G-Resources Group Limited - Proxy Solicitation & Information Statement 2008

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Smart Rich Energy Finance (Holdings) Ltd., you should at once hand this circular and the accompanying form of proxy to the purchaser or transferee or to the bank, licensed securities dealer or other agent through whom the sale or the transfer was effected for transmission to the purchaser or the transferee.

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

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(Incorporated in Bermuda with limited liability)

(Stock Code: 1051)

(1) VERY SUBSTANTIAL DISPOSAL AND VERY SUBSTANTIAL ACQUISITION
(2) REFRESHMENT OF THE GENERAL SCHEME LIMIT UNDER THE SHARE OPTION SCHEME AND
(3) NOTICE OF SPECIAL GENERAL MEETING

A notice convening the special general meeting of the Company to be held at Suite 1606-7, 16/F, Great Eagle Centre, 23 Harbour Road, Wanchai, Hong Kong on Wednesday, 23 July 2008 at 11:00 a.m. is set out on pages 192 to 193 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 instructions printed thereon and return it to Union Registrars Limited, the branch share registrar of Smart Rich Energy Finance (Holdings) Ltd., at Rooms 1901-2, Fook Lee Commercial Centre, Town Place, 33 Lockhart Road, Wanchai, Hong Kong as soon as possible but in any event not less than 48 hours before the time for holding the special general meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the special general meeting or any adjournment thereof should you so wish.

For identification purpose only

8 July 2008

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
The Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Information on MPIL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Information on SUNPEC Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Reasons for the Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Financial effects of the Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Financial effects of the acquisition of the Consideration Shares . . . . . . . . . . . . . .	10
Use of proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Listing Rules’ Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Proposed refreshment of the General Scheme Limit . . . . . . . . . . . . . . . . . . . . . . . .	11
The SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Procedure for demanding a poll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Further information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Appendix I – Financial information of the Group . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Appendix II – Unaudited pro forma financial information of
the Remaining Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	88
Appendix III – Additional financial information of the Group . . . . . . . . . . . . . . .	97
Appendix IV – Management discussion and analysis. . . . . . . . . . . . . . . . . . . . . . . . .	100
Appendix V – Financial information of the SUNPEC Group . . . . . . . . . . . . . . . . .	113
Appendix VI – Property Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	173
Appendix VII – General information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	184
Notice of SGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	192

DEFINITIONS

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

“Agreement”	the conditional sale and purchase agreement dated 17
	April 2008 (as amended and varied by a supplemental
	agreement dated 20 May 2008) entered into between
	the Company, the Vendors and the Purchaser for the
	sale and purchase of the Sale Shares
“associates”	has the meaning ascribed to it under the Listing Rules
“Board”	the board of Directors
“Company”	Smart Rich Energy Finance (Holdings) Ltd., a company
	incorporated in Bermuda with limited liability and the
	shares of which are listed on the Main Board of the
	Stock Exchange
“Completion”	completion of the Sale
“connected person(s)”	has the meaning ascribed thereto under the Listing
	Rules
“Consideration Shares”	253,571,428 new SUNPEC Shares to be issued by
	SUNPEC to the Company or its nominee(s), as part of
	the consideration for the Sale, upon Completion
“Director(s)”	the director(s) of the Company
“General Scheme Limit”	the total number of Shares which may be issued upon
	the exercise of all Options granted under the Share
	Option Scheme and any other share option schemes
	of the Company, being 10% of the shares of the
	Company in issue as at 28 August 2007 (the date on
	which the special general meeting of the Company
	was held for the purpose of approving the refreshment
	of the general scheme limit)
“Group”	the Company and its subsidiaries
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong”	the Hong Kong Special Administrative Region of the
	People’s Republic of China

– 1 –

DEFINITIONS

“Latest Practicable Date”	2 July 2008, being the latest practicable date prior to
	the bulk-printing of this circular for ascertaining
	certain information contained herein
“Listing Rules”	the Rules Governing the Listing of Securities on the
	Stock Exchange
“Madagascar”	the Republic of Madagascar
“MPIL”	Madagascar Petroleum International Limited, a
	company incorporated in the British Virgin Islands
	with limited liability in June 2005 and the issued share
	capital of which is beneficially owned as to 54% by
	SUNPEC, 10% by Dr. Hui Chi Ming (chairman, an
	executive director and a controlling shareholder of
	SUNPEC) and 36% in aggregate by the Vendors as at
	the Latest Practicable Date
“Oilfield Block 2104”	an onshore block of land of approximately 20,100
	square kilometers in the Republic of Madagascar for
	oil and gas exploitation and operation
“OMNIS”	Office Des mines Nationales Et Des Industries
	Strategiques, (English translation being: The National
	Office for Mining and Strategic Industries) a state-
	owned agency of Madagascar commissioned to manage
	and oversee the national petroleum and mineral
	resources of Madagascar
“Option”	an option to subscribe for Shares granted pursuant to
	the Share Option Scheme
“Production Sharing Contract”	the Production Sharing Contract dated 7 October 2005
	entered into between MPIL and OMNIS, pursuant to
	which MPIL was granted certain oil and gas
	exploration, exploitation and operation rights and
	profit sharing right at Oilfield Block 2104
“PRC”	the People’s Republic of China, which for the purpose
	of this circular, shall exclude Hong Kong, the Macau
	Special Administration Region of the PRC and Taiwan
“Purchaser”	Rich Theme Holdings Limited, a wholly-owned
	subsidiary of SUNPEC
“Remaining Group”	the Group immediately after Completion

– 2 –

DEFINITIONS

“Sale”	the sale of the Sale Shares by the Vendors to the
	Purchaser
“Sale Shares”	an aggregate of 360 ordinary shares of US$1.00 each
	in the share capital of MPIL, which represent 36%
	equity interest of MPIL and are, as at the Latest
	Practicable Date, owned as to 105 shares by Dorson
	Group Limited, 105 shares by Hopestar Group Limited
	and 150 shares by Dormer Group Limited, respectively
“SFO”	Securities and Futures Ordinance (Chapter 571 of the
	laws of Hong Kong)
“SGM”	a special general meeting of the Company to be
	convened and held for approving, among other
	matters, the Sale and the refreshment of the General
	Scheme Limit
“Share Option Scheme”	the share option scheme adopted by the Company on
	30 July 2004
“Share(s)”	the share(s) of HK$0.01 each in the capital of the
	Company
“Shareholder(s)”	the holder(s) of the Shares
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“subsidiary”	has the meaning ascribed to it under the Listing Rules
“SUNPEC”	Sino Union Petroleum & Chemical International
	Limited, the shares of which are traded on the Stock
	Exchange with the stock code: 346
“SUNPEC Group”	SUNPEC and its subsidiaries (including the Purchaser)
“SUNPEC Shares”	the share(s) of HK$0.02 each in the capital of SUNPEC
“Vendors”	Dorson Group Limited, Hopestar Group Limited and
	Dormer Group Limited, all of which are wholly-owned
	subsidiaries of the Company
“%”	per cent

– 3 –

LETTER FROM THE BOARD

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(Incorporated in Bermuda with limited liability)

(Stock Code: 1051)

Executive Directors:

Mr. Wong Kam Fu (Chairman) Dr. Lew Mon Hung (Deputy Chairman) Mr. Tam Wai Keung, Billy (Vice President) Mr. Wah Wang Kei, Jackie (Managing Director)

Mr. Wong Hong Loong Mr. Sin Chi Keung, Mega

Registered office:

Canon’s Court 22 Victoria Street Hamilton HM 12 Bermuda

Principal place of

business in Hong Kong:

Independent non-executive Directors:

Mr. Wong Che Man, Eddy Mr. Tang King Fai Mr. Dai Zhongcheng

Suite 1606-7, 16/F Great Eagle Centre 23 Harbour Road Wanchai Hong Kong

8 July 2008

To the Shareholders

Dear Sir or Madam,

(1) VERY SUBSTANTIAL DISPOSAL AND VERY SUBSTANTIAL ACQUISITION (2) REFRESHMENT OF THE GENERAL SCHEME LIMIT UNDER THE SHARE OPTION SCHEME AND

(3) NOTICE OF SPECIAL GENERAL MEETING

INTRODUCTION

It was announced on 22 April 2008 that on 17 April 2008, the Company entered into the Agreement (as amended and varied by a supplemental agreement dated 20 May 2008) with the Purchaser, a wholly-owned subsidiary of SUNPEC, pursuant to which the Company has conditionally agreed to procure the Vendors, and the Vendors have agreed, to sell, and the Purchaser has conditionally agreed to acquire, the Sale Shares at a total consideration of HK$810 million.

The Sale constitutes a very substantial disposal, and the acquisition of the Consideration Shares, as part consideration for the Sale, pursuant to the Sale constitutes a very substantial acquisition, for the Company under the Listing Rules and are conditional upon approval by the Shareholders at the SGM.

For identification purposes only

– 4 –

LETTER FROM THE BOARD

The Board also proposes to refresh the General Scheme Limit so that the total number of Shares which may be allotted and issued upon the exercise of all Options to be granted under the Share Option Scheme or any other share option scheme of the Company on or after the date of the SGM will not exceed 10% of the issued share capital of the Company as at the date of passing of the relevant resolution approving the refreshment of the General Scheme Limit.

The purpose of this circular is to provide you with information regarding (i) the Sale; (ii) the refreshment of the General Scheme Limit; and (iii) other information as required under the Listing Rules.

THE AGREEMENT

Date of the Agreement:

17 April 2008

Parties to the Agreement:

(i) The Company;
(ii) Dorson Group Limited, Hopestar Group Limited and Dormer Group Limited, all of which are wholly-owned subsidiaries of the Group; and
(iii) Rich Theme Holdings Limited, which is a wholly-owned subsidiary of SUNPEC. The SUNPEC Group is a third party independent of the Company and its connected persons. Further information of the SUNPEC Group is set out in the paragraph headed “Information on the SUNPEC Group” below.

Assets to be disposed of

The Sale Shares, being 360 ordinary shares of US$1.00 each in the share capital of MPIL, representing 36% of the equity interest in MPIL.

Consideration

The total consideration for the Sale is HK$810 million, which shall be settled by the Purchaser in the following manner:

(i) as to HK$50 million (“ Deposit ”) shall be paid in cash as a refundable deposit within 30 days after the publication of the announcement of SUNPEC regarding the Sale and as part payment of the consideration on Completion;
(ii) as to HK$50 million shall be paid in cash on Completion; and
(iii) as to the remaining balance of HK$710 million shall be satisfied by the issue and allotment of 253,571,428 Consideration Shares by SUNPEC at HK$2.80 per Consideration Share to the Company or its nominee(s) on Completion.

– 5 –

LETTER FROM THE BOARD

On 22 May 2008, the Deposit was duly paid by the Purchaser.

The consideration for the Sale was determined after arm’s length negotiations between the Purchaser, the Company and the Vendors with reference to (i) the commercial prospect of Oilfield Block 2104; (ii) the estimated value of Oilfield Block 2104, the major asset of MPIL, of approximately HK$5 billion opined by BMI Appraisal Limited, an independent valuer, as at 12 February 2008; (iii) the estimated reserves of Oilfield Block 2104 assessed by Chinese University of Petroleum, an independent professional oil reserve assessor; and (iv) the consideration of the acquisition of 54% equity interest in MPIL, which constitute a major and connected transaction of SUNPEC and the details of which was announced by SUNPEC on 9 November 2007. The Board has noted fully, among other matters, the estimated value of Oilfield Block 2104 opined by BMI Appraisal Limited and is of the view that such value, as derived on the assumption of no change of certain factors, such as operational information of Oilfield Block 2104 and environmental and competition for the market in which Oilfield Block 2104 is exposed to, does not necessarily reflect the ultimate fair value of the minority interest of the Group in MPIL. The Board reiterates that it is in the interests of the Company and the Shareholders for the Company to realize the present value of its investment by reference to the consideration of the Sale, as the realization of the estimated value of Oilfield Block 2104 as opined by the valuer would encounter the unforeseeable risks in exploration and exploitation of the project and entail necessary capital commitment by the Group into MPIL for further development.

The issue price of the Consideration Shares was determined after arm’s length negotiation between the Purchaser, the Company and the Vendors with reference to the recent trading performance of the SUNPEC Shares and the business prospects of the SUNPEC Group; and the issue price of the consideration shares issued by SUNPEC in the acquisition of 54% equity interest in MPIL mentioned above.

Conditions precedent

Completion shall be conditional upon fulfillment of the following conditions:

(i) the passing of the relevant resolutions at the SGM by the Shareholders for approving the Agreement and transactions contemplated therein;
(ii) the passing of the relevant resolutions at the special general meeting of SUNPEC by its independent shareholders for approving the Agreement and transactions contemplated therein; and
(iii) the listing of and permission to deal in the Consideration Shares having been granted to SUNPEC by the Stock Exchange.

Completion shall take place on the third business day immediately after the date on which all conditions precedent are satisfied, which shall not be later than 30 August 2008. In the event that Completion cannot occur on or before 30 August 2008 due to the non-fulfillment of the condition (i) above or any other reason caused by the Company and the Vendors, the Company or the Vendors (as the case may be) shall inform the Purchaser

– 6 –

LETTER FROM THE BOARD

immediately and the deposit of HK$50 million (together with the interests accrued thereon, calculated at the rate of 5% p.a.) shall be refunded to the Purchaser within three business days.

Consideration Shares

For the purpose of the Listing Rules, the acquisition of the Consideration Shares, as part consideration for the Sale, pursuant to the Sale constitutes a very substantial acquisition for the Company. The Consideration Shares, when issued and allotted on Completion, will represent (i) approximately 4.66% of the issued share capital of SUNPEC as at the Latest Practicable Date; and (ii) approximately 4.46% of the issued share capital of SUNPEC as enlarged by the issue of the Consideration Shares (assuming no further issue of SUNPEC Shares prior to Completion).

Based on the issue price of HK$2.80 per Consideration Share, the aggregate value of the Consideration Shares amounts to HK$710 million.

Pursuant to the Agreement, the Company has unconditionally and irrevocably undertaken to and covenanted with the Purchaser that, without the prior written consent of the Purchaser, the holder(s) of the Consideration Shares will not transfer, dispose of or pledge in any form the whole or any part of the Consideration Shares to any third party, for a period of one year commencing from the issue date of the Consideration Shares.

INFORMATION ON MPIL

To the best knowledge of the Directors, MPIL is an investment holding company incorporated in the British Virgin Islands, which has not commenced any significant business operations other than the entering into of the Production Sharing Contract with OMNIS in respect of Oilfield Block 2104, an onshore site with total area of 20,100 kilometer square in Madagascar, for oil and gas exploitation and operation and certain transactions pertaining thereto. Pursuant to the Production Sharing Contract, MPIL is vested with all the relevant rights to engage in oil and gas exploration for 8 years, oilfield development for 5 years, and exploitation and operation for oil for 25 years (with 5 years possible extension) and gas for 35 years (with 10 years possible extension) at Oilfield Block 2104. Depending on the rate of crude oil production of Oilfield Block 2104, MPIL will share the remaining profit oil after government royalty according to the sharing ratios in the range of 45% to 73% as set out in the Production Sharing Contract. MPIL is responsible for the arrangement of the required capital commitment, human resources and equipment for the project development of oil and gas in Oilfield Block 2104. The mining title of Oilfield Block 2104 was granted to OMNIS under the Presidential Decree numbered 2005-707 dated 19 October 2005 and the Director General of OMNIS issued a written confirmation on 8 November 2007 to certify that MPIL is granted with the mining right in Oilfield Block 2104 and the contractor of MPIL is authorized to perform their exploration work in Oilfield Block 2104.

– 7 –

LETTER FROM THE BOARD

During the period from January 2006 to November 2007, the Company, through the Vendors, acquired the Sale Shares, representing an aggregate of 36% equity interest on MPIL for a total consideration of HK$487,741,000. Other than the consideration paid for the Sale Shares, the Group has not up to the Latest Practicable Date made any capital investment in MPIL for its investment or development in Oilfield Block 2104, as such capital investment, which depends on a number of factors including the results of fieldwork, the amount of oil and gas reserves discovered and the scale and method of exploration work required, cannot be ascertained at present stage.

The audited loss before and after taxation and extraordinary items of MPIL for the period from 23 June 2005 (being the date of its incorporation) to 31 March 2006, for the year ended 31 March 2007 and for the eight months ended 30 November 2007 was approximately HK$1.6 million, HK$3.5 million and HK$7.5 million respectively. As at 30 November 2007, the audited consolidated net liabilities of MPIL were approximately HK$12.6 million.

INFORMATION ON SUNPEC GROUP

To the best knowledge of the Directors, the SUNPEC Group is principally engaged in the sale and distribution of polyurethane materials in the PRC as well as oil exploration and exploitation in the Republic of Madagascar. Upon the issue of the Consideration Shares, the Company and the Vendors will own 255,371,428 SUNPEC Shares (which comprise 1,800,000 SUNPEC Shares the Company owns as at the Latest Practicable Date and 253,571,428 Consideration Shares), which represent approximately 4.49% of the issued share capital of SUNPEC as enlarged by the issue of the Consideration Shares (assuming no further issue of SUNPEC Shares prior to Completion).

Based on the latest published financial information available to the Directors, the audited profit before and after taxation of SUNPEC for the year ended 31 March 2006 was approximately HK$3.0 million and HK$0.6 million, respectively; the audited profit before and after taxation of SUNPEC for the year ended 31 March 2007 was approximately HK$10.9 million and HK$8.1 million, respectively; and the audited profit before and after taxation of SUNPEC for the year ended 31 March 2008 was HK$1,936 million and HK$1,929 million. As at 31 March 2008, the audited consolidated net assets of SUNPEC were approximately HK$6,177 million.

Your attention is drawn to the financial information of the SUNPEC Group as set out in appendix V to this circular.

– 8 –

LETTER FROM THE BOARD

REASONS FOR THE SALE

The Company is an investment holding company and the Group is principally engaged in the provision of credit card security services and provision of financial information through internet and mobile phones and information technology related business and investment in the oil and gas business. After Completion, the Group will continue to engage in the provision of credit card security services and provision of financial information through internet and mobile phones and information technology related business, which will continue to contribute to the results of the Group and maintain a sufficient level of operation. As announced by the Company on 5 March 2008, the Company is currently in the process of acquiring 51% equity interest in Mongol Oil Shale LLC, a company incorporated in Mongolia, which holds exploration and mining rights in a coal mine comprising land and has an estimated total land area of 96 square kilometres situated in Bayan Soum of the Tuv Province, Mongolia. The Company is continuously looking for business opportunities in Mongolia and other resources rich countries. With the recent visit of the Mongolia President to Hong Kong on 9 April 2008, the Board believes the Group can foster a long-term relationship with the Mongolia Government. Accordingly, the Company will, in addition to the existing business mentioned above, deploy its resources in the development of business opportunities in Mongolia.

While the Board has reckoned and valued the opportunity to acquire the interest in MPIL (through the acquisition of the Sale Shares) in that the Group can participate in the project in its initial stage, it is of the view that the Sale presents a good opportunity for the Company to yield, in part, a reasonable return from its investment in MPIL and the acquisition of the Consideration Shares as part consideration for the Sale will also enable the Group to participate, indirectly through the equity interest in SUNPEC, in the further development in Oilfield Block 2104.

In deciding (i) the timing of the Sale; (ii) the unlisted nature of the Sale Shares and (iii) whether the consideration for the Sale represents a fair value of the Sale Shares (and the ultimate indirect interest of the Group in MPIL), the Directors have taken into account fully, among other matters, the recent business development of SUNPEC in its principal business (in particular, oil exploration and exploitation business in the oilfield block 3113 in Madagascar). Essentially, the Sale constitutes a swap of the minority interest in MPIL, which is not listed securities, for the SUNPEC Shares, which are listed and traded on the Stock Exchange, through which the Group can realize its investment for better financial resources that enable it to further develop its business in the oil and gas field.

It is of particular importance that given the limited liquidity of the Sale Shares, which are unlisted securities, the opportunity for the realization of such interest at a significant amount does not occur very often and the Group can take advantage of this opportunity to realise the minority investment at a significant profit and apply the proceeds from the Sale to its existing business and also acquire the Consideration Shares. Taking into account the above mentioned factors, the Sale is in the best interests of the Company and the Shareholders as a whole.

– 9 –

LETTER FROM THE BOARD

Based on the above, the Directors (including the independent non-executive Directors) consider that the Agreement is on normal commercial terms and the terms of which are fair and reasonable and the entering into of the Agreement is in the interests of the Company and the Shareholders as a whole.

FINANCIAL EFFECTS OF THE SALE

The net book value of the Sale Shares as at 31 March 2008 was HK$487,741,000, being the equivalence of the total consideration paid by the Group for the Sale Shares. The Group would expect to realize a net disposal gain of approximately HK$322,259,000 as a result of the Sale, according to the unaudited pro forma financial information of the Remaining Group. However, the final net disposal gain of the Company realized from the Sale at Completion will depend on the trading price of SUNPEC Shares as at the date of Completion and at the time of the realization of the Consideration Share by the Company.

Upon Completion, the Sale is expected to result in a net cash inflow to the Remaining Group amounting to HK$100 million.

FINANCIAL EFFECTS OF THE ACQUISITION OF THE CONSIDERATION SHARES

Upon Completion, the Consideration Shares will be accounted for as available-forsales investments in the consolidated financial statement of the Group with effect from Completion.

USE OF PROCEEDS

The total net cash proceeds of approximately HK$98.5 million from the Sale will be applied as general working capital of the Group.

LISTING RULES’ IMPLICATIONS

The Sale constitutes a very substantial disposal, and the acquisition of the Consideration Shares, as part consideration for the Sale, pursuant to the Sale constitutes a very substantial acquisition, for the Company under Chapter 14 of the Listing Rules and is conditional on approval by the Shareholders at the SGM.

No Shareholder has a material interest in the Sale and thus no Shareholder is required to abstain from voting for the relevant resolution at the SGM in approving the Sale and the transaction contemplated thereunder.

– 10 –

LETTER FROM THE BOARD

PROPOSED REFRESHMENT OF THE GENERAL SCHEME LIMIT

The purpose of the Share Option Scheme is to provide incentives or rewards to such eligible participants for their contribution to the Group and/or to enable the Group to recruit and retain high-calibre employees and attract human resources that are valuable to the Group and any entity in which any member of the Group holds any equity interest.

Under the Share Option Scheme, the total number of Shares which may be issued upon exercise of all Options granted under the Share Option Scheme and any other share option schemes of the Company (excluding, for the purpose of calculating the General Scheme Limit, Options lapsed in accordance with the terms of the Share Option Scheme or any other share option schemes of the Company) shall not exceed the General Scheme Limit. The Company may seek approval of the Shareholders in general meeting for refreshing the General Scheme Limit provided that the total number of Shares in respect of which Options may be granted under the Share Option Scheme and any other share option schemes of the Company as refreshed shall not exceed 10% of the total number of Shares in issue as at the date of the approval of the Shareholders on the refreshment of the General Scheme Limit. Options previously granted under the Share Option Scheme or any other share option schemes of the Company (including Options outstanding, exercised, cancelled or lapsed in accordance with the terms of the Share Option Scheme or any other share option schemes of the Company) will not be counted for the purpose of calculating the General Scheme Limit as refreshed. The maximum number of Shares which may be issued upon exercise of all outstanding Options granted and yet to be exercised under the Share Option Scheme and any other share option schemes of the Company should not exceed 30% of the total number of Shares in issue from time to time.

Particulars of the Options granted under the Share Option Scheme as at the Latest Practicable Date are set forth below:

Options outstanding	:	355,480,000
Options cancelled	:	60,201,662
Options lapsed	:	66,146,654
Options exercised	:	281,134,995
Options granted (including outstanding,
cancelled, lapsed or exercised)	:	762,963,311

Save as disclosed herein, as at the Latest Practicable Date, there were no options, warrants and similar rights to subscribe or purchase equity securities of the Company.

– 11 –

LETTER FROM THE BOARD

The General Scheme Limit

The current general scheme limit under the Share Option Scheme is 364,084,378 Shares, being 10% of the share of the Company in issue as at 28 August 2007 (the date on which the special general meeting of the Company was held for the purpose of refreshing the then general scheme mandate). As at the Latest Practicable Date, Options carrying the rights to subscribe for up to a total of 350,480,000 Shares have been granted under the Share Option Scheme. Unless the General Scheme Limit is refreshed, only up to 13,604,378 Shares may be issued pursuant to the grant of further Options under the Share Option Scheme. The refreshment of the General Scheme Limit will increase the flexibility of the Company in achieving the purpose of the Share Option Scheme as mentioned aforesaid.

As at the Latest Practicable Date, there were 3,740,843,781 Shares in issue. Assuming that no further Shares will be issued or repurchased prior to the SGM, the maximum number of Options that can be granted by the Company under the refreshed General Scheme Limit would be 374,084,378 Shares, representing 10% of the Shares in issue as at the date of the SGM. As required by the Share Option Scheme and the Listing Rules, an ordinary resolution will be proposed at the SGM to approve the refreshment of the General Scheme Limit so that the total number of securities which may be issued upon exercise of all Options to be granted under the Share Option Scheme and any other share option schemes of the Company under the refreshed General Scheme Limit shall be 10% of the total number of Shares in issue as at the date of approving of the refreshed General Scheme Limit.

Application for Listing

Application will be made to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Shares which may be issued upon the exercise of any option that may be granted under the Share Option Scheme or any other share option schemes of the Company under the refreshed General Scheme Limit.

THE SGM

Set out on pages 192 to 193 of this circular is a notice convening the SGM to be held at Suite 1606-7, 16/F, Great Eagle Centre, 23 Harbour Road, Wanchai, Hong Kong on Wednesday, 23 July 2008 at 11:00 a.m., whereat ordinary resolutions will be proposed to for approval of the Sale (and the transaction contemplated thereunder) and the proposed refreshment of the General Scheme Limit.

A form of proxy for use at the SGM is enclosed. Whether or not you intend to attend the SGM, please complete the form of proxy in accordance with the instructions printed thereon and deposit it to the Company’s branch share registrar in Hong Kong, Union Registrars Limited at Rooms 1901-2, Fook Lee Commercial Centre, Town Place, 33 Lockhart Road, Wanchai, Hong Kong as soon as possible but in any event not less than 48 hours before the time fixed for holding of the SGM or adjourned meeting thereof. The lodging of the proxy form will not preclude you from attending and voting in person at the SGM or any adjourned meeting if you so wish.

– 12 –

LETTER FROM THE BOARD

PROCEDURE FOR DEMANDING A POLL

Pursuant to clause 70 of the bye-laws of the Company, at any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands unless a poll is (before or on the declaration of the result of the show of hands) demanded by:

(i) the chairman of the meeting; or
(ii) at least 3 Shareholders present in person or by duly authorized corporate representative or by proxy for the time being entitled to vote at the meeting; or
(iii) by any Shareholder or Shareholders present in person or by duly authorized corporate representative or by proxy and representing not less than one-tenth of the total voting rights of all the Shareholders having the right to vote at the meeting; or
(iv) by any Shareholder or Shareholders present in person or by duly authorized corporate representative or by proxy and holding Shares 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 be so demanded and the demand is not withdrawn, a declaration by the chairman of the meeting that a resolution has on a show of hands been carried or 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 or against such resolution.

RECOMMENDATION

The Directors, including the independent non-executive Directors, consider that the proposed ordinary resolutions for approval of the Sale (and the transaction contemplated thereunder) and the proposed refreshment of the General Scheme Limit are in the best interests of the Company and the Shareholders as a whole and so recommend the Shareholders to vote in favour of the resolutions at the SGM.

FURTHER 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

Smart Rich Energy Finance (Holdings) Ltd. Lew Mon Hung Deputy Chairman

– 13 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

==> picture [232 x 61] intentionally omitted <==

8 July 2008

The Board of Directors

Smart Rich Energy Finance (Holdings) Limited

Dear Sirs,

We set out below our report on the financial information (the “Financial Information”) of Smart Rich Energy Finance (Holdings) Limited (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”) for the inclusion in the Company’s circular dated 8 July 2008 (the “Circular”) in connection with the proposed disposal of the entire 36% equity interests in Madagascar Petroleum International Limited (“MPIL”) (the “Disposal”) and acquisition of 4.46% equity interests in Sino Union Petroleum & Chemical International Limited (“SUNPEC”) representing the consideration shares of the Disposal (collectively referred to the “Very Substantial Transaction”) might have affected the Financial Information of the Group presented.

The Financial Information comprises the consolidated and Company balance sheets as at 30 June 2005, 2006 and 2007 and at 31 March 2008, and the consolidated income statements, the consolidated statement of changes in equity and the consolidated cash flow statements of the Group for each of the years ended 30 June 2005, 2006 and 2007 and the nine months ended 31 March 2008 (the “Relevant Periods”), and a summary of significant accounting policies and other explanatory notes.

The Company was incorporated in Bermuda as an exempted company with limited liability under the Companies Act 1981 of Bermuda (as amended). As at the date of this report, the address of the registered office and principal place of business of the Company is Canon’s Court, 22 Victoria Street, Hamilton HM12, Bermuda and Suite 1606-7, 16th Floor, Great Eagle Centre, No. 23 Harbour Road, Wanchai, Hong Kong respectively.

The Company and its subsidiaries have adopted 30 June as their financial year end date. The consolidated financial statements of the Group for the year ended 30 June 2005 was audited by Ho and Ho & Company. For each of the two years ended 30 June 2006 and 2007, the consolidated financial statements of the Group were audited by SHINEWING (HK) CPA Limited.

– 14 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

The Company acts as an investment holding company. As at the date of this report, the Company has direct or indirect interests in the following subsidiaries:

	Place of		Nominal value	Effective percentage	Effective percentage
	incorporation	Class of	of issued	of equity interests/
	and	shares/	and fully paid/	voting rights
Name of subsidiary	operations	equity held	registered capital	held by the Company		Principal activities
				Directly Indirectly
				%	%
Credit Card DNA Security	Hong Kong	Ordinary	HK$1	100	–	Investment holding
System Limited
Star Cyberpower V.F. Limited	British Virgin	Ordinary	US$1	–	100	Investment holding
	Islands
	(“BVI”)
Star Cyber DNA Limited	BVI	Ordinary	US$1	–	100	Investment holding
Star Mobile DNA Payment	Hong Kong	Ordinary	HK$2	–	100	Provision of credit
Gateway Limited						card security device
						and digital network
						authorisation
						services
天碼軟件開發（深圳）有限公司	PRC	Registered	US$1,000,000	–	100	Provision of credit
Credit Card DNA Security		capital				card security device
System (Shenzhen)						and digital network
Limited_(Note (i))_						authorisation
						services
Starstruck Group Limited	BVI	Ordinary	US$1	–	100	Investment holding
Star Financial Limited	Hong Kong	Ordinary	HK$200	–	100	Provision of financial
						information services
Supreme Zone Limited	Hong Kong	Ordinary	HK$10,000	–	100	Provision of SMS
						personalised
						gateway services
Star Cyberpower Limited	BVI	Ordinary	US$1	–	100	Investment holding
China Eastern Investments	BVI	Ordinary	US$1	–	100	Investment holding
Limited
Star Cyberpower Management	Hong Kong	Ordinary	HK$10,000	100	–	Provision of
Limited						management
						services
Ming Yuen Assets Limited	BVI	Ordinary	US$10	–	100	Holding of a patent
						and technology

– 15 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

	Place of		Nominal value	Effective percentage	Effective percentage
	incorporation	Class of	of issued	of equity interests/
	and	shares/	and fully paid/	voting rights
Name of subsidiary	operations	equity held	registered capital	held by the Company		Principal activities
				Directly Indirectly
				%	%
Star EPS.com Limited	BVI	Ordinary	US$1	–	100	Investment holding
星光易辦事科技（深圳）有限公司	PRC	Registered	US$150,000	–	100	Provision of
Star EPS.com (Shenzhen)		capital				e-business solution
Limited_(Note (i))_						and e-commerce
						platform
Star EPS.com (HK) Limited	Hong Kong	Ordinary	HK$1	–	100	Electronic commerce
(“Star EPS (HK)”)
Hopestar Group Limited	BVI	Ordinary	US$100	100	–	Investment holding
(“Hopestar”)
Dorson Group Limited	BVI	Ordinary	US$100	100	–	Investment holding
(“Dorson”)
Emailcallyou.com Limited	Hong Kong	Ordinary	HK$1	–	100	Provision of email
						service
Hong Kong 4 Networks	Hong Kong	Ordinary	HK$1	100	–	Investment holding
(Holdings) Limited
(Note (ii))
Ocean Hill Limited	BVI	Ordinary	US$1	100	–	Investment holding
香港好易聯投資集團	Hong Kong	Ordinary	HK$1	–	100	Investment holding
有限公司
128128.com Limited_(Note (iii))_	Hong Kong	Ordinary	HK$1	–	100	Investment holding
深圳支付通商務服務有限公司	PRC	Registered	HK$2,000,000	–	90	Provision of credit
Shenzhen Payment Express		capital				card security device
Business Services Limited						and digital network
(Note (iv))						authorisation
						services
Sky Stand Group Limited	BVI	Ordinary	US$1	100	–	Investment holding
Triple Winner International	BVI	Ordinary	US$1	100	–	Investment holding
Limited (“Triple Winner”)

– 16 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

	Place of		Nominal value	Effective percentage
	incorporation	Class of	of issued	of equity interests/
	and	shares/	and fully paid/	voting rights
Name of subsidiary	operations	equity held	registered capital	held by the Company	Principal activities
				Directly Indirectly
				% %
Dormer Group Limited	BVI	Ordinary	US$10,000	– 100	Investment holding
(“Dormer”)
Greatest Rise Investments	BVI	Ordinary	US$1	100 –	Investment holding
Limited

Notes:

(i) It is a wholly-owned foreign enterprise established in the PRC and the English name is for identification purpose only.
(ii) The name of the company was changed from H.K. 4 Networks (Holdings) Limited to Hong Kong 4 Networks (Holdings) Limited on 6 February 2007.
(iii) The name of the company was changed from On Ming Limited to 128128.com Limited on 16 July 2007.
(iv) It is a sino-foreign equity joint venture registered under the PRC law and the English name is for identification purpose only.

For the purpose of this report, the directors of the Company have prepared the consolidated financial statements of the Group for the Relevant Periods (the “Underlying Financial Statements”) in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”). We have undertaken an independent audit of the Underlying Financial Statements in accordance with Hong Kong Standards on Auditing issued by the HKICPA.

The Financial Information of the Group for the Relevant Periods as set out in this report has been prepared from the Underlying Financial Statements. No adjustments were deemed necessary by us to the Underlying Financial Statements in preparing our report for inclusion in the Circular.

We have examined the Underlying Financial Statements and have carried out such additional procedures as are necessary in accordance with the Auditing Guideline 3.340 “Prospectuses and the Reporting Accountant” as recommended by the HKICPA.

The directors of the Company are responsible for the preparation of the Underlying Financial Statements and the Financial Information of the Group which give a true and fair view. In preparing the Financial Information, it is fundamental that appropriate accounting policies are selected and applied consistently. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and the true and fair presentation of financial statements that are free from material

– 17 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. The directors of the Company are also responsible for the contents of the Circular in which this report is included. It is our responsibility to compile the Financial Information set out in this report from the Underlying Financial Statements of the Group, to form an independent opinion, based on examination, on the Financial Information and to report our opinion to you.

Opinion

In our opinion, the Financial Information, for the purpose of this report, gives a true and fair view of the state of affairs of the Group and the Company as at 30 June 2005, 2006 and 2007 and at 31 March 2008 and of the consolidated results and consolidated cash flows of the Group for the Relevant Periods.

The comparative consolidated income statements, consolidated statements of changes in equity and consolidated cash flow statements of the Group for the nine months ended 31 March 2007, together with the notes thereon (the “31 March 2007 financial information”) have been extracted from the Group’s consolidated financial statements for the same period which was prepared solely for the purpose of this report. We have reviewed the 31 March 2007 financial information in accordance with Statement of Auditing Standards 700 “Engagement to Review Interim Financial Reports” issued by the HKICPA. Our review consisted principally of making enquiries of management and applying analytical procedures to the 31 March 2007 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 31 March 2007 financial information. On the basis of our review which does not constitute an audit, we are not aware of any material modifications that should be made to the 31 March 2007 financial information.

