GoFintech Quantum Innovation Limited - M&A Activity 2003

THIS COMPOSITE DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or otherwise transferred all your shares in New Times Group Holdings Limited, you should at once hand this Composite Document and the accompanying form of acceptance and transfer to the purchaser(s) or transferee(s) or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or transferee(s).

Neither The Stock Exchange of Hong Kong Limited nor the Securities and Futures Commission of Hong Kong takes any responsibility for the contents of this Composite Document, makes any 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 Composite Document.

VICTORY RIDER LIMITED NEW TIMES GROUP HOLDINGS LIMITED (Incorporated in the British Virgin Islands （新時代集團控股有限公司）[*] with limited liability) (Incorporated in Bermuda with limited liability)

UNCONDITIONAL VOLUNTARY CASH OFFER BY

KINGSTON SECURITIES LIMITED

ON BEHALF OF VICTORY RIDER LIMITED TO ACQUIRE ALL THE SHARES OF NEW TIMES GROUP HOLDINGS LIMITED (OTHER THAN THOSE SHARES ALREADY OWNED BY VICTORY RIDER LIMITED OR PARTIES ACTING IN CONCERT WITH IT)

FINANCIAL ADVISER TO VICTORY RIDER LIMITED

KINGSTON CORPORATE FINANCE LIMITED

INDEPENDENT FINANCIAL ADVISER TO THE INDEPENDENT BOARD COMMITTEE

ALTUS CAPITAL LIMITED

A letter from the Board is set out on pages 4 to 7 of this Composite Document.

A letter from Kingston Securities Limited containing, among other things, the details of the terms of the Offer is set out on pages 8 to 13 of this Composite Document.

A letter from the Independent Board Committee to the Independent Shareholders is set out on page 14 of this Composite Document.

A letter of advice from Altus Capital Limited containing its opinion and advice to the Independent Board Committee in connection with the Offer is set out on pages 15 to 27 of this Composite Document.

The procedures for acceptance and settlement of the Offer is set out on pages 28 to 32 in Appendix I to this Composite Document and in the accompanying form of acceptance. Acceptances of the Offer should be received by Tengis Limited, Ground Floor, BEA Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong by no later than 4:00 p.m. on Friday, 12 December 2003 or such later time and/or date as Victory Rider Limited may determine and announce in accordance with the Takeovers Code.

21 November 2003

* For identification purpose only

	Page
Expected timetable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	ii
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Letter from Kingston Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Letter from Altus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
Appendix I – Further terms of the Offer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	28
Appendix II – Financial information of the Group. . . . . . . . . . . . . . . . . . . . . . . . . . . .	33
Appendix III – Comfort letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	68
Appendix IV – General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	71

– i –

EXPECTED TIMETABLE

Offer commences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 21 November 2003

Latest time for acceptance of the Offer (Note 1) . . . . . . . . 4:00 p.m. on Friday, 12 December 2003

Closing Date (Note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 December 2003

Announcement of the results of the Offer

to be published in the newspapers (Note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 December 2003

Latest date for despatch of remittances

for the amounts due in respect of valid

acceptance received under the Offer (Note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 December 2003

Notes:

Under the Takeovers Code, where an offer document and the offeree board circular are combined in a composite document, the offer must remain open for acceptance for at least 21 days following the date on which the composite document is posted. Accordingly, the Offer will remain open for acceptance until 4:00 p.m. on Friday, 12 December 2003. While the Offeror has no intention of revising or extending the Offer beyond the Closing Date, the Offeror reserves the right to extend the Offer until such date as it may determine in accordance with the Takeovers Code. The Offeror will issue a teletext announcement through the Stock Exchange by 7:00 p.m. on the Closing Date in relation to whether the Offer has expired, or has been revised or extended, which announcement will state either the next closing date or that the Offer will remain open until further notice. Such announcement will be republished in newspapers on the next business day thereafter. If the Offeror decides to extend the Offer and no closing date is specified in the relevant announcement, at least 14 days’ notice in writing will be given, before the Offer is closed, to the Shareholders who have not accepted the Offer.
Remittances in respect of the consideration payable for the Shares tendered under the Offer will be posted to the relevant qualifying Shareholders by ordinary post at their own risk as soon as possible but in any event within 10 days of the date of receipt by the Registrar of all the relevant documents to render the relevant acceptances under the Offer complete and valid.

All time references contained in this Composite Document refer to Hong Kong time.

– ii –

DEFINITIONS

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

“Altus”	Altus Capital Limited, a corporation licensed under the
	transitional arrangements to carry on business in types 1, 4, 6, 9
	regulated activities under the SFO and the independent financial
	adviser to the Independent Board Committee in respect of the
	Offer
“Announcement”	the announcement dated 26 September 2003 made jointly by
	the Company and Victory Rider regarding details of the Offer
“associate”	the same meaning ascribed thereto in the Listing Rules
“Board”	the board of Directors
“CCASS”	the Central Clearing and Settlement System established and
	operated by Hong Kong Securities Clearing Company Limited
“Closing Date”	12 December 2003 or if the Offer is revised or extended, the
	closing date of the Offer as revised or extended in accordance
	with the Takeovers Code
“Companies Ordinance”	Companies Ordinance (Chapter 32 of the Laws of Hong Kong)
“Company”	New Times Group Holdings Limited, a company incorporated
	in Bermuda with limited liability, the securities of which are
	listed on the Stock Exchange
“Composite Document”	this composite document jointly despatched by the Offeror and
	the Company setting out, inter alia, the details of the Offer,
	the procedures for acceptance of the Offer, the letter from the
	Independent Board Committee and the letter from Altus
“Directors”	the directors of the Company
“Executive”	the Executive Director of the Corporate Finance Division of
	the SFC or any delegate of the Executive Director
“Form of Acceptance”	the accompanying form of acceptance and transfer in respect
	of the Offer
“Group”	the Company and its subsidiaries
“HKSCC”	Hong Kong Securities Clearing Company Limited
“Hong Kong”	The Hong Kong Special Administrative Region of the PRC

– 1 –

DEFINITIONS

“Independent Board Committee” the independent board committee of the Company comprising Ms. Lau Ching Yin, Judy and Mr. Lo Kwok Hung, John, being the independent non-executive Directors, which has been established for the purpose of advising the Independent Shareholders in relation to the Offer
“Independent Shareholders” Shareholders other than the Offeror, Kandy Profits, their associates and parties acting in concert with any of them
“Independent Third Parties” parties not connected nor acting in concert with the directors, chief executives or substantial shareholders of the Company or any of its subsidiaries or an associate of any of them
“Kandy Profits” Kandy Profits Limited, an investment holding company incorporated in the British Virgin Islands with limited liability, of which Mr. Cheong Tin Yau is the sole beneficial owner and the sole director
“Kingston” Kingston Corporate Finance Limited, a corporation licensed under the transitional arrangements to carry on business in types 4 and 6 regulated activities (advising on securities and corporate finance) under the SFO and the financial adviser to the Offeror in respect of the Offer
“Kingston Securities” Kingston Securities Limited, a corporation licensed under the transitional arrangements to carry on business in types 1, 4, 6 and 9 regulated activities (dealing in securities, advising on securities and corporate finance and asset management) under the SFO
“Last Trading Day” 1 September 2003, being the last trading day prior to the suspension of trading in the Shares from 2:30 p.m. on 1 September 2003, pending issue of the Announcement
“Latest Practicable Date” 18 November 2003, being the latest practicable date prior to the printing of this Composite Document for the purpose of ascertaining certain information for inclusion in this Composite Document
“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange
“Ms. Huang” Ms. Huang Ning

“Offer” the unconditional voluntary cash offer made by Kingston Securities, on behalf of the Offeror, to acquire all the Shares not already owned by the Offeror or parties acting in concert with it including Kandy Profits at the Offer Price

– 2 –

DEFINITIONS

“Offer Price”	HK$0.30 per Offer Share in cash
“Offer Share(s)”	all the issued Share(s) (other than those already owned by the
	Offeror or parties acting in concert with it including Kandy
	Profits)
“Offeror” or “Victory Rider”	Victory Rider Limited, an investment holding company
	incorporated in the British Virgin Islands with limited liability,
	of which Ms. Huang is the sole beneficial owner and the sole
	director
“Option(s)”	Share option(s) granted under the share option scheme adopted
	by the Company on 30 August 2002
“Overseas Shareholders”	Shareholders whose addresses on the register of members of
	the Company are outside Hong Kong
“parties acting in concert”	has the meaning ascribed thereto in the Takeovers Code
“PRC”	The People’s Republic of China
“Registrar”	Tengis Limited, the Hong Kong branch share registrar of the
	Company at Ground Floor, BEA Harbour View Centre, 56
	Gloucester Road, Wanchai, Hong Kong
“SFC”	The Securities and Futures Commission of Hong Kong
“SFO”	The Securities and Futures Ordinance (Chapter 571 of the Laws
	of Hong Kong)
“Share(s)”	ordinary share(s) of HK$0.10 each in the share capital of the
	Company
“Shareholder(s)”	holder(s) of the Share(s)
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Takeovers Code”	the Hong Kong Code on Takeovers and Mergers
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“%” or “per cent.”	percentage

– 3 –

LETTER FROM THE BOARD

NEW TIMES GROUP HOLDINGS LIMITED （新時代集團控股有限公司）[*]

(Incorporated in Bermuda with limited liability)

Executive Directors: Cheong Tin Yau (Chairman) Liu Jicheng (Deputy Chairman) Lam Kwan Sing

Independent non-executive Directors: Lau Ching Yin, Judy Lo Kwok Hung, John

Registered office: Clarendon House 2 Church Street Hamilton HM11 Bermuda

Head office and principal place of business: 22nd Floor 80 Gloucester Road Wanchai Hong Kong

21 November 2003

To the Independent Shareholders and,

for information only, the holders of the Options

Dear Sir or Madam,

UNCONDITIONAL VOLUNTARY CASH OFFER BY KINGSTON SECURITIES LIMITED ON BEHALF OF VICTORY RIDER LIMITED TO ACQUIRE ALL THE SHARES OF NEW TIMES GROUP HOLDINGS LIMITED

(OTHER THAN THOSE SHARES ALREADY OWNED BY VICTORY RIDER LIMITED OR PARTIES ACTING IN CONCERT WITH IT)

INTRODUCTION

On 26 September 2003, the Offeror and the Board, upon notification by the Offeror, announced an unconditional voluntary cash offer to be made, on behalf of the Offeror, by Kingston Securities for all the shares of the Company, not already owned by the Offeror (or parties acting in concert with it including Kandy Profits).

The Offer is made following the acquisition by the Offeror of 121,666,000 Shares, representing approximately 28.1 per cent of the issued share capital of the Company, from Kandy Profits on 1 September 2003 at HK$0.30 per Share. Accordingly, the Offer is being made for 190,936,000 Shares, representing approximately 44.1 per cent of the entire issued share capital of the Company, without taking into account the 120,700,000 Shares held by Kandy Profits. Kandy Profits who owns 120,700,000 Shares, representing approximately 27.9 per cent of the issued share capital, is a party presumed to be acting in concert with the Offeror pursuant to the Takeovers Code.

* For identification purpose only

– 4 –

LETTER FROM THE BOARD

The purpose of this letter is to provide you with, among other matters, further information relating to the Group and the Offer.

THE OFFER

The Offer will be made in compliance with the Takeovers Code by Kingston Securities on behalf of the Offeror on the following terms:

For each Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$0.30 in cash

As at the Latest Practicable Date, the Company had also granted Options for the subscription of an aggregate of 28,886,800 Shares under the share option scheme adopted by the Company on 30 August 2002. Holders of all outstanding Options have undertaken to the Offeror that they will not exercise any rights attached to the Options for subscription of new Shares during the period from the date of the Announcement up to and including the Closing Date nor accept any offer that the Offeror may make under Rule 13 of the Takeovers Code for the Options held by them while the Offer remains open for acceptance. All the holders of the Options have confirmed that the Offeror does not have to extend the Offer or make any comparable offer arising out of or in relation to the Offer to them for the Options. Details of the Options are as follows:

	Exercise price	Number of
Exercise period	of each Option	outstanding Options
1 February 2003 to 31 January 2008	HK$0.67	28,886,800

The holders of the Options do not own any Shares as at the Latest Practicable Date.

Save as aforesaid, there are no outstanding warrants, options, subscription rights in respect of any class of equity share capital of the Company or securities convertible into Shares as at the Latest Practicable Date.

The Offer is not conditional on acceptances being received in respect of a minimum number of Offer Shares.

Further terms of the Offer, including the procedures for acceptance, are set out in the letter from Kingston Securities in this Composite Document, in Appendix I to this Composite Document and in the Form of Acceptance. An expected timetable of the Offer is set out under the heading “Expected Timetable” of this Composite Document.

INFORMATION ON THE GROUP

The Group is principally engaged in the trading of precision components processing equipment, PRC property investments and other investment activities.

– 5 –

LETTER FROM THE BOARD

The audited consolidated net loss of the Company for the years ended 31 March 2003 and 31 March 2002 was approximately HK$76.1 million and HK$39.9 million respectively. The latest unaudited pro forma consolidated net tangible assets of the Company as set out in Appendix II to this Composite Document was approximately HK$175.7 million equivalent to net tangible asset per Share of approximately HK$0.41. The audited consolidated net tangible assets of the Company as at 31 March 2003 and 31 March 2002 were HK$145.2 million and HK$220.3 million respectively. Further financial information of the Group is set out in Appendix II to this Composite Document.

The shareholding structure of the Company as at the Latest Practicable Date was as follows:

		Approximate
		percentage of
	Number of Shares	shareholding
		(%)
The Offeror_(Note 1)_	121,666,000	28.08
Kandy Profits_(Note 2)_	120,700,000	27.86
Kistefos Investment A.S.(Note 3)	62,400,000	14.40
Public	128,536,000	29.66
Total	433,302,000	100.00

Notes:

The Offeror is wholly owned by Ms. Huang.
Kandy Profits is wholly owned by Mr. Cheong Tin Yau.
So far as is known to the Directors, Kistefos Investment A.S. is wholly owned by A.S. Kistefos Traesliberi, in which Christen Sveaas has an 85% beneficial interest.

INTENTION OF THE DIRECTORS IN RESPECT OF THEIR SHAREHOLDING INTERESTS IN THE COMPANY

The interest of the Directors in securities of the Company are set out in the paragraph headed “Disclosure of Interests” of Appendix IV to this Composite Document.

Save as disclosed in the paragraph headed “Disclosure of Interests” of Appendix IV to this Composite Document, none of the Directors holds any securities as at the Latest Practicable Date.

None of the Directors, who hold the Shares or the Options, as the case may be, intend to accept the Offer.

INFORMATION ON THE OFFEROR

Your attention is drawn to the letter from Kingston Securities contained in this Composite Document for information on the Offeror.

– 6 –

LETTER FROM THE BOARD

ADDITIONAL INFORMATION

Your attention is drawn to the general information set out in Appendix IV to this Composite Document.

RECOMMENDATION

We strongly advise you to read the letter from each of the Independent Board Committee and Altus, the independent financial adviser to the Independent Board Committee, set out in this Composite Document which set out their respective recommendation and advice in respect of the Offer.

Yours faithfully, For and on behalf of

New Times Group Holdings Limited Cheong Tin Yau Chairman

– 7 –

LETTER FROM KINGSTON SECURITIES

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

Kingston Securities Limited

Suite 2801, 28th Floor One International Finance Centre 1 Harbour View Street, Central, Hong Kong

21 November 2003

To the Independent Shareholders and,

for information only, the holders of the Options

Dear sir or madam,

UNCONDITIONAL VOLUNTARY CASH OFFER BY KINGSTON SECURITIES LIMITED ON BEHALF OF VICTORY RIDER LIMITED TO ACQUIRE ALL THE SHARES OF NEW TIMES GROUP HOLDINGS LIMITED (OTHER THAN THOSE SHARES ALREADY OWNED BY VICTORY RIDER LIMITED OR PARTIES ACTING IN CONCERT WITH IT)

INTRODUCTION

THE OFFER

The Offer will be made in compliance with the Takeovers Code by Kingston Securities on behalf of the Offeror on the following terms:

For each Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$ 0.30 in cash

The determination of the Offer Price is based on the price per Share which the Offeror paid to Kandy Profits for 121,666,000 Shares on 1 September 2003. The Offer Price represents (i) a discount of approximately 33.33 per cent. to the closing price of HK$0.45 as quoted by the Stock Exchange of the Shares on the Last Trading Day; (ii) a discount of approximately 33.33 per cent.

– 8 –

LETTER FROM KINGSTON SECURITIES

to the average of closing prices of the Shares of HK$0.45 over the last 10 trading days before the release of the Announcement; (iii) a discount of approximately 35.48 per cent. to the average of closing prices of the Shares of HK$0.465 over the last 20 trading days before the release of the Announcement; (iv) a discount of approximately 16.67 per cent. to the closing price of the Shares of HK$0.36 as at the Latest Practicable Date and (v) a discount of approximately 26.83 per cent. to the latest unaudited pro forma consolidated net tangible assets per Share of approximately HK$0.41 set out in Appendix II to this Composite Document.

There is no condition regarding the acceptance of the Offer. The Offer does not involve any issue of unlisted securities.

Highest and lowest closing price

The highest and lowest closing prices of the Shares as quoted by the Stock Exchange during the six-month period preceding the date of the Announcement and up to and including the Latest Practicable Date were HK$0.48 per Share from 30 May 2003 to 11 June 2003 and from 13 June 2003 to 15 August 2003, and HK$0.327 per Share on 27 March 2003 respectively.

Dealings in Shares

The Offeror confirms that there have been no dealings in the Shares by the Offeror or parties acting in concert with it in the past six months from 2 March 2003 to 1 September 2003 and up to the Latest Practicable Date other than (i) the acquisition of 121,666,000 Shares by the Offeror from Kandy Profits on 1 September 2003 and; (ii) the subscription of 88,122,000 new Shares at HK$0.30 each of Kandy Profits under the rights issue of Shares completed in May 2003, details of which are set out in the announcement of the Company dated 7 May 2003.

Options

	Exercise price	Number of
Exercise period	of each Option	outstanding Options
1 February 2003 to 31 January 2008	HK$0.67	28,886,800

The holders of the Options do not own any Shares as at the Latest Practicable Date.

The Offer is not conditional on acceptances being received in respect of a minimum number of Offer Shares.

– 9 –

LETTER FROM KINGSTON SECURITIES

Total Consideration

As at the Latest Practicable Date, there were 433,302,000 Shares in issue. On the basis of the Offer Price of HK$0.30 per Share, the entire issued share capital of the Company is valued at approximately HK$129.99 million under the Offer. In the event that all the Independent Shareholders accept the Offer, the total consideration of the Offer will be approximately HK$57.3 million based on the Offer Price. Kingston has been engaged by the Offeror as its financial adviser in respect of the Offer and Kingston Securities will make the Offer on behalf of the Offeror. Kingston Securities has provided the Offeror with a loan facility of HK$57.5 million for the purpose of financing the Offer. Kingston confirms that it is satisfied that there are sufficient financial resources available to the Offeror for meeting full acceptances of the Offer.

The sole director of the Offeror confirms that the payment of interest on repayment of or security for any liability (contingent or otherwise) in relation to the amount of funds required for the full acceptances of the Offer will not depend, to any significant extent, on the business of the Company.

Compulsory acquisition

Save for satisfying any requirements imposed by law, the Offeror and parties acting in concert with it do not intend to exercise any right which may be available under the provisions of the Companies Act 1981 of Bermuda to acquire compulsorily any outstanding issued Shares not acquired under the Offer after it is closed but reserve the right to do so. Any exercise of rights of compulsory acquisition by the Offeror and parties acting in concert with it will be in full compliance with the requirements pursuant to the Takeovers Code.

Effect of accepting the Offer

By accepting the Offer, Shareholders will sell their Shares and all rights attached to them, including the rights to receive all dividends and distribution declared, made or paid on or after the posting of this Composite Document.

INFORMATION ON THE GROUP

The Group is principally engaged in the trading of precision components processing equipment, PRC property investments and other investment activities.

