Founder Holdings Limited — Proxy Solicitation & Information Statement 2004

May 3, 2004

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your stockbroker, other licensed corporation or bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in New Century Group Hong Kong Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or transferee or to the bank, stockbroker, licensed corporation or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

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

==> picture [116 x 57] intentionally omitted <==

NEW CENTURY GROUP HONG KONG LIMITED 新世紀集團香港有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 234)

CONNECTED AND DISCLOSEABLE TRANSACTION ACQUISITION OF VESSELS AND SHARE PREMIUM CANCELLATION

Financial adviser to New Century Group Hong Kong Limited

Somerley Limited

Independent financial adviser to the Independent Board Committee

Menlo Capital Limited

A letter from the Independent Board Committee (as defined herein) containing its recommendations in respect of the terms of the Agreement (as defined herein) is set out on page 18 of this circular. A letter from Menlo Capital Limited containing its advice to the Independent Board Committee in respect of the terms of the Agreement is set out on pages 19 to 37 of this circular.

A notice convening a special general meeting of New Century Group Hong Kong Limited to be held at Plaza I-III, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wanchai, Hong Kong on Thursday, 27th May, 2004 at 10:00 a.m. is set out on pages 50 to 52 of this circular. If you are not able to attend the meeting, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return it to the principal place of business of New Century Group Hong Kong Limited in Hong Kong at Unit 3808, 38/F., West Tower, Shun Tak Centre 168-200 Connaught Road Central, Hong Kong as soon as possible and in any event not later than forty-eight (48) hours before the time appointed for holding the meeting. Completion and return of the form of proxy will not preclude you from attending and voting at the meeting or any adjournment of it, if you so wish.

* For identification only

3rd May, 2004

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Agreement dated 26th March, 2004 (as supplemented on 30th March, 2004) . . . . . . . . . . . .	7
Share Premium Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
Special General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16
Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	17
Further information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	17
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18
Letter of advice from Menlo Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	19
Appendix I – Independent Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	38
Appendix II – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	45
Notice of Special General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	50

DEFINITIONS

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

• “Acquisition”

acquisition of (i) 2,500 shares in People Value, representing 25% of the entire issued share capital of People Value; and (ii) the rights and benefits of and in the sale loan of up to US$10,662,500 pursuant to the Agreement

• “Agreement”

sale and purchase agreement dated 26th March, 2004 (as supplemented on 30th March, 2004) entered into between the Vendor, the Purchaser, People Value and Huang Worldwide in relation to the Acquisition

• “Announcement”

the announcement of the Company dated 1st April, 2004 relating to the Acquisition and the Share Premium Cancellation

• “associates”

has the meaning ascribed to it under the Listing Rules

• “Board”

board of Directors

• “BVI”

• British Virgin Islands

• “Charter Agreements”

two agreements both dated 17th October, 2002 entered into between the Original Owners and the Charterer for the chartering of the Vessels, details of which were set out in the announcement of the Company dated 17th October, 2002

“Charterer”

Balance Profits Limited, the existing charterer of the Vessels by virtue of the Charter Agreements. Balance Profits Limited is a wholly-owned subsidiary of the Company

• “Charterparty Novation Agreements”

• the novation agreements relating to the Vessels to be entered into between the Original Owners, the Charterer and the Subsidiaries whereby, among other things, the Vessels will continue to be chartered by the Subsidiaries to the Charterer after the Vessel Acquisition by the Subsidiaries on the same terms and conditions as the Charter Agreements

• “Company”

New Century Group Hong Kong Limited, a company incorporated in Bermuda with limited liability and the shares of which are listed on the Stock Exchange

• “Completion”

completion of the Agreement

• “Consideration”

US$10,665,000 (subject to adjustment), the consideration for the Acquisition pursuant to the Agreement

– 1 –

DEFINITIONS

• “Convertible Bond”

• a convertible bond in the principal amount of up to US$10,665,000 (subject to adjustment) to be issued by the Company to the Vendor or its nominee entitling the holder thereof to convert the outstanding principal amount into new Shares

• “Conversion Shares”

• the Shares to be issued by the Company pursuant to the conversion rights attaching to the Convertible Bond which for the time being is equivalent to a maximum of 136,372,131 new Shares which may be issued upon full conversion of the maximum principal amount of the Convertible Bond based on the initial conversion price of HK$0.61 per Share (subject to adjustment)

• “Directors” directors of the Company

• “Evervalue”

• Evervalue Profits Limited, a company incorporated in the BVI. Evervalue and its beneficial owners are independent third parties not connected with the directors, chief executive or substantial shareholders of the Company or any of its subsidiaries or associates of any of them

• “Group”

the Company and its subsidiaries

• “Huang Group”

• Huang Group (BVI) Limited, a company incorporated in the BVI and held by Mr. Kan Ka Chong, Frederick, as trustee of a discretionary trust, the discretionary beneficiaries of which are Mr. Ng (Huang) Cheow Leng, his family members and unspecified charities

• “Huang Shipmanagement”

• Huang Shipmanagement Pte Ltd. (formerly named as New Century Shipmanagement Pte Ltd.), which is wholly owned by the parents of Mr. Wilson Ng, the chairman of the Company, and Ms. Lilian Ng, Mr. Ng Wee Keat and Ms. Ng Siew Lang, Linda, who are all executive Directors

• “Huang Worldwide”

• Huang Worldwide Holding Limited, a wholly-owned subsidiary of Huang Group and the immediate holding company of New Century Worldwide

• “Independent Board Committee”

• an independent committee of the Board comprising Messrs. Wong Kwok Tai, Kwan Kai Kin, Kenneth and Ho Yau Ming, Charles, being all independent non-executive Directors

• “Independent Shareholders”

Shareholders other than New Century Worldwide and its associates

• “Independent Valuer”

Vigers Appraisal & Consulting Limited, an independent firm of professional valuers

– 2 –

DEFINITIONS

• “Latest Practicable Date”

• “Listing Committee”

• “Listing Rules”

• “Main Board”

• “Management Agreements”

• “Menlo Capital”

• “Mortgage”

• “New Century Worldwide”

• “Original Owners”

• “People Value”

• “PRC”

• 30th April, 2004, being the latest date prior to the printing of this circular for ascertaining certain information contained in this circular

the listing sub-committee of the board of directors of the Stock Exchange with responsibility for the Main Board

• the Rules Governing the Listing of Securities on the Stock Exchange

• the stock market operated by the Stock Exchange prior to the establishment of the Growth Enterprises Market (“GEM”) and which continues to be operated by the Stock Exchange in parallel with the GEM

• two agreements both dated 17th October, 2002 entered into between the Charterer and Huang Shipmanagement for the management of the operations of the Vessels, details of which were set out in the announcement of the Company dated 17th October, 2002

• Menlo Capital Limited, a corporation licensed to carry on businesses in type 6 regulated activities (advising on corporate finance) under the SFO and the independent financial adviser to the Independent Board Committee in relation to the Agreement, the issue of the Convertible Bond and the issue of the Conversion Shares

• the mortgage on the vessel “Leisure World” to be granted by one of the Subsidiaries in favour of a bank for securing a bank loan of approximately US$6,250,000 to finance part of the purchase price of such vessel before the Completion

• New Century Worldwide Capital Limited, an indirect wholly-owned subsidiary of Huang Group and the controlling shareholder of the Company

• Queenston Investment Limited and Jackston Shipping Limited, companies incorporated in the BVI and are indirect wholly-owned subsidiaries of Huang Group, which are the original owners of the Vessels named “Leisure World” and “Amusement World” respectively

People Value Limited, a company incorporated in the BVI on 2nd March, 2004

the People’s Republic of China

– 3 –

DEFINITIONS

• “Purchaser” Peak Ever Enterprises Limited, a wholly-owned subsidiary of the Company

• “Sale Loan” up to US$10,662,500 (subject to adjustment), representing 25% of the Vendor’s Loans, to be assigned by the Vendor to the Purchaser upon the Completion

• “Sale Shares” 2,500 ordinary shares of US$1.00 each in the capital of People Value beneficially owned by the Vendor, representing 25% of the entire issued shares of People Value

• “SFO” Securities and Futures Ordinance (Cap 571 of the Laws of Hong Kong)

• “Shares” ordinary shares of HK$0.01 each in the share capital of the Company

• “Share Premium Cancellation” the cancellation of the entire amount standing to the credit of the share premium account of the Company as at 30th September, 2003

• “Shareholders” holders of Shares

• “Shareholders’ Agreement” the shareholders’ agreement to be entered into among the Vendor, the Purchaser and People Value upon the Completion

• “Special General Meeting” the special general meeting of the Company convened to be held at Plaza I-III, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wanchai, Hong Kong on Thursday, 27th May, 2004 at 10:00 a.m. for the relevant Shareholders to consider, and if thought fit, to approve the Agreement, the issue of the Convertible Bond and the Conversion Shares, and the Share Premium Cancellation, notice of which is set out herein

• “Stock Exchange” The Stock Exchange of Hong Kong Limited

• “Sub-charter Agreements” two agreements both dated 17th October, 2002 entered into between the Charterer and Evervalue in relation to the subchartering of the Vessels by the Charterer, details of which were set out in the announcement of the Company dated 17th October, 2002

• “Subsidiaries” two subsidiaries of People Value, each of which will acquire one of the Vessels from the Original Owners before the Completion for the aggregate price of US$48,500,000

– 4 –

DEFINITIONS

“Vendor”	Marcus Profits Limited, a company incorporated in the BVI which
	is wholly owned by Huang Worldwide
“Vendor’s Loans”	the two interest-free loans in the total principal amount of
	US$42,650,000 (subject to adjustment) to be advanced by the
	Vendor to People Value and/or the Subsidiaries pursuant to the
	Agreement
“Vessel Acquisition by the	the acquisition of the Vessels by the Subsidiaries for an
Subsidiaries”	aggregate price of US$48,500,000 before the Completion
“Vessels”	two cruise liners named “Leisure World” and “Amusement World”
	respectively currently owned by the Original Owners
“HK$”	Hong Kong dollars
“S$”	Singaporean dollars
“US$”	United States of American dollars

Throughout this circular, amounts in US$ and S$ have been translated, for illustration only, into HK$ at the exchange rate of US$1.0 = HK$7.8 and S$1.0 = HK$4.6, respectively.

– 5 –

LETTER FROM THE BOARD

==> picture [116 x 57] intentionally omitted <==

NEW CENTURY GROUP HONG KONG LIMITED 新世紀集團香港有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 234)

Executive Directors:

Mr. Wilson Ng (Chairman) Mr. Lo Ming Chi, Charles Ms. Chen Ka Chee Ms. Lilian Ng Ms. Sio Ion Kuan Mr. Ng Wee Keat Ms. Ng Siew Lang, Linda

Independent Non-executive Directors:

Mr. Wong Kwok Tai Mr. Kwan Kai Kin, Kenneth Mr. Ho Yau Ming, Charles

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

Head Office and Principal Place of Business in Hong Kong: Unit 3808, 38th Floor West Tower, Shun Tak Centre 168-200 Connaught Road Central Hong Kong

3rd May, 2004

To the Shareholders

Dear Sirs or Madam,

CONNECTED AND DISCLOSEABLE TRANSACTION ACQUISITION OF VESSELS AND SHARE PREMIUM CANCELLATION

INTRODUCTION

The Directors announced on 1st April, 2004 that the Purchaser entered into the Agreement with the Vendor, People Value and Huang Worldwide to acquire from the Vendor (i) the Sale Shares; and (ii) the rights and benefits of and in the Sale Loan of up to US$10,662,500 (equivalent to approximately HK$83,167,500) (subject to adjustment as mentioned below). Details of the Sale Shares and the Sale Loan are set out below. The Directors also announced on the same date the proposed Share Premium Cancellation.

The Agreement constitutes a discloseable transaction under the old Listing Rules effective up to and until 30th March, 2004. By virtue of Huang Group’s interests in the Vendor and the Company, the transactions contemplated under the Agreement also constitute connected transactions of the Company

* For identification only

– 6 –

LETTER FROM THE BOARD

under the old Listing Rules effective up to and until 30th March, 2004. Accordingly, the Agreement, including the issue of the Convertible Bond and the Conversion Shares, is subject to the approval of the Independent Shareholders at a general meeting of the Company.

The Independent Board Committee comprising Messrs. Wong Kwok Tai, Kwan Kai Kin, Kenneth and Ho Yau Ming, Charles, being all independent non-executive Directors, has been established to consider and to advise the Independent Shareholders in respect of the terms of the Agreement and the transactions contemplated thereunder. Menlo Capital has been appointed as the independent financial adviser to advise the Independent Board Committee in this regard.

The purpose of this circular is to provide the Shareholders with (i) further information on the Agreement and the transactions contemplated thereunder; (ii) further information on the Share Premium Cancellation; (iii) the letter from the Independent Board Committee containing its recommendation to the Independent Shareholders in relation to the terms of the Agreement; (iv) the letter from Menlo Capital to the Independent Board Committee containing its advice in relation to the terms of the Agreement; and (v) the notice of the Special General Meeting.