– 18 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION

CONSOLIDATED INCOME STATEMENTS

Notes
Turnover
(6)
Cost of sales
Gross profit/(loss)
Other operating income
Distribution costs
Administrative expenses
Share-based payment expenses
Finance costs
(7)
Gain on disposal of partial
interest in a jointly
controlled entity
(15)
Gain/(loss) attributable to
financial assets at fair value
through profit or loss
(8)
Gain on disposal of available-
for-sale investments
Share of loss of a jointly
controlled entity
Impairment loss recognised in
respect of an intangible asset
Loss before income tax
(9)
Income tax
(10)
Loss for the year/period
Attributable to:
– Equity holders of the Company
– Minority interests
Loss per share
Basic
(11)

For the nine months
For the year ended 30 June
ended 31 March
2005
2006
2007
2007
2008
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
(Unaudited)
3,332
3,974
6,838
4,931
7,399
(3,356)
(3,418)
(4,868)
(3,240)
(6,186)
(24)
556
1,970
1,691
1,213
1,115
2,291
1,456
639
2,134
(2,170)
(1,406)
(1,237)
(877)
(986)
(29,217)
(44,095)
(42,939)
(17,840)
(46,381)
(1,184)
(5,989)
(11,324)
(11,289)
(27,842)
(1,582)
(121)
(466)
(391)
–
–
–
920
920
–
15
3,149
1,819
10
(3,941)
–
–
11,242
11,242
–
(79)
(450)
(784)
(566)
(598)
(38,284)
(37,128)
(10,472)
–
–
(71,410)
(83,193)
(49,815)
(16,461)
(76,401)
–
–
6,263
(1,844)
–
(71,410)
(83,193)
(43,552)
(18,305)
(76,401)
(71,410)
(83,193)
(43,506)
(18,305)
(76,248)
–
–
(46)
–
(153)
(71,410)
(83,193)
(43,552)
(18,305)
(76,401)
(4.02) cents
(3.91) cents
(1.72) cents
(0.76) cents
(2.09) cents

– 19 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS
Notes Non-current assets Property, plant and equipment (13) Intangible asset (14) Interest in a jointly controlled entity (15) Available-for-sale investments (16) Deposits paid for acquisition of properties (17) Deposit paid for the acquisition of a subsidiary (16(b)) Current assets Temporary payments (19) Deposit paid for the acquisition of an available-for-sale investment (16(c)), (20) Deposit paid for the acquisition of a subsidiary (21) Debtors, deposits and prepayments (22) Amount due from a jointly controlled entity (15) Available-for-sale investments (16) Financial assets at fair value through profit or loss (23) Pledged bank deposits (24) Bank balances and cash (24) Current liabilities Other creditors and accrued charges (25) Provision for taxation Bank borrowings (26) Net current assets Total assets less current liabilities Non-current liabilities Convertible note (27) Deferred taxation (28) Capital and reserves Share capital (29) Reserves Equity attributable to equity holders of the Company Minority interests	As at 30 June		2007 HK$’000 3,082 – 598 140,020 10,104 100,000 253,804 7,838 3,000 – 2,502 – – 6,338 7,076 24,937 51,691 2,871 1,545 – 4,416 47,275 301,079 – – 301,079 31,443 269,579 301,022 57 301,079	As at 31 March
	2005 HK$’000 2,461 47,600 1,080 – – – 51,141 – – – 2,429 – – 71 – 11,229 13,729 2,172 – – 2,172 11,557 62,698 12,824 7,808 42,066 108,203 (66,137) 42,066 – 42,066	2006 HK$’000 3,095 10,472 406 140,020 9,340 – 163,333 – – – 1,813 700 10,435 2,836 5,263 2,983 24,030 3,201 – 1,943 5,144 18,886 182,219 – 7,808 174,411 23,993 150,418 174,411 – 174,411		2008 HK$’000 5,062 – – 496,364 10,104 –
				511,530
				– 3,283 23,647 5,254 – – 4,497 162 45,224
				82,067
				4,049 1,545 –
				5,594
				76,473
				588,003 – –
				588,003

				37,408 550,595
				588,003 –
				588,003

– 20 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

BALANCE SHEETS

BALANCE SHEETS
Notes Non-current assets Property, plant and equipment (13) Investments in subsidiaries (18) Amounts due from subsidiaries (18) Current assets Deposit paid for acquisition of a subsidiary (21) Deposits and prepayments Financial asset at fair value through profit or loss (23) Bank balances and cash (24) Current liability Other creditors and accrued charges (25) Net current assets Total assets less current liabilities Non-current liabilities Amounts due to subsidiaries (18) Convertible note (27) Capital and reserves Share capital (29) Reserves (37)	As at 30 June		2007 HK$’000 68 140,020 – 140,088 – 116 – 11,020 11,136 862 10,274 150,362 71,295 – 71,295 79,067 31,443 47,624 79,067	As at 31 March
	2005 HK$’000 736 108,750 – 109,486 – 734 – 7,439 8,173 1,161 7,012 116,498 29,859 12,824 42,683 73,815 108,203 (34,388) 73,815	2006 HK$’000 168 140,020 – 140,188 – 56 1,606 465 2,127 960 1,167 141,355 29,848 – 29,848 111,507 23,993 87,514 111,507		2008 HK$’000 50 140,020 347,721
				487,791
				23,647 137 – 41,800
				65,584
				972
				64,612
				552,403
				71,290 –
				71,290
				481,113

				37,408 443,705
				481,113

– 21 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

At 1 July 2004 Issue of shares during the year Exercise of share options Recognition of equity settled share based payment and exercise of share option Exchange difference arising on translation of – the Group – the jointly controlled entity Loss for the year At 30 June 2005 and 1 July 2005 Changes in fair value of available- for-sale investments Exchange difference arising on translation of the Group Loss for the year Total recognised income and expenses for the year Issue of shares during the year Issue of shares for acquisition of subsidiaries Issue of shares upon exercise of share options Repurchase of shares Recognition of equity settled share-based payment Redemption of convertible note Capital reduction Elimination of accumulated losses of the Company Cancellation of share options At 30 June 2006 and 1 July 2006	Share capital HK$’000 102,776 4,000 1,427 – – – – 108,203 – – – – 21,200 14,929 433 (807 ) – – (119,965 ) – – 23,993			Attributable to equity holders of the Company	Sub-total HK$’000 83,365 22,400 6,595 1,184 (58 ) (10 ) (71,410 ) 42,066 2,679 68 (83,193 ) (80,446 ) 127,200 84,020 2,593 (2,991 ) 5,989 (4,020 ) – – – 174,411	Minority interests HK$’000 – – – – – – – – – – – – – – – – – – – – – –	Total HK$’000 83,365 22,400 6,595 1,184 (58 ) (10 ) (71,410 ) 42,066 2,679 68 (83,193 ) (80,446 ) 127,200 84,020 2,593 (2,991 ) 5,989 (4,020 ) – – – 174,411
		Share premium HK$’000 274,433 18,400 5,168 55 – – – 298,056 – – – – 106,000 69,091 2,477 (2,991 ) – – – – – 472,633	Capital redemption reserve HK$’000 – – – – – – – – – – – – – – – 807 – – – – – 807	Equity component of Share- convertible based Exchange Other Contributed notes compensation translation Accumulated reserve surplus reserve reserve reserve losses HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 – – 4,340 – – (298,184 ) – – – – – – – – – – – – – – – 1,129 – – – – – – (58 ) – – – – – (10 ) – – – – – – (71,410 ) – – 4,340 1,129 (68 ) (369,594 ) 2,679 – – – – – – – – – 68 – – – – – – (83,193 ) 2,679 – – – 68 (83,193 ) – – – – – – – – – – – – – – – (317 ) – – – – – – – – – – – 5,989 – – – – (4,340 ) – – 320 – 119,965 – – – – – (119,965 ) – – – 119,965 – – – (101 ) – 101 2,679 – – 6,700 – (332,401 )

– 22 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (CONT’D)

Transfer to profit or loss on disposal of available-for-sale investments Exchange difference arising on translation of – the Group – the jointly controlled entity Loss for the year Total recognised income and expenses for the year Capital injection from a minority shareholder of a newly incorporated subsidiary Issue of shares during the year Issue of shares upon exercise of share options Transaction costs attributable to issue of new shares Recognition of equity settled share based payment Cancellation of share options At 30 June 2007 and 1 July 2007 Exchange difference arising on translation of the foreign operations of the Group Loss for the period Total recognised income and expenses for the period Capital injection from a minority shareholder of a subsidiary Issue of shares during the year Issue of shares for acquisition of subsidiaries Issue of shares upon exercise of share options Transaction costs attributable to issue of new shares Recognition of equity settled share based payment Cancellation of share options At 31 March 2008	Share capital HK$’000 – – – – – – 4,790 2,660 – – – 31,443 – – – – 1,818 4,139 8 – – – 37,408			Attributable to equity holders of the Company	Sub-total HK$’000 (2,679 ) (498 ) 49 (43,506 ) (46,634 ) – 117,355 47,440 (2,874 ) 11,324 – 301,022 773 (76,248 ) (75,475 ) – 98,534 235,921 289 (130 ) 27,842 – 588,003	Minority interests HK$’000 – – – (46 ) (46 ) 103 – – – – – 57 – (153 ) (153 ) 96 – – – – – – –	Total HK$’000 (2,679 ) (498 ) 49 (43,552 ) (46,680 ) 103 117,355 47,440 (2,874 ) 11,324 – 301,079 773 (76,401 ) (75,628 ) 96 98,534 235,921 289 (130 ) 27,842 – 588,003
		Share premium HK$’000 – – – – – – 112,565 59,410 (2,874 ) – – 641,734 – – – – 96,716 231,782 359 (130 ) – – 970,461	Capital redemption reserve HK$’000 – – – – – – – – – – – 807 – – – – – – – – – – 807	Equity component of Share- convertible based Exchange Other Contributed notes compensation translation Accumulated reserve surplus reserve reserve reserve losses HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (2,679 ) – – – – – – – – – (498 ) – – – – – 49 – – – – – – (43,506 ) (2,679 ) – – – (449 ) (43,506 ) – – – – – – – – – – – – – – – (14,630 ) – – – – – – – – – – – 11,324 – – – – – (1,957 ) – 1,957 – – – 1,437 (449 ) (373,950 ) – – – – 773 – – – – – – (76,248 ) – – – – 773 (76,248 ) – – – – – – – – – – – – – – – – – – – – – (78 ) – – – – – – – – – – – 27,842 – – – – – (1,539 ) – 1,539 – – – 27,662 324 (448,659 )

– 23 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (CONT’D)

Unaudited

Attributable to equity holders of the Company

			Attributable to equity holders of the Company
Share capital HK$’000 At 1 July 2006 23,993 Transfer to profit or loss on disposal of available-for-sale investments – Exchange difference arising on translation of – the Group – – the jointly controlled entity – Loss for the period – Total recognised income and expenses for the period – Issue of shares upon exercise of share options 232 Recognition of equity settled share based payment – Cancellation of share options – At 31 March 2007 24,225	Share premium HK$’000 472,633 – – – – – 3,819 – – 476,452	Capital redemption reserve HK$’000 807 – – – – – – – – 807	Equity component of Share- convertible based Exchange Other Contributed notes compensation translation Accumulated reserve surplus reserve reserve reserve losses HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 2,679 – – 6,700 – (332,401) (2,679) – – – – – – – – – (478) – – – – – (9) – – – – – – (18,305) (2,679) – – – (487) (18,305) – – – (975) – – – – – 11,289 – – – – – (1,246) – 1,246 – – – 15,768 (487) (349,460)	Sub-total HK$’000 174,411 (2,679) (478) (9) (18,305) (21,471) 3,076 11,289 – 167,305	Minority interests HK$’000 – – – – – – – – – –	Total HK$’000 174,411 (2,679) (478) (9) (18,305
						(21,471
						3,076 11,289 –
						167,305

– 24 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

CONSOLIDATED CASH FLOW STATEMENTS

Notes Operating activities Loss before income tax Adjustments for: Share of loss of a jointly controlled entity Interest income Dividend income Interest expenses Depreciation Service fee (20) Bad debts written off Allowance for bad and doubtful debts Share-based payment expenses (Gain)/loss attributable to financial assets at fair value through profit or loss Gain on disposal of available-for-sale investments Loss/(gain) on disposal of property, plant and equipment Gain on redemption of convertible note Gain on disposal of partial interest in a jointly controlled entity Impairment loss recognised in respect of an intangible asset Operating cashflows before movements in working capital Decrease/(increase) in debtors, deposits and prepayments (Decrease)/increase in other creditors and accrued charges Net cash used in operating activities	For the year ended 30 June 2005 2006 2007 HK$’000 HK$’000 HK$’000 (71,410) (83,193) (49,815) 79 450 784 (137) (1,272) (1,072) – (9) (16) 1,582 121 466 1,453 1,492 1,084 – – – 697 497 – – – 1,510 1,184 5,989 11,324 (15) (3,149) (1,819) – – (11,242) 140 38 16 – (944) – – – (920) 38,284 37,128 10,472 (28,143) (42,852) (39,228) 1,700 119 (2,199) (1,633) 1,021 (330) (28,076) (41,712) (41,757)	For the nine months ended 31 March 2007 2008 HK$’000 HK$’000 (Unaudited) (16,461) (76,401) 566 598 (252) (1,441) (16) (18) 391 – 804 884 – 7,838 – – – – 11,289 27,842 (10) 3,941 (11,242) – 16 (3) – – (920) – – – (15,835) (36,760) (3,268) (2,752) 66 (192) (19,037) (39,704)
		2007 HK$’000 (Unaudited) (16,461) 566 (252) (16) 391 804 – – – 11,289 (10) (11,242) 16 – (920) – (15,835) (3,268) 66 (19,037)

– 25 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

CONSOLIDATED CASH FLOW STATEMENTS (CONT’D)

Notes Investing activities Increase in deposits paid for the acquisition of a subsidiary Proceeds from disposal of available-for-sale investments Purchase of financial assets at fair value through profit or loss Increase in temporary payments Proceeds from disposal of financial asset at fair value through profit or loss Increase in deposits paid for acquisition of an available- for-sale investment (Increase)/decrease in pledged bank deposits Interest received Purchase of property, plant and equipment Capital contribution to a jointly controlled entity Proceeds from partially disposal of a jointly controlled entity Increase in deposits paid for acquisition of properties Repayment from/(advance to) a jointly controlled entity Dividend received Acquisition of subsidiaries (32) Purchase of available-for-sale investments Proceeds from disposal of property, plant and equipment Purchase of interest in a jointly controlled entity Net cash/(used in) from investing activities	For the year ended 30 June 2005 2006 2007 HK$’000 HK$’000 HK$’000 – – (100,000) – – 18,998 – (61,466) (8,895) – – (7,838) – 61,850 7,212 – – (3,000) – (5,263) (1,813) 126 1,272 1,072 (907) (2,165) (1,066) – – (1,008) – – 1,001 – (9,340) (764) (224) (476) 700 – 9 16 – (56,000) – – (7,756) – – 35 – (945) – – (1,950) (79,300) (95,385)	For the nine months ended 31 March 2007 2008 HK$’000 HK$’000 (Unaudited) – (23,647) 18,998 – – (6,010) – – 2,754 3,910 – (7,794) (1,776) 6,914 252 1,441 (648) (2,581) (1,008) – 1,001 – – – (236) – 16 18 – (11,800) – – – 38 – – 19,353 (39,511)
		2007 HK$’000 (Unaudited) – 18,998 – – 2,754 – (1,776) 252 (648) (1,008) 1,001 – (236) 16 – – – – 19,353

– 26 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

CONSOLIDATED CASH FLOW STATEMENTS (CONT’D)

Notes Financing activities Net proceeds from issue of shares by placement Redemption of convertible notes Payment on repurchase of shares Proceeds from issue of shares on exercise of share options New bank borrowings raised Repayment of bank borrowings Capital injection from a minority shareholder of a subsidiary Interest paid Net cash from financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of the year/period Effect of foreign currency rate changes Cash and cash equivalents at end of the year/period, representing by bank balances and cash	For the year ended 30 June 2005 2006 2007 HK$’000 HK$’000 HK$’000 22,400 127,200 114,481 – (15,900) – – (2,991) – 6,595 2,593 47,440 – 1,943 4,057 – – (6,000) – – 103 (318) (113) (466) 28,677 112,732 159,615 (1,349) (8,280) 22,473 12,636 11,229 2,983 (58) 34 (519) 11,229 2,983 24,937	For the nine months ended 31 March	For the nine months ended 31 March
		2007 HK$’000 (Unaudited) – – – 3,076 4,057 – – (391) 6,742 7,058 2,983 (477) 9,564	2008 HK$’000 98,404 – – 289 – – 96 –
			98,789
			19,574 24,937 713
			45,224

– 27 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION

1. GENERAL INFORMATION

The Company is incorporated and registered as an exempted company in Bermuda with limited liability and its shares are listed on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).

The address of the registered office and principal place of business of the Company is Canon’s Court, 22 Victoria Street, Hamilton HM12, Bermuda and Suite 1606-7, 16th Floor, Great Eagle Centre, No. 23 Harbour Road, Wanchai, Hong Kong, respectively.

The Financial Information is presented in Hong Kong dollars, which is same as the functional currency of the Company and its subsidiaries.

The Company acts as an investment holding company. The principal activities of its subsidiaries and jointly controlled entity are stated in notes 38 and 15, respectively.

2. ADOPTION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS (“HKFRSs”)

At the date of this report, the Hong Kong lnstitute of Certified Public Accountants (“HKICPA”) issued the following new and revised HKFRSs, Hong Kong Accounting Standards (“HKAS”) and interpretation (hereinafter collectively referred to as “new HKFRSs”). However, the Group has not early applied these new and revised standards or interpretations (“HK(IFRIC)-INTs”) that have been issued but are not yet effective as at the date of this report. The directors of the Company anticipate that the application of these new HKFRSs will have no material impact on the results and the financial position of the Group.

HKAS 1 (Revised)	Presentation of Financial Statements1
HKAS 1 (Amendment)	Presentation of Financial Statements – Puttable Financial
	Instruments and Obligations Arising on Liquidation1
HKAS 23 (Revised)	Borrowing Cost1
HKAS 27 (Revised)	Consolidated and Separate Financial Statements2
HKAS 32 (Amendment)	Financial Instruments: Presentation1
HKFRS 2 (Amendment)	Share-based Payment – Vesting Conditions and Cancellations1
HKFRS 3 (Revised)	Business Combination2
HKFRS 8	Operating Segments1
HK(IFRIC)-INT 12	Service Concession Arrangements3
HK(IFRIC)-INT 13	Customer Loyalty Programmes4
HK(IFRIC)-INT 14	HKAS 19 – The Limit on a Defined Benefit Asset,
	Minimum Funding Requirements and Their Interaction3

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

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

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

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

– 28 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

3. SIGNIFICANT ACCOUNTING POLICIES

The Financial Information has been prepared in accordance with HKFRSs issued by the HKICPA. In addition, the consolidated financial statements comply with the applicable disclosure provisions of the Rules Governing the Listing of Securities on the Stock Exchange and by the Hong Kong Companies Ordinance.

The Financial Information has been prepared on the historical cost basis except for certain financial instruments, which are stated at their fair values, as explained in the accounting policies set out below.

Basis of consolidation

The Financial Information incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Business combinations

The acquisition of businesses 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 recognised at their fair values at the acquisition date.

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

Minority interests

Minority interests in the net assets of consolidated subsidiaries are presented separately from the Group’s equity therein. Minority interests in the net assets consists 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.

Investments in subsidiaries

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

– 29 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

Interest in a 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 consolidated financial statements 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 recognising its share of further losses. An additional share of losses is provided for and a liability is recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of that jointly controlled entity.

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

Property, plant and equipment

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

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

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

Intangible assets

Intangible assets acquired separately

Intangible asset represents the cost of acquisition of patents and technology for the provision of credit card security device and digital network authorisation services.

Intangible assets acquired separately and with finite useful lives are carried at costs less accumulated amortisation and any accumulated impairment losses. Amortisation for intangible assets with finite useful lives is provided on a straight-line basis over their estimated useful lives. Alternatively, intangible assets with indefinite useful lives are carried at cost less any subsequent accumulated impairment losses (see the accounting policy in respect of impairment losses below).

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

– 30 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

Financial instruments

Financial assets and financial liabilities are recognised on the consolidated 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 cost 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 and loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

Financial assets

The Group’s financial assets are classified into financial assets at fair value through profit or loss, loans and receivables and available-for-sale financial assets. All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.

Effective interest method

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

Income is recognised on an effective interest basis for debt instruments.

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.

Financial assets at fair value through profit or loss

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 assets form 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 FVTPL.

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 recognised directly in profit or loss in the period in which they arise.

– 31 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

Financial instruments (cont’d)

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. At each balance sheet date subsequent to initial recognition, loans and receivables (including temporary payments, deposits paid for acquisition of properties, deposit paid for the acquisition of an available-for-sales investment and a subsidiary, debtors, deposits and prepayments, amount due from a jointly controlled entity, pledged bank deposits and bank balances) are carried at amortised cost using the effective interest method, less any identified impairment losses (see accounting policy on impairment loss on financial assets below).

Available-for-sale financial assets

Impairment loss on financial assets

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

Objective evidence of impairment could include:

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

For certain categories of financial asset, such as trade and other receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Group’s past experience of collective payments, an increase in the number of delayed payments in the portfolio past the average credit period of 60 days, observable changes in national or local economic conditions that correlate with default on receivables.

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

– 32 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

Financial instruments (cont’d)

Impairment loss on financial assets (cont’d)

For financial assets carried at cost, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods.

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

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

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

Financial 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 mainly other financial liabilities.

Effective interest method

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

Interest expense is recognised on an effective interest basis.

Other financial liabilities

Other financial liabilities including other creditors and accrued charges and bank borrowings are subsequently measured at amortised cost, using the effective interest rate method.

Equity instruments

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

– 33 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

Financial instruments (cont’d)

Convertible notes

Convertible notes issued by the Group that contain both financial liability and equity components are classified separately into respective liability and equity components on initial recognition. Conversion option that 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 instrument is classified as an equity instrument. On initial recognition, the fair value of the liability component is determined using the prevailing market interest for similar non-convertible debt. The difference between the proceeds of issue of the convertible notes and the fair value assigned to the liability component, representing the embedded call option for the holder to convert the note into equity, is included in equity as an equity component of convertible notes (equity component of convertible notes reserve).

In the subsequent periods, the liability component of the convertible loan notes is carried at amortised 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 equity component of convertible notes reserve until the embedded option is exercised (in which case the balance stated in equity component of convertible notes reserve will be transferred to share premium). Where the option remains unexercised at the expiry date, the balance stated in equity component of convertible notes reserve will be released to accumulated profits. No gain or loss is recognised 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 gross 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 portion and amortised over the period of the convertible loan notes using the effective interest method.

Derecognition

Financial assets are derecognised 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 receivable and the cumulative gain or loss that had been recognised directly in equity is recognised in profit or loss. If the Group retains substantially all the risks and rewards of ownership of a transferred assets, the Group continues to recognise the financial asset and recognise a collateralised borrowings for proceed received.

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

Impairment losses on tangible and intangible assets other than goodwill

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

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

– 34 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

Foreign currencies

In preparing the Financial Information 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 recognised 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 recognised in equity in the consolidated financial statements. Exchange differences arising on the retranslation of nonmonetary 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 recognised directly in equity, in which cases, the exchange differences are also recognised 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 recognised as a separate component of equity (the exchange translation reserve). Such exchange differences are recognised in profit or loss in the period in which the foreign operation is disposed of.

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods sold or services provided in the normal course of business, net of discounts and sales related taxes, proceeds from sales of financial assets at fair value through profit or loss/available-for-sale investments, interest income and dividend income.

Revenue from goods sold is recognised when title of goods sold has passed to the customers, which is at the time of delivery.

Service income is recognised when services are rendered.

Proceeds from sale of financial assets at fair value through profit or loss/available-for-sale investment are recognised on a trade date basis when the risks and rewards of ownership are transferred and title has passed.

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

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

– 35 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

Equity settled share-based payment transactions

Share options granted to directors and employees of the Company

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-based compensation 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 recognised in profit or loss with a corresponding adjustment to share-based compensation reserve.

At the time when the share options are exercised, the amount previously recognised in sharebased compensation reserve will be transferred to share premium. When the share options are forfeited or are still not exercised at the expiry date, the amount previously recognised in sharebased compensation reserve will be transferred to accumulated losses.

Share options granted to suppliers/consultants

Share options issued in exchange for goods or services are measured at the fair values of the goods or services received. The fair values of the goods or services received are recognised as expenses immediately, unless the goods or services qualify for recognition as assets. Corresponding adjustment has been made to share-based compensation reserve.

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

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the consolidated 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 recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and a jointly controlled entity, 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.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited to 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.

– 36 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

Retirement benefit scheme

The retirement benefit scheme contributions relating to the mandatory provident fund scheme charged to the consolidated income statement represent contributions payable to the scheme by the Group at rates specified in the rules of the scheme.

The amount of contributions payable to pension scheme in jurisdictions other than Hong Kong is charged to the consolidated income statement as an expense when employees have rendered services entitling them to the contributions.

Leasing

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

The Group as lessee

Rentals payable under operating leases are charged to 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 recognised as a reduction of rental expense over the lease term on a straightline basis.

Provisions

Provisions are recognised 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.

Borrowing costs

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

4. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

The preparation of the Financial Information in conformity with HKFRSs requires management to make judgments, estimates and assumption that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other source. Actual results may differ from these estimates.

Depreciation of property, plant and equipment

Property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives, after taking into account the estimated residual value. The Group assesses annually the residual value and the useful life of the property, plant and equipment and if the expectation differs from the original estimates, such differences from the original estimates will impact the depreciation charges in the year in which the estimates change.

– 37 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

4. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (CONT’D)

Estimated impairment of assets

At each balance sheet date, the Group reviews internal and external sources of information to identify indications that the following assets may be impaired, an impairment loss previously recognised no longer exists or may have decreased:

property, plant and equipment;
intangible assets;
interests in subsidiaries;
available-for-sale investments;
deposit paid for acquisition of an available-for-sale investment;
deposit paid for acquisition of a subsidiary; and
temporary payments.

If any such indication exists, the asset’s recoverable amount is estimated. In addition, for intangible assets that are not yet available for use and intangible assets that have indefinite useful lives, the recoverable amount is estimated annually whether or not there is any indication of impairment. An impairment loss is recognised in the consolidated income statement whenever the carrying amount of an asset exceeds its recoverable amounts.

The sources utilised to identify indications of impairment are often subjective in nature and the Group is required to use judgement in applying such information to its business. The Group’s interpretation of this information has a direct impact on whether an impairment assessment is performed as at any given balance sheet date.

If an indication of impairment is identified, such information is further subject to an exercise that requires the Group to estimate the recoverable value, representing the greater of the asset’s fair value less cost to sell or its value in use. Depending on the Group’s assessment of the overall materiality of the asset under review and complexity of deriving reasonable estimates of the recoverable value, the Group may perform such assessment utilising internal resources or the Group may engage external advisors to counsel the Group in making this assessment. Regardless of the resources utilitised, the Group is required to make many assumptions to make this assessment, including the utilisation of such asset, the cash flows to be generated, appropriate market discount rates and the projected market and regulatory conditions. Changes in any of these assumptions could result in a material change to future estimates of the recoverable value of any asset.

Share-based payment expenses

The share-based payment expense is subject to the limitations of the Black-Scholes-Merton Option Pricing Model and the uncertainty in estimates used by management in the assumptions. The estimates include limited early exercise behaviour, expected interval and frequency of open exercise periods in the share option life, and other relevant parameters of the share option model.

Allowance for bad and doubtful debts

The policy for allowance of bad and doubtful debts of the Group is based on the evaluation of collectibility and aging analysis of accounts and on management’s judgment. A considerable amount of judgment is required in assessing the ultimate realisation of these receivables, including the current creditworthiness and the past collection history of each customer. If the financial conditions of customers of the Group were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

– 38 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

5. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

Financial assets Loan receivables: Deposits paid for acquisition of properties Temporary payments Deposit paid for the acquisition of an available-for-sale investment Deposit paid for the acquisition of a subsidiary Debtors, deposits and prepayments Amount due from a jointly controlled entity Pledged bank deposits Bank balances and cash Available-for-sale investments Financial assets at fair value through profit or loss Financial liabilities Other liabilities: Other creditors and accrued charges Bank borrowings Convertible note	As at 30 June 2005 2006 HK$’000 HK$’000 – 9,340 – – – – – – 2,429 1,813 – 700 – 5,263 11,229 2,983 13,658 20,099 – 150,455 71 2,836 2,172 3,201 – 1,943 12,824 – 14,996 5,144	As at 30 June 2005 2006 HK$’000 HK$’000 – 9,340 – – – – – – 2,429 1,813 – 700 – 5,263 11,229 2,983 13,658 20,099 – 150,455 71 2,836 2,172 3,201 – 1,943 12,824 – 14,996 5,144	2007 HK$’000 10,104 7,838 3,000 100,000 2,502 – 7,076 24,937 155,457 140,020 6,338 2,871 – – 2,871	As at 31 March
		2006 HK$’000 9,340 – – – 1,813 700 5,263 2,983 20,099 150,455 2,836 3,201 1,943 – 5,144		2008 HK$’000 10,104 – 3,283 23,647 5,254 – 162 45,224
				87,674

				496,364

				4,497

				4,049 – –
				4,049

The Group’s major financial instruments include equity investments, deposits paid for the acquisition of available-for-sales investments, a subsidiary and properties, debtors, deposits and prepayments, pledged bank deposits, bank balances and cash, other creditors and accrued charges. Details of these financial instruments are disclosed in respective notes. The risk 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.

Fair value

The fair values of financial assets and financial liabilities reported in the balance sheets of the Group and the Company approximate their carrying amounts due to their immediate or shortterm maturities.

Currency risk

The Group has certain investments in operations in the PRC, whose assets and liabilities are denominated in Renminbi. Renminbi is not a freely convertibly currency in the international market and its exchange rate is determined by the People’s Bank of China.

– 39 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

5. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D)

Credit risk

The carrying amounts of debtors and deposits included in the consolidated balance sheet represent the Group’s maximum exposure to credit risk in relation to its financial assets. No other financial assets carrying a significant exposure to credit risk. The Group has no significant concentration of credit risk, with exposure spread over a number of counterparties and customers.

Interest rate risk

The Group’s exposure to market risk for changes in interest rates relates primarily to the Group’s interest bearing bank borrowings.

Liquidity risk

In the management of the liquidity risk, the Group monitors and maintains a level of cash and cash equivalents deemed adequate by the management to finance the Group’s operations and to maintain a balance between continuity of funding and flexibility through the use of bank borrowings.

The following table details the Group’s remaining contractual maturity for its financial liabilities. For non-derivative 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.

At 30 June 2005

Other creditors and accrued charges At 30 June 2006 Other creditors and accrued charges Bank borrowings	Total Within undiscounted 1 year cash flows HK$’000 HK$’000 2,172 2,172 Total Within undiscounted 1 year cash flows HK$’000 HK$’000 3,201 3,201 1,960 1,960 5,161 5,161	Total Within undiscounted 1 year cash flows HK$’000 HK$’000 2,172 2,172 Total Within undiscounted 1 year cash flows HK$’000 HK$’000 3,201 3,201 1,960 1,960 5,161 5,161
		5,161

– 40 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

5. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D)

At 30 June 2007

Other creditors and accrued charges At 31 March 2008 Other creditors and accrued charges	Total Within undiscounted 1 year cash flows HK$’000 HK$’000 2,871 2,871 Total Within undiscounted 1 year cash flows HK$’000 HK$’000 4,049 4,049

6. TURNOVER AND SEGMENT INFORMATION

Turnover represents the net amounts received and receivable for the followings:

Provision of financial information services Provision of credit card security device and digital network authorisation services Trading of electronic goods and accessories Others		For the	For the nine months year ended 30 June ended 31 March 2006 2007 2007 2008 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) 2,526 2,848 2,028 2,968 1,414 3,963 2,880 2,644 – – – 1,784 34 27 23 3 3,974 6,838 4,931 7,399	For the nine months ended 31 March	For the nine months ended 31 March
		2005 HK$’000 2,309 984 – 39 3,332	2006 HK$’000 2,526 1,414 – 34 3,974		2008 HK$’000 2,968 2,644 1,784 3
					7,399

– 41 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

6. TURNOVER AND SEGMENT INFORMATION (CONT’D)	(a) Business segments	For management purposes, the Group is currently organised into three (2007, 2006 and 2005: two) operating divisions as detailed above. These	divisions are the basis on which the Group reports its primary segment information. An analysis of the Group’s turnover and contributions to	operating results and segmental assets and liabilities by business segments is as follows:	Consolidated income statements	Provision of credit card security device	Provision of financial information services and digital network authorisation services Trading of electronic goods and accessories Others Total	For the nine months For the nine months For the nine months For the nine months For the nine months	For the year ended 30 June ended 31 March For the year ended 30 June ended 31 March For the year ended 30 June ended 31 March For the year ended 30 June ended 31 March For the year ended 30 June ended 31 March	2005 2006 2007 2007 2008 2005 2006 2007 2007 2008 2005 2006 2007 2007 2008 2005 2006 2007 2007 2008 2005 2006 2007 2007 2008	HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000	(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)	TURNOVER	External sales 2,309 2,526 2,848 2,028 2,968 984 1,414 3,963 2,880 2,644 – – – – 1,784 39 34 27 23 3 3,332 3,974 6,838 4,931 7,399			SEGMENT RESULTS (441) (902) (1,076) (236) 11 (8,301) (9,425) (5,412) (3,996) (3,613) – – – – 29 (88) (859) (443) (320) (12) (8,830) (11,186) (6,931) (4,552) (3,585)			Unallocated corporate expenses (22,650) (37,457) (45,143) (23,124) (68,277)	Finance costs (1,582) (121) (466) (391) –	Gain/(loss) attributable to financial assets	at fair value through profit or loss 15 3,149 1,819 10 (3,941)	Gain on disposal of available-for-sale	investments – – 11,242 11,242 –	Gain on disposal of partial interest in	a jointly controlled entity – – 920 920 –	Share of loss of a jointly controlled entity (79) (450) (784) (566) (598)	Impairment loss recognised in respect of	an intangible asset (38,284) (37,128) (10,472) – –	Loss before income tax (71,410) (83,193) (49,815) (16,461) (76,401)	Income tax – – 6,263 (1,844) –	Loss for the year/period (71,410) (83,193) (43,552) (18,305) (76,401)

– 42 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

				As at	31 March	2008	HK$’000		23,782	–	496,364	–	23,647		3,283	46,521	593,597		1,862	3,732	5,594
			Total		As at 30 June	2006 2007	HK$’000 HK$’000		30,267 30,782	406 598	150,455 140,020	– 7,838	– 100,000		– 3,000	6,235 23,257	187,363 305,495		4,125 2,854	8,827 1,562	12,952 4,416

						2005	HK$’000		53,551	1,080	–	–	–		–	10,239	64,870		965	21,839	22,804
				As at	31 March	2008	HK$’000		14										–
			Others		As at 30 June	2006 2007	HK$’000 HK$’000		161 40										– 18
						2005	HK$’000		192										–
			Trading of electronic goods and accessories	As at	As at 30 June 31 March	2005 2006 2007 2008	HK$’000 HK$’000 HK$’000 HK$’000		– – – 1,784										– – – –
6. TURNOVER AND SEGMENT INFORMATION (CONT’D)	(a) Business segments (cont’d)	Provision of credit card security device	Provision of financial information services and digital network authorisation services	As at As at	As at 30 June 31 March As at 30 June 31 March	2005 2006 2007 2008 2005 2006 2007 2008	HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000	ASSETS	Segment assets 355 579 848 4,610 53,004 29,527 29,894 17,374	Interest in a jointly controlled entity	Available-for-sale investments	Temporary payments	Deposit paid for the acquisition of a subsidiary	Deposit paid for the acquisition of	an available-for-sale investment	Unallocated corporate assets	Total assets	LIABILITIES	Segment liabilities 816 925 1,294 1,508 149 3,200 1,542 354	Unallocated corporate liabilities	Total liabilities

– 43 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

			Total	For the nine months	For the year ended 30 June ended 31 March	2005 2006 2007 2007 2008	HK$’000 HK$’000 HK$’000 HK$’000 HK$’000	(Unaudited)		433 1,071 357 220 959	474 1,094 709 428 2,340	422 535 559 433 474	1,031 957 525 371 410		38,284 37,128 10,472 – –	109 497 – – –	588 – – – –	– – 500 – –		– – 1,010 – –	1,184 5,989 11,324 11,289 27,842		40 38 – – –		100 – 16 16 (3)		1,582 104 – – –
			Others	For the nine months	For the year ended 30 June ended 31 March	2005 2006 2007 2007 2008	HK$’000 HK$’000 HK$’000 HK$’000 HK$’000	(Unaudited)		– – – – –		90 90 47 43 12			– – – – –	– – – – –		– – – – –					– – – – –
			Trading of electronic goods and accessories	For the nine months	For the year ended 30 June ended 31 March	2005 2006 2007 2007 2008	HK$’000 HK$’000 HK$’000 HK$’000 HK$’000	(Unaudited)		– – – – –		– – – – –			– – – – –	– – – – –		– – – – –					– – – – –
6. TURNOVER AND SEGMENT INFORMATION (CONT’D)	(a) Business segments (cont’d)	Provision of credit card security device	Provision of financial information services and digital network authorisation services	For the nine months For the nine months	For the year ended 30 June ended 31 March For the year ended 30 June ended 31 March	2005 2006 2007 2007 2008 2005 2006 2007 2007 2008	HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000	(Unaudited) (Unaudited)	OTHER INFORMATION	Capital additions – 90 117 54 476 433 981 240 166 483	Unallocated capital expenditure	Depreciation 97 19 34 23 74 235 426 478 367 388	Unallocated depreciation	Impairment loss recognised in respect of	an intangible asset – – – – – 38,284 37,128 10,472 – –	Bad debts written off – – – – – 109 497 – – –	Unallocated bad debts written off	Allowance for bad and doubtful debts – – – – – – – 500 – –	Unallocated allowance for bad and	doubtful debts	Unallocated share-based payment expenses	Loss on disposal of property, plant	and equipment 40 – – – – – 38 – – –	Unallocated loss/(gain) on disposal of	property, plant and equipment	Unallocated interest expense on	convertible note

– 44 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

6. TURNOVER AND SEGMENT INFORMATION (CONT’D)

(b) Geographical segments

The following provides an analysis of the Group’s turnover and contribution to loss from operations by geographical markets, irrespective of the origin of the services:

Turnover For the nine months For the year ended 30 June ended 31 March 2005 2006 2007 2007 2008 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) 2,731 3,208 5,756 4,078 6,022 601 766 1,082 853 1,377 3,332 3,974 6,838 4,931 7,399	Turnover For the nine months For the year ended 30 June ended 31 March 2005 2006 2007 2007 2008 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) 2,731 3,208 5,756 4,078 6,022 601 766 1,082 853 1,377 3,332 3,974 6,838 4,931 7,399	Contribution For the year ended	Contribution For the year ended	to loss from operations	to loss from operations	to loss from operations
				For the nine months 30 June ended 31 March 2007 2007 2008 HK$’000 HK$’000 HK$’000 (Unaudited) (46,644) (24,009 ) (67,157 (5,430) (3,667) (4,705 (52,074) (27,676 ) (71,862	For the nine months ended 31 March
2005 HK$’000 2,731 601 3,332	2006 HK$’000 3,208 766 3,974	2005 HK$’000 (27,504) (3,976) (31,480)	2006 HK$’000 (43,127) (5,516) (48,643)			2008 HK$’000 (67,157 (4,705
						(71,862

The following is an analysis of the carrying amount of segment assets and capital additions analysed by the geographical area in which the assets are located:

Carrying amount of segment assets As at As at 30 June 31 March 2005 2006 2007 2008 HK$’000 HK$’000 HK$’000 HK$’000 62,220 184,206 293,691 590,952 2,650 3,157 11,804 2,645 64,870 187,363 305,495 593,597	Carrying amount of segment assets As at As at 30 June 31 March 2005 2006 2007 2008 HK$’000 HK$’000 HK$’000 HK$’000 62,220 184,206 293,691 590,952 2,650 3,157 11,804 2,645 64,870 187,363 305,495 593,597	Capital additions	Capital additions
		As at 30 June 2005 2006 2007 HK$’000 HK$’000 HK$’000 731 2,016 706 176 149 360 907 2,165 1,066		As at 31 March
2005 HK$’000 62,220 2,650 64,870	2006 HK$’000 184,206 3,157 187,363	2005 HK$’000 731 176 907	2006 HK$’000 2,016 149 2,165	2008 HK$’000 2,555 744
				3,299

7. FINANCE COSTS

Interest expenses on: – convertible note – bank borrowings	For the	For the nine months year ended 30 June ended 31 March 2006 2007 2007 2008 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) 104 – – – 17 466 391 – 121 466 391 –	For the nine months ended 31 March	For the nine months ended 31 March
	2005 HK$’000 1,582 – 1,582	2006 HK$’000 104 17 121		2008 HK$’000 – –
				–

– 45 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

8. GAIN/(LOSS) ATTRIBUTABLE TO FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

Gain on disposal of financial assets at fair value through profit or loss Changes in fair value of financial assets at fair value through profit or loss		For the	For the nine months year ended 30 June ended 31 March 2006 2007 2007 2008 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) 3,325 1,058 18 185 (176) 761 (8) (4,126) 3,149 1,819 10 (3,941)
		2005 HK$’000 – 15 15	2006 HK$’000 3,325 (176) 3,149

9. LOSS BEFORE INCOME TAX

Loss before income tax has been arrived at after charging/(crediting): Staff costs: Directors’ remuneration (excluding share-based payment expenses) Other staff costs Contributions to retirement benefit scheme (excluding directors) Share-based payment expenses Total staff costs Auditors’ remuneration Depreciation Bad debts written off Allowance for bad and doubtful debts Operating lease charged on rented premises Share-based payment expenses (excluding staff costs) Loss/(gain) on disposal of property, plant and equipment Dividend income Gain on redemption of convertible note Interest income Exchange loss/(gain)		For the	For the nine months year ended 30 June ended 31 March 2006 2007 2007 2008 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) 19,240 12,145 5,164 17,979 10,996 8,316 7,096 7,781 679 605 278 441 5,060 10,331 10,324 27,842 35,975 31,397 22,862 54,043 590 600 250 60 1,492 1,084 804 884 497 – – – – 1,510 – – 2,784 2,501 1,860 1,916 929 993 965 – 38 16 16 (3) (9) (16) (16) (18) (944) – – – (1,272) (1,072) (252) (1,441) 61 (368) (368) (59)
		2005 HK$’000 8,310 9,351 418 1,184 19,263 480 1,453 697 – 2,412 – 140 – – (137) –	2006 HK$’000 19,240 10,996 679 5,060 35,975 590 1,492 497 – 2,784 929 38 (9) (944) (1,272) 61

– 46 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

10. INCOME TAX

Income tax comprises: Provision for Hong Kong Profits Tax for the year/period Deferred taxation_(note 28)_		For the	For the nine months year ended 30 June ended 31 March 2006 2007 2007 2008 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) – (1,545) (1,844) – – 7,808 – – – 6,263 (1,844) –	For the nine months ended 31 March	For the nine months ended 31 March
		2005 HK$’000 – – –	2006 HK$’000 – – –		2008 HK$’000 – –
					–

For the two years ended 30 June 2005 and 2006, no provision for Hong Kong Profits Tax had been made in the Financial Information as the Group had no assessable profit.

Hong Kong Profits Tax is calculated at 17.5% on the estimated assessable profit for the year ended 30 June 2007 and the nine months ended 31 March 2007.

No provision for Hong Kong Profits Tax has been made as the Group did not have any assessable profit in Hong Kong for the nine months ended 31 March 2008.

No provision for taxation in other jurisdictions for the Relevant Periods and the nine months ended 31 March 2007 has been made in the Financial Information as neither the Company nor any of its subsidiaries had any assessable profits subject to tax in other jurisdictions.

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

For the	For the nine months year ended 30 June ended 31 March 2006 2007 2007 2008 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (83,193) (49,815) (16,461) (76,401 (14,559) (8,717) (2,880) (13,370 13,674 2,311 4,149 12,028 (855) (790) (397) (158 1,771 791 888 1,367 (157) – – – 126 142 84 133 – (6,263) 1,844 –	For the nine months ended 31 March
2005 HK$’000 (71,410) (12,497) 7,994 (169) 4,697 (124) 99 –	2006 HK$’000 (83,193) (14,559) 13,674 (855) 1,771 (157) 126 –	2008 HK$’000 (76,401

		(13,370 12,028 (158 1,367 – 133
		–

– 47 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

11. LOSS PER SHARE

The calculation of the basic loss per share is based on the loss attributable to equity holders of the Company for the three years ended 30 June 2007 of approximately HK$43,506,000 (2005: HK$71,410,000 and 2006: HK$83,193,000) and on the weighted average number of 2,531,963,617 (2005: 1,774,779,744 and 2006: 2,128,120,533) ordinary shares in issue during the years.

The calculation of the basic loss per share is based on the loss attributable to equity holders of the Company for the nine months ended 31 March 2008 of approximately HK$76,248,000 (2007: HK$18,305,000) and on the weighted average number of 3,656,215,465 (2007: 2,403,264,348) ordinary shares in issue during the period.

No diluted loss per share has been presented for the three years ended 30 June 2005, 2006 and 2007 and the nine months ended 31 March 2007 and 2008 as the share options outstanding during each of the year/period ended of the Relevant Periods and nine months ended 31 March 2007 had an anti-dilutive effect on the basic loss per share for these periods.

12. DIRECTORS’ REMUNERATION AND EMPLOYEES’ REMUNERATION

(a) Directors’ remuneration

The emoluments paid or payable to each of the directors for the three years ended 30 June 2005, 2006 and 2007 and the nine months ended 31 March 2007 and 2008 were as follows:

For the year ended 30 June 2005

Executive directors Wong Kam Fu Wong Hoi Keung Lew Mon Hung Wong Hong Loong Wang Zhao Bin_(Note 1) Song Xiao Hai _Independent non-executive directors Ha Ping Cheng Kong Ming_(Note 2)_ Wong Che Man, Eddy	Other emoluments Contributions Salaries to retirement and other Discretionary benefit Housing Share-based Fees emoluments bonus scheme allowance payments HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 – 4,800 200 12 – – – 1,440 60 12 147 – – – 1,220 24 – – – 300 10 12 – – – 3 – – – – – – – – – – 20 – – – – – 20 – – – – – 30 – – – – – 70 6,543 1,490 60 147 –	Total HK$’000 5,012 1,659 1,244 322 3 – 20 20 30
		8,310

Notes:

Resigned on 6 July 2004.
Appointed on 30 September 2004.

– 48 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

12. DIRECTORS’ REMUNERATION AND EMPLOYEES’ REMUNERATION (CONT’D)

(a) Directors’ remuneration (cont’d)

For the year ended 30 June 2006

Executive directors Wong Kam Fu Wong Hoi Keung_(Note 1) Tam Wai Keung, Billy(Note 2) Lew Mon Hung Yi Xing Wu(Note 3) Sin Chi Keung, Mega(Note 2) Wong Hong Loong Song Xiao Hai(Note 4) _Independent non-executive directors Wong Che Man, Eddy Ha Ping Cheng Kong Ming_(Note 5) Yu King Wah(Note 6) Tang King Fai(Note 7)_	Other emoluments Contributions Salaries to retirement and other Discretionary benefit Housing Share-based Fees emoluments bonus scheme allowance payments HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 – 4,800 200 12 – 1,550 – 1,763 71 8 92 – – 364 – 6 – 310 – – 10,960 12 – 1,550 – 240 15 8 – 84 – 104 – 5 – 77 – 450 16 12 – 976 – – – – – – 60 – – – – 31 30 – – – – 31 3 – – – – – 9 – – – – 31 – – – – – – 102 7,721 11,262 63 92 4,640	Total HK$’000 6,562 1,934 680 12,522 347 186 1,454 – 91 61 3 40 –
		23,880

Notes:

Resigned on 24 January 2006.
Appointed on 26 January 2006.
Appointed on 2 November 2005 and resigned on 26 August 2006.
Resigned on 13 April 2006.
Resigned on 2 November 2005.
Appointed on 2 November 2005 and resigned on 23 February 2006.
Appointed on 22 May 2006.

