Fulum Group Holdings Limited — Proxy Solicitation & Information Statement 2008

Mar 25, 2008

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 or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Wing Hing International (Holdings) Limited (the “Company”), you should at once hand this circular together with the enclosed form of proxy to the purchaser or transferee or to the bank, stockbroker 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 on the whole or any part of the contents of this circular.

(Incorporated in Bermuda with limited liability)

(Stock Code: 621)

VERY SUBSTANTIAL DISPOSAL AND CONNECTED TRANSACTION

Independent financial adviser to the Independent Board Committee of Wing Hing International (Holdings) Limited

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A letter from the independent board committee is set out on page 23 of this circular. A letter from Partners Capital International Limited, the independent financial adviser, containing its advice to the independent board committee and the independent shareholders of the Company is set out on pages 24 to 36 of this circular.

A notice convening a special general meeting of the Company to be held at 14th Floor, Yau Lee Centre, 45 Hoi Yuen Road, Kwun Tong, Kowloon, Hong Kong on Monday, 14 April 2008 at 11:00 a.m. is set out on pages 145 to 146 of this circular. Whether or not you are able to attend the special general meeting, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the Company’s branch share registrar in Hong Kong, Tricor Tengis Limited, at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the special general meeting or any adjourned meeting. Completion and delivery of the form of proxy will not preclude you from attending and voting in person at the special general meeting if you so wish.

26 March 2008

CONTENTS

	Page
Definitions	1
Letter from the Board 5
Letter from the Independent Board Committee 23
Letter from Partners Capital 24
Appendix I – Valuation report on the properties held by Sunny Engineering Group 37
Appendix II – Accountants’ report on the Group 53
Appendix III – Unaudited pro forma financial information of the Remaining Group	125
Appendix IV – Other financial information of the Group 136
Appendix V – General information	138
Notice of SGM 145

• i -

DEFINITIONS

In this circular, unless the context otherwise requires, the following expressions shall have the following meanings when used herein:

• “Asset Co”

珠海威望迪水務污水處理有限公司(Veolia Water (Zhuhai) Wastewater Treatment Company Limited)

• “associates” has the meaning ascribed to this term under the Listing Rules “Board” the board of Directors

• “Business Day” a day (other than a Saturday, Sunday or public holiday) on which licensed banks are generally open for business in Hong Kong throughout their normal business hours

• “Company” Wing Hing International (Holdings) Limited, a company incorporated in Bermuda with limited liability and the issued Shares of which are listed on the Stock Exchange

• “Completion” completion of the sale and purchase of the Sale Shares and the Sale Loan in accordance with the terms and conditions of the Sale and Purchase Agreement

• “connected persons” has the meaning ascribed to this term under the Listing Rules

• “Consideration” the consideration of HK$171,000,000 payable by the Purchaser to the Company for the Disposal and to be satisfied in the manner as described in this circular

• “CSP Group” CSP and it associated companies, namely, the Asset Co and the Operation Co

• “CSP” CSP (HK) Limited

“Debt Assignment” the deed of assignment be made between the Company, the Target and the Purchaser upon Completion in relation to the assignment of the Sale Loan as security for the performance of the payment obligations under the Promissory Notes by the Purchaser

• “Directors” the directors of the Company

• “Disposal”

the Disposal of the Sale Shares and the Sale Loan by the Purchaser as contemplated under the Sale and Purchase Agreement

• 1 -

DEFINITIONS

• “First Promissory Note”

the promissory note in the principal amount of HK$40,000,000 and with a maturity date of 30 June 2008 to be executed by the Purchaser for the purpose of settling part of the Consideration

• “Group” the Company and its subsidiaries

• “Guarantor”

• Lo Chun Yang

• “Hong Kong” the Hong Kong Special Administrative Region of the PRC

• “Independent Board Committee” the independent board committee comprising all the independent non-executive Directors, formed to advise the Independent Shareholders as to the fairness and reasonableness of the Disposal

• “Independent Shareholders” Shareholders other than Grand Legend Limited and its associates

• “Latest Practicable Date” 19 March 2008, being the latest practicable date prior to the printing of this circular for ascertaining certain information in the circular

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

• “Operation Co” 珠海威望迪水務污水處理管理有限公司(Veolia Water (Zhuhai) Wastewater Treatment Operations Company Limited)

• “Partners Capital”

• Partners Capital International Limited, a licensed corporation under the SFO to conduct type 1 and type 6 regulated activities (dealing in securities and advising on corporate finance), being the independent financial adviser to the Independent Board Committee and the Independent Shareholders

• “PRC” the People’s Republic of China

• “Promissory Notes” the First Promissory Note, the Second Promissory and the Third Promissory Notes

• “Purchaser”

• Heart Ace Limited, a company incorporated in the British Virgin Islands with limited liability, the entire issued share capital of which is beneficially owned by the Guarantor

• “Remaining Group”

the Group excluding the Target Group upon Completion

• 2 -

DEFINITIONS

• “Reorganisation”

the reorganisation of the Group to be conducted prior to Completion, upon completion of which the Target will directly hold the entire issued share capital of Sunny Engineering and CSP and indirectly hold 35% of the issued share capital of King Fine Development Limited, 8% of the issued share capital of Wealthy Star Limited, 39% of the registered and paid up capital of the Operation Co and 40% of the registered and paid up capital of the Asset Co

• “Sale and Purchase Agreement” the conditional sale and purchase agreement dated 28 February 2008 entered into between the Purchaser and the Company in relation to the sale and purchase of the Sale Shares and the Sale Loan

• “Sale Loan” all obligations, liabilities and debts owing or incurred by the Target to the Company on or at any time prior to Completion whether actual, contingent or deferred and irrespective of whether the same is due and payable on Completion which as at 28 February 2008, amounted to HK$163,285,379

• “Sale Shares” 8,000,000 ordinary shares of HK$0.04 each in the issued share capital of the Target, representing the entire issued share capital of the Target

• “Second Promissory Note” the promissory note in the principal amount of HK$40,000,000 and with a maturity date of 30 September 2008 to be executed by the Purchaser for the purpose of settling part of the Consideration

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

• “SGM” the special general meeting of the Company to be held on Monday, 14 April 2008 at 11:00 a.m. to consider and, if thought fit, approve the Sale and Purchase Agreement and the transactions contemplated thereunder

• “Share Charge” the share charge to be executed by the Purchaser in favour of the Company upon Completion in relation to the charge of the Sale Shares by the Purchaser to the Company as security for the performance of the payment obligations under the Promissory Notes by the Purchaser

• “Share(s)” ordinary share(s) of HK$1.00 each in the capital of the Company

• 3 -

DEFINITIONS

“Shareholder(s)” holder(s) of the Share(s) “Stock Exchange” The Stock Exchange of Hong Kong Limited “Sunny Engineering Group” Sunny Engineering and it associated companies, namely, King Fine Development Limited and Wealthy Star Limited

• “Sunny Engineering” Sunny Engineering Limited

• “Target” Wing Hing Group (BVI) Limited, a company incorporated in the British Virgin Islands, whose entire issued share capital is beneficially owned by the Company

• “Target Group” the Target and its subsidiaries upon completion of the Reorganisation

• “Third Promissory Note” the promissory note in the principal amount of HK$41,000,000 and with a maturity date of 31 December 2008 to be executed by the Purchaser for the purpose of settling part of the Consideration

“VSA Agreement” the agreement dated 10 January 2008 entered into between CWS International Trading Limited and Ms Liu Pui Lan in relation to the sale and purchase of the entire issued share capital of Farrell Global Limited and the shareholders loan. For further details of the agreement, please refer to the announcement and the circular of the Company dated 14 January 2008 and 22 February 2008 respectively “HK$” Hong Kong dollars, the lawful currency of Hong Kong “US$” United States dollars, the lawful currency of the United States of America “%” per cent.

• 4 -

LETTER FROM THE BOARD

(Incorporated in Bermuda with limited liability)

(Stock Code: 621)

Executive Directors: Ng Tat Leung, George (Chairman) Wong Teck Ming (Deputy Chairman) Lui Siu Yee, Samuel Chan Wai Keung, Ivan Leung Pui Kwan

Independent non-executive Directors: Wong Lit Chor, Alexis Leung Wai Cheung Hui Wah Tat

Registered office: Canon’s Court 22 Victoria Street Hamilton HM 12 Bermuda

Head office and principal place of business in Hong Kong: 14th Floor Yau Lee Centre 45 Hoi Yuen Road Kwun Tong, Kowloon Hong Kong

26 March 2008

To the Shareholders

Dear Sir or Madam

VERY SUBSTANTIAL DISPOSAL AND CONNECTED TRANSACTION

INTRODUCTION

Reference is made to the announcement of the Company dated 4 March 2008 in which the Board announced that on 28 February 2008, the Company entered into the Sale and Purchase Agreement with the Purchaser pursuant to which the Purchaser has agreed to acquire and the Company has agreed to sell the Sale Shares and the Sale Loan for a total consideration of HK$171,000,000.

The Disposal constitutes a very substantial disposal on the part of the Company under the Listing Rules. As the Purchaser is a connected person of the Company, the Disposal also constitutes a connected transaction on the part of the Company and is subject to the approval of Independent Shareholders at the SGM.

The purpose of this circular is to provide you with further information regarding the Disposal and to seek approval from the Independent Shareholders for the Disposal and the transactions contemplated thereunder.

• 5 -

LETTER FROM THE BOARD

THE SALE AND PURCHASE AGREEMENT

Date: 28 February 2008

Parties: (1) Vendor : Wing Hing International (Holdings) Limited (2) Purchaser : Heart Ace Limited (3) Guarantor : Lo Chun Yang

The entire issued share capital of the Purchaser is legally and beneficially owned by the Guarantor. As the Guarantor is interested in the entire issued share capital of Grand Legend Limited, which is interested in approximately 19.84% of the entire issued share capital of the Company as at the Latest Practicable Date, the Guarantor is a connected person of the Company. The Purchaser being an associate of the Guarantor is also a connected person of the Company. The Purchaser is principally engaged in investment holding.

Assets to be disposed

Pursuant to the Sale and Purchase Agreement, the Purchaser has agreed to acquire and the Company has agreed to sell: (i) the Sale Shares, representing the entire issued share capital of the Target as at the Latest Practicable Date; and (ii) the Sale Loan, which amounts to approximately HK$163,285,379 as at 28 February 2008.

Consideration

The Consideration for the sale and purchase of the Sale Shares and Sale Loan shall be satisfied by the Purchaser in the following manner:

• (a) HK$20,000,000 has been paid in cash by the Purchaser to the Company on the date of signing of the Sale and Purchase Agreement as deposit;

• (b) HK$30,000,000 shall be payable in cash by the Purchaser to the Company on Completion; and

• (c) the balance of HK$121,000,000 by issuing the Promissory Notes.

The properties held by Sunny Engineering Group were preliminarily valued by Asset Appraisal Limited, an independent valuer, at HK$289,305,000 as at 31 January 2008 by adopting the direct comparison method to value the properties held by Sunny Engineering Group. The direct comparison method was used as the valuation method, where comparison based on prices realised or market prices of comparable properties is made. Comparable properties of similar size, character and location are analysed and carefully weighed against all the respective advantages and disadvantages of each property in order to arrive at a fair comparison of capital values.

• 6 -

LETTER FROM THE BOARD

The Consideration was determined with reference to the following three components:

		HK$’000
(i)	Net liabilities of the Target Group as at 31 January 2008	(76,158 )
(ii)	Sale Loan	163,285
(iii)	The difference between the market value_(Note 1)_	289,305
	and the book value_(Note 2)_of the share of properties	(194,203 )
	held by Sunny Engineering (as at 31 January 2008)	(16,642 )
	minus deferred tax_(Note 3)_	78,460
	Total of the above three components	165,587
	Consideration	171,000
	Premium	5,413
	Notes:
	1. Based on valuation by Asset Appraisal Limited, an independent valuer

1. Based on unaudited combined accounts of the Target Group

2. Based on a tax rate of 17.5%

The Consideration for the Sale Shares and the Sale Loan was agreed between the Company and the Purchaser after arm’s length negotiations after considering the valuation of the Target Group. As such, the Directors (including the independent non-executive Directors) consider the terms and conditions of the Disposal to be fair and reasonable and are in the interests of the Company and the Shareholders as a whole.

Conditions precedent

Completion shall be conditional upon and subject to:

• (a) the passing by the Independent Shareholders of the Company at a special general meeting of the Company to be convened and held of the necessary resolutions to approve the Sale and Purchase Agreement and the transactions contemplated thereunder;

• (b) all necessary consents and approvals required to be obtained on the part of the Purchaser in respect of the Sale and Purchase Agreement and the transactions contemplated thereunder having been obtained; and

• (c) completion of the Reorganisation.

• 7 -

LETTER FROM THE BOARD

As at the Latest Practicable Date, none of the conditions have been satisfied. All of the conditions are not waivable under the Sale and Purchase Agreement. If the conditions have not been satisfied on or before 30 April 2008, or such later date as the Company and the Purchaser may agree, the Sale and Purchase Agreement shall cease and determine, and thereafter neither party shall have any obligations and liabilities towards each other thereunder save for any antecedent breaches of the terms thereof.

Completion

Completion shall take place at 4:00 p.m. on the date falling two Business Days after the fulfilment (or waiver) of the conditions or such later date as may be agreed between the Company and the Purchaser.

Upon Completion, the Target will cease to be a subsidiary of the Company.

The Purchaser shall procure the relevant financial institutions to release the corporate guarantees provided by the Company in relation to the loans relating to the Sunny Engineering Group before the expiry of six months after Completion.

Guarantee

Under the Sale and Purchase Agreement, the Guarantor has guaranteed to the Company the due and punctual performance of the Purchaser of its obligations under the Sale and Purchase Agreement.

TERMS OF PROMISSORY NOTES

The terms of the Promissory Notes have been negotiated on an arm’s length basis and the principal terms of which are summarised below:

Issuer

The Company

Principal amount

The principal amount of the First Promissory Note, the Second Promissory Note and the Third Promissory Note is HK$40,000,000, HK$40,000,000 and HK$41,000,000 respectively.

Interest

The Promissory Notes carry no interest.

Maturity

The maturity date of the First Promissory Note, the Second Promissory Note and the Third Promissory Note is 30 June 2008, 30 September 2008 and 31 December 2008 respectively.

• 8 -

LETTER FROM THE BOARD

Security

The Promissory Notes are secured by the Shares Charge and Debt Assignment.

Early repayment

The Purchaser could, at its option, repay the Promissory Notes in whole or in part in multiples of HK$10,000,000 by giving a prior written notice to the Company, commencing on the date of the Promissory Notes up to the date immediately prior to the maturity date of the Promissory Notes. There will not be any premium or discount to the payment obligations under the Promissory Notes for any early repayment.

Assignment

The Promissory Notes may be transferred or assigned by the holder of the Promissory Notes to any party in multiples of HK$10,000,000.

INFORMATION ON THE TARGET GROUP

The Target was incorporated in the British Virgin Islands on 19 January 1994 and is principally engaged in investment holding.

None of the members in the Target Group were acquired by the Group within the period of 12 months prior to the date of this circular.

Sunny Engineering Group

According to the audited financial statements of Sunny Engineering prepared under the Hong Kong accounting standards, for the year ended 31 March 2006, the net loss before and after taxation was approximately HK$299,000. The net asset value of Sunny Engineering was approximately HK$8,003,000 as at 31 March 2006.

According to the audited financial statements of Sunny Engineering prepared under the Hong Kong accounting standards, for the year ended 31 March 2007, the net loss before and after taxation was approximately HK$842,000. The net asset value of Sunny Engineering was approximately HK$8,769,000 as at 31 March 2007.

Sunny Engineering Group is principally engaged in investment holding and property development. The property development projects in which Sunny Engineering Group are interested in include: (i) the redevelopment of No. 1 Wang Kwong Road, Kowloon Bay, Hong Kong into an office building of 33 storey; and (ii) the development of an office complex on the parcel of land situated at No. 111 King Lam Street, Kowloon, Hong Kong. For further details in relation to the above development projects, please refer to the circular of the Company dated 22 November 2005 and 29 October 2004 respectively. Only the Sunny Engineering Group in the Target Group held real properties.

• 9 -

LETTER FROM THE BOARD

CSP Group

According to the audited financial statements of CSP prepared under the Hong Kong accounting standards, for the year ended 31 March 2006, the net loss before and after taxation was approximately HK$2,000. The net liabilities of CSP was approximately HK$266,000 as at 31 March 2006.

According to the audited financial statements of CSP prepared under the Hong Kong accounting standards, for the year ended 31 March 2007, the net profit before and after taxation was approximately HK$15,000. The net liabilities of CSP was approximately HK$268,000 as at 31 March 2007.

CSP Group is principally engaged in investment, construction, maintenance, management and operation of wastewater treatment facilities in Zhuhai, the PRC. For further details in relation to the above wastewater treatment facilities, please refer to the circular of the Company dated 29 July 2005.

Reorganisation

The following charts show the group structure of the Group before completion of the Reorganisation and immediately after completion of the Reorganisation:

Group structure of the Group before completion of the Reorganisation

==> picture [405 x 304] intentionally omitted <==

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

The Company
100% 100% 100%
CWS International
Club Ace Holdings Limited The Target
Trading Limited
100% 100% 100% 100% 100% 100%
W H Interior CWF Piling &
W H China (Holdings) Design And Contracting EngineeringCivil Construction W. Hing CSP Sunny
Limited Company Company Company Limited Engineering
Limited Limited
Superstructure construction,
foundation piling, substructure Wasterwater Property
works, slope improvement, treatment development
special construction projects and business in business in
interior decoration works
the PRC Hong Kong
businesses in Hong Kong and the
PRC
----- End of picture text -----

• 10 -

LETTER FROM THE BOARD

Group structure of the Group immediately after completion of the Reorganisation

==> picture [405 x 305] intentionally omitted <==

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

The Company
100% 100% 100%
CWS International
Club Ace Holdings Limited The Target
Trading Limited
100% 100% 100% 100% 100% 100%
W H Interior CWF Piling &
W H China (Holdings) Design And Contracting EngineeringCivil Construction W. Hing CSP Sunny
Limited Company Company Company Limited Engineering
Limited Limited
Superstructure construction,
foundation piling, substructure Wasterwater Property
works, slope improvement, treatment development
special construction projects and business in business in
interior decoration works the PRC Hong Kong
businesses in Hong Kong and the
PRC
----- End of picture text -----

• 11 -

LETTER FROM THE BOARD

Target Group immediately after Completion

The following chart shows the group structure of the Target Group immediately after Completion:

==> picture [386 x 271] intentionally omitted <==

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

The Vendor
100%
The Target
100% 100%
Sunny
CSP
Engineering
40% 39% 35% 8%
King Fine Wealthy Star
Asset Co Operation Co
Development Limited
----- End of picture text -----

FINANCIAL EFFECT OF THE DISPOSAL

According to the unaudited pro forma financial information of the Remaining Group as set out in appendix III to this circular, after the Disposal, the net profit of the Group will increase from approximately HK$10,765,000 to approximately HK$109,615,000. The total assets of the Group will increase from approximately HK$250,588,000 to approximately HK$334,748,000. The total liabilities of the Group will decrease from approximately HK$86,826,000 to approximately HK$78,031,000.

The estimate gain on disposal of the Target Group (inclusive of (i) gain on fair value changes of investment properties; and (ii) revaluation surplus on self-occupied properties) will be approximately HK$83,873,000. The estimate gain on the Disposal represents the net amount (before expenses in connection with the Disposal) after deducting the Consideration by the sum of the carrying value underlying the Sale Shares (before adjustment of market revaluation as at 31 January 2008) and the face value of the Sale Loan.

• 12 -

LETTER FROM THE BOARD

MANAGEMENT DISCUSSION AND ANALYSIS OF THE RESULTS OF THE REMAINING GROUP

BUSINESS REVIEw

For the year ended 31 March 2007

During the year ended 31 March 2007 under review, the Remaining Group recorded a turnover of HK$479,988,000. The Remaining Group recorded a net profit from ordinary activities attributable to shareholders of approximately HK$109,615,000.

(i) Construction and building

The Remaining Group has secured several contracts during the last financial year, which include the additional columbarium at Diamond Hill for Architectural Services Department, a refurbishment contract for Silvercord at Canton Road, the alteration and addition works contract for the Existing Giant Panda House at Ocean Park and a foundation works contract at Tai Yip Street, Kwun Tong. Together with contracts previously secured, the total value of current contracts on hand amounted to about HK$553 million.

As regards major completed projects, the Remaining Group has satisfactorily completed the office development at King Lam Street, the Yew Chung Secondary School at Kowloon Tong, the temporary entrance and Skyfair works and the alteration and addition works for the Existing Giant Panda House at Ocean Park.

Liquidity and financial resources

For the year ended 31 March 2007

As at 31 March 2007, the Remaining Group did not have any outstanding borrowings.

The Remaining Group’s gearing ratio as at 31 March 2007 was Nil, calculated based on the Remaining Group’s total borrowings of HK$Nil over the Remaining Group’s total assets of HK$334,748,000.

The Remaining Group continues to adopt a policy of dealing principally with clients with whom the Remaining Group has enjoyed a long working relationship so as to minimise risks in its business.

Employees

The Remaining Group employed approximately 300 staff, excluding workers under exclusive subcontracting arrangements, for the year ended 31 March 2007. Total staff costs for the year ended 31 March 2007, excluding Directors’ remuneration, amounted to approximately HK$79,359,000. The remuneration packages of the Remaining Group’s employees are mainly based on their performance and experience, taking into account current industry practices. The remuneration policy and packages of the Remaining Group’s employees are reviewed regularly.

• 13 -

LETTER FROM THE BOARD

The Remaining Group operates a defined contribution Mandatory Provident Fund retirement benefits scheme (the “MPF Scheme”) under the Mandatory Provident Fund Schemes Ordinance, for all its employees who are eligible to participate in the MPF Scheme. Contributions are made based on a percentage of the employees’ basic salaries. The assets of the MPF Scheme are held separately from those of the Remaining Group in an independently administered fund. The Remaining Group’s employer contributions vest fully with the employees when contributed into the MPF Scheme in accordance with the rules of the MPF Scheme.

In addition to the provision of the MPF Scheme, a share option scheme (the “Scheme”) is also available to employees based on their performance. The Company operates the Scheme for the purpose of providing incentives or rewards to eligible participants for their contribution to the Remaining Group and/or to enable the Remaining Group to recruit and retain high-calibre employees and attract human resources that are valuable to the Remaining Group and any entity in which the Remaining Group holds an equity interest (the “Invested Entity”). Eligible participants of the Scheme include the Directors and employees of the Company, its subsidiaries or any Invested Entity, suppliers and customers of the Remaining Group or any Invested Entity, any technical, financial and legal professional advisers engaged by the Remaining Group or any Invested Entity, and any shareholder of any member of the Remaining Group or any Invested Entity or any holder of any securities issued by any member of the Remaining Group or any Invested Entity. The Scheme became effective on 29 August 2002 and unless otherwise terminated or amended, will remain in force for 10 years from that date.

Share options do not confer rights on the holders to dividends or to vote at shareholders’ meetings. No share options were granted under the Scheme as at 31 March 2007.

Exposure to fluctuations in exchange rates

Since the functional currencies of the Remaining Group’s operations are mainly Hong Kong dollars, United States dollars and Renminbi, the Directors consider that the potential foreign exchange exposure of the Remaining Group during the year ended 31 March 2007 is limited.

• 14 -

LETTER FROM THE BOARD

Material acquisitions and disposals of subsidiaries and associated companies

Save as disclosed below, there were no material acquisitions and disposals of subsidiaries, jointly controlled entities and associated companies during the year ended 31 March 2007.

The Remaining Group has disposed its equity interests in Anpoint Engineering Limited to an Independent Third Party during the year ended 31 March 2007.

Significant investments or capital assets

Save as the addition of land and buildings and those disclosed under the paragraph headed “Material acquisition and disposals of subsidiaries and associated companies”, there were no significant investment or capital assets for the year ended 31 March 2007.

Future plans for material investments or capital assets

The Remaining Group generally finances its material investments or capital assets with internally generated cash flow and banking facilities provided by its principal bankers in Hong Kong and PRC.

Save as the acquisition as disclosed in the circular of the Company dated 22 February 2008, there were no future plans for material investments or capital assets for the year ending 31 March 2008.

Contingent liabilities

As at 31 March 2007 the Remaining Group had executed guarantees in respect of performance bonds in favour of contract customers of approximately HK$54,138,000. In addition to the above, as at 31 March 2007, the Company had executed guarantees in favour of contract customers in respect of the performance of obligation under contracts by a jointly-controlled entity, China Harbour-CWF Joint Venture, with original contract sum of HK$84,938,000.

As at 31 March 2007 the Company had executed guarantees in favour of contract customers in respect of the performance of a subsidiary’s obligation under contracts with contract sum of nil.

As at 31 March 2007, the Remaining Group’s jointly-controlled entities had contingent liabilities in respect of performance bond guarantees amounting to HK$36,000,000 to which the Remaining Group, together with other joint venture partners, are jointly and severally liable.

As at 31 March 2007, certain subsidiaries of the Company had provided undertakings of financial support to certain of the Remaining Group’s jointly-controlled entities in proportion to their equity interests in these entities, in order that these entities could meet their obligations and liabilities as and when they fall due.

The Remaining Group’s share of the net deficiency in assets of these jointly-controlled entities as at 31 March 2007 in the amounts of HK$14,372,000 have already been accounted for in the financial statements for the year ended 31 March 2007.

• 15 -

LETTER FROM THE BOARD

The Remaining Group has a contingent liability in respect of possible future long service payments to employees under the Hong Kong Employment Ordinance, with a maximum possible amount of approximately HK$2.4 million as at 31 March 2007. The contingent liability has arisen because, at the balance sheet date, a number of current employees have achieved the required number of years of service to the Remaining Group in order to be eligible for long service payments under the Employment Ordinance if their employment is terminated under certain circumstances. A provision has not been recognised in the financial statements of the Remaining Group for the year ended 31 March 2007 in respect of such possible payments, as it is not considered probable that the situation will result in a material future outflow of resources from the Remaining Group.

As at the close of business on 31 March 2007, the Remaining Group was involved in various lawsuits and claims arising in the normal course of business of the Remaining Group, a summary of which is set out below:

• (i) The Remaining Group was involved during the three years ended 31 March 2003 in the undertaking of two construction contracts for the Hong Kong Housing Authority (the “HA”). In attending to these contract works, the Remaining Group received requests for clarifications from the HA regarding the technical compliance of the piling work sections of these contract works. Additional piling specification review, testing and other compliance procedures were carried out to substantiate the satisfactory adherence to the technical specifications required for these contract works and for any extension works required for the purpose of providing assurance to the HA. Provisions of approximately HK$2.5 million have been made in the financial statements for the year ended 31 March 2004 for all additional costs incurred, as well as those necessarily required to be incurred, in attending to these and other additional works reasonably anticipated by the Directors to be necessary for the satisfaction of the HA.

As a result of the execution of these additional contract works, which were not anticipated at the stage of contract inception, the contract period was prolonged with a corresponding overrun of the contract costs incurred. In accordance with the contractual agreement, the HA is entitled to claim against the Remaining Group for liquidated damages for the delay in completion of contract works. The maximum potential amount of liquidated damages involved was assessed by the Directors based on the contractual provisions of approximately HK$14 million, HK$14 million and HK$7.9 million, in aggregate, as at 31 March 2004, 2005 and 2006 respectively. Having regard to the circumstances surrounding the prolonged contract works as described above, the Directors are however of the opinion that the Remaining Group has meritorious defences against claims for the liquidated damages. In a letter dated 12 December 2000 issued by the HA, the HA confirmed that its building committee had considered the situation and approved the waiver of liquidated damages on an ex-gratia basis if the delay was due to unanticipated complex ground conditions and/or initiatives on supervision enhancement and design approval of piling works implemented after contract formation. Accordingly, although the Remaining Group’s grounds of claiming waiver of these possible liquidated damages has yet to be approved by the HA, having considered the legal counsel’s advice, the Directors are of the opinion that the likelihood of such damages falling to the Remaining Group is not probable and a provision therefor has not been made in presenting the financial statements for the three years ended 31 March 2006.

• 16 -

LETTER FROM THE BOARD

In July 2001, the piling sections involved in these HA contract works were completed and, up to 31 March 2006 the Remaining Group has not received any complaint or indications from the HA regarding sub-standard piling works. The Remaining Group has filed formal claims to the HA requesting compensation of the extra contract costs incurred, which have already been fully charged to the profit and loss account during each of the two years ended 31 March 2002, as a result of the contract prolongation. As the negotiations with the HA have not yet reached an advanced stage, as at 31 March 2006 in view of the uncertainties involved, no accrual for the potential compensation revenue has been made in the audited financial statements for the three years ended 31 March 2006.

Subsequent to 31 March 2006 two Supplemental Agreements for Granting Ex-Contractual Extension of Time and Ex-Gratia Payment (the “Supplemental Agreements”) were entered into between the Remaining Group and the HA for full settlement of all entitlements and claims of both parties in relation to the two construction contracts. Pursuant to the Supplemental Agreements, the Remaining Group has received approximately HK$17.7 million from the HA during the year ended 31 March 2007.

• (ii) The Remaining Group was previously engaged in early 2000 in the undertaking of a piling work contract, which was terminated by the contract customer during 2001 prior to the completion of contract works as a result of the allegation of non-conforming piles. In the previous year, the contract customer demanded from the Remaining Group the retrenchment of HK$5 million of the contract fees received by the Remaining Group, as compensation for early termination of the contract works. In prior years, the contract customer was in the process of undergoing a court compulsory winding-up and the provisional liquidator of the contract customer requested payment of HK$8 million from the Remaining Group. Having considered legal counsel’s advice, the Directors are of the opinion that the claim is unlikely to succeed. Accordingly, no provision has been made in the financial statements of the Remaining Group for the year ended 31 March 2007.

• (iii) The Remaining Group was previously engaged in early 2000 in the undertaking of a piling work contract. In 2001, the Remaining Group made a claim against the main contractor of HK$7 million for variation orders in addition to the original contract sum. In prior years, the main contractor submitted a counterclaim of HK$44 million for additional costs incurred due to wrongful repudiation of the subcontract. Having considered the legal counsel’s advice, the Directors are of the opinion that the Remaining Group has a good chance of defending the counterclaim. Accordingly, the Directors consider that a provision for the counterclaim is not necessary.

• (iv) The Remaining Group was held liable for two related claims for the alleged breach of contractual duties, brought against the Remaining Group by a contract customer and a nominated subcontractor in respect of renovation works undertaken by the Remaining Group in 1992. The total claims payable in respect of the claims amounted to HK$9.2 million. Certain Directors through companies beneficially and wholly-owned by them, have covenanted with the Remaining Group to jointly and severally indemnify and keep the Remaining Group indemnified in full against the damages payable. A provision therefor,

• 17 -

LETTER FROM THE BOARD

as well as the corresponding reimbursement recoverable of an equal amount, have been recognised in these financial statements. The outstanding claims payable in respect of the claims amounted to nil as at 31 March 2007.

