Imperium Financial Group Limited - Proxy Solicitation & Information Statement 2006

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Galileo Capital Group Limited, you should at once hand this circular, together with the enclosed form of proxy, 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.

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

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(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8029)

VERY SUBSTANTIAL ACQUISITION

Joint Financial Advisers to Galileo Capital Group Limited

A notice convening the EGM to be held at 19th Floor, Club Lusitano, 16 Ice House Street, Central, Hong Kong on Monday, 8 January 2007 at 4:00 p.m. is set out on pages 124 to 125 of this circular. Whether or not you intend to attend the EGM, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon to the Company’s branch share registrar in Hong Kong, Tengis Limited, at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong, as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the EGM. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM should you so wish.

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

22 December 2006

CHARACTERISTICS OF GEM

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

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

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

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Page

Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			. . . . . . . . . . . . . . .	5
Appendix I	–	Financial information of the Group . . . . . .	. . . . . . . . . . . . . . .	17
Appendix II	–	Financial information of Cheung Shing . . .	. . . . . . . . . . . . . . .	61
Appendix III	–	Financial information of Grand Sea . . . . . .	. . . . . . . . . . . . . . .	82
Appendix IV	–	Unaudited pro forma financial information
		of the Enlarged Group . . . . . . . . . . . . . .	. . . . . . . . . . . . . . .	102
Appendix V	–	Property valuation of the Enlarged Group	. . . . . . . . . . . . . . .	110
Appendix VI	–	General information . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . .	117
Notice of the	EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		. . . . . . . . . . . . . . .	124

– ii –

DEFINITIONS

In this circular, the following expressions shall have the meanings set out below unless the context requires otherwise:

“Acquisition” acquisition of the Sale Shares and the Shareholders’ Loan pursuant to the Sale and Purchase Agreement; and the acquisition of the Property Shares and the Property Shareholders’ Loan pursuant to the Property Agreement by Galileo Financial from the Vendors
“associates” has the meaning ascribed thereto in the GEM Listing Rules
“Board” the board of Directors “Business Day” a day on which banks are open for business in Hong Kong (excluding Saturdays, Sundays and public holidays)
“Cheung Shing” Cheung Shing Funeral Limited, a company incorporated under the laws of Hong Kong
“Company” Galileo Capital Group Limited, a company incorporated in the Cayman Islands with limited liability and the shares of which are listed on GEM
“Completion” completion of the sale and purchase of the Sale Shares or the Property Shares (as the case may be) and the assignment of the Shareholders’ Loan or the Property Shareholders’ Loan (as the case may be) pursuant to the Sale and Purchase Agreement or the Property Agreement (as the case may be)
“Completion Date” the 7th Business Day following the day on which all the conditions in the Sale and Purchase Agreement or the Property Agreement (as the case may be) are satisfied in full or waived (as the case may be), or such other date as the Parties may agree being the date on which Completion occurs
“connected persons” has the meaning ascribed thereto in the GEM Listing Rules and the word “connected” shall be construed accordingly

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DEFINITIONS

“Consideration”	the consideration payable by Galileo Financial for the
	acquisition of the Sale Shares and the Shareholders’ Loan
	from the Vendors
“Directors”	the directors of the Company
“EGM”	an extraordinary general meeting of the Company to be
	convened for the Shareholders to consider and, if thought
	fit, to approve the Sale and Purchase Agreement, the
	Property Agreement and the transactions contemplated
	thereunder
“Enlarged Group”	the Group as enlarged by completion of the Acquisition
“Galileo Financial”	Galileo Financial Services Limited, a company
	incorporated under the laws of Hong Kong and a wholly
	owned subsidiary of the Company
“GAML”	Galileo Asset Management Limited, a company
	incorporated under the laws of Hong Kong and a wholly
	owned subsidiary of the Company
“GEM”	Growth Enterprise Market of the Stock Exchange
“GEM Listing Rules”	Rules Governing the Listing of Securities on the GEM
“Grand Sea”	Grand Sea Limited, a company incorporated under the
	laws of Hong Kong
“Group”	the Company and its subsidiaries
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong”	the Hong Kong Special Administrative Region of the
	PRC
“Latest Practicable Date”	21 December 2006, being the latest practicable date for
	the purpose of ascertaining certain information contained
	in this circular
“Long Stop Date”	the date which falls three months after the date of the
	Sale and Purchase Agreement or the Property Agreement
	(as the case may be) or such other date as the Parties may
	agree in writing

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DEFINITIONS

“Mr. Woo”	Mr. Woo Shik Man, a shareholder of Cheung Shing and
	Grand Sea and one of the Vendors
“Ms. Cheung”	Ms. Cheung Kam Man, a shareholder of Cheung Shing
	and Grand Sea and one of the Vendors
“Ms. Kong”	Ms. Kong Sau Ping, a shareholder of Cheung Shing and
	Grand Sea and one of the Vendors
“New Brilliant”	New Brilliant Investments Limited, a company
	incorporated in the British Virgin Islands and is the
	controlling Shareholder
“Parties”	Galileo Financial and the Vendors
“PRC”	The People’s Republic of China
“Properties”	the three properties owned by Grand Sea, details of which
	are set out in the section headed “Information on Grand
	Sea” in the “Letter from the Board”
“Property Agreement”	the agreement dated 6 November 2006 entered into
	among Galileo Financial and the Vendors in relation to
	the acquisition of the Property Shares and the Property
	Shareholders’ Loan
“Property Consideration”	the consideration payable by Galileo Financial for the
	acquisition of the Property Shares and the Property
	Shareholders’ Loan from the Vendors
“Property Shareholders’ Loan”	all the shareholders’ loan owed by Grand Sea to the
	Vendors on the Completion Date, being HK$2,315,633 as
	at 30 September 2006 and all further advances (if any)
	made by the Vendors to Grand Sea up to Completion
“Property Shares”	the three ordinary shares in Grand Sea beneficially
	owned by the Vendors, representing the entire issued
	share capital of Grand Sea
“RMB”	Renminbi, the lawful currency of the PRC

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DEFINITIONS

“Sale and Purchase Agreement”	the agreement dated 6 November 2006 entered into
	among Galileo Financial and the Vendors in relation to
	the acquisition of the Sale Shares and the Shareholders’
	Loan
“Sale Shares”	the 17 ordinary shares in Cheung Shing beneficially
	owned by the Vendors, representing the entire issued
	share capital of Cheung Shing
“SFO”	the Securities and Futures Ordinance (Chapter 571 of the
	Laws of Hong Kong)
“Shareholder(s)”	holder(s) of the Shares
“Shareholders’ Loan”	all the shareholders’ loan owed by Cheung Shing to the
	Vendors on the Completion Date, being HK$1,768,418 as
	at 30 September 2006 and all further advances (if any)
	made by the Vendors to Cheung Shing up to Completion
“Shares”	ordinary shares of HK$0.02 each in the issued share
	capital of the Company
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Vendors”	Ms. Cheung, Mr. Woo and Ms. Kong
“%”	per cent

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LETTER FROM THE BOARD

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(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8029)

Executive Directors: Mr. Chui Bing Sun (Chairman) Mr. Lee Chi Shing, Caesar

Independent non-executive Directors:

Mr. Siu Hi Lam, Alick Mr. Kwok Kwan Hung Mr. Chien Hoe Yong

Registered office: Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands

Principal place of business: 19th Floor Club Lusitano 16 Ice House Street Central Hong Kong

22 December 2006

To the Shareholders

Dear Sir or Madam,

VERY SUBSTANTIAL ACQUISITION

INTRODUCTION

It was announced on 8 November 2006 that Galileo Financial, a wholly owned subsidiary of the Company, and the Vendors entered into: (a) the Sale and Purchase Agreement, pursuant to which Galileo Financial has conditionally agreed to purchase and the Vendors have conditionally agreed to sell the entire issued share capital of Cheung Shing and the Shareholders’ Loan for a total consideration of HK$5.1 million; and (b) the Property Agreement, pursuant to which Galileo Financial has conditionally agreed to purchase and the Vendors have conditionally agreed to sell the entire issued share capital of Grand Sea and the Property Shareholders’ Loan for a total consideration of HK$6.4 million.

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LETTER FROM THE BOARD

The Acquisition constitutes a “very substantial acquisition” of the Company under Chapter 19 of the GEM Listing Rules, and is therefore subject to the approval of the Shareholders. The EGM will be convened and held for the Shareholders to consider and, if thought fit, to approve the Sale and Purchase Agreement, the Property Agreement and the transactions contemplated thereunder.

The purpose of this circular is to provide you with, among other things, details of the Acquisition and the notice of the EGM.

THE SALE AND PURCHASE AGREEMENT

Date

6 November 2006

Parties

Purchaser: Galileo Financial, a wholly owned subsidiary of the Company

Vendors: Ms. Cheung, who owns eight shares of Cheung Shing, representing approximately 47.1% of its issued share capital;

Mr. Woo, who owns seven shares of Cheung Shing, representing approximately 41.2% of its issued share capital; and

Ms. Kong, who owns two shares of Cheung Shing, representing approximately 11.8% of its issued share capital.

To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, the Vendors are independent of and not connected with the Company or its connected persons pursuant to the GEM Listing Rules.

Assets to be acquired

Pursuant to the Sale and Purchase Agreement, Galileo Financial has conditionally agreed to purchase and the Vendors have conditionally agreed to sell the Sale Shares, being 17 ordinary shares of Cheung Shing, representing the entire issued share capital of Cheung Shing, and the Shareholders’ Loan owed by Cheung Shing to the Vendors.

Consideration

The aggregate consideration for the Sale Shares and the Shareholders’ Loan is HK$5.1 million in cash and will be paid by Galileo Financial in instalments as follows:

(a) HK$510,000, being deposit and in part payment of the Consideration, shall be paid to the Vendors pro rata to their respective shareholdings in Cheung Shing upon signing of the Sale and Purchase Agreement;

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LETTER FROM THE BOARD

(b) HK$1,020,000, being further deposit and part payment of the Consideration, shall be paid to the Vendors pro rata to their respective shareholdings in Cheung Shing on the Business Day immediately after the date on which Galileo Financial notifies or is deemed to have notified the Vendors that it is satisfied with the results of the due diligence to be conducted on Cheung Shing.

In the event that the Vendors shall not have received the notice in writing from Galileo Financial within 10 Business Days from (but excluding) the date of the Sale and Purchase Agreement, Galileo Financial shall be deemed to have notified the Vendors that it is satisfied with the results of the due diligence on the 11th day after (but excluding) the date of the Sale and Purchase Agreement; and

(c) HK$3,570,000, being the remaining part of the Consideration, shall be paid to the Vendors pro rata to their respective shareholdings in Cheung Shing on Completion.

The Consideration will be financed by the Group’s internal resources. As at the Latest Practicable Date, the first and second part payments of the Consideration, being HK$1,530,000 in aggregate, have been settled by Galileo Financial.

The Consideration of HK$5.1 million represents a premium of approximately HK$3.4 million to the aggregate of the audited net liabilities of Cheung Shing of approximately HK$0.1 million and shareholders’ loan of approximately HK$1.8 million as at 30 September 2006.

The Consideration has been determined after arm’s length negotiations between Galileo Financial and the Vendors, independent third parties, taking into consideration of: (a) Cheung Shing’s historical operating results; (b) that Cheung Shing only commenced its business in July 2005; and (c) the promising prospects of the funeral service industry in Hong Kong, details of which are set out in the section headed “Reasons for and benefits of the Acquisition” below.

The Directors (including the independent non-executive Directors) consider that the terms of the Sale and Purchase Agreement, are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Conditions precedent

The Sale and Purchase Agreement is conditional upon the following conditions being fulfilled or waived by Galileo Financial:

(a) Galileo Financial in its absolute discretion being satisfied with the results of the due diligence to be conducted on the business, assets, liabilities and financial position of Cheung Shing;
(b) if necessary, all approvals by the shareholders of Galileo Financial, their respective holding companies, government and regulatory authorities, corporate approvals and consents for the transactions contemplated under the Sale and Purchase Agreement

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LETTER FROM THE BOARD

being obtained; and if any of such shareholders’, governmental and regulatory and/or corporate approvals and consents are given subject to conditions, then provided that such conditions are reasonably acceptable to Galileo Financial;

(c) in relation to the transactions contemplated in the Sale and Purchase Agreement, all relevant regulatory requirements, if any, having been complied with and satisfied;
(d) the simultaneous completion of the Property Agreement;
(e) all warranties and representations given by Galileo Financial and the Vendors under the Sale and Purchase Agreement having remained true and accurate in all material respects;
(f) Cheung Shing having performed and complied with all agreements, obligations and conditions contained in the Sale and Purchase Agreement that are required to be performed or complied with by it on or before Completion; and
(g) no material adverse change or prospective material adverse change in Cheung Shing’s business, operations, financial conditions or prospects has occurred since the date of signing of the Sale and Purchase Agreement.

Galileo Financial may at any time waive in writing any conditions set out in the Sale and Purchase Agreement (other than conditions (b) and (c)) and such waiver may be made subject to such terms and conditions as may be determined by Galileo Financial. Conditions (b) and (c) are not capable of being waived by Galileo Financial.

Save for condition (a) under the section headed “Conditions precedent” above, none of the conditions of the Sale and Purchase Agreement had been satisfied or waived (as the case may be) up to the Latest Practicable Date.

Completion

Subject to fulfilment or waiver (as the case may be) of the conditions set out in the Sale and Purchase Agreement, Completion shall take place on the Completion Date.

If the conditions of the Sale and Purchase Agreement have not been fulfilled or waived by Galileo Financial at or before 12:00 noon on the Long Stop Date, the Sale and Purchase Agreement shall lapse, whereupon all rights and obligations of the Parties shall cease to have effect, and any deposit paid by Galileo Financial shall be dealt with in accordance with the following:

(a) The deposit shall be refundable to Galileo Financial forthwith upon demand in the event that:
(i) condition (a) set out in the section headed “Conditions precedent” above has not been fulfilled or waived by Galileo Financial on or before the 11th Business Day after (but excluding) the date of the Sale and Purchase Agreement; or

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LETTER FROM THE BOARD

(ii) Completion fails to occur on or before the Completion Date as a result of the default of the Vendors (including but not limited to any breach of the warranties and representations given by the Vendors in the Sale and Purchase Agreement or any of the Vendors’ other obligations under the Sale and Purchase Agreement).
(b) In the event that Completion fails to occur for any reason other than those set out in (a)(i) and (a)(ii) above, all paid deposit shall be forfeited by the Vendors as agreed damages.
(c) In the event that the second deposit of HK$1,020,000 is not paid when due, the Sale and Purchase Agreement shall lapse and the first deposit of HK$510,000 shall be forfeited by the Vendors as agreed damages.

THE PROPERTY AGREEMENT

Date

6 November 2006

Parties

Purchaser: Galileo Financial, a wholly owned subsidiary of the Company

Vendors: Ms. Cheung, who owns one share of Grand Sea, representing approximately 33.3% of its issued share capital;

Mr. Woo, who owns one share of Grand Sea, representing approximately 33.3% of its issued share capital; and

Ms. Kong, who owns one share of Grand Sea, representing approximately 33.3% of its issued share capital.

Assets to be acquired

Pursuant to the Property Agreement, Galileo Financial has conditionally agreed to purchase and the Vendors have conditionally agreed to sell the Property Shares, being three ordinary shares of Grand Sea, representing the entire issued share capital of Grand Sea, and the Property Shareholders’ Loan owed by Grand Sea to the Vendors.

Consideration

The aggregate consideration for the Property Shares and the Property Shareholders’ Loan is HK$6.4 million in cash and will be paid by Galileo Financial in instalments as follows:

(a) HK$640,000, being deposit and in part payment of the Property Consideration, shall be paid to the Vendors pro rata to their respective shareholdings in Grand Sea upon signing of the Property Agreement;

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LETTER FROM THE BOARD

(b) HK$1,280,000, being further deposit and part payment of the Property Consideration, shall be paid to the Vendors pro rata to their respective shareholdings in Grand Sea on the Business Day immediately after the date on which Galileo Financial notifies or is deemed to have notified the Vendors that it is satisfied with the results of the due diligence to be conducted on Grand Sea.