The audited consolidated net loss of the Company for the years ended 31 March 2003 and 31 March 2002 was approximately HK$76.1 million and approximately HK$39.9 million respectively. The latest unaudited pro forma consolidated net tangible assets of the Company as set out in Appendix II to this Composite Document was approximately HK$175.7 million equivalent to net tangible asset per Share of approximately HK$0.41. The audited consolidated net tangible assets of the Company as at 31 March 2003 and 31 March 2002 were approximately HK$145.2 million and approximately HK$220.3 million respectively. Further financial information of the Group is set out in Appendix II to this Composite Document. There is no change in accounting policy that leads to the figures shown in Appendix II to this Composite Document being not comparable.

– 10 –

LETTER FROM KINGSTON SECURITIES

The shareholding structure of the Company as at the Latest Practicable Date was as follows:

		Approximate
		percentage of
	Number of Shares	shareholding
		%
The Offeror_(Note 1)_	121,666,000	28.08
Kandy Profits_(Note 2)_	120,700,000	27.86
Kistefos Investment A.S.(Note 3)	62,400,000	14.40
Public	128,536,000	29.66
Total	433,302,000	100.00

Notes:

The Offeror is wholly owned by Ms. Huang.
Kandy Profits is wholly owned by Mr. Cheong Tin Yau.
So far as is known to the Directors, Kistefos Investment A.S. is wholly owned by A.S. Kistefos Traesliberi, in which Christen Sveaas has an 85% beneficial interest.

INFORMATION ON THE OFFEROR

The Offeror is a company which was incorporated in the British Virgin Islands on 5 February 2003 and is wholly and beneficially owned by Ms. Huang. The Offeror is an investment holding company. The Offeror has not carried in any business activities since its incorporation other than purchasing the 121,666,000 Shares from Kandy Profits and making the Offer. Ms. Huang is the sole director of the Offeror.

Ms. Huang, aged 35, graduated from 華南理工大學 (Hua Nam Polytechnic University). Ms. Huang has been the managing director of 中盛偉僑國際投資控股有限公司 (“中盛偉僑 ”) (China Waywide International Holding Co. Ltd. (“China Waywide”)) since 2001 which has participated in direct investments in battery materials production project, PRC property investments project and water treatment project. Before joining 中盛偉僑 (China Waywide), Ms. Huang had about 8 years of experience in trading of hair-care products and 7 years of experience in export of alcoholic drinks.

INTENTION OF THE OFFEROR REGARDING THE COMPANY

The Offeror intends that the Group will continue its existing business of the Company but will review its current business activities and assets in due course with a view to strengthening the operations and future development of the Group. In addition, it is proposing to identify suitable new investment opportunities to develop the Company further, although no specific targets have been identified. The Offeror is optimistic about the PRC property investments business of the Group. The Offeror confirms that it will procure that, following the close of the Offer, any asset

– 11 –

LETTER FROM KINGSTON SECURITIES

injections or disposals will be implemented in accordance with all applicable laws, regulations and relevant provisions of the Listing Rules. The Offeror has no intention to introduce any material changes to the business of the Group, including any redeployment of the fixed assets of the Group.

The Offeror has no intention to privatise the Company. As stated in the above, the Offeror intends that the Company should maintain its listing status and that it has undertaken to the Stock Exchange to take appropriate steps following the close of the Offer to ensure that such number of Shares as may be required by the Stock Exchange are held by the public.

DIRECTORS AND MANAGEMENT

The Board is currently made up of five Directors, comprising three executive and two independent non-executive Directors. All existing members of the Board shall remain as Directors. The Offeror intends to nominate Ms. Huang to the Board as a non-executive Director immediately following despatch of the Composite Document. Ms. Huang is also the managing director of China Waywide which has participated in certain PRC property investments projects. Given that one of the principal activities of the Group is property investments in the PRC, China Waywide may compete with the Group’s business in future. Ms. Huang to be nominated as the non-executive Director will not be involved in the daily business and operations of the Group. The Board considers that the Company is capable of carrying on its business independently.

The Offeror does not believe the proposed nomination to the Board has any material adverse impact on the Group.

Save as aforesaid, it is the intention of the Offeror that there will be no material changes in the Board, existing management and employee of the Group and that there will be no material change to the employment terms or conditions of the employees of the Group as a result of the Offer.

Save as disclosed above, there is no agreement between the Offeror and the existing directors of the Company with regard to their directorships in the Company.

MAINTENANCE OF THE LISTING STATUS OF THE COMPANY

The Offeror intends that the Company should maintain the listing of the Shares on the Stock Exchange, and the Offeror, the Company, all existing members of the Board and the new director to be appointed to the Board have undertaken to the Stock Exchange to take appropriate steps following the close of the Offer to ensure that such number of Shares as may be required by the Stock Exchange are held by the public. Save for the aforesaid undertaking to the Stock Exchange, there is no agreement to, arrangement for or understanding of any transfer of the Shares acquired pursuant to the Offer to any other persons by the Offeror.

The Stock Exchange has stated that it will closely monitor trading in the Shares following the close of the Offer. If the Stock Exchange believes that a false market exists or may exist in the Shares and that there are insufficient Shares in public hands to maintain an orderly market, then it will consider exercising its discretion to suspend trading in the Shares.

– 12 –

LETTER FROM KINGSTON SECURITIES

The Stock Exchange has also stated that, if the Company remains a company listed on the Stock Exchange, any future injections of assets into or disposals of assets of the Company will be subject to the provisions of the Listing Rules. Pursuant to the Listing Rules, the Stock Exchange has discretion to require the Company to issue a circular to its shareholders where any acquisition or disposal by the Company is proposed, irrespective of the size of such acquisition or disposal and in particular where such acquisition or disposal represents a departure from the principal activities of Company. The Stock Exchange also has the power pursuant to the Listing Rules, to aggregate a series of acquisitions or disposals by the Company and any such acquisitions or disposals may, in any event, result in the Company being treated as a new applicant for listing and subject to the requirements for new applicants as set out in the Listing Rules.

FURTHER TERMS OF THE OFFER

Further terms of the Offer, including procedures for acceptance and the acceptance period, are set out in Appendix I to this Composite Document and the Form of Acceptance.

GENERAL

To ensure equality of treatment of all Shareholders, those registered Shareholders who hold Shares as nominee for more than one beneficial owner should, as far as practicable, treat the holding of each beneficial owner separately. In order for the beneficial owners of the Shares whose investments are registered in nominee names to accept the Offer, it is essential that they provide instructions to their nominees of their intentions with regard to the Offer.

The attention of Shareholders who are not residents in Hong Kong is drawn to the section headed “Overseas Shareholders” in Appendix I to this Composite Document.

All documents and remittances sent to Shareholders by ordinary post will be sent to them at their own risk. Such documents and remittances will be sent to the Shareholders at their respective addresses as they appear in the register of members of the Company or, in the case of joint Shareholders, to the Shareholder whose name stands first in the register of members of the Company, as applicable. None of the Company, the Offeror, Kingston or Kingston Securities or any of their respective directors or any other person involved in the Offer will be responsible for any loss or delay in transmission or any other liabilities that may arise as a result thereof.

Independent Shareholders are strongly advised to consider carefully the information contained in the letter from the Board, the letter from the Independent Board Committee and the letter from Altus set out in this Composite Document.

Your attention is drawn to the additional information set out in the Appendices, which form part of this Composite Document.

Yours faithfully, For and on behalf of

Kingston Securities Limited

Director

Nicholas Chu

– 13 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

NEW TIMES GROUP HOLDINGS LIMITED （新時代集團控股有限公司）[*]

(Incorporated in Bermuda with limited liability)

21 November 2003

To Independent Shareholders and, for information only, the holders of the Options

Dear Sir or Madam,

UNCONDITIONAL VOLUNTARY CASH OFFER BY KINGSTON SECURITIES LIMITED ON BEHALF OF VICTORY RIDER LIMITED TO ACQUIRE ALL THE SHARES OF NEW TIMES GROUP HOLDINGS LIMITED (OTHER THAN THOSE SHARES ALREADY OWNED BY VICTORY RIDER LIMITED OR PARTIES ACTING IN CONCERT WITH IT)

We refer to the composite document dated 21 November 2003 issued jointly by the Offeror and the Company (the “Composite Document”), of which this letter forms part. Terms defined in the Composite Document shall bear the same meanings when used herein unless the context requires otherwise.

As Directors who are independent of the parties to the Offer, we have been appointed to form the Independent Board Committee to consider the Offer and Altus has been appointed as the independent financial adviser to advise us in this respect.

Your attention is drawn to the “Letter from the Board” and the “Letter from Kingston Securities” set out on pages 4 to 13 of the Composite Document and the “Letter from Altus” setting out its opinion and advice to us regarding the Offer as set out on pages 15 to 27 of the Composite Document. Having taken into account of the terms of the Offer and considered the advice given in the letter from Altus, we concur with Altus’ advice and recommend the Independent Shareholders to accept the Offer.

Notwithstanding our recommendation, the Independent Shareholders should consider carefully the terms of the Offer.

Yours faithfully,

For and on behalf of Independent Board Committee

Lau Ching Yin, Judy Lo Kwok Hung, John Independent non-executive Director Independent non-executive Director

* For identification purpose only

– 14 –

LETTER FROM ALTUS

The following is the full text of the letter from Altus dated 21 November 2003 setting out its advice to the Independent Board Committee.

ALTUS CAPITAL LIMITED

8/F, Hong Kong Diamond Exchange Building 8 Duddell Street, Central

Hong Kong

21 November 2003

To the Independent Board Committee

Dear Sirs,

Unconditional voluntary cash offer by Kingston Securities Limited on behalf of Victory Rider Limited to acquire all the shares of New Times Group Holdings Limited (other than those Shares already owned by Victory Rider Limited or parties acting in concert with it)

INTRODUCTION

We refer to our appointment as financial adviser to advise the Independent Board Committee in respect of the Offer, details of which are set out in the composite document (the “Composite Document”) dated 21 November 2003 jointly issued by the Offeror and the Company, of which this letter forms part. Terms used in this letter shall have the same meanings as defined in the Composite Document unless the context requires otherwise.

The Independent Board Committee has been established to advise the Independent Shareholders in relation to the Offer. We have been appointed to advise the Independent Board Committee as to whether or not the terms of the Offer are fair and reasonable so far as the Independent Shareholders are concerned and to give our opinion in relation to the Offer for its consideration in making its recommendation to the Independent Shareholders. In assessing the eligibility of the Directors to be a member of the Independent Board Committee, we have considered and taken into account the confirmations by each of the Directors to the SFC in respect of their interests in the Company and have noted the following:

Mr. Cheong Tin Yau, an executive Director, is a sole shareholder of Kandy Profits and a salaried employee of the Group.
Mr. Liu Jicheng is nominated by Mr. Cheong Tin Yau to be an executive Director and perform his duties under the instructions of Mr. Cheong Tin Yau.
Mr. Lam Kwan Sing is an executive Director and a salaried employee of the Group.

– 15 –

LETTER FROM ALTUS

Based on the foregoing, we consider that Mr. Cheong Tin Yau, Mr. Liu Jicheng and Mr. Lam Kwan Sing will not be eligible to be members of the Independent Board Committee. The Independent Board Committee thus comprises Ms. Lau Ching Yin and Mr. Lo Kwok Hung, John, both of whom are independent non-executive Directors.

BASIS OF OUR OPINION

In formulating our opinion, we have relied on the accuracy of the information and facts supplied by, the opinions expressed by and the representations of the Directors and the sole director of Victory Rider concerning the Group and Victory Rider respectively, including those facts, opinions and representations set out in the Composite Document. We have assumed that all information, facts, opinions and representations made or referred to in the Composite Document were true at the time they were made and continued to be true at the date of the Composite Document. We have no reason to doubt the truth, accuracy and completeness of the information, facts, opinions and representations provided to us by the Directors and the director of Victory Rider. The Directors have confirmed to us that no material facts have been omitted from the information supplied and opinion expressed and we have no reason to doubt that any relevant material facts has been withheld or omitted from the information provided and referred to in the Composite Document or the reasonableness of the opinions and representations expressed by the Group and Victory Rider, which have been provided to us.

The Directors have jointly and severally accepted full responsibility for the accuracy of the information contained in the Composite Document (other than information relating to Victory Rider and Ms. Huang) and confirmed, having made all reasonable enquires, that to the best of their knowledge, opinions expressed in the Composite Document (other than those expressed by Victory Rider and Ms. Huang) have been arrived at after due and careful consideration and there are no other facts not contained in the Composite Document the omission of which would make any such statement contained in the Composite Document misleading. The sole director of Victory Rider has declared in a responsibility statement set out in Appendix IV to the Composite Document that she is wholly responsible for the accuracy of the information contained in the Composite Document (other than information relating to the Group) and confirmed, having made all reasonable enquires, that to the best of her knowledge, opinions expressed in the Composite Document (other than those expressed by the Group) have been arrived at after due and careful consideration and there are no other facts not contained in the Composite Document the omission of which would make any such statement contained in the Composite Document misleading. We have no reason to suspect that such information is inaccurate or that any material facts have been omitted or withheld from the information supplied or opinions expressed in the Composite Document. We consider that we have reviewed sufficient information to reach an informed view and to justify reliance on the accuracy of the information contained in the Composite Document and to provide a reasonable basis for our recommendation. We have relied on such information and opinions and have not, however, conducted any independent investigation into the business, financial conditions and affairs or the future prospect of the Group, Victory Rider or their respective associates.

– 16 –

LETTER FROM ALTUS

We have not considered the tax implications on the Independent Shareholders of their acceptances or non-acceptances of the Offer since these are particular to their own individual circumstances. In particular, the Independent Shareholders who are residents outside Hong Kong or subject to overseas taxes or Hong Kong taxation on securities dealings should consider their own tax positions with regard to the Offer and, if in any doubt, should consult their own professional advisers.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In formulating our opinion, we have taken into consideration the following principal factors and reasons:

1. Background of the Offer

As at the Latest Practicable Date, Victory Rider or parties acting in concert with it owned an aggregate of 121,666,000 Shares, representing 28.1% of the issued share capital of the Company (without taking into account the Shares held by Kandy Profits). Kingston Securities, on behalf of Victory Rider, is making an unconditional voluntary cash offer to acquire all the issued Shares not already owned by Victory Rider or parties acting in concert with it (including Kandy Profits) on the following basis:

for each Offer Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$0.30 in cash

The Offer is being made for 190,936,000 Shares, representing about 44.1% of the entire issued share capital of the Company, without taking into account the 120,700,000 Shares held by Kandy Profits. Kandy Profits who owns 120,700,000 Shares, representing about 27.9 % of the issued share capital, is a party presumed to be acting in concert with the Offeror pursuant to the Code. Further terms of the Offer, including the procedures for acceptance, are set out in the Composite Document.

2. Financial Performance of the Group

The Company is an investment holding company and its operating subsidiaries are principally engaged in PRC property investment, other investment activities and the trading of precision components processing equipment.

– 17 –

LETTER FROM ALTUS

The audited consolidated results of the Group for the three years ended 31 March 2003 and the audited consolidated financial statements of the Group for the two years ended 31 March 2003 are set out in Appendix I to the Composite Document. A summary is as follows:

		For the financial year ended	For the financial year ended
		31 March (“FY”)
	2001	2002	2003
	HK$’000	HK$’000	HK$’000
Turnover	28,719	36,102	36,417
Net profit/(loss)	10,805	(39,884)	(76,080)

The profitability of the Group has been declining since FY2001 and the Group incurred a significant loss of about HK$76.1 million in FY2003. Referring to the annual report for FY2003, the Group’s results deteriorated and the losses increased to about HK$76.1 million. This was mainly attributable to the provision of about HK$20.2 million for unrealised loss on short term investments, realised loss of about HK$19.3 million on disposal of listed investments and the provision of about HK$8.1 million for doubtful receivables and slowmoving stock.

The annual report for FY2003 also stated that although the manufacturing operations of the Group contributed most of the Group’s turnover for FY2003, it had generated a loss of about HK$7.3 million and the Board disposed of its business in the manufacturing of precision components processing equipment pursuant to a sale and purchase agreement dated 22 July 2003 to an independent third party for a cash consideration of HK$25 million. The consideration is almost the same as the net asset value of the manufacturing operations and the transaction did not have significant impact on the Group’s profit and loss account. The turnover of the manufacturing operations of the Group were about HK$13.5 million and HK$28.8 million respectively for the two years ended 31 March 2003, representing 37.4% and 78.8% of the total turnover of the Group for the relevant periods. The loss of the manufacturing operations attributable to the Group were about HK$1.7 million and HK$7.3 million respectively for the two years ended 31 March 2003. According to the Directors, the turnover and loss of the manufacturing operations for the period from 1 April 2003 up to 21 August 2003, the date of completion of the disposal, were about HK$18.1 million and HK$1.2 million respectively. The Directors consider that the disposal of the manufacturing operations would not materially affect the profitability of the Group and will provide cash for the Group as working capital or for other investments. Other businesses of the Group also had unsatisfactory performance due to unfavorable market conditions.

The Directors have advised that, in August 2003, the Group had entered into an agreement to dispose of the corporate finance and investment advisory business to an independent third party. The Directors have also advised that the market environment for the remaining trading and investment businesses of the Group has remained difficult after FY2003, and that the Group has continued in its efforts to reduce overheads since FY2003.

– 18 –

LETTER FROM ALTUS

On 16 July 2003, it was announced that a subsidiary of the Company had entered into a sale and purchase agreement on 14 July 2003 in relation to the acquisition of the entire issued capital of Elegant Pool Limited, which is engaged solely in acquiring and holding properties in Beijing, the PRC, and the shareholders loan owing by Elegant Pool Limited to the vendor at a consideration of HK$70 million. The properties are for commercial purpose. The above acquisition will be financed by the Group’s existing cash balances. According to the circular of the Company dated 6 August 2003, the properties are subject to four tenancy agreements and total rent receivable is about RMB593,000 (about HK$559,000) per month and, based on the acquisition price of HK$70 million, the rental yield of the properties will be about 9.6% per annum. Taking into account the market values of the properties based on a valuation report issued by Chung, Chan & Associates of about RMB80 million (about HK$75.5 million) as at 8 July 2003, a negative goodwill has arisen from the acquisition as set out in the section headed “Unaudited pro forma statement of adjusted consolidated net tangible assets” in Appendix II to the Composite Document.

After completion of the acquisition, the asset base of the Group will mainly comprise investment properties and short term investments and the Directors expect that the investment properties will contribute steady rental income to the Group.

Independent Shareholders are advised to read the sections on “Information on the Offeror” and “Intention of the Offeror regarding the Company” in the “Letter from Kingston Securities” contained in the Composite Document in order to have a general overview of the direction, management and prospects of the Group.

3. Net asset value

Based on the audited consolidated balance sheet of the Group as at 31 March 2003, the net assets of the Group amounted to about HK$145.2 million. These comprised mainly short term investments of about HK$61.1 million, and cash and bank balances of about HK$49.7 million. The short term investments represent investments in listed companies in Hong Kong which are mainly of small capitalisation. The Board has advised that the Company holds about 20.17% in the issued share capital of Starbow Holdings Limited and other securities of several Hong Kong listed companies representing in each case less than 5% in the issued share capital of such companies.

As stated in the section headed “Unaudited pro forma statement of adjusted consolidated net tangible assets” in Appendix II to the Composite Document, the Company recorded realised loss on disposal of short term listed investments of about HK$22.4 million and an unrealised gain on short term listed investments of about HK$5.7 million for the six months ended 30 September 2003. This represents a net loss of about HK$16.7 million for the period.

Further, the Company conducted a rights issue of Shares on the basis of one rights share for every two Shares held, which was completed in May 2003.

– 19 –

LETTER FROM ALTUS

As stated in Appendix II to the Composite Document, the unaudited pro forma adjusted consolidated net tangible assets of the Group amounted to about HK$175.7 million, after taking into consideration the net proceeds of about HK$41.1 million from the rights issue, the negative goodwill of about HK$6.1 million arising from the acquisition of Elegant Pool Limited and the related shareholder’s loan and the net loss of about HK$16.7 million on short term investments for the six months ended 30 September 2003. On this basis, the Offer Price represents a discount of 25.9% to the unaudited pro forma adjusted consolidated net tangible asset value per Share of about HK$0.405.

