hmvod Limited — Interim / Quarterly Report 2009

Aug 11, 2008

**Tai Shing International (Holdings) Limited *** 泰盛國際（控股）有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8103)

FIRST QUARTERLY ANNOUNCEMENT FOR THE THREE MONTHS ENDED 30 JUNE 2008

CHARACTERISTICS OF THE GROWTH ENTERPRISE MARKET (“GEM”) OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE “STOCK EXCHANGE”)

GEM has been established as a market designed to accommodate companies to which a high investment risk may be attached. In particular, companies may list on GEM with neither a track record of profitability nor any obligation to forecast future profitability. Furthermore, there may be risks arising out of the emerging nature of companies listed on GEM and the business sectors or countries in which the companies operate. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors.

Given the emerging nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board and no assurance is given that there will be a liquid market in the securities traded on GEM.

The principal means of information dissemination on GEM is publication on the internet website operated by the Stock Exchange. Listed companies are not generally required to issue paid announcements in gazetted newspapers. Accordingly, prospective investors should note that they need to have access to the GEM website in order to obtain up-to-date information on GEM-listed issuers.

The Stock Exchange takes no responsibility for the contents of this announcement, 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 announcement.

This announcement, for which the directors of Tai Shing International (Holdings) Limited collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on the GEM of the Stock Exchange for the purpose of given information with regard to Tai Shing International (Holdings) Limited. The directors, having made all reasonable enquiries, confirm that, to the best of their knowledge and belief:— (1) the information contained in this announcement is accurate and complete in all material respects and not misleading; (2) there are no other matters the omission of which would make any statement in this announcement misleading; and (3) all opinions expressed in this announcement have been arrived at after due and careful consideration and are founded on bases and assumptions that are fair and reasonable.

* For identification purpose only

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HIGHLIGHTS

• Turnover for the three months ended 30 June 2008 amounted to approximately HK$16.0 million representing an increase of approximately 112% over the corresponding period in 2007.

• Profit attributable to the shareholders for the three months ended 30 June 2008 amounted to approximately HK$0.3 million. (2007: loss of HK$0.4 million)

• Profit per share for the three months ended 30 June 2007 was approximately 0.32 HK cents. (2007: loss per share of 0.45 HK cents)

• The Board does not recommend the payment of any dividend for the three months ended 30 June 2008.

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The board of directors (the “Board”) of Tai Shing International (Holdings) Limited (the “Company”) is pleased to present the unaudited condensed consolidated results of the Company and its subsidiaries (collectively the “Group”) for the three months ended 30 June 2008, together with the unaudited comparative figures for the corresponding period in 2007, are as follows:—

CONDENSED CONSOLIDATED INCOME STATEMENT (UNAUDITED)

for the three months ended 30 June 2008

Notes Turnover 4 Cost of services and merchandise sold Gross profit Other revenue Selling expenses General and administrative expenses Other expenses 5 Profit/(Loss) before operation 6 Finance costs Profit/(Loss) before taxation Income Tax 7 Profit/(Loss) for the period Attributable to: Equity holder to the Company Earnings/(Loss) per share-basic (HK cents) 9	Three months ended 30 June 2008 2007 HK$’000 HK$’000 15,877 7,493 (12,972) (4,681) 2,905 2,812 84 374 (129) (904) (1,993) (2,671) (270) — 597 (389) (250) — 347 (389) — (24) 347 (413) 347 (413) 0.32 (0.45)

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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED RESULTS

1. General Information

Tai Shing International (Holdings) Limited (the “Company”) was incorporated in the Cayman Islands as an exempted company with limited liability under the Companies Law of the Cayman Islands. The address of its registered office is Cricket Square, Hutchins Drive P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands. The address of its principal place of business is 24th Floor, Prosperous Commercial Building, 54-58 Jardine’s Bazaar, Causeway Bay, Hong Kong. The Company’s shares are listed on the Growth Enterprise Market (“GEM”) of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).