In the event that the Vendors shall not have received the notice in writing from Galileo Financial within 10 Business Days from (but excluding) the date of receipt of the title documents of the Properties by Galileo Financial’s solicitors, Galileo Financial shall be deemed to have notified the Vendors that it is satisfied with the results of the due diligence on the 11th day after (but excluding) the date of receipt of the title documents of the Properties by Galileo Financial’s solicitors; and

(c) HK$4,480,000, being the remaining part of the Property Consideration, shall be paid to the Vendors pro rata to their respective shareholdings in Grand Sea on Completion.

The Property Consideration will be financed by the Group’s internal resources. As at the Latest Practicable Date, the first and second part payments of the Property Consideration, being HK$1,920,000 in aggregate, have been settled by Galileo Financial.

Pursuant to the Property Agreement, the Vendors have jointly and severally and irrevocably undertaken to utilise the Property Consideration or any part thereof for the discharge of all indebtedness owed by Grand Sea to the mortgagee under all the mortgages or charges in respect of the Properties, being approximately HK$1.7 million as at 30 September 2006, before 3:00 p.m. on the Completion Date.

The Property Consideration of HK$6.4 million represents a discount of approximately HK$0.1 million to the aggregate of the audited net assets of Grand Sea of approximately HK$2.5 million, shareholders’ loan of approximately HK$2.3 million and mortgage loan of approximately HK$1.7 million as at 30 September 2006.

The Property Consideration has been determined after arm’s length negotiations between Galileo Financial and the Vendors taking into consideration of: (a) the current market value of the Properties as estimated by banks; and (b) the prominent location of the Properties for operating funeral service business as they are close to the Kowloon Public Mortuary and three funeral parlours in Hunghom, Kowloon.

The Directors (including the independent non-executive Directors) consider that the terms of the Property Agreement, are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE BOARD

Conditions precedent

The Property Agreement is conditional upon the following conditions being fulfilled or waived by Galileo Financial:

(a) Galileo Financial in its absolute discretion being satisfied with the results of the due diligence to be conducted on Grand Sea;
(b) the simultaneous completion of the Sale and Purchase Agreement;
(c) if necessary, all approvals by the shareholders of Galileo Financial, their respective holding companies and regulatory authorities, corporate approvals and consents for the transactions contemplated under the Property Agreement being obtained; and if any of such shareholders and regulatory and/or corporate approvals and consents are given subject to conditions, then provided that such conditions are reasonably acceptable to Galileo Financial;
(d) in relation to the transactions contemplated in the Property Agreement, all relevant regulatory requirements, if any, having been complied with and satisfied;
(e) all warranties and representations given by Galileo Financial and the Vendors under the Property Agreement having remained true and accurate in all material respects;
(f) Grand Sea having performed and complied with all agreements, obligations and conditions contained in the Property Agreement that are required to be performed or complied with by it on or before Completion; and
(g) no material adverse change or prospective material adverse change in Grand Sea’s business, operations, financial conditions or prospects has occurred since the date of signing of the Property Agreement.

Galileo Financial may at any time waive in writing any conditions set out in the Property Agreement (other than conditions (c) and (d)) and such waiver may be made subject to such terms and conditions as may be determined by Galileo Financial. Conditions (c) and (d) are not capable of being waived by Galileo Financial.

Save for condition (a) under the section headed “Conditions precedent” above, none of the conditions in the Property Agreement had been satisfied or waived (as the case may be) up to the Latest Practicable Date.

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LETTER FROM THE BOARD

Completion

Subject to fulfilment or waiver (as the case may be) of the conditions set out in the Property Agreement, Completion shall take place on the Completion Date.

If the conditions in the Property Agreement have not been fulfilled or waived by Galileo Financial at or before 12:00 noon on the Long Stop Date, the Property Agreement shall lapse, whereupon all rights and obligations of the Parties shall cease to have effect, and any deposit paid by Galileo Financial shall be dealt with in accordance with the following:

(a) The deposit shall be refundable to Galileo Financial forthwith upon demand in the event that:
(i) condition (a) set out in the section headed “Conditions precedent” above has not been fulfilled or waived by Galileo Financial on or before the 11th day after (but excluding) the date of receipt of all title documents in respect of the Properties by Galileo Financial’s solicitors; or
(ii) Completion fails to occur on or before the Completion Date as a result of the default of the Vendors (including but not limited to any breach of the warranties and representations given by the Vendors in the Property Agreement or any of the Vendors’ other obligations under the Property Agreement).
(b) In the event that Completion fails to occur for any reason other than those set out in (a)(i) and (a)(ii) above, all paid deposit shall be forfeited by the Vendors as agreed damages.
(c) In the event that the second deposit of HK$1,280,000 is not paid when due, the Property Agreement shall lapse and the first deposit of HK$640,000 shall be forfeited by the Vendors as agreed damages.

INFORMATION ON CHEUNG SHING AND GRAND SEA

Information on Cheung Shing

Overview

Cheung Shing is a private company incorporated in Hong Kong with limited liability on 30 July 2004. It commenced business in July 2005.

Cheung Shing is a licensed undertaker of burials in Hong Kong and is principally engaged in the provision of funeral services in Hong Kong such as arrangement of coffins and burial cloths, ordering gravestones, paper commodities and urns and reserving cemetery and crematory.

Following Completion, Galileo Financial intends that there will be no material changes to the existing employees of Cheung Shing. Therefore, the Directors consider that the Group will have sufficient expertise to manage the business of Cheung Shing.

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LETTER FROM THE BOARD

Financial information

For the period from 30 July 2004, the date of incorporation, to 31 March 2005, Cheung Shing recorded both audited loss before and after taxation of approximately HK$0.3 million. For the year ended 31 March 2006, Cheung Shing recorded both audited profit before and after taxation of approximately HK$0.05 million. For the six months ended 30 September 2006, Cheung Shing recorded both audited profit before and after taxation of approximately HK$0.2 million. As at 30 September 2006, the audited net liabilities value of Cheung Shing was approximately HK$0.1 million. Excluding the shareholders’ loan of approximately HK$1.8 million, Cheung Shing would have net assets value of approximately HK$1.7 million as at 30 September 2006.

The accountants’ report of Cheung Shing is set out in Appendix II to this circular.

Information on Grand Sea

Overview

Grand Sea is a private company incorporated in Hong Kong with limited liability on 16 July 2004. Grand Sea has not carried on any business or operation save for the holding and leasing of the Properties since its incorporation.

Grand Sea owns three properties in Hunghom, Kowloon, namely, (a) shop N on G/F Cheong Lok Mansion, 1H, 1J & 1K Baker Street, 2F, 2G & 2H Cooke Street, 1-11 Lo Lung Hang Street, 2-12 Malacca Street, Kowloon and on M/F Cheong Lok Mansion, 1G Baker Street, Kowloon; (b) shop O on G/F Cheong Lok Mansion, 1H, 1J & 1K Baker Street, 2F, 2G & 2H Cooke Street, 1-11 Lo Lung Hang Street, 2-12 Malacca Street, Kowloon and on M/F Cheong Lok Mansion, 1G Baker Street, Kowloon; and (c) shop P on G/F Cheong Lok Mansion, 1H, 1J & 1K Baker Street, 2F, 2G & 2H Cooke Street, 1-11 Lo Lung Hang Street, 2-12 Malacca Street, Kowloon and on M/F Cheong Lok Mansion, 1G Baker Street, Kowloon. Shops N and O are currently occupied by Cheung Shing. Shop P is leased to a third party which operates a florist shop. The Properties are next to each other and have a saleable area of about 1,903 square feet in aggregate. The Properties are charged for mortgage loans of approximately HK$1.7 million as at 30 September 2006.

A valuation report on the Properties is set out in Appendix V to this circular.

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LETTER FROM THE BOARD

Financial information

Grand Sea recorded both audited profit before and after taxation of approximately HK$2.1 million for the period from 16 July 2004, the date of incorporation, to 31 March 2005. For the year ended 31 March 2006, Grand Sea recorded audited profit before and after taxation of approximately HK$0.3 million and HK$0.2 million respectively. For the six months ended 30 September 2006, Grand Sea recorded audited profit before and after taxation of approximately HK$0.2 million and HK$0.1 million respectively. As at 30 September 2006, the audited net assets value of Grand Sea was approximately HK$2.5 million. Excluding the shareholders’ loan of approximately HK$2.3 million, Grand Sea would have net assets value of approximately HK$4.8 million as at 30 September 2006.

The accountants’ report of Grand Sea is set out in Appendix III to this circular.

REASONS FOR AND BENEFITS OF THE ACQUISITION

The Group is principally engaged in the provision of corporate finance services to middle-sized companies in the Greater China region. These services include conducting industrial research and analysis and due diligence of investment targets for potential investors in respect of proposed mergers and acquisitions. The Group also offers business introduction service and arranges for access to credit facilities or fund raising activities. The Group has recorded losses for the past five years.

It was stated in the composite offer document dated 18 July 2006 jointly issued by New Brilliant and the Company that New Brilliant intended to explore other business/investment opportunities for enhancing the Group’s future development and strengthening its revenue base. The Directors consider that the Acquisition is in line with the Group’s business strategy to diversify into other businesses and broaden its revenue base.

It is generally believed that the aging population and increasing death rate have driven the demand growth of funeral services in Hong Kong. According to the Hong Kong Census and Statistics Department, the proportion of people aged 65 or above to Hong Kong’s total population increased from 11.4% in mid-2002 to 12.2% in mid-2006; while the number of deaths grew from 34,300 in 2002 to 38,800 in 2005. Between 2002 and 2005, the number of funeral service companies in Hong Kong has doubled to approximately 80. The Task Force on Population Policy set up by the Chief Secretary of Administration in 2003 estimated that a quarter of Hong Kong’s population would aged 65 or above by 2031. As such, the Directors believe that the funeral service industry in Hong Kong has a promising prospect and the investment in Cheung Shing will enable the Group to capture and participate in the growth of this business. Therefore, the Acquisition represents an attractive investment opportunity for the Group.

Given the prominent location of the Properties for operating funeral service business and the positive outlook of the property market in Hong Kong, the Directors believe that it is in the interest of the Group to acquire the Properties.

In view of the above, the Directors (including the independent non-executive Directors) consider that the Acquisition is in the interests of the Company and the Shareholders as a whole.

– 14 –

LETTER FROM THE BOARD

IMPACT OF THE ACQUISITION ON THE GROUP

Following Completion, Cheung Shing and Grand Sea will become indirect wholly owned subsidiaries of the Company. The Group had an unaudited net assets value of approximately HK$9.9 million as at 30 September 2006. Based on the unaudited pro forma consolidated balance sheet of the Enlarged Group, the net assets value of the Enlarged Group would have been approximately HK$9.9 million assuming that Completion had taken place on 30 September 2006. The Group recorded net profit of approximately HK$2.8 million for the six months ended 30 September 2006. Based on the unaudited pro forma consolidated profit and loss account of the Enlarged Group, the Enlarged Group would have profit of approximately HK$3.1 million for the six months ended 30 September 2006 assuming that Completion had taken place on 1 April 2006. Please refer to Appendix IV to this circular for the unaudited pro forma financial information of the Enlarged Group for details.

EGM

Set out on pages 124 to 125 of this circular is a notice of the EGM to be held at 19th Floor, Club Lusitano, 16 Ice House Street, Central, Hong Kong on Monday, 8 January 2007 at 4:00 p.m. Whether or not you intend to attend the EGM, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon to the Company’s branch share registrar in Hong Kong, Tengis Limited, at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong, as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the EGM. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM should you so wish.

PROCEDURES FOR DEMANDING A POLL

Pursuant to Article 72 of the articles of association of the Company, at any general meeting, a resolution put to the vote of the meeting shall be decided on a show of hands unless a poll is (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) demanded:

(i) by the chairman of the meeting; or
(ii) by at least three Shareholders present in person (or, in the case of a Shareholder being a corporation, by its duly authorised representative) or by proxy for the time being entitled to vote at the meeting; or

– 15 –

LETTER FROM THE BOARD

(iii) by any Shareholder or Shareholders present in person (or, in the case of a Shareholder being a corporation, by its duly authorised representative) or by proxy and representing not less than one-tenth of the total voting rights of all the Shareholders having the right to vote at the meeting; or
(iv) by any Shareholder or Shareholders present in person (or, in the case of a Shareholder being a corporation, by its duly authorised representative) or by proxy and holding Shares conferring a right to vote at the meeting being Shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all Shares conferring that right.

RECOMMENDATION

Having considered the reasons set out herein, the Directors, including the independent non-executive Directors, are of the opinion that the Sale and Purchase Agreement and the Property Agreement and the transactions contemplated thereunder are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors therefore recommend the Shareholders to vote in favour of the ordinary resolution to be put forward at the EGM.

ADDITIONAL INFORMATION

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

Yours faithfully, By Order of the Board Galileo Capital Group Limited Chui Bing Sun Chairman

– 16 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. FINANCIAL SUMMARY

Set out below is a summary of the audited financial information of the Group for the three years ended 31 March 2006 and the unaudited financial information of the Group for the six months ended 30 September 2006 and six months ended 30 September 2005 extracted from the relevant annual reports and half-yearly reports of the Company.

CONSOLIDATED INCOME STATEMENTS

2006 HK$ 2,357,000 (544,764)	For the year ended 31 March 2005 2004 HK$ HK$ 916,054 4,339,022 (171,143) (2,156,074)	For the year ended 31 March 2005 2004 HK$ HK$ 916,054 4,339,022 (171,143) (2,156,074)	For the six months ended 30 September 2006 2005 HK$ HK$ Unaudited Unaudited 450,000 730,000 (69,682) (393,274) 380,318 336,726 4,792,741 28 (2,358,877) (1,725,685) – – – – (847) – 2,813,335 (1,388,931) – – 2,813,335 (1,388,931) HK0.34 cent HK(0.17) cent	For the six months ended 30 September 2006 2005 HK$ HK$ Unaudited Unaudited 450,000 730,000 (69,682) (393,274) 380,318 336,726 4,792,741 28 (2,358,877) (1,725,685) – – – – (847) – 2,813,335 (1,388,931) – – 2,813,335 (1,388,931) HK0.34 cent HK(0.17) cent
1,812,236 779 (3,744,815) – – – (1,931,800) –	744,911 15,062 (3,839,082) (41,704) – (2) (3,120,815) –	2,182,948 194,672 (4,052,363) (602,502) (65,053) (40,570) (2,382,868) –	380,318 4,792,741 (2,358,877) – – (847) 2,813,335 –	336,726 28 (1,725,685 – – –
				(1,388,931 –
(1,931,800) HK(0.24) cent	(3,120,815) HK(0.39) cent	(2,382,868) HK(0.30) cent	2,813,335 HK0.34 cent

– 17 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

CONSOLIDATED BALANCE SHEETS

2006 HK$ 532,140	At 31 March 2005 2004 HK$ HK$ 733,558 926,621	At 31 March 2005 2004 HK$ HK$ 733,558 926,621	At 30 September 2006 2005 HK$ HK$ Unaudited Unaudited 516,673 632,243 20,000 10,000 117,120 117,120 11,420,300 283,254 11,557,420 410,374 – – 1,352,509 359,299 7,810 – 788,576 – 2,148,895 359,299 9,408,525 51,075 9,925,198 683,318 19,200,000 16,000,000 (9,302,785) (19,168,131) 9,897,215 (3,168,131) – 3,851,449 27,983 – 9,925,198 683,318	At 30 September 2006 2005 HK$ HK$ Unaudited Unaudited 516,673 632,243 20,000 10,000 117,120 117,120 11,420,300 283,254 11,557,420 410,374 – – 1,352,509 359,299 7,810 – 788,576 – 2,148,895 359,299 9,408,525 51,075 9,925,198 683,318 19,200,000 16,000,000 (9,302,785) (19,168,131) 9,897,215 (3,168,131) – 3,851,449 27,983 – 9,925,198 683,318
311,000 117,120 330,821 758,941 – 639,344 – 4,362,737 5,002,081 (4,243,140)	– 117,120 541,329 658,449 34 375,589 – – 375,623 282,826	620,000 129,743 1,885,294 2,635,037 5,702 813,163 – − 818,865 1,816,172	20,000 117,120 11,420,300 11,557,420 – 1,352,509 7,810 788,576 2,148,895 9,408,525	10,000 117,120 283,254
				410,374
				– 359,299 – –
				359,299
				51,075
(3,711,000)	1,016,384	2,742,793	9,925,198
16,000,000 (19,711,000) (3,711,000) – –	16,000,000 (17,779,200) (1,779,200) 2,795,584 –	16,000,000 (14,658,385) 1,341,615 1,401,178 –	19,200,000 (9,302,785) 9,897,215 – 27,983	16,000,000 (19,168,131
				(3,168,131 3,851,449 –
(3,711,000)	1,016,384	2,742,793	9,925,198

– 18 –

APPENDIX I FINANCIAL INFORMATION OF THE GROUP

2. AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE YEAR ENDED 31 MARCH 2006

The following are the audited consolidated financial statements of the Group extracted from the annual report of the Company for the year ended 31 March 2006.