• (v) A subsidiary of the Company, Anpoint Engineering Limited, was engaged in the undertaking of a HVAC installation works contract in 2004. In December 2004, Anpoint Engineering Limited made a claim against the sub-contractor for loss and damage caused by the subcontractor’s wrongful repudiation of contract in the sum of approximately HK$1.4 million and other loss and damage due to completion of outstanding works and remedial works and payment of Labour Tribunal claims to unpaid workers on the sub-contractor’s behalf. The sub-contractor submitted a counterclaim for unpaid workdone and loss of profit in the sum of approximately HK$1.8 million. Having considered the legal counsel’s advice, the Directors are of the opinion that Anpoint Engineering Limited has a good chance of defending the counterclaim. Accordingly, the Directors consider that a provision for the counterclaim is not necessary. Subsequent to 31 March 2006, the Remaining Group disposed its entire equity interest in Anpoint Engineering Limited to an independent third party.

• (vi) A number of claims have been brought against the Remaining Group in respect of compensation for alleged personal injuries sustained by construction workers during the execution of contract works. The Directors believe that any liabilities of the Remaining Group in respect of such claims will be covered either by the Remaining Group’s insurance policies, or that the Remaining Group has a meritorious defense against such claims. Accordingly, the Directors do not believe that these claims will have any material adverse impact on the Remaining Group and, therefore no provisions have been made in respect thereof in the financial statements of the Remaining Group for the year ended 31 March 2007.

• (vii) A claim for approximately HK$1.6 million was brought against a subsidiary of the Company by a sub-contractor in 2002 alleging that the Remaining Group is liable for the settlement of sub-contracting charges to the subcontractor. No provision for the claim was made for the years ended 31 March 2004 and 2005, the case was fully settled during the year ended 31 March 2006 with the payment by the Group of approximately HK$1.6 million to the sub-contractor.

Indebtedness

Save as disclosed under the section headed “Indebtedness” as set out in Appendix III “Financial Information of the Group” or as otherwise disclosed herein, and apart from intra-group liabilities and normal trade payables, the Group did not have any outstanding borrowings, bank overdrafts, loans or other similar indebtedness under acceptances (other than normal trade bill) or acceptance credits, debentures or other loan capital, mortgages, charges, hire purchase or finance lease commitments, guarantees, capital commitments or other contingent liabilities at the close of business on 31 March 2007.

• 18 -

LETTER FROM THE BOARD

The Directors have confirmed that there has not been any material change in the indebtedness and contingent liabilities of the Group since 31 March 2007.

REASONS FOR THE DISPOSAL

The Group is principally engaged in superstructure construction, foundation piling, substructure works, slope improvement, special construction projects and interior decoration works in Hong Kong and the PRC.

Prior to completion of the VSA Agreement, the businesses of the Group are (i) superstructure construction, foundation piling, substructure works, slope improvement, special construction projects and interior decoration works in Hong Kong and the PRC; (ii) wastewater treatment in the PRC; and (iii) property development in Hong Kong.

Assuming upon Completion and prior to completion of the VSA Agreement, the businesses of the Group will be superstructure construction, foundation piling, substructure works, slope improvement, special construction projects and interior decoration works in Hong Kong and the PRC.

The estimated net proceeds receivable by the Group for the Disposal will amount of approximately HK$169,470,000. The Directors intend to utilise the net proceeds from the Disposal as general working capital and as funds for future development of the Group when investment opportunities arise. As at the date of this announcement, the Company has not identified any specific investment plans.

The advantages of the Disposal include: (i) the disposal of the non-core segment of the operations of the Group; (ii) the disposal of investments of the Group with minority interests holdings, which the Group does not have the controlling voting rights; and (iii) the Group can reallocate the financial resources of the Group to focus on its other businesses; and (iv) elimination of further financial drain of the Group.

The disadvantages of the Disposal include: (i) the discontinuation of the business relationships with business counterparts in the Target Group; and (ii) the professional fees incurred in relation to the Disposal.

The Directors consider that the Consideration represents a premium over the net asset value of the Target Group and the Disposal represents a good opportunity for the Group to realise the Target Group and to strengthen the financial position of the Group. Taking into account of the valuation of the Target Group, the Board is of the view that the terms and conditions of the Disposal are fair and reasonable and the Disposal is in the interests of the Company and the Shareholders as a whole.

PROSPECTS OF THE REMAINING GROUP

Due to the shrinking market size, the local construction market has been highly competitive and the Group envisages such difficult environment to persist in the medium term future. The traditional low-end construction market will suffer more due to the higher number of competitors and hence keener competition.

• 19 -

LETTER FROM THE BOARD

The Group has developed over time from a traditional low-margin construction contractor to a diversified conglomerate engaged in construction, property investment, environmental engineering and investment, and higher-margin specialist construction in various areas related to leisure markets. In a continuously effort to further broaden the Group’s income sources, the Directors recognise that the rising global demand for diversified sources of energy amongst nations and enterprises represents a profitable and sustainable investment opportunity whereby the Group can take part in energyrelated investment in a less capital-intensive manner by undertaking the production, development and management of sophora and biological vegetable oil, including sunflower oil. Aside from the energy-related prospects, there is the further opportunity to extract various other by-products which can be sold both as edible oil in the PRC market and international commodities. The global market for sophora products and biological vegetable oil is expected to experience a shortage as these products are increasingly being used as a renewable and environmental friendly alternative energy amidst continuing economic growth and accelerating industrialisation and urbanisation in the PRC and other emerging countries. The Board is of the view that, upon Completion, the Group’s earning asset base and income potentials will be strategically enhanced.

Furthermore, with the opportunity provided by the acquisition as set out in the circular of the Company dated 22 February 2008 to diversify into the growing PRC market, the Group will continue to explore prudently other investment possibilities. The Group anticipates to gradually increase the investment portfolio in this area.

In Hong Kong, the Group will focus on high-value specialist construction markets, such as leisure theme park markets and high-end A&A (alteration and addition) refurbishment projects.

LISTING RULES IMPLICATIONS

The Disposal constitutes a very substantial disposal on the part of the Company under the Listing Rules. As the Purchaser is a connected person of the Company, the Disposal also constitutes a connected transaction on the part of the Company and will be subject to the approval of the Independent Shareholders at the SGM by way of poll.

The Disposal is subject to, among others, the approval by the Independent Shareholders at the SGM to be taken by way of a poll. Grand Legend Limited, which holds approximately 19.84% of the entire issued share capital of the Company, and its associates will abstain from voting for the relevant resolution at the SGM to approve the Disposal and the transactions contemplated thereunder due to their interests in the Disposal.

INDEPENDENT BOARD COMMITTEE

The Independent Board Committee comprising all the independent non-executive Directors has been formed to advise the Independent Shareholders as to the fairness and reasonableness of the Disposal. Partners Capital has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in this regard.

• 20 -

LETTER FROM THE BOARD

SGM

Set out on pages 145 to 146 is a notice convening the SGM to be held at 14th Floor, Yau Lee Centre, 45 Hoi Yuen Road, Kwun Tong, Kowloon, Hong Kong on Monday, 14 April 2008 at 11:00 a.m. at which relevant resolution(s) will be proposed to the Shareholders to consider and, if thought fit, approve the Disposal and the transactions contemplated thereunder.

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

PROCEDURE FOR DEMANDING A POLL AT GENERAL MEETING

According to bye-law 79 of the bye-laws of the Company, a resolution put to the vote at any general meeting shall be determined by a show of hands of the Shareholders present in person (or, in the case of a Shareholder being a corporation, by its authorised representative entitled to vote) or by proxy unless a poll is (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) demanded by:

• (i) the chairman of such meeting; or

• (ii) at least three Shareholders present in person (or, in the case of a Shareholder being a corporation, by its duly authorised representative) or by proxy for the time being entitled to vote at the meeting; or

• (iii) any Shareholder or Shareholders present in person (or, in the case of a Shareholder being a corporation, by its duly authorised representative) or by proxy and representing not less than one-tenth of the total voting rights of all Shareholders having the right to vote at the meeting; or

• (iv) any Shareholder or Shareholders present in person (or, in the case of a Shareholder being a corporation, by its duly authorised representative) or by proxy and holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the shares conferring that right.

Unless a poll is duly demanded in accordance with the foregoing provisions, a declaration by the chairman that a resolution has on a show of hands been carried unanimously, or by a particular majority, or lost, and an entry to that effect in the book containing the minutes of the proceedings of the Company, shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against such resolution.

• 21 -

LETTER FROM THE BOARD

RECOMMENDATION

The Board considers that the terms of the Disposal are fair and reasonable and are in the interests of the Company and the Shareholders as a whole. Accordingly, the Board recommends the Shareholders to vote in favour of the ordinary resolution as set out in the notice of SGM.

ADDITIONAL INFORMATION

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

Yours faithfully

For and on behalf of the Board

wing Hing International (Holdings) Limited Ng Tat Leung, George Chairman

• 22 -

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

(Incorporated in Bermuda with limited liability) (Stock Code: 621)

26 March 2008

To the Independent Shareholders

Dear Sir or Madam,

VERY SUBSTANTIAL DISPOSAL AND CONNECTED TRANSACTION

We refer to the circular of the Company dated 26 March 2008 (the “ Circular ”) to the Shareholders, of which this letter forms part. Capitalised terms used in this letter shall have the same meanings as defined in the Circular unless the context otherwise requires.

We have been appointed by the Board as members to form the Independent Board Committee and to advise you the terms of the Disposal whether such terms are fair and reasonable and in the interests of the Company and the Independent Shareholders as a whole and how to vote on resolutions regarding the Disposal.

Partners Capital has been appointed to advise the Independent Board Committee and the Independent Shareholders as to whether the terms of the Disposal are fair and reasonable so far as the Independent Shareholders are concerned, whether such terms are in the interests of the Company and the Independent Shareholders as a whole. Details of its advice, together with the principal factors taken into consideration in arriving at such advice, is set out on pages 24 to 36 of the Circular. Your attention is also drawn to the letter from the Board set out on pages 5 to 22 of the Circular and the additional information set out in the appendices of the Circular.

Having considered the terms of the Disposal and the advice of Partners Capital, we are of the opinion that the Disposal was on normal commercial terms and the terms of the Disposal are fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Independent Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the resolutions to be proposed at the SGM to approve the Disposal.

Yours faithfully

Independent Board Committee of

Wing Hing International (Holdings) Limited

Wong Li Chor, Alexis Independent non-executive Director

Leung Wai Cheung Independent non-executive Director

Hui Wah Tat Anthony

Independent non-executive Director

• 23 -

LETTER FROM PARTNERS CAPITAL

Set out below is a full text of the letter of advice from Partners Capital to the Independent Board Committee and the Independent Shareholders in relation to the Disposal, which has been prepared for the purpose of incorporation into this circular.

==> picture [240 x 33] intentionally omitted <==

Partners Capital International Limited Unit 3906, 39/F, COSCO Tower 183 Queen’s Road Central Hong Kong

To the Independent Board Committee and

the Independent Shareholders

26 March 2008

Dear Sirs,

VERY SUBSTANTIAL DISPOSAL AND CONNECTED TRANSACTION

INTRODUCTION

We refer to our engagement to advise the Independent Board Committee and the Independent Shareholders in respect of the terms of the Disposal, particulars of which are set out in a circular (the “Circular”) of the Company to the Shareholders dated 26 March 2008 and in which this letter is reproduced. Unless the context requires otherwise, capitalised terms used in this letter shall have the same meanings as given to them under the definitions section of the Circular.

As set out in the letter from the Board (the “Letter from the Board”) contained in the Circular, the Company, entered into the Sale and Purchase Agreement with the Purchaser on 28 February 2008, pursuant to which the Purchaser has agreed to acquire and the Company has agreed to sell the Sale Shares and the Sale Loan for a total consideration of HK$171,000,000. The Disposal constitutes a very substantial disposal on the part of the Company under the Listing Rules. As the Purchaser is a connected person of the Company, the Disposal also constitutes a connected transaction on the part of the Company and will be subject to the approval of the Independent Shareholders at the SGM by way of poll.

In formulating our opinion, we have relied on the accuracy of the information and representations contained in the Circular and have assumed that all information and representations made or referred to in the Circular were true at the time they were made and continue to be true as at the Latest Practicable Date. We have also relied on our discussion with the management of the Company regarding the information and representations contained in the Circular. We have also assumed that all statements of belief, opinion and intention made by the Directors in the Circular were reasonably made after due enquiry. We consider that we have reviewed sufficient information to reach an informed view, to justify relying on the accuracy of the information contained in the Circular and to provide a reasonable basis for our advice. We have no reason to suspect that any material facts have been omitted or withheld from the information contained or opinions expressed in the Circular nor to doubt the truth, accuracy and completeness of the information and representations provided to us by the Directors. We have not, however, conducted an independent in-depth investigation into the business and affairs of the Group, the Sale Shares, the Sale Loan, the Target Group, the Purchaser and their respective associates nor have we carried out any independent verification of the information supplied.

• 24 -

LETTER FROM PARTNERS CAPITAL

PRINCIPAL FACTORS CONSIDERED

In arriving at our opinion regarding the terms of the Disposal, we have considered the following principal factors and reasons:

1. Reasons for entering into the Sale and Purchase Agreement

As set out in the Letter from the Board, prior to completion of the VSA Agreement, the businesses of the Group are (i) superstructure construction, foundation piling, substructure works, slope improvement, special construction projects and interior decoration works in Hong Kong and the PRC; (ii) wastewater treatment in the PRC; and (iii) property development in Hong Kong. We analyse the background and the reasons for the Disposal as follows:

(i) Background of the assets to be disposed of under the Disposal

We understand from the Directors that the Target Group shall immediately after completion of the Reorganisation be principally engaged in (i) property development/investment/holding in Hong Kong; and (ii) investment, construction, maintenance, management and operation of wastewater treatment facilities in Zhuhai, the PRC. The following chart shows the group structure of the Target Group immediately after completion of the Reorganisation:

==> picture [405 x 190] intentionally omitted <==

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

The Target
100% 100%
CSP Sunny
Engineering
40% 39% 8% 35%
King Fine
(6) Operation Wealthy Star
(6) Asset Co Co Limited Development
Limited
100% 100% 100% 100% 100%
(4) Office (2) Residential (1) Industrial
(5) Office
building (with (3) Office unit quarter (with unit (with car
building site
car parks) car park) parks)
----- End of picture text -----

• 25 -

LETTER FROM PARTNERS CAPITAL

We summarise details of the key assets to be disposed of under the Target Group in the following table:

									Profit/(loss)	contribution
								Attributable
				% equity				market value
	Nature of key			attributable	Initial			(or carrying	for the	for the six
	assets to	Geographical		to the	date of	Completion	Cost of	value) as at	year ended	months ended
Component	be disposed of	location	Usage	Group	investment	date	investment	31 January 2008	31 March 2007	30 September 2007
								(approximate HK$)
1	Industrial unit (with	Kwun Tong,	for self-	100%	2004	1978	5.48 million	22.50 million	(0.19 million)	(0.20 million)
	car parks)	Hong Kong	occupation					(Note 1)	Depreciation	Depreciation
2	Residential quarter	Tuen Mun,	for self-	100%	2004	1977	1.90 million	4.00 million	(0.05 million)	(0.05 million)
	(with car park)	Hong Kong	occupation					(Note 1)	Depreciation	Depreciation
3	Office unit	Tsimshatsui,	for investment	100%	2004	1975	3.40 million	6.50 million	0.40 million	–
		Hong Kong						(Note 1)	Revaluation & 0.12
									million
									Rental income
4	Office building (with	Cheung Shan Wan,	for sale and for	35%	2004	2007	Loan of 21.67	121.91 million	–	–
	car parks)	Hong Kong	investment				million (maximum)	(Note 1)
							& share capital of
							3,500
5	Office building	Kowloon Bay,	for development	8%	2005	2010	Loan of 53.46	134.40 million	–	–
	site	Hong Kong					million (maximum)	(Note 1)
							& Share capital
							of 800
6	Asset Co and	Zhuhai, China	Provision of	40% and	2002	N/A	34.64 million	16.89 million	(7.13 million)	(4.53 million)
	Operation Co		wastewater	39%				(Note 2)	Share of result of	Share of result of
			treatment						jointly controlled	jointly controlled
			services						entities	entities
	Source: the Company

Note:

1. representing the market value as valued by Asset Appraisal Limited, an independent valuer

2. representing the carrying value of “interests in jointly controlled entities” as shown on the unaudited consolidated balance sheet of the Target Group

As illustrated in the above table, we note that the attributable market value of each of the five property assets under the Target Group as at 31 January 2008 was higher than the relevant cost of investment incurred by the Group. By contrast, the carrying value of Asset Co and Operation Co under the Target Group as at 31 January 2008 was lower than the relevant cost of investment incurred by the Group.

• 26 -

LETTER FROM PARTNERS CAPITAL

We further summarise the relative proportions of the key assets to be disposed of under the Target Group (in terms of (i) attributable market value for property assets and (ii) carrying value for wastewater treatment assets) as at 31 January 2008 in the following pie chart:

key assets to be disposed of under the Target Group

==> picture [277 x 138] intentionally omitted <==

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

(3) Office unit
(6) Asset Co and
2% (2) Residential
Operation Co
quarter (with car park)
6%
1%
(1) Industrial unit
(with car parks)
7%
(5) Office building site
44%
(4) Office building
(with car parks)
40%
----- End of picture text -----

(ii) Reasons for the Disposal

The Directors consider that the Consideration represents a premium over the net assets of the Target Group and the Sale Loan and the Disposal represents a good opportunity for the Group to realise the Target Group and to strengthen the financial position of the Group. We analyse the reasons for the Disposal as follows:

• Property market in Hong Kong

• (a) For component 1 (Industrial unit (with car parks)) under the Target Group:

According to the “Market Overview on Hong Kong Property Market” by Colliers International (an international property consultant) in January 2008, the average prices of factory and industrial-office sector are expected to edge up by 13% in 2008 while the average price of warehouse premises are anticipated to rise 18%, in light of further growth in external trades and the negative interest rate environment boosting the buying interest.

• (b) For component 2 (Residential quarter (with car park)) under the Target Group:

According to the commentary by Goldman Sachs (an international investment bank) as reported on 5 March 2008, the growth momentum in Hong Kong residential property market might slow down as a result of the faltering economy (amidst a scarcity in new property supply, low debt ratio and a mediocre speculative atmosphere in the past year). The forecast increase in Hong Kong’s housing price is slashed from 40% to 20% in 2008 in the next two years.

• 27 -

LETTER FROM PARTNERS CAPITAL

• (c) For component 3 (Office unit), 4 (Office building (with car parks)) and 5 (Office building site) under the Target Group:

According to the commentary by Debenham Tie Leung Limited (an international property adviser) in January 2008, the office rent in Hong Kong is expected to edge up by approximately 15% in the first half of 2008, due to sound economic fundamentals and limited supplies of office space. However, in the second half of 2008, the office rent level and the overall economy in Hong Kong will be clouded by the surfacing of fuller impacts from the US sub-prime mortgage crisis (which in turn should add uncertainty to the office property price, as rental is the main factor used to determine the office price). According further to the “Market Overview on Hong Kong Property Market” by Colliers International (an international property consultant) in January 2008, the pace of rental growth in the overall Grade A office market is to slow to 3% per annum in 2008 due to the combined effect of the recent financial credit crisis and the quantum of new supply of Grade A office in Kowloon East.

Upon enquiry, despite the generally bullish outlook for component 1 to 5 under the Target Group, we understand from the Directors that the Group prefers (on a prudent approach) to lock-in realisable market value of the five property assets under the Target Group at this stage for a profit, rather than taking risk to wait for upside potential on their future market value, especially given the negative economic impacts arising from sub-prime credit crunch are yet to fully surface in Asian region. In any case, as illustrated in the above pie chart, the office properties (namely, component 3, 4 and 5) already accounted for approximately 86% of the total portfolio of key assets to be disposed of under the Target Group as at 31 January 2008, of which component 5 (accounting for approximately 44%) is an office building site in Kowloon Bay scheduled to be completed not earlier than 2010. On such basis, we consider that the overall fundamentals and prospects of the Target Group should largely be subject to the performance of the office property sector in Hong Kong, which is less bullish after the first half of 2008 according to the analysis in point (c) above.

• Wastewater treatment market in the PRC

According to the news dated 14 December 2007 by Nan Fang Daily, with a view to improving the water quality in the PRC, the Ministry of Construction of the PRC China expects the PRC government is planning to invest approximately RMB 330 billion in construction of wastewater treatment facilities during the Eleven-fifth Plan (the “Plan”) of China. The Plan is in a position to benefit the constructors of wastewater treatment facilities.

• 28 -

LETTER FROM PARTNERS CAPITAL

However, the Plan may not be necessarily beneficial to the operators of wastewater treatment facilities (such as Asset Co and Operation Co), given that the average wastewater treatment fee income prevailing in the PRC market is seriously low at approximately RMB0.67 per tonne of wastewater, which is only enough to cover 67% of wastewater treatment expenses according to the Secretary of State Environmental Protection Administration of China as reported on 12 February 2008 by SINA Corporation. Although Asset Co and Operation Co managed to lock-in a higher wastewater treatment fee income according to the relevant concession agreement for their existing wastewater treatment plant invested in 2002, (i) Asset Co and Operation Co were still loss-making at approximately RMB7.13 million and RMB4.53 million respectively for the year ended 31 March 2007 and for the six month ended 30 September 2007; and (ii) the Group (as operator) may face difficulty in seeking or tendering for other new wastewater treatment projects in the PRC with promising profitability potential.

Upon enquiry, we understand from the Directors that the loss-making track record of Asset Co and Operation Co were mainly attributable to the impairment loss in accounts receivable from customer, which were accumulated up to approximately 18.7 million as at 31 March 2007. We further understand from the Directors that such accounts receivable continued to accumulate further with no subsequent settlement, reflecting the difficulty faced by of Asset Co and Operation Co to collect wastewater treatment fee income from customer since 2002. As the Group is only a minority shareholder owning 40% equity interest in Asset Co and 39% equity interest in Operation Co respectively, the Group has not been in a position to take effective and proactive action in the recovery of outstanding accounts receivable in the absence of support from the major shareholder of Asset Co and Operation Co. On such basis, the Directors do not rule out the possibility of further increase in impairment loss in accounts receivable of Asset Co, thereby causing further loss of the Group’s minority investment in wastewater treatment business.

• Realignment of the Group’s core business under its majority control

Upon Completion and completion of the VSA Agreement, the businesses of the Group will be (i) superstructure construction, foundation piling, substructure works, slope improvement, special construction projects and interior decoration works in Hong Kong and the PRC; and (ii) development and management of a series of sophora products and of biological vegetable oil, including sunflower oil.

Upon further discussion with the Directors, we understand that the Disposal is in line with the Group’s strategy to

• (a) exit from non-core business segments and those which are merely held as minority investments by the Group without majority control in voting rights and management (namely,

• i. the 100% owned properties held for self-occupation and for investment in Hong Kong;

• 29 -

LETTER FROM PARTNERS CAPITAL

• ii. the 39% or 40% equity-owned wastewater treatment business in the PRC; and

• iii. the 8% or 35% owned property development/investment projects in Hong Kong); and

• (b) reallocate more resources to focus on its majority-controlled business segments (namely,

• i. the 100% owned core business of construction; and

• ii. the 55% owned new business of biological vegetable oil cultivation).

We understand from the Directors that the Company has been specialising in superstructure construction, foundation piling, substructure works and slope improvement since its listing on the Stock Exchange in 1995. Upon our review of the annual report of the Company for the year ended 31 March 2007 and as further confirmed by the Directors, we note that the core business of construction of the Group recorded a better segment result and a higher gross profit margin than the remaining business segments of the Group. On the back of support from this core construction business, which however may be facing competition at times, the Group diversified into the biological vegetable oil market by way of a very substantial acquisition in early 2008.

• Elimination of further financial drain on the Group

According to the note of “subsequent event” as set out in appendix II to the Circular, we note that the Target Group suffered from net current liabilities and from net asset deficit as at 31 March 2007. Upon enquiry, we note that the ongoing operations of the Target Group were mostly funded by amounts due to the Remaining Group. The Directors cannot rule out the possibility of the need to incur further substantial working capital commitment or investment on the part of the Group for supporting the ongoing operations of the Target Group, in particular its 8% interests in a property development project in Kowloon Bay which attributable construction costs outstanding are estimated at approximately HK$60 million. Further, the Directors advise that Asset Co has an outstanding sizeable bank loan of RMB123,500,000 due for repayment in 2010.

On the above basis, we concur with the Directors’ view that the Disposal represents an opportunity to avoid (i) providing further funding support to the Target Group; and (ii) incurring possible financial losses of wastewater treatment business segment for the foreseeable future.

• 30 -

LETTER FROM PARTNERS CAPITAL

2. Terms of the Disposal

• (i) Consideration

As set out in the Letter from the Board, and as further discussed with the Directors, the Consideration was determined with reference to the following three components:

		HK$’000
(i)	net liabilities of the Target Group as at 31 January 2008	(76,158 )
(ii)	the Sale Loan	163,285
(iii)	the difference between the market value_(Note 1)_	289,305
	and the book value_(Note 2)_of the share
	of properties held by Sunny	(194,203 )
	Engineering (as at 31 January 2008) minus deferred tax_(Note 3)_	(16,642 )
		78,460
(a)	Total of the above three components	165,587
(b)	the Consideration	171,000
	Excess of (b) over (a)	5,413

Notes:

1. Based on valuation by Asset Appraisal Limited (the “Valuer”), an independent valuer

2. Based on unaudited combined accounts of the Target Group

3. Based on a tax rate of 17.5%

We note that the sum of components (i) and (iii) is essentially representing the “net asset value underlying the Sale Shares” as adjusted for market revaluation as at 31 January 2008 on the properties held by the Target Group on a net-of-deferred-tax basis. We further note that component (ii) is the “face value of the Sale Loan” as measured on a dollar-for-dollar basis as at 31 January 2008. The sum of the aforesaid components (i), (ii) and (iii) is approximately HK$165,587,000, which is less than the Consideration of HK$171,000,000 receivable by the Group by approximately HK$5,413,000.

Upon review and as advised by the Directors, we note that property development/ investment/holding segment constitutes the largest component of the Target Group in terms of asset (accounting for about 94% after adjusting for market valuation by property valuer). However, wastewater treatment segment (comprising CSP, Asset Co and Operation Co) constitutes the largest component of the Target Group in terms of turnover and profit/loss (accounting for about 100% and 89% of the total turnover and the net loss of the Target Group respectively for the year ended 31 March 2007). Notwithstanding that, the turnover was about HK$0.3 million only for the year ended 31 March 2007, and was subsequently down to zero for the six months ended 30 September 2007. Meanwhile, Asset Co and Operation Co (which accounted for only

• 31 -

LETTER FROM PARTNERS CAPITAL

about 6% of the total portfolio of key assets to be disposed of under the Target Group) had been loss-making for the year ended 31 March 2007 and for the six month ended 30 September 2007 and, hence, any valuation approach based on price-to-earnings multiple is not applicable. Based on the foregoing, the Target Group can predominantly be regarded as an asset-based entity for valuation purpose and, hence, reference to net asset value (after adjustment for market valuation by property valuer) is an acceptable approach for assessing the underlying value of the Target Group.

We understand that the properties held by Sunny Engineering Group are valued by the Valuer by way of the direct comparison method, where comparison based on prices realised or market prices of comparable properties (of similar size, character and location) is made (after carefully weighing against all the respective advantages and disadvantages of each property). We consider that the direct comparison method adopted by the Valuer is in line with the market practice of valuing tangible fixed assets of land and buildings (for which there can be an open market for transactions by willing buyers and sellers) and is hence reasonable.

Upon review of the relevant valuation report as set out in Appendix I to the Circular, and upon discussion with the Valuer, we compare the market value as assessed by the Valuer as at 31 January 2008 for each of the properties held by the Target Group against the range of recently transacted price of market comparable transactions in the following table:

			Market value
			as assessed by	Recently
			the Valuer for the	transacted price of
			properties held by	market comparable
			the Target Group	transactions
			(HK$ per sq. ft.)	(HK$ per sq. ft.)	Note
1.	Industrial unit (with car parks)	for self-occupation	2,002	1,974 to 1,989	1
2.	Residential quarter	for self-occupation	3,030	2,542 to 2,676
	(with car park)
3.	Office unit	for investment	5,372	4,605 to 5,236	1
4.	Office building	for sale and	3,008	2,500 to 3,500	2
	(with car parks)	for investment
5.	Office building site	for development	3,115	2,411 to 3,007	3
Note:

1. based on saleable floor area 2. based on gross floor area

2. based on accommodation value, after incorporating the enhancement in value attributable to the recently paid land premium as assessed by Lands Department of HK$1,674 per sq. ft. for changing the land use from Industrial to Commercial/Business

3. 32 -

LETTER FROM PARTNERS CAPITAL

Upon comparison, we note that the market value as assessed by the Valuer for the properties held by the Target Group was higher than or within the range of recently transacted price of market comparable transactions. On such basis, and given that the Consideration represents a premium of about 3% over the sum of the adjusted net asset value underlying the Sale Shares and the face value of the Sale Loan, we are of the view that the Consideration is acceptable from the perspective of the Company as vendor.

(ii) Promissory Notes

• Maturity

The maturity date of the First Promissory Note (with principal amount of HK$40,000,000), the Second Promissory Note (with principal amount of HK$40,000,000) and the Third Promissory Note (with principal amount of HK$41,000,000) is 30 June 2008, 30 September 2008 and 31 December 2008 respectively.

On such basis, we note that the Company would not be entitled to a total of about 79% of the Consideration redeemable in cash until (in three roughly equal tranches) two months, five months and eight months away from the date of Completion, assuming Completion takes place at the end of April 2008 and assuming no early repayment of the Promissory Notes.

• Security and credit risk

The issuer of the Promissory Notes is the Purchaser, the due and punctual performance of which obligations under the Sale and Purchase Agreement (including the payment obligations under the Promissory Notes) is guaranteed by Mr. Lo Chun Yang as the Guarantor. We understand that Mr. Lo Chun Yang was interested approximately 19.84% of the entire issued share capital of the Company as at the Latest Practicable Date and is a connected person of the Company.

The Promissory Notes are secured by the Shares Charge and the Debt Assignment. In other words, the Promissory Notes would be secured by (i) the charge of the Sale Shares and (ii) the assignment of the Sale Loan, each by the Purchaser in favour of the Company upon Completion as security for the Purchaser’s performance of the payment obligations under the Promissory Notes.

On such basis, we understand that the Company as vendor and as holder of the Promissory Notes would be entitled to exercise back its rights over the Sale Shares and the Sale Loan in the event that the Purchaser fails to fulfill any of its payment obligations under the Promissory Notes following Completion.

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LETTER FROM PARTNERS CAPITAL

• Interest

The Promissory Notes carry no interest.

On such basis, we consider that the nature of the Promissory Notes resembles that of non-interest bearing advances from the Company to the Purchaser. However, the Promissory Notes are secured in nature. Hence, the Promissory Notes are different from conventional advances from the Company (or accounts receivable) which are typically unsecured in nature.

• Early redemption

The Purchaser could, at its option, repay the Promissory Notes (with no premium nor discount) in whole or in part in multiples of HK$10,000,000 by giving a prior written notice to the Company, commencing on the date of the Promissory Notes up to the date immediately prior to the maturity date of the Promissory Notes.

On such basis, we consider that this mechanism offers flexibility to the Purchaser as issuer (but not the Company as holder) in opting at its own discretion for early repayment of the Promissory Notes (in part or in full) at any time prior to maturity.

• Assignment

The Promissory Notes may be transferred or assigned by the holder of the Promissory Notes to any party in multiples of HK$10,000,000.

On such basis, we consider that this mechanism offers flexibility to the Company as holder in opting at its own discretion for transferring or assigning the Promissory Notes for settlement purpose or otherwise.

