Greenheart Group Limited — Proxy Solicitation & Information Statement 2004

Sep 17, 2004

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action you should take, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Omnicorp Limited, you should at once hand this circular, together with the enclosed form of proxy, to the purchaser(s) or the transferee(s) or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or the transferee(s).

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

This circular is for information purpose only and does not constitute an invitation or offer to acquire, purchase or subscribe for any securities.

OMNICORP LIMITED 兩儀控股有限公司[*] (Incorporated in Bermuda with limited liability) (Stock Code: 94)

MAJOR TRANSACTION

Proposed acquisition and subscription of approximately 51.52% interest in Windsor Treasure Group Holdings Limited

A notice convening a special general meeting of Omnicorp Limited to be held at Concord Rooms 2 & 3, 8/F, Renaissance Harbour View Hotel, No. 1 Harbour Road, Wanchai, Hong Kong on Thursday, 7 October 2004 at 10:00 a.m. are set out in pages 84 to 86 of this circular. A form of proxy for use by the Shareholders at the special general meeting is enclosed herein. Whether or not you intend to attend and vote at the special general meeting in person, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon to the branch share registrar and transfer office of the Company in Hong Kong, Tengis Limited at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong as soon as possible but in any event not later than 48 hours before the time for holding the special general meeting. Completion and return of the form of proxy will not preclude you from attending and voting in person at the special general meeting or any adjourned meeting should you so wish.

* For identification purposes only

17 September 2004

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Information on the Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Information on the Windsor Treasure Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Reasons for the Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Effects of the Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16
Business Review and Prospects of the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	19
Listing and Dealing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	19
Procedure for Demanding a Poll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	19
SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	20
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	20
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	20
Appendix I – Financial Information on the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	21
Appendix II – Financial Information on Windsor Treasure Group . . . . . . . . . . . . . . . . . . . . .	50
Appendix III – Unaudited Pro Forma Financial Information on the Enlarged Group. . . . .	71
Appendix IV – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	75
Notice of Special General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	84

DEFINITIONS

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

• “Ace Victory”

Ace Victory Investments Limited, a company incorporated in BVI with limited liability and wholly and beneficially owned by Mr. Cheung

• “Acquisition”

• (a) the proposed acquisition by the Purchaser from the Vendors of the Sale Shares; and

• (b) the proposed subscription by the Purchaser of the Subscription Shares

upon the terms and subject to the conditions set out in the Agreement

• “Agreement”

the share purchase and subscription agreement dated 19 August 2004 entered into between the Purchaser, the Vendors, Windsor Treasure, the Company and the Warrantors relating to the Acquisition

• “Announcement” the announcement dated 26 August 2004 made by the Company in respect of the Acquisition

• “Announcement Date”

• 26 August 2004, being the date of the Announcement

• “associates”

has the meaning ascribed thereto in the Listing Rules

• “Business Day”

• a day on which banks are open for business in Hong Kong throughout their normal business hours (excluding Saturday and Sunday)

• “Bloominvest”

Bloominvest Group Limited, a company incorporated in BVI with limited liability and wholly and beneficially owned by Mr. Sung

• “Board”

the board of Directors

“BVI” the British Virgin Islands “Capitalrise” Capitalrise Group Limited, a company incorporated in BVI with limited liability and wholly and beneficially owned by Mr. Sung and his family member(s)

“Company”

Omnicorp Limited, an exempted company incorporated in Bermuda with limited liability, the ordinary shares of which are listed on the main board of the Stock Exchange

– 1 –

DEFINITIONS

• “Completion”

• “connected person(s)”

• “Consideration”

• “Consideration Shares”

• “Directors”

• “Enlarged Group”

• “Even Skill”

• “Good Profit”

• “Group”

• “Hero Profit”

• “Hong Kong”

• “Independent Third Party(ies)”

• “Latest Practicable Date”

• “Last Trading Day”

• “Listing Rules”

completion of the Acquisition upon the terms and subject to the conditions set out in the Agreement

has the meaning ascribed thereto in the Listing Rules

the consideration for the Acquisition, being a sum of HK$34,006,000

• 17,003,000 new Shares to be allotted and issued, credited as fully paid, at HK$1.00 per Share to the Vendors to satisfy 50% of the Consideration

the directors of the Company

the Group and the Windsor Treasure Group

• Even Skill Technology Limited, a company incorporated in BVI with limited liability and is wholly and beneficially owned by Mr. Huang and his family member(s)

• Good Profit Trading Limited, a company incorporated in BVI with limited liability and wholly and beneficially owned by Mr. Chan and his family member(s)

the Company and its subsidiaries

• Hero Profit International Limited, a company incorporated in BVI with limited liability and wholly and beneficially owned by Mr. Chan

the Hong Kong Special Administrative Region of the PRC

• independent third party(ies) not connected with the directors, chief executive and substantial shareholders of the Company and its subsidiaries or any of their respective associates

• 15 September 2004, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information contained herein

• 19 August 2004, the last day on which the Shares were traded immediately preceding the publication of the Announcement

the Rules Governing the Listing of Securities on the Stock Exchange

– 2 –

DEFINITIONS

“Metronet”

• “Mr. Chan”

• “Mr. Cheung”

• “Mr. Huang”

• “Mr. Sung”

• “PRC” or “China”

• “Purchaser”

• “Reorganization”

• “Sale Shares”

Metronet Investments Limited, a company incorporated in BVI with limited liability and wholly and beneficially owned by Mr. Cheung and his family member(s)

• Mr. Chan Kwok Kin, an Independent Third Party

• Mr. Cheung Kong Cheung, an Independent Third Party

• Mr. Huang Wei Ye, an Independent Third Party

• Mr. Sung Kai Hing, an Independent Third Party

• the People’s Republic of China, excluding Hong Kong, Macau Special Administrative Region of the PRC and Taiwan, for the purpose of this circular

Talent Sino Holdings Limited, a company incorporated in BVI with limited liability and a wholly and beneficially owned subsidiary of the Company

the reorganization of the Windsor Treasure Group upon completion of which, Windsor Treasure will become the holding company of the companies, amongst others, 東莞富豪家具有 限公司,深圳大豪興利家具實業有限公司 , and 深圳興利家 具有限公司, being the limited liability companies established and existing under the laws of PRC, Hing Lee (China) Company Limited, being a limited company incorporated in Hong Kong and Sharp Motion Worldwide Limited, being a limited company incorporated in BVI

3,470 ordinary shares of US$1.00 each in the issued share capital of Windsor Treasure, being 34.70% of its issued share capital as at the Latest Practicable Date and approximately 25.76% of its then issued share capital immediately after Completion (as enlarged by the issue of the Subscription Shares), of which 772 Sale Shares were owned by Capitalrise, 139 Sale Shares were owned by Bloominvest, 772 Sale Shares were owned by Good Profit, 104 Sale Shares were owned by Hero Profit, 772 Sale Shares were owned by Metronet, 104 Sale Shares were owned by Ace Victory, 447 Sale Shares were owned by Even Skill and 360 Sales Shares were owned by Wellasia as at the Latest Practicable Date, or such number of shares which, upon the Reorganization has become effective and immediately after Completion, represents approximately 25.76% of the then issued share capital of Windsor Treasure (as enlarged by the issue of the Subscription Shares)

– 3 –

DEFINITIONS

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

• “SGM” a special general meeting of the Company to be convened and held for consideration and approval of, amongst other things, the Agreement, the Acquisition and the allotment and issue of the Consideration Shares

• “Share(s)”

• ordinary share(s) of HK$0.01 each in the share capital of the Company

• “Shareholder(s)”

holder(s) of Shares

• “Stock Exchange”

The Stock Exchange of Hong Kong Limited

• “Subscription Shares”

• 3,470 new ordinary shares of US$1.00 each in the share capital of Windsor Treasure, which represents 34.70% of its issued share capital as at the Latest Practicable Date and approximately 25.76% of its then issued share capital immediately after Completion, or such number of shares which, upon the Reorganization has become effective and immediately after Completion, represents approximately 25.76% of the then issued share capital of Windsor Treasure

• “substantial shareholder”

has the meaning ascribed thereto in the Listing Rules

• “Vendors”

• Capitalrise, Bloominvest, Good Profit, Hero Profit, Metronet, Ace Victory, Even Skill and Wellasia, being the registered and beneficial owners of the relevant number of Sale Shares who are Independent Third Parties and are not connected persons of the Company

• “Warrantors”

• Mr. Chan, Mr. Cheung, Mr. Sung and Mr. Huang, who are respectively the sole beneficial owner of Hero Profit, Ace Victory, Bloominvest and Wellasia and, together with their respective family member(s), the respective beneficial owner of Good Profit, Metronet, Capitalrise and Even Skill

• “Wellasia”

• Wellasia International Limited, a company incorporated in BVI with limited liability and wholly and beneficially owned by Mr. Huang

– 4 –

DEFINITIONS

“Windsor Treasure” Windsor Treasure Group Holdings Limited, an investment holding company incorporated in BVI on 20 April 2004 with limited liability, the ultimate beneficial owners of which are all Independent Third Parties. It was owned as to 22.24% by Capitalrise, 4% by Bloominvest, 22.24% by Good Profit, 3% by Hero Profit, 22.24% by Metronet, 3% by Ace Victory, 12.89% by Even Skill and 10.39% by Wellasia as at the Latest Practicable Date “Windsor Treasure Group” Windsor Treasure and its subsidiaries upon completion of the Reorganization “HK$” Hong Kong dollars, the lawful currency of Hong Kong “RMB” Renminbi, the lawful currency of the PRC “US$” United States dollars, the lawful currency of the United States of America “%” per cent.

Amounts denominated in RMB in this circular has been converted into HK$ at a rate of RMB1.06 =HK$1.0 for illustration purposes.

– 5 –

LETTER FROM THE BOARD

OMNICORP LIMITED 兩儀控股有限公司[*]

(Incorporated in Bermuda with limited liability)

Executive Directors: Lui Chun Bing, Tommy (Vice Chairman and Managing Director) Au Hoi Tsun, Peter Lee Hoong Seun Sung Yan Wai, Petrus Chim Chun Kwan, Sandy

Non-Executive Director Shaw Wen Fei (Chairman)

Independent non-executive Directors: Wong Che Keung, Richard Tong Yee Yung, Joseph

Registered Office: Canon’s Court 22 Victoria Street Hamilton HM12 Bermuda

Head Office and Principal Place of Business in Hong Kong: Suites 904 – 905 9th Floor Dah Sing Financial Centre 108 Gloucester Road Wanchai Hong Kong

17 September 2004

To the Shareholders

Dear Sir or Madam,

MAJOR TRANSACTION Proposed acquisition and subscription of approximately 51.52% interest in Windsor Treasure Group Holdings Limited

INTRODUCTION

The Company announced on 26 August 2004 that the Purchaser (a wholly owned subsidiary of the Company), the Vendors, Windsor Treasure, the Company and the Warrantors entered into the Agreement, pursuant to which the Purchaser has conditionally agreed (i) to acquire the Sale Shares and (ii) to subscribe for the Subscription Shares. Assuming Completion takes place, Windsor Treasure will become an indirect non-wholly owned subsidiary of the Company.

* For identification purposes only

– 6 –

LETTER FROM THE BOARD

The Acquisition constitutes a major transaction for the Company pursuant to Chapter 14 of the Listing Rules. The purpose of this circular is to provide you with further details of the Agreement, the Acquisition and allotment and issue of the Consideration Shares together with the notice of SGM for considering and, if thought fit, to approve at the SGM the Agreement, the Acquisition and the allotment and issue of the Consideration Shares.

INFORMATION ON THE AGREEMENT

Date

19 August 2004

Parties to the Agreement Vendors Capitalrise, Bloominvest, Good Profit, Hero Profit, Metronet, Ace Victory, Even Skill and Wellasia, who are respectively the legal and beneficial owners of the relevant number of the Sale Shares. To the best of the knowledge, information and belief of the Directors, having made all reasonable enquiries, the Vendors and their respective ultimate beneficial owners are Independent Third Parties and are not connected persons of the Company

Vendors’ warrantors Mr. Sung, Mr. Chan, Mr. Cheung and Mr. Huang Purchaser Talent Sino Holdings Limited, a company incorporated in BVI with limited liability and a wholly owned subsidiary of the Company Purchaser’s warrantor The Company The company to be acquired Windsor Treasure

Assets to be acquired under the Agreement

Pursuant to the Agreement, the Purchaser has conditionally agreed to acquire:

• (A) the Sale Shares, being 3,470 ordinary shares of US$1.00 each in the issued share capital of Windsor Treasure, representing 34.70% of the entire issued share capital of Windsor Treasure as at the Latest Practicable Date and approximately 25.76% of its then entire issued share capital immediately after Completion, or such number of shares which, upon the Reorganization has become effective and immediately after Completion, represents approximately 25.76% of the then issued share capital of Windsor Treasure (as enlarged by the issue of the Subscription Shares); and

• (B) the Subscription Shares, being 3,470 new ordinary shares of US$1.00 each in the share capital of Windsor Treasure, which represents approximately 25.76% of the then entire issued share capital of Windsor Treasure immediately after Completion, or such number of shares which, upon the Reorganization has become effective and immediately after Completion, represents approximately 25.76% of the then issued share capital of Windsor Treasure (as enlarged by the issue of the Subscription Shares).

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LETTER FROM THE BOARD

which collectively represent an effective interest of approximately 51.52% in the enlarged issued share capital of Windsor Treasure.

Aggregate Consideration

The Consideration payable by the Purchaser to the Vendors in respect of the Sale Shares and the Subscription Shares is HK$34,006,000 and shall be satisfied in the following manner:

• (a) 50% of the Consideration, i.e. a sum of HK$17,003,000, being the consideration for the Sale Shares, will be satisfied by the allotment and issue of the Consideration Shares of 17,003,000 new Shares at an issue price of HK$1.00 per Consideration Share by the Company to the Vendors, credited as fully paid, within 5 Business Days after Completion; and

• (b) the remaining 50% of the Consideration, i.e. HK$17,003,000, being the consideration for the Subscription Shares, shall be paid in cash to Windsor Treasure upon Completion.

The Directors presently intend to finance the cash portion of the Consideration by internal resources of the Group. The acquisition of Sale Shares and the subscription of the Subscription Shares shall be inter-conditional and shall take place simultaneously at Completion.

The Consideration Shares represent approximately 22.89% of the existing issued share capital of the Company as at the Latest Practicable Date and approximately 18.62% of the then issued share capital of the Company immediately after Completion (as enlarged by the issue of Consideration Shares).

The issue price of the Consideration Shares of HK$1.00 per Consideration Share represents:

• (a) a discount of approximately 1.96% to the closing price of HK$1.020 per Share as quoted on the Stock Exchange on the Last Trading Day;

• (b) a discount of approximately 3.29% to the average closing price of HK$1.034 per Share as quoted on the Stock Exchange during the period of the last 5 trading days before and inclusive of the Last Trading Day;

• (c) a discount of approximately 0.43% to the average closing price of HK$1.004 per Share as quoted on the Stock Exchange during the period of the last 30 trading days before and inclusive of the Last Trading Day;

• (d) a discount of approximately 2.91% to the closing price of HK$1.030 per Share as quoted on the Stock Exchange on the Latest Practicable Date;

• (e) a discount of approximately 2.34% to the average closing price of HK$1.024 per Share as quoted on the Stock Exchange during the period of the last 5 trading days up to and inclusive of the Latest Practicable Date; and

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LETTER FROM THE BOARD

• (f) a discount of approximately 53.27% to the audited consolidated net tangible assets of the Company of HK$2.14 per Share as at 31 December 2003.

Basis for determining the Consideration

The Consideration was arrived at after arm’s length negotiations between the Purchaser and the Vendors by reference to the prospects of the business of the Windsor Treasure Group, the potential and growth of the consumer market in the PRC for medium to high-end furniture, the combined net tangible asset value of the entire Windsor Treasure Group upon and as at the date of Completion guaranteed jointly and severally by the Vendors and the Warrantors of not less than HK$38,000,000 (including the cash portion of the Consideration of HK$17,003,000 for the Subscription Shares) and the profit guaranteed jointly and severally by the Vendors and the Warrantors for the year ending 31 December 2004 of the entire Windsor Treasure Group of not less than HK$7,500,000.

Based on the profit guaranteed by the Vendors and the Warrantors, the Consideration represents a price earnings multiple of approximately 8.80 times on a fully-diluted basis and approximately 7.01 times on a weighted average basis (on the assumption that the Completion will take place on 15 October 2004 and without taking into account any interest factor). The guaranteed net tangible asset value upon and as at the date of Completion of HK$38,000,000 (including the cash portion of the Consideration of HK$17,003,000 for the Subscription Shares) also represents an asset backing ratio (being the guaranteed net tangible asset value of the entire Windsor Treasure Group upon and as at the date of Completion of HK$38,000,000 x 51.52% ÷ the Consideration of HK$34,006,000 x 100%) of approximately 57.57%. Having considered the factors described in the paragraphs headed “Information on the Windsor Treasure Group” and “Reasons for the Acquisition” below, the Directors are of the view that the terms of the Agreement (including the Consideration) are fair and reasonable as far as the Company and the Shareholders are concerned.

Guaranteed net tangible asset value

Pursuant to the Agreement, the Vendors and the Warrantors have jointly and severally undertaken and represented to the Purchaser that upon Completion, the combined net tangible asset value of the entire Windsor Treasure Group as shown in its audited accounts upon and as at the date of Completion will not be less than HK$38,000,000 (the “Guaranteed NTA”). For the purpose of calculating the Guaranteed NTA, the consideration for the Subscription Shares will be taken into account. In the event that the actual audited combined net tangible asset value of the entire Windsor Treasure Group upon and as at the date of Completion falls short of the Guaranteed NTA, the Vendors will make up the shortfall amount in cash within 15 Business Days from the date of the auditors’ report in respect of the audited accounts of Windsor Treasure Group upon Completion. Pursuant to the Agreement, the Vendors and the Warrantors have jointly and severally undertaken to procure the audited accounts of Windsor Treasure Group as at the date of Completion (the “Completion Accounts”) to be issued within two months from the date of Completion.

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LETTER FROM THE BOARD

Guaranteed Profit

Pursuant to the Agreement, the Vendors and the Warrantors have jointly and severally undertaken and represented to the Purchaser that the consolidated profit after taxation and minority interests of the entire Windsor Treasure Group (before extraordinary items) as shown in its audited accounts for the year ending 31 December 2004 prepared in accordance with the accounting principles generally accepted in Hong Kong will not be less than HK$7,500,000 (the “Guaranteed Profit”). In the event that the audited results fall short of the Guaranteed Profit, the Purchaser will be compensated in cash an amount representing 51.52% of the profit shortfall multiplied by 8.80 times for the shortfall, which shall be paid by the Vendors to the Purchaser within 15 Business Days from the date of the auditors’ report in respect of the audited accounts of the Windsor Treasure Group for the year ending 31 December 2004. Pursuant to the Agreement, the Vendors and the Warrantors have undertaken to procure the audited accounts of Windsor Treasure Group for the year ending 31 December 2004 to be issued on or before 31 March 2005.

After the Completion, the Company will make announcements with regard to the following:

1. whether the Guaranteed NTA and the Guaranteed Profit have been reached by the Windsor Treasure Group according to the Agreement;

2. details of the shortfall between the Guaranteed NTA and the actual net tangible asset value upon Completion and between the Guaranteed Profit and the actual amount of profits; and

3. whether the Vendors and the Warrantors have fulfilled their obligations pursuant to the Agreement in the event that a shortfall arises on the Guaranteed NTA and/or the Guaranteed Profit.

The announcement on the Guaranteed NTA shall be made within 5 Business Days from the deadline for the Vendors and the Warrantors to perform their obligations in the event of a shortfall or within 20 Business Days after the issue of the Completion Accounts, whichever is earlier. The announcement on the Guaranteed Profit shall be made within 5 Business Days from the deadline for the Vendors and the Warrantors to perform their obligations in the event of a shortfall or within 20 Business Days after the issue of the audited accounts of Windsor Treasure Group for the year ending 31 December 2004, whichever is earlier.