CONSOLIDATED INCOME STATEMENT

For the year ended 31 March 2006

Notes Revenue 8 Direct costs Gross profit Other operating income Administrative expenses Other operating expenses Finance costs 9 Loss before tax 10 Income tax expense 13 Loss for the year Dividend 14 Loss per share Basic 15	2006 HK$ 2,357,000 (544,764)	2005 HK$ 916,054 (171,143) 744,911 15,062 (3,839,082) (41,704) (2) (3,120,815) – (3,120,815) – HK(0.39) cent
	1,812,236 779 (3,744,815) – – (1,931,800) –	744,911 15,062 (3,839,082 (41,704 (2
		(3,120,815 –
	(1,931,800) – HK(0.24) cent

– 19 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

CONSOLIDATED BALANCE SHEET

At 31 March 2006

Notes Non-current asset Property, plant and equipment 16 Current assets Trade receivables 18 Prepayments, deposits and other receivables Bank balances and cash Current liabilities Unsecured bank overdrafts Accruals and other payables Due to a director 19 Net current (liabilities) assets Capital and reserves Share capital 20 Reserves Equity attributable to equity holders of the parent Non-current liability Due to a director 19	2006 HK$ 532,140	2005 HK$ 733,558 – 117,120 541,329 658,449 34 375,589 – 375,623 282,826 1,016,384 16,000,000 (17,779,200) (1,779,200) 2,795,584 1,016,384
	311,000 117,120 330,821 758,941 – 639,344 4,362,737 5,002,081 (4,243,140)	– 117,120 541,329
		658,449
		34 375,589 –
		375,623
		282,826
	(3,711,000)
	16,000,000 (19,711,000) (3,711,000) –	16,000,000 (17,779,200
		(1,779,200 2,795,584
	(3,711,000)

– 20 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

BALANCE SHEET

At 31 March 2006

Notes Non-current asset Interest in subsidiaries Current assets Due from subsidiaries Bank balances and cash Current liabilities Accruals and other payables Unsecured bank overdraft Due to a subsidiary Due to a director Net current liabilities Capital and reserves Share capital 20 Reserves 22 Equity attributable to equity holders of the parent Non-current liability Due to a director	2006 HK$ –	2005 HK$ 66,641 – 13,549 13,549 162,622 34 – – 162,656 (149,107) (82,466) 16,000,000 (18,878,050) (2,878,050) 2,795,584 (82,466)
	6,857 225,186 232,043 165,101 – 492,605 4,362,737 5,020,443 (4,788,400)	– 13,549
		13,549
		162,622 34 – –
		162,656
		(149,107
	(4,788,400)
	16,000,000 (20,788,400) (4,788,400) –	16,000,000 (18,878,050
		(2,878,050 2,795,584
	(4,788,400)

– 21 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 March 2006

Share capital HK$ 16,000,000	Share premium HK$ 8,095,956	Merger deficit HK$ (119,998)	Accumulated losses HK$ (22,634,343)	Total HK$ 1,341,615 (3,120,815) (3,120,815) (1,779,200) (1,931,800) (1,931,800) (3,711,000)
– – 16,000,000 – –	– – 8,095,956 – –	– – (119,998) – –	(3,120,815) (3,120,815) (25,755,158) (1,931,800) (1,931,800)	(3,120,815
				(3,120,815
				(1,779,200
				(1,931,800
				(1,931,800
16,000,000	8,095,956	(119,998)	(27,686,958)

Note: The merger deficit of the Group represents the difference between the nominal value of the shares of acquired subsidiaries over the nominal value of the share capital of the Company issued in exchange therefor.

– 22 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 31 March 2006

OPERATING ACTIVITIES Loss before tax Adjustments for: Depreciation of property, plant and equipment Bad debts written off Interest income Loss on disposal of property, plant and equipment Operating cash flows before movements in working capital (Increase) decrease in trade receivables, prepayments, deposits and other receivables Increase (decrease) in accruals and other payables Cash used in operations Interest received NET CASH USED IN OPERATING ACTIVITIES INVESTING ACTIVITIES Purchase of property, plant and equipment Proceeds on disposal of property, plant and equipment NET CASH USED IN INVESTING ACTIVITIES FINANCING ACTIVITIES Advance from a director Interest paid Repayment of amount due to a director NET CASH FROM FINANCING ACTIVITIES NET DECREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR, represented by Bank balances and cash Unsecured bank overdrafts	2006 HK$ (1,931,800) 214,658 – (8) –	2005 HK$ (3,120,813) 212,375 10,004 (26) 2,050 (2,896,410) 622,619 (437,574) (2,711,365) 26 (2,711,339) (25,362) 4,000 (21,362) 1,394,406 (2) – 1,394,404 (1,338,297) 1,879,592 541,295 541,329 (34) 541,295
	(1,717,150) (311,000) 263,755 (1,764,395) 8 (1,764,387) (13,240) – (13,240) 2,011,563 – (444,410) 1,567,153 (210,474) 541,295 330,821 330,821 –	(2,896,410 622,619 (437,574
		(2,711,365 26
		(2,711,339
		(25,362 4,000
		(21,362
		1,394,406 (2 –
		1,394,404
		(1,338,297 1,879,592
		541,295
		541,329 (34
	330,821

– 23 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31 March 2006

1. GENERAL

The Company is incorporated in the Cayman Islands on 11 July 2000 as an exempted company with limited liability under the Companies Law (Revised) of the Cayman Islands. Its shares were listed on the Growth Enterprise Market (the “GEM”) of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”). As at the balance sheet date, the parent of the Company (the “Immediate Holding Company”) is Link Wise Investments Limited, a company incorporated in the British Virgin Islands, and the ultimate holding company of the Company (the “Ultimate Holding Company”) is Huge Profit Team Limited, a company incorporated in the British Virgin Islands. The address of the registered office and principal place of business of the Company are disclosed in the page 3 of the annual report.

The Company acts as an investment holding company. Details of the principal activities of its subsidiaries are set out in note 17. There were no significant changes in the nature of the Group’s principal activities during the year.

The consolidated financial statements are presented in Hong Kong dollars. The functional currency of the Group is mainly Hong Kong dollars (“HKD”) which is the same as the presentation currency of the Group.

2. APPLICATION OF HONG KONG FINANCIAL REPORTING STANDARDS/CHANGES IN ACCOUNTING POLICIES

In the current year, the Group has applied, for the first time, a number of new Hong Kong Financial Reporting Standards (“HKFRS(s)”), Hong Kong Accounting Standards (“HKAS(s)”) and Interpretations (hereinafter collectively referred to as “new HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”) that are effective for accounting periods beginning on or after 1 January 2005. The application of the new and revised HKFRSs has resulted in a change in the presentation of the consolidated income statement, consolidated balance sheet and consolidated statement of changes in equity. The changes in presentation have been applied retrospectively. The adoption of the new and revised HKFRSs has resulted in changes to the Group’s accounting policies in the following areas that have an effect on how the results for the current and/or prior accounting years are prepared and presented:

Financial Instruments

In the current year, the Group has applied HKAS 32 “Financial Instruments: Disclosure and Presentation” and HKAS 39 “Financial Instruments: Recognition and Measurement”. HKAS 32 requires retrospective application and the adoption of the standard had no material impact on how financial instruments of the Group are presented for current or prior accounting periods. HKAS 39, which is effective for annual periods beginning on or after 1 January 2005, generally does not permit the recognition, derecognition or measurement of financial assets and liabilities on a retrospective basis. The principal effects resulting from the implementation of HKAS 39 are summarised below:

Classification and measurement of financial assets and financial liabilities

The Group has applied the relevant transitional provisions in HKAS 39 with respect to the classification and measurement of financial assets and financial liabilities that are within the scope of HKAS 39.

Financial assets and financial liabilities other than debt and equity securities

From 1 April 2005 onwards, the Group has classified and measured its financial assets and financial liabilities other than debt and equity securities (which were previously outside the scope of SSAP 24) in accordance with the requirements of HKAS 39. Financial assets under HKAS 39 are classified as “Financial assets at fair value through profit or loss”, “Available-for-sale financial assets”, “Loans and receivables” or “Held-to-maturity financial assets”. Financial liabilities are generally classified as “financial liabilities at fair value through profit or loss” or “other financial liabilities”. Financial liabilities at fair value through profit or loss are measured at fair value, with changes in fair value being recognised in profit or loss directly. Other financial liabilities are carried at amortised cost using the effective interest method after initial recognition. However, there has been no material effect on how the results for the current accounting period are prepared and presented.

– 24 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Share-based Payments

In the current year, the Group has applied HKFRS 2 “Share-based Payment” which requires an expense to be recognised where the Group buys goods or obtains services in exchange for shares or rights over shares (“equity-settled transactions”), or in exchange for other assets equivalent in value to a given number of shares or rights over shares (“cash-settled transactions”). The principal impact of HKFRS 2 on the Group is in relation to the expensing of the fair value of share options granted to directors and employees of the Company, determined at the date of grant of the share options, over the vesting period. Prior to the application of HKFRS 2, the Group did not recognise the financial effect of these share options until they were exercised. In relation to share options granted before 1 April 2005, in accordance with the relevant transitional provision, the Group has not applied HKFRS 2 to share options granted after 7 November 2002 and had vested before 1 April 2005. As there had been no share options which remained outstanding during the two years ended 31 March 2006 and 31 March 2005, the application of HKFRS 2 has had no financial impact on the results of the Group for current or prior accounting periods.

No financial effects from the changes in accounting policies described above on the results of the current year and of the prior period and to the Group’s assets, liabilities and equities as at 31 March 2005.

3. POTENTIAL IMPACT ARISING ON THE NEW ACCOUNTING STANDARD NOT YET EFFECTIVE

The Group has not early applied the following new standards and interpretations that have been issued but are not yet effective. The directors of the Company anticipate that the application of these standards or interpretations will have no material impact on the financial statements of the Group.

HKAS 1 (Amendment)	Capital disclosures1
HKAS 19 (Amendment)	Actuarial gains and losses, group plans and disclosures2
HKAS 21 (Amendment)	Net investment in a foreign operation2
HKAS 39 (Amendment)	Cash flow hedge accounting of forecast intragroup transactions2
HKAS 39 (Amendment)	The fair value option2
HKAS 39 & HKFRS 4 (Amendments)	Financial guarantee contracts2
HKFRS 6	Exploration for and evaluation of mineral resources2
HKFRS 7	Financial instruments: Disclosures1
HK(IFRIC) – INT 4	Determining whether an arrangement contains a lease2
HK(IFRIC) – INT 5	Rights to interests arising from decommissioning, restoration and
	environmental rehabilitation funds2
HK(IFRIC) – INT 6	Liabilities arising from participating in a specific market – waste
	electrical and electronic equipment3
HK(IFRIC) – INT 7	Applying the restatement approach under HKAS 29 “Financial
	Reporting in Hyperinflationary Economies”4
HK(IFRIC) – INT 8	Scope of HKFRS 25
HK(IFRIC) – INT 9	Reassessment of Embedded Derivates6

1 Effective for annual periods beginning on or after 1 January 2007.
2 Effective for annual periods beginning on or after 1 January 2006.
3 Effective for annual periods beginning on or after 1 December 2005.
4 Effective for annual periods beginning on or after 1 March 2006.
5 Effective for annual periods beginning on or after 1 May 2006.
6 Effective for annual periods beginning on or after 1 June 2006.

– 25 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

4. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The Group recorded a net loss of HK$1,931,800 for the year ended 31 March 2006 and had net current liabilities and deficiency in assets at the balance sheet date of HK$4,243,140 and HK$3,711,000, respectively. The net current liabilities of the Group mainly comprised of the amount due to Mr. Liu Ka Lim (“Mr. Liu”), a substantial beneficial owner and director of the Company, amounted to HK$4,362,737 as at 31 March 2006. The Group largely finances day-to-day working capital requirements using funds advanced from Mr. Liu.

As disclosed in note 28 to the financial statements, subsequent to the balance sheet date, the Company’s substantial shareholders, Link Wise Investments Limited (“Link Wise”) and Mr. Leong Sai Cheong, Joe, entered into a share purchase agreement with an independent buyer (the “Share Purchase Agreement”) in respect of approximately 73.3% of the Company’s shares held by the substantial shareholders (the “Sale Shares”). Link Wise is indirectly wholly owned by Mr. Liu, director of the Company. Notwithstanding that, the financial statements have been prepared on the assumption that the Group will continue to operate as a going concern for the foreseeable future.

In order to improve the financial position, liquidity and cash flow position of the Group, the following measures/arrangement have been implemented:

(a) Pursuant to the Share Purchase Agreement as further disclosed in note 28 to the financial statements, amount up to HK$4,372,097 due to Mr. Liu will be waived upon the completion of the Share Purchase Agreement;
(b) The Directors have been informed by Mr. Liu, that Mr. Liu will continue to support the operation of the Group;
(c) The Directors have been taking ongoing action to tighten cost controls over various general and administrative expenses, including the strict monitoring of the Group’s accounts receivable and payable.

In the opinion of the Directors, in light of the ongoing support from Mr. Liu and the various measures/arrangements implemented to date, and together with the expected results of the completion of Share Purchase Agreement, the Group will have sufficient working capital for its current requirements. Accordingly, the Directors are satisfied that it is appropriate to prepare the financial statements on a going concern basis, notwithstanding the Group’s financial position and tight liquidity as at 31 March 2006.

Should the Group be unable to continue as a going concern, adjustment would have to be made in the financial statements to reduce the values of the assets to their recoverable amounts, to provide for any further liabilities which might arise and to reclassify non-current asset and liabilities as current assets and liabilities, respectively. The consequential effects of these potential adjustments may have significant effect on the loss of the Group for the year and the net assets of the Group as at 31 March 2006.

5. SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements have been prepared on the historical cost basis.

The consolidated financial statements have been prepared in accordance with HKFRSs. In addition, the consolidated financial statements include applicable disclosures required by the Rules Governing the Listing of Securities on the Growth Enterprise Market of The Stock Exchange (the “GEM Listing Rules”) and by the Hong Kong Companies Ordinance.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries.

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.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with those used by other members of the Group.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

– 26 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Property, plant and equipment

Property, plant and equipment are stated at cost less subsequent accumulated depreciation and accumulated impairment losses.

Depreciation is provided to write off the cost of items of property, plant and equipment over their estimated useful lives and after taking into account their estimated residual value, using the straight-line method, at the following rates per annum:

Computer equipment	30%
Office equipment	20%
Furniture and fixtures	20%

Any revaluation increase arising on the revaluation of property, plant and equipment is credited to the 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 net carrying amount arising on revaluation of an asset is dealt with as an expense to the extent that it exceeds the balance, if any, on the revaluation reserve relating to a previous revaluation of that asset. On the subsequent derecognition of a revalued asset, the attributable revaluation surplus is transferred to retained profits.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the income statement in the year in which the item is derecognised.

Financial instruments

Financial assets and financial liabilities are recognised on the balance sheet when the Group becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

Financial assets

The Group’s financial assets are classified into loans and receivables. All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace. The accounting policies adopted in respect of each category of financial assets are set out below.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. At each balance sheet date subsequent to initial recognition, loans and receivables including trade and other receivables and bank balances are carried at amortised cost using the effective interest method, less any identified impairment losses. An impairment loss is recognised in profit or loss when there is objective evidence that the asset is impaired, and is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the original effective interest rate. Impairment losses are reversed in subsequent periods when an increase in the asset’s recoverable amount can be related objectively to an event occurring after the impairment was recognised, subject to a restriction that the carrying amount of the asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

– 27 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Financial liabilities and equity

Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.

