008: profit of HK$45,942,000) and on the weighted average number of 721,511,272 ordinary shares (2008: 621,896,913) in issue during the Period.

No diluted (loss) earnings per share was presented because the exercise price of the Company’s share options was higher than the average market price of the Company’s shares during both periods.

6. TRADE RECEIVABLES

The aged analysis of the trade receivables which were past due but not impaired are as follows:

0 – 30 days 31 – 60 days 61 – 90 days Over 90 days Trade receivables which were neither past nor impaired Gross impaired trade receivables Less: Impairment on trade receivables_(Note c)_	As at 31 March 31 March 2009 2008 (unaudited) (audited) HK$’000 HK$’000 4,167 1,052 2 174 2 270 29 17 4,200 1,513 205,038 266,883 38,045 23,066 (38,000) (650) 209,283 290,812	As at 31 March 31 March 2009 2008 (unaudited) (audited) HK$’000 HK$’000 4,167 1,052 2 174 2 270 29 17 4,200 1,513 205,038 266,883 38,045 23,066 (38,000) (650) 209,283 290,812
		1,513 266,883 23,066 (650)
		290,812

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes:

(a) No aged analysis for loans to margin clients is disclosed as in the opinion of the Directors, the aged analysis does not give additional value in view of the nature of business of shares margin financing.
(b) As at 31 March 2009 and 31 March 2008, the total market value of securities pledged as collateral in respect of the loans to margin clients were approximately HK$688,237,000 and HK$657,811,000 respectively.
(c) The movement in the impairment on trade receivables:

Balance at the beginning of the period Impairment recognised Balance at the end of the period	As at 31 March 31 March 2009 2008 (unaudited) (audited) HK$’000 HK$’000 650 117 37,350 533 38,000 650	As at 31 March 31 March 2009 2008 (unaudited) (audited) HK$’000 HK$’000 650 117 37,350 533 38,000 650
		650

As at 31 March 2009, the impairment represented individually impaired trade receivables of HK$38,000,000 (2008: HK$650,000) with an aggregate gross balance of HK$38,045,000 (2008: HK$23,066,000) due to margin clients’ default or delinquency in interest or principal payments.

7. LOANS AND ADVANCES

Unsecured fixed-rate loan receivables Carrying amount analysed for reporting purpose: Current assets (receivable within 12 months from the period end date) – Unsecured fixed-rate loan receivables	As at 31 March 31 March 2009 2008 (unaudited) (audited) HK$’000 HK$’000 10,000 – 10,000 –	As at 31 March 31 March 2009 2008 (unaudited) (audited) HK$’000 HK$’000 10,000 – 10,000 –

		–

The effective interest rate (which are equal to contractual interest rates) on the Group’s loan receivables is 25% per annum (2008: Nil).

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

8. TRADE PAYABLES

Trade payables from the business of dealing in futures contracts: Margin clients Trade payables from the business of dealing in securities: Margin and cash clients Clearing house and brokers Trade payables from the business of corporate finance	As at 31 March 31 March 2009 2008 (unaudited) (audited) HK$’000 HK$’000 54,491 35,089 226,607 187,755 29,146 – – 11,000 310,244 233,844	As at 31 March 31 March 2009 2008 (unaudited) (audited) HK$’000 HK$’000 54,491 35,089 226,607 187,755 29,146 – – 11,000 310,244 233,844
		233,844

No aged analysis is disclosed as in the opinion of the Directors, the aged analysis does not give additional value in view of the nature of these businesses.

Included in trade payables amounts of HK$223,581,000 and HK$173,445,000 at 31 March 2009 and 2008 respectively were payable to clients and other institutions in respect of the trust and segregated bank balances received and held for clients and other institutions in the course of the conduct of regulated activities.