2. Basis of Preparation of Financial Statements

The Group’s unaudited consolidated results have been prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”), accounting principles generally accepted in Hong Kong and the applicable disclosures required by the Rules Governing the Listing of Securities on the GEM of the Stock Exchange and by the Hong Kong Companies Ordinance.

The Group’s unaudited consolidated results have been prepared under the historical cost convention, except that financial assets at fair value through profit or loss are carried at their fair values.

The accounting policies adopted in preparing the unaudited consolidated results for the three months ended 30 June 2008 and 2007 are consistent with those following the preparation of the Group’s annual financial statements for the year ended 31 March 2008. The consolidated results are unaudited but have been reviewed by the Company’s audit committee.

3. Adoption of New and Revised HKFRSs

For the three months ended 30 June 2008, the Group has adopted all the new and revised HKFRSs issued by the HKICPA that are relevant to its operations and effective for accounting periods beginning on or after 1 January 2006. The adoption of these new and revised HKFRSs did not result in substantial changes to the Group’s accounting polices and amounts reported for the current period or prior accounting periods.

4. Turnover

Turnover represents income arising from the provision of systems development and integration, the sales of software and hardware products and provision of professional services.

An analysis of the turnover by principal activities of the operations of the Group during the three months ended 30 June 2008 is as follows:

Systems development Professional services fees	UNAUDITED Three months ended 30 June 2008 2007 HK$’000 HK$’000 15,821 7,493 56 — 15,877 7,493	UNAUDITED Three months ended 30 June 2008 2007 HK$’000 HK$’000 15,821 7,493 56 — 15,877 7,493
		7,493

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5. Other Expenses

	UNAUDITED	UNAUDITED
	Three months ended
		30 June
	2008	2007
	HK$’000	HK$’000
Fair value losses on financial assets at
fair value through profit or loss	270	—

6. Profit/(Loss) before operation

Profit/(Loss) before operation is stated after charging/(crediting):

	UNAUDITED	UNAUDITED
	Three months ended
		30 June
	2008	2007
	HK$’000	HK$’000
Auditors’ remuneration	113	200
Depreciation	516	489
Finance cost — bank interest	250	—
Operating leases	459	559
Staff costs	3,749	3,650
Net exchange loss	8	—

7. Income tax

	UNAUDITED	UNAUDITED
	Three months ended
		30 June
	2008	2007
	HK$’000	HK$’000
PRC enterprise income tax	—	24

No Hong Kong profits tax have been provided in the financial statements as the Group has no assessable profits arising in Hong Kong during the three months ended 30 June 2008 and 2007.

Pursuant to the relevant laws and regulations in the PRC, Beijing Tongfang Electronic Science & Technology Co., Ltd (“Beijing Tongfang”) is subject to PRC Enterprise Income Tax at a rate of 15% on its taxable income and is granted a 50% relief, which is effective from 1 January 2004 to 31 December 2006 (“Tax Holidays”). After the Tax Holidays, Beijing Tongfang is subject to a preferential Enterprise Income Tax rate of 10% which is effective from 1 January 2007 to 31 December 2009, as it is qualified as an advanced technology enterprise.

8. Dividend

The Board does not recommend the payment of any dividend for the three months ended 30 June 2008 (2007: Nil).

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9. Earnings/( Loss) per share

The calculation of basic earnings/(loss) per share for the three months ended 30 June 2008 were based on the profit attributable to the shareholders of approximately of HK$347,000 (2006: loss of HK$413,000) divided by the weighted average number of 109,190,000 shares (2006: 90,995,000 shares) in issue during the period.

There were no potential dilutive ordinary shares in issue during the three months ended 30 June 2008 and 2007, accordingly, no diluted earning/(loss) per share has been presented.

