Greenheart Group Limited - Proxy Solicitation & Information Statement 2006

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your stockbroker or other licensed securities dealer, 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 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 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.

OMNICORP LIMITED �� ! " # $ �[*] (incorporated in Bermuda with limited liability) (Stock Code: 94)

VERY SUBSTANTIAL DISPOSAL: PROPOSED DISPOSAL OF APPROXIMATELY 51.52% INTEREST IN THE ISSUED SHARE CAPITAL OF AND SHAREHOLDER’S LOAN TO WINDSOR TREASURE GROUP HOLDINGS LIMITED

A notice convening a special general meeting of Omnicorp Limited to be held at The Cypress, 3/F., New World Renaissance Hotel (to be renamed as “Renaissance Kowloon Hotel” from 1 July 2006), 22 Salisbury Road, Tsimshatsui, Kowloon, Hong Kong on Wednesday, 19 July 2006 at 10:00 a.m. is set out on pages 89 to 90 of this circular.

Whether or not you intend to attend and vote at the special general meeting in person, please complete the enclosed form of proxy in accordance with the instructions printed thereon and return it to the Company’s branch share registrar in Hong Kong, Tengis Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as practicable but in any event not later than 48 hours before the time appointed 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 should you so wish.

for identification purpose only

28 June 2006

	Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
The Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Information on the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Information on the Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Information on Windsor Treasure Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Reasons and benefits of the Disposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Financial effects of the Disposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Management discussion and analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Implications of the Listing Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Procedure to demand a poll by Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Further Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
APPENDIX I – FINANCIAL INFORMATION ON THE GROUP . . . . . . . . . . . . . . . . . . . . .	14
APPENDIX II – UNAUDITED PRO FORMA FINANCIAL INFORMATION ON
THE REMAINING GROUP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	66
APPENDIX III – GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	78
NOTICE OF SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	89

DEFINITIONS

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

“Agreement” a conditional agreement for the sale and purchase of the Sale Shares and the Shareholder’s Loan between Talent Sino as vendor, the Purchaser as purchaser and the Company as guarantor dated 22 May 2006;
“Announcement” the announcement issued by the Company dated 26 May 2006;
“Board” or “Director” directors of the Company;
“Company” Omnicorp Limited, a company incorporated in Bermuda whose shares are listed on the Stock Exchange;
“Completion” completion of the Disposal;

“Consideration” the consideration of the Sale Shares and the Shareholder’s Loan under the Agreement;

“Disposal” the disposal of the Sale Shares and the Shareholder’s Loan under the Agreement;
“Group” the Company and its subsidiaries;
“Independent Third Party” third party who is independent of the Company and its connected person (as defined in the Listing Rules);
“Latest Practicable Date” 23 June 2006, being the latest practicable date prior to the printing of this circular for ascertaining certain information referred to in this circular;
“Listing Rules” Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited;
“Long Stop Date” 29 September 2006 (or such other date as the parties to the Agreement may agree in writing);
“Purchaser” Triple Express Enterprises Limited, a company incorporated in the British Virgin Islands;
“Relevant Shareholders” the shareholders of Windsor Treasure (other than Talent Sino) and/or their associates who have interest in the Shares;
“Remaining Group” the Group immediately after Completion;

DEFINITIONS

“Sale Shares”	the 20,820 ordinary shares of US$1.00 each in the capital of
	Windsor Treasure, representing approximately 51.52% of the entire
	issued and paid-up share capital of Windsor Treasure;
“SFO”	Securities and Futures Ordinance (Chapter 571 of the Laws of
	Hong Kong);
“SGM”	the special general meeting of the Company to be held at
	10:00 a.m. on 19 July 2006 at The Cypress, 3/F., New World
	Renaissance Hotel (to be renamed as “Renaissance Kowloon Hotel”
	from 1 July 2006), 22 Salisbury Road, Tsimshatsui, Kowloon,
	Hong Kong and any adjournment thereof, notice of which is set
	out on pages 89 to 90 of this circular;
“Shareholder’s Loan”	all amounts, whether principal or interest, owing by Windsor
	Treasure to Talent Sino as at Completion;
“Shareholders”	shareholders of the Company;
“Share(s)”	ordinary shares in the issued capital of the Company;
“Stock Exchange”	The Stock Exchange of Hong Kong Limited;
“Talent Sino”	Talent Sino Holdings Limited, a company incorporated in the
	British Virgin Islands and a wholly owned subsidiary of the
	Company;
“Windsor Treasure”	Windsor Treasure Group Holdings Limited, a company
	incorporated in the British Virgin Islands and a 51.52% owned
	subsidiary of the Company;
“Windsor Treasure Group”	Windsor Treasure and its subsidiaries;
“AUD”	Australia dollars, the lawful currency of Australia;
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong;
“US$”	United States Dollars, the lawful currency of The United States of
	America; and
“%”	per cent.

LETTER FROM THE BOARD

OMNICORP LIMITED �� ! " # $ �[*]

(incorporated in Bermuda with limited liability)

(Stock Code: 94)

Executive Directors: Sung Kai Hing, Simon (Vice Chairman) Au Hoi Tsun, Peter (Managing Director and Chief Executive Officer) Hui Tung Wah, Samuel Sung Yan Wai, Petrus

Independent non-executive Directors: Wong Kin Chi (Chairman) Wong Che Keung, Richard Tong Yee Yung, Joseph

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

Principal place of business: Units 1505-7, 15th Floor Shui On Centre 6-8 Harbour Road Wanchai, Hong Kong

28 June 2006

To the Shareholders

Dear Sir/ Madam,

VERY SUBSTANTIAL DISPOSAL: PROPOSED DISPOSAL OF APPROXIMATELY 51.52% INTEREST IN THE ISSUED SHARE CAPITAL OF AND SHAREHOLDER’S LOAN TO WINDSOR TREASURE GROUP HOLDINGS LIMITED

INTRODUCTION

On 26 May 2006, the Company announced that the Company and Talent Sino, being a wholly owned subsidiary of the Company, entered into the Agreement with the Purchaser whereby Talent Sino has conditionally agreed to sell and the Purchaser has conditionally agreed to buy the Sale Shares and the Shareholder’s Loan at an aggregate consideration of HK$96,000,000.

for identification purpose only

LETTER FROM THE BOARD

The Disposal constitutes a very substantial disposal for the Company under Chapter 14 of the Listing Rules and is conditional upon the approval of the Shareholders at the SGM. The Purchaser, the ultimate beneficial owner of the Purchaser, the Relevant Shareholders, and their respective associates are required to abstain from voting at the SGM in relation to the resolution for approving the Agreement and the transactions thereunder.

The purpose of this circular is to provide you with, among others, (i) further details of the Disposal; (ii) unaudited pro forma financial information of the Remaining Group; and (iii) the notice of the SGM, and seek your approval in respect of the Agreement and the transactions contemplated thereunder.

THE AGREEMENT

On 22 May 2006, the Company and Talent Sino, being a wholly owned subsidiary of the Company, entered into the Agreement with the Purchaser whereby Talent Sino has conditionally agreed to sell and the Purchaser has conditionally agreed to buy the Sale Shares and the Shareholder’s Loan at an aggregate consideration of HK$96,000,000. The principal terms of the Agreement are set out below:

Date: 22 May 2006 Vendor: Talent Sino Purchaser: Triple Express Enterprises Limited Guarantor: The Company. The Company unconditionally and irrevocably guarantees to the Purchaser the due and punctual performance and observance by Talent Sino of all its obligations, commitments, undertakings, warranties, indemnities and covenants under and pursuant to the terms of the Agreement.

Subject matter:

Sale Shares and Shareholder’s Loan

As at the date of the Agreement, the amount of the Shareholder’s Loan was approximately HK$28,711,000, of which HK$27,500,000 was principal and HK$1,211,000 was interest. Interest will continue to accrue on the principal amount of the Shareholder’s Loan at the rate of 6% per annum.

Consideration:

HK$96,000,000 which shall be paid by the Purchaser in the following manner:

(a) a deposit in the amount of HK$9,600,000 (the “ Deposit ”) was paid by the Purchaser to Talent Sino’s solicitors as escrow agent on 23 May 2006 and shall be released to Talent Sino upon Completion;
(b) in addition to the Deposit, a sum of HK$67,200,000 will be payable by the Purchaser to Talent Sino upon Completion; and
(c) the balance of HK$19,200,000 will be payable by the Purchaser to Talent Sino three months after Completion.

LETTER FROM THE BOARD

Long stop date:

29 September 2006 (or such other date as the parties may agree in writing)

Conditions Precedent

Completion is conditional upon the satisfaction of the following:–

(a) the passing of (an) ordinary resolution(s) by the Shareholders as required by the Listing Rules to approve the Agreement and the transactions contemplated thereunder;
(b) all necessary consents (if any) in connection with the sale of the Sale Shares and/or the Shareholder’s Loan being granted by the relevant third parties;
(c) the Purchaser notifying Talent Sino in writing prior to 6:00 p.m. on 18 July 2006 that it is satisfied with the results of its due diligence investigations on Windsor Treasure Group;
(d) the Purchaser notifying Talent Sino in writing prior to 6:00 p.m. on or before the 5th business day after 18 July 2006 that the Purchaser is satisfied with the contents of the disclosure letter in respect of the representations, warranties and undertakings of Talent Sino under the Agreement;
(e) the representations, warranties and undertakings of Talent Sino under the Agreement (other than certain warranties as specified in the Agreement) remaining true and accurate in all material respects and not misleading in any material respect, in each case, as at Completion by reference to the circumstances then subsisting as if repeated at Completion and at all times between the date of the Agreement and Completion (subject to those matters set out in the disclosure letter); and
(f) as at Completion, no change which is materially adverse to the assets and operations of Windsor Treasure Group and no event, fact or matter having occurred which would likely give rise to such change.

The relevant third parties’ consents required for the sale of the Sale Shares and the Shareholder’s Loan under condition (b) above include the consents of the minority shareholders of Windsor Treasure and the mortgagee of the existing share mortgage over the Sale Shares.

While conditions set out in (a) and (b) above cannot be waived by the parties, the Purchaser may waive all or any of the conditions set out in (c) to (f) above at any time by notice in writing to Talent Sino.

Completion shall take place on the 5th business day after the last of the conditions in (a) to (d) above has been fulfilled and/or waived, or such other date as the parties may agree in writing. In the event that any of the conditions shall not have been fulfilled or waived prior to the Long Stop Date (or, in the case of the conditions set out in (c) and (d), by the respective dates set out above) then neither party to the Agreement shall be bound to proceed with the sale and purchase of the Sale Shares and the Shareholder’s Loan, in which event, the Deposit (including accrued interest thereon) will be returned to the Purchaser, and the Disposal will not proceed.

LETTER FROM THE BOARD

Basis for determining the Consideration

The Directors consider that the terms of the Agreement were arrived at after arm’s length negotiations between the parties. The Consideration was determined by reference to (a) the price/ earnings ratio of approximately 4.17 times based on 51.52% of the audited profit after taxation and extraordinary items and minority interests of Windsor Treasure for the year ended 31 December 2005 amounting to approximately HK$67,289,000 in respect of the consideration for the Sale Shares; and (b) the total outstanding principal amount of the Shareholder’s Loan together with interest thereon calculated up to 22 May 2006 amounting to HK$28,711,000.

INFORMATION ON THE GROUP

The principal activities of the Group consist of manufacturing and sale of home furniture, electronic components and products, contact and contactless smart card readers and related products, trading of building materials and sundry products, property holding and investment holding.

INFORMATION ON THE PURCHASER

The information regarding the Purchaser below was provided by the Purchaser.

The Purchaser is an investment holding company specifically established to hold the shares in Windsor Treasure, which is ultimately wholly owned by Mr. Samuel Shin Fang. Mr. Fang is an active investor in Asia and North America and is the President of SF Capital Limited, a family office created to manage different investment assets. Prior to the founding of SF Capital Limited, he was the Chairman of GET Manufacturing Inc., one of the largest electronics manufacturing service provider in the Far East with operations in Hong Kong, China, the United States of America, Mexico and Europe. Mr. Fang sits on the board of several private companies and is currently on the supervisory board of Osram LCS, a joint venture company between Siemens AG and his family.

As at the Latest Practicable Date, Mr. Fang, being the ultimate beneficial owner of the Purchaser, and his associate were interested in 4,104,750 Shares and 3,000,000 Shares representing 2.73% and 1.99% of the issued share capital of the Company respectively. Save as aforesaid, to the best knowledge, information and belief of the Directors, after making all reasonable enquiries, the Purchaser and its ultimate beneficial owner are Independent Third Parties.

INFORMATION ON WINDSOR TREASURE GROUP

Windsor Treasure is a company incorporated in the British Virgin Islands on 20 April 2004 and Windsor Treasure Group is principally engaged in the design, manufacture, sale and marketing of home furniture. As at the Latest Practicable Date, Windsor Treasure is owned as to approximately 51.52% by Talent Sino, 9.76% ultimately by Mr. Sung Kai Hing, Simon, a Director, and his wife, 9.27% ultimately by Mr. Chan Kwok Kin and his wife, 9.27% ultimately by Mr. Cheung Kong Cheung and his family member, 8.30% ultimately by Mr. Huang Wei Ye and his wife and 11.88% by two Independent Third Parties. Messrs. Sung Kai Hing, Simon, Chan Kwok Kin, Cheung Kong Cheung and Huang Wei Yei are also directors of Windsor Treasure Group. Upon Completion, the Group will no longer have any interest in, or carry on business of, Windsor Treasure and Windsor Treasure will cease to be a subsidiary of the Company.

LETTER FROM THE BOARD

The audited financial highlights of Windsor Treasure Group are set out below:–

	Period from	For the
	24 November 2004(Note 1)	financial year ended
	to 31 December 2004	31 December 2005
	HK$’000	HK$’000
Total turnover	33,956	223,658
Total asset value at the end of the financial period	131,182	181,876
Net asset value at the end of the financial period	43,745	75,088
Profit before taxation and extraordinary items	2,049	32,640
Profit after taxation and extraordinary items	1,946	31,944
Profit after taxation, extraordinary items
and minority interests_(Note 2)_	1,852	31,293
Notes:

The date of completion of the acquisition of 51.52% of Windsor Treasure Group by Talent Sino.
Such minority interests represent the interests of the minority shareholders of the subsidiaries of Windsor Treasure.

REASONS AND BENEFITS OF THE DISPOSAL

In reviewing the expansion and financial needs of Windsor Treasure Group and taking into account the reasonable purchase price offered by the Purchaser, and the size, diversified nature of the business, long term business strategies, financial resources and funding requirements of the Group, the Directors consider that it is the appropriate time for the Company to realize its investment in Windsor Treasure Group.

The Group acquired its 51.52% interest in Windsor Treasure in November 2004. While Windsor Treasure Group had significant growth in both revenue and profit for the year 2005, in order to maintain its market position in the highly competitive home furniture industry in China, Windsor Treasure Group is committed to further stepping up its marketing campaign through television, other media, exhibition and other promotional events, development of its franchising system, expansion of network coverage, expansion and upgrading of its manufacturing facilities, all of which require injection of substantial amount of financial resources and management efforts by the Group. The Company has provided Windsor Treasure a shareholder’s loan in the aggregate principal amount of HK$27.50 million as at the Latest Practicable Date. The Directors expect that further advances would be required to be made by the Group to Windsor Treasure on a continuous basis in order to meet the expansion and financial needs of Windsor Treasure Group if the Company decides to keep its investment in Windsor Treasure. Besides, capital expenditure on manufacturing facilities may not be repaid in the short run if the growth rate cannot be sustained. After Completion, it is no longer necessary for the Company to continue its funding to Windsor Treasure Group and the Company can allocate its resources to support the funding requirements of the other divisions of the Group’s business.

LETTER FROM THE BOARD

A loan due from Talent Sino to Independent Third Parties in the principal amount of HK$30,000,000 which is secured by, inter alia, a share mortgage over the Sale Shares was originally due on 28 April 2006. The lenders have agreed to extend the loan for around five months so that the loan will be due to be repaid by the Group on 29 September 2006. The loan bears interest at the rate of 1.25% per month. Part of the proceeds arising from the Disposal will be applied to repay the loan. As a result of the Disposal, the gearing ratio of the Group will also be reduced by the repayment of the loan. Having considered the substantial financial requirements of Windsor Treasure Group, the Directors believe that it is sensible to dispose of Windsor Treasure and retain a cash position at a level which is sufficient to support the cash flow requirements of other business divisions of the Remaining Group and/or to other new investment opportunities should they arise.

If the Disposal does not proceed, the Directors will consider other means of fund raising, such as rights issue or placing, to fulfill the funding requirements of Windsor Treasure Group and other business divisions of the Group and repay the loan mentioned above.

The terms of the Agreement were arrived at after arm’s length negotiations and on normal commercial terms between the parties and with reference to the basis of the Consideration as set out in the paragraph headed “Basis for determining the Consideration” under the section headed “THE AGREEMENT” on page 6 of this circular. Based on the carrying value of the Sale Shares of HK$50,967,000 as at 31 December 2005 (which represents the share of the net assets value of 51.52% of Windsor Treasure Group as at 31 December 2005 of HK$38,686,000 and the net book value of the goodwill arising from the acquisition of 51.52% of Windsor Treasure Group as at 31 December 2005 of HK$12,281,000) and the face value of the Shareholder’s Loan as at the date of the Agreement, the Company will obtain a gain of approximately HK$16,322,000 upon Completion. In view of the above, the Directors consider that the Consideration was reasonable and the Disposal represents a good opportunity to realise the Group’s investment.

Based on the above, the Directors are of the view that the terms of the Agreement are fair and reasonable and in the interests of the Shareholders as a whole.

USE OF PROCEEDS

The net proceeds arising from the Disposal are currently intended to be used by the Group (a) for repayment of the loan in the principal amount of HK$30,000,000 mentioned above, (b) as to approximately HK$30,000,000 (on the basis of HK$0.20 per Share and 150,439,152 Shares as at the Latest Practicable Date ) for distribution to Shareholders by way of a special interim dividend proposed to be declared by the Company subject to and after Completion and (c) the remaining amount to be used for general working capital purpose.

FINANCIAL EFFECTS OF THE DISPOSAL

According to the audited consolidated accounts of Windsor Treasure, as at 31 December 2005, the total assets and total liabilities of Windsor Treasure Group were HK$181.88 million and HK$78.72 million (excluding the Shareholder’s Loan which amounted to HK$28.07 million as at 31 December 2005) respectively and the minority shareholders interest of Windsor Treasure recorded in the Company’s consolidated balance sheet was HK$36.40 million. Upon Completion, such assets, liabilities and the minority shareholders interest of Windsor Treasure will be removed from the consolidated accounts of the Company upon the deconsolidation of Windsor Treasure Group.