The Company will also disclose in its annual report the above information together with a statement of the independent non-executive Directors confirming the above.

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LETTER FROM THE BOARD

Conditions of the Agreement

Completion of the Agreement is conditional upon, amongst other things:

• (A) the passing by the Shareholders at the SGM of an ordinary resolution to approve:

• (i) the Agreement and the Acquisition; and

• (ii) the issue and allotment of the Consideration Shares;

• (B) the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, the Consideration Shares and all relevant regulatory requirements (if any) having been complied with and satisfied;

• (C) the Purchaser being satisfied with and having accepted the results of the due diligence review to be conducted on the Windsor Treasure Group;

• (D) the receipt of the PRC legal opinion regarding, amongst other things, the legal status, ownership of shareholding/registered capital in each of the PRC member of the Windsor Treasure Group, business, assets, liabilities of Windsor Treasure and each of the PRC members of the Windsor Treasure Group both before and after completion of the Reorganization and any other matters the Purchaser shall be aware of in respect of the Acquisition (including but not limited to the approval from the relevant PRC authorities, if required) in the form and content satisfactory to the Purchaser;

• (E) there being no material breach of any warranties by the Vendors and Warrantors, unless otherwise disclosed;

• (F) the issue of an unqualified independent opinion by the reporting accountants designated by the Purchaser on the combined financial statements of the Windsor Treasure Group for the three financial years ended 31 December 2003 and the six months ended 30 June 2004;

• (G) there being no material breach of any terms and conditions of the Agreement by each of the Vendors, Windsor Treasure and other members of the Windsor Treasure Group before Completion;

• (H) the receipt by the Purchaser of a valuation report issued by an independent and qualified valuer and being completed to the satisfaction of and is accepted by the Purchaser showing the value of the factory premises in Dongguan of Windsor Treasure Group in the PRC; and

• (I) the completion of the Reorganization.

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LETTER FROM THE BOARD

Each of the Vendors has agreed to use its best endeavours to procure the fulfillment of the conditions (save for (A) and (B) above) before Completion. Except for conditions (A), (B), (F) and (I), all conditions can be waived by the Purchaser under the Agreement. It is the position of the Company that it will not waive any condition if the condition is a requisite for the legality of both the Acquisition and the PRC members of Windsor Treasure Group after Reorganization. In this connection, the Company will not waive condition (D) insofar as the approval of the relevant PRC authorities and other matters relating to the legality of the PRC members are concerned.

Completion

Completion will take place within 5 Business Days after the date on which the conditions are satisfied or waived (as the case may be) or such other date as mutually agreed by the Vendors and the Purchaser in writing. If for any reason all the relevant conditions shall not have been fulfilled or waived on or before 30 November 2004 (or such later date as agreed by the Purchaser and the Vendors in writing), the Agreement shall automatically terminate and be null and void and of no further effect and no party to the Agreement shall have any liability to any other party, but without prejudice to any claim by any party in respect of any antecedent breach of the terms of the Agreement.

Board of directors of Windsor Treasure

It is one of the terms of the Agreement that after Completion, the board of directors of Windsor Treasure would consist of 9 directors, of which 5 would be nominated by the Purchaser and 4 by the Vendors. Businesses arising at any meeting of the directors shall be decided by a simple majority of votes.

INFORMATION ON THE WINDSOR TREASURE GROUP

Windsor Treasure is an investment holding company incorporated on 20 April 2004 in BVI with limited liability. It has not carried on any business since its incorporation save for entering into the Agreement. The Windsor Treasure Group is undergoing the Reorganization for the purposes of, amongst other things, enabling Windsor Treasure to become the holding company of Windsor Treasure Group and consolidating the group structure and the operating members of the Windsor Treasure Group. The Reorganization is essential such that the Purchaser will not have to acquire and/or subscribe the equity interest of the operating members of the Windsor Treasure Group separately for the purpose of the Acquisition. The Reorganization will be completed before Completion. Upon completion of the Reorganization, Windsor Treasure will become the holding company of Windsor Treasure Group.

The three companies established in PRC, namely深圳大豪興利家具實業有限公司 , 東莞富豪家 具有限公司 and 深圳興利家具有限公司 are the main operating members of the Windsor Treasure Group. As at the Latest Practicable Date, 65% of the equity interest in 深圳大豪興利家具實業有限公 司 was beneficially owned by Mr. Sung, Mr. Chan and Mr. Cheung while the remaining 35% was held by an Independent Third Party, not connected with any of the Warrantors. An aggregate of 78% of the equity interest in 東莞富豪家具有限公司 was beneficially owned by Mr. Sung, Mr. Chan and Mr. Cheung

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LETTER FROM THE BOARD

while the remaining 22% was held by an Independent Third Party, not connected with any of the Warrantors. The whole equity interest in 深圳興利家具有限公司 was beneficially owned by Mr. Sung, Mr. Chan, Mr. Cheung and Mr. Huang’s wife. After Completion, the aforesaid independent third parties will remain as respective holder of the minority equity interest in 深圳大豪興利家具實業有限公司 and 東莞富豪家具有限公司.

After Reorganization, Windsor Treasure Group will mainly comprise the aforesaid operating members, a company holding the relevant brand names and the intermediate holding companies for the purpose of Reorganization. Subject to the PRC legal opinion and the result of the Purchaser’s due diligence exercise, the Purchaser is currently not aware of any facts which suggest that these PRC companies are not duly established or the business operations of which do not comply with all relevant laws.

Windsor Treasure Group is engaged in the design, manufacture, sale and marketing of medium to high-end home furniture, mainly wood furniture. Windsor Treasure Group’s furniture is marketed under various brands including but not limited to “Johnston”, “歐瑞” “PZ-King”, “Degas”, “Sunrays”, “QQStar” and “Novita”. The Group’s products comply with the ISO 9001 design and manufacture of home furniture standards. Approximately 80% of the Windsor Treasure Group’s products are sold to independent sales agents and trading firms who are primarily furniture wholesalers or retailers and operate, in aggregate, over 400 sales outlets in the PRC. The remaining 20% of the Windsor Treasure Group’s products are exported to various countries including the USA, the Middle East and Japan. In this respect, one of the Windsor Treasure Group’s PRC operating members has been granted a separate-rate status, under which that member is at present entitled to an import duty of 10.92% in the preliminary determination following the recent anti-dumping investigation conducted by the Department of Commerce of the USA on the import of wooden bedroom furniture to the USA from the PRC. This compares favourably with the punitive anti-dumping PRC-wide rate of 198.08% imposed on most of the PRC wooden furniture companies exporting to the USA.

According to the financial information of the Windsor Treasure Group as set out in Appendix II to this circular, for the 6 months ended 30 June 2004, the Windsor Treasure Group recorded an audited combined net profit before taxation and an audited combined net profit after taxation of approximately HK$3.21 million and approximately HK$3.18 million respectively. For the year ended 31 December 2003, Windsor Treasure Group recorded an audited combined net profit before taxation and an audited combined net profit after taxation of approximately HK$2.90 million and approximately HK$2.84 million respectively. For the year ended 31 December 2002, Windsor Treasure Group recorded an audited combined net loss before taxation and an audited combined net loss after taxation of approximately HK$5.85 million and approximately HK$5.91 million respectively, both of which included a loss on disposal of a property in Hong Kong of approximately HK$4.83 million.

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LETTER FROM THE BOARD

As set out in Appendix II to this circular, the audited combined net asset value/(deficiency) of the Windsor Treasure Group as at 30 June 2004, 31 December 2003 and 31 December 2002 was approximately HK$23.40 million, HK$20.43 million and (HK$4.84 million) respectively.

REASONS FOR THE ACQUISITION

The principal activity of the Company is investment holding. The principal activities of its subsidiaries consist of manufacture and sale of electronic components, manufacture and sale of contactless smart card readers and related products, general trading, property holding and investment holding.

As mentioned in the Company’s annual report for the year ended 31 December 2003, the Company was excited by the business opportunities in the PRC and given the Group’s satisfactory performance in 2003, the Group was poised for further expansion in 2004 through internal growth and acquisitions, if opportunities arose.

Windsor Treasure Group has been engaged in the design, manufacture, sale and marketing of medium to high-end home furniture since 1993. The furniture market in China has been growing rapidly in recent years owing to the boom in the property market in China driven by the increase in household incomes and the continuous rise in the standard of living in China. The size of the China furniture industry is estimated at RMB 204 billion for 2003. China is one of the top three largest furniture export countries in the world and furniture exports from China have increased by 335% from 1994 to 2001. China has also replaced Canada as the largest exporter of furniture to the US market in 2003. China exported about US$5.4 billion and US$7.3 billion of furniture in 2002 and 2003 respectively.

The China economy grew at an average rate of about 10% per year during the period from 1990 to 2001, which is the highest growth rate in the world. China’s gross domestic product grew 8% in 2002 and further 9.1% in 2003 despite the setbacks of the severe acute respiratory syndrome outbreak and a sluggish world economy. It is believed that the growth in the China economy and improved living standards in recent years would sustain the growing demand for medium to high-end home furniture in the domestic market. Taking into account the above, the Directors consider that the Acquisition provides a good opportunity for the Company to tap the growing consumer market in the PRC. Further, following the US Department of Commerce’s anti-dumping duty investigation, an anti-dumping duty rate of 198.08% is imposed on all PRC-made wooden bedroom furniture with effect from 17 July 2004. The Windsor Treasure Group is one of the few corporations preliminarily found to be eligible for a separate-rate of 10.92% rather than the PRC-wide rate of 198.08% and thus, the management of the Group believes that

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LETTER FROM THE BOARD

the Windsor Treasure Group stands on a much advantageous position to further expand its export business of home furniture to the USA. However, the above is a preliminary determination of the US Department of Commerce after the anti-dumping investigation and there is no guarantee that the separate-rate status may not be subject to any change in the future. If the separate-rate status cannot be maintained, it is possible that Windsor Treasure Group will be subject to the PRC wide rate of 198.08%. Nevertheless, if the Windsor Treasure Group can continue to maintain its current trade practice in its export activities, it is unlikely for Windsor Treasure Group to be placed in a less advantageous position in the furniture market in the future.

The management of the Group has substantial experience in business development and investment and in assisting entrepreneurial companies like the Windsor Treasure Group to manage and further expand their business in high growth markets such as China. Furthermore, the relative strength of the Group in strategic planning, financial management, corporate development, and international markets are expected to bring strong synergies and additional depth and strength to the present management team of the Windsor Treasure Group. All in all, the Directors believe that the Acquisition would strengthen the Company’s investment portfolio and broaden its income base.

The acquisition of approximately 51.52% interest in the Windsor Treasure Group by the Group at a total consideration of HK$34,006,000 under the Agreement is a result of arm’s length negotiations and on normal commercial terms between the parties to the Agreement and with reference to the basis of the Consideration as set out in the paragraph headed “Basis for determining the Consideration” above. Therefore, the Board considers that the terms of the Agreement are fair and reasonable and the Acquisition is in the interest of the Group and the Shareholders as a whole. The Board does not have any present intention to acquire any further interests in the Windsor Treasure Group.

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LETTER FROM THE BOARD

EFFECTS OF THE AGREEMENT

Shareholding Structure

The table below sets out the shareholding structure of the Company immediately before and after Completion (assuming no other changes in shareholding before then):

	Immediately		Immediately
	before Completion		after Completion
	Number of Shares	%	Number of Shares	%
The Grande (Nominees)	6,573,795	8.85	6,573,795	7.20
Limited_(Note 1)_
Planet Adventure Limited	6,200,000	8.35	6,200,000	6.79
(Note 2)
Patova International Limited	100,000	0.13	100,000	0.11
(Note 2)
Lui Chun Bing, Tommy_(Note 3)_	4,266,800	5.74	4,266,800	4.67
Shaw Wen Fei_(Note 4)_	1,064,900	1.43	1,064,900	1.17
Au Hoi Tsun, Peter_(Note 5)_	345,000	0.46	345,000	0.38
Capitalrise_(Note 6)_	–	–	3,782,800	4.14
Bloominvest_(Note 7)_	–	–	681,100	0.75
Good Profit_(Note 8)_	–	–	3,782,800	4.14
Hero Profit_(Note 9)_	–	–	509,600	0.56
Metronet_(Note 10)_	–	–	3,782,800	4.14
Ace Victory_(Note 11)_	–	–	509,600	0.56
Even Skill_(Note 12)_	–	–	2,190,300	2.40
Wellasia_(Note 13)_	–	–	1,764,000	1.93
Public	55,739,273	75.04	55,739,273	61.06
	74,289,768	100	91,292,768	100

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LETTER FROM THE BOARD

Notes:

1. A wholly-owned subsidiary of The Grande Holdings Limited whose shares are listed on the main board of the Stock Exchange. Mr. Ho Wing On, Christopher is deemed under the SFO to be interested in these Shares because of his indirect interest in The Grande Holdings Limited through Barrican Investments Corporation and The Grande International Holdings Limited.

2. Beneficially owned by Mr. Huen Wing Ming, Patrick.

3. These Shares include 226,800 Shares held by Mr. Lui Chun Bing, Tommy in person and 4,000,000 Shares held by Expert View Group Limited, which is beneficially owned as to approximately 66.67% and 33.33% by Ms. Sum Kin Man and Mr. Lui Tin Shun respectively, the wife and son of Mr. Lui Chun Bing, Tommy, who is the ViceChairman and Managing Director of the Group and a Director.

4. These Shares are held by Sharp States Investments Inc., the entire issued share of which is wholly-owned by Mr. Shaw Wen Fei, the Chairman of the Group and a Director.

5. A Director.

6. A company wholly and beneficially owned by Mr. Sung and his family member(s).

7. A company wholly and beneficially owned by Mr. Sung.

8. A company wholly and beneficially owned by Mr. Chan and his family member(s).

9. A company wholly and beneficially owned by Mr. Chan.

10. A company wholly and beneficially owned by Mr. Cheung and his family member(s).

11. A company wholly and beneficially owned by Mr. Cheung.

12. A company wholly and beneficially owned by Mr. Huang and his family member(s).

13. A company wholly and beneficially owned by Mr. Huang.

As shown in the shareholding structure above, none of the Vendors together with their respective associates will hold more than 5% of the then issued capital of the Company immediately upon Completion. Mr. Sung, Mr. Chan, Mr. Cheung and Mr. Huang have respectively confirmed with the Stock Exchange that they and their respective associates are Independent Third Parties and are not connected persons of the Company and that they and their respective associates do not have any relationship with one another save for the business relationship arising from the ordinary and usual course of business of the Windsor Treasure Group. Mr. Sung, Mr. Chan, Mr. Cheung and Mr. Huang have also confirmed that they have no arrangement whatsoever with one another in respect of the trading, dealing or disposal of the Consideration Shares and they have no intention to enter into any such arrangement in the future.

As at the Latest Practicable Date, the authorised share capital of the Company was HK$150,000,000 divided into 15,000,000,000 Shares of HK$0.01 each, of which 74,289,768 Shares had been issued and fully paid. Immediately after Completion and the issue and allotment of the Consideration Shares, the number of issued Shares of the Company will increase to 91,292,768. The Consideration Shares will rank pari passu in all respects including all rights as to dividends, voting and interests in capital among themselves and with other Shares in issue on the date of such allotment and issue except for any dividends or other distributions that may be declared, paid or made before the date of Completion.

The Agreement does not contain any provision which would restrict the subsequent sale of the Consideration Shares.

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LETTER FROM THE BOARD

As at the Latest Practicable Date, the Company did not have any controlling shareholder (as defined in the Listing Rules) and the issue of the Consideration Shares pursuant to the Agreement will not introduce any controlling shareholder to the Company.

Financial effects of the Acquisition on the Group

Subject to Completion, the Company will indirectly hold approximately 51.52% of the then issued share capital of Windsor Treasure. Accordingly, Windsor Treasure will become a non-wholly owned subsidiary of the Company and the post-acquisition financial results of the Windsor Treasure Group will be consolidated to the results of the Group.

Net asset value

As at 31 December 2003, the audited consolidated net asset value of the Group amounted to approximately HK$169.19 million, representing approximately HK$2.28 per Share (based on 74,289,768 Shares in issue as at that date). Based on the unaudited pro forma statement of adjusted combined net asset value of the Enlarged Group as set out in Appendix III to this circular, the unaudited pro forma adjusted combined net asset value of the Enlarged Group will increase by approximately 10.05% to approximately HK$186.19 million, representing approximately HK$2.04 per Share (based on 91,292,768 Shares to be issued immediately after Completion). The decrease in the net asset value per Share is primarily due to the dilution effect arising from the Consideration Shares to be issued immediately after Completion.

Earnings

Upon Completion, the financial results of the Enlarged Group shall include 51.52% of the net earnings/loss of Windsor Treasure Group. In addition, the Group will record a goodwill of an amount equivalent to the amount of premium paid by the Purchaser over the net tangible asset value of the Windsor Treasure Group attributable to the Group. In accordance with the Group’s current accounting policies, such goodwill will be amortized on a straight-line basis over a period of 20 years which shall be charged to the consolidated profit and loss account of the Group.

Given the profit guarantee provided by the Vendors and the Warrantors jointly and severally under the Agreement, the earnings potential and prospects of the Windsor Treasure Group, the Directors consider that the Acquisition could benefit the results of the Enlarged Group in future.

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LETTER FROM THE BOARD

BUSINESS REVIEW AND PROSPECTS OF THE GROUP

The principal activity of the Company is investment holding. The principal activities of its subsidiaries consist of manufacture and sale of electronic components, manufacture and sale of contactless smart card readers and related products, general trading, property holding and investment holding.

The audited consolidated turnover of the Group for each of the two years ended 31 December 2003 and 31 December 2002 amounted to approximately HK$248.37 million and HK$136.43 million respectively. The Group recorded an audited loss after taxation and minority interest of approximately HK$192.94 million for the year ended 31 December 2002 and an audited profit after taxation and minority interest of approximately HK$10.86 million for the year ended 31 December 2003. The loss per Share for the year ended 31 December 2002 is HK$3.83 and the earnings per Share for the year ended 31 December 2003 is HK$0.18.

As mentioned in the Company’s annual report for the year ended 31 December 2003, the Company was excited by the business opportunities in the PRC and given the Group’s satisfactory performance in 2003, the Group is poised for further expansion in 2004 through internal growth and, if opportunities arose, acquisition.

The Directors are positive about the prospects of the consumer market in the PRC and in particular the furniture industry which is expected to grow at a steady and satisfactory level although competition in this market will remain keen. The Board also believes that the Acquisition will diversify and strengthen the earning base of the Group.

LISTING AND DEALING

Application will be made to the Listing Committee of the Stock Exchange for the granting of the listing of, and permission to deal in, the Consolidation Shares.

PROCEDURE FOR DEMANDING A POLL

Pursuant to the bye-law 67 of the bye-laws of the Company, every resolution submitted to a general meeting shall be determined on a show of hands in the first instance by the Shareholders present in person, but a poll may be demanded (before or on the declaration of the result of the show of hands) by the Chairman or by:

• (a) at least 3 Shareholders present in person or by a duly authorised corporate representative or by proxy for the time being entitled to vote at the meeting; or

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LETTER FROM THE BOARD

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

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

SGM

The Acquisition constitutes a major transaction for the Company under Chapter 14 of the Listing Rules and is therefore subject to approval by the Shareholders at a general meeting of the Company. Set out in this circular is a notice convening the SGM which will be held at 10:00 a.m. on Thursday, 7 October 2004 at Concord Rooms 2 & 3, 8th Floor, Renaissance Harbour View Hotel, No. 1 Harbour Road, Wanchai, Hong Kong at which an ordinary resolution will be proposed to approve the Agreement, the Acquisition and the allotment and issue of Consideration Shares as set out in pages 84 to 86 of this circular. As at the Latest Practicable Date, the Directors, having made all reasonable enquiries, are not aware that there is any Shareholder who is required to abstain from voting at the SGM under the Listing Rules.