– 49 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

12. DIRECTORS’ REMUNERATION AND EMPLOYEES’ REMUNERATION (CONT’D)

(a) Directors’ remuneration (cont’d)

For the year ended 30 June 2007

Executive directors Wong Kam Fu Tam Wai Keung, Billy Lew Mon Hung Yi Xing Wu_(Note 1) Sin Chi Keung, Mega Wong Hong Loong Edward Patrick Jacobson(Note 2) _Non-executive directors Frank Douglas Magnus_(Note 2) Tang Yantian(Note 2) _Independent non-executive directors Wong Che Man, Eddy Ha Ping_(Note 3) Tang King Fai Dai Zhongcheng(Note 4)_	Other emoluments Contributions Salaries to retirement and other Discretionary benefit Housing Share-based Fees emoluments bonus scheme allowance payments HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 – 4,800 200 12 – – – 840 33 12 – 271 – – 5,269 12 – 380 – 55 – 2 – – – 240 9 12 – 108 – 480 20 12 – 678 – – – – – 434 – – – – – 434 – – – – – 434 80 – – – – 108 27 – – – – 108 30 – – – – 108 – – – – – – 137 6,415 5,531 62 – 3,063	Total HK$’000 5,012 1,156 5,661 57 369 1,190 434 434 434 188 135 138 –
		15,208

Notes:

Resigned on 26 August 2006.
Appointed on 3 January 2007.
Resigned on 26 May 2007.
Appointed on 12 June 2007.

– 50 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

12. DIRECTORS’ REMUNERATION AND EMPLOYEES’ REMUNERATION (CONT’D)

(a) Directors’ remuneration (cont’d)

For the period ended 31 March 2007

Unaudited

Executive directors Wong Kam Fu Tam Wai Keung, Billy Lew Mon Hung Yi Xing Wu_(Note 1) Sin Chi Keung, Mega Wong Hong Loong Edward Patrick Jacobson(Note 2) _Non-executive directors Frank Douglas Magnus_(Note 2) Tang Yantian(Note 2_) Independent non-executive directors Wong Che Man, Eddy Ha Ping Tang King Fai	Other emoluments Contributions Salaries to retirement and other Discretionary benefit Housing Share-based Fees emoluments bonus scheme allowance payments HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 – 3,600 200 9 – – – 630 33 9 – 271 – – – 9 – 380 – 55 – 2 – – – 180 9 9 – 108 – 360 20 9 – 678 – – – – – 434 – – – – – 434 – – – – – 434 30 – – – – 108 – – – – – 108 – – – – – 108 30 4,825 262 47 – 3,063	Total HK$’000 3,809 943 389 57 306 1,067 434 434 434 138 108 108
		8,227

Notes:

Resigned on 26 August 2006.
Appointed on 3 January 2007.

– 51 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

12. DIRECTORS’ REMUNERATION AND EMPLOYEES’ REMUNERATION (CONT’D)

(a) Directors’ remuneration (cont’d)

For the period ended 31 March 2008

Executive directors Wong Kam Fu Tam Wai Keung, Billy Lew Mon Hung Sin Chi Keung, Mega Wong Hong Loong Edward Patrick Jacobson_(Note 1) _Non-executive directors Frank Douglas Magntus_(Note 1) Tang Yantian(Note 1) _Independent non-executive directors Wong Che Man, Eddy Tang King Fai, Dai Zhongcheng	Other emoluments Contributions Salaries to retirement and other Discretionary benefit Housing Share-based Fees emoluments bonus scheme allowance payments HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 – 3,600 – 9 – – – 630 – 9 – 837 – – 13,041 9 – 1,150 – 180 – 9 – 84 – 360 – 9 – 1,150 – – – – – – – – – – – – – – – – – – 75 – – – – 84 25 – – – – 84 23 – – – – 84 123 4,770 13,041 45 – 3,473	Total HK$’000 3,609 1,476 14,200 273 1,519 – – – 159 109 107
		21,452

Note:

Retired on 28 November 2007.

No director waived any emoluments in any of the three years ended 30 June 2005, 2006 and 2007 and the nine months ended 31 March 2007 and 2008.

The remuneration of directors is determined by the remuneration committee having regard to the performance of individuals and market trends.

– 52 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

12. DIRECTORS’ REMUNERATION AND EMPLOYEES’ REMUNERATION (CONT’D)

(b) Employees’ emoluments

Of the five individuals with the highest emoluments in the Group, there were three, four and two executive directors of the Company respectively whose emoluments are set out above for the three years ended 30 June 2007. Of the five individuals with the highest emoluments in the Group, there were one and two executive directors of the Company respectively whose emoluments are set out above for the two nine months ended 31 March 2007 and 2008. The emolument of the remaining two, one and three highest paid individuals for the three years ended 30 June 2007 and the emolument of the remaining four and three highest paid individuals for the two nine months ended 31 March 2007 and 2008 are as follows:

Salaries and other emoluments, discretionary bonus and other benefits Share-based payment expenses Contributions to retirement benefit scheme	For the 2005 HK$’000 1,133 310 24 1,467	For the nine months year ended 30 June ended 31 March 2006 2007 2007 2008 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) 664 868 814 1,273 155 3,039 4,052 7,922 12 35 32 11 831 3,942 4,898 9,206	For the nine months ended 31 March	For the nine months ended 31 March
		2006 HK$’000 664 155 12 831		2008 HK$’000 1,273 7,922 11
				9,206

The emoluments of the two, one and three highest paid employees for the three years ended 30 June 2007, four and three highest paid employees for the two nine months ended 31 March 2007 and 2008 fall in the following bands:

Nil to HK$1,000,000 HK$1,000,001 to HK$1,500,000 HK$2,500,001 to HK$3,000,000 HK$3,000,001 to HK$3,500,000	2005 HK$’000 2 – – – 2	No. of individual	No. of individual
		2006 HK$’000 1 – – – 1	2007 2007 HK$’000 HK$’000 (Unaudited) – – 3 4 – – – – 3 4	2008 HK$’000 – – 1 2
				3

(c) During the Relevant Periods and the nine months ended 31 March 2007, no emoluments have been paid by the Group to any directors or the five highest paid individuals as an inducement to join or upon joining the Group, or as compensation for loss of office.

– 53 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

13. PROPERTY, PLANT AND EQUIPMENT

The Group

Furniture, Leasehold fixtures and improvement equipment HK$’000 HK$’000 COST At 1 July 2004 1,152 5,134 Additions 221 686 Disposal (786) (1,031) At 30 June 2005 and 1 July 2005 587 4,789 Exchange alignment 15 40 Additions 42 665 Disposal – (165) At 30 June 2006 and 1 July 2006 644 5,329 Exchange alignment 11 31 Additions 126 940 Disposal – (239) At 30 June 2007 and 1 July 2007 781 6,061 Exchange alignment 25 92 Additions – 1,081 Disposal – – At 31 March 2008 806 7,234 ACCUMULATED DEPRECIATION At 1 July 2004 839 2,507 Charge for the year 101 1,274 Eliminated on disposal (786) (891) At 30 June 2005 and 1 July 2005 154 2,890 Exchange alignment 4 17 Charge for the year 167 1,016 Eliminated on disposal – (92) At 30 June 2006 and 1 July 2006 325 3,831 Exchange alignment 4 17 Charge for the year 145 570 Eliminated on disposal – (223) At 30 June 2007 and 1 July 2007 474 4,195 Exchange alignment 11 46 Charge for the period 79 488 Eliminated on disposal – – At 31 March 2008 564 4,729 NET CARRYING VALUES At 31 March 2008 242 2,505 At 30 June 2007 307 1,866 At 30 June 2006 319 1,498 At 30 June 2005 433 1,899	Motor vehicles HK$’000 388 – – 388 – 1,458 – 1,846 – – – 1,846 – 2,218 (1,288) 2,776 181 78 – 259 – 309 – 568 – 369 – 937 – 317 (793) 461 2,315 909 1,278 129	Total HK$’000 6,674 907 (1,817) 5,764 55 2,165 (165) 7,819 42 1,066 (239) 8,688 117 3,299 (1,288) 10,816 3,527 1,453 (1,677) 3,303 21 1,492 (92) 4,724 21 1,084 (223) 5,606 57 884 (793) 5,754 5,062 3,082 3,095 2,461

– 54 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

13. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

The Group (cont’d)

The above items of property, plant and equipment are depreciated on a straight-line basis after taking into account their estimated residual value, at the following rates per annum:

Leasehold improvement 10% to 50% or over the terms of the leases whichever is shorter Furniture, fixtures and equipment 20% Motor vehicles 20%

The Company

Furniture,
Leasehold
fixtures and
improvement
equipment
HK$’000
HK$’000
COST
At 1 July 2004
–
4,505
Additions
–
112
Disposal
–
(532)
At 30 June 2005 and 1 July 2005
–
4,085
Additions
22
–
At 30 June 2006 and 1 July 2006
22
4,085
Disposal
–
(239)
At 30 June 2007 and 1 July 2007
22
3,846
Additions
–
11
At 31 March 2008
22
3,857
ACCUMULATED DEPRECIATION
At 1 July 2004
–
2,881
Charge for the year
–
871
Eliminated on disposal
–
(403)
At 30 June 2005 and 1 July 2005
–
3,349
Charge for the year
7
583
At 30 June 2006 and 1 July 2006
7
3,932
Charge for the year
15
68
Eliminated on disposal
–
(222)
At 30 June 2007 and 1 July 2007
22
3,778
Charge for the period
–
29
At 31 March 2008
22
3,807
NET CARRYING VALUES
At 31 March 2008
–
50
At 30 June 2007
–
68
At 30 June 2006
15
153
At 30 June 2005
–
736

Total
HK$’000
4,505
112
(532)
4,085
22
4,107
(239)
3,868
11
3,879
2,881
871
(403)
3,349
590
3,939
83
(222)
3,800
29
3,829
50
68
168
736

– 55 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

14. INTANGIBLE ASSET

The Group

	Patents and
	technology
	HK$’000
COST
At 1 July 2004	86,697
Transfer from accumulated amortisation and
impairment loss upon adoption of HKAS 38_(Note a)_	(813)
At 30 June 2005, 2006 and 2007 and 31 March 2008	85,884
ACCUMULATED AMORTISATION AND IMPAIRMENT LOSS
At 1 July 2004	813
Transfer to cost upon adoption of HKAS38_(Note a)_	(813)
Impairment loss recognised in the consolidated income statement	38,284
At 30 June 2005 and 1 July 2005_(Note b)_	38,284
Impairment loss recognised in the consolidated income statement_(Note c)_	37,128
At 30 June 2006 and 1 July 2006	75,412
Impairment loss recognised in the consolidated income statement_(Note d)_	10,472
At 30 June 2007, 1 July 2007 and 31 March 2008	85,884
CARRYING VALUE
At 30 June 2007 and 31 March 2008	–
At 30 June 2006	10,472
At 30 June 2005	47,600

Notes:

(a) Upon adoption of HKAS 38, intangible asset was no longer amortised, and the accumulated amortisation of patents and technology as at 1 July 2004 of HK$813,000 was eliminated against the cost.
(b) During the year 2005, the directors conducted reviews of the Group’s intangible asset with the view supported by the independent professional appraiser and determined that the intangible asset was impaired due to the change in market conditions. Accordingly, impairment losses of approximately HK$38,284,000 had been recognised for the year ended 30 June 2005.
(c) During the year 2006, the directors conducted review on the Group’s intangible asset on the basis of its future value in use and determined that the intangible asset was impaired due to the change in current market conditions. Accordingly, impairment losses of approximately HK$37,128,000 had been recognised in the consolidated income statement for the year ended 30 June 2006.
(d) The directors of the Company had reviewed the carrying value of the Group’s intangible asset as at 30 June 2007 with reference to the valuation carried out by BMI Appraisals Limited, a professional valuer independent to the Group. The recoverable amount of the intangible asset has been determined based on the value-in-use basis. Accordingly, an impairment loss of approximately HK$10,472,000 had been recognised in the consolidated income statement for the year ended 30 June 2007.

– 56 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

15. INTEREST IN A JOINTLY CONTROLLED ENTITY

The Group

Cost of investment in an unlisted jointly controlled entity Share of post acquisition losses Amount due from a jointly controlled entity	As at 30 June 2005 2006 HK$’000 HK$’000 935 935 (79) (529) 856 406 224 700	As at 30 June 2005 2006 HK$’000 HK$’000 935 935 (79) (529) 856 406 224 700	2007 HK$’000 1,832 (1,234) 598 –	As at 31 March 2008 HK$’000 1,832 (1,832) – –
		2006 HK$’000 935 (529) 406 700

The amount due from a jointly controlled entity was unsecured, non-interest bearing and repayable on demand. As at 30 June 2005, the directors believe that the amount would not be repaid within one year and therefore the amount was classified as non-current. The amount as at 30 June 2006 was fully repaid during the year ended 30 June 2007. The fair value of the amount due from a jointly controlled entity was approximated to the corresponding carrying amount.

During the year ended 30 June 2007, the Group disposed of 10% of the equity interest in a jointly controlled entity owned by the Group for a consideration of approximately HK$1,001,000, resulting in a gain on disposal of HK$920,000.

Details of the Group’s jointly controlled entity as at 31 March 2008 are as follows:

					Effective
					percentage
		Place of			of equity	Voting
	Form of	incorporation			interests	rights
Name of	business	and	Class of	Registered	held by	held by	Principal
jointly controlled entity	structure	operations	equity held	capital	the Group	the Group	activity
					%	%
北京一卡通電子支付科技	Incorporated	PRC	Registered	RMB4,580,000	40	50	Provision of
有限公司			capital	(2005 and 2006:			electronic
Beijing Superpass e-payment				RMB2,000,000)			payment
Co. Limited_(Note)_							platform

Note: The English name is for identification purpose only.

– 57 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

15. INTEREST IN A JOINTLY CONTROLLED ENTITY (CONT’D)

Extracts of the results and financial position of Beijing Superpass e-payment Co. Limited based on the unaudited summarised financial information as at each of the year/period ended of the Relevant Periods, prepared under accounting principles generally accepted in Hong Kong are as follows:

Turnover Loss for the year/period Group’s share of loss of a jointly controlled entity Total assets Total liabilities Net assets/(liabilities) attributable to venturers Group’s share of net assets of a jointly controlled entity	For the nine months ended For the year ended 30 June 31 March 2005 2006 2007 2008 HK$’000 HK$’000 HK$’000 HK$’000 – – – – 157 899 1,960 2,620 79 450 784 598 As at As at 30 June 31 March 2005 2006 2007 2008 HK$’000 HK$’000 HK$’000 HK$’000 1,953 1,550 3,512 2,679 (241) (738) (2,017) (2,881 1,712 812 1,495 (202 856 406 598 –	For the nine months ended For the year ended 30 June 31 March 2005 2006 2007 2008 HK$’000 HK$’000 HK$’000 HK$’000 – – – – 157 899 1,960 2,620 79 450 784 598 As at As at 30 June 31 March 2005 2006 2007 2008 HK$’000 HK$’000 HK$’000 HK$’000 1,953 1,550 3,512 2,679 (241) (738) (2,017) (2,881 1,712 812 1,495 (202 856 406 598 –
		2008 HK$’000 –

		2,620

		598

		As at 31 March
		2008 HK$’000 2,679 (2,881
		(202

		–

The Group has discontinued recognition of its share of losses of the jointly controlled entity since the Group’s share of losses in this jointly controlled entity has exceeded its interest in this jointly controlled entity. The amounts of unrecognised share of this jointly controlled entity, extracted from the relevant unaudited summarised financial information in respect of the Group’s jointly controlled entity, for the nine months ended 31 March 2008 on cumulatively, are as follows:

Unrecognised share of losses of jointly controlled entity for the period Accumulated unrecognised share of losses of controlled entity	For the nine months ended 31 March	For the nine months ended 31 March
		2008 HK$’000 450

		450

– 58 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

16. AVAILABLE-FOR-SALE INVESTMENTS

The Group

Notes Unlisted equity securities, at cost W-Phone, Inc. (“W-Phone”) (a) Madagascar Petroleum International Limited (“MPIL”) (b) Easy Link Card Business Services Limited (“Easy Link Card”) (c) Less:_Impairment loss recognised (a) Unlisted investments in unit trust, at fair value (d) _Less:_Amount shown under current assets _Notes:	As at 30 June 2005 2006 HK$’000 HK$’000 3,420 3,420 – 140,020 – – 3,420 143,440 (3,420) (3,420) – 140,020 – 10,435 – 150,455 – (10,435) – 140,020	As at 30 June 2005 2006 HK$’000 HK$’000 3,420 3,420 – 140,020 – – 3,420 143,440 (3,420) (3,420) – 140,020 – 10,435 – 150,455 – (10,435) – 140,020	2007 HK$’000 3,420 140,020 – 143,440 (3,420) 140,020 – 140,020 – 140,020	As at 31 March 2008 HK$’000 3,420 487,741 8,623 499,784 (3,420) 496,364 – 496,364 – 496,364
		2006 HK$’000 3,420 140,020 – 143,440 (3,420) 140,020 10,435 150,455 (10,435) 140,020

(a) W-Phone is a private entity incorporated in the United States of America. The unlisted investment in W-Phone are measured at cost less accumulated impairment losses 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.
(b) MPIL is a private entity incorporated in the BVI. The unlisted investment as at 30 June 2006 and 2007 represents 21% equity interests in MPIL, held by two wholly-owned subsidiaries of the Company namely Hopestar and Dorson. The board of directors of MPIL comprises of three directors, one of whom was nominated by the Company. However, the directors of the Company are of the opinion that a substantial or majority ownership is held by another investor who actually precludes them from having significant influence in MPIL. Therefore, the investment in MPIL is regarded as available-for-sale investment and is measured at cost less accumulated impairment losses at 30 June 2006 and 2007.

During the nine months ended 31 March 2008, the Group further increase its equity interests in MPIL by 15% through the acquisition of the entire share capital of Dormer, a limited company incorporated in the BVI, as to 99.66% from Udaya Holdings Limited (“Udaya”) at a consideration of HK$335,921,000, and as to 0.34% from Luck Express Consultants Limited at a consideration of HK$11,800,000. The aggregate consideration of HK$347,721,000 is to be settled by (i) the HK$100,000,000 deposit paid as at 30 June 2007; (ii) 413,896,104 shares of HK$0.01 each issued at published price of HK$0.57 per share on 30 July 2007; and (iii) HK$11,800,000 in cash. Accordingly the effective interest in MPIL held by the Group increased from 21% to 36%. Regardless of the increased shareholding in MPIL, the directors of the Company are of the opinion that a substantial or majority ownership is held by another investor who actually precludes them from having significant influence in MPIL. Therefore, the investment in MPIL is continued to be regarded as an available-for-sale investment and is measured at cost less accumulated impairment losses as at 31 March 2008.

– 59 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

16. AVAILABLE-FOR-SALE INVESTMENTS (CONT’D)

Notes: (cont’d)

(b) (cont’d)

To the best knowledge of the directors, MPIL is an investment holding company incorporated in June 2005 and has not commenced any significant business operations other than the entering into the oil and gas product sharing agreement (the “Product Sharing Agreement”) on 7 October 2005 with Office Des Mines Nationales Et Des Industries Strategiques (“OMNIS”), the English translation being “The National Office for Mining and Strategic Industries” of the Republic of Madagascar and the service agreement (the “Service Agreement”) with China National Petroleum Company, in respect of an onshore block of land (“Block 2104”) of approximately 20,100 square kilometers in the Republic of Madagascar for oil and gas exploitation and operation.

Pursuant to the Product Sharing Agreement, MPIL has the rights of exploitation and operation in respect of Block 2104 and the right for 45% to 73% (the actual percentage depends on the rate of daily crude oil production in the Block 2104 and the more barrels per day Block 2104 produces, the lower percentage of profit that MPIL can share) of the product (or the profit thereof) sharing for a minimum term of 25 years commencing from 7 October 2005. MPIL would be responsible for the arrangement of the required capital commitment, human resources and equipment for the project development of oil and gas in Block 2104 whereas OMNIS would be entitled to the benefit under the product sharing arrangement on the basis of the pre-agreed ratio under the Product Sharing Agreement. Pursuant to the Service Agreement, BGP Inc. will provide exploration and data collection, processing and analyzing services to MPIL regarding the Block 2104. Based on the information disclosed by the management of MPIL and the vendors to the Company, MPIL did not have any long-term liability as at the balance sheet date of 31 March 2008 (save for the commitment, cost and expenses incurred and to be incurred pursuant to the Product Sharing Agreement and the Service Agreement).

(c) On 25 September 2006, Star EPS (HK), a wholly-owned subsidiary of the Company, entered into a sale and purchase agreement with an independent third party to acquire 10% of the entire registered capital of 廣州易聯商業服務有限公司(“廣州易聯”), a limited liability company incorporated under the laws of the PRC, at a consideration of RMB3,000,000 (equivalent to approximately HK$3,000,000). The consideration has been fully paid as at 30 June 2007.

On 20 December 2007, Star EPS (HK), entered into another agreement for transferring the deposit paid to the immediate holding company of 廣州易聯 , Easy Link Card, which is incorporated in Hong Kong and holds the entire issued share capital of 廣州易聯 , as a consideration to acquire 10% of the entire issued capital of Easy Link Card. During the nine months ended 31 March 2008, Star EPS (HK) further contributed HK$5,623,000 to acquire an additional 9% equity interests of Easy Link Card. The acquisition was completed on 5 February 2008. Accordingly, the Group held an aggregate of 19% equity interests in Easy Link Card as at 31 March 2008.

(d) The unlisted investments represent investments in unit trust established in Cayman Islands with the maturity date in February 2007. During the year ended 30 June 2007, the unit trust has been fully redeemed at a consideration of approximately HK$18,998,000.

17. DEPOSITS PAID FOR ACQUISITION OF PROPERTIES

The Group

The amounts were paid as deposits for the acquisition of properties as offices in Beijing. In the opinion of the directors, the deposits are non-refundable and therefore classified as non-current assets. Subsequently to the balance sheet date, on 3 April 2008, the Company obtained the legal title of the relevant properties.

– 60 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

18. INVESTMENTS IN SUBSIDIARIES

The Company

Unlisted shares, at cost Amounts due from subsidiaries Amounts due to subsidiaries	As at 30 June 2005 2006 HK$’000 HK$’000 108,750 140,020 – – 29,859 29,848	As at 30 June 2005 2006 HK$’000 HK$’000 108,750 140,020 – – 29,859 29,848	2007 HK$’000 140,020 – 71,295	As at 31 March
		2006 HK$’000 140,020 – 29,848		2008 HK$’000 140,020

				347,721

				71,290

The balances with subsidiaries are unsecured, interest-free and have no fixed terms of repayment. The carrying amounts of these amounts due from/(to) subsidiaries approximate to their fair values.

Details of the Company’s principal subsidiaries are stated in Note 38.

19. TEMPORARY PAYMENTS

On 22 May 2007, the Group entered into an agreement for the option to purchase potential oil assets (“Potential Assets”) with Templeton Global Limited (“Templeton Global”). Pursuant to the agreement, the Group was granted with an option (“Purchase Option”) to purchase the Potential Assets.

The Potential Assets principally comprise a 60% interest in (“KAOK”), a limited liability company formed under the laws of Kazakhstan. KAOK holds 100% of the mineral right to develop certain oil fields with an area size of 42.2 square kilometer in Aktyubinsk, Kazakhstan which has estimated reserves in excess of 30 million barrels of oil. The mineral right held by KAOK is an oil exploitation and operation agreement dated 15 October 2004 and made between the National Office for Energy and Mining of the Republic of Kazakhstan and the KAOK for a maximum term of 9 years.

The consideration payable for the Purchase Option is a nominal amount of US$100 (equivalent to approximately HK$780). The Company may elect to exercise the Purchase Option by giving notice in writing to Templeton Global from 22 May 2007 to 31 October 2007 (the “Exercise Period”). During the Exercise Period, the Group was entitled to conduct due diligence investigations in respect of the Potential Assets. In order to ensure that the Group acts expeditiously regarding the review and assessment of the acquisition of Potential Assets, the Group had placed a deposit of US$1 million (equivalent to approximately HK$7,837,000) with Templeton Global. The deposit would be repayable to the Group if the Company elected not to pursue the acquisition.

If the Group elects to exercise the Purchase Option, the purchase price payable by the Company to Templeton Global should be an amount equal to but not exceeding US$18 million subject to adjustment for cash and debt.

– 61 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

19. TEMPORARY PAYMENTS (CONT’D)

In addition, an independent consultant has been appointed for the transaction (the “Consultant”). The consideration for the service rendered amounted to US$1 million (the “Service Fee”). Both parties have agreed in writing that the Service Fee would be payable by the Group if it failed to enter into a formal sale and purchase agreement with Templeton Global in respect to the acquisition of the Potential Assets on or before 31 October 2007. Otherwise, the Service fee would be payable by Templeton Global.

During the nine months ended 31 March 2008, the Group failed to conclude a formal sale and purchase agreement with Templeton Global in connection with the acquisition of the Potential Assets. Accordingly, Templeton Global refunded the entire temporary payment of HK$7,837,000 to the consultant directly to settle the Service Fee under the instruction of the Company. This constitutes to a non-cash transaction and details are set out in note 31(iv).

20. DEPOSIT PAID FOR THE ACQUISITION OF AN AVAILABLE-FOR-SALE INVESTMENT

As at 30 June 2007, the Group had paid a deposit of approximately RMB3,000,000 for the acquisition of 10% equity interests in 廣州易聯 . The acquisition was completed during the nine months ended 31 March 2008 and respective deposit was transferred to available-for-sale investments as set out in Note 16(c).

On 24 January 2008, Star Financial Limited, a wholly-owned subsidiary of the Company, entered into a share transfer agreement to acquire 7% equity interests of an unlisted company. During the nine months ended 31 March 2008, the Company paid RMB3,000,000, (equivalent to HK$3,283,000), as a deposit for the acquisition of an available-for-sale investment.

As of the date of approval of the Financial Information, the Group was still in the process of obtaining the legal title of the relevant investment.

21. DEPOSIT PAID FOR THE ACQUISITION OF A SUBSIDIARY

On 23 October 2007, Triple Winner, a wholly-owned subsidiary of the Company entered into a framework agreement (the “Framework Agreement”) with Guoye PRC Inc. (“Guoye”) in relation to the acquisition of 51% equity interests in Mongol Oil Shale LLC which holds coal resources in Mongolia (the “Proposed Acquisition”). As at 31 March 2008, the Company paid a refundable cash deposit of US$3,000,000 (equivalent to HK$23,647,000) to Guoye.

Pursuant to the terms as set out in the Framework Agreement, if Triple Winner and Guoye fail to enter into a definitive agreement in relation to the Proposed Acquisition on or before 31 January 2008, the Framework Agreement shall lapse and the parties have no further obligation to each other, save and except that Guoye shall refund to Triple Winner the deposit paid in the amount of US$3,000,000 without interest.

Since Triple Winner and Guoye did not enter into any definitive agreement on or before 31 January 2008 and the Framework Agreement lapsed, and accordingly, Triple Winner proceeded to recover the deposit which has been paid to Guoye.

On 7 March 2008, Guoye brought an action in High Court against Triple Winner and the Company for the damages for the breach of the Framework Agreement. Details of the litigation are set out in Note 35.

– 62 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

22. DEBTORS, DEPOSITS AND PREPAYMENTS

The Group allows an average credit period of 60 days to its trade customers. Included in debtors, deposits and prepayments are trade debtors with the following ageing analysis:

The Group

0-60 days 61-90 days Over 90 days Trade debtors Other debtors, deposits and prepayments _Less:_Allowance for bad and doubtful debts	As at 30 June 2005 2006 HK$’000 HK$’000 191 598 53 1 644 1 888 600 1,541 1,213 2,429 1,813 – – 2,429 1,813	As at 30 June 2005 2006 HK$’000 HK$’000 191 598 53 1 644 1 888 600 1,541 1,213 2,429 1,813 – – 2,429 1,813	2007 HK$’000 550 510 296 1,356 2,656 4,012 (1,510) 2,502	As at 31 March
		2006 HK$’000 598 1 1 600 1,213 1,813 – 1,813		2008 HK$’000 1,930 67 256
				2,253 4,511
				6,764 (1,510
				5,254

Movement in the allowance for trade receivables:

Balance at beginning of the year/period Increase in impairment on trade receivables Balance at the end of the year/period	As at 30 June 2005 2006 HK$’000 HK$’000 – – – – – –	As at 30 June 2005 2006 HK$’000 HK$’000 – – – – – –	2007 HK$’000 – 1,510 1,510	As at 31 March
		2006 HK$’000 – – –		2008 HK$’000 1,510 –
				1,510

At each of the balance sheet dates of the Relevant Periods, the Group’s trade debtors were individually determined to be impaired. The individually impaired receivables are recognised based on the credit history of its customers, such as financial difficulties or default in payments, and current market conditions. The Group does not hold any collateral over these balances.

Based on past experience, the management believes that no impairment allowance is necessary in respect of these past due but not impaired balances as there has not been a significant change in credit quality and the balances are still considered fully recoverable.

Ageing of trade receivables which are past due but not impaired:

61-90 days Over 90 days Total	As at 30 June 2005 2006 HK$’000 HK$’000 53 1 644 1 697 2	As at 30 June 2005 2006 HK$’000 HK$’000 53 1 644 1 697 2	2007 HK$’000 510 296 806	As at 31 March
		2006 HK$’000 1 1 2		2008 HK$’000 67 256
				323

– 63 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

23. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

The Group

Listed equity securities held for trading, at fair value Unlisted investment in investment fund, at fair value Market value of listed securities The Company Unlisted investment in investment fund, at fair value	As at 30 June 2005 2006 HK$’000 HK$’000 71 1,230 – 1,606 71 2,836 71 1,230 As at 30 June 2005 2006 HK$’000 HK$’000 – 1,606	2007 HK$’000 6,338 – 6,338 6,338 2007 HK$’000 –	As at 31 March
			2008 HK$’000 4,497 –
			4,497

			4,497

			As at 31 March
			2008 HK$’000 –

24. PLEDGED BANK DEPOSITS AND BANK BALANCES AND CASH

The Group – pledged bank deposits

Included in the pledged bank deposits, there were approximately nil, HK$153,000, HK$158,000 and HK$162,000, respectively, as at 30 June 2005, 2006 and 2007 and 31 March 2008 were pledged to a bank to secure a merchant account of a subsidiary. An amount of bank deposit of nil, HK$5,110,000 and HK$6,918,000, respectively, as at 30 June 2005, 2006 and 2007 were pledged to a bank to secure the general banking facilities granted to a subsidiary. During the nine months ended 31 March 2008, the pledge on bank deposits was released upon the expiry of the respective general banking facilities.

The deposits carry fixed interest rate ranging from nil, 3.4125% to 5.035%, 2.8125% to 5.1000% and 2.5125% to 3.4125% per annum, respectively, during the Relevant Periods. The carrying amount of the pledged bank deposits approximated to their fair value.

The Group and the Company – bank balances

Bank balances carry interest at market rates which range from 1.75% to 4.52%, 2.5875% to 4.0875% and 2.7875% to 5.1% per annum during the three years ended 30 June 2005, 2006 and 2007 and 0.75% to 5.7875% per annum during the nine months ended 31 March 2008.

– 64 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

25. OTHER CREDITORS AND ACCRUED CHARGES

The Group

As at 30 June	As at 30 June	As at 31 March
2005 2006 HK$’000 HK$’000 2,172 3,201 As at 30 June		2008 HK$’000 4,049

		As at 31 March
2005 HK$’000 1,161	2006 HK$’000 960	2008 HK$’000 972

Secured bank loans	As at 30 June 2005 2006 2007 HK$’000 HK$’000 HK$’000 – 1,943 –	As at 31 March
		2008 HK$’000 –

The above amounts bear interest at prevailing market rates and are repayable on demand or within one year.

At 30 June 2006, the Group had floating rate borrowings of approximately HK$1,943,000. The floating rate borrowings as at 30 June 2006 carried interest at 90% of the benchmark lending rate of the People’s Bank of China and had been fully settled during the year ended 30 June 2007.

The Group’s borrowings that are denominated in currencies other than the functional currencies of the relevant group entities are set out below:

				RMB’000
As at	30	June	2006	2,000

At the balance sheet dates, the Group has the following undrawn borrowing facilities:

Floating rate – expiring within one year	As at 30 June	As at 30 June	2007 HK$’000 7,000	As at 31 March
	2005 HK$’000 –	2006 HK$’000 2,914		2008 HK$’000 –

– 65 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

26. BANK BORROWINGS (CONT’D)

At 30 June 2006, the bank loans were secured by the pledged bank deposits of approximately HK$5,110,000 (note 24).

At 30 June 2007, the general banking facilities granted to a subsidiary were secured by the pledged bank deposits of approximately HK$6,918,000 (note 24).

27. CONVERTIBLE NOTE

The Group and the Company

Liability component at the beginning of the year/period Interest charged to finance costs Interest paid _Less:_redemption during the year/period Liability at the end of the year/period	As at 30 June 2005 2006 HK$’000 HK$’000 11,560 12,824 1,582 104 (318) (104) 12,824 12,824 – (12,824) 12,824 –	As at 30 June 2005 2006 HK$’000 HK$’000 11,560 12,824 1,582 104 (318) (104) 12,824 12,824 – (12,824) 12,824 –	2007 HK$’000 – – – – – –	As at 31 March
		2006 HK$’000 12,824 104 (104) 12,824 (12,824) –		2008 HK$’000 – – –
				– –
				–

On 11 June 2004, the Company issued a convertible note in the amount of HK$69,000,000 to Alpha Logistics Group Limited (“Alpha Logistics”). The convertible note bears interest at 2% per annum which were payable semi-annually in arrears and the holder of the convertible note had the option to convert the convertible note into ordinary shares of the Company, subject to adjustment, at any time from 11 June 2004 to 10 June 2007. Interest expenses on the note were calculated using the effective interest method by applying the effective interest rate of 6.67% per semi-annum to the liability component.

In accordance with HKAS 32, the fair value of the liability component of the note was calculated using a market interest rate for an equivalent non-convertible note. The residual amount, representing the value of equity conversion component, was included in shareholders’ equity component of convertible note reserve.

On 27 October 2005, the Company early redeemed the convertible note with the consideration of HK$15,900,000. A gain of HK$944,000 and HK$320,000 were attributed to the liability and equity elements respectively, of which HK$944,000 was credited to consolidated income statement and HK$320,000 was credited to accumulated losses on the redemption date.

28. DEFERRED TAXATION

The Group

The movement for the year/period in deferred tax liabilities in relation to an intangible asset was as follow:

At 1 July 2004, 30 June 2005, 30 June 2006 and 1 July 2006 Credit to consolidated income statement for the year At 30 June 2007, 1 July 2007 and 31 March 2008	HK$’000 7,808 (7,808
	–

– 66 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

28. DEFERRED TAXATION (CONT’D)

At each of the balance sheet dates of the Relevant Periods, the Group has estimated the unused tax losses of approximately HK$189,786,000 (2005: HK$151,230,000; 2006: HK$174,385,000 and 2007: HK$178,903,000) available for offset against future profits. No deferred tax asset has been recognised in respect of the unused tax losses due to the unpredictability of future profits stream.

29. SHARE CAPITAL

The Company

Authorised: Ordinary shares of HK$0.01 each at 1 July 2004, 30 June 2005, 30 June 2006, 30 June 2007 and 31 March 2008 Issued and fully paid: Ordinary shares of HK$0.01 each at 30 June 2004 and 1 July 2004 Issue of new shares of HK$0.01 each_(Note a) Exercise of share options(Note b) Ordinary shares of HK$0.01 each at 30 June 2005 and 1 July 2005 Issue of new shares of HK$0.01 each(Note c) Issue of new shares to acquire two subsidiaries of HK$0.01 each(Note d) Exercise of share options(Note e) Repurchase of shares(Note f) Consolidation of every 6 shares into 1 share(Note g) Capital reduction(Note h) Ordinary shares of HK$0.01 each at 30 June 2006 and 1 July 2006 Issue of new shares of HK$0.01 each(Note i) Exercise of share options(Note j) Ordinary shares of HK$0.01 each at 30 June 2007 and 1 July 2007 Issue of new shares to acquire a subsidiary(Note k) Issue of new shares(Note l) Exercise of share options(Note m)_ Ordinary shares of HK$0.01 each at 31 March 2008	Number of shares 60,000,000,000 10,277,550,165 400,000,000 142,790,000 10,820,340,165 2,120,000,000 1,492,925,926 43,320,000 (80,700,000) (11,996,571,742) – 2,399,314,349 479,000,000 265,999,996 3,144,314,345 413,896,104 181,800,000 833,333 3,740,843,782	Value HK$’000 600,000 102,776 4,000 1,427 108,203 21,200 14,929 433 (807) – (119,965) 23,993 4,790 2,660 31,443 4,139 1,818 8 37,408

– 67 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

29. SHARE CAPITAL (CONT’D)

The movements in the ordinary share capital during the year ended 30 June 2005 are as follows:

(a) 400,000,000 shares of HK$0.01 each were issued and allotted to a third party at HK$0.056 per share, representing a discount of approximately 18.8% on the closing price of HK$0.069 per share on 27 September 2004, under a private share placement.

Shares were issued under the general mandate granted to the directors on 26 March 2004.

(b) 142,790,000 shares of HK$0.01 each were issued and allotted as a result of the exercise of share options by the directors and employees of the Company, details of which are set out in note 30.

The movements in the ordinary share capital during the year ended 30 June 2006 are as follows:

(c) 2,120,000,000 shares of HK$0.01 each were issued and allotted to the independent third parties at a price of HK$0.060 per share representing a discount of approximately 15.5% on the closing price of HK$0.071 per share on 22 September 2005, under a private share placement pursuant to the general mandate granted by the shareholders to the directors on 3 December 2004.
(d) In order to finance the acquisition of two subsidiaries of the company, 567,000,000 and 925,925,926 shares of HK$0.01 each were issued and allotted to vendors at HK$0.06 and HK$0.054 per share on 22 February 2006 and 24 March 2006 respectively. The issue prices represented a premium of approximately 3.45% and a discount of approximately 11.48% to the closing prices of HK$0.058 and HK$0.061 per share respectively.
(e) During the year, 40,530,000 and 2,790,000 share options were exercised by the employees of the Company at subscription prices of HK$0.06 and HK$0.058 respectively for a total consideration of HK$2,593,000 resulting in the issue of 43,320,000 new shares of HK$0.01 each.
(f) During the year, the Company repurchases certain of its own shares on The Stock Exchange of Hong Kong Limited pursuant to the general mandate to repurchase securities approved by the shareholders of the Company on 3 December 2004. All of the repurchased shares were cancelled, accordingly, the issued share capital of the Company was reduced by the nominal value of these shares.

	Number of			Aggregate
	ordinary shares			consideration
Date of repurchase	of HK$0.01 each	Price per share		paid
		Highest	Lowest
		HK$	HK$	HK$’000
27 October 2005	2,700,000	0.039	0.038	104
28 October 2005	78,000,000	0.040	0.030	2,887
Total	80,700,000			2,991

None of the Company’s subsidiaries sold or redeemed any of the Company’s listed securities during the year ended 30 June 2006.

– 68 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

29. SHARE CAPITAL (CONT’D)

(g) By a resolution passed at the special general meeting of the Company held on 29 March 2006, the issued share capital of the company had been consolidated for every six ordinary shares of HK$0.06 each into one ordinary share of HK$0.01 each (“Consolidated Shares”).
(h) By a resolution passed at the special general meeting of the Company held on 29 March 2006, it was resolved that with effect from 30 March 2006:
(i) the nominal value of the Consolidated Shares in issue was reduced from HK$0.06 to HK$0.01 each by canceling the issued share capital to the extent of HK$0.05 paid up on each of the issued Consolidated Shares;
(ii) credit arising from the capital reduction was entirely transferred to the contributed surplus account of the Company;
(iii) an amount equivalent to the contributed surplus account arising from the capital reduction was set off against the accumulated losses.

Details of the above are set out in the circular of the Company dated 6 March 2006.

The movements in the ordinary share capital during the year ended 30 June 2007 are as follows:

(i) On 26 April 2007, 479,000,000 shares of HK$0.01 each were issued and allotted to the independent third parties at a price of HK$0.245 per share.
(j) During the year, 165,000,000, 30,500,000, 18,000,000 and 52,499,996 shares options were exercised by the directors, employees and consultants of the Company at subscription prices of HK$0.132, HK$0.152, HK$0.153 and HK$0.348 respectively for a total consideration of approximately HK$47,440,000 resulting in the issue of 265,999,996 new shares of HK$0.01 each.

The movements in the ordinary share capital for the nine months ended 31 March 2008 are as follows:

(k) As part of the consideration for the acquisition of a subsidiary, 413,896,104 shares of HK$0.01 each were issued and allotted to vendors at a price of HK$0.57 per share on 30 July 2007. The fair value of the ordinary share of the Company, determined by the published price available at the date of acquisition was HK$0.57 per share.
(l) On 31 July 2007, 81,800,000 shares of HK$0.01 each were issued and allotted to independent third parties at a price of HK$0.63 per share under private share placements.

On 27 September 2007, 100,000,000 shares of HK$0.01 each were issued and allotted to independent third parties at a price of HK$0.47 per share under private share placements.

(m) During the nine months ended 31 March 2008, 833,333 share options were exercised by the directors of the Company at a subscription price of HK$0.348 per share for a total consideration of HK$290,000 resulting in the issue of 833,333 new shares of HK$0.01 each.

All the new ordinary shares issued during each of the balance sheet dates of the Relevant Periods ranked pari passu in all respect with the then existing ordinary shares of the Company.

– 69 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

30. SHARE-BASED PAYMENT TRANSACTIONS

The Company’s share option scheme was adopted pursuant to a resolution passed on 30 July 2004 (the “2004 Scheme”), for the purpose of providing incentives or rewards to directors, employees, invested entities, suppliers and customers of the Group and entities that provide research, development or technological support or other services to the Group, any shareholders of any members of the Group or any invested entities or any holders of any securities issued by any members of the Group or any invested entities, and will expire on 29 July 2014. Under the 2004 Scheme, the Board of Directors of the Company may grant options to eligible employees, including executive directors of the Company or any subsidiaries, to subscribe for shares in the Company.

The maximum number of shares of the Company which may be issued upon exercise of all outstanding options granted and yet to be exercised under the 2004 Scheme or any other share option scheme adopted by the Company must not in aggregate exceed 30% of its issued share capital from time to time. The total number of shares which may be issued upon exercise of all options to be granted under the 2004 Scheme and any other share option scheme of the Group must not in aggregate exceed 10% of the shares in issue unless it is approved by shareholders in a general meeting of the Company. The maximum number of shares issuable under the options to each eligible participant in any 12-month period is limited to 1% of the shares in issue unless it is approved by shareholder in a general meeting of the Company. Any grant of options under the 2004 Scheme to a director, chief executive or substantial shareholder of the Company or any of their respective associates must be approved by independent non-executive directors (excluding any independent non-executive director who is the grantee of the options). Any share options granted to a substantial shareholder or an independent non-executive director of the Company or to any of their respective associates, in excess of 0.1% of the shares in issue and with an aggregate value (based on the closing price of the shares at the date of grant) in excess of HK$5 million, in any 12-month period, are subject to shareholders’ approval in a general meeting of the Company.