AGREEMENT DATED 26TH MARCH, 2004 (AS SUPPLEMENTED ON 30TH MARCH, 2004)

Parties to the Agreement

• (i) Vendor: Marcus Profits Limited, which is wholly owned by Huang Worldwide

• (ii) Purchaser: Peak Ever Enterprises Limited, a wholly-owned subsidiary of the Company

• (iii) Target company: People Value Limited, a wholly-owned subsidiary of the Vendor

• (iv) Guarantor: Huang Worldwide, which guarantees that the Vendor will observe and perform the conditions, terms and provisions contained in the Agreement

Assets to be acquired

The Purchaser has agreed to acquire from the Vendor (i) the Sale Shares, being 2,500 shares in People Value, representing 25% of the issued share capital of People Value; and (ii) the rights and benefits of and in the Sale Loan of up to US$10,662,500 (equivalent to approximately HK$83,167,500) (subject to adjustment as mentioned below), representing 25% of the Vendor’s Loans. People Value is an investment holding company established solely for the purpose of the Acquisition. Save for entering into the Agreement, People Value has not carried out any business since its establishment. The principal assets of People Value upon the Completion will be the entire beneficial interests in the Vessels.

The Vessels are two cruise liners named “Leisure World” and “Amusement World” respectively. “Leisure World” was built in 1969 with carrying capacity of 1,252 persons. “Leisure World” has been operating as a cruise liner in Singapore, Malaysia and Indonesia for eleven years. “Amusement World” was built in 1967 with carrying capacity of 874 persons. “Amusement World” has been operating as a

– 7 –

LETTER FROM THE BOARD

cruise liner in Singapore, Malaysia and Indonesia for seven years. The Vessels possess accommodation, dining facilities and function rooms. Other facilities include sun decks, gaming rooms, child care facilities, beauty salons, massage facilities, exercise facilities, lounges, bars, entertainment and shopping facilities. The Vessels attract customers from the Asia region.

As at the Latest Practicable Date, the Vessels were held by the Original Owners, which are indirect wholly-owned subsidiaries of Huang Group. For the purpose of the Agreement, the Vendor will procure People Value to set up the Subsidiaries which will acquire from the Original Owners the vessel “Leisure World” at US$30,000,000 (equivalent to approximately HK$234,000,000) and the vessel “Amusement World” at US$18,500,000 (equivalent to approximately HK$144,300,000). One of the Subsidiaries will grant the Mortgage over “Leisure World” in favour of a bank to secure a bank loan of approximately US$6,250,000 (equivalent to approximately HK$48,750,000) to finance part of the purchase price of such vessel. The interest rate of the bank loan is expected to be the cost of fund in US dollars quoted by a licensed bank in Singapore (being 1.7585% per annum at present) plus 1.75%. The remaining amount will be financed by the interest-free Vendor’s Loans. The Original Owners acquired the vessels “Leisure World” and “Amusement World” in 1995 and 2000 respectively and the historical cost to the Original Owners of the vessels “Leisure World” and “Amusement World” amounted to US$18,200,000 (equivalent to approximately HK$141,960,000) and US$6,864,148 (equivalent to approximately HK$53,540,354) respectively.

Reference is made to the announcement of the Company dated 17th October, 2002 disclosing that the Group had entered into the Charter Agreements, the Sub-Charter Agreements and the Management Agreements in relation to the chartering from the Original Owners to the Charterer, the sub-chartering from the Charterer to Evervalue and the management of the Vessels by Huang Shipmanagement for the operation as leisure cruise liners in the Southeast Asia region. Details were also set out in the circular of the Company dated 5th November, 2002.

As one of the conditions precedent to the Agreement as mentioned below, the Charterparty Novation Agreements relating to the Vessels will be entered into between the Original Owners, the Charterer and the Subsidiaries whereby, among other things, the Vessels will continue to be chartered by the Subsidiaries to the Charterer after the Vessel Acquisition by the Subsidiaries on the same terms and conditions as the Charter Agreements.

Consideration

The consideration of US$10,665,000 (equivalent to approximately HK$83,187,000) (subject to adjustment as mentioned below) for the Acquisition is based on (i) the valuation of the Vessels at US$48,500,000 (equivalent to approximately HK$378,300,000) as at 20th March, 2004 made by the Independent Valuer; (ii) the unaudited proforma consolidated net assets of People Value of US$4,000 (equivalent to approximately HK$31,200), which amount has taken into account the book value of the Vessels of US$48,500,000 (equivalent to approximately HK$378,300,000); and (iii) the amount of the Sale Loan of up to US$10,662,500 (equivalent to approximately HK$83,167,500). The Consideration represents a premium of approximately 0.01% over the aggregate value of (i) the unaudited proforma consolidated net assets of People Value attributable to the Sale Shares; and (ii) the Sale Loan to be acquired by the Purchaser.

– 8 –

LETTER FROM THE BOARD

The Independent Valuer is an independent firm of professional valuers. The person in charge of the valuation of the Vessels is a professional mechanical engineer who has over 30 years of experience in the valuation of industrial plant. He also has over 20 years of experience in the valuation of plant machinery and equipment in Hong Kong, the PRC and Asia Pacific Rim.

The consideration will be satisfied by the Purchaser by procuring the Company to issue the Convertible Bond to the Vendor or its nominee on the Completion.

The principal terms of the Convertible Bond will be as follows:

• Principal amount:

Not more than US$10,665,000 (subject to adjustment as mentioned below), credited as fully paid at its face value in satisfaction of the Consideration.

• Maturity date:

Unless previously converted or repaid, the outstanding principal amount of the Convertible Bond will be repaid by the Company on the day preceding the second anniversary of the date of issue of the Convertible Bond.

• Interest:

• 1% per annum on the principal amount outstanding from time to time, payable semi-annually in arrears.

• Conversion and redemption:

• Unless previously redeemed on the basis referred to below, the whole or any part (in an amount or integral multiple of US$1,000,000 or if less, the entire outstanding amount of the Convertible Bond) of the outstanding principal amount of the Convertible Bond may be convertible from time to time and at any time over the two-year term of the Convertible Bond at the initial conversion price of HK$0.61 per Share (subject to adjustment) and at the agreed exchange rate of US$1.00 to HK$7.80. To the extent not previously converted, the Company shall redeem the Convertible Bond in cash at maturity.

The conversion price of the Convertible Bond is subject to adjustment provisions which are standard terms for convertible securities of similar type. The adjustment events will arise as a result of certain change in the share capital of the Company including consolidation or sub-division of Shares, capitalisation of profits or reserves, capital distributions in cash or specie or subsequent issue of securities in the Company.

• Early Redemption:

Early redemption of the whole or part (in an amount or integral multiple of US$1,000,000 or if less, the entire outstanding amount of the Convertible Bond) of the Convertible Bond by the Company will be permitted at any time after its date of issue (together with accrued interest thereon). The Vendor may within five business

– 9 –

LETTER FROM THE BOARD

days from the date of the redemption notice elect to convert the whole or any part (in an amount or integral multiple of US$1,000,000 or if less, the entire outstanding amount of the Convertible Bond) of the outstanding principal amount of the Convertible Bond into the Conversion Shares at the initial conversion price of HK$0.61 per Share (subject to adjustment).

Listing:

No application will be made for the listing of the Convertible Bond on any stock exchange. Application has been made to the Listing Committee for the listing of and, permission to deal in, the Conversion Shares on the Stock Exchange.

Conversion Shares:

• On the basis of the principal amount of US$10,665,000 and the initial conversion price of HK$0.61 per Share, a maximum total of 136,372,131 Conversion Shares may be issued upon full conversion of the Convertible Bond. The Conversion Shares shall, upon issue, rank pari passu in all respects with the then issued Shares.

Transferability:

The Convertible Bond will not be assignable or transferable except with the prior written consent of the Company.

The maximum total of 136,372,131 Conversion Shares to be issued upon full conversion of the Convertible Bond represents approximately 16.40% of the existing share capital of the Company and approximately 14.09% of the enlarged share capital of the Company. The initial conversion price of the Convertible Bond of HK$0.61 per Share represents:

• (i) the closing price of HK$0.61 per Share on the Stock Exchange on 25th March, 2004, being the last trading day before the suspension of trading in the Shares prior to the issue of the Announcement;

• (ii) a discount of approximately 0.3% to the average closing price of HK$0.612 per Share on the Stock Exchange during the period of the last five trading days up to and including 25th March, 2004;

• (iii) a discount of approximately 0.8% to the average closing price of HK$0.615 per Share on the Stock Exchange during the period of the last ten trading days up to and including 25th March, 2004;

• (iv) a discount of approximately 5.0% to the average closing price of HK$0.642 per Share on the Stock Exchange during the period of the last thirty trading days up to and including 25th March, 2004;

• (v) a discount of approximately 15.3% to the closing price of HK$0.72 per Share as quoted on the Stock Exchange on the Latest Practicable Date;

– 10 –

LETTER FROM THE BOARD

• (vi) a premium of approximately 189.1% over the audited net tangible assets of the Company of HK$0.211 per Share as at 31st March, 2003; and

• (vii) a premium of approximately 178.5% over the unaudited net tangible assets of the Company of HK$0.219 per Share as at 30th September, 2003.

Pursuant to the Agreement, the Vendor has undertaken to the Purchaser that it will maintain the minimum public float of the Company in accordance with the Listing Rules and that it will not cause or procure any part of the Convertible Bond to be converted into Conversion Shares if by doing so the minimum public float of the Company will not be maintained.

Adjustment on the Consideration and principal amount of the Convertible Bond

It is anticipated that People Value and/or the Subsidiaries will derive income from the Charterparty Novation Agreements immediately following the Vessel Acquisition by the Subsidiaries and prior to the Completion. Pursuant to the Charter Agreements, the aggregate daily charter hire to be received by People Value and/or the Subsidiaries will be S$82,500 (equivalent to approximately HK$379,500), details of which were set out in the announcement of the Company dated 17th October, 2002. That being the case, the Vendor shall have the right to request People Value and/or the Subsidiaries to whom the Vendor’s Loans are advanced to repay part of the Vendor’s Loans (on a pro-rata basis) at any time after the Vessel Acquisition by the Subsidiaries and prior to the Completion provided that People Value or the Subsidiaries are financially able to do so. In the event of any such partial repayment:

• (a) the Consideration payable by the Purchaser to the Vendor upon the Completion shall be adjusted downward by an amount equivalent to the amount of the Sale Loan partially repaid;

• (b) the principal amount of the Sale Loan shall be adjusted downward in the same manner and the Vendor shall only be obliged to assign the remaining outstanding balance of the Sale Loan to the Purchaser upon the Completion; and

• (c) the principal amount of the Convertible Bond to be issued upon the Completion will be adjusted to be equivalent to the Consideration.

Conditions of the Agreement

The Agreement is subject to and conditional upon the following conditions precedent being fulfilled on or before the following dates:

• (a) all consents and approvals (if any) of the Stock Exchange, any relevant governmental or regulatory authorities and other relevant third parties which are necessary and essential for the entering into and the implementation of the Agreement and all transactions contemplated under the Agreement (save and except for the approval for the listing of and permission to deal in the Conversion Shares to be issued by the Company under the Convertible Bond from the Stock Exchange as referred to in paragraph (h) below) having been obtained on or before 28th May, 2004 (or such later date as shall be agreed between the Vendor and the Purchaser in writing);

– 11 –

LETTER FROM THE BOARD

• (b) the approval of the Agreement by the shareholders of the Company at a duly convened special general meeting of the Company by resolution passed in accordance with the Listing Rules on or before 28th May, 2004 (or such later date as shall be agreed between the Vendor and the Purchaser in writing);

• (c) the reorganisation of shareholding arrangement of People Value as set out in the Agreement having been implemented and completed on or before 15th July, 2004 (or such later date as shall be agreed between the Vendor and the Purchaser in writing);

• (d) the Vessel Acquisition by the Subsidiaries having been implemented and completed on or before 15th July, 2004 (or such later date as shall be agreed between the Vendor and the Purchaser in writing);

• (e) the Purchaser being satisfied that, upon the completion of the Vessel Acquisition by the Subsidiaries, the Subsidiaries will have good and marketable title to the Vessels free from encumbrances (save and except for the Mortgage) on or before 15th July, 2004 (or such later date as shall be agreed between the Vendor and the Purchaser in writing);

• (f) the Mortgage having been duly executed and completed on or before 15th July, 2004 (or such other date as shall be agreed between the Vendor and the Purchaser in writing);

• (g) the Charterparty Novation Agreements having been duly executed and completed on or before 15th July, 2004 (or such later date as shall be agreed between the Vendor and the Purchaser in writing); and

• (h) the approval for the listing of and permission to deal in the Conversion Shares to be issued by the Company under the Convertible Bond from the Stock Exchange having been obtained on or before 15th July, 2004 (or such later date as shall be agreed between the Vendor and the Purchaser in writing).

None of the above conditions precedent is waivable. If any of the above conditions precedent shall not have been fulfilled on or before the respective dates as set out above, the Agreement shall be void and of no effect and no party shall have any rights or claims whether for loss or damages or other relief whatsoever against any of the other parties on any ground save for antecedent breaches.