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

9. RELATED PARTY TRANSACTIONS

During the both periods, the Group had the following significant transactions with the related parties:

		For the 12 months	ended
		31 March
		2009	2008
		(unaudited)	(audited)
		HK$’000	HK$’000
(i)	Advisory income from related companies	2,055	320
(ii)	Commission and brokerage income from
	– a related company	–	141
	– directors and their associates	1,034	3,505
(iii)	Client interest income from directors and their associates	653	1,072
(iv)	Management fee to related companies
	– computer services	1,374	245
	– administrative services and staff cost	2,285	1,631
(v)	Operating lease rentals expenses to related companies	3,563	1,999
(vi)	Printing, advertising and promotion expenses to
	related companies	457	1,033
(vii)	Secretarial fee expenses to a related company	200	–
(viii)	Underwriting and placing commission income
	from related companies	–	3,560
(ix)	Commission paid to the associates of a director	–	124
(x)	Interest expenses paid to a controlling shareholder	–	1,310

Note: Certain directors , key management personnel and a substantial shareholder of the Company have significant influence or are deemed to have significant influence in the above related companies.

10. OPERATING LEASE COMMITMENTS

As at 31 March 2009, the Group had total future minimum lease payments under noncancellable operating leases falling due as follows:

Within one year In the second to fifth years inclusive	As at 31 March 2009 31 March 2008 Rental Hired Rental Hired premises equipment premises equipment (unaudited) (unaudited) (audited) (audited) HK$’000 HK$’000 HK$’000 HK$’000 5,094 148 1,967 153 4,334 286 230 434 9,428 434 2,197 587	As at 31 March 2009 31 March 2008 Rental Hired Rental Hired premises equipment premises equipment (unaudited) (unaudited) (audited) (audited) HK$’000 HK$’000 HK$’000 HK$’000 5,094 148 1,967 153 4,334 286 230 434 9,428 434 2,197 587
		587

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

5. MATERIAL CHANGE

Save as disclosed below, the Directors confirm that as at the Latest Practicable Date, there was no 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 consolidated financial statements of the Group were made up.

(i) The revenue of the Group had decreased by 55.68% from approximately HK$185.26 million for the twelve months ended 31 March 2008 to HK$82.10 million for the twelve months ended 31 March 2009. The decrease was mainly due to economic downturn since the last quarter of the year 2008 and fewer initial public offerings (“IPOs”) for the twelve months ended 31 March 2009. As a result, both commission income and margin loan and IPO loan interests dropped.
(ii) The Group recorded a profit of approximately HK$45.94 million for the twelve months ended 31 March 2008, while a loss of approximately HK$26.55 million for the twelve months ended 31 March 2009. The loss was primarily attributable to the persistent widespread economic and financial uncertainty globally and in Hong Kong, which resulted in a decrease in turnover and an increase in impairment on trade receivables of the Group.
(iii) As stated in (ii) above, there was an impairment on trade receivables of the Group of approximately HK$37.35 million for the twelve months ended 31 March 2009 due to margin clients’ default or delinquency in interest or principal repayment. The Group only recorded an impairment on trade receivables of approximately HK$0.53 million for the twelve months ended 31 March 2008.

6. INDEBTEDNESS STATEMENT

Borrowings

As at the close of business on 30 June 2009, being the latest practicable date prior to the printing of this circular for the purpose of the indebtedness, the Group had outstanding secured bank borrowings of approximately HK$1,018 million, which were secured by a charge over securities subscribed under IPO.

Contingent Liabilities

As at 30 June 2009, the Group did not have any material contingent liabilities.

Save as disclosed above, as at the close of the business on 30 June 2009, the Group did not have any other outstanding indebtedness, loan capital, bank overdrafts and liabilities under acceptance (other than normal trade bills) or other similar indebtedness, debentures, mortgages, charges or loans or acceptance credits or hire purchase or finance lease commitment or guarantees or other material contingent liabilities.

Subsequent changes in indebtedness position

The amount of bank borrowings as set out above had been fully repaid since 30 June 2009 up to the Latest Practicable Date. Save for such repayment, the Directors confirm that there was no material change in the indebtedness status of the Group since 30 June 2009 up to the Latest Practicable Date.

GENERAL INFORMATION

APPENDIX II

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules and Takeovers Code for the purpose of giving information with regard to the Company. The Directors jointly and severally accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this circular have been arrived at after due and careful consideration and there are no other facts not contained in this circular, the omission of which would make any statement in this circular misleading.