10. Reserves

Movements in reserve for the three months ended 30 June 2008 and 2007 are as follows:

At 1 April 2007 Exchange differences on translation of foreign operations and net income recognised directly in equity Loss for the period Total recognised income and expense for the period At 30 June 2007 At 1 April 2008 Exchange differences on translation of foreign operations and net income recognised directly in equity Profit for the period Total recognised income and expenses for the period At 30 June 2008			Unaudited	Unaudited
	Share Premium HK$’000 14,049 — — — 14,049 22,905 — — — 22,905	General Reserve HK$’000 1,224 — — — 1,224 1,904 — — — 1,904	Capital Reserve HK$’000 1,200 — — — 1,200 1,200 — — — 1,200	Foreign currency Accumulated translation Profits/ Reserve (Losses) HK$’000 HK$’000 1,932 1,381 630 — — (413) 630 (413) 2,562 968 4,215 (19,152) 394 — — 342 394 342 4,609 (18,810)	Total HK$’000 19,786 630 (413) 217 20,003 16,532 394 342 736 17,268

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11. Litigation

On 19 April 2006, a High Court Action No.858 of 2006 was commenced by Chan Kar Kui, Wong Calvin Ting Chi, Chan Wai Phan, Chan Man Wan and Kwok King Chuen (the “Plaintiffs”) against the Company for specific performance of the agreement entered between the Plaintiffs and the Company’s former director, To Cho Kei, on behalf of the Company, in around May/June 2000 to purchase from the Plaintiffs all their shareholdings in Epplication.Net Limited (“Epplication.Net”) at a consideration of HK$6,800,000 being twice of the actual amount that the Plaintiffs expended on Epplication.Net by way of transfer or allotment of the shares of the Company of the equivalent value, or alternatively, damages with interests and costs. The Company has filed a defence denying the allegation as the Company has no record of any agreement for the purchase of the Plaintiffs’ shareholdings in Epplication.Net and the Plaintiffs have not produced any documentary evidence to support their claim. The directors believe that the Company has strong defence in this action and therefore, no provision for liabilities was made.

MANAGEMENT’S DISCUSSION AND ANALYSIS

BUSINESS REVIEW

Turnover for the three months ended 30 June 2008 amounted to approximately HK$ 16.0 million representing an increase of approximately 112% over the corresponding period in 2007.

In the three months ended 30 June 2008, the Group has continued to expand in the security and surveillance business in the PRC through its associated company, Tai Shing (Hong Kong) Limited. Management is confident that this will become one of the major profit centres of the Group in the next few years.

FINANCIAL PERFORMANCE

For the three months ended 30 June 2008, the Group recorded a turnover of HK$ 16.0 million (2007: HK$7.5 million) representing an increase of approximately 112% as compared to that of the corresponding period in 2007. General and administrative expenses decreased to approximately HK$ 2.0 million as compared to HK$2.7 million of the previous corresponding period, representing a decrease of approximately 25% . Profit attributable to the shareholders was approximately HK$ 0.3 million (2007: loss of HK$0.4 million).

FUTURE PROSPECTS

In addition to supplying management information system to power plant and power grid in China, the Group has extended to carry out the security and surveillance business in the PRC through its associated company, Tai Shing (Hong Kong) Limited.

DIRECTORS’ AND CHIEF EXECUTIVE’S INTERESTS IN SECURITIES

As at 30 June 2008, the relevant interests or short positions of the directors 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 Securities and Futures Ordinance (Chapter 571, the Laws of Hong Kong) (“SFO”)) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they have taken or deemed to have under such provisions of the SFO), or which are required, pursuant to Section 352 of the SFO, to be entered in

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the register maintained by the Company referred to therein, or which are required, pursuant to Rule 5.46 of the GEM Listing Rules relating to securities transactions by the directors, to be notified to the Company and the Stock Exchange, were as follows:

Long positions in the shares of the Company

			Approximate
	Nature of	Number of	Percentage of
	Shares	Shares	issued share
Name of Director	interested	interested	capital
Mr. Luk Yat Hung_(Note)_	Corporate	21,542,476	19.73%
Mr. Ho Cho Hang	Personal	1,100,000	1.01%

Note: Mr. Luk Yat Hung will be taken to be interested in 21,542,476 shares in the Company as a result of him being beneficially interested in 100% of the issued share capital of Wide Source Group Ltd. which in turn holds 21,542,476 shares in the Company.

