THIS PROSPECTUS IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Jackin International Holdings Limited, you should at once hand this prospectus to the purchaser or transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

A copy of this prospectus, together with a copy of the application form for Offer Shares, have been registered with the Registrar of Companies in Hong Kong as required by Section 342C of the Companies Ordinance (Chapter 32 of the Laws of Hong Kong) and filed with the Registrar of Companies in Bermuda pursuant to the Companies Act 1981 of Bermuda. The Registrar of Companies in Hong Kong, the Securities and Futures Commission of Hong Kong and the Registrar of Companies in Bermuda take no responsibility as to the contents of any documents referred to above.

Dealings in the securities of Jackin International Holdings Limited may be settled through CCASS and you should consult your licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser for details of those settlement arrangements and how such arrangements may affect your rights and interests.

Subject to the granting of listing of, and permission to deal in, the Offer Shares on the Stock Exchange, the Offer Shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the date of commencement of dealings in the Offer Shares on the Stock Exchange or such other date as determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second trading day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time.

The Stock Exchange and HKSCC take no responsibility for the contents of this prospectus, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this prospectus.

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JACKIN INTERNATIONAL HOLDINGS LIMITED ! " # $ % & ' ( ) []

(incorporated in Bermuda with limited liability)

(Stock code : 630)

OPEN OFFER TO QUALIFYING SHAREHOLDERS ON THE BASIS OF ONE OFFER SHARE FOR EVERY TWO EXISTING SHARES HELD ON THE RECORD DATE

Financial advisers

Kim Eng Corporate Finance (Hong Kong) Limited

CMB International Capital Corporation Limited

Underwriter

The latest time for acceptance and payment for the Offer Shares is 4:00 p.m. on 7 January 2005. The procedure for acceptance is set out on page 16 of this prospectus.

The Underwriter may terminate the Underwriting Agreement by notice in writing to the Company. Please refer to the paragraph headed “Termination of the Underwriting Agreement” in the “Letter from the Board” contained in this prospectus for further details. If the Underwriter terminates the Underwriting Agreement, or if the conditions of the Underwriting Agreement have not been fulfilled by 21 January 2005 in accordance with the terms thereof, the Open Offer will not proceed. Shareholders and potential investors should therefore exercise caution when dealing in the Shares, and if they are in any doubt about their position, they should consult their professional advisers.

It should be noted that the Shares have been dealt in on an ex-entitlement basis since 17 December 2004. Dealings in such Shares takes place while the conditions to which the Open Offer is subject remain unfulfilled. Any Shareholder or other person dealing in such Shares up to the date on which all conditions to which the Open Offer is subject are fulfilled (which is expected to be 10 January 2005), will accordingly bear the risk that the Open Offer may not become unconditional or may not proceed. Any Shareholder or other person contemplating selling or purchasing Shares during such period who is in any doubt about his/her/its position is recommended to consult his/her/its own professional adviser.

24 December 2004

* For identification purposes only

	Page
Expected timetable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Appendix I – Financial information of the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18
Appendix II – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	89

– i –

EXPECTED TIMETABLE

The expected timetable for the Open Offer is set out below:

Last day of dealings in Shares on a cum-entitlement basis . . . . . . . . . . . . . . . . . . 16 December 2004

First day of dealings in Shares on an ex-entitlement basis . . . . . . . . . . . . . . . . . . 17 December 2004

Latest time for lodging transfers of Shares

or exercise of subscription rights attaching to the Share Options to qualify for the Open Offer . . . . . . . . . . . 4:00 p.m. on 20 December 2004

Register of members closes (both dates inclusive) . . . . . . . . . . . . . . . . . . . . . . 21-23 December 2004 Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 December 2004 Register of members re-opens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 December 2004 Despatch of the Prospectus Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 December 2004

Latest time for acceptance of, and payment for, Offer Shares . . . . . . . 4:00 p.m. on 7 January 2005

Open Offer expected to become unconditional on or before . . . . . . . . 5:00 p.m. on 10 January 2005

Announcement of results of the Open Offer to be published

on the newspapers on or before. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 January 2005

Certificates for fully-paid Offer Shares expected

to be despatched on or before . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 January 2005 Dealings in fully-paid Offer Shares on the Stock Exchange expected to commence on . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:30 a.m. on 14 January 2005

Note: All times refer to Hong Kong local time in this prospectus.

The above timetable is indicative only and may be executed or varied as agreed by the Company and the Underwriter pursuant to the Underwriting Agreement. Any changes to the expected timetable will be published or notified to Shareholders.

– 1 –

DEFINITIONS

In this prospectus, unless the context otherwise requires, the following terms shall have the following meanings:

“Announcement”

the announcement of the Company dated 3 December 2004 relating to, inter alia, the Open Offer

“associate”

has the meaning ascribed to it under the Listing Rules

“Board”

the board of Directors

“Business Day”

a day (other than a Saturday and days on which a tropical cyclone warning signal No.8 or above or a black rainstorm warning signal is hoisted in Hong Kong at any time between 9:00 a.m. and 5:00 p.m.) on which licensed banks in Hong Kong are generally open for business throughout their normal business hours

“CCASS”
the Central Clearing and Settlement System established and operated by HKSCC
“Company”

Jackin International Holdings Limited, a company incorporated in Bermuda with limited liability which has its issued shares listed on the Stock Exchange

“Company Act”

the Companies Act 1981 of Bermuda

“Companies Ordinance”

Companies Ordinance (Chapter 32 of the Laws of Hong Kong)

“Controlling Shareholders”

comprising (i) Ms. Ho Yin King, Helena, an executive Director; (ii) Mr. Ho Fai Keung, Jacky, an executive Director; and (iii) Sun Union Enterprises Limited, a company incorporated in the British Virgin Islands with limited liability which is owned as to approximately 61.8% by Ms. Ho Yin King, Helena and as to approximately 38.2% by Mr. Ho Fai Keung, Jacky, and aggregately holding approximately 30.1% interest in the Company as at the Latest Practicable Date

“Director(s)”

the director(s) of the Company

– 2 –

DEFINITIONS

“Group” the Company and its subsidiaries

“Hong Kong” The Hong Kong Special Administrative Region of the People’s Republic of China

“HKSCC” Hong Kong Securities Clearing Company Limited
“Last Trading Day” 1 December 2004, being the last trading day which was immediately prior to the suspension of trading in the Shares on the Stock Exchange pending the release of the Announcement
“Latest Acceptance Time” 4:00 p.m. on 7 January 2005 or such other time as the Underwriter may agree in writing with the Company, being the latest time for acceptance of the Offer Shares
“Latest Practicable Date” 21 December 2004 being the latest practicable date for the purpose of ascertaining certain information for inclusion in this prospectus
“Latest Time for Termination” 5:00 p.m. (Hong Kong time) on the next Business Day after the Latest Acceptance Time
“Listing Committee” has the meaning ascribed thereto in the Listing Rules “Listing Rules” Rules Governing the Listing of Securities on the Stock Exchange
“Martin Currie” Martin Currie China Hedge Fund Limited, a company holding an aggregate of approximately 7.4% of the existing issued share capital of the Company as at the Latest Practicable Date
“New Share Option Scheme” the new share option scheme adopted by the Company on 12 June 2004
“Offer Share(s)” not less than 229,154,272 but not more than 234,972,772 new Share(s) to be issued and allotted under the Open Offer

“Old Share Option Scheme” the share option scheme adopted by the Company on 8 November 1996

– 3 –

DEFINITIONS

“Open Offer” the offer of the Offer Shares on the basis of one Offer Share for every two existing Shares held by the Qualifying Shareholders on the Record Date
“Prospectus” this prospectus of the Company containing details of, among other things, the Open Offer
“Prospectus Documents” the Prospectus and the application form(s) in relation to the Open Offer
“Prospectus Posting Date” 24 December 2004 or such later date as the Underwriter may agree in writing with the Company
“Qualifying Shareholders” Shareholders whose names appear on the register of members of the Company at the close of business on the Record Date with registered addresses in the territories where the making of the Open Offer will not violate any relevant local laws, regulations and other requirements
“Record Date” 23 December 2004 or such other date as the Underwriter may agree in writing with the Company for the determination of entitlements of the Shareholders under the Open Offer
“Registrar” Standard Registrars Limited at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong, the Company’s branch share registrar in Hong Kong
“SFC” the Securities and Futures Commission of Hong Kong
“SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
“Shareholder(s)” holder(s) of the Share(s)
“Share(s)” ordinary share(s) of HK$0.10 each in the share capital of the Company
“Share Options” the outstanding share options granted pursuant to the terms of the Old Share Option Scheme
“Stock Exchange” The Stock Exchange of Hong Kong Limited

– 4 –

DEFINITIONS

“Subscription Price subscription price for the Offer Shares, being HK$0.10 per Offer Share

“Underwriter” Sun Hung Kai International Limited, a deemed licensed corporation to carry out types 1, 4, 6 and 9 regulated activities under the SFO and the underwriter of the Open Offer

“Underwriting Agreement”

the underwriting agreement dated 1 December 2004 entered into between the Company and the Underwriter in relation to the underwriting of the Open Offer

“HK$” Hong Kong dollars

“%” per cent.

– 5 –

LETTER FROM THE BOARD

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JACKIN INTERNATIONAL HOLDINGS LIMITED ! " # $ % & ' ( ) []

(incorporated in Bermuda with limited liability)

Executive Directors: Registered office: Ho Yin King, Helena Clarendon House (Chairman and the Managing Director) 2 Church Street Ho Fai Keung, Jacky (Joint Deputy Chairman) Hamilton HM 11 Low Nyap Heng Bermuda

Independent non-executive Directors: Head office and principal Li Sau Hung, Eddy place of business in Hong Kong: Leung Ka Kui, Johnny Unit 8, 10/F Chan Kam Kwan, Jason Riley House 88 Lei Muk Road Kwai Chung New Territories Hong Kong

24 December 2004

To Shareholders,

Dear Sir or Madam,

INTRODUCTION

It was announced on 3 December 2004 that the Company proposed to raise not less than approximately HK$22.9 million, before expenses, by issuing not less than 229,154,272 new Shares but not more than 234,972,772 new Shares by way of Open Offer to the Qualifying Shareholders at the Subscription Price of HK$0.10 per Offer Share on the basis of one Offer Share for every two existing Shares held on the Record Date.

The purpose of this prospectus is to provide you with further information regarding, among other things, the Open Offer and the financial and other information of the Group.

* For identification purposes only

– 6 –

LETTER FROM THE BOARD

THE OPEN OFFER

The Company proposed to raise not less than approximately HK$22.9 million, before expenses, by issuing not less than 229,154,272 new Shares but not more than 234,972,772 new Shares by way of Open Offer to the Qualifying Shareholders at the Subscription Price of HK$0.10 per Offer Share on the basis of one Offer Share for every two existing Shares held on the Record Date. There were no Open Offers or similar fund raising activities made by the Company in the 12 months preceding the date of the Announcement.

Issue statistics

Basis of the Open Offer: one Offer Share for every two existing Shares held on the Record Date by the Qualifying Shareholders Number of Shares in issue as at 458,308,545 Shares the Latest Practicable Date: Number of Offer Shares to be issued: not less than 229,154,272 Offer Shares and not more than 234,972,772 Offer Shares Subscription Price: HK$0.10 per Offer Share

As at the Latest Practicable Date, there are outstanding Share Options entitling the holders thereof to subscribe for 11,637,000 Shares at exercise prices ranging from HK$0.8832 per Share to HK$1.0336 per Share. Adjustment will be made to the exercise prices of the Share Options in accordance with the terms of the Old Share Option Scheme as a result of the Open Offer and will be announced in further announcement.

Save for the Share Options, the Company has no other share options, warrant, derivatives or other securities convertible into or exchangeable for Shares outstanding as at the Latest Practicable Date.

TERMS OF THE OPEN OFFER

Subscription Price for the Offer Shares

The Subscription Price of HK$0.10 per Offer Share is payable in full upon application is made for the Offer Shares.

– 7 –

LETTER FROM THE BOARD

The Subscription Price represents:

(i) a discount of 50% to the closing price of HK$0.2000 per Share as quoted on the Stock Exchange on the Last Trading Day;
(ii) a discount of approximately 40.0% to the theoretical ex-entitlement price of approximately HK$0.1667 per Share based on the closing price per Share as quoted on the Stock Exchange on the Last Trading Day;
(iii) a discount of approximately 48.3% to the average closing price of approximately HK$0.1933 per Share for the previous ten trading days as quoted on the Stock Exchange up to and including the Last Trading Day;
(iv) a discount of approximately 27.5% to the closing price of HK$0.1380 per Share as quoted on the Stock Exchange on the Latest Practicable Date; and
(v) a discount of approximately 25.5% to the average closing price of approximately HK$0.1342 per Share for the previous ten trading days as quoted on the Stock Exchange up to and including the Latest Practicable Date.

Note: The theoretical ex-entitlement price is calculated based on the following formula:

(2 x closing price on the Last Trading Day) + (1 x the Subscription Price)

2 + 1

The Subscription Price was determined after arm’s length negotiation between the Company and the Underwriter with reference to prevailing market conditions. The Board considers that the Subscription Price and the terms of the Open Offer are fair and reasonable and that the Open Offer is in the interest of the Company and the Shareholders as a whole.

Qualifying Shareholders

To qualify for the Open Offer, a Shareholder must be registered as a member of the Company on the Record Date.

In order to be registered as a member of the Company on the Record Date, all transfer of Shares (together with the relevant share certificate(s)) must be lodged for registration with the Company’s branch share registrar in Hong Kong, Standard Registrars Limited at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong by no later than 4:00 p.m. (Hong Kong time) on 20 December 2004 pursuant to the expected timetable.

– 8 –

LETTER FROM THE BOARD

The Prospectus Documents have only been registered in Hong Kong and filed in Bermuda. The Company has sent the Prospectus Documents to the Shareholders on 24 December 2004. After making relevant legal enquiry in compliance with the Listing Rules, the Directors are of the view that no Shareholder is required or should be expedient to be excluded from the Open Offer.

The invitation to apply for the Offer Shares will not be transferable or capable of renunciation. In addition, there will not be any trading of nil-paid entitlements of the Offer Shares on the Stock Exchange.

Closure of register of members

Pursuant to the expected timetable, the register of members of the Company was closed from 21 December 2004 to 23 December 2004, both dates inclusive. No transfer of Shares were registered during this period.

Fractions of Offer Shares

The Company will not invite application for any fractions of Offer Shares. The Company will allot all Offer Shares created from the aggregation of fractions of Offer Shares to the Underwriter.

Share certificates

Subject to the fulfilment of conditions of the Open Offer as set out in the section headed “Conditions of the Open Offer” below, certificates for all fully-paid Offer Shares are expected to be posted on or before 12 January 2005 to those who have applied and paid for the Offer Shares at their own risk.

Application for listing

The Company has applied to the Stock Exchange for the listing of, and permission to deal in, the Offer Shares on the Stock Exchange.

Subject to the granting of listing of, and permission to deal in, the Offer Shares on the Stock Exchange, the Offer Shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the commencement date of dealings in the Offer Shares on the Stock Exchange or such other date as determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second trading date thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time.

– 9 –

LETTER FROM THE BOARD

Dealings in the Offer Shares on the Stock Exchange will be subject to the payment of the applicable stamp duty, Stock Exchange trading fee, the SFC transaction levy, an investor compensation levy or any other applicable fees and charges in Hong Kong.

Status of the Offer Shares

The Offer Shares (when allotted, issued and fully-paid) will rank pari passu with the Shares in issue on the date of allotment and issue of the Offer Shares in all respects. Holders of fully-paid Offer Shares will be entitled to receive all future dividends and distributions which may be declared, made or paid by reference to a record date falling after the date of allotment of the Offer Shares.

UNDERWRITING ARRANGEMENTS

Underwriting Agreement

Date:	1 December 2004
Underwriter:	Sun Hung Kai International Limited
Number of Offer Shares	Not less than 143,149,272 Offer Shares (representing all
underwritten:	the Offer Shares other than those 86,005,000 Offer Shares
	irrevocably undertaken to be applied by the Controlling
	Shareholders and Martin Currie) and a maximum of
	148,967,772 Offer Shares
Commission:	an underwriting commission of 2.5% of the aggregate
	Subscription Price of 148,967,772 Offer Shares
	underwritten by the Underwriter

Undertaking from the Controlling Shareholders

The Controlling Shareholders holding an aggregate of 138,162,000 Shares as at the date of the Announcement (representing approximately 30.1% of the existing issued share capital of the Company as set out in the following table) have irrevocably undertaken to the Company to take up their respective full entitlement of 69,081,000 Offer Shares under the Open Offer.

– 10 –

LETTER FROM THE BOARD

No. of Shares held as at date Name of the Controlling Shareholders of the Announcement Ms. Ho Yin King, Helena_(Note 1) 10,574,000 Mr. Ho Fai Keung, Jacky(Note 2) 8,792,000 Sun Union Enterprises Limited(Note 3)_ 118,796,000 Total 138,162,000	No. of Offer Shares undertaken to take up 5,287,000 4,396,000 59,398,000
	69,081,000

Notes:

Ms. Ho Yin King, Helena is an executive Director, and is the sister of Mr. Ho Fai Keung, Jacky, another executive Director.
Mr. Ho Fai Keung, Jacky is an executive Director, and is the brother of Ms. Ho Yin King, Helena, another executive Director.
Sun Union Enterprises Limited is a wholly-owned subsidiary of Complete Associates Limited which is beneficially owned as to approximately 61.8% by Ms. Ho Yin King, Helena and as to approximately 38.2% by Mr. Ho Fai Keung, Jacky.

Undertaking from Martin Currie

Martin Currie which was holding an aggregate of 33,848,000 Shares as at the date of the Announcement (representing approximately 7.4% of the existing issued share capital of the Company) has irrevocably undertaken to the Company to take up its respective full entitlement of 16,924,000 Offer Shares under the Open Offer.

Underwritten Shares

After deducting those Offer Shares undertaken to be taken up by the Controlling Shareholders and Martin Currie, the remaining balance of not less than 143,149,272 Offer Shares but not more than 148,967,772 Offer Shares have been fully underwritten by the Underwriter pursuant subject to and upon the terms and conditions of the Underwriting Agreement.

– 11 –

LETTER FROM THE BOARD

Termination of the Underwriting Agreement

The Underwriter reserves the right to terminate the arrangements set out in the Underwriting Agreement. If at any time at or prior to the Latest Time for Termination:

(a) there has introduction of any new regulation or any change in existing law or regulation (or the judicial interpretation thereof) or other occurrence of any nature whatsoever which may in the reasonable opinion of the Underwriter materially and adversely affect the business or the financial or trading position or prospects of the Group as a whole; or
(b) there has occurrence of any local, national or international event or change, whether or not forming part of a series of events or changes occurring or continuing before, and/or after the date of the Underwriting Agreement, of a political, military, financial, economic or other nature (whether or not ejusdem generis with any of the foregoing), or in the nature of any local, national or international outbreak or escalation of hostilities or armed conflict, or affecting local securities markets which may, in the reasonable opinion of the Underwriter materially and adversely affect the business or the financial or trading position or prospects of the Group as a whole; or
(c) any material adverse change in the business or in the financial or trading position of the Group as a whole; or
(d) any material adverse change in market conditions (including, without limitation, a change in fiscal or monetary policy or foreign exchange or currency markets, suspension or restriction of trading in securities) occurs which in the reasonable opinion of the Underwriter makes it inexpedient or inadvisable to proceed with the Open Offer;

then in any such case the Underwriter may (after consultation with the Company and/or its advisers as the circumstances shall admit) by notice in writing to the Company on its own behalf and on behalf of all other parties to the Underwriting Agreement (which may be given at any time up to the Latest Time for Termination) rescind the Underwriting Agreement.