Completion

Completion is to take place on or before the 7th business day after the fulfilment of the conditions precedent referred to above. Upon the Completion, the Vendor, the Purchaser and People Value shall enter into the Shareholders’ Agreement, the principal terms of which are set out below.

Shareholders’ Agreement

Summarised below are the principal terms of the Shareholders’ Agreement to be entered into among the Vendor, the Purchaser and People Value upon the Completion:

– 12 –

LETTER FROM THE BOARD

Parties: Shareholders: the Vendor and the Purchaser

the Vendor, the Purchaser and People Value

Subject matter: Formation and operation of People Value Share capital:

The issued share capital of People Value is US$10,000, divided into 10,000 shares. Of the 10,000 shares, 7,500 shares (equivalent to 75% of the issued share capital of People Value) will be beneficially owned by the Vendor and 2,500 shares (equivalent to 25% of the issued share capital of People Value) will be beneficially owned by the Purchaser.

No shares of People Value shall be transferred by a shareholder to any person or a company without the written approval by the board of People Value.

Business objective:

• The business objective of People Value and the Subsidiaries will be confined to acting as the holding companies of the owners or as owners (as the case may be) of the Vessels.

Board of directors:

Unless otherwise agreed in writing by all shareholders of People Value, People Value shall have a board comprising not more than four directors. The Vendor shall be entitled to nominate up to three persons to be directors and the Purchaser shall be entitled to nominate up to one person as director.

• Working capital and financing:

• In the event that further financing is required for the proper growth and operation of People Value and the Subsidiaries in addition to the Vendor’s Loans (including the Sale Loan), People Value or the Subsidiaries concerned will attempt to obtain necessary financing for itself through loans from commercial banks or other financial institutions on the strength of its own financial standing.

– 13 –

LETTER FROM THE BOARD

Shareholding structure of the Company

The following is a summary of the shareholding in the Company (i) as at the Latest Practicable Date and immediately after the completion of the Acquisition; and (ii) upon full conversion of the Convertible Bond (assuming no other changes in shareholding before then and the Convertible Bond is in the principal amount of US$10,665,000):

Shareholders New Century Worldwide Capital Limited Vendor Directors (including directors of subsidiaries of the Company) Public Total	As at the Latest Practicable Date and immediately after the Completion Shares % 474,496,952 57.05 – – 112,998,450 13.59 244,234,512 29.36 831,729,914 100.00	Upon full conversion of the Convertible Bond Shares % 474,496,952 49.01 136,372,131 14.09 112,998,450 11.67 244,234,512 25.23 968,102,045 100.00	Upon full conversion of the Convertible Bond Shares % 474,496,952 49.01 136,372,131 14.09 112,998,450 11.67 244,234,512 25.23 968,102,045 100.00
			100.00

Reasons for the Acquisition

The principal activities of the Group comprise vessel-chartering, hotel operation, property investment, provision of property information and professional valuation services through websites, and securities trading.

In October 2002, the Group entered into the Charter Agreements, the Sub-charter Agreements and the Management Agreements for chartering, sub-chartering and management of the Vessels for the operation as leisure cruise liners in the Southeast Asia region, details of which were set out in the announcement of the Company dated 17th October, 2002 and the circular of the Company dated 5th November, 2002.

According to the Group’s audited financial statements for the year ended 31st March, 2003 and the latest published interim report for the six months ended 30th September, 2003 as shown below, the revenue earned from the Vessel-chartering segment became more significant to the Group and represented approximately 61.9% of total revenue in all segments in the financial year 2003 and became 81.0% for the interim period ended 30th September, 2003.

		Year ended	Six	months ended
	31st March, 2003		30th September, 2003
	Vessel All		Vessel	All
	chartering	segments	chartering	segments
	(HK$’ million)	(HK$’ million)	(HK$’ million)	(HK$’ million)
Revenue	73.9	119.4	98.0	120.9
Results	14.8	(31.4)	11.1	8.9

– 14 –

LETTER FROM THE BOARD

Following the SARS period in 2003, the economy of Southeast Asia region has been recovering. This is particularly beneficial to the tourism industry in the Southeast Asia region as demonstrated by the increasing number of tourists travelling around the region. In addition to the stable revenue generated from the vessel chartering business, the Company believes that the Acquisition could enable the Group to leverage on its expertise in the cruise liner business and share the equity value generated by the Vessels. The Acquisition should also enhance the asset portfolio of the Group by acquiring the Vessels with stable profit generating ability. Upon the Completion, People Value will become an associated company of the Company. The Group’s interest in People Value will be stated in the consolidated balance sheet at the Group’s share of net assets under the equity method of accounting less any impairment loss. The effect of such accounting treatment is yet to be quantified, the Directors however believe that the Acquisition will not have any adverse impact on the earnings, assets and liabilities of the Group.

The Directors consider the terms of the Agreement to be fair and reasonable as far as the Shareholders are concerned and that the Agreement is in the interest of the Company.

Compliance with the Listing Rules

The Agreement constitutes a discloseable transaction under the provisions of the old Listing Rules effective up to and until 30th March, 2004. Huang Group is the ultimate holding company of New Century Worldwide which has become the controlling shareholder of the Company since June 2001. New Century Worldwide was interested in approximately 57.05% of the share capital of the Company as at the Latest Practicable Date. The Vendor is an indirect wholly-owned subsidiary of Huang Group. By virtue of Huang Group’s interests in the Vendor and the Company, the transactions under the Agreement also constitute connected transactions of the Company under the old Listing Rules effective up to and until 30th March, 2004. Accordingly, the Agreement, including the issue of Convertible Bond and the Conversion Shares, is subject to the approval of the Independent Shareholders at a general meeting of the Company. New Century Worldwide and its associates will abstain from voting on the relevant resolution in relation to the Agreement, including the issue of the Convertible Bond and the Conversion Shares.

SHARE PREMIUM CANCELLATION

The Directors propose the Share Premium Cancellation which involves the cancellation of the entire amount standing to the credit of the share premium account of the Company as at 30th September, 2003.

The credit arising from the Share Premium Cancellation will be credited to the contributed surplus account of the Company. Based on the unaudited accounts of the Company as at 30th September, 2003, a credit of an amount of HK$368,310,037.48 will arise as a result of the Share Premium Cancellation, which amount will be transferred to the contributed surplus account of the Company. On the basis of the credit balance of the contributed surplus account of the Company of HK$217,891,457.06 as at 30th September, 2003, the contributed surplus account of the Company will become HK$586,201,494.54 after such transfer. The Board proposes to apply part of such contributed surplus to offset the accumulated losses of the Company, which amounted to HK$423,613,688.25 as at 30th September, 2003 on the basis of the unaudited balance sheet of the Company as at that date. On this basis and assuming there is no change in the balance of the accumulated losses of the Company after 30th September, 2003, the credit balance of the contributed surplus account is expected to be HK$162,587,806.29 after setting off in full

– 15 –

LETTER FROM THE BOARD

the accumulated losses of the Company and may be applied in accordance with the laws of Bermuda and the bye-laws of the Company, including capitalization issues for distribution to the Shareholders and the offset of accumulated losses, if any, of the Company.

Effect of the Share Premium Cancellation

Other than the expenses incurred in relation to the Share Premium Cancellation, the implementation thereof will not alter the underlying assets, business operations, management or financial position of the Company or the relative interests or rights of the Shareholders. The Share Premium Cancellation itself will not have any material effect on the financial position of the Group.

Conditions of the Share Premium Cancellation

The Share Premium Cancellation will be conditional upon:

• (a) the passing of a special resolution by the Shareholders to approve the Share Premium Cancellation at the Special General Meeting;

• (b) compliance with the relevant legal procedures and requirements under the Bermuda laws to effect the Share Premium Cancellation; and

• (c) the obtaining of all necessary approvals from the regulatory authorities or otherwise as may be required in respect of the Share Premium Cancellation.

None of the above conditions is waivable.

Reasons for the Share Premium Cancellation

The unaudited financial statements of the Company as at 30th September, 2003 showed that the Company had accumulated losses of HK$423,613,688.25. The Directors believe that it is unlikely that the Company will be able to generate sufficient profits in the near future to eliminate such deficit and that it would be inappropriate for the Company to pay dividends while the deficit remains. The Directors propose the Share Premium Cancellation to be adopted by the Company such that the amount arising from such cancellation will be transferred to the contributed surplus account which will be applied to eliminate the accumulated losses as at 30th September, 2003. Based on the accumulated losses as at 30th September, 2003, the balance of the share premium account and the contributed surplus account as at 30th September, 2003, the accumulated losses of the Company as at 30th September, 2003 are expected to be fully eliminated upon the Share Premium Cancellation becoming effective.

SPECIAL GENERAL MEETING

Set out on pages 50 to 52 of this circular is a notice convening the Special General Meeting to be held at Plaza I-III, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wanchai, Hong Kong on Thursday, 27th May, 2004, at 10:00 a.m. at which resolutions will be proposed to consider and, if thought fit, to approve, among other things, the Agreement, the issue of the Convertible Bond and the Conversion Shares, and the Share Premium Cancellation.

– 16 –

LETTER FROM THE BOARD

New Century Worldwide and its associates will abstain from voting on the resolution approving the Agreement, the issue of the Convertible Bond and the Conversion Shares.

You will find enclosed a form of proxy for use at the Special General Meeting. If you are not able to attend the Special General Meeting, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return it to the principal place of business of the Company in Hong Kong at Unit 3808, 38/F., West Tower, Shun Tak Centre, 168-200 Connaught Road Central, Hong Kong as soon as possible and, in any event not later than forty-eight (48) hours before the time appointed for holding of the Special General Meeting. Completion and return of the form of proxy will not preclude you from attending and voting in person at the Special General Meeting or any adjournment of it, if you so wish.

RECOMMENDATIONS

Menlo Capital has been appointed to advise the Independent Board Committee with regard to the terms of the Agreement. Menlo Capital considers that the Acquisition is in the interests of the Company and the Independent Shareholders as a whole and the terms of the Agreement are fair and reasonable insofar as the Independent Shareholders are concerned. The text of the letter from Menlo Capital containing its advice and the principal factors it has taken into account in arriving at its recommendation are set out on pages 19 to 37 of this circular.

The Independent Board Committee, having taken into account the advice of Menlo Capital, considers that the Acquisition is in the interests of the Company and the Independent Shareholders as a whole and the terms of the Agreement are fair and reasonable insofar as the Independent Shareholders are concerned. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of the resolution to be proposed at the Special General Meeting approving the Agreement and the transactions contemplated thereunder. The full text of the letter from the Independent Board Committee is set out on page 18 of this circular.

The Directors believe that the Share Premium Cancellation is in the interests of the Company and the Shareholders. Accordingly, the Directors recommend the Shareholders to vote in favour of the relevant resolution to approve the aforesaid proposal.

FURTHER INFORMATION

Your attention is drawn to the text of the letters from the Independent Board Committee and Menlo Capital respectively containing their opinions regarding the terms of the Agreement.

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

– 17 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

==> picture [116 x 57] intentionally omitted <==

NEW CENTURY GROUP HONG KONG LIMITED 新世紀集團香港有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 234)

3rd May, 2004

To the Independent Shareholders

Dear Sirs or Madam,

CONNECTED AND DISCLOSEABLE TRANSACTION ACQUISITION OF VESSELS

We refer to the circular (the “Circular”) dated 3rd May, 2004 issued by the Company in connection with, among other things, the Agreement of which this letter forms part. Capitalised terms used in this letter shall have the same meanings as those defined in the Circular unless specified otherwise.

The Independent Board Committee has been established to advise the Independent Shareholders in respect of the terms of the Agreement. Menlo Capital has been appointed as the independent financial adviser to advise us in this respect. We wish to draw your attention to the letter from the Board as set out on pages 6 to 17 of the Circular and the letter of advice from Menlo Capital as set out on pages 19 to 37 of the Circular.

The Independent Board Committee, having taken into account the advice of Menlo Capital, considers that the Acquisition is in the interests of the Company and the Independent Shareholders as a whole and the terms of the Agreement are fair and reasonable insofar as the Independent Shareholders are concerned. On this basis, we recommend the Independent Shareholders to vote in favour of the relevant resolution set out in the notice of Special General Meeting.

Wong Kwok Tai

Yours faithfully, Independent Board Committee Kwan Kai Kin, Kenneth Ho Yau Ming, Charles

* For identification only

– 18 –

LETTER OF ADVICE FROM MENLO CAPITAL

The following is the text of a letter from Menlo to the Independent Board Committee in connection the Agreement, the Issue of the Convertible Bond and the issue of the Conversion Shares, which has been prepared for the purpose of inclusion in this circular:

Menlo Capital Limited

Room 505, Nan Fung Tower 173 Des Voeux Road Central Hong Kong

3 May 2004

To the Independent Board Committee of

New Century Group Hong Kong Limited

Dear Sirs,

CONNECTED AND DISCLOSEABLE TRANSACTION

INTRODUCTION

We refer to our appointment to advise the Independent Board Committee in respect of the terms of the acquisition of (i) 2,500 shares in People Value representing 25% of the entire issued share capital of People Value; and (ii) the rights and benefits of and in the Sale Loan of up to US$10,662,500 (equivalent to approximately HK$83,167,500) pursuant to the Agreement, which will be satisfied by the issue of the Convertible Bond as consideration to Marcus Profits Limited, a company incorporated in the BVI which is wholly owned by Huang Worldwide (the “Vendor”) or its nominee on the Completion, details of which are set out in the letter from the Board (the “Board Letter”) contained in the Company’s circular dated 3 May 2004 (the “Circular”) of which this letter forms part. We have been engaged to advise the Independent Board Committee as to whether or not the terms of the Agreement are fair and reasonable insofar as the Independent Shareholders are concerned. Terms used in this letter shall have the same meanings as defined in the Circular unless the context requires otherwise.