3. Financial effects of the Disposal on the Group

• (i) Earnings and net assets

As set out in the Letter from the Board, it is estimated that the gain on disposal of the Target Group (inclusive of (i) gain on fair value changes of investment properties and (ii) revaluation surplus on self-occupied properties) is approximately HK$83,873,000. We understand from the Company such estimated gain on the Disposal represents the net amount (before expenses incurred in connection with the Disposal) after deducting the Consideration by the sum of the carrying value underlying the Sale Shares (before adjustment of market revaluation as at 31 January 2008) and the face value of the Sale Loan. Subject to Completion which is scheduled to take place within April 2008, such estimated gain on the Disposal is not expected to be reflected in the consolidated profit and loss account of the Group until the year ending 31 March 2009. In turn, such estimated gain on the Disposal is expected to impact positively on the net assets position of the Group by an equivalent amount.

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LETTER FROM PARTNERS CAPITAL

Given that the Promissory Notes carry no interest, the Group as the holder of the Promissory Notes would not be entitled to any interest income therefrom following Completion. Meanwhile, the Group would cease to benefit from any future profit contribution potential from the Target Group following Completion.

(ii) Liquidity/cashflow

The Consideration of HK$171,000,000 shall be settled by the Purchaser in tranches as to (a) HK$20,000,000 in cash on the date of signing of the Sale and Purchase Agreement as deposit; (b) HK$30,000,000 in cash on Completion; and (c) the balance of HK$121,000,000 by issuing the Promissory Notes. On such basis, the Company would be entitled to a total of about 29% of the Consideration in cash by the date of Completion, with the remaining balance of about 79% redeemable in cash in three roughly equal tranches by 30 June 2008, 30 September 2008 and 31 December 2008 respectively (which is two months, five months and eight months away from the date of Completion assuming Completion takes place at the end of April 2008 and assuming no early repayment opted by the Purchaser).

The net proceeds receivable by the Group for the Disposal are estimated at approximately HK$169,470,000. The Directors intend to utilise the net proceeds from the Disposal as general working capital and as funds for future development of the Group when investment opportunities arise, although we understand from the Directors that the Company has not identified any specific investment plans up to the Latest Practicable Date. On such basis, and taking into further account that the Group would upon Completion no longer be required to support the working capital requirements of the Target Group (in particular its 8% interests in a property development project in Kowloon Bay which attributable outstanding construction costs outstanding are estimated at approximately HK$60 million), the Disposal is expected to have a positive impact on the liquidity position of the Group immediately upon Completion. However, the Group would at the same time cease to benefit from any future cashflow contribution potential from the Target Group following Completion.

(iii) Gearing

As advised by the Directors, the properties held by the Target Group are pledged to secure banking facilities granted to the Target Group itself. According to appendix II and III to the Circular, the Group recorded secured bank borrowings of approximately HK$3.5 million as at 31 March 2007, which would be down to zero upon Completion. On the basis of such reduction in indebtedness, and coupled with the increase in the net assets position of the Group which in turn is attributable to gain on the Disposal in the Group’s profit and loss accounts, the gearing ratio (defined as indebtedness divided by net assets) of the Group is expected to improve immediately upon Completion.

(iv) Contingent liabilities

As set out in Appendix II to the Circular, as at 30 September 2007, the Company had executed guarantees for approximately HK$73,760,000 and HK$44,100,000 in respect of the

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LETTER FROM PARTNERS CAPITAL

general banking facilities granted to Wealthy Star Development Limited (an investee entity in which the Target has 8% equity interest via Sunny Engineering) and King Fine Development Limited (an associate in which the Group has 35% equity interests) respectively.

As set out in the Letter from the Board, the Purchaser shall procure the relevant financial institutions to release the corporate guarantees provided by the Company in relation to the loans relating to the Sunny Engineering Group before the expiry of six months after Completion. On such basis, we consider that the Company would be relieved from the exposure of contingent liabilities arising from the guarantees relating to the Target Group by six months after Completion.

RECOMMENDATION

Having considered the above principal factors, in particular,

• (i) the reasons for entering into the Sale and Purchase Agreement, including

• (a) to exit from non-core business segments (and those without majority control in voting rights and management) and to realign the core business under its majority control. This would enable the Group to reallocate more resources to focus on its majority-controlled business segments (namely, (i) core construction business in which the Company has been specialising since its listing on the Stock Exchange in 1995, and (ii) new business of biological vegetable oil cultivation); and

• (b) to avoid (i) providing further funding support to the Target Group; and (ii) incurring possible financial losses of wastewater treatment business segment for the foreseeable future;

• (ii) the Consideration represents a premium of about 3% over the sum of the adjusted net asset value underlying the Sale Shares and the face value of the Sale Loan; and

• (iii) the favorable financial effects of the Disposal on the Group,

we consider that the terms of the Disposal to be on normal commercial terms and fair and reasonable so far as the Independent Shareholders are concerned, and are in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Board Committee to advise the Independent Shareholders to, and we recommend the Independent Shareholders to, vote in favour of the resolution to approve the Sale and Purchase Agreement.

Yours faithfully, For and on behalf of Partners Capital International Limited

Alan Fung Harry Yu Managing Director Executive Director

• 36 -

appendix i

valuation report on the properties held by sunny engineering group

The following is the text of a letter, summary of value and valuation certificate, prepared for the purpose of incorporation in this circular received from Asset Appraisal Limited, an independent valuer, in connection with its valuation as at 31 January 2008 of the property interests held by the Group.

==> picture [230 x 42] intentionally omitted <==

==> picture [164 x 39] intentionally omitted <==

26 March 2008

the board of directors

Wing hing international (holdings) limited

14th Floor Yau Lee Centre 45 Hoi Yuen Road Kwun Tong Kowloon Hong Kong

Dear Sirs,

re: valuation of properties situated in hong Kong (the “properties”)

In accordance with your instructions to value certain property interests held by Wing hing international holdings limited (the “Company”) or its subsidiaries or its associates (“the Group”) in Hong Kong, we confirm that we have carried out inspections of the properties, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market values of the properties as at 31 January 2008 (the “date of valuation”).

basis oF valuation

Our valuation of the properties represents the market value which we would define as intended to mean “the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion”.

titleship

We have caused title search to be made in the Land Registry for the properties situated in Hong Kong. However, we have not verified ownership of the properties and the existence of any encumbrances that would affect ownership of them.

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valuation report on the properties held by sunny engineering group

appendix i

valuation Methodology

The properties situated in Hong Kong are valued by the comparison method where comparison based on prices realised or market prices of comparable properties is made. Comparable properties of similar size, character and location are analysed and carefully weighed against all the respective advantages and disadvantages of each property in order to arrive at a fair comparison of capital values.

In valuing of the property interests in Group I and IV, which are held by the Group for occupation and investment, we have valued each of these property interests by the direct comparison approach assuming sale of these property interests in its existing state with the benefit of vacant possession and making references to comparable sales transactions as available in the relevant markets.

In valuing of the property interests in Group II, which are completed real estate developments held by the Group for sale, we have valued each of these property interests by the direct comparison approach. We have assumed sale of each of these property interests in its existing state with the benefit of vacant possession and making reference to comparable sales transactions as available in the relevant markets. For those property interests which have been contracted to be sold but the formal assignment procedure of which have not yet completed, we have valued this portion of property interests by taking the contract prices.

In valuing the property interests in Group III, which are real estate development held by the Group under development, we have valued the property interests on the basis that the property will be developed and completed in accordance with the Group’s latest development schemes provided to us. In arriving at out opinion of value, we have adopted the direct comparison approach by making references to comparable sales evidences as available in the relevant market and have also taken into consideration the development costs already spent ant to be spent to reflect the quality of the completed development. The “Capital value of the property as if the property is completed at the date of valuation” represents our opinion of the aggregate selling prices of the development assuming that it would have completed at the date of valuation.

assuMptions

Our valuation has been made on the assumption that the owners sell the properties on the market without the benefit of deferred terms contracts, leaseback, joint ventures, management agreements or any similar arrangement which would serve to affect the values of the properties.

Other special assumptions for our valuation (if any) would be stated out in the footnotes of the valuation certificate attached herewith.

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valuation report on the properties held by sunny engineering group

appendix i

liMiting Conditions

No allowance has been made in our report for any charges, mortgages or amounts owing on the properties valued nor for any expenses or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the properties are free from encumbrances, restrictions and outgoings of an onerous nature, which could affect their values. Our valuation have been made on the assumption that the seller sells the property on the market without the benefit of a deferred term contract, leaseback, joint venture, management agreement or any similar arrangement, which could serve to affect the values of the properties.

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

We have not carried out detailed site measurements to verify the correctness of the site areas in respect of the properties but have assumed that the site areas shown on the documents and official site plans handed to us are correct. All documents and contracts have been used as reference only and all dimensions, measurements and areas are approximations.

We have inspected the exterior and, where possible, the interior of the buildings and structures of the properties. However, no structural survey has been made for them. In the course of our inspection, we did not note any apparent defects. We are not, however, able to report whether the buildings and structures inspected by us are free of rot, infestation or any structural defect. No test was carried out on any of the building services and equipment.

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

In valuing the properties, we have complied with all the requirements contained in Chapter 5 of the Rules Governing the Listing of Securities issued by The Stock Exchange of Hong Kong Limited; the HKIS Valuation Standards on Properties (First Edition 2005) published by The Hong Kong Institute of Surveyors effective from 1st January 2005.

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appendix i

valuation report on the properties held by sunny engineering group

Our summary of valuation and valuation certificate are attached herewith.

Yours faithfully, for and on behalf of asset appraisal limited

sandra lau

MFin MHKIS AAPI RPS(GP)

Director

Sandra Lau is a member of the Hong Kong Institute of Surveyors, an Associate of the Australian Property Institute and a Registered Professional Surveyor in General Practice. She is on the list of Property Valuers for Undertaking Valuations for Incorporation or Reference in Listing Particulars and Circulars and Valuations in Connection with Takeovers and Mergers of the Hong Kong Institute of Surveyors, Registered Business Valuer under the Hong Kong Business Forum and has over 10 years’ experience in valuation of properties in Hong Kong, in Macau and in the PRC.

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valuation report on the properties held by sunny engineering group

appendix i

suMMary oF valuation

			Market value		Market value
		in	existing state	interest	attributable to the
			as at	attributable	group as at
property		31	January 2008	to the group	31 January 2008
			HK$	%	HK$
group	i – properties held by the group for investment
1.	Third Floor		6,500,000	100%	6,500,000
	Lee Chau Commercial Building
	No. 11 Hart Avenue
	Tsim Sha Tsui
	Kowloon
	Hong Kong.
2.	Units B and C on 10/F, Unit A		49,800,000	35%	17,430,000
	on 18/F, Units B and C on 22/F
	Units B, C and D on 23/F
	Unit B on 25/F and 31/F
	No. 111 King Lam Street
	Kowloon.
			sub-total	56,300,000	23,930,000
group	ii – properties held by the group for		sale
3.	Whole floor of 7/F, 8/F, 11/F,		298,500,000	35%	104,475,000
	12/F, 15/F, 16/F, 19/F, 21/F, 26/F,
	28/F, 29/F, 30/F and 32/F,
	Unit A & D on 10/F, Units A & B
	on 17/F, Unit B, C & D on 18/F,
	Unit A & D on 20/F, Unit A on
	22/F, Unit A on 23/F, Unit A, C & D
	on 25/F and Car Parking Space
	Nos. C1-C9, C11-C13 (inclusive) on
	1/F, Nos. C14 to C26 (inclusive) on
	2/F, Nos. C27-C45 (inclusive) on 3/F
	and Nos. C46 to C64 (inclusive) on 5/F
	No. 111 King Lam Street
	Kowloon.
			sub-total	298,500,000	104,475,000

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valuation report on the properties held by sunny engineering group

appendix i

		Market value		Market value
		in existing state	interest	attributable to the
		as at	attributable	group as at
property		31 January 2008	to the group	31 January 2008
		HK$	%	HK$
group	iii – properties held by the group for development
4.	No. 1 Wang Kwong Road	1,680,000,000	8%	134,400,000
	Kowloon Bay
	Kowloon.
		sub-total	1,680,000,000	134,400,000
group	iv– properties held by the group for self-occupation
5.	Flat 1 on Ground Floor Block C	4,000,000	100%	4,000,000
	and Car Park Space 70 on Basement
	Castle Peak Villas
	No. 19 Lok Chui Street
	Tuen Mun
	New Territories
	Hong Kong.
6.	Factories on 14th Floor and	22,500,000	100%	22,500,000
	Car Parking Space Nos. 1 & 2
	on Ground Floor
	Yau Lee Centre
	No. 45 Hoi Yuen Road
	Kwun Tong
	Kowloon
	Hong Kong.
		sub-total	26,500,000	26,500,000
		grand total of property value
		attributable to the group:		289,305,000

• 42 -

valuation report on the properties held by sunny engineering group

appendix i

valuation CertiFiCate

group i – properties held by the group for investment

• property description and tenure 1. Third Floor The property comprises an Lee Chau office unit on the third floor of Commercial a 10-storey commercial building Building No. 11 completed in about 1975. Hart Avenue Tsim Sha Tsui The saleable floor area of the Kowloon Hong property is approximately 112.4 Kong. square meter (1,210 square feet). 1/11th share of The property is held under The Remaining Conditions of Regrant No.9800 Portion of for a term of 150 years Kowloon Inland commencing on 25 December Lot No.9775. 1898. The annual government rent for the whole lot is $184.

	Market value
	as at
particulars of	31 January
occupancy	2008
	HK$
The property is	6,500,000
currently vacant.
	100% interest
	attributable to
	the Company
	6,500,000

Note:

1. The registered owner of the property is Sunny Engineering Limited, an indirect wholly-owned subsidiary of the Company, vide memorial no.UB9324704 dated 30 August 2004.

2. The property is subject to a legal charge in favour of Wing Hang Bank Limited vide memorial no.06011301280093 dated 30 December 2005.

3. The property falls within an area zoned for “Commercial” on Tsim Sha Tsui Outline Zoning Plan No. S/K1/22.

4. 43 -

valuation report on the properties held by sunny engineering group

appendix i

description and tenure

property

1. Units B and C The property comprises various on 10/F, Unit A office units on the 10/F, 18/F, on 18/F, Units B 22/F, 23/F, 25/F and whole floor and C on 22/F, of 31/F of a 29-storey office Units B, C and building completed in 2007. D on 23/F, Unit B on 25/F and The gross floor area of the whole floor of property is approximately 1,588 31/F No. 111 square meter (17,098 square King Lam Street feet). Kowloon.

	Market value
	as at
particulars of	31 January
occupancy	2008
	HK$
The property is	49,800,000
subject to various
tenancies at a	35% interest
monthly rent	attributable to
of HK$268,919	the Company
exclusive of rates	17,430,000
and management fee.
(refer to Note 4 for
breakdown)

The property is held under Section A and Conditions of Sale No. the Remaining UB8186 for a term of 99 years Portion of New commencing on 1 July 1898 and Kowloon Inland the terms have been statutorily Lot No. 4761. extended until 30 June 2047. The annual government rent for the property is 3% of the rateable value of the property.

Note:

1. The registered owner of the property is King Fine Development Limited, (the company holds 35% share of King Fine Development Limited) vide memorial no.UB9359677 dated 23 September 2004.

2. The property falls within an area zoned for “Other Specified Use” annotated “Business” on Cheung Sha Wan Outline Zoning Plan No. S/K5/30.

3. The property is subject to a Mortgage in favour of Industrial and Commercial Bank of China (Asia) Limited vide memorial no.0712102830548 dated 18 December 2007.

4. As advised by the Company, the tenancy details of each unit as stipulated below:

address	period	Monthly rental (hK$)	Monthly rental (hK$)
Unit C 10/F	20/1/2008-19/1/2010		17,760.0
Unit B 10/F	20/9/2007-19/9/2009		14,580.0
Unit A 18/F	1/10/2007-30/9/2010		29,348.4
Units B and C 22/F	16/7/2007-15/7/2010		33,726.0
Units B-D 23/F	1/8/2007-31/7/2009		59,706.0
Unit B 25/F	1/8/2007-31/7/2009		16,937.6
31/F	1/7/2007-30/6/2010		96,861.0
			268,919.0

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valuation report on the properties held by sunny engineering group

appendix i

group ii – properties held by the group for sale

description and tenure

property

1. Whole floor of The property comprises various 7/F, 8/F, 11/F, office units on the 10/F, 17/F, 12/F, 15/F, 16/F, 18/F, 20/F, 22/F, 23/F, 25/F and 19/F, 21/F, 26/F, whole floor of 7/F, 8/F, 11/F, 28/F, 29/F, 30/F 12/F, 15/F, 16/F, 19/F, 21/F, 26/ and 32/F, Unit F, 28/F, 29/F, 30/F and 32/F and A & D on 10/F, 63 car parking spaces of a 29Units A & B on storey office building completed 17/F, Unit B, C in 2007. & D on 18/F, Unit A & D on The gross floor area of the 20/F, Unit A on property is approximately 9,167 22/F, Unit A on square meter (98,677 square 23/F, Unit A, feet). C & D on 25/F and Car Parking The property is held under Space Nos. Conditions of Sale No. C1-C9, C11UB8186 for a term of 99 years C13 (inclusive) commencing on 1 July 1898 and on 1/F, Nos. the terms have been statutorily C14 to C26 extended until 30 June 2047. (inclusive) on The annual government rent 2/F, Nos. C27for the property is 3% of the C45 (inclusive) rateable value of the property. on 3/F and Nos. C46 to C64 (inclusive) on 5/F No. 111 King Lam Street Kowloon.

	Market value
	as at
particulars of	31 January
occupancy	2008
	HK$
The property is	298,500,000
vacant.
	35% interest
	attributable to
	the Company
	104,475,000

Section A and the Remaining Portion of New Kowloon Inland Lot No. 4761.

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appendix i

valuation report on the properties held by sunny engineering group

Note:

1. The registered owner of the property is King Fine Development Limited, (the company holds 35% share of King Fine Development Limited) vide memorial no.UB9359677 dated 23 September 2004.

2. The property falls within an area zoned for “Other Specified Use” annotated “Business” on Cheung Sha Wan Outline Zoning Plan No. S/K5/30.

3. The property is subject to a Mortgage in favour of Industrial and Commercial Bank of China (Asia) Limited vide memorial no.0712102830548 dated 18 December 2007.

4. As confirmed by the Company, up to the valuation date, various office units with a total gross floor area of 34,205 square feet and 10 car parking spaces were subject to separate agreements for sale and purchase at a total consideration of $103,556,233. Such sale proceeds have been reflected in our valuation.

5. 46 -

valuation report on the properties held by sunny engineering group

appendix i

group iii – properties held by the group for development

property

1. No. 1 Wang Kwong Road Kowloon Bay Kowloon.

2. New Kowloon Inland Lot No. 5925.

description and tenure

• The property comprises a roughly rectangular level site with a registered area of approximately 4,154 square meters (44,714 square feet).

A 31-storey office building will be erected on the property with total gross floor area of about 50,101.724 square meter (539,294.96 square feet) and scheduled to be completed in 2010.

Market value as at particulars of 31 January occupancy 2008 HK$ The property is 1,680,000,000 under construction. 8% interest attributable to the Company 134,400,000

Pursuant to the approved building plans dated 13 September 2007, the floor schedule of the development is as follows:

Floor	use	gFa
		(sq.m.)
G/F	Entrance	1,408.112
	Lobby/Shops
1/F-6/F	Car Parking
	Space
7/F-35/F	Office	48,693.61

Currently the property is under construction.

The property is held under Conditions of Regrant No. 9800 for a term of 150 years commencing on 25 December 1898. The rent payable is $1,000.00 p.a.

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valuation report on the properties held by sunny engineering group

appendix i

Note:

1. The registered owner of the property is Wealthy Star Development Limited (the company holds 8% share of Wealthy Star Development Limited) vide memorial no.05122400870197 dated 8 December 2005.

2. The property is subject to a Debenture and a Floating Charge in favour of Industrial and Commercial Bank of China (Asia) Limited vide memorial no. 07010300830262 dated 7 December 2006.

3. The property falls within an area zoned for “Other Specified Use” annotated “Business” on Ngau Tau Kok & Kowloon Bay Outline Zoning Plan No. S/K13/25. The material planning conditions of the subject lot as specified in the explanatory notes of the Outline Zoning Plan are as follows:

Proposed Use	:	Office & Shop
Plot Ratio	:	12
Permissible Building Height	:	140meterPD

1. Pursuant Modification Letter dated 25 January 2008, the registered owner has completed lease modification with Lands Department. The material land grant conditions of the subject lot as specified in the modification letter are as follows:

Building Convent	:	31 March 2013
Use	:	shall not be used for any purpose other than for non-residential purpose excluding
		hotel, petrol filling station and residential care home; (ii) any trade that is now or
		may thereafter be declared an offensive trade under Public Health and Municipal
		Services Ordinance; (iii) the use or storage of any dangerous goods as defined
		in the Dangerous Goods Ordinance.
Gross floor area	:	the total gross floor area of the property shall not be less than 29,909square
		meter and 49,848 square meter, but bonus gross floor area may be awarded upon
		surrender any part of the lot.
Height	:	no part of any building may exceed the aggregate height of 140 meter above the
		Hong Kong Principal Datum.

1. As advised by the Group, the property has settled all the land premium and free from any encumbrances.

2. As advised by the Group, the total construction cost to complete the development as at 31 January 2008 is estimated approximately $800,000,000 and outstanding construction cost to be spent to complete development as at 31 January 2008 is estimated approximately $747,800,000. In the course of our valuation, we have taken into account the said cost.

3. The capital value of the property as if completed as at 31 January 2008 was $3,200,000,000.

4. 48 -

valuation report on the properties held by sunny engineering group

appendix i

group iv – property held by the group for self occupation

• Market value as at

• particulars of 31 January

• property description and tenure occupancy 2008 HK$

• 1. Flat 1 on Ground The property comprises a The property is 4,000,000 Floor Block C domestic unit on ground floor occupied by the and together with a car parking Group as a director 100% interest Car Park Space space on basement of a 6-storey quarter. attributable to 70 on Basement apartment building completed in the Company Castle Peak about 1977. 4,000,000 Villas No. 19 Lok Chui The saleable floor area of the Street property is approximately 122.63 Tuen Mun square meter (1,320 square feet.) New Territories Hong Kong. The property is held under New Grant No. 2005 for terms of 99

• 11/1241 share of years less the last three days Lot no. 987 in commencing on 1 July 1898 and D.D. 381. the terms have been statutorily extended until 30 June 2047.

The annual government rent for the property is 3% of the rateable value of the property.

Note:

1. The registered owner of the property is Sunny Engineering Limited, an indirect wholly owned subsidiary of the Company, vide memorial no.TM1108516 dated 30 August 2004.

2. The property is subject to a legal charge in favour of Wing Hang Bank Limited vide memorial no. 06011301280104 dated 30 December, 2005.

3. The property falls within an area zoned for “Residential (Group B)” on Tuen Mun Outline Zoning Plan No. S/TM/23.

4. 49 -

valuation report on the properties held by sunny engineering group

appendix i

description and tenure

property

1. Factories on 14th The property comprises an Floor and industrial unit on the 14th floor Car Parking together with two carparking Space Nos. 1 & 2 spaces on ground floor of a on Ground Floor 15-storey industrial building Yau Lee Centre completed in about 1978. No. 45 Hoi Yuen Road The saleable floor area of Kwun Tong the property is approximately Kowloon 1,044.22 square meter (11,240 Hong Kong. square feet). 496/9995th share The property is held under a of Kwun Tong Government Lease for terms of Inland Lot 21 years renewable for a further No. 12. term of 21 years commencing on 1 July 1955 and the terms have been statutorily extended until 30 June 2047.

Market value as at particulars of 31 January occupancy 2008 HK$ The property is 22,500,000 occupied by the Group. 100% interest attributable to the Company 22,500,000

The annual government rent for the property is 3% of the rateable value of the property.

Note:

1. The registered owner of the property is Sunny Engineering Limited, an indirect wholly owned subsidiary of the Company, vide memorial no. UB9220741 dated 3 May 2004.

2. The property is subject to a mortgage in favour of DBS Bank (Hong Kong) Limited vide memorial no. UB9318280 dated 25 August 2004.

3. The property falls within an area zoned for “Other Specified Use” annotated “Business” on Kwun Tong South Outline Zoning Plan No. S/K14S/15.

4. 50 -

valuation report on the properties held by sunny engineering group

appendix i

property reconciliation

property		(No.	2) Units B and C	(No. 3) Whole floor	(No. 4) No. 1
		on 10/F, Unit A on 18/F,		of 7/F, 8/F, 11/F, 12/F,	Wang Kwong Road
		Units B and C on 22/F,		15/F, 16/F, 19/F, 21/F,	Kowloon Bay
		Units B, C and D on		26/F, 28/F, 29/F, 30/F	Kowloon.
		23/F, Unit B on 25/F and		and 32/F, Unit A & D
		31/F	No. 111 King Lam	on 10/F, Units A & B
		Street Kowloon.		on 17/F, Unit B, C & D
				on 18/F, Unit A & D on
				20/F, Unit A on 22/F,
				Unit A on 23/F, Unit A,
				C & D on 25/F and Car
				Parking Space Nos. C1-
				C9, C11- C13 (inclusive)
				on 1/F, Nos. C14 to C26
				(inclusive) on 2/F, Nos.
				C27-C45 (inclusive) on
				3/F and Nos. C46 to C64
				(inclusive) on 5/F No.
				111 King Lam Street
				Kowloon.
Carrying value as at 30			23,245,254	160,339,265	432,897,727
September 2007
(Note 1)
Cash injection for the			1,187,826	8,193,295	1,036,585,004
period_(Note 2)_
Less: Sale of	properties		–	17,935,680	–
(Note 2)
Carrying value as at 31			24,433,080	150,596,880	1,469,482,731
January 2008
(Note 2)
Revaluation	Surplus/		25,366,920	147,903,120	210,517,269.00
Deficit of 100% property
interest
(Note 2)
Interest Attributable to			35%	35%	8%
the Company
Revaluation	Surplus/		8,878,422	51,766,092	16,841,382
Deficit of respective
p r o p e r t y	i n t e r e s t
attributable	to the
Company
Valuation Report as at			49,800,000	298,500,000	1,680,000,000
31 January 2008

• 51 -

appendix i

valuation report on the properties held by sunny engineering group

Notes:–

1. extracted from the management account of the Company for the period ended 30 September 2007.

2. extracted from the management account of the Company for the period ended 31 January 2007.

3. pursuant to the revaluation of the properties.

property	(No.	1) Third Floor	(No. 5) Flat 1 on Ground	(No. 6) Factories
	Lee Chau Commercial		Floor Block C and	on 14th Floor
	Building No.11 Hart		Car Park Space 70 on	and Car Parking
	Avenue Tsim Sha Tsui		Basement Castle Peak	Space Nos.1 & 2
	Kowloon Hong Kong		Villas No.19 Lok Chui	on Ground Floor
			Street Tuen Mun New	Yau Lee Centre
			Territories Hong Kong	No.45 Hoi Yuen
				Road Kwun Tong
				Kowloon Hong
				Kong
Carrying value as at 30		4,800,000	2,157,895	8,259,302
September 2007
(Note 1)
Depreciation for the		0	33,333	133,333
period from 30 September
2007 to 30 January 2008
(Note 2)
Carrying value as at 31		4,800,000	2,191,228	8,392,635
January 2008 (Note 4)
Revaluation Surplus/		1,700,000	1,808,727	14,107,365
Deficit of 100% property
interest
(Note 3)
Valuation Report as at		6,500,000	4,000,000	22,500,000
31 January 2008

Notes:

1. extracted from the management account of the Company for the period ended 30 September 2007.

2. extracted from the management account of the Company for the period ended 31 January 2007.

3. pursuant to the revaluation of the properties. Such revaluation of property will not be recorded in the Company’s accounts as they are stated at cost less accumulated depreciation and currency realignment (if any).

4. 52 -

AccountAnts’ report on the group

Appendix ii

The following is the text of a report, prepared for the sole purpose of inclusion in this circular, received from the auditors of the Company, HLB Hodgson Impey Cheng, Chartered Accountants, Certified Public Accountants, Hong Kong. As described in the paragraph headed “Documents Available for Inspection” in Appendix V, a copy of the following accountants’ report is available for inspection.

==> picture [227 x 85] intentionally omitted <==

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

26 March 2008

The Board of Directors Wing Hing International (Holdings) Limited 14th Floor Yau Lee Centre 45 Hoi Yuen Road Kowloon Hong Kong

Dear Sirs,

We set out below our report on the financial information (the “Financial Information”) regarding Wing Hing International (Holdings) Limited (the “Company”) and its subsidiaries (collectively referred to as the “Group”) for each of the three years ended 31 March 2005, 2006 and 2007 and the six months ended 30 September 2007 (the “Relevant Periods”), for inclusion in the circular dated 26 March 2008 (the “Circular”) issued by the Company in connection with the very substantial disposal and connected transaction whereby the Company proposes to dispose of the Sale Shares and the Sale Loan (both terms as defined in the Circular) to Heart Ace Limited.

The Company was incorporated on 10 July 1995 in Bermuda as an exempted company with limited liability under the Companies Act 1981 of Bermuda. The Company is an investment holding company.

• 53 -

AccountAnts’ report on the group

Appendix ii

As at the date of this report, the Company has the following subsidiaries:

	Form of business
	structure, place	issued and	equity interests
	and date of	fully paid	attributable to
name of subsidiary	incorporation	share capital	the company	principal activities
Wing Hing Group (BVI) Limited	Limited liability	Ordinary HK$320,000	100% (Direct)	Investment holding
(Note (ii))	company incorporated
	in the British Virgin
	Islands (“BVI”)
	on 19 January 1994
CWS International Trading Limited	Limited liability company	Ordinary US$10	100% (Direct)	Investment holding
(Note (ii))	incorporated in BVI
	on 17 January 1996
W. Hing Construction Company	Limited liability company	Ordinary HK$102,300,100	100% (Indirect)	Superstructure construction
Limited_(Note (iii))_	incorporated in	Deferred HK$2,380,000
	Hong Kong	(Note (i))
	on 15 December 1989
CWF Piling & Civil Engineering	Limited liability company	Ordinary HK$48,500,000	100% (Indirect)	Foundation piling works
Company Limited_(Note (iii))_	incorporated in	Deferred HK$1,500,000
	Hong Kong	(Note (i))
	on 28 March 1972
Sunny Engineering Limited	Limited liability company	Ordinary HK$1,000	100% (Indirect)	Property investment and
(Note (iii))	incorporated in			investment holding
	Hong Kong
	on 8 August 1991
W H China (Holdings) Limited	Limited liability company	Ordinary HK$2	100% (Indirect)	Investment holding
(Note (iii))	incorporated in
	Hong Kong
	on 14 May 1996
W H Interior Design and	Limited liability company	Ordinary HK$2	100% (Indirect)	Interior decoration
Contracting Company Limited	incorporated in
(Note (iii))	Hong Kong
	on 7 April 1998

• 54 -

AccountAnts’ report on the group

Appendix ii

Form of business structure, place issued and equity interests and date of fully paid attributable to name of subsidiary incorporation share capital the company principal activities JCL Engineering Limited Limited liability Ordinary HK$10,000 91% (Indirect) Environmental engineering (Note (iii)) company incorporated in Hong Kong on 25 September 1998 CSP (HK) Limited Limited liability company Ordinary HK$10 100% (Indirect) Investment holding (Note (iii)) incorporated in Hong Kong on 26 May 1999 TCL Piling Specialist Limited Limited liability company Ordinary HK$1,920,002 100% (Indirect) Foundation piling works (Note (iii)) incorporated in Hong Kong on 2 August 1999

Notes:

• (i) The deferred shares carry no rights to dividends and no rights to receive notice of or to attend or vote at any general meeting of the company. In the winding-up of a company, holders of the deferred shares are entitled to receive amounts paid-up or credited as paid-up on shares after the holders of the ordinary shares of the company have received a total return of HK$1,000,000,000 per share. As at the date of this report, all these deferred shares were owned by Wing Hing Group (BVI) Limited.