ADDITIONAL INFORMATION

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

RECOMMENDATION

Based on the reasons for the Acquisition and the benefits expected to accrue to the Group as described in the paragraphs headed “Reasons for the Acquisition” and “Business review and prospects of the Group” above, the Directors are of the opinion that the proposed Acquisition and the allotment and issue of Consideration Shares are fair and reasonable and that the resolution to be proposed at the SGM is in the interests of the Company and its Shareholders as a whole. Accordingly, the Directors recommend you to vote in favour of the resolution to be proposed at the SGM.

By Order of the Board

Omnicorp Limited Lui Chun Bing, Tommy Managing Director

– 20 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

A. FINANCIAL SUMMARY

• (1) The following financial information has been extracted from the audited financial statements of the Group for each of the three years ended 31 December 2003:

CONSOLIDATED PROFIT & LOSS ACCOUNT

For the year ended 31 December 2003

Note TURNOVER 3 Cost of sales and services Gross profit Other revenue Distribution costs Administrative expenses Other operating expenses PROFIT/(LOSS) FROM OPERATING ACTIVITIES 6 Finance costs 7 Share of results of associates PROFIT/(LOSS) BEFORE TAXATION Taxation 9 PROFIT/(LOSS) BEFORE MINORITY INTERESTS Minority interests NET PROFIT/(LOSS) ATTRIBUTABLE TO SHAREHOLDERS 10, 25 EARNINGS/(LOSS) PER SHARE 11 Basic Diluted ASSETS AND LIABILITIES Total assets Total liabilities and minority interests NET ASSETS	2003 HK$’000 248,373 (219,920) 28,453 38,500 (2,449) (30,398) (17,486) 16,620 (2,299) (1,374) 12,947 2,341 15,288 (4,429) 10,859 0.18 dollars 0.18 dollars 270,520 (101,330) 169,190	2002 HK$’000 136,427 (111,955) 24,472 6,780 (4,238) (57,623) (170,311) (200,920) (2,313) (4,147) (207,380) 1,039 (206,341) 13,397 (192,944) (3.83 dollars) N/A 231,250 (99,200) 132,050	2001 HK$’000 78,697 (73,746) 4,951 5,080 (1,444) (22,603) (51,578) (65,594) (65,204) (1,747) (132,545) (718) (133,263) (24) (133,287) (3.55 dollars) N/A 862,316 (634,732) 227,584

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

• (2) Set out below the audited financial statements of the Group for the year ended 31 December 2003 is a reproduction of pages 22 to 61 of the 2003 annual report of the Company. References to page numbers are the page numbers of such annual report of the Company.

CONSOLIDATED BALANCE SHEET

31 December 2003

Note NON-CURRENT ASSETS Properties, plant and equipment 12 Investment properties 13 Long term investments 14 Interests in associates 17 Goodwill 16 CURRENT ASSETS Inventories 18 Trade and other receivables 19 Prepayments and deposits Cash and bank balances 20 CURRENT LIABILITIES Trade and other payables 21 Interest bearing bank borrowings 22 Deposits received Taxation payable NET CURRENT ASSETS TOTAL ASSETS LESS CURRENT LIABILITIES NON-CURRENT LIABILITIES Deferred tax 23 MINORITY INTERESTS CAPITAL AND RESERVES Share capital 24 Reserves 25	2003 HK$’000 9,859 18,000 56,712 48,400 10,197 143,168 30,645 63,808 1,696 31,203 127,352 23,761 39,390 263 23 63,437 63,915 207,083 85 37,808 169,190 743 168,447 169,190	2002 HK$’000 5,475 31,200 50,394 33,058 –
		120,127
		30,701 44,032 4,680 31,710
		111,123
		29,918 33,148 285 4,779
		68,130
		42,993
		163,120 – 31,070
		132,050
		533 131,517
		132,050

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2003

1 January 2002 Issue of new shares Share issue expenses Transfer on re-organisation Capital reduction Share repurchase Release on disposal of subsidiaries Currency translation differences Loss for the year 31 December 2002 and 1 January 2003 Issue of new shares Share issue expenses Currency translation differences Profit for the year 31 December 2003	Share capital HK$’000 37,937 15,800 – – (53,200) (4) – – – 533 210 – – – 743	Retained Share Exchange profits/ premium Contributed fluctuation (accumulated account surplus reserve losses) HK$’000 HK$’000 HK$’000 HK$’000 745,032 460,074 12,173 (1,027,632) 86,050 – – – (2,764) – – – (781,232) (430,000) – 1,211,232 – 53,200 – – (769) – – – – – (537) – – – (366) – – – – (192,944) 46,317 83,274 11,270 (9,344) 27,970 – – – (901) – – – – – (998) – – – – 10,859 73,386 83,274 10,272 1,515	Total HK$’000 227,584 101,850 (2,764) – – (773) (537) (366) (192,944)
			132,050 28,180 (901) (998) 10,859
			169,190

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 31 December 2003

Note NET CASH USED IN OPERATIONS 26(a) Hong Kong profits tax refunded Hong Kong profits tax paid Taxes paid outside Hong Kong Interest paid NET CASH USED IN OPERATING ACTIVITIES CASH FLOW FROM INVESTING ACTIVITIES Interest received Purchases of long term investments Purchases of properties, plant and equipment Purchases of associates Loans to associates Repayment of loan from an associate Proceeds from disposal of: Properties, plant and equipment Investment properties Long term investments Subsidiaries 26(b) Acquisition of subsidiaries, net of cash acquired 26(c) Decrease/(increase) in pledged time deposits and guarantee funds Net cash used in investing activities NET CASH OUTFLOW BEFORE FINANCING ACTIVITIES CASH FLOW FROM FINANCING ACTIVITIES Proceeds from issue of new shares Proceeds from subscription of share options by minority shareholders of a subsidiary Cost of share repurchase Share issue expenses Proceeds from interest bearing bank borrowings Net cash generated from financing activities (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS Effect of exchange rate changes 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 Pledged time deposits and guarantee funds 20 Bank overdrafts 22	2003 HK$’000 (27,570) – – (262) (2,299) (30,131) 433 (1,000) (8,349) (725) (31,095) 6,250 – 11,677 22,000 (13,010) (11,837) 9,569 (16,087) (46,218) 28,180 2,902 – (901) 15,755 45,936 (282) (2,558) 11,670 8,830 31,203 (16,278) (6,095) 8,830	2002 HK$’000 (45,750) 403 (186) (56) (2,313) (47,902) 526 (4,843) (3,558) (5,775) – 2,000 10 – – (111) (2,754) (2,264) (16,769) (64,671) 71,650 – (773) (2,764) 3,695 71,808 7,137 (730) 5,263 11,670 31,710 (15,847) (4,193) 11,670

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

BALANCE SHEET

31 December 2003

Note NON-CURRENT ASSETS Interests in subsidiaries 15 CURRENT ASSETS Prepayments and deposits Cash and bank balances CURRENT LIABILITIES Trade and other payables NET CURRENT LIABILITIES CAPITAL AND RESERVES Share capital 24 Reserves 25	2003 HK$’000 180,746 23 7 30 1,082 (1,052) 179,694 743 178,951 179,694	2002 HK$’000 142,386 225 8 233 1,439 (1,206) 141,180 533 140,647 141,180

– 25 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

1. CORPORATE INFORMATION

During the year, the Group was engaged in the following activities:

– Manufacture and sale of electronic components

– Manufacture and sale of contact and contactless smart card readers and related products

• General trading

• Property holding

– Investment holding

2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES

Basis of accounting

These financial statements have been prepared in accordance with accounting principles generally accepted in Hong Kong and comply with accounting standards issued by the Hong Kong Society of Accountants (“HKSA”), and the disclosure requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

They have been prepared under the historical cost convention, modified with respect to the measurement of investment properties, certain properties, plant and equipment and other investments, as explained in the respective accounting policies below.

Adoption of Statement of Standard Accounting Practice

During the current year, the Group has adopted SSAP 12 (Revised) “Income Taxes” issued by the Hong Kong Society of Accountants which is effective for accounting periods commencing on or after 1 January 2003. The principal effect of the implementation of SSAP 12 (Revised) is in relation to deferred tax. In prior years, deferred tax was provided using the income statement liability method on all significant differences to the extent it was probable that the liability would crystallise in the foreseeable future. A deferred tax asset was not recognised until its realisation was assured beyond reasonable doubt. SSAP 12 (Revised) requires the adoption of the balance sheet liability method, whereby deferred tax is recognised in respect of all temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, with limited exceptions. In the absence of any specific transitional requirements in SSAP 12 (Revised), the new accounting policy has been applied retrospectively. The adoption of SSAP 12 (Revised) has had no material effect on the results for the current or prior periods.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries made up to 31 December. The results of subsidiaries 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 within the Group are eliminated on consolidation.

Goodwill on consolidation

Positive goodwill arising on consolidation represents the excess of the cost of the acquisition over the Group’s share of the fair value of the identifiable assets and liabilities acquired. In respect of acquisitions of subsidiaries:

• (i) before 1 January 2001, positive goodwill is eliminated against reserves; and

• (ii) since 1 January 2001, positive goodwill is amortised to the consolidated profit and loss account on a straight-line basis over its estimated useful life. Positive goodwill is stated in consolidated balance sheet at cost less accumulated amortisation and impairment losses, if any.

On disposal of a subsidiary, any attributable amount of purchased goodwill not previously amortised through the consolidated profit and loss account or which has previously been dealt with as a movement on group reserves is included in the calculation of the profit or loss on disposal.

Subsidiaries

A subsidiary is a company in which the Company, directly or indirectly, controls more than half of its voting power or issued share capital or controls the composition of its board of directors. Interests in subsidiaries are stated in the Company’s balance sheet at cost less provisions, for any impairment, as determined by the Directors. The results of subsidiaries are accounted for by the Company on the basis of dividends received and receivable.

– 26 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (Continued)

Associates

An associate is a company, not being a subsidiary, in which the Group holds a substantial long-term interest in the equity share capital and over which the Group is in a position to exercise significant management influence.

The consolidated profit and loss account includes the Group’s share of results of associates for the year, and amortisation and impairment losses of goodwill, if any. The consolidated balance sheet includes the Group’s share of net assets, after attributing fair values to the net assets at the date of acquisition.

Properties, plant and equipment

Properties, plant and equipment, other than investment properties, are stated at cost or valuation less accumulated depreciation and any impairment.

The cost of an item of property, plant and equipment (an “Item”) comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Expenditure incurred after the Item has been put into operation, such as repairs and maintenance, is normally charged to the profit and loss account in the period in which it is incurred. In situations where it can be clearly demonstrated that the expenditure has resulted in an increase in the future economic benefits expected to be obtained from the use of the Item, the expenditure is capitalised as an additional cost of the Item.

When, in the opinion of the Directors, the recoverable amounts of properties, plant and equipment have declined below their carrying amounts, provisions are made to write down the carrying amounts of such assets to their recoverable amounts. Reductions of the carrying value are charged to the profit and loss account, except to the extent that they reverse previous revaluation surpluses in respect of the same items, when they are charged to the revaluation reserve.

The gain or loss on disposal or retirement of an Item recognised in the profit and loss account is the difference between the sale proceeds and the carrying amount of the relevant Item, and is recognised in the profit and loss account. On disposal of a revalued Item, the relevant portion of the revaluation reserve realised in respect of the previous valuations is transferred to retained profits as a movement in reserves.

Depreciation is calculated on the straight-line basis to write off the cost or valuation of each item over its estimated useful life. The principal annual rates used for this purpose are as follows:

Leasehold land	Over unexpired lease terms
Buildings	2% – 5%
Leasehold improvements	18% – 20% or over the lease terms whichever is shorter
Plant and machinery	10% – 25%
Furniture and equipment	12.5% – 30%
Motor vehicles	20% – 33%

Investment properties

Investment properties are those properties which are held for their investment potential, are income producing and are intended to be held on a long term basis. They are stated at their open market values on the basis of annual valuations. Any surplus or deficit on revaluation is taken to the investment properties revaluation reserve unless the total of this reserve is insufficient to cover a deficit, in which case the amount by which the deficit exceeds the amount in the reserve is charged to the profit and loss account. Where a deficit has previously been charged to the profit and loss account and a revaluation surplus subsequently arises, the surplus is credited to the profit and loss account to the extent of the deficit previously charged.

The gain or loss on disposal of an investment property, representing the difference between the net sales proceeds and the carrying amount of the relevant asset, is recognised in the profit and loss account. Any revaluation reserve balance attributable to the relevant asset being sold is transferred to retained profits upon disposal of the asset.

Long term investments

Long term investments are stated in the balance sheet at cost less any provision for impairment, as determined by the Directors.

– 27 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (Continued)

Impairment of assets

An assessment is made at each balance sheet date of whether there is any indication of impairment of any asset, or whether there is any indication that an impairment loss previously recognised for an asset in prior years may no longer exist or may have decreased. If any such indication exists, the asset’s recoverable amount is estimated. An asset’s recoverable amount is calculated as the higher of the asset’s value in use or its net selling price.

An impairment loss is recognised only if the carrying amount of an asset exceeds its recoverable amount. An impairment loss is charged to the profit and loss account in the period in which it arises, unless the asset is carried at a revalued amount, when the impairment loss is accounted for in accordance with the relevant accounting policy for that revalued asset.

A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the recoverable amount of an asset, however not to an amount higher than the carrying amount that would have been determined (net of any depreciation/amortisation), had no impairment loss been recognized for the asset in prior years.

A reversal of an impairment loss is credited to the profit and loss account in the period in which it arises, unless the asset is carried at a revalued amount, when the reversal of the impairment loss is accounted for in accordance with the relevant accounting policy for that revalued asset.

Inventories

Inventories are valued at the lower of cost, on the weighted average basis, and net realisable value after making due allowance for any obsolete or slow moving items. In the case of finished goods and work in progress, cost includes direct materials, direct labour, sub-contracting charges and, where applicable, production overheads. Net realisable value is determined by reference to estimated selling prices less all further costs to be incurred in selling and distribution.

Provisions

Provisions are recognised for liabilities of uncertain timing or amount when the Group or the Company has a legal or constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation, and a reliable estimate can be made. Where the time value of money is material, provisions are stated at the present value of the expenditures expected to settle the obligation.

Revenue

Revenue is recognised when it is probable that the economic benefits will flow to the Group and when the revenue can be measured reliably, on the following bases:

• (a) sale of goods, when the significant risks and rewards of ownership have been transferred to the buyer, provided that the Group maintains neither managerial involvement associated with ownership, nor effective control over the goods sold;

• (b) proceeds on disposals of investments, including interests in subsidiaries, associates, investments in listed and unlisted shares and disposals of investment properties and fixed assets, when all conditions for disposal have been met and the risks and rewards of ownership have been transferred to the buyer;

• (c) rental income, on the straight-line basis over the lease terms;

• (d) interest, on a time proportion basis taking into account the principal outstanding and the effective interest rate applicable; and

• (e) dividends, when the shareholders’ right to receive payment is established.

Segment reporting

For reporting purposes, segment assets include those operating assets that are employed by a segment and segment liabilities include those operating liabilities that result from the operating activities by a segment, excluding tax assets and liabilities. Capital expenditure comprises additions to properties, plant and equipment. Business segments have been used as the primary reporting format.

– 28 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (Continued)

Borrowing costs

Borrowing costs are interest and other costs incurred in connection with the borrowing of funds. All borrowing costs are charged to the profit and loss account in the year in which they are incurred.

Operating leases

Leases where substantially all the risks and rewards of ownership of assets remain with the leasing company are accounted for as operating leases. Rentals applicable to such operating leases are charged to the profit and loss account on a straight-line basis over the relevant lease term.

Retirement costs

The Group operates two approved defined contribution retirement benefits schemes for employees: a Mandatory Provident Fund (“MPF”) Exempted Occupational Retirement (“ORSO”) Scheme and a MPF Scheme under the Mandatory Provident Fund Schemes Ordinance within the Group. The ORSO Scheme requires the Group to contribute 5% to 10% of the employees’ monthly basic salaries and requires the employees to contribute 5% of their monthly basic salaries, whilst the MPF Scheme requires both the Group and the employees to contribute 5% of the employees’ monthly gross earnings with a ceiling of HK$1,000 per month. Under the ORSO Scheme, the unvested portion of the benefits in respect of employees on termination of employment can be utilised by the Group to reduce its future levels of contributions. The assets of both the ORSO Scheme and the MPF Scheme are held separately from those of the Group in independently administered funds. The contributions payable to these schemes are charged to the profit and loss account as incurred.

Foreign currency translation

Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange ruling at that date. All foreign currency transactions during the year are converted at the exchange rates existing on the respective transaction dates. All exchange differences are credited or charged, respectively, to the consolidated profit and loss account.

The exchange differences arising from the translation of the balance sheets of foreign subsidiaries using the closing rates of exchange prevailing on the balance sheet date are taken directly to reserve. Profit and loss accounts of foreign subsidiaries accounted for under the net investment method are translated into Hong Kong dollars using average rate for the year. The differences between the profit and loss accounts translated at average rate and at closing rate are taken directly to exchange fluctuation reserve.

Taxation

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

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years, and it further excludes items that are never taxable or deductible.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognized for all taxable temporary differences, and deferred tax assets are recognized to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.

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

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

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.

– 29 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (Continued)

Cash equivalents

For the purpose of the consolidated cash flow statement, cash equivalents represent short term highly liquid investments which are readily convertible into known amounts of cash and which were within three months of maturity when acquired, less advances from banks repayable within three months from the date of the advance. For the purpose of balance sheet classification cash equivalents represent assets similar in nature to cash and also include time deposits and guarantee funds pledged.

3. TURNOVER

Turnover represents the aggregate of the net invoiced value of goods sold and rental income, but excludes intragroup transactions.