Long positions in underlying shares of equity derivatives and debentures of the Company

As at 30 June 2008, no long positions of directors and chief executive in the underlying shares of equity derivatives and debentures of the Company and its associated corporations were recorded in the register or as otherwise notified to the Company and the Stock Exchange pursuant to Rule 5.46 of the GEM Listing Rules.

Short positions in shares, underlying shares of equity derivatives and debentures of the Company

During the period under review, no short positions of the directors and chief executive in the shares, underlying shares of equity derivatives and debentures of the Company and its associated corporations were recorded in the register or as otherwise notified to the Company and the Stock Exchange pursuant to Rule 5.46 of the GEM Listing Rules.

Save as disclosed above, as at 30 June 2008, none of the directors or chief executive of the Company or their respective associates had any interests or short positions in the shares, underlying shares of equity derivative and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which would have to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they are taken or deemed to have under such provisions of the SFO), or which were required to be kept under Section 352 of the SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to the minimum standards of dealing by the directors of listed issuers as referred to in Rule 5.46 of the GEM Listing Rules.

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SUBSTANTIAL SHAREHOLDERS

So far as is known to the directors of the Company, as at 30 June 2008, the following persons who had an interest or short positions in the shares of the Company as recorded in the register required to be kept under Section 336 of the SFO:—

Long positions in shares of the Company

			Approximate Percentage
Name of Shareholders	Note	Number of shares held	of shareholding
Wise Sourse Group Ltd.	1	21,542,476	19.73%
Mr. Luk Yat Hung	2	21,542,476	19.73%
Resuccess Investments Ltd.	3	15,890,000	14.55%
Tongfang Co. Ltd	4	15,890,000	14.55%
Tsinghua Holdings Co. Ltd	5	15,890,000	14.55%
Best Jade Ltd.	6	7,190,000	6.58%
Ms. Li Luyuan	7	7,190,000	6.58%

Notes:

1. Wide Source Group Ltd. (“Wide Source”) is a company incorporated in the British Virgin Islands with limited liability and is ultimately and beneficially owned as to 100% by Mr. Luk Yat Hung.

2. Mr. Luk Yat Hung will be taken to be interested in 21,542,476 shares in the Company as a result of him being beneficially interested in 100% of the issued share capital of Wide Source which in turn holds 21,542,476 shares in the Company.

3. Resuccess Investments Ltd. is a company incorporated in the British Virgin Islands with limited liability and is owned by Tongfang Co. Ltd.

4. Tongfang Co. Ltd will be taken to be interest in 15,890,000 shares in the Company as a result of it being benefically interested in 100% of the issued share capital of Resuccess Investments Ltd.

5. Tsinghua Holdings Co. Ltd will be taken to be interested in 15,890,000 shares in the Company as a result of it being benefically interested in 33.06% of the issued share capital of Tongfang Co. Ltd.

6. Best Jade Ltd. (“Best Jade”) is a company incorporated in the British Virgin Islands with limited liability and is 100% ultimately and beneficially owned by Ms. Li Luyuan.

7. Ms. Li Luyuan will be taken to be interested in 7,190,000 shares in the Company as a result of her being beneficially interested in the entire issued share capital of Best Jade which in turn holds 7,190,000 shares in the Company.

Long positions in underlying shares of the Company

As at 30 June 2008, no long positions of other persons or substantial shareholders in the underlying shares of equity derivatives of the Company and its associated corporations were recorded in the register.

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Short positions in shares of the Company

As at 30 June 2008, no short positions of other persons or substantial shareholders in the shares of the Company and its associated corporations were recorded in the register.