• (ii) No audited financial statements have been prepared for these companies which were incorporated in a jurisdiction where there were no statutory audit requirements.

• (iii) We have acted as auditors of these companies for each of the three years ended 31 March 2005, 2006 and 2007. The statutory financial statements of these companies for each of the three years ended 31 March 2005, 2006 and 2007 were prepared in accordance with accounting principles generally accepted in Hong Kong.

We have acted as auditors of the Company for each of the Relevant Periods. Audited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in Hong Kong for each of the three years ended 31 March 2005, 2006 and 2007. For the purpose of this report, we have carried out independent audit procedures in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) on the consolidated financial statements of the Group for the six months ended 30 September 2007, which were prepared in accordance with accounting principles generally accepted in Hong Kong.

• 55 -

AccountAnts’ report on the group

Appendix ii

We have examined the audited consolidated financial statements (the “Underlying Financial Statements”) of the Group for the Relevant Periods. Our examination was made in accordance with Auditing Guideline 3.340 “Prospectuses and the Reporting Accountant” as recommended by the HKICPA.

The consolidated income statements, consolidated cash flow statements and consolidated statements of changes in equity of the Group for each of the Relevant Periods and the consolidated balance sheets as at 31 March 2005, 2006 and 2007 and 30 September 2007 as set out in this report have been prepared based on the Underlying Financial Statements for the Relevant Periods for the purpose of preparing our report for inclusion in the Circular.

The Underlying Financial Statements are the responsibility of the directors of the Company who approve their issue. The directors of the Company are responsible for the contents of the Circular in which this report is included. It is our responsibility to compile the Financial Information from the Underlying Financial Statements, to form an independent opinion on the Financial Information and to report our opinion to you.

In our opinion, the Financial Information together with the notes thereon gives, for the purpose of this report, a true and fair view of the state of affairs of the Group as at 31 March 2005, 2006 and 2007 and 30 September 2007 and of the results and cash flows of the Group for each of the three years ended 31 March 2005, 2006 and 2007 and the six months ended 30 September 2007.

The comparative consolidated income statement, consolidated cash flow statement and consolidated statement of changes in equity of the Group for the six months ended 30 September 2006, together with the notes thereon (the “30 September 2006 Financial Information”), were prepared by the directors of the Company solely for the purpose of this report. We have reviewed the 30 September 2006 Financial Information in accordance with Statement of Auditing Standard 700 “Engagements to review interim financial reports” issued by the HKICPA. Our review consisted principally of making enquiries of management and applying analytical procedures to the 30 September 2006 Financial Information and based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the 30 September 2006 Financial Information. On the basis of our review which does not constitute an audit, we are not aware of any material modification that should be made to the 30 September 2006 Financial Information.

• 56 -

AccountAnts’ report on the group

Appendix ii

i. FinAnciAL inForMAtion

consolidated income statements

Notes Revenue 5 Cost of sales Gross profit Other income 7 Other gains and losses Administrative and operating expenses Share of profits less losses of associates Share of profits less losses of jointly-controlled entities Finance costs 8 Profit/(Loss) before tax Income tax 9 profit/(Loss) for the year/ period 10 Attributable to: Equity holders of the Company Minority interests earnings/(Loss) per share Basic (HK cents per share) 13 Diluted (HK cents per share) 13	Year ended 31 March 2005 HK$’000 (Audited) 434,801 (401,079 ) 33,722 6,968 517 (30,137 ) 176 3,602 (870 ) 13,978 520 14,498 14,176 322 14,498 48.8 42.7	Year ended 31 March 2006 HK$’000 (Audited) 494,445 (490,730 ) 3,715 13,294 4,889 (42,019 ) (413 ) 800 (890 ) (20,624 ) (369 ) (20,993 ) (22,336 ) 1,343 (20,993 ) (63.46 ) N/A	Year ended period ended period ended 31 March 30 september 30 september 2007 2006 2007 HK$’000 HK$’000 HK$’000 (Audited) (Unaudited) (Audited) 480,292 226,978 327,015 (425,548 ) (206,210 ) (305,837 ) 54,744 20,768 21,178 43,829 25,739 7,934 5,713 32 1,497 (68,816 ) (39,490 ) (15,543 ) (3,497 ) (322 ) (768 ) (19,467 ) 1,122 (4,283 ) (1,007 ) (500 ) (143 ) 11,499 7,349 9,872 (734 ) (511 ) 170 10,765 6,838 10,042 9,519 5,597 10,041 1,246 1,241 1 10,765 6,838 10,042 18.97 12.13 18.49 N/A N/A N/A

• 57 -

AccountAnts’ report on the group

Appendix ii

consolidated balance sheets

Notes non-current assets Property, plant and equipment 14 Prepaid lease payments 15 Investment property 16 Goodwill 17 Interests in associates 18 Interests in jointly-controlled entities 19 Available-for-sale investment 20 Amount due from an investee entity 20 Contract retention receivables 21 Deferred tax assets 27 current assets Accounts receivable 21 Other receivables 22 Pledged bank deposits 23 Bank balances and cash 23 current liabilities Accounts payable 24 Other payables 25 Bank borrowings, secured 26 Tax liabilities Convertible notes 28 net current assets total assets less current liabilities	As at 31 March 2005 HK$’000 (Audited) 24,776 709 4,000 2,308 10,770 46,107 – – 6,762 151 95,583 131,154 19,148 35,025 13,025 198,352 107,176 28,916 7,387 716 11,218 155,413 42,939 138,522	As at 31 March 2006 HK$’000 (Audited) 23,997 692 4,400 2,308 17,704 37,621 1 13,164 3,963 112 103,962 114,553 13,698 20,944 18,465 167,660 100,921 13,808 15,602 657 – 130,988 36,672 140,634	As at As at 31 March 30 september 2007 2007 HK$’000 HK$’000 (Audited) (Audited) 21,198 16,599 675 667 4,800 4,800 1,943 1,943 21,039 21,426 9,309 5,026 1 1 16,604 17,136 2,154 5,752 104 439 77,827 73,789 95,357 111,396 26,987 32,551 16,675 16,675 33,742 47,295 172,761 207,917 73,583 94,930 7,911 7,825 846 868 – – – – 82,340 103,623 90,421 104,294 168,248 178,083	As at As at 31 March 30 september 2007 2007 HK$’000 HK$’000 (Audited) (Audited) 21,198 16,599 675 667 4,800 4,800 1,943 1,943 21,039 21,426 9,309 5,026 1 1 16,604 17,136 2,154 5,752 104 439 77,827 73,789 95,357 111,396 26,987 32,551 16,675 16,675 33,742 47,295 172,761 207,917 73,583 94,930 7,911 7,825 846 868 – – – – 82,340 103,623 90,421 104,294 168,248 178,083
				73,789
				111,396 32,551 16,675 47,295
				207,917
				94,930 7,825 868 – –
				103,623
				104,294
				178,083

• 58 -

Appendix ii

AccountAnts’ report on the group

Notes non-current liabilities Deferred tax liabilities 27 Bank borrowings, secured 26 net assets capital and reserves Share capital 29 Reserves Equity attributable to the equity holders of the Company Minority interests total equity	As at 31 March 2005 HK$’000 (Audited) 15 – 15 138,507 28,750 105,492 134,242 4,265 138,507	As at 31 March 2006 HK$’000 (Audited) 609 3,503 4,112 136,522 36,200 95,235 131,435 5,087 136,522	As at As at 31 March 30 september 2007 2007 HK$’000 HK$’000 (Audited) (Audited) 1,828 1,259 2,658 2,287 4,486 3,546 163,762 174,537 54,300 54,300 106,511 117,285 160,811 171,585 2,951 2,952 163,762 174,537	As at As at 31 March 30 september 2007 2007 HK$’000 HK$’000 (Audited) (Audited) 1,828 1,259 2,658 2,287 4,486 3,546 163,762 174,537 54,300 54,300 106,511 117,285 160,811 171,585 2,951 2,952 163,762 174,537
				3,546
				174,537
				54,300 117,285
				171,585 2,952
				174,537

• 59 -

AccountAnts’ report on the group

Appendix ii

consolidated cash flow statements

Notes operating activities Profit/(Loss) for the year/period Adjustments for: Amortization of prepaid lease payments Amortization of goodwill Depreciation for property, plant and equipment Gain on disposal of subsidiaries Gain on fair value changes of an investment property (Gain)/Loss on fair value changes of property, plant and equipment Impairment loss recognized in respect of amounts due from contract customers Impairment loss reversed in respect of amounts due from contract customers Interest income (Gain)/Loss on disposal of property, plant and equipment Loss on disposal of an associate Loss on disposal of a jointly-controlled entity Write back of long outstanding payables Share of profits less losses of associates Share of profits less losses of jointly-controlled entities Finance costs Others Income tax Operating cash flows before movements in working capital	Year ended 31 March 2005 HK$’000 (Audited) 14,498 17 577 4,078 (92 ) (2,500 ) (438 ) 2,487 – (261 ) 26 – – – (176 ) (3,602 ) 870 – (520 ) 14,964	Year ended 31 March 2006 HK$’000 (Audited) (20,993 ) 17 – 5,451 – (400 ) 58 1,894 – (908 ) 195 710 – (7,346 ) 413 (800 ) 890 – 369 (20,450 )	Year ended period ended period ended 31 March 30 september 30 september 2007 2006 2007 HK$’000 HK$’000 HK$’000 (Audited) (Unaudited) (Audited) 10,765 6,838 10,042 17 8 8 – – – 4,888 2,504 2,427 (3,843 ) – – (400 ) – – 11 – – 989 – – (2,246 ) – – (785 ) (371 ) (655 ) 165 97 (1,497 ) – – – 111 – – (371 ) – – 3,497 322 768 19,467 (1,122 ) 4,283 1,007 500 143 – 24 – 734 511 (170 ) 34,006 9,311 15,349

• 60 -

Appendix ii

AccountAnts’ report on the group

Notes Accounts receivable Balances with jointly-controlled entities Balances with associates Balances with related companies Balances with minority shareholders Prepayments, deposits and other receivables Accounts payable Other payables and accruals Cash generated from/(used in) operations Interest paid Hong Kong profits tax paid Net cash generated by/(used in) operating activities investing activities Interest received Dividends received from jointly-controlled entities Dividends received from an associate Addition of prepaid lease payments Purchase of property, plant and equipment Acquisition of subsidiaries 31 Disposal of subsidiaries 31 Acquisition of associates Amounts advanced to associates Purchase of available-for-sale investment Amounts advanced to an investee entity Proceeds from disposal of property, plant and equipment	Year ended 31 March 2005 HK$’000 (Audited) 343 (5,061 ) 8,606 2,818 6,042 141 4,826 (6,610 ) 26,069 (480 ) (7 ) 25,582 261 5,650 – (500 ) (6,251 ) 293 (9 ) – (8,316 ) – – 294	Year ended 31 March 2006 HK$’000 (Audited) 19,624 9,429 (2,503 ) 1,895 (1,179 ) 2,507 (8,006 ) 46 1,363 (836 ) (16 ) 511 908 9,286 2,449 – (913 ) (9,663 ) – (850 ) (8,946 ) (1 ) (13,164 ) 66	Year ended period ended period ended 31 March 30 september 30 september 2007 2006 2007 HK$’000 HK$’000 HK$’000 (Audited) (Unaudited) (Audited) 6,236 (4,270 ) (19,637 ) (3,523 ) (4,749 ) (5,373 ) (2,372 ) (7,084 ) 1,607 – – – 144 141 – (693 ) (385 ) (1,798 ) (10,630 ) (3,106 ) 21,347 (478 ) 724 (85 ) 22,690 (9,418 ) 11,410 (1,007 ) (500 ) (143 ) (48 ) (657 ) – 21,635 (10,575 ) 11,267 785 371 655 3,560 2,960 – – – – – – – (291 ) (207 ) (356 ) – – – (14,009 ) – – – – – – (15,419 ) (1,155 ) – – – (3,440 ) (2,960 ) (532 ) 269 216 4,024

• 61 -

Appendix ii

AccountAnts’ report on the group

Notes Capital contribution to jointly-controlled entities Decrease in pledged bank deposits Net cash generated by/(used in) investing activities Financing activities Proceeds from issue of ordinary shares Proceeds from bank borrowings Repayment of bank borrowings Proceeds from new trust receipts loans Repayment of trust receipts loans Repayment of term loan Released upon disposal of a subsidiary Capital contributions from minority interests Dividends paid to minority interests Proceeds from issue of convertible notes Redemption of convertible notes Net cash generated by/(used in) financing activities net increase/(decrease) in cash and cash equivalents cash and cash equivalents brought forward cash and cash equivalents carried forward Analysis of balances of cash and cash equivalents Bank balances and cash Bank overdrafts	Year ended 31 March 2005 HK$’000 (Audited) (15,573 ) 2,350 (21,801 ) – – (11,168 ) 3,680 (611 ) – – – – 11,500 – 3,401 7,182 2,136 9,318 13,025 (3,707 ) 9,318	Year ended 31 March 2006 HK$’000 (Audited) – 14,081 (6,747 ) – 6,120 (195 ) 37,379 (27,943 ) – – 608 (650 ) – – 15,319 9,083 9,318 18,401 18,465 (64 ) 18,401	Year ended 31 March 2007 HK$’000 (Audited) – 4,269 (8,857 ) 18,100 – (801 ) 24,363 (37,479 ) (1,620 ) – – – – – 2,563 15,341 18,401 33,742 33,742 – 33,742	period ended 30 september 2006 HK$’000 (Unaudited) – 2,808 (12,231 ) 18,100 – (393 ) 24,362 (20,410 ) (1,620 ) (3,387 ) – – – – 16,652 (6,154 ) 18,401 12,247 12,329 (82 ) 12,247	period ended 30 september 2007 HK$’000 (Audited) – – 2,636 – – (350 ) – – – – – – 15,000 (15,000 ) (350 ) 13,553 33,742 47,295 47,295 – 47,295

• 62 -

AccountAnts’ report on the group

Appendix ii

consolidated statements of changes in equity

			Attributable to the equity	Attributable to the equity	holders of the company	holders of the company
						convertible
			contributed	Assets		loan
	share	share	surplus revaluation		Warrant	note equity	retained		Minority	total
	capital	premium	(note (i))	reserve	reserve	reserve	profits	total	interests	equity
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
At 1 April 2004	28,750	166,405	1,781	13,972	–	–	(97,140 )	113,768	3,018	116,786
Gain on fair value changes
of property, plant
and equipment	–	–	–	5,389	–	–	–	5,389	75	5,464
Deferred tax	–	–	–	237	–	–	–	237	–	237
Release upon disposal
of property, plant
and equipment	–	–	–	(3,987 )	–	–	3,987	–	–	–
Net income recognized
directly in equity	–	–	–	1,639	–	–	3,987	5,626	75	5,701
Profit for the year	–	–	–	–	–	–	14,176	14,176	322	14,498
Total income and
expenses recognized
for the year	–	–	–	1,639	–	–	18,163	19,802	397	20,199
Acquisition of additional
interest in a subsidiary	–	–	–	–	–	–	–	–	242	242
Recognition of equity
component of
convertible notes	–	–	–	–	–	672	–	672	–	672
Capital contributions
from minority shareholders	–	–	–	–	–	–	–	–	608	608
At 31 March 2005	28,750	166,405	1,781	15,611	–	672	(78,977 )	134,242	4,265	138,507
Gain on fair value changes
of property, plant
and equipment	–	–	–	4,083	–	–	–	4,083	130	4,213
Loss on fair value changes
of property, plant
and equipment	–	–	–	(5 )	–	–	–	(5 )	(1 )	(6 )
Deferred tax	–	–	–	(221 )	–	–	–	(221 )	–	(221 )

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			Attributable to the equity	Attributable to the equity	holders of the company	holders of the company
						convertible
			contributed	Assets		loan
	share	share	surplus revaluation		Warrant	note equity	retained		Minority	total
	capital	premium	(note (i))	reserve	reserve	reserve	profits	total	interests	equity
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Release upon disposal
of property, plant
and equipment	–	–	–	(980 )	–	–	980	–	–	–
Net income recognized
directly in equity	–	–	–	2,877	–	–	980	3,857	129	3,986
Loss for the year	–	–	–	–	–	–	(22,336 )	(22,336 )	1,343	(20,993 )
Total income and expenses
recognized for the year	–	–	–	2,877	–	–	(21,356 )	(18,479 )	1,472	(17,007 )
Issue of shares upon
conversion of
convertible notes	5,750	6,194	–	–	–	(672 )	–	11,272	–	11,272
Capital Reduction_(Note (ii))_	–	(138,808 )	–	–	–	–	138,808	–	–	–
Acquisition of additional
interest in a subsidiary:
– Issue of Consideration
Shares	1,700	1,700	–	–	–	–	–	3,400	–	3,400
– Issue of warrants	–	–	–	–	1,000	–	–	1,000	–	1,000
Dividend paid to minority
shareholders	–	–	–	–	–	–	–	–	(650 )	(650 )
At 31 March 2006	36,200	35,491	1,781	18,488	1,000	–	38,475	131,435	5,087	136,522
Gain on fair value
changes of property,
plant and equipment	–	–	–	2,882	–	–	–	2,882	–	2,882
Loss on fair value changes
of property, plant
and equipment	–	–	–	(7 )	–	–	–	(7 )	–	(7 )
Deferred tax	–	–	–	(1,040 )	–	–	–	(1,040 )	–	(1,040 )
Release upon disposal
of property, plant
and equipment	–	–	–	(585 )	–	–	585	–	–	–

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			Attributable to	Attributable to	the equity	holders of the company	holders of the company	holders of the company	holders of the company
								convertible
			contributed		Assets			loan
	share	share	surplus	revaluation		Warrant		note equity	retained			Minority			total
	capital	premium	(note (i))		reserve		reserve	reserve	profits		total	interests			equity
	HK$’000	HK$’000	HK$’000	HK$’000		HK$’000		HK$’000	HK$’000	HK$’000		HK$’000		HK$’000
Net income recognized
directly in equity	–	–	–		1,250		–	–	585		1,835		–		1,835
Profit for the year	–	–	–		–		–	–	9,519		9,519		1,246		10.765
Total income and
expenses recognized
for the year	–	–	–		1,250		–	–	10,104		11,354		1,246		12,600
Issue of ordinary shares	18,100	–	–		–		–	–	–		18,100		–		18,100
Release on disposal of
a subsidiary	–	–	–		(78 )		–	–	–		(78 )		(3,382 )		(3,460 )
At 31 March 2007	54,300	35,491	1,781		19,660		1,000	–	48,579	160,811			2,951	163,762
Deferred tax	–	–	–		733		–	–	–		733		–		733
Release upon disposal
of property, plant
and equipment	–	–	–		(4,192 )		–	–	4,192		–		–		–
Net income recognized
directly in equity	–	–	–		(3,459 )		–	–	4,192		733		–		733
Profit for the period	–	–	–		–		–	–	10,041		10,041		1		10,042
Total income and expenses
recognized for the period	–	–	–		(3,459 )		–	–	14,233		10,774		1		10,775
At 30 september 2007	54,300	35,491	1,781		16,201		1,000	–	62,812	171,585			2,952	174,537
For the period ended 30
september 2006 (unaudited)
At 1 April 2006	36,200	35,491	1,781		18,488		1,000	–	38,475	131,435			5,087	136,522
Deferred tax	–	–	–		29		–	–	–		29		–		29
Release upon disposal
of property, plant
and equipment	–	–	–		(582 )		–	–	582		–		–		–

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			Attributable to	Attributable to	the equity	holders of the company	holders of the company	holders of the company	holders of the company
								convertible
			contributed		Assets			loan
	share	share	surplus	revaluation		Warrant		note equity	retained			Minority			total
	capital	premium	(note (i))		reserve		reserve	reserve	profits		total	interests			equity
	HK$’000	HK$’000	HK$’000	HK$’000		HK$’000		HK$’000	HK$’000	HK$’000		HK$’000		HK$’000
Net income recognized
directly in equity	–	–	–		(553 )		–	–	582		29		–		29
Profit for the period	–	–	–		–		–	–	5,597		5,597		1,241		6,838
Total income and
expenses recognized
for the period	–	–	–		(553 )		–	–	6,179		5,626		1,241		6,867
Issue of ordinary shares	18,100	–	–		–		–	–	–		18,100		–		18,100
Release on disposal of
a subsidiary	–	–	–		(78 )		–	–	–		(78 )		(3,387 )		(3,465 )
At 30 september 2006	54,300	35,491	1,781		17,857		1,000	–	44,654	155,083			2,941	158,024

Notes:

• (i) The contributed surplus of the Group arose as a result of the Group reorganization completed on 2 October 1995 and represents the difference between the nominal value of the aggregate share capital of the subsidiaries acquired pursuant to the Group reorganization, over the nominal value of the share capital of the Company issued in exchange therefor.

• (ii) On 27 June 2005, the Company announced that it proposed to effect a capital reduction by eliminating approximately HK$138,808,000 standing to the credit of the Company’s share premium account (the “Capital Reduction”). The credit arising from the Capital Reduction would be applied to set off against the accumulated losses of the Company at 31 March 2005. The Capital Reduction was approved by the shareholders of the Company at a special general meeting held on 25 August 2005 and became effective on the same date.

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notes to the financial information

1. generAL

Wing Hing International (Holdings) Limited (the “Company”) was incorporated on 10 July 1995 in Bermuda as an exempted company with limited liability under the Companies Act 1981 of Bermuda and its shares are listed on the Main Board of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”). The Company’s registered office is situated at Canon’s Court, 22 Victoria Street, Hamilton HM12, Bermuda. The Company’s principal place of business in Hong Kong is situated at 14th Floor, Yau Lee Centre, 45 Hoi Yuen Road, Kwun Tong, Kowloon, Hong Kong.

The financial information is presented in Hong Kong dollars, which is the same as the functional currency of the Company.

The Company and its subsidiaries (collectively referred to as the “Group”) are principally engaged in the undertaking of superstructure construction, foundation piling, substructure works, slope improvement, special construction projects, interior decoration and landscaping works in Hong Kong.

2. signiFicAnt Accounting poLicies

The financial information has been prepared on the historical cost basis except for certain properties, plant and equipment and financial instruments, which are measured at revalued amounts or fair values, as explained in the accounting policies set out below.

The financial information has been prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”). In addition, the financial information includes applicable disclosures required by the Rules Governing the Listing of Securities on the Stock Exchange (the “Listing Rules”) and by the Hong Kong Companies Ordinance.

The Group has not early applied the following new standards, amendment or interpretations that have been issued but are not yet effective. The directors of the Company anticipate that the application of these standards, amendment or interpretations will have no material impact on the results and the financial position of the Group.

HKAS 1 (Revised) Presentation of Financial Statements[1] HKAS 23 (Revised) Borrowing Costs[1] HKFRS 8 Operating Segments[ 1] HK(IFRIC) – INT 12 Service Concession Arrangements[2] HK(IFRIC) – INT 13 Customer Loyalty Programmes[3] HK(IFRIC) – INT 14 HKAS 19-The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction[ 2]

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

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

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

Basis of consolidation

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

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

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

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

Minority interests in the net assets of consolidated subsidiaries are presented separately from the Group’s equity therein. Minority interests in the net assets consist of the amount of those interests at the date of the original business combination and the minority’s share of changes in equity since the date of the combination. Losses applicable to the minority in excess of the minority’s interest in the subsidiary’s equity are allocated against the interests of the Group except to the extent that the minority has a binding obligation and is able to make an additional investment to cover the losses.

Business combinations

The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under HKFRS 3 “Business Combinations” are recognized at their fair values at the acquisition date, except for non-current assets (or disposal groups) that are classified as held for sale in accordance with HKFRS 5 “Non-current Assets Held for Sale and Discontinued Operations”, which are recognized and measured at fair value less costs to sell.

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

The interest of minority shareholders in the acquiree is initially measured at the minority’s proportion of the net fair value of the assets, liabilities and contingent liabilities recognized.

goodwill

Goodwill arising on an acquisition of a subsidiary represents the excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable assets, liabilities and contingent liabilities of the relevant subsidiary at the date of acquisition. Such goodwill is carried at cost less any accumulated impairment losses.

Capitalized goodwill arising on an acquisition of a subsidiary is presented separately in the consolidated balance sheet.

For the purposes of impairment testing, goodwill arising from an acquisition is allocated to each of the relevant cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the acquisition. A cash-generating unit to which goodwill has been allocated is tested for impairment annually, and whenever there is an indication that the unit may be impaired. For goodwill arising on an acquisition in a financial year, the cash-generating unit to which goodwill has been allocated is tested for impairment before the end of that financial year.

When the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated to reduce the carrying amount of any goodwill allocated to the unit first, and then to the other assets of the unit pro rata on the basis of the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognized directly in the consolidated income statement. An impairment loss for goodwill is not reversed in subsequent periods.

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On subsequent disposal of a subsidiary, the attributable amount of goodwill capitalized is included in the determination of the amount of profit or loss on disposal.

investments in associates

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

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

Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the associate recognized at the date of acquisition is recognized as goodwill. The goodwill is included within the carrying amount of the investment and is assessed for impairment as part of the investment.

Any excess of the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognized immediately in profit or loss.

Where a group entity transacts with an associate of the Group, profits and losses are eliminated to the extent of the Group’s interest in the relevant associate.

Jointly-controlled entities

Joint venture arrangements that involve the establishment of a separate entity in which venturers have joint control over the economic activity of the entity are referred to as jointly-controlled entities.

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

Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the jointly-controlled entity recognized at the date of acquisition is recognized as goodwill. The goodwill is included within the carrying amount of the investment and is assessed for impairment as part of the investment.

Any excess of the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognized immediately in profit or loss.

When a group entity transacts with a jointly-controlled entity of the Group, unrealized profits or losses are eliminated to the extent of the Group’s interest in the jointly-controlled entity, except to the extent that unrealized losses provide evidence of an impairment of the asset transferred, in which case, the full amount of losses is recognized.

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construction contracts

Where the outcome of a construction contract can be estimated reliably, revenue and costs are recognized by reference to the stage of completion of the contract activity at the balance sheet date, as measured by the proportion that contract costs incurred for work performed to date bear to the estimated total contract costs, except where this would not be representative of the stage of completion. Variations in contract work, claims and incentive payments are included to the extent that they have been agreed to the customer.

Where the outcome of a construction contract cannot be estimated reliably, contract revenue is recognized to the extent of contract costs incurred that it is probable will recoverable. Contract costs are recognized as an expense in the period in which they are incurred.

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

revenue recognition

Revenue from construction contracts is recognized on the percentage of completion basis, as further explained in the accounting policy for “Construction contracts” above.

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

Service income is recognized when services are provided.

Interest income from a financial asset is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts the estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount.

property, plant and equipment

Property, plant and equipment are stated at cost or fair value less subsequent accumulated depreciation and impairment losses.

Buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the consolidated balance sheet at their revalued amounts, being the fair value at the date of revaluation less any subsequent accumulated depreciation and any subsequent accumulated impairment losses. Revaluations are performed with sufficient regularity such that the carrying amount does not differ materially from that which would be determined using fair values at the balance sheet date.

Any revaluation increase arising on revaluation of buildings is credited to the asset revaluation reserve, except to the extent that it reverses a revaluation decrease of the same asset previously recognized as an expense, in which case the increase is credited to the consolidated income statement to the extent of the decrease previously charged. A decrease in net carrying amount arising on revaluation of an asset is dealt with as an expense to the extent that it exceeds the balance, if any, on the asset revaluation reserve relating to a previous revaluation of that asset. On the subsequent sale or retirement of a revalued asset, the attributable revaluation surplus is transferred to retained profits.

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

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Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, the term of the relevant lease.

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

investment properties

On initial recognition, investment properties are measured at cost, including any directly attributable expenditure. Subsequent to initial recognition, investment properties are measured using the fair value model. Gains or losses arising from changes in the fair value of investment property are included in profit or loss for the period in which they arise.

An investment property is derecognized upon disposal or when the investment property is permanently withdrawn from use or no future economic benefits are expected from its disposals. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the consolidated income statement in the year in which the item is derecognized.

Leasing

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

The Group as lessor

Rental income from operating leases is recognized in the consolidated income statement on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized as an expense on a straight-line basis over the lease term.

The Group as lessee

Assets held under finance leases are recognized as assets of the Group at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the consolidated balance sheet as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability.

Finance charges are charged directly to profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with the Group’s general policy on borrowing costs (see below).

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

Leasehold land

Interest in leasehold land is amortized over the lease term on a straight-line basis.

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Foreign currencies

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

Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are recognized in profit or loss in the period in which they arise, except for exchange differences arising on a monetary item that forms part of the Company’s net investment in a foreign operation, in which case, such exchange differences are recognized in equity in the financial information. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognized directly in equity, in which cases, the exchange differences are also recognized directly in equity.

For the purposes of presenting the financial information, the assets and liabilities of the Group’s foreign operations are translated into the presentation currency of the Group (i.e. Hong Kong dollars) at the rate of exchange prevailing at the balance sheet date, and their income and expenses are translated at the average exchange rates for the year, unless exchange rates fluctuate significantly during the period, in which case, the exchange rates prevailing at the dates of transactions are used. Exchange differences arising, if any, are recognized as a separate component of equity (the translation reserve). Such exchange differences are recognized in profit or loss in the period in which the foreign operation is disposed of.

Goodwill and fair value adjustments on identifiable assets acquired arising on an acquisition of a foreign operation are treated as assets and liabilities of that foreign operation and translated at the rate of exchange prevailing at the balance sheet date. Exchange differences arising are recognized in the translation reserve.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, are capitalized as part of the cost of those assets. Capitalization of such borrowing costs ceases when the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.

All other borrowing costs are recognized in profit or loss in the period in which they are incurred.

retirement benefit costs

Payments to defined contribution retirement benefit plans are charged as an expense when employees have rendered service entitling them to the contributions.

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taxation

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

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

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

Deferred tax liabilities are recognized for taxable temporary differences arising on investments in subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

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

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

Financial instruments

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

Financial assets

The Group’s financial assets are classified into one of the four categories, including financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments and available-for-sale . All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace. The accounting policies adopted in respect of each category of financial assets are set out below.

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Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss has two subcategories, including financial assets held for trading and those designated as at fair value through profit or loss on initial recognition.

A financial asset other than a financial asset held for trading may be designated as at fair value through profit or loss upon initial recognition if:

• ‧ such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or

• ‧ the financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or

• ‧ it forms part of a contract containing one or more embedded derivatives, and HKAS 39 permits the entire combined contract (asset or liability) to be designated as at fair value through profit or loss.