The director of Win Move and its ultimate beneficial owners, jointly and severally accept full responsibility for the accuracy of the information contained in this circular (other than information relating to the Group) and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this circular have been arrived at after due and careful consideration and there are no other facts not contained in this circular, the omission of which would make any statement in this circular misleading.

2. SHARE CAPITAL

The authorised and issued share capital of the Company are as follows:

Authorised ordinary share capital: 500,000,000,000 Shares as at the Latest Practicable Date Issued and to be issued as fully paid: 721,511,272 Shares as at 31 March 2008, being the date to which the latest published audited consolidated financial statements of the Company were made up and as at the Latest Practicable Date 144,300,000 Total Subscription Shares to be issued (assuming no share options will be exercised on or before completion) 865,811,272	HK$ 5,000,000,000

	7,215,112 1,443,000
	8,658,112

All the issued Shares are fully paid and rank pari passu in all respects including the rights as to voting, dividends and return of capital.

Since 31 March 2008, the date of which the latest audited financial statements of the Company were made up, and up to the Latest Practicable Date, no Shares have been allotted and issued by the Company.

GENERAL INFORMATION

APPENDIX II

As at the Latest Practicable Date, the Company has the following share options:

			Exercise price
			of the	No. of Share
Name of grantee	Date of grant	Exercise period	share option	upon conversion
Ms. Daisy Yeung	28 January 2008	28 January 2008 –	HK$1.20	3,000,000
		27 January 2013
Mr. Chan Pak Lam, Tom	28 January 2008	28 January 2008 –	HK$1.20	3,000,000
		27 January 2013

Save for the aforesaid options, the Company did not have any other derivatives, options, warrants or conversion rights affecting the Shares and no capital of any member of the Group was under option, or agreed to conditionally or unconditionally to be put under option as at the Latest Practicable Date.

3. DISCLOSURE OF INTERESTS

(a) Interests of Directors

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

(i) Long position in the Shares

			Approximate
			percentage
			of the existing
	Capacity/	Number of	issued
Name of Director	Nature of interest	Shares	share capital
Ms. Daisy Yeung_(Note)_	Beneficiary of a trust	397,472,302	55.09%

Note: The 397,472,302 Shares comprise (i) 253,172,302 Shares held by Win Move and (ii) 144,300,000 Shares to be issued to Win Move pursuant to the Subscription Agreement and the Supplemental Subscription Agreement. The entire issued share capital of Win Move was indirectly held by STC International Limited, being the trustee of the AY Trust, a discretionary trust under which Ms. Daisy Yeung is one of the eligible beneficiaries.

GENERAL INFORMATION

APPENDIX II

(ii) Long positions in underlying shares of the Company

			Approximate
			percentage of
		Number of	the existing
	Capacity/	underlying	issued
Name of Director	Nature of interest	Shares	share capital
Ms. Daisy Yeung_(Note)_	Beneficial owner	3,000,000	0.42%
Mr. Chan Pak Lam, Tom	Beneficial owner	3,000,000	0.42%
(Note)

Note: These are share options granted to the Directors on 28 January 2008 pursuant to the share option scheme adopted by the Company and became effective on 27 September 2007 and are exercisable from 28 January 2008 to 27 January 2013 at a price of HK$1.20 per share.

Saved as disclosed above, as at the Latest Practicable Date, none of the Directors or the chief executive of the Company and their associates had any interests or short positions in any Shares, underlying shares and debentures of the Company or any associated corporation (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO), the Model Code for Securities Transactions by Directors of Listed Issuers and which were required to be entered in the register maintained by the Company pursuant to Section 352 of the SFO.