Sale of electronic and related products Sale of smart card readers and related products Trading Rental income	Group 2003 2002 HK$’000 HK$’000 120,242 120,664 9,295 14,510 117,741 – 1,095 1,253 248,373 136,427	Group 2003 2002 HK$’000 HK$’000 120,242 120,664 9,295 14,510 117,741 – 1,095 1,253 248,373 136,427
		136,427

4. SEGMENT INFORMATION

An analysis of the Group’s revenue, results, assets, liabilities and capital expenditure for the year by business and geographical segments, as compared to the previous year, is as follows:

(a) Business segments

REVENUE SEGMENT PROFIT/(LOSS) Interest and other income Profit on disposal of subsidiaries Gain on deemed disposal of associates Gain on long term investments Profit on disposal of investment properties Write back of impairment of long term investments Amortisation on goodwill of subsidiaries Amortisation and impairment on goodwill of associates Impairment of investment properties Impairment of long term investments Unallocated administrative and other operating expenses Finance costs Share of results of associates	Electronic Components 2003 2002 HK$’000 HK$’000 120,242 120,664	Electronic Components 2003 2002 HK$’000 HK$’000 120,242 120,664	Smart Card Technology 2003 2002 HK$’000 HK$’000 9,295 14,510	Smart Card Technology 2003 2002 HK$’000 HK$’000 9,295 14,510	Property Investments 2003 2002 HK$’000 HK$’000 1,095 1,253	Property Investments 2003 2002 HK$’000 HK$’000 1,095 1,253	Trading 2003 2002 HK$’000 HK$’000 117,741 –	Trading 2003 2002 HK$’000 HK$’000 117,741 –	Consolidated 2003 2002 HK$’000 HK$’000 248,373 136,427	Consolidated 2003 2002 HK$’000 HK$’000 248,373 136,427
	7,421	6,868	38	(17,480) 552		753	2,687	–	10,698 (9,859) 5,262 2,585 2,157 4,195 3,404 – 20,200 – 2,477 – 5,000 – (695) – (10,984) (127,049) (4,000) (14,658) – (24,480) (16,899) (31,654) (2,299) (2,313) (1,374) (4,147)

– 30 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

4. SEGMENT INFORMATION (Continued)

• (a) Business segments (Continued)

Electronic Smart Card Property Components Technology Investments Trading 2003 2002 2003 2002 2003 2002 2003 2002 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 PROFIT/(LOSS) BEFORE TAXATION TAXATION PROFIT/(LOSS) BEFORE MINORITY INTERESTS ASSETS Segment assets 99,732 89,786 4,138 6,863 18,000 31,249 16,196 – Unallocated assets LIABILITIES Segment liabilities 54,435 49,744 3,099 7,968 263 168 1,669 – Unallocated liabilities CAPITAL EXPENDITURE Segment 7,914 6,472 54 2,813 – – 9 – Other DEPRECIATION AND AMORTISATION Segment 2,571 2,747 189 771 – 110 474 – Other IMPAIRMENT LOSS Segment – – – – 4,000 14,658 – – Other	Consolidated 2003 2002 HK$’000 HK$’000 12,947 (207,380) 2,341 1,039	Consolidated 2003 2002 HK$’000 HK$’000 12,947 (207,380) 2,341 1,039
	15,288	(206,341)
	138,066 127,898 132,454 103,352
	270,520 231,250
	59,466 3,971	57,880 10,250
	63,437	68,130
	7,977 476	9,285 1,178
	8,453	10,463
	3,234 2,575	3,628 10,925
	5,809	14,553
	4,000 8,945	14,658 140,897
	12,945	155,555

– 31 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

4. SEGMENT INFORMATION (Continued)

(b) Geographical area

2003 HK$’000 REVENUE 246,031 SEGMENT PROFIT/(LOSS) 10,558 Interest and other income Profit on disposal of subsidiaries Gain on deemed disposal of associates Gain on long term investments Profit on disposal of investment properties Write back of impairment of long term investments Amortisation on goodwill of subsidiaries Amortisation and impairment on goodwill of associates Impairment of investment properties Impairment of long term investments Unallocated administrative and other operating expenses Finance costs Share of results of associates PROFIT/(LOSS) BEFORE TAXATION TAXATION PROFIT/(LOSS) BEFORE MINORITY INTERESTS	2003 HK$’000 246,031	Asia 2002 HK$’000 130,148 (6,065 )	Europe 2003 2002 HK$’000 HK$’000 983 4,619 56 (3,910)	United States of America 2003 2002 HK$’000 HK$’000 1,359 1,660 84 116	Consolidated 2003 2002 HK$’000 HK$’000 248,373 136,427 10,698 (9,859) 5,262 2,585 2,157 4,195 3,404 – 20,200 – 2,477 – 5,000 – (695) – (10,984) (127,049 ) (4,000 ) (14,658) – (24,480) (16,899) (31,654) (2,299 ) (2,313) (1,374 ) (4,147) 12,947 (207,380 ) 2,341 1,039 15,288 (206,341 )
	10,558

The Group’s assets and liabilities are principally located in Asia. Accordingly, segment assets, segment liabilities and other information by geographical area are not separately shown.

– 32 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

5.

RELATED PARTY TRANSACTIONS

In addition to the related party transactions detailed elsewhere in the financial statements, the Group had the following material transactions with related parties during the year:

			Group
		2003		2002
	Notes	HK$’000		HK$’000
Consultancy fee paid by the Company
to Princeton Venture Partners Limited	(a)	750		2,300
Interest income charged to Princeton
Venture Partners Limited	(b)	302		599
Disposal of long term investments to
Princeton Venture Partners Limited	(a)	22,000		–
Consultancy fee paid to the Company
by Bizipoint Company Limited	(a)	90		–
Interest income charged to
Bizipoint Company Limited	(c)	18		–
Rental income charged to
Bizipoint Company Limited	(a)	200		–

Notes:

(a) The considerations were determined through negotiations between the respective parties.

(b) Interest income was calculated at 3% per annum.

• (c) Interest income was calculated at 7% per annum.

6. PROFIT/(LOSS) FROM OPERATING ACTIVITIES

This is arrived at after crediting:

Gross rental income Less: outgoings Net rental income Interest income Profit on disposal of subsidiaries Gain on deemed disposal of associates Gain on long term investments Profit on disposal of investment properties Write back of impairment of long term investments and after charging: Amortisation on goodwill of subsidiaries Amortisation and impairment on goodwill of associates Auditors’ remuneration: Hong Kong Overseas Bad and doubtful debts Cost of inventories sold Depreciation on properties, plant and equipment Impairment of investment properties Impairment of long term investments Loss on disposal of properties, plant and equipment Operating lease rentals for land and buildings Staff costs: Wages and salaries (including Directors’ emoluments) Retirement fund contributions	Group 2003 2002 HK$’000 HK$’000 1,095 1,253 (543) (500 552 753 816 1,125 2,157 4,195 3,404 – 20,200 – 2,477 – 5,000 – 695 – 10,984 127,049 1,230 1,372 – – 1,050 1,581 219,920 111,955 3,075 3,921 4,000 14,658 – 24,480 892 1,375 2,436 2,499 19,208 27,688 92 660	Group 2003 2002 HK$’000 HK$’000 1,095 1,253 (543) (500 552 753 816 1,125 2,157 4,195 3,404 – 20,200 – 2,477 – 5,000 – 695 – 10,984 127,049 1,230 1,372 – – 1,050 1,581 219,920 111,955 3,075 3,921 4,000 14,658 – 24,480 892 1,375 2,436 2,499 19,208 27,688 92 660
		753 1,125 4,195 – – – – – 127,049 1,372 – 1,581 111,955 3,921 14,658 24,480 1,375 2,499 27,688 660

– 33 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

7. FINANCE COSTS

Interest and similar charges on: Bank loans and overdrafts wholly repayable within five years Finance lease Other	Group 2003 2002 HK$’000 HK$’000 1,986 1,912 5 202 308 199 2,299 2,313	Group 2003 2002 HK$’000 HK$’000 1,986 1,912 5 202 308 199 2,299 2,313
		2,313

8. DIRECTORS’ EMOLUMENTS

(a) Directors’ emoluments

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

Fees Salaries and other benefits Contributions to retirement schemes	Group 2003 2002 HK$’000 HK$’000 200 200 7,470 9,110 46 112 7,716 9,422	Group 2003 2002 HK$’000 HK$’000 200 200 7,470 9,110 46 112 7,716 9,422
		9,422

Emoluments paid to Independent non-executive Directors during the year were HK$200,000 (2002: HK$200,000).

There were no arrangements under which a Director waived or agreed to waive any emolument during the year.

Emoluments of the Directors fell within the following bands:

HK$Nil to HK$1,000,000 HK$1,000,001 to HK$2,000,000 HK$2,000,001 to HK$2,500,000 HK$2,500,001 to HK$3,000,000 HK$3,500,001 to HK$4,000,000	Group 2003 2002 Number of Number of Directors Directors 8 5 – 2 1 – 1 1 – 1 10 9	Group 2003 2002 Number of Number of Directors Directors 8 5 – 2 1 – 1 1 – 1 10 9
		9

(b) Employees’ emoluments

Of the five individuals with the highest emoluments in the Group, five (2002: four) were Directors of the Company whose emoluments have been included in note 8(a) above.

– 34 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

9. TAXATION

Provision for Hong Kong profits tax has been made at the current rate of taxation of 17.5% on the estimated assessable profit for the year (2002: Nil). The tax credit for the year relates to the overprovision of tax in the prior year. Taxes on income earned outside Hong Kong have been calculated at the rates of taxation prevailing in the countries in which the Group operates, based on existing law, practice and interpretation thereof.

Current year provision: Hong Kong Outside Hong Kong Prior years under/(over) provision: Hong Kong Outside Hong Kong Share of tax in associates Deferred tax –note 23 Tax credit for the year – net	Group 2003 2002 HK$’000 HK$’000 208 – – 56 208 56 77 (30) (2,711) – (2,634) (30) (2,426) 26 – – 85 (1,065) (2,341) (1,039)	Group 2003 2002 HK$’000 HK$’000 208 – – 56 208 56 77 (30) (2,711) – (2,634) (30) (2,426) 26 – – 85 (1,065) (2,341) (1,039)
		56
		(30) –
		(30)
		26 – (1,065)
		(1,039)

Tax credit for the year can be reconciled to the profit/(loss) before taxation per profit and loss account as follows:

Profit/(loss) before taxation Tax at the domestic income tax rate of 17.5% (2002: 16%) Tax effect of different tax rates of subsidiaries operating in other jurisdictions Tax effect of expenses that are not deductible in determining taxable profit/(loss) Tax effect of tax depreciation not recognised Tax effect of income that are not taxable in determining taxable profit/(loss) Tax effect of unused tax losses not recognised Over provision in prior year Tax credit for the year	2003 HK$’000 12,947 2,267 (1,710) 7,154 104 (13,130) 5,608 (2,634) (2,341)	2002 HK$’000 (207,380)
		(33,181) (718) 32,282 (56) (5,476) 6,140 (30)
		(1,039)

10. NET PROFIT/(LOSS) ATTRIBUTABLE TO SHAREHOLDERS

The net profit attributable to shareholders dealt with in the financial statements of the Company is HK$11,235,000 (2002 loss: HK$191,725,000).

– 35 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

11. EARNINGS/(LOSS) PER SHARE

The calculation of basic earnings/(loss) per share is based on the net profit attributable to shareholders of HK$10,859,000 (2002 loss: HK$192,944,000) and the weighted average of 61,456,891 shares (2002: 50,404,084 shares) in issue during the year.

The diluted earnings per share for the year ended 31 December 2003 was HK$0.18. This is based on the net profit attributable to shareholders of HK$10,859,000 and the weighted average of 61,605,423 shares which is adjusted for the effect of share options issued during the year. That for the year ended 31 December 2002 has not been shown as there were no outstanding warrants and share options and it also has an anti-dilutive effect.

12. PROPERTIES, PLANT AND EQUIPMENT

Group

Cost 1 January 2003 Additions Disposals Acquisition of subsidiaries Disposal of subsidiaries 31 December 2003 Accumulated depreciation 1 January 2003 Charge for the year Disposals Acquisition of subsidiaries Disposal of subsidiaries 31 December 2003 Net book value 31 December 2003 31 December 2002	Leasehold improvements HK$’000 2,122 3,729 (1,872) – – 3,979 1,371 884 (1,472) – – 783 3,196 751	Plant and machinery HK$’000 12,268 3,759 (581) – – 15,446 9,285 1,364 (423) – – 10,226 5,220 2,983	Furniture and equipment HK$’000 7,898 855 (589) 117 (126) 8,155 6,485 635 (255) 13 (24) 6,854 1,301 1,413	Motor vehicles HK$’000 1,314 6 – – – 1,320 986 192 – – – 1,178 142 328	Total HK$’000 23,602 8,349 (3,042) 117 (126)
					28,900
					18,127 3,075 (2,150) 13 (24)
					19,041
					9,859
					5,475

– 36 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

13. INVESTMENT PROPERTIES

1 January, at valuation Acquisition of subsidiary Disposals Impairment 31 December, at valuation Analysed by lease term and geographical location: Medium term leasehold properties situated outside Hong Kong	Group 2003 2002 HK$’000 HK$’000 31,200 14,200 – 36,658 (9,200) (5,000) (4,000) (14,658) 18,000 31,200 18,000 31,200	Group 2003 2002 HK$’000 HK$’000 31,200 14,200 – 36,658 (9,200) (5,000) (4,000) (14,658) 18,000 31,200 18,000 31,200
		31,200
		31,200

The investment property was revalued by reference to appraisals made by Dudley Surveyors Limited, chartered surveyors, on an open market value basis based on its existing use on 31 December 2003.

Details of the investment property of the Group as at 31 December 2003 are as follows:

Location	Lease	Term Use
No. 15,	Medium term lease	Industrial
Lane 2, Bao An County,
Gong Yuan Road East,
Shenzhen, PRC

14. LONG TERM INVESTMENTS

Unlisted equity investments, at cost Loan receivable Listed investments, in Hong Kong Stock Exchange, at cost Less: provision for impairment Net carrying value Listed investments, at market value	Group 2003 2002 HK$’000 HK$’000 66,147 72,230 – 2,500 144 144 66,291 74,874 (9,579) (24,480) 56,712 50,394 65 115	Group 2003 2002 HK$’000 HK$’000 66,147 72,230 – 2,500 144 144 66,291 74,874 (9,579) (24,480) 56,712 50,394 65 115
		74,874 (24,480)
		50,394
		115

During the year, the Group completed the acquisition from the liquidators of a large group of companies operating in Hong Kong, Macau and China, a loan with a gross value of HK$23,700,000 (“The Loan”) advanced to a timber company which controls substantial timber concessions in South America (“Timberco”) for a total cash consideration of HK$3,500,000. The Loan was subsequently converted into the shares of Timberco equivalent to HK$23,700,000 upon its successful financial restructuring in September 2003.

In the opinion of the Directors, the underlying values of the long term investments were not less than their carrying values at the balance sheet date.

– 37 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

15. INTERESTS IN SUBSIDIARIES

Unlisted shares, at cost Due from subsidiaries Due to subsidiaries Less: provision	Group 2003 2002 HK$’000 HK$’000 1 1,374 404,875 1,011,540 (1) (5,892 404,875 1,007,022 (224,129) (864,636 180,746 142,386	Group 2003 2002 HK$’000 HK$’000 1 1,374 404,875 1,011,540 (1) (5,892 404,875 1,007,022 (224,129) (864,636 180,746 142,386
		1,007,022 (864,636
		142,386

HK$14,038,000 due from a subsidiary is interest bearing and repayable on demand. Except for the above, the amounts due from/to subsidiaries are unsecured, interest-free and they do not have any fixed terms for repayment.

Particulars of the principal subsidiaries are as follows:

		Total issued
		ordinary/
	Place of	registered	Equity
Name of	incorporation/	and paid-up	interest	owned	Principal
subsidiary	registration	capital	by the	Group	activities
			2003	2002
Directly held:
Barnet Consultancy	British Virgin	US$1	100%	100%	Provision of
Limited	Islands				consultancy
					services
Clever Able	British Virgin	US$1	100%	100%	Investment
Investments Limited	Islands				holding
Clever United	British Virgin	US$1	100%	100%	Investment
Holdings Limited	Islands				holding
Crown Tech	British Virgin	US$1	100%	100%	Investment
Holdings Limited	Islands				holding
E-opportunity Limited	British Virgin	US$1	100%	100%	Investment
	Islands				holding
Giant Assets Limited	British Virgin	US$1	100%	100%	Investment
	Islands				holding
O2New Technology	British Virgin	US$1	100%	100%	Investment
Limited	Islands				holding
Olympic Glory Limited	British Virgin	US$1	100%	100%	Investment
	Islands				holding
OmniSports Holdings	British Virgin	US$1	100%	100%	Investment
Limited	Islands				holding
Proven Sino Investments	British Virgin	US$1	100%	–	Investment
Limited	Islands				holding
Smart Union International	British Virgin	US$1	100%	100%	Investment
Limited	Islands				holding
Touchstone Trading	British Virgin	US$1	100%	–	Investment
Limited	Islands				holding

– 38 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

15. INTERESTS IN SUBSIDIARIES (Continued)

		Total issued
		ordinary/
	Place of	registered	Equity
Name of	incorporation/	and paid-up	interest	owned	Principal
subsidiary	registration	capital	by the	Group	activities
			2003	2002
Indirectly held:
Asia eMarket Limited	British Virgin	US$152	A-share	A-share	Investment
	Islands		96.2%	96.2%	holding
Prosperous Returns	Hong Kong	HK$2	100%	100%	Corporate
Limited					services
Super Intellect	Hong Kong	HK$2	100%	100%	Corporate
Limited					services
Vandyke Limited	British Virgin	US$1,000	100%	100%	Property
	Islands				holding
Sino Trade Enterprises	British Virgin	US$10	60.0%	–	Investment
Holdings Limited	Islands				holding
Sino Trade Enterprises	Hong Kong	HK$20,000	60.0%	–	General
Limited					trading
Omnitech Holdings	Bermuda/	AUD2,345,635	51.6%	50.2%	Investment
Limited	Australia				holding
Lik Hang Holdings	British Virgin	US$910,000	51.6%	50.2%	Manufacture
Limited	Islands				and sale of
					electronic
					components
VFJ Technology Holdings	British Virgin	US$2,594,724	35.6%	34.7%	Manufacture
Limited	Islands				and sale of
					contact and
					contactless
					smart card
					readers
Unicom Group Limited	British Virgin	US$100	63.0%	–	Investment
	Islands				holding
Emerald Capital Limited	British Virgin	US$30	63.0%	–	General
	Islands				trading

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

Except for Vandyke Limited and Lik Hang Holdings Limited which operate in the PRC, all other principal subsidiaries operate in Hong Kong.

In the opinion of the Directors, the underlying values of interests in subsidiaries were not less than their carrying values at the balance sheet date.

– 39 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

16. GOODWILL

Cost 1 January 2003 Additions 31 December 2003 Accumulated amortisation 1 January 2003 Amortisation 31 December 2003 Net book value 31 December 2003 31 December 2002	HK$’000 – 10,892
	10,892
	– 695
	695
	10,197
	–

17. INTERESTS IN ASSOCIATES

Share of net assets/(liabilities) Net book value of goodwill – see below Loans to associates Amount due from an associate Interest receivable on loans to associates	Group 2003 2002 HK$’000 HK$’000 5,265 (5,229) 10,375 23,691 15,640 18,462 30,800 13,000 295 – 1,665 1,596 48,400 33,058	Group 2003 2002 HK$’000 HK$’000 5,265 (5,229) 10,375 23,691 15,640 18,462 30,800 13,000 295 – 1,665 1,596 48,400 33,058
		18,462 13,000 – 1,596
		33,058

The loans to associates as at 31 December 2003 are unsecured, interest bearing (except for HK$364,000 is non interest bearing) and there are no fixed terms for repayment (except for HK$7,250,000 which are repayable in 2005).

– 40 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

17. INTERESTS IN ASSOCIATES (Continued)

The loan to an associate as at 31 December 2002 was unsecured, interest bearing and was repaid in 2003.

Movements in goodwill:

Cost 1 January 2003 Additions Disposals 31 December 2003 Accumulated amortisation 1 January 2003 Amortisation and impairment Reclassification from impairment of long term investments Disposals 31 December 2003 Net book value 31 December 2003 31 December 2002	HK$’000 223,691 725 (4,416
	220,000
	200,000 10,984 1,400 (2,759
	209,625
	10,375
	23,691

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

		Place of		Equity
	Class of	incorporation/	interest owned			Principal
Name of associate	shares held	operation	by	the Group		activities
			2003		2002
Bizipoint Group Limited	Ordinary	British Virgin	41.0%	41.0%		E-business
		Islands/				consulting
		Hong Kong				services
Bizipoint Company Limited	Ordinary	Hong Kong/	41.0%	41.0%		E-business
		Hong Kong				consulting
						services
Beijing Zhong Shang	Registered	PRC/PRC	36.9%	36.9%		E-business
Hui Xin Network	Capital					consulting
Technology Development						services
Company Limited
PVP Limited	Ordinary	British Virgin	37.2%	50.0%		Investment
		Islands/				holding and
		Hong Kong				consultancy
Princeton Venture Partners	Ordinary	British Virgin	37.2%	50.0%		Investment
Limited		Islands/				holding and
		Hong Kong				consultancy

– 41 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

17. INTERESTS IN ASSOCIATES (Continued)

The above table lists the principal associates of the Group which, in the opinion of the Directors, principally affected the results of the year, or formed a substantial portion of the net assets of the Group.

An impairment loss of HK$6,527,000 (2002: HK$116,417,000) was made at the balance sheet date against the cost of the goodwill relating to Bizipoint Group Limited to reflect the impairment in the fair values of the associate’s assets at 31 December 2003.