At each balance sheet date subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value, with changes in fair value recognized directly in profit or loss in the period in which they arise.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. At each balance sheet date subsequent to initial recognition, loans and receivables are carried at amortized cost using the effective interest method, less any identified impairment losses. An impairment loss is recognized in profit or loss when there is objective evidence that the asset is impaired, and is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the original effective interest rate. Impairment losses are reversed in subsequent periods when an increase in the asset’s recoverable amount can be related objectively to an event occurring after the impairment was recognized, subject to a restriction that the carrying amount of the asset at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized.

Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Group’s management has the positive intention and ability to hold to maturity. At each balance sheet date subsequent to initial recognition, held-to-maturity investments are measured at amortized cost using the effective interest method, less any identified impairment losses. An impairment loss is recognized in profit or loss when there is objective evidence that the asset is impaired, and is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed on initial recognition. Impairment losses are reversed in subsequent periods when an increase in the investment’s recoverable amount can be related objectively to an event occurring after the impairment was recognized, subject to the restriction that the carrying amount of the asset at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized.

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Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated or not classified as financial assets at fair value through profit or loss, loans and receivables or held-to-maturity investments. At each balance sheet date subsequent to initial recognition, available-for-sale financial assets are measured at fair value. Changes in fair value are recognized in equity, until the financial asset is disposed of or is determined to be impaired, at which time, the cumulative gain or loss previously recognized in equity is removed from equity and recognized in profit or loss. Any impairment losses on available-for-sale financial assets are recognized in profit or loss. Impairment losses on available-for-sale equity investments will not reverse in profit or loss in subsequent periods. For available-for-sale debt investments, impairment losses are subsequently reversed if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss.

Financial liabilities and equity

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

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

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss has two subcategories, including financial liabilities held for trading and those designated as at fair value through profit or loss on initial recognition.

A financial liability other than a financial liability held for trading may be designated as at fair value through profit or loss upon initial recognition if:

• ‧ such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or

• ‧ the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or

• ‧ it forms part of a contract containing one or more embedded derivatives, and HKAS 39 permits the entire combined contract (asset or liability) to be designated as at fair value through profit or loss.

At each balance sheet date subsequent to initial recognition, financial liabilities at fair value through profit or loss are measured at fair value, with changes in fair value recognized directly in profit or loss in the period in which they arise.

Other financial liabilities

Other financial liabilities are subsequently measured at amortized cost, using the effective interest method.

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Convertible loan notes

Convertible loan notes issued by the Company that contain both the liability and conversion option components are classified separately into respective items on initial recognition. Conversion option will be settled by the exchange of a fixed amount of cash or another financial asset for a fixed number of the Company’s own equity instruments is an equity instrument.

On initial recognition, the fair value of the liability component is determined using the prevailing market interest rate of similar non-convertible debts. The difference between the proceeds of the issue of the convertible loan notes and the fair value assigned to the liability component, representing the conversion option for the holder to convert the loan notes into equity, is included in equity (convertible loan notes equity reserve).

In subsequent periods, the liability component of the convertible loan notes is carried at amortized cost using the effective interest method. The equity component, represented by the option to convert the liability component into ordinary shares of the Company, will remain in convertible loan notes equity reserve until the conversion option is exercised (in which case the balance stated in convertible loan notes equity reserve will be transferred to share premium). Where the option remains unexercised at the expiry date, the balance stated in convertible loan notes equity reserve will be released to the retained profits. No gain or loss is recognized in profit or loss upon conversion or expiration of the option.

Transaction costs that relate to the issue of the convertible loan notes are allocated to the liability and equity components in proportion to the allocation of the proceeds. Transaction costs relating to the equity component are charged directly to equity. Transaction costs relating to the liability component are included in the carrying amount of the liability component and amortized over the period of the convertible loan notes using the effective interest method.

Equity instruments

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

Consideration paid to reacquire the Company’s own equity instruments are deducted from equity. No gain or loss is recognized in profit or loss.

Financial guarantee contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument. A financial guarantee contract issued by the Group and not designed as at fair value through profit or loss is recognized initially at its fair value less transaction costs that are directly attributable to the issue of the financial guarantee contract. Subsequent to initial recognition, the Group measures the financial guarantee contact at the higher of: (i) the amount determined in accordance with HKAS 37 “Provisions, Contingent Liabilities and Contingent Assets”; and (ii) the amount initially recognized less, when appropriate, cumulative amortization recognized in accordance with HKAS 18 “Revenue”.

Derecognition

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

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Financial liabilities are derecognized when the obligation specified in the relevant contract is discharged, cancelled or expires. The difference between the carrying amount of the financial liability derecognized and the consideration received or receivable is recognized in consolidated income statement.

provisions

Provisions are recognized when the Group has a present obligation as a result of a past event, and it is probable that the Group will be required to settle that obligation. Provisions are measured at the directors’ best estimate of the expenditure required to settle the obligation at the balance sheet date, and are discounted to present value where the effect is material.

impairment losses (other than goodwill)

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

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

share-based payment transactions

Equity-settled share-based payment transactions

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

At each balance sheet date, the Group revises its estimates of the number of options that are expected to ultimately vest. The effect of the change in estimate, if any, is recognized in profit or loss with a corresponding adjustment to share options reserve.

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

For share options granted to suppliers in exchange for goods or services, they are measured at the fair value of the goods or services received. The fair values of the goods or services are recognized as expenses immediately, unless the goods or services qualify for recognition as assets. Corresponding adjustments are made to equity.

Cash-settled share-based payment transactions

For cash-settled share-based payments, the Group measures the goods or services acquired and the liability incurred at the fair value of the liability. At each balance sheet date, the liability is remeasured at its fair value until the liability is settled, with any changes in fair value recognized in profit or loss.

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3. criticAL Accounting JudgMents And KeY sources oF estiMAtion uncertAintY

The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year:

impairment of goodwill

Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been allocated. The value in use calculation requires the Group to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate the present value.

estimated impairment of property, plant and equipment

The Group evaluates whether items of property, plant and equipment have suffered any impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable, in accordance with the stated accounting policy. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of estimates.

estimated useful lives of property, plant and equipment

Management determines the estimated useful lives and related depreciation charges for its property, plant and equipment. This estimate is based on the historical experience of the actual useful lives of property, plant and equipment of similar nature and functions. It could change significantly as a result of technical innovations and competitor actions in response to severe industry cycles. Management will increase the depreciation charges where useful lives are less than previously estimated, or it will write-off or write-down obsolete or non-strategic assets that have been abandoned or sold.

impairment loss of accounts and other receivables

The Group’s policy for doubtful receivables is based on the on-going evaluation of the collectability and aging analysis of the accounts and other receivables and on management’s judgments. Considerable judgment is required in assessing the ultimate realization of these receivables, including the current creditworthiness and the past collection history of each debtor, and the present values of the estimated future cash flows discounted at the effective interest rates. If the financial conditions of the Group’s debtors were to deteriorate, resulting in an impairment of their ability to make payments, additional impairment loss of accounts and other receivables may be required.

outcome of construction contracts

The Group determines whether outcome of a construction contract can be estimated reliably. This requires a continuous estimation of the total contract revenue and costs and stage of completion with reference to work certified by architects and the assessment of the probability of the future economic flows to the Group.

income taxes

Determining income tax provisions involves judgment on the future tax treatment of certain transactions. The Group carefully evaluates tax implications of transactions and tax provisions are set up accordingly. The tax treatment of such transactions is reconsidered periodically to take into account all changes in tax legislations. Where the final tax outcome of these transactions is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

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4. FinAnciAL risK MAnAgeMent oBJectiVes And poLicies

4.1 cApitAL risK MAnAgeMent

The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximizing the return to stakeholders through the optimization of the debt and equity balance. The Group’s overall strategy remains unchanged from prior year.

The capital structure of the Group consists of debt (which includes borrowings and convertible notes), cash and cash equivalents and equity attributable to equity holders of the Company, comprising issued share capital, reserves and retained profits.

gearing ratio

The gearing ratio at the balance sheet dates was as follows:

Debt (i) Cash and cash equivalents Net debt Equity (ii) Net debt to equity ratio	As at 31 March 2005 HK$’000 18,605 (9,318 ) 9,287 138,507 6.7%	As at 31 March 2006 HK$’000 19,105 (18,401 ) 704 136,522 0.5%	As at As at 31 March 30 september 2007 2007 HK$’000 HK$’000 3,504 3,155 (33,742 ) (47,295 ) (30,238 ) (44,140 ) 163,762 174,537 N/A N/A

(i) Debt comprises long and short-term borrowings and convertible notes as detailed in notes 26 and 28 respectively.

(ii) Equity includes all capital and reserves of the Group.

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4.2 FinAnciAL instruMents

Categories of financial instruments

	As at	As at	As at	As at
	31 March	31 March	31 March	30 september
	2005	2006	2007	2007
	HK$’000	HK$’000	HK$’000	HK$’000
Financial assets
Fair value through profit or loss	–	–	–	–
Held-to-maturity investments	–	–	–	–
Loans and receivables (including
cash and cash equivalents)	191,046	179,441	185,801	223,087
Available-for-sale financial assets	–	1	1	1
Financial liabilities
Fair value through profit or loss	–	–	–	–
Amortized cost	130,429	107,815	73,142	79,985

The Group’s major financial instruments include accounts receivable, other receivables, amounts due from and due to related parties, bank balances and cash, accounts payable, other payables, bank borrowings and convertible notes. Details of these financial instruments are disclosed in the respective notes. The risks associated with these financial instruments and the policies on how to mitigate these risks are set out below. The management manages and monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner.

Market risks

Foreign currency risk management

The management of the Group considers that the Group is not exposed to significant foreign currency

risk.

interest rate risk management

The Group’s cash flow interest rate risk relates primarily to variable-rate borrowings. It is the Group’s policy to keep its borrowings at floating rate of interests so as to minimize the fair value interest rate risk.

The Group’s exposures to interest rates on financial liabilities are detailed in the liquidity risk management section of this note. The Group’s cash flow interest rate risk is mainly concentrated on the fluctuation of Prime rate arising from the Group’s Hong Kong dollar denominated borrowings.

Sensitivity analysis

The sensitivity analyses below have been determined based on the exposure to interest rates for nonderivative instruments at the balance sheet date. For variable-rate borrowings, the analysis is prepared assuming the amount of liability outstanding at the balance sheet date was outstanding for the whole year. A 100 basis point increase or decrease in interest rates is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

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If interest rates had been 100 basis points higher/lower and all other variables were held constant, the Group’s profit and equity reserve would decrease/increase by:

	Year ended	Year ended	Year ended	period ended	period ended
	31 March	31 March	31 March	30 september	30 september
	2005	2006	2007	2006	2007
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Decrease/increase in profit
for the year/period	358	200	446	99	584
Decrease/increase in equity
reserve at year/period end	358	200	446	99	584

price risk

The management of the Group considers that the Group is not exposed to significant price risk.

credit risk

At the balance sheet date, the Group’s maximum exposure to credit risk which would cause a financial loss to the Group due to failure to discharge on obligation by the counterparties are the carrying amounts of the respective recognized financial assets as stated in the balance sheet.

In order to minimize the credit risk, the management of the Group has delegated a team responsible for determination of credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Group reviews the recoverable amount of each individual trade debt and debt investments at each balance sheet date to ensure that adequate impairment losses are made for irrecoverable amounts. In this regard, the directors of the Company consider that the Group’s credit risk is significantly reduced.

The credit risk for bank balances is considered minimal as such amounts are placed with banks with high credit ratings.

Other than concentration of credit risk on liquid funds which are deposited with several banks with high credit ratings, the Group does not have any other significant concentration of credit risk.

Liquidity risk management

Ultimate responsibility for liquidity risk management rests with the board of directors, which has built an appropriate liquidity risk management framework for the management of the Group’s short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.

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The following table details the Group’s remaining contractual maturity for its financial liabilities. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay.

				total	total
				undiscounted	carrying
	Within 1 year	1-5 years	over 5 years	cash flows	amount
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
As at 31 March 2005
Accounts payable	82,908	–	–	82,908	82,908
Other payables	28,916	–	–	28,916	28,916
Bank borrowings	7,387	–	–	7,387	7,387
Convertible notes	11,500	–	–	11,500	11,218
As at 31 March 2006
Accounts payable	74,902	–	–	74,902	74,902
Other payables	13,808	–	–	13,808	13,808
Bank borrowings	15,881	3,941	–	19,822	19,105
As at 31 March 2007
Accounts payable	61,727	–	–	61,727	61,727
Other payables	7,911	–	–	7,911	7,911
Bank borrowings	1,051	2,890	–	3,941	3,504
As at 30 September 2007
Accounts payable	69,005	–	–	69,005	69,005
Other payables	7,825	–	–	7,825	7,825
Bank borrowings	1,051	2,365	–	3,416	3,155

Fair value of financial instruments

The fair values of financial assets and financial liabilities are determined in accordance with generally accepted pricing models based on discounted cash flow analysis using prices or rates form observable current market transactions as input.

The directors consider that the carrying amounts of financial assets and financial liabilities recorded in the financial information approximate their fair values.

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5. reVenue

An analysis of the Group’s revenue for the Relevant Periods is as follows:

Construction contract revenue Revenue from sales of goods	Year ended 31 March 2005 HK$’000 403,795 31,006 434,801	Year ended 31 March 2006 HK$’000 460,956 33,489 494,445	Year ended period ended period ended 31 March 30 september 30 september 2007 2006 2007 HK$’000 HK$’000 HK$’000 447,385 209,228 311,507 32,907 17,750 15,508 480,292 226,978 327,015	Year ended period ended period ended 31 March 30 september 30 september 2007 2006 2007 HK$’000 HK$’000 HK$’000 447,385 209,228 311,507 32,907 17,750 15,508 480,292 226,978 327,015
				327,015

6. Business And geogrAphicAL segMents

Business segments

For management purposes, the Group is currently organized into five operating divisions:

• (a) Superstructure construction works segment;

• (b) Foundation piling, substructure works and slope improvement works segment;

• (c) Special construction projects segment including civil engineering work and electrical and mechanical works;

• (d) Interior decoration and landscaping works segment; and

• (e) Corporate and others segment, which comprises the Group’s investment holding and trading of construction machines and plastic products.

These divisions are the basis on which the Group reports its primary segment information.

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Segment information about these businesses is presented below.

Foundation piling, substructure interior works decoration superstructure and slope special and construction improvement construction landscaping works works projects works HK$’000 HK$’000 HK$’000 HK$’000 period ended 30 september 2007 reVenue External sales 307,469 4,020 – 19 Inter-segment sales – 15,843 – 34,473 Total 307,469 19,863 – 34,492 resuLt Segment result 16,517 6,865 – 2,772 Unallocated income Unallocated corporate expenses Share of profits less losses of – associates – jointly-controlled entities Finance costs Profit before tax Income tax Profit for the period BALAnce sheet ASSETS Segment assets 118,682 20,864 – 269 Interests in associates Interests in jointly-controlled entities Unallocated corporate assets Consolidated total assets LIABILITIES Segment liabilities 79,980 12,055 – 7,338 Unallocated corporate liabilities Consolidated total liabilities

corporate and others eliminations consolidated HK$’000 HK$’000 HK$’000 15,507 – 327,015 – (50,316 ) – 15,507 (50,316 ) 327,015 12,906 (10,603 ) 28,457 655 (14,046 ) (768 ) (4,283 ) (143 ) 9,872 170 10,042 52,230 (2,622 ) 189,423 21,426 5,026 65,831 281,706 2,341 1,041 102,755 4,414 107,169

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Foundation piling, substructure works superstructure and slope special construction improvement construction works works projects HK$’000 HK$’000 HK$’000 other inForMAtion Depreciation and amortization 119 112 – (Gain)/Loss on disposal of property, plant and equipment 12 – – period ended 30 september 2006 (unaudited) reVenue External sales 175,911 19,854 1,653 Inter-segment sales – 167 – Total 175,911 20,021 1,653 resuLt Segment result 7,075 32,303 (1,984 ) Unallocated income Unallocated corporate expenses Share of profits less losses of – associates – jointly-controlled entities Finance costs Profit before tax Income tax expense Profit for the period Year ended 31 March 2007 reVenue External sales 400,745 31,466 1,653 Inter-segment sales – 1,704 – Total 400,745 33,170 1,653	interior decoration and landscaping works HK$’000 1 – 11,810 22,471 34,281 7,871 13,521 32,082 45,603	corporate and others eliminations consolidated HK$’000 HK$’000 HK$’000 2,203 – 2,435 (1,509 ) – (1,497 ) 17,750 – 226,978 – (22,638 ) – 17,750 (22,638 ) 226,978 9,216 (8,345 ) 46,136 500 (39,587 ) (322 ) 1,122 (500 ) 7,349 (511 ) 6,838 32,907 – 480,292 – (33,786 ) – 32,907 (33,786 ) 480,292

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Foundation piling, substructure interior works decoration superstructure and slope special and construction improvement construction landscaping works works projects works HK$’000 HK$’000 HK$’000 HK$’000 resuLt Segment result 43,720 46,466 (2,034 ) 7,672 Unallocated income Unallocated corporate expenses Share of profits less losses of – associates – jointly-controlled entities Finance costs Profit before tax Income tax expense Profit for the year BALAnce sheet ASSETS Segment assets 100,740 15,313 – 3,697 Interests in associates Interests in jointly-controlled entities Unallocated corporate assets Consolidated total assets LIABILITIES Segment liabilities 61,390 14,043 – 3,313 Unallocated corporate liabilities Consolidated total liabilities other inForMAtion Capital additions 208 – – 39 Depreciation and amortization 225 275 – 76 Loss on fair value changes of property, plant and equipment 11 – – – Impairment losses recognized in respect of amounts due from contract customers 130 649 – 210 Impairment losses reversed in respect of amounts due from contract customers (2,246 ) – – – Loss on disposal of property, plant and equipment 100 33 – 32 Loss on disposal of a jointly–controlled entity – – 111 – Gain on fair value changes of investment property – – – – Gain on disposal of subsidiaries – – – (3,843 ) Write back of long outstanding payables (74 ) (187 ) – (110 )

corporate and others eliminations consolidated HK$’000 HK$’000 HK$’000 2,014 (50 ) 97,788 6,663 (68,981 ) (3,497 ) (19,467 ) (1,007 ) 11,499 (734 ) 10,765 47,505 521 167,776 21,039 9,309 52,464 250,588 2,748 – 81,494 5,332 86,826 44 – 291 4,329 – 4,905 – – 11 – – 989 – – (2,246 ) – – 165 – – 111 (400 ) – (400 ) – – (3,843 ) – – (371 )

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Foundation piling, substructure interior works decoration superstructure and slope special and construction improvement construction landscaping works works projects works HK$’000 HK$’000 HK$’000 HK$’000 Year ended 31 March 2006 reVenue External sales 326,263 54,535 58,671 21,487 Inter-segment sales 287 4,055 2,882 34,661 Total 326,550 58,590 61,553 56,148 resuLt Segment result 32,523 17,780 (40,795 ) 8,709 Unallocated income Unallocated corporate expenses Share of profits less losses of – associates – jointly-controlled entities Finance costs Loss before tax Income tax expense Loss for the year BALAnce sheet ASSETS Segment assets 87,549 23,325 8,740 8,776 Interests in associates Interests in jointly-controlled entities Unallocated corporate assets Consolidated total assets LIABILITIES Segment liabilities 74,547 17,876 12,936 5,867 Unallocated corporate liabilities Consolidated total liabilities

corporate and others eliminations consolidated HK$’000 HK$’000 HK$’000 33,489 – 494,445 – (41,885 ) – 33,489 (41,885 ) 494,445 3,954 1,277 23,448 1,308 (44,877 ) (413 ) 800 (890 ) (20,624 ) (369 ) (20,993 ) 45,483 595 174,468 17,704 37,621 41,829 271,622 3,503 – 114,729 20,371 135,100

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Foundation piling, substructure interior works decoration superstructure and slope special and construction improvement construction landscaping works works projects works HK$’000 HK$’000 HK$’000 HK$’000 other inForMAtion Capital additions 24 281 – 419 Depreciation and amortization 465 361 14 179 Loss on fair value changes of property, plant and equipment – – – 58 Impairment losses recognized in respect of amounts due from contract customers 1,431 199 147 – Loss on disposal of property, plant and equipment 37 41 – 117 Loss on disposal of an associate – – – – Gain on fair value changes of investment property – – – – Write back of long outstanding payables (4,902 ) (609 ) (131 ) (166 ) Year ended 31 March 2005 reVenue External sales 284,645 77,680 37,532 3,938 Inter-segment sales 1,380 6,830 17,955 8,044 Total 286,025 84,510 55,487 11,982 resuLt Segment result 9,308 11,946 4,781 (440 ) Unallocated income Unallocated corporate expenses Share of profits less losses of – associates – jointly-controlled entities Finance costs Profit before tax Income tax Profit for the year

corporate and others eliminations consolidated HK$’000 HK$’000 HK$’000 189 – 913 4,449 – 5,468 – – 58 102 15 1,894 – – 195 619 91 710 (400 ) – (400 ) (1,538 ) – (7,346 ) 31,006 – 434,801 – (34,209 ) – 31,006 (34,209 ) 434,801 15,154 3,771 44,520 1,911 (35,361 ) 176 3,602 (870 ) 13,978 520 14,498

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			Foundation
			piling,
			substructure		interior
			works		decoration
superstructure			and slope	special	and
construction			improvement	construction	landscaping	corporate
		works	works	projects	works	and others	eliminations	consolidated
		HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
BALAnce sheet
ASSETS
Segment assets		107,943	26,920	14,725	3,872	32,564	525	186,549
Interests in associates								10,770
Interests in jointly-controlled entities								46,107
Unallocated corporate assets								50,509
Consolidated total assets								293,935
LIABILITIES
Segment liabilities		87,758	22,224	15,004	6,630	15,397	297	147,310
Unallocated corporate liabilities								8,118
Consolidated total liabilities								155,428
other inForMAtion
Capital additions		102	–	–	80	6,069	–	6,251
Addition to prepaid lease payments		–	–	–	–	500	–	500
Depreciation and amortization		346	280	14	95	3,360	–	4,095

Inter-segment sales are charged at prevailing market rates.

geographical segments

Over 90% of the Group’s revenue and assets are derived from customers and operations based in Hong Kong and accordingly, no further analysis of the Group’s geographical segments is presented.

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7. other incoMe

Year ended 31 March 2005 HK$’000 Service fee income from: – jointly-controlled entities 1,716 – associates 865 – independent third parties 1,077 3,658 Interest income on bank deposits 261 Rental income from investment property 164 Rental income from machinery held for operating lease purposes 1,948 Others 937 6,968 FinAnce costs Year ended 31 March 2005 HK$’000 Interest on bank borrowings – wholly repayable within five years 377 – not wholly repayable within five years – Effective interest expense on convertible notes 493 870	Year ended 31 March 2006 HK$’000 9,630 125 269 10,024 908 112 832 1,418 13,294 Year ended 31 March 2006 HK$’000 754 68 68 890	Year ended period ended period ended 31 March 30 september 30 september 2007 2006 2007 HK$’000 HK$’000 HK$’000 40,366 23,709 3,401 370 138 1,708 765 1,085 715 41,501 24,932 5,824 785 371 655 128 56 – 167 66 594 1,248 314 861 43,829 25,739 7,934 Year ended period ended period ended 31 March 30 september 30 september 2007 2006 2007 HK$’000 HK$’000 HK$’000 1,007 500 143 – – – – – – 1,007 500 143	Year ended period ended period ended 31 March 30 september 30 september 2007 2006 2007 HK$’000 HK$’000 HK$’000 40,366 23,709 3,401 370 138 1,708 765 1,085 715 41,501 24,932 5,824 785 371 655 128 56 – 167 66 594 1,248 314 861 43,829 25,739 7,934 Year ended period ended period ended 31 March 30 september 30 september 2007 2006 2007 HK$’000 HK$’000 HK$’000 1,007 500 143 – – – – – – 1,007 500 143
			143

8. FinAnce costs

No borrowing costs were capitalized during the Relevant Periods.

9. incoMe tAx

Current tax – Hong Kong Deferred tax Tax charge/(credit) for the year/period	Year ended 31 March 2005 HK$’000 (1,331 ) 811 (520 )	Year ended 31 March 2006 HK$’000 (43 ) 412 369	Year ended period ended period ended 31 March 30 september 30 september 2007 2006 2007 HK$’000 HK$’000 HK$’000 547 549 – 187 (38 ) (170 ) 734 511 (170 )	Year ended period ended period ended 31 March 30 september 30 september 2007 2006 2007 HK$’000 HK$’000 HK$’000 547 549 – 187 (38 ) (170 ) 734 511 (170 )
				(170 )

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Hong Kong Profits Tax is calculated at 17.5% of the estimated assessable profit for the Relevant Periods.

The tax charge/(credit) for the Relevant Periods can be reconciled to the profit/(loss) per the consolidated income statement as follows:

Profit/(Loss) before tax Tax at Hong Kong Profits Tax rate of 17.5% Tax effect of income not taxable for tax purpose Tax effect of expenses not deductible for tax purpose Utilization of tax losses previously not recognized Others Tax charge/(credit) for the year/period	Year ended 31 March 2005 HK$’000 13,978 2,446 (1,484 ) 2,523 (2,673 ) (1,332 ) (520 )	Year ended 31 March 2006 HK$’000 (20,624 ) (3,610 ) (1,468 ) 1,804 (4,480 ) 8,123 369	Year ended period ended period ended 31 March 30 september 30 september 2007 2006 2007 HK$’000 HK$’000 HK$’000 11,499 7,349 9,872 2,012 1,286 1,728 (1,977 ) (363 ) (555 ) 1,028 427 428 (5,011 ) (2,600 ) (2,651 ) 4,682 1,761 880 734 511 (170 )

10. proFit/(Loss) For the YeAr/period

Profit/(Loss) for the year/period has been arrived at after charging/(crediting):

Depreciation for property, plant and equipment Less: Amounts capitalized in construction contracts Amortization of prepaid lease payments Total depreciation and amortization	Year ended 31 March 2005 HK$’000 4,078 (2,044 ) 2,034 17 2,051	Year ended 31 March 2006 HK$’000 5,451 (3,663 ) 1,788 17 1,805	Year ended period ended period ended 31 March 30 september 30 september 2007 2006 2007 HK$’000 HK$’000 HK$’000 4,888 2,504 2,427 (3,677 ) (1,839 ) (1,791 ) 1,211 665 636 17 8 8 1,228 673 644

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Appendix ii

AccountAnts’ report on the group

Auditors’ remuneration (Gain)/Loss on disposal of property, plant and equipment Gain on disposal of subsidiaries Loss on disposal of an associate Loss on disposal of a jointly-controlled entity (Gain)/Loss on fair value changes of property, plant and equipment Impairment losses recognized in respect of amounts due from contract customers Impairment losses reversed in respect of amounts due from contract customers Write back of long outstanding payables Minimum lease payments under operating leases during the period: Leasehold land and buildings Less: Amounts capitalized in construction contracts Plant and machinery Less: Amounts capitalized in construction contracts	Year ended 31 March 2005 HK$’000 570 26 (92 ) – – (438 ) 2,487 – – 1,007 – 1,007 1,568 (1,568 ) – 1,007	Year ended 31 March 2006 HK$’000 590 195 – 710 – 58 1,894 – (7,346 ) 1,526 (531 ) 995 7,362 (7,362 ) – 995	Year ended period ended period ended 31 March 30 september 30 september 2007 2006 2007 HK$’000 HK$’000 HK$’000 610 300 300 165 97 (1,497 ) (3,843 ) – – – – – 111 – – 11 – – 989 – – (2,246 ) – – (371 ) – – 1,115 866 228 (442 ) (442 ) – 673 424 228 3,117 3,021 548 (3,117 ) (3,021 ) (548 ) – – – 673 424 228

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Employee benefits expense (including directors’ remuneration): Wages and salaries Contributions to retirement benefits schemes Less: Amounts capitalized in construction contracts Cost of services and inventories recognized as an expense Gain on fair value changes of an investment property	Year ended 31 March 2005 HK$’000 31,895 1,221 33,116 (22,200 ) 10,916 401,079 (2,500 )	Year ended 31 March 2006 HK$’000 66,984 1,875 68,859 (40,635 ) 28,224 490,730 (400 )	Year ended period ended period ended 31 March 30 september 30 september 2007 2006 2007 HK$’000 HK$’000 HK$’000 81,685 45,401 24,340 3,035 1,680 811 84,720 47,081 25,151 (23,860 ) (13,221 ) (13,982 ) 60,860 33,860 11,169 425,548 206,210 305,837 (400 ) – –	Year ended period ended period ended 31 March 30 september 30 september 2007 2006 2007 HK$’000 HK$’000 HK$’000 81,685 45,401 24,340 3,035 1,680 811 84,720 47,081 25,151 (23,860 ) (13,221 ) (13,982 ) 60,860 33,860 11,169 425,548 206,210 305,837 (400 ) – –
				25,151 (13,982 )
				11,169
				305,837 –

11. directors’ eMoLuMents

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

For the period ended 30 september 2007

Fees HK$’000 Executive directors Mr. Ng Tat Leung, George – Mr. Wong Teck Ming – Mr. Lui Siu Yee, Samuel – Mr. Chan Wai Keung, Ivan – Mr. Lo Chung Sun, Simon – Independent non-executive directors Mr. Wong Lit Chor, Alexis – Mr. Lo Ka Wai – Dr. Leung Wai Cheung – Total –	contributions to salaries and retirement other benefits benefits schemes HK$’000 HK$’000 851 6 690 6 486 6 441 6 627 6 – – – – – – 3,095 30	total HK$’000 857 696 492 447 633 – – –
		3,125

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For the period ended 30 september 2006

Fees HK$’000 Executive directors Mr. Ng Tat Leung, George – Mr. Wong Teck Ming – Mr. Chen Jinkui – Mr. Sun Haichao – Mr. Lui Siu Yee, Samuel – Mr. Chan Wai Keung, Ivan – Mr. Lo Chung Sun, Simon – Non-executive director Mr. Wang Xianzhang – Independent non-executive directors Mr. Wong Lit Chor, Alexis – Mr. Lo Ka Wai – Dr. Leung Wai Cheung – Total –	contributions to salaries and retirement other benefits benefits schemes HK$’000 HK$’000 718 6 556 6 – – – – 287 6 442 6 531 6 – – – – – – – – 2,534 30	total HK$’000 724 562 – – 293 448 537 – – – –
		2,564

For the year ended 31 March 2007

Fees HK$’000 Executive directors Mr. Ng Tat Leung, George – Mr. Wong Teck Ming – Mr. Chen Jinkui (resigned on 9 November 2006) – Mr. Sun Haichao (resigned on 9 November 2006) – Mr. Lui Siu Yee, Samuel – Mr. Chan Wai Keung, Ivan – Mr. Lo Chung Sun, Simon – Non-executive director Mr. Wang Xianzhang (resigned on 29 August 2006) – Independent non-executive directors Mr. Wong Lit Chor, Alexis 80 Mr. Lo Ka Wai 80 Dr. Leung Wai Cheung 80 Total 240	contributions to salaries and retirement other benefits benefits schemes HK$’000 HK$’000 1,435 12 1,113 12 – – – – 568 12 883 12 1,062 12 – – – – – – – – 5,061 60	total HK$’000 1,447 1,125 – – 580 895 1,074 – 80 80 80
		5,361

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For the year ended 31 March 2006

Fees HK$’000 Executive directors Mr. Ng Tat Leung, George – Mr. Wong Teck Ming – Mr. Chen Jinkui – Mr. Sun Haichao – Mr. Lui Siu Yee, Samuel – Mr. Chan Wai Keung, Ivan – Mr. Lo Chung Sun, Simon – Non-executive director Mr. Wang Xianzhang – Independent non-executive directors Mr. Wong Lit Chor, Alexis 80 Mr. Lo Ka Wai 80 Dr. Leung Wai Cheung 80 Total 240	contributions to salaries and retirement other benefits benefits schemes HK$’000 HK$’000 1,570 12 1,233 12 – – – – 730 12 883 12 1,132 12 – – – – – – – – 5,548 60	total HK$’000 1,582 1,245 – – 742 895 1,144 – 80 80 80
		5,848

For the year ended 31 March 2005

Fees HK$’000 Executive directors Mr. Ng Tat Leung, George – Mr. Wong Teck Ming – Mr. Chen Jinkui – Mr. Sun Haichao – Mr. Lui Siu Yee, Samuel – Mr. Chan Wai Keung, Ivan – Mr. Lo Chung Sun, Simon – Mr. Zhang Xiaoshu (resigned on 20 September 2004) – Mr. Miao Jianmin (resigned on 31 March 2005) – Mr. Zheng Changyong (resigned on 31 March 2005) – Non-executive director Mr. Wang Xianzhang – Independent non-executive directors Mr. Wong Lit Chor, Alexis 50 Mr. Lo Ka Wai 50 Dr. Leung Wai Cheung 50 Total 150	contributions to salaries and retirement other benefits benefits schemes HK$’000 HK$’000 1,424 12 1,113 12 – – – – 559 12 883 12 1,062 12 – – 200 – 200 – – – – – – – – – 5,441 60	total HK$’000 1,436 1,125 – – 571 895 1,074 – 200 200 – 50 50 50
		5,651

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Appendix ii

During the Relevant Periods, no emoluments ware paid by the Group to the directors as an inducement to join or upon joining the Group or as compensation for loss of office. None of the directors has waived any emoluments during the Relevant Periods.