An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. The accounting policies adopted in respect of financial liabilities and equity instruments are set out below.

Financial liabilities

Financial liabilities including trade and other payables and amount due to a director are subsequently measured at amortised cost, using the effective interest rate method.

Equity instruments

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue

costs.

Derivative financial instruments

Derivatives financial instruments of the Group do not qualify for hedge accounting thus they are deemed as financial assets held for trading or financial liabilities held for trading. Changes in fair value of such derivative are recognised directly in the income statement.

Impairment losses

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. An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a revalued amount under another standard, in which case the impairment loss is treated as a 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 relevant 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.

Revenue recognition

Services incomes are recognised when services are rendered, on an accrual basis or where condition attached to the relevant agreements and mandates is in satisfaction of the relevant condition.

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

Provisions

Provisions are recognised when the Group has a present obligation as a result of a past event, and it is probable that the Group will be required to settle that obligation. Provisions are measured at the directors’ best estimate of the expenditure required to settle the obligation at the balance sheet date, and are discounted to present value where the effect is material.

– 28 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Taxation

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

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’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 recognised on differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from 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 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 profits 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, based on tax rates that have been enacted or substantially enacted by the balance sheet date. Deferred tax is charged or credited to profit or loss, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Leasing

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 lessees. All leases other than finance leases are classified as operating leases.

Rentals payable under operating leases are charged to the income statement on a straight line basis over the term of the relevant leases. Benefit received and receivable as an incentive to enter into an operating lease are also spread on a straight-line basis over the lease term.

Retirement benefit scheme

Payments to the Mandatory Provident Fund Scheme (“MPF Scheme”) and state-managed retirement benefit schemes are charged as an expense as they fall due.

Borrowing costs

All borrowing costs are recognised in profit or loss in the period in which they are incurred.

Foreign currencies

Transactions in currencies other than the functional currency of that entity (“foreign currencies”) are recorded in its functional currency (i.e. the currency of the primary economic environment in which the entity operates) at the rates of exchanges prevailing on the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

– 29 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are included in profit or loss for the period. Exchange difference arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period except for difference arising on the retranslation of non-monetary items in respect of which gain and losses are recognised directly in equity. For such non-monetary items, any exchange component of that gain or loss is also recognised directly in equity.

For the purposes of presenting the consolidated financial statements, the assets and liabilities of the Group’s foreign operations are translated into Hong Kong dollars at the rate of exchange prevailing at the balance sheet date, and their income and expenses are translated at the average exchange rates for the year, unless exchange rates fluctuate significantly during the period, in which case, the exchange rates prevailing at the dates of transactions are used. Exchange differences arising, if any, are recognised as a separate component of equity (the translation reserve). Such exchange differences are recognised in profit or loss in the period in which the foreign operation is disposed of.

6. KEY SOURCES OF ESTIMATION UNCERTAINTY

In the process of applying the Group’s accounting policies described in note 5, management makes various estimations based on past experiences, expectations of the future and other information. The key source of estimation uncertainty and the judgement that may significantly affect the amounts recognised in the financial statements are disclosed below:

Income taxes

The Group is subject to income taxes in Hong Kong. Recognition of deferred tax assets, which principally related to tax losses, depends on the management’s expectation of future taxable profit that will be available against which tax losses can be utilised. The outcome of their actual utilisation may be different.

7. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group’s major financial instruments include trade and other receivables, cash and bank balances, accruals and other payables and amount due to a director. Details of these financial instruments are disclosed in respective notes. The risks associated with these financial instruments and the policies on how to mitigate these risks are set out below. The management manages and monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner.

Credit risk

The Group’s maximum exposure to credit risk in the event of the counterparties failure to perform their obligations as at 31 March 2006 is the carrying amount of trade and other receivables, as stated in the consolidated balance sheet. The Group reviews the recoverable amount of each individual debt at each balance sheet date to ensure that adequate impairment losses are made for irrecoverable amounts. In this regard, the Directors consider that the Group’s credit risk is significantly reduced.

The credit risk on liquid funds is limited because the counterparties are banks with good reputation.

– 30 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

8. REVENUE AND SEGMENT INFORMATION

Revenue represents the net amounts received and receivable from services provided by the Group to outside customers.

Segment information is presented by way of two segment formats: (i) on a primary segment reporting basis, by business segment; and (ii) on a secondary segment reporting basis, by geographical segment.

The Group’s operating businesses are structured and managed separately, according to the nature of their operations and services they provide. Each of the Group’s business segments represents a strategic business unit that offers services which are subject to risks and returns that are different from those of the other business segments. The Group had only one business segment for the two years ended 31 March 2006 and 31 March 2005 which were business consultancy service segment. The business consultancy services segment provides services to assist clients on various business or management issues.

In determining the Group’s geographical segments, turnover is attributed to the segments based on the location of the customers, and assets are attributed to the segments based on the location of the assets.

Geographical segments

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

Turnover – external Other segment information: Segment assets Capital expenditure	Hong 2006 HK$ 2,057,000	Kong 2005 HK$ 390,000	China’s Mainland 2006 2005 HK$ HK$ 300,000 526,054	China’s Mainland 2006 2005 HK$ HK$ 300,000 526,054	Consolidated 2006 2005 HK$ HK$ 2,357,000 916,054	Consolidated 2006 2005 HK$ HK$ 2,357,000 916,054
	1,291,081	1,392,007	–	–	1,291,081	1,392,007
	13,240	25,362	–	–	13,240	25,362

9. FINANCE COSTS

Interest on: Amount due to a director (note) Unsecured bank overdrafts	2006 HK$ – – –	2005 HK$ – 2
		2

Note: The amount due to a director is unsecured and carries interest at 1.5% per annum. However, interests were waived by the director for both years.

– 31 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

10. LOSS BEFORE TAX

Loss before tax has been arrived at after charging (crediting): Directors’ emoluments (Note 11) Staff costs* Retirement benefit scheme contributions, excluding directors Total employee benefits expense including those of directors Depreciation for property, plant and equipment Bad debts written off Auditors’ remuneration Loss on disposal of property, plant and equipment Interest income	2006 HK$ 836,325 1,184,419 53,405 2,074,149 214,658 – 250,000 – (8)	2005 HK$ 419,627 1,198,524 54,306
		1,672,457 212,375 10,004 250,000 2,050 (26)

Directors’ emoluments of HK$535,765 (2005: HK$119,322) has been recognised during the year, which has been included in direct costs.
** None (2005: HK$50,000) of the staff costs has been recognised during the year, which has been included in direct costs.

11. DIRECTORS’ EMOLUMENTS

The emoluments paid or payable to each of the eight (2005: seven) directors were as follows:

Directors’ fees HK$ Mr. Liu Ka Lim – Mr. Kan Siu Lun – Mr. Sun Wai Tat, Victor – Mr. Pong Wai Yan, Louis (Note 1) – Miss Lam So Ying (Note 2) – Miss Sy Wai Shuen (Note 2) – Mr. Shum Kai Wing 60,000 Mr. Wong Yuk Man, Edmand 60,000 Mr. Chow Cheuk Lap 60,000 Total emoluments 180,000	2006 Salaries and other benefits Retirement benefits scheme contributions HK$ HK$ – – 339,000 – 221,765 10,560 – – 80,000 5,000 – – – – – – – – 640,765 15,560	Total Directors’ fees HK$ HK$ – – 339,000 – 232,325 – – – 85,000 – – – 60,000 60,000 60,000 60,000 60,000 35,833 836,325 155,833	2005 Salaries and other benefits Retirement benefits scheme contributions HK$ HK$ 24,198 – 1,000 1,000 228,697 8,899 – – – – – – – – – – – – 253,895 9,899	Total HK$ 24,198 2,000 237,596 – – – 60,000 60,000 35,833
				419,627

Notes:

Mr. Pong Wai Yan, Louis resigned on 1 September 2004.
Miss Lam So Ying and Miss Sy Wai Shuen were appointed on 21 December 2005.

During the year, no share option was granted to the Directors.

– 32 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

12. EMPLOYEES’ EMOLUMENTS

Of the five individuals with the highest emoluments in the Group, two (2005: one) were directors of the Company whose emoluments are included in the disclosures in note 11 above. The remaining three (2005: four) individuals were as follows:

Salaries and other benefits Retirement benefit scheme contributions Their emoluments were within the following bands: HK$ nil to HK$1,000,000	2006 HK$ 655,000 29,750 684,750 2006 Number of employees 3	2005 HK$ 710,833 29,700
		740,533

		2005 Number of employees 4

During the two years ended 31 March 2006 and 31 March 2005, no emoluments were paid by the Group to any of the directors as an inducement to join or upon joining the Group or as compensation for loss of office.

13. INCOME TAX EXPENSE

No provision for Hong Kong Profits Tax has been made as the Group had no assessable profits arising in Hong Kong for both years ended 31 March 2006 and 31 March 2005.

The tax charge for the year can be reconciled to the loss before tax as follows:

Loss before tax Tax at Hong Kong Profits Tax rate Tax effect of expenses not deductible for tax purpose Tax effect of income not taxable for tax purpose Tax effect of tax losses not recognised Tax expense and effective tax rate for the year	2006 HK$ % (1,931,800)	2006 HK$ % (1,931,800)	2005 HK$ % (3,120,815)	2005 HK$ % (3,120,815)
	(338,065) 54,938 (8,863) 291,990	(17.5) 2.8 (0.4) 15.1	(546,143) 52,953 (5) 493,195	(17.5) 1.7 – 15.8
	–	–	–	–

Details of deferred tax are set out in note 23.

14. DIVIDEND

No dividend was paid or proposed during the year ended 31 March 2006, nor has any dividend been proposed since the balance sheet date (2005: nil).

– 33 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

15. LOSS PER SHARE

The calculation of the basic loss per share attributable to the ordinary equity holders of the Company is based on the following data:

Loss for the year and loss for the purposes of the basic loss per share Weighted average number of ordinary shares for the purposes of basic loss per share	2006 HK$ 1,931,800 2006 Number of shares 800,000,000	2005 HK$ 3,120,815

		2005 Number of shares 800,000,000

Diluted loss per share figures have not been presented as the Company did not have any potential ordinary shares for both years.

16. PROPERTY, PLANT AND EQUIPMENT

Computer equipment HK$ 152,277 16,500 (6,540)	Office equipment HK$ 134,088 8,862 –	Furniture and fixtures HK$ 676,653 – –	Total HK$ 963,018 25,362 (6,540)
162,237 13,240 175,477 5,913 48,796 (490) 54,219 50,738 104,957	142,950 – 142,950 2,397 28,248 – 30,645 28,590 59,235	676,653 – 676,653 28,087 135,331 – 163,418 135,330 298,748	981,840 13,240
			995,080
			36,397 212,375 (490)
			248,282 214,658
			462,940
70,520 108,018	83,715 112,305	377,905 513,235	532,140

			733,558

– 34 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

17. INTERESTS IN SUBSIDIARIES

Details of the Company’s subsidiaries at 31 March 2006 are as follows:

			Issued and
			fully paid up	Proportion of
	Place of	Form of legal	ordinary	ownership interest			Principal
Name of subsidiary	incorporation	entity	share capital	and voting power		held	activities
				Directly	Indirectly
				%		%
Galileo Asset	Hong Kong	Limited	HK$10,000	–		100	Provision of
Management Limited		company					financial advisory
							services for non
							Hong Kong
							markets
Galileo Asset	The Cayman	Limited	US$10,000	–		100	Inactive
Management Group	Islands	company
Limited
Galileo Capital	Hong Kong	Limited	HK$15,500,000	–		100	Provision of
Limited		company					business
							information,
							business
							brokerage and
							financial advisory
							services in Hong
							Kong
Golden Harvest	Hong Kong	Limited	HK$2	–		100	Provision of
Trading Limited		company					administrative
							services for the
							Group in Hong
							Kong
Galileo Capital Group	British Virgin	Limited	US$10,000	100		–	Investment
(BVI) Limited	Islands	company					holding in Hong
							Kong
Galileo Financial	Hong Kong	Limited	HK$10,000	–		100	Inactive
Services Limited		company
Wealth Supply	British Virgin	Limited	US$1	–		100	Inactive
International Limited	Islands	company

None of the subsidiaries had any debt capital outstanding at the end of the year or at any time during the year.

18. TRADE RECEIVABLES

The general credit terms is seven days from the date of issue of payment invoice and the Group also offers extended credit terms to certain customers with reference to their respective financial background, reputation and credit worthiness.

At 31 March 2006, all trade receivables, net of allowances, were outstanding for less than 90 days (2005: nil).

The Directors consider that the carrying amount of the Group’s trade receivables approximates their fair value.

– 35 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

19. DUE TO A DIRECTOR

				2006	2005
				HK$	HK$
Mr.	Liu	Ka	Lim	4,362,737	2,795,584

The amount due to a director is unsecured and carries interest at 1.5% per annum. However, interests were waived by the director for both years. Pursuant to the Share Purchase Agreement as disclosed in note 28 to the financial statements, amount up to HK$4,372,097 will be waived upon the completion of the share purchase transaction. Completion is subject to satisfaction and/or waiver of the conditions contained in the Share Purchase Agreement. Accordingly, such waiver of loan may or may not occur.

As at 31 March 2005, the balance was classified as non-current liabilities.

The Directors consider that the carrying amount of amount due to a director approximates its fair value.

20. SHARE CAPITAL OF THE COMPANY

Ordinary shares of HK$0.02 each Authorised: At 1 April 2004, 31 March 2005 and 31 March 2006 Issued and fully paid: At 1 April 2004, 31 March 2005 and 31 March 2006	Number of shares 6,000,000,000 800,000,000	Amount HK$ 120,000,000

		16,000,000

21. SHARE OPTIONS

The Company operates a share option scheme (the “Scheme”) of which the eligible participants (including any employee and executive director of the Company or any of its subsidiaries, who has full time employment with the Company or any such subsidiary at the time) may be granted an option to subscribe for shares of the Company. The Scheme will remain in force for a period of 10 years from 29 November 2000.

The maximum number of shares in respect of which share options may be granted under the Scheme may not exceed, in nominal amount, 30% of the issued share capital of the Company. The maximum number of shares issuable under share options to each eligible participant in the Scheme is limited to 25% of the maximum aggregate number of shares for the time being issued and which may fall to be issued under the Scheme.

The offer of a grant of share options may be accepted within 21 days inclusive of, and from the date of the offer. The exercise period of the share options granted is determined by the directors, and commences after a certain vesting period and ends on a date which is not later than 10 years from the respective date when the share options are granted, subject to the provisions for any terminations thereof.

In respect of the share options to be granted after the listing of the Company’s shares on the GEM of the Stock Exchange, the subscription price will be a price determined by the directors, but may not be less than the highest of the closing price of the shares on the GEM of the Stock Exchange on the date of grant of the particular option or the average of the closing prices of the shares on the GEM of the Stock Exchange for the five trading days immediately preceding the date of the offer of grant of the particular option or the nominal value of a share.

In respect of the share options granted prior to the listing of the Company’s shares on the GEM of the Stock Exchange (the “Pre-IPO Share Options”), the subscription price of the Pre-IPO Share Options should not be less than the nominal value of a share.

– 36 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

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

There was no outstanding share option as at 31 March 2006 and 31 March 2005.

The Directors consider that the Scheme does not comply with certain supplementary guidance published by the Stock Exchange concerning Rule 23.03(13) of the GEM Listing Rules and the note immediately followed the rule. Since there are other elements of the Scheme currently being studied by the Directors and would most likely be amended in the near future, the Directors decide to amend the Scheme in an Extraordinary General Meeting as soon as such studies are finalized.

No share option was granted or exercised during the years ended 31 March 2006 and 31 March 2005.