The number of shares of the Company in respect of which options had remained outstanding under the 2004 Scheme of the Company was 88,168,318; 124,781,646; 25,566,666 as at 30 June 2005, 2006 and 2007 respectively and 338,880,000 as at 31 March 2008, representing 4.9%, 5.2%, 0.81% and 9.06% of the shares of the Company in issue at that date.

Total consideration received during the three years ended 30 June 2007 was HK$44, HK$28 and HK$21 respectively and total consideration received during the nine months ended 31 March 2008 was HK$34 from eligible participants for taking up the options granted during the Relevant Periods.

Options granted must be taken up within 28 days of the date of grant, upon payment of HK$1 as the consideration for accepting the grant. The exercise period of the share options granted under the 2004 Scheme shall be determined by the Board of Directors when such options are granted, provided that such period shall not end more than 10 years from the date of grant.

The exercise price is determined by the Board of Directors of the Company, and will not be less than the highest of the closing price of the Company’s shares at the date of grant, the average closing price of the Company’s shares for the five trading days immediately preceding the date of grant and the nominal value of the Company’s shares.

– 70 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

30. SHARE-BASED PAYMENT TRANSACTIONS (CONT’D)

(a) The following table disclosed movements of the Company’s share options for year ended 30 June 2005:

Exercise price per share Exercise after price adjusted per share for the prior to effect of the share the share Category of Date of consolidation consolidation participants grant (Note 1) (Note 1) HK$ HK$ Directors 30.10.2002 0.0386 0.232 18.10.2004 0.0670 0.402 04.11.2004 0.0600 0.360 Employees of 02.08.2001 0.4000 2.400 the Group 01.09.2001 0.4000 2.400 28.11.2003 0.0127 0.076 04.11.2004 0.0600 0.360 21.01.2005 0.0680 0.408 Others 04.11.2004 0.0600 0.360	Outstanding at 1 July 2004 100,000,000 – – 256,250 100,000 300,000 – – – 100,656,250	Granted during the year – 450,000,000 3,000,000 – – – 96,500,000 20,000,000 5,000,000 574,500,000	Exercised during the year (100,000,000 ) (26,000,000 ) – – – (300,000 ) (16,490,000 ) – – (142,790,000 )	Cancelled/ lapsed during the year – – – (256,250 ) (100,000 ) – (3,000,000 ) – – (3,356,250 )	Effects on consolidation of shares (Note 1) – (353,333,336 ) (2,500,002 ) – – – (64,175,010 ) (16,666,667 ) (4,166,667 ) (440,841,682 )	Outstanding at 30 June 2005 – 70,666,664 499,998 – – – 12,834,990 3,333,333 833,333
						88,168,318

Exercisable at the end of the year

87,834,985

– 71 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

30. SHARE-BASED PAYMENT TRANSACTIONS (CONT’D)

(a) (cont’d)

The following table disclosed movements of the Company’s share options for year ended 30 June 2006:

Exercise price Category of per share participants Date of grant (Note 1) HK$ Directors 18.10.2004 0.402 04.11.2004 0.360 02.11.2005 0.282 07.02.2006 0.348 Employees of the Group 04.11.2004 0.360 21.01.2005 0.408 03.11.2005 0.294 07.02.2006 0.348 Others 04.11.2004 0.360 09.11.2005 0.348 10.11.2005 0.360 25.11.2005 0.360 28.11.2005 0.360 01.12.2005 0.360 07.02.2006 0.348 Exercisable at the end of the year	Outstanding at 1 July 2005 (Note 1) 70,666,664 499,998 – – 12,834,990 3,333,333 – – 833,333 – – – – – – 88,168,318	Granted during the year – – 1,666,666 48,999,997 – – 1,833,333 3,666,665 – 3,333,332 9,166,664 2,499,999 333,333 3,333,332 1,999,999 76,833,320	Exercised during the year – – – – (5,921,662 ) – – (465,000 ) (833,333 ) – – – – – – (7,219,995 )	Cancelled/ lapsed during the year (28,999,999) (166,666) – (333,333) – – (1,833,333) – – – (1,666,666) – – – – (32,999,997)	Outstanding at 30 June 2006 41,666,665 333,332 1,666,666 48,666,664 6,913,328 3,333,333 – 3,201,665 – 3,333,332 7,499,998 2,499,999 333,333 3,333,332 1,999,999
					124,781,646

					124,781,646

– 72 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

30. SHARE-BASED PAYMENT TRANSACTIONS (CONT’D)

(a) (cont’d)

The following table disclosed movements of the Company’s share options for year ended 30 June 2007:

Exercise Category of price participants Date of grant per share HK$ Directors 18.10.2004 0.402 04.11.2004 0.360 02.11.2005 0.282 07.02.2006 0.348 03.01.2007 0.152 Employees of the Group 04.11.2004 0.360 21.01.2005 0.408 07.02.2006 0.348 28.12.2006 0.132 Others 09.11.2005 0.348 10.11.2005 0.360 25.11.2005 0.360 28.11.2005 0.360 01.12.2005 0.360 07.02.2006 0.348 05.02.2007 0.153 02.04.2007 0.228	Outstanding at 1 July 2006 41,666,665 333,332 1,666,666 48,666,664 – 6,913,328 3,333,333 3,201,665 – 3,333,332 7,499,998 2,499,999 333,333 3,333,332 1,999,999 – – 124,781,646	Granted during the year – – – – 56,500,000 – – – 165,000,000 – – – – – – 18,000,000 400,000 239,900,000	Exercised during the year – – – (47,166,665 ) (30,500,000 ) – – – (165,000,000) (3,333,332 ) – – – – (1,999,999 ) (18,000,000 ) – (265,999,996)	Cancelled/ lapsed during the year (41,666,665) (333,332) (1,666,666) (333,333) (2,000,000) (6,913,328) (3,333,333) (3,201,665) – – (7,499,998) (2,499,999) (333,333) (3,333,332) – – – (73,114,984)	Outstanding at 30 June 2007 – – – 1,166,666 24,000,000 – – – – – – – – – – – 400,000
					25,566,666

Exercisable at the end of the year

25,566,666

– 73 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

30. SHARE-BASED PAYMENT TRANSACTIONS (CONT’D)

(a) (cont’d)

The following table disclosed movements of the Company’s share options for the nine months ended 31 March 2008:

Exercise Category of price participants Date of grant per share HK$ Directors 07.02.2006 0.348 03.01.2007 0.152 08.01.2008 0.255 Employees of the Group 08.01.2008 0.255 Others 02.04.2007 0.228 Exercisable at the end of the period	Outstanding at 1 July 2007 1,166,666 24,000,000 – – 400,000 25,566,666	Granted during the period – – 61,480,000 271,000,000 – 332,480,000	Exercised during the period (833,333 ) – – – – (833,333 )	Cancelled/ lapsed during the period (333,333) – – (18,000,000) – (18,333,333)	Outstanding at 31 March 2008 – 24,000,000 61,480,000 253,000,000 400,000
					(338,880,000

					338,880,000

(b) Movements in the number of share options outstanding and their related weighted average exercise prices are as follows:

2004 Scheme Outstanding at beginning of the year/period Granted during the year/period Exercised during the year/period Cancelled/lapsed during the year/period Outstanding at the end of the year/period Exercisable at the end of the year/period 1994 Scheme Outstanding at beginning of the year Granted during the year Exercised during the year Cancelled/lapsed during the year Outstanding at the end of the year	For the year ended 30 June 2005 2006 2007 Weighted Weighted Number of average Number of average Weighted share exercise share exercise Number of average options price options price share exercise (Note 1) (Note 1) (Note 1) (Note 1) options price HK$ HK$ HK$ – – 88,168,318 0.3954 124,781,646 0.3688 95,749,991 0.3948 76,833,320 0.3477 239,900,000 0.1384 7,081,671 0.3858 7,219,995 0.3592 265,999,996 0.1783 500,002 0.3600 32,999,997 0.3931 73,114,984 0.3781 88,168,318 0.3954 124,781,646 0.3688 25,566,666 0.1621 87,834,985 0.3954 124,781,646 0.3688 25,566,666 0.1621 16,776,040 0.2388 – – – – – – – – – – 16,716,666 0.2310 – – – – 59,374 2.4000 – – – – – – – – – –	For the nine months ended 31 March
		2008 Weighted Number of average share exercise options price HK$ 25,566,666 0.1621 332,480,000 0.2550 833,333 0.3480 18,333,333 0.2567 338,880,000 0.2477 338,880,000 0.2477 – – – – – – – – – –

– 74 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

30. SHARE-BASED PAYMENT TRANSACTIONS (CONT’D)

(c) In respect of the share options exercised during the Relevant Periods, the weighted average share price at the dates of exercise is HK$0.3632, HK$0.4242, HK$0.3342 and HK$0.6448 respectively.
(d) During the year ended 30 June 2005, options were granted at the following dates and the respective estimated fair values are as follows (Note 2):

	Date of grant	Date of grant
	04.11.2004	21.01.2005
No. of share options granted*	7,083,333	3,333,333
Estimated fair values of share options granted
(HK$’000)	774	410

During the year ended 30 June 2006, options were granted at the following dates and the respective estimated fair values are as follows:

				Date of	grant
	02.11.2005	03.11.2005	09.11.2005	10.11.2005	25.11.2005		28.11.2005	01.12.2005	07.02.2006
No. of share options
granted*	1,666,666	1,833,333	3,333,332	9,166,664	2,499,999		333,333	3,333,332	54,666,661
Estimated fair values
of share options granted
(HK$’000)	84	78	170	295		106	14	158	5,084

During the year ended 30 June 2007, options were granted at the following dates and the respective estimated fair values are as follows:

		Date of	grant
	28.12.2006	03.01.2007	05.02.2007	02.04.2007
No. of share options granted	165,000,000	56,500,000	18,000,000	400,000
Estimated fair values of share
options granted_(HK$’000)_	7,260	3,064	965	35

During the nine months ended 31 March 2007, options were granted at the following dates and the respective estimated fair values are as follows:

		Date of grant
	28.12.2006	03.01.2007	05.02.2007
No. of share options granted	165,000,000	56,500,000	18,000,000
Estimated fair values of share
options granted_(HK$’000)_	7,260	3,064	965

– 75 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

30. SHARE-BASED PAYMENT TRANSACTIONS (CONT’D)

(d) (cont’d)

During the nine months ended 31 March 2008, options were granted at the following dates and the respective estimated fair values are as follows:

	Date of grant
	08.01.2008
No. of share options granted	332,480,000
Estimated fair values of share options granted_(HK$’000)_	27,842

(e) The fair values of the share options granted for the two years ended 30 June 2005 and 2006 were valued by BMI Appraisal Limited and by LCH (Asia-Pacific) Surveyors Limited and RHL Appraisal Ltd. for the year ended 30 June 2007 and the nine months ended 31 March 2008, respectively.

The fair values were valued using the Black-Scholes-Merton Option Pricing Model, the value and adjusted value of the options granted for the year ended 30 June 2005 were as follows (Note 2):

	Date of grant	Date of grant
	04.11.2004	21.01.2005
Variables
Closing share price at date of grant*	0.360	0.408
Exercise price_(HK$)_*	0.360	0.408
Risk free rate_(i)_	0.587%	1.205%
Expected volatility_(ii)_	120.42%	115.02%
Expiration of the option	1 year	1.1 years
Expected dividend yield_(iii)_	0%	0%

The inputs into the model during the year ended 30 June 2006 were as follow:

				Date of	grant
	02.11.2005	03.11.2005	09.11.2005	10.11.2005	25.11.2005	28.11.2005	01.12.2005	07.02.2006
Variables
Closing share price at
date of grant*	0.282	0.294	0.342	0.348	0.348	0.348	0.354	0.342
Exercise price_(HK$)_*	0.282	0.294	0.348	0.360	0.360	0.360	0.360	0.348
Risk free rate_(i)_	4.093%	4.137%	4.174%	3.999%	3.833%	3.825%	3.844%	3.84%
Expected volatility_(ii)_	55.88%	55.86%	55.98%	55.93%	55.55%	55.54%	55.54%	67.4%
Expiration of the option	1 year	1 year	1 year	0.66 year	0.66 year	0.66 year	0.66 year	1 year
Expected dividend yield_(iii)_	0%	0%	0%	0%	0%	0%	0%	0%

– 76 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

30. SHARE-BASED PAYMENT TRANSACTIONS (CONT’D)

(e) (cont’d)

The inputs into the model during the year ended 30 June 2007 were as follow:

		Date of	grant
	28.12.2006	03.01.2007	05.02.2007	02.04.2007
Variables
Closing share price at date of grant	0.132	0.152	0.152	0.228
Exercise price_(HK$)_	0.132	0.152	0.153	0.228
Risk free rate_(iv)_	3.48%	3.57%	4.05%	3.57%
Expected volatility_(v)_	92%	89.44%	88.59%	95.18%
Expiration of the option	1 year	1 year	1 year	0.58 year
Expected dividend yield_(iii)_	0%	0%	0%	0%

The inputs into the model during the nine months ended 31 March 2008 were as follow:

	Date of grant
	08.01.2008
Variables
Closing share price at date of grant	0.250
Exercise price_(HK$)_	0.255
Risk free rate_(iv)_	2.69%
Expected volatility_(vi)_	86.14%
Expiration of the option	2 years
Expected dividend yield_(iv)_	0%

(i) The risk free rate is determined by the reference to the Exchange Fund Notes and their expected life.
(ii) The historical volatility rate of the share price of the Company was determined with reference to the 260 days historical share prices of the Company proceeding the balance sheet date.
(iii) The expected dividend yield was based on historical dividend payment record of the Group.
(iv) The applicable risk-free rate was the yield from 6 months to 1 year Hong Kong Monetary Authority exchange fund bills quoted at the respective grant date.
(v) The historical volatility rate of the share price of the Company was determined with reference to the 180 days historical share prices of the Company before the respective grant date.
(vi) The historical volatility rate of the share price of the Company was determined with reference to the 365 days historical share price of the Company by excluding abnormal price flucation due to its corporate events.

The Group recognised the total expenses of approximately HK$1,184,000, HK$5,989,000 and HK$11,324,000 for the three years ended 30 June 2005, 2006 and 2007 and HK$27,842,000 for the nine months ended 31 March 2008 in relation to share options granted by the Company.

Adjusted after consolidation of shares (Note 1)

– 77 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

30. SHARE-BASED PAYMENT TRANSACTIONS (CONT’D)

Notes:

(1) By a resolution passed at the special general meeting of the company held on 29 March 2006, the issued share capital of the Company had been consolidated for every six ordinary shares of HK$0.01 each into one ordinary share of HK$0.06 each. The Consolidation Shares were reduced from HK$0.06 each to HK$0.01 each by canceling the issued share capital to the extent of HK$0.05 paid up on each of the issued Consolidated Shares. Due to the share consolidation, the exercise price per share and the number of share options brought forward from last year have been adjusted to reflect the effect of the share consolidation during the year ended 30 June 2006.
(2) The Group has not applied HKFRS 2 to share options granted on or before 7 November 2002 and share options that were granted after 7 November 2002 and had vested before 1 January 2005 in accordance with the relevant transitional provisions.

31. MAJOR NON-CASH TRANSACTIONS

During the year ended 30 June 2006, the Group had the following major non-cash transactions:

(i) The consideration for acquisition of 100% interests in Hopestar was partly settled by the Company’s issue of 567,000,000 ordinary shares at HK$0.06 per share, totaling HK$34,020,000.
(ii) The consideration for acquisition of 100% interests in Dorson was partly settled by the Company’s issue of 925,925,926 ordinary shares at HK$0.054 per share, totaling HK$50,000,000.

During the nine months ended 31 March 2008, the Group has the following major non-cash transactions:

(iii) The consideration for acquisition of 100% interests in Dormer was partly settled by the Company’s issue of 413,896,104 ordinary shares at HK$0.57 per share, totalling approximately HK$235,921,000.
(iv) The Company settled the Service Fee of HK$7,837,000 by the refund of the entire temporary payment from Templeton Global.
(v) The Group purchased a motor vehicle at a consideration of HK$1,379,000 to be settled by trade-in of an existing motor vehicle with a net carrying value of HK$495,000 at a transfer value of HK$460,000.

No major non-cash transaction occurred during the year ended 30 June 2005 and 2007 and the nine months ended 31 March 2007.

– 78 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

32. ACQUISITION OF SUBSIDIARIES

For the year ended 30 June 2006

The Group acquired two subsidiaries namely Hopestar and Dorson with 100% of the issued share capital on 22 February 2006 and 24 March 2006 for considerations of HK$40,020,000 and HK$100,000,000 respectively. This acquisition of subsidiaries has been accounted for using the purchase method. At the acquisition date, Hopestar and Dorson’s sole assets are holding 10.5% equity interests respectively in MPIL. Accordingly, the Group effectively held 21% equity interests in MPIL and which was considered as available-for-sale investment of the Group. Details of which one set out in note 16.

In the opinion of the directors, the fair value of the identifiable assets and liabilities of the subsidiaries acquired during the year ended 30 June 2006 have no significant difference from their respective carrying amounts. The net asset acquired in the transaction, and the identified asset arising, are as follows:

	Acquirees’
	carrying amount
	HK$
Net assets acquired:
Available-for-sale investment	140,020,078
Other payable	(78)
	140,020,000
Consideration is satisfied by:
Cash	56,000,000
Shares issued_(Note)_	84,020,000
	140,020,000

Hopestar and Dorson did not contribute any revenue nor profit to the Group for the period between the date of acquisition and the balance sheet date as at 30 June 2006.

The outflow of cash and cash equivalents in respect of the purchase of subsidiaries were HK$56,000,000.

Note: As part of the consideration for the acquisition of Hopestar and Dorson, 1,492,925,926 ordinary shares of the Company with par value of HK$0.01 each were issued. The fair value of the ordinary shares of the Company, determined using the published price available at the date of the acquisition, amounted to HK$84,207,000.

For the nine months ended 31 March 2008

The Group acquired a subsidiary namely Dormer with 99.66% of the issued share capital on 30 July 2007 for a consideration of approximately HK$335,921,000. This acquisition of subsidiary has been accounted for using the purchase method. As at the acquisition date, Dormer’s sole asset is holding of 15% equity interests in MPIL. Upon the acquisition of Dormer, the Group effectively held 14.95% equity interests in MPIL and which was considered as an available-forsale investment of the Group.

Subsequently on 5 November 2007, the Group further acquired the remaining 0.34% of the issued share capital of Dormer at a cash consideration of HK$11,800,000 and accordingly, Dormer became a wholly-owned subsidiary of the Group.

– 79 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

32. ACQUISITION OF SUBSIDIARIES (CONT’D)

For the nine months ended 31 March 2008 (cont’d)

In the opinion of the directors, the fair value of the identifiable assets and liabilities of the subsidiary acquired during the nine months ended 31 March 2008 have no significant difference from their respective carrying amounts. The net asset acquired in the transaction, and the identified asset arising, are as follows:

	Acquirees’
	carrying amount
	HK$’000
Net assets acquired:
Available-for-sale investment	347,721
Consideration is satisfied by:
Cash	11,800
Deposit paid for the acquisition of a subsidiary_(Note 16(b))_	100,000
Shares issued_(Note)_	235,921
	347,721

Dormer did not contribute any revenue nor profit to the Group for the period between the date of acquisition and the balance sheet date as at 31 March 2008.

The outflow of cash and cash equivalents in respect of the purchase of a subsidiary were HK$11,800,000 during the nine months ended 31 March 2008.

Note: As part of the consideration for the acquisition of Dormer, 413,896,104 ordinary shares of the Company with par value of HK$0.01 each were issued. The fair value of the ordinary shares of the Company, determined using the published price available at the date of the acquisition, amounted to approximately HK$235,921,000. Details of which were set out in note 29(k).

33. COMMITMENTS

The Group

At the balance sheet date, the Group had the following commitments, so far as not provided for in the consolidated financial statements, in respect of:

(a) Capital commitments:

Authorised and contracted for – acquisition of interests in subsidiaries – acquisition of property, plant and equipment – additional investment in the interest in jointly controlled entity – acquisition of available-for-sales investment	As at 30 June 2005 2006 HK$’000 HK$’000 – – 7 1,039 – 1,002 – –	As at 30 June 2005 2006 HK$’000 HK$’000 – – 7 1,039 – 1,002 – –	2007 HK$’000 255,742 – – –	As at 31 March
		2006 HK$’000 – 1,039 1,002 –		2008 HK$’000 351,000

				–

				–

				2,128

– 80 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

33. COMMITMENTS (CONT’D)

(b) Operating lease commitments for future minimum lease payments under non-cancellable operating leases in respect of land and buildings which fall due as follows:

Within one year In the second to fifth year inclusive	As at 30 June	As at 30 June	2007 HK$’000 1,553 432 1,985	As at 31 March
	2005 HK$’000 1,628 703 2,331	2006 HK$’000 840 – 840		2008 HK$’000 1,361 –
				1,361

Operating lease payments represent rentals payable by the Group for certain of its office properties and warehouse. Leases are negotiated for terms ranging from one to two years.

(c) Operating lease commitments for future minimum lease payment under non-cancellable operating leases of a jointly controlled entity in respect of land and buildings which fall due as follows:

Within one year	As at 30 June 2005 2006 2007 HK$’000 HK$’000 HK$’000 20 61 133	As at 31 March
		2008 HK$’000 –

Operating lease payments represent rentals payable by a jointly controlled entity of the Group for certain of its office premises. Leases are negotiated for a one-year term.

34. RETIREMENT BENEFITS SCHEME

The Group participates in a pension scheme, which was registered under the Mandatory Provident Fund Schemes Ordinance (the “MPF Ordinance”), for all its employees in Hong Kong. The scheme is a defined contribution scheme effective from December 2000 and is funded by contributions from employer and employees according to the provisions of the MPF Ordinance. During the period under review, the total amount contributed by the Group to the scheme and charged to the consolidated income statement was HK$200,000 for the nine months ended 31 March 2008 (year ended 30 June 2005: HK$326,000, 2006: HK$329,000 and 2007: HK$267,000) and no contributions were forfeited.

The employees in the subsidiaries in the PRC are members of the state-sponsored pension scheme operated by the government in the PRC. The subsidiaries in the PRC are required to contribute a certain percentage of their payroll to the pension scheme to fund the benefits. The only obligation of the Group with respect to the pension scheme is to make the required contributions under the scheme. During the Relevant Periods, the total amount contributed by the Group to the scheme and charged to the consolidated income statement was HK$286,000 (year ended 30 June 2005: HK$152,000, 2006: HK$413,000 and 2007: HK$400,000).

– 81 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

35. CONTINGENT LIABILITIES

(i) On 7 March 2008, Guoye brought an action in High Court of Hong Kong under HCA 364 of 2008 against Triple Winner, a wholly-owned subsidiary of the Company which is incorporated in the BVI, and the Company for damages for breach of an agreement dated 23 October 2007 together with interest and/or further relief and costs. The writ was served on the Company on 11 March 2008 and on Triple Winner on 6 June 2008. The directors of the Company are not aware of any further action taken by Guoye after the filing of the acknowledgement of services by the Company on 20 March 2008 and Triple Winner will file its acknowledgement of services in due course. The directors of the Company are of the view that Guoye has no cause of action against the Company and Triple Winner. Accordingly, the Company and Triple Winner will take appropriate actions to defend strenuously.

As at 31 March 2008, with the advices by the Company’s legal adviser, the directors of the Company are of the opinion that the Group has proper and valid defence to Guoye’s action and accordingly, no provision for loss has been accounted for in this Financial Information.

(ii) On 23 April 2008, Ms. Susan So, a director of Guoye, brought an action in High Court of Hong Kong under HCA 699 of 2008 against the Company for damages for breach of contract to be assessed, interest and other relief and costs. The Company has already filed a defence on 3 June 2008. The directors of the Company are of the view that Ms. Susan So has no cause of action against the Company and accordingly, no provision has been accounted for in this Financial Information.

36. RELATED PARTY TRANSACTIONS

During the Relevant Periods and the nine months ended 31 March 2007, the Group entered into the following transactions with related parties:

(a) Key management personnel compensation

The Group

*The Group*
Salaries, bonus and other benefits Share-based payments_(Note)_ Contributions to retirement benefit scheme	For the	For the nine months year ended 30 June ended 31 March 2006 2007 2007 2008 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) 21,496 13,181 5,886 19,581 4,805 3,240 3,240 5,651 111 87 62 62 26,412 16,508 9,188 25,294	For the nine months ended 31 March
	2005 HK$’000 12,363 528 106 12,997	2006 HK$’000 21,496 4,805 111 26,412		2008 HK$’000 19,581 5,651 62
				25,294

The Company

*The Company*
Salaries, bonus and other benefits Share-based payments_(Note)_ Contributions to retirement benefit scheme	For the	For the nine months year ended 30 June ended 31 March 2006 2007 2007 2008 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) 19,177 12,083 5,117 17,934 4,640 3,063 3,063 3,473 63 62 47 45 23,880 15,208 8,227 21,452	For the nine months ended 31 March
	2005 HK$’000 8,250 – 60 8,310	2006 HK$’000 19,177 4,640 63 23,880		2008 HK$’000 17,934 3,473 45
				21,452

– 82 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

36. RELATED PARTY TRANSACTIONS (CONT’D)

(a) Key management personnel compensation (cont’d)
- Note: Share option benefits represent fair value at grant date of share options issue under 2004 Scheme charged to the consolidated income statement during the year/period disregarding whether the options have been vested/exercised or not.
(b) Details of the balance with a jointly controlled entity are set out in the consolidated balance sheet and note 15.
(c) During the two years ended 30 June 2005 and 2006, the Group paid interest expenses on convertible note of approximately HK$318,000 and HK$104,000, respectively, to Alpha Logistics Group Limited, a company wholly owned by a director, Wong Kam Fu.

37. RESERVES

The Group

The amounts of the Group’s reserves and the movements therein for the three years ended 30 June 2005, 2006, 2007 and the nine months ended 31 March 2008 are presented in the consolidated statement of changes in equity.

The Company

Share premium HK$’000 At 1 July 2004 274,433 Issue of shares during the year 18,400 Exercise of share options 5,168 Recognition of equity settled shared-based payment 55 Loss for the year – At 30 June 2005 and 1 July 2005 298,056 Issue of shares during the year 106,000 Issues of shares for acquisition of subsidiaries 69,091 Exercise of share options 2,477 Recognition of equity settled shared-based payment – Repurchase of shares (2,991) Redemption of convertible notes – Cancellation of share options – Capital reduction – Elimination of accumulated losses of the Company – Loss for the year –	Equity Capital component of Share-based redemption Contributed convertible compensation Accumulated reserve surplus note reserve reserve losses HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (Note 30) – 93,289 4,340 – (391,520) – – – – – – – – – – – – – 1,129 – – – – – (39,682) – 93,289 4,340 1,129 (431,202) – – – – – – – – – – – – – (317) – – – – 5,989 – 807 – – – – – – (4,340) – 320 – – – (101) 101 – 119,965 – – – – (119,965) – – 119,965 – – – – (175,099)	Total HK$’000 (19,458 ) 18,400 5,168 1,184 (39,682 ) (34,388 ) 106,000 69,091 2,160 5,989 (2,184) (4,020) – 119,965 – (175,099 )

– 83 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

37. RESERVES (CONT’D)

The Company (cont’d)

Share premium HK$’000 At 30 June 2006 and 1 July 2006 472,633 Issue of shares during the year 112,565 Exercise of share options 59,410 Transaction costs attributable to issue of new shares (2,874) Recognition of equity settled share-based payment – Cancellation of share options – Loss for the year – At 30 June 2007 and 1 July 2007 641,734 Exercise of share options during the period 359 Issue of shares for acquisition of subsidiaries 231,782 Issue of shares during the period 96,716 Transaction costs attributable to issue of new shares (130) Recognition of equity settled share-based payment – Cancellation of share options – Profit for the period – At 31 March 2008 970,461	Equity Capital component of Share-based redemption Contributed convertible compensation Accumulated reserve surplus note reserve reserve losses HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (Note 30) 807 93,289 – 6,700 (485,915) – – – – – – – – (14,630 ) – – – – – – – – – 11,324 – – – – (1,957) 1,957 – – – – (205,685) 807 93,289 – 1,437 (689,643) – – – (78) – – – – – – – – – – – – – – – – – – – 27,842 – – – – (1,539 ) 1,539 – – – – 39,590 807 93,289 – 27,662 (648,514)	Total HK$’000 87,514 112,565 44,780 (2,874) 11,324 – (205,685 ) 47,624 281 231,782 96,716 (130 ) 27,842 – 39,590 443,705

The contributed surplus of the Company includes (i) the difference between the consolidated shareholders’ funds of the subsidiaries at the date at which they were acquired by the Company, and the nominal amount of the Company’s shares issued for the acquisition at the time of the group reorganisation prior to the listing of the Company’s shares in 1994; and (ii) the surplus arising from the group reorganisation in 1998.

Under the Companies Act 1981 of Bermuda (as amended), the contributed surplus account of the Company is available for distribution. However, the Company cannot declare or pay a dividend, or make a distribution out of contributed surplus if

(a) it is, or would after the payment be, unable to pay its liabilities as they become due; or
(b) the realisable value of its assets would thereby be less than the aggregate of its liabilities and its issued share capital and share premium accounts.

In the opinion of the directors, no reserves are available for distribution to shareholders as at 30 June 2005, 2006 and 2007 and as at 31 March 2008.

– 84 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

38. SUBSIDIARIES

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

			Nominal value
			of issued and	Effective percentage of
	Place of	Class of	fully paid/	equity interests/voting
	incorporation	shares/	registered	rights	held by
Name of subsidiary	and operations	equity held	capital	the Company		Principal activities
				Directly	Indirectly
				%	%
Credit Card DNA Security	Hong Kong	Ordinary	HK$1	100	–	Investment holding
System Limited
Star Cyberpower V.F. Limited	BVI	Ordinary	US$1	–	100	Investment holding
Star Cyber DNA Limited	BVI	Ordinary	US$1	–	100	Investment holding
Star Mobile DNA Payment	Hong Kong	Ordinary	HK$2	–	100	Provision of credit card
Gateway Limited						security device and
						digital network
						authorisation services
天碼軟件開發(深圳)有限公司	PRC	Registered	US$1,000,000	–	100	Provision of credit card
Credit Card DNA Security		capital				security device and
System (Shenzhen) Limited						digital network
(Note (i))						authorisation services
Starstruck Group Limited	BVI	Ordinary	US$1	–	100	Investment holding
Star Financial Limited	Hong Kong	Ordinary	HK$200	–	100	Provision of financial
						information services
Supreme Zone Limited	Hong Kong	Ordinary	HK$10,000	–	100	Provision of SMS
						personalised gateway
						services
Star Cyberpower Limited	BVI	Ordinary	US$1	–	100	Investment holding
China Eastern Investments	BVI	Ordinary	US$1	–	100	Investment holding
Limited
Star Cyberpower Management	Hong Kong	Ordinary	HK$10,000	100	–	Provision of
Limited						management services
Ming Yuen Assets Limited	BVI	Ordinary	US$10	–	100	Holding of a patent and
						technology
Star EPS.com Limited	BVI	Ordinary	US$1	–	100	Investment holding
星光易辦事科技(深圳)有限公司	PRC	Registered	US$150,000	–	100	Provision of e-business
Star EPS.com (Shenzhen)		capital				solution and
Limited_(Note (i))_						e-commerce platform
Star EPS.com (HK) Limited	Hong Kong	Ordinary	HK$1	–	100	Electronic commerce
Hopestar Group Limited	BVI	Ordinary	US$100	100	–	Investment holding

– 85 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

38. SUBSIDIARIES (CONT’D)

			Nominal value
			of issued and	Effective percentage of
	Place of	Class of	fully paid/	equity interests/voting
	incorporation	shares/	registered	rights	held by
Name of subsidiary	and operations	equity held	capital	the Company			Principal activities
				Directly	Indirectly
				%		%
Dorson Group Limited	BVI	Ordinary	US$100	100		–	Investment holding
Emailcallyou.com Limited	Hong Kong	Ordinary	HK$1	–	100		Provision of email service
Hong Kong 4 Networks	Hong Kong	Ordinary	HK$1	100		–	Investment holding
(Holdings) Limited
(Note (ii))
Ocean Hill Limited	BVI	Ordinary	US$1	100		–	Investment holding
香港好易聯投資集團有限公司	Hong Kong	Ordinary	HK$1	–	100		Investment holding
128128.com Limited_(Note (iii))_	Hong Kong	Ordinary	HK$1	–	100		Investment holding
深圳支付通商務服務有限公司	PRC	Registered	HK$2,000,000	–		90	Provision of credit card
Shenzhen Payment Express		capital					security device and
Business Services Limited							digital network
(Note (iv))							authorisation services
Sky Stand Group Limited	BVI	Ordinary	US$1	100		–	Investment holding
Triple Winner International	BVI	Ordinary	US$1	100		–	Investment holding
Limited
Dormer Group Limited	BVI	Ordinary	US$10,000	–	100		Investment holding
Greatest Rise Investments	BVI	Ordinary	US$1	100		–	Investment holding
Limited

Notes:

(i) It is a wholly-owned foreign enterprise established in the PRC and the English name is for identification purpose only.
(ii) The name of the Company was changed from H.K. 4 Networks (Holdings) Limited to Hong Kong 4 Networks (Holdings) Limited on 6 February 2007.
(iii) The name of the Company was changed from On Ming Limited to 128128.com Limited on 16 July 2007.
(iv) It is a sino-foreign equity joint venture registered under the PRC law and the English name is for identification purpose only.

None of the subsidiaries of the Group had any debt securities outstanding at the respective balance sheet dates or at any time during the three years ended 30 June 2005, 2006 and 2007 and the nine months ended 31 March 2007 and 2008.

– 86 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

II. POST BALANCE SHEET EVENTS

(i) On 5 March 2008, a wholly-owned subsidiary of the Company has entered into a sale and purchase agreement with Clear Smooth Investments Limited (“Clear Smooth”) in relation to the acquisition of 51% of the issued share capital of Mongol Oil Shale LLC, a company incorporated in Mongolia.

The consideration of the acquisition is a sum of US$45 million (equivalent to approximately HK$351 million) and shall be satisfied (i) as to US$30 million (equivalent to approximately HK$234 million) in cash and (ii) as to US$15 million (equivalent to approximately HK$117 million) by issue of convertible notes by the Company to Clear Smooth or its nominee.

Details of the acquisition are set out in the announcement of the Company dated 5 March 2008.

(ii) On 17 April 2008, the Company entered into an agreement with the purchaser, a wholly-owned subsidiary of SUNPEC, pursuant to which the Company has conditionally agreed to dispose of its 36% equity interests in MPIL at a total consideration of HK$100 million in cash and HK$710 million by the issue and allotment by SUNPEC of 253,571,428 consideration shares at HK$2.80 per consideration share. After the completion of the transaction, the Company will hold 4.46% equity interests in SUNPEC and which will be accounted for as an available-for-sales investment of the Group.

On 22 May 2008, the Company has duly received the HK$50,000,000 deposit from SUNPEC in connection to the Disposal.

III. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared by the Group in respect of any periods subsequent to 31 March 2008 and up to the date of this report.

Yours faithfully,

SHINEWING (HK) CPA Limited

Certified Public Accountants

Ip Yu Chak

Practising Certificate Number: P04798 Hong Kong

– 87 –

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

1. UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

The following is the text of a report, prepared for the purpose of inclusion of this circular, received from SHINEWING (HK) CPA Limited, certified public accountants, Hong Kong:

(A) Introduction

The accompanying unaudited pro forma financial information (“Unaudited Pro Forma Financial Information”) of the Remaining Group has been prepared in accordance with Rule 4.29 of the Listing Rules for the purpose of illustrating the effect of the very substantial transaction for the disposal of the entire 36% equity interests in Madagascar Petroleum International Limited (“MPIL”) (the “Disposal”) and acquisition of 4.46% equity interests in Sino Union Petroleum & Chemical International Limited (“SUNPEC”), representing the consideration shares of the Disposal (collectively referred to the “Very Substantial Transaction”).

The following is the Unaudited Pro Forma Financial Information of the Remaining Group as if the Very Substantial Transaction has been completed on 1 July 2007 for the unaudited pro forma consolidated income statements and unaudited pro forma consolidated cash flow statements and on 31 March 2008 for the unaudited pro forma consolidated balance sheets.

The Unaudited Pro Forma Financial Information of the Remaining Group are based on a number of assumptions, estimates and uncertainties. Accordingly, the accompanying Unaudited Pro Forma Financial Information of the Remaining Group does not purport to describe the actual financial position, results or cash flows of the Remaining Group’s operations that would have been attained had the Very Substantial Transaction actually occurred on the dates indicated herein. Further, the accompanying Unaudited Pro Forma Financial Information of the Remaining Group does not purport to predict the future financial position, results or cash flows of the operation of the Remaining Group.

The Unaudited Pro Forma Financial Information of the Remaining Group should be read in conjunction with the Accountant’s Report of the Group as set out in Appendix I to this Circular and other financial information included elsewhere in this Circular.

(B) Unaudited Pro Forma Consolidated Income Statement of the Remaining Group

The following is the unaudited pro forma consolidated income statement of the Remaining Group assuming the Very Substantial Transaction has been completed on 1 July 2007. The unaudited pro forma consolidated income statement has been prepared based on the audited consolidated income statement of the Group for the nine months ended 31 March 2008 as set out in Appendix I to this Circular, after making pro forma adjustments relating to the Very Substantial Transaction that are (i) directly attributable to the transactions; (ii) expected to have a continuing impact on the Remaining Group; and (iii) factually supportable.

– 88 –

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

(B) Unaudited Pro Forma Consolidated Income Statement of the Remaining Group (cont’d)

As the unaudited pro forma consolidated income statement of the Remaining Group has been prepared for illustrative purposes only and because of its nature, it may not give a true picture of the results of the Remaining Group for the nine months ended 31 March 2008 or for any future period.

The Group
for the nine
months ended
Pro forma
31 March 2008
adjustments
HK$’000
HK$’000
HK$’000
Note 1
Note 2
Note 3
Turnover
7,399
Cost of Sales
(6,186)
Gross profit
1,213
Other operating income
2,134
Distribution costs
(986)
Administrative expenses
(46,381)
(1,500)
Share-based payment expenses
(27,842)
Loss attributable to financial assets
at fair value through profit or loss
(3,941)
Gain on disposal of
available-for-sale investments
–
322,259
Share of loss of a jointly
controlled entity
(598)
(Loss)/profit before income tax
(76,401)
Income tax
–
(Loss)/profit for the period
(76,401)

Pro forma
Remaining
Group
HK$’000
7,399
(6,186)
1,213
2,134
(986)
(47,881)
(27,842)
(3,941)
322,259
(598)
244,358
–
244,358

Notes:

The amounts have been extracted without adjustment from the Accountants’ Report of the Group for the nine months ended 31 March 2008 as set out in Appendix I to this Circular.
The adjustment reflects the results of the Disposal assuming that the Disposal has been taken place on 1 July 2007. There would be an estimated gain of approximately HK$322,259,000 assuming that the Disposal has taken place on 1 July 2007.
The transaction costs estimated by the management of approximately HK$1,500,000 in connection with the Very Substantial Transaction, which mainly represented the legal and professional fee.
Except for the Very Substantial Transaction, no adjustment has been made to reflect any trading result or other transactions of the Group entered into subsequent to 31 March 2008.

– 89 –

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

(C) Unaudited Pro Forma Consolidated Cash Flow Statement of the Remaining Group

The following is the unaudited pro forma consolidated cash flow statement of the Remaining Group assuming that the Very Substantial Transaction has been completed on 1 July 2007. The unaudited pro forma consolidated cash flow statement has been prepared based on the audited consolidated cash flow statement of the Group for the nine months ended 31 March 2008 as set out in Appendix I to this Circular, after making pro forma adjustments relating to the Very Substantial Transaction that are (i) directly attributable to the transactions; (ii) expected to have a continuing impact on the Remaining Group; and (iii) factually supportable.

As the unaudited pro forma consolidated cash flow statement of the Remaining Group has been prepared for illustrative purposes only and because of its nature, it may not give a true picture of the cash flows of the Remaining Group for the nine months ended 31 March 2008 or for any future period.