As at 29 August 2003, the market capitalisation of the Company was about HK$195.0 million. Taking into consideration that following the acquisition of the properties in Beijing, the assets of the Group will mainly comprise investment properties and short term investments, we, therefore, have reviewed companies listed on the main board of the Stock Exchange which: (1) are engaged in property investment and securities trading and (2) have market capitalisation of less than HK$300 million, and identified 5 companies that met the above criteria (the “Comparables”). In particular, we have reviewed the premiums/discounts of the closing share prices of the Comparables as at 29 August 2003 to their net asset values per share as reported in their most recent annual reports, for the purpose of comparing the discount of the Offer Price per Share to the net asset value of the Group, to the market in general.

		Net tangible	Discount of
	Closing	asset value	closing price to
	price on	per share based	net tangible
	29 August	on the latest	asset value
	2003	annual report	per share
	(HK$)	(HK$)	(%)
Beauforte Investors
Corporation Limited	2.5	21.798	88.5
Premium Land Limited	0.061	0.076	19.7
Heng Fung Holdings Limited	2.25	7.245	68.9
Pioneer Global Group Limited	0.20	0.713	71.9
China United Holdings Limited	1.10	1.491	26.2
Minimum discount			19.7
Maximum discount			88.5
Mean			55.0
Median			68.9
The Company	0.30 (Note 1)	0.405 (Note 2)	25.9

Notes:

The Offer Price
Unaudited pro forma adjusted consolidated net tangible asset per Share

– 20 –

LETTER FROM ALTUS

The discounts of the closing share prices to the net asset values of the Comparables range from about 19.7% to about 88.5% and the median is about 68.9%. We note that a discount of about 25.9% to the unaudited pro forma adjusted consolidated net tangible asset value per Share of about HK$0.405 is significantly less than the median, being a discount of about 68.9%.

4. Price/earnings multiples and dividend yields

One of the most commonly used references for valuing a company is the price/ earnings multiple. However, since the Company recorded audited consolidated net losses for the past two financial years ended 31 March 2003 and that no forecast of profit or loss has been made, a meaningful price/earnings multiple cannot be derived for assessing the value of the Group.

We have also reviewed the dividend payment history of the Company and noted that for the past two financial years ended 31 March 2003, the Company has not paid or declared any dividends to the Shareholders. Accordingly, there is no basis to appraise the fairness and reasonableness of the Offer Price per Share based on the historical dividend yield of the Company.

5. Historical Share price performance and trading liquidity

Share price performance

The Offer Price of HK$0.30 per Share represents:

(i) a discount of about 33.3% to the closing price of HK$0.45 per Share quoted by the Stock Exchange on the Last Trading Day;
(ii) a discount of about 33.3% to the average closing price of HK$0.45 per Share for the 10 trading days up to and including the Last Trading Day;
(iii) a discount of about 35.5% to the average closing price of about HK$0.465 per Share for the 20 trading days up to and including the Last Trading Day; and
(iv) a discount of about 16.7% to the closing price of HK$0.36 per Share as quoted on the Stock Exchange on the Latest Practicable Date.

The following chart sets out the daily historical closing prices of the Shares traded on the Stock Exchange starting from November 2002 to the latest period up to and including the Latest Practicable Date (the “Review Period”).

– 21 –

LETTER FROM ALTUS

==> picture [327 x 187] intentionally omitted <==

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

New Times Group Holdings Limited
0.6
0.5
0.4
0.3
0.2
Trading of Shares suspended
0.1
0.0
Date
HK$
1/11/02 1/12/02 1/1/03 1/2/03 1/3/03 1/4/03 1/5/03 1/6/03 1/7/03 1/8/03 1/9/03 1/10/03 1/11/03 18/11/03
----- End of picture text -----

The highest and lowest closing prices of the Shares for each of the months during the Review Period were as follows:

	Highest	Lowest		Average daily
	closing price	closing price	Month/	closing price
	of the	of the	period end	of the
	month/period	month/period	closing price	month/period
2002
November_(Note 1)_	0.547	0.533	0.540	0.542
December_(Note 1)_	0.540	0.413	0.413	0.444
2003
January_(Note 1)_	0.413	0.413	0.413	0.413
February_(Note 1)_	0.413	0.390	0.413	0.407
March_(Note 1)_	0.413	0.327	0.367	0.371
April_(Note 1)_	0.367	0.365	0.365	0.366
May	0.480	0.350	0.480	0.359
June	0.480	0.480	0.480	0.480
July	0.480	0.480	0.480	0.480
August	0.480	0.450	0.450	0.466
September_(Note 2)_	0.450	0.380	0.380	0.427
October	0.380	0.360	0.360	0.373
November (up to the Latest
Practicable Date)	0.360	0.360	0.360	0.360

Notes:

Share prices prior to 2 April 2003 have been adjusted due to the rights issue conducted by the Company in April/May 2003.
Trading of the Shares has been suspended from 2:30 p.m. on 1 September 2003 to 26 September 2003.

– 22 –

LETTER FROM ALTUS

During the Review Period, the Share price had a general downward trend from November 2002 to April 2003 and then rose to HK$0.48 at the end of May 2003. The Shares had been traded between the highest and lowest closing prices of HK$0.547 and HK$0.327 respectively. The Offer Price is lower than the lowest closing price during the Review Period, and represents a discount of about 45.2% to the highest closing price of HK$0.547 and a discount of about 8.3% to the lowest closing price of HK$0.327 during the Review Period.

After the release of the Announcement, the Share price decreased to HK$0.36 as at the Latest Practicable Date. Since the resumption of trading of the Shares and up to the Latest Practicable Date, the closing prices of the Shares have ranged between HK$0.36 to HK$0.45.

Liquidity

The following chart sets out the daily trading volume of the Shares during the Review Period.

==> picture [330 x 210] intentionally omitted <==

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

New Times Group Holdings Limited
35,000,000
30,000,000
25,000,000
20,000,000
15,000,000
10,000,000
5,000,000
0
Date
Number of Shares
1/11/02 1/12/02 1/1/03 1/2/03 1/3/03 1/4/03 1/5/03 1/6/03 1/7/03 1/8/03 1/9/03 1/10/03 1/11/03 18/11/03
----- End of picture text -----

– 23 –

LETTER FROM ALTUS

The following table sets out the total number of Shares traded per month, and the respective percentages of monthly trading volume compared with the issued share capital and with the Shares held by the public respectively for the Review Period:

		Shares traded
	Number of	as a percentage	Shares traded
Shares traded		of the issued	as a percentage
	per month/	share capital	of Shares held
	period	of the Company	by the public
		(Note 1)	(Note 2)
2002
November	18,936,000	6.56%	14.07%
December	780,000	0.27%	0.58%
2003
January	60,000	0.02%	0.04%
February	32,452,000	11.23%	24.11%
March	4,330,000	1.50%	3.22%
April	0	0.00%	0.00%
May	16,000	0.004%	0.008%
June	8,000	0.002%	0.004%
July	4,362,000	1.01%	2.28%
August	5,070,000	1.17%	2.66%
September_(Note 3)_	0	0.00%	0.00%
October	5,600,000	1.29%	2.93%
November (up to the
Latest Practicable Date)	0	0.00%	0.00%

Notes:

Based on the number of Shares in issue. For the period up to April 2003, there were 288,868,000 Shares in issue. For the period from May 2003 up to the Latest Practicable Date, there were 433,302,000 Shares in issue.
Based on the number of Shares held by the public. For the period up to April 2003, total number of Shares held by the public was 134,624,000. For the period from May 2003 up to the Latest Practicable Date, total number of Shares held by the public was 190,936,000.
Trading of the Shares has been suspended from 2:30 p.m. on 1 September 2003 to 26 September 2003.

As illustrated in the above table, prior to the release of the Announcement, the Shares have been thinly traded on the Stock Exchange for the past few months, except for November 2002 and February 2003. The trading volume of the Shares was very thin and within the range of 0.00% to about 1.50% of the issued share capital of the Company or of 0.00% to about 3.22% of the Shares held by the public since March 2003, being six months prior to the release of the Announcement. For the 206 trading days during 1 November 2002 to the Last Trading Day, there were 165

– 24 –

LETTER FROM ALTUS

trading days when no trading of the Shares (excluding the days suspended for trading) was recorded on the Stock Exchange. The aggregate amount of Shares owned by Independent Shareholders as at the date of the Announcement represents about 83.1 times of the monthly average trading volume of Shares of 2,297,667 Shares for the six months ended August 2003. For the 36 trading days after the release of the Announcement and up to the Latest Practicable Date, there were only four trading days when trading in the Shares have been recorded and an aggregate of about 5.6 million Shares have been traded on the Stock Exchange, representing about 1.3% of the issued Shares or about 2.9% of the Shares held by the public.

In view of the low liquidity of the Shares, the Independent Shareholders should note that whilst the Offer Price is lower than the low end of the trading range prior to the release of the Announcement, it may be difficult for the Independent Shareholders who have not accepted the Offer to sell a significant amount of Shares in the market within a short period of time without adversely affecting the market price of the Shares. Therefore, Independent Shareholders with relatively large shareholdings who wish to realise their investments may not be able to sell the Shares in the open market at a price higher than the Offer price (after deducting the related expenses), and should consider the Offer as an exit for their investments.

6. Intention of Victory Rider regarding the future prospects of the Group

As set out in the “Letter from Kingston Securities” contained in the Composite Document, it is the intention of Victory Rider to continue the existing businesses of the Company but will review its current business activities and assets in due course. In addition, it is proposing to identify new investment opportunities suitable for the Company, although no specific targets have been identified.

As set out in the Letter from Kingston Securities, it is the intention of Victory Rider to invite all existing members of the Board to remain as Directors and to nominate Ms. Huang to the Board as a non-executive Director. Ms. Huang Ning has experience in direct investments in battery materials production, PRC property investments and water treatment, as well as in the trading of hair-care products and in the export of alcoholic drinks. Ms. Huang is also the managing director of China Waywide, which has participated in certain PRC property investment projects. Given that China Waywide may compete with the Group’s business in the PRC investments in the future, Ms. Huang, therefore, will not be involved in the daily business and operations of the Group. Save for the appointment of Ms. Huang, it is the intention of Victory Rider that there will be no material changes to the Board, the existing management and employees of the Group.

Since Victory Rider has no clear stated plan with respect to the future business development of the Group and no intention to materially change the management of the Company, and also having taken into consideration the trading record of the Group in the past two financial years, as well as the Directors’ advice relating to the Group’s financial performance as referred in the paragraph headed “Financial performance of the Group” above, we are of the view that, in the absence of significant changes in the macro economic environment, there is uncertainty in relation to the future prospects of the Group.

– 25 –

LETTER FROM ALTUS

7. Maintaining listing status of the Company

Victory Rider intends that the Company should maintain the listing of the Shares on the Stock Exchange. Victory Rider, the Company, all existing members of the Board and any new Directors to be appointed to the Board have undertaken to the Stock Exchange to take appropriate steps following the close of the Offer to ensure that such number of Shares as may be required by the Stock Exchange are held by the public.

The Stock Exchange has stated that it will closely monitor trading in the Shares following the close of the Offer. If the Stock Exchange believes that a false market exists or may exist in the Shares and that there are insufficient Shares in public hands to maintain an orderly market, it will consider exercising its discretion to suspend trading in the Shares.

In this connection, it should be noted that, upon completion of the Offer, there may be an insufficient public float for the Shares and therefore, trading in the Shares may be suspended until a sufficient level of public float is attained.

The Stock Exchange has also stated that, if the Company remains a company listed on the Stock Exchange, any future injections of assets into or disposals of assets of the Company will be subject to the provisions of the Listing Rules. Pursuant to the Listing Rules, the Stock Exchange has discretion to require the Company to issue a circular to its Shareholders where any acquisition or disposal by the Company is proposed, irrespective of the size of such acquisition or disposal and in particularly where such acquisition and disposal represents a departure from the principal activities of the Company. The Stock Exchange also has the power pursuant to the Listing Rules, to aggregate a series of acquisitions or disposals by the Company and any such acquisitions or disposals may, in any event, result in the Company being treated as a new applicant for listing and subject to the requirements for new applicants as set out in the Listing Rules.

RECOMMENDATION

In summary:

(a) the Offer price per Share represents a discount of about 25.9% to the unaudited pro forma adjusted consolidated net tangible asset value per Share of about HK$0.405, and such discount is significantly less than the median of the Comparables, being a discount of about 68.9%;
(b) the Company has been making considerable losses in the past two financial years ended 31 March 2003;
(c) the Company did not declare any dividend to the Shareholders for the two consecutive financial years ended 31 March 2003;

– 26 –

LETTER FROM ALTUS

(d) thin trading volume of the Shares (as shown in the six months period ended 31 August 2003) may make it difficult for the Independent Shareholders to dispose of their Shares in the market after the close of the Offer; and
(e) after completion of the acquisition of Elegant Pool Limited, the Company will diversify into the property investment business and we have taken into consideration of such an effect on the Company in our analysis above.

We are of the view that the Offer, including the Offer Price, is fair and reasonable so far as the Independent Shareholders are concerned. Accordingly, we recommend the Independent Board Committee to advise the Independent Shareholders that they should consider accepting the Offer.

For those Independent Shareholders who wish to retain part or all of their investments in the Shares, they should carefully consider the future intentions of Victory Rider regarding the Group and evaluate the prospects of the Group after the close of the Offer, details of which are set out in the “letter from Kingston Securities” contained in the Composite Document.

Since the trading price of the Shares is higher than the Offer Price, we would like to advise those Independent Shareholders who, having regard to their own circumstances, wish to realise whole or part of their Shares to closely monitor the market price and the liquidity of the Shares in the market during the Offer period and consider selling their Shares in the market during the Offer period, rather than accepting the Offer, if the net proceeds of the sale exceed the amount receivable under the Offer.

Independent Shareholders should read carefully the procedures for accepting the Offer as detailed in Appendix I to the Composite Document and are strongly advised that the decision to realise or to hold their investment in the Shares is subject to individual circumstances and investment objectives.

Yours faithfully, For and on behalf of Altus Capital Limited Arnold Ip Kevin Chan Executive Director Executive Director

– 27 –

FURTHER TERMS OF THE OFFER

APPENDIX I

1. PROCEDURE FOR ACCEPTANCE

If the share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title in respect of your Shares is/are in your name, and you wish to accept the Offer, you must send the duly completed Form of Acceptance together with the relevant share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title and/or any indemnity or indemnities required in respect thereof, to the Registrar, Tengis Limited, Ground Floor, BEA Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong in any event not later than 4:00 p.m. on Friday, 12 December 2003 or such later time and/or date as the Offeror may determine and announce in accordance with the Takeovers Code.

If the share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title in respect of your Shares is/are in the name of a nominee company or some name other than your own, and you wish to accept the Offer whether in full or in respect of part of your holding(s) of Shares, you must either:

(a) lodge your share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title, with the nominee company, or other nominee, with instructions authorising it to accept the Offer on your behalf and requesting it to deliver the relevant Form(s) of Acceptance duly completed together with the relevant share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title to the Registrar; or
(b) arrange for the Shares to be registered in your name by the Company through the Registrar and send the relevant Form(s) of Acceptance duly completed together with the relevant share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title to the Registrar; or
(c) if your Shares have been lodged with your licensed securities dealer in securities/ custodian bank through CCASS, instruct your licensed securities dealer in securities/ custodian bank to authorise HKSCC Nominees Limited to accept the Offer on your behalf on or before the deadline set out by HKSCC Nominees Limited, in this case on Thursday, 11 December 2003, which is one business day before the latest date on which acceptances of the Offer must be received by the Registrar. In order to meet the deadline set by HKSCC Nominees Limited, you should check with your licensed securities dealer in securities/custodian bank for the timing on processing of your instruction, and submit your instruction to your licensed securities dealer in securities/ custodian bank as required by them; or
(d) if your Shares have been lodged with your Investor Participant’s Account with CCASS, authorise your instruction via the CCASS Phone System or CCASS Internet System not later than one business day (in this case on Thursday, 11 December 2003) before the latest date on which acceptances of the Offer must be received by the Registrar.

If the share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title in respect of your Shares is/are not readily available and/or is/are lost and you wish to accept the Offer, as the case may be, the relevant Form(s) of Acceptance should nevertheless be completed and delivered to the Registrar together with a letter stating that you have lost one or more of your share certificate(s) and/or transfer receipts and/or other document(s) of title or that it/they is/are not readily available. If you find such document(s) or if it/they become available, the relevant share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title should be forwarded to the Registrar as soon as possible thereafter. If you have lost your share certificate(s), you should also write to the Registrar for a letter of indemnity which, when completed in accordance with the instruction given, should be returned to the Registrar.

– 28 –

FURTHER TERMS OF THE OFFER

APPENDIX I

If you have lodged transfer(s) of any of your Shares for registration in your name and have not yet received your share certificate(s), and you wish to accept the Offer, you should nevertheless complete the relevant Form(s) of Acceptance and deliver it/them to the Registrar together with the transfer receipt(s) duly signed by yourself. Such action will be deemed to be an irrevocable authority to any of Kingston, Kingston Securities, the Company, the Offeror or their respective agent(s) to collect from the Company or the Registrar on your behalf the relevant share certificate(s) when issued and to deliver such certificate(s) to the Registrar and to authorise and instruct the Registrar to hold such certificate(s), subject to the terms of the Offer, as if it/they were delivered to the Registrar with the relevant Form(s) of Acceptance.

An acceptance may not be counted towards fulfilling an acceptance condition unless:

(a) it is received by the Registrar on or before the latest time for acceptance at 4:00 p.m. on 12 December 2003 or such later time and/or date as the Offeror may determine and announce in accordance with the Takeovers Code and the Registrar has recorded that the acceptance has been so received; and
(b) the Form of Acceptance is duly completed and is:
(i) accompanied by share certificate(s) in respect of the relevant Offer Shares and, if those certificate(s) is, are not in the name of the acceptor, such other documents (e.g. a duty stamped transfer of the relevant Offer Shares in blank or in favour of the acceptor executed by the registered holder) in order to establish the right of the acceptor to become the registered holder of the relevant Offer Shares; or
(ii) from a registered holder or his personal representatives (but only up to the amount of the registered holding and only to the extent that the acceptance relates to the Offer Shares which are not taken into account under another subparagraph of this paragraph (b)).

If the Form of Acceptance is executed by a person other than the registered holder, appropriate evidence of authority (e.g. grant of probate or certified copy of a power of attorney) must be produced.

No acknowledgement of receipt of any Form(s) of Acceptance, share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) will be given.

2. SETTLEMENT

Provided that the relevant Form of Acceptance and the relevant share certificate(s) and, or transfer receipt(s) and, or any document(s) of title (and, or any satisfactory indemnity or indemnities required in respect thereof) are in complete and good order in all respects and have been received by the Registrar not later than by 4:00 p.m. on Friday, 12 December 2003 or such later time and/or date as the Offeror may determine and announce in accordance with the Takeovers Code, a cheque for the amount representing the cash consideration due to you in respect of the Offer Shares tendered by you under the Offer, less seller’s ad valorem stamp duty payable by you will be despatched to you by ordinary post at your own risk as soon as possible but in any event within 10 days of the date on which all the relevant documents which render such acceptance complete and valid are received by the Registrar.

– 29 –

FURTHER TERMS OF THE OFFER

APPENDIX I

Settlement of the consideration to which any accepting Shareholder is entitled under the offer will be implemented in full in accordance with the terms of the Offer, without regard to any lien, right of set-off, counterclaim or other analogous right to which the offeror may otherwise be, or claim to be, entitled against such accepting Shareholder.

3. ACCEPTANCE PERIOD, REVISIONS AND EXTENSIONS

Although the Offeror does not intend to extend or revise the Offer, it reserves the right to do so in accordance with the relevant provisions of the Takeovers Code. If the Offer is revised or extended, the announcement of such revision or extension will state the next closing date. If the Offer is revised or extended, the Offer will remain open for acceptance for a period of not less than 14 days from the day following the posting of such written notification of the revision or extension to the Shareholders and, unless previously revised or extended, shall be closed on the subsequent closing date as stated in the written notification.