If the Underwriter exercises such right and terminates the Underwriting Agreement, the Open Offer will not proceed.

– 12 –

LETTER FROM THE BOARD

CONDITIONS OF THE OPEN OFFER

The Open Offer is conditional upon, among others, the fulfilment of the following conditions:

(a) the delivery to the Stock Exchange and registration with the Registrar of Companies in Hong Kong respectively one copy of each of the Prospectus Documents as having been approved by resolution of the Directors (and all other documents required to be attached thereto) not later than the Prospectus Posting Date and otherwise in compliance with the Listing Rules and the Companies Ordinance (Chapter 32 of the Laws of Hong Kong);
(b) the obtaining of the permission of the Bermuda Monetary Authority for the issue of the Offer Shares, if necessary;
(c) the posting of the Prospectus Documents to the Qualifying Shareholders on the Prospectus Posting Date; and
(d) the Listing Committee of the Stock Exchange granting or agreeing to grant (subject to allotment) and not having withdrawn or revoked the listing of and permission to deal in all the Offer Shares prior to the Prospectus Posting Date.

Conditions (a) to (c) has been fulfilled as at the Prospectus Posting Date. In the event that condition (d) has not been satisfied on the respective dates mentioned in the Underwriting Agreement (or such other date as the Underwriter may agree with the Company), the Open Offer will not proceed.

INFORMATION ON THE GROUP

The Group is principally engaged in the manufacture of information storage media products and computer accessories and trading of media products. For each of the two years ended 31 December 2002 and 2003, the audited net profit of the Group attributable to Shareholders was approximately HK$16.4 million and approximately HK$12.1 million respectively. As at 31 December 2002 and 2003, the Company recorded audited net assets of approximately HK$231.0 million and approximately HK$299.5 million respectively.

In addition, the Company recorded unaudited net profit of approximately HK$10.3 million for the six months ended 30 June 2004 and unaudited net assets of approximately HK$310.0 million as at 30 June 2004.

– 13 –

LETTER FROM THE BOARD

In terms of production volume of floppy disks, the Group is among the top three manufacturers in the world. As the floppy disk market continues to consolidate and the number of players declines, the Group expects to gain more market share and reputable clients who have continuous demand for blank information storage media products. Given the Group’s low cost manufacturing bases located in the PRC, its competitiveness and established standing, the Group is confident that this business segment will be a reliable revenue stream and expects it to grow steadily.

Meanwhile, the Group will actively expand into other potential distribution markets. To further broaden its income source, the Group will continue to obtain more distribution rights of new computer accessories and media products, such as those for DVDR, DVDRW, optical mouse, 8mm storage video cassettes, digital camera, USB storage media, and data cartridge from suppliers with internationally reputable brand names.

As at the Latest Practicable Date, the Board comprises (a) executive Directors: Ms. Ho Yin King, Helena, Mr. Ho Fai Keung, Jacky and Mr. Low Nyap Heng; and (b) independent nonexecutive Directors: Mr. Li Sau Hung, Eddy, Mr. Leung Ka Kui, Johnny and Mr. Chan Kam Kwan, Jason.

REASONS OF THE OPEN OFFER AND USE OF PROCEEDS

The Directors consider that the Open Offer provides a good opportunity for the Group to raise funds to strengthen its capital base and improve its financial position to provide flexibility for the Group’s future development and expansion.

The net proceeds of the Open Offer, after deduction of expenses of approximately HK$1.9 million (including the underwriting commission, legal and other professional fees, and printing and other related expenses), are estimated to be not less than approximately HK$21.0 million and the Company intends to apply such amount as to (a) approximately HK$12.0 million for expansion of its computer accessories production; and (b) as to the remaining balance of not less than approximately HK$9.0 million as the Group’s general working capital.

WARNING OF THE RISKS OF DEALINGS IN SHARES AND OFFER SHARES

The Shares have been dealt with on an ex-entitlement basis from 17 December 2004. If the Underwriter terminates the Underwriting Agreement, or the conditions of the Underwriting Agreement are not fulfilled on or before 21 January 2005, the Open Offer will not proceed. Any person dealing in the Shares on an ex-entitlement basis will accordingly bear the risk that the Underwriting Agreement may not become unconditional and the Open Offer may not proceed.

Any Shareholder or other person contemplating selling or purchasing Shares from now up to the date on which the Underwriting Agreement becomes unconditional, who is in any doubt about his/her position is recommended to consult his/her own professional advisers.

Shareholders and potential investors are reminded to exercise caution when dealing in the Shares.

– 14 –

LETTER FROM THE BOARD

CHANGES IN THE SHAREHOLDING STRUCTURE OF THE COMPANY

The following table sets out the changes in the shareholding structure of the Company arising from the Open Offer (assuming no Share Option has been exercised from the Latest Practicable Date up to and including the date of completion of the Open Offer):

As at the Latest Practicable Date Number of Shares The Controlling Shareholders 138,162,000 Martin Currie_(Note)_ 33,848,000 Mr. Ho Fai Sing, Alfred 23,750,000 Mr. Chiu Kin Lok, Rocko 59,494,545 Underwriter – Other Shareholders 203,054,000 Total 458,308,545	Share- holding (%) 30.1% 7.4% 5.2% 13.0% 0.0% 44.3% 100.0%	Immediately following completion of the Open Offer assuming all the Shareholders have applied for the Offer Shares in full Share- Number of Shares holding (%) 207,243,000 30.1% 50,772,000 7.4% 35,625,000 5.2% 89,241,817 13.0% – 0.0% 304,581,000 44.3% 687,462,817 100.0%	Immediately following completion of the Open Offer assuming the Controlling Shareholders and Martin Currie have applied for Offer Shares in full and the Underwriter takes up in full the underwriting commitment pursuant to the Underwriting Agreement Share- Number of Shares holding (%) 207,243,000 30.1% 50,772,000 7.4% 23,750,000 3.5% 59,494,545 8.7% 143,149,272 20.8% 203,054,000 29.5% 687,462,817 100.0%	Immediately following completion of the Open Offer assuming the Controlling Shareholders and Martin Currie have applied for Offer Shares in full and the Underwriter takes up in full the underwriting commitment pursuant to the Underwriting Agreement Share- Number of Shares holding (%) 207,243,000 30.1% 50,772,000 7.4% 23,750,000 3.5% 59,494,545 8.7% 143,149,272 20.8% 203,054,000 29.5% 687,462,817 100.0%
				100.0%

Note: The register of Corporate Substantial Shareholder Notices kept by the Company pursuant to the SFO recorded the following as at the Latest Practicable Date:–

(i) the Corporate Substantial Shareholder Notice filed by Martin Currie on 19 March 2004, shared that Martin Currie, as beneficial owner, was interested in 33,092,000 Shares;
(ii) the Corporate Substantial Shareholder Notice filed by Martin Currie Investment Management Limited on 18 August 2004, shared that Martin Currie Investment Management Limited, as investment manager, was interested in 33,848,000 Shares; and
(iii) the Corporate Substantial Shareholder Notice filed by UBS AG on 2 July 2004, shared that UBS AG had a security interest in 33,092,000 Shares.

On 29 November 2004 Martin Currie confirmed that it was interested in 33,848,000 Shares as at that date instead of 33,092,000 Shares. It also confirmed that Martin Currie, Martin Currie Investment Management Limited and UBS AG were interested in the same block of Shares but in different nature of interests.

– 15 –

LETTER FROM THE BOARD

Both the Company and the Underwriter will ensure that appropriate steps will be taken to ensure the sufficiency of public float in the Shares.

PROCEDURE FOR ACCEPTANCE

If you are a Qualifying Shareholder, you will find an application form enclosed with this prospectus, which entitles you to apply for the number of Offer Shares in your assured entitlement shown thereon. If you wish to apply for such Offer Shares or any lesser number of such Offer Shares, you must complete, sign and lodge the same in accordance with the instructions printed thereon, together with remittance for full amount payable on application with the Registrar by not later than the Latest Acceptance Time, being 4:00 p.m. on 7 January 2005. All remittances must be made in Hong Kong dollars. Cheques must be drawn on an account with, and banker’s cashier orders must be issued by, a licensed bank in Hong Kong and made payable to “Jackin International Holdings Limited – Open Offer Account” and crossed “Account Payee Only”. The Qualifying Shareholders may not apply for the Offer Shares which are in excess of their entitlements.

It should be noted that unless the application form, together with the appropriate remittance, has been lodged with the Registrar by not later than the Latest Acceptance Time by a Qualifying Shareholder, his/her/its entitlement to apply under the Open Offer will be deemed to have been declined and will be cancelled.

All cheques or banker’s cashier orders will be presented for payment immediately following receipt and all interest earned on such application monies will be retained for the benefit of the Company. Any application form in respect of which the cheque or cashier order is dishonoured on first presentation is liable to be rejected, and in that event the relevant entitlements of the Qualifying Shareholder under the Open Offer will be deemed to have been declined and will be cancelled.

If the Underwriter exercises the right to terminate its obligations under the Underwriting Agreement before the Latest Time for Termination and/or if any of the conditions to which the Open Offer is subject are not fulfilled on or before 21 January 2005, the application monies will be refunded, without interest, by sending cheques made out to the applicants (or in the case of joint applicants, to the first named applicant) and crossed “Account Payee Only”, through ordinary post at the risk of the applicants to the address specified in the Registrar on or before 12 January 2005.

The application form is for use only by the person(s) named therein and is not transferable. All documents, including cheques and cashier orders for amounts due, will be sent at the risk of the persons entitled thereto to their registered addresses.

– 16 –

LETTER FROM THE BOARD

No receipt will be issued in respect of any application monies received.

ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in the Appendices to this prospectus.

By Order of the Board Jackin International Holdings Limited Ho Yin King, Helena Chairman

– 17 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

SUMMARY OF FINANCIAL RESULTS

The following is a summary of the audited consolidated results for the three years ended 31 December 2003 extracted from the published audited financial statements of the Group:

Turnover Profit (loss) before taxation Taxation (charge) credit Profit (loss) for the year Minority interests Profit (loss) attributable to Shareholders	2003 HK$’000 321,275 7,316 (455) 6,861 5,200 12,061	Consolidated 2002 2001 HK$’000 HK$’000 (Restated) 379,759 379,945 14,420 (104,029) 2,339 572 16,759 (103,457) (320) 1,374 16,439 (102,083)

Figures for the year ended 31 December 2002 have been adjusted to reflect the change in accounting policy for the adoption of SSAP 12 (Revised) as described in note 2 to the financial statements. No restatement of financial statements for the year ended 31 December 2001 was made for the adoption of SSAP 12 (Revised) as the Company considered it is not practical to do so.

– 18 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The following is a summary of the audited consolidated assets and liabilities as at 31 December 2003, 31 December 2002 and 31 December 2001 extracted from the published audited financial statements of the Group:

Assets Property, plant and equipment Interest in an associate Goodwill Other assets Total assets Liabilities Current liabilities Long term liabilities Total liabilities Total net assets Minority interests Total net assets attributable to shareholders	2003 HK$’000 201,743 – 42,017 282,705 526,465 205,271 21,672 226,943 299,522 – 299,522	Consolidated 2002 2001 HK$’000 HK$’000 (Restated) 202,023 226,336 10,219 6,868 44,489 46,961 228,293 248,483 485,024 528,648 187,161 219,044 62,427 90,512 249,588 309,556 235,436 219,092 4,401 4,172 231,035 214,920	Consolidated 2002 2001 HK$’000 HK$’000 (Restated) 202,023 226,336 10,219 6,868 44,489 46,961 228,293 248,483 485,024 528,648 187,161 219,044 62,427 90,512 249,588 309,556 235,436 219,092 4,401 4,172 231,035 214,920
			528,648
			219,044 90,512
			309,556
			219,092 4,172
			214,920

– 19 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The following is a summary of the audited consolidated statement of changes in equity for the three years ended 31 December 2003 extracted from the published audited financial statements of the Group:

THE GROUP At 1 January 2001 Loss for the year Exchange difference on translation of foreign subsidiaries and an associate not recognised in the income statement At 1 January 2002 Profit for the year Exchange difference on translation of foreign subsidiaries and an associate not recognised in the income statement Realised on disposals of land and buildings At 31 December 2002 At 1 January 2002 As previously reported Prior year adjustments As restated Profit for the year Exchange difference on translation of foreign subsidiaries and an associate not recognised in the income statement Realised on disposals of land and buildings Reversal of deferred tax liability on disposals of land and buildings At 1 January 2003 Exchange difference on translation of foreign subsidiaries and an associate not recognised in the income statement Effect of change in tax rate of deferred taxation Net gain (loss) not recognised in the income statement Profit for the year 2002 final dividend paid Issue of shares on exercise of conversion rights under convertible notes Issue of shares pursuant to placing Share issuing expenses Realised on disposal of an associate At 31 December 2003	Share capital HK$’000 35,849 – – 35,849 – – – 35,849 35,849 – 35,849 – – – – 35,849 – – – – – 6,781 3,200 – – 45,830	Share premium HK$’000 77,202 – – 77,202 – – – 77,202 77,202 – 77,202 – – – – 77,202 – – – – – 30,519 6,080 (576) – 113,225	Capital reserve HK$’000 (note 27) (35,034) – – (35,034) – – – (35,034) (35,034) – (35,034) – – – – (35,034) – – – – – – – – 11,450 (23,584)	Translation reserve HK$’000 (1,051) – 407 (644) – 450 – (194) (644) – (644) – 450 – – (194) 602 – 602 – – – – – 232 640	Properties revaluation reserve HK$’000 10,759 – – 10,759 – – (5,472) 5,287 10,759 (1,805) 8,954 – – (5,472) 876 4,358 – (70) (70) – – – – – – 4,288	Retained profits HK$’000 228,871 (102,083) – 126,788 16,594 – 5,472 148,854 126,788 1,031 127,819 16,439 – 5,472 (876) 148,854 – – – 12,061 (1,792) – – – – 159,123	Total HK$’000 316,596 (102,083) 407
							214,920 16,594 450 –
							231,964

							214,920 (774)
							214,146 16,439 450 – –
							231,035 602 (70)
							532
							12,061 (1,792) 37,300 9,280 (576) 11,682
							299,522

– 20 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The following is a summary of the audited consolidated cash flow statement for the three years ended as at 31 December 2003 extracted from the published audited financial statements of the Group:

OPERATING ACTIVITIES Profit/(loss) before taxation Adjustments for: Amortisation of goodwill Amortisation of issue costs of bonds Depreciation Share of profit of an associate Allowance for bad debt expenses Interest income Interest expenses on bank borrowings and other loans Interest expenses on obligations under finance leases and hire purchase contracts (Profit)/loss on disposal of a subsidiary Loss on disposal of property, plant and equipment Impairment loss recognised in respect of plant and machinery Impairment loss recognised in respect of intangible assets Exchange difference Operating cash flows before movements in working capital Increase in inventories Decrease in amounts due from an associate Increase in debtors, deposits and prepayments Decrease in trade and other payables (Decrease) increase in amount due to an associate Cash (used in) generated from operating activities Hong Kong Profits Tax refunded (paid) Overseas tax (paid) refunded NET CASH (USED IN) FROM OPERATING ACTIVITIES INVESTING ACTIVITIES Interest received Investment in an associate Capital contribution from minority interests Purchase of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of a subsidiary Proceeds from disposal of a subsidiary (net of cash and cash equivalents disposed of) Proceeds from disposal of an associate Product development cost incurred Bank deposits pledged Payment for acquisition of a business NET CASH USED IN INVESTING ACTIVITIES	2003 HK$’000 7,316 2,472 – 18,734 (751) 2 (168) 7,027 1,775 (3,200) 214 – – 602 34,023 (1,047) – (24,057) (9,211) (535) (827) 788 (1,036) (1,075) 168 – 799 (19,153) 485 – – 5,031 (4,650) (1,172) – (18,492)	2002 HK$’000 14,420 2,472 – 27,732 (1,609) 20 (393) 8,388 2,578 (3,559) 3,621 – – 359 54,029 (11,703) 940 (18,547) (9,774) 535 15,480 (190) 1,382 16,672 393 (1,882) – (11,255) 4,179 – 298 – – – – (8,267)	2001 (104,029) 2,471 48 30,376 (1,507) 38 (1,000) 8,252 5,702 18,272 18,573 70,000 6,221 – 53,417 (19,536) – (19,785) (12,484) – 1,612 (1,600) (4,061) (4,049) 1,000 – – (10,523) 5,119 (9,832) 6,999 – – – (14,550) (21,787)

– 21 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

FINANCING ACTIVITIES Dividend paid Interest paid Interest paid on obligations under finance leases and hire purchase contracts Proceeds from issue of shares less issuing expenses of HK$576,000 Redemption of convertible bonds New bank loans raised Repayment of bank loans Proceeds from sale and lease back transactions Repayments of obligations under finance leases and hire purchase contracts Capital contribution by minority shareholders NET CASH FROM (USED IN) FINANCING ACTIVITIES NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT 1 JANUARY CASH AND CASH EQUIVALENTS AT 31 DECEMBER ANALYSIS OF THE BALANCES OF CASH AND CASH EQUIVALENTS Bank balances and cash Bank overdrafts Notes	(1,792) (7,027) (1,775) 8,704 – 186,144 (166,444) 27,770 (25,565) – 20,015 448 22,177 22,625 43,648 (21,023) 22,625 2003 HK$’000	– (8,388) (2,578) – – 86,680 (121,857) 17,355 (28,481) – (57,269) (48,864) 71,041 22,177 40,774 (18,597) 22,177 2002 HK$’000	– (8,252) (5,702) – (15,016) 137,302 (64,100) 22,976 (49,123) 4,544 22,629 (3,207) 74,248 71,041 88,058 (17,017) 71,041 2001

– 22 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Set out below are the full texts of the auditors’ report of the Company for the year ended 31 December 2003 as extracted from the 2003 annual reports of the Company. Reference to page numbers in the auditors’ report and the audited financial statements of the Group is to the page numbers of the 2003 annual report of the Company.

REPORT OF THE AUDITORS

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TO THE MEMBERS OF JACKIN INTERNATIONAL HOLDINGS LIMITED

(incorporated in Bermuda with limited liability)

We have audited the financial statements on pages 21 to 74 which have been prepared in accordance with accounting principles generally accepted in Hong Kong.