GENERAL INFORMATION

APPENDIX II

(b) Interests of substantial Shareholders

As at the Latest Practicable Date, so far as is known to the Directors or the chief executive of the Company, the following persons (other than a Director or chief executive of the Company) had an interest or short position in the Shares and underlying Shares which fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO as recorded in the register maintained by the Company pursuant to Section 336 of the SFO, or who were, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of the Company or any other members of the Group:

Long position in the Shares

			Approximate
		Number of	percentage
	Shares interested		of the existing
	Capacity/	or deemed	issued
Name of shareholder	Nature of interest	to be interested	share capital
Win Move_(Note)_	Beneficial owner	397,472,302	55.09%
Million Way Holdings	Interested in a	397,472,302	55.09%
Limited_(Note)_	controlled corporation
STC International Limited_(Note)_	Trustee	397,472,302	55.09%
Dr. Yeung Sau Shing, Albert	Founder of a trust	397,472,302	55.09%
(Note)
Ms. Luk Siu Man, Semon	Family	397,472,302	55.09%
(Note)

Note: The 397,472,302 Shares comprise (i) 253,172,302 Shares held by Win Move and (ii) 144,300,000 Shares to be issued to Win Move pursuant to the Subscription Agreement and the Supplemental Subscription Agreement. The Shares were held by Win Move. The entire issued share capital of Win Move was held by Million Way Holdings Limited which was in turn wholly-owned by STC International Limited, being the trustee of the AY Trust. STC International Limited was deemed to be interested in the 397,472,302 Shares held by Win Move as trustee of the AY Trust. Dr. Yeung Sau Shing, Albert, as founder of the AY Trust, was deemed to be interested in the 397,472,302 Shares. By virtue of being the spouse of Dr. Yeung, Ms. Luk Siu Man, Semon was also deemed to be interested in the said Shares.

Save as disclosed above, the Directors or the chief executive of the Company were not aware that there was any person (other than a Director or chief executive of the Company) who, as at the Latest Practicable Date, had an interest or short position in the Shares and underlying Shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meeting of any other member of the Group.

GENERAL INFORMATION

APPENDIX II

4. MARKET PRICE

The table below shows the closing price of the Shares on the Stock Exchange on (i) the last day on which trading took place in each calendar month during the period six months preceding 7 August 2009, being the date of First Announcement and ending on the Latest Practicable Date; (ii) the Last Trading Day; (iii) the Second Announcement date and (iv) the Latest Practicable Date:

	Closing price
Date	per Share
	HK$
27 February 2009	0.220
31 March 2009	0.218
30 April 2009	0.315
29 May 2009	0.445
30 June 2009	0.405
31 July 2009	0.450
31 August 2009	0.400
Last Trading Day	0.440
Second Announcement date	0.420
Latest Practicable Date	0.420

The highest and lowest closing prices per Share recorded on the Stock Exchange during the period six months preceding 7 August 2009, being the date of First Announcement and ending on the Latest Practicable Date were HK$0.485 on 1 June 2009, and HK$0.205 on 5 March 2009, respectively.

5. SERVICE AGREEMENTS

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

None of the Directors has a service contract with the Company or any of its subsidiaries or associated companies which:

(a) (including continuous and fixed term contracts) was entered into or amended within six months before the date of the First Announcement;
(b) is a continuous contract with a notice period of 12 months or more; or
(c) is a fixed term contract with more than 12 months to run irrespective of the notice period.

6. COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors or their respective associates was interested in any business which competes or is likely to compete, either directly or indirectly, with the business of the Group.

GENERAL INFORMATION

APPENDIX II

7. OTHER INTERESTS

As at the Latest Practicable Date,

none of the Directors had any direct or indirect interest in any assets which have, since 31 March 2008, being the date of the latest published audited accounts of the Group, been acquired or disposed of by, or leased to, or are proposed to be acquired or disposed of by, or leased to, any member of the Group; and
save as the deemed interests of Ms. Daisy Yeung in the Subscription Agreement and the Supplemental Subscription Agreement by virtue of her being an eligible beneficiary of the AY Trust, none of the Directors was materially interested in any contract or arrangement entered into by any member of the Group which contract or arrangement is subsisting as at the Latest Practicable Date and which is significant in relation to the business of the Group taken as a whole.

8. LITIGATION

Save as disclosed below, none of the members of the Group was engaged in any litigation or arbitration or claims of material importance and no such litigation or arbitration or claim of material importance was known to the Directors to be pending or threatened by or against any members of the Group, as at the Latest Practicable Date.