4. ANNOUNCEMENTS

(i) By 6:00 p.m. on Friday, 12 December 2003, which is the Closing Date, the Offeror must inform the Executive and the Stock Exchange of its decisions in relation to revision, extension or expiry of the Offer. The Offeror shall publish a teletext announcement through the Stock Exchange by 7:00 p.m. on the closing date of the Offer stating whether the Offer has expired, been extended or revised (as the case may be). Such announcement will be republished on the next business day in accordance with paragraph (iii) below. The announcement shall specify the total number of Shares, as nearly as practicable, which the Offeror and any person acting in concert with it, directly and indirectly, owns or controls as at the date of that announcement, the number of Shares for which valid acceptances have been received, held, controlled or directed by the Offeror or persons acting in concert with it before the offer period, and the number of Shares acquired or agreed to be acquired by the Offeror or any person acting in concert with it during the period of the Offer.

The announcement shall include details of voting rights, rights of Shares, derivatives and arrangements as required by Rule 3.5(c), (d) and (f) of the Takeovers Code. The announcement shall also specify the percentages of the issued share capital and the percentages of voting rights of the Company represented by these numbers of Shares.

(ii) In computing the number of Shares represented by acceptances, there must be included for announcement purposes acceptances which are not in all respects in order or that are subject to verification.
(iii) As required under the Takeovers Code and the Listing Rules, all announcements in relation to the Offer, in respect of which the Executive and the Stock Exchange have confirmed that they have no further comments thereon, must be published as a paid announcement in at least one English language newspaper and one Chinese language newspaper, being in each case a newspaper which is published daily and circulated generally in Hong Kong and specified in the list of newspapers issued and published in the Gazette for the purpose of section 71A of the Companies Ordinance.

– 30 –

FURTHER TERMS OF THE OFFER

APPENDIX I

5. RIGHT OF WITHDRAWAL

Acceptances of the Offer shall be irrevocable and will not be permitted to be withdrawn, except in the circumstances to the effect that if the Offeror is unable to comply with any of the requirements of making announcements relating to the Offer, the Executive may require that acceptors be granted a right of withdrawal, on terms acceptable to the Executive.

6. STAMP DUTY

Seller’s ad valorem stamp duty arising in connection with acceptances of the Offer, amounting to HK$1.00 for every HK$1,000 or part thereof of the value of the consideration payable in respect of the relevant acceptance, will be payable by accepting Shareholders and will be deducted from the consideration payable on acceptance of the Offer.

7. OVERSEAS SHAREHOLDERS

The making of the Offer to Overseas Shareholders may be prohibited or affected by the laws of the relevant jurisdictions. Overseas Shareholders should obtain appropriate legal advice on, inform themselves about and observe any applicable legal requirement. It is the responsibility of each Overseas Shareholder who wishes to accept the Offer to satisfy himself, herself or itself as to the full observance of the laws of the relevant jurisdiction in connection therewith, including the obtaining of any governmental, exchange control or other consents which may be required and the compliance with other necessary formalities or legal requirements. Any such Overseas Shareholders will be responsible for any such transfer or other taxes by whomsoever payable and the Offeror, the Company, Kingston, Kingston Securities and any person acting on their behalf shall be entitled to be fully indemnified and held harmless by such Overseas Shareholders for any such transfer or other taxes as such person may be required to pay. Acceptances of the Offer by any such person will constitute a warranty by such person that such person is permitted under all applicable laws to receive and accept the Offer, and any revision thereof, and such acceptance shall be valid and binding in accordance with all applicable laws.

8. GENERAL

(i) Acceptance of the Offer by any person or persons holding Shares will be deemed to constitute a warranty by such person or persons to the Offeror that the Share(s) acquired under the Offer is/are sold by any such person or persons free from all liens, charges, encumbrances, equities and third party rights and together with all rights attaching thereto, including the right to receive all dividends and distributions declared, made or paid on or after 26 September 2003, the date of the Announcement.
(ii) All communications, notices, Forms of Acceptance, certificates, transfer receipts, other documents of title (and/or any satisfactory indemnity or indemnities required in respect thereof) and remittances to be delivered by or sent to or from the Shareholders will be delivered by or sent to or from them, or their designated agents, through ordinary post at their own risk, and none of the Offeror, the Company, Kingston, Kingston Securities nor the Registrar or any of their respective agents, accepts any liability for any loss in postage or any other liabilities that may arise as a result thereof.

– 31 –

FURTHER TERMS OF THE OFFER

APPENDIX I

(iii) The provisions set out in the Form of Acceptance form part of the terms of the Offer.
(iv) The accidental omission to despatch this Composite Document and/or the Form of Acceptance or any of them to any person to whom the Offer is made will not invalidate the Offer in any way.
(v) The Offer and all acceptances will be governed by and construed in accordance with the laws of Hong Kong.
(vi) Due execution of a Form of Acceptance will constitute an authority to the Company, any Directors, the Offeror, any directors of the Offeror, Kingston, Kingston Securities or such person or persons as the Offeror may direct, to complete and execute any document on behalf of the person or persons accepting the Offer and to do any other act that may be necessary or expedient for the purposes of vesting in the Offeror, or such person or persons as they may direct, the Shares in respect of which such person or persons has/have accepted the Offer.
(vii) References to the Offer in this Composite Document and in the Form of Acceptance shall include any extension and/or revision thereof.
(viii) The English text of this Composite Document and of the Form of Acceptance shall prevail over their respective Chinese text.

– 32 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

I. SUMMARY OF FINANCIAL RESULTS FOR THE THREE YEARS ENDED 31 MARCH 2003

The following financial information has been extracted from the audited financial statements of the Group for each of the three years ended 31 March 2003 set out in the 2003 annual report of the Company, reclassified as appropriate:

TURNOVER
Continuing operations
Discontinuing operations
Cost of sales
Gross profit
Other revenue and gains
Selling and distribution expenses
Administrative expenses
Other operating expenses
PROFIT/(LOSS) FROM OPERATING
ACTIVITIES
Finance costs
Share of loss of a jointly-controlled entity
Impairment of interest in an associate
PROFIT/(LOSS) BEFORE TAX
Tax – Continuing operations
LOSS BEFORE MINORITY INTERESTS
Minority interests
NET PROFIT/(LOSS) FROM ORDINARY
ACTIVITIES ATTRIBUTABLE TO
SHAREHOLDERS
PROFIT/(LOSS) PER SHARE
– Basic
– Diluted

For the year ended 31 March
2003
2002
2001
HK$’000
HK$’000
HK$’000
7,619
22,599
14,065
28,798
13,503
14,654
36,417
36,102
28,719
(32,544)
(23,634)
–
3,873
12,468
28,719
1,915
11,112
25,792
(433)
(538)
–
(31,830)
(25,455)
(36,197)
(50,105)
(36,177)
(4,027)
(76,580)
(38,590)
14,287
(112)
–
(1,494)
–
(222)
–
–
(1,014)
–
(76,692)
(39,826)
12,793
612
(140)
(1,988)
(76,080)
(39,966)
10,805
–
82
–
(76,080)
(39,884)
10,805
(25)cents
(13)cents
4 cents
N/A
N/A
N/A

There had been no extraordinary item, exceptional item or dividend paid out for each of the past three years ended 31 March 2003.

– 33 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

II. FINANCIAL STATEMENTS

The following is a summary of the audited consolidated accounts of the Company for the two years ended 31 March 2003 as extracted from the 2003 annual report of the Company.

Consolidated Profit and Loss Account

For the year ended 31 March 2003

Notes TURNOVER 5 Continuing operations Discontinuing operations 10 Cost of sales Gross profit Other revenue and gains 5 Selling and distribution expenses Administrative expenses Other operating expenses LOSS FROM OPERATING ACTIVITIES 6 Finance costs 7 Share of loss of a jointly-controlled entity Impairment of interest in an associate LOSS BEFORE TAX Continuing operations Discontinuing operations 10 Tax – Continuing operations 9 LOSS BEFORE MINORITY INTERESTS Minority interests NET LOSS FROM ORDINARY ACTIVITIES ATTRIBUTABLE TO SHAREHOLDERS 11 LOSS PER SHARE 12 – Basic – Diluted	2003 HK$’000 7,619 28,798 36,417 (32,544) 3,873 1,915 (433) (31,830) (50,105) (76,580) (112) – – (69,362) (7,330) (76,692) 612 (76,080) – (76,080) (25)cents N/A	2002 HK$’000 22,599 13,503 36,102 (23,634) 12,468 11,112 (538) (25,455) (36,177) (38,590) – (222) (1,014) (38,176) (1,650) (39,826) (140) (39,966) 82 (39,884) (13)cents N/A

– 34 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Consolidated Balance Sheet

As at 31 March 2003 Notes NON-CURRENT ASSETS Fixed assets 13 Interests in a jointly-controlled entity 15 Interest in an associate 16 Other investments 17 CURRENT ASSETS Inventories 18 Prepayments, deposits and other receivables Trade receivables 19 Short term investments 17 Tax recoverable 9 Time deposits Cash and bank balances CURRENT LIABILITIES Trade payables 20 Other payables and accrued liabilities 21 Provisions 22 Tax payable NET CURRENT ASSETS TOTAL ASSETS LESS CURRENT LIABILITIES NON-CURRENT LIABILITY Deferred tax 23 CAPITAL AND RESERVES Share capital 24 Reserves	2003 HK$’000 25,246 – – 5,000 30,246 14,096 17,297 9,368 61,127 494 3,753 49,742 155,877 10,357 13,068 16,889 638 40,952 114,925 145,171 – 145,171 28,887 116,284 145,171	2002 HK$’000 3,063 – – –
		3,063
		18,983 5,027 15,641 19,976 1,151 199,335 3,784
		263,897
		11,936 10,245 23,256 1,069
		46,506
		217,391
		220,454 106
		220,348

		28,648 191,700
		220,348

– 35 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Consolidated Statement of Changes in Equity For the year ended 31 March 2003

At 1 April 2001 Changes in fair value of long term investments Impairment of long term investments transferred to the profit and loss account Exchange realignment on translation of the financial statements of subsidiaries and net losses not recognised in the financial statements Dividend paid Net loss for the year At 31 March 2002 and 1 April 2002 Exercise of share options (note 24) Exchange realignment on translation of the financial statements of subsidiaries and net gains not recognised in the financial statements Net loss for the year At 31 March 2003 Reserves retained by: Company and subsidiaries A jointly-controlled entity At 31 March 2003 Company and subsidiaries A jointly-controlled entity At 31 March 2002	Issued share capital HK$’000 28,648 – – – – – 28,648 239 – – 28,887 28,887 – 28,887 28,648 – 28,648	Share premium account HK$’000 65,928 – – – – – 65,928 525 – – 66,453* 66,453 – 66,453 65,928 – 65,928	Capital reserve HK$’000 9,585 – – – – – 9,585 – – – 9,585* 9,585 – 9,585 9,585 – 9,585	Long term investment revaluation reserve HK$’000 – (10,494) 10,494 – – – – – – – –* – – – – – –	Exchange fluctuation reserve HK$’000 – – – (959) – – (959) – 139 – (820)* (820) – (820) (959) – (959)	Retained profits HK$’000 157,030 – – – – (39,884) 117,146 – – (76,080) 41,066* 41,288 (222) 41,066 117,368 (222) 117,146	Proposed final dividend HK$’000 4,297 – – – (4,297) – – – – – – – – – – – –	Total HK$’000 265,488 (10,494) 10,494 (959) (4,297) (39,884) 220,348 764 139 (76,080) 145,171 145,393 (222) 145,171 220,570 (222) 220,348

* These reserve accounts comprise the consolidated reserves of HK$116,284,000 (2002: HK$191,700,000) in the consolidated balance sheet.

– 36 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Consolidated Cash Flow Statement

For the year ended 31 March 2003

Notes CASH FLOWS FROM OPERATING ACTIVITIES Loss before tax Adjustments for: Finance costs 7 Depreciation 6 Interest income 5 Dividend income from listed investments 5 Provision for bad and doubtful debts 6 Provision for inventory obsolescence 6 Provision for legal and professional costs 6 Loss on disposal of fixed assets 6 Loss/(gain) on disposal of short term listed investments 5, 6 Unrealised loss on short term listed investments 6 Gain on disposal of an associate 5 Impairment of long term investments transferred from the investment revaluation reserve 6 Write-back of provision for staff bonus 6 Write-back of accruals for termination of an operating lease 6 Share of loss of a jointly-controlled entity Impairment of interest in an associate Operating loss before working capital changes Decrease/(increase) in inventories Increase in prepayments, deposits and other receivables Decrease/(increase) in trade receivables Increase in short term investments Increase/(decrease) in trade payables, provisions, other payables and accrued liabilities Exchange difference on working capital Cash used in operations Hong Kong profits tax refunded/(paid) Net cash outflow from operating activities – page 38 Continuing operations Discontinuing operations Total	2003 HK$’000 (76,692) 112 3,392 (1,150) (59) 5,866 2,258 – 297 19,324 20,190 (80) – (4,547) – – – (31,089) 2,629 (13,773) 1,910 (80,665) (581) 128 (121,441) 732 (138,496) 17,787 (120,709)	2002 HK$’000 (Restated) (39,826) – 1,025 (8,888) (302) 1,804 2,132 18,079 – (1,171) 5,800 – 10,494 (723) (1,390) 222 1,014 (11,730) (18,291) (2,202) (10,840) (18,196) (815) (959) (63,033) (1,237) (64,270) – (64,270)

– 37 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Notes Net cash outflow from operating activities – page 37 CASH FLOWS FROM INVESTING ACTIVITIES Interest received Dividend received from listed investments Investment in a jointly-controlled entity Increase in loans from a jointly-controlled entity Purchases of fixed assets Acquisition of a subsidiary 27(b) Purchases of other investments Proceeds from disposal of fixed assets Proceeds from disposal of an associate Advances for investments Net cash inflow/(outflow) from investing activities Continuing operations Discontinuing operations Total CASH FLOWS FROM FINANCING ACTIVITIES Interest paid Proceed from issue of share capital 24 Contribution from a minority shareholder of a subsidiary Increase in amount due to a minority shareholder of a subsidiary Dividend paid Net cash inflow/(outflow) from financing activities Continuing operations Discontinuing operations Total NET DECREASE IN CASH AND CASH EQUIVALENTS Cash and cash equivalents at beginning of year CASH AND CASH EQUIVALENTS AT END OF YEAR ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS Cash and bank balances Time deposits with original maturity of less than three months when acquired	2003 HK$’000 (120,709) 1,150 59 – – (25,995) – (5,000) 134 80 – (17,558) (12,014) (29,572) (112) 764 – 5 – 652 5 657 (149,624) 203,119 53,495 49,742 3,753 53,495	2002 HK$’000 (Restated) (64,270) 8,888 302 (50,000) 49,778 (1,654) (500) – – – (4,798) 2,016 – 2,016 – – 82 3,964 (4,297) (251) – (251) (62,505) 265,624 203,119 3,784 199,335 203,119

– 38 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Balance Sheet

As at 31 March 2003

Notes NON-CURRENT ASSETS Interests in subsidiaries 14 CURRENT ASSETS Prepayments, deposits and other receivables Tax recoverable 9 Time deposits Cash and bank balances CURRENT LIABILITIES Other payables and accrued liabilities Provisions 22 NET CURRENT ASSETS CAPITAL AND RESERVES Share capital 24 Reserves 26(b)	2003 HK$’000 126,961 455 494 – 24,728 25,677 1,531 13,780 15,311 10,366 137,327 28,887 108,440 137,327	2002 HK$’000 124,361
		1,577 494 144,638 584
		147,293
		2,127 15,756
		17,883
		129,410
		253,771

		28,648 225,123
		253,771

– 39 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Notes to the Financial Statements

1. CORPORATE INFORMATION

The Company was incorporated in Bermuda as an exempted company with limited liability under the Companies Act 1981 of Bermuda (as amended). Its shares have been listed on The Stock Exchange of Hong Kong Limited since 13 October 1998. The registered office of the Company is located at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda.

On 23 May 2002, the Company’s shareholders received a voluntary conditional cash offer (the “Offer”) from Kandy Profits Limited (“Kandy Profits”) to acquire all the issued shares of the Company and outstanding share options to subscribe for shares of the Company. Kandy Profits is incorporated in the British Virgin Islands and is wholly owned by Mr. Cheong Tin Yau, a director and the chairman of the Company. After the close of the Offer, Dr. Chiang Lily, a former director of the Company, ceased to be a substantial shareholder of the Company and Kandy Profits became the major substantial shareholder of the Company.

During the year, the Group was involved in the following principal activities:

manufacture and trading of precision components processing equipment;
provision of corporate finance and investment advisory services; and
provision of securities investment and financial services.

Pursuant to an agreement dated 14 July 2003, the Group agreed to acquire the entire issued share capital of Elegant Pool Limited (“Elegant”) and the shareholder loan owing by Elegant to its existing shareholder at consideration of approximately HK$8.7 million and HK$61.3 million, respectively. Elegant was incorporated in the British Virgin Islands and was engaged in acquiring certain properties situated in Beijing for investment purposes.

Subsequent to the balance sheet date on 22 July 2003, the Group disposed of and discontinued its precision components processing equipment manufacturing business, further details of which are included in note 10 to the financial statements.

2. IMPACT OF NEW AND REVISED STATEMENTS OF STANDARD ACCOUNTING PRACTICE (“SSAPs”)

The following new and revised SSAPs are effective for the first time for the current year’s financial statements:

SSAP 1 (Revised) : “Presentation of financial statements” SSAP 11 (Revised) : “Foreign currency translation” SSAP 15 (Revised) : “Cash flow statements” SSAP 33 : “Discontinuing operations” SSAP 34 : “Employee benefits”

These SSAPs prescribe new accounting measurement and disclosure practices. The major effects on the Group’s accounting policies and on the amounts disclosed in these financial statements of adopting these SSAPs are summarised as follows:

SSAP 1 prescribes the basis for the presentation of financial statements and sets out guidelines for their structure and minimum requirements for the content thereof. The principal impact of the revision to this SSAP is that a consolidated statement of changes in equity is now presented on page 23 of the financial statements in place of the consolidated statement of recognised gains and losses that was previously required and in place of the Group’s reserves note.

SSAP 11 prescribes the basis for the translation of foreign currency transactions and financial statements. The adoption of the revised SSAP 11 has had no effect on the financial statements.

– 40 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

SSAP 15 prescribes the revised format for the cash flow statement. The principal impact of the revision of this SSAP is that consolidated cash flow statement now presents cash flows under three headings, cash flows from operating, investing and financing activities, rather than the five headings previously required.

SSAP 33 replaces the existing disclosure requirements for discontinuing operations, which were previously included in SSAP 2. The SSAP defines a discontinuing operation and prescribes when an enterprise should commence including discontinuing operations disclosures in its financial statements and the disclosures required. The principal impact of the SSAP is that more extensive disclosures concerning the Group’s discontinuing operations are now included in the consolidated profit and loss account, consolidated cash flow statement and note 10 to the financial statements.

SSAP 34 prescribes the recognition and measurement criteria to apply to employee benefits, together with the required disclosures in respect thereof. The adoption of this SSAP has resulted in no material change to the previously adopted accounting treatments for employee benefits. Disclosures are now required in respect of the Company’s share option schemes, as detailed in note 25 to the financial statements. These share option scheme disclosures are similar to those required by the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited (the “Listing Rules”) previously included in the Report of the Directors, which are now included in the notes to the financial statements as a consequence of the SSAP.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of preparation

These financial statements have been prepared in accordance with Hong Kong Statements of Standard Accounting Practice, accounting principles generally accepted in Hong Kong and the disclosure requirements of the Hong Kong Companies Ordinance. They have been prepared under the historical cost convention, except for the periodic remeasurement of certain equity investments as further explained below.

Basis of consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiaries, together with the Group’s share of post-acquisition results and reserves of its associate and jointly-controlled entity under the equity method of accounting. The results of subsidiaries and associates acquired or disposed of during the year are consolidated from or to their effective dates of acquisition or disposal, respectively. All significant intercompany transactions and balances have been eliminated on consolidation.

Minority interests represent the interests of outside shareholders in the results and net assets of the Company’s subsidiaries.

Subsidiaries

A subsidiary is a company over which the Company can exercise control, which is normally evidenced when the Company has the power to govern the financial and operating policies so as to obtain benefits from its activities. In the Company’s financial statements, interests in subsidiaries are stated at cost less any impairment losses, while income from subsidiaries is recorded to the extent of dividends received and receivable.