LETTER FROM THE BOARD

Based on the consolidated balance sheet of the Group as at 31 December 2005 set out in Appendix I to this circular, the equity attributable to the Shareholders as at 31 December 2005 was approximately HK$201.38 million. Based on the unaudited pro forma balance sheet of the Remaining Group set out in Appendix II to this circular prepared on the assumption that the Disposal had been completed on 31 December 2005, the unaudited pro forma equity attributable to the Shareholders in respect of the Remaining Group would be equal to approximately HK$218.35 million. The increase in the equity attributable to the Shareholders of approximately HK$16.97 million is a result of the gain on the Disposal.

Upon Completion, Windsor Treasure will cease to be a subsidiary of the Company and cease to contribute its earnings to the Remaining Group.

MANAGEMENT DISCUSSION AND ANALYSIS

(a) Financial Review

For the year ended 31 December 2005 and as if the Disposal had been completed on 1 January 2005, the Remaining Group recorded a turnover of approximately HK$169.62 million and loss attributable to shareholders of approximately HK$3.83 million. The turnover was mainly attributed by the Group’s electronics components division operating under Lik Hang Holdings Limited (“ Lik Hang ”) and the smart card technology division mainly operating under VFJ Technology Holdings Limited (“ VFJ ”) which accounted for about 95.56% and 1.69% respectively of the total turnover of the Remaining Group. Rental income and trading of building materials and sundry products accounted for the remaining 2.75%.

The electronic components division operated under Lik Hang recorded a 22.77% increase in revenue from approximately HK$132.02 million for the year 2004 to approximately HK$162.08 million for the year 2005. Besides organic growth, the increase in revenue was mainly attributable to the successful launch of composite components, in particular power supply related products. Gross profit margin in this division decreased because of keen competition and rising material and labour costs. Despite that, operating profit from this division increased by 36.58% from approximately HK$5.96 million for the year 2004 to approximately HK$8.14 million for the year 2005 due to stringent cost control.

The Remaining Group’s smart card technology division mainly operated under VFJ has been facing intense competition in China from local suppliers. While the technology of the Remaining Group’s products remains competitive, there was a decrease in revenue of 57.54% from approximately HK$6.76 million for the year 2004 to approximately HK$2.87 million for the year 2005. Notwithstanding all efforts to reduce cost, the operating loss increased by 150.62% from approximately HK$2.42 million for the year 2004 to approximately HK$6.06 million for the year 2005.

Besides the operating loss from VFJ, the Group’s operating result was further affected by its investment activities. The Remaining Group recorded a loss from operating activities of approximately HK$32.17 million which was mainly attributable to the revaluation deficit on listed investments of approximately HK$8.21 million, the write-off of the Group’s interest in Bizipoint Group Limited, an associate in the e-commerce business (including unamortised goodwill) which has become dormant due to continual negative operating cashflow, of approximately HK$10.00 million.

LETTER FROM THE BOARD

Equity attributable to the Shareholders as at 31 December 2005 in respect of the Remaining Group amounted to approximately HK$218.35 million or HK$1.45 per Share.

If the Completion had taken place on 1 January 2005, a gain of HK$32.47 million would be recorded and the loss attributable to Shareholders would be HK$3.83 million.

(b) Liquidity, Financial Resources and Capital Structure

As at 31 December 2005, the Remaining Group had current assets and current liabilities of approximately HK$257.90 million and HK$112.77 million respectively, cash and bank deposits of approximately HK$129.12 million and short-term bank borrowings of approximately HK$57.54 million.

As at 31 December 2005, the Remaining Group had a gearing ratio of 41.52% being the ratio of bank borrowings and other loan to shareholders’ funds. Upon Completion, the loan of HK$30.00 million due to Independent Third Parties which was secured by, inter alia, a share mortgage over the Sales Share will be repaid, hence the gearing ratio will further improve.

The Remaining Group has limited exposure to the foreign exchange fluctuations risks as most of its sales are denominated in Hong Kong dollars, United States dollars and Renminbi, being the same currencies in which the Remaining Group’s related costs and expenses are denominated. The Directors considered that the recent appreciation of Renminbi may have a positive but immaterial impact to the Remaining Group. During the year, the Remaining Group did not use any financial instruments for hedging purposes and the Remaining Group did not have any hedging instruments outstanding as at 31 December 2005.

During the year 2005, the Company successfully raised additional working capital through the following fund raising activities:

(i) in February 2005, the Company entered into a placing agreement with a placing agent for placing an aggregate of 9,000,000 new shares at HK$0.96 per Share to independent investors. The net proceeds raised by the placing amounted to approximately HK$8.30 million, which were, as planned, used as general working capital and also for expansion of operation of the Group. Details of the placing are contained in the Company’s announcement dated 4 February 2005;
(ii) in May 2005, the Company completed the open offer of 50,146,384 new Shares on the basis of one offer share for every two Shares held by the then Shareholders on the specified record date at the subscription price of HK$0.38 per offer share. The net proceeds raised by the open offer amounted to approximately HK$18.00 million which were, as planned, used as general working capital and also for financing ongoing business development of the Group. Details of the open offer are contained in the Company’s circular dated 3 May 2005.

During the year 2005, the Company issued and allotted an aggregate of 59,146,384 new Shares as a result of the placing and the open offer set out above. As at 31 December 2005 and the Latest Practicable Date, the Company had 150,439,152 Shares in issue.

LETTER FROM THE BOARD

During the year 2005, the Company increased its shareholding in Omnitech Holdings Limited (“ Omnitech ”), an indirect non-wholly owned subsidiary of the Company and the shares of which are listed on the Australian Stock Exchange, through the following transactions:

(i) on 23 November 2005, Hai Yang Investment Limited (“ Hai Yang ”), a wholly owned subsidiary of the Company, fully exercised the option granted by Omnitech to Hai Yang on 18 May 2005 and acquired 10,000,000 shares in Omnitech. The shareholding of the Company in Omnitech increased from 51.56% to 66.04%. Details of the transaction are contained in the Company’s circular dated 14 December 2005; and
(ii) on 23 November 2005, Hai Yang entered into a deed of assignment as assignor with Omnitech as assignee and VFJ as debtor whereby, inter alia, Omnitech issued 16,033,019 shares in Omnitech to Hai Yang. The shareholding of the Company in Omnitech increased from 66.04% to 77.04%. Details of the transaction are contained in the Company’s circular dated 14 December 2005.

(c) Pledge on Assets

As at 31 December 2005, the Remaining Group pledged bank balances in the amount of approximately HK$22.29 million for its secured bank borrowings, and provided, inter alia, a floating charge against the Remaining Group’s entire asset and a share mortgage over the Sale Shares as security for the HK$30.00 million loan facility from Independent Third Parties.

(d) Contingent Liabilities

As at 31 December 2005, the Remaining Group had contingent liabilities of approximately HK$86.80 million in respect of corporate guarantee to banks and others.

(e) Employees and Remuneration Policies

While the Remaining Group will continue to adopt strict financial discipline and cost control, it will actively pursue a personnel policy which will provide performance based rewards and incentives in order to retain and attract high caliber executives and employees.

As at 31 December 2005, the Remaining Group had approximately 1,200 employees, out of which approximately 1,100 were production workers in China. In addition to the provision of annual bonuses, medical insurance and in-house and external training programs, discretionary bonuses and share options are also available to employees based on their individual performance. The remuneration policy and packages of the Group are reviewed from time to time.

LETTER FROM THE BOARD

(f) Prospects

Given the diversified nature of its business activities of the Remaining Group, the Directors are actively reviewing all the Group’s business and investment activities, long term strategies, and the implications of funding, management and other resources required to achieve better returns.

The electronic components division will continue its effort to expand sales in the direction of composite component/power supply. The direction and strategy of the smart card technology division will also be reviewed to remedy the continual loss situation. The Company will continue its effort on tight cost policies and new product development in order to meet the challenges of increasing costs of raw materials and labour.

The proceeds from the Disposal can provide additional working capital to the Remaining Group or other new investment opportunities should they arise. As at the Latest Practicable Date, the Company has not identified any investment target yet.

IMPLICATIONS OF THE LISTING RULES

The Disposal constitutes a very substantial disposal of the Company under Chapter 14 of the Listing Rules. Pursuant to Rule 14.49 of the Listing Rules, the Disposal is conditional upon the approval of the Shareholders at the SGM. The Purchaser, the ultimate beneficial owner of the Purchaser, the Relevant Shareholders, and their respective associates are required to abstain from voting at the SGM in relation to the resolution for approving the Agreement and the transactions thereunder.

As at the Latest Practicable Date, Mr. Fang, being the ultimate beneficial owner of the Purchaser and his associate were interested in 4,104,750 Shares and 3,000,000 Shares representing 2.73% and 1.99% of the issued share capital of the Company respectively and the Relevant Shareholders were in aggregate interested in 25,504,500 Shares representing 16.95% of the issued share capital of the Company.

SGM

A notice convening the SGM, at which an ordinary resolution will be proposed to the Shareholders approving the Agreement and the transactions thereunder, is set out on pages 89 to 90 of this circular. The proposed resolution will be voted by way of poll at the SGM.

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

LETTER FROM THE BOARD

PROCEDURE TO DEMAND A POLL BY SHAREHOLDERS

Under the bye-laws of the Company, a poll can be demanded by:

(i) the chairman of the meeting;
(ii) at least three members present in person or by proxy or representative for the time being entitled to vote at the meeting;
(iii) any member or members present in person or by proxy or representative and representing not less than one-tenth of the total voting rights of all the members having the right to vote at the meeting;
(iv) a member or members present in person or by proxy or representative 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; or
(v) if required by the Listing Rules, by the chairman of such meeting or any Director or Directors who, individually or collectively, hold proxies in respect of shares representing five per cent. (5%) or more of the total voting rights at the meeting.

RECOMMENDATION

The Directors consider that the Disposal is in the interests of the Company and the Shareholders as a whole and its terms are fair and reasonable and recommend the Shareholders to vote in favour of the ordinary resolution set out in the notice of SGM contained in this circular to approve the Disposal.

FURTHER INFORMATION

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

By Order of the Board Omnicorp Limited Au Hoi Tsun, Peter Managing Director

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

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28 June 2006

The Directors Omnicorp Limited

Dear Sirs,

We set out below our report on the financial information (“Financial Information”) relating to Omnicorp Limited (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”) for the years ended 31 December 2003, 2004 and 2005 (the “Relevant Periods”) for inclusion in the circular of the Company dated 28 June 2006 (the “Circular”) in connection with the proposed disposal of approximately 51.52% interest in the issued share capital of and shareholder’s loan to Windsor Treasure Group Holdings Limited.

The Company is a limited liability company incorporated in Bermuda and its shares are listed on The Stock Exchange of Hong Kong Limited.

We have acted as auditors of the Group for the Relevant Periods.

During the Relevant Periods, the principal activity of the Company was investment holding. The principal activities of the subsidiaries consisted of the manufacture and sale of electronic components and products, contact and contactless smart card readers and related products, home furniture, trading of building materials and sundry products, property holding and investment holding. Details of the subsidiaries of the Company are listed in note 15 to the Financial Information below.

We have undertaken an independent audit of the respective financial statements of the companies in the Group for the Relevant Periods in accordance with Hong Kong Standards on Auditing 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 consolidated financial statements of the Group for the Relevant Periods (the “Underlying Financial Statements”), on the basis set out in note 2(b) to the Financial Information below. We have examined the Underlying Financial Statements in accordance with the Auditing Guideline “Prospectuses and the Reporting Accountant” issued by the HKICPA.

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

In our opinion, on the basis of presentation set out in note 2(b) to the Financial Information below, the Financial Information gives, for the purpose of this report, a true and fair view of the state of the affairs of the Company and of the Group as at 31 December 2003, 2004 and 2005, and of the results and cash flows of the Group for the Relevant Periods.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

A. FINANCIAL SUMMARY

The following financial information has been extracted from the audited consolidated financial statements of the Group for the Relevant Periods:

CONSOLIDATED PROFIT AND LOSS ACCOUNT

Note TURNOVER 3 Cost of sales Gross profit Other revenue Distribution costs Administrative expenses Other operating expenses PROFIT FROM OPERATING ACTIVITIES 6 Finance costs 7 Share of results of associates PROFIT/(LOSS) BEFORE TAX Taxation 9 PROFIT/(LOSS) FOR THE YEAR ATTRIBUTABLE TO: 10, 28 Equity holders of the Company Minority interests EARNINGS/(LOSS) PER SHARE FOR PROFIT/(LOSS) ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY 11 Basic Diluted	Year 2003 HK$’000 248,373 (219,920) 28,453 38,500 (2,449) (30,398) (17,486) 16,620 (2,299) (1,374) 12,947 2,341 15,288 10,859 4,429 15,288 0.14 dollars 0.14 dollars	ended 31 December 2004 2005 HK$’000 HK$’000 176,760 393,273 (147,147) (316,388) 29,613 76,885 31,958 5,188 (2,476) (9,819) (33,261) (40,750) (14,464) (29,014) 11,370 2,490 (4,249) (7,538) 1,862 (391) 8,983 (5,439) (340) (969) 8,643 (6,408) 7,175 (19,791) 1,468 13,383 8,643 (6,408) 0.08 dollars (0.14 dollars) N/A N/A

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

CONSOLIDATED BALANCE SHEET

Note NON-CURRENT ASSETS Properties, plant and equipment 12 Investment property 13 Long term investments 14 Interests in associates 16 Goodwill 17 CURRENT ASSETS Inventories 18 Trade and other receivables 19 Prepayments and deposits Current tax recoverable Listed investments 20 Cash and bank balances 21 CURRENT LIABILITIES Due to related parties 22 Trade and other payables 23 Interest bearing bank borrowings 24 Other loan payable 25 Deposits received Current tax payable NET CURRENT ASSETS	As at 31 December 2003 2004 2005 HK$’000 HK$’000 HK$’000 9,859 32,077 30,995 18,000 12,000 10,430 56,712 23,700 23,700 48,400 64,828 50,689 10,197 21,767 21,767 143,168 154,372 137,581 30,645 76,446 89,964 63,808 99,011 145,421 1,696 6,208 2,214 – 1,214 3,362 – 24,265 19,568 31,203 55,446 67,990 127,352 262,590 328,519 – 4,130 26 23,761 74,498 65,433 39,390 50,032 67,152 – 15,000 30,000 263 10,709 22,929 23 2,040 1,951 63,437 156,409 187,491 63,915 106,181 141,028	As at 31 December 2003 2004 2005 HK$’000 HK$’000 HK$’000 9,859 32,077 30,995 18,000 12,000 10,430 56,712 23,700 23,700 48,400 64,828 50,689 10,197 21,767 21,767 143,168 154,372 137,581 30,645 76,446 89,964 63,808 99,011 145,421 1,696 6,208 2,214 – 1,214 3,362 – 24,265 19,568 31,203 55,446 67,990 127,352 262,590 328,519 – 4,130 26 23,761 74,498 65,433 39,390 50,032 67,152 – 15,000 30,000 263 10,709 22,929 23 2,040 1,951 63,437 156,409 187,491 63,915 106,181 141,028
		137,581
		89,964 145,421 2,214 3,362 19,568 67,990
		328,519
		26 65,433 67,152 30,000 22,929 1,951
		187,491
		141,028

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

Note TOTAL ASSETS LESS CURRENT LIABILITIES NON-CURRENT LIABILITIES Interest bearing bank borrowings 24 Deferred tax liabilities 26 EQUITY ATTRIBUTABLE TO COMPANY’S SHAREHOLDERS Share capital 27 Reserves 28 MINORITY INTERESTS	As at 31 December 2003 2004 2005 HK$’000 HK$’000 HK$’000 207,083 260,553 278,609 – 3,834 3,124 85 44 17 85 3,878 3,141 206,998 256,675 275,468 743 913 1,504 168,447 192,452 199,880 169,190 193,365 201,384 37,808 63,310 74,084 206,998 256,675 275,468	As at 31 December 2003 2004 2005 HK$’000 HK$’000 HK$’000 207,083 260,553 278,609 – 3,834 3,124 85 44 17 85 3,878 3,141 206,998 256,675 275,468 743 913 1,504 168,447 192,452 199,880 169,190 193,365 201,384 37,808 63,310 74,084 206,998 256,675 275,468
		3,141
		275,468

		1,504 199,880
		201,384 74,084
		275,468

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the three years ended 31 December 2005

1 January 2003 Profit for the year Currency translation differences Issue of new shares Share issue expenses Exercise of share options of subsidiaries Acquisition of subsidiaries Disposal of subsidiaries 31 December 2003 and 1 January 2004 Profit for the year Currency translation differences Issue of new shares Dividend paid to minority shareholders Acquisition of subsidiaries 31 December 2004 and 1 January 2005 Loss for the year Currency translation differences Transfer Employee share options Movement for the year Issue of new shares Share issue expenses Issue of new shares to minority shareholders Dividends paid to minority shareholders Deemed disposal 31 December 2005			Attributable to equity holders of the Company	Attributable to equity holders of the Company	Attributable to equity holders of the Company	Attributable to equity holders of the Company	Total HK$’000 132,050 10,859 (998 ) 28,180 (901 ) – – – 169,190 7,175 (3 ) 17,003 – – 193,365 (19,791 ) 428 – 1,015 (235 ) 27,695 (1,093 ) – – – 201,384	Minority interests HK$’000 31,070 4,429 – – – 1,398 1,592 (681 ) 37,808 1,468 (5 ) – (1,439 ) 25,478 63,310 13,383 748 – – – – – 637 (2,357 ) (1,637 ) 74,084	Total equity HK$’000 163,120 15,288 (998 ) 28,180 (901 ) 1,398 1,592 (681 ) 206,998 8,643 (8 ) 17,003 (1,439 ) 25,478 256,675 (6,408) 1,176 – 1,015 (235 ) 27,695 (1,093 ) 637 (2,357 ) (1,637 ) 275,468
	Share capital HK$’000 533 – – 210 – – – – 743 – – 170 – – 913 – – – – – 591 – – – – 1,504	Share premium HK$’000 46,317 – – 27,970 (901 ) – – – 73,386 – – 16,833 – – 90,219 – – – – – 27,104 (1,093 ) – – – 116,230	Contributed surplus HK$’000 83,274 – – – – – – – 83,274 – – – – – 83,274 – – – – – – – – – – 83,274	Exchange fluctuation reserve HK$’000 11,270 – (998 ) – – – – – 10,272 – (3 ) – – – 10,269 – 428 – – – – – – – – 10,697	Enterprises development fund HK$’000 – – – – – – – – – – – – – – – – – 15 – (101 ) – – – – – (86 )	Retained Employee profits/ Reserve compensation (accumulated fund reserve losses) HK$’000 HK$’000 HK$’000 – – (9,344) – – 10,859 – – – – – – – – – – – – – – – – – – – – 1,515 – – 7,175 – – – – – – – – – – – – – – 8,690 – – (19,791 ) – – – 16 – (31 ) – 1,015 – (134 ) – – – – – – – – – – – – – – – – – (118 ) 1,015 (11,132 )