In March 2009, Emperor Securities Limited, an indirect wholly-owned subsidiary of the Company, commenced legal actions against its six clients for recovery of outstanding debts in the aggregate amount of approximately HK$39.2 million. The legal proceedings are pending. The Directors may seek further legal advice and consider taking further steps in pursuing such claims.

9. QUALIFICATION OF EXPERT

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

Name Qualification Pelican Securities Limited a corporation licensed to carry out type 1 (dealing in securities), type 4 (advising on securities) and type 6 (advising on corporate finance) regulated activities under the SFO

As at the Latest Practicable Date, Pelican Securities was not beneficially interested in the share capital of any member of the Group nor had it have any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group nor did it have any interest, either direct or indirect, in any assets which had been, since the date to which the latest published audited financial statements of the Company were made up, 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.

GENERAL INFORMATION

APPENDIX II

10. CONSENTS OF EXPERT

As at the date of this circular, Pelican Securities has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of its opinion and letter and/or references to its name, opinion or letter in the form and context in which they respectively appear.

11. ARRANGEMENTS IN CONNECTION WITH THE TOTAL SUBSCRIPTION

As at the Latest Practicable Date,

(a) there was no agreement or arrangement between any Director and any other person which is conditional on or dependent upon the outcome of the Total Subscription and the Whitewash Waiver or otherwise connected with the Total Subscription and the Whitewash Waiver;
(b) there was no agreement, arrangement or understanding (including any compensation arrangement) existing between Win Move or any person acting in concert with it and any of the Directors, recent Directors, Shareholders or recent Shareholders having any connection with or dependence upon the Total Subscription and the Whitewash Waiver;
(c) no benefit will be given to any Directors as compensation for loss of office or otherwise in connection with the Total Subscription and the Whitewash Waiver;
(d) there was no arrangement to which Win Move is a party (whether by way of option, indemnity or otherwise) in relation to the Shares and which might be material to the Total Subscription and the Whitewash Waiver;
(e) no person had any arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code with (i) Win Move or any person acting in concert with it; or (ii) the Company or any person who is an associate of the Company by virtue of class (1), (2), (3) or (4) of the definition of “associate” as defined under the Takeovers Code;
(f) save as the Subscription Agreement and the Supplemental Subscription Agreement pursuant to which Ms. Daisy Yeung had a deemed interest, no material contract was entered into by Win Move and/or parties acting in concert with it in which any Director has a material personal interest;
(g) no person had any irrevocable commitment to vote for or against the resolutions to be proposed at the SGM to approve the Subscription Agreement, the Supplemental Subscription Agreement and the Whitewash Waiver; and
(h) none of the Directors, in respect of their own beneficial shareholdings, has any intention to vote for or against the resolutions in relation to the Subscription Agreement, the Supplemental Subscription Agreement and the Whitewash Waiver at the SGM.

GENERAL INFORMATION

APPENDIX II

12. SHAREHOLDINGS AND DEALINGS IN SHARES

As at the Latest Practicable Date:

(a) save as (i) the 253,172,302 Shares beneficially held by Win Move, (ii) Ms. Daisy Yeung, the Managing Director of the Company, who is deemed to be interested in the 253,172,302 Shares held by Win Move (which is wholly owned by STC International Limited, the trustee of the AY Trust, a trust of which Ms. Daisy Yeung is one of the eligible beneficiaries), and (iii) the share option granted to Ms. Daisy Yeung on 28 January 2008 conferring rights for her to subscribe for 3,000,000 Shares, Win Move and persons acting in concert with it (including the director of Win Move) do not own or control any Shares, derivatives, options, warrants and conversion rights or other similar rights which are convertible or exchangeable into Shares;
(b) the Company did not own or control any shares, derivatives, options, warrants and conversion rights or other similar rights which are convertible or exchangeable into shares in Win Move;
(c) save for Win Move being a wholly-owned company under the AY Trust, a trust of which Ms. Daisy Yeung is one of the eligible beneficiaries, none of the Directors was interested in any shares, derivatives, options, warrants and conversion rights or other similar rights which are convertible or exchangeable into shares of Win Move; and
(d) save as (i) Ms. Daisy Yeung, the Managing Director of the Company, who is deemed to be interested in the 253,172,302 Shares held by Win Move (which is wholly owned by STC International Limited, the trustee of the AY Trust, a trust of which Ms. Daisy Yeung is one of the eligible beneficiaries), and (ii) the share options granted to Ms. Daisy Yeung and Mr. Chan Pak Lam, Tom on 28 January 2008 conferring rights for her/him to subscribe for 3,000,000 Shares respectively, none of the Directors was interested in any Shares, derivatives, options, warrants and conversion rights or other similar rights which are convertible or exchangeable into Shares.