Joint venture companies

A joint venture company is a company set up by contractual arrangement, whereby the Group and other parties undertake an economic activity. The joint venture company operates as a separate entity in which the Group and the other parties have an interest.

The joint venture agreement between the venturers stipulates the capital contributions of the joint venture parties, the duration of the joint venture and the basis on which the assets are to be realised upon its dissolution. The profits and losses from the joint venture company’s operations and any distributions of surplus assets are shared by the venturers, either in proportion to their respective capital contributions, or in accordance with the terms of the joint venture agreement.

– 41 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

A joint venture company is treated as:

(a) a subsidiary, if the Company has unilateral control, directly or indirectly, over the joint venture company;
(b) a jointly-controlled entity, if the Company does not have unilateral control, but has joint control, directly or indirectly, over the joint venture company;
(c) an associate, if the Company does not have unilateral or joint control, but holds, directly or indirectly, generally not less than 20% of the joint venture company’s registered capital and is in a position to exercise significant influence over the joint venture company; or
(d) a long term investment, if the Company holds, directly or indirectly, less than 20% of the joint venture company’s registered capital and has neither joint control of, nor is in a position to exercise significant influence over, the joint venture company.

Jointly-controlled entities

A jointly-controlled entity is a joint venture company which is subject to joint control, resulting in none of the participating parties having unilateral control over the economic activity of the jointlycontrolled entity.

The Group’s share of the post-acquisition results and reserves of jointly-controlled entities is included in the consolidated profit and loss account and consolidated reserves, respectively. The Group’s interests in jointly-controlled entities are stated in the consolidated balance sheet at the Group’s share of net assets under the equity method of accounting, less any impairment losses.

Associates

An associate is a company over which the Group has significant influence, but not control or joint control, over its financial and operating policy decisions. In the consolidated financial statements, interests in associates are accounted for under the equity method of accounting, whereby the interests are initially recorded at cost and are adjusted thereafter to recognise the Group’s share of the post-acquisition results of associates, distributions received from associates, other necessary alterations in the Group’s proportionate interest in associates arising from changes in the equity of associates that have not been included in the profit and loss account of associates, amortisation of the difference between the cost of investment and the Group’s share of the aggregate fair value of the identifiable net assets acquired at the date of acquisition (goodwill), and any impairment losses. The Group’s share of post-acquisition results of associates is included in the consolidated profit and loss account.

Impairment of assets

Assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of one of these assets may not be recoverable. Whenever the carrying amount of an asset exceeds its recoverable amount, an impairment loss representing the difference between the carrying amount and the recoverable amount of an asset is recognised in the profit and loss account. The recoverable amount is the higher of an asset’s net selling price and value in use. The net selling price is the amount obtainable from the sale of an asset in an arm’s length transaction less the costs of the disposal, while value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life.

Reversal of impairment loss of an asset recognised in prior years is recorded when there is an indication that the impairment loss recognised for the asset no longer exists or has decreased. The reversal is recorded in the profit and loss account.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Fixed assets and depreciation

Fixed assets are stated at cost less accumulated depreciation and any impairment losses. Major expenditures on modifications and betterments of fixed assets which will increase their future economic benefits are capitalised, while expenditures on maintenance and repairs are expensed when incurred. Depreciation is provided on a straight-line basis to write off the cost of each asset over its estimate useful life. The annual rates of depreciation are as follows:

Leasehold land Over the lease terms Building 2.2% Leasehold improvements 25%-33% (Over the unexpired period of the leases) Machinery and equipment 20% Furniture and office equipment 20% Motor vehicles 33%

The depreciation methods and useful lives are reviewed periodically to ensure that the methods and rates of depreciation are consistent with the expected pattern of economic benefits from fixed assets.

Gains and losses on disposal of fixed assets are recognised in the profit and loss account based on the net disposal proceeds less the then carrying amount of the assets.

Long term investments

Long term investments are non-trading investments in listed and unlisted equity securities intended to be held on a long term basis.

Listed securities are stated at their fair values on the basis of their quoted market prices at the balance sheet date, on an individual investment basis. Unlisted securities are stated at their estimated fair values based on directors’ valuation on an individual basis.

The gains or losses arising from changes in the fair value of a security are dealt with as movements in the long term investment revaluation reserve, until the security is sold, collected, or otherwise disposed of, or until the security is determined to be impaired, when the cumulative gain or loss derived from the security recognised in the long term investment revaluation reserve, together with the amount of any further impairment, is charged to the profit and loss account in the period in which the impairment arises.

Short term investments

Short term investments are investments in equity securities held for trading purposes and are stated at their fair values on the basis of their quoted market prices at the balance sheet date, on an individual investment basis. The gains or losses arising from changes in the fair value of a security are credited or charged to the profit and loss account in the period in which they arise.

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost includes costs of raw materials determined using the first-in-first-out method of costing and, in the case of work in progress and finished goods, also direct labour and an appropriate proportion of production overheads. Net realisable value is based on estimated selling price in the ordinary course of business, less further costs expected to be incurred to completion and disposal. Provision is made for obsolete, slow-moving or defective items where appropriate.

When inventories are sold, the carrying amount of those inventories is recognised as an expense in the period in which the related revenue is recognised. The amount of any write-down of inventories to net realisable value and all losses of inventories are recognised as an expense in the period the writedown or loss occurs. The amount of any reversal of write-down of inventories, arising from an increase in net realisable value, is recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Taxation

Individual companies within the Group provide for profits tax on the basis of their profits for financial reporting purposes, adjusted for income and expense items which are not assessable or deductible for profits tax purposes.

Deferred taxation is provided under the liability method, at the current tax rates, in respect of significant timing differences between profit as computed for taxation purposes and profit as stated in the financial statements, except when it is considered that no liability will arise in the foreseeable future. Deferred tax assets are not recognised unless the related benefits are expected to crystallise in the foreseeable future.

Cash and cash equivalents

For the purpose of the consolidated cash flow statement, cash and cash equivalents comprise cash on 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.

For the purpose of the balance sheet, cash and cash equivalents comprise cash on hand and at banks, including term deposits, which are not restricted as to use.

Revenue recognition

Revenue is recognised when the outcome of a transaction can be measured reliably and when it is probable that the economic benefits associated with the transaction will flow to the Group. Revenues are recognised on the following bases:

(i) sale of precision components processing equipment is recognised when the merchandise is shipped and title has passed;
(ii) interest income from bank deposits is recognised on a time proportion basis that takes into account the effective yield on the bank deposits;
(iii) corporate finance and investment advisory fees are recognised when services are rendered;
(iv) gain on disposal of marketable securities is recognised on the trade date;
(v) dividend income is recognised when the right to receive payment is established; and
(vi) rental income is recognised on a straight-line basis over the terms of the leases.

Provisions and contingencies

A provision is recognised when there is a present obligation, legal or constructive, as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligations, and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed regularly and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditures expected to be required to settle the obligation.

Contingent liabilities are not recognised in the financial statements. They are disclosed unless the possibility of an outflow of resources embodying economic benefits is remote. A contingent asset is not recognised in the financial statements but disclosed when an inflow of economic benefits is probable.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Operating leases

Operating leases represent those lease under which substantially all the risks and rewards of ownership of the leased assets remain with the lessors. Where the Group is the lessor, rentals receivable under the operating leases are credited to the profit and loss account on the straight-line basis over the lease terms. Where the Group is the lessee, rentals payable under the operating leases are charged to the profit and loss account on the straight-line basis over the lease terms.

Related parties

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party, or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or common significant influence. Related parties may be individuals or corporate entities.

Foreign currencies

Individual companies within the Group maintain their books and records in the primary currencies of their respective operations (“functional currencies”). In the financial statements of the individual companies, transactions in other currencies during the year are translated into the respective functional currencies at the applicable rates of exchange prevailing at the time of the transaction; monetary assets and liabilities denominated in other currencies are translated into the respective functional currencies at the applicable rate of exchange in effect at the balance sheet date. Exchange gains and losses are dealt with in the profit and loss account of the individual companies.

The Group prepares consolidated financial statements in Hong Kong dollars. For the purpose of consolidation, all the assets and liabilities of subsidiaries with functional currencies other than Hong Kong dollars are translated into Hong Kong dollars at the applicable rates of exchange in effect at the balance sheet date; all income and expense items are translated into Hong Kong dollars at the applicable average exchange rates during the year. Exchange differences arising from such translation are dealt with as movements in exchange fluctuation reserve.

Employee benefits

Retirement benefits scheme

The Group operates a defined contribution Mandatory Provident Fund retirement benefits scheme (the “MPF Scheme”) under the Mandatory Provident Fund Schemes Ordinance, for its eligible employees in Hong Kong who are eligible to participate in the MPF Scheme.

Contributions are made based on a percentage of the employees’ basic salaries and are charged to the profit and loss account 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.

The employees of the Group’s subsidiary which operates in Mainland China are required to participate in the retirement benefits scheme (the “RB Scheme”) operated by the local municipal government in Mainland China. This subsidiary is required to contribute a certain percentage of its payroll costs to the RB Scheme to fund the benefits. The only obligation of the Group with respect to the RB Scheme is to pay the ongoing required contributions under the RB Scheme. Contributions under the RB Scheme are charged to the profit and loss account as they become payable in accordance with the rules of the RB Scheme.

Employment Ordinance long service payments

Certain of the Group’s employees have completed the required number of years of service to the Group in order to be eligible for long service payments under the Hong Kong Employment Ordinance in the event of the termination of their employment. The Group is liable to make such payments in the event that such a termination of employment meets the circumstances specified in the Employment Ordinance.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

A provision has not been recognised in respect of such possible payments, as it is not considered probable that the situation will result in a material future outflow of resources from the Group.

Share option scheme

The Company 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 Company’s or the Group’s balance sheet until such time as the options are exercised, and no charge is recorded in the profit and loss account or 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 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.

4. SEGMENT INFORMATION

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 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 the other business segments. Summary details of the business segments are as follows:

Continuing operations

(a) the trading of precision components processing equipment;
(b) the provision of securities investment and financial services;
(c) the provision of corporate finance and investment advisory services; and

Discontinuing operations

(d) the manufacture and distribution of precision components processing equipment.

In determining the Group’s geographical segments, revenues 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.

Intersegment sales and transfers are transacted with reference to the selling prices used for sales made to third parties at the then prevailing market prices.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

(a) Business segments

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

Group

Continuing operations Trading of Corporate precision Securities finance and components investment investment processing and financial advisory equipment services services 2003 2002 2003 2002 2003 2002 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Segment revenue: Sales and services to external customers 5,429 17,391 – – 2,190 5,208 Intersegment sales – – – – 1,680 4,280 Interest income 16 – 788 7,101 331 1,744 Total 5,445 17,391 788 7,101 4,201 11,232 Segment results (11,338) 1,919 (345) 217 3,464 833 Unallocated revenue Unallocated expenses Loss from operating activities Finance costs Share of loss of a jointly-controlled entity Impairment of interest in an associate Loss before tax Tax Loss before minority interests Minority interests Net loss from ordinary activities attributable to shareholders	Discontinuing operations Manufacture and distribution of precision components processing equipment 2003 2002 HK$’000 HK$’000 28,798 13,503 200 762 15 43 29,013 14,308 (7,330) (1,650 )	Discontinuing operations	Eliminations 2003 2002 HK$’000 HK$’000 – – (1,880) (5,042 ) – – (1,880) (5,042 ) (1,880) (5,042 )	Consolidated 2003 2002 HK$’000 HK$’000 36,417 36,102 – – 1,150 8,888 37,567 44,990 (17,429) (3,723 ) 963 2,224 (60,114) (37,091 ) (76,580) (38,590 ) (112) – – (222) – (1,014 ) (76,692) (39,826 ) 612 (140) (76,080) (39,966 ) – 82 (76,080) (39,884 )

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Group

Discontinuing Continuing operations operations Manufacture and Trading of Corporate distribution precision Securities finance and of precision components investment investment components processing and financial advisory processing equipment services services equipment 2003 2002 2003 2002 2003 2002 2003 2002 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Segment assets 13,487 17,874 591 234 17,542 57,401 42,464 24,434 Unallocated assets Total assets Segment liabilities 284 6,633 246 289 3,261 7,753 17,304 9,116 Unallocated liabilities Total liabilities Other segment information: Depreciation 971 56 86 – 170 770 1,918 190 Unallocated depreciation Total Impairment losses recognised in the profit and loss account Unrealised loss on short term listed investments Provision for bad and doubtful debts Capital expenditure 8,009 132 441 – 136 211 12,094 1,301 Unallocated capital expenditure Total	Discontinuing operations	Consolidated 2003 2002 HK$’000 HK$’000 74,084 99,943 112,039 167,017 186,123 266,960 21,095 23,791 19,857 22,821 40,952 46,612 3,145 1,016 247 9 3,392 1,025 – 11,508 20,190 5,800 5,866 1,804 20,680 1,644 5,315 10 25,995 1,654	Consolidated 2003 2002 HK$’000 HK$’000 74,084 99,943 112,039 167,017 186,123 266,960 21,095 23,791 19,857 22,821 40,952 46,612 3,145 1,016 247 9 3,392 1,025 – 11,508 20,190 5,800 5,866 1,804 20,680 1,644 5,315 10 25,995 1,654
			266,960

			23,791 22,821
			46,612

			1,016 9
			1,025

			11,508 5,800 1,804

			1,644 10
			1,654

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

(b) Geographical segments

The following table presents revenue and certain asset and expenditure information for the Group’s geographical segments.

Group

Segment revenue: Sales and services to external customers Other revenue Total Other segment information: Segment assets Capital expenditure	Hong Kong 2003 2002 HK$’000 HK$’000 7,618 4,902 1,439 11,063 9,057 15,965 142,183 242,535 13,901 364	Mainland China 2003 2002 HK$’000 HK$’000 14,004 20,137 80 – 14,084 20,137 21,051 4,925 12,012 –	Taiwan 2003 2002 HK$’000 HK$’000 17,305 11,165 396 49 17,701 11,214 22,889 19,500 82 1,290	Eliminations Consolidated 2003 2002 2003 2002 HK$’000 HK$’000 HK$’000 HK$’000 (2,510) (102) 36,417 36,102 – – 1,915 11,112 (2,510) (102) 38,332 47,214 – – 186,123 266,960 – – 25,995 1,654	Eliminations Consolidated 2003 2002 2003 2002 HK$’000 HK$’000 HK$’000 HK$’000 (2,510) (102) 36,417 36,102 – – 1,915 11,112 (2,510) (102) 38,332 47,214 – – 186,123 266,960 – – 25,995 1,654
					47,214

					266,960 1,654

5. TURNOVER, REVENUE AND GAINS

Turnover represents the net invoiced value of goods sold, after allowances for returns and trade discounts and the income from the rendering of services during the year.

An analysis of the Group’s turnover, other revenue and gains is as follows:

Turnover Corporate finance and investment advisory fees: Continuing operations Sale of precision components processing equipment: Continuing operations Discontinuing operations Other revenue Interest income Dividend income from listed investments Rental income Others Gains Gain on disposal of an associate Gain on disposal of short term listed investments	2003 HK$’000 2,190 5,429 28,798 36,417 1,150 59 45 581 1,835 80 – 80 1,915	2002 HK$’000 5,208 17,391 13,503
		36,102

		8,888 302 151 600
		9,941
		– 1,171
		1,171
		11,112

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

6. LOSS FROM OPERATING ACTIVITIES

The Group’s loss from operating activities is arrived at after charging/(crediting):

Cost of inventories sold Depreciation Staff costs (excluding directors’ remuneration –note 8): Wages and salaries Retirement scheme contributions Auditors’ remuneration Minimum lease payments under operating leases on leasehold land and buildings Provision for inventory obsolescence Loss on disposal of fixed assets Provision for bad and doubtful debts Unrealised loss on short term listed investments Provision for legal and professional costs Legal and professional fees in respect of a conditional cash offer to acquire all the issued shares and outstanding share options of the Company Loss on disposal of short term listed investments Impairment of long term investments transferred from the investment revaluation reserve* Write-back of provision for staff bonus_(note 22)_ Write-back of accruals for termination of an operating lease	2003 HK$’000 30,286 3,392 10,820 310 11,130 650 3,689 2,258 297 5,866 20,190 – 4,428 19,324 – (4,547) –	2002 HK$’000 21,502 1,025 9,306 251 9,557 610 2,898 2,132 – 1,804 5,800 18,079 – – 10,494 (723) (1,390)

* Included in “Other operating expenses” on the face of the consolidated profit and loss account.

7. FINANCE COSTS

Finance costs represent interests on amounts due to securities dealers (2002: Nil).

– 50 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

8. DIRECTORS’ REMUNERATION AND THE FIVE HIGHEST PAID EMPLOYEES

Directors’ remuneration

Directors’ remuneration disclosed pursuant to the Listing Rules and Section 161 of the Companies Ordinance is as follows:

Fees: Executive directors Independent non-executive directors Other emoluments (executive directors): Basic salaries, housing benefits, other allowances and benefits in kind Compensation for loss of office Retirement scheme contributions	Group 2003 2002 HK$’000 HK$’000 – – 380 195 380 195 5,708 5,840 1,000 – 20 33 6,728 5,873 7,108 6,068	Group 2003 2002 HK$’000 HK$’000 – – 380 195 380 195 5,708 5,840 1,000 – 20 33 6,728 5,873 7,108 6,068
		195
		5,840 – 33
		5,873
		6,068

The number of directors whose remuneration fell within the following bands is as follows:

Nil – HK$1,000,000 HK$1,500,001 – HK$2,000,000 HK$2,000,001 – HK$2,500,000 HK$3,000,001 – HK$3,500,000	Number of directors 2003 2002 10 4 – 1 2 – – 1 12 6	Number of directors 2003 2002 10 4 – 1 2 – – 1 12 6
		6

There was no arrangement under which a director waived or agreed to waive any remuneration during the year.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Five highest paid employees

Of the five highest paid employees, four (2002: three) were directors of the Company and their remuneration has been included in the directors’ remuneration set out above. The details of the remuneration of the remaining one (2002: two) non-director, highest paid employees are as follows:

Basic salaries, housing benefits, other allowances and benefits in kind Retirement scheme contributions HK$1,000,001 – HK$1,500,000 HK$1,500,001 – HK$2,000,000	Group 2003 2002 HK$’000 HK$’000 1,560 3,093 12 19 1,572 3,112 Number of employees 2003 2002 – 1 1 1 1 2	Group 2003 2002 HK$’000 HK$’000 1,560 3,093 12 19 1,572 3,112 Number of employees 2003 2002 – 1 1 1 1 2
		2

Certain employees were also granted share options under the Company’s share option scheme, further details of which are set out in note 25 to the financial statements. No value in respect of the share options granted was charged to the profit and loss account at the time when the options were granted.

9. TAX

No Hong Kong profits tax has been provided as the Company, its subsidiaries, associate and jointlycontrolled entity had no assessable profits arising in Hong Kong for the year. In the prior year, Hong Kong profits tax had been provided at the rate of 16% on the estimated assessable profits arising in Hong Kong during that year.

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, practices and interpretations in respect thereof. In accordance with the relevant tax rules and regulations, the Company’s subsidiary registered in Mainland China benefits from income tax exemption and reduction.

Tax recoverable represents the excess of provisional tax paid over the estimated tax liability.

Hong Kong Overprovision in prior year Deferred tax_(note 23)_ Tax charge/(credit) for the year	Group 2003 2002 HK$’000 HK$’000 – 680 (506) (540 (106) – (612) 140	Group 2003 2002 HK$’000 HK$’000 – 680 (506) (540 (106) – (612) 140
		140

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

10. DISCONTINUING OPERATIONS

Pursuant to a sale and purchase agreement dated 22 July 2003, the Group disposed of its entire interests in certain subsidiaries engaging in the manufacture and distribution of precision components processing equipment to an independent third party (the “Purchaser”) for a cash consideration of HK$25 million. The disposal will be completed upon certain procedures to be performed by the Purchaser on or before 21 August 2003. The disposal has no significant impact on the Group’s profit and loss account.