The amounts of directors’ emoluments which are directly attributable to construction activities and capitalized in construction contracts amounted to approximately HK$716,000, HK$716,000, HK$716,000 and HK$522,000 for each of the three years ended 31 March 2005, 2006 and 2007 and the period ended 30 September 2007, respectively.

The directors’ emoluments shown above do not include the estimated monetary value of the Group’s owned premises provided rent-free to a director. The estimated rental value of such accommodation was approximately HK$96,000, HK$96,000, HK$96,000 and HK$48,000 for each of the three years ended 31 March 2005, 2006 and 2007 and the period ended 30 September 2007, respectively.

12. eMpLoYees’ eMoLuMents

Of the five individuals with the highest emoluments in the Group for each of the three years ended 31 March 2005, 2006 and 2007 and the periods ended 30 September 2006 and 2007, 4, 3, 4, 4 and 4 respectively were directors of the Company whose emoluments are included in the disclosures in Note 11 above. The emoluments of the remaining individuals were as follows:

Salaries and other benefits Contributions to retirement benefits schemes Their emoluments were within the	Year ended Year ended 31 March 31 March 2005 2006 HK$’000 HK$’000 1,308 3,044 12 24 1,320 3,068 following bands:	Year ended period ended period ended 31 March 30 september 30 september 2007 2006 2007 HK$’000 HK$’000 HK$’000 2,650 2,650 480 5 5 6 2,655 2,655 486	Year ended period ended period ended 31 March 30 september 30 september 2007 2006 2007 HK$’000 HK$’000 HK$’000 2,650 2,650 480 5 5 6 2,655 2,655 486
			486

Number of individuals Nil-HK$1,000,000 HK$1,000,001-HK$1,500,000 HK$1,500,001-HK$2,000,000 HK$2,500,001-HK$3,000,000	Year ended 31 March 2005 HK$’000 – 1 – – 1	Year ended 31 March 2006 HK$’000 – 1 1 – 2	Year ended period ended period ended 31 March 30 september 30 september 2007 2006 2007 HK$’000 HK$’000 HK$’000 – – 1 – – – – – – 1 1 – 1 1 1	Year ended period ended period ended 31 March 30 september 30 september 2007 2006 2007 HK$’000 HK$’000 HK$’000 – – 1 – – – – – – 1 1 – 1 1 1
				1

compensation to key management personnel

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

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13. eArnings/(Loss) per shAre

The calculation of the basic earnings/(loss) per share attributable to the ordinary equity holders of the Company is based on the following data:

earnings/(Loss) Earnings/(Loss) for the purpose of basic earnings/(loss) per share (profit/(loss) for the year/period attributable to equity holders of the Company) number of shares (in thousand) Weighted average number of ordinary shares for the purpose of calculating basic earnings/(loss) per share	Year ended 31 March 2005 HK$’000 14,176 29,032	Year ended 31 March 2006 HK$’000 (22,336 ) 35,195	Year ended period ended period ended 31 March 30 september 30 september 2007 2006 2007 HK$’000 HK$’000 HK$’000 9,519 5,597 10,041 50,184 46,145 54,300	Year ended period ended period ended 31 March 30 september 30 september 2007 2006 2007 HK$’000 HK$’000 HK$’000 9,519 5,597 10,041 50,184 46,145 54,300
				54,300

The weighted average number of ordinary shares used in the calculation of earnings per share for the year ended 31 March 2007 has accounted for the issuance of new shares pursuant to the rights issue which was completed in June 2006. The corresponding number of ordinary shares for the years ended 31 March 2005 and 2006 has been retrospectively adjusted to reflect the said rights issue.

No diluted earnings per share has been presented because the exercise price of the Company’s outstanding warrants was higher than the average market price for shares for the years ended 31 March 2006 and 2007 and the periods ended 30 September 2006 and 2007.

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14. propertY, pLAnt And eQuipMent

cost or VALuAtion At 1 April 2004 Additions Disposals Acquisition of a subsidiary Revaluation At 31 March 2005 Additions Disposals Revaluation At 31 March 2006 Additions Disposals Disposal of subsidiaries Revaluation At 31 March 2007 Additions Disposals At 30 September 2007 Analysis of cost or valuation At 31 March 2005 At cost At valuation At 31 March 2006 At cost At valuation At 31 March 2007 At cost At valuation	Leasehold buildings HK$’000 1,400 5,216 – – 1,534 8,150 – – 1,550 9,700 – – – 300 10,000 – – 10,000 – 8,150 8,150 – 9,700 9,700 – 10,000 10,000	plant and Furniture and machinery equipment HK$’000 HK$’000 12,700 8,426 45 880 (50 ) – 310 92 763 – 13,768 9,398 243 203 (36 ) – (2,047 ) – 11,928 9,601 39 46 (2 ) – (469 ) (1,045 ) (1,580 ) – 9,916 8,602 – 10 (2,491 ) – 7,425 8,612 – 9,398 13,768 – 13,768 9,398 – 9,601 11,928 – 11,928 9,601 – 8,602 9,916 – 9,916 8,602	Motor vehicles HK$’000 1,075 110 (270 ) 158 129 1,202 467 (225 ) (199 ) 1,245 206 (432 ) (154 ) (195 ) 670 346 (36 ) 980 – 1,202 1,202 – 1,245 1,245 – 670 670	total HK$’000 23,601 6,251 (320 ) 560 2,426 32,518 913 (261 ) (696 ) 32,474 291 (434 ) (1,668 ) (1,475 ) 29,188 356 (2,527 ) 27,017 9,398 23,120 32,518 9,601 22,873 32,474 8,602 20,586 29,188

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Appendix ii

AccountAnts’ report on the group

At 30 September 2007 At cost At valuation depreciAtion At 1 April 2004 Provided for the year Acquisition of a subsidiary Eliminated on revaluation At 31 March 2005 Provided for the year Eliminated on revaluation At 31 March 2006 Provided for the year Eliminated on disposal of subsidiaries Eliminated on revaluation At 31 March 2007 Provided for the period At 30 September 2007 cArrYing AMounts At 30 September 2007 At 31 March 2007 At 31 March 2006 At 31 March 2005	Leasehold buildings HK$’000 – 10,000 10,000 – 149 – (149 ) – 178 (178 ) – 242 – (242 ) – 250 250 9,750 10,000 9,700 8,150	plant and Furniture and machinery equipment HK$’000 HK$’000 – 8,612 7,425 – 7,425 8,612 – 7,015 2,728 722 25 5 (2,753 ) – – 7,742 3,774 735 (3,774 ) – – 8,477 3,763 484 (48 ) (971 ) (3,715 ) – – 7,990 1,806 164 1,806 8,154 5,619 458 9,916 612 11,928 1,124 13,768 1,656	Motor vehicles HK$’000 – 980 980 – 479 20 (499 ) – 764 (764 ) – 399 (17 ) (382 ) – 208 208 772 670 1,245 1,202	total HK$’000 8,612 18,405
				27,017
				7,015 4,078 50 (3,401 )
				7,742 5,451 (4,716 )
				8,477 4,888 (1,036 ) (4,339 )
				7,990 2,428
				10,418
				16,599
				21,198
				23,997
				24,776

The above items of property, plant and equipment are depreciated on a straight-line basis at the following rates per annum:

Leasehold buildings:	Over the lease terms
Plant and machinery:	10%
Furniture and equipment:	20%
Motor vehicles:	20%

At the balance sheet dates, the Group’s leasehold buildings were situated in Hong Kong and held under medium term leases, which were pledged to secure general banking facilities granted to the Group.

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The Group’s leasehold buildings were revalued on 31 March 2007 at HK$10,000,000 (2006: HK$9,700,000; 2005: HK$8,150,000) by AA Property Services Limited, independent qualified professional valuers not connected with the Group. AA Property Services Limited has appropriate qualifications and recent experiences in the valuation of similar properties in the relevant locations. The valuation was performed on an open market, vacant possession basis with reference to comparable market transactions. The gain on revaluation of approximately HK$542,000 (2006: HK$1,728,000; 2005: HK$1,683,000) was credited to the assets revaluation reserve.

The fair value of the Group’s plant and machinery at 31 March 2007 of approximately HK$9,916,000 (2006: HK$11,928,000; 2005: HK$13,768,000) was arrived at on the basis of a valuation carried out at that date by AA Property Services Limited, on a fair market value, continued use basis. The gain on revaluation of approximately HK$2,135,000 (2006: HK$1,785,000; 2005: HK$3,516,000) was credited to the assets revaluation reserve, and a loss on revaluation of approximately HK$58,000 was charged to the consolidated income statement for the year ended 31 March 2006.

The fair value of the Group’s motor vehicles at 31 March 2007 of approximately HK$670,000 (2006: HK$1,245,000; 2005: HK$1,202,000) was arrived at on the basis of a valuation carried out at that date by AA Property Services Limited, on a fair market value, continued use basis. The gain on revaluation of approximately HK$198,000 (2006: HK$565,000; 2005: HK$628,000) was credited to the assets revaluation reserve and a loss on revaluation of approximately HK$11,000 was charged to the consolidated income statement for the year ended 31 March 2007.

The directors consider that the carrying values of furniture and equipment at the balance sheet dates approximate their fair values and, in view of the immateriality of the individual amount involved, a professional valuation has not been carried out on these assets.

15. prepAid LeAse pAYMents

The Group’s prepaid lease payments at the balance sheet dates represented leasehold land in Hong Kong held under medium-term leases. The leasehold land was amortized on a straight-line basis over the remaining term of leases.

16. inVestMent propertY

FAir VALue Balance brought forward Increase in fair value Balance carried forward	As at 31 March 2005 HK$’000 1,500 2,500 4,000	As at 31 March 2006 HK$’000 4,000 400 4,400	As at 31 March 2007 HK$’000 4,400 400 4,800	As at 30 september 2007 HK$’000 4,800 –
				4,800

The fair value of the Group’s investment property at 31 March 2007 has been arrived at on the basis of a valuation carried out on that date by AA Property Services Limited, independent qualified professional valuers not connected with the Group. AA Property Services Limited has appropriate qualifications and recent experiences in the valuation of similar properties in the relevant locations. The valuation was arrived at by reference to comparable market transactions.

All of the Group’s property interests held under operating leases to earn rentals purposes are measured using the fair value model and are classified and accounted for as investment properties.

At the balance sheet dates, the Group’s investment property was located in Hong Kong and held under medium term lease, which was pledged to secure general banking facilities granted to the Group.

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17. goodWiLL

cost And cArrYing AMounts Balance brought forward Acquisition of a subsidiary Eliminated on disposal of a subsidiary Balance carried forward	As at 31 March 2005 HK$’000 1,943 365 – 2,308	As at 31 March 2006 HK$’000 2,308 – – 2,308	As at 31 March 2007 HK$’000 2,308 – (365 ) 1,943	As at 30 september 2007 HK$’000 1,943 – –
				1,943

Goodwill acquired in a business combination is allocated, at acquisition, to the cash-generating units (CGUs) that are expected to benefit from that business combination. The carrying amount of goodwill had been allocated as follows:

Landscaping – Design Landscapes International (HK) Company Limited (single CGU) Trading of plastic products – Supertact Plastics Company Limited (single CGU)	As at 31 March 2005 HK$’000 365 1,943 2,308	As at 31 March 2006 HK$’000 365 1,943 2,308	As at 31 March 2007 HK$’000 – 1,943 1,943	As at 30 september 2007 HK$’000 – 1,943
				1,943

The recoverable amount of the trading of plastic products CGU is determined based on a value in use calculation which uses cash flow projections based on financial budgets approved by management covering a five-year period, and a discount rate of 5% per annum. Cash flows beyond that five-year period have been extrapolated using a steady 7.5% per annum growth rate, which are determined by management based on past performance and its expectation of market development.

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18. interests in AssociAtes

Share of net assets Amounts due from associates Less: Amounts due from associates classified as current	As at 31 March 2005 HK$’000 2,454 9,870 12,324 (1,554) 10,770	As at 31 March 2006 HK$’000 442 18,862 19,304 (1,600) 17,704	As at As at 31 March 30 september 2007 2007 HK$’000 HK$’000 874 106 31,243 30,853 32,117 30,959 (11,078) (9,533 ) 21,039 21,426

Particulars of the Group’s principal associates are as follows:

			equity	interests attributable to the	interests attributable to the	group
		place of	As at	As at	As at	As at
	Form of	incorporation	31 March	31 March 31 March		30 september	principal
name	business structure	and operations	2005	2006	2007	2007	activities
CLJV Limited	Limited liability	Hong Kong	50%	–	–	–	Property investment
	company
Design Landscapes	Limited liability	Hong Kong	–	–	50%	50%	Provision of
International (HK)	company						landscaping services
Company Limited
Design Landscapes	Limited liability	Hong Kong	50%	50%	50%	50%	Provision of
International (Group)	company						landscaping services
Company Limited
Aquatec International Limited	Limited liability	Hong Kong	24%	–	–	–	Provision of cooling
	company						tower water management
							treatment service
King Fine Development Limited	Limited liability	Hong Kong	35%	35%	35%	35%	Property development
	company
Powerluck Properties Limited	Limited liability	BVI	–	35%	35%	35%	Property development
	company
Hypsos Leisure Asia Limited	Limited liability	Hong Kong	–	42.5%	42.5%	42.5%	Exhibition project
	company						management

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

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The summarized financial information in respect of the Group’s associates is set out below:

Total assets Total liabilities Revenue Loss for the year/period	As at and for the year ended 31 March 2005 HK$’000 26,886 27,405 22,047 1,578	As at and for the year ended 31 March 2006 HK$’000 79,714 78,760 721 980	As at As at and for the and for the year ended period ended 31 March 30 september 2007 2007 HK$’000 HK$’000 196,507 203,043 196,326 204,331 71,110 21,346 8,945 916

19. interests in JointLY-controLLed entities

Interests in jointly-controlled entities	As at 31 March 2005 HK$’000 46,107	As at 31 March 2006 HK$’000 37,621	As at As at 31 March 30 september 2007 2007 HK$’000 HK$’000 9,309 5,026

Particulars of the Group’s principal jointly-controlled entities are as follows:

			equity	interests attributable to the	interests attributable to the	group
		place of	As at	As at	As at	As at
	Form of	incorporation	31 March	31 March 31 March		30 september	principal
name	business structure	and operations	2005	2006	2007	2007	activities
AWG-JV Limited	Limited liability	Hong Kong	50%	50%	50%	–	Foundation piling works
	company
Costain-China Harbour Joint Venture	Unincorporated	Hong Kong	40%	40%	40%	40%	Foundation piling works
CCL Joint Venture	Unincorporated	Hong Kong	33%	33%	–	–	Superstructure construction
CHEC-CWF Limited	Limited liability	Hong Kong	–	30%	30%	30%	Highway maintenance
	company
China Harbour-Transfield	Unincorporated	Hong Kong	15.3%	15.3%	15.3%	15.3%	Drainage improvement
Joint Venture
W. Hing-Kentech Joint Venture	Unincorporated	Hong Kong	70%	70%	–	–	Superstructure construction
MLL-CWF Joint Venture	Unincorporated	Hong Kong	40%	40%	40%	40%	Foundation piling works
China Harbour-CWF	Unincorporated	Hong Kong	49%	49%	49%	49%	Foundation piling works
Joint Venture
Veolia Water (Zhuhai) Wastewater	Sino-foreign	PRC	24%	40%	40%	40%	Provision of wastewater
Treatment Company Limited	co-operative joint						treatment service
	venture
Veolia Water (Zhuhai) Wastewater	Sino-foreign	PRC	23.4%	39%	39%	39%	Provision of wastewater
Treatment Operations	co-operative joint						treatment management
Company Limited	venture						service

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Appendix ii

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

The summarized financial information in respect of the Group’s jointly-controlled entities is set out below:

Total assets Total liabilities Revenue Profit/(Loss) for the year/period 20. AVAiLABLe-For-sALe inVestMent Unlisted equity securities, at cost	As at and for the year ended 31 March 2005 HK$’000 285,772 174,155 144,088 13,320 As at 31 March 2005 HK$’000 –	As at and for the year ended 31 March 2006 HK$’000 365,215 261,489 248,398 13,694 As at 31 March 2006 HK$’000 1	As at As at and for the and for the year ended period ended 31 March 30 september 2007 2007 HK$’000 HK$’000 378,923 384,619 365,967 390,912 412,994 299,129 (68,134) (17,394 ) As at As at 31 March 30 september 2007 2007 HK$’000 HK$’000 1 1

Notes:

• (i) The Group holds 8% of the issued share capital of Wealthy Star Development Limited, a limited liability company incorporated in Hong Kong which is principally engaged in property development. The Group’s investment in Wealthy Star Development Limited is measured at cost less impairment at each balance sheet date because the range of reasonable fair value estimates is so significant that the directors of the Company are of the opinion that the fair value cannot be measured reliably.

• (ii) The amount due from an investee entity, Wealthy Star Development Limited, of approximately HK$13,164,000, HK$16,604,000 and HK$17,136,000 at 31 March 2006 and 2007 and 30 September 2007, respectively is unsecured, interest-free and has no fixed terms of repayment.

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21. Accounts receiVABLe

Accounts receivable, with aged analysis 0-90 days 91-180 days 181-365 days Over 365 days Less: accumulated impairment contract retention receivables Retentions held by contract customers Less: accumulated impairment Less: contract retention receivables classified as non-current assets Retentions held by contract customers included in accounts receivable under current assets Amounts due from contract customers total accounts receivable as shown under current assets	As at 31 March 2005 HK$’000 75,267 965 1,405 37,261 114,898 (26,505 ) 88,393 40,017 (12,878 ) 27,139 (6,762 ) 20,377 22,384 131,154	As at 31 March 2006 HK$’000 55,673 743 651 34,783 91,850 (28,712 ) 63,138 45,319 (12,549 ) 32,770 (3,963 ) 28,807 22,608 114,553	As at As at 31 March 30 september 2007 2007 HK$’000 HK$’000 45,153 63,227 276 25 70 599 29,715 28,196 75,214 92,047 (27,333 ) (27,831 ) 47,881 64,216 33,606 33,753 (9,859 ) (9,859 ) 23,747 23,894 (2,154 ) (5,752 ) 21,593 18,142 25,883 29,038 95,357 111,396

The Group’s credit terms for its contracting business are negotiated with contract customers. Accounts receivable of a non-retention nature are generally due within 30 days of certification by independent architects as to the value of the contract works performed and claimed by the Group in its interim applications for progress payment.

Retentions are due on the expiration of contract maintenance/defects liability period, which is determined in accordance with relevant contract terms and generally stipulated as 181 days to 365 days from the date of practical completion of the contract works.

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Included in accounts receivable are amounts due from contract customers which represent the excess of contract costs incurred to date by the Group plus recognized profits, less recognized losses and progress billings raised by the Group for respective contracts at the balance sheet dates:

Contract costs incurred plus recognized profits less recognized losses to date Less: progress billings Amounts due from contract customers	As at 31 March 2005 HK$’000 406,766 (384,382 ) 22,384	As at 31 March 2006 HK$’000 416,749 (394,141 ) 22,608	As at As at 31 March 30 september 2007 2007 HK$’000 HK$’000 844,087 882,116 (818,204 ) (853,078 ) 25,883 29,038	As at As at 31 March 30 september 2007 2007 HK$’000 HK$’000 844,087 882,116 (818,204 ) (853,078 ) 25,883 29,038
				29,038

Included in the Group’s accounts receivable are the following amounts due from associates and a jointlycontrolled entity of the Group which are unsecured, interest-free and payable on similar credit terms to those offered to other major customers of the Group. The receivables arose from the undertaking of construction contract works during the Relevant Periods.

Associates Jointly-controlled entity 22. other receiVABLes Prepayments, deposits and other receivables Amounts due from jointly-controlled entities Amounts due from associates Amounts due from minority shareholders Amount due from a related company	As at 31 March 2005 HK$’000 – 10,754 As at 31 March 2005 HK$’000 4,854 8,417 1,554 2,428 1,895 19,148	As at 31 March 2006 HK$’000 3,423 5,363 As at 31 March 2006 HK$’000 2,320 5,171 1,600 4,607 – 13,698	As at As at 31 March 30 september 2007 2007 HK$’000 HK$’000 6,087 1,582 1,163 178 As at As at 31 March 30 september 2007 2007 HK$’000 HK$’000 2,794 4,531 8,652 14,024 11,078 9,533 4,463 4,463 – – 26,987 32,551	As at As at 31 March 30 september 2007 2007 HK$’000 HK$’000 6,087 1,582 1,163 178 As at As at 31 March 30 september 2007 2007 HK$’000 HK$’000 2,794 4,531 8,652 14,024 11,078 9,533 4,463 4,463 – – 26,987 32,551
				32,551

The amounts due from jointly-controlled entities, associates, minority shareholders and a related company are unsecured, interest-free and have no fixed terms of repayment.

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23. pLedged BAnK deposits And BAnK BALAnces And cAsh

The pledged bank deposits and bank balances at the balance sheet dates were mainly denominated in Hong Kong dollars and United States dollars and carried interest at prevailing market rate.

24. Accounts pAYABLe

Accounts payable, with aged analysis 0-90 days 91-180 days 181-365 days Over 365 days Amounts due to contract customers Total accounts payable as shown under current liabilities	As at 31 March 2005 HK$’000 56,483 2,043 2,860 21,522 82,908 24,268 107,176	As at 31 March 2006 HK$’000 36,806 5,596 8,050 24,450 74,902 26,019 100,921	As at As at 31 March 30 september 2007 2007 HK$’000 HK$’000 32,515 36,011 3,646 7,747 4,746 8,955 20,820 16,292 61,727 69,005 11,856 25,925 73,583 94,930	As at As at 31 March 30 september 2007 2007 HK$’000 HK$’000 32,515 36,011 3,646 7,747 4,746 8,955 20,820 16,292 61,727 69,005 11,856 25,925 73,583 94,930
				69,005 25,925
				94,930

Included in accounts payable are amounts due to contract customers which represent the excess of progress billings raised by the Group for the respective contracts over the contract costs incurred to date by the Group plus recognized profits less recognized losses at the balance sheet dates:

Contract costs incurred plus recognized profits less recognized losses to date Less: progress billings Amounts due to contract customers	As at 31 March 2005 HK$’000 802,652 (826,920 ) (24,268 )	As at 31 March 2006 HK$’000 430,520 (456,539 ) (26,019 )	As at As at 31 March 30 september 2007 2007 HK$’000 HK$’000 308,331 384,326 (320,187 ) (410,251 ) (11,856 ) (25,925 )	As at As at 31 March 30 september 2007 2007 HK$’000 HK$’000 308,331 384,326 (320,187 ) (410,251 ) (11,856 ) (25,925 )
				(25,925 )

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25. other pAYABLes

Other payables and accruals Amounts due to jointly-controlled entities Amounts due to minority shareholders Amounts due to associates	As at 31 March 2005 HK$’000 5,011 6,342 15,106 2,457 28,916	As at 31 March 2006 HK$’000 4,957 7,808 1,043 – 13,808	As at As at 31 March 30 september 2007 2007 HK$’000 HK$’000 4,278 4,193 2,592 2,591 1,041 1,041 – – 7,911 7,825	As at As at 31 March 30 september 2007 2007 HK$’000 HK$’000 4,278 4,193 2,592 2,591 1,041 1,041 – – 7,911 7,825
				7,825

The amounts due to jointly-controlled entities, minority shareholders and associates are unsecured, interest-free and have no fixed terms of repayment.

26. BAnK BorroWings, secured

Mortgage loan Term loan Trust receipt loans Bank overdrafts Carrying amount repayable: On demand or within one year More than one year, but not exceeding two years More than two years, but not more than five years More than five years Less: Amounts due within one year shown under current liabilities	As at 31 March 2005 HK$’000 – – 3,680 3,707 7,387 As at 31 March 2005 HK$’000 7,387 – – – 7,387 (7,387 ) –	As at 31 March 2006 HK$’000 4,305 1,620 13,116 64 19,105 As at 31 March 2006 HK$’000 15,602 801 2,405 297 19,105 (15,602 ) 3,503	As at As at 31 March 30 september 2007 2007 HK$’000 HK$’000 3,504 3,155 – – – – – – 3,504 3,155 As at As at 31 March 30 september 2007 2007 HK$’000 HK$’000 846 868 848 868 1,810 1,419 – – 3,504 3,155 (846 ) (868 ) 2,658 2,287	As at As at 31 March 30 september 2007 2007 HK$’000 HK$’000 3,504 3,155 – – – – – – 3,504 3,155 As at As at 31 March 30 september 2007 2007 HK$’000 HK$’000 846 868 848 868 1,810 1,419 – – 3,504 3,155 (846 ) (868 ) 2,658 2,287
				3,155 (868 )
				2,287

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The mortgage loan at 30 September 2007 was denominated in Hong Kong dollars and its effective interest rate was 6.25% per annum.

At 30 September 2007, the Group’s bank borrowings and banking facilities were supported by the following:

• (i) legal charges over the Group’s leasehold land and buildings situated in Hong Kong, with carrying value of approximately HK$9,750,000;

• (ii) legal charges over the Group’s investment property situated in Hong Kong, with carrying value of approximately HK$4,800,000;

• (iii) pledged deposits of approximately HK$16,675,000 of the Group;

• (iv) corporate guarantees executed by the Company in respect of banking facilities granted to certain subsidiaries of the Company; and

• (v) cross guarantees amongst certain subsidiaries of the Company.

In the opinion of the directors, no material liabilities will arise from the above corporate guarantees which arose in the ordinary course of business and the fair value of the corporate guarantees granted by the Company is immaterial.

27. deFerred tAxAtion

The following are the major deferred tax balances recognized and movements thereon during the Relevant Periods:

deferred tax liabilities

Accelerated tax depreciation HK$’000 At 1 April 2004 312 Credit to consolidated income statement for the year (60 ) Credit to equity for the year – At 31 March 2005 252 Credit to consolidated income statement for the year (392 ) Charge to equity for the year – At 31 March 2006 (140 ) Charge to consolidated income statement for the year 140 Charge to equity for the year – At 31 March 2007 – Charge to consolidated income statement for the period – Credit to equity for the period – At 30 September 2007 –	revaluation of assets HK$’000 1,788 – (237 ) 1,551 – 221 1,772 – 1,040 2,812 – (734 ) 2,078	total HK$’000 2,100 (60 ) (237) 1,803 (392 ) 221 1,632 140 1,040 2,812 – (734) 2,078

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deferred tax assets

decelerated

At 1 April 2004 Charge to consolidated income statement for the year At 31 March 2005 Charge to consolidated income statement for the year At 31 March 2006 Credit/(charge) to consolidated income statement for the year At 31 March 2007 Charge to consolidated income statement for the period At 30 September 2007	tax revaluation tax losses depreciation of assets HK$’000 HK$’000 HK$’000 2,672 14 124 (857 ) (14 ) – 1,815 – 124 (804 ) – – 1,011 – 124 (403 ) 356 – 608 356 124 (2 ) (37 ) – 606 319 124	total HK$’000 2,810 (871 ) 1,939 (804 ) 1,135 (47 ) 1,088 (39 ) 1,049

For the purpose of balance sheet presentation, certain deferred tax assets and liabilities have been offset. The following is the analysis of the deferred tax balances for financial reporting purposes:

Deferred tax liabilities Deferred tax assets	As at 31 March 2005 HK$’000 15 (151 ) (136 )	As at 31 March 2006 HK$’000 609 (112 ) 497	As at As at 31 March 30 september 2007 2007 HK$’000 HK$’000 1,828 1,259 (104 ) (439 ) 1,724 820

At 31 March 2007, the Group has unused tax losses of HK$40,091,000 available for offset against future profits. A deferred tax asset has been recognized in respect of approximately HK$3,474,000 of such losses. No deferred tax asset has been recognized in respect of the remaining HK$36,617,000 due to the unpredictability of future profit streams. All unused tax losses may be carried forward indefinitely.

28. conVertiBLe notes

On 12 May 2004, the Company entered into a conditional subscription agreement with Grand Legend Limited and Mr. Lo Chun Yang in respect of the subscription of a convertible note with an aggregate principal amount of HK$11,500,000. The convertible note was interest bearing at the rate of 1% per annum on the outstanding principal amount of the convertible note from its date of issue to the maturity date, which was eighteen calendar months after its date of issue. The convertible note may be converted at the option of the subscriber at a conversion price of HK$0.20 per ordinary share at any time after its date of issue and up to the maturity date. Completion of the note subscription agreement took place in June 2004. During the year ended 31 March 2006, the convertible note was converted in full by the subscriber at a conversion price of HK$0.20 per share and accordingly, 57,500,000 new shares of HK$0.10 each

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in the capital of the Company were issued to the subscriber. All shares issued upon conversion ranked pari passu in all respects with the then existing shares of the Company. The convertible note contained two components, liability and equity element. The equity element is presented in equity heading “Convertible loan note equity reserve”. The effective interest rate of the liability component was 5.13% per annum.

On 7 May 2007, the Company entered into a conditional subscription agreement with Best Time International Limited in respect of the subscription of a convertible note with an aggregate principal amount of HK$15,000,000. The convertible note was interest-bearing at the rate of 1% per annum on the outstanding principal amount of the convertible note from its date of issue to the maturity date, which was the second anniversary from its date of issue. The convertible note may be converted at the option of the subscriber at a conversion price of HK$1.50 per ordinary share at any time after its date of issue and up to the maturity date. On 29 August 2007, the convertible note was redeemed at the principal amount of HK$15,000,000. No interest expense was incurred on redemption.