People Value, a company incorporated in the BVI, is a wholly-owned subsidiary of the Vendor, principal asset upon the Completion will be the beneficial interests in the Vessels. The Vessels are the two cruise liners namely “Leisure World” and “Amusement World” which are currently owned by the Original Owners and operated under the Charter Agreements, details of which are set out in the announcement of the Company dated 17 October 2002. Pursuant to the Agreement, the Vendor will procure People Value to set up the Subsidiaries and the Subsidiaries will acquire from the Original Owners the Vessels for the aggregate price of US$48,500,000 (equivalent to approximately HK$378,300,000). The Charterparty Novation Agreement will have to be executed such that the Vessels will continue to be chartered by the Subsidiaries to the Charterer after the Vessel Acquisition by the

– 19 –

LETTER OF ADVICE FROM MENLO CAPITAL

Subsidiaries on the same terms and conditions as the Charter Agreements. Pursuant to the Agreement, Peak Ever Enterprises Limited, a wholly-owned subsidiary of the Company (the “Purchaser”) will acquire 25% of the entire issued share capital of People Value and the rights and benefits of and in the Sale Loan. The Agreement will constitute a discloseable transaction of the Company under the Listing Rules.

Given Huang Group is the ultimate holding company of New Century Worldwide which in turn held approximately 57.05% of the issued share capital of the Company as a controlling shareholder of the Company as at the Latest Practicable Date and by virtue of Huang Group’s interest in the Vendor, the transactions under the Agreement constitute connected transactions of the Company pursuant to Rule 14.23(1)(b) of the Listing Rules (the “ Transaction”). The Agreement is conditional upon, among other things, the approval of the Independent Shareholders. New Century Worldwide and its associates will abstain from voting on the relevant resolution approving the Agreement at the special general meeting (the “SGM”). Other conditions precedent for the completion of the Acquisition are set out in the subsection headed “Conditions of the Agreement” in the section headed “Agreement dated 26th March, 2004 (as supplemented on 30th March, 2004)” in the Board Letter contained in the Circular.

Our role as the independent financial adviser to the Independent Board Committee is to express our opinion on whether the terms under the Agreement in respect of the Acquisition are fair and reasonable insofar as the Independent Shareholders are concerned.

BASIS OF OUR OPINION

In formulating our opinion, we have relied on the statements, information, opinions and representations contained in the Circular and the information and representations provided to us by the Directors and the management of the Company. We have assumed that all information, representations and opinions contained or referred to in the Circular and all information, representations and opinions which have been provided by the Directors or management of the Company, for which they are solely responsible, are true and accurate at the time they were made and will continue to be accurate at the date of the despatch of the Circular.

We consider that we have been provided with sufficient information on which to form a reasonable basis for our opinion. We have no reason to suspect that any relevant information has been withheld, nor are we aware of any fact or circumstance which would render the information provided and representations and opinions made to us untrue, inaccurate or misleading. Having made all reasonable enquiries, the Directors have further confirmed that, to the best of their knowledge and belief, there are no other facts or representations the omission of which would make any statement contained in the Circular, including this letter, misleading. We have not, however, carried out any independent verification of the information provided by the Directors and the management of the Company, nor have we conducted an independent investigation into the business and affairs of the Company.

– 20 –

LETTER OF ADVICE FROM MENLO CAPITAL

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion in respect of the terms of the transactions under the Agreement, we have taken into consideration, inter alia, the following principal factors and reasons:

Reasons for entering into the Agreement

1. Background

The year 2003 was difficult almost for all industries since the global economy persisted to shrinking due to recession, high unemployment rate, terrorists’ attacks and in particular the Iraq war. Followed by the outbreak of severe acute respiratory syndrome (“SARS”) in the late first quarter of 2003, most of the industries in Hong Kong had experienced significant decline in business. The Directors are of the view that the Company and its subsidiaries (the “Group”) had taken measures to reduce the adverse impact on its business performance, first by the liquidation of unsound investments in business such as film processing and electronic products, and then by strengthening the Group’s investments with stable revenue generating power.

Apart from the businesses of property investment and securities trading which, the Directors believe, would provide a stable revenue base and capital gains from the holding of appropriate investment portfolio on the recovery of the local economy, and the business in the operation of hotel resort in Indonesia of which the Directors is optimistic towards the business prospects, the Group had restructured its investment profiles by diversifying its business into the Asian cruise line business in late 2002.

Pursuant to a resolution passed at a special general meeting on 22 November 2002, the Group chartered the Vessels from the Original Owners and sub-chartered the Vessels to an independent third party with effect from 27 November 2002, providing cruise services in the Southeast Asia region. The offering of a variety of cruise and ground resort services to tourists in Singapore, Malaysia and Indonesia complements the resort operation of the Group. For details of the Charter Agreements, the Sub-charter Agreements and the Management Agreements for the chartering, sub-chartering and management of the Vessels for the operation of the Vessels please refer to the announcement of the Company dated 17 October 2002 and the circular of the Company dated 5 November 2002.

According to the Group’s audited financial statements for the year ended 31 March 2003 and the latest published interim report for the six months ended 30 September 2003 as shown below, the revenue earned from the Vessel-chartering segment became more significant to the Group and represented approximately 61.9% of total revenue in all segments in the financial year 2003 and became 81.0% for the interim period ended 30 September 2003.

– 21 –

LETTER OF ADVICE FROM MENLO CAPITAL

	Year ended 31	March 2003	6 months ended 30	September 2003
	Vessel chartering	**All segments **	Vessel chartering	All segments
	(HK$’ million)	(HK$’ million)	(HK$’ million)	(HK$’ million)
Revenue	73.9	119.4	98.0	120.9
Results	14.8	(31.4)	11.1	8.9

The contribution to the results of the Group from this business segment was proven to successfully restore the overall performance of the Group to profitability for the interim period ended 30 September 2003 from an operating loss incurred in 2003. The back to back chartering and sub-chartering arrangements not only kept the Group intact from cyclical fluctuations of the Asian cruise line business but also provided stable revenue to the Group.

In May 2003, owing to the impact of SARS on a number of South East Asian countries, the Group agreed to grant an allowance to the sub-charterer over a period of 6 months from 1 April 2003. Subsequently, the World Health Organisation announced the removal of Singapore from the list of areas with local transmission of SARS on 31 May 2003 and the number of passengers boarding the vessels has shown an increase back to the level of the pre-SARS period, the Group agreed with the sub-charterer to terminate the allowances effective from 1 July 2003. Following the adverse impact from SARS in Asia and the occupancy rate of the hotel gradually returned to the pre-SARS level, the Directors consider that the cruise liner operation will continue to generate attractive returns and will position the Group to benefit from the continuous improvement in the Asia Pacific economy in the foreseeable future.

After the acquisition of 25% of the entire issued share capital of People Value, the Group will equity account for the financial results and position of People Value, i.e. share of the profits and net assets of the People Value in the Group’s own consolidated financial statements, which, the Directors believe, would enhance the asset value of the Group and bring a positive impact on the Group’s performance.

We consider that the Acquisition is in line with the Group’s strategies in offering of a variety of cruise and ground resort services to tourists in the Southeast Asia region which compliment the Group’s resort operations and concur with the Directors’ view that the Acquisition provides a good opportunity for the Group in pursuing this strategy in order to enhance its overall value and competitiveness in the market.

2. The Vessels to be acquired

The Vessels are the two cruise liners called “Leisure World” and “Amusement World”. Leisure World was built in 1969 with carrying capacity of 1,252 persons while Amusement World was built in 1967 with carrying capacity of 874 persons. Leisure World and Amusement World have been operating as cruise liners in Singapore, Malaysia and Indonesia for over eleven years and seven years respectively. Both possess accommodation and amusement facilities for the provision of cruise tour services including casinos, restaurants and bars, cafeteria, massage parlors, beauty salons, clinic, exercise center, laundry, tailor shop, children’s play room, sun decks, entertainment and shopping facilities. As per the Valuation Report issued by Vigers Appraisal & Consulting Limited (“Vigers”) dated 26 March 2004, Vigers opined that the remaining economic life of Leisure World is 15 years while that of Amusement World is 14

– 22 –

LETTER OF ADVICE FROM MENLO CAPITAL

years. Below is the estimated net revenue of the Vessels after the Acquisition based on the Charter Agreements and the Charterparty Novation Agreements:

Daily charter charges from the Charterer Annualized revenue before depreciation, interest expenses and other expenses Depreciation based on valuation Estimated interest expenses Estimated net annual revenue before other expenses Valuation	Leisure World S$ 50,000 US$ 10,763,000 (2,000,000) (219,000) 8,544,000 30,000,000	Amusement World S$ 32,500 US$ 6,996,000 (1,321,000) – 5,675,000 18,500,000	Total S$ 82,500 US$ 17,759,000 (3,321,000) (219,000) 14,219,000 48,500,000

• Note 1: The charter period commenced from 27 November 2002 and the charter rates shall be subject to review after expiration of five years from the commencement of the Charter Agreements.

• Note 2: The interest expenses of the bank loan upon the date of the Completion is expected to be the cost of fund in US dollars quoted by the bank in Singapore (being 1.7585% per annum at present) plus the margin of 1.75% on the outstanding principal amount of the bank loan of US$6,250,000 upon the date of the Completion.

• Note 3: The repayment of bank loan per annum is based on the terms of the Mortgage which will be granted to the Subsidiaries for financing part of the purchase price of “Leisure World”.

Note 4: The exchange rate applied here: US$1.0 = HK$7.8 S$1.0 = HK$4.6

Based on the Charterparty Novation Agreements which will be entered between the Original Owners, the Charterer and the Subsidiaries, the Vessels will continue to be chartered by the Subsidiaries to the Charterer after the Vessel Acquisition by the Subsidiaries on the same terms and conditions as the Charter Agreements. It is anticipated that the above estimated net revenues before other expenses for the Vessels will be beneficial to People Value for each of the first five years from the commencement of the Charter Agreements pursuant to the Charterparty Novation Agreements until the charter arrangements are terminated by either the Subsidiaries or the Charterer serving on the other party not less than 60 days written notice of termination. The daily charter charges for the sixth year and beyond will be subject to review by both parties. The Directors believe that the charter charges of a stable nature earned by the Subsidiaries will have a positive impact on the Group’s performance and net assets since, as a result of the Acquisition, the Group will equity account for 25% of the financial results and position of People Value in the Group’s own consolidated financial statements. We concur with the Director’s view that the anticipated economic benefits to be generated from the Vessels earned by the Subsidiaries safeguarded by the Charterparty Novation Agreements would bring a positive impact on the Group’s performance and net assets when the Group equity accounts for 25% of the financial results and position of People Value in the Group’s own consolidated financial statements such that the Acquisition is in the interests of the Company and the Shareholders (including the Independent Shareholders) as a whole.

– 23 –

LETTER OF ADVICE FROM MENLO CAPITAL

For details of the terms of the Charter Agreements for the chartering of the Vessels please refer to the circular of the Company dated 5 November 2002. The details of the terms regarding the continuation of the Charter Agreement as stipulated in the Charterparty Novation Agreements are set out in the subsection headed “Conditions Precedent” under the section headed “Consideration” below.

3. Valuation of the Vessels

The letter from the Independent Valuer included in the “Valuation Report” dated 26 March 2004 in respect of its valuation is set out in Appendix I to the Circular. The valuation of the Vessels performed by the Independent Valuer is based on their fair market values in continued use as part of a going-concern which represent in the amount of US$30 million (equivalent to approximately HK$234 million) for Leisure World and US$18.5 million (equivalent to approximately HK$144.3 million) for Amusement World. The valuation methodology in arriving at their opined values includes cost approach and market data or comparative sales approach. In the opinion of the Independent Valuer, these approaches are the most common used methods in the valuation of vessels.

We agree that physical condition due to wear and tear is proportional to use and the degree of maintenance rather than age. Use and degree of maintenance should be the appropriate indicator to estimate physical deterioration. Pursuant to the assessment of the physical condition of the Vessels, we were informed by the Independent Valuer that they have conducted an inventory and inspection on the Vessels, investigated market conditions and interviewed personnel including captains and chief engineers in order to establish the operating condition, utility and history of the subject Vessels. The cost of repair and maintenance is born by the charterer.

We note that the Independent Valuer has carefully examined the physical condition of the Vessels and based on the factors they have considered and their findings we find that the assumption for determining the fair market value in continued use as part of a going-concern were properly based.