Respective responsibilities of directors and auditors

The Company’s directors are responsible for the preparation of financial statements which give a true and fair view. In preparing financial statements which give a true and fair view, it is fundamental that appropriate accounting policies are selected and applied consistently.

It is our responsibility to form an independent opinion, based on our audit, on those financial statements and to report our opinion solely to you, as a body, in accordance with Section 90 of the Bermuda Companies Act, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

Basis of opinion

We conducted our audit in accordance with Statements of Auditing Standards issued by the Hong Kong Society of Accountants. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgments made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the circumstances of the Company and of the Group, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance as to whether the financial statements are free from material misstatement. In forming our opinion, we also evaluated the overall adequacy of the presentation of information in the financial statements. We believe that our audit provides a reasonable basis for our opinion.

– 23 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Opinion

In our opinion the financial statements give a true and fair view of the state of affairs of the Company and of the Group as at 31 December 2003 and of the profit and cash flows of the Group for the year then ended and have been properly prepared in accordance with the disclosure requirements of the Hong Kong Companies Ordinance.

Deloitte Touche Tohmatsu Certified Public Accountants

Hong Kong, 27 April 2004

– 24 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

CONSOLIDATED INCOME STATEMENT

For the year ended 31 December 2003

Notes Turnover 4 Cost of sales Gross profit Other operating income 6 Selling and distribution costs Administrative expenses Profit from operations 7 Finance costs 8 Share of profit of an associate Loss on disposal of an associate 9 Profit on disposal of a subsidiary 33 Profit before taxation Taxation 12 Profit for the year Minority interests Profit attributable to shareholders Dividends 13 Earnings per share 14 Basic	2003 HK$’000 321,275 (240,512) 80,763 4,880 (15,023) (55,858) 14,762 (11,397) 751 – 3,200 7,316 (455) 6,861 5,200 12,061 – 3.31 cents	2002 HK$’000 (Restated) 379,759 (278,262) 101,497 5,923 (23,899) (60,512) 23,009 (13,757) 1,609 – 3,559 14,420 2,339 16,759 (320) 16,439 1,792 4.59 cents

– 25 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

CONSOLIDATED BALANCE SHEET

At 31 December 2003

Notes Non-current assets Property, plant and equipment 15 Intangible assets 16 Interest in an associate 18 Goodwill 19 Current assets Inventories 20 Tax recoverable Debtors, deposits and prepayments 21 Bank deposit pledged 22 Bank balances and cash 23 Current liabilities Trade and other payables 24 Convertible notes 28 Amount due to an associate Current portion of non-current liabilities 32 Net current assets Shareholders’ funds Share capital 25 Reserves 27 Minority interests Non-current liabilities Convertible notes 28 Deferred taxation 29 Bank borrowings 30 Obligations under finance leases and hire purchase contracts 31	2003 HK$’000 201,743 13,169 – 42,017 256,929 70,994 767 152,955 1,172 43,648 269,536 43,507 2,300 – 159,464 205,271 64,265 321,194 45,830 253,692 299,522 – – 999 2,805 17,868 21,672 321,194	2002 HK$’000 (Restated) 202,023 8,519 10,219 44,489
		265,250
		69,947 974 108,079 – 40,774
		219,774
		52,718 – 535 133,908
		187,161
		32,613
		297,863

		35,849 195,186
		231,035
		4,401
		39,600 929 11,424 10,474
		62,427
		297,863

– 26 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

BALANCE SHEET

At 31 December 2003 Notes Non-current assets Investments in subsidiaries 17 Current assets Amounts due from subsidiaries Debtors, deposits and prepayments Bank balances and cash Current liabilities Convertible notes 28 Bank borrowings 30 Other payables Shareholders’ funds Share capital 25 Reserves 27 Non-current liabilities Convertible notes 28	2003 HK$’000 39,172 143,582 84 99 143,765 2,300 395 – 2,695 141,070 180,242 45,830 134,412 180,242 – 180,242	2002 HK$’000 39,172
		137,688 282 104
		138,074
		– – 107
		107
		137,967
		177,139

		35,849 101,690
		137,539
		39,600
		177,139

– 27 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2003

THE GROUP At 1 January 2002 As previously reported Prior year adjustments_(note 2)_ As restated Profit for the year Exchange difference on translation of foreign subsidiaries and an associate not recognised in the income statement Realised on disposals of land and buildings Reversal of deferred tax liability on disposals of land and buildings At 1 January 2003 Exchange difference on translation of foreign subsidiaries and an associate not recognised in the income statement Effect of change in tax rate of deferred taxation Net gain (loss) not recognised in the income statement Profit for the year 2002 final dividend paid Issue of shares on exercise of conversion rights under convertible notes Issue of shares pursuant to placing Share issuing expenses Realised on disposal of an associate At 31 December 2003	Share capital HK$’000 35,849 – 35,849 – – – – 35,849 – – – – – 6,781 3,200 – – 45,830	Share premium HK$’000 77,202 – 77,202 – – – – 77,202 – – – – – 30,519 6,080 (576) – 113,225	Capital Translation reserve reserve HK$’000 HK$’000 (note 27) (35,034) (644) – – (35,034) (644) – – – 450 – – – – (35,034) (194) – 602 – – – 602 – – – – – – – – – – 11,450 232 (23,584) 640	Properties revaluation reserve HK$’000 10,759 (1,805) 8,954 – – (5,472) 876 4,358 – (70) (70) – – – – – – 4,288	Retained profits HK$’000 126,788 1,031 127,819 16,439 – 5,472 (876) 148,854 – – – 12,061 (1,792) – – – – 159,123	Total HK$’000 214,920 (774)
						214,146 16,439 450 – –
						231,035 602 (70)
						532
						12,061 (1,792) 37,300 9,280 (576) 11,682
						299,522

– 28 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 31 December 2003

Notes OPERATING ACTIVITIES Profit before taxation Adjustments for: Amortisation of goodwill Depreciation Share of profit of an associate Allowance for bad debt expenses Interest income Interest expenses on bank borrowings and other loans Interest on obligations under finance leases and hire purchase contracts Profit on disposal of a subsidiary Loss on disposal of property, plant and equipment Exchange difference Operating cash flows before movements in working capital Increase in inventories Decrease in amounts due from an associate Increase in debtors, deposits and prepayments Decrease in trade and other payables (Decrease) increase in amount due to an associate Cash (used in) generated from operating activities Hong Kong Profits Tax refunded (paid) Overseas tax (paid) refunded NET CASH (USED IN) FROM OPERATING ACTIVITIES INVESTING ACTIVITIES Interest received Investment in an associate Capital contribution from minority interests Purchase of property, plant and equipment Proceeds from disposal of property, plant and equipment Proceeds from disposal of a subsidiary (net of cash and cash equivalents disposed of) 33 Proceeds from disposal of an associate Product development cost incurred Bank deposits pledged NET CASH USED IN INVESTING ACTIVITIES	2003 HK$’000 7,316 2,472 18,734 (751) 2 (168) 7,027 1,775 (3,200) 214 602 34,023 (1,047) – (24,057) (9,211) (535) (827) 788 (1,036) (1,075) 168 – 799 (19,153) 485 – 5,031 (4,650) (1,172) (18,492)	2002 HK$’000 14,420 2,472 27,732 (1,609) 20 (393) 8,388 2,578 (3,559) 3,621 359 54,029 (11,703) 940 (18,547) (9,774) 535 15,480 (190) 1,382 16,672 393 (1,882) – (11,255) 4,179 298 – – – (8,267)

– 29 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

FINANCING ACTIVITIES Dividend paid Interest paid Interest paid on obligations under finance leases and hire purchase contracts Proceeds from issue of shares less issuing expenses of HK$576,000 New bank loans raised Repayment of bank loans Proceeds from sale and lease back transactions Repayments of obligations under finance leases and hire purchase contracts NET CASH FROM (USED IN) FINANCING ACTIVITIES NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT 1 JANUARY CASH AND CASH EQUIVALENTS AT 31 DECEMBER ANALYSIS OF THE BALANCES OF CASH AND CASH EQUIVALENTS Bank balances and cash Bank overdrafts	2003 HK$’000 (1,792) (7,027) (1,775) 8,704 186,144 (166,444) 27,770 (25,565) 20,015 448 22,177 22,625 43,648 (21,023) 22,625	2002 HK$’000 – (8,388) (2,578) – 86,680 (121,857) 17,355 (28,481) (57,269) (48,864) 71,041 22,177 40,774 (18,597) 22,177

– 30 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31 December 2003

1. GENERAL

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

The Company is an investment holding company. The principal activities of the Group are the manufacture of information storage media products and computer accessories, provision of total fulfillment services, trading of media products.

2. ADOPTION OF HONG KONG FINANCIAL REPORTING STANDARD

In the current year, the Group has adopted, for the first time, the following Hong Kong Financial Reporting Standard (“HKFRS”) issued by the Hong Kong Society of Accountants (“HKSA”), the term of HKFRS is inclusive of Statements of Standard Accounting Practice (“SSAP”s) and Interpretations approved by the HKSA:

SSAP 12 (Revised) Income Taxes

The principal effect of the implementation of SSAP 12 (Revised) is in relation to deferred tax. In previous years, partial provision was made for deferred tax using the income statement liability method, i.e. a liability was recognised in respect of timing differences arising, except where those timing differences were not expected to reverse in the foreseeable future. SSAP 12 (Revised) requires the adoption of a balance sheet liability method, whereby deferred tax is recognised in respect of all temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, with limited exceptions. In the absence of any specific transitional requirements in SSAP 12 (Revised), the new accounting policy has been applied retrospectively. Comparative amounts for 2002 have been restated accordingly.

As a result of this change in policy, the balance of retained profits at 1 January 2002 has been increased by HK$1,031,000, representing the cumulative effect of the change in policy on the results for periods prior to 1 January 2002. The balance on the Group’s properties revaluation reserve at 1 January 2002 has been decreased by HK$1,805,000, representing the deferred tax liability recognised in respect of the revaluation surplus on the Group’s properties at that date. The change has resulted in a decrease in properties revaluation reserve of HK$70,000 for the year ended 31 December 2003 (2002: a decrease of HK$155,000 in the profit for the year ended 31 December 2002).

3. PRINCIPAL ACCOUNTING POLICIES

The financial statements have been prepared under the historical cost convention as modified for the revaluation of certain properties.

– 31 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The principal accounting policies which have been adopted in preparing these financial statements and which conform with accounting principles generally accepted in Hong Kong are as follows:

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries made up to 31 December each year.

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

All significant intercompany transactions and balances within the Group have been eliminated on consolidation.

Goodwill

Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable assets and liabilities of a subsidiary or associate at the date of acquisition.

Goodwill arising on acquisitions prior to 1 January 2001 continues to be held in reserves, and will be charged to the income statement at the time of disposal of the relevant subsidiaries, or at such time as the goodwill is determined to be impaired.

Goodwill arising on acquisitions after 1 January 2001 is capitalised and amortised on a straight-line basis over its useful economic life. Goodwill arising on the acquisition of an associate is included within the carrying amount of the associate. Goodwill arising on the acquisition of subsidiaries is presented separately in the balance sheet as a separate intangible asset.

On disposal of a subsidiary, the attributable amount of unamortised goodwill/goodwill previously eliminated against or credited to reserves is included in the determination of the profit or loss on disposal.

Investments in subsidiaries

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

loss.

Investment in an associate

The consolidated income statement includes the Group’s share of the post-acquisition results of its associate for the year. In the consolidated balance sheet, interests in associates are stated at the Group’s share of the net assets of the associate less any identified impairment loss.

Where the Group transacts with its associates, unrealised profits and losses are eliminated to the extent of the Group’s interest in the associates, except where unrealised losses provide evidence of an impairment of the asset transferred.

– 32 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Revenue recognition

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

Service income is recognised when services are provided.

Interest income from bank deposits is accrued on a time basis, by reference to the principal outstanding and at the interest rate applicable.

Operating lease rental income is recognised over the terms of relevant leases on a straight line basis.

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

Property, plant and equipment

Property, plant and equipment are stated at cost or valuation less accumulated depreciation and impairment

losses.

Land and buildings are stated in the balance sheet at their revalued amount, being the fair value on the basis of their existing use at the date of revaluation less any subsequent accumulated depreciation and accumulated impairment losses. Revaluations are performed with sufficient regularity such that the carrying amount does not differ materially from that which would be determined using fair values at the balance sheet date.

Any revaluation increase arising on revaluation of land and buildings is credited to the properties revaluation reserve, except to the extent that it reverses a revaluation decrease of the same asset previously recognised as an expense, in which case the increase is credited to the income statement to the extent of the decrease previously charged. A decrease in the net carrying amount arising on revaluation of an asset is charged to the income statement to the extent that it exceeds the balance, if any, on the properties revaluation reserve relating to a previous revaluation of that asset. On the subsequent sale or retirement of a revalued asset, the attributable revaluation surplus is transferred to retained profits.

Depreciation is provided to write off the cost or valuation of property, plant and equipment over their estimated useful lives from the date on which they become full operational and after taking into account their estimated residual value, using the straight line method, at the following rates per annum:

Land and buildings 2.5% or over the term of the leases if less than 40 years Plant and machinery other than those for manufacturing of compact disc products 10% – 20% Furniture, fixtures and equipment 20% Motor vehicles 30% Moulds 20% Stampers 33[1] /3%

– 33 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Depreciation is provided to write down the cost of plant and machinery used for the manufacture of compact disc products to its estimated residual value based on the actual units of production as a proportion of its total anticipated units of production. The anticipated units of production are determined with reference to the production specifications obtained from the suppliers.

The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sale proceeds and the carrying amount of the asset and is recognised in the income statement.

Assets held under finance leases and hire purchase contracts are depreciated over their expected useful lives on the same basis as owned assets.

Impairment

At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. Impairment losses are recognised as an expense immediately unless the revalued asset is carried at revalued amount under another standard, in which case the impairment loss is treated as revaluation decrease under that standard.

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

Assets held under finance leases and hire purchase contracts

Leases are classified as finance leases when the terms of the lease transfer substantially all the risks and rewards of ownership of the assets concerned to the Group. Assets held under finance leases and hire purchase contracts are capitalised at their fair values at the date of acquisition. The corresponding liability to the lessor/hirer, net of interest charges, is included in the balance sheet as a finance lease or hire purchase obligation. Finance costs, which represent the difference between the total commitments and the fair value of the assets acquired, are charged to the income statement over the period of the relevant leases or contracts so as to produce a constant periodic rate of charge on the remaining balance of the obligations for each accounting period.

All other leases are classified as operating leases and the annual rentals income and expenses are credited and charged to the income statement on a straight-line basis over the relevant lease terms.

Royalty charges

Lump sum payments for royalty charges for licences for use by the Group for a specified period are charged to the income statement over the term of the licence agreements or over five years, whichever the shorter. Other royalty charges payable which are computed based on the number of units produced by the Group are charged to the income statement as incurred. Any other payments relating to the acquisition of licences are written off when incurred.

– 34 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Research and development expenditure

Expenditure on research activities is recognised as an expense in period in which it is incurred.

An internally-generated intangible asset arising from development expenditure is recognised only if it is anticipated that the development costs incurred on a clearly-defined project will be recovered through future commercial activity. The resultant asset is amortised on a straight line basis over its useful life.

Where no internally-generated intangible asset can be recognised, development expenditure is recognised as an expense in the period in which it is incurred.

Distribution rights

Distribution rights represent payments made to independent third parties for the purpose of acquiring the rights for publication and distribution of media products and are stated at cost less amortisation and impairment losses, where appropriate. Distribution rights are amortised on a straight line basis over the term of the distribution agreements.

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is calculated using the first-in, firstout method.

Foreign currencies

Transactions in foreign currencies are translated at the rates ruling on the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are re-translated at the rates ruling on the balance sheet date. Gains and losses arising on exchange are dealt with in the income statement.

On consolidation, the assets and liabilities of overseas operations which are denominated in foreign currencies are translated at the rates ruling on the balance sheet date. Income and expense items are translated at the average exchange rates for the period. All exchange differences arising on consolidation are dealt with in reserves.

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

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

– 35 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill (or negative goodwill) or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

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

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

Convertible notes

Convertible notes are separately disclosed and regarded as liabilities unless conversion actually occurs.

Retirement benefit scheme

The retirement benefit costs charged in the income statement represent the contributions payable in respect of the current year to the Group’s retirement benefit schemes.

4. TURNOVER

Turnover represents the aggregate of the amounts received and receivable for goods sold and services rendered, net of returns and allowances, by the Group to outside customers during the year and is analysed as follows:

Manufacture and trading of media products Total fulfilment services Distribution of media products Manufacture and trading of computer accessories	2003 HK$’000 167,678 13,355 122,193 18,049 321,275	2002 HK$’000 229,107 58,377 80,831 11,444
		379,759

– 36 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

5. BUSINESS AND GEOGRAPHICAL SEGMENTS

Business segments

For management purposes, the Group is currently organised into four operating divisions – the manufacture and trading of media products and computer accessories, total fulfilment services, and distribution of media products. These divisions are the basis on which the Group reports its primary segment information.

Segment information about these business segments is presented below.

Manufacture and trading of media products HK$’000 Year ended 31 December 2003 Turnover External sales 203,733 Inter-segment sales (36,055) Total 167,678 Inter-segment sales are charged at prevailing market Results Segment results 36,838 Other operating income Unallocated corporate expenses Profit from operations Finance costs Share of profit of an associate 751 Profit on disposal of a subsidiary 3,200 Profit before taxation Taxation charge Profit for the year	Manufacture and trading of computer accessories HK$’000 27,223 (9,174) 18,049 rates. 3,781	Total fulfilment services HK$’000 13,355 – 13,355 2,239	Distribution of media products HK$’000 122,193 – 122,193 27,380	Eliminations HK$’000 (45,229) 45,229 – –	Consolidated HK$’000 321,275 –
					321,275

					70,238 168 (55,644)
					14,762 (11,397) 751 3,200
					7,316 (455)
					6,861

– 37 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Manufacture Manufacture and trading and trading Total Distribution of media of computer fulfilment of media products accessories services products HK$’000 HK$’000 HK$’000 HK$’000 As at 31 December 2003 BALANCE SHEET ASSETS Segment assets 297,331 54,477 65,516 44,212 Unallocated corporate assets Consolidated total assets LIABILITIES Segment liabilities 6,117 8,167 3,213 54,821 Unallocated corporate liabilities Consolidated total liabilities OTHER INFORMATION Capital additions 11,727 11,968 7 101 Depreciation of property, plant and equipment 12,437 4,927 827 264 Amortisation of goodwill – – – 2,472	Consolidated HK$’000 461,536 64,162
	525,698

	72,318 153,626
	225,944

– 38 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Manufacture and trading of media products HK$’000 Year ended 31 December 2002 Turnover External sales 256,828 Inter-segment sales (27,721) Total 229,107 Inter-segment sales are charged at prevailing market Results Segment results 46,851 Other operating income Unallocated corporate expenses Profit from operations Finance costs Share of profit of an associate 1,609 Profit on disposal of a subsidiary 3,559 Profit before taxation Taxation credit Profit for the year	Manufacture and trading of computer accessories HK$’000 42,201 (30,757) 11,444 rates. 13,128	Total fulfilment services HK$’000 58,473 (96) 58,377 5,950	Distribution of media products HK$’000 98,576 (17,745) 80,831 11,030	Eliminations HK$’000 (76,319) 76,319 – –	Consolidated HK$’000 (restated) 379,759 –
					379,759

					76,959 2,941 (56,891)
					23,009 (13,757) 1,609 3,559
					14,420 2,339
					16,759

– 39 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

As at 31 December 2002 BALANCE SHEET ASSETS Segment assets Unallocated corporate assets Consolidated total assets LIABILITIES Segment liabilities Unallocated corporate liabilities Consolidated total liabilities OTHER INFORMATION Capital additions Depreciation of property, plant and equipment Amortisation of goodwill	Manufacture and trading of media products HK$’000 262,033 32,873 4,943 22,591 –	Manufacture and trading of computer accessories HK$’000 79,166 44,555 5,493 3,347 –	Total fulfilment services HK$’000 43,405 5,868 50 1,225 –	Distribution of media products HK$’000 35,815 9,304 688 398 2,472	Consolidated HK$’000 (restated) 420,419 53,412
					473,831

					92,600 156,059
					248,659

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Geographical segments

The Group’s operations are located in Asia, Europe and North America.