– 90 –

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

(C) Unaudited Pro Forma Consolidated Cash Flow Statement of the Remaining Group (cont’d)

Group (cont’d)
		The Group
	for the nine					Pro forma
months ended						Remaining
31	March 2008		Pro forma adjustments			Group
		HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
		Note 1	Note 2	Note 3	Note 4
OPERATING ACTIVITIES
(Loss)/profit before income tax		(76,401)	322,259		(1,500)	244,358
Adjustment for:
Share of loss of a jointly
controlled entity		598				598
Interest income		(1,441)				(1,441)
Dividend income		(18)				(18)
Depreciation		884				884
Service Fee		7,838				7,838
Gain on disposal of property,
plant and equipment		(3)				(3)
Loss attributable to financial assets
at fair value through profit or loss		3,941				3,941
Gain on disposal of available-for-sale
investments		–	(322,259)			(322,259)
Share-based payment expenses		27,842				27,842
Operating cashflows before
movements in working capital		(36,760)				(38,260)
Increase in debtors, deposit
and prepayments		(2,752)				(2,752)
Decrease in other creditors and
accrued charges		(192)				(192)
NET CASH USED IN OPERATING ACTIVITIES		(39,704)				(41,204)
INVESTING ACTIVITIES
Increase in deposits paid for
the acquisition of a subsidiary		(23,647)				(23,647)
Proceeds from disposal of
available-for-sale investments		–		100,000		100,000
Purchase of financial assets at fair value
through profit or loss		(6,010)				(6,010)
Proceeds from disposal of financial assets
at fair value through profit or loss		3,910				3,910
Decrease in pledged bank deposit		6,914				6,914
Interest received		1,441				1,441
Purchase of property, plant and equipment		(2,581)				(2,581)
Dividend received		18				18
Increase in deposit paid for acquisition of
an available-for-sale investment		(7,794)				(7,794)
Purchase of subsidiary		(11,800)				(11,800)
Proceeds from disposal of property,
plant and equipment		38				38
NET CASH (USED IN)/FROM
INVESTING ACTIVITIES		(39,511)				60,489

– 91 –

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

(C) Unaudited Pro Forma Consolidated Cash Flow Statement of the Remaining Group (cont’d)

		The Group
	for the nine					Pro forma
months ended						Remaining
31	March 2008		Pro forma adjustments			Group
		HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
		Note 1	Note 2	Note 3	Note 4
FINANCING ACTIVITIES
Net proceeds from issue of shares
by placement		98,404				98,404
Proceeds from issue of shares on
exercise of share options		289				289
Capital injection from a minority
shareholder of a subsidiary		96				96
NET CASH FROM FINANCING ACTIVITIES		98,789				98,789
NET INCREASE IN CASH AND
CASH EQUIVALENTS		19,574				118,074
CASH AND CASH EQUIVALENTS
AT BEGINNING OF THE PERIOD		24,937				24,937
EFFECT OF FOREIGN CURRENCY
RATE CHANGES		713				713
CASH AND CASH EQUIVALENTS AT END OF
THE PERIOD, REPRESENTING
BY BANK BALANCES AND CASH		45,224				143,724

Notes:

The amounts have been extracted without adjustment from the Accountants’ Report of the Group for the nine months ended 31 March 2008 set out in Appendix I to this Circular.
The adjustment reflects the results of the Disposal assuming that the Disposal has been taken place on 1 July 2007. There would be an estimated gain of approximately HK$322,259,000 assuming that the Disposal has taken place on 1 July 2007.
The adjustment reflects the cash consideration of approximately HK$100,000,000 arising from the Disposal as if the Disposal had taken place on 1 July 2007. The remaining balance of the consideration of approximately HK$710,000,000 would be settled by the issue and allotment of 253,571,428 consideration shares at HK$2.8 each by SUNPEC to the Company, which is considered as a non-cash item.
The transaction costs estimated by the management of approximately HK$1,500,000 in connection with the Very Substantial Transaction, which mainly represented the legal and professional fee, assuming fully settled by cash on 1 July 2007.
Except for the Very Substantial Transaction, no adjustment has been made to reflect any trading result or other transactions of the Group entered into subsequent to 31 March 2008.

– 92 –

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

(D) Unaudited Pro Forma Consolidated Balance Sheet of the Remaining Group

The following is the unaudited pro forma consolidated balance sheet of the Remaining Group assuming the Very Substantial Transaction has been completed on 31 March 2008. The unaudited pro forma consolidated balance sheet has been prepared based on the audited consolidated balance sheet of the Group as at 31 March 2008 as set out in Appendix I to this Circular, after making pro forma adjustments relating to the Very Substantial Transaction that are (i) directly attributable to the transactions; (ii) expected to have a continuing impact on the Remaining Group; and (iii) factually supportable.

As the unaudited pro forma consolidated balance sheet of the Remaining Group has been prepared for illustrative purposes only and because of its nature, it may not give a true picture of the financial position of the Remaining Group as at 31 March 2008 or at any future date.

The Group as at Pro forma 31 March 2008 adjustments HK$’000 HK$’000 HK$’000 Note 1 Note 2 Note 3 Non-current assets Property, plant and equipment 5,062 Available-for-sales investments 496,364 222,259 Deposits paid for the acquisition of properties 10,104 511,530 Current assets Deposit paid for the acquisition of a subsidiary 23,647 Deposit paid for the acquisition of an available-for-sale investment 3,283 Debtors, deposits and prepayments 5,254 Financial assets at fair value through profit or loss 4,497 Pledged bank deposits 162 Bank balances and cash 45,224 100,000 (1,500) 82,067 Current liabilities Other creditors and accrued charge 4,049 Provision for taxation 1,545 5,594 Net current assets 76,473 588,003 Capital and reserves Share capital 37,408 Reserves 550,595 322,259 (1,500) 588,003	Pro forma Remaining Group HK$’000 5,062 718,623 10,104
	733,789
	23,647 3,283 5,254 4,497 162 143,724
	180,567
	4,049 1,545
	5,594
	174,973
	908,762

	37,408 871,354
	908,762

– 93 –

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

(D) Unaudited Pro Forma Consolidated Balance Sheet of the Remaining Group (cont’d)

Notes:

The balances have been extracted without adjustment from the Accountants’ Report of the Group as at 31 March 2008 as set out in Appendix I to this Circular.
The adjustment reflects the total consideration for the Disposal of approximately HK$810,000,000 which is to be settled partly in cash as to HK$100,000,000 and partly by the issue and allotment of 253,571,428 consideration shares at HK$2.8 each totalling approximately HK$710,000,000 by SUNPEC to the Company. The total cost of the entire 36% equity interests in MPIL to be disposed of as at 31 March 2008 was approximately HK$487,741,000. An estimated gain of approximately HK$322,259,000 would arise assuming that the Disposal had taken place on 31 March 2008. The consideration shares represent 4.46% equity interests in SUNPEC and the Group recorded it as available-forsale investments with changes in fair value to be dealt with in the equity.
The transaction costs estimated by the management of approximately HK$1,500,000 in connection with the Very Substantial Transaction, which mainly represented the legal and professional fee, assuming fully settled by cash on 31 March 2008.
Except for the Very Substantial Transaction, no adjustment has been made to reflect any trading result or other transactions of the Group entered into subsequent to 31 March 2008.

– 94 –

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

2. LETTER FROM THE REPORTING ACCOUNTANTS

The following is the text of the letter from SHINEWING (HK) CPA Limited in respect of the unaudited pro forma financial information of the Remaining Group:

==> picture [232 x 62] intentionally omitted <==

8 July 2008

The Board of Directors Smart Rich Energy Finance (Holdings) Limited Suite 1606-7 16/F., Great Eagle Centre No. 23 Harbour Road Wanchai Hong Kong

Dear Sirs,

We report on the unaudited pro forma financial information (the “Unaudited Pro Forma Financial Information”) of Smart Rich Energy Finance (Holdings) Limited (the “Company”) and its subsidiaries (hereafter collectively referred to as the “Group”), set out on page 88 to 94 in Appendix II to the circular of the Company dated 8 July 2008 (the “Circular”), which has been prepared by the director of the Company (the “Directors”), for illustrative purposes only, to provide information about how the proposed disposal of the entire 36% equity interests in Madagascar Petroleum International Limited (the “Disposal”) and acquisition of 4.46% equity interests in Sino Union Petroleum & Chemical International Limited, representing the consideration shares of the Disposal (collectively referred to the “Very Substantial Transaction”) might have affected the financial information of the Group presented. The Group, after the completion of the Very Substantial Transaction, is hereinafter referred to as the “Remaining Group”.

Respective responsibilities of directors of the Company and reporting accountant

It is the responsibility solely of the Directors to prepare the Unaudited Pro Forma Financial Information in accordance with paragraph 29 of Chapter 4 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 (the “HKICPA”).

It is our responsibility to form an opinion, as required by paragraph 29(7) of Chapter 4 of the Listing Rules, on the Unaudited Pro Forma Financial Information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the Unaudited Pro Forma Financial Information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

– 95 –

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

Basis of opinion

We conducted our work in accordance with Hong Kong Standard on Investment Circular Reporting Engagements 300 “Accountants’ Reports on Pro Forma Financial Information in Investment Circulars” issued by the HKICPA. Our work consisted primarily of comparing the unadjusted consolidated balance sheet as at 31 March 2008, unadjusted consolidated income statement and unadjusted consolidated cash flow statement of the Group for the nine months ended 31 March 2008 with the Accountants’ Report as set out in Appendix I of this Circular, considering the evidence supporting the adjustments and discussing the Unaudited Pro Forma Financial Information with the Directors. This engagement did not involve independent examination of any of the underlying financial information.

We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the Unaudited Pro Forma Financial Information has been properly compiled by the Directors on the basis stated, that such basis is consistent with the accounting policies of the Group and that the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information as disclosed pursuant to paragraph 29(1) of Chapter 4 of the Listing Rules.

The Unaudited Pro Forma Financial Information is for illustrative purposes only, based on the judgments and assumptions of the Directors, 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 Remaining Group as at 31 March 2008 or at any future date;
the results and cash flows of the Remaining Group for the nine months ended 31 March 2008 or any future periods.

Opinion

In our opinion:

(a) the Unaudited Pro Forma Financial Information has been properly compiled by the Directors on the basis stated;
(b) such basis is consistent with the accounting policies of the Group; and
(c) the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information as disclosed pursuant to paragraph 29(1) of Chapter 4 of the Listing Rules.

SHINEWING (HK) CPA Limited Certified Public Accountants Ip Yu Chak Practising Certificate Number: P04798 Hong Kong

– 96 –

APPENDIX III

ADDITIONAL FINANCIAL INFORMATION OF THE GROUP

INDEBTEDNESS

Borrowings

As at the close of business on 31 May 2008 (being the latest practicable date for the purpose of this statement of indebtedness prior to the printing of this circular), the Group had no outstanding borrowings.

Contingent liabilities

As at 31 May 2008, the Group and the Remaining Group had the following contingent liabilities:

(i) On 7 March 2008, Guoye PRC Inc. (“Guoye”) brought an action in High Court of Hong Kong under HCA 364 of 2008 against Triple Winner International Limited (“Triple Winner”), a wholly-owned subsidiary of the Company which is incorporated in the British Virgin Islands, and the Company for damages for breach of an agreement dated 23 October 2007 together with interest and/ or further relief and costs. The writ was served on the Company on 11 March 2008 and on Triple Winner on 6 June 2008. The directors of the Company are not aware of any further action taken by Guoye after the filing of the acknowledgement of services by the Company on 20 March 2008 and Triple Winner will file its acknowledgement of services in due course. The directors of the Company are of the view that Guoye has no cause of action against the Company and Triple Winner. Accordingly, the Company and Triple Winner will take appropriate actions to defend strenuously.

As at 31 May 2008, with the advices by the Company’s legal adviser, the directors of the Company are of the opinion that the Group has proper and valid defence to Guoye’s action and accordingly, no provision for loss has been accounted for as at the close of business on 31 May 2008.

(ii) On 23 April 2008, Ms. Susan So, a director of Guoye, brought an action in High Court of Hong Kong under HCA 699 of 2008 against the Company for damages for breach of contract to be assessed, interest and other relief and costs. The Company has already filed a defence on 3 June 2008. The directors of the Company are of the view that Ms. Susan So has no cause of action against the Company and accordingly, no provision has been considered necessary as at the close of business on 31 May 2008.

– 97 –

APPENDIX III

ADDITIONAL FINANCIAL INFORMATION OF THE GROUP

Commitments

Capital commitments outstanding at 31 May 2008 not provided for in the financial statements were as follows:

	The Group and
	the Remaining
	Group
	HK$’000
Contracted for	353,607
Authorised but not contracted for	5,460
	359,067

As at 31 May 2008, both the Group and the Remaining Group had operating lease commitments of approximately HK$1,456,000, in respect of rental premises.

Disclaimer

To the best knowledge of the Directors, save as aforesaid or as otherwise disclosed herein and apart from intra-group liabilities, none of the companies in the Group and the Remaining Group has outstanding mortgages, charges, debentures, or other loan capital, loans or other similar indebtedness, liabilities under acceptances or acceptable credits or hire purchase commitments or any guarantees or other material contingent liabilities as at the close of business on 31 May 2008.

The Directors have confirmed that, save as disclosed above, there has not been any material adverse change in the indebtedness and contingent liabilities of the Group and the Remaining Group since 31 May 2008.

WORKING CAPITAL

The Directors, after due and careful enquiry, are of the opinion that the Remaining Group will, following the Completion and taking into account the internally generated funds and the net proceeds from the Sales, have sufficient working capital for its requirements in next 12 months from the date of this Circular in the absence of unforeseeable circumstances.

– 98 –

APPENDIX III

ADDITIONAL FINANCIAL INFORMATION OF THE GROUP

PROPERTY VALUATION

The reconciliations between the audited net book value of the Group’s property interests as at 31 March 2008 and the valuation of such property interests as at 30 June 2008 set out in Appendix VI to this circular are set forth as follows:

Net book value of the Group’s property interests as at 31 March 2008_(note) Recognition of initial cost of the investment property upon the issue of building ownership certificates on 3 April 2008 Valuation surplus Valuation as at 30 June 2008 _Equivalent to	HK$’000 – 10,104 10,123
	20,227

	RMB’000 17,800

Note: The properties of the Group valued by Greater China Appraisal Limited, an independent property valuer, as set out in Appendix VI to this circular is not recognised as investment property as at the balance sheet date of 31 March 2008 as the respective building ownership certificates were only issued on 3 April 2008, subsequent to the balance sheet date.

NO MATERIAL ADVERSE CHANGE

To the best knowledge of the Directors, the Directors have confirmed that there has been no material adverse change in the financial or trading position of the Group and the Remaining Group since 31 March 2008, being the date of the latest audited consolidated financial results as set out herein.

– 99 –

APPENDIX IV MANAGEMENT DISCUSSION AND ANALYSIS

FOR THE NINE MONTHS ENDED 31 MARCH 2008

Results

For the nine months ended 31 March 2008, the Group’s turnover amounted to approximately HK$7.40 million, comparing to approximately HK$4.93 million reported in the same period for 2007. The increment of approximately 50.1% is mainly contributed by the steadily growth in the existing business segment in the provision of financial information services and the new business segment in trading of electronics goods and accessories which commenced in March 2008. Loss attributable to equity holders of the Company for the nine months period was approximately HK$76.25 million, compared to loss of approximately HK$18.31 million in the corresponding period of 2007, representing an increase of 316.54%. The loss was mainly due to the recognition of share-based payment expense of approximately HK$27.84 million upon the granting of share options under the Share Option Scheme during the nine months ended period, additional operating expenses incurred for business expansion in the period and increased administrative expenses in relation to the Company’s search of new business opportunities in different countries including Mongolia, Kazakhstan and Indonesia.

Business Review

During the nine month period ended 31 March 2008, DNA security service, DNA Mobile email services and financial information services (WINFCS) were still the Group’s core business segment. Apart from these, the Group continued to diversify its business scope into natural resources exploitation industry by investing in MPIL and looking for business opportunities in natural resources in Mongolia, Kazakhstan and Indonesia. In addition, the Group commenced a new line of business on trading of electronic goods and accessories in March 2008. This new business segment contributed a turnover of approximately HK$1.78 million, which accounted for 24.11% of the total turnover of the Group for the nine months ended 31 March 2008.

During the nine months ended 31 March 2008, the Group’s financial information service (WINFCS) recorded a turnover of approximately HK$2.97 million (2007: approximately HK$2.03 million) which accounted for 40.11% of the total turnover.

The DNA security service and DNAPAY service contributed to approximately 35.73% of the Group’s total turnover for the nine months ended 31 March 2008, amounting to approximately HK$2.64 million compared with approximately HK$2.88 million for the corresponding period for 2007, representing a decrease of 8.19%. Although there was a slight decline in the turnover of this division, the operating result has improved from a loss of approximately HK$4.0 million for the nine months ended 31 March 2007 to a loss of approximately HK$3.61 million for the nine months ended 31 March 2008, representing a decrease of approximately 9.58%.

– 100 –

APPENDIX IV

MANAGEMENT DISCUSSION AND ANALYSIS

Net Asset Value

As at 31 March 2008, the Group’s total net asset amounted to approximately HK$588 million, represented an increase of 95.30% comparing to approximately HK$301.08 million as at 30 June 2007. Based on the total number of 3,740,843,782 Shares issued as at 31 March 2008, net asset value per Share was HK15.72 cents.

Liquidity and Financial Resources

The Group recorded a net cash inflow of approximately HK$19.57 million during the nine months ended 31 March 2008. At 31 March 2008, cash and bank balances of the Group amounted to approximately HK$45.22 million (30 June 2007: approximately HK$24.94 million). The bank deposit of approximately HK$6.92 million pledged to a bank to secure general banking facilities granted to a subsidiary of the Group as at 30 June 2007 was properly released upon the expiry of the respective general banking facilities during the nine months ended 31 March 2008, and a bank deposit of approximately HK$0.16 million (as at 31 March 2008) was pledged to a bank to secure a merchant account of a subsidiary (30 June 2007: approximately HK$0.16 million).

The Group’s gearing ratio, expressed as the percentage of the Group’s total borrowings over shareholders’ equity, was nil at 31 March 2008 (30 June 2007: nil) as the Group did not have any borrowings as at 30 June 2007 and 31 March 2008.

The Group conducted most of its business in Renminbi, United States dollars and Hong Kong dollars. It does not have any significant exposure to foreign exchange fluctuation.

Business Outlook

DNA Marketing Services, delivered through a Web-based SMS marketing system, allows mass promotion messages to be delivered via mobile SMS. We expect this service will continue to contribute to the revenue stream of the Group.

DNA Mobile Email Services, enabled by DNA technology, has been launched together with Hutchison Global Communications in January 2008. With the view that there is huge potential market for mobile email services, further marketing activities have been held to target the mass market for the ever-increasing needs of mobile email for any mobile users with or without data services enabled.

We also see growth in the financial information service sector. We are revamping the whole service offerings adopting the latest technology to cope with the fast changing market place. Our customer base has been increasing since feature enriched new software and services were launched in April 2007. Since then, the service portal – 128128.com has received great attentions and drive significant traffic to the portal. In addition to the existing services packages, new service plan has been launched in May 2008 to target for the low to medium class of financial services users with the aim to further enlarge our market share in this sector of business. Noting the recent downturn of the Hong Kong stock market, the Company is closely monitoring the performance of this business line.

– 101 –

APPENDIX IV

MANAGEMENT DISCUSSION AND ANALYSIS

As announced on 5 March 2008, the Company entered into a sale and purchase agreement with Clear Smooth Investments Limited (“Clear Smooth”) in relation to the acquisition of 51% of the issued share capital of Mongol Oil Shale LLC at a total consideration of US$45 million (equivalent to approximately HK$351 million). This transaction is yet to be completed and the Company is reviewing the information received from Clear Smooth.

As Mongolia is rich in natural resources, the Group will continue to explore other investment opportunities in Mongolia and is also looking for business opportunities in Indonesia and some Africa countries which may create value for its shareholders.

Human Resources

As at 31 March 2008, the Group had 29 and 50 employees in Hong Kong and Mainland China respectively. Employees are remunerated at a competitive level and are rewarded according to their performance. Our Group’s remuneration packages include medical scheme, group insurance, mandatory provident fund and performance bonus.

According to the Share Option Scheme, share options may be granted to directors and eligible employees of the Group to subscribe for Shares in accordance with the terms and conditions stipulated therein.

FOR THE YEAR ENDED 30 JUNE 2007

Results

For the year ended 30 June 2007, the Group’s turnover amounted to approximately HK$6.84 million, comparing to HK$3.97 million reported in the preceding year. It was an increase of approximately 72.3%. Loss attributable to shareholders for the year was HK$43.51 million, compared to loss of HK$83.19 million in year 2006, representing a decrease of 47.7%. The loss was mainly due to the recognized impairment loss in respect of the intangible asset – patents and technology amounting to HK$10.47 million and the additional operating expenses incurred for business expansion in the year.

Business Review

During the year under review, financial information services (WINFCS) marketed via Star Financial brand, and DNA security service and epayment platform service (DNAPAY) enabled by patented DNA technology, were still the Group’s core business segments, while the Group diversified its business scope into the oil and gas exploitation industry.

During the year ended 30 June 2007, the Group’s financial information service (WINFCS) recorded a turnover of HK$2.85 million (2006: HK$2.53 million) which accounted for 41.7% of the total turnover. A loss of HK$1.08 million was incurred in this division of business, an increase of 20.0% when compared with a loss of HK$0.9 million in the year 2006.

– 102 –

APPENDIX IV MANAGEMENT DISCUSSION AND ANALYSIS

Due to a healthy growth in China and Hong Kong, the DNA security service and DNAPAY service contributed to approximately 57.9% of the Group’s total turnover, amounting to approximately HK$3.96 million compared with HK$1.41 million in the year 2006, an increase of 180.9%. A loss of HK$5.41 million was incurred in this division of business, a decrease of 42.6% when compared with a loss of HK$9.43 million in the year 2006.

Net Asset Value

As at 30 June 2007, the Group’s total net asset amounted to HK$301.08 million, represented an increase of 72.6% comparing to HK$174.41 million as at 30 June 2006.

Liquidity and Financial Resources

The Group recorded a net cash inflow of approximately HK$22.47 million during the year. At 30 June 2007, cash and bank balances of the Group amounted to approximately HK$24.94 million (2006: HK$2.98 million).

The Group did not have any bank or other borrowings as at the year end date (2006: HK$1.94 million). The Group conducted most of its business in Renminbi, United States dollars and Hong Kong dollars so that it does not have any significant exposure to foreign exchange fluctuation.

The Group’s gearing ratio, expressed as the percentage of the Group’s total borrowings over shareholders’ equity, was nil at 30 June 2007 (2006: 1.1%) as the Group did not have any borrowings as at the year end date.

Material Acquisitions and Disposals of Subsidiaries and Associated Companies

On 25 July 2007, Dorson Group Limited, a wholly-owned subsidiary of the Company, has acquired 96.66% of the entire issued share capital of Dormer Group Limited (“ Dormer ”) (the “Acquisition”). Dormer holds 15% interest in MPIL in which the Company has 21% indirect interest prior to the Acquisition. Following the Acquisition, the Group has a total integrated interest of 35.5% in MPIL.

Save as disclosed above, there were no material acquisitions or disposals of subsidiaries and associated companies during the year.

Business Outlook

Carrying a mobile phone has become almost as common as carrying a wallet. This creates tremendous business opportunities for us, who are providing proprietary solutions and services based on mobile phone popularities. DNA project with Bank of China has been successfully launched in December 2006. We are working on to launch new DNA services with different partners to enhance existing services and enable new services, such as DNA Pay, a unique mobile payment solution. By riding on the next wave of technology and services innovations, our patented DNA technology gives us an absolute competitive edge in the market place.

– 103 –

APPENDIX IV MANAGEMENT DISCUSSION AND ANALYSIS

DNA Marketing Services, delivered through a Web-based SMS marketing system, continue to grow. It allows mass promotion messages to be delivered via mobile SMS. We expect this service will constantly contribute to the revenue stream.

DNA Mobile Email Services, enabled by DNA technology, will be launched together with Hutchison Global Communications in Q4 2007. The Group has identified a huge potential market for mobile email services. Targeting mass market, it will address the ever-increasing needs of mobile email for any mobile users with or without data services enabled. We believe we can quickly penetrate market and gain significant market share in this market segment.

Financial information service industry is growing positively. We are revamping the whole services offerings adopting the latest technology to cope with fast changing market place. Our customer base is increasing since feature enriched new software and services were launched in April 2007. Since then, the service portal – 128128.com, has received great attentions and drive significant traffic to the portal.

Targeting end-users and corporations in Hong Kong and mainland China, we aim to become the leading player by providing an integrated financial information service platform. We expect financial information services will constantly contribute to the Group’s revenue stream.

As approved in the special general meeting of Shareholders held on 25 July 2007, the Company increased its shareholding in MPIL from 21% to 35.5%. MPIL is an investment holding company incorporated in June 2005 and entered into the oil and gas product sharing agreement on 7 October 2005 with OMNIS of approximately 20,100 square kilometres in Madagascar for oil and gas exploitation and operation.

As announced on 25 May 2007 and 29 August 2007, the Company entered into the agreement with Templeton Global Limited (“ Templeton Global ”) for grant of option to purchase potential oil assets. Templeton Global is a company incorporated in the British Virgin Islands (“BVI”) with limited liability and its sole asset is 100% interest in Sinoreach Limited. Sinoreach Limited, which is a company incorporated in the BVI with limited liability, owns the sole asset of 60% interest in (“ KAOK ”). KAOK, which is a limited liability company formed under the laws of Kazakhstan, holds 100% of mineral right to develop certain oil fields with an area size of 42.2 square kilometre in Akytubinsk, Kazakhstan with an estimated reserves in excess of 30 million barrels of oil. The mineral right held by KAOK is an oil exploitation and operation agreement dated 15 October 2004 and made between the National Office for Energy and Mining of Republic of Kazakhstan and KAOK for a maximum of 9 years. The option period after extension will be expired on 31 October 2007.

On 10 October 2007, the Company entered into a framework agreement with Mr. Zorigt and Mr. Chuluunbat (the “ Vendors ”) in relation to the proposed acquisition of 51% equity interest in Satellite Geological Survey Co., Limited (“ SGS ”). From the information provided by the Vendors, the Government of Mongolia will grant certain concession rights to SGS on the exploration and exportation of natural resources, essentially oil and gas, in

– 104 –

APPENDIX IV MANAGEMENT DISCUSSION AND ANALYSIS

relation to Blocks VII, IX, XN, XS and XXVI (the “ Blocks ”) lie in the south of Mongolia. The Vendors advised the Company that the total depression area of the Blocks is approximately 100,000 square kilometers and pursuant to the preliminary evaluation of the Vendors, the total oil resources of the Blocks may amount to 1 billion tonne. The Company and the Vendors shall enter into a definitive agreement on or before 31 January 2008.

The Company will continue searching for other energy projects which may create value for its shareholders.

Human Resources

As at 30 June 2007, the Group had 29 and 46 employees in Hong Kong and Mainland China respectively. Employees are remunerated at a competitive level and are rewarded according to their performance. Our Group’s remuneration packages include medical scheme, group insurance, mandatory provident fund and performance bonus.

FOR THE YEAR ENDED 30 JUNE 2006

Results

For the year ended 30 June 2006, the Group’s turnover amounted to approximately HK$3.97 million, comparing to HK$3.33 million reported in the preceding year. It was an increase of approximately 19%. Gross profit from operation was approximately HK$0.55 million, comparing to a gross loss of HK$0.02 million in the last year. Loss attributable to shareholders for the year was HK$83.19 million, compared to loss of HK$71.41 million in year 2005, representing an increase of 16.5%. The loss was mainly due to the recognised impairment loss in respect of the intangible asset – patents and technology amounting to HK$37.13 million and the additional operating expenses incurred for business expansion in the year.

Business Review

During the year under review, DNA security service, epayment platform service (DNAPAY) and financial information services (WINFCS) were still the Group’s core business segments, while the Group diversified its business scope into the oil and gas exploitation industry.

During the year ended 30 June 2006, the DNA security service and DNAPAY service contributed to approximately 36% of the Group’s total turnover, amounting to approximately HK$1.41 million. It was reported a healthy growth in China and Hong Kong.

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APPENDIX IV MANAGEMENT DISCUSSION AND ANALYSIS

In DNA security service, the Group signed up more banks for using our services in China. Our prospective user banks continued to show their strong interests in our services in China and Hong Kong. This expansion of business scope enhanced the competitiveness of the Group in the market and diversified its revenue opportunities into e-commerce business.

DNAPAY platform allows retailers/merchants to collect payments electronically from purchasers’ bank cards/accounts or any prepaid financial instruments at all sales channels via www.stareps.com.

The Group has successfully signed the agreements with Lanzhou City Commercial Bank (蘭州市城商銀行 ), Beijing Postal Savings and Remittance Bureau (北京郵政儲匯局 ) and BOC Credit Card (International) Ltd. during the year. DNAPAY will generate revenue to the Group very soon. We are looking forward to the future prospect of the DNA security service and DNAPAY service due to that the above mentioned parties have been adopting our technology and services in their businesses. It is expected that DNAPAY will be well received by users in China and Hong Kong and will provide better return to the Group in the near future.

Furthermore, the electronic payment platform, EPAY, which is developed by Beijing Superpass e-payment Co. Ltd., a jointly controlled entity formed between the Group and Beijing Municipal Administration & Communications Card Co. Ltd. (BMACC), had been delayed to commerce business. It is believed that EPAY would be fully operative in Beijing very soon.

The Group’s financial information service (WINFCS) recorded a turnover of HK$2.53 million which accounted for 63% of the total turnover. The Group aimed at developing WINFCS which will provide users with wireless services to access various information while they are traveling. Moreover, users will be supported to access into WINFCS by using PDA and mobile phone in near future.

In January and February 2006, the Group entered into the acquisition agreements respectively with Barta Holdings Limited and Feliz Group Limited for acquiring total 21% issued share capital of MPIL. MPIL had been vested with the rights of oil and gas exploitation and operation in respect of Oilfield Block 2104 by OMNIS for a minimum term of 25 years.

The Engineering Technology Research Institute, Liaohe Petroleum Exploration Bureau (the “ PRC Institution ”) was engaged to conduct fieldwork search of Oilfield Block 2104 and prepared a geological assessment report dated 22 February 2006. In the report, the PRC Institution estimated that the crude oil reserve of Oilfield Block 2104 amounting to 21.2 x 108 tons. Based on the results of such report, the Company estimates that the crude oil reserve of Oilfield Block 2104 amounts to not less than 15 billion barrels. On 29 May 2006, Dr. Wang Tao (“ Dr. Wang ”), the former minister at the Ministry of Petroleum Industry in China, has been appointed as a senior consultant of MPIL. The main duty of Dr. Wang is to direct and co-ordinate the exploration and development of Oilfield Block 2104. It is known to us that the investment and its performance in Madagascar were appreciated

– 106 –

APPENDIX IV MANAGEMENT DISCUSSION AND ANALYSIS

and recognized by the PRC senior official. With the anticipated economic growth in the world, the directors expect that the nationwide oil and gas consumption demand would continue to rise. The acquisition represents a good opportunity for the Group to invest in the oil and gas exploitation and operation in Madagascar. The Group will enjoy these benefits through this acquisition in the coming years.

Net Asset Value

As at 30 June 2006, the Group’s total net asset amounted to HK$174 million, represented an increase of HK$132 million comparing to last year ended 30 June 2005. The significant increase in asset value was attributable to new capital injection of approximately HK$213.8 million that was raised by placement of 602.1 million new shares (Shares after consolidation) and by exercise of share option of 7.22 million new shares (Shares after consolidation) during the current year. During the same year, the Group re-purchased 13.45 million shares (Shares after consolidation) at the prices from HK18.0 cents to HK24.0 cents per share (Shares after consolidation) from the market.

A capital reorganization exercise was conducted in March 2006 of which every six old shares was consolidated into one new share of the Company (the “ Share Consolidation ”) and the paid up capital of the consolidated new shares was reduced from HK$0.06 per share to HK$0.01 per share by cancellation of HK$0.05 paid up capital for each consolidated new share (the “ Reduction of Capital ”) (the “ Capital Reorgainisation ”). With a view to facilitating any capital fund-raising exercise in the future, the directors considered that the Capital Reorganisation would provide flexibility to the Company to issue new shares which was in the interest of the Company and the Shareholders as whole. A credit of approximately HK$119.97 million was aroused as a result of the Capital Reduction and credited to the contributed surplus account of the Company and applied for the partial elimination of the accumulated losses of the Company.

Liquidity and Financial Resources

The Group recorded a net cash outflow of approximately HK$8.28 million during the year. At 30 June 2006, cash and bank balances of the Group amounted to approximately HK$2.98 million (2005: HK$11.23 million). Bank and other borrowings of the Group as at the same date amounted to approximately HK$1.94 million (2005: HK$12.82 million). At 30 June 2006, the bank deposits of HK$5.11 million (2005: Nil) was pledged to a bank to secure the general banking facility granted to a subsidiary.

The Group’s bank and other borrowings were denominated as to 100% in Renminbi. The Group conducted most of its business in Renminbi, United States dollars and Hong Kong dollars so that it does not have any significant exposure to foreign exchange fluctuation.

The Group’s gearing ratio, expressed as the percentage of the Group’s total borrowings over shareholders’ equity, was approximately 1.1% at 30 June 2006.

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APPENDIX IV MANAGEMENT DISCUSSION AND ANALYSIS

On 22 September 2005, a net cash proceed of HK$127 million was raised through placing of 353.33 million of new ordinary shares (Shares after consolidation), of which HK$56 million was used to acquire 21% interests of Madagascar Petroleum International Limited for investment purpose in January and March 2006 and HK$9 million was paid as a deposit for acquiring an office property for own use in Beijing in March 2006.

Business Outlook

During the year under review, business result was not satisfactory despite the continued hard work and dedication of our people in improving the performance of the business products and services on one hand and in exploring and developing business opportunities in China and Hong Kong on the other hand. The management will throw more energy on reviewing the operating environment and its own business portfolio in Madagascar, the PRC and Hong Kong so as to put the situation into context. The Group will continue take measures to enhance cost control and to improve operational efficiency and positively respond to the market situation. In view of the promising future for our full range of products and services under the atmosphere of the continued e-banking and e-commerce boom in both Hong Kong and China, the Group will continue to place emphasis on these markets and to explore business opportunities on its existing foundation.

In the second half year of 2006, the MPIL will continue to conduct geological and scientific research of oilfields exploration and development of oil and gas. Following Dr. Wang Tao’s participation in the fieldwork of Oilfield Block 2104, it is believed that MPIL’s pre-exploration preparation of Oilfield Block 2104 will largely be enhanced.

On 25 September 2006, the Group entered into agreements to acquire 10% interests in a company with a goal of providing DNAPAY service to more financial institutions in Shenzhen. The Group will broaden our customer base and recruit more merchants using DNAPAY service in Shenzhen under the co-operative plan with the invested company.

The Group has identified a huge potential market for mobile email services. We address the ever-increasing needs of mobile email for any mobile user with or without data services enabled. With our services, a user can be notified when an email arrives, caller display will inform who send the email. User holds the decision which emails should be informed. The Group is actively engaged with major telecom operators, email providers and system integrators to launch mobile email services branded “EmailCallYou”. Since “EmailCallYou” services are innovative, they create values to all parties. We believe our win-win revenue sharing model with partners will help the Group quickly penetrating into the market and gain significant market share. In the medium to long term, this business will provide promising return to the Group.

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APPENDIX IV MANAGEMENT DISCUSSION AND ANALYSIS

FOR THE YEAR ENDED 30 JUNE 2005

Results

Turnover of the Group for the year ended 30 June 2005 was HK$3.33 million compared to HK$3.27 million in the same period of 2004, representing an increase of 1.8%. Gross loss from operation was HK$0.02 million compared to HK$1.00 million in the same period of 2004, representing a decrease of 98.0%. Loss for the year (excluding interest, taxation, depreciation, impairment loss or amortization of intangible asset) was HK$30.09 million compared to HK$32.13 million in the same period of 2004, representing a decrease of 6.3%. Loss attributable to shareholders was HK$71.41 million compared to HK$35.71 million, representing an increase of approximately 100%. The enlarged loss was mainly due to the impairment loss recognised in respect of the intangible asset – patents and technology amounting to HK$38.28 million, the loss arising from the adoption of the new HKFRS and the additional operating expenses incurred due to establishment of a sales office in Beijing. Loss per share for the current year was HK0.67 cents compared to HK0.48 cents for the corresponding period in 2004, representing an increase of approximately 39.6%.

Business Review

e-banking and e-business continued to report a strong growth in China and Hong Kong. However, banks in both China and Hong Kong were prioritizing their resources in competing for higher market share in this regard and leaving little effort in enhancing the security of their systems at this stage, though understood to be mandatory in the immediate future. As a result, we were not able to sign up more user banks during the period despite the fact that strong interests of our products have been shown from prospective user banks.

Our product range has been expanded to include frontend e-business applications for commercial as well as the banking sector. With the introduction of our present webbased electronic payment platform and newly developed web based e-business development tools for business entities, we are now able to provide banks and their corporate customers with one-stop total solution for their e-business development. This expansion of our business scope will warrant our competitiveness in the market place and diversify our revenue opportunities into e-commerce and benefit from the e-commerce boom.

Despite the huge extension in business coverage and adoption of a more competitive human resources policy to attract new talents to join the Group and retaining those loyal and competent staff, we still managed to control our operational cost at a reasonable level. The total number of staff under the Group’s employment did not increase comparably and maintained at 63 (including executive directors) as at 30 June 2005.

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APPENDIX IV

MANAGEMENT DISCUSSION AND ANALYSIS

DNA Security Business

Banks in PRC continued to focus their effort in preparing for the competition upon the opening up of the banking industry to foreign participation at the end of 2006. In response, they were occupied in operational restructuring, personnel adjustment, system upgrade for core business in improving operation efficiency and new capital injection. Our sales, therefore, remained stagnant due to these unfavorable market conditions. Meanwhile, banks in Hong Kong and Macau focused their effort in capturing business opportunities arising from CEPA and RMB business, the demand for back-end security products for e-banking was also adversely affected. As a result, we were not able to sign up new user bank during the year.

DNA service recorded a loss of HK$8.30 million compared to HK$8.86 million in the same period of 2004, representing a decrease of 6.3%. The loss for the year was mainly due to the expenses incurred in establishing a Beijing office, operating expenses of Shenzhen office and more active marketing and sales activities.

Amongst the three partner banks that had implemented DNA system, two partner banks already launched DNA service. The number of subscribers though fell short of our expectation was growing steadily.

The remaining one partner bank has delayed the launch of DNA service to synchronize with the completion date of their project in centralizing their data processing operation in their centralized computer system. The Group and the management of its subsidiaries in the China have been working very closely with the partner banks in promoting DNA service. It is expected that the number of subscribers will reach a reasonable level in 2006.

DNAPAY - a web based e-payment platform

DNAPAY platform allows retailers/merchants to collect payments electronically from purchasers’ bank cards/accounts or any prepaid financial instruments at all sales channels via www.stareps.com. These sales channels include Internet-shops, television shopping channels, telephone and mail orders, collectively known as virtual channels and at the traditional retail shops.

It is anticipated that the DNAPAY platform, jointly offered with Shenzhen Development bank in China, is to be operational in before the end of 2005. DNAPAY will offer the bank’s cardholder and merchant a brand new innovative e-payment/e-payment collection service. It is anticipated that DNAPAY will be well received by users due to its fraud prevention capability and user-friendliness. As we are entitled to share the payment settlement commission chargeable to merchants from our partner banks, it is expected that DNAPAY will contribute significant commission revenue to the Group when capitalizing on the fast growing e-commerce business in China and Hong Kong in the near future.

– 110 –

APPENDIX IV MANAGEMENT DISCUSSION AND ANALYSIS

In addition, www.stareps.com started offering e-business development tools, which include building of web site; on-line inventory control; member loyalty program; SMS/ MMS/Email communication gateway and issuance/redemption facilities, to merchants in setting up their own electronic operation at minimal cost. This paid service will not only able to broaden our revenue base but also enabling Shenzhen Development bank to recruit more merchants to use DNAPAY service.

Furthermore, the electronic payment platform, EPAY, which is developed by Beijing Superpass e-payment Co. Ltd., a jointly controlled entity formed between the Group and Beijing Municipal Administration & Communications Card Co. Ltd., (BMACC) is due operational in November 2005 in Beijing. Apart from being an e-payment platform, EPAY has been trying to expand its business scope to electronic ticketing services using IC card issued by BMACC. It could be used electronically as an access identification device or ticket claiming identification at events venues to prevent forgery tickets. We are exploring the possibility of using the system for Olympic ticket issuance and access control in 2008.

It is anticipated that there will be no further capital injection into the jointly controlled entity in the near future.

Member Services

With the anticipated fast growing DNA users in China for both individuals and merchants, a member club has been formed to offer registered club members a wide range of benefits in Hong Kong, Macau and China as part of our DNA subscription campaign at banks. This club is operating under a company, DNA Club Ltd. (to be renamed as Supreme Zone Limited). It is planned to offer to our business partners an access to our members at a nominal fee to cover our operating expenses at the early stage. When our memberships grow to a target level, we will offer more paid services to our members and business partners alike and turn the club into a revenue generating business unit.

Financial Information Service (WINFCS)

For the year ended 30 June 2005, WINFCS, an on-line and instant financial information services providing real time Hong Kong stock quotation and financial news; commentaries and information of Hong Kong listed companies to the professional and individual investors in Hong Kong & China, reported a gross profit of HK$192,000.

It is believed that the subscribers base of WINFCS will be increased due to the improved investment market conditions in Hong Kong and new services features to be launched before end of this year to make WINFCS more competitive in the market place.

Net Asset Value

As at 30 June 2005, the Group’s total net asset amounted to HK$42.07 million, represented a decrease of HK$41.30 million comparing to last year ended 30 June 2004. The significant reduction in asset value was attributable to the impairment loss of intangible asset amounting to HK$38.28 million plus the HK$2.45 million loss arising from the adoption of new HKFRS.

– 111 –

APPENDIX IV MANAGEMENT DISCUSSION AND ANALYSIS

Based on the total number of 10,820,340,165 ordinary shares issued as at 30 June 2005, net asset value per share was HK0.39 cents, a decrease of 51.9% comparing with HK0.81 cents per share as at 30 June 2004.

Liquidity and Financing

The Group’s bank balance and cash decreased by HK$1.41 million to HK$11.23 million as at 30 June 2005. The decrease was represented by cash inflow of HK$28.99 million from placement of new shares and exercise of share option minus HK$28.08 million being used for operating activities and HK$1.17 million used as cash advanced and paid up capital for our 50% interest in a jointly controlled entity, Beijing Superpass e-payment Co Ltd.

Other than the convertible note in the face value of HK$15.9 million which bear interest at 2% per annum, there were no other material contingent liabilities and no bank loan for the Group as at 30 June 2005. Also there was no asset of the Group being charged nor pledged.

On 22 September 2005, a net proceed of HK$127 million was raised via placing of 2.12 billion of new ordinary shares. It is planned that HK$62 million will be used as general working capital and products and brand name promotion and balance of HK$65 million will be reserved for investment purpose.

Business Outlook

During the year under review, business result was not satisfactory despite the continued hard work and dedication of our people in exploring and developing business opportunities in China, Hong Kong and Macau. However, business for our full range of products remains promising due to the continued e-banking and ecommerce boom in both Hong Kong and China and implementation of the new business plan as mentioned in our chairman’s statement. It is expected that the Group’s performance will improve gradually in the years to come.