Liability component at beginning of the year/period Liability component at date of issue Interest charged Interest paid Conversion of convertible note Redemption of convertible note Liability component at end of the year/period	As at 31 March 2005 HK$’000 – 10,828 493 (103 ) – – 11,218	As at 31 March 2006 HK$’000 11,218 – 68 (14 ) (11,272 ) – –	As at 31 March 2007 HK$’000 – – – – – – –	As at 30 september 2007 HK$’000 – 15,000 – – – (15,000 )
				–

29. shAre cApitAL

Notes Authorized At 1 April 2004, 31 March 2005 and 31 March 2006 (Ordinary shares of HK$0.1 each) Share consolidation (b) At 31 March 2007 and 30 September 2007 (Ordinary shares of HK$1 each) issued and fully paid At 1 April 2004 and 31 March 2005 (Ordinary shares of HK$0.1 each) Issue of shares upon conversion of convertible notes Issue of shares for acquisition of additional interest in a subsidiary At 31 March 2006 and 1 April 2006 (Ordinary shares of HK$0.1 each) Share consolidation (b) Rights issue (c) At 31 March 2007 and 30 September 2007 (Ordinary shares of HK$1 each)	number of shares 1,000,000,000 (900,000,000 ) 100,000,000 287,500,000 57,500,000 17,000,000 362,000,000 (325,800,000 ) 18,100,000 54,300,000	share capital HK$’000 100,000 –
		100,000
		28,750 5,750 1,700
		36,200 – 18,100
		54,300

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Notes:

• (a) On 30 August 2005, the Company issued 5,000,000 unlisted warrants to Complete Success Limited at a warrant issue price of HK$0.20 per warrant as part of the purchase consideration for acquisition of additional interest in a subsidiary. The warrants were issued to Complete Success Limited in registered form and constituted by a warrant instrument, and rank pari passu in all respects among themselves. Each warrant carries the right to subscribe for one share of HK$1.00 each in the capital of the Company at an adjusted subscription price of HK$2.64 per share.

• (b) Pursuant to the resolutions passed by the Company’s shareholders at the special general meeting of the Company held on 22 May 2006, every 10 ordinary shares of HK$0.10 each in the issued and unissued share capital of the Company were consolidated into one consolidated share of HK$1.00.

• (c) In June 2006, the Company completed a rights issue by issuing 18,100,000 shares of HK$1.00 each at the subscription price of HK$1.00 per share.

30. shAre option scheMe

The Company operates a share option scheme (the “Scheme”) for the purpose of providing incentives or rewards to eligible participants for their contribution to the Group and/or to enable the Group to recruit and retain high-caliber employees and attract human resources that are valuable to the Group and any entity in which the Group holds an equity interest (the “Invested Entity”). Eligible participants of the Scheme include the directors and employees of the Company, its subsidiaries or any Invested Entity, suppliers and customers of the Group or any Invested Entity, any technical, financial and legal professional advisers engaged by the Group or any Invested Entity, and any shareholder of any member of the Group or any Invested Entity or any holder of any securities issued by any member of the Group or any Invested Entity. The Scheme became effective on 28 August 2002 and unless otherwise terminated or amended, will remain in force for 10 years from that date.

The maximum number of shares which may be issued upon exercise of all outstanding share options granted and yet to be exercised under the Scheme and any other share option schemes of the Company must not exceed 30% of the total number of shares in issue from time to time. The total number of shares which may be issued upon exercise of all share options to be granted under the Scheme and any other share option schemes of the Company shall not in aggregate exceed 10% of the total number of shares in issue on 28 August 2002. Share options which lapse in accordance with the terms of the Scheme or any other share option schemes of the Company will not be counted for the purpose of calculating the 10% limit. The Company may seek approval of the shareholders in a general meeting for refreshing the 10% limit under the Scheme, save that the total number of shares which may be issued upon exercise of all share options to be granted under the Scheme and any other share option schemes of the Company under the limit as refreshed shall not exceed 10% of the total number of shares in issue as at the date of approval of the limit as refreshed. Share options previously granted under the Scheme or any other share option schemes of the Company (including share options outstanding, cancelled, lapsed or exercised in accordance with the terms of the Scheme or any other share option schemes of the Company) will not be counted for the purpose of calculating the limit as refreshed. The total number of shares issued and to be issued upon exercise of the share options granted to each eligible participant (including both exercised and outstanding options) in any 12-month period shall not exceed 1% of the total number of shares in issue.

Each grant of the share options to a director, chief executive or substantial shareholder of the Company, or to any of their associates, under the Scheme must comply with the requirements of Rule 17.04 of the Listing Rules and must be subject to approval by independent non-executive directors to whom share options have not been granted. In addition, any grant of share options to a substantial shareholder or an independent non-executive director of the Company, or to any of their associates, which would result in the shares issued and to be issued upon exercise of all share options already granted and to be granted (including share options exercised, cancelled and outstanding) to such person in the 12-month period up to and including the date of such grant in excess of 0.1% of the shares of the Company in issue and

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with an aggregate value (based on the closing price of the Company’s shares at the date of each grant) in excess of HK$5 million, are subject to prior shareholders’ approval in a general meeting. The offer of a grant of share options shall be accepted within 28 days from the date of the offer, upon payment of a nominal consideration of HK$1 in total by the grantee. The exercise period of the share options granted is determinable by the directors, save that such period shall not be more than 10 years from the date of the offer of the share options, subject to the provisions for early termination set out in the Scheme. There is no minimum period for which an option must be held before the exercise of the subscription right attaching thereto, except as otherwise imposed by the board of directors.

The exercise price of the share options is determinable by the directors, but may not be less than the highest of (i) the closing price of the Company’s shares as quoted on the daily quotation sheets of the Stock Exchange on the date of the offer of the share options; (ii) the average closing price of the Company’s shares as quoted on the daily quotation sheets of the Stock Exchange for the five trading days immediately preceding the date of the offer; and (iii) the nominal value of the Company’s shares.

Share options do not confer rights on the holders to dividends or to vote at shareholders’ meetings.

The Company has not granted any share options during the Relevant Periods. At 30 September 2007, there were no outstanding share options.

31. notes to the consoLidAted cAsh FLoW stAteMent

(i) Acquisition of additional interest in a subsidiary for the year ended 31 March 2006

On 21 June 2005, Wing Hing Group (BVI) Limited (“Wing Hing BVI”), a wholly-owned subsidiary of the Company, entered into an acquisition agreement (the “Acquisition Agreement”) with Complete Success Limited. Pursuant to the Acquisition Agreement, Wing Hing BVI agreed to acquire from Complete Success Limited four shares of HK$1.00 each in the capital of CSP (HK) Limited (“CSP”), representing 40% of the entire issued share capital of CSP, and the shareholder’s loan of HK$14,063,184.68 owed by CSP to Complete Success Limited, at an aggregate consideration of HK$14,063,188.68.

Prior to the entering into of the Acquisition Agreement, CSP was owned as to 60% and 40% by Wing Hing BVI and Complete Success Limited, respectively. Complete Success Limited, being a substantial shareholder of CSP, was a connected person of the Company and the transaction constituted a discloseable and connected transaction on the part of the Company under the Listing Rules. The resolutions in respect of the transaction were duly passed by the Company’s shareholders at the special general meeting of the Company held on 25 August 2005.

The aggregate consideration was satisfied as to:

• (a) HK$3,400,000 by Wing Hing BVI procuring the Company to allot and issue 17,000,000 new shares of HK$0.10 each in the capital of the Company (“Consideration Shares”) to Complete Success Limited, credited as fully paid, at a price of HK$0.20 per Consideration Share;

• (b) HK$1,000,000 by Wing Hing BVI procuring the Company to issue the unlisted warrants to Complete Success Limited;

• (c) HK$4,946,207.55 by Wing Hing BVI paying in cash to Complete Success Limited; and

• (d) HK$4,716,981.13 by Wing Hing BVI paying in cash to Veolia Water (Zhuhai) Wastewater Treatment Company Limited (“Veolia Water (Zhuhai)” – a jointly-controlled entity of the Group) to settle the loan of HK$4,716,981 owed by Complete Success Limited to Veolia Water (Zhuhai).

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An analysis of the net outflow of cash and cash equivalents in respect of the acquisition of additional interest in CSP is as follows:

Notes Total consideration satisfied by: Issue of Consideration Shares (a) Issue of warrants (b) Total non-cash consideration Cash consideration (c) Cash consideration (d) Net outflow of cash and cash equivalents in respect of the acquisition of additional interest in CSP Total consideration	Year ended 31 March 2006 HK$’000 3,400 1,000
	4,400
	4,946 4,717
	9,663
	14,063

In the opinion of the directors, the net fair value of assets, liabilities and contingent liabilities of CSP as at the date of the aforesaid acquisition was insignificant.

(ii) disposal of subsidiaries

On 13 July 2006, W. Hing Construction Company Limited (“WH Construction”), a wholly-owned subsidiary of the Company, entered into a conditional subscription agreement dated 13 July 2006 with Design Landscapes International (HK) Company Limited (“Design Landscapes”), pursuant to which WH Construction agreed to subscribe for 42,711 new shares of Design Landscapes for an aggregate cash consideration of HK$93,110. On the same day, Mr Keith Jeferey Dood, an independent third party, entered into another conditional subscription agreement dated 13 July 2006 with Design Landscapes, pursuant to which Mr. Dood agreed to subscribe for 67,511 new shares of Design Landscapes for an aggregate cash consideration of HK$147,174. Upon completion of the aforesaid subscription agreements, the interest of WH Construction in Design Landscapes was reduced from 51% to approximately 50%. Accordingly, the results of Design Landscapes were consolidated up to August 2006 and accounted for as an associate of the Group thereafter.

On 18 October 2006, Wing Hing BVI entered into a sale and purchase agreement with an independent third party pursuant to which Wing Hing BVI agreed to sell and the purchaser agreed to acquire the entire issued share capital of Anpoint Engineering Limited (“Anpoint”), an indirect wholly-owned subsidiary of the Company, for a consideration of HK$1.00. Upon completion of the sale and purchase agreement, the Group ceased to hold any equity interests in Anpoint.

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net assets/(liabilities) disposed of: Property, plant and equipment Accounts receivable Other receivables Bank balances and cash Accounts payable Other payables and accruals Amount due to a related company Amounts due to associates Amounts due to minority shareholders Tax liabilities Minority interests Attributable goodwill Release of assets revaluation reserves Gain on disposal of subsidiaries Satisfied by: Interest in associates Cash consideration paid for acquisition of new shares of an associate Net cash outflow arising on disposal: Cash consideration paid for acquisition of new shares of an associate Bank balances and cash disposed of	Year ended 31 March 2005 HK$’000 – – – 9 – – (101 ) – – – – (92 ) – – (92 ) 92 – – – – – (9 ) (9 )	Year ended 31 March 2006 HK$’000 – – – – – – – – – – – – – – – – – – – – – – –	Year ended 31 March 2007 HK$’000 632 16,026 219 13,916 (16,337 ) (201 ) – (10,009 ) (2 ) (1,156 ) (3,382 ) (294 ) 365 (78 ) (7 ) 3,843 3,836 3,929 (93 ) 3,836 93 13,916 14,009

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(iii) Acquisition of subsidiaries

Net assets acquired: Property, plant and equipment Accounts receivable Other receivables Bank balances and cash Amounts due to related companies Accounts payable Minority interests Goodwill on acquisition Satisfied by: Cash Reclassification to interests in subsidiaries from interests in associates Net cash inflow arising on acquisition: Cash consideration Bank balances and cash acquired	Year ended 31 March 2005 HK$’000 510 5,578 126 825 (2,717 ) (3,813 ) (250 )
	259 456
	715
	532 183
	715
	(532 ) 825
	293

32. operAting LeAses

the group as lessee

At the balance sheet dates, the Group had commitments for future minimum lease payments under noncancelable operating leases which fall due as follows:

	As at	As at	As at	As at
	31 March	31 March	31 March	30 september
	2005	2006	2007	2007
	HK$’000	HK$’000	HK$’000	HK$’000
Within one year	112	391	28	84

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the group as lessor

At the balance sheet dates, the Group had contracted with tenants for the following future minimum lease payments:

	As at	As at	As at	As at
	31 March	31 March	31 March	30 september
	2005	2006	2007	2007
	HK$’000	HK$’000	HK$’000	HK$’000
Within one year	56	9	–	–

33. contingent LiABiLities

• (i) At 30 September 2007, the Group had executed guarantees in respect of performance bonds in favor of contract customers of approximately HK$41,502,000. In addition, at 30 September 2007, the Company had executed guarantees in favor of contract customers in respect of the performance of obligation under contracts by a jointly-controlled entity, China-Harbour-CWF Joint Venture, with original contract sum of approximately HK$85,392,000.

At 30 September 2007, the Company had executed guarantees for approximately HK$36,000,000 and HK$44,100,000 in respect of the general banking facilities granted to CHEC-CWF Limited (a jointlycontrolled entity in which the Group has 30% equity interests) and King Fine Development Limited (an associate in which the Group has 35% equity interests), respectively.

At 30 September 2007, the Company had executed guarantees for approximately HK$73,760,000 in respect of the general banking facilities granted to Wealthy Star Development Limited (an investee entity in which the Group has 8% equity interest).

• (ii) At 30 September 2007, certain subsidiaries of the Company had provided undertakings of financial support to certain of the Group’s jointly-controlled entities in proportion to their equity interests in these entities, in order that these entities could meet their obligations and liabilities as and when they fall due. The Group’s share of the net deficiency in assets of these jointly-controlled entities at 30 September 2007 has already been accounted for in presenting the financial information.

• (iii) The Group was previously engaged in early 2000 in the undertaking of a piling work contract, which was terminated by the contract customer during 2001 prior to completion of contract works as a result of allegation of non-conforming piles. In the previous year, the contract customer demanded from the Group the retrenchment of HK$5 million of the contract fees received by the Group, as compensation for early termination of the contract works. In prior years, the contract customer was in the process of undergoing a court compulsory winding-up and the provisional liquidator of the contract customer requested payment of HK$8 million from the Group. Having considered legal counsel’s advice, the directors are of the opinion that the claim is unlikely to succeed. Accordingly, no provision has been made.

• (iv) The Group has a contingent liability in respect of possible future long service payments to employees under the Hong Kong Employment Ordinance, with a maximum possible amount of HK$2.6 million at 30 September 2007. The contingent liability has arisen because, at the balance sheet date, a number of current employees have achieved the required number of years of service to the Group in order to be eligible for long service payments under the Hong Kong Employment Ordinance if their employment is terminated under certain circumstances. A provision has not been recognized in respect of such possible payments, as it is not considered probable that the situation will result in a material future outflow of resources from the Group.

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• (v) The Group was previously engaged in early 2000 in the undertaking of a piling work contract. In 2001, the Group made a claim against the main contractor of HK$7 million for variation orders in addition to the original contract sum. In prior years, the main contractor submitted a counterclaim of HK$44 million for additional costs incurred due to wrongful repudiation of the subcontract. Having considered the legal counsel’s advice, the directors are of the opinion that the Group has a good chance of defending the counterclaim. Accordingly, the directors consider that a provision for the counterclaim is not necessary.

• (vi) A number of claims have been brought against the Group in respect of compensation for alleged personal injuries sustained by construction workers during the execution of contract works. The directors believe that any liabilities of the Group in respect of such claims will be covered either by the Group’s insurance policies, or that the Group has a meritorious defense against such claims. Accordingly, the directors do not believe that these claims will have any material adverse impact on the Group and therefore no provisions have been made.

34. retireMent BeneFit pLAns

The Group operates a Mandatory Provident Fund Scheme for all qualifying employees in Hong Kong. The assets of the scheme are held separately from those of the Group, in funds under the control of trustees. The Group contributes 5% of relevant payroll costs to the scheme, which contribution is matched by employees. The total amount contributed by the Group to the scheme and charged to the consolidated income statement amounted to approximately HK$1,221,000, HK$1,875,000, HK$3,035,000, HK$1,680,000 and HK$811,000 for each of the three years ended 31 March 2005, 2006 and 2007 and the periods ended 30 September 2006 and 2007, respectively. At 30 September 2007, there were no forfeited contributions available for the Group to offset contributions payable in future years.

35. reLAted pArtY trAnsActions

Save as disclosed elsewhere in the financial information, the Group had the following significant related party transactions during the Relevant Periods:

Notes Service fee income from jointly – controlled entities (i) Service fee income from associates (i) Sales of materials to a jointly – controlled entity (ii) Purchases of finished goods from a jointly-controlled entity (ii) Subcontracting fee paid to a jointly-controlled entity (iii) Contract sum received and receivable from jointly-controlled entities (iv) Contract sum received and receivable from an associate (iv)	Year ended 31 March 2005 HK$’000 (1,716 ) (865 ) (11,544 ) 16,780 23,278 (93,804 ) –	Year ended 31 March 2006 HK$’000 (9,630 ) (125 ) (12,406 ) 18,505 6,849 (3,473 ) –	Year ended period ended period ended 31 March 30 september 30 september 2007 2006 2007 HK$’000 HK$’000 HK$’000 (40,366 ) (23,709 ) (3,401 ) (370 ) (138 ) (1,708 ) (12,123 ) (6,679 ) (5,173 ) 18,473 10,235 9,338 – – – (304 ) – – (685 ) (435 ) –

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Notes:

• (i) The service fee income was charged in relation to the provision of management and consultancy services and labors in respect of the undertaking of construction works. The service charge was made on a cost recovery basis.

• (ii) The sales of materials and purchases of finished goods were made in accordance with terms mutually agreed between the parties.

• (iii) The subcontracting fee was paid in accordance with terms mutually agreed between the parties.

• (iv) The contract sum was received for construction contracts subcontracted to the Group. The contract fees were charged in accordance with terms mutually agreed between the parties.

ii. suBseQuent eVents

• (a) On 10 January 2008, CWS International Trading Limited, a wholly owned subsidiary of the Company, entered into a conditional sale and purchase agreement with Ms. Liu Pui Lan, pursuant to which CWS International Trading Limited agreed to acquire and Ms. Liu Pui Lan agreed to sell the sale share (representing the entire issued share capital of Farrell Global Limited) and the sale loan (representing all obligations, liabilities and debts owing or incurred by Farrell Global Limited to Ms. Liu Pui Lan on or at any time prior to completion of the aforesaid transaction) for a total consideration of HK$250,000,000. The transaction constitutes a very substantial acquisition on the part of the Company under the Listing Rules and is subject to the approval of the Company’s shareholders at a special general meeting of the Company.

• (b) On 28 February 2008, the Company entered into a conditional sale and purchase agreement with Heart Ace Limited pursuant to which Heart Ace Limited agreed to acquire and the Company agreed to sell the sale shares (representing the entire issued share capital of Wing Hing Group (BVI) Limited, a wholly owned subsidiary of the Company) and the sale loan (representing all obligations, liabilities and debts owing or incurred by Wing Hing Group (BVI) Limited to the Company on or at any time prior to completion of the aforesaid transaction) for a total consideration of HK$171,000,000. The underlying assets to be disposed by the Company comprise the Company’s interests in the entire issued share capital of Wing Hing Group (BVI) Limited, the entire issued share capital of Sunny Engineering Limited, the entire issued share capital of CSP (HK) Limited, 35% of the issued share capital of King Fine Development Limited, 8% of the issued share capital of Wealthy Star Development Limited, 39% of the registered and paid up capital of Veolia Water (Zhuhai) Wastewater Treatment Operations Company Limited and 40% of the registered and paid up capital of Veolia Water (Zhuhai) Wastewater Treatment Company Limited (collectively referred to as the “Disposed Assets”). The transaction constitutes a very substantial disposal and connected transaction on the part of the Company under the Listing Rules and is subject to the approval of the Company’s independent shareholders at a special general meeting of the Company.

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• (i) Included in the consolidated income statements of the Group are the results attributable to the Disposed Assets during the Relevant Periods which are presented on a combined basis after elimination of intra-entity transactions:

Year ended 31 March 2005 HK$’000 Revenue 49,628 Cost of sales (49,429 ) Gross profit 199 Other income 123 Other gains and losses 772 Administrative and operating expenses (1,534 ) Share of profits less losses of associates 395 Share of profits less losses of jointly-controlled entities (3 ) Finance costs – Loss before tax (48 ) Income tax (49 ) Loss for the year/period (97 )	Year ended 31 March 2006 HK$’000 3,473 (3,202 ) 271 433 400 (1,028 ) (1 ) (5,086 ) (68 ) (5,079 ) (307 ) (5,386 )	Year ended period ended period ended 31 March 30 september 30 september 2007 2006 2007 HK$’000 HK$’000 HK$’000 304 – – (271 ) – (6 ) 33 – (6 ) 265 57 – 453 – 1,509 (1,167 ) (471 ) (711 ) – – – (7,133 ) 317 (4,533 ) (253 ) (135 ) (88 ) (7,802 ) (232 ) (3,829 ) (174 ) 87 (165 ) (7,976 ) (145 ) (3,994 )

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AccountAnts’ report on the group

Appendix ii

• (ii) Included in the consolidated balance sheets of the Group are the assets and liabilities attributable to the Disposed Assets at the balance sheet dates which are presented on a combined basis after elimination of intra-entity transactions:

non-current assets Property, plant and equipment Prepaid lease payments Investment property Interests in associates Interests in jointly-controlled entities Available-for-sale investment Amount due from an investee entity current assets Accounts receivable Other receivables Bank balances and cash current liabilities Accounts payable Other payables Amounts due to the Remaining Group Bank borrowings, secured non-current liabilities Deferred tax liabilities Bank borrowings, secured net liabilities	As at 31 March 2005 HK$’000 21,727 709 4,000 8,317 33,632 – – 68,385 6,055 246 231 6,532 6,518 91 90,007 – 96,616 – – – (21,699 )	As at 31 March 2006 HK$’000 21,151 692 4,400 17,262 28,546 1 13,164 85,216 5,331 24 231 5,586 7,108 184 102,482 802 110,576 609 3,503 4,112 (23,886 )	As at 31 March 2007 HK$’000 19,696 675 4,800 20,165 21,414 1 16,604 83,355 1,178 31 746 1,955 3,274 189 106,771 846 111,080 1,828 2,658 4,486 (30,256 )	As at 30 september 2007 HK$’000 15,334 667 4,800 21,320 16,880 1 17,136 76,138 192 2,031 967 3,190 1,993 4 106,434 868 109,299 1,259 2,287 3,546 (33,517 )

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AccountAnts’ report on the group

Appendix ii

• (iii) Included in the consolidated cash flow statements of the Group are the cash flows attributable to the Disposed Assets during the Relevant Periods which are presented on a combined basis after elimination of intra-entity transactions:

Year ended 31 March 2005 HK$’000 operating activities Loss for the year/period (97 ) Adjustments for: Amortization of prepaid lease payments 17 Depreciation for property, plant and equipment 2,981 Gain on fair value changes of an investment property (600 ) Interest income (9 ) Gain on disposal of property, plant and equipment (172 ) Share of profits less losses of associates (395 ) Share of profits less losses of jointly-controlled entities 3 Finance costs – Income tax 49 Operating cash flows before movements in working capital 1,777 Accounts receivable (3,675 ) Balances with associates (8,316 ) Balances with the Remaining Group 48,556 Prepayments, deposits and other receivables 1,482 Accounts payable (3,106 ) Other payables and accruals (2,663 ) Cash generated from/(used in) operations 34,055 Interest paid – Net cash generated by/(used in) operating activities 34,055	Year ended 31 March 2006 HK$’000 (5,386 ) 17 4,077 (400 ) (1 ) – 1 5,086 68 307 3,769 724 (8,946 ) 12,475 222 590 93 8,927 (68 ) 8,859	Year ended period ended period ended 31 March 30 september 30 september 2007 2006 2007 HK$’000 HK$’000 HK$’000 (7,976 ) (145 ) (3,994 ) 17 8 8 4,106 2,053 2,164 (400 ) – – (2 ) (1 ) (1 ) – – (1,509 ) – – – 7,132 (317 ) 4,534 253 135 88 174 (87 ) 165 3,304 1,646 1,455 4,153 4,083 986 (2,903 ) (1,631 ) (1,155 ) 4,289 3,381 (337 ) (7 ) – (2,000 ) (3,834 ) (3,943 ) (1,281 ) 5 (184 ) (185 ) 5,007 3,352 (2,517 ) (253 ) (135 ) (88 ) 4,754 3,217 (2,605 )

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AccountAnts’ report on the group

Appendix ii

Year ended 31 March 2005 HK$’000 investing activities Interest received 9 Purchase of property, plant and equipment (19,546 ) Purchase of investment properties (3,400 ) Acquisition of associates (4 ) Purchase of available-for -sale investment – Amounts advanced to an investee entity – Proceeds from disposal of property, plant and equipment 222 Capital contribution to jointly-controlled entities (11,350 ) Net cash generated by/ (used in) investing activities (34,069 ) Financing activities Proceeds from bank borrowings – Repayment of bank borrowings – Net cash generated by/ (used in) financing activities – net increase/(decrease) in cash and cash equivalents (14 ) cash and cash equivalents brought forward 245 cash and cash equivalents carried forward 231	Year ended 31 March 2006 HK$’000 1 – – – (1 ) (13,164 ) – – (13,164 ) 4,500 (195 ) 4,305 – 231 231	Year ended period ended period ended 31 March 30 september 30 september 2007 2006 2007 HK$’000 HK$’000 HK$’000 2 1 1 – – (293 ) – – – – – – – – – (3,440 ) (2,960 ) (532 ) – – 4,000 – – – (3,438 ) (2,959 ) 3,176 – – – (801 ) (393 ) (350 ) (801 ) (393 ) (350 ) 515 (135 ) 221 231 231 746 746 96 967

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AccountAnts’ report on the group

Appendix ii

iii. suBseQuent FinAnciAL stAteMents

No audited consolidated financial statements of the Group have been prepared in respect of any period subsequent to 30 September 2007.

Yours faithfully,

hLB hodgson impey cheng Chartered Accountants Certified Public Accountants Hong Kong

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unAudited pro formA finAnciAl informAtion of the remAining group

Appendix iii

A. unAudited pro formA finAnciAl informAtion of the remAining group

unaudited pro forma consolidated Balance Sheet

The unaudited pro forma consolidated balance sheet of the Remaining Group (the “Unaudited Pro Forma Consolidated Balance Sheet”) has been prepared in accordance with Rule 4.29 of the Listing Rules for the purpose of illustrating the effect of the Disposal as if the Disposal had been completed on 31 March 2007.

The Unaudited Pro Forma Consolidated Balance Sheet is based on the audited consolidated balance sheet of the Group as at 31 March 2007 as extracted from Appendix II to this circular, after making pro forma adjustments relating to the Disposal that are (i) directly attributable to the transaction and (ii) factually supportable.

The Unaudited Pro Forma Consolidated Balance Sheet is based on a number of assumptions, estimates and uncertainties. Accordingly, the Unaudited Pro Forma Consolidated Balance Sheet does not purport to describe the actual financial position of the Remaining Group that would have been attained had the Disposal been completed on 31 March 2007. The Unaudited Pro Forma Consolidated Balance Sheet does not purport to predict the future financial position of the Remaining Group.

The Unaudited Pro Forma Consolidated Balance Sheet should be read in conjunction with the historical financial information of the Group as set out in Appendix II to this circular and other financial information included elsewhere in this circular. The Unaudited Pro Forma Consolidated Balance Sheet does not take account of any trading or other transactions subsequent to the dates of the respective financial statements of the companies comprising the Group included in the Unaudited Pro Forma Consolidated Balance Sheet.

The Unaudited Pro Forma Consolidated Balance Sheet has been prepared by the Directors for illustrative purposes only and because of its hypothetical nature, it may not give a true picture of the financial position of the Remaining Group following completion of the Disposal or at any future date.

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unAudited pro formA finAnciAl informAtion of the remAining group

Appendix iii

non-current assets Property, plant and equipment Prepaid lease payments Investment property Goodwill Interests in associates Interests in jointly-controlled entities_(Note 3)_ Available-for-sale investment Amount due from an investee entity Contract retention receivables Deferred tax assets current assets Accounts receivable Other receivables Promissory Notes receivable in connection with the Disposal Pledged bank deposits Bank balances and cash current liabilities Accounts payable Other payables Bank borrowings, secured non-current liabilities Deferred tax liabilities Bank borrowings, secured net assets/(liabilities) capital and reserves Share capital Reserves Equity attributable to the equity holders of the Company Minority interests total equity	the group as at 31 march 2007 HK$’000 21,198 675 4,800 1,943 21,039 9,309 1 16,604 2,154 104 77,827 95,357 26,987 – 16,675 33,742 172,761 73,583 7,911 846 82,340 1,828 2,658 4,486 163,762 54,300 106,511 160,811 2,951 163,762	pro forma adjustment HK$’000 (Note 1) (19,696 ) (675 ) (4,800 ) – (20,165 ) (21,414 ) (1 ) (16,604 ) – – (83,355 ) (1,178 ) (31 ) – – (746 ) (1,955 ) (3,274 ) (189 ) (846 ) (4,309 ) (1,828 ) (2,658 ) (4,486 ) (76,515 ) – (76,515 ) (76,515 ) – (76,515 )	pro forma adjustment HK$’000 (Note 2) – – – – – – – – – – – – – 121,000 – 20,000 30,000 (1,530 ) 169,470 – – – – – – – 169,470 – 169,470 169,470 – 169,470	pro forma remaining group HK$’000 1,502 – – 1,943 874 (12,105 ) – – 2,154 104 (5,528 ) 94,179 26,956 121,000 16,675 81,466 340,276 70,309 7,722 – 78,031 – – – 256,717 54,300 199,466 253,766 2,951 256,717

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unAudited pro formA finAnciAl informAtion of the remAining group

Appendix iii

Notes to the Unaudited Pro Forma Consolidated Balance Sheet

1. The adjustment represents the exclusion of the assets and liabilities attributable to the Disposed Assets as at 31 March 2007 as if the Disposal had been completed on 31 March 2007.

2. The adjustment represents the net consideration of approximately HK$169,470,000 comprising (i) the Consideration of HK$171,000,000 and (ii) the estimated expenses to be incurred in connection with the Disposal of approximately HK$1,530,000. The Consideration shall be settled by the Purchaser in the following manner: (a) HK$20,000,000 has been paid in cash by the Purchaser to the Company on the date of signing of the Sale and Purchase Agreement as deposit; (b) HK$30,000,000 shall be payable in cash by the Purchaser to the Company on Completion; and (c) the balance of HK$121,000,000 by issuing 3 Promissory Notes with principal amounts of HK$40,000,000, HK$40,000,000 and HK$41,000,000 respectively and with maturity dates of 30 June 2008, 30 September 2008 and 31 December 2008 respectively.

For the purpose of preparing the Unaudited Pro Forma Consolidated Balance Sheet, it has been assumed that the cash element of the Consideration of approximately HK$50,000,000 and the Promissory Notes with an aggregate principal amount of HK$121,000,000 had been received by the Group, and the estimated expenses to be incurred in connection with the Disposal of approximately HK$1,530,000 had been paid by the Group on 31 March 2007, as if the Disposal had been completed on 31 March 2007. It has been further assumed that the face value of the Promissory Notes approximated their fair values due to their short maturity.