The following table provides an analysis of the Group’s sales by geographical market, irrespective of the origin of the goods/services:

Asia – The People’s Republic of China including Hong Kong – Other regions in Asia Europe North America	Turnover by geographical market 2003 2002 HK$’000 HK$’000 178,582 165,251 71,372 54,030 54,220 111,117 17,101 49,361 321,275 379,759	Turnover by geographical market 2003 2002 HK$’000 HK$’000 178,582 165,251 71,372 54,030 54,220 111,117 17,101 49,361 321,275 379,759
		379,759

The following is an analysis of the carrying amount of segment assets, and additions to property, plant and equipment and intangible assets, analysed by geographical location of assets:

Asia – Hong Kong – The People’s Republic of China – Other regions in Asia Europe North America	Carrying amount of segment assets 2003 2002 HK$’000 HK$’000 347,071 313,396 156,372 114,671 10,520 27,909 7,263 13,557 4,472 4,298 525,698 473,831	Additions to property, plant and equipment and intangible assets 2003 2002 HK$’000 HK$’000 10,895 8,870 11,472 2,241 1,403 1 – 82 33 61 23,803 11,255	Additions to property, plant and equipment and intangible assets 2003 2002 HK$’000 HK$’000 10,895 8,870 11,472 2,241 1,403 1 – 82 33 61 23,803 11,255
			11,255

– 41 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

6. OTHER OPERATING INCOME

Commission income Interest income Operating lease rental income from plant and machinery Others	THE GROUP 2003 2002 HK$’000 HK$’000 2,746 1,320 168 393 846 1,662 1,120 2,548 4,880 5,923	THE GROUP 2003 2002 HK$’000 HK$’000 2,746 1,320 168 393 846 1,662 1,120 2,548 4,880 5,923
		5,923

7. PROFIT FROM OPERATIONS

Profit from operations has been arrived at after charging: Amortisation of goodwill included in administrative expenses Auditors’ remuneration Depreciation on – Owned assets – Assets held under finance leases and hire purchase contracts Allowance for bad debt expenses Loss on disposal of property, plant and equipment Rental payments in respect of premises under operating leases Staff costs, including directors’ remuneration (note 10 below) Retirement benefit scheme contributions, including those attributable to directors Total staff costs	THE GROUP 2003 2002 HK$’000 HK$’000 2,472 2,472 980 1,220	THE GROUP 2003 2002 HK$’000 HK$’000 2,472 2,472 980 1,220	THE GROUP 2003 2002 HK$’000 HK$’000 2,472 2,472 980 1,220
	11,429 7,305		23,170 4,562
	18,734		27,732
	2 214 7,554		20 3,621 9,136
	53,170 1,139		64,168 1,450
	54,309		65,618

– 42 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

8. FINANCE COSTS

Interest paid on – Bank loans, overdrafts and other loans wholly repayable within five years – Bank loans with instalments repayable after five years – Obligations under finance leases and hire purchase contracts Bank charges Exchange loss	THE GROUP 2003 2002 HK$’000 HK$’000 7,027 8,286 – 102 1,775 2,578 1,759 2,012 836 779 11,397 13,757	THE GROUP 2003 2002 HK$’000 HK$’000 7,027 8,286 – 102 1,775 2,578 1,759 2,012 836 779 11,397 13,757
		13,757

9. LOSS ON DISPOSAL OF AN ASSOCIATE

During the year, the Group disposed of its associate at a consideration of approximately HK$10 million resulting in a loss of approximately HK$12 million. The directors, based on legal advice, considered such loss would be fully reimbursed by a claim to a customer.

10. DIRECTORS’ EMOLUMENTS

Directors’ fee Executive Independent Non-executive Other emoluments (Executive Directors) Salaries and other benefits Retirement benefit scheme contributions Total emoluments	THE GROUP 2003 2002 HK$’000 HK$’000 – – 400 400 400 400 6,649 8,558 31 33 6,680 8,591 7,080 8,991	THE GROUP 2003 2002 HK$’000 HK$’000 – – 400 400 400 400 6,649 8,558 31 33 6,680 8,591 7,080 8,991
		400
		8,558 33
		8,591
		8,991

– 43 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The directors’ remuneration shown above includes the estimated monetary value of premises provided rent free to one (2002: two) of the Executive Directors. The estimated rental value of such accommodation was HK$369,600 (2002: HK$544,800).

Emoluments of the Directors were within the following bands:

Nil to HK$1,000,000 HK$2,000,001 to HK$2,500,000 HK$2,500,001 to HK$3,000,000 HK$3,500,000 to HK$4,000,000	THE GROUP 2003 2002 No. of No. of Directors Directors 2 2 1 1 1 1 1 1 5 5	THE GROUP 2003 2002 No. of No. of Directors Directors 2 2 1 1 1 1 1 1 5 5
		5

No director waived any emoluments during the year ended 31 December 2003 (2002: Nil).

11. EMPLOYEES’ EMOLUMENTS

Of the five individuals with the highest emoluments in the Group, three (2002: three) were directors of the Company whose emoluments are set out in note 10 above. The emoluments of the remaining two (2002: two) employees were as follows:

Salaries and other benefits Retirement benefit scheme contributions Their emoluments were within the following bands: HK$1,000,001 to HK$1,500,000	THE GROUP 2003 2002 HK$’000 HK$’000 2,388 2,602 24 24 2,412 2,626 THE GROUP 2003 2002 No. of No. of employees employees 2 2

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

12. TAXATION

The taxation (charge) credit comprises Current tax Hong Kong Overseas (Under)overprovision in prior years Hong Kong Overseas Deferred tax credit_(Note 29)_ Current year Taxation attributable to the Company and its subsidiaries Share of taxation attributable to an associate	2003 HK$’000 (45) (326) (371) (84) – (84) – (455) – (455)	2002 HK$’000 (Restated) (889) (149) (1,038) – 90 90 3,427 2,479 (140) 2,339

Hong Kong Profits Tax is calculated at 17.5% (2002:16%) of the estimated assessable profits for the year. The Hong Kong Profits Tax rate has been increased from 16% to 17.5% with effect from year of assessment 2003/04. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.

– 45 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

The taxation for the year can be reconciliated to the profit per consolidated income statement as follows:

Profit before taxation Tax at the Hong Kong Profit Tax rates of 17.5% (2002: 16%) Tax effect of share of results of associates Tax effect of expenses not deductible for tax purposes Under (over)provision in respect of prior years Tax effect of tax losses not recognised Utilisation of tax losses previously not recognised Tax effect attributable to exempt profits Effect of different tax rates of subsidiaries operating in other jurisdictions Others Tax effect and effective tax rate for the year 13. DIVIDENDS Final dividend at Nil (2002: HK0.5 cent) per share proposed	2003 HK$’000 % 7,316 1,280 17.5 – – 2,072 28.3 84 1.1 6,182 84.5 – – (9,186) (125.5) (28) (0.4) 51 0.7 455 6.2	2002 HK$’000 % (Restated) 14,420 2,307 16.0 140 1.0 2,417 16.7 (90) (0.6) 2,867 19.9 (106) (0.7) (8,513) (59.0) (139) (1.0) (1,222) (8.5) (2,339) (16.2) 2003 2002 HK$’000 HK$’000 – 1,792

– 46 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

14. EARNINGS PER SHARE

The calculation of the basic earnings per share is based on the following data:

Earnings for the purposes of basic earnings per share Number of shares for the purposes of basic earnings per share	Earnings 2003 2002 HK$’000 HK$’000 (Restated) 12,061 16,439 Number of shares 2003 2002 364,081,059 358,494,000	Earnings 2003 2002 HK$’000 HK$’000 (Restated) 12,061 16,439 Number of shares 2003 2002 364,081,059 358,494,000

		of shares 2002 358,494,000

No diluted earnings per share has been presented as the exercise price of the Company’s outstanding share options and convertible notes was higher than the average market price for both 2003 and 2002.

The adjustment to comparative basic per share, arising from the change in accounting policy as described in note 2 above, is as follows:

Reported figures before adjustment Adjustments arising from the adoption of SSAP 12 (Revised) Restated	2002 HK cents 4.63 (0.04)
	4.59

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

15. PROPERTY, PLANT AND EQUIPMENT

THE GROUP AT COST/VALUATION At 1 January 2003 Additions Disposals Deficit on revaluation At 31 December 2003 COMPRISING: At cost At valuation 2003 DEPRECIATION AND IMPAIRMENT LOSS At 1 January 2003 Provided for the year Eliminated on disposals Eliminated on revaluation At 31 December 2003 NET BOOK VALUES At 31 December 2003 At 31 December 2002	Land and buildings HK$’000 18,400 – – (3,240) 15,160 – 15,160 15,160 2,690 550 – (3,240) – 15,160 15,710	Plant and machinery HK$’000 368,389 16,937 (663) – 384,663 384,663 – 384,663 217,890 13,382 (416) – 230,856 153,807 150,499	Furniture, fixtures and equipment HK$’000 78,684 945 (212) – 79,417 79,417 – 79,417 46,475 4,429 (140) – 50,764 28,653 32,209	Moulds and stampers HK$’000 18,823 – – – 18,823 18,823 – 18,823 16,171 6 – – 16,177 2,646 2,652	Motor vehicles HK$’000 4,574 1,271 (1,380) – 4,465 4,465 – 4,465 3,621 367 (1,000) – 2,988 1,477 953	Total HK$’000 488,870 19,153 (2,255) (3,240)
						502,528
						487,368 15,160
						502,528
						286,847 18,734 (1,556) (3,240)
						300,785
						201,743

						202,023

– 48 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The net book value of land and buildings shown above comprises

Land in Hong Kong Medium-term lease Land outside Hong Kong Short-term lease	THE GROUP 2003 2002 HK$’000 HK$’000 13,641 14,159 1,519 1,551 15,160 15,710	THE GROUP 2003 2002 HK$’000 HK$’000 13,641 14,159 1,519 1,551 15,160 15,710
		15,710

Notes:

(a) The land and buildings of the Group were revalued at 31 December 2003 on an open market value basis by Messrs. Greater China Appraisal Limited and Messrs. Jointgoal Surveyors Limited. Both of them are firms of professional valuers and are not connected with the Group.

If leasehold land and buildings had not been revalued, they would have been included in these financial statements at historical cost less accumulated depreciation at HK$10,643,000 (2002: HK$11,013,000).

(b) The net book value of property, plant and equipment includes an amount of HK$56,568,000 (2002: HK$46,066,000) in respect of assets held under finance leases and hire purchase contracts.
(c) The Group had pledged its leasehold land and buildings with a net book value of HK$13,641,000 (2002: HK$9,180,000) to secure bank and other loans granted to its subsidiaries.
(d) Plant and machinery includes assets carried at a cost of HK$16.5 million (2002: HK$25.0 million) with accumulated depreciation of HK$4.5 million (2002: HK$12.9 million) in respect of assets held for use under operating leases. Depreciation charged in respect of those assets in the year amounted to HK$0.3 million (2002: HK$0.3 million).
(e) During the year, the Group ceased its operation of video compact disc production. Accordingly, no further depreciation was then provided for those production lines. The directors are considering to modify the capacity of production lines to that for production of compact discs – recordable. The directors have reviewed the carrying amounts of the production lines and considered that no impairment losses are necessary after considering the modification plans of the production lines.

– 49 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

16. INTANGIBLE ASSETS

THE GROUP AT COST At 1 January 2003 Incurred during the year At 31 December 2003 AMORTISATION At 1 January 2003 and 31 December 2003 NET BOOK VALUES At 31 December 2003 At 31 December 2002	Development costs HK$’000 – 4,650 4,650 – 4,650 –	Distribution rights HK$’000 8,519 – 8,519 – 8,519 8,519	Total HK$’000 8,519 4,650
			13,169
			–
			13,169

			8,519

Notes:

(a) No amortisation is provided in respect of the development costs during the year as the production of related products from this development costs commenced in 2004.
(b) The distribution rights represent the Group’s right to distribute a number of media products. Sale of these media products in the People's Republic Of China will commence in 2004 through its distribution network.

17. INVESTMENTS IN SUBSIDIARIES

	THE COMPANY
	2003	2002
	HK$’000	HK$’000
Unlisted shares	39,172	39,172

The carrying value of the unlisted shares is based on the fair values of the underlying net assets of the subsidiaries at the time they became members of the Group under the group reorganisation in November 1996.

Details of the subsidiaries are set out in note 42.

– 50 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

18. INTEREST IN AN ASSOCIATE

Share of net assets

THE GROUP
2003	2002
HK$’000	HK$’000
–	10,219

At 31 December 2002, the Group had an interest in the following associate:

==> picture [380 x 111] intentionally omitted <==

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

Proportion of
Form of Place of registered capital
business incorporation held indirectly
Name of company structure and operation by the Group Principal activities
Dalian Hualu Optical Sino-foreign Mainland, People’s 24% Development, production
Technology Co., Ltd. joint venture Republic of and sales of computer
enterprise China media and computer
software
----- End of picture text -----

19. GOODWILL

COST At 1 January 2003 and at 31 December 2003 AMORTISATION At 1 January 2003 Charge for the year At 31 December 2003 NET BOOK VALUES At 31 December 2003 At 31 December 2002	THE GROUP HK$’000 49,432

	4,943 2,472
	7,415
	42,017

	44,489

The amortisation period adopted for goodwill is 20 years.

– 51 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

20. INVENTORIES

Raw materials Work in progress Finished goods	THE GROUP 2003 2002 HK$’000 HK$’000 16,741 21,521 25,046 18,596 29,207 29,830 70,994 69,947	THE GROUP 2003 2002 HK$’000 HK$’000 16,741 21,521 25,046 18,596 29,207 29,830 70,994 69,947
		69,947

The inventories are stated at cost.

During the year, the cost of inventories recognised as expense amounting to HK$169,791,000 (2002: HK$178,405,000).

– 52 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

21. DEBTORS, DEPOSITS AND PREPAYMENTS

Trade debtors Other debtors, deposits and prepayments	THE GROUP 2003 2002 HK$’000 HK$’000 54,111 44,007 98,844 64,072 152,955 108,079	THE GROUP 2003 2002 HK$’000 HK$’000 54,111 44,007 98,844 64,072 152,955 108,079
		108,079

The Group has a policy of allowing a credit period ranging from 30 to 90 days. The aged analysis of the trade debtors is as follows:

1 to 3 months 4 to 6 months 7 to 9 months 10 to 12 months Over 1 year	THE GROUP 2003 2002 HK$’000 HK$’000 41,999 36,420 6,295 3,709 1,650 3,092 1,913 293 2,254 493 54,111 44,007	THE GROUP 2003 2002 HK$’000 HK$’000 41,999 36,420 6,295 3,709 1,650 3,092 1,913 293 2,254 493 54,111 44,007
		44,007

22. BANK DEPOSIT PLEDGED

The amount represents bank balance pledged with a bank in the People’s Republic of China as security for a guarantee issued by the bank to a court in the People’s Republic of China in relation to a claim to a debtor of the Group amounting to HK$2,906,000.

23. BANK BALANCES AND CASH

Time deposits with banks Bank balances and cash	THE GROUP 2003 2002 HK$’000 HK$’000 11,916 11,356 31,732 29,418 43,648 40,774	THE GROUP 2003 2002 HK$’000 HK$’000 11,916 11,356 31,732 29,418 43,648 40,774
		40,774

– 53 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

24. TRADE AND OTHER PAYABLES

Trade creditors Other creditors and accruals The aged analysis of the trade creditors is as follows: 1 to 3 months 4 to 6 months 7 to 9 months 10 to 12 months Over 12 months 25. SHARE CAPITAL Shares of HK$0.10 each Authorised At 1 January 2002, 1 January 2003 and 31 December 2003 Issued and fully paid At 1 January 2002 and 1 January 2003 Issue of new shares on 9 December 2003_(Note a below) Issues of new shares on exercise of conversion rights under the convertible notes(Note b below)_ At 31 December 2003	THE GROUP 2003 2002 HK$’000 HK$’000 33,821 36,623 9,686 16,095 43,507 52,718 THE GROUP 2003 2002 HK$’000 HK$’000 6,035 27,184 7,997 8,545 8,616 266 4,184 628 6,989 – 33,821 36,623 Number of shares Amount HK$’000 1,000,000,000 100,000 358,494,000 35,849 32,000,000 3,200 67,814,545 6,781 458,308,545 45,830	THE GROUP 2003 2002 HK$’000 HK$’000 33,821 36,623 9,686 16,095 43,507 52,718 THE GROUP 2003 2002 HK$’000 HK$’000 6,035 27,184 7,997 8,545 8,616 266 4,184 628 6,989 – 33,821 36,623 Number of shares Amount HK$’000 1,000,000,000 100,000 358,494,000 35,849 32,000,000 3,200 67,814,545 6,781 458,308,545 45,830
		36,623

		Amount HK$’000 100,000

		35,849 3,200 6,781
		45,830

– 54 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes:

(a) Pursuant to the placing agreement and the subscription agreement both dated 25 November 2003, Sun Union Enterprises Limited, a substantial shareholder of the Company placed 32,000,000 existing shares of HK$0.10 each of the Company at a price of HK$0.29 per share to placees and at the same time subscribed for 32,000,000 new shares of the Company at the price of HK$0.29 per share which were issued on 9 December 2003. The net proceeds of approximately HK$8.7 million were to be used for the expansion of the Group’s distribution business in the People’s Republic of China and the Group’s other business operations.
(b) On 24 September 2003 and 24 December 2003, the Company issued a total number of 67,814,545 new shares of HK$0.10 each at a price of HK$0.55 per share on the exercise of conversion rights by the holders of the convertible notes.

All the shares which were issued during the year rank pari passu in all respects.

There were no changes in the authorised and issued capital during the year ended 31 December 2002.