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

CONSOLIDATED CASH FLOW STATEMENT

Note NET CASH USED IN OPERATIONS 29(a) Taxes (paid)/refunded outside Hong Kong Interest paid NET CASH USED IN OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Interest received Purchases of long term investments Purchases of listed investments Purchases of properties, plant and equipment Purchases of associates Repayment of loan from an associate Loans to associates Dividends paid to minority shareholders Proceeds from disposals of: Properties, plant and equipment Investment properties Long term investments Subsidiaries 29(b) Acquisition of subsidiaries, net of cash acquired 29(c) Decrease/(increase) in pledged time deposits and guarantee funds Net cash (used in)/generated from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of new shares Proceeds from subscriptions of share by minority shareholders Share issue expenses Proceeds from other loan Proceeds from interest bearing bank borrowings Net cash generated from financing activities	Year 2003 HK$’000 (27,570) (262) (2,299) (30,131) 433 (1,000) – (8,349) (725) 6,250 (31,095) – – 11,677 22,000 (13,010) (11,837) 9,569 (16,087) 28,180 2,902 (901) – 15,755 45,936	ended 31 December 2004 2005 HK$’000 HK$’000 (10,112) (27,594) 272 (3,194) (4,249) (7,538) (14,089) (38,326) 2,211 1,082 – – – (3,523) (5,967) (10,039) – – – 3,821 – – (1,500) (2,357) – 3,168 – – 18,637 – (20) – 7,580 – (10) (5,997) 20,931 (13,845) – 27,695 – 637 – (1,093) 15,000 15,000 1,662 15,634 16,662 57,873

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Note (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS Cash and cash equivalents at beginning of year Effect of exchange rate changes 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 21 Bank overdrafts 24	Year 2003 HK$’000 (282) 11,670 (2,558) 8,830 31,203 (16,278) (6,095) 8,830	ended 31 December 2004 2005 HK$’000 HK$’000 23,504 5,702 8,830 32,325 (9) 287 32,325 38,314 55,446 67,990 (16,288) (22,285) (6,833) (7,391) 32,325 38,314

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

BALANCE SHEET

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)/ASSETS CAPITAL AND RESERVES Share capital 27 Reserves 28	As at 31 December 2003 2004 2005 HK$’000 HK$’000 HK$’000 180,746 194,152 220,095 23 241 218 7 7 18 30 248 236 1,082 23 300 (1,052) 225 (64) 179,694 194,377 220,031 743 913 1,504 178,951 193,464 218,527 179,694 194,377 220,031

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

For the three years ended 31 December 2003, 2004 and 2005

1. CORPORATE INFORMATION

During the Relevant Periods, the Group was engaged in the following activities:

Manufacture and sale of electronic components and products
Manufacture and sale of contact and contactless smart card readers and related products
Design, manufacture, sale and marketing home furniture
Trading of building materials and sundry products
Property holding
Investment holding

2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES

(a) Statement of compliance

These financial statements have been prepared in accordance with all applicable Hong Kong Financial Reporting Standards (“HKFRSs”), which term collectively includes all applicable individual Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards (“HKASs”) and Interpretations issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”), accounting principles generally accepted in Hong Kong and the disclosure requirements of the Hong Kong Companies Ordinance. These financial statements also comply with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

(b) Basis of preparation of financial statements

The measurement basis used in the preparation of the financial statements is the historical cost basis except for investment property which is stated at its fair value as explained in note 2 i).

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

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The Directors have considered the development, selection and disclosure of the Group’s critical accounting policies and estimates. There are no critical accounting judgments in applying the Group’s accounting policies.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (Continued)

(c) Adoption of new and revised Hong Kong Financial Reporting Standards

During the financial year ended 31 December 2005, the Group has adopted the new and revised HKFRSs which are effective for accounting periods commencing on or after 1 January 2005. The new and revised HKFRSs which are relevant to the Group’s operations are:

HKAS 1	Presentation of Financial Statements
HKAS 2	Inventories
HKAS 7	Cash Flow Statements
HKAS 8	Accounting Policies, Changes in Accounting Estimates and Errors
HKAS 10	Events after the Balance Sheet Date
HKAS 12	Income Taxes
HKAS 16	Property, Plant and Equipment
HKAS 17	Leases
HKAS 18	Revenue
HKAS 19	Employee Benefits
HKAS 21	The Effects of Changes in Foreign Exchange Rates
HKAS 23	Borrowing Costs
HKAS 24	Related Party Disclosures
HKAS 27	Consolidated and Separate Financial Statements
HKAS 32	Financial Instruments: Disclosure and Presentation
HKAS 36	Impairment of Assets
HKAS 37	Provisions, Contingent Liabilities and Contingent Assets
HKAS 38	Intangible Assets
HKAS 39	Financial Instruments: Recognition and Measurement
HKAS 40	Investment Property
HKFRS 2	Share-based Payment
HKFRS 3	Business Combinations

The adoption of HKASs 2, 7, 8, 10, 12, 16, 18, 19, 23, 27, 37 and 39 has had no material impact on the accounting policies of the Group and the Company and the methods of computation in the Group’s and the Company’s financial statements. The effect of the adoption of the other HKFRSs is summarised as follows:

HKAS 1 “Presentation of Financial Statements”

HKAS 1 has affected the presentation of minority interest on the face of the consolidated profit and loss account, consolidated balance sheet, consolidated statement of changes in equity and other disclosures.

HKAS 17 “Leases”

The adoption of revised HKAS 17 has resulted in a change in the accounting policy relating to the reclassification of land use rights from property, plant and equipment to operating leases. The upfront prepayments made for land use rights are expensed in the profit and loss account on a straight-line basis over the period of the lease or where there is an impairment, the impairment is expensed in the profit and loss account. In prior years, the land use rights were accounted for at cost less accumulated depreciation and accumulated impairment. The change in accounting policy has been applied retrospectively.

No reclassification of land use right from property, plant and equipment to operating leases has been made in the Group’s financial statements as, in the opinion of the Directors, the land use right of the Group’s leasehold property situated overseas did not have any commercial value. On 30 September 2005, the Group disposed of the leasehold property situated overseas. Accordingly, no reclassification of land use right from property, plant and equipment to operating leases is required in these financial statements.

There was no impact on opening retained profits from the adoption of HKAS 17.

HKAS 21 “The Effects of Changes in Foreign Exchange Rates”

HKAS 21 had no material effect on the Group’s policy. The functional currency of each of the consolidated entities has been re-evaluated based on the guidance to the revised standard. All the Group entities have the same functional currency as the presentation currency for the respective entity’s financial statements.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (Continued)

(c) Adoption of new and revised Hong Kong Financial Reporting Standards (Continued)

In order to comply with HKAS 21, the Group has changed its accounting policy relating to retranslation of goodwill with effect from 1 January 2005. In prior years, goodwill arising on the acquisition of a foreign operation was translated at the exchange rates ruling at the transaction dates. Under the new policy, any goodwill arising on the acquisition of a foreign operation is treated as an asset of the foreign operation and is retranslated at exchange rates ruling at the balance sheet date, together with the retranslation of the net assets of the foreign operation. In accordance with the transitional provisions in HKAS 21, this new policy has not been adopted retrospectively and is only applied to acquisitions occurring on or after 1 January 2005. As the Group has not acquired any new foreign operations since that date, the change in policy has had no impact on the financial statements for the year ended 31 December 2005.

HKAS 24 “Related Party Disclosures”

As a result of the adoption of HKAS 24, the definition of related parties as disclosed in note 2 (y) has been expanded to clarify that related parties include entities that are under the significant influence of a related party that is an individual (i.e. key management personnel, significant shareholders and/or their close family members) and post-employment benefit plans which are for the benefit of employees of the Group or of any entity that is a related party of the Group. The clarification of the definition of related parties has not resulted in any material changes to the previously reported disclosures of related party transactions nor has it had any material effect on the disclosures made in the current period, as compared to those that would have been reported had Statement of Standard Accounting Practice 20 “Related Party Disclosures”, still been in effect.

HKAS 32 “Financial Instruments: Disclosure and Presentation”

HKAS 32 has affected the disclosure of information to enhance understanding of the significance of financial instruments as to the Group’s financial position, performance and cash flows, and assist in assessing the amounts, timing and certainty of future cash flows associated with those instruments.

HKAS 40 “Investment Property”

The Group’s investment property is stated at its open market value on the basis of annual valuation. In prior years, any surplus or deficit on revaluation was taken to the investment property revaluation reserve unless the total of this reserve was insufficient to cover a deficit, in which case the amount by which the deficit exceeded the amount in the reserve was charged to the profit and loss account. Following the adoption of HKAS 40, changes in fair value of the investment property are included in the profit and loss account. The change in accounting policy has been applied retrospectively. There was no impact on opening retained profits from the adoption of HKAS 40.

HKFRS 2 “Share-based Payment”

The adoption of HKFRS 2 has resulted in a change in the accounting policy for share-based payments. Until 31 December 2004, the provision of share options to employees (including Directors) did not result in an expense in the profit and loss account. Effective on 1 January 2005, the Group recognises the fair value of the share options as an expense in the profit and loss account. A corresponding increase is recognised in a capital reserve within equity. Where the employees are required to meet vesting conditions before they become entitled to the options, the Group recognises the fair value of the options granted over the vesting period. Otherwise, the Group recognise the fair value in the period in which the options are granted. The fair value of share options granted during the year has been determined by an external valuer using the Black-Scholes Model. The options are exercisable starting from the date of grant and the options have a contractual option term of five years. The Company has no legal or constructive obligation to repurchase or settle the options in cash.

The Group has taken advantage of the transitional provisions of HKFRS 2 under which the new recognition and measurement policies have not been applied to options granted after 7 November 2002 and vested before 31 December 2004.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (Continued)

(c) Adoption of new and revised Hong Kong Financial Reporting Standards (Continued)

HKFRS 3 “Business Combinations”, HKAS 36 “Impairment of Assets” and HKAS 38 “Intangible Assets”

The adoption of HKFRS 3, HKAS 36 and HKAS 38 has resulted in a change in the accounting policy for goodwill. Until 31 December 2004, goodwill was:

Amortised on a straight-line basis over the economic useful life; and

Assessed for an indication of impairment at each balance sheet date.

In accordance with the provisions of HKFRS 3:

The Group ceased amortisation of goodwill from 1 January 2005;

Accumulated amortisation as at 31 December 2004 has been eliminated with a corresponding decrease in the cost of goodwill; and

From the year ended 31 December 2005 onwards, goodwill is tested annually for impairment, as well as when there is indication for impairment.

HKFRS 3 has been adopted prospectively after the adoption date.

(d) Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries made up to 31 December 2003, 2004 and 2005. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the Group.

A subsidiary, in accordance with the Hong Kong Companies Ordinance, is a company in which the Group, directly or indirectly, holds more than half of the issued share capital or controls more than half the voting power or controls the composition of the board of directors. Subsidiaries are considered to be controlled if the Company has the power, directly or indirectly, to govern the financial and operating policies, so as to obtain benefits from their activities.

The results of subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. All significant intercompany transactions and balances within the Group are eliminated on consolidation.

The acquisition of subsidiaries during the year has been accounted for using the purchase method of accounting. This method involves allocating the cost of the business combinations to fair values of the assets acquired, and liabilities and contingent liabilities assumed at the date of acquisition. The cost of the acquisition is measured at the aggregate of the fair values of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition.

Minority interests at the balance sheet date, being the portion of the net assets of subsidiaries attributable to equity interests that are not owned by the Company, whether directly or indirectly through subsidiaries, are presented in the consolidated balance sheet and statement of changes in equity within equity, separately from equity attributable to the equity shareholders of the Company. Minority interests in the results of the Group are presented on the face of the consolidated profit and loss account as an allocation of the total profit or loss for the year between minority interests and the equity shareholders of the Company.

Where losses applicable to the minority exceed the minority’s interest in the equity of a subsidiary, the excess, and any further losses applicable to the minority, are charged against the Group’s interest except to the extent that the minority has a binding obligation to, and is able to, make additional investment to cover the losses. If the subsidiary subsequently reports profits, the Group’s interest is allocated all such profits until the minority’s share of losses previously absorbed by the Group has been recovered.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (Continued)

(e) Goodwill on consolidation

Goodwill represents the excess of the cost of a business combination or an investment in an associate over the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities. Goodwill is stated at cost less accumulated impairment losses. Goodwill is allocated to cashgenerating units and is tested annually for impairment. In respect of associates, the carrying amount of goodwill is included in the carrying amount of the interests in the associates.

Any excess of the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the cost of a business combination or an investment in an associate is recognised immediately in the profit and loss account.

On disposal of a cash generating unit or an associate during the year, any attributable amount of purchased goodwill is included in the calculation of the profit or loss on disposal.

(f) Investments in subsidiaries

Investments in subsidiaries are stated in the Company’s balance sheet at cost less any identified impairment losses. Results of the subsidiaries are accounted for by the Company on the basis of dividends received and receivable.

(g) Investments in associates

An associate is an entity in which the Group or the Company has significant influence, but not control or joint control, over its management, including participation in the financial and operating policy decisions.

An investment in an associate is accounted for in the consolidated financial statements under the equity method and is initially recorded at cost and adjusted thereafter for the post acquisition change in the Group’s share of the associate’s net assets, unless it is classified as held for sale (or included in a disposal group that is classified as held for sale). The consolidated profit and loss account includes the Group’s share of the post-acquisition, post-tax results of the associates for the year, including any impairment loss on goodwill relating to the investments in associates recognised for the year.

When the Group’s share of losses exceeds its interest in an associate, the Group’s interest is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate. For this purpose, the Group’s interest in the associate is the carrying amount of the investment under the equity method together with the Group’s long-term interests that in substance form part of the Group’s net investment in the associate. Unrealised profits and losses resulting from transactions between the Group and its associates are eliminated to the extent of the Group’s interests in the associates, except where unrealised losses provide evidence of an impairment of the asset transferred, in which case they are recognised immediately in the profit and loss account.

In the Company’s balance sheet, its investments in associates are stated at cost less impairment losses, unless it is classified as held for sale (or included in a disposal group that is classified as held for sale).

(h) Property, plant and equipment and depreciation

Property, 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 item 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.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (Continued)

(h) Property, plant and equipment and depreciation (Continued)

When, in the opinion of the Directors, the recoverable amounts of property, 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:

Buildings 2% – 5% Leasehold improvements 18% – 20% or over the lease terms whichever is shorter Plant and machinery 9% – 25% Furniture and equipment 12.5% – 30% Motor vehicles 18% – 33%

(i) Investment property

Investment properties are land and/or buildings which are owned or held under a leasehold interest to earn rental income and/or for capital appreciation. These include land held for a currently undetermined future use.

Investment property is stated in the balance sheet at fair value. Any gain or loss arising from a change in fair value or from the retirement or disposal of an investment property is recognised in the profit and loss account. Rental income from investment properties is accounted for as described in note 2 (q).

(j) Long term investments

Long term investments are investments in equity instruments with no reliable fair value measurement and are stated at cost less any impairment as determined by the Directors.

(k) Impairment of assets

At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If 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.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (Continued)

(l) 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.

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

(m) Listed investments

Listed investments are investments in equity securities and are classified as financial assets measured at fair value through profit and loss. They are stated at their fair values on the basis of their quoted market prices at the balance date, on an individual investments basis. The gains or losses arising from changes in the fair value of a security are credited or charged to the profit and loss account in the period in which they arise.

(n) Trade and other receivables

Trade and other receivables are initially recognised at fair value and thereafter stated at cost less allowance for bad and doubtful debts.

(o) Trade and other payables

Trade and other payables are initially recognised at fair value and thereafter stated at amortised cost unless the effect of discounting would be immaterial, in which case they are stated at cost.

(p) 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.

(q) 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:

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;

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;

Rental income, on the straight-line basis over the lease terms;

Interest, on a time proportion basis taking into account the principal outstanding and the effective interest rate applicable; and

Dividends, when the shareholders’ right to receive payment is established.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (Continued)

(r) 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.

(s) 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.

(t) Operating leases

Leases which do not transfer substantially all the risks and rewards of ownership to the Group are classified as operating leases.

Where the Group has the use of assets held under operating leases, payments made under the leases are charged to profit and loss account in equal instalments over the accounting periods covered by the lease term, except where an alternative basis is more representative of the pattern of benefits to be derived from the leased assets. Lease incentives received are recognised in profit and loss account as an integral part of the aggregate net lease payments made. Contingent rentals, if any, are charged to profit and loss account in the accounting period in which they are incurred.

(u) Employee benefits

Short term employee benefits and contributions to defined contribution retirement plans

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

Share based payments

The fair value of share options granted to employees is recognised as an employee cost with a corresponding increase in a capital reserve within equity. The fair value is measured at grant date using the BlackScholes Model, taking into account the terms and conditions upon which the options were granted. Where the employees have to meet vesting conditions before becoming unconditionally entitled to the share options, the total estimated fair value of the share options is spread over the vesting period, taking into account the probability that the options will vest.

During the vesting period, the number of share options that is expected to vest is reviewed. Any adjustment to the cumulative fair value recognised in prior years is charged/credited to the profit and loss account for the year of the review, unless the original employee expenses qualify for recognition as an asset, with a corresponding adjustment to the capital reserve. On vesting date, the amount recognised as an expense is adjusted to reflect the actual number of share options that vest (with a corresponding adjustment to the capital reserve) except where forfeiture is only due to not achieving vesting conditions that relate to the market price of the Company’s shares. The equity amount is recognised in the capital reserve until either the option is exercised (when it is transferred to the share premium account) or the option expires (when it is released directly to retained profits).

Termination benefits

Termination benefits are recognised when, and only when, the Group demonstrably commits itself to terminate employment or to provide benefits as a result of voluntary redundancy by having a detailed formal plan which is without realistic possibility of withdrawal.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (Continued)

(v) Foreign currency translation

Foreign currency transactions during the year are translated at the foreign exchange rates ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the foreign exchange rates ruling at the balance sheet date. Foreign exchange gains and losses are recognised in the profit and loss account.

Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the foreign exchange rates ruling at the transaction dates. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated using the foreign exchange rates ruling at the dates the fair value was determined.