– 112 –

APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

A summary of the published results and of the assets and liabilities of SUNPEC for the last three financial years ended 31 March 2008, as extracted from the relevant results announcement and annual reports of SUNPEC, is set out below:

AUDITED FINANCIAL INFORMATION FOR THE YEAR ENDED 31 MARCH 2008

CONSOLIDATED INCOME STATEMENT

For the year ended 31 March 2008

Notes Turnover 4 Cost of sales Gross profit Other revenue 4 Other income 5 Excess of acquirer’s interest in fair value of acquiree’s identifiable net asset over costs 6 Selling and distribution costs Administrative expenses Profit from operating activities 5 Finance costs 7 Profit before taxation Taxation 8 Profit for the year Attributable to equity holders of the parent Earnings per share 9 Basic Diluted	2008 HK$’000 1,712,962 (1,646,520) 66,442 520 – 1,910,182 (13,041) (24,320) 1,939,783 (4,044) 1,935,739 (6,370) 1,929,369 1,929,369 HK49.64 cents HK49.06 cents	2007 HK$’000 554,686 (527,244) 27,442 685 967 – (1,437) (16,785) 10,872 – 10,872 (2,809) 8,063 8,063 HK0.63 cents HK0.62 cents

– 113 –

APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

CONSOLIDATED BALANCE SHEET

At 31 March 2008

Notes ASSETS Non-Current Assets Property, plant and equipment Investment property Intangible assets Exploration and evaluation assets 11 Goodwill Current Assets Trade receivables 12 Prepayments, deposits and other receivables Bank deposit Cash and bank balances Total Assets EQUITY Capital and reserves attributable to the Company’s equity holders Share capital Reserves Total Equity LIABILITIES Current Liabilities Trade payables 13 Tax payable Other payables and accruals Amounts due to a holding company Amounts due to related companies Non-Current Liabilities Deferred taxation Total Liabilities Total Equity and Liabilities Net Current Assets Total Assets Less Current Liabilities	2008 HK$’000 1,175 12,285 249,842 5,615,126 2,364 5,880,792 144,121 162,767 – 228,457 535,345 6,416,137 92,835 6,084,199 6,177,034 145,573 37,619 28,036 2,911 22,314 236,453 2,650 239,103 6,416,137 298,892 6,179,684	2007 HK$’000 624 – – – –
		624
		136,797 57,877 6,415 90,062
		291,151
		291,775

		26,334 185,751
		212,085
		41,212 31,249 4,878 2,351 –
		79,690
		–
		79,690
		291,775

		211,461

		212,085

– 114 –

APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

NOTES:

1. BASIS OF PREPARATION

The measurement basis used in preparation of the consolidated financial statements is historical cost convention except for certain investment property, financial assets and liabilities, exploration and evaluation assets and intangible assets have been carried at fair value.

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

2. APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS

In the current year, the Group has applied, for the first time, a number of new standards, amendments and interpretations (the “new HKFRSs”) issued by the HKICPA, which are effective for the Group’s accounting periods beginning on 1 April 2007. The new HKFRSs adopted by the Group in the financial statements are set out as follows:

HKAS 1 (Amendment) Presentation of Financial Statements: Capital Disclosures HKFRS 7 Financial Instruments: Disclosures HK(IFRIC) – Int 8 Scope of HKFRS 2 HK(IFRIC) – Int 9 Reassessment of Embedded Derivatives HK(IFRIC) – Int 10 Interim Financial Reporting and Impairment HK(IFRIC) – Int 11 HKFRS 2 – Group and Treasury Share Transactions

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

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

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

HKAS 1 (Revised) Presentation of Financial Statements[1] HKAS 23 (Revised) Borrowing Costs[1] HKAS 27 (Revised) Consolidated and Separate Financial Statements[2] HKFRS 2 (Amendment) Share-bases Payment – Vesting Conditions and Cancellations[1] HKFRS 3 (Revised) Business Combinations[2] HKFRS 8 Operating Segments[1] HK(IFRIC) – Int 12 Service Concession Arrangements[3] HK(IFRIC) – Int 13 Customer Loyalty Programmes[4] HK(IFRIC) – Int 14 HKAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction[3]

1 Effective for annual periods beginning on or after 1 January 2009
2 Effective for annual periods beginning on or after 1 July 2009
3 Effective for annual periods beginning on or after 1 January 2008
4 Effective for annual periods beginning on or after 1 July 2008

– 115 –

APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

3. BUSINESS AND GEOGRAPHICAL SEGMENTS

Segment information is presented by way of two segment formats: (i) on a primary segment reporting basis, by business segment; and (ii) on a secondary segment reporting basis, by geographical segment.

The Group’s operating businesses are structured and managed separately, according to the nature of their operations and the products and services they provided. Each of the Group’s business segments represents a strategic business unit that offers products and services which are subject to risks and returns that are different from those of the other business segments. Summary details of the business segments are as follow:

(a) the polyurethane (“PU”) materials segment involves the trading of PU materials, such as isocyanate, polyols and various kinds of PU catalysts; and
(b) the fuel oil segment.

In determining the Group’s geographical segments, revenue and results are attributed to the segments based on the location of the customers, and assets are attributed to the segments based on the location of the assets.

(a) Business segments

The following tables present revenue, profit and certain asset, liability and expenditure information for the Group’s business segments.

The Group

Segment revenue: Sales to external customers Total revenue Segment results Interest income Unallocated income Excess of acquirer’s interest in fair value of acquiree’s identifiable net asset over costs Gain on disposal of subsidiaries Unallocated expenses Profit from operating activities Finance costs Profit before taxation Taxation Net profit from ordinary activities attributable to shareholders	PU materials 2008 2007 HK$’000 HK$’000 400,060 554,686 400,060 554,686 19,716 22,407 – 571	Fuel oil 2008 2007 HK$’000 HK$’000 1,312,902 – 1,312,902 – 46,726 – – –	Oil, gas exploration, exploitation and operation 2008 2007 HK$’000 HK$’000 – – – – – – – –	Consolidated 2008 2007 HK$’000 HK$’000 1,712,962 554,686 1,712,962 554,686 66,442 22,407 510 685 10 – 1,910,182 – – 571 (37,361 ) (12,791) 1,939,783 10,872 (4,044 ) – 1,935,739 10,872 (6,370 ) (2,809 ) 1,929,369 8,063

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APPENDIX V

FINANCIAL INFORMATION OF THE SUNPEC GROUP

Oil, gas exploration, exploitation PU materials Fuel oil and operation 2008 2007 2008 2007 2008 2007 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Balance Sheet Segment assets 271,458 276,645 137,202 15,130 5,616,208 – Intangible assets Unallocated assets Total assets Segment liabilities 59,014 66,673 106,950 – 24,014 – Unallocated liabilities Total liabilities Other segment information: Depreciation 151 269 – – 183 – Capital expenditure 143 390 – – 308 –	Consolidated 2008 2007 HK$’000 HK$’000 6,024,868 291,775 249,842 – 141,427 – 6,416,137 291,775 189,978 66,673 49,125 13,017 239,103 79,690 334 269 451 390	Consolidated 2008 2007 HK$’000 HK$’000 6,024,868 291,775 249,842 – 141,427 – 6,416,137 291,775 189,978 66,673 49,125 13,017 239,103 79,690 334 269 451 390
		291,775

		66,673 13,017
		79,690

		269 390

(b) Geographical segments

During the year ended 31 March 2008 and 2007, the Group’s entire turnover was derived from sales in the PRC, no geographical segmental information on turnover were presented.

At 31 March 2008, more than 90% of the Group’s assets were located at the Madagascar and at 31 March 2007, more than 90% of Group’s assets were located at the PRC, no geographical segmental information on assets is presented.

4. TURNOVER AND OTHER REVENUE

Turnover represents the net invoiced value of good sold, after allowances for returns and trade discounts. All significant intercompany transactions have been eliminated on consolidation.

An analysis of the Group’s turnover and other revenue are as follows:

Turnover Sale of PU materials Sale of fuel oil Other revenue Bank interest income Others	The Group 2008 2007 HK$’000 HK$’000 400,060 554,686 1,312,902 – 1,712,962 554,686 510 685 10 – 520 685	The Group 2008 2007 HK$’000 HK$’000 400,060 554,686 1,312,902 – 1,712,962 554,686 510 685 10 – 520 685
		554,686

		685 –
		685

– 117 –

APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

Other revenue analysed by category of asset is as follows:

Loan and receivables (including cash and bank balances) Non-financial assets	2008 HK$’000 510 10 520	2007 HK$’000 685 –
		685

5. PROFIT FROM OPERATING ACTIVITIES

The Group’s profit from operating activities is arrived at after charging:

Cost of inventories sold Auditors’ remuneration Depreciation Impairment loss recognised in respect of goodwill Minimum lease payments under operating lease in respect of rented premises Staff costs (including Directors’ remuneration): Salaries and wages Mandatory provident fund contributions and after crediting: Other income Gain on disposal of subsidiaries Exchange gain, net	2008 HK$’000 1,646,520 400 334 – 1,448 9,703 131 – – –	2007 HK$’000 527,224 400 269 25 1,774 5,597 70

		571 396
		967

6. ACQUISITIONS OF SUBSIDIARIES

(a) Acquisition of Madagascar Energy International Limited (“MEIL”)

On 3 January 2007, the Company entered into a sale and purchase agreement to acquire 93% issued share capital of MEIL from Golden Nova Holdings Limited for a total provisional consideration of HK$800 million. The acquisition was completed on 4 June 2007. As at the date of completion of the acquisition, the fair value of the cost of the acquisition was approximately HK$3,210,142,000.

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APPENDIX V

FINANCIAL INFORMATION OF THE SUNPEC GROUP

The net assets acquired in the transaction and the excess of acquirer’s interest in fair value of acquiree’s identifiable net assets over cost arising is as follows:

Net assets acquired: Property, plant and equipment Deposits Cash and bank balances Amount due to related companies Exploration rights 100% equity interest of MEIL Acquisition of 93% equity interest in MEIL Excess of acquirer’s interest in fair value of acquiree’s identifiable net assets over cost_(note i) Total consideration satisfied by: Cash consideration Issue of bond Issue of shares(note iii) Issue of convertible note(note iv)_ Total consideration Net cash outflow arising on acquisition: Cash and bank balances acquired Cash consideration	Acquiree’s carrying amount HK$’000 608 18 1,702 (9,903) – (7,575) (7,045)	Fair value adjustment HK$’000 – – – – 5,507,575 5,507,575 5,122,045	Fair value HK$’000 608 18 1,702 (9,903) 5,507,575 5,500,000 5,115,000 (1,904,858) 3,210,142 10,000 85,956 2,825,000 289,186 3,210,142 1,702 (10,000) (8,298)

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APPENDIX V

FINANCIAL INFORMATION OF THE SUNPEC GROUP

(b) Acquisition of Dolaway Group Limited (Dolaway)

On 5 September 2007, the Company entered into a sale and purchase agreement to acquire 100% issued share capital of Dolaway from Good Progress Group Limited for a consideration of HK$12 million. The acquisitions were completed on 10 January 2008.

Net assets acquired: Investment property Other receivables Deferred tax liabilities Goodwill Total consideration satisfied by: Cash consideration Net cash outflow arising on acquisition: Cash consideration	Acquiree’s carrying amount HK$’000 12,285 1 (2,650) 9,636	Fair value adjustment HK$’000 – – – –	Fair value HK$’000 12,285 1 (2,650) 9,636 2,364 12,000 12,000 (12,000)

(c) Acquisition of Madagascar Energy International Gas Station Group Limited (MEIGSGL)

On 5 September 2007, the Company entered into a sale and purchase agreement to acquire 100% issued share capital of MEIGSGL from Good Progress Group Limited for a consideration of HK$248 million. The acquisitions were completed on 10 January 2008. As at the date of completion, the fair value of the cost of acquisition was approximately HK$244,497,000.

Acquiree’s carrying amount HK$’000 Net assets acquired: Amount due to related companies (21) Intangible assets – (21) Excess of acquirer’s interest in fair value of acquiree’s identifiable net assets over cost_(note i) Total consideration satisfied by: Cash consideration, including transaction cost Issue of shares(note iii)_ Net cash outflow arising on acquisition: Cash consideration paid	Fair value adjustment HK$’000 – 249,842 249,842	Fair value HK$’000 (21) 249,842 249,821 (5,324) 244,497 48,664 195,833 244,497 (33,664)

– 120 –

APPENDIX V

FINANCIAL INFORMATION OF THE SUNPEC GROUP

(d) Summary of the acquisition of the subsidiaries is set out as follow:

Acquiree’s carrying amount Fair value adjustment Effective interest acquired Effective net assets acquired Goodwill Excess of acquirer’s interest in fair value of acquiree’s identifiable net assets over cost_(note i) Total consideration satisfied by: Cash consideration, including transaction cost Issue of bond Issue of shares(note iii) Issue of Convertible Note(note iv)_ Total consideration Net cash outflow arising on acquisition: Cash and bank balances acquired Cash consideration paid, including transaction cost	MEIL HK$’000 (7,575) 5,507,575 5,500,000 93% 5,115,000 – (1,904,858) 3,210,142 10,000 85,956 2,825,000 289,186 3,210,142 1,702 (10,000) (8,298)	Dolaway HK$’000 9,636 – 9,636 100% 9,636 2,364 – 12,000 12,000 – – – 12,000 – (12,000) (12,000)	MEIGSGL HK$’000 (21) 249,842 249,821 100% 249,821 – (5,324) 244,497 48,664 – 195,833 – 244,497 – (33,664) (33,664)	Total HK$’000 2,040 5,757,417 5,759,457 N/A 5,374,457 2,364 (1,910,182) 3,466,639 70,664 85,956 3,020,833 289,186 3,466,639 1,702 (55,664) (53,962)

Note:

i. In the opinion of the directors of the Company, the excess of acquirer’s interest in fair value of acquiree’s identifiable net assets over cost arose in the business combination is mainly attributable to the increase in the fair value of the right in exploration, exploitation and operation in the oilfield block 3113 in Madagascar and the right in import, transportation and distribution of petroleum in Madagascar. The excess were recognised in the consolidated income statement immediately.
ii. MEIL, Dolaway and MEIGSGL acquired during the year ended 31 March 2008 attributed loss of approximately HK$1,909,000, HK$9,000 and HK$10,000 to the Group’s profit after taxation respectively. None of these subsidiaries acquired during the year contribute any revenue to the Group.
iii. The share considerations for acquisition of MEIL and MEIGSGL were settled through issue of 1,250,000,000 shares and 138,888,889 respectively. The fair values of the share considerations were determined in accordance with the quoted market price of the Company’s share as at the completion date of the acquisition.
iv. The fair value of the convertible notes issued has been arrived at on the basis of a valuation carried out on the completion date of the acquisition by Messers. BMI Appraisal Limited, independent qualified professional valuers not connected with the Group. The valuation was arrived at by reference to discounted cash flow method and binomial method.

– 121 –

APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

7. FINANCE COSTS

			2008	2007
			HK$’000	HK$’000
Interest expenses on bond – wholly repayable within	5	years	4,044	–

8. TAXATION

No provision for Hong Kong profits tax has been made as the Group did not have assessable profits for the year (2007: Nil). Taxes on profits assessable elsewhere have been calculated at the rates of tax prevailing in the countries in which the Group operates, based on existing legislation, interpretations and practices in respect thereof.

	2008	2007
	HK$’000	HK$’000
Current year provision:
Overseas	6,370	2,809

9. EARNINGS PER SHARE

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

*Earnings* Earnings attributable to the equity holders of the Company for the purposes of basic and diluted earnings per share *Number of shares* Weighted average number of ordinary shares for the purpose of basic earnings per share Effect of dilutive potential ordinary shares: Share options Weighted average number of ordinary shares for the purpose of diluted earnings per share	2008 HK$’000 1,929,369 Number of 2008 ’000 3,886,389 46,577 3,932,966	2007 HK$’000 8,063

		shares 2007 ’000 1,271,772 28,150
		1,299,922

The denominators used are the same as those detailed above for both basic and diluted earnings per share.

10. DIVIDENDS

The directors do not recommend the payment of any dividend for the year ended 31 March 2008 (2007: Nil).

– 122 –

APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

11. EXPLORATION AND EVALUATION ASSETS

The Group

Cost At 1 April 2007 Acquisition of a subsidiary Additions At 31 March 2008	Exploration rights HK$’000 (Note i) – 5,507,575 – 5,507,575	Evaluation costs HK$’000 (Note ii) – – 107,551 107,551	Total HK$’000 – 5,507,575 107,551
			5,615,126

Note:

i. The exploration rights were obtained by the Group through acquisition of a subsidiary. For further details of the acquisition, please refer to Note 6.

The rights represent the oil, gas exploration, exploitation and operations rights and profit sharing rights at Madagascar Oilfield Block 3113, an onshore site for oil and gas exploration, exploitation and operation in Madagascar (“Oilfield Block 3113”). Depending on the rate of crude oil production, the Group will share the profit on a pre-agreed ratio in the range of 45% to 73% with the Office Des mines Natinales Et Des Industries Strategiques, a government office of the Republic of Madagascar (“OMNIS ”).

ii. The evaluation costs represents expenditure paid for provision of services on activities relating to evaluation of the technical feasibility and commercial viability of extracting oil and gas in Madagascar Oilfield Block 3113.

12. TRADE RECEIVABLES

The Group

Trade receivables, which generally have credit terms of 90 days, are recognised and carried at the original invoiced amount less provision for impairment loss.

An aged analysis of the trade receivables at the balance sheet date, based on invoiced date, is as follows:

Current to 30 days 31 days to 90 days Over 90 days	2008 HK$’000 120,139 23,982 – 144,121	2007 HK$’000 100,702 32,725 3,370
		136,797

The carrying amount of trade receivables approximate to their fair values.

Included in the Group’s trade receivables balance, trade receivables with a carrying amount of HK$1,451,000 (2007: HK$36,095,000) which are past due at the reporting date for which the Group has not provided for impairment loss. The Group does not hold any collateral over these balances.

– 123 –

APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

Ageing of trade receivables which are past due but not impaired

31-90 days Over 90 days	2008 HK$’000 1,451 – 1,451	2007 HK$’000 36,095 –
		36,095

13. TRADE PAYABLES

The Group

An aged analysis of the trade payables at the balance sheet date, based on invoice date, is as follows:

follows:
Current to 30 days 31 days to 90 days Over 90 days	2008 HK$’000 100,889 44,684 – 145,573	2007 HK$’000 41,212 – –
		41,212

The average credit period on purchases of is three months. The Group has financial risk management policies in place to ensure that all payables are paid within the credit timeframe.

– 124 –

APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

AUDITED FINANCIAL INFORMATION FOR THE YEAR ENDED 31 MARCH 2006 AND 2007

Set out below is a summary of the audited consolidated accounts of the Company for the year ended 31 March 2006 and 2007 as extracted from the 2007 annual report of the Company. References to page number in this section are to the page numbers of such annual report of the Company.

CONSOLIDATED BALANCE SHEET

at 31 March 2007

Notes ASSETS Non-Current Assets Property, plant and equipment 7 Current Assets Inventories 11 Trade receivables 12 Prepayments, deposits and other receivables Bank deposit Cash and bank balances Total Assets	2007 HK$’000 624 – 136,797 57,877 6,415 90,062 291,151 291,775	2006 HK$’000 541
		9,121 158,684 57,468 – 6,028
		231,301
		231,842

– 125 –

APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

Notes EQUITY Capital and reserves attributable to the Company’s equity holders Share capital 14(a) Reserves Total Equity LIABILITIES Current Liabilities Trade payables 16 Tax payable Other payables and accruals Amount due to a holding company 17 Non-Current Liabilities Deferred taxation 19 Total Liabilities Total Equity and Liabilities Net Current Assets Total Assets Less Current Liabilities	2007 HK$’000 26,334 185,751 212,085 41,212 31,249 4,878 2,351 79,690 – – 79,690 291,775 211,461 212,085	2006 HK$’000 23,940 152,500
		176,440

		15,758 28,411 5,916 5,234
		55,319

		83
		83
		55,402
		231,842

		175,982

		176,523

– 126 –

APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

BALANCE SHEET

at 31 March 2007

Notes ASSETS Non-Current Assets Interests in subsidiaries 10 Current Assets Bank deposit Cash and bank balances Total Assets EQUITY Capital and reserves attributable to the Company’s equity holders Share capital 14(a) Reserves 15 Total Equity LIABILITIES Current Liabilities Amount due to a holding company 17 Amounts due to subsidiaries 13 Other payables and accruals Total Liabilities Total Equity and Liabilities Net Current Liabilities Total Assets Less Current Liabilities	2007 HK$’000 118,875 6,415 18 6,433 125,308 26,334 78,734 105,068 – 19,785 455 20,240 20,240 125,308 (13,807) 105,068	2006 HK$’000 106,364 – 5,549 5,549 111,913 23,940 65,826 89,766 1,252 19,785 1,110 22,147 22,147 111,913 (16,598) 89,766

– 127 –

APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

CONSOLIDATED INCOME STATEMENT

for the year ended 31 March 2007

Notes Continuing operation Turnover 23 Cost of sales Gross profit Other revenue 23 Other income 24 Selling and distribution costs Administrative expenses Profit from operating activities 24 Finance costs 27 Profit before taxation Taxation 28 Profit for the year from continuing operation Discontinued operation Profit for the year from discontinued operation Profit for the year Attributable to equity holders of the Company Earnings per share From continuing and discontinued operations 31 Basic Diluted From continuing operation Basic Diluted	2007 HK$’000 554,686 (527,244) 27,442 685 967 (1,437) (16,785) 10,872 – 10,872 (2,809) 8,063 – 8,063 8,063 HK0.63 cents HK0.62 cents HK0.63 cents HK0.62 cents	2006 HK$’000 577,729 (554,719) 23,010 7 810 (1,720) (18,198) 3,909 (923) 2,986 (2,381) 605 14,962 15,567 15,567 HK1.30 cents HK1.14 cents HK0.05 cents N/A

– 128 –

APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 31 March 2007

Attributable to equity holders of the Company

At 1 April 2005 Redemption of convertible bond Net profit for the year At 31 March 2006 and 1 April 2006 Issue of shares_(Note i)_ Exchange difference arising on translation of foreign operations Net profit for the year At 31 March 2007	Share capital HK$’000 23,940 – – 23,940 2,394 – – 26,334	Reserves	Reserves		Subtotal HK$’000 138,950 (2,017) 15,567 152,500 25,137 51 8,063 185,751	Total HK$’000 162,890 (2,017) 15,567 176,440 27,531 51 8,063 212,085
		Share Contributed Convertible premium surplus reserve HK$’000 HK$’000 HK$’000 note (ii) 53,127 3,156 2,017 – – (2,017) – – – 53,127 3,156 – 25,137 – – – – – – – – 78,264 3,156 –	Exchange reserve HK$‘000 – – – – – 51 – 51	Retained profits HK$’000 80,650 – 15,567 96,217 – – 8,063 104,280

Note:

(i) During the year ended 31 March 2007, the Company placed 119,700,000 ordinary shares of HK$0.02 each to a placing price of HK$0.23. Further details are set out as Note 14(a) to financial statements.
(ii) The contribution surplus of the Group represents the difference between the nominal value of the share capital of the subsidiaries acquired pursuant to a reorganisation scheme (“the Group Reorganisation”) to rationalise the structure of the Group in preparation for the public listing of the Company’s shares on The Stock Exchange of Hong Kong Limited set out in the Company’s prospectus dated 30 March 2001, over the nominal value of the shares of the Company issued in exchange therefore.

– 129 –

APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

CONSOLIDATED CASH FLOW STATEMENT

for the year ended 31 March 2007

Notes Cash flows from operating activities Profit before taxation Continuing operation Discontinued operation Adjustments for: Interest income Depreciation Impairment loss recognised in respect of goodwill Gain on disposal of property, plant and equipment Gain on disposal of subsidiaries Finance costs Operating profit before working capital changes Decrease in inventories Increase in financial assets at fair value through profit or loss Decrease/(increase) in trade receivables Increase in prepayment, deposits and other receivables Increase in trade payables Decrease in amount due to a holding company Decrease in other payables and accruals Cash generated from/(used in) operations Interest received Net cash inflow/(outflow) from operating activities	2007 HK$’000 10,872 – 10,872 (685) 269 25 – (571) – 9,910 9,121 – 21,887 (418) 25,469 (4,111) (259) 61,599 685 62,284	2006 HK$’000 2,986 14,962 17,948 (7) 2,117 – (772) (18,638) 3,591 4,239 6,072 (153) (7,305) (4,691) 2,114 (8,024) (13,679) (21,427) 7 (21,420)

– 130 –

APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

Notes Cash flows from investing activities Sales proceeds from disposal of property, plant and equipment Purchases of property, plant and equipment Proceeds from acquisition of subsidiaries, net 20 Proceeds from disposal of subsidiaries, net 21 Net cash inflow from investing activities Cash flows from financing activities Capital element of finance lease payments Redemption of convertible bond Finance costs paid Issue of shares Net cash inflow/(outflow) from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Effect of exchange rate changes on the balance of cash held in foreign currencies Cash and cash equivalents at end of year Analysis of balances of cash and cash equivalents Bank deposit Cash and bank balances Cash and cash equivalent at end of year	2007 HK$’000 – (390) 1,203 (268) 545 – – – 27,531 27,531 90,360 6,028 89 96,477 6,415 90,062 96,477	2006 HK$’000 1,856 (33) – 50,716 52,539 (1,856) (26,813) (2,668) – (31,337) (218) 6,246 – 6,028 – 6,028 6,028

– 131 –

APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

NOTES TO FINANCIAL STATEMENTS

31 March 2007

1. CORPORATE INFORMATION

The Company was incorporated in Bermuda on 5 January 2001 as an exempted company with limited liability under the Companies Act 1981 of Bermuda and its shares are listed on The Stock Exchange of Hong Kong Limited. The registered office and the principal place of business of the Company are disclosed in the corporate information section of the annual report.

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

The Company acts as an investment holding company while its subsidiaries are engaged in the trading of polyurethane materials.

The directors consider the ultimate holding company to be Wisdom On Holdings Limited, a company incorporated in the British Virgin Islands.

2. APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS (“HKFRSs”)

In the current year, the Group has applied, for the first time, a number of new standard, amendments and interpretations (the “new HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”), which are either effective for accounting periods beginning on or after 1 December 2005 or 1 January 2006. The new HKFRSs adopted by the Group in the financial statements are set out as follows:

HKAS 19 (Amendment)	Actuarial Gains and Losses, Group Plans and
	Disclosures
HKAS 21 (Amendment)	Net Investment in a Foreign Operation
HKAS 39 & HKFRS 4 (Amendments)	Financial Guarantee Contracts
HKAS 39 (Amendment)	The Fair Value Option
HKAS 39 (Amendment)	Cash Flow Hedge Accounting of Forecast
	Intragroup Transactions
HKFRS 6	Exploration for and Evaluation of Mineral Resources
HK(IFRIC) – Int 4	Determining whether an Arrangement contains a
	Lease
HK(IFRIC) – Int 5	Rights to Interests arising from Decommissioning,
	Restoration and Environmental Rehabilitation
	Funds
HK(IFRIC) – Int 6	Liabilities arising from Participating in a Specific
	Market – Waste Electrical and Electronic
	Equipment
HK(IFRIC) – Int 7	Applying the Restatement Approach under HKAS
	29 Financial Reporting in Hyperinflationary
	Economies

The adoption of these new and revised standards and interpretation has had no material effect on these financial statements.

The Company and Group have not early applied the following new standards, amendments or interpretations that have been issued but are not yet effective. The Group is not yet in a position to determine whether these standards and interpretations will have significant impact on how the results of operations and financial position are prepared and presented. These standards and interpretations may result in changes in the future as to how the results and financial position are prepared and presented.

– 132 –

APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

HKAS 1 (Amendment) Capital Disclosures[1] HKAS 23 (Revised) Borrowing cost[2] HKFRS 7 Financial Instruments: Disclosures[1] HKFRS 8 Operating Segments[2] HK(IFRIC) – Int 8 Scope of HKFRS 2[3] HK(IFRIC) – Int 9 Reassessment of Embedded Derivatives[4] HK(IFRIC) – Int 10 Interim Financial Reporting and Impairment[5] HK(IFRIC) – Int 11 HKFRS 2 – Group and Treasury Share Transactions[6] HK(IFRIC) – Int 12 Service Concession Arrangements[7]

1 Effective for annual periods beginning on or after 1 January 2007
2 Effective for annual periods beginning on or after 1 January 2009
3 Effective for annual periods beginning on or after 1 May 2006
4 Effective for annual periods beginning on or after 1 June 2006
5 Effective for annual periods beginning on or after 1 November 2006
6 Effective for annual periods beginning on or after 1 March 2007
7 Effective for annual periods beginning on or after 1 January 2008

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The measurement basis used in preparation of the financial statements is historical cost convention except for certain financial assets and liabilities are measured at fair value.

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

These consolidated financial statements are presented in thousands of units of HK dollars (HK$’000), unless otherwise stated.

(a) Basis of consolidation

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

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

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

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

(b) Business combination

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 recognised 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 recognised and measured at fair value less costs to sell.

– 133 –

APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

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

(c) Goodwill

Goodwill arising on acquisitions prior to 1 January 2005

Goodwill arising on an acquisition of a subsidiary or a jointly controlled entity for which the agreement date is before 1 January 2005 represents the excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable assets and liabilities of the relevant subsidiary or the relevant jointly controlled entity at the date of acquisition.

For previously capitalised goodwill arising on acquisitions of subsidiaries, the Group has discontinued amortisation from 1 January 2005 onwards, and such goodwill (net of cumulative amortisation at 31 December 2005) is tested for impairment annually, and whenever there is an indication that the cash generating unit to which the goodwill relates may be impaired (see the accounting policy below).

Goodwill arising on acquisitions on or after 1 January 2005

Goodwill arising on an acquisition of a subsidiary or a jointly controlled entity (which is accounted for using proportionate consolidation) for which the agreement date is on or after 1 January 2005 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 or jointly controlled entity at the date of acquisition. Such goodwill is carried at cost less any accumulated impairment losses.

Capitalised goodwill arising on an acquisition of a subsidiary or a jointly controlled entity 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 recognised directly in the consolidated income statement. An impairment loss for goodwill is not reversed in subsequent periods.

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

– 134 –

APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

(d) Impairment of assets

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

(e) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods provided in the normal course of business, net of discounts and sales related taxes.

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

(f) Property, plant and equipment

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

Depreciation is provided on the reducing balance method so as to write down the cost of property, plant and equipment to their realisable value over their anticipated useful lives at the following annual rates:

Land use rights	:	Over the unexpired terms of the leases
Building	:	Over the unexpired terms of the leases
Plant and machinery	:	20% – 30% on the reducing balance method
Furniture, fixtures and equipment	:	20% – 30% on the reducing balance method
Motor vehicles	:	30% on the reducing balance method

(g) Leasing

– 135 –

APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

The Group as lessee

(h) Foreign currencies translation

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. Nonmonetary 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. Nonmonetary 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 recognised 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 recognised in equity in the consolidated financials statements. 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 nonmonetary items in respect of which gains and losses are recognised directly in equity, in which cases, the exchange differences are also recognised directly in equity.

For the purposes of presenting the consolidated financial statements, 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 recognised as a separate component of equity (the translation reserve). Such exchange differences are recognised 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 recognised in the translation reserve.

(i) Retirement benefits schemes

(i) Salaries, annual bonuses, paid annual leave, leave passage and the cost to the Group of non-monetary benefits are accrued in the year in which the associated services are rendered by employees of the Group. Where payment or settlement is deferred and the effect would be material, these amounts are stated at their present values.

– 136 –

APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

(ii) The Group operates a defined contribution Mandatory Provident Fund retirement benefits scheme (the “MPF Scheme”) under the Mandatory Provident Fund Schemes Ordinance for those employees who are eligible to participate in the MPF Scheme. The MPF Scheme has operated since 1 December 2000. Contributions are made based on a percentage of the employees’ basic salaries and are charged to the consolidated income statement as they become payable in accordance with the rules of the MPF Scheme. The assets of the MPF Scheme are held separately from those of the Group in an independently administered fund. The Group’s employer contributions vest fully with the employees when contributed into the MPF Scheme, except for the Group’s employer voluntary contributions, which are refunded to the Group when the employee leaves employment prior to the contributions vesting fully, in accordance with the rules of the MPF Scheme.

(iii) The Group operates a share option scheme for the purpose of providing incentives and rewards to eligible participants who contribute to the success of the Group’s operations. The financial impact of share options granted under the share option scheme is not recorded in the Group’s balance sheet until such time as the options are exercised, and no charge is recorded in the consolidated income statement or consolidated balance sheet for their cost. Upon the exercise of share options, the resulting shares issued are recorded by the Company as additional share capital at the nominal value of the shares, and the excess of the exercise price per share over the nominal value of the shares is recorded by the Company in the share premium account. Options which are cancelled prior to their exercise date, or which lapse, are deleted from the register of outstanding options.

(iv) Share-based payment expenses

The fair value of the employee services received in exchange for the grant of the share options and restricted share awards is recognised as an expense in the income statement.

The total amount to be expensed over the vesting period is determined with reference to the fair value of the share options and restricted share awards granted. At each balance sheet date, the Company revises its estimates of the number of share options that are excepted to become exercisable and the number of restricted share awards that become vested. It recognised the impact of the revision of original estimates, if any, in the income statement, and a corresponding adjustment to equity in the balance sheet will be mode over the remaining vesting periods.

The proceeds received, net of any directly attributable transaction costs, are credited to share capital and share premium accounts when the share options are exercised and when the restricted share awards are vested.

(j) Taxation

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

The tax currently payable is based on taxable profit for the year. Taxable profit is the profit for the year, determined in accordance with the rules established by the taxation authorities, upon which income taxes are payable.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount 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 recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary difference can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill (or negative goodwill) or from the initial recognition (other than a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

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APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

Deferred tax liabilities are recognised for taxable temporary differences arising on investment in subsidiaries and associates, except where the Company 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 year when the liability is settled or the asset realised. Deferred tax is charged or credited in the income statement, except when it related to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

(k) Inventories

Inventories are stated at the lower of cost and net realisable value after making due allowances for obsolete or slow-moving items. Cost is determined on the first-in, firstout basis and, in the case of work in progress and finished goods, comprises direct materials, direct labour and an appropriate proportion of manufacturing overheads and/ or, where appropriate, subcontracting charges. Net realisable value is based on estimated selling prices less any further estimated costs to be incurred to completion and disposal.

(l)

Financial instruments

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

Financial assets

The Group’s financial assets are classified into financial assets at fair value through profit or loss and loans and receivables. All regular way purchases or sales of financial assets are recognised and derecognised on a trade basis. Regular way purchases or sale of financial assets that required 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.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. At each balance sheet date subsequent to initial recognition, loans and receivables (including trade receivables, loan receivables, pledged bank deposits and bank balances) are carried at amortised cost using the effective interest method, less any identified impairment losses. An impairment loss is recognised in the income statement 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 increased in the asset’s recoverable amount can be related objectively to an event occurring after the impairment was recognised, subject to a restriction that the carrying amount of the asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

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APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

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 recognised in equity, until the financial asset is disposed of or is determined to be impaired, at which time, the cumulative gain or loss previously recognised in equity is removed from equity and recognised in profit or loss. Any impairment losses on availablefor-sale financial assets are recognised in profit or loss. Impairment losses on availablefor-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.

For available-for-sale equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured and derivatives that are linked to and must be settled by delivery of such unquoted equity instruments, they are measured at cost less any identified impairment losses at each balance sheet date subsequent to initial recognition. An impairment loss is recognised in profit or loss when there is objective evidence that the asset is impaired. The amount of the impairment loss is measured as the difference between the carrying amount of the asset and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses will not reverse in subsequent periods.

Financial liabilities and equity

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

Other financial liabilities

Other financial liabilities including accounts payables, other payables and accruals are subsequently measured at amortised cost, using the effective interest rate method.

Equity instruments

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

Derecognition

Financial liabilities are derecognised from the Group’s balance sheet when the obligation specified in the relevant contract is discharged, cancelled or expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid or payable is recognised in the income statement.

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APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

(m) Provisions

(n) Cash and cash equivalents

For the purpose of the consolidated cash flow statement, cash and cash equivalents comprises of cash in hand and demand deposits, and short term highly liquid investments which are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value, and have a short maturity of generally within three months when acquired, less bank overdrafts which are repayable on demand and form an integral part of the Group’s cash management.

(o) Accounts and other receivables

Accounts and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of accounts and other receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in the income statement.

(p) Land use rights

All land in the PRC is state-owned or collectively-owned and no individual land ownership right exists. The Group acquired the rights to use certain land. The premiums paid for such rights are treated as prepayment for operating lease and recorded as land use rights, which are amortised on a straight line basis over the period of the right.

(q) Construction in progress

Plant and machinery under construction is stated at specifically identified cost, aggregate cost of development, materials and supplies, wages and other direct expenses, less provision for diminution in value. No depreciation is provided until the completion of the development and when the plant and machinery can be put to effective use.

(r) Related party transactions

Parties are considered to be related to the Group if:

a. the party, directly or indirectly through one or more intermediaries, (i) controls, is controlled by, or is under common control with, the Group; (ii) has an interest in the Group that gives it significant influence over the Group; (iii) has joint control over the Group;
b. the party is an associate;
c. the party is a jointly-controlled entity;
d. the party is a member of the key management personnel of the Group or its parent;

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APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

e. the party is a close member of the family of any individual referred to in (a) or (d);
f. the party is an entity that is controlled, joint-controlled or significantly influenced by or for which significant voting power in such entity resides with, directly or indirectly, any individual referred to in (d) or (e); or
g. the party is a post-employment benefit plan for the benefit of the employees of the Group, of any entity that is related party of the Group.

A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.

(s) Contingent liabilities and contingent asset

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

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

(t) Segment reporting

A segment is a distinguishable component of the Group that is engaged either in providing products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments.

In accordance with the Group’s internal financial reporting system, the Group has determined that business segments as the primary reporting format and geographical segment information as secondary reporting format.

Segment revenue, expenses, results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis to that segment. For example, segment assets may include inventories, trade receivables and fixed assets. Segment revenue, expenses, assets and liabilities are determined before intra-group balances and transactions are eliminated as part of the consolidation process, except to the extent that such intra-group balances and transactions are between group enterprises within a single segment. Intra-segment pricing is based on similar terms as those available to other external parties.

Segment capital expenditure is the total cost incurred during the year to segment assets (both tangible and intangible) that are expected to be used for more than one year.

Unallocated items mainly comprise financial and corporate assets, interest-bearing loans, borrowings, corporate and financing expenses and minority interests.

– 141 –

APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

4. KEY SOURCES OF ESTIMATION UNCERTAINTY

In the process of applying the Group’s accounting policies which are described in Note 3 to financial statement, management has made certain key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that may have a significant risk in causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below:

(a) Income taxes

Significant judgement is required in determining the provision for income tax. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. Where the final tax outcome of these matters 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 determinations is made.

5. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

(a) Financial risk management objectives and policies

The Group’s major financial instruments include trade receivables, prepayments, deposits and other receivables, cash and cash equivalents, trade payables, other payables and accruals and amount due to a holding company. The directors consider that the carrying amounts of financial assets and liabilities in the consolidated financial statements approximate to their fair value. Details of these financial instruments are disclosed in respective notes. The risks associated with these financial instruments and the policies on how to mitigate these risks are set out below. The management manages and monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner.

Market risks

(i) Foreign exchange risk

The Group is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the Hong Kong dollar. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities and net investments in foreign operations.

(ii) Fair value interest rate risk

The Group does not have significant interest-bearing assets or liabilities. As a result, the Group’s results and operating cash flows are substantially independent of changes in market interest rates.

(iii) Price risk

The Group is exposed to unlisted equity securities price risk because investments held by the Group are classified on the combined balance sheet as available-forsale financial assets. The Group is not exposed to commodity price risk.

– 142 –

APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

Credit risk

The Group’s credit risk is primarily attributable to trade and other receivables. The Group has no significant concentrations of credit risk. It has policies in place to ensure that sales of products are made to customers with an appropriate credit history. The exposures to these credit risks are monitored on an going basis.

Liquidity risk

The Group manages its liquidity risk by regularly monitoring current and excepted liquidity requirements and ensuring sufficient liquid cash and intended lines of funding from major financial institutions to meet the Group’s liquidity requirements in the short and long term.

(b) Fair value of financial instruments

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

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

6. SEGMENT INFORMATION

The Group’s operating businesses are structured and managed separately, according to the nature of their operations and the products and services they provide. Each of the Group’s business segments represents a strategic business unit that offers products and services which are subject to risks and returns that are different from those of other business segments. Summary details of the business segments are as follows:

(a) the polyurethane (“PU”) materials segment involves the trading of PU materials, such as isocyanate, polyols and various kinds of PU catalysts.
(b) the petrochemical products segment involves the manufacture and sales of petrochemical fuel products, which was discontinued during the year ended 31 March 2006 (Note 22).

– 143 –

APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

(a) Business segments

The following tables present revenue, profit and certain asset, liability and expenditure information for the Group’s business segments.

The Group

	Continuing	Continuing	Discontinued	Discontinued
	operation		operation
			Petrochemical
	PU materials		products		Consolidated
	2007	2006	2007	2006	2007	2006
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Segment revenue:
Sales to external
customers	554,686	577,729	–	40,979	554,686	618,708
Total revenue	554,686	577,729	–	40,979	554,686	618,708
Segment results	22,407	4,515	–	(1,008)	22,407	3,507
Interest income					685	7
Unallocated expenses					(12,791)	(613)
Profit from operating
activities					10,301	2,901
Gain on disposal of
subsidiaries	571	–	–	18,638	571	18,638
Profit from operation	10,872	3,909	–	17,630	10,872	21,539
Finance costs	–	(923)	–	(2,668)	–	(3,591)
Profit before taxation	10,872	2,986	–	14,962	10,872	17,948
Taxation	(2,809)	(2,381)	–	–	(2,809)	(2,381)
Net profit attributable
to shareholders equity
holders of the
Company					8,063	15,567
Balance Sheet
Segment assets	291,775	231,842	–	–	291,775	231,842
Total assets					291,775	231,842
Segment liabilities	79,690	55,402	–	–	79,690	55,402
Total liabilities					79,690	55,402
Other segment information:
Depreciation	269	1,083	–	1,034	269	2,117
Capital expenditure	390	33	–	–	390	33

– 144 –

APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

(b) Geographical segments

During the year ended 31 March 2007 and 2006, the Group’s entire turnover was derived from sales in the PRC and more than 90% of the Group’s assets were located at the PRC at 31 March 2007 and 2006. Therefore, no geographical segmental information on revenue and assets was presented.