Information relating to Bizipoint Group Limited and its subsidiaries (“Bizipoint Group”) and PVP Limited and its subsidiaries (“PVP Group”) as required by SSAP 10 (revised) “Accounting for investments in associates” is as follows:

Bizipoint Group

Turnover Profit/(loss) for the year Long-term assets Current assets Current liabilities Deferred income PVP Group Turnover Profit/(loss) for the year Long-term assets Current assets Current liabilities Long-term liabilities	2003 HK$’000 4,441 493 178 575 (2,034) (5,333) 2003 HK$’000 9,700 1,124 48,826 6,828 (1,911) (30,897)	2002 HK$’000 4,896 (1,948 452 2,302 (1,026 (9,333
		2002 HK$’000 4,409 (4,446 5,186 11,515 (6,932 (13,000

18.

INVENTORIES

Raw materials Finished goods	Group 2003 2002 HK$’000 HK$’000 26,008 28,217 4,637 2,484 30,645 30,701	Group 2003 2002 HK$’000 HK$’000 26,008 28,217 4,637 2,484 30,645 30,701
		30,701

The amount of inventories stated at net realisable value is HK$93,000 (2002: HK$1,963,000).

19. TRADE AND OTHER RECEIVABLES

The aging analysis of trade and other receivables (net of provision for doubtful debts) is as follows:

Current One to three months More than three months	Group 2003 2002 HK$’000 HK$’000 38,804 29,535 7,859 13,979 17,145 518 63,808 44,032	Group 2003 2002 HK$’000 HK$’000 38,804 29,535 7,859 13,979 17,145 518 63,808 44,032
		44,032

The Group allows an average credit period of 30 to 45 days to its trade customers.

– 42 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

20. CASH AND BANK BALANCES

Cash and bank balances represent cash on hand and at banks and include time deposits and guarantee funds of HK$16,278,000 (2002: HK$15,847,000) pledged as security for general banking facilities provided to certain subsidiaries.

21. TRADE AND OTHER PAYABLES

The aging analysis of trade and other payables is as follows:

Current One to three months More than three months	Group 2003 2002 HK$’000 HK$’000 14,455 11,964 4,597 10,817 4,709 7,137 23,761 29,918	Group 2003 2002 HK$’000 HK$’000 14,455 11,964 4,597 10,817 4,709 7,137 23,761 29,918
		29,918

22. INTEREST BEARING BANK BORROWINGS

Due within one year: Bank overdrafts-secured Bank import loans-secured Bank loan-unsecured	Group 2003 2002 HK$’000 HK$’000 6,095 4,193 33,295 28,598 – 357 39,390 33,148	Group 2003 2002 HK$’000 HK$’000 6,095 4,193 33,295 28,598 – 357 39,390 33,148
		33,148

The above secured bank borrowings are secured by charges over time deposits and guarantee funds of approximately HK$16,278,000 (2002: HK$15,847,000), and against guarantees issued by certain subsidiaries and a Director of these subsidiaries.

23. DEFERRED TAX

1 January Release to profit and loss account –note 9 Disposals of subsidiaries 31 December	Group 2003 2002 HK$’000 HK$’000 – 1,302 85 (1,065) – (237) 85 –	Group 2003 2002 HK$’000 HK$’000 – 1,302 85 (1,065) – (237) 85 –
		–

The principal components of the Group’s deferred tax liabilities provided for/(deferred tax assets recognised), and the amounts not provided/(not recognised) are as follows:

Accelerated capital allowances Tax losses	Group Provided Not provided 2003 2002 2003 2002 HK$’000 HK$’000 HK$’000 HK$’000 85 – 11 113 – – (37,057) (100,501) 85 – (37,046) (100,388)	Group Provided Not provided 2003 2002 2003 2002 HK$’000 HK$’000 HK$’000 HK$’000 85 – 11 113 – – (37,057) (100,501) 85 – (37,046) (100,388)
		(100,388)

No deferred tax asset has been recognised in respect of tax losses due to the unpredictability of future profit streams.

– 43 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

24. SHARE CAPITAL

Share

Number of ordinary shares of HK$0.01 Authorized: 1 January 2003 and 31 December 2003 15,000,000,000 Issued and fully paid: 1 January 2003 53,289,768 Issue of new shares 21,000,000 31 December 2003 74,289,768	Amount HK$’000 150,000
	533 210
	743

During the year, the following changes in the share capital of the Company were recorded :

(a) On 1 April 2003, the Company raised HK$13 million by issuing 10,000,000 new shares at HK$1.3 per share; and

(b) On 11 December 2003, the Company raised HK$15 million by issuing 11,000,000 new shares at HK$1.38 per share.

Share options

At the Special General Meeting held on 22 March 2002, a new share option scheme in compliance with the new listing requirements was approved for adoption by the Company. Please refer to the Report of the Directors for details.

At the balance sheet date, there were 2,800,000 share options granted and 2,720,000 share options outstanding under the share option scheme adopted by the Company on 22 March 2002.

25. RESERVES

Group

1 January 2002 Issue of new shares Share issue expenses Transfer on re-organisation Capital reduction Share repurchase Release on disposal of subsidiaries Currency translation differences Loss for the year 31 December 2002 and 1 January 2003 Issue of new shares Share issue expenses Currency translation differences Profit for the year 31 December 2003	Share premium account HK$’000 745,032 86,050 (2,764) (781,232) – (769) – – – 46,317 27,970 (901) – – 73,386	Contributed surplus HK$’000 460,074 – – (430,000) 53,200 – – – – 83,274 – – – – 83,274	Exchange fluctuation reserve HK$’000 12,173 – – – – – (537) (366) – 11,270 – – (998) – 10,272	Retained profits/ (accumulated losses) HK$’000 (1,027,632) – – 1,211,232 – – – – (192,944) (9,344) – – – 10,859 1,515	Total HK$’000 189,647 86,050 (2,764) – 53,200 (769) (537) (366) (192,944)
					131,517 27,970 (901) (998) 10,859
					168,447

Included in the Group’s retained profit at 31 December 2003 were accumulated losses of HK$10,504,000 (2002: HK$9,130,000) relating to associates.

– 44 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

25. RESERVES (Continued)

Company

1 January 2002 Issue of new shares Share issue expenses Transfer on re-organisation Capital reduction Share repurchase Loss for the year 31 December 2002 and 1 January 2003 Issue of new shares Share issue expenses Profit for the year 31 December 2003	Share premium account HK$’000 745,032 86,050 (2,764) (781,232) – (769) – 46,317 27,970 (901) – 73,386	Contributed surplus HK$’000 502,176 – – (430,000) 53,200 – – 125,376 – – – 125,376	Retained profits/ (accumulated losses) HK$’000 (1,050,553) – – 1,211,232 – – (191,725) (31,046) – – 11,235 (19,811)	Total HK$’000 196,655 86,050 (2,764) – 53,200 (769) (191,725)
				140,647 27,970 (901) 11,235
				178,951

The Company’s contributed surplus, which arose from the Group reorganization on 2 July 1991, represents the difference between the nominal value of the Company’s shares issued under the reorganization scheme, in exchange for the shares in the subsidiaries and the fair value of the consolidated net asset value of the acquired subsidiaries, reduced by distributions to shareholders.

Under the Companies Act of Bermuda and the Bye-Laws of the Company, the contributed surplus is distributable to shareholders. The Companies Act of Bermuda also stipulates that a company shall not declare or pay a dividend, or make a distribution out of contributed surplus, if there are reasonable grounds for believing that (a) the company is, or would after the payment be, unable to pay its liabilities as they become due; or (b) the realisable value of the company’s assets would thereby be less than the aggregate of its liabilities and its issued capital and share premium account.

– 45 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

26. NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT

• (a) Reconciliation of profit/(loss) before taxation to net cash used in operations

Profit/(loss) before taxation Adjustments for: Profit on disposal of subsidiaries Exchange gain Interest income Interest expenses Depreciation on properties, plant and equipment Bad and doubtful debts Amortisation and impairment on goodwill of associates Amortisation on goodwill of subsidiaries Impairment of investment properties Impairment of long term investments Loss on disposal of properties, plant and equipment Write back of impairment of long term investments Gain on long term investments Profit on disposal of investment properties Gain on deemed disposal of associates Share of results of associates Operating profit/(loss) before working capital changes Decrease in inventories Increase in trade and other receivables Decrease/(increase) in prepayments and deposits Decrease in trade and other payables (Decrease)/increase in deposits received Net cash used in operations (b) Disposal of subsidiaries Net assets disposed of: Properties, plant and equipment Investment properties Trade and other receivables Prepayments and deposits Cash and bank balances Trade and other payables Deposits received Interest bearing bank borrowings Taxation payable Deferred tax Minority interests Represented by: Cash received Investment properties Trade and other receivables Minority interests Profit on disposal Exchange fluctuation reserve	Group 2003 2002 HK$’000 HK$’000 12,947 (207,380) (2,157) (4,195) (718) – (816) (1,125) 2,299 2,313 3,075 3,921 1,050 1,581 10,984 127,049 695 – 4,000 14,658 – 24,480 892 1,375 (5,000) – (20,200) – (2,477) – (3,404) – 1,374 4,147 2,544 (33,176) 56 1,109 (31,254) (6,170) 3,164 (2,520) (2,058) (5,180) (22) 187 (27,570) (45,750) Group 2003 2002 HK$’000 HK$’000 102 7,523 – 5,000 25,567 598,295 – 71 15,861 111 (20,923) (603,006) – (543) (16,038) – (2,068) (399) – (237) (681) (309) 1,820 6,506 2,851 – – 36,658 1,126 – – (26,494) (2,157) (4,195) – 537 1,820 6,506	Group 2003 2002 HK$’000 HK$’000 12,947 (207,380) (2,157) (4,195) (718) – (816) (1,125) 2,299 2,313 3,075 3,921 1,050 1,581 10,984 127,049 695 – 4,000 14,658 – 24,480 892 1,375 (5,000) – (20,200) – (2,477) – (3,404) – 1,374 4,147 2,544 (33,176) 56 1,109 (31,254) (6,170) 3,164 (2,520) (2,058) (5,180) (22) 187 (27,570) (45,750) Group 2003 2002 HK$’000 HK$’000 102 7,523 – 5,000 25,567 598,295 – 71 15,861 111 (20,923) (603,006) – (543) (16,038) – (2,068) (399) – (237) (681) (309) 1,820 6,506 2,851 – – 36,658 1,126 – – (26,494) (2,157) (4,195) – 537 1,820 6,506
		6,506
		– 36,658 – (26,494) (4,195) 537
		6,506

The subsidiaries disposed of during the year utilised HK$16,521,000 from the Group’s net cash used in operations.

– 46 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

26. NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT (Continued)

(b) Disposal of subsidiaries (Continued)

Analysis of net outflow of cash and cash equivalents in respect of the disposed subsidiaries:

Cash received Cash and bank balances of disposed subsidiaries	2003 HK$’000 2,851 (15,861) (13,010)	2002 HK$’000 – (111)
		(111)

(c) Acquisition of subsidiaries

Net assets acquired: Properties, plant and equipment Inventories Trade and other receivables Prepayments and deposits Cash and bank balances Pledged time deposits Trade and other payables Taxation payable Interest bearing bank borrowings Minority interests Less: Minority interests Transferred from associates Goodwill on consolidation Represented by: Cash paid Share issued	Group 2003 2002 HK$’000 HK$’000 104 6,905 – 31,810 13,700 37,309 180 1,675 175 (2,314) 10,000 13,583 (16,824) (24,301) – (4,995) (4,623) (25,260) (583) (1,416) 2,129 32,996 (1,009) (16,416) – (6,864) 1,120 9,716 10,892 2,724 12,012 12,440 12,012 440 – 12,000 12,012 12,440	Group 2003 2002 HK$’000 HK$’000 104 6,905 – 31,810 13,700 37,309 180 1,675 175 (2,314) 10,000 13,583 (16,824) (24,301) – (4,995) (4,623) (25,260) (583) (1,416) 2,129 32,996 (1,009) (16,416) – (6,864) 1,120 9,716 10,892 2,724 12,012 12,440 12,012 440 – 12,000 12,012 12,440
		32,996 (16,416) (6,864)
		9,716 2,724
		12,440
		440 12,000
		12,440

The subsidiaries acquired during the year utilised HK$12,000,000 from the Group’s net cash used in operations between the date of acquisition and the balance sheet date.

Analysis of net outflow of cash and cash equivalents in respect of the acquisition of subsidiaries:

Cash paid Cash and bank balances of acquired subsidiaries Net outflow of cash and cash equivalents in respect of the acquisition of subsidiaries	2003 HK$’000 (12,012) 175 (11,837)	2002 HK$’000 (440) (2,314)
		(2,754)

– 47 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

26. NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT (Continued)

(d) Major non-cash transaction

In May 2003, the Group entered into an agreement with an associate to convert part of the loan amounted to HK$6,750,000 into equity of the associate.

27. CONTINGENT LIABILITIES

Group 2003 2002 HK$’000 HK$’000 Corporate guarantee given to banks by subsidiaries 73,043 44,000 28. COMMITMENTS Capital commitments – contracted for – authorised but not contracted for Total minimum commitments under non-cancellable operating leases for land and buildings due: As lessee Within one year In the second to fifth years, inclusive After five years As lessor Within one year In the second to fifth years, inclusive After five years	Company 2003 2002 HK$’000 HK$’000 – – Group 2003 2002 HK$’000 HK$’000 – 1,012 – – – 1,012 2,980 4,732 1,476 4,473 – – 4,456 9,205 1,577 – 6,309 – 394 – 8,280 –	Company 2003 2002 HK$’000 HK$’000 – – Group 2003 2002 HK$’000 HK$’000 – 1,012 – – – 1,012 2,980 4,732 1,476 4,473 – – 4,456 9,205 1,577 – 6,309 – 394 – 8,280 –
		1,012
		4,732 4,473 –
		9,205
		– – –
		–

The Company has no capital or operating lease commitments.

29. SUBSEQUENT EVENTS

Subsequent to the balance sheet date on 25 March 2004, the Group entered into an agreement with an independent third party to dispose of its strategic investment in a manufacturing business in China for a consideration of HK$15,000,000.

30. APPROVAL OF THE FINANCIAL STATEMENTS

The financial statements were approved and authorized for issue by the Board of Directors on 26 March 2004.

– 48 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

B. INDEBTEDNESS

Borrowings

As at the close of business on 31 July 2004, being the latest practicable date for the purpose of this indebtedness statement, the Group had outstanding secured bank borrowings of approximately HK$44.21 million, which comprise bank overdrafts of approximately HK$6.53 million and import loans of approximately HK$37.68 million.

Debt securities

As at the close of business on 31 July 2004, the Group had no outstanding debt securities issued or authorised or otherwise created but unissued.

Mortgages, charges and security

As at the close of business on 31 July 2004, the Group’s time deposits and guarantee funds totalling approximately HK$16.28 million were pledged to banks to secure the bank borrowings granted by banks to the Group.

Other commitments

As at the close of business on 31 July 2004, the Group had outstanding minimum commitments under non-cancellable operating leases in respect of land and buildings which fall due within one year and in the second to fifth years inclusive of approximately HK$3.44 million and HK$1.19 million respectively.

Contingent liabilities

As at the close of business on 31 July 2004, the Group had contingent liabilities in respect of a corporate guarantee of up to HK$35.54 million given to banks by a subsidiary of the Company.

Disclaimer

Save as disclosed above or otherwise disclosed herein, and apart from intra-group liabilities, the Group did not, as at the close of business on 31 July 2004, have any outstanding loan capital issued or agreed to be issued, shares or debentures, mortgages loans, or other similar indebtedness or any finance lease commitments, hire purchase commitments, liabilities under acceptance, acceptance credits, guarantees or other material contingent liabilities.

The Directors have confirmed that there had not been any material change in the Group’s Indebtedness subsequent to 31 July 2004.

C. WORKING CAPITAL

The Directors are of the opinion that in the absence of unforeseen circumstances, following the investment in the Windsor Group and after taking into account the financial resources available to the Group including internally generated cash inflow and other credit facilities available, the Group has sufficient working capital for its present requirements for the next twelve months from the date of this circular.

– 49 –

APPENDIX II FINANCIAL INFORMATION ON THE WINDSOR TREASURE GROUP

The following is the text of the Accountants’ report on the Windsor Treasure Group, prepared for the purpose of inclusion in this circular by Moore Stephens, Certified Public Accountants, Hong Kong.

==> picture [132 x 110] intentionally omitted <==

17 September 2004

The Directors Omnicorp Limited Windsor Treasure Group Holdings Limited

Dear Sirs,

We set out below our report on the combined financial information (“Financial Information”) relating to Windsor Treasure Group Holdings Limited (the “Company”) and those companies which will become subsidiaries of the Company upon completion of the Reorganization (collectively referred to as the “Group”) for the three years ended 31 December 2001, 2002 and 2003 and the six months ended 30 June 2003 and 2004 (the “Relevant Periods”) for inclusion in the circular of Omnicorp Limited (“Omnicorp”) dated 17 September 2004 (the “Circular”).

The Company was incorporated as a limited liability company under the International Business Companies Ordinance in the British Virgin Islands on 20 April 2004. It has not carried on any business since its incorporation. The Group is undergoing a Reorganization for the purpose of enabling the Company to become the holding company of Group. The Group is engaged in the design, manufacture, sale and marketing of medium to high-end home furniture, mainly wood furniture.

The companies which were in existence as of 30 June 2004 and will become subsidiaries of the Company upon Reorganization are as follows (see also Section VII “Subsequent Events”):–

		Issued	Equity interest
		and	attributable
	Place and date	fully	to the Company
	of incorporation/	paid-up	directly or	Principal
Name of company	registration	capital	indirectly	activities
Hing Lee (China) Company	Hong Kong	HK$18,010,000	100%	Investment
Limited (“Hing Lee China”)	23 December 1992			holding
Sharp Motion Worldwide	British Virgin Islands	US$1	100%*	Trademark
Limited	2 January 2003			holding
Hing Lee Furniture Group	Hong Kong	HK$3	100%	Dormant
Limited	9 January 2004

– 50 –

FINANCIAL INFORMATION ON THE WINDSOR TREASURE GROUP

APPENDIX II

		Issued	Equity interest
		and	attributable to
	Place and date	fully	the Company
	of incorporation/	paid-up	directly or	Principal
Name of company	registration	capital	indirectly	activities
深圳興利家具有限公司	PRC	Registered	100%	Design,
(“SZXL”)	16 December 2002	capital		manufacture,
		RMB8,000,000		sale and
				marketing
				of medium to
				high-end
				home
				furniture
東莞富豪家具有限公司	PRC	Registered	78%*	Manufacture
(“DGRF”)	21 September 1993	capital		and sale of
		HK$8,080,000		bed
				mattresses
深圳大豪興利家具實業	The People’s	Registered	65%*	Design,
有限公司(“SZDHXL”)	Republic of China	capital		manufacture,
	(“PRC”)	RMB10,000,000		sale and
	18 December 1995			marketing
				of medium to
				high-end
				home
				furniture

• indirectly held through Hing Lee China

The financial statements of Hing Lee China were audited by Edward Lau & Co. for the years ended 31 December 2001, 2002 and 2003.

The financial statements of SZDHXL and SZXL were audited by 深圳 市興粵合伙會計師事務所 for the years ended 31 December 2001, 2002 and 2003, which firm is registered in the PRC.

The financial statements of DGRF were audited by 東莞市敘信會計事務所 for the years ended 31 December 2001 and 2002, and by 東莞市忠証會計師事務所 for the year ended 31 December 2003, both of which firms are registered in the PRC.

No audited financial statements have been prepared for the other companies which will become subsidiaries of the Company upon Reorganization since their respective dates of incorporation.

– 51 –

FINANCIAL INFORMATION ON THE WINDSOR TREASURE GROUP

APPENDIX II

For the purpose of this report, we have, however, undertaken an independent audit of the respective financial statements of the companies in the Group for the Relevant Periods in accordance with Statements of Auditing Standards issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”).

The Financial Information of the Group for the Relevant Periods set out in this report has been prepared from the audited financial statements and the management accounts (the “Underlying Financial Statements”) of the Group, on the basis set out in note 1 of Section VI below. We have examined the Underlying Financial Statements for the Relevant Periods in accordance with the Auditing Guideline “Prospectuses and the Reporting Accountant” promulgated by the HKICPA.