During the period beginning six months prior to 7 August 2009, being date of the First Announcement and up to the Latest Practicable Date,

(a) none of the Company and the Directors had dealt for value in shares, convertible securities, warrants, options and derivatives of Win Move;
(b) save for the Placing Agreement, the Top-Up Subscription Agreement, the Subscription Agreement and the Supplemental Subscription Agreement entered into by Win Move, of which Ms. Daisy Yeung is deemed to be interested in by virtue of her being one of the eligible beneficiaries of the AY Trust, none of the Directors had dealt for value in shares, convertible securities, warrants, options and derivatives of the Company;
(c) save for the non-discretionary dealings in the Shares for and on behalf of its individual clients by Emperor Securities Limited and Win Move disposing the Placing Shares, none of (i) the directors of Win Move and (ii) Win Move and parties acting in concert with it had dealt for value in the shares, convertible securities, warrants, options and derivatives of the Company;

GENERAL INFORMATION

APPENDIX II

(d) none of the Company’s subsidiaries, pension fund of the Group, professional adviser named under the section headed “Qualification of expert” in this appendix or Emperor Capital Limited (advisor to the Company) or any adviser as specified in class (2) of the definition of associates under the Takeovers Code, but excluding exempt principal traders, own or control any interest in or had dealt for value in the shares, convertible securities, warrants, options and derivatives of the Company;
(e) no fund manager who managed securities of the Company on a discretionary basis and are connected with the Company had any interest in or had dealt for value in any shares, convertible securities, warrants, options and derivatives of the Company; and
(f) none of (i) the Directors, (ii) the Company and (iii) Win Move and parties acting in concert with it has borrowed or lent any of the Shares, convertible securities, warrants, options and derivatives of the Company.

13. MATERIAL CONTRACTS

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

(a) the subscription agreement dated 16 November 2007 entered between Charron Holdings Limited and the Company for the subscription of 120,240,000 Shares by Charron Holdings Limited at HK$0.97 per Share;
(b) the sale and purchase agreement dated 20 December 2007 entered into between Emperor Financial Services (Hong Kong) Limited and Profit Ascent Group Limited, a wholly-owned subsidiary of the Group in relation to acquisition by the Group of the entire issued share capital of Emperor Capital Limited at a consideration of HK$9.8 million;
(c) the Top-Up Subscription Agreement;
(d) the Subscription Agreement; and
(e) the Supplemental Subscription Agreement.

14. GENERAL

(a) The business address of the Directors is situated at 24th Floor, Emperor Group Centre, 288 Hennessy Road, Wanchai, Hong Kong.
(b) The share registrar and transfer office of the Company is Tricor Secretaries Limited, 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong.
(c) The secretary of the Company is Ms. Choi Suk Hing, Louisa.

GENERAL INFORMATION

APPENDIX II

(d) The registered address of Win Move is at P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands and the correspondence address of Win Move is at 28th Floor, Emperor Group Centre, 288 Hennessy Road, Wanchai, Hong Kong.
(e) The principal members of the parties acting in concert with Win Move and their addresses are as follow:
(i) Emperor Securities Limited, and its registered address is at 23rd to 24th Floors, Emperor Group Centre, 288 Hennessy Road, Wanchai, Hong Kong; and
(ii) AY Trust, and its correspondence address is at 28th Floor, Emperor Group Centre, 288 Hennessy Road, Wanchai, Hong Kong.
(f) The English text of this document shall prevail over their Chinese text in case of inconsistencies.

15. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours at the principal place of business of the Company in Hong Kong from the date of this circular up to and including the date of the SGM:

(a) the letter from Pelican Securities, the text of which is set out on pages 14 to 26 of this circular;
(b) the consent letter from Pelican Securities, referred to in paragraph headed “Consents of expert” in this appendix;
(c) the letter of recommendation from the Independent Board Committee, the text of which is set out on page 13 of this circular;
(d) the copies of material contracts referred to in the paragraph headed “Material contracts” in this appendix;
(e) the memorandum of association and bye-laws of the Company;
(f) the memorandum and articles of association of Win Move;

GENERAL INFORMATION

APPENDIX II

(g) the annual reports of the Company for the financial years ended 31 March 2007 and 31 March 2008;
(h) the interim report of the Company for the six months ended 30 September 2008; and
(i) the second interim report of the Company for the twelve months ended 31 March 2009.

The above documents will be available at the website of the SFC at www.sfc.hk and the Company’s website at www.emp717.com from the date of this circular up to (and including) the date of the SGM in accordance with Note 1 to Rule 8 of the Takeovers Code.

NOTICE OF SGM

==> picture [223 x 102] intentionally omitted <==

(Incorporated in Bermuda with limited liability) (Stock Code: 717)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT a special general meeting (the “Meeting”) of Emperor Capital Group Limited (the “Company”) will be held at 28th Floor, Emperor Group Centre, 288 Hennessy Road, Wanchai, Hong Kong on Tuesday, 22 September 2009 at 10:30 a.m. to consider, and if thought fit pass, the following resolutions which will be proposed with or without amendments as ordinary resolutions:

ORDINARY RESOLUTIONS

(1) “ THAT:
(a) the subscription agreement dated 5 August 2009 and the supplemental subscription agreement dated 19 August 2009 (collectively “the Agreements”), a copy of each has been produced to this Meeting marked “A” and initialled by the chairman of the Meeting for the purpose of identification, entered into between the Company and Win Move Group Limited pursuant to which, subject to the fulfilment of the conditions set out therein, the Company agreed to issue and Win Move Group Limited agreed to subscribe in cash 144,300,000 new shares of HK$0.01 each in the capital of the Company at the price of HK$0.42 per share be approved; and
(b) the directors of the Company be and are hereby authorised to exercise all the powers of the Company and take all steps as might in their opinion be necessary or desirable in connection with the Agreements and the performance thereof, without limitation:
- (i) the execution, amendment, supplement, delivery, submission and implementation of any further documents or agreements;
- (ii) the amendment of the terms of the Agreements; and
- (iii) the taking of other actions necessary to implement the Agreements, including the issue of the 144,300,000 new shares of the Company.”

for identification purposes only

NOTICE OF SGM

(2) “ THAT subject to the passing of Ordinary Resolution No. 1, the waiver (the “Whitewash Waiver”) granted or to be granted by the Executive Director of the Corporate Finance Division of the Securities and Futures Commission pursuant to Note 1 on Dispensations from Rule 26 of the Hong Kong Code on Takeovers and Mergers waiving any obligation on the part of Win Move Group Limited and parties acting in concert with it to make a general offer for all the securities of the Company not already owned or agreed to be subscribed by them as a result of the subscription under the Agreements and the transactions contemplated therein be hereby approved and that the directors of the Company be and are 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 matters relating to or in connection with the Whitewash Waiver.”

By Order of the Board Emperor Capital Group Limited Choi Suk Hing, Louisa Company Secretary

Hong Kong, 4 September 2009

Registered office: Principal Office: Clarendon House 24th Floor Church Street Emperor Group Centre Hamilton HM11 288 Hennessy Road Bermuda Wanchai Hong Kong

Notes:

Any member of the Company entitled to attend and vote at a meeting of the Company shall be entitled to appoint another person as his proxy to attend and vote instead of him.
A proxy need not be a member of the Company. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under seal or under the hand of an officer or attorney duly authorised.
The instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power or authority shall be deposited to the Company’s branch share registrar in Hong Kong, Tricor Secretaries Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong, not less than fortyeight (48) hours before the time for holding the meeting or adjourned meeting or poll (as the case may be) at which the person named in such instrument proposes to vote and in default the instrument of proxy shall not be treated as valid.
Delivery of an instrument appointing a proxy shall not preclude a member from attending and voting in person at the meeting convened or poll concerned and, in such event, the instrument appointing a proxy shall be deemed to be revoked.
Where there are joint registered holders of any share, any one of such persons may vote at any meeting, either personally or by proxy, in respect of such share as if he were solely entitled thereto; but if more than one of such joint holders be present at any meeting personally or by proxy, that one of the said persons so present whose name stand first on the register in respect of such share shall alone be entitled to vote in respect thereof.
A form of proxy for use at the Meeting is enclosed herewith.
The resolutions will be voted by way of poll.