Short positions in underlying shares of the Company

As at 30 June 2008, no short positions of other persons or substantial shareholders in the underlying shares of equity derivatives of the Company and its associated corporations were recorded in the register.

Save as disclosed above, as at 30 June 2008, the directors were not aware of any other person who had an interest or short position in the shares or underlying shares (including interests in options, if any) of the Company as recorded in the register required to be kept under Section 336 of the SFO.

DIRECTORS’ INTERESTS IN CONTRACTS

No contracts of significance in relation to the Group’s business to which the Group was a party and in which a director of the Group had a material interest, whether directly or indirectly, subsisted at the three months ended 30 June 2008 or at any time during such period.

DIRECTORS’ COMPETING INTERESTS

As of 30 June 2008, none of the directors, substantial shareholders or management shareholders of the Company or their respective associates (as defined under the GEM Listing Rules) had any business or interest in a business which competes or may compete with the business of the Group.

SHARE OPTION SCHEME

Pursuant to the written resolutions of the shareholders, the Company has conditionally adopted and approved a share option scheme on 22 October 2003 (“New Share Option Scheme”) to replace the share option scheme adopted on 26 August 2000 (“Old Share Option Scheme”). The principal terms of the New Share Option Scheme were set out in the Appendix I to the circular of the Company dated 30 September 2003. No option has been granted by the Company under both the Old Share Option Scheme and New Share Option Scheme during the period under review or outstanding as at 30 June 2008.

The purpose of the New Share Option Scheme is to enable the Company to grant share options to selected participants as incentives or rewards for their contribution and prospective contribution to and stronger business relationship between the selected participants and the Group.

Save as disclosed above, as at 30 June 2008, none of the directors, chief executive or management shareholders or their respective associates (as defined under the GEM Listing Rules) had any interests or rights to subscribe for any shares of the Company or any of its associated corporations as defined in the SDI Ordinance.

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AUDIT COMMITTEE

The Company has established an audit committee on 18 May 2000 with written terms of reference in compliance with the requirements as set out in Rules 5.28 to 5.30 of the GEM Listing Rules. The primary duties of audit committee are to review and supervise the financial reporting process and internal control system of the Group and to provide advice and comments to the Board.

The Audit Committee comprises four independent non-executive directors, namely, Mr. Chung Shui Ming Timpson, Professor Ip Ho Shing Horace and Mr. Yan Yonghong, and Mr. Chung Shui Ming Timpson is the chairman of the audit committee. Mr. Yan Yonghong and Mr. Peng lijun, and Mr. Chung Shui Ming Timpson is the chairman of the audit committee.

The audit committee has reviewed the unaudited consolidated results of the Group for the three months ended 30 June 2008 and has provided advice and comments thereon.

BOARD PRACTICES AND PROCEDURES

Up to the three months period ended 30 June 2008, the Company has complied with the board practices and procedures as set out in Rules 5.34 to 5.45 of the GEM Listing Rules.

COMPLIANCE WITH CODE ON CORPORATE GOVERNANCE PRACTICES

The company has complied with the code provisions as set out in the Code on Corporate Governance Practices contained in Appendix 15 of the GEM Listing Rules throughout the period under review.

PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SECURITIES

During the three months period under review, neither the Company nor any of its subsidiaries had purchased, sold or redeemed any of the Company’s listed securities.

On behalf of the Board. Li Wenli Director

Hong Kong, 11 August 2008

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As at the date hereof, the Board comprises the following directors:

Executive directors:

Mr. Ho Cho Hang

Ms. Li Wenli

Non-executive director:

Mr. Luk Yat Hung (Chairman)

Independent non-executive directors:

Mr. Chung Shui Ming, Timpson Professor Ip Ho Shing, Horace Mr. Yan Yonghong Mr. Peng Lijun

This announcement will remain on the GEM website at www.hkgem.com on the “Latest Company Announcements” page for at least 7 days from the day of its publication.

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