22. RESERVE OF THE COMPANY

Share premium HK$ 8,095,956	Contributed surplus Accumulated losses HK$ HK$ 367,874 (24,448,209)	Contributed surplus Accumulated losses HK$ HK$ 367,874 (24,448,209)	Total HK$ (15,984,379
– – 8,095,956 – –	– – 367,874 – –	(2,893,671) (2,893,671) (27,341,880) (1,910,350) (1,910,350)	(2,893,671
			(2,893,671
			(18,878,050
			(1,910,350
			(1,910,350
8,095,956	367,874	(29,252,230)	(20,788,400

Note: The contributed surplus of the Company represents the difference between the then consolidated net assets of the acquired subsidiaries over the nominal value of the share capital of the Company issued in exchange therefor.

23. DEFERRED TAX

The following are the major deferred tax liabilities/assets recognised by the Group, and the movements thereon, during the current and prior years.

At 1 April 2004 (Charge) credit to the income statement for the year At 1 April 2005 (Charge) credit to the income statement for the year At 31 March 2006	Accelerated tax depreciation HK$ (80,211) (10,980)	Tax losses HK$ 80,211 10,980	Total HK$ – –
	(91,191) 6,705	91,191 (6,705)	– –
	(84,486)	84,486	–

– 37 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

The following is the analysis of the deferred tax balances (after offset) for balance sheet purposes:

Deferred tax liabilities Deferred tax assets	2006 HK$ (84,486) 84,486 –	2005 HK$ (91,191) 91,191
		–

At the balance sheet date, the Group has unused tax losses of approximately HK$23,270,000 (2005: HK$21,185,000) available for offset against future profits. A deferred tax asset has been recognised in respect of approximately HK$483,000 (2005: HK$521,000) of such losses. No deferred tax asset has been recognised in respect of the remaining tax losses of approximately HK$22,787,000 (2005: HK$20,664,000) due to the unpredictability of future profits streams. All losses may be carried forward indefinitely subject to the approvals of tax authorities in respective jurisdictions.

24. RELATED PARTY TRANSACTIONS

Transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are disclosed below.

Compensation of key management personnel

The remuneration of directors and key executives as key management of the Group during the year was as follows:

Short-term benefits Post-employment benefits	2006 HK$ 980,765 22,560 1,003,325	2005 HK$ 480,353 20,898
		501,251

The remuneration of directors and key executives is determined, in consultation with the Remuneration Committee, by the Directors having regard to the performance of individuals and market trends.

25. OPERATING LEASE COMMITMENTS

The Group made approximately HK$635,144 (2005: HK$611,844) and HK$168,000 (2005: HK$120,000) minimum lease payments under operating leases during the year in respect of office premises and motor vehicle respectively.

At the balance sheet date, the Group had commitments for future minimum lease payments in respect of office premises and motor vehicle under non-cancellable operating leases which fall due as follows:

Within one year In the second to fifth year inclusive	2006 HK$ 495,720 – 495,720	2005 HK$ 684,864 495,720
		1,180,584

Leases are negotiated for an average term of three years and rentals are fixed throughout the lease period.

– 38 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

26. CONTINGENT LIABILITIES

On 12 November 2004, Galileo Asset Management Limited (“GAML”), a wholly owned subsidiary of the Company, entered into a consultancy agreement (the “Consultancy Agreement”) with a client (the “Client”). On 7 January 2006, the Client lodged a claim with GAML for RMB800,000.

In the opinion of an independent legal advisor, the Client had been in breach of the Consultancy Agreement as it was repeatedly in default of making payment as agreed under the Consultancy Agreement. In view of the above, it is advised that GAML is not obliged to return to the Client. Accordingly, the Directors consider the RMB800,000 to be non-refundable upfront fee payable under the Consultancy Agreement, and no liability has been assumed and accordingly, amount of RMB800,000 has not been accounted for in the income statement.

The Directors consider that the outcome of the claim referred above will not have a material adverse effect on the financial position of the Group.

27. RETIREMENT BENEFITS SCHEME

The Group operates a Mandatory Provident Fund Scheme (the “Scheme”) for all its qualifying employees. The assets of the Scheme are held separately from those of the Group, in funds under the control of trustees. The Group contributes the lower of 5% of the relevant payroll costs or HK$1,000 for each of its employees to the Scheme per month, which contribution is matched by the employees.

28. POST BALANCE SHEET EVENT

Link Wise Investments Limited and Mr. Leong Sai Cheong, Joe, the substantial shareholders of the Company (the “Vendors”), entered into a share purchase agreement on 24 May 2006 (the “Share Purchase Agreement”) with an independent third party (the “Offeror”) to which the Vendors have conditionally agreed to sell, and the Offeror has conditionally agreed to purchase 586,450,000 shares in aggregate (the “Sale Shares”) at a total consideration of HK$14,661,250. The Sale Shares representing approximately 73.3% of the existing issued share capital of the Company. Completion is subject to satisfaction and/or waiver of a number of conditions precedent. Details of the Share Purchase Agreement have been announced on 29 May 2006.

– 39 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

3. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2006

The following are the unaudited consolidated financial statements of the Group extracted from the half-yearly report of the Company for the six months ended 30 September 2006.

CONDENSED CONSOLIDATED INCOME STATEMENT

For the three months and six months ended 30 September 2006

For the three months ended 30 September 2006 2005 HK$ HK$ Unaudited Unaudited 170,000 30,000 (10,500) (15,000)	For the three months ended 30 September 2006 2005 HK$ HK$ Unaudited Unaudited 170,000 30,000 (10,500) (15,000)	For the six months ended 30 September 2006 2005 HK$ HK$ Unaudited Unaudited 450,000 730,000 (69,682) (393,274) 380,318 336,726 4,792,741 28 (2,358,877) (1,725,685) (847) – 2,813,335 (1,388,931) – – 2,813,335 (1,388,931) – – HK0.34 cent HK(0.17) cent	For the six months ended 30 September 2006 2005 HK$ HK$ Unaudited Unaudited 450,000 730,000 (69,682) (393,274) 380,318 336,726 4,792,741 28 (2,358,877) (1,725,685) (847) – 2,813,335 (1,388,931) – – 2,813,335 (1,388,931) – – HK0.34 cent HK(0.17) cent
159,500 4,792,737 (1,526,801) (846) 3,424,590 –	15,000 16 (891,843) – (876,827) –	380,318 4,792,741 (2,358,877) (847) 2,813,335 –	336,726 28 (1,725,685 –
			(1,388,931 –
3,424,590 – HK0.41 cent	(876,827) – HK(0.11) cent	2,813,335 – HK0.34 cent

– 40 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

CONDENSED CONSOLIDATED BALANCE SHEET

At at 30 September 2006

Notes Non-current asset Property, plant and equipment 8 Current assets Trade receivables 9 Prepayments, deposits and other receivables Bank balances and cash Current liabilities Accruals and other payables Obligation under finance lease Due to a director 10 Net current assets (liabilities) Capital and reserves Share Capital 11 Reserves Equity attributable to equity holders of the parent Non-current liability Obligation under finance lease	At 30 September 2006 HK$ Unaudited 516,673	At 31 March 2006 HK$ Audited 532,140 311,000 117,120 330,821 758,941 639,344 – 4,362,737 5,002,081 (4,243,140) (3,711,000) 16,000,000 (19,711,000) (3,711,000) – (3,711,000)
	20,000 117,120 11,420,300 11,557,420 1,352,509 7,810 788,576 2,148,895 9,408,525	311,000 117,120 330,821
		758,941
		639,344 – 4,362,737
		5,002,081
		(4,243,140
	9,925,198
	19,200,000 (9,302,785) 9,897,215 27,983	16,000,000 (19,711,000
		(3,711,000 –
	9,925,198

– 41 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 September 2006

Share capital HK$ Unaudited 16,000,000 –	Share premium HK$ Unaudited 8,095,956 –	Merger deficit Accumulated losses HK$ HK$ Unaudited Unaudited (119,998) (25,755,158) – (1,388,931)	Merger deficit Accumulated losses HK$ HK$ Unaudited Unaudited (119,998) (25,755,158) – (1,388,931)	Total HK$ Unaudited (1,779,200) (1,388,931) (3,168,131) (3,711,000) 11,200,000 (405,120) 2,813,335 9,897,215
16,000,000 16,000,000 3,200,000 – –	8,095,956 8,095,956 8,000,000 (405,120) –	(119,998) (119,998) – – –	(27,144,089) (27,686,958) – – 2,813,335	(3,168,131
				(3,711,000 11,200,000 (405,120 2,813,335
19,200,000 Note 1	15,690,836 Note 1	(119,998) Note 2	(24,873,623)

Note 1: Please refer to the note 11 of share capital for details of the issue of a total number of 160,000,000 ordinary shares of HK$0.02 each in the Company during the period.

Note 2: The merger deficit of the Group represents the difference between the nominal value of the shares of acquired subsidiaries over the nominal value of the share capital of the Company issued in exchange therefor.

– 42 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

For the six months ended 30 September 2006

Net cash used in operating activities Net cash used in investing activities Net cash from financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period Analysis of the balances of cash and cash equivalents Bank balances and cash	For the six months ended 30 September 2006 2005 HK$ HK$ Unaudited Unaudited (1,047,746) (1,308,646) (57,130) (5,260) 12,194,355 1,055,865 11,089,479 (258,041) 330,821 541,295 11,420,300 283,254 11,420,300 283,254

– 43 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL RESULTS

1. Basis of preparation

The interim consolidated financial statements have been prepared on the historical cost basis except for certain property, plant and equipment and financial instruments, which are measured at fair values.

The interim consolidated results of the Group for the six months ended 30 September 2006 are unaudited but have been reviewed by the Audit Committee of the Company.

The unaudited interim consolidated financial statements have been prepared in accordance with the Hong Kong Accounting Standard 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”) and applicable disclosure requirements of the GEM Listing Rules. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended 31 March 2006.

The HKICPA has issued a number of new and revised Hong Kong Financial Reporting Standards. For those which are effective for accounting periods beginning on 1 January 2006, the adoption has no significant impact on the Group’s results and financial position; and for those which are not yet effective, the Group is in the process of assessing their impact on the Group’s results and financial position.

The accounting policies and methods of computation used in the preparation of the half-yearly consolidated financial statements are consistent with those used in the consolidated financial statements of the Company for the year ended 31 March 2006.

2. Revenue and segment information

Revenue represents the net amounts received and receivable from services provided by the Group to outside customers.

The Group’s operating businesses are structured and managed separately, according to the nature of their operations and services they provide. Each of the Group’s business segments represents a strategic business unit that offers services which are subject to risks and returns that are different from those of the other business segments. The Group had only one business segment for both periods ended 30 September 2006 and 30 September 2005 which were business consultancy service segment. The business consultancy service segment provides services to assist clients on various business or management issues.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Geographical segments

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

Hong 2006 HK$ Turnover – external 450,000 Other segment information: Segment assets 12,074,093 Capital expenditure 96,177 Other income Amount waived by a former director of the Company (Note) Exchange gains Bank interest income	Kong China’s Mainland Total for the six months ended 30 September 2005 2006 2005 2006 2005 HK$ HK$ HK$ HK$ HK$ 430,000 – 300,000 450,000 730,000 1,042,617 – – 12,074,093 1,042,617 5,260 – – 96,177 5,260 For the three months ended 30 September For the six months ended 30 September 2006 2005 2006 2005 HK$ HK$ HK$ HK$ Unaudited Unaudited Unaudited Unaudited 4,792,737 – 4,792,737 – – 15 – 21 – 1 4 7 4,792,737 16 4,792,741 28	Kong China’s Mainland Total for the six months ended 30 September 2005 2006 2005 2006 2005 HK$ HK$ HK$ HK$ HK$ 430,000 – 300,000 450,000 730,000 1,042,617 – – 12,074,093 1,042,617 5,260 – – 96,177 5,260 For the three months ended 30 September For the six months ended 30 September 2006 2005 2006 2005 HK$ HK$ HK$ HK$ Unaudited Unaudited Unaudited Unaudited 4,792,737 – 4,792,737 – – 15 – 21 – 1 4 7 4,792,737 16 4,792,741 28
		28

3. Other income

Note:

On 24 May 2006, Link Wise Investments Limited and Mr. Leong Sai Cheong, Joe, the substantial shareholders of the Company (the “Vendors”), entered into a share purchase agreement (the “Share Purchase Agreement”) with New Brilliant Investments Limited (the “Offeror”) to which the Vendors have conditionally agreed to sell, and the Offeror has conditionally agreed to purchase 586,450,000 shares in aggregate (the “Sale Shares”) at a total consideration of HK$14,661,250. The Sale Shares represented approximately 73.3% of the entire issued share capital of the Company as at the date hereof. All the conditions of the Share Purchase Agreement were fulfilled on 11 July 2006 and completion took place on the same date. Upon the completion, Mr. Liu Ka Lim, a former director and substantial shareholder of the Company, waived his rights and interests in the debts, liabilities and indebtedness of up to HK$4,792,737 owed to him by the Group.

4. Depreciation

Profit (Loss) before tax for the three months and six months ended 30 September 2006 is arrived at after charging depreciation of HK$57,503 and HK$111,644 respectively (three months and six months ended 30 September 2005: HK$53,379 and HK$106,575 respectively).

5. Income tax expense

No provision for Hong Kong Profits Tax has been made as the Group had no assessable profits arising in Hong Kong for the three months and six months ended 30 September 2006 and the corresponding period in 2005.

As at 30 September 2006, there were no significant deferred tax liabilities for which a recognition or provision would have been required (31 March 2006: Nil).

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

6. Dividend

The Directors do not recommend the payment of an interim dividend for the three months and six months ended 30 September 2006 (three months and six months ended 30 September 2005: Nil).

7. Earnings (Loss) per share

The calculation of basic earnings (loss) per share attributable to the ordinary equity holders of the Company is based on the following data:

Profit (Loss) for the period and profit (loss) for the purpose of determining basic earnings (loss) per share Weighted average number of ordinary shares for the purpose of determining basic earnings (loss) per share	For the three months ended 30 September 2006 2005 HK$ HK$ 3,424,590 (876,827) Number of shares Number of shares 831,304,348 800,000,000	For the six months ended 30 September 2006 2005 HK$ HK$ 2,813,335 (1,388,931) Number of shares Number of shares 815,737,705 800,000,000

Diluted earnings (loss) per share figures have not been presented as the Company did not have any potential ordinary shares for both periods.

8. Property, plant and equipment

During the six months ended 30 September 2006, the Group spent HK$96,177 on plant and equipment.

9. Trade receivables

The general credit terms is seven days from the date of issue of payment invoices and the Group also offers extended credit terms to certain customers with reference to their respective financial background, reputation and credit worthiness.

At 30 September 2006, all trade receivables, net of allowances, were outstanding for less than 90 days (31 March 2006: HK$311,000).

The Directors consider that the carrying amount of the Group’s trade receivables approximate their fair value.

10. Due to a director

The current period balance due to a director, Mr. Chui Bing Sun, is unsecured, carries interest at 2.5% per annum and repayable on demand. However, interest for the period ended 30 September 2006 was waived by the director.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

11. Share capital

Ordinary shares of HK$0.02 each Authorised: At 31 March 2006 and 30 September 2006 Issued and fully paid: At 31 March 2006 Issue of shares At 30 September 2006	Number of shares 6,000,000,000	Amount HK$ 120,000,000

	800,000,000 160,000,000	16,000,000 3,200,000
	960,000,000	19,200,000

The Company entered into a subscription agreement (the “Subscription Agreement”) with New Brilliant Investments Limited (“New Brilliant”) on 30 August 2006. Pursuant to the Subscription Agreements, a total of 160,000,000 ordinary shares with par value of HK$0.02 were issued at a subscription price of HK$0.07 per subscription share following the completion of the placing agreement for the placing of 160,000,000 existing shares owned by New Brilliant. The issued share capital of the Company was thus increased from HK$16,000,000 to HK$19,200,000. The excess of the subscription proceeds over the nominal value of share capital issued was credited as share premium. The Company intended to apply the net subscription proceeds of approximately HK$10.8 million for general working capital of the Group.

12. Related party transactions

Other income

Details of the amount waived by a former director of the Company are disclosed in note 3.