The Independent Valuer advised that the estimation of remaining economic life of the Vessels has been substantially based on the observed condition at the time of appraisal and condition of maintenance, and the consideration of normal rates of depreciation for that kind of asset. We noted that the Independent Valuer has taken reasonable procedures for their observation to the physical condition of the Vessels and the examination of maintenance policy together with the factors considered regarding the rate of depreciation as stated above which are sufficient for comments on the remaining economic life of the Vessels. The Independent Valuer opines that the estimate of remaining economic life for Leisure World is 15 years while that for Amusement World is 14 years.

Therefore, based on the foregoing, we are of the view that (i) the assumptions for the valuation of the Vessels are properly grounded by taking into consideration of the procedures taken by the Independent Valuer in assessing the physical condition of the Vessels, and (ii) the fair market values of the Vessels in continued use together with the estimates of their remaining economic life have been arrived at on a fair and reasonable basis.

– 24 –

LETTER OF ADVICE FROM MENLO CAPITAL

Consideration

1. Basis of the consideration

The consideration of US$10,665,000 (equivalent to approximately HK$83,187,000) (subject to adjustment as mentioned below) for the Acquisition which will be satisfied by the Purchaser by procuring the Company to issue the Convertible Bond to the Vendor or its nominee upon the Completion is based on (i) the valuation of the Vessels at US$48,500,000 (equivalent to approximately HK$378,300,000) as at 20 March 2004 prepared by the Independent Valuer; (please refer to “Independent Valuation”, Appendix I to the Circular) (ii) unaudited proforma consolidated net assets of People Value of US$4,000 (equivalent to approximately HK$31,200), which amount has included the book value of the Vessels of US$48,500,000 (equivalent to approximately HK$378,300,000); and (iii) the amount of the Sale Loan of up to US$10,662,500 (equivalent to approximately HK$83,167,500), as set out in the Board Letter of the Circular.

The unaudited proforma consolidated net assets of the People Value is based on the projected balance sheet as at 30 June 2004 prepared by the Directors in which no financial result is taken into consideration before that date. Pursuant to the Shareholders Agreement, the business activities of People Value and its subsidiaries shall be confined to acting as holding company or as owners of the Vessels. The projected net assets of US$4,000 (equivalent to approximately HK$31,200) include the amount of the book value of the Vessels of US$48,500,000 (equivalent to approximately HK$378,300,000), the purchase price of which are to be financed by the Mortgage and the Vendor’s loan.

The Vendor’s Loans are the two interest-free loans in the total principal amount of US$42,650,000 (subject to adjustment as mentioned below) to be advanced by the Vendor to People Value and its Subsidiaries pursuant to the Agreement. Since the Company has agreed to acquire from the Vendor 2,500 ordinary shares of US$1.00 each in the capital of People Value beneficially owned by the Vendor, representing 25% of the entire issued shares of People Value (the “Sale Shares”) and the Vender’s Loans (together with the funding of the Mortgage) will be applied to finance the purchase price of the Vessels, the Sales Loan will be assigned by the Vendor to the Purchaser upon the Completion. The amount of the Sales Loan of up to US$10,662,500 (equivalent to approximately HK$83,167,500) (subject to adjustment as mentioned below) is based on 25% of the Vendor’s Loans. We consider that the rights and benefits of and in the Sales Loan of up to US$10,662,500 assigned from the Vendor to the Purchaser are fairly determined.

US$

25% of unaudited proforma consolidated net assets of People Value attributable to the Sale Shares The Sale Loan to be acquired by the Purchaser Aggregated value Consideration Premium of consideration to the aggregated value Premium in percentage	1,000 10,662,500
	10,663,500 10,665,000
	1,500 0.014%

– 25 –

LETTER OF ADVICE FROM MENLO CAPITAL

The consideration of US$10,665,000 (equivalent to approximately HK$83,187,000) to satisfy the Acquisition payable by the Company upon the Completion is a premium of approximately 0.014% to the aggregate value of (i) 25% of the unaudited proforma consolidated net assets of People Value equivalent to US$1,000 (equivalent to approximately HK$7,800) attributable to the Sale Shares; and (ii) the Sale Loan of up to US$10,662,500 (equivalent to approximately HK$83,167,500) to be acquired by the Purchaser. We are of the view that the consideration was determined on arm’s length negotiation and arrived at on a fair and reasonable basis.

2. Terms of Convertible Bond

The consideration for the Acquisition will be satisfied by the Purchaser by way of the issue of the Convertible Bond in the sum of US$10,665,000 (equivalent to approximately HK$83,187,000) (subject to adjustment as mentioned below) to the Vendor or its nominee upon Completion. The principal terms of the Convertible Bond can be summarized as follows:

Maturity date: Unless previously converted or repaid, the outstanding principal amount together with all unpaid and accrued interest of the Convertible Bond will be repaid by the Company on the day preceding the second anniversary of the date of issue of the Convertible Bond.

Interest: 1% per annum on the principal amount outstanding from time to time, payable semiannually in arrears. The Group has bank and other loans of approximately HK$38.14 million as per the unaudited condensed consolidated balance sheet for the six months period ended 30 September 2003 in the interim report of the Company. The interest rate of 1% per annum for the Convertible Bond is lower than the estimated average interest rate of 4.25% per annum payable on the Group’s bank borrowings mentioned aforesaid and lower than the prime rate of 5% as at the Latest Practicable Date, which represents a lower borrowing cost to be incurred by the Company. Therefore, the interest rate of 1% per annum on the Convertible Bond payable to the Vendor or its nominee is considered favourable to the Company.

Conversion and redemption: Unless previously redeemed on the basis referred to below, the whole or any part (in an amount or integral multiple of US$1,000,000 or if less, the entire outstanding amount of the Convertible Bond) of the outstanding principal amount of the Convertible Bond may be convertible from time to time and at any time over the two-year term of the Convertible Bond at a conversion price of HK$0.61 (detailed analysis of the conversion price is set out in the sub-section headed “Share price performance and comparison of the conversion price for the Convertible Bond”) per Share (subject to adjustment provisions as mentioned below) and at the agreed exchange rate of US$1.00 to HK$7.80. To the extent not previously converted, the Company shall redeem the Convertible Bond in cash at maturity. As the exchange rate is fixed, the Company is therefore free from the exchange rate risk, which may arise due to the exchange rate fluctuation during the two-year term of the Convertible Bond.

The conversion price of the Convertible Bond is subject to adjustment provisions which are standard terms for convertible securities of similar type. The adjustment events will arise as a result of certain change in the share capital of the Company including consolidation or sub-division of shares, capitalization of profits or reserves, capital distributions in cash or specie or subsequent issue of securities in the Company.

– 26 –

LETTER OF ADVICE FROM MENLO CAPITAL

Early Redemption: Early redemption of the whole or part (in an amount or integral multiple of US$1,000,000 or if less, the entire outstanding amount of the Convertible Bond) of the Convertible Bond by the Company will be permitted at any time after its date of issue (together with accrued interest thereon). The Directors confirm that it is penalty-free for early redemption of the Convertible Bond by the Company, which is regarded as being in the interests of the Company.

The Vendor may within five business days from the date of the redemption notice elect to convert the whole or any part (in an amount or integral multiple of US$1,000,000 or if less, the entire outstanding amount of the Convertible Bond) of the outstanding principal amount of the Convertible Bond into the Conversion Shares at a conversion price of HK$0.61 per Share (subject to adjustment provisions as mentioned above).

Listing: No application will be made for a listing of the Convertible Bond on any stock exchange. Application has been made for the listing of and permission to deal in the Conversion Shares on the Stock Exchange.

Conversion Shares: On the basis of the principal amount of US$10,665,000 and the initial conversion price of HK$0.61 per Share, a maximum total of 136,372,131 Conversion Shares will be issued upon full conversion of the Convertible Bond. The Conversion Shares shall upon issue rank pari passu in all respects with the then issued Shares.

Transferability: The Convertible Bond will not be assignable or transferable except with the prior written consent of the Company.

Adjustment on the Consideration and principal amount of the Convertible Bond: It is anticipated that People Value and/or the Subsidiaries will derive income from the Charterparty Novation Agreements immediately following the Vessel Acquisition by the Subsidiaries and prior to the Completion, with an expected aggregate daily charge of S$82,500 (equivalent to approximately HK$379,500) pursuant to the Charter Agreement, details of which were set out in the announcement of the Company dated 17 October 2002. If that is the case, the Vendor shall have the right to request People Value and/or the Subsidiaries to whom the Vendor’s Loans are advanced to repay part of the Vendor’s Loans (on a pro-rata basis) at any time after the Vessel Acquisition by the Subsidiaries and prior to the Completion provided that People Value and/or the Subsidiaries are financially able to do so. In the event of any such partial repayment:–

• (i) the Consideration payable by the Purchaser to the Vendor upon the Completion shall be adjusted downward by an amount equivalent to the amount of the Sale Loan partially repaid;

• (ii) the principal amount of the Sale Loan shall be adjusted downward in the same manner and the Vendor shall only be obliged to assign the remaining outstanding balance of the Sale Loan to the Purchaser upon the Completion; and

• (iii) the principal amount of the Convertible Bond to be issued upon the Completion will be adjusted to be equivalent to the Consideration.

– 27 –

LETTER OF ADVICE FROM MENLO CAPITAL

Given that the Consideration was determined principally based on the amount of the outstanding Sale Loan, changes of it would raise a necessity to adjust the amount of the Consideration and therefore the principal amount of the Convertible Bond accordingly. We are in the view that the foregoing adjustment terms for the Consideration and principal amount of the Convertible Bond are fair and reasonable as far as the Company and the Shareholders are concerned.

Based on the foregoing assessments, we concur with the Director’s view that the terms of the Convertible Bond were arrived at after arm’s length negotiation.

3. Conditions precedent

Completion of the Agreement is subject to the fulfillment of the conditions as set out in the subsection headed “Conditions of the Agreement” under the section headed “Agreement dated 26th March, 2004” in the Board Letter. If any of the conditions shall not be fulfilled on or before the respective dates (or such later date as shall be agreed between the Vendor and the Purchaser in writing), the Agreement shall be void and of no effect and no party shall have any rights to claim for damages against the other parties.

With reference to the announcement of the Company dated 17 October 2002 and the details as set out in the circular of the Company dated 5 November 2002 regarding that the Group had entered into the Charter Agreements, the Sub-Charter Agreements and the Management Agreements in relation to the chartering from the Original Owners to the Charterer, the sub-chartering from the Charterer to Evervalue and the management of the Vessels by Huang Shipmanagement for the operation as leisure cruise liners in the Southeast Asia region, the Charterparty Novation Agreements will be entered into between the Original Owners, the Charterer and the Subsidiaries as one of the conditions precedent to the Agreement such that whereby, among other things, the Vessels will continue to be chartered by the Subsidiaries to the Charterer after the Vessel Acquisition by the Subsidiaries on the same terms and conditions as the Charter Agreement.

– 28 –

LETTER OF ADVICE FROM MENLO CAPITAL

The following is an illustration of the situation of the chartering, sub-chartering and management of the Vessels before the Acquisition:

==> picture [437 x 269] intentionally omitted <==

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

Vessel named Queenston Jackston Vessel named
“Leisure World” Investment Shipping “Amusement World”
Limited Limited
Deposit +
Charter Agreements
Charter Charges
Sub-charter Agreements
Balance Profits Limited Evervalue
(Charterer)
Deposit + Sub-charter Charges
Management Agreements Management Charges
Document Lines
Huang Shipmanagement
Pte Ltd. Fund Flow Line
----- End of picture text -----

Note: Huang Shipmanagement Pte Ltd. (formerly named as New Century Shipmanagement Pte Ltd.) which is wholly owned by the parents of Mr. Wilson Ng, the Chairman of the Company and Ms. Lilian Ng, Mr. Ng Wee Keat and Ms. Ng Siew Lang, Linda, who are all executive Directors.

– 29 –

LETTER OF ADVICE FROM MENLO CAPITAL

The following is an illustration of the situation of the chartering, sub-chartering and management of the Vessels upon the completion of the Acquisition:

==> picture [434 x 410] intentionally omitted <==

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

Purchaser Vendor
75%
25%
People Value
Vessel named Subsidiary of Subsidiary of Vessel named
“Leisure World” People People “Amusement World”
Value Value
Deposit +
Charterparty Novation Agreement
Charter Charges
Sub-charter Agreements
Balance Profits Limited Evervalue
(Charterer)
Deposit + Sub-charter Charges
Management Agreements Management Charges
Huang Shipmanagement
Pte Ltd.
----- End of picture text -----

Pursuant to the Charterparty Novation Agreements, the Subsidiaries will substitute for the Original Owners in the Charter Agreements which will remain in full force and effect as a binding and valid contract between the Subsidiaries and the Charterer; the Subsidiaries will assume and perform the obligations undertaken by the Original Owners in the Charter Agreements while the Charterer will continue to perform the obligations undertaken by the Charterer in the Charter Agreement and will pay all amounts of charter hires becoming payable. After the Vessel Acquisition by the Subsidiaries, the Original Owners shall have no further obligation to the Charterer under the Charter Agreement. This arrangement will safeguard the continuing of sub-chartering to Evervalue and the management of the Vessels by Huang Shipmanagement for the operation as leisure cruise liners after the transfer of title of the Vessels to the Subsidiaries, which will secure benefit for the Charterer under the Sub-charter Agreement and ensure the Group to continue to enjoy a stable revenue from the sub-chartering activities. The Directors believe that the entering into the Charterparty Novation Agreement between the Original Owners, the Charterer and the Subsidiaries will in all respects benefit the Group.