The results of the discontinuing operations included in the consolidated profit and loss account for the two years ended 31 March 2003 were as follows:

TURNOVER Cost of sales Gross profit Other revenue and gains Selling and distribution expenses Administrative expenses Other operating expenses LOSS BEFORE TAX Tax NET LOSS FROM ORDINARY ACTIVITIES ATTRIBUTABLE TO SHAREHOLDERS	2003 HK$’000 28,798 (26,969) 1,829 712 (374) (9,229) (268) (7,330) – (7,330)	2002 HK$’000 13,503 (10,998) 2,505 805 (534) (3,859) (567) (1,650) – (1,650)

The carrying amounts of the total assets and liabilities relating to the discontinuing operations as at 31 March were as follows:

Total assets Total liabilities Net assets	2003 HK$’000 42,464 (17,304) 25,160	2002 HK$’000 24,434 (9,116) 15,318

11. NET LOSS FROM ORDINARY ACTIVITIES ATTRIBUTABLE TO SHAREHOLDERS

The net loss from ordinary activities attributable to shareholders for the year ended 31 March 2003 dealt with in the financial statements of the Company was HK$117,208,000 (2002: net profit of HK$34,829,000).

12. LOSS PER SHARE

The calculation of basic loss per share is based on the net loss attributable to shareholders for the year of HK$76,080,000 (2002: HK$39,884,000) and the weighted average of 306,833,231 (2002: 304,558,835) ordinary shares in issue during the year, adjusted for rights issue of the Company subsequent to the balance sheet date (note 24).

Diluted loss per share for the years ended 31 March 2003 and 2002 have not been shown because the share options outstanding during these years had an anti-dilutive effect on the basic loss per share for these years.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

13. FIXED ASSETS

Group

Cost: At beginning of year Additions Disposals Exchange adjustment At 31 March 2003 Accumulated depreciation: At beginning of year Provided during the year Disposals At 31 March 2003 Net book value: At 31 March 2003 At 31 March 2002	Leasehold land and Leasehold building improvements HK$’000 HK$’000 – 2,366 4,480 565 – (2,053) – – 4,480 878 – 2,103 51 281 – (2,053) 51 331 4,429 547 – 263	Machinery and equipment HK$’000 1,675 12,000 – 7 13,682 134 1,694 – 1,828 11,854 1,541	Furniture and office equipment HK$’000 2,165 8,427 (909) 3 9,686 1,170 1,240 (661) 1,749 7,937 995	Motor vehicles HK$’000 1,041 523 (968) 1 597 777 126 (785) 118 479 264	Total HK$’000 7,247 25,995 (3,930) 11 29,323 4,184 3,392 (3,499) 4,077 25,246 3,063

The Group’s leasehold land and building is situated in Hong Kong and held under medium term lease.

14. INTERESTS IN SUBSIDIARIES

Unlisted shares, at cost Due from subsidiaries Due to subsidiaries Provision for impairment	Company 2003 2002 HK$’000 HK$’000 131,899 131,899 118,955 17,609 (23,893) (25,147) 226,961 124,361 (100,000) – 126,961 124,361

The balances with the subsidiaries are unsecured, interest-free and have no fixed terms of repayment.

– 54 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Particulars of the principal subsidiaries are as follows:

	Place of	Nominal value of	Percentage	Percentage
	incorporation/	issued ordinary/	of	equity
	registration	registered	attributable
Name	and operations	share capital	to the	Company	Principal activities
			Direct	Indirect
New Times Holdings	British Virgin Islands/	Ordinary	100%	–	Investment holding
Limited (formerly	Hong Kong	HK$1,000
Pacific Challenge
Incorporated)
Chateron Corporate	Hong Kong	Ordinary	–	100%	Provision of
Finance Limited		HK$10,000,000			corporate finance
					and investment
					advisory services
Dongguan Long Heng	Mainland China	Registered capital	–	79.1%	Manufacturing and
Machinery Company		HK$3,500,000			trading of precision
Limited/*					components
					processing
					equipment
Elect Investments	British Virgin Islands/	Ordinary	–	100%	Investment holding
Limited	Hong Kong	US$100
Express Magic	British Virgin Islands/	Ordinary	–	100%	Investment holding
Limited	Hong Kong	US$1
First Up Limited	British Virgin Islands/	Ordinary	–	100%	Investment holding
	Hong Kong	US$1
Grand Dragon	British Virgin Islands/	Ordinary	–	79.1%	Investment holding
Industrial Limited	Hong Kong	US$50,000
Grand Dynasty Capital	Hong Kong	Ordinary	–	100%	Investment advisory
Limited		HK$3,000,000
Ideal Far East Limited	Hong Kong	Ordinary	–	100%	Trading of precision
		HK$10,000			components
					processing
					equipment
Jefta Holding Limited	British Virgin Islands/	Ordinary	–	100%	Investment holding
	Hong Kong	US$100
Key Foundation	British Virgin Islands/	Ordinary	–	100%	Investment holding
Limited	Hong Kong	US$1
Nissin Top Machinery	Taiwan	Ordinary	–	79.1%	Manufacturing
Company Limited*		NT$50,000,000			of machinery
Pacific Challenge	British Virgin Islands/	Ordinary	–	100%	Investment holding
Investments	Hong Kong	US$1
Limited

– 55 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

	Place of	Nominal value of	Percentage	Percentage
	incorporation/	issued ordinary/	of	equity
	registration	registered	attributable
Name	and operations	share capital	to the	Company	Principal activities
			Direct	Indirect
Profit Dynamic Limited	British Virgin Islands/	Ordinary	–	100%	Investment holding
	Hong Kong	US$1
Shine Tech International	Hong Kong	Ordinary	–	79.1%	Investment holding
Limited		HK$10,000
South Richest Limited	Hong Kong	Ordinary	–	100%	Investment holding
		HK$2
Team World Holdings	British Virgin Islands/	Ordinary	–	100%	Investment holding
Limited	Hong Kong	US$100
Ultra Technologies	British Virgin Islands/	Ordinary	–	100%	Investment holding
Limited	Hong Kong	US$1

* Not audited by Ernst & Young Hong Kong or other Ernst & Young International member firms.

** The subsidiary is a foreign enterprise registered in Mainland China to be operated for 12 years up to June 2012.

The above table lists the subsidiaries of the Company which, in the opinion of the directors, principally affected the results for the year or formed a substantial portion of the net assets of the Group. To give details of other subsidiaries would, in the opinion of the directors, result in particulars of excessive length.

15. INTERESTS IN A JOINTLY-CONTROLLED ENTITY

Share of net assets Loans from a jointly-controlled entity	Group 2003 2002 HK$’000 HK$’000 49,778 49,778 (49,778) (49,778) – –

The loans from the jointly-controlled entity represented the Group’s withdrawal of substantially its initial investment from the jointly-controlled entity, which is unsecured, interest-free and is not expected to be settled within 1 year.

Particulars of the jointly-controlled entity are as follows:

			Percentage
			of equity
		Place of	indirectly
	Business	incorporation	attributable to
Name	structure	and operations	the Company	Principal activity
E1-SkyTech Investment	Corporate	Cayman Islands	50%	Investment holding
Company Limited

In the prior year, the Group received investment advisory fee income from the jointly-controlled entity amounted to HK$1,917,000, which was charged based on 2% of the jointly-controlled entity’s net asset managed by the Group.

– 56 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

16. INTEREST IN AN ASSOCIATE

					Group
				2003	2002
				HK$’000	HK$’000
Share of net assets				–	1,014
Provision for impairment				–	(1,014)
				–		–

Particulars of the associate are as follows:
			Percentage
				of equity
		Place of	indirectly
	Business	incorporation	attributable to
Name	structure	and operations	the	Company	Principal activity
Pacific Challenge	Corporate	British Virgin Islands		26%	Investment holding
Technology Capital
Limited*

* The associate was disposed of to a third party at a consideration of HK$80,000 during the year.

17. INVESTMENTS

Other investments Unlisted equity investments, at fair value Short term investments Listed equity investments, at fair value: – Hong Kong – Outside Hong Kong Market value of listed equity investments: – At balance sheet date – At date of report	Group 2003 2002 HK$’000 HK$’000 5,000 – 61,127 18,656 – 1,320 61,127 19,976 61,127 19,976 32,090 10,292	Group 2003 2002 HK$’000 HK$’000 5,000 – 61,127 18,656 – 1,320 61,127 19,976 61,127 19,976 32,090 10,292

		18,656 1,320
		19,976

		19,976

		10,292

– 57 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

18. INVENTORIES

Raw materials Work in progress Finished goods _Less:_Provision for inventory obsolescence	Group 2003 2002 HK$’000 HK$’000 7,744 10,693 2,918 1,690 7,824 8,732 18,486 21,115 (4,390) (2,132 14,096 18,983	Group 2003 2002 HK$’000 HK$’000 7,744 10,693 2,918 1,690 7,824 8,732 18,486 21,115 (4,390) (2,132 14,096 18,983
		21,115 (2,132
		18,983

The carrying amount of inventories carried at net realisable value included in the above balance was HK$13,060,000 (2002: HK$18,983,000) as at the balance sheet date.

19. TRADE RECEIVABLES

Credit is offered to customers following a financial assessment of the customers or to those customers which have an established payment record. The Group usually allows an average credit period of 90 days to its customers and seeks to maintain strict control over its outstanding receivables. The following is an aged analysis of the trade receivables as at the balance sheet date, based on the invoice date.

Less than 90 days 91-180 days Over 181 days _Less:_Provision for bad and doubtful debts	Group 2003 2002 HK$’000 HK$’000 6,719 10,069 1,774 5,928 6,550 3,526 15,043 19,523 (5,675) (3,882 9,368 15,641	Group 2003 2002 HK$’000 HK$’000 6,719 10,069 1,774 5,928 6,550 3,526 15,043 19,523 (5,675) (3,882 9,368 15,641
		19,523 (3,882
		15,641

20. TRADE PAYABLES

The following is an aged analysis of trade payables as at the balance sheet date, based on the invoice date.

Less than 90 days 91-180 days 181-360 days Over 360 days	Group 2003 2002 HK$’000 HK$’000 8,141 8,928 1,615 2,255 300 10 301 743 10,357 11,936	Group 2003 2002 HK$’000 HK$’000 8,141 8,928 1,615 2,255 300 10 301 743 10,357 11,936
		11,936

– 58 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

21. OTHER PAYABLES AND ACCRUED LIABILITIES

Included in other payables and accrued liabilities of the Group was a loan due to a minority shareholder of a subsidiary amounting to HK$3,969,000 (2002: HK$3,964,000). The balance is unsecured, interest-free and has no fixed terms of repayment.

22. PROVISIONS

Group

	Provision for
	legal and
	professional	Provision for
	costs		staff bonus	Total
	HK$’000		HK$’000	HK$’000
Balance at beginning of year	15,756		7,500	23,256
Additional provision	–		231	231
Amounts utilised during the year	(1,976)		(75)	(2,051)
Reversal of unutilised amounts	–		(4,547)	(4,547)
At 31 March 2003	13,780		3,109	16,889

Company
			Provision for
				legal and
				professional
				costs
				HK$’000
Balance at beginning of year				15,756
Amounts utilised during the year				(1,976)
At 31 March 2003				13,780

Provision for legal and professional costs was made in respect of a litigation as detailed in note 28 to the financial statements. The amount of the provision for legal costs is estimated based on the legal opinion obtained from the independent legal advisors of the Group.

The Group provides staff bonuses for the purpose of providing incentives to encourage executives and management staff to remain with the Group in order to preserve management continuity. The amount of the provision for staff bonus is made based on the directors’ estimation.

– 59 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

23. DEFERRED TAX

Balance at beginning of year Credit for the year_(note 9)_ At 31 March	Group 2003 2002 HK$’000 HK$’000 106 106 (106) – – 106	Group 2003 2002 HK$’000 HK$’000 106 106 (106) – – 106
		106

At 31 March 2003, no provision for deferred tax had been made as the Group did not have any significant unprovided deferred tax liabilities in respect of the year. In the prior year, deferred tax had been provided for, using the liability method, at the rate of 16% on the significant timing differences between the taxable profits and profits reported in the financial statements.

The principal component of the Group’s deferred tax liability in the prior year comprised accelerated depreciation allowances.

The unprovided deferred tax asset calculated at 17.5% (2002: 16%) of the attributable timing differences at the balance sheet date is HK$2,896,000 (2002: HK$1,046,000) representing principally tax losses carried forward.

24. SHARE CAPITAL

Authorised: 900,000,000 ordinary shares of HK$0.10 each Issued and fully paid: 288,868,000 (2002: 286,480,000) ordinary shares of HK$0.10 each	2003 HK$’000 90,000 28,887	2002 HK$’000 90,000

		28,648

During the year, the subscription rights attaching to 2,388,000 share options were exercised at the subscription price of HK$0.32 per share (note 25), resulting in the issue of 2,388,000 share of HK$0.10 each for total cash consideration, before expenses, of HK$764,160.

Subsequent to the balance sheet date, on 9 May 2003, 144,434,000 shares were issued to subscribers, through rights issue, at HK$0.30 per share, for a total consideration, before expenses, of HK$43,330,200. The proceeds from the issue of share capital were used to finance the Group’s working capital.

– 60 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

The movements in the Company’s issued share capital up to the date of this report is as follows:

At 1 April 2001, 31 March 2002 and 1 April 2002 Share options exercised At 31 March 2003 Rights issue of shares At the date of report	Number of shares in issue 286,480,000 2,388,000 288,868,000 144,434,000 433,302,000	Issued share capital HK$’000 28,648 239 28,887 14,443 43,330	Share premium account HK$’000 65,928 525 66,453	Total HK$’000 94,576 764
				95,340

25. SHARE OPTION SCHEMES

SSAP 34 was adopted during the year, as explained in note 2 and under the heading “Employee benefits” in note 3 to the financial statements. As a result, the following detailed disclosures relating to the Company’s share option schemes are now included in the notes to the financial statements. In the prior year, these disclosures were included in the Report of the Directors, as their disclosure is also a requirement of the Listing Rules.

On 11 September 1998, the Company approved a share option scheme (the “Old Scheme”) under which the directors of the Company may, at their discretion, invite any employees, including executive directors, of the Group to take up share options to subscribe for shares of the Company at any time during the 10 years from the date of approval. The Old Scheme became effective upon the listing of the Company’s shares on The Stock Exchange of Hong Kong Limited (“the Stock Exchange”) in October 1998.

The maximum number of shares in respect of which options may be granted (together with options exercised and options outstanding) under the Old Scheme may not exceed 10% of the issued share capital of the Company, excluding any shares issued pursuant to the Old Scheme from time to time. The maximum entitlement of each eligible person under the Old Scheme must not exceed 25% of the aggregate number of shares for the time being issued and issuable under the Old Scheme.

The offer of a grant of share options under the Old Scheme may be accepted within 28 days from the date on which such offer was made. The amount payable by the grantee of a share option to the Company on acceptance of the offer of the grant is HK$10. The subscription price for shares under the Old Scheme will be no less than 80% of the average of the closing prices of the shares on the Stock Exchange on the five trading days immediately preceding the date of offer of the option, or the nominal value of the shares, whichever is the higher.

In compliance with the amended Chapter 17 of the Listing Rules, the Old Scheme was terminated on 30 August 2002 and a new share option scheme (the “New Scheme”) was adopted pursuant to an ordinary resolution passed at a special general meeting of the Company on 30 August 2002. As a result, the Company will no longer grant any further share options under the Old Scheme.

Under the New Scheme, eligible participants include any director or proposed director, including independent non-executive director, employee or proposed employee, secondee, any holder of securities issued by any member of the Group, any business or joint venture partner, contractor, agent or representative, any person or entity that provides research, development or other technology support or advisory, consultancy, professional or other services to the Group, any supplier, producer or licensor of goods or services to the Group, any customer, licensee or distributor of goods or services of the Group, or any landlord or tenant of the Group or any substantial shareholder or company controlled by a substantial shareholder, or any company controlled by one or more persons belonging to any of the above classes of participants. The New Scheme became effective on 30 August 2002 and, unless otherwise terminated earlier by shareholders in a general meeting, will remain in force for a period of 10 years from that date.

– 61 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Pursuant to the New Scheme, the maximum number of share options may be granted under the New Scheme and any other share option schemes of the Company is an amount equivalent, upon their exercise, not in aggregate exceed 30% of the issued share capital of the Company from time to time, excluding any shares issued on the exercise of share options. At 31 March 2003, the number of share issuable under the share options granted under the New Scheme was 28,886,800 which represented 10% of the Company’s shares in issue at that date. The maximum number of shares issuable under share options to each eligible participant under the New Scheme within any 12-month period is limited to 1% of the shares of the Company in issue at any time. Any further grant of share options in excess of such limit is subject to shareholders’ approval in a general meeting.

Pursuant to the New Scheme, share options granted to a director, chief executive or substantial shareholder of the Company, or any of their associates, are subject to approval in advance by the independent non-executive directors. In addition, any grant of share options to a substantial shareholder or an independent non-executive director, or any of their associates, will result in the total number of shares issued and to be issued upon exercise of share options already granted and to be granted to such person under the New Scheme and any other share option schemes of the Company, including options exercised, cancelled and outstanding, in any 12-month period up to and including the date of grant representing in aggregate over 0.1% of the shares in issue, and having an aggregate value, based on the closing price of the Company shares at each date of grant, in excess of HK$5 million, such further grant of share options is required to be approved by shareholders in a general meeting in accordance with the Listing Rules.

The offer of a grant of share options under the New Scheme may be accepted within 28 days from the date of the offer, upon payment of a nominal consideration of HK$1 in total by the grantee. The exercise period of the share options granted is determinable by the directors, and commences after a certain vesting period and ends on a date which is not later than 10 years from the date of the offer of the share options or the expiry date of the New Scheme, if earlier.

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

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

The following share options were outstanding under the New Scheme during the year:

							Price of
				Date of	Exercise	Exercise	Company’s
	At	Granted	At	grant of	period	price of	shares at
Name or category	1 April	during	31 March	share	of share	share	grant date
of participant	2002	the year	2003	options	options	*options **	of options**
				15 October	1 February 2003 to
Non-director	–	28,886,800	28,886,800	2002	31 January 2008	HK$0.67	HK$0.67

The following share options were outstanding under the Old Scheme during the year:

								Price of
								Company’s
					Date of	Exercise	Exercise	shares at
Name or	At	Exercised	Cancelled	At	grant of	period	price of	exercise
category	1 April	during	during	31 March	share	of share	share	date of
of participant	2002	the year	the year	2003	options	options	options*	options**
						7 May 2002 to
					4 February	31 December
Non-director	23,880,000	2,388,000	21,492,000	–	2002	2007	HK$0.32	HK$0.587

– 62 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

The exercise price of the share options is subject to adjustment in the case of rights or bonus issues, or other similar changes in the Company’s share capital.
** The price of the Company’s shares disclosed as at the date of the grant of the share options is the Stock Exchange closing price on the trading day immediately prior to the date of the grant of the options. The price of the Company’s shares disclosed as at the date of the exercise of the share options is the weighted average of the Stock Exchange closing prices over all of the exercises of options within the disclosure category.

The 2,388,000 share options exercised during the year resulted in the issue of 2,388,000 ordinary shares of the Company and additional share capital of HK$238,800 and share premium of HK$525,360 (before issue expenses), as detailed in note 24 to the financial statements.

At the balance sheet date, the Company had 28,886,800 share options outstanding under the New Scheme. The exercise in full of the share options would, under the present capital structure of the Company, result in the issue of 28,886,800 additional ordinary shares of the Company and additional share capital of HK$2,888,680 and share premium of HK$16,465,476 (before issue expenses).

26. RESERVES

(a) 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 23 of the financial statements.

The capital reserve of the Group represents the difference between the nominal value of ordinary shares issued by the Company and the aggregate of the share capital and share premium of subsidiaries acquired through a reorganisation in relation to the listing of the Company’s shares on The Stock Exchange of Hong Kong Limited in October 1998.