26. SHARES OPTIONS

The Company’s share option scheme was adopted pursuant to a resolution passed on 8 November 1996 (“the Scheme”) for the primary purpose of providing incentives to directors and eligible employees, and will expire in November 2006. Under the Scheme, the board of directors of the Company may grant options to eligible employees, including directors (executive and non-executive) of the Company and its subsidiaries, to subscribe for shares in the Company.

The total number of shares in respect of which options may be granted under the Scheme is not permitted to exceed 10% of the issued shares of the Company from time to time excluding the aggregate number of shares of the Company which have been duly allotted and issued pursuant to the Scheme, without prior approval from the Company’s shareholders. The number of shares in respect of which options may be granted to any individual in aggregate is not permitted to exceed 25% of the shares of the Company in issue and issuable.

Options granted must be taken up within 30 days of the date of grant, upon payment of HK$1 per option. Options may be exercised at any time from the date of acceptance of the share option to the 10th anniversary of the date of acceptance of the option. The exercise price is determined by the Directors, and will not be less than the higher of the 80% of the average closing price of the shares for the five business days immediately preceding the date of grant and the nominal value of the Company’s shares. There is no minimum period for which an option must be held before it can be exercised.

As the Rules Governing the Listing of Securities on the Stock Exchange (the “Listing Rules”) relating to the share option schemes were amended on 1 September 2001, share option can be granted under the Scheme provided that the existing Listing Rules on share option schemes are complied with.

No option was granted, exercised, lapsed or cancelled during the year ended 31 December 2003.

– 55 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

The following table discloses details of the Company’s share options held by employees (including directors):

Option type 1997A 1997B 1999	Outstanding at 1 January 2002 6,287,000 5,775,000 1,050,000 13,112,000	Lapsed during the year – (1,475,000) – (1,475,000)	Outstanding at 31 December 2002 and 31 December 2003 6,287,000 4,300,000 1,050,000
			11,637,000

Details of the share options held by the directors included in the above table are as follows:

Directors Option type Ms. Ho Yin King, Helena 1997A Mr. Ho Fai Keung, Jacky 1997A Total	Outstanding at 1 January 2002, 1 January 2003 and 31 December 2003 3,750,000 2,537,000
	6,287,000

Details of specific categories of options are as follows:

Option type	Date of grant	Vesting period	Exercise period	Exercise price
				HK$
1997A	24 December 1996	8 January 1997	8 January 1997	1.0336
		to 7 January 2007	to 7 January 2007
1997B	24 December 1996	24 January 1997	24 January 1997	1.0336
		to 23 January 2007	to 23 January 2007
1999	4 September 1999	4 September 1999	4 September 1999	0.8832
		to 3 September 2009	to 3 September 2009

No charge is recognised in the income statement in respect of the value of options granted.

– 56 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

27. RESERVES

THE GROUP At 1 January 2002 As previously reported Adoption of SSAP 12 (Revised) As restated Profit for the year Translation of foreign subsidiaries and an associate Realised on disposals of land and buildings Reversal of deferred tax liability on disposals of land and buildings At 1 January 2003 Profit for the year 2002 final dividend paid Translation of foreign subsidiaries and an associate Premium on shares issued on conversion of convertible notes Premium arising from placing of shares Share issuing expenses Realised on disposal of an associate Effect of change in tax rate of deferred taxation At 31 December 2003 Comprising: At 31 December 2003 The Company and subsidiaries At 31 December 2002 The Company and subsidiaries The associate	Share premium HK$’000 77,202 – 77,202 – – – – 77,202 – – – 30,519 6,080 (576) – – 113,225 113,225 77,202 – 77,202	Capital reserve HK$’000 (35,034) – (35,034) – – – – (35,034) – – – – – – 11,450 – (23,584) (23,584) (35,034) – (35,034)	Translation reserve HK$’000 (644) – (644) – 450 – – (194) – – 602 – – – 232 – 640 640 38 (232) (194)	Properties revaluation reserve HK$’000 10,759 (1,805) 8,954 – – (5,472) 876 4,358 – – – – – – – (70) 4,288 4,288 4,358 – 4,358	Retained profits HK$’000 126,788 1,031 127,819 16,439 – 5,472 (876) 148,854 12,061 (1,792) – – – – – – 159,123 159,123 145,792 3,062 148,854	Total HK$’000 179,071 (774)
						178,297 16,439 450 – –
						195,186 12,061 (1,792) 602 30,519 6,080 (576) 11,682 (70)
						253,692

						253,692

						192,356 2,830
						195,186

– 57 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

The capital reserve of the Group at 31 December 2003 amounted to HK$23,584,000 (2002: HK$35,034,000), comprising the reserve arising on group reorganisation in 1994 of HK$1,863,000 (2002: HK$1,863,000) and the goodwill arising on acquisition of subsidiaries and an associate amounting to HK$25,447,000 (2002: HK$25,447,000) and HK$nil (2002: HK$11,450,000) respectively.

THE COMPANY At 1 January 2002 Loss for the year At 1 January 2003 Loss for the year 2002 final dividend paid Premium on shares issued on conversion of convertible notes Premium arising from placing of shares Share issuing expenses At 31 December 2003	Share premium HK$’000 77,202 – 77,202 – – 30,519 6,080 (576) 113,225	Contributed surplus HK$’000 15,048 – 15,048 – – – – – 15,048	Retained profits HK$’000 10,120 (680) 9,440 (1,509) (1,792) – – – 6,139	Total HK$’000 102,370 (680) 101,690 (1,509) (1,792) 30,519 6,080 (576) 134,412

The contributed surplus of the Company represents the difference between the underlying net tangible assets of the subsidiaries acquired by the Company and the nominal value of the share capital issued by the Company at the time of the group reorganisation prior to the listing of the Company’s shares in 1994. Under the Companies Act 1981 of Bermuda (as amended), the contributed surplus is available for distribution to shareholders. However, the Company cannot declare or pay a dividend, or make a distribution out of contributed surplus if (a) it is, or would after the payment be, unable to pay its liabilities as they become due; and (b) the realisable value of its assets would thereby be less than the aggregate of its liabilities and its issued share capital and share premium account.

In the opinion of Directors, the reserves of the Company which are available for distribution to shareholders at 31 December 2003 amounted to HK$134,412,000 (2002: HK$101,690,000).

28. CONVERTIBLE NOTES

	THE GROUP	THE GROUP	THE COMPANY	THE COMPANY
	2003	2002	2003	2002
	HK$’000	HK$’000	HK$’000	HK$’000
Convertible notes	2,300	39,600	2,300	39,600

– 58 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The convertible notes issued were part of the consideration for the acquisition of a company holding an agreement for sale and promotion of media products together with the distributorship and sales agreement with the existing clients of certain vendors in 2001.

The convertible notes in 2002 amounting to HK$39,600,000 comprised four convertible notes and were interest free. The convertible notes entitle the holders to convert the notes into new shares of the Company within three years from date of issue of the notes. Three convertible notes amounting to HK$37,300,000 were converted into new shares of the Company during the year at the conversion price of HK$0.55 per share. The remaining convertible note which was due for redemption on 5 January 2004 was accordingly classified under current liabilities.

29. DEFERRED TAXATION

A summary of the major deferred tax liabilities and assets recognised and movements thereon during the current and prior year is as follows:

THE GROUP At 1 January 2002 – as previously reported – adjustment on adoption of SSAP 12 (Revised) – as restated Credit to income for the year Realised on disposal of land and buildings At 31 December 2002 and 1 January 2003 Charge to income – for the year – change in tax rate Charge to equity – effect of change in tax rate At 31 December 2003	Accelerated tax depreciation HK$’000 3,582 2,479 6,061 13,062 – 19,123 1,199 1,793 – 22,115	Tax loss HK$’000 – (3,510) (3,510) (15,613) – (19,123) (1,199) (1,793) – (22,115)	Revaluation of properties HK$’000 – 1,805 1,805 – (876) 929 – – 70 999	Total HK$’000 3,582 774 4,356 (2,551) (876) 929 – – 70 999

– 59 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

At 31 December 2003, the Group has deductible temporary differences of HK$999,000 (2002: HK$929,000). No deferred tax asset has been recognised in relation to such deductible temporary differences as it is not probable that taxable profit will be available against which the deductible temporary differences can be utilised.

At 31 December 2003, the Group has unused tax losses of HK$196,484,000 (2002: HK$178,622,000) available for offset against future profits. A deferred tax asset has been recognised in respect of HK$126,369,000 (2002: HK$119,517,000) of such losses. No deferred tax asset has been recognised in respect of the remaining HK$70,115,000 (2002: HK$59,105,000) due to the unpredictability of future profit streams. The unrecognised tax losses may be carried forward indefinitely except the losses of HK$7,740,000 (2002: HK$8,885,000) which will expire as follows.

Year of expiry 2006 2007 2008	2003 HK$ 1,477,000 4,409,000 1,854,000 7,740,000	2002 HK$ 2,736,000 6,149,000 –
		8,885,000

– 60 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

30. BANK BORROWINGS

Bank borrowings comprise the following: Mortgage loan Short term bank loan Bank import and export loans Bank overdrafts Secured Unsecured Bank loans and overdrafts are repayable as follows: Within one year More than one year, but not exceeding two years More than two years, but not exceeding five years Less: Amounts due within one year shown under current liabilities_(Note 32)_ Amounts due after one year	THE GROUP 2003 2002 HK$’000 HK$’000 3,719 2,851 47,767 57,571 73,282 44,646 21,023 18,597 145,791 123,665 3,719 2,851 142,072 120,814 145,791 123,665 142,986 112,241 953 9,685 1,852 1,739 145,791 123,665 (142,986) (112,241) 2,805 11,424	THE COMPANY 2003 2002 HK$’000 HK$’000 – – – – – – 395 – 395 – – – 395 – 395 – 395 – – – – – 395 – (395) – – –	THE COMPANY 2003 2002 HK$’000 HK$’000 – – – – – – 395 – 395 – – – 395 – 395 – 395 – – – – – 395 – (395) – – –
			–

			– –
			–

			– – –
			– –
			–

– 61 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

31. OBLIGATIONS UNDER FINANCE LEASES AND HIRE PURCHASE CONTRACTS

Amounts payable under finance leases and hire purchase contracts Within one year In the second to fifth year inclusive _Less:_Future finance charges _Less:_Amounts due within one year shown under current liabilities (Note 32) Amounts due after one year	Minimum lease payments THE GROUP 2003 2002 HK$’000 HK$’000 17,676 22,906 18,606 10,804 36,282 33,710 (1,936) (1,569) 34,346 32,141	Present value of minimum lease payments THE GROUP 2003 2002 HK$’000 HK$’000 16,478 21,667 17,868 10,474 34,346 32,141 N/A N/A 34,346 32,141 (16,478) (21,667) 17,868 10,474

It is the Group’s policy to lease certain of its plant and equipment under finance leases. The average lease term is 3 years. For the year ended 31 December 2003, the average effective borrowing rate was 5% (2002: 7%). Interest rates are fixed at the contract date. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

The Group’s obligations under finance leases are secured by the lessor’s charge over the leased assets.

During the year, the Group entered into thirteen (2002: three) arrangements to obtain finance amounting to approximately HK$27.8 million (2002: HK$17 million). Under these arrangements, the Group sold certain plant and machinery with a carrying amount of approximately HK$19.1 million (2002: HK$10.6 million) to the financers at an aggregate consideration of approximately HK$29.3 million (2002: HK$17.9 million). At the same time, the Group entered into lease agreements with the financers to lease back the plant and machinery for an average of 41 (2002: 32) months; and at the end of those lease terms, the Group is either entitled to repurchase or continue to lease the plant and machinery at notional prices. Accordingly, the sale proceeds from the sale of these plant and machinery are treated as borrowings and classified as obligations under finance leases. The finance charges, which represent the difference between the total minimum lease payments and the obligations under finance leases, are charged to the income statement over the period of the relevant leases so as to produce a constant periodic rate of charge on the remaining balance of the obligations for each accounting period.

The Company had no obligations under finance leases and hire purchase contracts during the two years ended 31 December 2003 and at the balance sheet dates.

– 62 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

32. CURRENT PORTION OF NON-CURRENT LIABILITIES

Bank borrowings_(Note 30) Obligations under finance leases and hire purchase contracts(Note 31)_ DISPOSAL OF A SUBSIDIARY NET ASSETS DISPOSED OF: Property, plant and equipment Debtors, deposits and prepayments Bank balance and cash Trade and other payable Gain on disposal of a subsidiary Total consideration Satisfied by: Cash consideration Deferred consideration Net cash inflow on disposal: Cash consideration Bank balances and cash disposed of	THE GROUP 2003 2002 HK$’000 HK$’000 142,986 112,241 16,478 21,667 159,464 133,908	THE GROUP 2003 2002 HK$’000 HK$’000 142,986 112,241 16,478 21,667 159,464 133,908	THE GROUP 2003 2002 HK$’000 HK$’000 142,986 112,241 16,478 21,667 159,464 133,908	THE GROUP 2003 2002 HK$’000 HK$’000 142,986 112,241 16,478 21,667 159,464 133,908	THE COMPANY 2003 2002 HK$’000 HK$’000 395 – – – 395 – 2003 2002 HK$’000 HK$’000 – 36 1,800 56 – 2 – (3,353) 1,800 (3,259) 3,200 3,559 5,000 300 – 300 5,000 – – 300 – (2) – 298	THE COMPANY 2003 2002 HK$’000 HK$’000 395 – – – 395 – 2003 2002 HK$’000 HK$’000 – 36 1,800 56 – 2 – (3,353) 1,800 (3,259) 3,200 3,559 5,000 300 – 300 5,000 – – 300 – (2) – 298	THE COMPANY 2003 2002 HK$’000 HK$’000 395 – – – 395 – 2003 2002 HK$’000 HK$’000 – 36 1,800 56 – 2 – (3,353) 1,800 (3,259) 3,200 3,559 5,000 300 – 300 5,000 – – 300 – (2) – 298

					2003 HK$’000 – 1,800 – – 1,800 3,200 5,000 – 5,000 – – –

33. DISPOSAL OF A SUBSIDIARY

The deferred consideration will be settled in cash by the purchaser between 30 April 2004 to 30 April 2005.

– 63 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The subsidiary disposed of during the year contributed HK$11,790,000 (2002: HK$4,622,000) to the Group’s turnover and incurred a loss of HK$3,207,000 (2002: HK$3,650,000) attributable to the Group.

34. MAJOR NON-CASH TRANSACTIONS

(a) During the year, the Group disposed of its associate for a consideration of HK$10,007,000, of which HK$4,976,000 included in other debtors have not been settled at the balance sheet date.
(b) During the year, the Group disposed of a subsidiary for a consideration of HK$5,000,000. The consideration have not yet due at the balance sheet date.

35. AMOUNT RECEIVABLE FROM A LEGAL CLAIM

In 1997, the Company entered into an agreement with a customer under which the Company was required to set up a software manufacturing fulfillment plant in Shanghai, the People’s Republic of China and the customer was obliged, among other things, to place annual minimum orders to the Company for the five years ended 31 December 2002. Should the customer fail to place the minimum orders, the Company is entitled to claim for the shortfall. During the two years ended 31 December 1999, the orders from the customers did not meet the minimum orders stipulated in the agreement and the Company took action in 2000 to claim for the total shortfall under the agreement amounting to approximately US$54 million. Up to the date of approval of the financial statements, the liability hearing of the arbitration has completed and a partial award on liability has been issued by the tribunal. Under the award, the Group is entitled to claim its actual loss pretermination of the agreement on shortfall and its actual loss post termination of the agreement for damages for wrongful repudiation of the agreement.

Up to 31 December 2003, all direct expenditure incurred for the claim of approximately HK$61.9 million have been recognised in relation to the claim. Based on legal advise, the directors consider the above expenses are fully recoverable from the relevant customer and accordingly an income of the same amount has been recognised in the current year and included as other receivables. This income has been offset against the above expenditure and the loss on disposal of the associate.

36. CONTINGENT LIABILITIES

Bills discounted with recourse Guarantees given to bankers in respect of banking facilities granted to subsidiaries	THE GROUP 2003 2002 HK$’000 HK$’000 26,452 51,535 – – 26,452 51,535	THE COMPANY 2003 2002 HK$’000 HK$’000 – – 372,259 362,600 372,259 362,600	THE COMPANY 2003 2002 HK$’000 HK$’000 – – 372,259 362,600 372,259 362,600
			362,600

– 64 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

37. LEASE COMMITMENTS

The Group as lessee

At the balance sheet date, the Group had commitments for future minimum lease payments under noncancellable operating leases in respect of premises, which fall due as follows:

Within one year In the second to fifth year inclusive Over five years	THE GROUP 2003 2002 HK$’000 HK$’000 4,551 3,375 12,708 9,676 4,655 6,244 21,914 19,295	THE GROUP 2003 2002 HK$’000 HK$’000 4,551 3,375 12,708 9,676 4,655 6,244 21,914 19,295
		19,295

The Company had no commitments under non-cancellable operating leases as at the balance sheet dates.

Operating lease payments represent rentals payable by the Group for certain of its office properties. Leases are negotiated for an average term of 3 (2002: 4) years and rentals are fixed for an average of 3 (2002: 4) years.

The Group as lessor

Rental income earned in respect of plant and machinery during the year was HK$846,000 (2002: HK$1,662,000). The plant and machinery are expected to generate rental yields of 7% (2002: 12%) on an ongoing basis. All of the plant and machinery leased originally have committed lessees for two (2002: one) years.

At the balance sheet date, the Group had contracted with lessees for the following future minimum lease payments:

Within one year In the second to fifth year inclusive	THE GROUP 2003 2002 HK$’000 HK$’000 1,080 735 90 – 1,170 735	THE GROUP 2003 2002 HK$’000 HK$’000 1,080 735 90 – 1,170 735
		735

– 65 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

38. CAPITAL COMMITMENTS

At the balance sheet date, the Group and the Company did not have any significant capital commitments.

39. RETIREMENT AND PENSION PLAN

The Group has a Mandatory Provident Fund Scheme (“MPF Scheme”) for all employees. The MPF Scheme is registered with the Mandatory Provident Fund Scheme Authority under the Mandatory Provident Fund Schemes Ordinance. The assets of the MPF Scheme are held separately from those of the Group in funds under the control of an independent trustee. Under the rules of the MPF Scheme, the employer and its employees are each required to make contributions to the MPF Scheme at rates specified in the rules of the MPF Scheme. The only obligation of the Group with respect of MPF Scheme is to make the required contributions under the MPF Scheme.

The retirement benefits scheme contributions arising from the MPF Scheme charged to the income statement represent contributions payable to the funds by the Group at rates specified in the rules of the MPF Scheme.

The employees of the Group’s subsidiaries in other jurisdictions are members of state-managed retirement benefit schemes operated by the government of the jurisdictions. The subsidiaries are required to contribute a specified percentage of their payroll costs to the retirement benefit schemes. The only obligations of the Group with respect of the retirement benefit schemes is to make the specified contributions.

During the year, the Group made retirement benefits scheme contributions amounting to HK$1,139,000 (2002: HK$1,450,000).