– 30 –

LETTER OF ADVICE FROM MENLO CAPITAL

4. Share price performance and comparison of the conversion price for the Convertible Bond

The chart below shows the closing prices of the Company’s shares traded on the Stock Exchange during the 12 months preceding 25th March, 2004 (the “Last Trading Day”), being the last trading day before suspension of trading of the Company’s share pending release of the Announcement (the “Comparison Period”), and up to and including the Latest Practicable Date.

==> picture [422 x 233] intentionally omitted <==

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

0.8
0.7
0.6
0.5
Conversion
Price:
0.4 HK$0.61
0.3
0.2
0.1
0
Date
c
Share Price
25/03/2003 04/04/2003 16/04/2003 30/04/2003 14/05/2003 26/05/2003 06/06/2003 18/06/2003 30/06/2003 11/07/2003 23/07/2003 04/08/2003 14/08/2003 26/08/2003 05/09/2003 18/09/2003 30/09/2003 13/10/2003 23/10/2003 04/11/2003 14/11/2003 26/11/2003 08/12/2003 18/12/2003 02/01/2004 14/01/2004 28/01/2004 09/02/2004 19/02/2004 02/03/2004 12/03/2004 24/03/2004 07/04/2004 21/04/2004
----- End of picture text -----

The closing prices of the Company’s shares during the last year featured a sustained relatively steady period ranging from HK$0.25 to HK$0.33 during the period from 25 March 2003 to 30 September 2003. The closing prices started rising in mid-October and continued to rise sharply to reach HK$0.72 on 21 January 2004 and the Latest Practicable Date, an accumulated increase of approximately 152.63% since 30 September 2003. According to the Directors, the rise in closing prices would be possibly due to the announcement of a discloseable transaction made by the Company on 24 November 2003 regarding the acquisition of property, which the Directors believe that was a good investment opportunity for further investment in commercial property with stable rental income source yielding, and would improve the Group’s operating performance and also widen its asset base and earnings base. On 19 December 2003, the Company made an announcement on the interim result that the Group had recorded a turnaround in earnings of net profit of approximately HK6.74 million for the six months ended 30 September 2003 against a net loss of approximately HK$11.67 million for the corresponding period of the previous year. The Directors believe that the acquisition of property and the good performance in interim report resulted in substantial rises in share prices. The share prices, thereafter, dropped and reached HK$0.61 as at the Last Trading Day, represented an accumulated decrease of 15.28% since 21 January 2004. On the Latest Practicable Date, the share price closed at HK$0.72. The overall rise in market prices is to a certain extent being supported by the fundamentals of the Group.

– 31 –

LETTER OF ADVICE FROM MENLO CAPITAL

The conversion price per Conversion Share of HK$0.61 (subject to adjustment) represents:

• The closing price of HK$0.61 per Share on the Stock Exchange on the Last Trading Day;

• A discount of approximately 0.33% to the average closing price of HK$0.612 per Share on the Stock Exchange for the 5 consecutive trading days up to and including the Last Trading Day;

• A discount of approximately 0.81% to the average closing price of HK$0.615 per Share on the Stock Exchange for the 10 consecutive trading days up to and including the Last Trading Day;

• A discount of approximately 4.98% to the average closing price of HK$0.642 per Share on the Stock Exchange for the 30 consecutive trading days up to and including the Last Trading Day;

• A discount of approximately 4.54% to the average closing price of HK$0.639 per Share on the Stock Exchange for the 60 consecutive trading days up to and including the Last Trading Day;

• A premium of approximately 26.56% to the average closing price of HK$0.482 per Share on the Stock Exchange for the 150 consecutive trading days up to and including the Last Trading Day;

• A premium of approximately 34.96% to the average closing price of HK$0.452 per Share on the Stock Exchange for the 180 consecutive trading days up to and including the Last Trading Day;

• A premium of approximately 51.36% to the average closing price of the Company’s shares of HK$0.403 for the Comparison Period;

• A premium of approximately 189.10% over the audited net tangible asset value per Share of approximately HK$0.211 as at 31 March 2003 according to the Company’s interim report;

• A premium of approximately 178.54% over the unaudited net tangible asset value per Share of approximately HK$0.219 as at 30 September 2003 according to the Company’s interim report;

• A discount of approximately 15.28% to the closing price of HK$0.72 per Share on the Stock Exchange on the Latest Practicable Date.

Because of the volatility of the Share price since October last year, we are of the view that it is not appropriate to place much weight on a comparison of the conversion price to the prevailing short-term closing price of the Shares. We consider that the assessment of the conversion price by reference to the performance of the Share price over say a 150-180 day period would be more appropriate in order to

– 32 –

LETTER OF ADVICE FROM MENLO CAPITAL

mitigate the effect of short-term volatility. The conversion price of HK$0.61 per Conversion Share represents a premium of ranging from 26.63% to 35.05% on the average closing price of the 150-180 day period. Having considered the above, in our opinion, the conversion price is in the interests of the Company and the Independent Shareholders.

Financial effects from the Acquisition

1. Financial performance

As stated in the earlier paragraph in the subsection headed “Valuation of the Vessels” in the section headed “Reasons for entering into the Agreement” in this letter, the Vessels will generate an anticipated net annual revenue before other expenses in aggregate of approximately US$14.2 million (equivalent to approximately HK$110.9 million). As a result of the Acquisition, the Group will equity account for 25% of the financial results and position of People Value, i.e. share of the results and net assets of People Value in the Group’s own consolidated financial statements which, the Directors believe, would bring a positive impact on the Group’s performance and net assets.

2. Gearing position

Based on the unaudited consolidated accounts for the six months ended 30 September 2003 as shown in the Company’s interim report, the Group has long-term debt of approximately HK$26.28 million. Taken into account the Consideration for the Acquisition of up to US$10,665,000 (equivalent to approximately HK$83,187,000) in the form of issuing the Convertible Bond to the Vendor or its nominee in an amount of up to US$10,665,000 on the Completion, this results in a pro forma ratio of long-term debt to net assets as follows:

Long term interest-bearing bank and other loans: Convertible Bond Total Net assets Ratio of long-term debt to net assets	HK$ million 26.28 83.19
	109.47
	182.38 60.02%

The Group’s gearing ratio will be lifted up from 14.41% to 60.02% based upon the pro forma ratio of long-term debt to net assets immediately following the Acquisition. We consider that the gearing ratio is acceptable as the debt noted above may be considered as a medium term, with approximately two-year maturity in normal circumstances and no repayment of the debt is needed in the meantime until the maturity date of the Convertible Bond by which if not converted the Company then has to repay to the Vendor or its nominee. Please see below sub-section for the cash flow position of the Group during the two-year term of the Convertible Bond.

– 33 –

LETTER OF ADVICE FROM MENLO CAPITAL

3. Cash flow position

The Directors believe that the Acquisition will not have any immediate effect on the net cash flow position given that the consideration for the Acquisition of up to US$10,665,000 (equivalent to approximately HK$83,187,000) (subject to adjustment as mentioned above) will be satisfied by way of issuing the Convertible Bond in an amount of up to US$10,665,000 (equivalent to approximately HK$83,187,000), except the payment of low fixed interest in 1% per annum on the principal amount outstanding from time to time payable semi-annually in arrear amounted to US$106,650 (equivalent to approximately HK$831,870) until maturity, which is the day preceding the second anniversary of the date of issue of the Convertible Bond, assuming that the Vendor or its nominee does not exercise his right to convert until maturity.

The conversion is fixed at an agreed exchange rate of US$1.00 to HK$7.80 free the Company from exchange risk. In case if the Convertible Bond is not converted and has to be repaid on maturity, because for example the Company’s Share price is below HK$0.61 at the relevant time, some re-financing exercise may be required to supplement the accumulated cash for redemption of the Convertible Bond.

There is the other favourable feature besides the low fixed coupon of 1% is that no premium over par is payable on redemption of the Convertible Bond. We agree with the Directors’ view that there is no immediate impact on the net cash flow position to the Group and the payment of 1% interest semiannually will not hinder the continuance of Group’s operation assuming that the Group continues to keep in such a healthy liquidity asset with reference to the financial position in the interim report of the Group for the six months ended 30 September 2003. The Directors do not anticipate any difficulty in refinancing for the redemption of the Convertible Bond if necessary upon their maturity.

Dilution and potential dilution of existing shareholders’ shareholdings

The shareholding structures of the Company at present, after Completion of the Acquisition and upon full conversion of the Convertible Bond are as follows: (for simplicity purpose details of the subsidiaries and other investments of the Company (except the acquisition of 25% of the entire issued share capital of People Value upon the Completion ) are not shown here:

(i) At present and upon the Completion

The following charts show the respective shareholding structure of the Company as at the Latest Practicable Date:

==> picture [359 x 96] intentionally omitted <==

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

Directors (including New Century
Public
directors of subsidiaries) Worldwide
13.59% (Note 2) 57.05% (Note 1) 29.36%
The Company
----- End of picture text -----

Note 1: New Century Worldwide Capital Limited is an indirect wholly-owned subsidiary of Huang Group and the controlling shareholder of the Company.

– 34 –

LETTER OF ADVICE FROM MENLO CAPITAL

• Note 2: The other 13.59% interest is held by the chairman of the Company, Mr. Wilson Ng as to 1.56%, and the executive directors of the Company, Mr. Ng Wee Keat as to 1.56%, Mr. Lo Ming Chi, Charles as to 0.11%, Ms. Lilian Ng as to 1.56%, Ms. Ng Siew Lang, Linda as to 1.56%, Ms. Sio Ion Kuan as to 3.13%, Ms. Chen Ka Chee as to 3.91% and the remaining 0.2% being held by the directors of subsidiaries of the Company.

(ii) After the completion of the Acquisition

The following chart shows the shareholding structure of the Company upon the completion of the Acquisition, but before any conversion of the Convertible Bond (assuming no other changes in shareholding in the Company after the Latest Practicable Date):

==> picture [399 x 224] intentionally omitted <==

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

Directors (including New Century
Public
directors of subsidiaries) Worldwide
13.59% (Note 2) 57.05% (Note 1) 29.36%
The Company
100.00%
Purchaser
25.00% (Note 3)
75.00% (Note 3)
People Value Vendor
----- End of picture text -----

• Note 3: Pursuant to the Agreement, the Company has agreed to acquire from the Vendor the Sale Shares which represents 25% of the entire issued share capital of People Value.

– 35 –

LETTER OF ADVICE FROM MENLO CAPITAL

• (iii) Upon full conversion of the Convertible Bond

The following chart shows the shareholding structure of the Company following the Completion of the Acquisition and as if the Convertible Bond is fully converted at the Conversion Price of HK$0.61 per Share (assuming no other changes in shareholding in the Company after the Latest Practicable Date):

==> picture [393 x 199] intentionally omitted <==

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

Directors (including New Century Vendor Public
directors of subsidiaries) Worldwide or its nominee
11.67% 49.01% 14.09% 25.23%
The Company
100.00%
Purchaser
25.00% (Note 3)
75.00% (Note 3)
People Value Vendor
----- End of picture text -----

Note 3: This assumes that all the Conversion Shares on conversion of the Convertible Bond are issued, allotted and held by the Vendor or its nominee.

Pursuant to the Agreement, the Vendor has undertaken to the Purchaser that it will maintain the minimum public float of the Company in accordance with the Listing Rules and that it will not cause or procure any part of the Convertible Bond to be converted into the Conversion Shares if by doing so the minimum public float of the Company will not be maintained.

The Directors believe that the exercise of the conversion rights by the Vendor or its nominee will bring a dilution of the existing shareholding in the Company held by the public will be also diluted accordingly from 29.36% to 25.23%.

Since the consideration of the Acquisition payable by the Company to the Vendor or its nominee by way of issuance of the Convertible Bond in the sum of US$10,665,000 (equivalent to approximately HK$83,187,000) (subject to adjustment as mentioned above) with the conversion price of HK$0.61 are considered to have been determined after arm’s length negotiations and the terms of which are regarded as fair and reasonable, the Directors believe that the Acquisition will be in the interests to the Company and its Independent Shareholders. In view of the potential interests to be brought in from the Acquisition, therefore, we concur with the Directors that the potential dilution of the shareholdings of existing shareholdings in the above are justified as a result of the exercise of conversion rights by the Vendor or its nominee.

– 36 –

LETTER OF ADVICE FROM MENLO CAPITAL

RECOMMENDATION

Taking into account the principal factors and reasons as mentioned above on balance, we are of the opinion that the Acquisition is in the interests of the Company and the Independent Shareholders as a whole and the terms under the Agreement thereof are fair and reasonable insofar as the Independent Shareholders are concerned. Accordingly, we advise the Independent Board Committee to recommend the Independent Shareholders to vote in favour of the resolution to be proposed at the SGM in respect of the Acquisition.