Compensation of key management personnel

The remuneration of directors and key executives as key management of the Group during the period was as follows:

Short-term benefits Post-employment benefits	For the three months ended 30 September 2006 2005 HK$ HK$ 344,193 160,386 6,347 5,637 350,540 166,023	For the six months ended 30 September 2006 2005 HK$ HK$ 483,875 635,661 11,165 12,270 495,040 647,931	For the six months ended 30 September 2006 2005 HK$ HK$ 483,875 635,661 11,165 12,270 495,040 647,931
			647,931

The remuneration of directors and key executives is determined, in consultation with the Remuneration Committee, by the Directors having regard to the performance of individuals and market trends.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Accruals and other payables

Included in the accruals and other payable of HK$185,000 due to Mr. Liu Ka Lim (“Mr. Liu”) is unsecured, carries interest at 1.5% per annum and repayable on demand. However, interest for the six months ended 30 September 2006 is waived by Mr. Liu who was a former director of the Company.

Due to a director

Details of the amount due to a director are disclosed in note 10.

13. Post balance sheet event

On 6 November 2006, Galileo Financial Services Limited (“Galileo Financial”), a wholly owned subsidiary of the Company, and independent parties (the “Vendor”) entered into: (a) a sale and purchase agreement (the “Sale and Purchase Agreement”), pursuant to which Galileo Financial has conditionally agreed to purchase and the Vendors have conditionally agreed to sell the entire issued share capital of Cheung Shing Funeral Limited (“Cheung Shing”) and all the shareholders’ loan owed by Cheung Shing to the Vendors for a total consideration of HK$5.1 million; and (b) a property agreement (the “Property Agreement”), pursuant to which Galileo Financial has conditionally agreed to purchase and the Vendors have conditionally agreed to sell the entire issued share capital of Grand Sea Limited (“Grand Sea”) and all the shareholders’ loan owed by Grand Sea to the Vendors for a total consideration of HK$6.4 million. Completion is subject to satisfaction and/or waiver of a number of conditions precedent. Details of the Sale and Purchase Agreement and Property Agreement were announced on 9 November 2006.

Cheung Shing is a licensed undertaker of burials in Hong Kong and is principally engaged in the provision of funeral services in Hong Kong.

Grand Sea has not carried on any business or operation save for the holding of the three properties owned by Grand Sea (the “Properties”) since its incorporation. Cheung Shing currently occupies the Properties for conducting its business.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

4. INDEBTEDNESS

As at the close of business on 31 October 2006, being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this circular, the Enlarged Group had borrowings amounting to HK$5,919,528, details of which are as follows:

Borrowings

The following table illustrates the Enlarged Group’s bank and other borrowings as at 31 October 2006:

Shareholders’ loan (Note i) Bank borrowings (Note ii) – secured Obligation under finance leases	The Group HK$ – – 35,142 35,142	Cheung Shing HK$ 1,768,418 – 126,390 1,894,808	Grand Sea HK$ 2,315,633 1,673,945 – 3,989,578	Total HK$ 4,084,051 1,673,945 161,532
				5,919,528

Note:

(i) As at 31 October 2006, the shareholders’ loan of HK$4,084,051 is interest-free, unsecured and has no fixed terms of repayment. The shareholders’ loan will be eliminated upon completion of the Acquisition.
(ii) As at 31 October 2006, the bank borrowings of HK$1,673,945 are secured by pledge of Grand Sea’s investment properties and personal guarantee of all shareholders of Grand Sea. The bank borrowings will be repaid by the Vendors upon completion of the Acquisition.

Contingent liabilities

On 12 November 2004, GAML entered into a consultancy agreement (the “Consultancy Agreement”) with a client (the “Client”). On 7 January 2006, the Client lodged a claim with GAML for RMB0.8 million. In the opinion of an independent legal advisor, the Client had been in breach of the Consultancy Agreement as it was repeatedly in default of making payment as agreed under the Consultancy Agreement. In view of the above, it is advised that GAML is not obliged to return the fee to the Client. Accordingly, the Directors consider the RMB0.8 million to be non-refundable upfront fee payable under the Consultancy Agreement, and no liability has been assumed and accordingly, amount of RMB0.8 million has not been accounted for in the income statement. The Directors consider that the outcome of the claim referred above will not have a material adverse effect on the financial position of the Group.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Disclaimer

Save as disclosed above and apart from intra-group liabilities, the Enlarged Group did not have any loan capital issued and outstanding or agreed to be issued, any loan capital, bank overdrafts and liabilities under acceptances or other similar indebtedness, debentures, mortgages, charges or loans or acceptance credits or hire purchase commitments, guarantees or other material contingent liabilities as at the close of business on 31 October 2006.

No material adverse change

Save as disclosed herein, the Directors have confirmed that there has not been any material change in the indebtedness and contingent liabilities of the Enlarged Group since 31 October 2006 up to the Latest Practicable Date.

5. WORKING CAPITAL

The Directors are of the opinion that, following completion of the Acquisition, taking into account the financial resources available to the Enlarged Group, including the internally generated funds, the present available banking facilities, the proposed banking facilities to be obtained by mortgage on investment properties and the continuous financial support from the major shareholder of the Enlarged Group, and in the absence of unforeseen circumstances, the Enlarged Group will have sufficient working capital for its present requirements that is for at least the next 12 months from the date of this circular.

6. MATERIAL CHANGES

The Directors are not aware of any material adverse changes in the financial or trading position of the Group since 31 March 2006, the date to which the latest audited consolidated financial statements of the Group were made.

7. MANAGEMENT DISCUSSION AND ANALYSIS

For the year ended 31 March 2004

Financial performance

The Group recorded a turnover of approximately HK$4.3 million for the year ended 31 March 2004, representing an increase of approximately 24.7% over the previous year’s turnover of approximately HK$3.5 million. As a result of the continued cost control policy, cost of services for the year had decreased from approximately HK$2.7 million to approximately HK$2.2 million, representing a reduction of more than 20%. Administrative and general expenses likewise had shown a significant reduction of approximately 36% to nearly HK$4.1 million for the same period. For this reason, net loss attributable to the Shareholders for the year ended 31 March 2004 was approximately HK$2.4 million, representing a decrease of nearly 60% from that of the previous financial year of approximately HK$5.8 million.

– 50 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Liquidity and financial resources

As at 31 March 2004, the Group’s net tangible assets amounted to approximately HK$1.3 million and net current assets amounted to approximately HK$1.8 million. The Group had approximately HK$1.9 million cash and bank balances as at 31 March 2004, which was declined from approximately HK$4.3 million as at 31 March 2003 primarily due to further loss incurred during the year. Total current liabilities value of the Group was about HK$0.8 million as at 31 March 2004 (31 March 2003: approximately HK$0.8 million), comprised a bank overdraft of approximately HK$6,000 and accruals. In addition, the Group had a loan advance of approximately HK$1.4 million from an executive Director. The Group had neither any outstanding secured borrowings nor created any mortgages or charges on the Group’s assets. Since the Group’s assets and liabilities were mainly denominated in Hong Kong dollars, the management did not consider that the Group was significantly exposed to any material foreign currency exchange risks and thereby no related hedges were made by the Group.

Gearing ratio

The Group’s gearing ratio, being total borrowings divided by shareholders’ funds, was approximately 100% as at 31 March 2004 (31 March 2003: approximately 31.5%), such increase was due to further loss incurred during the financial year under review.

Capital structure

There was no change in the capital structure of the Company during the year.

Material acquisitions and disposals during the year

The Company disposed four of its subsidiaries, namely, Hong Kong Enterprise Exchange Limited, Hong Kong Enterprise Market Limited, Hong Kong Enterprise Equity Market Limited and Hong Kong Enterprise Asset and Equity Market Limited during the year.

Employees information

The total number of employees was 8 as at 31 March 2004 (31 March 2003: 21), and the total remuneration for the year under review was about HK$2.4 million (2003: approximately HK$2.8 million). The remuneration policy of the Group was reviewed and approved by the Board. Discretionary bonus was linked to performance of the individual employee.

Charges on assets

During the years ended 31 March 2004 and 2003, none of the Group’s assets had been charged.

Contingent liabilities

As at 31 March 2004, the Group had no contingent liabilities.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Dividend

The Directors did not recommend the payment of dividend for the year ended 31 March 2004.

Business review

In 2003, whilst Hong Kong’s deflationary economy was still undergoing structural changes, the weak demand for financial services prompted the management to assess the Group’s corporate strategy and long term business objectives. The PRC with an insatiable appetite for sophisticated financial services and investment products remained to be the market of the future. Enterprise reform was the driving force behind the demand for a variety of financing vehicles which the domestic banks were unable to satisfy. In this connection, Hong Kong had increasingly been recognised as the indispensable destination of choice for PRC companies seeking to raise funds through the capital market. At the same time, the World Trade Organisation membership had lowered entry barriers for institutional investors and international funds to take equity stakes in PRC enterprises with good potential for growth.

With a new shareholding structure and strong management team in place, the Group was able to broaden the scope and volume of its business activities. Instead of focusing mainly on mergers and acquisitions, and advisory services to small and medium enterprises, the Group had in-house expertise to offer a wider range of financial products to clients in the Greater China region. These services included industry research, due diligence of potential acquisition targets, access to funding sources through credit financing, mergers and acquisitions, corporate restructuring, asset disposal, rights issue, placing, and initial public offerings.

In order to better reflect the new identity of the Company, the Shareholders voted for the resolution to change the name of the Company to Galileo Capital Holdings Limited at an extraordinary general meeting held on 28 January 2004.

Enterprise asset and equity market place

Following the disposal of four of the Company’s subsidiaries, namely, Hong Kong Enterprise Exchange Limited, Hong Kong Enterprise Market Limited, Hong Kong Enterprise Equity Market Limited and Hong Kong Enterprise Asset and Equity Market Limited, business activities in this division had significantly reduced and this division was not considered part of the Group’s core business for the year under review.

Cost rationalisation

As a response to the continued economic doldrums during 2003, the Group had made further progress in improving the efficient usage of its financial and human resources. Cost control measures had led to a significant reduction of cost of services provided from approximately HK$2.7 million to approximately HK$2.2 million.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

For the year ended 31 March 2005

Financial performance

The Group recorded a turnover of approximately HK$0.9 million for the year ended 31 March 2005, representing a decrease of approximately 79% over the previous year’s turnover of approximately HK$4.3 million. The decrease was mainly due to the fact that almost all of the deals under negotiation required more time for completion. Many of those clients were scheduled to conclude their agreements with the Group in the next financial year.

Cost of services for the year had continued its downward trend from approximately HK$2.2 million for the year ended 31 March 2004 to approximately HK$0.2 million for the year ended 31 March 2005, representing a reduction of approximately 92%. As a result, gross profit margin for the year was approximately 81.3%, a notable improvement over approximately 50.3% achieved in the previous financial year.

Administrative and general expenses together with other operating expenses reduced by approximately 16.6% to about HK$3.9 million compared to approximately HK$4.7 million in the previous financial year.

Net loss for the year ended 31 March 2005 was approximately HK$3.1 million, representing an increase of nearly 31%. While all cost and expenditure items remained at a stable level, the higher loss recorded mainly reflected the much smaller turnover recorded for the year with the bulk of the revenue due from clients to be recognised in future financial periods when the deals were successfully concluded.

Liquidity and financial resources

As at 31 March 2005, the Group had net tangible liabilities of approximately HK$1.8 million and net current assets of approximately HK$0.3 million. The net tangible liabilities were mainly caused by the amount due to a Director had gone up from HK$1.4 million to nearly HK$2.8 million. This amount was unsecured and carried interest at 1.5% per annum which for the year under review was waived. The Group had approximately HK$0.5 million cash and bank balances as at 31 March 2005, which was a decline of more than 70% due to further loss incurred during the year.

Gearing ratio

The Group’s gearing ratio, being total borrowings divided by shareholders’ funds, was 100% as at 31 March 2005 (31 March 2004: 100%).

Capital structure

There was no change in the capital structure of the Company during the year.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Employees information

The total number of employees was 16 as at 31 March 2005 (31 March 2004: 8), and the total remuneration for the year under review was approximately HK$1.6 million (2004: approximately HK$2.4 million). The remuneration policy of the Group was reviewed and approved by the Board. Discretionary bonus was linked to performance of the individual employee.

The Group would offer options to reward employees who made significant contributions and to retain key staffs pursuant to the share option scheme of the Group.

Charges on assets

During the years ended 31 March 2005 and 2004, none of the Group’s assets had been charged.

Contingent liabilities

As at 31 March 2005, the Group had no contingent liabilities.

Dividend

The Directors did not recommend the payment of dividend for the year ended 31 March 2005.

Business review

2004 was a pivotal year for the Group as the new Shareholders and management team had taken over the running of the business. The Group moved quickly to implement an effective set of cost control measures while at the same time, took steps to ensure that existing and new client relationships did not suffer as a result of the Group’s policy of entrenchment. Through cooperation with other investment banks and financial service providers, the Group had managed to conclude protracted negotiations with a few promising PRC clients for fund-raising activities.

The Hangzhou representative office of the Group had been promoting its expertise to local state and private enterprises. A number of interesting deals from the Northern and Western regions of the PRC had also been received through the Group’s associates in Beijing. The Group had begun the process of picking out the private firms with better prospect to consider how they would benefit from using the Group’s financial services.

– 54 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

For the year ended 31 March 2006

Financial performance

The Group recorded a turnover of approximately HK$2.4 million for the year ended 31 March 2006, representing a strong increase of approximately 157% over the previous year’s turnover of approximately HK$0.9 million. The increase was mainly due to the fact that many of the deals under negotiation throughout the two years ended 31 March 2006 were completed during the financial year under review. The income generated was therefore recognised after these transactions had been concluded successfully.

Cost of services for the year had gone up to approximately HK$0.5 million from approximately HK$0.2 million recorded in the previous financial year. Nonetheless, the cost of services at less than 25% of turnover was still considered manageable and the increase was in line with the higher turnover as anticipated.

Administrative and general expenses together with other operating expenses reduced by approximately 2.5% to approximately HK$3.7 million compared to approximately HK$3.8 million in the previous financial year.

Net loss for the year ended 31 March 2006 was approximately HK$1.9 million, representing a decrease of approximately HK$1.2 million or more than 38%. As all cost and expenditure items remained at a stable level, the smaller loss mainly reflected a higher turnover recorded for the year with the bulk of the revenue due from clients recognised in the financial year under review when the deals were successfully brought to a conclusion.

Liquidity and financial resources

As at 31 March 2006, the Group had net tangible liabilities of approximately HK$3.7 million and net current liabilities of approximately HK$4.2 million. The net tangible liabilities value was caused by the amount due to a Director had gone up from approximately HK$2.8 million to nearly HK$4.4 million. This advance was unsecured and carried interest at 1.5% per annum which for the year under review was waived. The Group had approximately HK$0.3 million cash and bank balances as at 31 March 2006, which was a decline of nearly 39% due to further loss incurred during the year.

Gearing ratio

As at 31 March 2006, the Group had a gearing ratio (being total debts net of payables under ordinary course of business over total assets) of approximately 338% (31 March 2005: approximately 201%).

Capital structure

There was no change in the capital structure of the Company during the year.

– 55 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Employees information

The total number of employees was 13 as at 31 March 2006 (31 March 2005: 16), and the total remuneration for the year under review was about HK$2.1 million (2005: approximately HK$1.7 million). The remuneration policy of the Group was reviewed and approved by the Board and the remuneration committee of the Company. Discretionary bonus was linked to performance of the individual employee.

Charges on assets

During the years ended 31 March 2006 and 2005, none of the Group’s assets was charged.

Contingent liabilities

GAML had been claimed by a client for refund of fees in the amount of RMB0.8 million.

However, the Company’s legal adviser had advised GAML’s directors that such client had been in breach of the consultancy agreement between GAML and such client and that GAML was not obliged to return the sum of RMB0.8 million to the client but conversely GAML would have a potential claim against the client for breach of contract. Accordingly, the Directors considered the RMB0.8 million to be non-refundable upfront fee payable under the consultancy agreement, and no liability had been assumed and accordingly, the amount of RMB0.8 million had not been accounted for in the income statement.

The Directors considered that the outcome of the claim referred above would not have a material adverse effect on the financial position of the Group.

Dividend

The Directors did not recommend the payment of dividend for the year ended 31 March 2006.