AI assistant

Emperor Capital Group Ltd. — Proxy Solicitation & Information Statement 2009

49418_rns_2009-09-03_605b7fb3-4ce2-450c-8619-7461a2480e17.pdf

(1) CONNECTED TRANSACTION – SUBSCRIPTION OF SHARES BY A CONNECTED PERSON AND (2) WHITEWASH WAIVER

Financial Adviser to the Company

Independent Financial Adviser to the Independent Board Committee and Independent Shareholders

Pelican Securities Limited

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

LETTER FROM THE BOARD

(1) CONNECTED TRANSACTION – SUBSCRIPTION OF SHARES BY A CONNECTED PERSON AND (2) WHITEWASH WAIVER

INTRODUCTION

LETTER FROM THE BOARD

CONNECTED TRANSACTION

THE SUBSCRIPTION AGREEMENT DATED 5 AUGUST 2009 AND THE SUPPLEMENTAL SUBSCRIPTION AGREEMENT DATED 19 AUGUST 2009

Parties

Number of Total Subscription Shares

Subscription Price

LETTER FROM THE BOARD

Mandate to issue new Shares

Ranking of new Shares

Conditions of the Total Subscription

LETTER FROM THE BOARD

Completion

Application for listing

USE OF PROCEEDS

REASONS FOR THE TOTAL SUBSCRIPTION

LETTER FROM THE BOARD

EFFECT ON SHAREHOLDING

INTENTION OF WIN MOVE REGARDING THE GROUP

WHITEWASH WAIVER

LETTER FROM THE BOARD

LISTING RULES IMPLICATION

SGM

LETTER FROM THE BOARD

RECOMMENDATION

GENERAL

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

(1) CONNECTED TRANSACTION – SUBSCRIPTION OF SHARES BY A CONNECTED PERSON AND (2) WHITEWASH WAIVER

LETTER FROM PELICAN SECURITIES

PELICAN SECURITIES LIMITED

Emperor Capital Group Limited

(1) CONNECTED TRANSACTION – SUBSCRIPTION OF SHARES BY A CONNECTED PERSON AND (2)WHITEWASH WAIVER

INTRODUCTION

LETTER FROM PELICAN SECURITIES

LETTER FROM PELICAN SECURITIES

BASIS OF OUR ADVICE

PRINCIPAL FACTORS TAKEN INTO CONSIDERATION

1. Background of the Total Subscription

LETTER FROM PELICAN SECURITIES

2. Financial Performance of the Group

LETTER FROM PELICAN SECURITIES

LETTER FROM PELICAN SECURITIES

3. Reasons for and benefits of the Total Subscription

LETTER FROM PELICAN SECURITIES

4. Subscription Price

LETTER FROM PELICAN SECURITIES

Daily closing prices of the Company

5. Financial effects of the Total Subscription on the Group

(a) Cashflow

(b) Earnings

(c) Net Asset Value

LETTER FROM PELICAN SECURITIES

(d) Gearing

6. Effects on shareholding of existing Shareholders

LETTER FROM PELICAN SECURITIES

7. Intention of Win Move and parties acting in concert with it

8. Whitewash Waiver

(a) Background

RECOMMENDATIONS

LETTER FROM PELICAN SECURITIES

1. SUMMARY OF FINANCIAL INFORMATION

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

RESULTS

2. AUDITED FINANCIAL STATEMENTS OF THE GROUP FOR THE YEAR ENDED 31 MARCH 2008

Consolidated Income Statement

Emperor Capital Group Ltd. Proxy Solicitation & Information Statement 2009