The Underlying Financial Statements are the responsibility of the directors of the respective companies now comprising the Group. It is also the responsibility of the directors of the respective companies comprising the Group to compile the Financial Information set out in this report from the Underlying Financial Statements. The directors of Omnicorp are responsible for the contents of the Circular in which this report is included. It is our responsibility to form an independent opinion on the Financial Information.

In our opinion, on the basis of presentation set out in note 1 of Section VI below, the Financial Information gives, for the purpose of this report, a true and fair view of the combined balance sheet of the Group and the state of affairs of the Company as at 31 December 2001, 2002, 2003 and 30 June 2003 and 2004, and of the combined results and cash flows of the Group for the Relevant Periods.

– 52 –

FINANCIAL INFORMATION ON THE WINDSOR TREASURE GROUP

APPENDIX II

FINANCIAL INFORMATION

I. Combined profit and loss accounts

Note Turnover 4 Cost of sales Gross profit Other revenue 4 Distribution costs Administrative expenses Profit/(loss) from operating activities 5 Finance costs 9 Profit/(loss) before taxation Taxation 10 Profit/(loss) after taxation Minority interests Profit/(loss) from ordinary activities attributable to shareholders 11 Earnings per share – basic 13 – diluted 13	Six months ended 30.6.2004 30.6.2003 HK$’000 HK$’000 68,327 38,902 (57,664) (35,424) 10,663 3,478 79 101 (3,649) (2,642) (3,820) (3,498) 3,273 (2,561) (65) – 3,208 (2,561) (33) (29) 3,175 (2,590) (285) 722 2,890 (1,868) N/A N/A N/A N/A	31.12.2003 HK$’000 106,630 (90,942) 15,688 251 (6,697) (6,315) 2,927 (31) 2,896 (58) 2,838 (319) 2,519 N/A N/A	Year ended 31.12.2002 HK$’000 55,529 (50,212) 5,317 619 (7,291) (4,204) (5,559) (293) (5,852) (53) (5,905) 418 (5,487) N/A N/A	31.12.2001 HK$’000 55,820 (49,209) 6,611 1,260 (3,329) (3,541) 1,001 (444) 557 (85) 472 (188) 284 N/A N/A

– 53 –

FINANCIAL INFORMATION ON THE WINDSOR TREASURE GROUP

APPENDIX II

II. Combined balance sheets

Note Non-current assets Fixed assets 14 Current assets Due from an affiliated company 15 Inventories 16 Trade and other receivables 17 Prepayments and deposits 18 VAT refundable Cash and bank balances 19 Current liabilities Due to directors and shareholders 20 Trade and other payables 21 Receipts in advance Current tax payable Short term loans 22 Net current assets Total assets less current liabilities Non-current liabilities Long term loans 23 Shareholders’ loans 24 Minority interests Net assets/(liabilities) Paid up capital 25 Reserves 26 Shareholders’ funds/(deficiency)	30.6.2004 HK$’000 20,307 432 52,670 26,911 2,843 1,424 3,658 87,938 10,976 45,159 14,266 91 9,245 79,737 8,201 28,508 – – – 5,107 23,401 25,635 (2,234) 23,401	30.6.2003 HK$’000 19,883 – 44,781 13,756 1,788 3,274 4,516 68,115 13,242 44,627 5,141 – 4,302 67,312 803 20,686 – 19,482 19,482 3,836 (2,632) 6,879 (9,511) (2,632)	31.12.2003 HK$’000 21,079 330 49,167 18,907 2,631 3,012 7,474 81,521 10,714 49,359 11,498 58 5,661 77,290 4,231 25,310 – – – 4,877 20,433 25,557 (5,124) 20,433	31.12.2002 HK$’000 11,939 834 47,615 7,152 4,896 4,073 6,670 71,240 9,107 43,081 6,163 96 5,472 63,919 7,321 19,260 – 19,482 19,482 4,620 (4,842) 2,801 (7,643) (4,842)	31.12.2001 HK$’000 21,408 – 49,047 5,689 1,277 2,669 5,206 63,888 6,602 41,443 1,697 274 5,549 55,565 8,323 29,731 5,334 19,646 24,980 6,901 (2,150) 10 (2,160) (2,150)

– 54 –

FINANCIAL INFORMATION ON THE WINDSOR TREASURE GROUP

APPENDIX II

III. Combined statements of changes in equity

1 January 2001 Profit for the year Transfers 31 December 2001 Inclusion of SZXL Acquisition of additional interests in DGRF Loss for the year 31 December 2002 Increase in paid up capital of SZXL Capitalisation of shareholders’ loans Profit for the year Transfers 31 December 2003 Profit for the period Issue of new shares 30 June 2004 1 January 2003 Increase in paid up capital of SZXL Loss for the period 30 June 2003	Share capital HK$’000 10 – – 10 2,791 – – 2,801 4,756 18,000 – – 25,557 – 78 25,635 2,801 4,078 – 6,879	Exchange reserve HK$’000 (21) – – (21) – (45) – (66) – – – – (66) – – (66) (66) – – (66)	Statutory reserve fund HK$’000 55 – 19 74 – 24 – 98 – – – 11 109 – – 109 98 – – 98	Enterprise expansion Accumulated fund losses HK$’000 HK$’000 42 (2,520) – 284 19 (38) 61 (2,274) – – 25 – – (5,487) 86 (7,761) – – – – – 2,519 11 (22) 97 (5,264) – 2,890 – – 97 (2,374) 86 (7,761) – – – (1,868) 86 (9,629)	Total HK$’000 (2,434) 284 –
					(2,150) 2,791 4 (5,487)
					(4,842) 4,756 18,000 2,519 –
					20,433 2,890 78
					23,401
					(4,842) 4,078 (1,868)
					(2,632)

– 55 –

FINANCIAL INFORMATION ON THE WINDSOR TREASURE GROUP

APPENDIX II

IV. Combined cash flow statements

Cash flows from operating activities Profit/(loss) before taxation Adjustments for: Depreciation of fixed assets Loss/(gain) on disposal of fixed assets Operating profit before working capital changes (Increase)/decrease in amount due from an affiliated company (Increase)/decrease in inventories (Increase)/decrease in trade and other receivables, prepayments and deposits Increase in amounts due to directors and shareholders (Decrease)/increase in trade and other payables and receipts in advance Cash (used in)/generated from operations China Enterprise Income Tax paid Net cash (used in)/generated from operating activities Cash flows from investing activities Payments to acquire fixed assets Receipt from disposal of fixed assets Net cash (used in)/generated from investing activities Cash flows from financing activities Decrease in minority interests Issue of new shares Inclusion of SZXL Acquisition of additional interests in DGRF Increase in paid up capital of SZXL New bank loans Shareholders’ loans/(repayment) New other loans Repayment of bank loans Repayment of long term loans Repayment of short term loans Net cash generated from/(used in) financing activities (Decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of year/period Cash and cash equivalents at end of year/period Analysis of the balances of cash and cash equivalents Cash and bank balances	Six months ended 30.6.2004 30.6.2003 HK$’000 HK$’000 3,208 (2,561) 1,357 1,330 – – 4,565 (1,231) (102) 834 (3,503) 2,834 (6,628) (2,697) 262 4,135 (1,432) 524 (6,838) 4,399 – (125) (6,838) 4,274 (585) (9,300) – 26 (585) (9,274) (55) (62) 78 – – – – – – 4,078 4,716 – – – – – (1,132) (1,170) – – – – 3,607 2,846 (3,816) (2,154) 7,474 6,670 3,658 4,516 3,658 4,516	Year ended 31.12.2003 31.12.2002 HK$’000 HK$’000 2,896 (5,852) 2,692 2,055 65 4,830 5,653 1,033 504 (834) (1,552) 1,432 (8,429) (6,486) 125 2,505 11,613 6,104 7,914 3,754 (96) (231) 7,818 3,523 (12,297) (1,030) 400 3,614 (11,897) 2,584 (62) – – – – 2,791 – (1,859) 4,756 – 1,887 – – (164) – – (1,698) (661) – (1,560) – (3,190) 4,883 (4,643) 804 1,464 6,670 5,206 7,474 6,670 7,474 6,670	31.12.2001 HK$’000 557 1,985 (60)
			2,482 – (9,065) 5,822 659 (2,587)
			(2,689) (3)
			(2,692) (2,055) 283
			(1,772) (75) – – – – – 342 5,188 – – (753)
			4,702
			238 4,968
			5,206
			5,206

– 56 –

FINANCIAL INFORMATION ON THE WINDSOR TREASURE GROUP

APPENDIX II

V. Company balance sheets

Note Current asset Cash balance Paid up capital 25	30.6.2004 HK$’000 78 78	30.6.2003 31.12.2003 31.12.2002 31.12.2001 HK$’000 HK$’000 HK$’000 HK$’000 – – – – – – – –	30.6.2003 31.12.2003 31.12.2002 31.12.2001 HK$’000 HK$’000 HK$’000 HK$’000 – – – – – – – –
			–

VI. Notes to the Financial Information

1. Basis of presentation of combined financial information

The combined profit and loss accounts and the combined cash flow statements of the Group for the Relevant Periods have been prepared as if the proposed group structure had been in existence throughout the Relevant Periods or in the case of certain companies in the Group since their dates of establishment to 30 June 2004 where this is a shorter period. The combined balance sheets of the Group as at 31 December 2001, 2002, 2003, 30 June 2003 and 2004 have been prepared to present the assets and liabilities of the Group as if the group structure had been in existence as at those dates.

All significant intra-group transactions, cash flows and balances have been eliminated on combination.

The combined financial information has been prepared in accordance with all applicable Hong Kong Financial Reporting Standards (which include all applicable Statements of Standard Accounting Practice (“SSAPs”) and Interpretations) issued by the Hong Kong Institute of Certified Public Accountants and accounting principles generally accepted in Hong Kong.

2. Significant accounting policies

Fixed assets and depreciation

Fixed assets are stated at cost, less provisions for depreciation and any impairment losses. The cost of an asset comprises its purchase price and any directly attributable cost of bringing the asset to its working condition and location for its intended use. Expenditure incurred after the fixed asset has been put into operation, such as repairs and maintenance and overhaul costs, is normally charged to the profit and loss account in the year in which it is incurred. In situations where it can be clearly demonstrated that the expenditure has resulted in an increase in the future economic benefits expected to be obtained from the use of the fixed asset, the expenditure is capitalised as an additional cost of the fixed asset. When an asset is sold, its cost and accumulated depreciation are removed from the financial statements and any gain or loss resulting from the disposal, being the difference between the net disposal proceeds and the carrying amount of the asset, is included in the profit and loss account.

Depreciation is calculated on the straight-line basis to write off the cost of each asset, less its estimated residual value, over its estimated useful life. The effective annual rates used for fixed assets for this purpose are as follows:–

Land 2.5% Buildings 2.5%-5% Leasehold improvements over the lease terms Plant and machinery 9% Motor vehicles 18 – 20% Office equipment 18 – 20%

– 57 –

FINANCIAL INFORMATION ON THE WINDSOR TREASURE GROUP

APPENDIX II

2. Significant accounting policies (continued)

Impairment of assets

At each balance sheet date, the Group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the greater of net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. Impairment losses are recognised as an expense immediately, unless the relevant asset is land or buildings other than investment property carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised as income immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined on the weighted average basis and, in the case of work in progress and finished goods, comprises direct materials, subcontracting charges and an appropriate proportion of overheads. Net realisable value is based on estimated selling prices less further costs expected to be incurred to completion and disposal.

Accounts receivable

Provision is made against accounts receivable to the extent they are considered to be doubtful. Accounts receivable in the balance sheet are stated net of such provision.

Foreign currency translation

Monetary assets and liabilities denominated in foreign currencies are translated into Hong Kong dollars at the approximate rates of exchange ruling at the balance sheet date. All foreign currency transactions during the year are converted at the exchange rates existing on the respective transaction dates.

Foreign exchange gains or losses are credited or charged, respectively, to the profit and loss account.

Taxation

Taxation represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years, and it further excludes items that are never taxable or deductible.

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

– 58 –

FINANCIAL INFORMATION ON THE WINDSOR TREASURE GROUP

APPENDIX II

2. Significant accounting policies (continued)

Taxation (continued)

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

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

Revenue recognition

Revenue is recognised when it is probable that the economic benefits will flow to the Group and when the revenue can be measured reliably, on the following bases:–

• i) on the sale of goods, when the significant risks and rewards of ownership have been transferred to the buyer, provided that the Group maintains neither managerial involvement to the degree usually associated with ownership, nor effective control over the goods sold;

• ii) rental income, on a time proportion basis over the lease terms;

• iii) royalty income, on the accrual basis; and

• iv) interest income, on a time proportion basis taking into account the principal amounts outstanding and the effective interest rates applicable.

Trademarks, patents and intellectual rights

Expenditures in respect of the development and registration of trademarks, patents and intellectual rights relating to home furniture developed by the Group are charged to the profit and loss account at the time such expenditures are incurred.

Operating leases

Leases where substantially all the risks and rewards of ownership of assets remain with the lessors are accounted for as operating leases. Payments made under operating leases net of any incentives received from the lessors are charged to the profit and loss account on a straight-line basis over the lease periods.

Contributions to pension and retirement schemes

Contributions to pension and retirement schemes are charged to the profit and loss account in the period to which they relate.

Borrowing costs

Borrowing costs are interest and other costs incurred in connection with the borrowing of funds. All borrowing costs are charged to the profit and loss account in the year in which they are incurred.

Cash equivalents

For the purpose of the combined cash flow statements, cash equivalents represent short term highly liquid investments which are readily convertible into known amounts of cash and which were within three months of maturity when acquired, less advances from banks repayable within three months from the date of the advance.

Related parties

Two 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.

– 59 –

FINANCIAL INFORMATION ON THE WINDSOR TREASURE GROUP

APPENDIX II

3. Segmental information

Segment information is presented by way of the Group’s primary segment reporting basis, by geographical segment. No further business segment information is presented as over 90% of the Group’s revenue and assets relate to the sales of and royalty income generated from home furniture.

In determining the Group’s geographical segments, revenues are attributed to the segments based on the location of the customers.

Segment revenue – PRC, including Hong Kong – elsewhere	Six months ended Year ended 30.6.2004 30.6.2003 31.12.2003 31.12.2002 31.12.2001 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 46,492 25,908 86,728 40,937 49,681 21,835 12,994 19,902 14,592 6,139 68,327 38,902 106,630 55,529 55,820	Six months ended Year ended 30.6.2004 30.6.2003 31.12.2003 31.12.2002 31.12.2001 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 46,492 25,908 86,728 40,937 49,681 21,835 12,994 19,902 14,592 6,139 68,327 38,902 106,630 55,529 55,820
		55,820

The Group’s assets and liabilities are principally located in the PRC. Accordingly, segment assets, segment liabilities and other information by geographical area are not separately shown.

4. Turnover and revenue

The Group’s turnover represents the invoiced value of goods sold and services rendered, net of value added tax and business tax in the PRC, and after allowances for goods returned and trade discounts.

An analysis of turnover and revenue is as follows:–

Turnover Sales of home furniture Royalty income Other revenue Bad debts recovered Bank interest income Compensation received Gain on disposal of fixed assets Rental income Sundry income Tax refund Write back of accounts payable Total revenue recognised during the Relevant Periods	Six months ended Year ended 30.6.2004 30.6.2003 31.12.2003 31.12.2002 31.12.2001 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 66,738 38,265 105,356 55,529 55,820 1,589 637 1,274 – – 68,327 38,902 106,630 55,529 55,820 – – – – 44 6 – 20 70 19 – 101 148 47 – – – – – 60 – – – 443 531 22 – 83 59 19 51 – – – – – – – – 587 79 101 251 619 1,260 68,406 39,003 106,881 56,148 57,080	Six months ended Year ended 30.6.2004 30.6.2003 31.12.2003 31.12.2002 31.12.2001 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 66,738 38,265 105,356 55,529 55,820 1,589 637 1,274 – – 68,327 38,902 106,630 55,529 55,820 – – – – 44 6 – 20 70 19 – 101 148 47 – – – – – 60 – – – 443 531 22 – 83 59 19 51 – – – – – – – – 587 79 101 251 619 1,260 68,406 39,003 106,881 56,148 57,080
		55,820 44 19 – 60 531 19 – 587
		1,260
		57,080

– 60 –

FINANCIAL INFORMATION ON THE WINDSOR TREASURE GROUP

APPENDIX II

5. Profit/(loss) from operating activities

Profit/(loss) from operating activities is arrived at after charging:–

	Six months ended	Six months ended		Year ended
	30.6.2004	30.6.2003	31.12.2003	31.12.2002	31.12.2001
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Depreciation of fixed assets	1,357	1,330	2,692	2,055	1,985
Loss on disposal of fixed assets	–	–	65	4,830	–
Operating lease rentals
– land and buildings	2,383	906	3,947	1,712	1,846
Staff costs
– wages and salaries
(including directors’
emoluments)	6,468	3,530	9,422	5,316	6,320
– contributions to retirement/
pension schemes
(see also note 8 below)	595	444	825	571	572

6. Directors’ emoluments

Details of the emoluments paid by the Group to the directors during the Relevant Periods are as follows:–

		Six months ended	Six months ended			Year ended
		30.6.2004	30.6.2004	31.12.2003		31.12.2002	31.12.2001
		HK$’000	HK$’000	HK$’000		HK$’000	HK$’000
Salaries and allowances		47	49		97	174	109
Retirement/pension contributions		1	1		1	1	1
		48	50		98	175	110
Emoluments of the directors fell	within the following		band:–
		No. of	No. of		No. of	No. of	No. of
		directors	directors	directors		directors	directors
Nil – HK$1,000,000		4	4		4	4	4

None of the executive and non-executive directors received any emoluments for the Relevant Periods.

There was no arrangement under which a director waived or agreed to waive any emoluments during the Relevant Periods.

– 61 –

FINANCIAL INFORMATION ON THE WINDSOR TREASURE GROUP

APPENDIX II

7. Emoluments of the five highest paid employees

One of the five highest paid employees is a director of the Group. The emoluments paid to him by the Group are set out in note 6 above.

Details of the emoluments paid to the remaining four highest paid employees during the Relevant Periods are as follows:–

	Six months ended	Six months ended	Six months ended			Year ended
	30.6.2004		30.6.2003	31.12.2003		31.12.2002	31.12.2001
	HK$’000		HK$’000		HK$’000	HK$’000	HK$’000
Salaries and allowances	89		98		206	124	147
Retirement/pension contributions	5		2		5	5	5
	94		100		211	129	152
Emoluments of the above individuals,	who are not	directors of the		Group, fell within		the following	band:–
	No. of		No. of		No. of	No. of	No. of
individuals		individuals		individuals		individuals	individuals
Nil – HK$1,000,000	4		4		4	4	4

During the Relevant Periods, no emoluments were paid by the Group to the directors or the highest paid, nondirector employees as bonus, as an inducement to join the Group, or as compensation for loss of office.

8. Retirement and pension schemes

The Group does not have to provide any retirement benefit to its employees in the jurisdiction of the British Virgin Islands.

According to the relevant regulations, the PRC companies are required to participate in the employee pension scheme operated by the relevant local government bureau in the PRC and to make contributions for its eligible employees. The amount of contributions to be borne by the Group is calculated at a certain percentage of the salaries and wages for those eligible employees.

9. Finance costs

	Six months ended	Six months ended		Year ended
	30.6.2004	30.6.2003	31.12.2003	31.12.2002	31.12.2001
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Interest on bank loans	65	–	31	293	444

– 62 –

FINANCIAL INFORMATION ON THE WINDSOR TREASURE GROUP

APPENDIX II

10. Taxation

No provision for domestic taxation has been made by the Company as the Company is not subject to tax in the British Virgin Islands or elsewhere.

Under the Income Tax Law of the PRC, pursuant to approval documents issued by the relevant tax authorities, certain of the PRC companies were granted tax exemptions during the Relevant Periods.