Business review

2005 saw the unmistakable sign of the local economy continuing its strong recovery. Business activities in the capital and securities markets had both picked up considerably in tandem with the PRC’s growing needs for overseas fund-raising. Through cooperation with other investment banks and financial service providers, the Group had been involved in the protracted negotiations with a number of promising clients in the PRC for placements and listings as well as finalising credit facilities. The better than expected increase in turnover had been generated from financial advisory assignments due to the Group’s strong in-house structuring expertise.

– 56 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Whenever possible, the Group had been active in building bridges to second-tier cities in the PRC. This was a sustained long term process to establish a strong delivery platform for the Group’s financial and investment products to corporate clients. The management hoped to position the Group as a premier financial service provider in the Greater China region in the years to come.

For the six months ended 30 September 2006

Financial performance

For the six months ended 30 September 2006, the Group recorded a turnover of approximately HK$0.5 million, representing a decrease of approximately 38% compared to the corresponding period in the previous financial year. The drop in revenue was mainly attributable to postponement in the completion of some of the deals during the six months under review.

Cost of services had been maintained at similar level as that of the same period in the previous financial year reflecting the effective control of overhead expenses. Overall, the Group’s net profit for the six months under review was approximately HK$2.8 million compared to a net loss of approximately HK$1.4 million for the corresponding period in the previous financial year. The profit was attributable to an ex-Director, Mr. Liu Ka Lim, who waived his rights and interests in the debts, liabilities and indebtedness of up to approximately HK$4.8 million owed to him by the Group. Earnings per Share was HK0.34 cent, an increase from the corresponding period in the previous financial year of loss per Share of HK0.17 cent.

Business review

For the six-month period under review, the local financial market had shown mixed signs of direction with significant shrinkage in turnover of property transactions while the local stock market continued to seek for a clearer trend pending confirmation of interest rate hikes which to a certain extent would be affected by the unstable oil prices. Following a series of austerity measures which had been launched by the PRC government to curb the overheated property market, the resultant chain effect in tightening of money supply in other sectors of the economy was seen during the period under review. This had led to increased opportunity in offering the Group’s services in raising finance for high quality projects. Whilst the Group continued to pursue a pro-active strategy in marketing its services, it also adopted a prudent and cost-saving approach in allocating resources because of the challenging conditions of the external market. This was reflected in the confinement of administrative and general expenses.

– 57 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Liquidity, charges on assets and financial resources

As at 30 September 2006, the Group’s net assets increased to approximately HK$9.9 million from net liabilities of approximately HK$3.7 million as at 31 March 2006. As at 30 September 2006, the Group had approximately HK$11.4 million net cash and bank balances, representing an increase from approximately HK$0.3 million as at 31 March 2006, primarily due to the issuance of 160,000,000 Shares on 13 September 2006.

During the six months ended 30 September 2006, the Group financed its operations with internal financial resources and the balance of proceeds from the placing of new Shares on 13 September 2006. Save for the finance lease of an office equipment, of which the balance as at 30 September 2006 was approximately HK$0.04 million, entered into by the Group during the period, there was no charge on the Group’s assets as at 30 September 2006.

As at 30 September 2006, save for the above finance lease, the Group did not have any other outstanding secured borrowings, mortgages or charges.

The gearing ratio, being total debts net of payable under ordinary course of business over total assets, was approximately 7% as at 30 September 2006 (31 March 2006: approximately 338%).

Capital structure

Pursuant to the subscription agreement dated 30 August 2006, the Company issued and allotted a total of 160,000,000 Shares at a subscription price of HK$0.07 per subscription Share to the subscriber on 13 September 2006, following the completion of the placing agreement for the placing of 160,000,000 existing Shares to not less than six placees at a placing price of HK$0.07 per placing Share. The closing price per Share on 29 August 2006 (being the last trading day prior to the entering into of the placing agreement) as quoted on the Stock Exchange was HK$0.079 and the net price of the issue to the Company was approximately HK$0.068 per Share. The Company raised a net proceeds of approximately HK$10.8 million through the placing and the subscription and the fund was used as general working capital of the Group.

The above subscription Shares were issued pursuant to the general mandate to allot, issue and deal with Shares granted to the Directors by the resolution of the Shareholders passed at the annual general meeting of the Company held on 21 July 2006.

Contingent liabilities

GAML had been claimed by a client for refund of fees in the amount of RMB0.8 million.

– 58 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

have a potential claim against the client for breach of contract. Accordingly, the Directors considered the RMB0.8 million to be non-refundable upfront fee payable under the consultancy agreement, and no liability had been assumed and accordingly, the amount of RMB0.8 million had not been accounted for in the income statement.

The Directors considered that the outcome of the claim referred above would not have a material adverse effect on the financial position of the Group.

Foreign exchange exposure

Most of the trading transactions, assets and liabilities of the Group were denominated in Hong Kong dollars. As at 30 September 2006, the Group had no significant exposure under foreign exchange contracts, interest, currency swaps or other financial derivatives.

Employees information

The total number of employees was 9 as at 30 September 2006 (30 September 2005: 13), and the total remuneration for the six months ended 30 September 2006 was approximately HK$0.9 million (six months ended 30 September 2005: approximately HK$1.2 million). The Group’s remuneration policy for senior executives was basically performance-linked. Staff benefits, including medical coverage and mandatory provident funds were provided to employees where appropriate. Discretionary bonus was linked to performance of the individual employee. The Group would offer options to reward employees who made significant contributions and to retain key staff pursuant to the share option scheme of the Group. The remuneration policy of the Group was reviewed and approved by the remuneration committee of the Company as well as by the Board.

Corporate matters

On 24 May 2006, Link Wise Investments Limited and Mr. Leong Sai Cheong, Joe, the substantial Shareholders (the “Vendors”), entered into a share purchase agreement (the “Share Purchase Agreement”) with New Brilliant to which the Vendors had conditionally agreed to sell, and New Brilliant had conditionally agreed to purchase 586,450,000 Shares in aggregate (the “Sale Shares”) at a total consideration of approximately HK$14.7 million. The Sale Shares represented approximately 73.3% of the entire issued share capital of the Company as at the date of the Share Purchase Agreement. The Share Purchase Agreement was completed on 11 July 2006 and the mandatory unconditional cash offer made by New Brilliant was closed on 8 August 2006.

– 59 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Change of Directors

During the period under review, there were changes to the Directors with effect from 14 August 2006. Mr. Chui Bing Sun was appointed as the chairman and an executive director of the Company; Mr. Lee Chi Shing, Caesar was appointed as an executive Director; Mr. Chien Hoe Yong, Mr. Kwok Kwan Hung and Mr. Siu Hi Lam, Alick were appointed as independent non-executive Directors. Mr. Liu Ka Lim, Mr. Kan Siu Lun, Mr. Sun Wai Tat, Victor, Miss Lam So Ying and Miss Sy Wai Shuen resigned as executive Directors due to their respective personal reasons.

8. FINANCIAL AND TRADING PROSPECTS OF THE ENLARGED GROUP

For the remaining current financial year, the management intends to continue the existing business of the provision of corporate finance services. Demand for fund-raising and financial advisory services is expected to be strong in view of the continuing recovery of the economy in Hong Kong and the PRC. The management believes that the strong demand for fund-raising activities, especially from PRC companies, experienced by the market year-to-date is expected to continue in the first quarter of the following year, which is expected to benefit the corporate finance business of the Group. However, despite strong demand, the market remains highly competitive. Therefore, the Group will continue to strengthen its prudent and cost-saving approach in allocating resources to this segment.

The management is conducting a review of the financial position and operations of the Group in order to formulate a long-term strategy and explore other business or investment opportunities for enhancing its future development and strengthening its revenue base, in particular the management is considering investing into the funeral service businesses in the PRC and Hong Kong. It is generally believed that the ageing population and increasing death rate have driven the demand growth of funeral services in Hong Kong. As such population trend is expected to continue, the management believes that the funeral service industry in Hong Kong has a promising prospect and the potential investment in Cheung Shing will enable the Group to capture and participate in the growth of this business and as well as to broaden its revenue base. Since the funeral service business is rapidly growing, the management intends to allocate more financial resources to the segment in the future to facilitate its growth. In addition, the Group is also in the process of negotiation with an independent third party for a possible acquisition of a funeral service business in the PRC. Up to the date of this circular, terms and conditions of the acquisition have yet finalised.

– 60 –

APPENDIX II FINANCIAL INFORMATION OF CHEUNG SHING

1. ACCOUNTANTS’ REPORT OF CHEUNG SHING

The following is the text of the accountants’ report from Grant Thornton, Certified Public Accountants, Hong Kong, the independent reporting accountants, prepared for the purpose of incorporation in this circular.

==> picture [136 x 40] intentionally omitted <==

22 December 2006

The Directors Galileo Capital Group Limited 19th Floor, Club Lusitano 16 Ice House Street Central Hong Kong

Dear Sirs,

We set out below our report on the financial information of Cheung Shing Funeral Limited (“Cheung Shing”) in Sections I and II below, including the balance sheets as at 31 March 2005 and 2006 and 30 September 2006, the income statements, the statements of changes in equity and the cash flow statements for the period from 30 July 2004 (date of incorporation) to 31 March 2005, year ended 31 March 2006 and the six months ended 30 September 2006 (the “Relevant Period”), and the notes thereto (the “Financial Information”), for inclusion in the circular of Galileo Capital Group Limited (the “Company”) dated 22 December 2006 (the “Circular”) in connection with the proposed acquisition of the entire issued share capital of Cheung Shing and the shareholders’ loan owed by Cheung Shing to Ms. Cheung Kam Man, Mr. Woo Shik Man and Ms. Kong Sau Ping (the “Cheung Shing Acquisition”).

Cheung Shing was incorporated in Hong Kong with limited liability pursuant to the Hong Kong Companies Ordinance on 30 July 2004. The principal activity of Cheung Shing is engaged in provision of funeral services.

The statutory financial statements of Cheung Shing for the period from 30 July 2004 (date of incorporation) to 31 March 2006, which were prepared in accordance with the Small and Medium-sized Entity Financial Reporting Standard as issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) and the Hong Kong Companies Ordinance, were audited by Chan & Man Certified Public Accountants, a firm of certified public accountants registered in Hong Kong. No audited financial statements have been prepared by Cheung Shing in respect of any period subsequent to 31 March 2006.

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APPENDIX II

FINANCIAL INFORMATION OF CHEUNG SHING

The Financial Information prepared in accordance with the Hong Kong Financial Reporting Standards (“HKFRS”) issued by HKICPA for the Relevant Period set out in this report have been prepared by the directors of Cheung Shing (the “Directors”). For the purpose of this report, we have examined the Financial Information and carried out such additional procedures as are necessary in accordance with Auditing Guideline 3.340 “Prospectus and the Reporting Accountant” issued by HKICPA.

The preparation of the Financial Information which gives a true and fair view is the responsibility of the Directors. The directors of the Galileo Capital Group Limited are responsible for the contents of the Circular in which this report is included. In preparing the Financial Information which gives 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 examination, on the Financial Information and to report our opinion to you.

In our opinion, the Financial Information gives, for the purpose of this report, a true and fair view of the state of affairs of Cheung Shing as at 31 March 2005 and 2006 and 30 September 2006 and of Cheung Shing’s results and cash flows for the period from 30 July 2004 (date of incorporation) to 31 March 2005, year ended 31 March 2006 and the six months ended 30 September 2006.

The unaudited comparative Financial Information (the “Comparative Financial Information”) of Cheung Shing for the six months ended 30 September 2005 has been prepared solely for the purpose of this report. The Directors are responsible for preparing the Comparative Financial Information. It is our responsibility to form an independent conclusion, based on our review, on the Comparative Financial Information and to report our conclusion to you. For the purpose of this report, we have performed a review of the Comparative Financial Information in accordance with Statement of Auditing Standards 700 “Engagement to review interim financial reports” issued by the HKICPA. Our review consists principally of making enquiries of management and applying analytical procedures to the Comparative Financial Information and, based thereon, assessing whether the accounting policies and presentation has been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit and therefore provides a lower level of assurance than an audit. Accordingly, we do not express an audit opinion on the Comparative Financial Information for the six months ended 30 September 2005.

For the purpose of this report and on the basis of our review which does not constitute an audit, we are not aware of any material modifications that should be made to the Comparative Financial Information for the six months ended 30 September 2005.

– 62 –

APPENDIX II FINANCIAL INFORMATION OF CHEUNG SHING

I. FINANCIAL INFORMATION

1. Income statements

Period from 30 July 2004 (date of incorporation) to 31 March 2005 Notes HK$ Revenue 5 – Cost of sales – Gross profits – Other income 28,866 Administrative expenses (342,311) Operating (loss)/profit (313,445) Finance cost 6 (3,664) (Loss)/Profit before income tax 7 (317,109) Income tax expense 8 – (Loss)/Profit for the period/year (317,109)	Year ended 31 March 2006 HK$ 2,216,566 (1,226,025)	Six months ended 30 September 2005 2006 HK$ HK$ (unaudited) 744,148 1,613,853 (414,164) (908,466) 329,984 705,387 – – (414,742) (532,072) (84,758) 173,315 (5,249) (5,249) (90,007) 168,066 – – (90,007) 168,066	Six months ended 30 September 2005 2006 HK$ HK$ (unaudited) 744,148 1,613,853 (414,164) (908,466) 329,984 705,387 – – (414,742) (532,072) (84,758) 173,315 (5,249) (5,249) (90,007) 168,066 – – (90,007) 168,066
– 28,866 (342,311) (313,445) (3,664) (317,109) –	990,541 – (934,505) 56,036 (10,511) 45,525 –	329,984 – (414,742) (84,758) (5,249) (90,007) –	705,387 – (532,072
			173,315 (5,249
			168,066 –
(317,109)	45,525	(90,007)

– 63 –

FINANCIAL INFORMATION OF CHEUNG SHING

APPENDIX II

2. Balance sheets

As at 31 2005 HK$ 693,188	March 2006 HK$ 1,172,260	As at 30 September 2006 HK$ 1,116,586 103,180 18,700 566,061 687,941 1,768,418 3,498 116,667 1,888,583 (1,200,642) (84,056) (19,445) (103,501) 17 (103,518) (103,501)
– 13,700 920,349 934,049 1,633,234 – 116,667 1,749,901 (815,852) (122,664) (194,444)	99,200 18,700 389,688 507,588 1,743,172 13,798 116,667 1,873,637 (1,366,049) (193,789) (77,778)	103,180 18,700 566,061
		687,941 1,768,418 3,498 116,667
		1,888,583
		(1,200,642
		(84,056
		(19,445
(317,108) 1 (317,109) (317,108)	(271,567) 17 (271,584) (271,567)

– 64 –

APPENDIX II FINANCIAL INFORMATION OF CHEUNG SHING

3. Statements of changes in equity

Period from 30 July 2004 (date of incorporation) to 31 March 2005 HK$ Capital deficiency at beginning of the period/year – Issue of shares (Note 14) 1 Net (loss)/profit for the period/year (Note 15) (317,109) Capital deficiency at end of the period/year (317,108)	Year ended 31 March 2006 HK$ (317,108) 16 45,525 (271,567)	Six months ended 30 September 2005 2006 HK$ HK$ (unaudited) (317,108) (271,567) 16 – (90,007) 168,066 (407,099) (103,501)

– 65 –

FINANCIAL INFORMATION OF CHEUNG SHING

APPENDIX II

4. Cash flow statements

Period from 30 July 2004 (date of incorporation) to 31 March 2005 HK$ (317,109) 3,664 26,119	Year ended 31 March 2006 HK$ 45,525 10,511 101,464	Six months ended 30 September 2005 2006 HK$ HK$ (unaudited) (90,007) 168,066 5,249 5,249 50,732 64,692 (34,026) 238,007 (2,000) – – (3,980) 7,762 (10,300) (28,264) 223,727 (5,249) (5,249) (33,513) 218,478 (494,898) (9,018) (494,898) (9,018) 16 – 101,540 25,246 (58,333) (58,333) 43,223 (33,087) (485,188) 176,373 920,349 389,688 435,161 566,061 435,161 566,061	Six months ended 30 September 2005 2006 HK$ HK$ (unaudited) (90,007) 168,066 5,249 5,249 50,732 64,692 (34,026) 238,007 (2,000) – – (3,980) 7,762 (10,300) (28,264) 223,727 (5,249) (5,249) (33,513) 218,478 (494,898) (9,018) (494,898) (9,018) 16 – 101,540 25,246 (58,333) (58,333) 43,223 (33,087) (485,188) 176,373 920,349 389,688 435,161 566,061 435,161 566,061
(287,326) (13,700) – – (301,026) (3,664) (304,690) (369,307) (369,307) 1 1,633,234 (38,889) 1,594,346 920,349 –	157,500 (5,000) (99,200) 13,798 67,098 (10,511) 56,587 (580,536) (580,536) 16 109,938 (116,666) (6,712) (530,661) 920,349	(34,026) (2,000) – 7,762 (28,264) (5,249) (33,513) (494,898) (494,898) 16 101,540 (58,333) 43,223 (485,188) 920,349	238,007 – (3,980 (10,300
			223,727 (5,249
			218,478
			(9,018
			(9,018
			– 25,246 (58,333
			(33,087
			176,373 389,688
920,349 920,349	389,688 389,688	435,161 435,161

– 66 –

APPENDIX II FINANCIAL INFORMATION OF CHEUNG SHING

II. NOTES TO FINANCIAL INFORMATION

1. BASIS OF PRESENTATION

The Financial Information has been prepared in accordance with all applicable Hong Kong Financial Reporting Standards (“HKFRS”), which include all applicable individual Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards and Interpretations issued by the Hong Kong Institute of Certified Public Accountants and the Hong Kong Companies Ordinance. The Financial Information also included all the applicable disclosure requirements of the GEM Listing Rules.