The results of foreign operations are translated into Hong Kong dollars at the exchange rates approximating the foreign exchange rates ruling at the dates of the transactions. Balance sheet items, including goodwill arising on consolidation of foreign operations acquired on or after 1 January 2005, are translated into Hong Kong dollars at the foreign exchange rates ruling at the balance sheet date. The resulting exchange differences are recognised directly in a separate component of equity. Goodwill arising on consolidation of a foreign operation acquired before 1 January 2005 is translated at the foreign exchange rate that applied at the date of acquisition of the foreign operation.

On disposal of a foreign operation, the cumulative amount of the exchange differences recognised in equity which relate to that foreign operation is included in the calculation of the profit or loss on disposal.

(w) 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.

(x) Cash and cash equivalents

For the purpose of the consolidated cash flow statement, cash and cash equivalents comprise cash at bank and on hand, demand deposits with banks and other financial institutions, and short term highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value, having been within three months of maturity at acquisition, less advances from banks repayable within three months from the date of the advance. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are also included as a component of cash and cash equivalents.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (Continued)

(y) Related parties

A party is considered to be related to the Group if:

(i) the party has the ability, directly or indirectly through one or more intermediaries, to control the Group or exercise significant influence over the Group in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common significant influence;
(ii) the party is an associate;
(iii) the party is a member of the key management personnel of the Group;
(iv) the party is a close member of the family of any individual referred to in (i) or (iii);
(v) the party is an entity that is controlled, jointly controlled or significantly influenced by or for which significant voting power in such entity resides with, directly or indirectly, any individual referred to in (iii) or (iv); or
(vi) the party is a post-employment benefit plan for the benefit of employees of the Group, or of any entity that is a related party of the Group.

3. TURNOVER

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

Sales of electronic components and products Sales of smart card readers and related products Sales of home furniture Trading of building materials and sundry products Rental income	2003 HK$’000 237,735 9,295 – 248 1,095 248,373	Group 2004 HK$’000 132,020 6,761 33,956 2,446 1,577 176,760	2005 HK$’000 162,077 2,865 223,658 3,096 1,577
			393,273

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

4. SEGMENT INFORMATION

An analysis of the Group’s revenue, results, assets, liabilities and capital expenditure for the three years ended 31 December 2005 by business and geographical segments is as follows:

(a) Business segments

		Electronic			Smart Card								Building Materials	Building Materials	Building Materials
	Components and Products				Technology		Property Investments			Home Furniture			and Sundry Products			Consolidated
	2003	2004	2005	2003	2004	2005	2003	2004	2005	2003	2004	2005	2003	2004	2005	2003	2004	2005
	_HK$’000 _	_HK$’000 _	_HK$’000 _	_HK$’000 _	_HK$’000 HK$’000 _		_HK$’000 HK$’000 _		_HK$’000 _	_HK$’000 HK$’000 _		_HK$’000 _	_HK$’000 _	_HK$’000 _	_HK$’000 _	_HK$’000 _	_HK$’000 _	HK$’000
REVENUE	237,735	132,020	162,077	9,295	6,761	2,865	1,095	1,577	1,577	–	33,956	223,658	248	2,446	3,096	248,373	176,760	393,273
SEGMENT PROFIT/(LOSS)	9,945	5,957	8,137	38	(2,416)	(6,055)	552	1,048	1,048	–	2,025	33,428	163	205	(42)	10,698	6,819	36,516
Interest and other income																5,262	6,567	3,481
Profit on disposal of subsidiaries																2,157	468	–
Gain on deemed disposal
of associates																3,404	8	–
Gain on long term investments																20,200	18,997	–
Profit on disposal of
investment properties																2,477	–	–
Profit on disposal of
long term investments																–	5,918	–
Write back of share of loss
of an associate																–	–	1,545
Write back of impairment of
long-term investment																5,000	–	–
Negative goodwill																–	–	1,505
Revaluation deficit on
listed investments																–	–	(8,206)
Impairment of
investment property																(4,000)	(6,000)	(1,570)
Impairment of long term
investments																–	(25)	–
Amortisation on goodwill
of subsidiaries																(695)	(763)	–
Amortisation and impairment
on goodwill of associates																(10,984)	(767)	(9,608)
Write off of amounts
due from associates																–	–	(1,864)
Write off of rental deposits																–	–	(239)
Bad and doubtful debts																–	(2,440)	(698)
Unallocated administrative
and other operating expenses																(16,899)	(17,412)	(18,372))
Finance costs																(2,299)	(4,249)	(7,538)
Share of results of associates																(1,374)	1,862	(391)
(LOSS)/PROFIT BEFORE
TAXATION																12,947	8,983	(5,439)
TAXATION																2,341	(340)	(969)
(LOSS)/PROFIT BEFORE
MINORITY INTERESTS																15,288	8,643	(6,408)

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

4. SEGMENT INFORMATION (Continued)

(a)	Business	Business	segments *(Continued)*	segments *(Continued)*	segments *(Continued)*	segments *(Continued)*
		Electronic			Smart Card									Building Materials
	Components and Products				Technology		Property Investments				Home Furniture			and Sundry Products				Consolidated
	2003	2004	2005	2003	2004	2005	2003	2004	2005		2003	2004	2005	2003	2004	2005		2003	2004	2005
	_HK$’000 _	_HK$’000 _	_HK$’000 _	_HK$’000 _	_HK$’000 HK$’000 _		_HK$’000 _	_HK$’000 _	_HK$’000 _		_HK$’000 _	_HK$’000 _	_HK$’000 _	_HK$’000 _	_HK$’000 _	_HK$’000 _		_HK$’000 _	_HK$’000 _	HK$’000
ASSETS
Segmented assets	111,245	109,650	138,650	4,138	3,371	24,371	18,000	12,000	13,281		–	103,105	183,355	4,683	1,864	13,308		138,066	229,990	372,965
Unallocated assets																		132,454	186,972	93,135
																		270,520	416,962	466,100
LIABILITIES
Segment liabilities	54,435	53,927	80,681	3,099	5,973	23,718	263	263	263		–	88,269	80,464	1,669	1,316	2,012		59,466	149,748	187,138
Unallocated liabilities																		3,971	10,495	3,477
																		63,437	160,243	190,615
CAPITAL EXPENDITURE
Segment	7,914	5,114	6,681	54	125	6	–	–		–	–	20,050	2,970	9	–		–	7,977	25,289	9,657
Other																		476	715	381
																		8,453	26,004	10,038
DEPRECIATION AND
AMORTISATION
Segment	2,571	2,994	3,519	189	164	148	–	–		–	–	400	2,970	474	–		–	3,234	3,558	6,637
Other																		2,575	1,710	279
																		5,809	5,268	6,916
IMPAIRMENT LOSS
Segment	–	–	–	–	–	–	4,000	6,000	1,570		–	–	–	–	–		–	4,000	6,000	1,570
Other																		8,945	–	–
																		12,945	6,000	1,570

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

4. SEGMENT INFORMATION (Continued)

(b) Geographical area

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 Profit on disposal of long term investments Write back of impairment of long term investments Write back of share of loss of an associate Negative goodwill Revaluation deficit on listed investments Impairment of investment property Impairment of long term investments Amortisation on goodwill of subsidiaries Amortisation and impairment on goodwill of associates Write off of amounts due from associates Write off of rental deposits Bad and doubtful debts 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$’000 246,031 10,558	Asia 2004 HK$’000 166,772 7,406	2005 HK$’000 357,397 31,781	2003 HK$’000 983 56	Europe 2004 HK$’000 6,759 (688)	2005 HK$’000 21,078 3,150	2003 HK$’000 1,359 84	United States of America 2004 2005 HK$’000 HK$’000 3,229 14,798 101 1,585	2003 HK$’000 248,373 10,698 5,262 2,157 3,404 20,200 2,477 – 5,000 – – – (4,000) – (695) (10,984) – – – (16,899) (2,299) (1,374) 12,947 2,341 15,288	Consolidated 2004 2005 HK$’000 HK$’000 176,760 393,273 6,819 36,516 6,567 3,481 468 – 8 – 18,997 – – – 5,918 – – – – 1,545 – 1,505 – (8,206) (6,000) (1,570) (25) – (763) – (767) (9,608) – (1,864) – (239) (2,440) (698) (17,412) (18,372) (4,249) (7,538) 1,862 (391) 8,983 (5,439) (340) (969) 8,643 (6,408)	Consolidated 2004 2005 HK$’000 HK$’000 176,760 393,273 6,819 36,516 6,567 3,481 468 – 8 – 18,997 – – – 5,918 – – – – 1,545 – 1,505 – (8,206) (6,000) (1,570) (25) – (763) – (767) (9,608) – (1,864) – (239) (2,440) (698) (17,412) (18,372) (4,249) (7,538) 1,862 (391) 8,983 (5,439) (340) (969) 8,643 (6,408)
											36,516 3,481 – – – – – – 1,545 1,505 (8,206) (1,570) – – (9,608) (1,864) (239) (698) (18,372) (7,538) (391) (5,439) (969) (6,408)

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.

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 three years ended 31 December 2005:

			Group
		2003	2004	2005
	Notes	HK$’000	HK$’000	HK$’000
Consultancy fee paid by the Group
to Princeton Venture Partners Limited	(a)	(750)	–	(150)
Interest income charged to Princeton
Venture Partners Limited	(b)	302	363	288
Rental income received from Princeton
Venture Partners Limited	(a)	–	165	315
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	–	360
Interest income charged to
Bizipoint Company Limited	(c)	18	75	75
Rental income received from
Bizipoint Company Limited	(a)	200	24	30

Notes:

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

(b) Interest income was calculated at 5% per annum (2004: 5%; 2003: 3%).

Remuneration for key management personnel, including amounts paid to the Company’s Directors and highest paid employees as disclosed in note 8, is as follows:

Short-term employee benefits Post-employment benefits Equity compensation benefits	2003 HK$’000 7,670 46 – 7,716	Group 2004 HK$’000 6,735 57 – 6,792	2005 HK$’000 7,971 52 484
			8,507

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

6. PROFIT 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 Profit on disposal of long term investments Write back of impairment of long term investments Write back of provisions Negative goodwill and after charging: Amortisation on goodwill of subsidiaries Amortisation and impairment on goodwill of associates Revaluation loss of listed investments Auditors’ remuneration Bad and doubtful debts Write off of amount due from associates 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 Employee share options 7. FINANCE COSTS Interest and similar charges on: Bank loans and overdrafts wholly repayable within five years Finance lease Other loan Other	2003 HK$’000 1,095 (543) 552 816 2,157 3,404 20,200 2,477 – 5,000 – – 695 10,984 – 1,230 1,050 – 219,920 3,075 4,000 – 892 2,436 19,208 92 – 2003 HK$’000 1,986 5 – 308 2,299	Group 2004 HK$’000 1,577 (529) 1,048 2,575 468 8 18,997 – 5,918 – 2,346 – 763 767 – 937 4,270 – 147,147 3,738 6,000 25 21 3,026 19,522 479 – Group 2004 HK$’000 2,537 – 1,063 649 4,249	2005 HK$’000 1,577 (529) 1,048 1,194 – – – – – – 339 1,505 – 9,608 8,206 1,297 3,367 1,864 316,388 6,916 1,570 – 1,415 7,999 34,783 1,796 1,015 2005 HK$’000 3,536 – 2,620 1,382 7,538

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

8. DIRECTORS’ AND EMPLOYEES’ EMOLUMENTS

(a) Directors’ emoluments

The emoluments paid or payable to each of the ten (2004: nine; 2003: twelve) directors were as follows:

Other emoluments Salaries Contributions and other to retirement Fees benefits schemes HK$’000 HK$’000 HK$’000 Shaw Wen Fei – – – Lui Chun Bing, Tommy 1,100 1,708 7 Sung Kai Hing – 190 5 Au Hoi Tsun, Peter 120 1,548 12 Hui Tung Wah – 1,005 6 Sung Yan Wai, Petrus – 1,690 12 Chim Chun Kwan, Sandy – 310 10 Wong Che Keung, Richard 100 – – Tong Yee Yung, Joseph 100 – – Wong Kin Chi 100 – – Total for 2005 1,520 6,451 52 Other emoluments Salaries Contributions and other to retirement Fees benefits schemes Total HK$’000 HK$’000 HK$’000 HK$’000 Shaw Wen Fei – – – – Lui Chun Bing, Tommy – 2,940 12 2,952 Au Hoi Tsun, Peter – 1,613 12 1,625 Sung Yan Wai, Petrus – 1,069 12 1,081 Chim Chun Kwan, Sandy – 294 12 306 Lee Hoong Seun – 904 9 913 Wong Che Keung, Richard 100 – – 100 Tong Yee Yung, Joseph 100 – – 100 Wong Kin Chi 25 – – 25 Total for 2004 225 6,820 57 7,102	Other emoluments	Other emoluments	Share-based payment HK$’000 98 98 98 37 98 31 – 8 8 8 484 Less: Prior year bonus waived HK$’000 – – (310) – – – – – – (310)	Total HK$’000 98 2,913 293 1,717 1,109 1,733 320 108 108 108
				8,507

				Total HK$’000 – 2,952 1,315 1,081 306 913 100 100 25
		7,102		6,792

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

8. DIRECTORS’ AND EMPLOYEES’ EMOLUMENTS (Continued)

(a) Directors’ emoluments (Continued)

Shaw Wen Fei Lui Chun Bing, Tommy Au Hoi Tsun, Peter Hui Tung Wah Sung Yan Wai, Petrus Leung Man Kwan Francis Chim Chun Kwan, Sandy Lee Hoong Seun Wong Che Keung, Richard Tong Yee Yung, Joseph Huen Wing Ming, Patrick Lau Ho Kit, Ivan Total for 2003	Fees HK$’000 – – – – – – – – 100 100 – – 200	Other emoluments Salaries Contributions and other to retirement benefits schemes HK$’000 HK$’000 – – 2,730 12 2,051 12 481 – 910 6 280 – 303 12 531 4 – – – – – – 184 – 7,470 46	Total HK$’000 – 2,742 2,063 481 916 280 315 535 100 100 – 184
			7,716

Emoluments paid to Independent non-executive Directors during the year were HK$324,000 (2004: HK$225,000; 2003: HK$200,000).

Except as disclosed above, there are no arrangements under which a Director waived or agreed to waive any emolument during the year.

(b) Employees’ emoluments

During the year, the five highest paid individuals included four director (2004: five directors; 2003: five directors), details of those emoluments are set out above. The emoluments of the remaining one (2004: Nil; 2003: Nil) highest paid individual was as follows:

Salaries and other benefits Contributions to retirement schemes Share-based payment	2003 HK$’000 – – – -	Group 2004 HK$’000 – – – –	2005 HK$’000 991 12 6
			1,009

The emoluments of the one (2004: nil; 2003: nil) individual with the highest emoluments was within the following band:

			Group
		2003	2004	2005
		Number of	Number of	Number of
		employees	employees	employees
HK$1,000,001	to HK$1,500,000	–	–	1

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 (2004: 17.5%; 2003: 17.5%). 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 year under/(over) provision: Hong Kong Outside Hong Kong Deferred tax – note 26 Taxation	2003 HK$’000 208 – 208 77 (2,711) (2,634) (2,426) 85 (2,341)	Group 2004 HK$’000 278 59 337 – 44 44 381 (41) 340	2005 HK$’000 276 720 996 – – – 996 (27) 969

Taxation is 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% (2004: 17.5%; 2003: 17.5%) Tax effect of different tax rates of subsidiaries operating in other jurisdictions Tax effect of expenses that are not deductible in determining taxable profit Tax effect of reduction in tax rates granted by local tax authorities Tax effect of temporary differences not recognised Tax effect of tax depreciation not recognised Tax effect of income that are not taxable in determining taxable profit Tax effect of unused tax losses not recognised Prior year underprovision Taxation	2003 HK$’000 12,947 2,267 (1,710) 7,154 – – 104 (13,130) 5,608 (2,634) (2,341)	Group 2004 HK$’000 8,983 1,572 (1,863) 925 – – – (2,142) 1,804 44 340	2005 HK$’000 (5,439) (952) 4,716 1,089 (1,020) (303) 2,078 (6,145) 1,506 – 969

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

10. NET (LOSS)/PROFIT ATTRIBUTABLE TO SHAREHOLDERS

The net loss attributable to shareholders dealt with in the financial statements of the Company is HK$1,963,000 (2004: loss of HK$2,320,000; 2003: profit of HK$11,235,000).

11. (LOSS)/EARNINGS PER SHARE

The calculation of basic loss per share is based on the net loss attributable to shareholders of HK$19,791,000 (2004: profit of HK$7,175,000; 2003: HK$10,859,000) and the weighted average of 140,691,370 shares (2004: 94,916,774 shares – adjusted for Open Offer; 2003: 76,698,200 shares – adjusted for Open Offer) in issue during the Current Year.

No diluted loss per share is presented for the year ended 31 December 2005 as the exercise of share options outstanding would be anti-dilutive. A diluted earnings per share amount for the year ended 31 December 2004 has not been disclosed as the share options outstanding as of 31 December 2004 had an anti-dilutive effect on the basic earning per share for this year. The diluted earnings per share for the year ended 31 December 2003 was HK$0.14. This is based on the net profit attributable to shareholders of HK$10,859,000 and the weighted average of 76,883,568 shares which is adjusted for the effect of share options issued during the year and the effect for Open Offer.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

12. PROPERTIES, PLANT AND EQUIPMENT

Group

Cost 1 January 2003 Additions Disposals Acquisitions of subsidiaries Disposal of subsidiaries 31 December 2003 and 1 January 2004 Additions Disposals Acquisitions of subsidiaries Disposal of subsidiaries 31 December 2004 and 1 January 2005 Exchange difference Additions Disposals 31 December 2005 Accumulated depreciation 1 January 2003 Charge for the year Disposals Acquisitions of subsidiaries Disposal of subsidiaries 31 December 2003 and 1 January 2004 Additions Disposals Acquisitions of subsidiaries Disposal of subsidiaries 31 December 2004 and 1 January 2005 Exchange difference Additions Disposals 31 December 2005 Net book value 31 December 2005 31 December 2004 31 December 2003	Land and buildings situated overseas HK$’000 – – – – – – – – 4,255 – 4,255 82 – (4,337) – – – – – – – 33 – – – 33 1 200 (234) – – 4,222 –	Leasehold improvements HK$’000 2,122 3,729 (1,872) – – 3,979 2,716 – 1,835 – 8,530 35 4,391 (452) 12,504 1,371 884 (1,472) – – 783 1,036 – 153 – 1,972 2 1,896 (135) 3,735 8,769 6,558 3,196	Plant and machinery HK$’000 12,268 3,759 (581) – – 15,446 2,757 (14) 21,101 – 39,290 406 5,074 (153) 44,617 9,285 1,364 (423) – – 10,226 2,018 (5) 9,323 – 21,562 184 3,693 (153) 25,286 19,331 17,728 5,220	Furniture and equipment HK$’000 7,898 855 (589) 117 (126) 8,155 361 (116) 1,461 (31) 9,830 26 573 (227) 10,202 6,485 635 (255) 13 (24) 6,854 532 (104) 705 (4) 7,983 11 612 (62) 8,544 1,658 1,847 1,301	Motor vehicles HK$’000 1,314 6 – – – 1,320 133 (185) 2,768 – 4,036 54 – (340) 3,750 986 192 – – – 1,178 119 (185) 1,202 – 2,314 24 515 (340) 2,513 1,237 1,722 142	Total HK$’000 23,602 8,349 (3,042) 117 (126)
						28,900 5,967 (315) 31,420 (31)
						65,941 603 10,038 (5,509)
						71,073
						18,127 3,075 (2,150) 13 (24)
						19,041 3,738 (294) 11,383 (4)
						33,864 222 6,916 (924)
						40,078
						30,995

						32,077

						9,859

The Group’s land and buildings situated overseas are held under medium term lease.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

13. INVESTMENT PROPERTY

1 January, at valuation Disposals Impairment 31 December, at valuation Analysed by lease term and geographical location: Medium term leasehold properties situated outside Hong Kong	2003 HK$’000 31,200 (9,200) (4,000) 18,000 18,000	Group 2004 HK$’000 18,000 – (6,000) 12,000 12,000	2005 HK$’000 12,000 – (1,570)
			10,430

			10,430

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 each balance sheet date.