7. PROPERTY, PLANT AND EQUIPMENT

Plant Furniture, Construction and fixtures and Motor Building in progress machinery equipment vehicles Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 37,703 23,803 75,742 3,151 7,715 148,114 – – – 33 – 33 – – – – (2,408) (2,408) (37,703) (23,803) (75,742) (892) (5,307) (143,447) – – – 2,292 – 2,292 – – – 390 – 390 – – – (472) – (472) – – – 2,210 – 2,210 1,006 – 2,756 1,384 1,398 6,544 – – 1,034 481 602 2,117 – – – – (1,324) (1,324) (1,006) – (3,790) (114) (676) (5,586) – – – 1,751 – 1,751 – – – 269 – 269 – – – 1 – 1 – – – (435) – (435) – – – 1,586 – 1,586 – – – 624 – 624 – – – 541 – 541	Plant Furniture, Construction and fixtures and Motor Building in progress machinery equipment vehicles Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 37,703 23,803 75,742 3,151 7,715 148,114 – – – 33 – 33 – – – – (2,408) (2,408) (37,703) (23,803) (75,742) (892) (5,307) (143,447) – – – 2,292 – 2,292 – – – 390 – 390 – – – (472) – (472) – – – 2,210 – 2,210 1,006 – 2,756 1,384 1,398 6,544 – – 1,034 481 602 2,117 – – – – (1,324) (1,324) (1,006) – (3,790) (114) (676) (5,586) – – – 1,751 – 1,751 – – – 269 – 269 – – – 1 – 1 – – – (435) – (435) – – – 1,586 – 1,586 – – – 624 – 624 – – – 541 – 541	Plant Furniture, Construction and fixtures and Motor Building in progress machinery equipment vehicles Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 37,703 23,803 75,742 3,151 7,715 148,114 – – – 33 – 33 – – – – (2,408) (2,408) (37,703) (23,803) (75,742) (892) (5,307) (143,447) – – – 2,292 – 2,292 – – – 390 – 390 – – – (472) – (472) – – – 2,210 – 2,210 1,006 – 2,756 1,384 1,398 6,544 – – 1,034 481 602 2,117 – – – – (1,324) (1,324) (1,006) – (3,790) (114) (676) (5,586) – – – 1,751 – 1,751 – – – 269 – 269 – – – 1 – 1 – – – (435) – (435) – – – 1,586 – 1,586 – – – 624 – 624 – – – 541 – 541	Plant Furniture, Construction and fixtures and Motor Building in progress machinery equipment vehicles Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 37,703 23,803 75,742 3,151 7,715 148,114 – – – 33 – 33 – – – – (2,408) (2,408) (37,703) (23,803) (75,742) (892) (5,307) (143,447) – – – 2,292 – 2,292 – – – 390 – 390 – – – (472) – (472) – – – 2,210 – 2,210 1,006 – 2,756 1,384 1,398 6,544 – – 1,034 481 602 2,117 – – – – (1,324) (1,324) (1,006) – (3,790) (114) (676) (5,586) – – – 1,751 – 1,751 – – – 269 – 269 – – – 1 – 1 – – – (435) – (435) – – – 1,586 – 1,586 – – – 624 – 624 – – – 541 – 541	Plant Furniture, Construction and fixtures and Motor Building in progress machinery equipment vehicles Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 37,703 23,803 75,742 3,151 7,715 148,114 – – – 33 – 33 – – – – (2,408) (2,408) (37,703) (23,803) (75,742) (892) (5,307) (143,447) – – – 2,292 – 2,292 – – – 390 – 390 – – – (472) – (472) – – – 2,210 – 2,210 1,006 – 2,756 1,384 1,398 6,544 – – 1,034 481 602 2,117 – – – – (1,324) (1,324) (1,006) – (3,790) (114) (676) (5,586) – – – 1,751 – 1,751 – – – 269 – 269 – – – 1 – 1 – – – (435) – (435) – – – 1,586 – 1,586 – – – 624 – 624 – – – 541 – 541
– – – –	– – – –	– – – –
–	–	–	1,586	–
–	–	–	624	–

–	–	–	541	–

– 145 –

APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

8. LAND USE RIGHTS

The Group

Cost At 1 April 2005 Disposal of subsidiaries_(Note 21) At 31 March 2006, 1 April 2006 and 31 March 2007 Amortisation and impairment At 1 April 2005 Disposal of subsidiaries(Note 21)_ At 31 March 2006, 1 April 2006 and 31 March 2007 Carrying value At 31 March 2007 At 31 March 2006	HK$’000 11,704 (11,704) – 117 (117) – – –

The Group’s land use rights represented prepaid operating lease payments in respect of land use rights outside Hong Kong under medium-term leases.

9. GOODWILL

The Group

Cost
At 1 April 2005
Disposal of subsidiaries_(Note 21)
At 31 March 2006, 1 April 2006
Acquisition of subsidiaries(Note 20)_
At 31 March 2007
Amortisation and impairment
At 1 April 2005
Elimination of accumulated amortisation upon adoption of HKFRS 3
At 31 March 2006, 1 April 2006
Impairment loss recognised during the year
At 31 March 2007
Carrying value
At 31 March 2007
At 31 March 2006

HK$’000
16,511
(16,511)
–
25
25
1,179
(1,179)
–
25
25
–
–

– 146 –

APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

As explained in Note 6 to the financial statements, the Group uses business segments as its primary segment for reporting segment information. For the purpose of impairment testing, goodwill with indefinite useful lives have been allocated to one individual cash generating units (CGUs) determined based on the related segment. The carrying amounts of goodwill (net of impairment losses) at 31 March 2007 allocated to this unit is as follow:

HK$’000

PU materials

–

During the year ended 31 March 2007, management of the Group determines that impairment loss of HK$25,000 in respect of its CGUs containing goodwill.

The recoverable amounts of the above CGUs have been determined on the basis of value in use calculations. Their recoverable amounts are based on certain similar key assumptions. All value in use calculations use cash flow projections based on the financial budgets approved by the management covering a five-year period. Cash flows beyond five-year period is extrapolated using a zero growth rate for an indefinite period. Management of the Group reassessed the value of the goodwill and considered full impairment loss of HK$25,000 approximately should be made.

10. INTERESTS IN SUBSIDIARIES

The Company

Unlisted shares, at cost Amounts due from subsidiaries Less:_Provision for impairment loss on amounts due from subsidiaries(Note)_	2007 HK$’000 54,245 100,163 154,408 (35,533) 118,875	2006 HK$’000 54,245 82,567
		136,812 (30,448
		106,364

The amounts due from subsidiaries are unsecured, interest-free and had no fixed term of repayment.

The directors consider the fair value of the amounts due from/to subsidiaries at the balance sheet date approximates to the corresponding carrying amounts.

Note:

The directors had reviewed the net asset values of the Company’s subsidiaries for the year ended 31 March 2007 and considered a provision for impairment of approximately HK$5,085,000 (2006: HK$30,448,000) should be made in respect of amounts due from subsidiaries.

At 1 April Provision for impairment loss recognised during the year At 31 March	2007 HK$’000 30,448 5,085 35,533	2006 HK$’000 – 30,448
		30,448

– 147 –

APPENDIX V

FINANCIAL INFORMATION OF THE SUNPEC GROUP

Particulars of the subsidiaries of the Company at 31 March 2007 were as follows:

		Issued and
	Place of	fully paid-up	Percentage of equity
	incorporation/	share/registered	attributable to
Name of company	establishment	capital	the Company		Principal activities
			Direct Indirect
Market Reach Group	British Virgin	Ordinary	100	–	Investment
Limited	Islands (“BVI”)	US$10,000			holding
Wah Tat Industrial	BVI	Ordinary US$10	–	100	Trading of
Trading Limited					polyurethane
					materials
Kurow Agents Limited	BVI	Ordinary US$10	–	100	Provision of
					transportation
					services in the PRC
Revolving Maze	BVI	Ordinary US$10	–	100	Provision of marketing
Trading Limited					and technical
					support services
					in the PRC
Harvest Star Investment	BVI	Ordinary US$1	100	–	Investment holding
Limited
Prime Rose Investment	BVI	Ordinary US$10	–	100	Trading of
Limited					polyurethane
					materials
Minglun Industrial	Hong Kong	Ordinary HK$2	–	100	Provision of
Limited					administrative
					services to fellow
					subsidiaries in
					Hong Kong
Minglun Industrial	Hong Kong	Ordinary HK$2	–	100	Trading of
(H.K.) Limited					polyurethane
					materials
Glory Hill Group Limited	BVI	Ordinary US$1	100	–	Investment holding
Amistar Enterprises	BVI	Ordinary US$1	100	–	Investment holding
Limited
Metro City Group Limited	BVI	Ordinary US$1	100	–	Investment holding
Sliverise Group Limited	BVI	Ordinary US$1	–	100	Investment holding
Pilot Wisdom Limited	Hong Kong	Ordinary HK$100	–	100	Investment holding
Panaview Trading	Macau	Ordinary US$1	–	100	Provision of
Limited					administrative
					services to fellow
					subsidiaries
Liaohe Energy Limited	BVI	Ordinary US$1	–	100	Investment holding
Deno Group Limited	BVI	Ordinary US$100	–	100	Investment holding
深圳中聯石油化工	The PRC	Registered capital	–	100	Provision of marketing
有限公司*		US$100,000,000			and technical
					support services
					in the PRC
Reachasia Group Limited	BVI	Ordinary US$100	–	100	Investment holding

深圳中聯石油化工有限公司 is a wholly foreign owned enterprise established in the PRC.

– 148 –

APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

11. INVENTORIES

	The Group
	2007	2006
	HK$’000	HK$’000
Finished goods	–	9,121

12. TRADE RECEIVABLES

The Group

Trade receivables, which generally have credit terms of 90 days, are recognised and carried at the original invoiced amount less provision for impairment loss.

An aged analysis of the trade receivables at the balance sheet date, based on invoiced date, is as follows:

Current to 30 days 31 days to 90 days Over 90 days	The Group 2007 2006 HK$’000 HK$’000 100,702 72,344 32,725 68,989 3,370 17,351 136,797 158,684	The Group 2007 2006 HK$’000 HK$’000 100,702 72,344 32,725 68,989 3,370 17,351 136,797 158,684
		158,684

The carrying amount of trade receivables approximate to their fair values.

13. AMOUNTS DUE TO SUBSIDIARIES

The amounts due to subsidiaries are unsecured, interest-free and have no fixed term of repayments.

14. SHARE CAPITAL

(a) Shares

Authorised: Ordinary shares of HK$0.02 each Issued and fully paid: At beginning of year Issue of ordinary shares_(Note i)_ At end of year	Number of shares 2007 2006 ’000 ’000 10,000,000 10,000,000 1,197,000 1,197,000 119,700 – 1,316,700 1,197,000	Share capital 2007 2006 HK$’000 HK$’000 200,000 200,000 23,940 23,940 2,394 – 26,334 23,940	Share capital 2007 2006 HK$’000 HK$’000 200,000 200,000 23,940 23,940 2,394 – 26,334 23,940

			23,940 –
			23,940

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APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

Note:

(i) During the year ended 31 March 2007, the Company placed 119,700,000 ordinary shares of HK$0.02 each at a placing price of HK$0.23 per share with High Rich International Investment Company Limited for the purpose of increasing general working capital of the Group. The new shares rank pari passu with the existing shares in all respects.

(b) Share Option Scheme

The Company operates a share option scheme (“the Scheme”) for the purpose of providing incentives and rewards to eligible participants who contribute to the success of the Group’s operations. Eligible participants of the Scheme included the Company’s directors and other employees of the Group. The Scheme was adopted on 1 November 2002 and, unless otherwise cancelled or amended, will remain in force for ten years from that date.

The maximum number of shares in respect of which share options may be granted under the Scheme shall not exceed 10% of the share capital of the Company in issue at the date of approval of the Scheme. In addition, the maximum number of shares in respect of which share options may be granted to any eligible person within any 12 month period is limited to 1% of the shares of the Company in issue at any time. Any future grant of share options in excess of this limit is subject to shareholders’ approval in a general meeting.

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 stated in the Stock Exchange’s daily quotation sheets on the date of grant, which must be a business day; (ii) the average closing price of the Company’s shares as stated on the Stock Exchange’s daily quotation sheets for the five business days immediately preceding the date of grant; and (iii) the nominal value of the Company’s shares.

The offer of a grant of share options may be accepted within 28 days from the date of the offer with a consideration of HK$1 being payable by the grantee. An option may be exercised in accordance with the terms of the Scheme at any time during a period to be determined and notified by the Directors to each grantee, which period may commence on the date on which the offer is made but shall end in any event not later than 10 years from the date of grant of the option subject to the provisions for early termination thereof and to the minimum period for which the option has to be held before it can be exercise as the Directors may at their discretion determine.

The following table discloses movements in the Company’s share options during the year ended 31 March 2007:

Name or category of participant Directors Mr. Tsang Kwok Man Employees other than directors In aggregate	At 1 April 2006 11,000,000 40,000,000 51,000,000	Number of share options Granted Exercised Lapsed during during during the year the year the year – – – – – – – – –	Price of Company’s Date of Exercise Exercise share at At grant of period price grant date 31 March share of share of share of share 2007 options options options options* (dd/mm/yy) (dd/mm/yy) HK$ HK$ 11,000,000 8/11/2004 8/11/2004 to 0.1324 0.13 7/11/2014 40,000,000 8/11/2004 11/11/2004 to 0.1324 0.13 7/11/2014 51,000,000

The vesting period of the share options is from the date of grant until the commencement of the exercise period.

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FINANCIAL INFORMATION OF THE SUNPEC GROUP

(i) The Group recognises the fair value of share options granted as an expense in the income statement over the vesting period with a corresponding increase being recognised in employee share-based payment reserve. The employee share-based payment reserve is transferred to share capital and share premium, together with the exercise price, when the option holder exercise its rights. As a transitional provision, the cost of share option granted after 7 November 2002 and had not yet vested on 1 January 2005 were expensed retrospectively in the income statement of the respective periods.
(ii) All share option granted are not expensed as the options were all vested before 1 January 2005 and not subject to the requirements of HKFRS 2.
(iii) During the year ended 31 March 2007, no share options were granted nor exercised.

15. RESERVES

The Group

The amounts of the Group’s reserves and the movements therein for the current and prior years are presented in the consolidated statement of changes in equity on page 25 of the financial statements.

The Company

At 1 April 2005 Redemption of convertible bond Net loss for the year At 31 March 2006 and 1 April 2006 Issue of ordinary shares Net loss for the year At 31 March 2007	Share premium HK$’000 53,127 – – 53,127 25,137 – 78,264	Contribution surplus HK$’000 54,045 – – 54,045 – – 54,045	Convertible bond reserve HK$’000 2,017 (2,017) – – – – –	Accumulated loss HK$’000 (6,816) – (34,530) (41,346) – (12,229) (53,575)	Total HK$’000 102,373 (2,017) (34,530 ) 65,826 25,137 (12,229 ) 78,734

Notes:

(a) The contributed surplus of the Company represents the difference between the combined net assets value of the subsidiaries acquired pursuant to the Group Reorganisation over the nominal value of the shares of the Company issued in exchange therefore.
(b) The Company had distributable reserves of HK$78,734,000 (2006: HK$65,826,000) at 31 March 2007, which included the Company’s contributed surplus in the amount of HK$54,045,000 (2006: HK$54,045,000). Under the Companies Act 1981 of Bermuda, the contributed surplus is distributable to shareholders of the Company in certain circumstances. In addition, the Company’s share premium account, in the amount of HK$78,264,000 (2006: HK$53,127,000) at 31 March 2007, may be distributed in the form of fully paid bonus shares.

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APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

16. TRADE PAYABLES

The Group

An aging analysis of the trade payables at the balance sheet date, based on invoice date, is as follows:

Current to 30 days 31 days to 90 days Over 90 days	The Group 2007 2006 HK$’000 HK$’000 41,212 3,211 – 9,548 – 2,999 41,212 15,758	The Group 2007 2006 HK$’000 HK$’000 41,212 3,211 – 9,548 – 2,999 41,212 15,758
		15,758

17. AMOUNT DUE TO A HOLDING COMPANY

The Group and the Company

The amount due is unsecured, interest-free and repayable on demand.

18. CONVERTIBLE BOND

The Group and the Company

Pursuant to the ordinary resolutions in a special general meeting of the Company on 24 December 2004, the Company issued a convertible bond in the principal of HK$26,812,800 (the “Convertible Bond”) to Wisdom On Holdings Limited (the “Bondholder”), the controlling shareholder of the Company. The Bondholder may at any time after the expiry of the period of six months from the date of issue of the Convertible Bond up to the second anniversary of the issue of the Convertible Bond convert the whole or part of the principal amount of the Convertible Bond into shares of HK$0.02 each in the share capital of the Company, at the conversion price of HK$0.112 per share. The Bondholder may at any time after the period of six months from the date of issue of the Convertible Bond and while the Convertible Bond is still outstanding require the Company to redeem the principal amount outstanding under the Convertible Bond. The Convertible Bond may be assigned or transferred to any third party and interest of 1% per annum will be accrued from the date of issue on a day to day basis on the principal amount of the Convertible Bond outstanding, payables semi-annually in arrears.

During the year ended 31 March 2006 the Convertible Bond was redeemed by the bondholder.

The Group adopted HKAS 32 for the year ended 31 March 2006. The fair value of the liability component of the bond was determined upon issuance, using the prevailing market interest rate for similar debt without a conversion option and was carried as a current liability. The residual amount was assigned to the conversion option as the equity component that was recognised is shareholders’ equity.

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APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

The net proceeds received from the issue of the convertible bond had been split between the liability and equity components, as follows:

Face value of convertible bond issued on 24 December 2004 Equity component Liability component on initial recognition on 24 December 2004 Interest expenses Interest payable Transfer from convertible reserve upon redemption Redemption of convertible bond Amortised cost at 31 March	The Group and the Company 2007 2006 HK$’000 HK$’000 – 26,813 – (2,017 – 24,796 – 1,252 – (1,252 – 2,017 – (26,813 – –	The Group and the Company 2007 2006 HK$’000 HK$’000 – 26,813 – (2,017 – 24,796 – 1,252 – (1,252 – 2,017 – (26,813 – –
		24,796 1,252 (1,252 2,017 (26,813
		–

The fair value of the liability component was calculated using a market interest rate for an equivalent non-convertible bond. The residual amount, representing the value of the equity conversion component, was included in shareholders’ equity in convertible bond reserve. The fair value of the liability component and the equity conversion component were determined at issuance of the Convertible Bond.

Interest expense on the bond was calculated using the effective interest method by applying the effective interest rates of 2.5% to the liability component.

19. DEFERRED TAXATION

At 1 April 2006/2005 Disposal of subsidiaries_(Note 21)_ At 31 March 2007/2006	The Group 2007 2006 HK$’000 HK$’000 83 83 (83) – – 83	The Group 2007 2006 HK$’000 HK$’000 83 83 (83) – – 83
		83

The provision for deferred tax of the Group was made principally in respect of accelerated depreciation allowances to the extent that a liability is expected to crystallise.

The Group and the Company did not have any significant unprovided deferred tax liabilities at 31 March 2007 (2006: HK$Nil).

20. ACQUISITIONS OF SUBSIDIARIES

On 1 April 2006 and 20 June 2006, the Group acquired 100% of the issued share capital of Liaohe Energy Limited (the “Liaohe Energy”) together with its 100% equity interest in 深圳中聯石油化有限公司 (collectively referred to as “Liaohe Group”) and 100% of the issued share capital of Deno Group Limited respectively for considerations of HK$1 for both acquisitions. The amount of goodwill arising as a result of the acquisition was HK$25,000 in aggregate. The fair value of the net asset acquired is approximately equal to its carrying amount.

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APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

The net assets acquired in the transaction and the goodwill arising is as follows:

Net assets acquired: Cash and bank balances Other payables Goodwill Total consideration Satisfied by: Cash consideration Net cash inflow arising on acquisition: Cash and bank balances disposed of	Acquiree’s carrying amount HK$’000 1,203 (1,228) (25) 25 – – HK$1 HK$’000 1,203

The subsidiaries acquired during the year ended 31 March 2007 contributed approximately HK$368,000 to the Group’s profit after taxation.

The goodwill is attributable to the profitability from acquisition of Liaohe Group and Deno Group Limited.

21. DISPOSAL OF SUBSIDIARIES

On 30 March 2007, the Group entered into sale and purchase agreements to dispose of its 100% equity interest in Wah Tat Industrial Limited, Wah Tat Industrial (Hong Kong) Limited and Wah Tat PU Industrial (Hong Kong) Limited to independent third party for cash consideration of HK$1, HK$1,480,002 and HK$10,000 respectively.

On 13 July 2005, the Group entered into a sale and purchase agreement to dispose of its 100% equity interest in Liaohe Energy Limited (“Liabohe Energy”) to individual third party together with its 100% equity interest in Liaoning Xinmin Petrochemical Company Limited (“Lianoning Xinmin”), for a cash consideration of HK$51,000,000. The operation of Liaohe Energy and Liaoning Xinmin is reported in the financial statements as a discontinued operation.

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APPENDIX V

FINANCIAL INFORMATION OF THE SUNPEC GROUP

Summary of the aggregate effects of the disposal of subsidiaries are as follows:

Net assets disposed of: Property, plant and equipment Land use rights Inventories Financial assets at fair value through profit or loss Trade receivables Prepayments, deposits and other receivables Cash and bank balances Trade and bills payables Other payables and accruals Tax payable Bank borrowings Deterred taxation Goodwill Exchange reserve Gain on disposal of subsidiaries Satisfied by: Cash consideration Net cash (outflow)/inflow arising on disposal: Cash consideration Cash and bank balances disposed of	2007 HK$’000 37 – – – – 1,492 268 (15) (780) – – (83) 919 – – 571 1,490 1,490 – (268) (268)	2006 HK$’000 137,861 11,587 26,115 8,120 943 2,905 284 (19,055) (36,880) (19,886) (95,423) – 16,571 16,511 (720) 18,638 51,000 51,000 51,000 (284) 50,716

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APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

22. DISCONTINUED OPERATION

The profit from the discontinued operation which has been included in the consolidated income statement is analysed as follows:

Profit for the year from discontinued operation Revenue Expenses Profit before taxation Income tax expenses Gain on disposal of petrochemical products operation Profit for the year from discontinued operation Cash flow from discontinued operation Net operating cash inflow Net financing cash outflow Total net cash outflow	2007 HK$’000 – – – – – – – – – –	2006 HK$’000 40,979 (44,655
		(3,676 –
		(3,676
		18,638
		14,962

		1,193 (2,668
		(1,475

23. TURNOVER AND OTHER REVENUE

Turnover represents the net invoiced value of good sold, after allowances for returns and trade discounts. All significant intercompany transactions have been eliminated on consolidation.

An analysis of the Group’s turnover and other revenue are as follows:

Turnover Continuing operation Sale of goods Discontinued operation Sale of goods Other revenue Bank interest income	The Group 2007 2006 HK$’000 HK$’000 554,686 577,729 – 40,979 554,686 618,708 685 7	The Group 2007 2006 HK$’000 HK$’000 554,686 577,729 – 40,979 554,686 618,708 685 7
		618,708

		7

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APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

24. PROFIT FROM OPERATING ACTIVITIES

The Group’s profit from operating activities is arrived at after charging:

Cost of inventories sold Continuing operation Discontinued operation Auditors’ remuneration Depreciation Impairment loss recognised in respect of goodwill Minimum lease payments under operating leases in respect of rented premises Staff costs (including Directors’ remuneration –Note 25) Salaries and wages Mandatory provident fund contributions and after crediting: Other income Continuing operation Gain on disposal of property, plant and equipment Gain on disposal of subsidiaries Exchange gain, net Discontinued operation Gain on disposal of subsidiaries	The Group 2007 2006 HK$’000 HK$’000 527,244 554,719 – 37,759 400 400 269 2,117 25 – 1,774 1,320 5,597 6,049 70 124 – 772 571 – 396 38 967 810 – 18,638 967 19,448	The Group 2007 2006 HK$’000 HK$’000 527,244 554,719 – 37,759 400 400 269 2,117 25 – 1,774 1,320 5,597 6,049 70 124 – 772 571 – 396 38 967 810 – 18,638 967 19,448
		810 18,638
		19,448

The cost of inventories sold do not include any staff costs and depreciation, which are also included in the respective total amounts disclosed separately above for each of these types of expenses (2006: HK$2,618,000).

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APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

25. DIRECTORS’ REMUNERATION

The board of directors of the Company is currently composed of six executive directors, one non-executive director and three independent non-executive directors. Directors’ remuneration disclosed pursuant to the Listing Rules and Section 161 of the Hong Kong Companies Ordinance, are as follows:

			Salaries	Salaries		Mandatory	Mandatory
Name of directors	Fee		and bonuses			provident fund		Total
	2007	2006	2007	2006		2007	2006	2007	2006
	HK$’000	HK$’000	HK$’000	HK$’000		HK$’000	HK$’000	HK$’000	HK$’000
Executive directors
Dr. Wang Tao
(appointed on 15 June 2006)	–	–	180		–	–	–	180	–
Dr. Hui Chi Ming	–	–	–		–	–	–	–	–
Mr. Cheung Shing	–	–	650		650	12	12	662	662
Dr. Chui Say Hoe	–	–	600		650	12	12	612	662
Mr. Tsang Kwok Man	–	–	650		650	12	12	662	662
Mr. Cui Yeng Xu
(appointed on 15 June 2006)	–	–	450		–	–	–	450	–
Mr. Chen Hua
(resigned on 31 January 2007)	–	–	–		–	–	–	–	–
Non-executive director
Mr. Chow Cham Ki, Kenneth	120	120	–		–	–	–	120	120
Independent non-executive directors
Mr. Chan Wai Dune	200	200	–		–	–	–	200	200
Dr. Yu Sun Say	120	120	–		–	–	–	120	120
Mr. Ng Wing Ka	120	120	–		–	–	–	120	120
	560	560	2,530	1,950		36	36	3,126	2,546

Included in the directors’ remuneration were fees of HK$560,000 (2006: HK$560,000) paid to independent non-executive directors and non-executive director. No fees were paid to executive directors during the year (2006: HK$Nil).

During the year, there were no bonuses paid or payable to the directors (2006: HK$150,000). No directors waived or agreed to waive any remuneration during the year (2006: HK$Nil). In addition, no emoluments were paid by the Group to the directors as an inducement to join, or upon joining the Group, or as compensation for loss of office (2006: HK$Nil).

During the year, no share options to subscribe for ordinary shares of the Company were granted to directors under the Company’s share option scheme (2006: HK$Nil).

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APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

26. FIVE HIGHEST PAID INDIVIDUALS

The five highest paid individuals during the year included three (2006: three) directors, details of whose remuneration are set out in Note 25 above. The remuneration of the remaining two (2006: two) non-directors, highest paid individuals, which each fell within the HK$Nil to HK$1,000,000 band, are as follows:

Basic salaries, housing benefits, other allowances and benefits in kind Mandatory provident fund contributions	The Group 2007 2006 HK$’000 HK$’000 1,235 1,300 24 24 1,259 1,324	The Group 2007 2006 HK$’000 HK$’000 1,235 1,300 24 24 1,259 1,324
		1,324

During the year, there was no bonuses were paid any of the five highest paid individuals of the Group (2006: HK$100,000). No emoluments were paid by the Group to any of the five highest paid individuals as an inducement to join, or upon joining the Group, or as a compensation for loss of office (2006: HK$Nil).

During the year, no share options to subscribe for ordinary shares of the Company were granted to employees under the Company’s share option scheme (2006: HK$Nil).

27. FINANCE COSTS

Continuing operation Imputed interest expenses on convertible bond Discontinued operation Interest on bank loans wholly repayable within five years (Note 22)	2007 HK$’000 – – –	2006 HK$’000 923 2,668
		3,591

28. TAXATION

(a) Taxation in the consolidated income statement represents:

	The Group
	2007	2006
	HK$’000	HK$’000
Current year provision:
Overseas	2,809	2,381

No provision for Hong Kong profits tax has been made as the Group did not have assessable profits for the year (2006: HK$Nil). Taxes on profits assessable elsewhere have been calculated at the rates of tax prevailing in the countries in which the Group operates, based on existing legislation, interpretations and practices in respect thereof.

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APPENDIX V

FINANCIAL INFORMATION OF THE SUNPEC GROUP

(b) Reconciliation between tax expenses and accounting profit at applicable tax rates:

The Group – for the year ended 31 March 2007

Profit/(loss) before taxation Tax at applicable income tax rate Tax effect of expenses and income not deductible or taxable for tax purposes Tax effect of unrecognised temporary difference Tax effect of tax losses not recognised Tax charge for year	Hong Kong HK$’000 % (12,435 ) (2,176) 17.5 (133) 1.1 (9) 0.1 2,318 (18.7 ) – –	The PRC HK$’000 % (460) (152) 33.0 (86) 18.7 – – 238 (51.7) – –	Macau HK$’000 % 23,767 2,852 12.0 (66) (0.3 ) – – 23 0.1 2,809 11.8	Total HK$’000 % 10,872 524 4.8 (285) (2.6 ) (9) (0.1 ) 2,579 23.7 2,809 25.8

The Group – for the year ended 31 March 2006

Profit/(loss) before taxation Continuing operation Discontinued operation Tax at applicable income tax rate Tax effect of expenses and income not deductible or taxable for tax purposes Tax effect of tax losses not recognised Tax charge for year	Hong Kong HK$’000 % (6,318) 18,499 12,181 2,132 17.5 (2,142) (17.6 ) 10 0.1 – –	The PRC HK$’000 % – (3,537) (3,537) (1,167) 33.0 – – 1,167 (33.0) – –	Macau HK$’000 % 9,304 – 9,304 1,117 12.0 1,257 13.5 7 0.1 2,381 25.6	Total HK$’000 % 2,986 14,962 17,948 2,082 11.6 (885) (4.9 ) 1,184 6.6 2,381 13.3

29. NET LOSS FROM ORDINARY ACTIVITIES ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY

The net loss from ordinary activities attributable to equity holders of the Company dealt with in the financial statements of the Company for the year ended 31 March 2007 was HK$12,229,000 (2006: HK$34,530,000).

30. DIVIDENDS

The directors do not recommend the payment of any dividend in respect of the year ended 31 March 2007 (2006: HK$Nil).

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APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

31. EARNINGS PER SHARE

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

For continuing and discontinued operations Earnings Earnings attributable to the equity holders of the Company for the purposes of basic earnings per share Effect of dilutive potential ordinary shares: Interest on convertible bond Earnings attributable to the equity holders of the Company for the purposes of diluted earnings per share Number of shares Weighted average number of ordinary shares for the purpose of basic earnings per share Effect of dilutive potential ordinary shares: Convertible bond Share options Weighted average number of ordinary shares for the purpose of diluted earnings per share For continuing operation Earnings Earnings attributable to the equity holders of the Company for the purposes of basic earnings per share _Less:_Profit for the year from discontinued operation Earnings attributable to the equity holders of the Company for the purposes of basic earnings per share	2007 HK$’000 8,063 – 8,063 Number of 2007 ’000 1,271,772 – 28,150 1,299,922 2007 HK$’000 8,063 – 8,063	2006 HK$’000 15,567 923 16,490 shares 2006 ’000 1,197,000 239,402 14,413 1,450,815 2006 HK$’000 15,567 (14,962) 605

No diluted earnings per shares for continuing operation for the year ended 31 March 2006 have been presented because the conversion of the convertible bond to ordinary shares would increase earnings per share.

The denominators used are the same as those detailed above for both basic and diluted earnings per share.

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APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

For discontinued operation

There is no basic earnings per share (2006: HK1.25 cents per share) and no diluted earnings per share (2006: HK1.03 cents per share) for the discontinued operation. It was because there was no profit for the year from the discontinued operation during the year ended 31 March 2007 (2006: HK$14,962,000).

32. OPERATING LEASE ARRANGEMENTS

The Group leases certain of its office properties under operating lease arrangements. Leases for properties are negotiated for terms ranging between 1 and 2 years.

At 31 March 2007, the Group had total future minimum lease payments under non-cancellable operating failing due as follows:

Within one year In the second to fifth years, inclusive	The Group 2007 2006 HK$’000 HK$’000 2,048 390 530 – 2,578 390	The Group 2007 2006 HK$’000 HK$’000 2,048 390 530 – 2,578 390
		390

33. COMMITMENT

The Company had entered into a conditional sale and purchase agreement (“Proposed Acquisition”) in relation to the acquisition of the 93% equity interest of MEIL from Golden Nova Holdings Limited (“Golden Nova”) at a total consideration of HK$800 million. The Proposed Acquisition will be financed by the Group’s internal resources and the issues of bond, convertible note and the Company’s new shares. Please refer to Note 36 to financial statement for further details.

Capital commitment for the Proposed Acquisition at the balance sheet date is as follows:

	The Group and	The Group and
	the Company
	2007	2006
	HK$’000	HK$’000
Contracted but not provided for	800,000	–

34. CONTINGENT LIABILITIES

At 31 March 2007, the Group and the Company had no significant contingent liabilities (2006: HK$Nil).

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APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

35. MATERIAL RELATED PARTY TRANSACTIONS

Remuneration for key personnel management, including amount paid to the Company’s directors and certain of the highest paid employee, as disclosed in Notes 25 and 26 to financial statements, are as follows:

Key management personnel

Salaries and allowance Mandatory provident fund	2007 HK$’000 3,090 36 3,126	2006 HK$’000 2,510 36
		2,546

36. SUBSEQUENT EVENTS

(a) On 3 April 2007, the Company entered into a subscription agreement with an independent third party, pursuant to which the independent third party has conditionally agreed to subscribe for and the Company has conditionally agreed to allot and issue 69,500,000 shares in cash HK$1.44 per share. For further details, please refer to the Company’s announcement dated 4 April 2007.
(b) The Company entered into a sales and purchases agreement to acquire from Golden Nova 93% of the issued share capital of MEIL for a total consideration of HK$800 million. The conditional sales and purchases agreement was completed on 25 May 2007. The consideration for the acquisition was satisfied by (i) HK$10 million in cash (ii) HK$90 million bond; (iii) HK$300 million by issue of 1,250,000,000 new shares at HK$0.24 per share; and (iv) HK$400 million by issue of convertible note (the “Convertible Note”) at a conversion price of HK$0.24 per conversion. For further details, please refer to the Company’s circular dated 10 May 2007.
(c) On 4 June 2007, Golden Nova, the holder of the Convertible Note as mentioned in Note (b)(iv) above, has converted HK$400 million of the principal of the Convertible Note, representing the whole principal amount of the Convertible Note, at conversion price of HK$0.24 per share. As a result of the conversion, a total of 1,666,666,666 ordinary shares have been allotted and duly issued and the aggregate outstanding principal of the Convertible Note has been reduced to HK$Nil. For further details, please refer to the Company’s announcement dated 6 June 2007.
(d) On 8 June 2007, the Company was granted by Dr. Hui Chi Ming with a Call Option for an exclusive right to acquire equity interests in Madagascar Energy International Gas Station Group Ltd and Madagascar Petroleum International Gas Station Group Ltd., both are licensed for carrying on import, transportation and distribution of petroleum in Madagascar, by entering into the Option Deed for a consideration of HK$1. For further details, please refer to the Company’s announcement dated 8 June 2007.
(e) On 21 June 2007, the Group entered into an agreement to acquire from an independent third party 60% equity interests in the Zhuhai Zhonghuan Petroleum Limited for a consideration of HK$156 million. Zhuhai Zhonghuan Petroleum Limited is an investment holding company and it owns the entire interest in Maoming Zhonghuan Limited and 49% equity interests in Zhaoqing Zhonghuan Petroleum Limited. The Zhonghuan Group is principally engaged in the trading, transport and storage of petroleum and chemical products. For further details, please refer to the Company’s announcement dated 27 June 2007.

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APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

37. COMPARATIVE FIGURES

Comparative figures have been reclassified to conform to the current year’s presentation.

38. AUTHORISATION FOR ISSUE OF FINANCIAL STATEMENTS

The financial statements were approved and authorised for issue by the board of directors on 27 July 2007.

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APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED 31 MARCH 2008

Financial Review

For the financial year ended 31 March 2008, the Group recorded a turnover of approximately HK$400,060,000 (2007: HK$554,686,000) and HK$1,312,902,000 (2007: Nil) from trading of PU materials and trading of fuel oil respectively during the year, which was decreased by 28% and increased 100% respectively comparing to the previous year. Profit attributable to shareholders was HK$1,929,369,000 (2007: profit of HK$8,063,000), the profits included excess of acquirer’s interest in fair value of acquiree’s identifiable net asset over costs. Basic earnings per share is HK49.64 cents (2007: HK0.63 cents).

Operation Review

During the year under review, more than 90% of the Group’s profit derived from was excess of acquirer’s interest in fair value of acquiree’s identifiable net asset over costs. Turnover derived from distribution of PU materials and field oil and the principal market of the Group was the PRC. No revenue was derived from Hong Kong during the year (2007: Nil).

Distribution of PU materials

During the year, revenue from the distribution of PU materials was approximately HK$400,060,000 (2007: HK$554,686,000), representing decrease of approximately 28% compared to previous year. The distribution of PU materials contributed approximately HK$14 million (2007: HK$11 million) to the Group’s profit from operating activities for the year, representing an increase in 32% compared to previous year. The market of the PU materials became increasingly competitive and the demand of PU materials showed a decreasing trend during the financial year. The Group had scale down the revenue in order to deal with the risks coupling with such a competitive environment.

Distribution of petroleum products

On 3 April 2007, the Group entered into a supply and purchases agreement with Foshan Hua Heng Petroleum and Chemical Limited (“Foshan Hua Heng”) and Foshan Electricity Fuel Company (佛山市區電力燃料 ), pursuant to which the Group has agreed to supply 360,000 tons of fuels oil (with model no. 18 0CST) at the prevailing market price to the Foshan Hua Heng for its resale to Foshan Electricity Fuel Company during the contract period of 23 April 2007 to 23 April 2008. Foshan Hua Heng has undertaken and guaranteed that the profit margin of the Group for the sale of 360,000 tons fuel oil shall not less than RMB25.2 million, and Foshan Hua Heng shall at least RMB2.1 million per months to the Group for its profit margin of the monthly sale of 30,000 tons fuel oil Foshan Hua Heng.

– 165 –

APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

During the year, the Group has commenced the distribution business of fuels products, which contribute approximately HK$1,312,902,000 to the Group’s turnover, which account for 76.6% of the Group’s turnover for the year. The distribution business of fuel products contributed approximately HK$36,611,000 to the Group’s net profit from operating activities for the year.

Liquidity and Financial Resources

As at 31 March 2008, the Group did not have any outstanding borrowings (2007: Nil) and bank balances approximately HK$228,457,000 (2007: HK$90,062,000).

With the available resources and the proceeds from the allotment and issue of shares of the Company ordinary shares, the Group has adequate working capital to finance its business operations.

As at 31 March 2008, the current ratio (current assets divided by current liabilities) was 2.26 times (2007: 3.65 times) and the gearing ratio, calculated on the basis of bank borrowing and convertible bond divided by shareholders’ equity, was undefined due to the fact that the Group did not have any bank borrowings and convertible bond at 31 March 2008 (2007: undefined).

Subsequent Events

(a) On 3 November 2007, the Company entered into a sales and purchases agreement to acquire from the Sukapeak Holdings Limited the entire equity interest in Better Step Group Limited at a total consideration of HK$1,215 million. The consideration will be satisfied by (i) HK$120 million in cash, payable upon signing of the agreement; (ii) HK$615 million by the issue of 427,083,333 new shares at HK$1.44 per consideration share; and (iii) HK$480 million by the issue of convertible note at a conversion price of HK$1.44 per conversion share. The acquisition was completed on 8 April 2008. For further details, please refer to the Company announcement and circular dated 9 November 2007 and 12 March 2008 respectively.
(b) On 3 April 2007, the Group entered into a legally-binding Agreement with Shaanxi Yanchang Petroleum (Group) Limited (“Yanchang Petroleum”). Pursuant to the Agreement, the Group and Yanchang Petroleum shall jointly invest and manage the exploration, exploitation and operation of Oilfield Block 3113 and each party shall contribute 50% of the required capital investment for the development of Oilfield Block 3113. For further detail, please refer to the Group’s announcement and circular dated 11 April 2008 and 28 May 2008 respectively.

– 166 –

APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

(c) On 17 April 2008, the Group entered into a sale and purchase agreement with Smart Rich Energy Finance (Holdings) Limited (“Smart Rich Energy”) and Dorson Group Limited (“Dorson”) pursuant to which Dorson has conditionally agreed to acquire, and Smart Rich Energy has conditionally agreed to procure Dorson, and Dorson have agreed to sell 36% equity interest in Madagascar Petroleum International Limited (“MPIL”) for a total consideration of HK$810 million. The consideration will be satisfied by HK$100 million in cash and HK$710 million by the issue of 253,571,428 new shares at HK$2.8 per share. The acquisition has not been completed up to the date of this announcement. For further details, please refer to the Company announcement and circular dated 22 April 2007 and 16 May 2008 respectively.
(d) On 17 June 2008, MEIL entered into a legally-binding agreement with ECO Energy (International) Limited (“ECO”), a wholly-owned subsidiary of The Hong Kong and China Gas Company. Pursuant to the agreement, MEIL and ECO shall jointly invest and manage the exploration, exploitation and operations of Oilfield Block 3113 with Shaanxi Yanchang Petroleum (Group) Limited (“Yanchang Petroleum”). MEIL and ECO shall contribute 29% and 21% of the required capital investment for the development of Oilfield Block 3113 respectively. MEIL and ECO shall also share with Yanchang Petroleum all the obligations and rights entitled by MEIL in accordance with the Production Sharing Agreement, the Production Sharing Agreement entered into between MEIL and OMNIS, based on their respective investment proportion in Oilfield Block 3113.

MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED 31 MARCH 2007

Financial Review

For the financial year ended 31 March 2007, the Group recorded a turnover of approximately HK$554,686,000 (2006: HK$577,729,000) from trading of PU materials, which was decreased by 4% comparing to the previous year. Profit attributable to shareholders was HK$8,063,000 (2006: profit of HK$15,567,000), which was decreased by 48% comparing to the previous year, over which the previous profit included an exceptional gain on disposals of subsidiaries. Basic earnings per share from continuing and discontinued operations is HK0.63 cents (2006: HK1.30 cents).

Operational Review

During the year under review, the Group’s entire revenue was derived from distribution of PU materials and the principal market of the Group was the PRC, accounted for approximately 100% (2006: 100%) of the Group’s turnover.

– 167 –

APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

Distribution of PU materials

During the year under review, revenue from the distribution of PU materials was approximately HK$554,686,000 (2006: HK$577,729,000), representing decrease of approximately 4% compared to previous year. The distribution of PU materials contributed approximately HK$11 million (2006: HK$3.9 million) to the Group’s profit from operating activities for the year, representing an increase in 178% compared to previous year. The market of the PU materials became increasingly competitive and the demand of PU materials showed a decreasing trend during the financial year. The Group had scale down the revenue in order to deal with the risks coupling with such a competitive environment.