(b) Company

At 1 April 2001 Net profit for the year At 31 March 2002 and at 1 April 2002 Exercise of share options Net loss for the year At 31 March 2003	Share premium account HK$’000 65,928 – 65,928 525 – 66,453	Retained profits/ Contributed (accumulated surplus losses) HK$’000 HK$’000 122,864 1,502 – 34,829 122,864 36,331 – – – (117,208) 122,864 (80,877)	Total HK$’000 190,294 34,829 225,123 525 (117,208) 108,440

The contributed surplus of the Company represents the difference between the aggregate net asset value of subsidiaries acquired as a result of the reorganisation prepared of the listing of the Company’s shares on The Stock Exchange of Hong Kong Limited and the nominal amount of the Company’s shares issued for the acquisition. Under Section 54 of the Companies Act 1981 of Bermuda, contributed surplus is available for distribution as dividends to shareholders subject to the provisions of the Company’s byelaws and provided that immediately following the distribution, the Company is able to pay its liabilities as they fall due or the realisable value of the Company’s assets would not be less than the aggregate of its liabilities and its issued share capital and share premium account.

– 63 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

27. NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT

(a) Changes to the layout of the consolidated cash flow statement

SSAP 15 (Revised) was adopted during the current year, as detailed in note 2 to the financial statements, which has resulted in a change to the layout of the consolidated cash flow statement. The consolidated cash flow statement is now presented under three headings: cash flows from operating activities, investing activities and financing activities. Previously five headings were used, comprising the three headings listed above, together with cash flows from returns on investments and servicing of finance and from taxes paid. The significant reclassifications resulting from the change in presentation are that taxes are now included in cash flows from operating activities, interest and dividend received is now included in cash flows from investing activities, and interest paid and dividend paid are now included in cash flows from financing activities. The presentation of the 2002 comparative consolidated cash flow statement has been changed to accord with the new layout.

(b) Acquisition of a subsidiary

Net assets acquired: Fixed assets Inventories Prepayments, deposits and other receivables Due to a shareholder Cash consideration and net outflow of cash and cash equivalents in respect of the acquisition of a subsidiary	2003 HK$’000 – – – – – –	2002 HK$’000 1,281 2,824 189 (3,794) 500 500

28. LITIGATION

On 8 March 2001, Kistefos Investment A.S. (“Kistefos”), a shareholder of the Company which owned approximately 21.6% (2002: 21.78%) of the issued share capital of the Company at the balance sheet date, filed a petition (the “Petition”) against the Company and a former director of the Company, in the Supreme Court of Bermuda (the “Court”) under Section 111 (1) of the Companies Act 1981 of Bermuda. The Petition was based on an alleged claim that certain affairs of the Company had been conducted in a manner that was oppressive or unfairly prejudicial to the interests of certain shareholders of the Company, including Kistefos itself. Pursuant to the Petition, Kistefos sought an order from the Court to either (i) force the Company or the former director to purchase all the shares of the Company held by Kistefos, at a fair value to be determined by the Court; or (ii) wind up the Company by the Court.

After taking legal advice from its legal advisors in Bermuda, the Company made a strike out application in relation to the Petition, the Court hearing of which was completed in September 2001. In October 2001, the Court struck out the claim of Kistefos to wind up the Company, and the remaining relief claimed by Kistefos in the Petition remains to be dealt with by the Court in subsequent hearings. In December 2001, the Company appealed to the Court of Appeal of Bermuda to strike out the entire Petition. In February 2002, Kistefos filed a notice of intention to the Court of Appeal of Bermuda to appeal against the decision made by the Court to strike out the claim to wind up the Company. The hearing of the appeal was conducted in June 2002 and the Court of Appeal of Bermuda dismissed both the appeal of the Company and the cross-appeal of Kistefos. As a result, the claim by Kistefos to wind up the Company remains struck out, while the remaining relief claim will be dealt with by the Court in subsequent trials. After considering advice from its legal advisors, the directors of the Company consider that the Company has a strong case to the remaining relief claim in the Petition. Accordingly, the Company has not provided for any claim arising from the Petition, other than the related legal costs.

In connection with the Petition, a provision for legal and professional fees amounting to approximately HK$18,079,000 was charged to the consolidated profit and loss account during the year ended 31 March 2002.

– 64 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

29. OPERATING LEASE ARRANGEMENTS

As lessee

The Group leases its staff quarters and office under operating lease arrangements. Leases for properties are negotiated for terms ranging from 1 to 5 years.

At the balance sheet date, the Group had total future minimum lease payments under non-cancellable operating leases falling due as follows:

Within one year In the second to fifth years, inclusive	Group 2003 2002 HK$’000 HK$’000 3,098 1,250 4,729 1,596 7,827 2,846	Group 2003 2002 HK$’000 HK$’000 3,098 1,250 4,729 1,596 7,827 2,846
		2,846

The Company did not have any significant operating lease arrangements as at 31 March 2003 (2002: Nil).

30. RELATED PARTY TRANSACTIONS

In addition to the transaction detailed in note 15 to the financial statements, the Group did not have any material related party transactions during the year.

31. POST BALANCE SHEET EVENTS

In addition to the events described in notes 1, 10 and 24 to the financial statements, subsequent to the balance sheet date on 9 April 2003, the Group acquired approximately 20.17% of the issued share capital of Starbow Holdings Limited (“Starbow”), a company listed on The Stock Exchange of Hong Kong, for a cash consideration of approximately HK$17.2 million and is accounted for an other investment. Starbow and its subsidiaries are principally engaged in the distribution and retailing of computers and computer-related products and the provision of sub-contracting services.

32. COMPARATIVE AMOUNTS

As further explained in note 2 to the financial statements, due to the adoption of certain new and revised SSAPs during the current year, the accounting treatment and presentation of certain items and balances in the financial statements have been revised to comply with the new requirements. Accordingly, certain comparative amounts have been reclassified to conform with the current year’s presentation.

In addition, certain other comparative amounts have been reclassified. A summary of significant reclassifications of such comparative amounts is as follows:

(a) Interest income of HK$8,888,000 and a write-back of accrued expenses of HK$2,113,000, which were disclosed as “Turnover” and “Other revenue” in the consolidated profit and loss account for the year ended 31 March 2002 have been reclassified as “Other revenue” and “Administrative expenses”, respectively;
(b) Cost of investments of HK$10,494,000 (with impairment loss of the same amount), which was disclosed as “Loans receivable” and “Advances for investments” in the consolidated balance sheet as at 31 March 2002, has been reclassified as “Other investments”;
(c) Interest receivable of HK$1,386,000, which was disclosed as “Trade receivables” in the consolidated balance sheet as at 31 March 2002, has been reclassified as “Prepayments, deposits and other receivables”;

– 65 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

(d) Prepaid tax of HK$1,151,000, which was disclosed as “Prepayments, deposits and other receivables” in the consolidated balance sheet as at 31 March 2002, has been reclassified as “Tax recoverable”; and
(e) Customer deposits received of HK$2,595,000, which were disclosed as “Trade payables” in the consolidated balance sheet as at 31 March 2002, have been reclassified as “Other payables and accrued liabilities”.

As a result of the above reclassifications, the 2002 comparative segment information have also been changed to conform with the current year’s presentation.

33. APPROVAL OF THE FINANCIAL STATEMENTS

The financial statements were approved and authorised for issue by the board of directors on 25 July 2003.

MATERIAL CHANGE

Save for (i) the rights issue of Shares becoming unconditional on 7 May 2003; (ii) the acquisition of properties in Beijing, the PRC, details of which are set out in the circular of the Company dated 6 August 2003; (iii) the net loss on short-term listed investment of approximately HK$16,678,000 having incurred since 31 March 2003; and (iv) the cessation of business in the manufacture and distribution of precision components processing equipment in August 2003, which had a turnover of approximately HK$18,089,000 and incurred a net loss of approximately HK$1,193,000 from 1 April to 21 August 2003, details of which are set out in the annual report 2003 of the Company, the Directors are not aware of any material change in the financial or trading position or prospects of the Group since 31 March 2003, the date to which the latest audited accounts published on 25 July 2003 were made up.

STATEMENT OF INDEBTEDNESS

At the close of business on 30 September 2003, being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this prospectus, the Group had outstanding obligations under finance leases of approximately HK$208,000 and contingent liabilities in respect of the litigation brought by Kistefos, a Shareholder, against the Company and a formal Director of the Company. Details of the litigation are further described in the paragraph headed “Litigation” in Appendix IV of this Composite Document.

Save as aforesaid or as otherwise disclosed herein and apart from intra-group liabilities and normal accounts payable in the ordinary course of business of the Group, the Group did not have any outstanding indebtedness in respect of any mortgages, charges or debentures, loan capital, bank overdrafts, loans, debt securities or other similar indebtedness, or hire purchase commitments, finance lease commitments, guarantees or other material contingent liabilities as at the close of business on 30 September 2003.

The Directors have confirmed that there has been no material change in the indebtedness and the contingent liabilities of the Group since 30 September 2003.

– 66 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS

The following is a statement of the unaudited pro forma adjusted consolidated net tangible assets of the Group based on the audited consolidated balance sheet of the Group as at 31 March 2003 and adjusted as follows:

Audited consolidated net tangible assets of the Group as per its consolidated financial statements as at 31 March 2003 Net proceeds from the Right Issue as per the Company’s prospectus to shareholders dated 8 April 2003 Consideration paid/payable for the acquisition of Elegant Pool Limited (“Elegant Pool”) Net asset value of Elegant Pool acquired based on the unaudited management accounts as at 31 May 2003 of approximately HK$552,000, after adjusting for (i) the valuation of all properties acquired by Elegant Pool of approximately HK$14,179,000 and (ii) consideration for all the shareholder loan owing from Elegant Pool of approximately HK$61,329,000 Negative goodwill arising from the acquisition Realised loss on disposal of short term listed investments Unrealised gain of short term listed investments as at 30 September 2003 Net loss on short term listed investments Adjusted consolidated net tangible assets Pro forma adjusted unaudited net tangible assets per Share – based on 433,302,000 Shares* in issue as at the Latest Practicable Date	(70,000) 76,060 (22,421) 5,743	HK$’000 145,171 41,100 6,060 (16,678) 175,653 HK$0.41

* Assumes that none of the 28,886,800 outstanding Options shall be exercised by the holders thereof on or before 21 November 2003.

Working capital

Taking into account the available banking facilities and internal resources of the Group and the net proceeds of the Rights Issue, the Directors are of the opinion that the Group has sufficient working capital for its present requirements.

– 67 –

COMFORT LETTERS

APPENDIX III

==> picture [59 x 39] intentionally omitted <==

==> picture [78 x 35] intentionally omitted <==

21 November 2003

The Directors New Times Group Holdings Limited 22nd Floor 80 Gloucester Road Wanchai Hong Kong

Dear Sirs,

NEW TIMES GROUP HOLDINGS LIMITED (THE “COMPANY”) AND ITS SUBSIDIARIES (THE “GROUP”)

We have reviewed the calculations of the unaudited net loss on the trading of short term listed investments of the Group for the period from 1 April to 30 September 2003 amounting to approximately HK$16,678,000 (the “Unaudited Loss on Investments”), of which the directors of the Company are solely responsible for, as respectively set out in the sections “Material Change” and “Unaudited Pro Forma Statement of Adjusted Consolidated Net Tangible Assets” in appendix II to the unconditional voluntary cash offer document (the “Composite Document”) jointly issued by the Company, and Kingston Securities Limited on behalf of Victory Rider Limited dated 21 November 2003.

Our review of the Unaudited Loss on Investments consists principally of assessing whether the calculations are correctly compiled and prepared on a basis consistent with the accounting policies normally adopted by the Group.

As set out in the section “Material Change” in the Composite Document, the unaudited turnover and the unaudited net loss of certain subsidiaries of the Company engaged in the manufacture and distribution of precision components processing equipment, which have been disposed of by the Group on 21 August 2003 (the “Disposed Subsidiaries”), for the period from 1 April to 21 August 2003 as extracted from the unaudited management accounts of the Disposed Subsidiaries for that period (the “Unaudited Management Accounts”), amounted to approximately HK$18,089,000 and HK$1,193,000, respectively.

We have reviewed the Unaudited Management Accounts, of which the directors of the Company are solely responsible for, in accordance with SAS 700 “Engagements to review interim financial reports” issued by the Hong Kong Society of Accountants (the “HKSA”). A review consists principally of making enquiries of management and applying analytical procedures to the underlying financial data 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.

– 68 –

COMFORT LETTERS

APPENDIX III

We have relied upon the representations of the directors of the Company regarding the validity, completeness and accuracy of the relevant information in the review of the Unaudited Loss on Investments and the Unaudited Management Accounts. These reviews were substantially less in scope than an audit performed in accordance with the Statements of Auditing Standards issued by the HKSA and, accordingly, we do not express audit opinion on the Unaudited Loss on Investments and the Unaudited Management Accounts.

Based on our review which does not constitute an audit, so far as the accounting policies and calculations are concerned, the Unaudited Loss on Investments and the Unaudited Management Accounts have been properly compiled and prepared on a basis consistent in all material aspects with the accounting policies normally adopted by the Group, and we are not aware of any material modifications that should be made to the Unaudited Loss on Investments and the Unaudited Management Accounts.

Yours faithfully Ernst & Young

Certified Public Accountants Hong Kong

– 69 –

COMFORT LETTERS

APPENDIX III

ALTUS CAPITAL LIMITED

8/F, Hong Kong Diamond Exchange Building 8 Duddell Street, Central

Hong Kong

21 November 2003

The Directors New Times Group Holdings Limited 22nd Floor 80 Gloucester Road Wanchai Hong Kong

Dear Sirs,

NEW TIMES GROUP HOLDINGS LIMITED (THE “COMPANY”)

We refer to (i) the unaudited net loss on the trading of short term listed investments of the Group for the period from 1 April 2003 to 30 September 2003 (the “Unaudited Loss on Investments”) as set out in the sections headed “Material change” and “Unaudited pro forma statement of adjusted consolidated net tangible assets”; and (ii) the unaudited turnover and the net loss of certain subsidiaries of the Company engaged in the manufacture and distribution of precision components processing equipment, which have been disposed of by the Group on 21 August 2003 (the “Disposed Subsidiaries”), for the period from 1 April to 21 August 2003 (the “Unaudited Results”) as set out in the section headed “Material Change” in Appendix II to the composite document dated 21 November 2003 jointly issued by the Company and the Offeror in connection with the Offer (“Composite Document”). Terms used in this letter shall have the same meanings as terms defined in the Composite Document unless otherwise stated.

We have reviewed the Unaudited Loss on Investments and have discussed with the Directors the bases upon which the Unaudited Results have been made. We have also considered the letter dated 21 November 2003 addressed to you by Ernst & Young, the auditors of the Group regarding the procedures performed by them in respect of the accounting policies and calculations adopted by the Directors in preparation of the Unaudited Loss on Investments and the Unaudited Results. The preparation of the Unaudited Loss on Investments and the Unaudited Results are the sole responsibility of, and have been approved by, the Directors.

Based on the above, we are satisfied that (i) the Unaudited Loss on Investments set out in the sections headed “Material change” and the “Unaudited pro forma statement of adjusted consolidated net tangible assets”; and (ii) the Unaudited Results set out in the section headed “Material change”, in Appendix II to the Composite Document have been made by the Directors after due care and consideration.

Yours faithfully, For and on behalf of

Altus Capital Limited

Arnold Ip Kevin Chan Executive Director Executive Director

– 70 –

GENERAL INFORMATION

APPENDIX IV

1. RESPONSIBILITY STATEMENTS

This Composite Document includes particulars given in compliance with the Takeovers Code for the purpose of giving information with regard to the Group and the Offer.

The information contained in this Composite Document relating to the Group (other than information on future intentions of the Offeror and Ms. Huang in respect of the Group) has been supplied by the Directors who jointly and severally accept full responsibility for the accuracy of the information stated in this Composite Document relating to the Group (other than that relating to the Offeror and Ms. Huang), and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this Composite Document have been arrived at after due and careful consideration and there are no other facts not contained in this Composite Document the omission of which would make any statement contained in this Composite Document misleading. The issue of this Composite Document has been approved by the Board.

This Composite Document includes particulars given in compliance with the Takeovers Code for the purpose of giving information with regard to the Offeror, Ms. Huang, the Offer and the future intention of the Offeror and Ms. Huang regarding the Group. The information contained in this Composite Document relating to the Offeror, Ms. Huang, the terms and conditions of the Offers and the Offeror’s intentions regarding the Group has been supplied by the sole director of the Offeror. The sole director of the Offeror accept full responsibility for the accuracy of the information contained in this Composite Document (relating to the Offeror, Ms. Huang and their future intentions regarding the Group but other than information relating to the Group) and confirm, having made all reasonable enquiries, that to the best of her knowledge, opinions expressed in this Composite Document (other than those expressed by the Company) have been arrived at after due and careful consideration and there are no other facts not contained in this Composite Document the omission of which would make any statement contained in this Composite Document misleading.

2. SHARE CAPITAL OF THE COMPANY

(a) Authorised and issued share capital

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

HK$

Authorised:

900,000,000 Shares 90,000,000.00 Issued and fully paid up or credited as fully paid: 433,302,000 Shares (Note) 43,330,200.00

– 71 –

GENERAL INFORMATION

APPENDIX IV

Note: Pursuant to the rights issue of Shares completed in May 2003, the details of which are set out in the announcement of the Company dated 7 May 2003, 144,434,000 Shares were issued to subscribers at $0.30 per Share, for a total consideration, before expenses, of $43,330,200. The proceeds from the rights issue were used to finance the Group’s working capital. Save for the Shares issued pursuant to the rights issue, there had been no further issue of Shares since 31 December 2002 and upto the Latest Practicable Date.

All existing Shares rank equally in all respects with each other, including in particular as to dividend, voting rights and capital.

(b) Share options

As at the Latest Practicable Date, except for the Options for the subscription of an aggregate of 28,886,800 Shares under the share option scheme of the Company adopted by the Company on 30 August 2002, the Company did not have any outstanding options, warrants or other securities convertible or exchangeable into Shares, and no other share or loan capital of the Company had been put under option or agreed conditionally or unconditionally to be put under option and no other conversion right affecting the Shares or other derivatives in respect of securities which are being offered for or which carry voting rights had been issued or granted or agreed conditionally or unconditionally to be issued or granted.

3. DISCLOSURE OF INTERESTS

(a) Interests and short positions of the Directors in the Company and its associated corporations

As at the Latest Practicable Date, the following Directors have interests or short positions in the Shares, underlying Shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) which are required (a) to be notified to the Company or the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which he is taken or deemed to have under such provisions of the SFO); (b) pursuant to section 352 of the SFO, to be entered in the register referred to therein; (c) pursuant to the Model Code for Securities Transactions by Directors of Listed Companies in the Listing Rules, to be notified to the Company and the Stock Exchange; or (d) to be disclosed in this Composite Document pursuant to the requirements of the Takeovers Code:

Name of Director

Nature of interests Number of Shares

Mr. Cheong Tin Yau Corporate (note) 120,700,000 (long position)

Note: The interests in Shares are held by Kandy Profits Limited, an associated corporation of the Company. Mr. Cheong Tin Yau is beneficially interested in all the share of Kandy Profits Limited. Accordingly, Mr. Cheong is deemed to be interested in all the Shares which Kandy Profits Limited is interested by virtue of the SFO.

– 72 –

GENERAL INFORMATION

APPENDIX IV

Save as disclosed above, as at the Latest Practicable Date, none of the Directors have any interests or short positions in the Shares, underlying Shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) which are required (a) to be notified to the Company or the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which he is taken or deemed to have under such provisions of the SFO); (b) pursuant to section 352 of the SFO, to be entered in the register referred to therein; (c) pursuant to the Model Code for Securities Transactions by Directors of Listed Companies in the Listing Rules, to be notified to the Company and the Stock Exchange; or (d) to be disclosed in this Composite Document pursuant to the requirements of the Takeovers Code.