Details of the investment property of the Group as at the balance sheet dates 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 Listed investments (Hong Kong Stock Exchange) at cost Less: provision for impairment Net carrying value Listed investments, at market value	2003 HK$’000 66,147 144 66,291 (9,579) 56,712 65	Group 2004 HK$’000 23,700 – 23,700 – 23,700 N/A	2005 HK$’000 23,700 –
			23,700 –
			23,700
			N/A

During 2003, 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 dates.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

15. INTERESTS IN SUBSIDIARIES

Unlisted shares, at cost Due from subsidiaries Due to subsidiaries Less: provision	2003 HK$’000 1 404,875 (1) 404,875 (224,129) 180,746	Company 2004 HK$’000 1 418,281 (1) 418,281 (224,129) 194,152	2005 HK$’000 1 467,846 (1)
			467,846 (247,751)
			220,095

The amounts due from/to subsidiaries are unsecured, interest-free and there are no fixed terms for repayment. Particulars of the principal subsidiaries are as follows:

		Total issued
	Place of	ordinary/
	Incorporation/	registered			Equity
Name of	registration and	and paid-up		interest owned			Principal
subsidiary	operation	capital		by the Group			activities
			2003		2004	2005
Directly held:
Hai Yang Investment	British Virgin	US$1	100%		100%	100%	Investment
Limited	Islands						holding
Talent Sino Holdings	British Virgin	US$1	–		100%	100%	Investment
Limited	Islands						holding
Team Talent Limited	British Virgin	US$1	–		–	100%	Investment
	Islands						holding
Indirectly held:
Asia eMarket Limited	British Virgin	US$152	A-share		A-share	A-share	Investment
	Islands		96.2%		96.2%	96.2%	holding
Barnet Consultancy	British Virgin	US$1	100%		100%	100%	Provision of
Limited	Islands						corporate
							services
Best Start Limited	British Virgin	US$1	–		96.2%	96.2%	Investment
	Islands						holding
Cleverable Investment	British Virgin	US$1	100%		100%	–	Investment
Limited	Islands						holding
Clever United	British Virgin	US$1	100%		100%	100%	Investment
Holdings Limited	Islands						holding

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

15. INTERESTS IN SUBSIDIARIES (Continued)

			Total issued
		Place of	ordinary/
		Incorporation/	registered		Equity
Name of	registration and		and paid-up	interest owned			Principal
subsidiary		operation	capital		by the Group		activities
				2003	2004	2005
Indirectly held: (Continued)
Crown Tech		British Virgin	US$1	100%	100%	100%	Investment
Holdings Limited		Islands					holding
E-Opportunity Limited		British Virgin	US$1	100%	100%	–	Investment
		Islands					holding
Olympic Glory Limited		British Virgin	US$1	100%	100%	–	Investment
		Islands					holding
Prosperous Returns Limited		Hong Kong	HK$2	100%	100%	–	Provision of
							corporate
							service
Proven Sino Investments		British Virgin	US$1	100%	100%	–	Investment
Limited		Islands					holding
Smart Union International		British Virgin	US$1	–	100%	100%	Investment
Limited		Islands					holding
Super Intellect Limited		Hong Kong	HK$2	100%	100%	–	Provision of
							corporate
							service
Treasure Chance Limited		British Virgin	US$1	100%	100%	–	Investment
		Islands					holding
Grade Honor Limited		British Virgin	HK$2	–	100%	–	Provision of
		Islands					corporate
							service
Touchstone Trading		British Virgin	US$1	100%	100%	100%	Investment
Limited		Islands					holding
Unicom Group Limited		British Virgin	US$400	63%	63%	63%	Investment
		Islands					holding
Up Crown International		British Virgin	US$1	–	96.2%	96.2%	Investment
Limited		Islands					holding
Vandyke Limited		British Virgin	US$1,000	100%	100%	100%	Property
		Islands/					holding
		The People’s
		Republic of
		China (“PRC”)
Omnitech Holdings		Bermuda	AUD49,489,391	51.6%	51.6%	77%	Investment
Limited							holding

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

15. INTERESTS IN SUBSIDIARIES (Continued)

		Total issued
	Place of	ordinary/
	Incorporation/	registered		Equity
Name of	registration and	and paid-up	interest owned			Principal
subsidiary	operation	capital		by the Group		activities
			2003	2004	2005
Indirectly held: (Continued)
Lik Hang Holdings	British Virgin	US$1,166,800	51.6%	51.6%	77%	Investment
Limited	Islands					holding
VFJ Technology Holdings	British Virgin	US$2,594,724	35.6%	35.6%	53.2%	Manufacture
Limited	Islands					and sale of
						contact and
						contactless
						smart card
						readers
Emerald Capital Limited	British Virgin	US$30	63%	63%	63%	General
	Islands					trading
Windsor Treasure Group	British Virgin	US$30,001	–	51.5%	51.5%	Investment
Holdings Limited	Islands					holding
Great Ample Holdings	British Virgin	US$20,001	–	51.5%	51.5%	Investment
Limited	Islands					holding
Glory Skill Investments	British Virgin	US$2,901	–	51.5%	51.5%	Investment
Limited	Islands					holding
Springrich Investments	British Virgin	US$1	–	–	51.5%	Investment
Limited	Islands					holding
Success Profit International	British Virgin	US$10,001	–	51.5%	51.5%	Investment
Limited	Islands					holding
Hing Lee (China) Company	Hong Kong	HK$18,010,000	–	51.5%	51.5%	Investment
Limited						holding
Hing Lee Furniture Company British Virgin		US$1.00	–	–	51.5%	Trading of
Limited	Islands					furniture
Sharp Motion Worldwide	British Virgin	US$4	–	51.5%	51.5%	Trademark
Limited	Islands					holding
�� !"#$%&'	PRC	RMB10,000,000	–	33.5%	33.5%	Design,
�� !						manufacture,
						sale and
						marketing
						of home
						furniture

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

15. INTERESTS IN SUBSIDIARIES (Continued)

			Total issued
		Place of	ordinary/
	Incorporation/		registered		Equity
Name of	registration and		and paid-up		interest owned		Principal
subsidiary		operation	capital		by the Group		activities
				2003	2004	2005
Indirectly held: (Continued)
�� !"#$%&'		PRC	RMB30,000,000	–	51.5%	51.5%	Design,
							manufacture,
							sale and
							marketing
							of home
							furniture
�� !"#$%&'		PRC	HK$8,080,000	–	40.2%	40.2%	Manufacture
							and sale of
							bed mattresses
�� !"#$%&'()		PRC	HK$10,000,000	–	–	51.5%	Design,
							manufacture,
							sale and
							marketing
							of home
							furniture
�� !"#$%&'		PRC	HK$8,000,000	–	–	40.2%	Manufacture
							and sale of
							bed mattresses

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

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

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

16. INTERESTS IN ASSOCIATES

2003 HK$’000 Share of net assets 5,265 Net book value of goodwill – see below 10,375 15,640 Loans to associates 30,800 Amount due from an associate 295 Interest receivable on loans to associates 1,665 48,400 Movements in goodwill: Cost 1 January 2003 Additions Disposals 31 December 2003, 1 January 2004, 31 December 2004 and 1 January 2005 Elimination of accumulated amortisation upon the application of HKFRS 3 Impairment 31 December 2005 Accumulated amortisation 1 January 2003 Amortisation and impairment Reclassification from impairment of long term investments Disposals 31 December 2003 and 1 January 2004 Amortisation 31 December 2004 and 1 January 2005 Elimination of accumulated amortisation upon the application of HKFRS 3 31 December 2005 Net book value 31 December 2005 31 December 2004 31 December 2003	Group 2004 HK$’000 44,134 9,608 53,742 9,114 – 1,972 64,828	2005 HK$’000 50,689 – 50,689 – – – 50,689 HK$’000 223,691 725 (4,416) 220,000 (210,392) (9,608) – 200,000 10,984 1,400 (2,759) 209,625 767 210,392 (210,392) – – 9,608 10,375

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

16. INTERESTS IN ASSOCIATES (Continued)

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

		Place of
		incorporation/
	Class of	registration		Equity interest		Principal
Name of associate	shares held	and operation	owned by the		Group	activities
			2003	2004	2005
Bizipoint Group Limited	Ordinary	British Virgin	41.0%	41.0%	–	Investment
		Islands				holding
						(Became
						dormant
						in 2005)
Bizipoint Company Limited	Ordinary	Hong Kong	41.0%	41.0%	–	E-business
						consulting
						services
						(Became
						dormant
						in 2005)
Beijing Zhong Shang	Registered	PRC	36.9%	36.9%	–	E-business
Hui Xin Network	Capital					consulting
Technology Development						services
Company Limited						(Became
						dormant
						in 2005)
PVP Limited	Ordinary	British Virgin	A-share	A-share	A-share	Investment
		Islands	37.2%	37.2%	37.2%	holding
				B-share	B-share
				37.2%	37.2%
Princeton Venture Partners	Ordinary	British Virgin	37.2%	37.2%	37.2%	Investment
Limited		Islands				holding and
						consultancy

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

Information relating to Bizipoint Group Limited and its subsidiaries (“Bizipoint Group”) and PVP Limited and its subsidiaries (“PVP Group”) as required by HKAS 28 “Accounting for investments in associates” is as follows:

Bizipoint Group

Turnover Profit for the year Non-current assets Current assets Current liabilities Non-current liabilities, including deferred income PVP Group Turnover Profit/(loss) for the year Non-current assets Current assets Current liabilities Non-current liabilities	2003 HK$’000 4,441 493 178 575 (2,034) (4,993) 2003 HK$’000 9,700 1,124 48,826 6,828 (1,911) (30,897)	2004 HK$’000 4,117 3,255 62 441 (2,558) (993) 2004 HK$’000 4,439 639 117,736 15,803 (2,638) (7,917)	2005 HK$’000 – – – – – –

			2005 HK$’000 1,006 (1,238) 111,850 25,021 (625) –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

17. GOODWILL

Cost 1 January 2003 Additions 31 December 2003 and 1 January 2004 Additions 31 December 2004 and 1 January 2005 Elimination of accumulated amortisation upon the application of HKFRS 3 31 December 2005 Accumulated amortisation 1 January 2003 Amortisation 31 December 2003 and 1 January 2004 Amortisation 31 December 2004 and 1 January 2005 Elimination of accumulated amortisation upon the application of HKFRS 3 31 December 2005 Net book value 31 December 2005 31 December 2004 31 December 2003 INVENTORIES 2003 HK$’000 Raw materials 26,008 Work in progress – Finished goods 4,637 30,645	Group 2004 HK$’000 35,137 12,854 28,455 76,446	Group HK$’000 – 10,892 10,892 12,333 23,225 (1,458) 21,767 – 695 695 763 1,458 (1,458) – 21,767 21,767 10,197 2005 HK$’000 51,143 11,443 27,378 89,964

18. INVENTORIES

There is HK$815,000 inventory stated at net realisable value (2004: Nil; 2003: HK$93,000), included in the above.

In 2004, included in the Group’s inventories were finished goods of approximately HK$8,342,000 (2005: Nil, 2003: Nil) which have been pledged against trade payables totalling approximately HK$7,071,000 (2005: Nil; 2003: Nil).

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

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	2003 HK$’000 38,804 7,859 17,145 63,808	Group 2004 HK$’000 58,204 19,362 21,445 99,011	2005 HK$’000 69,241 21,241 54,939
			145,421

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

Trade and other receivables comprise the following:–

Hong Kong dollars United States dollars Chinese Renminbi	2003 HK$’000 63,195 – 613 63,808	Group 2004 HK$’000 63,065 10,565 25,381 99,011	2005 HK$’000 92,819 7,005 45,597
			145,421

20. LISTED INVESTMENTS

Listed equity investments, at market value: Hong Kong Overseas	2003 HK$’000 – – –	Group 2004 HK$’000 49 24,216 24,265	2005 HK$’000 2,637 16,931
			19,568

21. CASH AND BANK BALANCES

Cash and bank balances represent cash on hand and at banks and include time deposits and guarantee funds of HK$22,285,000 (2004: HK$16,288,000; 2003: HK$16,278,000) pledged as security for general banking facilities provided to certain subsidiaries.

Cash and bank balances comprise the following:

Hong Kong dollars United States dollars Chinese Renminbi Australian dollars Euros	2003 HK$’000 28,120 3,044 34 5 – 31,203	Group 2004 HK$’000 37,669 8,311 9,404 11 51 55,446	2005 HK$’000 34,868 24,571 7,444 1,057 50
			67,990

22. DUE TO RELATED PARTIES

The amounts due to related parties are unsecured, interest free and there are no fixed terms for repayment.

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

23. TRADE AND OTHER PAYABLES

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

Current One to three months More than three months Trade and other payables comprise the following:– Hong Kong dollars Australian dollars Chinese Renminbi	2003 HK$’000 14,455 4,597 4,709 23,761 2003 HK$’000 21,586 99 2,076 23,761	Group 2004 HK$’000 39,521 21,881 13,096 74,498 Group 2004 HK$’000 17,895 131 56,472 74,498	2005 HK$’000 34,474 11,666 19,293
			65,433

			2005 HK$’000 23,137 133 42,163
			65,433

24. INTEREST BEARING BANK BORROWINGS

The terms of the interest bearing bank borrowings are as follows:

Repayable on demand or within one year Bank overdrafts – secured Bank import loans – secured Bank loan – secured – unsecured Repayable in the second year Bank import loans – secured Bank loan – secured Repayable in the third to fifth years, inclusive Bank import loans – secured Bank loan – secured	2003 HK$’000 6,095 33,295 – – 39,390 – – – – – 39,390	Group 2004 HK$’000 6,833 31,421 1,887 9,891 50,032 1,000 – 2,834 – 3,834 53,866	2005 HK$’000 7,391 – 50,146 9,615
			67,152 – 1,289 – 1,835
			3,124
			70,276

The above secured bank borrowings are secured by:

(a) charges over time deposits and guarantee funds of approximately HK$22,285,000 (2004: HK$16,288,000; 2003: HK$16,278,000);

(b) charges over the Group’s land and buildings situated overseas, with net book value at 31 December 2004 of HK$4,220,000 (2003: Nil); and

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

25. OTHER LOAN PAYABLE

The other loan is secured by a fixed charge against the Group’s equity holding in a subsidiary, a floating charge against the Group’s entire assets and a corporate guarantee issued by the Company. It is interest bearing at 1.25% per month and repayable in 2006.

In 2004, the other loan was secured by a corporate guarantee issued by the Company and interest bearing at 1.5% per month. It was fully repaid in 2005.

26. DEFERRED TAX LIABILITIES

1 January Charge/(release) to profit and loss account – note 9 31 December	2003 HK$’000 – 85 85	Group 2004 HK$’000 85 (41) 44	2005 HK$’000 44 (27)
			17

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	2003 HK$’000 85 – 85	Group Provided 2004 2005 2003 HK$’000 HK$’000 HK$’000 44 17 11 – – (37,057) 44 17 (37,046)	Not provided 2004 2005 HK$’000 HK$’000 19 (16) (35,253) (36,759) (35,234) (36,775)	Not provided 2004 2005 HK$’000 HK$’000 19 (16) (35,253) (36,759) (35,234) (36,775)
				(36,775)

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

27. SHARE CAPITAL

Authorised: 1 January 2003, 2004, 2005 and 31 December 2003, 2004, 2005 Issued and fully paid: 1 January 2003 Issue of new shares 31 December 2003 and 1 January 2004 Issue of new shares 31 December 2004 and 1 January 2005 Issue of new shares 31 December 2005	ordinary shares of HK$0.01 15,000,000,000 53,289,768 21,000,000 74,289,768 17,003,000 91,292,768 59,146,384 150,439,152	Number of Amount HK$’000 150,000
		533 210
		743 170
		913 591
		1,504

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

27. SHARE CAPITAL (Continued)

During the three years ended 31 December 2005, 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.
(c) On 24 November 2004, the Company issued 17,003,000 new shares at HK$1.00 per share as part of considerations for the acquisition and subscription of approximately 51.5% interests in Windsor Treasure Group Limited (“Windsor Treasure”).
(d) On 28 February 2005, the Company issued 9,000,000 new shares at the placing price of HK$0.96 per share pursuant to the placing agreement entered into between the Company and Tai Fook Securities Company Limited dated 4 February 2005.
(e) On 23 May 2005, the Company issued 50,146,384 new shares at the subscription price of HK$0.38 per share pursuant to the open offer on the basis of one offer share for every two shares held by the then shareholders of the Company on the specified record date.

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 2,720,000 share options outstanding under the share option scheme adopted by the Company on 22 March 2002.

	2003	2003	2004	2004	2005	2005
	Weighted		Weighted		Weighted
	average		average		average
	exercise	Number	exercise	Number	exercise	Number
	Price	of options	Price	of options	Price	of options
Outstanding at the
beginning of the year	HK$1.14	2,720,000	HK$1.14	2,720,000	HK$0.95	2,720,000
					(Note)
Adjustment during the
year for open offer	–	–	–	–	HK$0.95	544,000
Granted during the year	–	–	–	–	HK$0.80	8,510,000
Lapsed during the year	–	–	–	–	HK$0.88	(960,000)
Outstanding at the end
of the year	HK$1.14	2,720,000	HK$1.14	2,720,000	HK$0.84	10,814,000
Exercisable at the end
of the year	HK$1.14	2,720,000	HK$1.14	2,720,000	HK$0.84	10,814,000

The options outstanding at 31 December 2005 had an exercise price of HK$0.95 or HK$0.80 (2004 and 2003: HK$1.14) and a weighted average remaining contractual life of 3.96 years (2004 and 2003: 3.53 years).