40. RELATED PARTY TRANSACTIONS

The Group had the following significant transactions with related parties conducted on terms arrived at by reference to market prices during the year:

	THE GROUP
	2003	2002
	HK$’000	HK$’000
Rental payments to Ms. Chan Siu Chu	277	324
Rental payments to Richmond Enterprise Limited	–	336
Rental payments to Fair Age Limited	–	55

Ms. Chan Siu Chu is the mother of the Directors of the Company, Ms. Ho Yin King, Helena and Mr. Ho Fai Keung,

Jacky.

Ms. Ho Yat Wah, Hermia, being an Executive Director of the Company until 30 September 2002, is also a director and shareholder of Richmond Enterprise Limited and Fair Age Limited.

The above related party transactions have been approved by the Independent Non-executive Directors.

– 66 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

41. POST BALANCE SHEET EVENT

The Company redeemed (without interest) the outstanding principal amount of convertible note of HK$2,300,000.

42. PARTICULARS OF PRINCIPAL SUBSIDIARIES

Particulars of the principal subsidiaries as at 31 December 2003 are as follows:

			Percentage
		Issued and	of issued
	Place/country	paid up	share capital/
	of incorporation	share capital/	registered
Name of subsidiary	and operation	registered capital	capital held	Principal activities
			(Note a)
Albata Technology Limited	Hong Kong	8,500,002 ordinary shares	100	Provision of software
		of HK$1 each		programming
Cheson Magnetic Limited	Macau	100,000 ordinary shares	100	Manufacture of floppy disks
		of MOP 1 each
China Gardens International	British Virgin	100 ordinary shares	80	Trading of media
Ltd.	Islands	of US$1 each		products
Clearview Development	British Virgin	10,000 ordinary shares	100	Investment holding
Limited	Islands	of US$1 each
Creative Information	People’s Republic	US$870,000	100	Inactive
Technology (Shanghai)	of China#
Co. Ltd.
Feitian Magnetic	People’s Republic	US$2,500,000	100	Manufacture of floppy disks
Information-Technology	of China#
(Shenzhen) Co., Ltd.
Fortune Luck Development	British Virgin	4 ordinary shares	100	Trading of data media
Ltd.	Islands	of US$1 each		products
Great China Global Limited	British Virgin	1 ordinary share	100	Trading of data media
	Islands	of US$1 each		products
Havenport Management	British Virgin	10,000 ordinary	100	Investment holding
Limited	Islands	shares of US$1
		each

– 67 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

			Percentage
		Issued and	of issued
	Place/country	paid up	share capital/
	of incorporation	share capital/	registered
Name of subsidiary	and operation	registered capital	capital held	Principal activities
			(Note a)
Jackin Accessories Industrial	British Virgin	1 ordinary share	100	Investment holding
Company Limited	Islands	of US$1 each
Jackin Trading Company	British Virgin	1 ordinary share	100	Trading of data media
Limited (formerly known as	Islands	of US$1		products
Jackin Advanced Optical
Technology Limited
Jackin Enterprises Limited	British Virgin	1 ordinary share	100	Holding of trade marks
	Islands	of US$1
Jackin Magnetic Company	Hong Kong	10 ordinary shares	100	Sale of floppy disks
Limited		of HK$100 each
		and 10,000 non-voting
		deferred shares
		of HK$100 each_(Note b)_
Jackin Magnetic (United	England	3 ordinary shares	100	Sale of floppy disks
Kingdom) Company Limited		of GBP 1 each
Jackin Manufacturing	British Virgin	1 ordinary share	100	Investment holding
(Shenzhen) Limited	Islands	of US$1
Jackin Media Marketing	Hong Kong	100 ordinary shares	100	Investment holding
Limited		of HK$1 each
Jackin Optical Marketing	Hong Kong	2 ordinary shares	100	Sale of compact disc
Company Limited		of HK$1 each		products
Jackin Purchasing Company	Hong Kong	2 ordinary shares	100	Provision of sourcing
Limited		of HK$1 each		and procurement services
Jackin Total Fulfilment	Hong Kong	2 ordinary shares	100	Inactive
Services Limited		of HK$1 each

– 68 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

			Percentage
		Issued and	of issued
	Place/country	paid up	share capital/
	of incorporation	share capital/	registered
Name of subsidiary	and operation	registered capital	capital held	Principal activities
			(Note a)
Jackin U.S.A. Inc.	United States	1 ordinary share	100	Sale of compact disc
	of America	of US$1		products, jewel cases
				and floppy disks and
				provision of total
				fulfilment services
				and supply chain
				management services
Jackin Video Cassette	Hong Kong	1,000 ordinary shares	100	Property holding
Co. Limited		of HK$1 each and
		1,000,000 non-voting
		deferred shares
		of HK$1 each_(Note b)_
Jackin Video Cassette	Taiwan	2,000,000 ordinary shares	99.9	Property holding
(Taiwan) Limited		of NT$10 each
Noble Team Holdings	British Virgin	10,000 ordinary shares	100	Investment holding
Limited	Islands	of US$1 each
Oakview International	British Virgin	100 ordinary shares	100	Investment holding
Limited	Islands	of US$1 each
Prince Diamond Co., Ltd.	British Virgin	2 ordinary shares	100	Investment holding
	Islands	of US$1 each
Profit Ring Industrial	Hong Kong	2 ordinary shares	100	Holding of plant & machinery
Limited		of HK$1 each
Sunny Printing	Hong Kong	100,000 ordinary shares	100	Provision of computer
(International)		of HK$1 each		software replication
Company Limited				services
Tempair Developments	British Virgin	10,000 ordinary shares	100	Investment holding
Limited	Islands	of US$1 each

– 69 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

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

Percentage
Issued and of issued
Place/country paid up share capital/
of incorporation share capital/ registered
Name of subsidiary and operation registered capital capital held Principal activities
(Note a)
Ugent Holdings British Virgin 10,000 ordinary shares 100 Investment holding
Limited Islands of US$1 each
!"#$%&'()+,- People’s Republic HK$5,000,000 80 Provision of software
of China programming
----- End of picture text -----

Notes:

(a) Except Oakview International Limited, which is directly owned by the Company, all other subsidiaries are indirectly held.
(b) The Company holds 100% of the issued ordinary share capital only. The deferred shares, which are not held by the Group, practically carry no rights to dividends or to receive notice of or to attend or vote at any general meeting of the respective companies or to participate in any distribution on winding up.
(c) Other than those subsidiaries incorporated in the British Virgin Islands, whose place of operations are basically in Hong Kong, the places of operations of all other subsidiaries are the same as their places of incorporation.
(d) The directors are of the opinion that a complete list of the particulars of all subsidiaries will be of excessive length and therefore the above list contains only the particulars of the subsidiaries which materially affect the results or assets of the Group.
(e) None of the subsidiaries had issued any debt securities at the end of the year.
These subsidiaries established in the People’s Republic of China are wholly foreign-owned enterprises.
This subsidiary established in the People’s Republic of China is a Sino-foreign equity joint venture enterprise.

– 70 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

UNAUDITED CONSOLIDATED INTERIM REPORT

The following information is extracted from the Group’s unaudited consolidated interim report for the six months ended 30 June 2004.

CONDENSED CONSOLIDATED INCOME STATEMENT

Notes TURNOVER 2 Cost of Sales Gross Profit Other Revenue 3 Selling and distribution costs Administrative expenses PROFIT FROM OPERATIONS Finance costs Share of profit of an associate Profit before taxation Taxation charge 6 Profit after taxation Minority interests PROFIT FOR THE PERIOD DIVIDENDS 7 EARNINGS PER SHARE – Basic 8	Six months ended 30 June 2004 2003 Unaudited Unaudited HK$’000 HK$’000 175,310 174,410 (130,874) (130,595) 44,436 43,815 1,759 1,491 (7,552) (7,121) (23,525) (24,360) 15,118 13,825 (4,447) (4,783) – 751 10,671 9,793 (323) (126) 10,348 9,667 – 495 10,348 10,162 – – 2.26 cents 2.83 cents

– 71 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

CONDENSED CONSOLIDATED BALANCE SHEET

Notes NON-CURRENT ASSETS Property, plant and equipment 9 Intangible assets Goodwill Current assets Inventories Tax recoverable Debtors, deposits and prepayments 10 Bank deposit pledged Bank balance and cash Current liabilities Trade and other payables 11 Taxation Current portion of non-current liabilities Convertible note 12 Net current assets	30 June 2004 Unaudited HK$’000 198,817 13,548 40,781 253,146 74,668 763 135,651 1,172 47,807 260,061 53,140 172 104,701 – 158,013 102,048 355,194	31 December 2003 Audited HK$’000 201,743 13,169 42,017
		256,929
		70,994 767 152,955 1,172 43,648
		269,536
		43,507 – 159,464 2,300
		205,271
		64,265
		321,194

– 72 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Shareholders’ funds Share capital Reserves 13 Minority interests Non-current liabilities Deferred taxation Bank and other borrowings Obligations under finance leases and hire purchase contracts Notes	45,830 264,172 310,002 – 999 17,904 26,289 45,192 355,194 30 June 2004 Unaudited HK$’000	45,830 253,692 31 December 2003 Audited HK$’000
		299,522
		–
		999 2,805 17,868
		21,672
		321,194

– 73 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

At 1 January 2003 Exchange difference on translation of foreign subsidiaries and an associate not recognised in the income statement Effect of change in tax rate of deferred taxation Net gain (loss) not recognised in the income statement Profit for the year 2002 final dividend paid Issue of shares on exercise of conversion rights under convertible notes Issue of shares pursuant to placing Share issuing expenses Realised on disposal of an associate At 31 December 2003 Profit for the period ended 30 June 2004 Exchange difference on translation of foreign subsidiaries At 30 June 2004	Share capital HK$’000 35,849 – – – – – 6,781 3,200 – – 45,830 – – 45,830	Share premium HK$’000 77,202 – – – – – 30,519 6,080 (576) – 113,225 – – 113,225	Capital reserve HK$’000 (35,034) – – – – – – – – 11,450 (23,584) – – (23,584)	Translation reserve HK$’000 (194) 602 – 602 – – – – – 232 640 – 132 772	Properties revaluation reserve HK$’000 4,358 – (70) (70) – – – – – – 4,288 – – 4,288	Retained profits HK$’000 148,854 – – – 12,061 (1,792) – – – – 159,123 10,348 – 169,471	Total HK$’000 231,035 602 (70) 532 12,061 (1,792) 37,300 9,280 (576) 11,682 299,522 10,348 132 310,002

– 74 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

OPERATING ACTIVITIES
Profit before taxation
Adjustments for:
Amortisation of goodwill
Depreciation
Share of profit of an associate
Interest income
Interest expenses on bank and other borrowings
Interest expenses on obligations under
finance leases and hire purchase contracts
Exchange difference
Operating cash flows before movements in working capital
Increase in inventories
Decrease in debtors, deposits and prepayments
Increase (Decrease) in trade and other payables
Cash generated from operating activities
Overseas tax paid
NET CASH FROM OPERATING ACTIVITIES
INVESTING ACTIVITIES
Interest received
Purchase of property, plant and equipment
Product development cost incurred
NET CASH USED IN INVESTING ACTIVITIES

Six months ended 30 June
2004
2003
Unaudited
Unaudited
HK$’000
HK$’000
10,671
9,793
1,236
1,236
8,414
9,973
–
(751)
(63)
(116)
3,064
3,327
643
790
132
(79)
24,097
24,173
(3,674)
(140)
17,304
13,328
7,333
(7,571)
45,060
29,790
(147)
–
44,913
29,790
63
116
(5,488)
(4,925)
(379)
–
(5,804)
(4,809)

– 75 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

FINANCING
Interest paid
Interest paid on obligations under finance
leases and hire purchase contracts
New bank loans raised
Repayment of bank loans
Proceeds from sale and lease back transactions
Repayments of obligations under finance
leases and hire purchase contracts
Capital contribution by minority shareholders
NET CASH USED IN FINANCING ACTIVITIES
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT 1 JANUARY
CASH AND CASH EQUIVALENTS AT 30 JUNE
ANALYSIS OF THE BALANCES OF CASH
AND CASH EQUIVALENTS
Bank balances and cash
Bank overdrafts

(3,064)
(3,327)
(643)
(790)
31,634
5,000
(60,577)
(22,792)
9,450
5,320
(14,777)
(12,469)
–
799
(37,977)
(28,259)
1,132
(3,278)
22,625
22,177
23,757
18,899
47,807
42,576
(24,050)
(23,677)
23,757
18,899
Six months ended 30 June
2004
2003
Unaudited
Unaudited
HK$’000
HK$’000

– 76 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2004

1. BASIS OF PREPARATION

The unaudited condensed consolidated financial statements have been prepared in accordance with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited (the “Listing Rules”) and the Statement of Standard Accounting Practice 25 “Interim Financial Reporting” issued by the Hong Kong Society of Accountants.

The unaudited condensed consolidated financial statements have been prepared in accordance with the accounting policies consistent with those adopted by the Group in its financial statement for the year ended 31 December 2003.

2. BUSINESS AND GEOGRAPHICAL SEGMENTS

The Group’s turnover and contribution to profit from operations for both periods ended 30 June 2004 and 30 June 2003 respectively, analysed by the business segments and geographical segments are as follows:

BY BUSINESS SEGMENTS
Manufacturing & trading of media products
Manufacturing & trading of computer accessories
Total fulfilment services
Distribution of media products
Other revenue
Unallocated corporate expenses
Profit from operations
Finance costs
Share of profit of an associate
Profit before taxation

Six months ended 30 June
2004
2003
Unaudited
Unaudited
Contribution
Contribution
to profit
to profit
from
from
Turnover
operations
Turnover
operations
HK$’000
HK$’000
HK$’000
HK$’000
93,590
20,410
103,239
21,914
26,460
5,740
10,963
2,137
3,045
434
10,111
1,821
52,215
12,059
50,097
11,203
175,310
38,643
174,410
37,075
–
850
(23,525)
(24,100)
15,118
13,825
(4,447)
(4,783)
–
751
10,671
9,793

– 77 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

BY GEOGRAPHICAL SEGMENTS Asia – The People’s Republic of China (including Hong Kong SAR) – Other regions in Asia Europe North and South America	110,351 100,416 31,974 34,416 23,613 32,824 9,372 6,754 175,310 174,410 Six months ended 30 June 2004 2003 Unaudited Unaudited Contribution Contribution to profit to profit from from Turnover operations Turnover operations HK$’000 HK$’000 HK$’000 HK$’000

3. OTHER REVENUE

Interest income Others	Six months 2004 Unaudited HK$’000 63 1,696 1,759	ended 30 June 2003 Unaudited HK$’000 116 1,375
		1,491

4. DEPRECIATION AND AMORTISATION

During the period, depreciation of HK$8,414,000 (six months ended 30 June 2003: HK$9,973,000) was charged in respect of the Group’s property, plant and equipment and amortisation of HK$1,236,000 (six months ended 30 June 2003: HK$1,236,000) was charged in respect of the Group's intangible assets and goodwill.

5. EMPLOYEES AND REMUNERATION POLICES

As at 30 June 2004, the number of employees of the Group was about 1,000 (as at 30 June 2003: 1,000) Remuneration package of employees are maintained at competitive level and includes monthly salaries, insurance and medical cover, mandatory provident fund and share option scheme. Other employee benefits include educational allowance and training programs and discretionary bonuses.

– 78 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

6. TAXATION

The charge comprises: Profits tax for the period Hong Kong Overseas	Six months 2004 Unaudited HK$’000 172 151 323	ended 30 June 2003 Unaudited HK$’000 68 58
		126

Hong Kong Profits Tax is calculated at 17.5% (six months ended 30 June 2003: 17.5%) of the estimated assessable profits for the period. Overseas taxation is calculated at the rates prevailing in the respective jurisdiction.

7. PROPOSED INTERIM DIVIDEND

The directors do not recommend the payment of interim dividend for the period (six months ended 30 June 2003:

nil).

8. EARNINGS PER SHARE

The calculation of earnings per share is based on the profit attributable to shareholders of HK$10,348,000 (six months ended 30 June 2003: HK$10,162,000) and the weighted average number of 458,308,545 (six months ended 30 June 2003: 358,494,000) shares in issue during the period.

No diluted earnings per share has been presented because the exercise price of the Company’s share options and the conversion of the Company’s outstanding convertible bonds were higher than the average price for shares for the periods of six months ended 30 June 2004 and the six months ended 30 June 2003 respectively.

9. PROPERTY, PLANT AND EQUIPMENT

For the six months ended 30 June 2004, the Group has acquired fixed assets amounting to approximately HK$5,488,000 (year ended 31 December 2003: HK$19,153,000).

10. DEBTORS, DEPOSITS AND PREPAYMENTS

Trade debtors Other debtors, deposits and prepayments	30 June 2004 Unaudited HK$’000 36,868 98,783 135,651	31 December 2003 Audited HK$’000 54,111 98,844
		152,955

– 79 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

The Group has a policy of allowing credit period varying from 30 to 90 days. The aged analysis of the trade debtors is as follows:

1 to 3 months 4 to 6 months 7 to 9 months 10 to 12 months Over 1 year	30 June 2004 Unaudited HK$’000 24,038 8,983 1,198 377 2,272 36,868	31 December 2003 Audited HK$’000 41,999 6,295 1,650 1,913 2,254
		54,111

11. TRADE AND OTHER PAYABLES

Trade creditors Other creditors and accruals The aged analysis of the trade creditors is as follows: 1 to 3 months 4 to 6 months 7 to 9 months 10 to 12 months Over 1 year	30 June 2004 Unaudited HK$’000 43,695 9,445 53,140 30 June 2004 Unaudited HK$’000 31,802 893 10,919 81 – 43,695	31 December 2003 Audited HK$’000 33,821 9,686
		43,507

		31 December 2003 Audited HK$’000 6,035 7,997 8,616 4,184 6,989
		33,821

– 80 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

12. CONVERTIBLE NOTE

The convertible note issued was part of the consideration for the acquisition of a company holding as agreement for the sale and promotion of the media products together with the distributorship and sales agreement with the existing clients of certain vendors in 2001.

The convertible note in 2003 amounting to HK$2,300,000 was redeemed during the period.

13. RESERVES

THE GROUP At 1 January 2003 Profit for the year ended 31 December 2003 2002 dividend paid Translation of foreign subsidiaries and an associate Premium on shares issued on conversion of convertible notes Premium arising from placing of shares Share issuing expenses Realised on disposal of an associate Effect of change in tax rate of deferred taxation At 31 December 2003 Profit for the period ended 30 June 2004 Translation of foreign subsidiaries As at 30 June 2004	Share Premium HK$’000 77,202 – – – 30,519 6,080 (576) – – 113,225 – – 113,225	Capital Reserve HK$’000 (35,034) – – – – – – 11,450 – (23,584) – – (23,584)	Properties Translation Revaluation Reserve Reserve HK$’000 HK$’000 (194) 4,358 – – – – 602 – – – – – – – 232 – – (70) 640 4,288 – – 132 – 772 4,288	Retained Profits HK$’000 148,854 12,061 (1,792) – – – – – – 159,123 10,348 – 169,471	Total HK$’000 195,186 12,061 (1,792) 602 30,519 6,080 (576) 11,682 (70) 253,692 10,348 132 264,172

The capital reserve of the Group at 30 June 2004 amounted to HK$23,584,000 (As at 31 December 2003: HK$23,584,000), comprising the reserve arising on group reorganisation in 1994 of HK$1,863,000 and the goodwill arising on acquisition of subsidiaries amounting to HK$25,447,000 (As at 31 December 2003: HK$25,447,000).