Yours faithfully, For and on behalf of Menlo Capital Limited Michael Leung Director

– 37 –

INDEPENDENT VALUATION

APPENDIX I

14.30(4)

The following is the text of the independent valuation prepared by the Independent Valuer in connection with the Vessels for inclusion in this circular:

Vigers Appraisal & Consulting Limited International Assets Appraisal Consultants 10th Floor The Grande Building 398 Kwun Tong Road Kwun Tong, Kowloon Hong Kong

==> picture [59 x 58] intentionally omitted <==

26th March 2004

The Directors

New Century Group Hong Kong Limited Suite 3808, 38th Floor West Tower, Shun Tak Centre 168-200 Connaught Road Central Hong Kong

Dear Sirs,

In accordance with your instructions for us to value two (2) cruise passenger vessels (referred to as the “Vessels”) exhibited to us as being owned by Queenston Investment Ltd. and Jackston Shipping Ltd. (collectively referred to as the “Company”), we confirm that we have carried out inspections, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the fair market value in continued use of the Vessels as at 20th March 2004.

BASIS OF VALUATION

We have valued the Vessels on the basis of their fair market value in continued use which is defined as the estimated amount at which the subject Vessels in their continued use might be expected to be purchased and sold between a willing buyer and a willing seller, neither being under compulsion, each having a reasonable knowledge of all relevant facts and with equity to both, and contemplating the use of the Vessels for which they were designed and built as part of an on-going business.

The opinion of fair market value is not necessarily intended to represent the amount that might be realized from piecemeal disposition of the subject Vessels in the open market or from alternative use of the Vessels.

VESSELS APPRAISED

The Vessels appraised are cruise liners identified as M/S Leisure World built in Germany in 1969 and M/S Amusement World a ro/ro type built in Sweden in 1967. The Vessels had since been rebuilt. The hulls and decks are welded steel construction. Facilities and accommodations from bridge (sun) deck to

– 38 –

INDEPENDENT VALUATION

APPENDIX I

D-deck include passengers and crew cabins, casinos, restaurants and bars, cafeteria, massage parlours, beauty salons, clinic, entertainment and shopping, exercise center, laundry, tailor shop, children’s play room and sun-decks.

The Vessels are equipped with navigational and communication equipment, centralized airconditioning system, steam boilers, fire fighting system, life saving apparatus, oil pollution prevention equipment, fresh water generation and treatment system, electro-hydraulic steering gears, anchoring equipment, compressed air system, passenger and goods elevators, mechanical and electrical workshops.

Vessel’s Principal Particulars

Vessel Name	:	M/S Leisure World
Type	:	Passenger Cruise Liner
Port of Registry	:	Nassau, Bahamas
Registered Owner	:	Queenston Investment Ltd.
Classification Society	:	DNV (Det Norske Veritas)
Call Sign	:	C6CM5
IMO No.	:	6921828
Official No.	:	710761
Builder	:	A.G. Weser, Werk Seebeck, Bremerhaven, Germany
Year Built	:	1969
Gross Registered Tonnage	:	15,653
Net Registered Tonnage	:	6,882
Dead Weight Tonnage	:	2,110
Length Overall	:	160.30 m
Length between P.P.	:	137.00 m
Breadth Moulded	:	22.80 m
Design Draft	:	6.735 m
Carrying Capacity	:	1,252 (926 passengers & 326 crew)
Cruise Speed	:	18 ~ 20 knots
Main Propulsion Engine	:	2 x 8690 bhp MAN turbo-charged diesel engine, model V8V-40/
		50, 400 rpm, V-8 cylinders, 40 x 54 cm bore x stroke, coupled to
		2 reduction gearboxes
Electric Diesel Generators	:	a) 4 x 832 kva NEBB, type WAB1050/121, each driven by
		Bergen diesel engine, type RSGB-8
		b) 1 x 1540 kva Leroy Somer, type LSA54VS55-8P, driven by
		Wartsila diesel engine, type 8R22/26
		c) 1 x 1020 kw Leroy Somer, type LSA52.2, driven by Wartsila
		diesel engine, type 6L20
Propellers	:	2 – sets KaMeWa controllable pitch
Rudders	:	2 sets
Stabilizers	:	2 sets
Bow Thrusters	:	2 sets KaMeWa

– 39 –

INDEPENDENT VALUATION

APPENDIX I

Deck Utilization

Bridge (Sun) Deck	:	Club Paradise, hawker centre, basketball court, children’s play
		area, open space
Boat Deck	:	Lido Bar & Casino, radio room, officers’ mess, passenger cabins,
		clinic
Rainbow Deck	:	Restaurant, main galley, entertainment club, casino
Atlantic Deck	:	Passenger cabins, reception, gift shop, children’s video game area,
		offices, baggage storage, crew bar & recreation room, conference
		room
Biscayne Deck	:	Passenger cabins, fitness centre, casino, tailor & upholstery shop,
		laundry for crew, dangerous goods storage, workshop, photo
		laboratory
Caribbean Deck	:	Passenger cabins, immigration area, workshops, garbage room,
		stores, computer room, casino
Tween Deck	:	Crew cabins, main laundry, crew mess & recreation, crew galley,
		walk-in freezers and cold storage, stores, main engine room,
		workshop
Vessel Name	:	M/S Amusement World
Type	:	Passenger Cruise Liner (converted from ro/ro)
Port of Registry	:	Nassau, Bahamas
Registered Owner	:	Jackston Shipping Ltd.
Classification Society	:	DNV (Det Norske Veritas)
Call Sign	:	C6NG3
IMO No.	:	6620773
Official No.	:	726164
Builder	:	Lindholmen, Gothemborg, Sweden
Year Built	:	1967
Gross Registered Tonnage	:	12,764
Net Registered Tonnage	:	3,924
Dead Weight Tonnage	:	2,591
Length Overall	:	140.53 m
Length between P.P.	:	128.24 m
Breadth Moulded	:	22.68 m
Design Draft	:	5.57 m
Carrying Capacity	:	874 (514 passengers & 360 crews)
Cruise Speed	:	14 ~ 17 knots
Main Propulsion Engine	:	4 x 2,520 hp Pielstick turbo-charged diesel engine, 6-cylinders
		in-line, type 6PC2 26-400, 500 rpm, with 2 – reduction gearboxes

– 40 –

INDEPENDENT VALUATION

APPENDIX I

Electric Diesel Generators	:	a) 2 x 640 kw Asea, type CAD109, each driven by Ruston
		diesel engine, type 6VEBCZ
		b) 1 x 800 kva Sulzer type GD8-800-50/7, driven by diesel
		engine, type AL25
		c) 1 x 775 kva Meidensha, type ED-AF, driven by Daihatsu
		diesel engine, type 8PSHTc-26D
		d) 2 x 1000 kva Stamford, type HC634JI, each driven by
		Cummins diesel engine, type KTA38-G4
Propellers	:	2 sets KaWeMa controllable pitch
Rudders	:	2 sets
Stabilizers	:	2 sets
Bow Thrusters	:	2 sets KaWeMa
Deck Utilization
Bridge (Sun) Deck	:	Skylight Bar, hawker centre, open space
Boat Deck	:	Main casino, restaurant, clinic, crew cabins
Saloon Deck	:	Restaurant, main galley, game arcade, crew canteen, Lion bar,
		playroom, gallery
A – Deck	:	Passenger cabins, CCTV room, massage room, reception, gift shop,
		casino
B – Deck	:	Passenger and crew cabins, crew mess and bar, crew laundry
C – Deck	:	Casinos (The Pharaoh’s Chamber & Bistro), restaurant,
		embarkation area, walk-in freezer & cold storage, crew recreation,
		conference room
D – Deck	:	Crew cabins, engine room, stores, workshop, laundry

General Observations

At the time of our inspection, the Vessels were observed to be generally in good operating condition. The Vessels’ hull shell platings above water, as far as could be ascertained afloat from forward to aft, port and starboard sides were found well-coated and painted. The navigational bridge deck, machinery decks and all other decks were found to be either painted/coated or carpeted. The passenger and crew accommodations, and all facilities were noted to be in good condition and ventilated through ducting by centralized air-conditioning system. The Vessels are provided with essential spare parts.

M/S Leisure World was last surveyed in September 11, 2003 and has undergone an ultrasonic thickness measurement (4th special survey) in August 2001. The last survey of M/S Amusement World was in November 22, 2003 and the ultrasonic thickness measurement (4th special survey) was conducted in July 2001.

The Vessels were inspected lying afloat at international water somewhere in Indonesia and Malaysia.

– 41 –

INDEPENDENT VALUATION

APPENDIX I

VALUATION METHODOLOGY

In arriving at our opinion of value, we have considered the two generally accepted approaches to values; namely:

Cost Approach – considers the cost to reproduce or replace in new condition the assets appraised in accordance with current market prices for similar assets, with allowance for accrued depreciation arising from condition, utility, age, wear and tear, or obsolescence present, taking into consideration past and present maintenance policy and rebuilding history.

Physical depreciation is the loss in value due to physical deterioration resulting from wear and tear in operation and exposure to elements. Deterioration due to age and deterioration due to usage are the main factors that affect physical condition. Physical condition due to wear and tear is proportional to use rather than age. Use is the best indicator to estimate physical deterioration.

Market Data or Comparative Sales Approach – considers prices recently paid for similar assets, with adjustments made to the indicated market prices to reflect condition and utility of the appraised assets relative to the market comparative. Asset for which there is an established secondhand market comparable is best appraised by this approach.

SCOPE OF INVESTIGATION AND CONSIDERATIONS

We have personally conducted an inventory and inspection of the subject Vessels, obtained further relevant information, investigated market conditions and interviewed personnel to establish condition, utility and history of the subject Vessels.

During our physical inspection, any deferred maintenance, physical wear and tear, operating malfunctions, lack of utility, or any observable conditions distinguishing the appraised Vessels from vessel of like kind in new condition were noted and made part of our judgement in arriving at the value. However, we did not undertake any tests of the equipment nor conduct a marine survey of the hull.

In analyzing the accrued depreciation based on the observed condition, we have examined the maintenance policy, level of use of the Vessels, and to all other factors which are deemed to have an influence in their value.

We have relied to a considerable extent on information such records, listings and specifications provided to us by the Company.

We have made no investigation of and assume no responsibility for titles to or liabilities against the Vessels appraised.

We have not made any deduction in respect of any grant either available or received, neither has any adjustment been made for any outstanding amounts owing under financing agreements.

Our investigation was restricted to a detailed inventory and appraisal of the subject Vessels and does not attempt to arrive at any conclusion of values of the Company as a total business entity.

– 42 –

INDEPENDENT VALUATION

APPENDIX I

For the purpose of this appraisal, we were furnished with the following documents and/or records:

• i. Certificate of Registry

• ii. Certificate of Classification

• iii. Passenger Ship Certificate of Inspection

• iv. Passenger Ship Safety Certificate

• v. International Tonnage Certificate (1969)

• vi. International Oil Pollution Prevention Certificate

• vii. Document of Compliance viii. Safety Management Certificate

• ix. Ship’s Radio Communication Licence

• x. Exemption Certificate

• xi. Minimum Safe Manning Certificate

• xii. Class Status Report xiii. Ultrasonic Thickness Measurement Report xiv. General Arrangement Plan

OPINION OF VALUE

Based on the foregoing, we are of the opinion that as at 20th March 2004, the fair market value in continued use of the Vessels, as part of a going-concern, is fairly represented in the amount of US$48,500,000 (United States Dollars Forty Eight Million Five Hundred Thousand), broken down as follows:

M/S Leisure World : US$30,000,000 M/S Amusement World : US$18,500,000 Total : US$48,500,000

REMAINING ECONOMIC LIFE

Remaining economic life represents the estimated period of time, expressed in years, that the asset will continue to perform economically and in a satisfactory manner the functions for which it was designed, constructed and built, assuming normal utilization and good maintenance program.

The estimates of remaining economic life had been based, in very large measure, upon the observed condition at the time of appraisal and condition of maintenance, and the consideration of normal rates of depreciation for the type of asset. The estimates had been prepared without specific consideration to economic factors, which are not determinable during ocular inspection that could affect the future utilization of the asset.

Our opinion of the remaining economic life of the Vessels is as follows:

• M/S Leisure World : 15 years • M/S Amusement World : 14 years

– 43 –

INDEPENDENT VALUATION

APPENDIX I

We hereby certify that we have neither present nor prospective interest in the Company or the appraised Vessels or the value reported.

Yours faithfully, For and on behalf of

VIGERS APPRAISAL & CONSULTING LIMITED

Raymond Ho Kai Kwong Maximo I. Montes Jr. Registered Professional Surveyor PME BSME MRICS MHKIS MSc(e-com) Associate Director Executive Director Plant and Machinery Valuation

Note: Maximo I. Montes Jr. is a Professional Mechanical Engineer who has 34 years experience in industrial plant valuation. He has 24 years experience in the valuation of plant machinery and equipment in Hong Kong, the PRC and Asia Pacific Rim.

– 44 –

GENERAL INFORMATION

APPENDIX II

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts the omission of which would make any statements herein misleading.