Note: Adjusted for open offer

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

27. SHARE CAPITAL (Continued)

The fair value of the options granted on 14 June 2005 was calculated using the Black-Scholes Option Pricing Model. The inputs into the model were as follows:

Weighted average share price at the date of grant	HK$0.77
Exercise price	HK$0.80
Risk free rate	3.22%
Expected life	3 years
Expected volatility	41.53%
Expected dividend yield	–

Expected volatility was referred to the historical volatilities of the share prices of the Company over the 260 trading days of the year immediately before the grant date.

The Group recognized the total expense of HK$1,015,000 for the year ended 31 December 2005 in relation to share options granted by the Company.

The Black-Scholes option pricing model was developed to estimate the fair value of the share options. The value of an option varies with different variables of certain subjective assumptions. Any changes in variables and assumptions so adopted may materially affect the estimation of the fair value of an option.

Options which are cancelled prior to their exercise date are deleted from the register of outstanding options.

28. RESERVES

Group

1 January 2003 Profit for the year Currency translation differences Issue of new shares Share issue expenses 31 December 2003 and 1 January 2004 Profit for the year Currency translation differences Issue of new shares 31 December 2004 and 1 January 2005 Loss for the year Currency translation differences Transfer Employee share options Movement for the year Issue of new shares Share issue expenses 31 December 2005	Share Premium HK$’000 46,317 – – 27,970 (901) 73,386 – – 16,833 90,219 – – – – – 27,104 (1,093) 116,230	Contributed surplus HK$’000 83,274 – – – – 83,274 – – – 83,274 – – – – – – – 83,274	Exchange Enterprises fluctuation Development reserve Fund HK$’000 HK$’000 11,270 – – – (998) – – – – – 10,272 – – – (3) – – – 10,269 – – – 428 – – 15 – – – (101) – – – – 10,697 (86)	Retained Employee profits/ Reserve compensation (Accumulated Fund reserve losses) HK$’000 HK$’000 HK$’000 – – (9,344) – – 10,859 – – – – – – – – – – – 1,515 – – 7,175 – – – – – – – – 8,690 – – (19,791) – – – 16 – (31) – 1,015 – (134) – – – – – – – – (118) 1,015 (11,132)	Total HK$’000 131,517 10,859 (998) 27,970 (901)
					168,447 7,175 (3) 16,833
					192,452 (19,791) 428 – 1,015 (235) 27,104 (1,093)
					199,880

Included in the Group’s retained profits at 31 December 2005 were accumulated losses of HK$8,251,000 (2004: HK$8,642,000; 2003: HK$10,504,000) relating to associates.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

28. RESERVES (Continued)

Company

1 January 2003 Profit for the year Issue of new shares Share issue expenses 31 December 2003 and 1 January 2004 Loss for the year Issue of new shares 31 December 2004 and 1 January 2005 Loss for the year Movement for the year Issue of new shares Share issue expenses 31 December 2005	Share Employee Premium Contributed compensation Accumulated account surplus reserve losses HK$’000 HK$’000 HK$’000 HK$’000 46,317 125,376 – (31,046) – – – 11,235 27,970 – – – (901) – – – 73,386 125,376 – (19,811) – – – (2,320) 16,833 – – – 90,219 125,376 – (22,131) – – – (1,963) – – 1,015 – 27,104 – – – (1,093) – – – 116,230 125,376 1,015 (24,094)	Total HK$’000 140,647 11,235 27,970 (901)
		178,951 (2,320) 16,833
		193,464 (1,963) 1,015 27,104 (1,093)
		218,527

The Company’s contributed surplus, which arose from the Group reorganisation on 2 July 1991, represents the difference between the nominal value of the Company’s shares issued under the reorganisation 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.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

29. 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 Write back of provisions Depreciation on properties, plant and equipment Bad and doubtful debts Write off of amount due from associates Write off of rental deposit Revaluation loss on listed investments 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 Profit on disposal of long term investments 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 Loss on disposal of listed securities Employee share option Negative goodwill Write back of share of loss of an associate Share of results of associates Operating profit/(loss) before working capital changes Decrease/(increase) in inventories Increase in trade and other receivables Decrease in prepayments and deposits Decrease in trade and other payables Decrease in amounts due to related parties Decrease/(increase) in deposits received Net cash used in operations	2003 HK$’000 12,947 (2,157) (718) (816) 2,299 – 3,075 1,050 – – – 10,984 695 4,000 – 892 – (5,000) (20,200) (2,477) (3,404) – – – – 1,374 2,544 56 (31,254) 3,164 (2,058) – (22) (27,570)	Group 2004 HK$’000 8,983 (468) – (2,575) 4,249 (2,346) 3,738 4,270 – – – 767 763 6,000 25 21 (5,918) – (18,997) – (8) – – – – (1,862) (3,358) 5,940 (9,319) 693 (10,372) (4,142) 10,446 (10,112)	2005 HK$’000 (5,439) – – (1,194) 7,539 (339) 6,916 3,367 1,864 239 8,206 9,608 – 1,570 – 1,415 – – – – – 14 1,015 (1,505) (1,545) 391 32,122 (12,700) (48,943) 3,842 (9,775) (4,159) 12,019 (27,594)

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

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

(b) Disposal of subsidiaries

		Group
	2003	2004	2005
	HK$’000	HK$’000	HK$’000
Net assets disposed of:
Properties, plant and equipment	102	27	–
Inventories	–	17	–
Trade and other receivables	25,567	6,705	–
Cash and bank balances	15,861	20	–
Trade and other payables	(20,923) (7,237)		–
Interest bearing bank borrowings	(16,038) –		–
Current tax payable	(2,068) –		–
Minority interests	(681) –		–
	1,820	(468)	–

Represented by:
Cash received	2,851	–	–
Trade and other receivables	1,126	–	–
Profit on disposal	(2,157) (468)		–
	1,820	(468)	–

The subsidiaries disposed of in 2004 utilised HK$16,000 (2003: HK$16,521,000) from the			Group’s net
cash used in operations.
Analysis of net outflow of cash and cash equivalents in respect of the disposed subsidiaries:
	2003	2004	2005
	HK$’000	HK$’000	HK$’000
Cash received	2,851	–	–
Cash and bank balances of disposed subsidiaries	(15,861) (20)		–
	(13,010) (20)		–

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

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

(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 Due to related parties Trade and other payables Current tax payable Interest bearing bank borrowings Minority interests _Less:_Minority interests Goodwill on consolidation Represented by: Cash paid Shares issued	2003 HK$’000 104 – 13,700 180 175 10,000 – (16,824) – (4,623) (583) 2,129 (1,009) 1,120 10,892 12,012 12,012 – 12,012	Group 2004 HK$’000 20,037 51,758 36,819 6,283 24,583 – (8,272) (70,692) (1,228) (12,076) (5,218) 41,994 (20,321) 21,673 12,333 34,006 17,003 17,003 34,006	2005 HK$’000 – – – – – – – – – – –
			– –
			– –
			–

			– –
			–

The subsidiaries acquired in 2004 utilised HK$6,365,000 (2003: 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 inflow/(outflow) of cash and cash equivalents in respect of the acquisition of subsidiaries:

Cash paid Cash and bank balances of acquired subsidiaries Net (outflow)/inflow of cash and cash equivalents in respect of the acquisition of subsidiaries	2003 HK$’000 (12,012) 175 (11,837)	2004 HK$’000 (17,003) 24,583 7,580	2005 HK$’000 – –
			–

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

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

(d) Major non-cash transactions
- (i) 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 associate.
- (ii) On 24 November 2004, the Company issued 17,003,000 new shares at HK$1.00 per share as part of the considerations for the acquisition and subscription of approximately 51.5% interests in Windsor Treasure.
- (iii) On 23 November 2005, the Company fully exercised its option to acquire 10,000,000 shares of Omnitech Holdings Limited (“OHL”), a non-wholly owned subsidiary of the Company, at a total consideration of A$1,000,000 (equivalent to HK$5,670,000), which was satisfied by way of set off of part of the loan from the Company to OHL of HK$5,670,000.
- (iv) On 22 December 2005, the Company further acquired 16,033,019 shares of OHL at a total consideration of HK$16,363,000, which was satisfied by the assignment of loan to VFJ Technology Limited, a non-wholly owned subsidiary of the Company, of HK$16,363,000 from the Company to OHL.

30. CONTINGENT LIABILITIES

		Group			Company
	2003	2004	2005	2003	2004	2005
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Corporate guarantees given
to banks and others	73,043	49,950	86,800	–	15,450	31,100

31. 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	2003 HK$’000 – – – 2,980 1,476 – 4,456 1,577 6,309 394 8,280	Group 2004 HK$’000 30,189 – 30,189 8,004 12,426 21,223 41,653 1,577 5,126 – 6,703	2005 HK$’000 – –
			–

			9,866 21,599 29,415
			60,880

			1,577 3,549 –
			5,126

The Company has no capital or operating lease commitments.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

32. FINANCIAL INSTRUMENTS

(a) Financial risk management

The Group is exposed to a variety of risks including foreign currency risk, credit risk, liquidity risk and cash flow interest rate risk arising in the normal course of the Group’s business activities.

The Group does not have any written risk management policies and guidelines. The directors monitor the financial risk management of the Group and take such measures as considered necessary from time to time to minimise such financial risks.

(i) Foreign currency risk

Foreign currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates.

The Group is exposed to foreign currency risk primarily through sales and purchases that are denominated in a currency other than the functional currency of the operations to which they relate. The currencies giving rise to this risk are primarily United States dollars, Australian dollars and Chinese Renminbi. The Group does not hold or issue any derivative financial instruments for trading purposes or to hedge against fluctuations in foreign exchange rates. The Group mitigates this risk by conducting the sales and purchases transactions in the same currency, whenever possible.

(ii) Credit risk

Credit risk arises from the possibility that customers may not be able to settle obligations within the normal terms of transactions. The Group performs ongoing credit evaluation of the debtors’ financial condition and maintains an account for allowance for doubtful trade and other accounts receivable based upon the expected collectibles of all trade and other accounts receivable.

At the balance sheet date, there were no major concentrations of credit risk.

The maximum exposure to credit risk is therefore represented by the carrying amount of each financial asset as stated in the balance sheet.

Cash is held with financial institutions of good standing.

(iii) Liquidity risk

Liquidity risk is the risk that an enterprise will encounter difficulty in raising funds to meet commitments associated with financial instruments. Liquidity risk may result from an inability to sell a financial asset quickly at close to its fair value.

Prudent liquidity risk management implies maintaining sufficient cash. The Group monitors and maintains a level of bank balances deemed adequate to finance the Group’s operations.

(iv) Cash flow and fair value interest rate risk

Cash flow interest rate risk is the risk that future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates.

As the Group has no significant interest-bearing assets, the Group’s income and operating cash flows are substantially independent of changes in market interest rates.

(b) Estimation of fair values

The notional amounts of financial assets and liabilities with a maturity of less than one year (including trade and other receivables, cash at bank, trade and other payables) are assumed to approximate their fair values.

The fair value of non-trade balances due from/to group and related companies has not been determined as the timing of the expected cash flows of these balances cannot be reasonably determined because of the relationship.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

33. POSSIBLE IMPACT OF AMENDMENTS, NEW STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE FOR THE ANNUAL ACCOUNTING PERIOD ENDED 31 DECEMBER 2005

Up to the date of these financial statements, the HKICPA has issued the following amendments, new standards and interpretations which are not yet effective for the accounting period ended 31 December 2005 and which have not been adopted in these financial statements:–

		Effective for accounting periods
		beginning on or after
HKAS 1 (Amendment)	Presentation of Financial Statements:	1 January 2007
	Capital Disclosures
HKAS 19 (Amendment)	Employee Benefits – Actuarial Gains	1 January 2006
	and Losses, Group Plans and Disclosures
HKAS 21 (Amendment)	The Effects of Changes in Foreign	1 January 2006
	Exchange Rate
HKAS 39 (Amendment)	Financial Instruments: Recognition	1 January 2006
	and Measurement
HKFRS 1 (Amendment)	First-time Adoption of Hong Kong	1 January 2006
	Financial Reporting Standards
HKFRS 6	Exploration for and Evaluation of	1 January 2006
	Mineral Resources
HKFRS 7	Financial Instruments: Disclosures	1 January 2007
HKFRS-Int 4	Determining whether an Arrangement	1 January 2006
	contains a Lease
HKFRS-Int 5	Rights to Interests arising from	1 January 2006
	Decommissioning, Restoration and
	Environmental Rehabilitation Funds
HK(IFRIC)-Int 6	Liabilities arising from Participating	1 December 2005
	in a Specific Market – Waste
	Electrical and Electronic Equipment
HK(IFRIC)-Int 7	Applying the Restatement Approach	1 March 2006
	under HKAS 29 Financial Reporting
	in Hyperinflationary Economics

In addition, the Hong Kong Companies (Amendment) Ordinance 2005 came into effect on 1 December 2005 and will be first applicable to the Group’s financial statements for the year beginning 1 January 2006.

The Group is in the process of making an assessment of what the impact of these amendments, new standards and interpretations is expected to be in the period of initial application. So far it has concluded that the adoption of these amendments, new standards and interpretations is unlikely to have a significant impact on the Group’s results of operations and financial position.

34. SUBSEQUENT EVENTS

Subsequent to the balance sheet date, the Company, Talent Sino, being a wholly owned subsidiary of the Company, entered into a conditional sale and purchase agreement dated 22 May 2006 with the Purchaser whereby Talent Sino has conditionally agreed to sell and the Purchaser has conditionally agreed to buy 51.52% of the entire issued and paid-up share capital of Windsor Treasure and the Shareholder’s Loan at an aggregate consideration of HK$96,000,000, the details of which are included in an announcement of the Company dated 26 May 2006 and also in this Circular. The financial information in respect of Windsor Treasure and its subsidiaries are set out in note 35 below.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

35. DISPOSAL OF WINDSOR TREASURE

The financial information of Windsor Treasure and its subsidiaries is as follows:–

(a) Consolidated profit and loss account

	24 November 2004
	(date of acquisition)	Year ended
	to 31 December	31 December
	2004	2005
	HK$’000	HK$’000
TURNOVER	33,956	223,658
Cost of sales	(29,992)	(167,984)
Gross profit	3,964	55,674
Other revenue	99	825
Distribution costs	(1,313)	( 8,728)
Administrative expenses	(524)	(13,111)
PROFIT FROM OPERATING ACTIVITIES	2,226	34,660
Finance costs	(177)	(2,020)
PROFIT BEFORE TAXATION	2,049	32,640
Taxation	(103)	(696)
PROFIT FOR THE YEAR	1,946	31,944
Minority interests	(94)	(651)
PROFIT ATTRIBUTABLE TO SHAREHOLDERS	1,852	31,293

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

35. DISPOSAL OF WINDSOR TREASURE (Continued)

(b) Consolidated balance sheet

NON-CURRENT ASSETS Property, plant and equipment CURRENT ASSETS Due from holding company Inventories Trade and other receivables Prepayments and deposits VAT recoverable Cash and bank balances CURRENT LIABILITIES Due to directors Trade and other payables Interest bearing bank borrowings Deposits received Other tax payable VAT payable Current tax payable NET CURRENT ASSETS TOTAL ASSETS LESS CURRENT LIABILITIES NON-CURRENT LIABILITIES Loan from holding company EQUITY ATTRIBUTABLE TO SHAREHOLDERS Share capital Reserves MINORITY INTERESTS	31 December 2004 2005 HK$’000 HK$’000 19,701 15,252 – 267 42,547 43,354 45,388 84,556 4,507 216 1,214 3,362 17,825 34,869 111,481 166,624 4,130 26 54,217 40,529 11,321 9,615 10,446 22,667 – 4 890 1,395 1,081 484 82,085 74,720 29,396 91,904 49,097 107,156 – 28,069 49,097 79,087 315 315 43,430 74,773 43,745 75,088 5,352 3,999 49,097 79,087	31 December 2004 2005 HK$’000 HK$’000 19,701 15,252 – 267 42,547 43,354 45,388 84,556 4,507 216 1,214 3,362 17,825 34,869 111,481 166,624 4,130 26 54,217 40,529 11,321 9,615 10,446 22,667 – 4 890 1,395 1,081 484 82,085 74,720 29,396 91,904 49,097 107,156 – 28,069 49,097 79,087 315 315 43,430 74,773 43,745 75,088 5,352 3,999 49,097 79,087
		166,624
		26 40,529 9,615 22,667 4 1,395 484
		74,720
		91,904
		107,156
		28,069
		79,087

		315 74,773
		75,088 3,999
		79,087

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

35. DISPOSAL OF WINDSOR TREASURE (Continued)

(c) Consolidated cash flow statements

	24 November 2004
	(date of acquisition)	Year ended
	to 31 December	31 December
	2004	2005
	HK$’000	HK$’000
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before taxation	2,049	32,640
Adjustments for:–
Bank interest received	(67)	(111)
Bank interest paid	124	1,210
Depreciation	349	2,970
Loss on disposal of property, plant and equipment	–	934
Operating profit before working capital changes	2,455	37,643
Increase in amount due from holding company	–	(267)
Decrease/(increase) in inventories	9,216	(807)
Increase in trade and other receivables	(17,187)	(39,168)
Decrease in prepayments and deposits	698	4,291
Increase in VAT recoverable	(680)	(2,148)
Increase/(decrease) in amounts due to related parties	1,815	(4,104)
Decrease in trade and other payables	(33)	(13,688)
(Decrease)/increase in deposits received	(2,934)	12,220
Increase in other tax payable	–	4
Increase in VAT payable	889	505
Net cash used in operations	(5,761)	(5,519)
Interest received	67	111
Interest paid	(124)	(1,210)
Overseas tax paid	(250)	(1,293)
Net cash used in operating activities	(6,068)	(7,911)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of properties, plant and equipment	(13)	(2,244)
Acquisition of subsidiaries, net of cash acquired	(4,651)	–
Dividend paid to minority shareholders	–	(2,357)
Proceeds from disposal of property, plant and equipment	–	3,168
Net cash used in investing activities	(4,664)	(1,433)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of new shares	17,237	–
Cash received from minority shareholders	–	265
Proceeds from loan from holding company	–	28,069
Proceeds from interest bearing bank borrowings	12,075	9,615
Repayment of bank loans	(755)	(11,321)
Net cash generated from financing activities	28,557	26,628

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

35. DISPOSAL OF WINDSOR TREASURE (Continued)

(c) Consolidated cash flow statements (Continued)

INCREASE IN CASH AND CASH EQUIVALENTS Cash and cash equivalents at beginning of year Effect of foreign exchange rate changes Cash and cash equivalents at end of year ANALYSIS OF THE BALANCES OF CASH AND CASH EQUIVALENTS Cash and bank balances	Year ended 31 December 2004 2005 HK$’000 HK$’000 17,825 17,284 – 17,825 – (240) 17,825 34,869 17,825 34,869

Yours faithfully,

Moore Stephens

Certified Public Accountants Hong Kong

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE REMAINING GROUP

==> picture [152 x 127] intentionally omitted <==

28 June 2006

The Directors Omnicorp Limited

Dear Sirs,

We report on the unaudited pro forma financial information of Omnicorp Limited (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”), which has been prepared by the directors for illustrative purposes only, to provide information about how the proposed disposal of approximately 51.52% interest in the issued share capital of and shareholder’s loan to Windsor Treasure Group Holdings Limited (the “Disposal”) might have affected the financial information presented, for inclusion as Appendix II to the Circular of the Company dated 28 June 2006 (the “Circular”). The basis of preparation of the pro forma financial information is set out on pages 68 to 77 the Circular.