Details of the charge in the combined profit and loss account are as follows:–

	Six months ended	Six months ended		Year ended
	30.6.2004	30.6.2003	31.12.2003	31.12.2002	31.12.2001
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Current tax – China Enterprise
Income Tax
– current year provision	33	29	58	96	85
– prior year overprovision	–	–	–	(43)	–
Taxation	33	29	58	53	85
The reconciliation between accounting profit/(loss)		and taxation at applicable tax rate is as follows:–
	Six months ended			Year ended
	30.6.2004	30.6.2003	31.12.2003	31.12.2002	31.12.2001
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Profit/(loss) before taxation	3,208	(2,561)	2,896	(5,852)	557
Tax at respective statutory income
tax rates	783	(942)	763	(1,190)	185
Tax effect of expenses that are not
deductible in determining
taxable profits	65	3	10	884	15
Tax effect of income that are not
taxable in determining
taxable profits	(286)	(111)	(223)	(4)	–
Utilisation of tax losses not
previously recognised	(118)	–	(123)	–	(40)
Tax losses not recognised	–	494	–	192	–
Tax effect of reduction in tax rates
granted by local tax authorities	(411)	585	(369)	214	(75)
Prior year overprovision	–	–	–	(43)	–
Taxation	33	29	58	53	85
Details of the Group’s unrecognised deferred tax asset are as follows:
	30.6.2004	30.6.2003	31.12.2003	31.12.2002	31.12.2001
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Unabsorbed tax losses	–	735	118	241	49

In the opinion of the Directors, no provision for deferred tax asset has been made in view of the unpredictability of future profit streams.

11. Profit/(loss) from ordinary activities attributable to shareholders

The net profit from ordinary activities attributable to shareholders dealt with in the financial statements of the Company is HK$Nil.

12. Dividend

No dividend has been paid or declared by the Company during the Relevant Periods.

13. Earnings per share

No earnings per share information has been presented as such information is not meaningful for the purpose of this report.

– 63 –

FINANCIAL INFORMATION ON THE WINDSOR TREASURE GROUP

APPENDIX II

14. Fixed assets

Group

Leasehold land and Leasehold Plant and buildings improvements machinery HK$’000 HK$’000 HK$’000 Cost 1 January 2001 16,020 – 11,250 Additions 988 – 272 Disposals – – – 31 December 2001 17,008 – 11,522 Additions – 134 402 Disposals (10,722) – – 31 December 2002 6,286 134 11,924 Additions 642 660 6,973 Disposals – – – 30 June 2003 6,928 794 18,897 Additions – 627 1,562 Disposals – – (262) 31 December 2003 6,928 1,421 20,197 Additions 63 414 85 30 June 2004 6,991 1,835 20,282 Depreciation 1 January 2001 3,062 – 4,322 Charge for the year 586 – 1,047 On disposals – – – 31 December 2001 3,648 – 5,369 Charge for the year 606 – 1,045 On disposals (2,278) – – 31 December 2002 1,976 – 6,414 Charge for the period 178 14 702 On disposals – – – 30 June 2003 2,154 14 7,116 Charge for the period 176 29 570 On disposals – – (173) 31 December 2003 2,330 43 7,513 Charge for the period 178 59 841 30 June 2004 2,508 102 8,354 Net book value 30 June 2004 4,483 1,733 11,928 30 June 2003 4,774 780 11,781 31 December 2003 4,598 1,378 12,684 31 December 2002 4,310 134 5,510 31 December 2001 13,360 – 6,153	Motor Office vehicles equipment HK$’000 HK$’000 1,506 1,490 758 37 (710) (81) 1,554 1,446 402 92 – (52) 1,956 1,486 497 528 (142) (17) 2,311 1,997 666 142 (520) (785) 2,457 1,354 8 15 2,465 1,369 666 655 182 170 (487) (81) 361 744 223 181 – (52) 584 873 331 105 (116) (17) 799 961 472 115 (384) (571) 887 505 171 108 1,058 613 1,407 756 1,512 1,036 1,570 849 1,372 613 1,193 702	Total HK$’000 30,266 2,055 (791)
		31,530 1,030 (10,774)
		21,786 9,300 (159)
		30,927 2,997 (1,567)
		32,357 585
		32,942
		8,705 1,985 (568)
		10,122 2,055 (2,330)
		9,847 1,330 (133)
		11,044 1,362 (1,128)
		11,278 1,357
		12,635
		20,307
		19,883
		21,079
		11,939
		21,408

The Group’s leasehold land and buildings are situated in both Hong Kong and the PRC and are held under medium term leases.

Certain of the Group’s fixed assets were pledged in favour of a bank in respect of a short term loan (see note 22 below).

– 64 –

FINANCIAL INFORMATION ON THE WINDSOR TREASURE GROUP

APPENDIX II

15.	Due from an affiliated company
		30.6.2004	30.6.2003	31.12.2003	31.12.2002	31.12.2001
		HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
	Hing Lee Furniture Wholesales Limited	432	–	330	834	–
	The amount due from an affiliated company is unsecured, interest-free and			there are no	fixed terms for	repayment.
16.	Inventories
		30.6.2004	30.6.2003	31.12.2003	31.12.2002	31.12.2001
		HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
	Raw materials	9,236	8,502	8,075	6,961	7,118
	Work in progress	9,927	6,736	10,302	7,603	9,169
	Finished goods	33,232	29,499	30,145	32,882	32,706
	Consumables	275	44	645	169	54
		52,670	44,781	49,167	47,615	49,047
	All inventories were stated at cost.
17.	Trade and other receivables
		30.6.2004	30.6.2003	31.12.2003	31.12.2002	31.12.2001
		HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
	Trade receivables – gross	25,417	11,973	17,696	5,322	3,751
	Less: Provision	(158)	(110)	(124)	(110)	(51)
	Trade receivables – net	25,259	11,863	17,572	5,212	3,700
	Other receivables	1,652	1,893	1,335	1,940	1,989
	Trade and other receivables	26,911	13,756	18,907	7,152	5,689
	An ageing analysis of the gross amount of trade receivables is as follows:–
		30.6.2004	30.6.2003	31.12.2003	31.12.2002	31.12.2001
		HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
	Current	9,171	5,186	8,721	647	217
	1 to 3 months	4,050	4,764	3,489	2,766	857
	Over 3 months	12,196	2,023	5,486	1,909	2,677
	Trade receivables	25,417	11,973	17,696	5,322	3,751

Generally, the Group has granted credit terms to its customers, ranging from 30 to 90 days.

18. Prepayments and deposits

Prepayments Rental and utility deposits	30.6.2004 HK$’000 2,575 268 2,843	30.6.2003 HK$’000 1,594 194 1,788	31.12.2003 HK$’000 2,363 268 2,631	31.12.2002 HK$’000 4,700 196 4,896	31.12.2001 HK$’000 902 375
					1,277

– 65 –

FINANCIAL INFORMATION ON THE WINDSOR TREASURE GROUP

APPENDIX II

19. Cash and bank balances

Denominated in Hong Kong dollars Denominated in Renminbi Denominated in other currencies Denominated in Hong Kong dollars	30.6.2004 HK$’000 118 3,261 279 3,658 30.6.2004 HK$’000 78	30.6.2003 HK$’000 32 4,346 138 4,516 30.6.2003 HK$’000 –	Group 31.12.2003 HK$’000 32 4,387 3,055 7,474 Company 31.12.2003 HK$’000 –	31.12.2002 HK$’000 337 4,841 1,492 6,670 31.12.2002 HK$’000 –	31.12.2001 HK$’000 83 4,642 481
					5,206
					31.12.2001 HK$’000 –

Renminbi (“RMB”) is not a currency freely convertible into other currencies; however, SZDHXL, being a foreigninvested enterprise, is permitted to exchange RMB for foreign currencies through banks authorised to conduct foreign exchange business.

20. Due to directors and shareholders

Chan Kwok Kin Cheung Kong Cheung Huang Wei Ye Sung Kai Hing	30.6.2004 HK$’000 5,062 2,420 697 2,797 10,976	30.6.2003 HK$’000 5,917 3,654 301 3,370 13,242	31.12.2003 HK$’000 4,774 2,762 697 2,481 10,714	31.12.2002 HK$’000 4,639 2,375 – 2,093 9,107	31.12.2001 HK$’000 3,805 1,541 – 1,256
					6,602

The amounts due to directors and shareholders are unsecured, interest-free and there are no fixed terms for repayment.

21. Trade and other payables

An ageing analysis of trade payables is as follows:–

Current 1 to 3 months Over 3 months Trade payables Other payables Trade and other payables	30.6.2004 HK$’000 6,522 15,640 19,350 41,512 3,647 45,159	30.6.2003 HK$’000 6,614 4,678 29,331 40,623 4,004 44,627	31.12.2003 HK$’000 12,185 8,999 22,563 43,747 5,612 49,359	31.12.2002 HK$’000 3,774 8,986 25,378 38,138 4,943 43,081	31.12.2001 HK$’000 4,726 10,404 23,247
					38,377 3,066
					41,443

– 66 –

FINANCIAL INFORMATION ON THE WINDSOR TREASURE GROUP

APPENDIX II

22. Short term loans

Short term bank loans Loan from深圳巿財政局 Other loan	30.6.2004 HK$’000 6,604 2,641 – 9,245	30.6.2003 HK$’000 528 3,774 – 4,302	31.12.2003 HK$’000 1,887 3,774 – 5,661	31.12.2002 HK$’000 1,698 3,774 – 5,472	31.12.2001 HK$’000 2,359 – 3,190
					5,549

The bank loans are secured by the properties of the Group and against a corporate guarantee given by SZXL. The loans carry an interest of 5.841% per annum and are repayable within one year.

The loan from 深圳巿財政局 is unsecured, interest-free and it is repayable on demand.

The other loan was unsecured and interest-free.

23. Long term loans

Loan from深圳巿財政局 Other loan	30.6.2004 HK$’000 – – –	30.6.2003 HK$’000 – – –	31.12.2003 HK$’000 – – –	31.12.2002 HK$’000 – – –	31.12.2001 HK$’000 3,774 1,560
					5,334

The loan from 深圳巿財政局 and the other loan were unsecured and interest-free.

24. Shareholders’ loans

The shareholders’ loans were unsecured and interest-free. On 30 December 2003, shareholders’ loans in the amount of HK$18,000,000 were capitalised as paid up capital, with the remaining balance transferred to the amounts due to directors and shareholders.

25. Paid up capital

Combined registered and fully paid Authorised: 50,000 ordinary shares of US$1 each Issued and fully paid: 10,000 ordinary shares	30.6.2004 HK$’000 25,635 30.6.2004 HK$’000 390 78	30.6.2003 HK$’000 6,879 30.6.2003 HK$’000 – –	Group 31.12.2003 HK$’000 25,557 Company 31.12.2003 HK$’000 – –	31.12.2002 HK$’000 2,801 31.12.2002 HK$’000 – –	31.12.2001 HK$’000 10
					31.12.2001 HK$’000 –
					–

– 67 –

FINANCIAL INFORMATION ON THE WINDSOR TREASURE GROUP

APPENDIX II

26. Reserves

1 January 2001 Profit for the year Transfers 31 December 2001 Acquisition of additional interests in DGRF Loss for the year 31 December 2002 Profit for the year Transfers 31 December 2003 Profit for the period 30 June 2004 1 January 2003 Loss for the period 30 June 2003	Exchange reserve HK$’000 (21) – – (21) (45) – (66) – – (66) – (66) (66) – (66)	Statutory Enterprise reserve expansion Accumulated fund fund losses HK$’000 HK$’000 HK$’000 55 42 (2,520) – – 284 19 19 (38) 74 61 (2,274) 24 25 – – – (5,487) 98 86 (7,761) – – 2,519 11 11 (22) 109 97 (5,264) – – 2,890 109 97 (2,374) 98 86 (7,761) – – (1,868) 98 86 (9,629)	Total HK$’000 (2,444) 284 –
			(2,160 4 (5,487)
			(7,643 2,519 –
			(5,124 2,890
			(2,234
			(7,643 (1,868
			(9,511

27. Major non-cash transactions

In the year ended 31 December 2003, the Group capitalised shareholders’ loans of HK$18,000,000 as paid up capital.

28. Related party transactions

Transactions with related parties during the Relevant Periods not disclosed elsewhere in the Financial Information are summarised as follows:–

	Six months ended	Six months ended		Year ended
	30.6.2004	30.6.2003	31.12.2003	31.12.2002	31.12.2001
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Rental income from
an affiliated company	–	–	–	443	531
Sales to an affiliated company	663	432	1,043	1,602	984

The above transactions were made at prices/rates and terms as agreed between the parties in the normal course of business.

– 68 –

FINANCIAL INFORMATION ON THE WINDSOR TREASURE GROUP

APPENDIX II

29. Commitments

At 30 June 2004, the Group had outstanding minimum commitments under non-cancellable operating leases in respect of equipment and land and buildings which fall due as follows:–

Within one year In the second and fifth years inclusive Over five years	30.6.2004 HK$’000 4,431 13,232 32,396 50,059	30.6.2003 HK$’000 4,082 14,145 35,641 53,868	31.12.2003 HK$’000 4,494 13,666 33,969 52,129	31.12.2002 HK$’000 1,260 2,519 – 3,779	31.12.2001 HK$’000 1,330 3,779 –
					5,109

As of 31 December 2001, 2002 and 2003, 30 June 2003 and 2004, the Company did not have any significant commitments.

30. Contingent liabilities

As of 31 December 2001, 2002 and 2003, 30 June 2003 and 2004, the Group did not have any significant contingent liabilities.

– 69 –

FINANCIAL INFORMATION ON THE WINDSOR TREASURE GROUP

APPENDIX II

VII. SUBSEQUENT EVENTS

1. The following companies were incorporated after 30 June 2004 for the purpose of becoming the holding companies of the PRC companies within the Group upon completion of the Reorganization:–

		Issued and	Attributable
Name of	Place and date	fully paid-up	equity	Principal
company	of incorporation	capital	interest	activities
Great Ample	British Virgin Islands	US$1	100%	Investment
Holdings Limited	22 July 2004			holding
Glory Skill	British Virgin Islands	US$1	100%	Investment
Investments Limited	28 July 2004			holding
Success Profit	British Virgin Islands	US$1	100%	Investment
International Limited	28 July 2004			holding

1. The Group’s land and buildings situated in Hong Kong have been disposed of to certain directors and shareholders subsequent to 30 June 2004 at the then net book value of approximately HK$843,000.

No other material significant events have taken place subsequent to 30 June 2004.

VIII. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared by the Group in respect of any period subsequent to 30 June 2004.

Yours faithfully, Moore Stephens

Certified Public Accountants

Hong Kong

– 70 –

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP

UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP

A. Unaudited pro forma statement of adjusted combined assets and liabilities

The following is a summary of the unaudited pro forma statement of adjusted combined assets and liabilities of the Enlarged Group based on the audited consolidated balance sheet of the Group as at 31 December 2003, as set out in Appendix I to this circular and the audited combined balance sheet of the Windsor Treasure Group as at 30 June 2004 as set out in Appendix II to this circular. This statement has been prepared for illustrative purposes only and because of its nature, it may not give a true picture of financial position of the Enlarged Group immediately upon completion of the Acquisition.

Unaudited statement of adjusted combined assets & liabilities

Non-current assets Tangible Goodwill_(Note 3) Current assets Current liabilities Net current assets Non-current liabilities Minority interests(Note 4)_ Net asset value Number of Shares Net assets per Share (HK$)	The Group 31/12/2003 HK$’000 (Note1) 132,971 10,197 143,168 127,352 63,437 63,915 85 37,808 169,190 74,289,768 2.28	Windsor Treasure Group 30/6/2004 HK$’000 (Note2) 20,307 – 20,307 87,938 79,737 8,201 – 5,107 23,401	Adjustments to reflect the Combined Acquisition HK$’000 HK$’000 153,278 10,197 13,190 163,475 215,290 143,174 72,116 85 42,915 19,588 192,591	Adjusted Combined HK$’000 153,278 23,387 176,665 215,290 143,174 72,116 85 62,503 186,193
				91,292,768 2.04

– 71 –

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP

Notes:

1. The figures for the Group are based on the audited financial statements of the Group set out in Appendix I to this circular.

2. The figures for the Windsor Treasure Group are based on the Accountants’ Report set out in Appendix II to this circular.

3. The goodwill arising from acquisition of the Windsor Treasure Group is calculated as follows:

Consideration Net assets of the entire Windsor Treasure Group as of 30 June 2004 Consideration of the Subscription Shares Net assets of 51.52% of the Windsor Treasure Group as of 30 June 2004 Goodwill	HK$’000 23,401 17,003 40,404	HK$’000 34,006 20,816 13,190

The consideration was calculated based on 17,003,000 new Shares to be issued at HK$1 each (being the issue price of the Consideration Shares) and the cash amount of HK$17,003,000 being the consideration of the Subscription Shares, to be paid as part of the total consideration.

The final amount of goodwill will be determined on the date of completion of the Acquisition when a further review of the value of the underlying assets of the Windsor Treasure Group will be performed. The unaudited adjusted pro forma combined net assets of the Enlarged Group will be increased or decreased by the amount of goodwill so allocated to the underlying assets of the Windsor Treasure Group.

1. Minority interests will be increased by the 48.48% interest in the Windsor Treasure Group upon Completion.

– 72 –

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP

B. COMFORT LETTER FROM MOORE STEPHENS

Letter on unaudited pro forma statement of adjusted assets and liabilities of the Enlarged Group

==> picture [132 x 110] intentionally omitted <==

17 September 2004

The Directors Omnicorp Limited

Dear Sirs,

We report on the pro forma financial information (“Pro Forma Financial Information”) set out in Section A of Appendix III to the circular dated 17 September 2004 (the “Circular”) in relation to the acquisition and subscription of approximately 51.52% interest in the share capital of Windsor Treasure Group Holdings Limited (the “Acquisition”), which has been prepared as if the Acquisition had been completed as at 30 June 2004, for illustrative purposes only, to provide information about how the Acquisition might have affected the financial information presented in respect of Omnicorp Limited (the “Company”) and its subsidiaries (collectively referred to as the “Group”).

Responsibilities

It is the responsibility solely of the directors of the Company to prepare the Pro Forma Financial Information in accordance with paragraph 4.29 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”).

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

– 73 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP

APPENDIX III

Basis of opinion

We conducted our work in accordance with the Statements of Investment Circular Reporting Standards and Bulletin 1998/8 “Reporting on pro forma financial information pursuant to the Listing Rules” issued by the Auditing Practices Board in the United Kingdom, where applicable. Our work, which involved no independent examination of any of the underlying financial information, consisted primarily of comparing the unadjusted financial information with the source documents, considering the evidence supporting the adjustments and discussing the Pro Forma Financial Information with the directors of the Company.

Our work did not constitute an audit or a review in accordance with Statements of Auditing Standards issued by the Hong Kong Institute of Certified Public Accountants, and accordingly we do not express such assurance on the Pro Forma Financial Information.

The Pro Forma Financial Information has been prepared in the basis set out in Section A of Appendix III of the Circular for illustrative purposes only and, because of its nature, it may not be indicative of the financial position of:–

• the Group had the Acquisition been completed at 30 June 2004; or

• the Group at any future date.

Opinion

In our opinion:–

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

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

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

Yours faithfully, Moore Stephens

Certified Public Accountants

Hong Kong

– 74 –

GENERAL INFORMATION

APPENDIX IV

1. RESPONSIBILITY STATEMENT

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

2. SHARE CAPITAL

(i) Ordinary Shares

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

Authorised: HK$ 15,000,000,000 Shares of HK$0.01 each 150,000,000.00 Issued and fully paid or credited as fully paid: 74,289,768 Shares of HK$0.01 each 742,897.68

All of the above Shares rank pari passu in all aspects, including all rights as to dividends, voting and interests in capital, among themselves and with all other Shares in issue on the date of issue.

Immediately after Completion and the allotment and issue of the Consideration Shares, the number of issued Shares of the Company will increase from 74,289,768 to 91,292,768.