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

As at the Latest Practicable Date, according to the register kept by the Company pursuant to section 336 of SFO, and so far as is known to any Directors or chief executive of the Company, the following persons had, or was deemed or taken to have, an interest or short position in the Shares or underlying Shares which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO or will be directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other members of the Group:

			Approximate
Name of	Nature of	Number of	percentage of
Shareholder	interests	Shares held	shareholding
			(%)
Kandy Profits Limited	Beneficial owner	120,700,000	27.86
Mr. Cheong Tin Yau_(note 1)_	Interest of a controlled	120,700,000	27.86
	corporation
Victory Rider Limited	Beneficial owner	121,666,000	28.08
Ms. Huang_(note 2)_	Interest of a controlled	121,666,000	28.08
	corporation
Kistefos Investment A.S.(note 3)	Beneficial owner	62,400,000	14.40

Notes:

The interests in these Shares are held by Kandy Profits Limited, the entire issued share capital of which is wholly and beneficially owned by Mr. Cheong Tin Yau. Accordingly, Mr. Cheong is deemed to be interested in all the Shares which Kandy Profits Limited is interested by virtue of the SFO.
The interests in these Shares are held by Victory Rider Limited, the entire issued share capital of which is wholly and beneficially owned by Ms. Huang. Accordingly, Ms. Huang is deemed to be interested in all the Shares which Victory Rider Limited is interested by virtue of the SFO.
So far as is known to the Directors, Kistefos Investment A.S. is wholly owned by A.S. Kistefos Traesliberi, in which Christen Sveaas has an 85% beneficial interest.

– 73 –

APPENDIX IV

GENERAL INFORMATION

Save as disclosed above, the Directors and chief executive of the Company were not aware of any persons who has an interest or short position in the Shares or underlying Shares which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO or will be directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other members of the Group.

(c) Other interests in the Company

As at the Latest Practicable Date,

(i) Ms. Huang, a director of the Offeror, was deemed to interested in 121,666,000 Shares, representing 28.1 per cent of the issued share capital of the Company by virtue of the SFO; save as disclosed, the Offeror and parties acting in concert with it do not own or control any Shares;
(ii) there was no agreement or arrangement between any Director and any other person which is conditional on or dependent upon the outcome of the Offers or otherwise connected with the Offer;
(iii) there was no agreement, arrangement or understanding (including any compensation arrangement) between the Offeror or any person acting in concert with it and any director, recent directors, shareholders or recent shareholders of the Company having any connection with or dependent upon the Offer;
(iv) no benefit (other than statutory compensation) would be given to any Director as compensation for loss of office or otherwise in connection with the Offer;
(v) save for the agreement dated 1 September 2003 entered into between the Offeror and Kandy Profits regarding the acquisition of the 121,666,000 Sale Shares from Kandy Profits by the Offeror on 1 September 2003, there is no contract or arrangement entered into by the Offeror at the date of this Composite Document in which a Director has a material personal interest;
(vi) no subsidiary or associate of the Company nor any pension fund of the Group had any interests in the Shares or had dealt in the securities of the Company for the period from the six months prior to the date of the Announcement to the Latest Practicable Date;
(vii) save for the undertaking given by Kandy Profits to the Offeror that it would not accept the Offer, to the best knowledge of the directors of the Offeror and the Directors after making all reasonable enquiries, no persons who had any arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code with the Offeror or with any persons who is an associate of the Offeror by virtue of classes (1), (2), (3) and (4) of the definition of associate as described by the Takeovers Code;

– 74 –

GENERAL INFORMATION

APPENDIX IV

(viii) no fund manager (other than exempt fund managers) connected with the Company had managed any Shares on a discretionary basis or had dealt in the securities of the Company for the period from the six months prior to the date of the Announcement to the Latest Practicable Date;
(ix) holders of all outstanding Options had undertaken to the Offeror that they will not exercise any part of the Options into Shares during the period from the date of this announcement up to and including the final closing date of the Offer nor accept any Offer that the Offeror may make under Rule 13 of the Takeovers Code for the Options held by them while the Offer remains open for acceptance;
(x) none of Kingston, Kingston Securities, Altus and Ernst & Young has any interests in the Shares and none of them had dealt in any securities of the Company for the period from the six months prior to the date of the Announcement to the Latest Practicable Date; and
(xi) no adviser to the Company as specified in class (2) of the definition of “associate” (but excluding exempt principal traders) in the Takeovers Code owned or controlled any Shares or had dealt for value in Shares for the period from the six months prior to the date of Announcement to the Latest Practicable Date.

(d) Interests in the Offeror

The Offeror is wholly owned by Ms. Huang.

Save as disclosed and as at the Latest Practicable Date,

(i) neither the Company nor any Directors owned or controlled any shares in the Offeror or had dealt in the securities of the Offeror for the period from the six months prior to the date of Announcement to the Latest Practicable Date; and
(ii) none of Company, Kingston, Kingston Securities, Altus and Ernst & Young had any interests in the shares of the Offeror.

– 75 –

GENERAL INFORMATION

APPENDIX IV

4. DEALING IN SECURITIES

The following table sets out the dealings in the Shares by the Offeror (and parties acting in concert with it including Kandy Profits) during the six-month period prior to the date of the Announcement and up to the Latest Practicable Date.

	No. of Shares	Type of
Date	transacted	transaction	Price per Share
			(HK$)
7 May 2003	88,122,000	subscription of Shares	0.30
		by Kandy Profits under
		the rights issue of Shares
1 September 2003	121,666,000	purchase of Shares	0.30
		from Kandy Profits
		by the Offeror

Pursuant to the Takeovers Code, as the Offer is made through Kingston Securities and Kingston is the financial advisor to the Offeror, each of Kingston and Kingston Securities is deemed to be acting in concert with the Offeror for the purpose of the Offer. None of the directors of Kingston and Kingston Securities is a shareholder of the Company.

Save as disclosed above, the Offeror and parties acting in concert with it (including Kandy Profits) and Ms. Huang had no other dealings in the Shares in the six-month period prior to the date of the Announcement and up to the Latest Practicable Date.

The Company, Kingston, Kingston Securities, Altus and Ernst & Young had not dealt for value in the Shares in the six-month period prior to the date of the Announcement and up to the Latest Practicable Date.

5. MARKET PRICES

(a) The highest and lowest closing price per Share as quoted on the Stock Exchange in the six months period prior to the Last Trading Day, up to and including the Latest Practicable Date, was HK$0.4800 from 30 May 2003 to 11 June 2003 and from 13 June 2003 to 15 August 2003 and HK$0.3270 on 27 March 2003, respectively.
(b) The table below sets out the closing price per Share as quoted on the main board of the Stock Exchange on (i) the last business day of each of the six calendar months immediately preceding the date of the Announcement on which trading of the Shares took place; (ii) the Last Trading Day; and (iii) the Latest Practicable Date:

Date	Closing price
*2003*	(HK$)
31 March (with suspension from 14 to 18 March 2003)	0.3670
30 April (with suspension from 17 to 25 April 2003)	0.3650
30 May	0.4800
30 June (with suspension on 12 June 2003)	0.4800
31 July	0.4800
1 September (being the Last Trading Day)	0.4500
18 November (being the Latest Practicable Date)	0.3600

– 76 –

GENERAL INFORMATION

APPENDIX IV

6. LITIGATION

On 8 March 2001, Kistefos Investment A.S. (“Kistefos”), a substantial Shareholder, filed a petition (“the Petition”) against the Company and a former Director of the Company, in the Supreme Court of Bermuda (the “Court”) under Section 111 (1) of the Companies Act 1981 of Bermuda. The Petition was based on a claim that certain affairs of the Company had been conducted in a manner which was oppressive or unfairly prejudicial to the interests of certain Shareholders, including Kistefos itself.

In the Petition, Kistefos sought an order from the Court to:–

(i) compel the Company or the former Director to purchase Kistefos’ shareholding in the Company at a fair value to be determined by the Court; or
(ii) wind up the Company.

The Company and the former Director sought to strike out the Petition. In October 2001, the Court struck out the claim of Kistefos to wind up the Company but refused to strike out the claim of Kistefos for an order compelling the Company or the former Director to repurchase the shareholding of Kistefos. This latter claim remains to be tried in the Court.

In June 2002, following the hearing of an appeal brought by the Company against the decision of October 2001, the Court of Appeal of Bermuda (the “Court of Appeal”) confirmed the earlier order of the Court. Accordingly, the claim of Kistefos to wind up the Company remains struck out, but the claim of Kistefos to compel the Company or the former Director to repurchase its shareholding remains to be tried.

Following the decision of the Court of Appeal in June 2002, the proceedings were dormant until recently. Kistefos filed a summons dated 7 March 2003 in the Court seeking directions for the future conduct of the litigation. In addition, Kistefos sought in its summons to re-amend the Petition. The application by Kistefos to make the amendments to the Petition was heard by the Court on 27 March 2003. On 28 March 2003, the Company announced that it was informed by its legal adviser in Bermuda that Kistefos did not proceed with the summons for directions at the Court hearing of 27 March 2003 but had instead asked that the existing Petition, as it currently stands, be set down for trial. Consequently, the Petition was not re-amended and the Court ordered that the Petition, as it currently stands, be set down for trial. The Company was informed by its legal adviser in Bermuda on 26 September 2003 that the trial of the Petition will take place commencing 21 June 2004.

The Petition remains at a preliminary stage. The Directors, after considering the advice from the Company’s Bermuda legal advisers, consider that the Company has a reasonably good defence to the original claim by Kistefos that the Company or the former Director should buy out the shareholding of Kistefos in the Company.

With regard to the Group’s contingent liabilities in respect of the litigation brought by Kistefos on the Company and a former Director of the Company, the Directors are of the view that given the ongoing status of the litigation brought by Kistefos, the Group is unable to quantify the amount of contingent liabilities which may arise from the litigation brought by Kistefos.

– 77 –

GENERAL INFORMATION

APPENDIX IV

Save as disclosed above, so far as the Directors are aware, neither the Company nor any of its subsidiaries is engaged in any litigation or arbitration or claims which is, in the opinion of the Directors, of material importance and no litigation or claims which is, in the opinion of the Directors, of material importance is known to the Directors to be pending or threatened by or against any member of the Group.

7. MATERIAL CONTRACTS

The following contracts, not being contracts in the ordinary course of business, have been entered into by members of the Group within the two years preceding the Latest Practicable Date and are or may be material:

(a) the acquisition agreement dated 14 March 2003 between Powerful Union Limited, a wholly owned subsidiary of the Company, and Dr. Hsiao Yue George Han in relation to the acquisition by Powerful Union Limited of the entire issued share capital of Tone Communication Limited for a cash consideration of HK$50 million;
(b) the loan agreement dated 14 March 2003 between Powerful Union Limited, a wholly owned subsidiary of the Company, and Tone Communication Limited in relation to the granting by Powerful Union Limited of an unsecured loan in an aggregate principal amount of HK$42.6 million to Tone Communication Limited;
(c) the underwriting agreement dated 14 March 2003 entered into between the Company and Chateron Corporate Finance Limited, a wholly owned subsidiary of the Company in relation to rights issue;
(d) the agreement dated 9 April 2003 between Elect Investments Limited, a wholly owned subsidiary of the Company, and Mr. Chim Pui Chung in relation to the acquisition of 20.17% of the entire issued share capital of Starbow Holdings Limited, a Hong Kong listed company, for a cash consideration of approximately HK$17.16 million;
(e) the termination agreement dated 11 June 2003 between Powerful Union Limited, a wholly owned subsidiary of the Company and Dr. Hsiao Yue George Han in relation to the termination of the acquisition agreement set out in paragraph 7(a) herein;
(f) the termination agreement dated 11 June 2003 between Powerful Union Limited, a wholly owned subsidiary of the Company and Tone Communication Limited in relation to the termination of the loan agreement set out in paragraph 7(b) herein;
(g) the agreement dated 14 July 2003 entered into between Powerful Union Limited, a wholly owned subsidiary of the Company and Mr. Woo Chun Kei, Jackie in relation to the acquisition by Powerful Union Limited of the entire issued share capital of Elegance Pool Limited and all the shareholder’s loan and monies owing from Elegance Pool Limited to Mr. Woo Chun Kei, Jackie as at the completion date of the agreement for a consideration of HK$70 million;

– 78 –

GENERAL INFORMATION

APPENDIX IV

(h) the agreement dated 22 July 2003 entered into between New Times Holdings Limited, a wholly owned subsidiary of the Company and an independent third party in relation to the disposal by the Company of certain of its subsidiaries engaging in the manufacture and distribution of precision components processing equipment for a cash consideration of HK$25 million; and
(i) the agreement dated 22 August 2003 entered into between New Times Holdings Limited, a wholly owned subsidiary of the Company, and Celestial Capital Limited in relation to the disposal of the entire equity interest in Chateron Corporate Finance Limited for a cash consideration of HK$7 million.

8. CONSENTS

Each of the Company, the Offeror, Kingston, Kingston Securities, Altus and Ernst & Young has given and has not withdrawn its written consent to the issue of this Composite Document with the inclusion herein of the report or letter (as the case may be) and references to its names, in the form and context in which it appears.

9. SERVICE CONTRACTS

None of the Directors has any existing or proposed service contracts with any member of the Group or any associated company of the Company which has more than 12 months to run nor any Director entered into or amended any service contract with any member of the Group or any associated company of the Company within six months before 26 September 2003, being the date of the Announcement.

10. QUALIFICATIONS

The following are the qualifications of the experts who have given opinions or advice which are contained in this Composite Document:

Name	Qualification
Kingston	deemed licensed corporation under the SFO
Kingston Securities	deemed licensed corporation under the SFO
Altus	deemed licensed corporation under the SFO
Ernst & Young	certified public accountants

11. GENERAL

(a) The registered office of the Company is at Clarendon House, 2 Church Street, Hamilton, HM11, Bermuda. Its correspondence address in Hong Kong is 22nd Floor, 80 Gloucester Road, Wanchai, Hong Kong.
(b) The registered office of the Offeror is at Drake Chambers, Road Town, Tortola, British Virgin Islands. The correspondence address of the Offeror and Ms. Huang, the sole beneficial owner and director of the Offeror, in Hong Kong is Unit 2007, 20th Floor, MLC Tower, 248 Queen’s Road East, Wanchai, Hong Kong.

– 79 –

GENERAL INFORMATION

APPENDIX IV

(c) The principal parties acting in concert with the Offeror include Victory Rider, Ms. Huang and Kandy Profits which is a party presumed to be acting in concert with Victory Rider pursuant to the Takeovers Code.
(d) The registered office of Kingston and Kingston Securities is at 2801, 28th Floor, One International Finance Centre, 1 Harbour View Street, Central, Hong Kong.
(e) The registered office of Altus is at 8th Floor, Hong Kong Diamond Exchange Building, 8 Duddell Street, Central, Hong Kong.
(f) The registered office of Kandy Profits is at P.O. Box 146, Road Town, Tortola, British Virgin Islands. The correspondence address of Kandy Profits and Mr. Cheong Tin Yau, the sole beneficial owner and director of Kandy Profits in Hong Kong is 22/F., 80 Gloucester Road, Wanchai, Hong Kong.
(g) The secretary of the Company is Ms. Yim Lai Wa, ACS, ACIS .
(h) The Company’s Hong Kong branch share registrar and transfer office is Tengis Limited of Ground Floor, BEA Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong.
(i) All time references contained in this Composite Document refer to Hong Kong time.
(j) The English text of this Composite Document and the Form of Acceptance shall prevail over the Chinese text.

12. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be made available for inspection during normal business hours on any weekday (except for public holidays) at the office of Preston, Gates & Ellis at 10th Floor, Hutchison House, 10 Harcourt Road, Central, Hong Kong and with effect from 1 December 2003, at 35th Floor, Two International Finance Centre, 8 Finance Street, Central, Hong Kong, up to and including the Closing Date:

(a) the memorandum of association and bye-laws/articles of association of the Company and the Offeror;
(b) the annual reports of the Company for the two years ended 31 March 2003;
(c) the letter from the Independent Board Committee, the text of which is set out on page 14 of this Composite Document;
(d) the letter from Kingston Securities, the text of which is set out on pages 8 to 13 of this Composite Document;
(e) the letter from Altus, the text of which is set out on pages 15 to 27 of this Composite Document;

– 80 –

GENERAL INFORMATION

APPENDIX IV

(f) the letters from each of Altus and Ernst & Young, the text of which is set out in Appendix III to this Composite Document;
(g) the letter of consent from each of the Company, Offeror, Kingston, Kingston Securities, Altus and Ernst & Young referred to in the section headed “Consents” in this Appendix;
(h) the material contracts referred to the section headed “Material Contracts” in this Appendix;
(i) the letters from the holders of the Options to the Company in connection with the rejection of an extension of the Offer or any comparable offer arising out of or in relation of the Offer for the Options; and
(j) the loan facility letter dated 1 September 2003 entered into between the Offeror and Kingston Securities.

– 81 –

AI assistant

GoFintech Quantum Innovation Limited — M&A Activity 2003

49098_rns_2003-11-21_c4ba1ef4-0c69-4ddc-b5dc-71c2275edf0b.pdf

UNCONDITIONAL VOLUNTARY CASH OFFER BY

KINGSTON SECURITIES LIMITED

FINANCIAL ADVISER TO VICTORY RIDER LIMITED

INDEPENDENT FINANCIAL ADVISER TO THE INDEPENDENT BOARD COMMITTEE

ALTUS CAPITAL LIMITED

CONTENTS

Announcement of the results of the Offer

All time references contained in this Composite Document refer to Hong Kong time.

DEFINITIONS

DEFINITIONS

NEW TIMES GROUP HOLDINGS LIMITED （新時代集團控股有限公司）[*]

INTRODUCTION

THE OFFER

The Offer is not conditional on acceptances being received in respect of a minimum number of Offer Shares.

INFORMATION ON THE GROUP

LETTER FROM THE BOARD

INTENTION OF THE DIRECTORS IN RESPECT OF THEIR SHAREHOLDING INTERESTS IN THE COMPANY

INFORMATION ON THE OFFEROR

ADDITIONAL INFORMATION

RECOMMENDATION

New Times Group Holdings Limited Cheong Tin Yau Chairman

Kingston Securities Limited

INTRODUCTION

THE OFFER

Highest and lowest closing price

Dealings in Shares

Options

Total Consideration

Compulsory acquisition

Effect of accepting the Offer

INFORMATION ON THE GROUP

INFORMATION ON THE OFFEROR

INTENTION OF THE OFFEROR REGARDING THE COMPANY

DIRECTORS AND MANAGEMENT

MAINTENANCE OF THE LISTING STATUS OF THE COMPANY

FURTHER TERMS OF THE OFFER

GENERAL

Independent Shareholders are strongly advised to consider carefully the information contained in the letter from the Board, the letter from the Independent Board Committee and the letter from Altus set out in this Composite Document.

NEW TIMES GROUP HOLDINGS LIMITED （新時代集團控股有限公司）[*]

UNCONDITIONAL VOLUNTARY CASH OFFER BY KINGSTON SECURITIES LIMITED ON BEHALF OF VICTORY RIDER LIMITED TO ACQUIRE ALL THE SHARES OF NEW TIMES GROUP HOLDINGS LIMITED (OTHER THAN THOSE SHARES ALREADY OWNED BY VICTORY RIDER LIMITED OR PARTIES ACTING IN CONCERT WITH IT)

Yours faithfully,

ALTUS CAPITAL LIMITED

INTRODUCTION

BASIS OF OUR OPINION

PRINCIPAL FACTORS AND REASONS CONSIDERED

1. Background of the Offer

for each Offer Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$0.30 in cash

2. Financial Performance of the Group

3. Net asset value

LETTER FROM ALTUS

4. Price/earnings multiples and dividend yields

5. Historical Share price performance and trading liquidity

Liquidity

LETTER FROM ALTUS

6. Intention of Victory Rider regarding the future prospects of the Group

7. Maintaining listing status of the Company

RECOMMENDATION

1. PROCEDURE FOR ACCEPTANCE

2. SETTLEMENT

3. ACCEPTANCE PERIOD, REVISIONS AND EXTENSIONS

4. ANNOUNCEMENTS

5. RIGHT OF WITHDRAWAL

6. STAMP DUTY

7. OVERSEAS SHAREHOLDERS

8. GENERAL

I. SUMMARY OF FINANCIAL RESULTS FOR THE THREE YEARS ENDED 31 MARCH 2003

II. FINANCIAL STATEMENTS

Consolidated Profit and Loss Account

Consolidated Balance Sheet

Consolidated Statement of Changes in Equity For the year ended 31 March 2003

Consolidated Cash Flow Statement

Balance Sheet

Notes to the Financial Statements

1. CORPORATE INFORMATION

2. IMPACT OF NEW AND REVISED STATEMENTS OF STANDARD ACCOUNTING PRACTICE (“SSAPs”)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of preparation

GoFintech Quantum Innovation Limited M&A Activity 2003