1. The balance of interests in jointly-controlled entities of the pro forma Remaining Group resulted in a net credit balance because at 31 March 2007, the Group had provided undertakings of financial support to certain of the Group’s jointly-controlled entities in proportion to its equity interests in these entities, in order that these entities could meet their obligations and liabilities as and when they fall due. Accordingly, the Group’s share of the net deficiency in assets of these jointly-controlled entities at 31 March 2007 has already been accounted for in presenting the Group’s financial statements for the year ended 31 March 2007.

unaudited pro forma consolidated income Statement

The unaudited pro forma consolidated income statement of the Remaining Group (the “Unaudited Pro Forma Consolidated Income Statement”) has been prepared in accordance with Rule 4.29 of the Listing Rules for the purpose of illustrating the effect of the Disposal as if the Disposal had been completed at the beginning of the year ended 31 March 2007.

The Unaudited Pro Forma Consolidated Income Statement is based on the audited consolidated income statement of the Group for the year ended 31 March 2007 as extracted from Appendix II to this circular, after making pro forma adjustments relating to the Disposal that are (i) directly attributable to the transaction and (ii) factually supportable.

The Unaudited Pro Forma Consolidated Income Statement is based on a number of assumptions, estimates and uncertainties. Accordingly, the Unaudited Pro Forma Consolidated Income Statement does not purport to describe the actual results of the Remaining Group that would have been attained had the Disposal been completed at the beginning of the year ended 31 March 2007. The Unaudited Pro Forma Consolidated Income Statement does not purport to predict the future results of the Remaining Group.

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unAudited pro formA finAnciAl informAtion of the remAining group

Appendix iii

The Unaudited Pro Forma Consolidated Income Statement should be read in conjunction with the historical financial information of the Group as set out in Appendix II to this circular and other financial information included elsewhere in this circular. The Unaudited Pro Forma Consolidated Income Statement does not take account of any trading or other transactions subsequent to the dates of the respective financial statements of the companies comprising the Group included in the Unaudited Pro Forma Consolidated Income Statement.

The Unaudited Pro Forma Consolidated Income Statement has been prepared by the Directors for illustrative purposes only and because of its hypothetical nature, it may not give a true picture of the results of the Remaining Group had the Disposal been completed at the beginning of the year ended 31 March 2007 or for any future period.

Revenue Cost of sales Gross profit Other income Other gains and losses Estimated gain on the Disposal Administrative and operating expenses Share of losses of associates Share of losses of jointly-controlled entities Finance costs Profit before tax Income tax expense Profit for the year	the group for the year ended 31 march 2007 HK$’000 480,292 (425,548 ) 54,744 43,829 5,713 – (68,816 ) (3,497 ) (19,467 ) (1,007 ) 11,499 (734 ) 10,765	pro forma adjustment HK$’000 (Note 4) (304 ) 271 (33 ) (265 ) (453 ) – 1,167 – 7,133 253 7,802 174 7,976	pro forma adjustment HK$’000 (Note 5) – – – – – 90,874 – – – – 90,874 – 90,874	pro forma remaining group HK$’000 479,988 (425,277 ) 54,711 43,564 5,260 90,874 (67,649 ) (3,497 ) (12,334 ) (754 ) 110,175 (560 ) 109,615

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unAudited pro formA finAnciAl informAtion of the remAining group

Appendix iii

Notes to the Unaudited Pro Forma Consolidated Income Statement:

1. The adjustment represents the exclusion of the income and expenses attributable to the Disposed Assets for the year ended 31 March 2007 as if the Disposal had been completed on 1 April 2006. This adjustment is not expected to have a continuing effect on the Remaining Group.

2. The adjustment represents the estimated gain on the Disposal of approximately HK$90,874,000 which is calculated based on (i) the net consideration of approximately HK$169,470,000 (representing the Consideration of HK$171,000,000 less the estimated expenses to be incurred in connection with the Disposal of approximately HK$1,530,000) and (ii) the adjusted net assets attributable to the Disposed Assets as at 31 March 2006 of approximately HK$78,596,000 (representing the net liabilities attributable to the Disposed Assets of approximately HK$23,886,000 less the amounts due to the Remaining Group of approximately HK$102,482,000), as if the Disposal had been completed on 1 April 2006. This adjustment is not expected to have a continuing effect on the Remaining Group.

Since the actual carrying amounts of the assets and liabilities attributable to the Disposed Assets on Completion may be different from the amounts used in the preparation of the Unaudited Pro Forma Consolidated Income Statement, the actual gain or loss on the Disposal may be materially different from the estimated amount shown above.

unaudited pro forma consolidated cash flow Statement

The unaudited pro forma consolidated cash flow statement of the Remaining Group (the “Unaudited Pro Forma Consolidated Cash Flow Statement”) has been prepared in accordance with Rule 4.29 of the Listing Rules for the purpose of illustrating the effect of the Disposal as if the Disposal had been completed at the beginning of the year ended 31 March 2007.

The Unaudited Pro Forma Consolidated Cash Flow Statement is based on the audited consolidated cash flow statement of the Group for the year ended 31 March 2007 as extracted from Appendix II to this circular, after making pro forma adjustments relating to the Disposal that are (i) directly attributable to the transaction and (ii) factually supportable.

The Unaudited Pro Forma Consolidated Cash Flow Statement is based on a number of assumptions, estimates and uncertainties. Accordingly, the Unaudited Pro Forma Consolidated Cash Flow Statement does not purport to describe the actual cash flows of the Remaining Group that would have been attained had the Disposal been completed at the beginning of the year ended 31 March 2007. The Unaudited Pro Forma Consolidated Cash Flow Statement does not purport to predict the future cash flows of the Remaining Group.

The Unaudited Pro Forma Consolidated Cash Flow Statement should be read in conjunction with the historical financial information of the Group as set out in Appendix II to this circular and other financial information included elsewhere in this circular. The Unaudited Pro Forma Consolidated Cash Flow Statement does not take account of any trading or other transactions subsequent to the dates of the respective financial statements of the companies comprising the Group included in the Unaudited Pro Forma Consolidated Cash Flow Statement.

The Unaudited Pro Forma Consolidated Cash Flow Statement has been prepared by the Directors for illustrative purposes only and because of its hypothetical nature, it may not give a true picture of the cash flows of the Remaining Group had the Disposal been completed at the beginning of the year ended 31 March 2007 or for any future period.

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unAudited pro formA finAnciAl informAtion of the remAining group

Appendix iii

operating activities Profit/(Loss) for the year Adjustments for: Estimated gain on the Disposal Amortization of prepaid lease payments Depreciation for property, plant and equipment Gain on disposal of subsidiaries Gain on fair value changes of an investment property Loss on fair value changes of property, plant and equipment Impairment loss recognized in respect of amounts due from contract customers Impairment loss reversed in respect of amounts due from contract customers Interest income Loss on disposal of property, plant and equipment Loss on disposal of a jointly-controlled entity Write back of long outstanding payables Share of losses of associates Share of losses of jointly-controlled entities Finance costs Income tax expense operating cash flows before movements in working capital Accounts receivable Balances with jointly-controlled entities Balances with associates Balances with the Remaining Group Balances with minority shareholders Prepayments, deposits and other receivables Accounts payable Other payables and accruals	the group for the year ended 31 march 2007 HK$’000 10,765 – 17 4,888 (3,843 ) (400 ) 11 989 (2,246 ) (785 ) 165 111 (371 ) 3,497 19,467 1,007 734 34,006 6,236 (3,523 ) (2,372 ) – 144 (693 ) (10,630 ) (478 )	pro forma adjustment HK$’000 (Note 6) 7,976 – (17 ) (4,106 ) – 400 – – – 2 – – – – (7,132 ) (253 ) (174 ) (3,304 ) (4,153 ) – 2,903 (4,289 ) – 7 3,834 (5 )	pro forma adjustment HK$’000 (Note 7) 90,874 (90,874 ) – – – – – – – – – – – – – – – – – – – – – – – –	pro forma remaining group HK$’000 109,615 (90,874 ) – 782 (3,843 ) – 11 989 (2,246 ) (783 ) 165 111 (371 ) 3,497 12,335 754 560 30,702 2,083 (3,523 ) 531 (4,289 ) 144 (686 ) (6,796 ) (483 )

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unAudited pro formA finAnciAl informAtion of the remAining group

Appendix iii

the group for the year ended 31 march 2007 HK$’000 cash generated from operations 22,690 Interest paid (1,007 ) Hong Kong profits tax paid (48 ) net cash generated by operating activities 21,635 investing activities Cash element of the Consideration less estimated expenses to be incurred in connection with the Disposal – Interest received 785 Dividends received from jointly-controlled entities 3,560 Purchase of property, plant and equipment (291 ) Disposal of subsidiaries (14,009 ) Amounts advanced to an investee entity (3,440 ) Proceeds from disposal of property, plant and equipment 269 Decrease in pledged bank deposits 4,269 net cash generated by/(used in) investing activities (8,857 ) financing activities Proceeds from issue of ordinary shares 18,100 Repayment of bank borrowings (801 ) Proceeds from new trust receipts loans 24,363 Repayment of trust receipts loans (37,479 ) Repayment of term loan (1,620 ) net cash generated by financing activities 2,563 net increase/(decrease) in cash and cash equivalents 15,341 cash and cash equivalents brought forward 18,401 cash and cash equivalents carried forward 33,742	pro forma adjustment HK$’000 (Note 6) (5,007 ) 253 – (4,754 ) – (2 ) – – – 3,440 – – 3,438 – 801 – – – 801 (515 ) (231 ) (746 )	pro forma adjustment HK$’000 (Note 7) – – – – 50,000 (1,530 ) – – – – – – – 48,470 – – – – – – 48,470 – 48,470	pro forma remaining group HK$’000 17,683 (754 ) (48 ) 16,881 48,470 783 3,560 (291 ) (14,009 ) – 269 4,269 43,051 18,100 – 24,363 (37,479 ) (1,620 ) 3,364 63,296 18,170 81,466

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unAudited pro formA finAnciAl informAtion of the remAining group

Appendix iii

Notes to the Unaudited Pro Forma Consolidated Cash Flow Statement:

1. The adjustment represents the exclusion of the cash flows attributable to the Disposed Assets for the year ended 31 March 2007 as if the Disposal had been completed on 1 April 2006. This adjustment is not expected to have a continuing effect on the Remaining Group.

2. The adjustment represents the net cash consideration of approximately HK$48,470,000 comprising (i) the cash element of the Consideration of HK$50,000,000 (of which HK$20,000,000 has been paid in cash by the Purchaser to the Company on the date of signing of the Sale and Purchase Agreement as deposit and HK$30,000,000 shall be payable in cash by the Purchaser to the Company on Completion) and (ii) the estimated expenses to be incurred in connection with the Disposal of approximately HK$1,530,000. This adjustment is not expected to have a continuing effect on the Remaining Group.

For the purpose of preparing the Unaudited Pro Forma Consolidated Cash Flow Statement, it has been assumed that the cash element of the Consideration of approximately HK$50,000,000 had been received by the Group and the estimated expenses to be incurred in connection with the Disposal of approximately HK$1,530,000 had been paid by the Group on 1 April 2006, as if the Disposal had been completed on 1 April 2006. The increase in the Promissory Notes is a non-cash item arising from disposal of subsidiaries and hence has not been included in the Unaudited Pro Forma Consolidated Cash Flow Statement.

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unAudited pro formA finAnciAl informAtion of the remAining group

Appendix iii

B. AccountAntS’ report on the unAudited pro formA finAnciAl informAtion of the remAining group

The following is the text of a report, prepared for the sole purpose of inclusion in this circular, received from the auditors of the Company, HLB Hodgson Impey Cheng, Chartered Accountants, Certified Public Accountants, Hong Kong. As described in the paragraph headed “Documents Available for Inspection” in Appendix V, a copy of the following accountants’ report is available for inspection.

==> picture [227 x 84] intentionally omitted <==

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

26 March 2008

The Board of Directors

Wing hing international (holdings) limited

14th Floor Yau Lee Centre 45 Hoi Yuen Road Kowloon Hong Kong

Dear Sirs,

AccountAntS’ report on the unAudited pro formA finAnciAl informAtion of the remAining group

introduction

We report on the unaudited pro forma financial information of Wing Hing International (Holdings) Limited (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”) as set out in Section A entitled “Unaudited Pro Forma Financial Information of the Remaining Group” of Appendix III (the “Pro Forma Financial Information”) to the Company’s circular dated 26 March 2008 (the “Circular”) in connection with the very substantial disposal and connected transaction whereby the Company proposes to dispose of the Sale Shares and the Sale Loan (both terms as defined in the Circular) to Heart Ace Limited. The Pro Forma Financial Information has been prepared by the directors of the Company for illustrative purposes only, to provide information about how the Disposal (as defined in the Circular) might have affected the financial information presented. The basis of preparation of the Pro Forma Financial Information is set out in Section A of Appendix III of the Circular.

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unAudited pro formA finAnciAl informAtion of the remAining group

Appendix iii

respective responsibilities of the directors of the company and the reporting accountants

It is the responsibility solely of the directors of the Company to prepare the Pro Forma Financial Information in accordance with Rule 4.29 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and with reference to Accounting Guideline 7 “Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars” issued by the Hong Kong Institute of Certified Public Accountants.

It is our responsibility to form an opinion, as required by Rule 4.29(7) of the Listing Rules, on the Pro Forma Financial Information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the Pro Forma Financial Information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

Basis of opinion

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

We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the Pro Forma Financial Information has been properly compiled by the directors of the Company on the basis stated, that such basis is consistent with the accounting policies of the Group and that the adjustments are appropriate for the purposes of the Pro Forma Financial Information as disclosed pursuant to Rule 4.29(1) of the Listing Rules.

The Pro Forma Financial Information has been prepared for illustrative purposes only, based on the judgments and assumptions of the directors of the Company, and, because of its hypothetical nature, does not provide any assurance or indication that any event will take place in the future and may not be indicative of:

• ‧ the financial position of the Group as at 31 March 2007 or any future date; or

• ‧ the results or cash flows of the Group for the year ended 31 March 2007 or for any future periods.

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unAudited pro formA finAnciAl informAtion of the remAining group

Appendix iii

opinion

In our opinion:

• a. the Pro Forma Financial Information has been properly compiled by the directors of the Company on the basis stated;

• b. such basis is consistent with the accounting policies of the Group; and

• c. the adjustments are appropriate for the purposes of the Pro Forma Financial Information as disclosed pursuant to Rule 4.29(1) of the Listing Rules.

Yours faithfully,

hlB hodgson impey cheng

Chartered Accountants Certified Public Accountants Hong Kong

• 135 -

other FinAnciAl inFormAtion oF the Group

Appendix iV

1. indeBtedneSS

Borrowings

As at the close of business on 31 January 2008, being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this circular, the Group had no secured interest-bearing bank borrowings.

As at 31 January 2008, the Group’s banking facilities were supported by the following:

• legal charges over the Group’s leasehold land and buildings and investment property, all of which are situated in Hong Kong, with aggregate carrying value of approximately HK$14,550,000; and

• pledged deposits of approximately HK$22,452,000 of the Group.

contingent liabilities

As at 31 January 2008, the Group had executed guarantees in respect of performance bonds in favor of contract customers of approximately HK$24,811,000. In addition to the above, as at 31 January 2008, the Company had executed guarantees in favor of contract customers in respect of the performance of obligation under contracts by a jointly-controlled entity, China Harbour-CWF Joint Venture, with contract sum of approximately HK$84,938,000.

As at 31 January 2008, the Group had executed guarantees for HK$36,000,000 in respect of the general banking facilities granted to the Group’s jointly-controlled entity.

As at 31 January 2008, the Group had executed a guarantee for HK$73,760,000 in respect of the general banking facilities granted to Wealthy Star Development Limited, an investee entity in which the Group has 8% equity interests.

The Group has a contingent liability in respect of possible future long service payments to employees under the Hong Kong Employment Ordinance, with a maximum possible amount of approximately HK$2,700,000 as at 31 January 2008. The contingent liability has arisen because, at 31 January 2008, a number of current employees have achieved the required number of years of service to the Group in order to be eligible for long service payments under the Hong Kong Employment Ordinance if their employment is terminated under certain circumstances. No provision has been recognised in the financial statements of the Group in respect of such possible payments, as it is not considered probable that the situation will result in a material future outflow of resources from the Group.

As at the close of business on 31 January 2008, the Group was involved in various lawsuits and claims arising in the normal course of its business from which contingent liabilities might arise, a summary of which is set out in the paragraph headed “Litigation” in Appendix V to this circular.

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other FinAnciAl inFormAtion oF the Group

Appendix iV

disclaimer

Save as referred to in this section and apart from intra-group liabilities and normal trade payables, the Group did not have, at the close of business on 31 January 2008, any loan capital issued and outstanding or agreed to be issued, bank overdrafts, loans or other similar indebtedness, liabilities under acceptances or acceptance credits, debentures, mortgages, charges, obligations under hire purchases contracts or finance leases, guarantees, or other material contingent liabilities.

2. WorKinG cApitAl

Taking into account the internally generated funds and the presently available credit facilities, the Directors are of the opinion that the Remaining Group will, following the completion of the Sale and Purchase Agreement, has sufficient working capital for its present requirements, that is for at least 12 months from the date of this circular, in the absence of unforeseeable circumstances.

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GENERAL INFORMATION

APPENDIX V

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Group. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this document 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 statement herein misleading.

2. DISCLOSURE OF INTERESTS

(a) Director’s interests and short positions in the securities of the Company and its associated corporations

As at the Latest Practicable Date, the interests and short positions of the Directors and the chief executive of the Company in the shares, underlying shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) (i) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers contained in the Listing Rules, were as follows:

		Nature of interests	Nature of interests
	Number or			Approximate
	attributable			percentage or
	number of	Interest of		attributable
	Shares held or	controlled	Beneficial	percentage of
Name of Director	short positions	corporation	owner	shareholding
				(%)
Ng Tat Leung George	15,690,069 (L)	10,772,700	4,917,369	28.90
		(Note)
Lui Siu Yee	30,600 (L)	–	30,600	0.05
Wong Teck Ming	30,000 (L)	–	30,000	0.05

L: Long Position

Note:

The 10,772,700 Shares was registered in the name of Total Success Worldwide Limited. The issued share capital of Total Success Worldwide Limited is owned as to approximately 46.46% by Chan Mo Yan, deceased, as to approximately 46.46% by Ng Tat Leung, George, the chairman of the Company and the managing Director, and as to approximately 7.08% by Wong Teck Ming, an executive Director.

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APPENDIX V

Save as disclosed above, as at the Latest Practicable Date, none of the Directors nor the chief executive of the Company had or was deemed to have any interests or short positions in the shares, underlying shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) (i) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers contained in the Listing Rules.

(b) Persons who have an interest or short position which is discloseable under Divisions 2 and 3 of Part XV of the SFO and substantial Shareholders

So far as is known to the Directors and the chief executive of the Company, as at the Latest Practicable Date, the following persons (not being Directors or chief executive of the Company) had, or were deemed to have, interests or short positions in the Shares or underlying Shares which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any member of the Remaining Group:

	Number or			Approximate
	attributable			percentage
	number of			or attributable
	Shares held or			percentage
Name of Shareholder	short positions	Nature of interests	of shareholding
				(%)
Liu Pui Lan	14,700,000 (L)	Beneficial owner		21.30
Chan Mo Yan, deceased_(Note 1)_	10,772,700 (L)	Interest of controlled	corporation	19.84
Total Success Worldwide	10,772,700 (L)	Beneficial owner		19.84
Limited_(Note 1)_
Grand Legend Limited_(Note 2)_	10,775,081 (L)	Beneficial owner		19.84
Lo Chun Yang_(Note 2)_	10,775,081 (L)	Interest of controlled	corporation	19.84
Loh Siu Yin, Lulu_(Note 2)_	10,775,081 (L)	Interest of spouse		19.84
Complete Success Limited_(Note 3)_	5,681,818 (L)	Beneficial owner		10.46
Li Dan Dan_(Note 3)_	5,681,818 (L)	Interest of controlled	corporation	10.46

L: Long Position

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GENERAL INFORMATION

APPENDIX V

Notes:

1. These Shares were registered in the name of Total Success Worldwide Limited. The issued share capital of Total Success Worldwide Limited is owned as to approximately 46.46% by Chan Mo Yan, deceased, as to approximately 46.46% by Ng Tat Leung, George, the chairman of the Company and the managing Director, and as to approximately 7.08% by Wong Teck Ming, an executive Director.

2. The entire issued share capital of Grand Legend Limited is owned by Lo Chun Yang. Loh Siu Yin, Lulu is the spouse of Lo Chun Yang.

3. The entire issued share capital of Complete Success Limited is owned by Li Dan Dan. Complete Success Limited currently holds 5,681,818 warrants of the Company, upon the exercise of which 5,681,818 Shares are to be issued.

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

As at the Latest Practicable Date, none of the Directors was a director or employee of a company which had, or was deemed to have, an interest or short position in the Shares or underlying Shares which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO.

3. MATERIAL CONTRACTS

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

• (i) the underwriting agreement dated 21 March 2006 and entered into between the Company and Sino Portal Group Limited in relation to the rights issue in proportion of one rights share for every two consolidated ordinary shares of HK$1.00 each in the share capital of the Company;

• (ii) the two subscription agreements both dated 13 July 2006 and entered into between W. Hing Construction Company Limited and Design Landscapes International (HK) Company Limited and between Keith Jeferey Dodd and Design Landscapes International (HK) Company Limited respectively. Pursuant to the two subscription agreements, W. Hing Construction Company Limited and Keith Jeferey Dodd agreed to subscribe 42,711 and 67,511 new shares of HK$1.00 each of Design Landscapes International (HK) Company Limited at a consideration of HK$93,110 and HK$147,174 respectively. Upon completion of the said subscription agreements, the interests of W. Hing Construction Company Limited in Design Landscapes International (HK) Company Limited have deemed to reduce from 51% to 50%;

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GENERAL INFORMATION

APPENDIX V

• (iii) the sale and purchase agreement dated 18 October 2006 and entered into among Wing Hing Group (BVI) Limited, Skree Investments Limited and Li Zhimin pursuant to which Wing Hing Group (BVI) Limited agreed to sell and Skree Investments Limited agreed to acquire the entire issued share capital of Anpoint Engineering Limited at a consideration of HK$1.00;

• (iv) the subscription agreement dated 7 May 2007 and entered into among the Company, Best Time International Limited and Liu Chi Wah, Jimmy in respect of the subscription of the convertible note with an aggregate principal amount of HK$15,000,000 by Best Time International Limited;

• (v) the sale and purchase agreement dated 21 May 2007 and entered into between CWS International Trading Limited and Leung Pui Kwan in relation to the sale and purchase of the entire issued share capital of Charm Faith Group Limited at a consideration of HK$150,000,000;

• (vi) the sale and purchase agreement dated 10 January 2008 and entered into between CWS International Trading Limited and Liu Pui Lan in relation to the sale and purchase of the entire issued share capital of Farrell Global Limited at a consideration of HK$250,000,000; and

• (vii) the Sale and Purchase Agreement.

4. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contract with any member of the Group (excluding contracts expiring or determinable by the employer within one year without payment of compensation (other than statutory compensation)).

5. EXPERTS

The following are the qualification of the experts who have given opinions or advice which are contained in this circular:

Qualifications

Name Qualifications Asset Appraisal Limited Chartered surveyor HLB Hodgson Impey Cheng Chartered Accountants Certified Public Accountants

Partners Capital a licensed corporation under the SFO permitted to engage in type 1 (dealing in securities) and 6 (advising on corporate finance) regulated activities

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GENERAL INFORMATION

APPENDIX V

Each of Asset Appraisal Limited, HLB Hodgson Impey Cheng and Partners Capital has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of its letter and report and references to its name in the form and context in which it appears.

As at the Latest Practicable Date, each of Asset Appraisal Limited, HLB Hodgson Impey Cheng and Partners Capital does not have any shareholding in any member of the Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

6. LITIGATION

• (i) The Group was previously engaged in early 2000 in the undertaking of a piling work contract, which was terminated by the contract customer during 2001 prior to the completion of contract works as a result of the allegation of non-conforming piles. In the previous year, the contract customer demanded from the Group the retrenchment of HK$5 million of the contract fees received by the Group, as compensation for early termination of the contract works. In prior years, the contract customer was in the process of undergoing a court compulsory winding-up and the provisional liquidator of the contract customer requested payment of HK$8 million from the Group. Having considered legal counsel’s advice, the Directors are of the opinion that the claim is unlikely to succeed. Accordingly, no provision has been made up to 31 March 2007.

• (ii) The Group was previously engaged in early 2000 in the undertaking of a piling work contract. In 2001, the Group made a claim against the main contractor of HK$7 million for variation orders in addition to the original contract sum. In prior years, the main contractor submitted a counterclaim of HK$44 million for additional costs incurred due to wrongful repudiation of the subcontract. Having considered the legal counsel’s advice, the Directors are of the opinion that the Group has a good chance of defending the counterclaim. Accordingly, the Directors consider that a provision for the counterclaim is not necessary.

• (iii) A number of claims have been brought against the Group in respect of compensation for alleged personal injuries sustained by construction workers during the execution of contract works. The total amount of the litigation claims cannot be quantified. As most of the litigation claims are personal injury claims and some of them have not reached the stage in which the amount of the claim can be calculated. The Directors believe that any liabilities of the Group in respect of such claims will be covered either by the Group’s insurance policies, or that the Group has a meritorious defense against such claims. Accordingly, the Directors do not believe that these claims will have any material adverse impact on the Group and, therefore no provisions have been made in respect thereof in the financial statements of the Group up to 31 March 2007.

Save as disclosed, no member of the Group is engaged in any litigation, arbitration or claim of material importance and no litigation, arbitration or claim of material importance is known to the Directors to be pending or threatened against any member of the Group as at the Latest Practicable Date.

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GENERAL INFORMATION

APPENDIX V

7. MATERIAL ADVERSE CHANGE

The Directors are not aware of any material adverse change in the financial position or trading position of the Group since 31 March 2007, being the date to which the latest published audited financial statements of the Group was made up.

8. COMPETING INTERESTS

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

9. MISCELLANEOUS

• (a) There is no contract or arrangement entered into by any member of the Group subsisting at the date of this circular in which any Director is materially interested and which is significant to the business of the Remaining Group.

• (b) As at the Latest Practicable Date, neither Asset Appraisal Limited, HLB Hodgson Impey Cheng, Partners Capital nor any Directors had any direct or indirect interest in any assets which had been acquired, disposed of by or leased to, or which were proposed to be acquired, disposed of by or leased to, any member of the Remaining Group since 31 March 2007, the date to which the latest published audited consolidated financial statements of the Group were made up.

• (c) The principal share registrar and transfer office of the Company is Butterfield Fund Services (Bermuda) Limited whose address is Rosebank Centre, 11 Bermudiana Road, Pembroke, Bermuda.

• (d) Tricor Tengis Limited, the transfer office of the Company is located at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong.

• (e) The company secretary of the Company is Chan Yuen Bik, Jane. Chan is a Fellow of the Hong Kong Institute of Company Secretaries in Hong Kong and a Fellow of the Institute of Chartered Secretaries and Administrators in the United Kingdom.

• (f) The qualified accountant of the Company appointed pursuant to Rule 3.24 of the Listing Rules is Ngan Chi Keung, Mike.

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GENERAL INFORMATION

APPENDIX V

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be made available for inspection during normal business hours on Business Days at the office of the Company at 14th Floor, Yau Lee Centre, 45 Hoi Yuen Road, Kwun Tong, Kowloon, Hong Kong from the date of this circular up to and including 14 April 2008 and at the SGM:

• (a) the memorandum of association and bye-laws of the Company;

• (b) the material contracts referred to in the paragraph headed “Material contracts” in this Appendix;

• (c) the written consents of the experts referred to in the paragraph headed “Experts” in this Appendix;

• (d) the letter from the Independent Board Committee, the text of which is set out on page 23 in this circular;

• (e) the letter of advice from Partners Capital to the Independent Board Committee and the Independent Shareholders, the text of which is set out on pages 24 to 36 in this circular; and

• (f) the valuation report on the properties held by Sunny Engineering Group, the text of which is set out in Appendix I to this circular;

• (g) the accountants’ report on the Group prepared by HLB Hodgson Impey Cheng, the text of which is set out in Appendix II to this circular;

• (h) the accountants’ report from HLB Hodgson Impey Cheng in respect of the unaudited pro forma financial information of the Remaining Group, the text of which is set out in Appendix III to this circular;

• (i) the annual reports of the Company for each of the two financial years ended 31 March 2006 and 31 March 2007;

• (j) the interim report of the Company for the six months ended 30 September 2007; and

• (k) circular of the Company dated 22 February 2008.

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Notice of SGM

(Incorporated in Bermuda with limited liability)

(Stock Code: 621)

Notice iS HeReBY GiVeN that a special general meeting (the “ SGM ”) of the shareholders of Wing Hing International (Holdings) Limited (the “ company ”) will be held at 14th Floor, Yau Lee Centre, 45 Hoi Yuen Road, Kwun Tong, Kowloon, Hong Kong on Monday, 14 April 2008 at 11:00 a.m. for the purpose of considering and, if thought fit, passing with or without amendments, the following resolution of the Company:

oRDiNARY ReSoLUtioN

“ tHAt

• (a) the conditional sale and purchase agreement (the “ Sale and Purchase Agreement ”) (a copy of which has been produced to the SGM marked “A” and signed by the chairman of the SGM for the purpose of identification) dated 28 February 2008 and entered into between the Company as vendor, Heart Ace Limited as purchaser and Lo Chun Yang as guarantor in relation to the sale and purchase of the 8,000,000 ordinary shares of HK$0.04 each in the issued share capital of Wing Hing Group (BVI) Limited (the “ target ”) and the shareholder’s loan owed by the Target to the Company at a total consideration of HK$171,000,000 and the transactions contemplated thereunder, be and are hereby approved, confirmed and ratified;

• (b) any one or more of the directors of the Company be and is/are hereby authorised to do all such acts and things and execute all such documents which he/they consider necessary, desirable or expedient for the purpose of, or in connection with, the implementation of and giving effect to the Sale and Purchase Agreement and the transactions contemplated thereunder.”

By order of the Board Wing Hing international (Holdings) Limited Ng tat Leung, George Chairman

Hong Kong, 26 March 2008

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Notice of SGM

Registered office: Head office and principal place of Canon’s Court business in Hong Kong: 22 Victoria Street 14th Floor Hamilton HM 12 Yau Lee Centre Bermuda 45 Hoi Yuen Road Kwun Tong, Kowloon Hong Kong

Notes:

1. A member entitled to attend and vote at the SGM is entitled to appoint one or more than one proxy to attend and, subject to the provisions of the bye-laws of the Company, to vote on his behalf. A proxy need not be a member of the Company but must be present in person at the SGM to represent the member. If more than one proxy is so appointed, the appointment shall specify the number and class of shares in respect of which each such proxy is so appointed.

2. A form of proxy for use at the SGM is enclosed. Whether or not you intend to attend the SGM in person, you are encouraged to complete and return the enclosed form of proxy in accordance with the instructions printed thereon. Completion and return of a form of proxy will not preclude a member from attending in person and voting at the SGM or any adjournment thereof, should he so wish.

3. In order to be valid, the form of proxy, together with a power of attorney or other authority, if any, under which it is signed, or a certified copy of such power or authority must be deposited at Company’s branch share registrar in Hong Kong, Tricor Tengis Limited, at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong not less than 48 hours before the time appointed for holding the SGM or any adjournment thereof.

4. In the case of joint holders of shares, any one of such holders may vote at the SGM, either personally or by proxy, in respect of such share as if he was solely entitled thereto, but if more than one of such joint holder are present at the SGM personally or by proxy, that one of the said persons so present whose name stands first on the register of members of the Company in respect of such shares shall alone be entitled to vote in respect thereof.

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