– 81 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

14. AMOUNT RECEIVABLE FROM A LEGAL CLAIM

In 1997, the Company entered into an agreement with a customer under which the Company was required to set up a software manufacturing fulfillment plant in Shanghai, the People's Republic of China and the customer was obliged, among other things, to place annual minimum orders to the Company for the five years ended 31 December 2002. Should the customer fail to place the minimum orders, the Company is entitled to claim for the shortfall. During the two years ended 31 December 1999, the orders from the customers did not meet the minimum orders stipulated in the agreement and the Company took action in 2000 to claim for the total shortfall under the agreement amounting to approximately US$54 million.

The Tribunal has issued a Partial Award on the issue of liability on 18 July 2003. Pursuant to the Partial Award, the Tribunal dismissed the customer's counterclaims and ruled that the customer has acted in repudiatory breach of the contract. Thus at the forthcoming quantum hearing, it is a matter of assessing how much the customer has to pay the Company in terms of damages.

On 14 November 2003, the Tribunal issued a Partial Award on the issue of costs and interest in respect of the liability hearing. The Company was awarded interest in the sum of US$70,648 on the outstanding invoices which the customer failed to settle.

The parties to the arbitration are now preparing for the quantum hearing which has been fixed to be heard by the Tribunal in January 2005 commencing on 17 January 2005 with three weeks reserved. Thereafter, it is anticipated that the Tribunal will be able to resolve the issue of quantum and the issue of the costs of the liability and quantum hearings respectively.

Up to 30 June 2004, all direct expenditure incurred for the claim of approximately HK$72.9 million have been recognised in relation to the claim. As stated in the annual report 2003, the directors have sought the legal advice on this matter and consider the above expenses are fully recoverable from the relevant customer and accordingly an income of the same amount has been recognised in the current period and included as other receivables.

15. CONTINGENT LIABILITIES

Bills discounted with recourse Guarantees given to bankers in respect of banking facilities granted to subsidiaries	THE GROUP 30 June 31 December 2004 2003 Unaudited Audited HK$’000 HK$’000 19,246 26,452 – – 19,246 26,452	THE COMPANY 30 June 31 December 2004 2003 Unaudited Audited HK$’000 HK$’000 – – 364,880 372,259 364,880 372,259	THE COMPANY 30 June 31 December 2004 2003 Unaudited Audited HK$’000 HK$’000 – – 364,880 372,259 364,880 372,259
			372,259

– 82 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

16. LEASE COMMITMENTS

The Group as lessee

At the balance sheet date, the Group had commitments for future minimum lease payments under noncancellable operating leases in respect of premises, which fall due as follows:

Within one year In the second to fifth year inclusive Over five years	THE GROUP 30 June 31 December 2004 2003 Unaudited Audited HK$’000 HK$’000 4,749 4,551 11,070 12,708 3,676 4,655 19,495 21,914	THE GROUP 30 June 31 December 2004 2003 Unaudited Audited HK$’000 HK$’000 4,749 4,551 11,070 12,708 3,676 4,655 19,495 21,914
		21,914

At 30 June 2004, the Company had no commitments under non-cancellable operating leases (As at 31 December 2003: Nil).

Operating lease payments represent rentals payable by the Group for certain of its office properties. Leases are negotiated for an average term of 3 (2003: 3) years and rentals are fixed for an average of 3 (2003: 3) years.

The Group as lessor

Rental income earned in respect of plant and machinery during the period was HK$540,000 (2003: HK$846,000). The plant and machinery are expected to generate rental yields of 7% (2003: 7%) on an ongoing basis. All of the plant and machinery leased originally have no committed lessees (2003: 2 years).

At the balance sheet date, the Group had contracted with lessees for the following future minimum lease payments:

Within one year In the second to fifth year inclusive	THE GROUP 30 June 31 December 2004 2003 Unaudited Audited HK$’000 HK$’000 – 1,080 – 90 – 1,170	THE GROUP 30 June 31 December 2004 2003 Unaudited Audited HK$’000 HK$’000 – 1,080 – 90 – 1,170
		1,170

– 83 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

17. CAPITAL COMMITMENTS

At the balance sheet date, the Group and the Company did not have any significant capital commitments.

18. RETIREMENT AND PENSION PLANS

The employees of the Group's subsidiaries in other jurisdictions are members of state-managed retirement benefit schemes operated by the government of the jurisdictions. The subsidiaries are required to contribute a specified percentage of their payroll costs to the retirement benefits scheme. The only obligations of the Group with respect of the retirement benefit schemes is to make the specified contributions.

During the period, the Group made retirement benefit scheme contributions amounting to HK$353,000 (2003: HK$547,000).

19. RELATED PARTY TRANSACTIONS

The Group had the following significant transactions with related parties conducted on terms arrived at by reference to market prices during the period:

Rental payments to Ms. Chan Siu Chu	THE GROUP 30 June 31 December 2004 2003 Unaudited Audited HK$’000 HK$’000 141 162 141 162	THE GROUP 30 June 31 December 2004 2003 Unaudited Audited HK$’000 HK$’000 141 162 141 162
		162

Ms. Chan Siu Chu is the mother of Ms. Ho Yin King, Helena and Mr. Ho Fai Keung, Jacky.

The above related party transactions have been approved by the Independent Non-executive Directors.

– 84 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

PRO FORMA STATEMENT OF UNAUDITED ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS OF THE GROUP

For illustrative purposes only, the pro forma financial information prepared in accordance with Rule 4.29 of the Listing Rules is set out here to provide the investors with further information on how the Open Offer might have affected the financial position of the Group after completion of the Open Offer. Although reasonable care has been exercised in preparing the said information, prospective investors who read the information should bear in mind that these figures are inherently subject to adjustments and may not give a complete picture of the actual financial position of the Group after the completion of the Open Offer.

Set out below is the pro forma statement of unaudited adjusted consolidated net tangible assets of the Group based on the unaudited consolidated net assets of the Group as at 30 June 2004 adjusted to reflect the effect of the Open Offer assuming that 229,154,272 Offer Shares are issued.

				Net	Net tangible
		Estimated		tangible asset	assets
		net proceeds	Pro forma	per Share	per Share
	Net tangible	of the	net tangible	before the	after the
	assets per	Open Offer	assets	Open Offer	Open Offer
	interim report	(Note 1)	(Note 2)	(Note 3)	(Note 4)
	HK$’000	HK$’000	HK$’000	HK	HK
Unaudited consolidated net tangible
assets as at 30 June 2004	355,194	21,000	376,194	0.775	0.547

This statement has been prepared for illustrative purposes only and because of its nature, it may not give a true picture of financial position of the Group following the Open Offer.

Notes:

The estimated net proceeds of the Open Offer are based on the Subscription Price of HK$0.10 per Offer Share.
It is assumed that there is no material change in the status of the Group from 30 June 2004 up to the Latest Practicable Date.
Based on the total number of 458,308,545 Shares in issue as at the Latest Practicable Date.
Based on the 687,462,817 Shares which comprise 458,308,545 Shares in issue as the Latest Practicable Date and the 229,154,272 Offer Shares to be issued pursuant to the Open Offer (assuming that no Share Option has been exercised after the date of this prospectus and before the date of dealing in the Offer Shares on the Stock Exchange).

– 85 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

COMFORT LETTER ON PRO FORMA STATEMENT OF UNAUDITED ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS OF THE GROUP

==> picture [258 x 26] intentionally omitted <==

17/F., Punfet Building, 701 Nathan Road, Kowloon, Hong Kong. Tel: 2388 0923 Fax: 2388 0770 E-mail: [email protected]

The Directors

Jackin International Holdings Limited

24 December 2004

Dear Sirs,

We report on the pro forma statement of unaudited adjusted consolidated net tangible assets (“Proforma Adjusted NTA”) of Jackin International Holdings Limited (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”) set out in Appendix I of the prospectus dated 24 December 2004 (the “Prospectus”) issued by the Company in connection with the open offer of not less than 229,154,272 shares of HK$0.10 each at HK$0.10 per offer share to shareholders on the basis of one offer share for every two existing shares held on the record date (the “Open Offer”). The Proforma Adjusted NTA has been prepared by directors of the Company, for illustrative purposes only, to provide information about how the Open Offer might have affected the financial information of the Group.

Responsibilities

It is the responsibility solely of the directors of the Company to prepare the Proforma Adjusted NTA in accordance with Rule 4.29 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”).

It is our responsibility to form an opinion, as required by paragraph 29(7) of Chapter 4 of the Listing Rules, on the Proforma Adjusted NTA and to report our opinion to you. We do not assume any responsibility nor accept any liability for any reports previously given by the Group’s auditors on any financial information used in the compilation of the Proforma Adjusted NTA.

– 86 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Basis of opinion

We conducted our work with reference to the Statements of Investment Circular Reporting Standards and Bulletin 1998/8 “Reporting on Pro Forma Financial Information Pursuant to the Listing Rules” issued by the Auditing Practices Board in the United Kingdom. Our work, which involved no independent examination of any of the underlying financial information, consisted primarily of comparing the unadjusted unaudited net tangible assets of the Group at 30 June 2004 with the published interim report, considering the evidence supporting the adjustments and discussing the Proforma Adjusted NTA with the directors of the Company.

Because the above work does not constitute an audit or a review made in accordance with Statements of Auditing Standards issued by the Hong Kong Institute of Certified Public Accountants, we do not express any such assurance on the Proforma Adjusted NTA.

The Proforma Adjusted NTA, which has been prepared based on the unaudited consolidated financial statements of the Group as set out in the Company’s 2004 interim report dated 30 August 2004, is for illustrative purposes only and, because of its nature, it may not give an indicative financial position of:

(a) the Company and its subsidiaries had the Open Offer occurred at 30 June 2004; or
(b) the Company and its subsidiaries for any future date.

Opinion

In our opinion:

(a) the Proforma Adjusted NTA has been properly compiled on the basis stated;
(b) such basis is consistent with the accounting policies of the Company; and
(c) the adjustments are appropriate for the purposes of the Proforma Adjusted NTA as disclosed pursuant to Rule 4.29 of Listing Rules.

Yours faithfully

P Tse & Company Certified Public Accountants Hong Kong

– 87 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

INDEBTEDNESS

Borrowings

As at 31 October 2004, being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this prospectus, the Group had outstanding borrowings of approximately HK$156.0 million comprising trust receipt loans of approximately HK$50.1 million, secured mortgage loans of approximately HK$3.2 million and bank loans and overdrafts of approximately HK$79.4 million and amounts payable under finance leases and hire purchase contracts of approximately HK$23.3 million. Save for the secured mortgage loans and amounts payable under finance leases and hire purchase contracts, other borrowings of the Group are repayable on demand.

Contingent liabilities

As at 31 October 2004, the Group had the bills discounted with recourse of approximately HK$16.1 million.

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

The Directors have confirmed that, save as disclosed above, there has been any material change in the indebtedness and contingent liabilities of the Group since 31 October 2004.

MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, save as disclosed in the 2004 interim report, the Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 December 2003, being the date to which the latest published audited accounts of the Group were made up.

WORKING CAPITAL

The Directors are of the opinion that, following the Open Offer, taking into account the existing cash and bank balances, the existing banking facilities and other loan facilities available and the expected net proceeds of the Open Offer, the Group will have sufficient working capital for its present requirements and for the period ending 12 months from the date of this prospectus in the absence of unforeseeable circumstances.

– 88 –

GENERAL INFORMATION

APPENDIX II

RESPONSIBILITY STATEMENT

This prospectus 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 prospectus, and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts the omission of which would make any statement herein misleading.

SHARE CAPITAL

The authorised and issued share capital of the Company as at the Latest Practicable Date were, and following completion of the Open Offer (assuming no Share Option has been exercised from the Latest Practicable Date to the completion of the Open Offer) will be, as follows:

Authorised: 1,000,000,000 Shares as at the Latest Practicable Date 1,000,000,000	HK$ 100,000,000.00
	100,000,000.00

Issued and to be issued as fully paid

458,308,545 Shares in issue as at the Latest Practicable Date 229,154,272 Offer Shares to be issued pursuant to the Open Offer_(Note 1)_ 687,462,817	45,830,854.50 22,915,427.20
	68,746,281.70

Note:

Based on 458,308,545 Shares in issue as at the Latest Practicable Date and on the basis of one Offer Share for every two existing Shares held.

All the existing issued Shares rank pari passu in all respects including all rights as to dividends, voting and return of capital. All the Offer Shares which will be issued upon completion of the Open Offer will rank pari passu in all respects with each other and with all the Shares in issue as at the date of allotment and issue of the Offer Shares including as regards to all rights as to dividends, voting and return of capital. All the Offer Shares to be issued will be listed on the Stock Exchange.

– 89 –

GENERAL INFORMATION

APPENDIX II

SHARE OPTION SCHEME

On 12 June 2004, the Shareholders approved the termination of the Old Share Option Scheme and the adoption of the New Share Option Scheme with rules complying with the new requirements of Chapter 17 of the Listing Rules. Upon termination of the Old Share Option Scheme, no further Share Options can be granted thereunder but in all other respects the provisions of the Old Share Option Scheme shall remain in force and all Share Options granted prior to such termination shall continue to be valid and exercisable in accordance therewith.

As at the Latest Practicable Date, certain Directors and employees of the Company held Share Options granted to them under the Old Share Option Scheme entitling them to subscribe for Shares.

		Outstanding
	Option	as at the Latest
	type	Practicable Date
Directors
Ms. Ho Yin King, Helena	1997A	3,750,000
Mr. Ho Fai Keung, Jacky	1997A	2,537,000
Total		6,287,000
Employees
	1997B	4,300,000
	1999	1,050,000
Total		5,350,000
Total Share Options outstanding from all categories		11,637,000

– 90 –

GENERAL INFORMATION

APPENDIX II

Details of specific categories of options under the Old Share Option Scheme as at the Latest Practicable Date were as follows:

Option				Exercise
type	Date of grant	Vesting period	Exercise period	price
				HK$
1997A	24 December 1996	8 January 1997	8 January 1997	1.0336
		to 7 January 2007	to 7 January 2007
1997B	24 December 1996	24 January 1997	24 January 1997	1.0336
		to 23 January 2007	to 23 January 2007
1999	4 September 1999	4 September 1999	4 September 1999	0.8832
		to 3 September 2009	to 3 September 2009

Save as disclosed above, as at the Latest Practicable Date, no share or loan capital of other members of the Group is under option or agreed conditionally or unconditionally to be put under option.

– 91 –

GENERAL INFORMATION

APPENDIX II

DIRECTORS’ INTERESTS

As at the Latest Practicable Date, the 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 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 were taken or deemed to have under such provisions of the SFO), or which were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein, or which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies of the Listing Rules, to be notified to the Company and the Stock Exchange were as follows:

(1) Long positions

Ordinary Shares of HK$0.10 each of the Company

					Percentage
			Number of Shares held		of the share
		Personal	Corporate		capital of
Name of director	Capacity	interests	*interests(Note)***	Total	the Company
Ms. Ho Yin King, Helena	Beneficial Owner and
	Interest of Controlled
	Corporations	10,574,000	118,796,000	129,370,000	28.23%
Mr. Ho Fai Keung, Jacky	Beneficial Owner and
	Interest of Controlled
	Corporations	8,792,000	118,796,000	127,588,000	27.84%

Note: The 118,796,000 Shares are directly held by Sun Union Enterprises Limited which is wholly owned by Complete Associates Limited. The share capital of Complete Associates Limited is beneficially owned as to approximately 61.8% by Ms. Ho Yin King, Helena and as to approximately 38.2% by Mr. Ho Fai Keung, Jacky.

The interests of Ms. Ho Yin King, Helena and Mr. Ho Fai Keung, Jacky in Complete Associates Limited has also been disclosed under the section headed “Substantial Shareholders” of this Appendix II.

– 92 –

GENERAL INFORMATION

APPENDIX II

(2) Long positions in shares of associated corporations

As at the Latest Practicable Date, the following Directors held interests in the shares of Jackin Video Cassette (Taiwan) Limited, a 99.9% owned subsidiary of the Company as follows:

		Number of shares
	Personal	Family
Name of Director	interests	interests	Total
Ms. Ho Yin King, Helena	4	4	8
Mr. Ho Fai Keung, Jacky	4	4	8

In addition to the above, the following Directors held interests in the non-voting deferred shares of subsidiaries of the Company (the entire issued ordinary share capitals of which were beneficially owned by the Company and/or its wholly-owned subsidiary or subsidiaries) as at the Latest Practicable Date as follows:

		Number of non-voting
Name of subsidiary	Name of Director	deferred shares held
Jackin Magnetic Company Limited	Ms. Ho Yin King, Helena	3,600 shares of HK$100 each
	Mr. Ho Fai Keung, Jacky	3,200 shares of HK$100 each
Jackin Video Cassette Co. Limited	Ms. Ho Yin King, Helena	330,000 shares of HK$1 each
	Mr. Ho Fai Keung, Jacky	340,000 shares of HK$1 each

In addition, a number of Directors held non-beneficial interests in shares in certain subsidiaries of the Company as qualifying shares.

– 93 –

GENERAL INFORMATION

APPENDIX II

(3) Directors’ right to acquire Shares

Share Option Scheme of the Company

The interests of the Directors in the Share Options under the Old Share Option Scheme have been disclosed under the section headed “Share Option Scheme” of this Appendix II.

Pursuant to the terms of the New Share Option Scheme, the Board is authorised, at its absolute discretion, to grant new share options to, among others, (a) full-time employees, including any executive directors or any non-executive directors of any member of the Group, (b) any part time employee of the Group with weekly working hours of 10 hours and above, (c) business associates of the Group and (d) trustee of any trust (whether family, discretionary or otherwise) whose beneficiaries or objects include the employee and business associates of the Group.

No share option was granted under the New Share Option Scheme up to the Latest Practicable Date.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or chief executive of the Company or their respective associates had or was deemed to have any interests or short positions in the Shares, underlying shares or 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 provision of the SFO) or which were required, pursuant to Section 352 of the SFO, to be entered in the register referred therein, or which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies of the Listing Rules, to be notified to the Company and the Stock Exchange.