Responsibilities

It is the responsibility solely of the directors of the Company to prepare the unaudited 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”) and with reference to AG 7 Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars issued by the Hong Kong Institute of Certified Public Accountants.

It is our responsibility to form an opinion, as required by paragraph 4.29(1) of the Listing Rules, on the unaudited pro forma financial information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the unaudited pro forma financial information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE REMAINING GROUP

APPENDIX II

Basis of opinion

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

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

The unaudited pro forma financial information is for illustrative purposes only, based on the judgements and assumptions of the directors of the Company, and, because of its hypothetical nature, does not provide any assurance or indication that any event will take place in the future and may not be indicative of:

the financial position of the Group or the Remaining Group (as defined in the Circular) as at 31 December 2005 or any future date; or
the earnings per share/results of the Group or the Remaining Group (as defined in the Circular) for the year ended 31 December 2005 or any future periods.

Opinion

In our opinion:

a. the unaudited pro forma financial information has been properly compiled by the directors of the Company on the basis stated;
b. such basis is consistent with the accounting policies of the Group; and
c. the adjustments are appropriate for the purposes of the unaudited 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

APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE REMAINING GROUP

UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE REMAINING GROUP

A. Unaudited pro forma consolidated balance sheet of the Group

					Unaudited
					pro forma
		Windsor		Disposal	consolidated
	The Group	Treasure		of	balance
	as at	Group		Windsor	sheet of the
	31 Dec 2005	as at		Treasure	Remaining
	(audited)	31 Dec 2005		Group	Group
	HK$’000	HK$’000	Note	HK$’000	HK$’000
NON-CURRENT ASSETS
Properties, plant and equipment	30,995	(15,252)			15,743
Investment property	10,430	–			10,430
Long term investments	23,700	–			23,700
Interests in associates	50,689	–			50,689
Goodwill	21,767	–	A3	(12,282)	9,485
	137,581	(15,252)			110,047
CURRENT ASSETS
Due from holding company	–	(267)	A4	267	–
Inventories	89,964	(43,354)			46,610
Trade and other receivables	145,421	(84,556)	A4	(267)	60,598
Prepayments and deposits	2,214	(216)			1,998
Current tax recoverable	3,362	(3,362)			–
Listed investments	19,568	–			19,568
Cash and bank balances	67,990	(34,869)	A5	96,000	129,121
	328,519	(166,624)			257,895
CURRENT LIABILITIES
Due to related parties	26	(26)			–
Trade and other payables	65,433	(40,529)			24,904
Interest bearing bank borrowings	67,152	(9,615)			57,537
Other loan payable	30,000	–			30,000
Deposits received	22,929	(22,667)			262
Current tax payable	1,951	(1,883)			68
	187,491	(74,720)			112,771

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE REMAINING GROUP

					Unaudited
					pro forma
		Windsor		Disposal	consolidated
	The Group	Treasure		of	balance
	as at	Group		Windsor	sheet of the
	31 Dec 2005	as at		Treasure	Remaining
	(audited)	31 Dec 2005		Group	Group
	HK$’000	HK$’000	Note	HK$’000	HK$’000
NET CURRENT ASSETS	141,028	(91,904)			145,124
TOTAL ASSETS LESS
CURRENT LIABILITIES	278,609	(107,156)			255,171
NON-CURRENT LIABILITIES
Loan from holding company	–	(28,069) A6		28,069	–
Interest bearing bank borrowings	3,124	–			3,124
Deferred tax liabilities	17	–			17
	3,141	(28,069)			3,141
	275,468	(79,087)			252,030
EQUITY ATTRIBUTABLE
TO COMPANY’S
SHAREHOLDERS
Share capital	1,504	(315)		315	1,504
Reserves	199,880	(74,773) A7		91,737	216,844
	201,384	(75,088)			218,348
MINORITY INTERESTS	74,084	(3,999) A7		(36,403)	33,682
	275,468	(79,087)			252,030

UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE REMAINING GROUP

APPENDIX II

Notes to the unaudited pro forma consolidated balance sheet

A1. The pro forma consolidated balance sheet of the Group as presented has been prepared as if the Disposal had been completed on 31 December 2005.
A2. The Company and Talent Sino, being a wholly owned subsidiary of the Company, entered into a conditional sale and purchase agreement (“the Agreement”) with the Purchaser whereby Talent Sino has conditionally agreed to sell and the Purchaser has conditionally agreed to buy 51.52% of the entire issued and paid-up share capital of Windsor Treasure and the Shareholder’s Loan at an aggregate consideration of HK$96,000,000. The Consideration will be payable by the Purchaser in cash. The adjustments were put through to eliminate the assets and liabilities of Windsor Treasure in the Group’s consolidated balance sheet as at 31 December 2005.
A3. Adjustment to goodwill of HK$12,282,000 represents the elimination of the net carrying amount as at 31 December 2005 of the goodwill arising from the acquisition of Windsor Treasure in November 2004.
A4. The amount due from Talent Sino of HK$267,000 is reclassified as an ordinary receivable as Talent Sino is no longer the holding company upon the completion of the Disposal.
A5. Cash receipt of HK$96,000,000 represents the consideration of the Disposal, pursuant to the Agreement.
A6. The Shareholder’s Loan from Talent Sino is settled upon the completion of the Disposal, pursuant to the Agreement. The amount of HK$28,069,000 represents settlement of the Shareholder’s Loan from Talent Sino of HK$28,711,000 less accrued interest of HK$642,000.
A7. Adjustments to reserves of HK$91,737,000 represent the elimination of Windsor Treasure’s reserves of HK$74,773,000 plus interest on loan to Windsor Treasure of HK$642,000 and the gain on disposal of subsidiaries of HK16,322,000, which is calculated based on the consideration of the Disposal of HK$96,000,000 less (1) shareholder’s loan of HK$28,711,000, (2) the share of net assets of Windsor Treasure at 31 December 2005 of HK$38,685,000 (i.e. 51.52% of HK$75,088,000, and (3) the net carrying value of goodwill of HK$12,282,000 (per A3 above).
A8. Adjustment to minority interests represents the elimination of the minority’s share of the net assets of Windsor Treasure Group as of 31 December 2005 (HK$75,088,000 x 48.48% = HK$36,403,000).

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE REMAINING GROUP

B. Unaudited pro forma consolidated profit and loss account of the Group

The Group
for year
ended 31
December
2005
(audited)
HK$’000
TURNOVER
393,273
Cost of sales
(316,388)
Gross profit
76,885
Other revenue
5,188
Distribution costs
(9,819)
Administrative expenses
(40,750)
Other operating expenses
(29,014)
PROFIT/(LOSS) FROM
OPERATING ACTIVITIES
2,490
Finance costs
(7,538)
Gain on disposal of subsidiaries
–
Share of results of associates
(391)
LOSS BEFORE TAXATION
(5,439)
Taxation
(969)
LOSS FOR THE YEAR
(6,408)
Minority interests
(13,383)
LOSS ATTRIBUTABLE TO
SHAREHOLDERS
(19,791)

Unaudited
pro forma
Windsor
consolidated
Treasure
profit and
Group
loss
for year
Disposal
account
ended 31
of
of the
December
Windsor
Remaining
2005
Treasure
Group
HK$’000
Note
HK$’000
HK$’000
(223,658)
169,615
167,984
(148,404)
(55,674)
21,211
(825)
4,363
8,728
(1,091)
13,111
(27,639)
–
(29,014)
(34,660)
(32,170)
2,020
(5,518)
–
B3
32,470
32,470
–
(391)
(32,640)
(5,609)
696
(273)
(31,944)
(5,882)
651
B4
14,787
2,055
(31,293)
(3,827)

APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE REMAINING GROUP

Notes to the unaudited pro forma consolidated profit and loss account

B1. The pro forma consolidated profit and loss account of the Group as presented has been prepared as if the Disposal had been completed on 1 January 2005.
B2. The Company and Talent Sino, being a wholly owned subsidiary of the Company, entered into a conditional sale and purchase agreement with the Purchaser whereby Talent Sino has conditionally agreed to sell and the Purchaser has conditionally agreed to buy 51.52% of the entire issued and paid-up share capital of Windsor Treasure and the Shareholder’s Loan at an aggregate consideration of HK$96,000,000. The Consideration will be payable by the Purchaser in cash. The adjustments reflect the elimination of the profit and loss items of Windsor Treasure in the Group’s consolidated profit and loss account for the year ended 31 December 2005.
B3. Gain on disposal of subsidiaries of HK$32,470,000 is calculated based on the consideration of the Disposal of HK$96,000,000 less (1) Shareholder’s Loan from Talent Sino of HK$28,711,000, (2) the share of net assets of Windsor Treasure Group as of 1 January 2005 of HK$22,537,000 (i.e. HK$43,745,000 x 51.52%), and (3) the net carrying amount of goodwill of HK$12,282,000.
B4. Adjustment to minority interests represents the elimination of the minority’s share of Windsor Treasure Group’s profit for the year ended 31 December 2005 of HK$15,170,000 (i.e. HK$31,293,000 x 48.48%), less the 48.48% share of the write back of the revaluation surplus upon the disposal of Windsor Treasure Group’s property of HK$383,000, which has been taken up at the consolidation level.

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE REMAINING GROUP

C. Unaudited pro forma consolidated cash flow statement of the Group

The Group
for year
ended 31
December
2005
(audited)
HK$’000
CASH FLOWS FROM
OPERATING ACTIVITIES
Loss before taxation
(5,439)
Adjustment for:
Interest income
(1,194)
Interest expenses
7,539
Write back of provisions
(339)
Depreciation on properties,
plant and equipment
6,916
Bad and doubtful debts
3,367
Write off of amount due
from associates
1,864
Write off of rental deposit
239
Revaluation loss on listed
investments
8,206
Amortization and impairment on
goodwill of associates
9,608
Impairment of investment
properties
1,570
Gain on disposal of subsidiaries
–
Loss on disposal of properties,
plant and equipment
1,415
Loss on disposal of listed
securities
14
Employee share option
1,015
Negative goodwill
(1,505)
Write back of share of loss of
an associate
(1,545)
Share of results of associates
391
OPERATING PROFIT/(LOSS)
BEFORE WORKING
CAPITAL CHANGES
32,122

Unaudited
Windsor
pro forma
Treasure
consolidated
Group
cash flow
for year
Disposal
statement
ended 31
of
of the
December
Windsor
Remaining
2005
Treasure
Group
HK$’000
Note
HK$’000
HK$’000
(32,640)
C3
32,470
(5,609)
111
(1,083)
(1,210)
6,329
–
(339)
(2,970)
3,946
–
3,367
–
1,864
–
239
–
8,206
–
9,608
–
1,570
–
C3
(32,470)
(32,470)
(934)
481
–
14
–
1,015
–
(1,505)
–
(1,545)
–
391
(37,643)
(5,521)

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE REMAINING GROUP

C. Unaudited pro forma consolidated cash flow statement of the Group (Continued)

The Group
for year
ended 31
December
2005
(audited)
HK$’000
Increase in amount due
from holding company
–
Increase in inventories
(12,700)
Increase in trade and other
receivables
(48,943)
Decrease/(increase) in
prepayments and deposits
3,842
Decrease in VAT recoverable
–
(Decrease)/increase in trade
and other payables
(9,775)
Decrease in amount due to
related parties
(4,159)
Increase/(decrease) in
deposits received
12,019
Increase in other tax payable
–
Increase in VAT payable
–
NET CASH USED IN
OPERATIONS
(27,594)
Interest paid
(7,538)
Taxes paid outside Hong Kong
(3,194)
NET CASH USED IN
OPERATING ACTIVITIES
(38,326)

Unaudited
Windsor
pro forma
Treasure
consolidated
Group
cash flow
for year
Disposal
statement
ended 31
of
of the
December
Windsor
Remaining
2005
Treasure
Group
HK$’000
Note
HK$’000
HK$’000
267
C4
(267)
–
807
(11,893)
39,168
C4
267
(9,508)
(4,291)
(449)
2,148
2,148
13,688
3,913
4,104
(55)
(12,220)
(201)
(4)
(4)
(505)
(505)
5,519
(22,075)
1,210
(6,328)
1,293
(1,901)
8,022
(30,304)

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE REMAINING GROUP

C. Unaudited pro forma consolidated cash flow statement of the Group (Continued)

The Group
for year
ended 31
December
2005
(audited)
HK$’000
CASH FLOWS FROM
INVESTING ACTIVITIES
Interest received
1,082
Purchase of listed investments
(3,523)
Purchases of properties, plant
and equipment
(10,039)
Repayment of loan from
an associate
3,821
Dividend paid to minority
shareholders
(2,357)
Proceeds from disposals of
properties, plant and equipment
3,168
Proceeds from disposal of
subsidiaries
–
Decrease in pledged time deposits
and guarantee funds
(5,997)
Net cash (used in)/generated
from investing activities
(13,845)
CASH FLOWS FROM
FINANCING ACTIVITIES
Proceeds from issue of new shares
27,695
Proceeds from subscriptions of
share by minority shareholders
637
Proceeds from loan from
holding company
–
Share issue expenses
(1,093)
Proceeds from other loan
15,000
Proceeds from interest bearing
bank borrowings
15,634
Repayment of bank loans
–
Net cash generated from
financing activities
57,873

Unaudited
Windsor
pro forma
Treasure
consolidated
Group
cash flow
for year
Disposal
statement
ended 31
of
of the
December
Windsor
Remaining
2005
Treasure
Group
HK$’000
Note
HK$’000
HK$’000
(111)
971
–
(3,523)
2,244
(7,795)
3,821
2,357
–
(3,168)
–
–
C5
67,931
67,931
–
(5,997)
1,322
55,408
–
27,695
(265)
372
(28,069)
C5
28,069
–
–
(1,093)
–
15,000
(9,615)
6,019
11,321
11,321
(26,628)
59,314

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE REMAINING GROUP

C. Unaudited pro forma consolidated cash flow statement of the Group (Continued)

The Group
for year
ended 31
December
2005
(audited)
HK$’000
INCREASE IN CASH AND
CASH EQUIVALENTS
5,702
Cash and cash equivalents at
1 December 2005
32,325
Effect of exchange rate changes
287
Cash and cash equivalent at
31 December 2005
38,314
ANALYSIS OF BALANCES
OF CASH AND CASH
EQUIVALENTS
Cash and cash balances
67,990
Pledged time deposit and
guarantee funds
(22,285)
Bank overdrafts
(7,391)
38,314

Unaudited
Windsor
pro forma
Treasure
consolidated
Group
cash flow
for year
Disposal
statement
ended 31
of
of the
December
Windsor
Remaining
2005
Treasure
Group
HK$’000
Note
HK$’000
HK$’000
(17,284)
84,418
(17,825)
14,500
240
527
(34,869)
99,445
(34,869)
C5
96,000
129,121
–
(22,285)
–
(7,391)
(34,869)
99,445

APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE REMAINING GROUP

Notes to the unaudited pro forma consolidated cash flow statement

C1. The pro forma consolidated cash flow statement of the Group as presented has been prepared as if the Disposal had been completed on 1 January 2005.
C2. The Company and Talent Sino, being a wholly owned subsidiary of the Company, entered into a conditional sale and purchase agreement with the Purchaser whereby Talent Sino has conditionally agreed to sell and the Purchaser has conditionally agreed to buy 51.52% of the entire issued and paid-up share capital of Windsor Treasure and the Shareholder’s Loan at an aggregate consideration of HK$ 96,000,000. The Consideration will be payable by the Purchaser in cash. The adjustments were put through to reconcile the cash flow effect of the Disposal for the pro forma cash flow statement.
C3. The adjustment of HK$32,470,000 represents the recognition of the gain on disposal of subsidiaries (see B3 above).
C4. The adjustment of HK$267,000 represents the reclassification of the amount due from Talent Sino to an ordinary receivable (see A4 above).
C5. The adjustment reflects the net proceeds received from the disposal of subsidiaries of HK$67,931,000, being the consideration of the Disposal of HK$96,000,000 less the settlement of the Shareholder’s Loan from Talent Sino of HK$28,069,000 (excluding interest accrual of HK$642,000).

GENERAL INFORMATION

APPENDIX III

1. RESPONSIBILITY

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

2. INTERESTS OF DIRECTORS

(a) Interest in Securities

As at the Latest Practicable Date, the interests and short positions of each Director and chief executive of the Company in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which are 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 is taken or deemed to have under such provisions of the SFO) or are required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein or are required pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers of the Listing Rules to be notified to the Company and the Stock Exchange were as follows:

Long positions

(i) Directors’ Interests in the Shares

Name of Director Capacity Sung Kai Hing, Simon Corporate_(Note 1) Au Hoi Tsun, Peter Beneficial owner Hui Tung Wah, Samuel Beneficial owner Family interest(Note 2)_	Percentage of Number of issued share capital Shares of the Company 6,695,850 4.45% 517,500 0.34% 280,000 0.19% 75,000 0.05% 355,000 0.24%	Percentage of Number of issued share capital Shares of the Company 6,695,850 4.45% 517,500 0.34% 280,000 0.19% 75,000 0.05% 355,000 0.24%
		0.24%

GENERAL INFORMATION

APPENDIX III

Notes:

Out of these 6,695,850 Shares, 5,674,200 Shares were held by Capitalrise Group Limited (“ Capitalrise ”), a corresponding interest of 80% and 20% of the issued share capital of which was beneficially owned by Mr. Sung Kai Hing, Simon and his spouse respectively. The remaining 1,021,650 Shares were held by Bloominvest Group Limited (“ Bloominvest ”), the entire issued share capital of which was wholly owned by Mr. Sung Kai Hing, Simon.
These 75,000 Shares were jointly owned by Mr. Hui Tung Wah, Samuel and his spouse.