Dividend

The Directors do not recommend the payment of final dividend for the year ended 31 March 2007 (2006: HK$Nil).

Liquidity and Financial Resources

At 31 March 2007, the Group did not have any outstanding bank borrowings (2006: HK$Nil) and had cash and bank balances approximately HK$90,062,000 (2006: HK$6,028,000).

With the available resources and the proceeds from the allotment and issue of shares of the Company ordinary shares subsequent to the balance sheet date, the Group has adequate working capital to finance its business operations.

At 31 March 2007, the current ratio (current assets divided by current liabilities) was 3.65 times (2006: 4.18 times) and the gearing ratio, calculated on the basis of bank borrowing, convertible bond and finance lease payables divided by shareholders’ equity, was undefined due to the fact that the Group did not have any bank borrowings, convertible bond and finance lease payables at 31 March 2007 (2006: undefined).

Charge on Assets

At 31 March 2007, none of the Group’s asset was pledged.

Exposure to Fluctuation in Exchange Rates and Related Hedges

As the Group’s transactions are mostly settled by Hong Kong dollars, Renminbi or Hong Kong dollars pegged currencies, the exposure to foreign exchange fluctuation is minimal, therefore no use of financial instruments for hedging purpose is considered necessary.

At 31 March 2007 the Group did not have any foreign currency investments which has been hedged by currency borrowings and other hedging instruments.

– 168 –

APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

Capital Commitment and Contingent Liabilities

Details of capital commitment of the Group at 31 March 2007 are set out in Note 33 to financial statement.

At 31 March 2007, the Group did not have any contingent liabilities.

Business Review and Future Prospects

The Group has dedicated its effort to improve its profitability by seeking new principle business to oil & gas industry. Subsequent to the year ended 31 March 2007, the Company has successfully acquired a new wholly-owned subsidiary which is engaged in oil & gas exploration, exploitation and operation businesses at Madagascar Oilfield Block 3113, an onshore site with total area of 8,320 kilometres.

In order to remain ahead of competition, the Group will continue to develop the new businesses acquired, actively seek for potential investment and determined to establish strong foothold in oil & gas industry.

Material Acquisitions and Disposals

The Company entered into a sales and purchases agreement to acquire 93% of the equity interest in MEIL for a total consideration of HK$800 million. The principal activities of MEIL are oil & gas exploration, exploitation and operation. For further details, please refer to the Company’s circular dated 10 May 2007.

Subsequent to the balance sheet date, the Group entered into an agreement to acquire 60% equity interests in Zhuhai Zhonghuan Petroleum Limited for a consideration of HK$156 million. Zhuhai Zhonghuan Petroleum Limited is an investment holding company and it owns the entire interest in Maoming Zhonghuan Limited and 49% equity interests in Zhaoqing Zhonghuan Petroleum Limited. The acquired group is principally engaged in the trading, transport and storage of petroleum and chemical products. For further details, please refer to the Company’s announcement dated 27 June 2007.

Employees and Remuneration Policies

At 31 March 2007, the Group’s total number of staff was 26 (2006: 18). Salaries of employees are maintained at a competitive level. The Group has not encountered any problem with the recruitment of its employees. None of the companies in the Group has experienced any labour disputes during the year and the Directors of the Company consider that the Group has maintained an excellent employment relationship. The Group remunerates its employees largely based on industry practice. Remuneration packages comprised salaries, commissions and bonuses based on individual performance.

– 169 –

APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED 31 MARCH 2006

Financial Review

For the financial year ended 31 March 2006, the Group recorded a turnover of approximately HK$618,708,000 (2005: HK$884,347,000) down 30% compared to the previous year. Profit attributable to shareholders was HK$15,567,000 (2005: loss of HK$1,351,000 as restated). Given the uncertainty faced by the Group during the year, we strived to sustain our results by implementation of stringent cost control and adoption of discriminative pricing approach in accepting sales order of the PU materials. Moreover, the Group had disposed its petrochemical manufacturing division because the Board considered the profitability of the petrochemical manufacturing division is not promising. For details, please refer to the following paragraph with headline “MATERIAL ACQUISITIONS AND DISPOSALS”. Earnings per share from continuing and discontinued operation is HK1.30 cents (2005: loss per share of HK0.11 cents as restated) per share.

Operational Review

During the year under review, approximately 93% (2005: 74%) of the Group’s revenue derived from distribution of PU materials and approximately 7% of the Group’s revenue derived from manufacturing of petrochemical products (2005: 26%) and the principal market of the Group was PRC, accounted for approximately 100% (2005: 95%) of the Group’s turnover. No revenue derived from Hong Kong (2005: 5%).

Distribution of PU materials

During the year under review, revenue from the distribution of PU materials was approximately HK$577,729,000 (2005: HK$652,717,000), representing decrease of approximately 11% compared to previous year. The distribution of PU materials contributed approximately HK$3.9 million (2005: HK$10 million) to the Group’s profit from operating activities for the year, representing a decrease 61% compared to previous year. The market of the PU materials became increasingly competitive during the second half of the financial year and the demand of PU materials showed a decreasing trend during the second half of the financial year. The Group had scale down the revenue in order to deal with the risks coupling with such a competitive environment.

Manufacturing business

During the year under review, the Group’s business of manufacture and sale of petrochemical fuel products contributed an operating loss of approximately HK$3.7 million to the Group’s net profit for the year. On 13 July 2005, the Group as vendor entered into a sale and purchase agreement to dispose the manufacturing division, Liaoning Xinmin Petrochemical Company Limited. Please refer to the following paragraph with headline “MATERIAL ACQUISITIONS AND DISPOSALS”.

– 170 –

APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

Dividend

The Directors do not recommend the payment of final dividend for the year ended 31 March 2006 (2005: Nil).

Liquidity and Financial Resources

During the year, a convertible bond issued by the Company of HK$26,813,000 had been fully redeemed. As at 31 March 2006, the Group did not have any outstanding bank borrowings (2005: HK$93.6 million) and cash and bank balances approximately HK$6,028,000 (2005: HK$6,246,000).

With the available resources and the proceeds from the sale of the Group’s subsidiaries subsequent to the balance sheet date, the Group has adequate working capital to finance its business operations.

As at 31 March 2006, the current ratio (current assets divided by current liabilities) was 4.18 times (2005: 1.08 times) and the gearing ratio (bank borrowing, convertible bond and finance lease payables divided by shareholders’ equity) was zero (2005: 74%).

Charge On Assets

As at 31 March 2006, none of the Group’s asset was pledged.

Exposure to Fluctuation in Exchange Rates and Related Hedges

As at 31 March 2006, the Group did not have any foreign currency investments which has been hedged by currency borrowings and other hedging instruments.

Capital Commitment and Contingent Liabilities

As at 31 March 2006, the Group did not have any capital commitment and contingent liabilities.

Material Acquisitions and Disposals

In July 2005, the Group entered into a sale and purchase agreement to dispose its 100% equity interest in Liaohe Energy Limited, the sole asset of Liaohe Energy Limited is its 100% equity interest in Liaoning Xinmin Petrochemical Company Limited which is principally engaged in the manufacture and sale of petrochemical products in Shenyang, Liaoning Province, the PRC. The consideration of the disposal was HK$51 million and the Group recognised a profit of approximately HK$19 million. For further details, please refer to the circular dated 7 September 2005.

– 171 –

APPENDIX V FINANCIAL INFORMATION OF THE SUNPEC GROUP

Employees and Remuneration Policies

As at 31 March 2006, the Group’s total number of staff was 18 (2005: 742). Salaries of employees are maintained at a competitive level. The Group has not encountered any problem with the recruitment of its employees. None of the companies in the Group has experienced any labour disputes during the year and the Directors of the Company consider that the Group has maintained an excellent employment relationship.

The Group remunerates its employees largely based on industry practice. Remuneration packages comprised salaries, commissions and bonuses based on individual performance.

– 172 –

APPENDIX VI

PROPERTY VALUATION

The following is the text of a letter, summary of valuation and valuation certificate, received from Greater China Appraisal Limited, an independent property valuer, prepared for the purpose of incorporation into this circular in connection with its valuation of the properties held by the Group as at 30 June 2008.

Room 2703 Shui On Centre 6-8 Harbour Road Wanchai Hong Kong

8 July 2008

The Directors

Smart Rich Energy Finance (Holdings) Limited Suite 1607-7 on 16th Floor Great Eagle Centre 23 Harbour Road Wanchai Hong Kong

Dear Sirs,

In accordance with the instructions from Smart Rich Energy Finance (Holdings) Limited (the “Company”) and its subsidiaries (together referred to as the “Group”) for us to value certain property interests in the People’s Republic of China (referred to as the “PRC”) and Hong Kong, we confirm that we have carried out inspections, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing the market values of such property interests as at 30 June 2008 (referred to as the “valuation date”).

It is our understanding that this valuation is used for the purpose of very substantial acquisition and very substantial disposal.

This letter which forms part of our valuation report explains the basis and methodology of valuation, and clarifies our assumptions made, titleship of properties and the limiting conditions.

BASIS OF VALUATION

The valuation of such property interests is our opinion of 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.”

– 173 –

APPENDIX VI

PROPERTY VALUATION

VALUATION METHODOLOGY

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

Since the property is let to third parties, we have also valued the property interests by income method by which the amount of rent payable on the valuation date was capitalized for the residue period of the tenancy with due allowance for reversionary interest of the relevant property after expiry of the existing tenancy. Full market rent was applied for capitalization after the current lease expired. The comparison method is also adopted to obtain the full market rental value. In the course of our valuation, we have considered the asking or transacted rental income comparables of similar properties in the locality.

ASSUMPTIONS

Our valuation has been made on the assumption that the owner sells the property on the open market in its existing state without the benefit of any deferred terms contracts, leaseback, joint ventures, management agreements or any similar arrangement which would serve to increase the value of the property.

As the property is held under long term land use rights, we have assumed that the owners of the property has free and uninterrupted rights to use or transfer the property for the whole of the unexpired term of the respective land use rights. In our valuation, we have assumed that the property can be freely disposed of and transferred to third parties on the open market without any additional payment to the relevant government authorities.

It is assumed that all applicable zoning and use regulations and restrictions have been complied with unless nonconformity has been stated, defined, and considered in the appraisal report. Moreover, it is assumed that the utilization of the land and improvements is within the boundaries of the site held by the owner or permitted to be occupied by the owner. In addition, we assumed that no encroachment or trespass exists, unless noted in the report.

Other special assumptions of the property, if any, have been stated out in the footnote of the valuation certificate for the property.

TITLESHIP INVESTIGATION

We have been provided with copies of legal documents regarding the property under valuation. However, due to the current registration system of the PRC, no investigation has been made for the legal title or any liabilities attached to the property.

– 174 –

APPENDIX VI

PROPERTY VALUATION

Moreover, we have been provided with copies of tenancy agreements of the properties rented to the Group. However, we have not inspected the original documents to verify ownership or to ascertain the existence of any amendments which do not appear on the copies handed to us.

In the course of our valuation, we have relied upon the legal opinion given by Shenzhen Office of Beijing W&H Law Firm (“the PRC Legal Advisor”) in relation to the legal title to the property under valuation.

All legal documents disclosed in this report are for reference only and no responsibility is assumed for any legal matters concerning the legal title to the property set out in this report.

LIMITING CONDITIONS

We have not carried out detailed site measurements to verify the correctness of the land or building areas in respect of the relevant property but have assumed that the areas shown on the legal documents provided to us are correct. Based on our experience of valuation of similar properties in the PRC, we consider the assumptions so made to be reasonable. All documents and contracts have been used as reference only and all dimensions, measurements and areas are approximations.

We have inspected the exterior and, where possible, the interior of the property included in this valuation report. However, no structural survey has been made and we are therefore unable to report as to whether the property is free from rot, infestation or any other structural defects. No tests were carried out on any of the services.

Having examined all relevant documentation, we have relied to a very considerable extent on the information provided by the Group and have accepted advice given to us by it on such matters as planning approvals, statutory notices, easements, tenure, occupation, lettings, construction costs, rentals, site and floor areas and in the identification of the property. We have had no reason to doubt the truth and accuracy of the information provided to us by the Group. We were also advised by the Group that no material factors have been omitted from the information to reach an informed view, and have no reason to suspect that any material information has been withheld.

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

Since the property is located in a relatively under-developed market, the PRC, those assumptions are often based on imperfect market evidence. A range of values may be attributable to the property depending upon the assumptions made. While the valuer has exercised his professional judgement in arriving at the value, investors are urged to consider carefully the nature of such assumptions which are disclosed in the valuation report and should exercise caution in interpreting the valuation report.

– 175 –

APPENDIX VI

PROPERTY VALUATION

OPINION OF VALUE

The summary of valuation and the valuation certificates have already shown the market values of the property.

REMARKS

Our valuation has been prepared in accordance with generally accepted valuation procedures and in compliance with the requirements of the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited including but not limited to the provisions of Chapter 5 and Practice Note 12.

In valuing the property, we have complied with the requirements contained in the HKIS Valuation Standards on Properties (1st Edition 2005) published by the Hong Kong Institute of Surveyors and effective from 1 January 2005.

Valuation of the property is denominated in Chinese Renminbi (RMB) and Hong Kong Dollars (HK$) for property in the PRC and Hong Kong respectively.

The valuation certificate is enclosed herewith.

This valuation report is issued subject to our general service conditions.

Yours faithfully, For and on behalf of

GREATER CHINA APPRAISAL LIMITED

K. K. Ip BLE, LLD

Chartered Valuation Surveyor Registered Professional Surveyor Managing Director

Note: Mr. K. K. Ip, who is a chartered valuation surveyor and a registered professional surveyor, has substantial experience in valuation of properties in the PRC since 1992.

– 176 –

APPENDIX VI

PROPERTY VALUATION

SUMMARY OF VALUATION

No. Property

Market Value as at 30 June 2008

Group I – Property Interests held by the Group

Units 1201, 1202, 1203, 1205 and 1206 RMB17,800,000 Zhongguancun Cultural Commercial Building No. 66 Bei Si Huan Xi Road Haidian District Beijing The PRC Subtotal: RMB17,800,000 Group II – Property Interests rented by the Group in the PRC 2. Unit 301 on 3rd Floor No Commercial Value East Wing Block 304 Shangbu Industrial Zone Huaquang Bei Road Futian District Shenzhen Guangdong Province The PRC 3. Units 1407-08 No Commercial Value Weixing Building No. 63 Zhichun Road Haidian District Beijing The PRC Subtotal: No Commercial Value

– 177 –

APPENDIX VI

PROPERTY VALUATION

No. Property

Market Value as at 30 June 2008

Group III – Property Interests rented by the Group in Hong Kong

Suite 1606-7 on 16/F No Commercial Value Great Eagle Centre No. 23 Harbour Road Wanchai Hong Kong 5. Unit E8 on 10/F No Commercial Value Tsing Yi Industrial Centre Phase 2 No. 1-33 Cheung Tat Road Tsing Yi New Terrorities Hong Kong Subtotal: No Commercial Value Grand total: RMB17,800,000

– 178 –

APPENDIX VI

PROPERTY VALUATION

VALUATION CERTIFICATE

Group I – Property Interests held by the Group

				Market value
				as at
No.	Property	Description and tenure	Particulars of Occupancy	30 June 2008
				(RMB)
1.	Units 1201, 1202,	The property comprises 5	As at the date of valuation,	17,800,000
	1203, 1205, 1206	office units within a	the property was leased to a
	Zhongguancun	17-storey building with a	tenant for a term of 4 years
	Cultural	4-storey basement	from 1 June 2008 to 31 May
	Commercial	completed in 2006.	2012 at yearly rent of
	Building		approximately RMB75,088.90
	No. 66 Bei Si Huan	The gross floor area of	exclusive of management fee,
	Xi Road	the property is	electricity,
	Haidian District	approximately 881.67	telecommunication, network
	Beijing	square metres	and car parking charges.
	The PRC	(approximately 9,490.30
		square feet).
		The property is held
		under 5 sets of Building
		Ownership Certificate.

Notes:

(i) According to 5 sets of Building Ownership Certificate (X Jing Fang Quan Zheng Hai Qi Zi Nos. 037385, 037387, 037390, 037391 and 037393) dated 3 April 2008 issued by the Construction Committee of Beijing, the building ownership of the property is held by Star Mobile DNA Payment Gateway Limited (“Star Mobile DNA”, a wholly-owned subsidiary of the Company).
(ii) We have been provided with a legal opinion regarding the property by the PRC Legal Advisor, which contains, inter alia, the following:
(a) Star Mobile DNA is in possession of 5 sets of Building Ownership Certificate;
(b) Star Mobile DNA has obtained legal ownership of the property and has the right to occupy, use, lease, dispose of the property;
(c) The property is not subject to any mortgages or any orders from the authorities.

– 179 –

APPENDIX VI

PROPERTY VALUATION

Group II – Property Interests rented by the Group in the PRC

Market value No. Property Description and Occupancy as at 30 June 2008 (RMB) 2. Unit 301 on 3rd Floor The property comprises a unit within a No Commercial Value East Wing 5-storey building completed in 1984. Block 304 Shangbu Industrial Zone The gross floor area of the property is Huaquang Bei Road approximately 500 square metres Futian District (approximately 5,382 square feet). Shenzhen Guangdong Province The property is held under a tenancy The PRC agreement dated 2 June 2008 between 星光電訊 (深圳 )有限公司 (the “Lessor”) and Credit Card DNA Security System (Shenzhen) Limited (a wholly-owned subsidiary of the Company) (the “Lessee”) for a term of 2 years from 1 June 2008 to 31 May 2010 at a monthly rent of RMB20,000 exclusive of management fee and other service charges. The tenancy is not assignable. The property is currently occupied by the Lessee as an office.

Notes:

(i) We have been provided with a legal opinion regarding the property by the PRC Legal Advisor, which contains, inter alia, the following:
(a) The registered owner of the property is 康富投資有限公司. Pursuant to an agreement between 康富投資有限公司 and the Lessor, the Lessor has obtained the using right and the leasing right of the property.
(b) The property is leased to the Lessee for a term of 2 years from 1 June 2008 to 31 May 2010 for office use.
(c) According to Shenzhen State-owned Land Resources and Building Administration Bureau, the prescribed usage of the property is industrial use. As the property is being leased for office use, the tenancy agreement is invalid due to the misusage of the property. In order to secure the Company’s interests in the property, it is suggested that the Company should urge the landlord or the Lessor to apply for the conversion of property usage from industrial to office use at the relevant authorities.

– 180 –

APPENDIX VI

PROPERTY VALUATION

Market value as at No. Property Description and Occupancy 30 June 2008 (RMB) 3. Units 1407-08 The property comprises a unit of a 16-storey No Commercial Value Weixing Building commercial building completed in 2002. No. 63 Zhichun Road Haidian District The gross floor area of the property is Beijing approximately 371.84 square metres The PRC (approximately 4,002 square feet). The property is held under a tenancy agreement dated 11 January 2008 between 北京衛星製造廠衛星大廈物業管理中心 (the “Lessor”) and Beijing Office of Credit Card DNA Security System (Shenzhen) Limited (a wholly-owned subsidiary of the Company) (the “Lessee”) for a term of 1 year from 16 January 2008 to 15 January 2009 at a monthly rent of RMB44,620.80 exclusive of other service charges.

The tenancy is not assignable.

The property is currently occupied by the Lessee as an office.

Notes:

(i) We have been provided with a legal opinion regarding the property by the PRC Legal Advisor, which contains, inter alia, the following:
(a) The registered owner of the property is 北京衛星製造廠 . Although the Lessor is failed to provide evidence showing authorization from the owner for leasing of the property, 北京衛星製造廠 has confirmed that the Lessor is a subsidiary of the owner and therefore the Lessor can be regarded as owner’s agent in the leasing of the property.
(b) The property is leased to the Lessee for a term of 1 year from 16 January 2008 to 15 January 2009 for research and office use.
(c) The tenancy agreement is legal and valid.

– 181 –

APPENDIX VI

PROPERTY VALUATION

Group III – Property Interests rented by the Group in Hong Kong

Market value No. Property Description and Occupancy as at 30 June 2008 (HK$) 4. Suite 1606-7 on 16th Floor The property comprises 2 office units of a No Commercial Value Great Eagle Centre 33-storey commercial building with 2-storey No. 23 Harbour Road basement completed in 1982.

Suite 1606-7 on 16th Floor Great Eagle Centre No. 23 Harbour Road Wanchai Hong Kong

The lettable floor area of the property is approximately 318.49 square metres (approximately 3,428 square feet).

The property is held under a tenancy agreement dated 27 November 2006 between Harbour View 16 Limited (the “Lessor”) and Star Cyberpower Management Limited (a wholly-owned subsidiary of the Company) (the “Lessee”) for a term of 2 years from 16 November 2006 to 15 November 2008 at a monthly rent of HK$96,000 exclusive of management fee and other service charges and subject to an option to renew the tenancy for a further term of one year at the prevailing market rental.

The tenancy is not assignable.

The property is currently occupied by the Lessee as an office.

– 182 –

APPENDIX VI

PROPERTY VALUATION

No. Property

Unit E8 on 10th Floor Tsing Yi Industrial Centre Phase II Nos. 1-33 Cheung Tat Road Tsing Yi New Terrorities Hong Kong

Market value as at 30 June 2008 (HK$)

Description and Occupancy

The property comprises a unit of a No Commercial Value 16-storey industrial building completed in 1985.

The gross floor area of the property is approximately 254.00 square metres (approximately 2,734 square feet).

The property is held under a tenancy agreement dated 21 December 2007 between Truswin Company Limited as lessor and Star Cyberpower Management Limited (a wholly-owned subsidiary of the Group) as lessee for a term of 1 year from 23 December 2007 to 22 December 2008 at a rent of HK$6,810 per month exclusive of management fee and other service charges.

The tenancy is not assignable.

The property is currently occupied by the Lessee as a warehouse.

– 183 –

APPENDIX VII

GENERAL INFORMATION

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 circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts the omission of which would make any statement herein misleading.

2. DIRECTORS’ INTERESTS IN SECURITIES

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

Long position in Shares and share options of the Company

		No. of	No. of		Approximate
Directors	Capacity	Shares	option	Total	Percentage
					(%) (Note 2)
Mr. Wong Kam Fu	Interest of controlled	603,121,089	–	603,121,089	16.12
and his associates	corporations and
(Note 1)	beneficial owner
Dr. Lew Mon Hung	Beneficial owner	29,452,666	13,740,000	43,192,666	1.15
Mr. Tam Wai Keung, Billy	Beneficial owner	24,833,333	10,000,000	34,833,333	0.93
Mr. Wah Wang Kei, Jackie	Beneficial owner	–	20,000,000	20,000,000	0.53
Mr. Wong Hong Loong	Beneficial owner	3,000,000	13,740,000	16,740,000	0.45
Mr. Sin Chi Keung, Mega	Beneficial owner	–	1,000,000	1,000,000	0.03
Mr. Wong Che Man, Eddy	Beneficial owner	200,000	1,000,000	1,200,000	0.03
Mr. Tang King Fai	Beneficial owner	600,000	1,000,000	1,600,000	0.04
Mr. Dai Zhongcheng	Beneficial owner	–	1,000,000	1,000,000	0.03

– 184 –

APPENDIX VII

GENERAL INFORMATION

Notes:

As at the date of the Latest Practicable Date, the 603,121,089 Shares comprised (i) 372,404,423 Shares held by Sheung Hai Developments Limited (“ Sheung Hai ”); (ii) 110,625,000 Shares held by Alpha Logistics Group Limited (“ Alpha Logistics ”); and (iii) 120,091,666 Shares are directly held by Mr. Wong Kam Fu. Each of Sheung Hai and Alpha Logistics is wholly and beneficially owned by Mr. Wong Kam Fu who is the chairman of the Company and an executive Director. Mr. Wong Kam Fu is also a director of Sheung Hai and Alpha Logistics.
The percentage shareholding is calculated based on the then existing issued share capital of the Company as at the date of the filing of the relevant notices by the Directors pursuant to the SFO.

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

3. SUBSTANTIAL SHAREHOLDERS AND PERSONS HAVING 5% OR MORE INTERESTS

As at the Latest Practicable Date, so far as was known to the Directors and the chief executive of the Company, the following persons (other than a Director or chief executive of the Company) had an interest or a short position in the Shares and 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 5% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group (including any company which will become a subsidiary of the Company by reason of an acquisition which has been agreed or proposed since 31 March 2008, being the date to which the latest audited consolidated financial statements have been made up) or had options in respect of such capital:

		Number of Shares
		and underlying	Approximate
Name	Capacity	Shares held	percentage
			(%)
Sheung Hai Developments	Beneficial owner	372,404,423	9.96
Limited_(Note 1)_
China Sound Limited	Beneficial owner	303,333,333	8.11
(Note 2)

– 185 –

APPENDIX VII

GENERAL INFORMATION

		Number of Shares
		and underlying	Approximate
Name	Capacity	Shares held	percentage
			(%)
Yi Xing Wu_(Note 2)_	Interest of a controlled	305,698,333	8.17
	corporation and
	beneficial owner
Chu Yuet Wah_(Note 3)_	Interest of a controlled	316,610,290	8.46
	corporation
Ma Siu Fong_(Note 3)_	Interest of a controlled	316,610,290	8.46
	corporation
Kingston Finance Limited	Security interest in Shares	316,610,000	8.46
Lam Yin Lok	Beneficial owner	255,416,234	6.82

Notes:

As at the date of the Latest Practicable Date, Sheung Hai Developments Limited was wholly and beneficially owned by Mr. Wong Kam Fu, and executive Director and the chairman of the Company. Mr. Wong Kam Fu is also a director of Sheung Hai Developments Limited.
As at the Latest Practicable Date, the 305,698,333 Shares comprised (i) 303,333,333 Shares held by China Sound Limited; and (ii) 2,365,000 Shares held by Mr. Yi Xing Wu. China Sound Limited is wholly and beneficially owned by Mr. Yi Xing Wu and Mr. Yi Xing Wu is a director of China Sound Limited.
As at the Latest Practicable Date, the 316,610,290 Shares comprised (i) 290 Shares held by Kingston Securities Limited; and (ii) 316,610,000 Shares held by Kingston Finance Limited, which are owned as to 51% by Ms. Chu Yuet Wah and 49% by Ms. Ma Siu Fong.

– 186 –

APPENDIX VII

GENERAL INFORMATION

Long position in the shares of other members of the Group

			Number of shares	Approximate
	Name of		in the capital	% of the
Name of shareholder	the company	Capacity	of the Company	shareholding
廣州易聯商業服務	深圳支付通商務服務有限公司	Beneficial owner	Not applicable	10%
有限公司	Shenzhen Payment Express
	Business Services Limited*
Mr. Shinensambuu	Mongol Oil Shale LLC	Beneficial owner	16,979	26.95%
Batsambuu			(note)
Ms. Shagdar	Mongol Oil Shale LLC	Beneficial owner	13,891	22.05%
Otgonchimeg			(note)

Note: Pursuant to the sale and purchase agreement dated 26 February 2008 entered into by, among others, Greatest Rise Investments Limited (a wholly-owned subsidiary of the Company) and Clear Smooth Investments Limited, the Group has agreed to acquire 51% of the issued share capital of Mongol Oil Shale LLC. Completion of the acquisition had not been occurred in accordance with the terms of the aforesaid agreement.

The relevant number of shares of Mongol Oil Shale LLC held by the respective party immediate after the proposed acquisition of Mongol Oil Shale LLC.

For identification purpose only

Save as disclosed above, as at the Latest Practicable Date, so far as was known to the Directors and the chief executive of the Company, no person (other than a Director or chief executive of the Company) had any interest or short position in the Shares and 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 5% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group (including any company which will become a subsidiary of the Company by reason of an acquisition which as been agreed or proposed since 31 March 2008, being the date to which the latest audited consolidated financial statements have been made up) or who had any options in respect of such capital.

4. DIRECTORS’ SERVICE CONTRACT

As at the Latest Practicable Date, there was no existing or proposed service contract between any of the Directors or proposed Directors and the Company or any member of the Group (including any company which will become a subsidiary of the Company by reason of an acquisition which as been agreed or proposed since 31 March 2008, being the date to which the latest audited consolidated financial statements have been made up), excluding contracts expiring or determinable by the Group within a year without payment of any compensation (other than statutory compensation).

– 187 –

APPENDIX VII

GENERAL INFORMATION

5. DIRECTORS’ INTERESTS IN COMPETING BUSINESS

As at the Latest Practicable Date, to the best knowledge of the Directors, none of the Directors or their respective associates (within the meaning defined in the Listing Rules) had any interests in any business which competed or might compete with the business of the Group.

6. INTERESTS IN ASSETS

As at the Latest Practicable Date, none of the Directors or experts named in the section headed “Experts and consents” in this appendix had any direct or indirect interest in the assets which had been, since 31 March 2008, the date to which the latest published audited consolidated financial statements of the Company have been made up, acquired or disposed of by or leased to any member of the Group (including any company which will become a subsidiary of the Company by reason of an acquisition or which has been agreed or proposed since 31 March 2008, being the date to which the audited consolidated financial statements of the Company have been made up), or were proposed to be acquired or disposed of by or leased to any member of the Group (including any company which will become a subsidiary of the Company by reason of an acquisition or which has been agreed or proposed since 31 March 2008, being the date to which the audited consolidated financial statements of the Company have been made up).

There was no contract or arrangement subsisting as at the Latest Practicable Date in which a Director was materially interested and which was significant in relation to the business of the Group (including any company which will become a subsidiary of the Company by reason of an acquisition or which has been agreed or proposed since 31 March 2008, being the date to which the audited consolidated financial statements of the Company have been made up).

7. MATERIAL CONTRACTS

Set out below are the material contracts (not being contracts entered into in the ordinary course of business) entered into by any member of the Group (including any company which will become a subsidiary of the Company by reason of an acquisition or which has been agreed or proposed since 31 March 2008, being the date to which the audited consolidated financial statements of the Company have been made up) within the two years immediately preceding the Latest Practicable Date:

(a) the Agreement;
(b) the sale and purchase agreement dated 26 February 2008 entered into by, among others, Greatest Rise Investments Limited (a wholly-owned subsidiary of the Company) and Clear Smooth Investments Limited regarding 51% of the issued share capital of Mongol Oil Shale LLC;

– 188 –

APPENDIX VII

GENERAL INFORMATION

(c) the sale and purchase agreement dated 5 November 2007 entered into by, among others, Dorson Group Limited (“Dorson”) (a wholly-owned subsidiary of the Company) and Luck Express Consultants Limited regarding the 334 shares interest of Dormer Group Limited (“Dormer”);
(d) the framework agreement dated 23 October 2007 entered into by Triple Winner International Limited (“Triple Winner”) (a wholly-owned subsidiary of the Company) and Guoye PRC Inc. (“Guoye”) regarding 51% of the issued share capital of Mongol Oil Shale LLC;
(e) the placing agreements dated 12 September 2007 entered into by the Company and each of Wellchamp Fund Limited and Galaxy China Opportunities Fund respectively for the placing of an aggregate of 100,000,000 Shares;
(f) the placing agreement entered into on 19 July 2007 between the Company and Mr. Yim Sang for the placing of 31,800,000 Shares;
(g) the placing agreement entered into on 17 July 2007 between the Company and Mr. Li Xing Hao for the placing of 50,000,000 Shares;
(h) the acquisition agreement dated 12 June 2007 entered into by Dorson and Udaya Holdings Limited and the Company regarding 96.66% of the entire issued share capital of Dormer;
(i) agreement for grant of option to purchase certain potential oil assets entered into on 22 May 2007 by the Company and Templeton Global Limited; and
(j) the placing agreements dated 13 April 2007 entered into by the Company and each of Wellchamp Fund Limited, Permahold Assets Management Co., Ltd. and Beijing Enterprises Holdings Limited respectively for the placing of an aggregate of 479,000,000 Shares.

8. LITIGATION

Save as disclosed below, as at the Latest Practicable Date, so far as the Directors were aware, no member of the Group (including any company which will become a subsidiary of the Company by reason of an acquisition or which has been agreed or proposed since 31 March 2008, being the date to which the audited consolidated financial statements of the Company have been made up) was engaged in any litigation or arbitration or claim of material importance and the Directors were not aware of any litigation or claims of material importance pending or threatened against any member of the Group (including any company which will become a subsidiary of the Company by reason of an

– 189 –

APPENDIX VII

GENERAL INFORMATION

acquisition or which has been agreed or proposed since 31 March 2008, being the date to which the audited consolidated financial statements of the Company have been made up):

On 8 January 2008, Guoye brought an action in High Court of Hong Kong under HCA 33 of 2008 against Shinensambuu Batsambuu (“Batsambuu”), Shagdar Otgonchimeg (“Otgonchimeg) and Mongol Oil Shale LLC for damages for breach of an agreement made between Guoye, Batsambuu and Otgonchimeg dated 17 October 2007 and the written supplemental agreement thereafter with interest and/or other relief and costs.
On 7 March 2008, Guoye brought an action in High Court of Hong Kong under HCA 364 of 2008 against Triple Winner, a wholly-owned subsidiary of the Company, and the Company for damages for breach of the framework agreement dated 23 October 2007 together with interest and/or further relief and costs.
On 23 April 2008, Ms. Susan So brought an action in High Court of Hong Kong under HCA 699 of 2008 against the Company for damages for breach of contract to be assessed, interest and other relief and costs.

9. EXPERTS AND CONSENTS

The following sets out the qualifications of the experts who have given opinion or advice which are contained in this circular:

Name	Qualification
SHINEWING (HK) CPA Limited	Certified Public Accountants
Greater China Appraisal Limited	Professional valuers

Each of the above experts has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of its letter and report (as the case may be) and references to its name, in the form and context in which they respectively appear.

As at the Latest Practicable Date, none of the above experts was beneficially interested in the share capital of any member of the Group, nor did any one of them have any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group (including any company which will become a subsidiary of the Company by reason of an acquisition or which has been agreed or proposed since 31 March 2008, being the date to which the audited consolidated financial statements of the Company have been made up).

10. MISCELLANEOUS

(a) The branch share registrar of the Company in Hong Kong is Union Registrars Limited at Rooms 1901-2, Fook Lee Commercial Centre, Town Place, 33 Lockhart Road, Wanchai, Hong Kong.

– 190 –

APPENDIX VII

GENERAL INFORMATION

(b) The secretary and qualified accountant of the Company is Ms. Cheng Sau Man, who is an associate member of Hong Kong Institute of Certified Public Accountants and a fellow member of the Association of Chartered Certified Accountants.
(c) The English text of this circular shall prevail over the Chinese text.

11. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours at the head office and principal place of business of the Company in Hong Kong at Suite 1606-7, 16/F, Great Eagle Centre, 23 Harbour Road, Wanchai, Hong Kong up to and including 23 July 2008:

(a) the memorandum of association and bye-laws of the Company;
(b) the material contracts as set out in the section headed “Material contracts” in this appendix;
(c) the report from SHINEWING (HK) CPA Limited on the audited consolidated financial statements of the Group for the three years ended 30 June 2007 and nine months ended 31 March 2008 together with all notes attached thereto, the text of which is set out in appendix I to this circular;
(d) the report from SHINEWING (HK) CPA Limited on the unaudited pro forma financial information of the Remaining Group, the text of which is set out in appendix II to this circular;
(e) the property valuation report, the text of which is set out in appendix VI to this circular;
(f) the letters of consent referred to under the section headed “Experts and consents” in this appendix;
(g) this circular; and
(h) a copy of each circular issued pursuant to the requirements set out in Chapter 14 and/or 14A of the Listing Rules which has been issued since 31 March 2008, being the date of the latest published audited accounts of the Company were made up.

– 191 –

NOTICE OF SGM

==> picture [361 x 56] intentionally omitted <==

*

(Incorporated in Bermuda with limited liability)

(Stock Code: 1051)

NOTICE IS HEREBY GIVEN THAT a special general meeting (the “ SGM ”) of Smart Rich Energy Finance (Holdings) Ltd. (the “ Company ”) will be held at Suite 1606-7, 16/F, Great Eagle Centre, 23 Harbour Road, Wanchai, Hong Kong on Wednesday, 23 July 2008 at 11:00 a.m. to consider and, if thought fit, pass with or without modifications, the following resolutions each of which will be proposed as an ordinary resolution as indicated below:

ORDINARY RESOLUTIONS

“ THAT :
(a) the conditional sale and purchase agreement dated 17 April 2008 (as amended and varied by a supplemental agreement dated 20 May 2008, collectively the “ Agreement ”, a copy of which has been produced to the meeting marked “A” and signed by the chairman of the meeting for purpose of identification) entered into between the Company, Rich Theme Holdings Limited as purchaser and Dorson Group Limited, Hopestar Group Limited and Dormer Group Limited as vendors (the “ Vendors ”) in relation to 360 shares of US$1.00 each in the share capital of Madagascar Petroleum International Limited, at an aggregate consideration of HK$810,000,000 be and are hereby approved, confirmed and ratified; and
(b) the directors of the Company be and are hereby authorised on behalf of the Company to do all such things and sign, seal, execute, perfect and deliver all such documents as they may in their discretion consider necessary, desirable or expedient, for the purposes of or in connection with the implementation and/or give effect to any matters relating to the Agreement and all transactions contemplated thereunder.”
“ THAT subject to and conditional upon the granting by the Listing Committee of The Stock Exchange of Hong Kong Limited of, the listing of and permission to deal in, the Shares to be issued pursuant to the exercise of options granted under the refreshed scheme mandate limit (the “ Refreshed General Scheme Limit ”) under the share option scheme as approved by an ordinary resolution passed by the shareholders of the Company on 28 August 2007 in the manner as set out in paragraph (a) of this resolution below,
(a) the refreshment of the Refreshed General Scheme Limit of up to 10% of the Shares in issue as at the date of passing of this resolution be and is hereby approved; and
For identification purpose only

– 192 –

NOTICE OF SGM

(b) the Directors be and are hereby authorised to do all such acts and things and execute all such documents, including under seal where applicable, as they consider necessary or expedient to give effect to the foregoing arrangement.”

By Order of the Board Smart Rich Energy Finance (Holdings) Ltd. Lew Mon Hung Deputy Chairman

Hong Kong, 8 July 2008

Principal place of business in Hong Kong: Suite 1606-7, 16/F Great Eagle Centre 23 Harbour Road Wanchai Hong Kong

Registered office: Canon’s Court 22 Victoria Street Hamilton HM12 Bermuda

Notes:

A shareholder of the Company (“ Shareholder ”) entitled to attend and vote at the SGM may appoint one or more proxies to attend and to vote in his stead. A proxy need not be a Shareholder.
Where there are joint registered holders of any share of the Company (“ Share ”), any one such person may vote at the SGM, either personally or by proxy, in respect of such Share as if he were solely entitled thereto; but if more than one of such joint holders be present at 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.
In order to be valid, the form of proxy when duly completed and signed in accordance with the instructions printed thereon together with the power of attorney or other authority, if any, under which it is signed or a notarially certified copy thereof must be delivered to Union Registrars Limited, the branch share registrar of Smart Rich Energy Finance (Holdings) Ltd., at Rooms 1901-2, Fook Lee Commercial Centre, Town Place, 33 Lockhart Road, Wanchai, Hong Kong, not less than 48 hours before the time appointed for holding the SGM or any adjournment thereof.
As at the date of this notice, the Board comprises Mr. Wong Kam Fu, Dr. Lew Mon Hung, Mr. Tam Wai Keung, Billy, Mr. Wah Wang Kei, Jackie, Mr. Wong Hong Loong and Mr. Sin Chi Keung, Mega as executive Directors and Mr. Wong Che Man, Eddy, Mr. Tang King Fai and Mr. Dai Zhongcheng as independent non-executive Directors.

– 193 –

AI assistant

G-Resources Group Limited — Proxy Solicitation & Information Statement 2008

49648_rns_2008-07-07_d6ddb7a1-14f4-4d8f-b588-0858fdd02f25.pdf

DEFINITIONS

DEFINITIONS

(Stock Code: 1051)

(1) VERY SUBSTANTIAL DISPOSAL AND VERY SUBSTANTIAL ACQUISITION (2) REFRESHMENT OF THE GENERAL SCHEME LIMIT UNDER THE SHARE OPTION SCHEME AND

(3) NOTICE OF SPECIAL GENERAL MEETING

INTRODUCTION

THE AGREEMENT

Date of the Agreement:

Parties to the Agreement:

Assets to be disposed of

Consideration

Conditions precedent

Consideration Shares

INFORMATION ON MPIL

INFORMATION ON SUNPEC GROUP

REASONS FOR THE SALE

FINANCIAL EFFECTS OF THE SALE

FINANCIAL EFFECTS OF THE ACQUISITION OF THE CONSIDERATION SHARES

USE OF PROCEEDS

LISTING RULES’ IMPLICATIONS

PROPOSED REFRESHMENT OF THE GENERAL SCHEME LIMIT

The General Scheme Limit

Application for Listing

THE SGM

PROCEDURE FOR DEMANDING A POLL

RECOMMENDATION

FURTHER INFORMATION

Opinion

I. FINANCIAL INFORMATION

CONSOLIDATED INCOME STATEMENTS

I. FINANCIAL INFORMATION (CONT’D)

CONSOLIDATED BALANCE SHEETS

I. FINANCIAL INFORMATION (CONT’D)

BALANCE SHEETS

I. FINANCIAL INFORMATION (CONT’D)

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

I. FINANCIAL INFORMATION (CONT’D)

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (CONT’D)

I. FINANCIAL INFORMATION (CONT’D)

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (CONT’D)

Unaudited

I. FINANCIAL INFORMATION (CONT’D)

CONSOLIDATED CASH FLOW STATEMENTS

I. FINANCIAL INFORMATION (CONT’D)

CONSOLIDATED CASH FLOW STATEMENTS (CONT’D)

I. FINANCIAL INFORMATION (CONT’D)

CONSOLIDATED CASH FLOW STATEMENTS (CONT’D)

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION

1. GENERAL INFORMATION

2. ADOPTION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS (“HKFRSs”)

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

3. SIGNIFICANT ACCOUNTING POLICIES

Basis of consolidation

Business combinations

Minority interests

Investments in subsidiaries

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

Interest in a jointly controlled entities

Property, plant and equipment

Intangible assets

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

Financial instruments

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

Financial instruments (cont’d)

Loans and receivables

Available-for-sale financial assets

Impairment loss on financial assets

I. FINANCIAL INFORMATION (CONT’D)

NOTES TO THE FINANCIAL INFORMATION (CONT’D)

G-Resources Group Limited Proxy Solicitation & Information Statement 2008