2. SHARE CAPITAL

The authorised and issued share capital of the Company as at the Latest Practicable Date and the Shares to be alloted and issued upon conversion of the Convertible Bond were as follows:

Authorised 2,000,000,000 Shares Issued and fully paid 831,729,914 Shares To be alloted and issued upon conversion of the Convertible Bond 136,372,131 Conversion Shares (subject to adjustment)	HK$ 20,000,000.00
	8,317,299.14
	1,363,721.31

3. DISCLOSURE OF INTERESTS

As at the Latest Practicable Date, the interests and short positions of each Director and chief executive of the Company in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which require notification to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which he is deemed or taken to have under such provisions of the SFO) or

– 45 –

GENERAL INFORMATION

APPENDIX II

which were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein, or which were required pursuant to the Model Code for Securities Transactions by Directors of Listed Companies to be notified to the Company and the Stock Exchange were as follows:

		Number of Shares	held
	Nature of	Long	Short	% of the Issued
Name of Directors	Interests	Position	Position	Share Capital
Mr. Wilson Ng	Personal interest	18,000,000 (Note 1)	–
	Other interest	474,496,952 (Note 2)	–	59.21%
Ms. Lilian Ng	Personal interest	18,000,000 (Note 1)	–
	Other interest	474,496,952 (Note 2)	–	59.21%
Ms. Sio Ion Kuan	Personal interest	31,000,000 (Note 1)	–
	Other interest	474,496,952 (Note 2)	–	60.78%
Mr. Ng Wee Keat	Personal interest	18,000,000 (Note 1)	–
	Other interest	474,496,952 (Note 2)	–	59.21%
Ms. Ng Siew Lang, Linda	Personal interest	18,000,000 (Note 1)	–
	Other interest	474,496,952 (Note 2)	–	59.21%
Mr. Lo Ming Chi, Charles	Personal interest	5,900,000 (Note 1)	–	0.71%
Ms. Chen Ka Chee	Personal interest	37,500,000 (Note 1)	–	4.51%

Notes:

1. Each of the personal interests of Mr. Wilson Ng, Ms. Lilian Ng, Ms. Sio Ion Kuan, Mr. Ng Wee Keat, Ms. Ng Siew Lang, Linda, Mr. Lo Ming Chi, Charles and Ms. Chen Ka Chee comprises interest in 5,000,000 underlying Shares in respect of share options granted by the Company.

2. These Shares are held by New Century Worldwide Capital Limited which is ultimately owned by a discretionary trust of which Mr. Wilson Ng, Ms. Lilian Ng, Ms. Sio Ion Kuan, Mr. Ng Wee Keat and Ms. Ng Siew Lang, Linda are discretionary beneficiaries.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or chief executive of the Company had any interests or short positions in the shares, underlying shares and debentures of the Company or any of its associated corporations which require notification to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which he is deemed or taken to have under such provisions of the SFO) or which were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein or which were required pursuant to the Model Code for Securities Transactions by Directors of Listed Companies to be notified to the Company and the Stock Exchange.

– 46 –

GENERAL INFORMATION

APPENDIX II

4. SUBSTANTIAL SHAREHOLDERS

So far as is known to any Director or chief executive of the Company and as at the Latest Practicable Date, the following persons, other than the Directors or chief executive of the Company as disclosed above, had interests or short positions in the shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was, directly or indirectly, interested in 5% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group and the amount of each such person’s interest in such securities, together with particulars of any options in respect of such capital:

Name of	Number of	Shares held		% of the Issued
Substantial Shareholders	Long Position	Short Position	Notes	Share Capital
New Century Worldwide Capital Limited	474,496,952	–	1	57.05%
Huang Worldwide Holding Limited	474,496,952	–	1	57.05%
Huang Group (BVI) Limited	474,496,952	–	1	57.05%
Mr. Ng (Huang) Cheow Leng	474,496,952	–	2	57.05%
Mr. Kan Ka Chong, Frederick	474,496,952	–	2, 3	57.05%

Notes:

1. Huang Group (BVI) Limited is the ultimate holding company of New Century Worldwide Capital Limited which held 474,496,952 shares. Huang Worldwide Holding Limited is the immediate holding company of New Century Worldwide Capital Limited. Accordingly, both Huang Group (BVI) Limited and Huang Worldwide Holding Limited are deemed to be interested in 474,496,952 shares held by New Century Worldwide Capital Limited.

2. Huang Group (BVI) Limited is held by Mr. Kan Ka Chong, Frederick, as trustee of a discretionary trust, the founder of which is Mr. Ng (Huang) Cheow Leng.

3. Mr. Kan Ka Chong, Frederick held 474,496,952 shares as trustee of the discretionary trust of which Mr. Wilson Ng, Ms. Lilian Ng, Ms. Sio Ion Kuan, Mr. Ng Wee Keat and Ms. Ng Siew Lang, Linda are discretionary beneficiaries.

Save as disclosed above, no other person as at the Latest Practicable Date had interests or short positions in the shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was, directly or indirectly, interested in 5% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other members of the Group, or in any options in respect of such capital.

5. EXPERTS

Menlo Capital

Menlo Capital Limited, a corporation licensed to carry on businesses in type 6 regulated activities (advising on corporate finance) under the SFO

Independent Valuer

Vigers Appraisal & Consulting Limited, an independent firm of professional valuers

Both Menlo Capital and the Independent Valuer have given and have not withdrawn their written consent to the issue of this circular with the inclusion of their letters or opinions as set out in this circular and reference to their names in the form and context in which they appear respectively.

– 47 –

GENERAL INFORMATION

APPENDIX II

As at the Latest Practicable Date, none of Menlo Capital or the Independent Valuer was beneficially interested in the share capital of any member of the Group nor did they 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 they have any interest, either direct or indirect, in any assets which have been, since the date to which the latest published audited consolidated financial statements of the Company were made up, acquired or disposed of or leased to or are proposed to be acquired or disposed of or leased to any member of the Group.

6. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, no Director had a service contract with the Company which was not determinable by the Company within one year without payment of compensation (other than statutory compensation).

7. LITIGATION

As at the Latest Practicable Date, neither the Company nor any of its subsidiaries was engaged in any litigation or arbitration of material importance and no litigation or claim of material importance was known to the Directors to be pending or threatened against the Company or any of its subsidiaries.

8. MISCELLANEOUS

• (a) None of the Directors was materially interested in any contract or arrangement subsisting at the Latest Practicable Date, which is significant in relation to the business of the Group.

• (b) None of the Directors has, or has had, any direct or indirect interest in any assets which have been acquired, disposed of by or leased to, or which are proposed to be acquired, disposed of by or leased to, the Company or any of its subsidiaries since 31st March, 2003, the date to which the latest audited consolidated financial statements of the Company were made up.

• (c) The Directors are not aware of any material adverse change in the financial or trading position of the Group since 31st March, 2003, being the date to which the latest audited consolidated financial statements of the Company were made up.

• (d) The secretary of the Company is Mr. Yu Wai Man, who is a fellow of the Association of Chartered Certified Accountants and an associate of the Hong Kong Society of Accountants.

• (e) The registered office of the Company is located at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda.

• (f) The head office and principal place of business of the Company in Hong Kong is located at Unit 3808, 38th Floor, West Tower, Shun Tak Centre, 168-200 Connaught Road Central, Hong Kong.

• (g) The branch share registrar of the Company in Hong Kong is Tengis Limited at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong.

– 48 –

GENERAL INFORMATION

APPENDIX II

9. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during normal business hours at the office of Richards Butler at 20th Floor, Alexandra House, 16-20 Chater Road, Central, Hong Kong from the date of this circular up to and including 27th May, 2004, the date of the Special General Meeting to be held.

• (a) the Memorandum of Association and bye-laws of the Company;

• (b) the annual reports of the Company for the two years ended 31st March, 2002 and 31st March, 2003;

• (c) the letter from Menlo Capital, the text of which is set out on pages 19 to 37 of this circular;

• (d) the letter from the Independent Board Committee, the text of which is set out on page 18 of this circular;

• (e) the valuation report, the text of which is set out in Appendix I to this circular;

• (f) the consent letters from Menlo Capital and the Independent Valuer referred to under the section headed “Experts” above; and

• (g) the Agreement.

– 49 –

NOTICE OF SPECIAL GENERAL MEETING

==> picture [116 x 57] intentionally omitted <==

NEW CENTURY GROUP HONG KONG LIMITED 新世紀集團香港有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 234)

NOTICE IS HEREBY GIVEN that a special general meeting of New Century Group Hong Kong Limited (the “Company”) will be held at Plaza I-III, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wanchai, Hong Kong on Thursday, 27th May, 2004 at 10:00 a.m. for the purpose of considering and if thought fit, passing, the following resolutions:

ORDINARY RESOLUTION

1. “ THAT:

2. (a) the sale and purchase agreement dated 26th March, 2004 entered into between Marcus Profits Limited (the “Vendor”), Peak Ever Enterprises Limited (the “Purchaser”), being a wholly-owned subsidiary of the Company, People Value Limited (“PVL”) and Huang Worldwide Holding Limited (the “Guarantor”) in relation to the interests in PVL (the “Agreement”), a copy of which has been produced to this meeting marked “A” and signed by the chairman of the meeting for the purpose of identification, be and is hereby approved, confirmed and ratified;

3. (b) the supplemental agreement dated 30th March, 2004 entered into between the Vendor, the Purchaser, PVL and the Guarantor (the “Supplemental Agreement”), a copy of which has been produced to this meeting marked “B” and signed by the chairman of the meeting for the purpose of identification, be and is hereby approved, confirmed and ratified;

4. (c) the convertible bond to be issued by the Company to the Purchaser pursuant to the terms of the Agreement (the “Convertible Bond”), a draft of which has been produced to this meeting marked “C” and signed by the chairman of the meeting for the purpose of identification, and the issue of the shares of the Company upon exercise of the conversion rights attaching to the Convertible Bond be and are hereby approved and confirmed;

5. (d) the sale loan assignment to be entered into between the Purchaser, the Vendor and PVL pursuant to the terms of the Agreement (the “Sale Loan Assignment”), a draft of which has been produced to this meeting marked “D” and signed by the chairman of the meeting for the purpose of identification, be and is hereby approved and confirmed;

6. (e) the shareholders’ agreement to be entered into between the Purchaser, the Vendor and PVL pursuant to the terms of the Agreement (the “Shareholders Agreement”), a draft of which has been produced to this meeting marked “E” and signed by the chairman of the meeting for the purpose of identification, be and is hereby approved and confirmed; and

* For identification only

– 50 –

NOTICE OF SPECIAL GENERAL MEETING

• (f) the directors of the Company be and are hereby authorised to do all things and acts and sign all documents which they may consider necessary, desirable or expedient to implement and/or give effect to any matters relating to or in connection with the Agreement, the Supplemental Agreement, the Convertible Bond, the Sale Loan Assignment and the Shareholders’ Agreement.”

SPECIAL RESOLUTION

1. “ THAT with effect from 09:30 am on the date falling on the next business day (not being a Saturday) following the date on which this resolution is passed:

2. (a) the entire amount standing to the credit of the share premium account of the Company as at 30th September, 2003, represented by an amount of HK$368,310,037.48 be cancelled (the “Share Premium Cancellation”); and

3. (b) the entire credit amount arising from the Share Premium Cancellation be credited to the contributed surplus account of the Company where it may be applied in accordance with the bye-laws of the Company and the laws of Bermuda, including to eliminate the accumulated losses of the Company as at 30th September, 2003 (the “Application of Credit”)

and the directors of the Company be and are hereby authorised to do all things and acts, and sign all documents which they may consider necessary, desirable or expedient to implement and/or give effect to any matters relating to or in connection with the Share Premium Cancellation and the Application of Credit.”

By Order of the Board Yu Wai Man Company Secretary

Hong Kong, 3rd May, 2004

– 51 –

NOTICE OF SPECIAL GENERAL MEETING

Head Office and Principal Place of Business in Hong Kong: Unit 3808, 38th Floor

West Tower

Shun Tak Centre 168-200 Connaught Road Central Hong Kong

Notes:

1. Any member of the Company entitled to attend and vote at the meeting of the Company shall be entitled to appoint another person as his proxy to attend and vote instead of him. Unless otherwise required by statutes, a proxy need not be a member of the Company. A member of the Company may appoint a proxy in respect of part only of his holding of shares in the Company.

2. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorized in writing or, if the appointor is a corporation, either under its seal or under the hand of an officer, attorney or other person authorized to sign the same. In the case of an instrument of proxy purporting to be signed on behalf of a corporation by an officer thereof it shall be assumed, unless the contrary appears, that such officer was duly authorized to sign such instrument of proxy on behalf of the corporation without further evidence of the fact.

3. The instrument appointing a proxy and (if required by the board) the power of attorney or other authority (if any) under which it is signed, or a certified copy of such power or authority, shall be delivered to the principal place of business of the Company in Hong Kong at Unit 3808, 38/F., West Tower, Shun Tak Centre, 168-200 Connaught Road Central, Hong Kong not less than forty-eight (48) hours before the time appointed for holding the meeting or adjourned meeting at which the person named in the instrument proposes to vote and in default the instrument of proxy shall not be treated as valid.

4. In the case of joint holders of a share if more than one of such joint holders be present at the meeting the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the register of members in respect of the joint holding.

– 52 –