(ii) Interest in share options of the Company

The Company adopted a share option scheme at its general meeting held on 22 March 2002. Each option gives the holder the right to subscribe for one Share. Details of the interests of Directors in the share options as at the Latest Practicable Date were as follows:–

	Number of		Exercise		Number of
	share options		price per		share options
Name of	as at		share of the	Exercise	as at the Latest
Director	1 January 2006	Date of grant	Company	period	Practicable Date
Sung Kai Hing,	800,000	14/06/2005	HK$0.80	15/06/2005 –	800,000
Simon				14/06/2010
Au Hoi Tsun,	540,000	14/07/2003	HK$0.95	15/07/2003 –	540,000
Peter				14/07/2008
	300,000	14/06/2005	HK$0.80	15/06/2005 –	300,000
				14/06/2010
Hui Tung Wah,	800,000	14/06/2005	HK$0.80	15/06/2005 –	800,000
Samuel				14/06/2010
Sung Yan Wai, Petrus	240,000	14/07/2003	HK$0.95	15/07/2003 –	240,000
				14/07/2008
	250,000	14/06/2005	HK$0.80	15/06/2005 –	250,000
				14/06/2010

APPENDIX III

GENERAL INFORMATION

	Number of		Exercise		Number of
	share options		price per		share options
Name of	as at		share of the	Exercise	as at the Latest
Director	1 January 2006	Date of grant	Company	period	Practicable Date
Wong Che Keung,	72,000	14/07/2003	HK$0.95	15/07/2003 –	72,000
Richard				14/07/2008
	700,000	14/06/2005	HK$0.80	15/06/2005 –	70,000
				14/06/2010
Tong Yee Yung,	72,000	14/07/2003	HK$0.95	15/07/2003 –	72,000
Joseph				14/07/2008
	700,000	14/06/2005	HK$0.80	15/06/2005 –	70,000
				14/06/2010
Wong Kin Chi	700,000	14/06/2005	HK$0.80	15/06/2005 –	70,000
				14/06/2010

(iii) Interest in shares of associated corporation

				Percentage of
				issued share
	Name of			capital of
Name of	associated		Number of	the associated
Director	corporation	Capacity	shares	corporation
Sung Kai Hing, Simon	Windsor Treasure	Corporate_(Note)_	3,942	9.76%

Note: Out of these 3,942 shares, 3,157 shares were held by Capitalrise which was owned as to 80% and 20% by Mr. Sung Kai Hing, Simon and his spouse respectively, and 785 shares were held by Bloominvest which was wholly owned by Mr. Sung Kai Hing, Simon.

GENERAL INFORMATION

APPENDIX III

(iv) Interest in share options of associated corporation

Share options were granted by Omnitech under a share option scheme adopted by the Company on 20 May 2004. Each option gives the holder the right to subscribe one share. Details of the interests of Directors in the share options as at the Latest Practicable Date were as follows:

	Number of		Exercise		Number of
	share options		price per		share options
Name of	as at		share in		as at the Latest
Director	1 January 2006	Date of grant	Omnitech	Exercise period	Practicable Date
Au Hoi Tsun, Peter	200,000	18/05/2005	AUD0.069	18/05/2005 –	200,000
				18/05/2008
Sung Yan Wai, Petrus	75,000	18/05/2005	AUD0.069	18/05/2005 –	75,000
				18/05/2008

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 shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which are 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 is taken or deemed to have under such provisions of the SFO) or are required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein or are required pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers of the Listing Rules to be notified to the Company and the Stock Exchange.

(b) Other Interest

As at the Latest Practicable Date,

(i) none of the Directors had any direct or indirect interest in any assets which had been acquired, disposed of by or leased to or which were proposed to be acquired, disposed of by or leased to, any member of the Group since 31 December 2005, the date to which the latest published audited accounts of the Company have been made up; and
(ii) none of the Directors was materially interested in any contract or arrangement subsisting and which was significant in relation to the business of the Group.

GENERAL INFORMATION

APPENDIX III

3. INTERESTS OF SUBSTANTIAL SHAREHOLDERS

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) has 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, 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:

Long positions

(i) Interest in the Shares

			Percentage of
			issued share
		Number	capital of the
Name of Shareholder	Capacity	of shares	Company
Planet Adventure Limited	Beneficial owner	9,300,000	6.18%
Huen Wing Ming, Patrick	Corporate_(Note 1)_	9,450,000	6.28%
Huen Ng Sui Fong, Isabel	Family interest_(Note 2)_	9,450,000	6.28%

Notes:

Planet Adventure Limited and Patova International Limited were wholly owned by Mr. Huen Wing Ming, Patrick who was deemed to be interested in 9,300,000 shares and 150,000 shares of the Company held by Planet Adventure Limited and Patova International Limited respectively under the SFO.
Mrs. Huen Ng Sui Fong, Isabel is the spouse of Mr. Huen Wing Ming, Patrick and was deemed to be interested in the shares of the Company in which Mr. Huen Wing Ming, Patrick was interested under the SFO.

GENERAL INFORMATION

APPENDIX III

(ii) Interest in the shares of the subsidiaries of the Company

			Percentage
			of issued
			share capital/
		Number	registered capital
Name of shareholder	Name of company	of shares	of the company
PAMA Group, Inc. in its capacity	VFJ	567,818	21.88%
as the general partner of PAMA
Private Equity Limited
Partnership II_(Note)_
�� !"#$%&'(	�� !"#$%&'	–	22%
(Dongguan Shi Changping	(Dongguan Rich
Industrial and Trading Co.	Furniture Co. Ltd.*)
Limited*)
Cheernew Investments Limited	�� !"#$%&'	–	22%
	(Dongguan Xijian Furniture
	Co. Limited*)
�� !"#$%&	�� !"#$%&'()*+	–	35%
(Universal Arts & Crafts Co.	(Shenzhen Dahao Xingli Furniture
Limited*)	Industrial Co. Limited*)

* For identification purpose only

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 is 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 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, 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 and none of the Directors was a director or employee of a company which 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 Divisions 2 and 3 of Part XV of the SFO.

GENERAL INFORMATION

APPENDIX III

4. SERVICE CONTRACTS

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

5. MATERIAL CONTRACTS

The following contracts (not being contracts entered into in the ordinary course of business carried on by the Group) had been entered into by members of the Group within the two years preceding the Latest Practicable Date and are or may be material:–

(i) a supplemental deed dated 22 July 2004 between the Company and VFJ relating to the extension of the amount of loan facility granted to VFJ by the Company and amendment to the date of advancement;
(ii) a deed of assignment dated 22 July 2004 between the Company and Hai Yang, a whollyowned subsidiary of the Company, relating to the assignment of the loan in an amount of HK$14,363,299.50 due by VFJ from the Company to Hai Yang;
(iii) a conditional deed of assignment dated 26 July 2004 entered into between Hai Yang as assignor, Omnitech as assignee and VFJ as debtor in relation to the assignment of the debt due from VFJ to Hai Yang in the amount of HK$16,306,109.79 in consideration of Omnitech’s allotment and issue of 15,088,470 new fully paid consolidated shares of Omnitech. However, the transaction contemplated in the deed did not proceed, details of which were set out in the Company’s announcement dated 25 October 2004;
(iv) a put and option deed dated 30 July 2004 between Best Start Services Limited (“ Best Start ”) and Mr. Lindsay James Gallagher in relation to 1,510,000 shares in TZ Limited whereby Best Start agreed to grant Mr. Gallagher a call option to purchase and Mr. Gallegher agreed to grant to Best Start a put option to require Mr. Gallagher to purchase 1,510,000 shares in TZ Limited at an exercise price of AUD0.43 per share of TZ Limited;
(v) a share purchase and subscription agreement dated 19 August 2004 entered into between, inter alia, Talent Sino, Capitalrise, Bloominvest, Good Profit Trading Limited, Hero Profit International Limited, Metronet Investments Limited, Ace Victory Investments Limited, Even Skill Technology Limited, Wellasia International Limited and Windsor Treasure in relation to the acquisition and subscription of the Sale Shares;
(vi) a share sale agreement dated 22 December 2004 entered into between Best Start as vendor and BES Investments Nominees Pty Limited as purchaser in respect of the sale of 2,500,000 shares in TZ Limited;
(vii) a conditional placing agreement dated 4 February 2005 between the Company and Tai Fook Securities Company Limited in relation the placing of 9,000,000 new Shares;

GENERAL INFORMATION

APPENDIX III

(viii) an underwriting agreement dated 4 April 2005 entered into between the Company and Kim Eng Securities (Hong Kong) Limited relating to the underwriting in respect of the issue of 50,146,384 Shares;
(ix) a conditional deed of assignment dated 23 November 2005 entered into between Hai Yang as assignor, Omnitech as assignee and VFJ as debtor in relation to the assignment of part of the debt due from VFJ to Hai Yang in the amount of HK$16,363,299.50;
(x) a loan agreement dated 30 November 2005 entered into between, inter alia, Talent Sino as borrower, AMS Corporate Finance Limited and Great Charm International Limited as lenders and the Company as guarantor in relation to a term loan facility of up to HK$30,000,000;
(xi) a supplemental deed dated 22 May 2006 entered into between , inter alia, Talent Sino as borrower, AMS Corporate Finance Limited and Great Charm International Limited as lenders and the Company as guarantor in relation to the extension of the repayment date of the term loan facility mentioned in paragraph (x) above; and
(xii) the Agreement.

Save as disclosed above, no contracts (not being contracts entered into in the ordinary course of business carried on by the Group) had been entered into by any member of the Group within the two years preceding the Latest Practicable Date.

6. MATERIAL LITIGATION

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

7. WORKING CAPITAL

The Directors are of the opinion that in the absence of unforeseen circumstances, following the disposal of the Windsor Treasure 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.

GENERAL INFORMATION

APPENDIX III

8. INDEBTEDNESS

Borrowings

As at the close of business on 30 April 2006, being the latest practicable date for the purpose of this indebtedness statement, the Group had outstanding secured bank borrowings of approximately HK$70.64 million which comprise bank overdrafts of approximately HK$8.29 million, short term loan and import loans of approximately HK$62.35 million. The Group also had other loan of HK$32.18 million, which comprised a loan in the principal amount of HK$30.00 million from Independent Third parties together with the accrued interest thereon as mentioned under the paragraph headed “REASONS AND BENEFITS OF THE DISPOSAL” of the Letter from the Board of this circular.

Debt securities

As at the close of business on 30 April 2006, 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 30 April 2006, the Group’s time deposits and guarantee funds totalling approximately HK$22.33 million were pledged to banks to secure the bank borrowings granted by the banks to the Group. The other loan is secured by a fixed charge against the Group’s equity holding in a subsidiary, a floating charge against the Group’s entire assets and a corporate guarantee issued by the Company.

Other commitments

As at the close of business on 30 April 2006, the Group had outstanding minimum commitments under non-cancellable operating leases in respect of land and buildings which fall due within one year, in the second to fifth years inclusive and over five years of approximately HK$6.81 million, HK$21.41 million and HK$18.45 million respectively.

Contingent liabilities

As at the close of business on 30 April 2006, the Group had contingent liabilities in respect of corporate guarantee of up to HK$87.88 million.

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 30 April 2006, 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 30 April 2006.

GENERAL INFORMATION

APPENDIX III

9. EXPERT AND CONSENT

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

Name

Qualification

Moore Stephens (the “ Accountant ”)

Certified Public Accountants

The Accountant has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of its letter or report and references to its names, in the form and context in which they respectively appear.

The Accountant has confirmed that as at the Latest Practicable Date,

(i) it did not have any shareholding in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group; and
(ii) it did not have any direct or indirect interest in any assets which had 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 since 31 December, 2005, being the date up to which the latest published financial statements of the Group were made.

GENERAL INFORMATION

APPENDIX III

10. MISCELLANEOUS

(i) Leung Man Kwan, Francis, an Australian Chartered Accountant, a fellow member of the Hong Kong Institute of Certified Public Accountants and an associate member of the Institute of Chartered Secretaries and Administrators, is the company secretary of the Company.
(ii) Mr. Tam Wing Yiu, Alex, an associate member of the Hong Kong Institute of Certified Public Accountants, is the qualified accountant of the Company.
(iii) The registered office of the Company is at Canon’s Court, 22 Victoria Street, Hamilton HM12, Bermuda. The branch share registrar of the Company in Hong Kong is Tengis Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong.
(iv) 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 are available for inspection at Sit, Fung, Kwong & Shum, Solicitors of 18th Floor, Gloucester Tower, The Landmark, 11 Pedder Street, Central, Hong Kong during normal business hours on any business day up to and including 19 July, 2006:–

(i) the memorandum of association and bye-laws of the Company;
(ii) the material contracts referred to in paragraph 5 headed “Material contracts” above;
(iii) the Accountant’s report of the Group as set out in Appendix I to this circular;
(iv) the letter from the Accountant in respect of the unaudited pro forma financial information of the Remaining Group as set out in Appendix II to this circular;
(v) the written consent referred to in paragraph 9 headed “Expert and consent” above;
(vi) annual reports of the Company for each of the two financial years ended 31 December 2004 and 2005; and
(vii) this circular.

NOTICE OF SGM

OMNICORP LIMITED �� ! " # $ �[] (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 The Cypress, 3/F., New World Renaissance Hotel (to be renamed as “Renaissance Kowloon Hotel” from 1 July 2006), 22 Salisbury Road, Tsimshatsui, Kowloon, Hong Kong on Wednesday, 19 July, 2006 at 10:00 a.m. for the purpose of considering and, if thought fit, passing, with or without amendments, the following ordinary resolution of the Company:–

ORDINARY RESOLUTION

“ THAT :

(a) a conditional sale and purchase agreement dated 22 May 2006 (the “ Agreement ”), a copy of which has been produced and marked “A” and signed by the chairman of the meeting for the purpose of identification, entered into between Talent Sino Holdings Limited (“ Talent Sino ”), a wholly owned subsidiary of the Company, Triple Express Enterprises Limited (the “ Purchaser ”) and the Company whereby Talent Sino conditionally agreed to sell and the Purchaser conditionally agreed to purchase 20,820 shares in Windsor Treasure Group Holdings Limited (“ Windsor Treasure ”) and all amounts, whether principal or interest, owing by Windsor Treasure to Talent Sino as at completion of the Agreement at an aggregate consideration of HK$96,000,000, and the transactions contemplated thereunder be and are hereby approved, confirmed and ratified; and
(b) any director be and is hereby authorised for and on behalf of the Company to execute all such other documents, instruments and agreements and to do all such acts or things deemed by him to be incidental to, ancillary to or in connection with the matters contemplated in or relating to the Agreement and completion thereof as he may consider necessary, desirable or expedient to give effect to the Agreement and the transactions contemplated thereunder.”

By Order of the Board Omnicorp Limited Leung Man Kwan, Francis Company Secretary

Hong Kong, 28 June 2006

for identification purpose only

NOTICE OF SGM

Head office and Principal place of business in Hong Kong: Units 1505-7, 15th Floor Shui On Centre 6-8 Harbour Road Wanchai, Hong Kong

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

Notes:

(1) Any shareholder entitled to attend and vote at the meeting is entitled to appoint another person as his proxy to attend and vote instead of him. A proxy need not be a shareholder of the Company. A shareholder who is a holder of two or more shares may appoint more than one proxy to attend and vote on the same occasion.
(2) In order to be valid, a form of proxy in the prescribed form together with the power of attorney or other authority (if any) under which it is signed or a notarially certified copy of that power or authority must be deposited at the Company’s branch share registrar in Hong Kong, Tengis Limited of 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong not less than 48 hours before the time fixed for holding the meeting.
(3) 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.
(4) 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.

AI assistant

Greenheart Group Limited — Proxy Solicitation & Information Statement 2006

48939_rns_2006-06-28_cef86df3-e263-44cd-ac77-85aa89bffc4f.pdf

CONTENTS

DEFINITIONS

DEFINITIONS

LETTER FROM THE BOARD

OMNICORP LIMITED �� ! " # $ �[*]

VERY SUBSTANTIAL DISPOSAL: PROPOSED DISPOSAL OF APPROXIMATELY 51.52% INTEREST IN THE ISSUED SHARE CAPITAL OF AND SHAREHOLDER’S LOAN TO WINDSOR TREASURE GROUP HOLDINGS LIMITED

INTRODUCTION

LETTER FROM THE BOARD

THE AGREEMENT

Subject matter:

Consideration:

LETTER FROM THE BOARD

Long stop date:

Conditions Precedent

LETTER FROM THE BOARD

Basis for determining the Consideration

INFORMATION ON THE GROUP

INFORMATION ON THE PURCHASER

INFORMATION ON WINDSOR TREASURE GROUP

LETTER FROM THE BOARD

REASONS AND BENEFITS OF THE DISPOSAL

LETTER FROM THE BOARD

USE OF PROCEEDS

FINANCIAL EFFECTS OF THE DISPOSAL

LETTER FROM THE BOARD

MANAGEMENT DISCUSSION AND ANALYSIS

(a) Financial Review

LETTER FROM THE BOARD

(b) Liquidity, Financial Resources and Capital Structure

LETTER FROM THE BOARD

(c) Pledge on Assets

(d) Contingent Liabilities

(e) Employees and Remuneration Policies

LETTER FROM THE BOARD

(f) Prospects

IMPLICATIONS OF THE LISTING RULES

SGM

LETTER FROM THE BOARD

PROCEDURE TO DEMAND A POLL BY SHAREHOLDERS

RECOMMENDATION

FURTHER INFORMATION

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

A. FINANCIAL SUMMARY

CONSOLIDATED PROFIT AND LOSS ACCOUNT

APPENDIX I

CONSOLIDATED BALANCE SHEET

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

APPENDIX I

CONSOLIDATED CASH FLOW STATEMENT

APPENDIX I

APPENDIX I

BALANCE SHEET

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

1. CORPORATE INFORMATION

2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES

(a) Statement of compliance

(b) Basis of preparation of financial statements

APPENDIX I

2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (Continued)

(c) Adoption of new and revised Hong Kong Financial Reporting Standards

HKAS 1 “Presentation of Financial Statements”

HKAS 17 “Leases”

APPENDIX I

2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (Continued)

(c) Adoption of new and revised Hong Kong Financial Reporting Standards (Continued)

HKAS 24 “Related Party Disclosures”

HKAS 32 “Financial Instruments: Disclosure and Presentation”

HKAS 40 “Investment Property”

HKFRS 2 “Share-based Payment”

APPENDIX I

2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (Continued)

Greenheart Group Limited Proxy Solicitation & Information Statement 2006