SUBSTANTIAL SHAREHOLDERS

So far as is known to the Directors or chief executive of the Company, as at the Latest Practicable Date, Shareholders (other than the Directors or chief executive of the Company) who had interests or short positions in the Shares or underlying Shares required to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or who was, directly or

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APPENDIX II

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 meeting of any other member of the Group or any options in respect of such capital were as follows:

Ordinary Shares of HK$0.10 each of the Company

				Percentage of the
		Number of	issued share capital
Name of Shareholder	Capacity	Shares held		of the Company
Complete Associates	Interest of controlled corporation	118,796,000 (Note 1)		25.9%
Limited
Ho Fai Sing, Alfred	Beneficial owner	23,750,000		5.2%
Martin Currie	Beneficial owner	33,848,000 (Note 2)		7.4%
Chiu Kin Lok, Rocko	Beneficial owner and interest	59,494,545 (Note 3)		12.98%
	of controlled corporation

Notes: 1. The 118,796,000 Shares are directly held by Sun Union Enterprises Limited which is wholly owned by Complete Associates Limited. The share capital of Complete Associates Limited is beneficially owned as to approximately 61.8% by Ms. Ho Yin King, Helena and as to approximately 38.2% by Mr. Ho Fai Keung, Jacky. Both Ms. Ho Yin King, Helena and Mr. Ho Fai Keung, Jacky are Directors of the Company.

2. The register of Corporate Substantial Shareholder Notices kept by the Company pursuant to the SFO recorded the following as at the Latest Practicable Date:–

(i) the Corporate Substantial Shareholder Notice filed by Martin Currie on 19 March 2004 showed that Martin Currie, as beneficial owner, was interested in 33,092,000 Shares;
(ii) the Corporate Substantial Shareholder Notice filed by Martin Currie Investment Management Limited on 18 August 2004 showed that Martin Currie Investment Management Limited, as investment manager, was interested in 33,848,000 Shares; and
(iii) the Corporate Substantial Shareholder Notice filed by UBS AG on 2 July 2004 showed that UBS AG had a security interest in 33,092,000 Shares.

On 29 November 2004, Martin Currie confirmed that it was interested in 33,848,000 Shares as at that date instead of 33,092,000 Shares. It also confirmed that Martin Currie, Martin Currie Investment Management Limited and UBS AG were interested in the same block of Shares but in different nature of interests.

Mr. Chiu Kin Lok, Rocko was interested in 59,494,545 Shares, of which 59,454,545 Shares were held by Art-Tech Enterprises Limited, a company in which Mr. Chiu has 100% interest, and 40,000 Shares were held by Mr. Chiu in the capacity of beneficial owner.

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GENERAL INFORMATION

APPENDIX II

So far as is known to any Director or chief executive of the Company, the parties, other than member of the Group, directly or indirectly, interested in 10% or more of the voting power at general meetings of the members of the Group as at the Latest Practicable Date were as follows:–

		Approximate percentage
		of total issued shares/
Name of subsidiary	Name of shareholders	equity interest
China Gardens	Perfect Element Holdings	20%
International Ltd.	Limited
!"#$%&'()	!"./&'()*+,-	20%
*+,-

Save as disclosed above, as at the Latest Practicable Date, there was no other person, other than the Directors, who was recorded in the register of the Company as having interests or short positions in the Shares or underlying shares of the Company which would fall to be disclosed to the Company under Divisions 2 and 3 of Part XV of the SFO or who was, 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 meeting of any other member of the Group or interested in any options in respect of such capital.

PARTICULARS OF DIRECTORS

Name	Address
Ms. HO Ying King, Helena	Flat B, 2/F., Fairview House, 6 Peony Road,
	Yau Yat Chuen, Kowloon
Mr. HO Fai Keung, Jacky	Flat F, 33/F., Block 5, Lok Shun Path,
	Royal Ascot, Shatin, New Territories.
Mr. LOW Nyap Heng	91, Jalan SS22/32 Damansara Jaya,
	47400 Petaling Jaya, Selangor, Malaysia
Dr. LI Sau Hung, Eddy	15/F., A1, Park View Court,
	No. 1 Lyttleton Road, Mid-Levels, H.K.
Mr. LEUNG Ka Kui, Johnny	16th Floor, The Chinese Bank Building,
	61 Des Voeus Road Central, Hong Kong
Mr. CHAN Kam Kwan, Jason	Unit 4305 Far East Finance Centre,
	16 Harbourt Road, Admiralty, Hong Kong

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APPENDIX II

Executive Directors

Ms. HO Yin King, Helena , aged 47, is a co-founder of the Group and the Chairman and Managing Director of the Company, and is responsible for the Group’s strategic planning. Ms. Ho graduated from the University of Toronto, Canada, with a bachelor’s degree in Commerce in 1981. She had two years’ experience in financial analysis and foreign exchange dealing prior to the establishment of the Group in 1983. Ms. Ho was elected the Winner of Young Industrialist Awards of Hong Kong 1993 by the Federation of Hong Kong Industries. She is the sister of Mr. Ho Fai Keung, Jacky.

Mr. HO Fai Keung, Jacky , aged 42, is a co-founder of the Group and the Joint Deputy Chairman of the Company. He is responsible for marketing of the Group’s products. Mr. Ho is the brother of Ms. Ho Yin King, Helena.

Mr. LOW Nyap Heng is a Malaysian, aged 53 and a fellow member of the Institute of Chartered Secretaries and Administrators, United Kingdom. He is currently the Executive Director of Bukit Melita Sdn Bhd. Prior to that, he was the Chief Executive Officer of Ayer Hitam Tin Dredging (Malaysia) Berhad from 1991 to 1993. He had also served as Executive Director of Kampung Lanjut Tin Dredging Berhad and Director of Roxy Industries Malaysia Berhad and Projects for Asia Management Sdn Bhd. Currently he is an Independent NonExecutive Director of DRB-HICOM Berhad as well as the Chairman of the Board’s Remuneration Committee and a member of the Board’s Audit Committee.

Independent Non-executive Directors

Dr. LI Sau Hung, Eddy , aged 50, has over 20 years’ experience in the manufacturing industry. He is a member of the Chinese People’s Political Consultative Committee and the president of Hong Kong Economic & Trade Association. He holds a master degrees in Business Administration and a PhD degree in economics. He was elected one of the Ten Outstanding Young Persons in Hong Kong in 1991 and the Winner of Young Industrialist Awards of Hong Kong 1993.

Mr. LEUNG Ka Kui, Johnny , aged 47, Bachelor of Laws of the University of London, is a qualified solicitor in Hong Kong, England & Wales and Singapore, and is a Notary Public and China Appointed Attesting Officer. He has over 19 years of experience in legal field and is the senior partner of Messrs. Johnny K.K. Leung & Co., Solicitors & Notaries.

Mr. CHAN Kam Kwan, Jason , aged 31. Mr. Chan holds a Bachelor of Commerce Degree from University of British Columbia and is a member of American Institute of Certified Public Accountants. Mr. Chan has over 8 years accounting and corporate finance experience in a big-4 international audit firm and several listed corporations. Mr. Chan is the

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APPENDIX II

Company Secretary of Universal Holdings Limited whose shares are listed on the main board of the Stock Exchange. Mr. Chan was also an executive director of Huabao International Holdings Limited, another listed company in Hong Kong, for the past 2 years until March 2004.

MATERIAL CONTRACTS

The following contracts, not being contracts in the ordinary course of business, have been entered into by members of the Group within two years preceding the date of this prospectus which are or may be material:

(1) the subscription agreement dated 25 November, 2003 entered into between Sun Union Enterprises Limited and the Company in respect of a top-up subscription of 32,000,000 Shares; and
(2) the Underwriting Agreement.

Save as disclosed, as at the Latest Practicable Date, no material contracts (not being contracts entered into in the ordinary course of business) have been entered into by any member of the Group within the two years immediately preceding the date of this prospectus which are or may be material.

DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had entered or proposed to enter into any service agreements with any member of the Group, excluding contracts expiring or determinable by the Group within one year without payment of compensation (other than statutory compensation).

LITIGATION

As at the Latest Practicable Date, so far as is known to the Directors, the members of the Group was engaged in the following litigation or arbitration of material importance:

(a) In 2000, a wholly-owned subsidiary of the Company (the “Plaintiff”) commenced arbitration proceedings against an information technology services supplier (the “Defendant”) in relation to the Defendant’s unilateral termination of a service agreement (the “Service Agreement”), whereby the Plaintiff agreed to provide various services to the Defendant in support of the Defendant’s software manufacturing facility in the PRC. In 2003, the tribunal made the partial award on liability that the Defendant wrongfully purported to terminate the Service Agreement and the Plaintiff was entitled to claim the pre and post termination damages at the hearing for damages.

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APPENDIX II

The quantum hearing will be held in January 2005 and the amount which the Plaintiff is claiming is in excess of US$45 million.

(b) The arbitration proceedings between the Company and a Hong Kong company (“HK Co.”) in relation to the Company’s claim of a debt in the sum of approximately RMB2,430,000 and interests of approximately RMB835,000 (the “Debt”) against the HK Co. has been discontinued. The Company has commenced a new legal proceedings in the Da Lian Intermediate People’s Court (the “Court”) in the PRC against the HK Co. in relation to the Debt.

The PRC legal adviser of the Company is dealing with (i) the ruling and the judgment of the discontinuation of the arbitration proceedings and (ii) the application to the Court to reserve the right to litigate, including restraining the HK Co. from paying third parties’ debt.

(c) In July 2004, a PRC company (the “PRC Plaintiff”) commenced legal proceedings in Shenzhen Intermediate People’s Court against a PRC computer and computer parts producer (the “PRC Defendant”) and averred that the PRC Defendant infringed its patent right and claiming the Defendant for the sum of RMB10,000,000. Pursuant to the writ of the Plaintiff, it stated that it is the PRC Defendant who infringes the patent right of the PRC Plaintiff and not the subsidiary of the Company. The subsidiary of the Company is only the retailer of such computer products.

The PRC legal adviser of the subsidiary of the Company is of the opinion that if the court held that the PRC Defendant has not infringe the PRC Plaintiff’s patent right, there would be no infringement of patent right on the subsidiary of the Company. However, if the court held that the PRC Defendant has infringed the PRC Plaintiff’s patent right, the subsidiary of the Company would have to produce evidence to prove that it has no knowledge as to the infringement. Then, the subsidiary of the Company would not incur any liabilities in the litigation.

(d) In December 2004, a PRC community committee (the “PRC CC”) commenced legal proceedings against an indirectly owned subsidiary of the Company (“Rental Claim Defendant”) in respect of the arrears of rent in the sum of approximately RMB344,000 from August 2004 to December 2004 (“Outstanding Rental”) payable by the Rental Claim Defendant under a tenancy agreement dated 30 June 2001 entered into between the PRC CC and the Rental Claim Defendant for a term of five years (“Tenancy Agreement”).

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GENERAL INFORMATION

APPENDIX II

The PRC legal adviser of the Rental Claim Defendant is of the opinion that if (i) the Tenancy Agreement is legally binding, (ii) the Rental Claim Defendant confirms its non-payment of Outstanding Rental of the aforesaid sum and (iii) PRC CC applies to the court to confiscate certain production machinery of the Rental Claim Defendant (the “Production Machinery”) in the net value of approximately RMB471,000, which said sum exceeds the amount of the Outstanding Rental, then the Outstanding Rental can be offset by the Production Machinery (the “Settlement Proposal”).

However, if PRC CC does not accept the Settlement Proposal and the Rental Claim Defendant cannot pay the arrears of rent, then the court in accordance with PRC CC’s application will sell the Production Machinery in auction. If the amount received in the auction cannot offset the Outstanding Rental, the Rental Claim Defendant is required to pay the Outstanding Rental.

The PRC CC issued a summons to the Rental Claim Defendant and the hearing of the summons is expected to be held on 5 January 2005.

Save as disclosed, neither the Company nor any of its subsidiaries was engaged in any litigation or arbitration of material importance and no litigation or claim of material importance is known to the Directors to be pending or threatened by or against either the Company or any of its subsidiaries as at the Latest Practicable Date.

EXPERTS

The following is the qualification of the experts who have given opinion or advice which is contained in the Prospectus:

Name Qualification

P Tse & Company certified public accountants (practising)

As at the Latest Practicable Date, P Tse & Company was not beneficially interested in the share capital of any member of the Group nor had they have any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group nor had they have any interest, either direct or indirect, in any assets which had been, since the date to which the latest published audited financial statements of the Company were made up, acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to any member of the Group.

CONSENTS

P Tse & Company have given and have not withdrawn their written consent to the issue of this prospectus with inclusion of their letter, if applicable, which have been prepared for inclusion in this prospectus, and references to their name in the form and context in which they are included.

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GENERAL INFORMATION

APPENDIX II

CORPORATE INFORMATION

Registered office

Clarendon House, 2 Church Street Hamilton HM 11, Bermuda

Head office and, principal place of Unit 8, 10/F business in Hong Kong Riley House 88 Lei Muk Road Kwai Chung New Territories Hong Kong

Company secretary CHOI Tze Kit, Sammy FCCA, FCPA Authorised Representatives HO Yin King, Helena CHOI Tze Kit, Sammy FCCA, FCPA Qualified accountant CHOI Tze Kit, Sammy FCCA, FCPA Principal share registrars and Butterfield Corporate Services Limited transfer office 65 Front Street Hamilton Bermuda

Hong Kong branch share registrars and Standard Registrars Limited transfer office G/F, Bank of East Asia Harbour View Centre 56 Gloucester Road Wanchai Hong Kong

Principal bankers The HongKong and Shanghai Banking Corporation Limited Hang Seng bank DBS Bank (Hong Kong) Limited ABN•AMRO Bank The Bank of East Asia Limited, Guangzhou Branch

Auditors Deloitte Touche Tohmatsu Legal advisers Johnson Stokes & Master David Lo & Partners Conyers Dill & Pearman

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APPENDIX II

AUDIT COMMITTEE

An audit committee of the Company which was established in accordance with the requirements of the Code of Best Practice, for the purposes of reviewing and providing supervision over the Group’s financial reporting process and internal controls. The audit committee comprises of LI Sau Hung, Eddy, LEUNG Ka Kui, Johnny and CHAN Kam Kwan, Jason. LI Sau Hung, Eddy is the chairman of the audit committee.

GENERAL

(a) There was no contract or arrangement entered into by any member of the Group subsisting at the Latest Practicable Date in which any Director was materially interested and which was significant in relation to the business of the Group.
(b) None of the Directors, proposed Directors in this prospectus, has, or has had, any direct or indirect interest in any assets which have been acquired, disposed of or leased to, or which are proposed to be acquired, disposed of or leased to, the Company or any of its subsidiaries, respectively, since 31 December 2003, the date to which the latest published audited consolidated financial statements of the Group were made up.
(c) None of any part of the equity or debt securities of the Group is listed or dealt in or any other recognized stock exchange or on which listing or permission to deal is being or is proposed to be sought.
(d) None of the Directors is materially interested in any contract or arrangement subsisting at the Latest Practicable Date which is significant in relation to the business of the Group taken as a whole.
(e) The English text of the Prospectus and the application form for Offer Shares shall prevail over their respective Chinese texts.

BINDING EFFECT

The Prospectus Documents and the acceptances of the Open Offer are governed by and shall be construed in accordance with the laws of Hong Kong. Where an application is made in pursuance of any of such documents, the relevant document(s) shall have the effect of rendering all persons concerned bound by the provisions, other than the penal provisions, of Sections 44A and 44B of the Companies Ordinance, so far as applicable.

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GENERAL INFORMATION

APPENDIX II

DOCUMENTS DELIVERED TO THE REGISTRARS OF COMPANIES

A copy of the Prospectus Documents having attached thereto all documents required to be condensed or attached to it (if any) has been registered with the Registrar of Companies in Hong Kong pursuant to Section 342C of the Companies Ordinance and has been filed with the Registrar of Companies in Bermuda pursuant to the Companies Act.

DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection at the head office and principal place of business of the Company in Hong Kong at Unit 8, 10/F., Riley House, 88 Lei Muk Road, Kwai Chung, New Territories, Hong Kong during normal business hours on any weekday other than public holidays, from the date of this prospectus up to and including 7 January 2005:

the memorandum of association and bye-laws of the Company;
the annual reports of the Company for the two years ended 31 December 2002 and 2003;
the interim report of the Company for the six months ended 30 June 2004;
letters of undertaking of the Controlling Shareholders and Martin Currie;
the subscription agreement dated 25 November 2003 entered into between Sun Union Enterprises Limited and the Company in respect of a top-up subscription of 32,000,000 shares;
the Underwriting Agreement;
the comfort letter issued by P Tse & Company on pro forma statement of unaudited adjusted consolidated net tangible assets of the Group, the text of which is set out on pages 86 and 87 of this prospectus; and
the written consents from P Tse & Company referred to in paragraph headed “Experts” of this Appendix.

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AI assistant

ICO Group Limited — Capital/Financing Update 2005

49938_rns_2005-01-04_f10aadb6-4a27-4b5e-a90b-a2e0f53b5768.pdf

JACKIN INTERNATIONAL HOLDINGS LIMITED ! " # $ % & ' ( ) []

Financial advisers

Underwriter

CONTENTS

EXPECTED TIMETABLE

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

LETTER FROM THE BOARD

JACKIN INTERNATIONAL HOLDINGS LIMITED ! " # $ % & ' ( ) []

INTRODUCTION

LETTER FROM THE BOARD

THE OPEN OFFER

Issue statistics

TERMS OF THE OPEN OFFER

Subscription Price for the Offer Shares

Qualifying Shareholders

LETTER FROM THE BOARD

Closure of register of members

Fractions of Offer Shares

Share certificates

Application for listing

LETTER FROM THE BOARD

Status of the Offer Shares

UNDERWRITING ARRANGEMENTS

Underwriting Agreement

Undertaking from the Controlling Shareholders

LETTER FROM THE BOARD

Undertaking from Martin Currie

Underwritten Shares

LETTER FROM THE BOARD

Termination of the Underwriting Agreement

LETTER FROM THE BOARD

CONDITIONS OF THE OPEN OFFER

INFORMATION ON THE GROUP

LETTER FROM THE BOARD

REASONS OF THE OPEN OFFER AND USE OF PROCEEDS

WARNING OF THE RISKS OF DEALINGS IN SHARES AND OFFER SHARES

LETTER FROM THE BOARD

CHANGES IN THE SHAREHOLDING STRUCTURE OF THE COMPANY

LETTER FROM THE BOARD

PROCEDURE FOR ACCEPTANCE

ADDITIONAL INFORMATION

SUMMARY OF FINANCIAL RESULTS

APPENDIX I

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

REPORT OF THE AUDITORS

TO THE MEMBERS OF JACKIN INTERNATIONAL HOLDINGS LIMITED

Respective responsibilities of directors and auditors

Basis of opinion

Opinion

APPENDIX I

CONSOLIDATED INCOME STATEMENT

CONSOLIDATED BALANCE SHEET

APPENDIX I

BALANCE SHEET

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

CONSOLIDATED CASH FLOW STATEMENT

NOTES TO THE FINANCIAL STATEMENTS

1. GENERAL

2. ADOPTION OF HONG KONG FINANCIAL REPORTING STANDARD

3. PRINCIPAL ACCOUNTING POLICIES

Basis of consolidation

Goodwill

Investments in subsidiaries

Investment in an associate

Revenue recognition

Property, plant and equipment

Impairment

Assets held under finance leases and hire purchase contracts

Royalty charges

Research and development expenditure

Distribution rights

Inventories

Foreign currencies

ICO Group Limited Capital/Financing Update 2005