(ii) Share Options

As at the Latest Practicable Date, there were 2,720,000 outstanding share options entitling holders thereof to subscribe for in aggregate 2,720,000 new Shares, representing

– 75 –

GENERAL INFORMATION

APPENDIX IV

approximately 3.66% of the existing issued share capital. The share options were granted under the share option scheme which was adopted on 22 March 2002. Each option gives the holder the right to subscribe for one Share. Details of these outstanding share options were as follows:

			Number
Name of option	Exercise price	Exercisable	of outstanding
holder	per Share	period	share options
Shaw Wen Fei	HK$1.14	15/07/2003 – 14/07/2008	600,000
Lui Chun Bing, Tommy	HK$1.14	15/07/2003 – 14/07/2008	600,000
Au Hoi Tsun, Peter	HK$1.14	15/07/2003 – 14/07/2008	450,000
Lee Hoong Seun	HK$1.14	15/07/2003 – 14/07/2008	200,000
Sung Yan Wai, Petrus	HK$1.14	15/07/2003 – 14/07/2008	200,000
Chim Chun Kwan, Sandy	HK$1.14	15/07/2003 – 14/07/2008	200,000
Wong Che Keung, Richard	HK$1.14	15/07/2003 – 14/07/2008	60,000
Tong Yee Yung, Joseph	HK$1.14	15/07/2003 – 14/07/2008	60,000
Employees	HK$1.14	15/07/2003 – 14/07/2008	350,000

3. DISCLOSURE OF INTERESTS AND SHORT POSITIONS IN SHARES AND OPTIONS

As at the Latest Practicable Date, the interests and short positions in the Shares, underlying Shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which he was taken or deemed to have under such provisions of the SFO) or were required, pursuant to Section 352 of the SFO,

– 76 –

GENERAL INFORMATION

APPENDIX IV

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

(i) Directors’ Interests in the issued Shares of the Company

Name of Director Capacity Shaw Wen Fei Corporate (Note 1) Lui Chun Bing, Tommy Beneficial owner Family interest (Note 2) Au Hoi Tsun, Peter Beneficial owner	Percentage of issued share Number capital of the of Shares Company 1,064,900 1.43% 266,800 0.36% 4,000,000 5.38% 4,266,800 5.74% 345,000 0.46%	Percentage of issued share Number capital of the of Shares Company 1,064,900 1.43% 266,800 0.36% 4,000,000 5.38% 4,266,800 5.74% 345,000 0.46%
		5.74% 0.46%

Notes:

1. These Shares were held by Sharp States Investments Inc., the entire issued share capital of which was wholly owned by Mr. Shaw Wen Fei.

2. These Shares were held by Expert View Group Limited, a corresponding interest of 66.67% and 33.33% of the issued share capital of which was beneficially owned by Ms. Sum Kin Man and Mr. Lui Tin Shun, the wife and the son of Mr. Lui Chun Bing, Tommy respectively. Mr. Lui Chun Bing, Tommy was deemed to be interested in the Shares held by Ms. Sum Kin Man and Mr. Lui Tin Shun.

(ii) Interest in share options of the Company

			Percentage of
			issued share
		Number	capital of the
Name	Capacity	of Shares	Company
Shaw Wen Fei	Beneficial owner	600,000	0.81%
Lui Chun Bing, Tommy	Beneficial owner	600,000	0.81%
Au Hoi Tsun, Peter	Beneficial owner	450,000	0.61%
Lee Hoong Seun	Beneficial owner	200,000	0.27%
Sung Yan Wai, Petrus	Beneficial owner	200,000	0.27%
Chim Chun Kwan, Sandy	Beneficial owner	200,000	0.27%
Wong Che Keung, Richard	Beneficial owner	60,000	0.08%
Tong Yee Yung, Joseph	Beneficial owner	60,000	0.08%

Save as disclosed herein, as at the Latest Practicable Date, none of Directors and chief executive of the Company had any interests and short positions in the Shares, underlying

– 77 –

GENERAL INFORMATION

APPENDIX IV

Shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which he was taken or deemed to have under such provisions of the SFO) or were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein or were required pursuant to the Model Code for Securities Transactions by Directors of Listed Companies of the Listing Rules to be notified to the Company and the Stock Exchange.

4. SUBSTANTIAL SHAREHOLDERS

(i) Interests in the Company

As at the Latest Practicable Date, so far as is known to any Director or chief executive of the Company, the following persons (other than a Director or the chief executive of the Company) had an interest or short position in the Shares and underlying Shares of the Company which would fall to be disclosed to the Company under the provisions of the Divisions 2 and 3 of Part XV of the SFO:

			Percentage of
			issued share
		Number	capital of the
Name of Shareholder	Capacity	of Shares	Company
The Grande (Nominees)
Limited_(Note 1)_	Beneficial owner	6,573,795	8.85%
The Grande Holdings
Limited_(Note 1)_	Corporate	6,573,795	8.85%
Barrican Investments
Corporation_(Note 1)_	Corporate	6,573,795	8.85%
The Grande International
Holdings Limited
(Note 1)	Corporate	6,573,795	8.85%
Ho Wing On,
Christopher_(Note 1)_	Corporate	6,573,795	8.85%
Planet Adventure Limited
(Note 2)	Beneficial owner	6,200,000	8.35%
Huen Wing Ming,
Patrick_(Note 2)_	Corporate	6,300,000	8.48%
Huen Ng Sui Fong,
Isabel_(Note 3)_	Family interest	6,300,000	8.48%

– 78 –

GENERAL INFORMATION

APPENDIX IV

Sum Kin Man Corporate (Notes 4 and 5) Family interest Expert View Group Limited_(Note 5) Beneficial owner Lui Tin Shun(Note 5)_ Corporate	4,000,000 866,800 4,866,800 4,000,000 4,000,000	5.38% 1.17%
		6.55% 5.38% 5.38%

Notes:

1. The Grande (Nominees) Limited was a wholly owned subsidiary of The Grande Holdings Limited. Barrican Investments Corporation held a controlling interest in the capital of The Grande Holdings Limited and was a wholly owned subsidiary of The Grande International Holdings Limited. The Grande International Holdings Limited was wholly owned by Mr. Ho Wing On, Christopher. The Grande Holdings Limited, Barrican Investments Corporation, The Grande International Holdings Limited and Mr. Ho Wing On, Christopher were deemed to be interested in the Shares held by The Grande (Nominees) Limited.

2. Planet Adventure Limited and Patova International Limited were wholly owned by Mr. Huen Wing Ming, Patrick who was deemed to be interested in 6,200,000 Shares and 100,000 Shares held by Planet Adventure Limited and Patova International Limited respectively.

3. Mrs. Huen Ng Sui Fong, Isabel is the spouse of Mr. Huen Wing Ming, Patrick and was deemed to be interested in the Shares in which Mr. Huen Wing Ming, Patrick was interested.

4. Ms. Sum Kin Man is the spouse of Mr. Lui Chun Bing, Tommy and was deemed to be interested in the Shares held by Mr. Lui Chun Bing, Tommy.

5. Expert View Group Limited was beneficially owned as to 66.67% and 33.33% by Ms. Sum Kin Man and Mr. Lui Tin Shun, the spouse and the son of Mr. Lui Chun Bing, Tommy respectively. Each of Ms. Sum Kin Man and Mr. Lui Tin Shun was deemed to be interested in the Shares held by Expert View Group Limited.

(ii) Other interests in other members of the Group

As at the Latest Practicable Date, so far as was known to any Director or chief executive of the Company, the following persons (other than a Director or the chief executive of the Company) were directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group:

			Percentage of
			issued share
		Number of	capital of the
Name of Shareholder	Name of Company	Shares	Company
PAMA Group, Inc. in its	VFJ Technology	567,818	21.88%
capacity as the general	Holdings Limited
partner of PAMA Private
Equity Limited Partnership
II_(Note)_
Lei Guangyu	Unicom Group Ltd.	37	37%

– 79 –

GENERAL INFORMATION

APPENDIX IV

Note: PAMA Group, Inc. also in its capacities as the general partner of PICA Limited Partnership held 110,587 shares in VFJ, representing 4.26% of VFJ’s issued share capital, and as managing general partner of Dutch Parallel Fund C.V. held 110,587 shares in VFJ, representing 4.26% of VFJ’s issued share capital.

Save as disclosed herein, as at the Latest Practicable Date, so far as was known to any Director or chief executive of the Company, no persons (other than a Director or the chief executive of the Company) had an interest or short position in the Shares and underlying Shares which would fall to be disclosed to the Company under the provisions of the Divisions 2 and 3 of Part XV of the SFO, or who were directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group.

4. SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had a service contract with the Company or any of its subsidiaries which was not determinable by the Group within one year without payment of compensation, other than statutory compensation.

5. MATERIAL LITIGATION

As at the Latest Practicable Date, so far as known to the Directors, there was no litigation or claim of material importance pending or threatened against any member of the Group.

6. DIRECTORS’ INTERESTS IN ASSETS AND/OR CONTRACTS AND OTHER INTERESTS

As at the Latest Practicable Date, none of the Directors had any direct or indirect interest in any asset which had, since 31 December 2003, being the date on which the latest published audited accounts of the Group were made up, been acquired or disposed of by or leased to any member of the Group or were proposed to be acquired or disposed of by or leased to any member of the Group.

As at the Latest Practicable Date, none of the Directors was materially interested in any contract entered into by any member of the Group which was subsisting as at the Latest Practicable Date and which was significant in relation to the business of the Group taken as a whole.

7.

MATERIAL CONTRACTS

During the two years immediately preceding the date of this circular, the following contracts, not being contracts entered into in the ordinary course of business, had been entered into by the Group and are or may be material:

• (a) Placing agreement dated 14 March 2003 between the Company and Christfund Securities Limited relating to the placing of 10,000,000 shares at HK$1.30 per share in the capital of the Company as announced on 14 March 2003;

• (b) Loan agreement dated 3 November 2003 between Olympic Glory Limited, a wholly-owned subsidiary of the Company and Princeton Venture Partners Limited regarding the loan of HK$8,000,000 granted to Princeton Venture Partners Limited by Olympic Glory Limited as announced on 14 May 2004;

– 80 –

GENERAL INFORMATION

APPENDIX IV

• (c) Placing agreement dated 27 November 2003 between the Company, VC CEF Brokerage Limited and Christfund Securities Limited relating to the placing of 11,000,000 shares at HK$1.38 per share in the capital of the Company as announced on 28 November 2003;

• (d) Loan agreement dated 31 March 2004 between the Company and VFJ Technology Holdings Limited, a non wholly-owned subsidiary of the Company, relating to the loan of HK$11,000,000 granted to VFJ Technology Holdings Limited by the Company and the significance of which was announced on 27 July 2004;

• (e) Supplemental deed dated 22 July 2004 between the Company and VFJ Technology Holdings Limited, a non wholly-owned subsidiary of the Company, relating to the extension of the amount of loan facility granted to VFJ Technology Holdings Limited by the Company and amendment to the date of advancement and the significance of which was announced on 27 July 2004;

• (f) Deed of Assignment dated 22 July 2004 between the Company and Hai Yang Investment Limited, a wholly-owned subsidiary of the Company, relating to the assignment of the loan in an amount of HK$14,363,299.50 due by VFJ Technology Holdings Limited, a non whollyowned subsidiary of the Company, from the Company to Hai Yang Investment Limited and the significance of which was announced on 27 July 2004;

• (g) Deed of Assignment dated 26 July 2004 between Hai Yang Investment Limited (“Hai Yang”), a wholly-owned subsidiary of the Company, Omnitech Holdings Limited (“Omnitech”), a non wholly-owned subsidiary of the Company, and VFJ Technology Holdings Limited, a non wholly-owned subsidiary of the Company relating to the assignment of a debt of HK$16,306,109.79 due from Hai Yang to Omnitech in consideration of Omnitech’s allotment and issue of 15,088,470 new fully paid consolidated shares of Omnitech Holdings Limited to Hai Yang as announced on 27 July 2004; and

• (h) the Agreement as announced on 27 August 2004.

8. EXPERT DISCLOSURE OF INTERESTS, CONSENT AND QUALIFICATION

As at the Latest Practicable Date, Moore Stephens, being certified public accountants, had no direct or indirect shareholding in any member of the Group, or any right to subscribe for or to nominate persons to subscribe for shares in any member of the Group, or any interests, directly or indirectly, in any assets which had been since 31 December 2003, being the latest published audited consolidated accounts of the Company were made up, acquired or disposed of by or leased to, or were proposed to be acquired or disposed of by or leased to any member of the Group.

As at the Latest Practicable Date, Moore Stephens had no interest, direct or indirect, in any assets which had been acquired or disposed of by or leased to or are proposed to be acquired, disposed of by or leased to the Group since 31 December 2003, the date on which the latest published audited accounts of the Group were made up.

Moore Stephens has given and has not withdrawn its written consent to the issue of this circular with the inclusion thereof its report and references to its name in the form and context in which it appears.

– 81 –

GENERAL INFORMATION

APPENDIX IV

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

Name Qualification Moore Stephens Certified Public Accountants

9. MATERIAL ADVERSE CHANGES

Save as disclosed in this circular, the Directors are not aware of any material adverse changes in the financial or trading position of the Group since 31 December 2003, the date on which the last published audited accounts of the Group were made up.

10. MISCELLANEOUS

• (a) Mr. Wong Kit Wai, a member of CPA Australia, is the secretary and qualified accountant of the Company.

• (b) The registered office of the Company is at Canon’s Court, 22 Victoria Street, Hamilton HM12, Bermuda. The head office and principal place of business of the Company in Hong Kong is at Suites 904 – 905, 9th Floor, Dah Sing Financial Centre, 108 Gloucester Road, Wanchai, Hong Kong.

• (c) The branch share registrar and transfer office of the Company in Hong Kong is Tengis Limited at Ground Floor, BEA Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong.

• (d) The English text of this circular shall prevail over the Chinese text in the case of inconsistency.

11. DOCUMENTS AVAILABLE FOR INSPECTION

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

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

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

• (c) the accountants’ report prepared by Moore Stephens on the Windsor Treasure Group, the text of which is set out in Appendix II to this circular;

• (d) the letter on the pro forma financial information dated 17 September 2004 on the unaudited pro forma statement of adjusted assets and liabilities of the Enlarged Group from Moore Stephens, the text of which is set out in Appendix III to this circular;

– 82 –

GENERAL INFORMATION

APPENDIX IV

• (e) the material contracts, including the Agreement, referred to in paragraph headed “Material Contracts” in this appendix;

• (f) the written consent referred to in the paragraph headed “Expert Disclosure of Interests, Consent and Qualification” in this appendix; and

• (g) the Company’s circular dated 10 August 2004 in relation to a discloseable transaction involving an assignment of debt and subscription of shares in Omnitech Holdings Limited.

– 83 –

NOTICE OF SPECIAL GENERAL MEETING

OMNICORP LIMITED 兩儀控股有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 94)

NOTICE IS HEREBY GIVEN that a special general meeting of Omnicorp Limited (the “ Company ”) will be held at 10:00 a.m. on Thursday, 7 October 2004 at Rooms 2 & 3, 8/F, Renaissance Harbour View Hotel, No. 1 Harbour Road, Wanchai, Hong Kong for the purpose of considering and, if thought fit, passing the following ordinary resolution (with or without modification):

“ THAT

• (a) the agreement dated 19 August 2004 (the “ Agreement ”) (a copy of which has been tabled at the meeting and marked “A” and initialled by the chairman of the meeting for the purpose of identification) entered into between each of Capitalrise Group Limited, Bloominvest Group Limited, Good Profit Trading Limited, Hero Profit International Limited, Metronet Investments Limited, Ace Victory Investments Limited, Even Skill Technology Limited, Wellasia International Limited as vendors, each of Mr. Sung Kai Hing, Mr. Chan Kwok Kin, Mr. Cheung Kong Cheung and Mr. Huang Wei Ye as the vendors’ warrantors, Talent Sino Holdings Limited, a wholly owned subsidiary of the Company as purchaser and the Company as the purchaser’s warrantor, pursuant to which Talent Sino Holdings Limited has agreed to (i) acquire 3,470 shares in Windsor Treasure Group Holdings Limited (the “ Windsor Treasure ”) or such number of shares which represents approximately 25.76% of the then issued share capital of Windsor Treasure immediately after Reorganization and Completion (as respectively defined in the Agreement) and (ii) subscribe for 3,470 new ordinary shares of US$1.00 each in the share capital of Windsor Treasure or such number of shares which represents approximately 25.76% of the then issued share capital of Windsor Treasure immediately after Reorganization and Completion (as respectively defined in the Agreement) at an aggregate consideration of HK$34,006,000, be and is hereby approved; and the execution, delivery and performance by Talent Sino Holdings Limited and the Company of the Agreement be and are hereby ratified, confirmed and approved; and the transactions contemplated in the Agreement be and are hereby approved; and

• (b) the allotment and issue of an aggregate of 17,003,000 shares (the “ Consideration Shares ”) of HK$0.01 each in the capital of the Company credited as fully paid at HK$1.00 per Consideration Share, as to 3,782,800 Consideration Shares to Capitalrise Group Limited; 681,100 Consideration Shares to Bloominvest Group Limited; 3,782,800 Consideration Shares to Good Profit Trading Limited; 509,600 Consideration Shares to Hero Profit International Limited; 3,782,800 Consideration Shares to Metronet Investments Limited; 509,600 Consideration Shares to Ace Victory Investments Limited; 2,190,300 Consideration Shares to Even Skill Technology Limited and 1,764,000 Consideration Shares to Wellasia

* For identification purposes only

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NOTICE OF SPECIAL GENERAL MEETING

International Limited pursuant to the Agreement be and is hereby approved and that the Consideration Shares shall, when issued and allotted, rank pari passu in all respects with all other Shares of HK$0.01 each in the capital of the Company in issue on the date of such allotment and issue except for any dividends or other distributions that may be declared, paid or made before the date of Completion (as defined in the Agreement); and

(c) the directors of the Company (the “ Directors ”) be and are hereby authorised to do on behalf of the Company whatever they may consider necessary, desirable or expedient for the purpose of, or in connection with, the performance and implementation and completion of the Agreement and generally to do all other acts and things and execute or procure execution of all agreements and documents required or contemplated by the Agreement or otherwise and to make such amendments thereto as the Directors may consider necessary, desirable or expedient.

By Order of the Board Omnicorp Limited Lui Chun Bing, Tommy Managing Director

Hong Kong, 17 September 2004

Head office and Principal place of business in Hong Kong: Suites 904 – 905 9th Floor Dah Sing Financial Centre 108 Gloucester Road Wanchai Hong Kong

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

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NOTICE OF SPECIAL GENERAL MEETING

Notes:

• (1) A form of proxy for use at the meeting is enclosed herewith.

• (2) The instrument appointing a proxy shall be in writing under the hand of the appointer or of his/her attorney duly authorised in writing, or if the appointer is a corporation, either executed under its common seal or under the hand of any officer, attorney or other person authorised to sign the same.

• (3) Any member of the Company entitled to attend and vote at the above meeting is entitled to appoint a proxy or proxies to attend and vote in his stead. A proxy need not be a member of the Company.

• (4) To be valid, the form of proxy together with any power of attorney or other authority under which it is signed, or a notarially certified copy of such power of attorney or authority, must be deposited with the Hong Kong branch share registrars of the Company, Tengis Limited, at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Hong Kong not later than 48 hours before the time appointed for holding the meeting.

• (5) Completion and return of the form of proxy will not preclude members from attending and voting at the special general meeting or any adjourned meeting thereof (as the case may be) should they so wish, and in such event, the form of proxy shall be deemed to be revoked.

• (6) Where there are joint registered holders of any share(s), any one of such joint holders may attend and vote at the meeting, either in person or by proxy, in respect of such share(s) as if he/she was solely entitled thereto, but if more than one of such joint holders are present at the meeting or any adjourned meeting thereof (as the case may be), the most senior shall alone be entitled to vote, whether in person or by proxy. For this purpose, seniority shall be determined by the order in which the names stand in the register of members of the Company in respect of the joint holding.

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