2. ADOPTION OF NEW AND REVISED HKFRS

Cheung Shing has not early adopted the following standards or interpretations of HKFRS which are relevant to Cheung Shing and that have been issued but are not yet effective.

HKAS 1 (Amendment) Capital Disclosures[1] HKFRS 7 Financial Instruments Disclosures[1]

1 Effective for annual periods beginning on or after 1 January 2007.

Cheung Shing has already commenced an assessment of the impact of these new HKFRS and has concluded that the adoption of these new HKFRS is unlikely to have a significant impact on the disclosures of the Financial Information.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3.1 Basis of preparation

The significant accounting policies that have been used in the preparation of the Financial Information are summarised below.

The Financial Information has been prepared on the historical cost basis except for revaluation of certain financial assets and liabilities. The measurement bases are fully described in the accounting policies below.

It should be noted that accounting estimates and assumptions have been used in preparation of the Financial Information. Although these estimates and assumptions are based on management’s best knowledge of current events and actions, actual results may ultimately differ from those estimates and assumptions.

The financial information has been prepared on a going concern basis which assumes the realisation of assets and satisfaction of liabilities in the ordinary course of business notwithstanding that at 31 March 2005, 31 March 2006 and 30 September 2006 Cheung Shing had net current liabilities of HK$815,852, HK$1,366,049 and HK$1,200,642 respectively and net liabilities of HK$317,108, HK$271,567 and HK$103,501 respectively. Cheung Shing’s continuance in business as a going concern is dependent upon the continuing financial support from all the shareholders of Cheung Shing before and after the Cheung Shing Acquisition, and their undertaking not to demand repayment of debt due from Cheung Shing until such time when repayment will not affect Cheung Shing’s ability to repay other creditors in the normal course of business.

Should Cheung Shing be unable to continue in business as a going concern, adjustments would have to be made to reduce the value of assets to their recoverable amounts, to provide for any further liabilities which might arise, and to reclassify non-current assets and non-current liabilities as current assets and current liabilities respectively.

3.2 Revenue recognition

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

Service income is recognised when the services were rendered.

Revenue from the sales of goods is rendered when the goods are delivered to customers.

– 67 –

FINANCIAL INFORMATION OF CHEUNG SHING

APPENDIX II

3.3 Property, plant and equipment

Property, plant and equipment are stated at acquisition cost less accumulated depreciation and accumulated impairment losses.

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

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to Cheung Shing and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the period in which they are incurred.

Depreciation on property, plant and equipment is calculated using the straight-line method to allocate their costs to their residual values over their estimated useful lives at the following rates:

Furniture and fixtures	20%
Office equipment	20%
Motor vehicles	20%
Leasehold improvements	4%

The assets’ useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

3.4 Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first-in first-out method. Net realisable value is calculated as the actual or estimated selling price less all further costs of completion and the estimated costs necessary to make the sale.

3.5 Impairment

Cheung Shing’s assets are subject to impairment testing.

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level. Individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

An impairment loss is recognised as an expense immediately for the amount by which the asset’s or cash-generating unit’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of fair value, reflecting market conditions less costs to sell and value in use, based on an internal discounted cash flow evaluation.

An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount and only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

3.6 Leases

Finance Leases

The economic ownership of a leased asset is transferred to the lessee if the lessee bears substantially all the risks and rewards related to the ownership of the leased asset. The related asset is recognised at the time of inception of the lease at the present value of the lease payments plus incidental payment, if any, to be borne by the lessee. A corresponding amount is recognised as a finance lease liability, irrespective of whether some of these lease payments are payable up-front at the date of inception of the lease.

– 68 –

APPENDIX II

FINANCIAL INFORMATION OF CHEUNG SHING

Subsequent accounting for assets held under finance lease agreement corresponds to those applied to comparable acquired assets. The corresponding finance lease liability is reduced by lease payments less finance charges, which are expensed to finance cost.

Operating leases

Leases where substantially all the risks and rewards of ownership of assets remain with the lessor are accounted for as operating leases. Annual rentals applicable to such operating leases are charged to the income statement on a straight line basis over the lease terms

3.7 Cash and cash equivalents

Cash comprises cash on hand and demand deposits repayable on demand with any bank or other financial institution.

Cash equivalents represent short-term, highly liquid investments which are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value. Bank overdrafts that are repayable on demand and form an integral part of Cheung Shing’s cash management are also included as a component of cash and cash equivalents for the purpose of the cash flow statement.

3.8 Financial liabilities

Cheung Shing’s financial liabilities includes amounts due to shareholders and obligations under finance lease. They are recognised when Cheung Shing becomes a party to the contractual agreements of the instrument. All interest related charges are recognised as an expense in finance cost in the income statement.

Financial liabilities are recognised initially at fair value, net of transaction costs incurred and are subsequently stated at amortised cost using the effective interest method.

Financial liabilities are classified as current liabilities unless Cheung Shing has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

3.9 Income taxes

Income tax comprises current tax and deferred tax.

Current income tax assets and/or liabilities comprise those obligations to, or claims from, tax authorities relating to the current or prior reporting period, that are unpaid at the balance sheet date. They are calculated according to the tax rates and tax laws applicable to the tax periods to which they relate, based on the taxable profit for the year. All changes to current tax assets or liabilities are recognised as a component of tax expense in the income statement.

Deferred tax is calculated using the liability method on temporary differences at the balance sheet date between the carrying amounts of assets and liabilities in the financial statements and their respective tax bases. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are recognised for all deductible temporary differences, tax losses available to be carried forward as well as other unused tax credits, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised.

Deferred tax assets and liabilities are not recognised if the temporary difference arises from initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither taxable nor accounting profit or loss.

Deferred tax is calculated, without discounting, at tax rates that are expected to apply in the period the liability is settled or the asset realised, provided they are enacted or substantively enacted at the balance sheet date.

Changes in deferred tax assets or liabilities are recognised in the income statement, or in equity if they relate to items that are charged or credited directly to equity.

3.10 Borrowing costs

All borrowing costs are expensed as incurred.

– 69 –

FINANCIAL INFORMATION OF CHEUNG SHING

APPENDIX II

3.11 Segment reporting

In accordance with Cheung Shing’s internal financial reporting, Cheung Shing has determined that business segments be presented as the primary reporting format and geographical segments as the secondary reporting format.

Capital expenditure comprises additions to property, plant and equipment.

In respect of geographical segment reporting, revenue are based on the country in which the customer is located and total assets and capital expenditure are based on where the assets are located.

3.12 Related parties

Parties are considered to be related to Cheung Shing if:

(i) directly, or indirectly through one or more intermediaries, the party:
- controls, is controlled by, or is under common control with Cheung Shing;
has an interest in Cheung Shing that gives it significant influence over Cheung Shing; or
has joint control over Cheung Shing;
(ii) the party is an associate;
(iii) the party is a jointly-controlled entity;
(iv) the party is a member of the key management personnel of Cheung Shing or its parent;
(v) the party is a close member of the family of any individual referred to in (i) or (iv);
(vi) the party is an entity that is controlled, jointly controlled or significantly influenced by or for which significant voting power in such entity resides with, directly or indirectly, any individual referred to in (iv) or (v); or
(vii) the party is a post-employment benefit plan for the benefit of employees of Cheung Shing, or of any entity that is a related party of Cheung Shing.

3.13 Share capital

Ordinary shares are classified as equity. Share capital is determined using the nominal value of shares that have been issued.

3.14 Retirement benefit costs and short term employee benefits

Defined contribution plan

Cheung Shing contributes to a defined contribution retirement benefit scheme (“MPF scheme”) under the Mandatory Provident Fund Scheme Ordinance which is available to its employees in Hong Kong. Contributions to the MPF Scheme by Cheung Shing and employees are calculated as percentages of employees’ basic salaries. The retirement benefit scheme cost charged to income statement represents contributions payable by Cheung Shing to the MPF scheme.

The assets of the MPF Scheme are held separately from those of Cheung Shing in independently administered funds.

3.15 Provisions, contingent liabilities and contingent assets

Provisions are recognised when Cheung Shing has a present obligation (legal or constructive) as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Where the time value of money is material, provisions are stated at the present value of the expenditure expected to settle the obligation.

– 70 –

FINANCIAL INFORMATION OF CHEUNG SHING

APPENDIX II

All provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate.

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.

4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Estimates and judgement are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Cheung Shing makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Depreciation

Cheung Shing depreciates the property, plant and equipment on a straight-line basis over the estimated useful lives of 5 to 25 years, starting from the date on which the assets are placed into productive use. The estimated useful lives reflect the Directors’ estimate of the periods that Cheung Shing intends to derive future economic benefits from the use of Cheung Shing’s property, plant and equipment.

5. REVENUE

Revenue, which is also Cheung Shing’s turnover, represents total service income earned.

6. FINANCE COST

Bank charge Interest on finance leases	Period from 30 July 2004 (date of incorporation) to 31 March 2005 HK$ 165 3,499 3,664	Year ended 31 March 2006 HK$ 15 10,496 10,511	Six months ended 30 September 2005 2006 HK$ HK$ (unaudited) – – 5,249 5,249 5,249 5,249	Six months ended 30 September 2005 2006 HK$ HK$ (unaudited) – – 5,249 5,249 5,249 5,249
				5,249

– 71 –

APPENDIX II FINANCIAL INFORMATION OF CHEUNG SHING

7. (LOSS)/PROFIT BEFORE INCOME TAX

(Loss)/Profit before income tax is arrived at after charging:

	Period from
	30 July 2004
	(date of
	incorporation)	Year ended	Six months ended
	to 31 March	31 March	30 September
	2005	2006	2005		2006
	HK$	HK$	HK$		HK$
			(unaudited)
Auditors’ remuneration	–	10,000	5,000		–
Depreciation
– owned assets	6,873	43,726	21,863		26,200
– leased assets	19,246	57,738	28,869		38,492
Operating lease charges in respect
of land and buildings	103,500	300,000	138,000	138,000
Staff costs (excluding directors’
remuneration)
– wages and salaries	40,492	184,800	79,240		87,600
– pension costs – defined
contribution plan	–	3,679	–		5,320

8. INCOME TAX EXPENSE

No provision has been made for current income tax as Cheung Shing did not have assessable profits for taxation purpose during the relevant period.

Reconciliation between income tax expense and accounting (loss)/profit at applicable tax rate is as follows:

(Loss) / Profit before income tax Tax at the applicable tax rate of 17.5% Tax effect of non-deductible expenses Tax effect of deductible temporary difference not recognised Tax effect on tax losses not recognised Income tax expense	Period from 30 July 2004 (date of incorporation) to 31 March 2005 HK$ (317,109)	Year ended 31 March 2006 HK$ 45,525	Six months ended 30 September 2005 2006 HK$ HK$ (unaudited) (90,007) 168,066	Six months ended 30 September 2005 2006 HK$ HK$ (unaudited) (90,007) 168,066
	(55,494) 1,515 (27,508) 81,487	7,967 56 (15,659) 7,636	(15,751) – (5,351) 21,102	29,412 1,282 2,207 (32,901
	–	–	–	–

No deferred tax liability has been provided in the financial information as there are no material temporary differences. No deferred tax asset in respect of tax losses was recognised as it is uncertain that assessable profits would be available to offset against the tax losses carried forwards.

– 72 –

APPENDIX II FINANCIAL INFORMATION OF CHEUNG SHING

9. DIRECTORS’ REMUNERATION AND SENIOR MANAGEMENT’S EMOLUMENTS

(a) Directors’ emoluments

Fees Other remunerations	Period from 30 July 2004 (date of incorporation) to 31 March 2005 HK$ – – –	Year ended 31 March 2006 HK$ – 10,000 10,000	Six months ended 30 September 2005 2006 HK$ HK$ (unaudited) – – – – – –	Six months ended 30 September 2005 2006 HK$ HK$ (unaudited) – – – – – –
				–

For the year ended 31 March 2006, details of the directors’ remunerations was summarised as follows:

Name of directors Woo Shik Man Cheung Kam Man	Fee HK$ – – –	Salary HK$ 5,000 5,000 10,000	Bonuses HK$ – – –	Other benefits HK$ – – –	Employer’s contribution to pension scheme HK$ – – –	Total HK$ 5,000 5,000
						10,000

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

(b) Five highest paid individuals

None of the directors of Cheung Shing was the five individuals whose emoluments were the highest in Cheung Shing during the Relevant Periods. The emoluments payable to the five highest paid individuals during the Relevant Periods are as follows:

			Period from
			30 July 2004
			(date of
			incorporation)	Year ended	Six months ended
			to 31 March	31 March	30 September
			2005	2006	2005	2006
			HK$	HK$	HK$	HK$
					(unaudited)
Wages	and	salaries	40,492	174,800	79,240	87,600

The emoluments of the five highest paid individuals fell within the emolument band of Nil to HK$1,000,000. During the Relevant Periods, no emoluments were paid by Cheung Shing to the five highest paid individuals, including the directors, as an inducement to join or upon joining Cheung Shing or as compensation for loss of office.

– 73 –

FINANCIAL INFORMATION OF CHEUNG SHING

APPENDIX II

10. PROPERTY, PLANT AND EQUIPMENT

Furniture and fixtures HK$ – 20,760 (1,269) 19,491	Office equipment HK$ – 15,098 (876) 14,222	Motor vehicles Leasehold improvements HK$ HK$ – – 384,920 298,529 (19,246) (4,728) 365,674 293,801	Motor vehicles Leasehold improvements HK$ HK$ – – 384,920 298,529 (19,246) (4,728) 365,674 293,801	Total HK$ – 719,307 (26,119) 693,188 719,307 (26,119) 693,188 693,188 580,536 (101,464) 1,172,260 1,299,843 (127,583) 1,172,260 1,172,260 9,018 (64,692) 1,116,586 1,308,861 (192,275) 1,116,586
20,760 (1,269)	15,098 (876)	384,920 (19,246)	298,529 (4,728)	719,307 (26,119
19,491	14,222	365,674	293,801
19,491 42,658 (11,415)	14,222 8,990 (3,942)	365,674 – (57,738)	293,801 528,888 (28,369)	693,188 580,536 (101,464
50,734	19,270	307,936	794,320
63,418 (12,684)	24,088 (4,818)	384,920 (76,984)	827,417 (33,097)	1,299,843 (127,583
50,734	19,270	307,936	794,320
50,734 9,018 (7,243) 52,509 72,436 (19,927)	19,270 – (2,409) 16,861 24,088 (7,227)	307,936 – (38,492) 269,444 384,920 (115,476)	794,320 – (16,548) 777,772 827,417 (49,645)	1,172,260 9,018 (64,692
				1,116,586
				1,308,861 (192,275
52,509	16,861	269,444	777,772

– 74 –

APPENDIX II

FINANCIAL INFORMATION OF CHEUNG SHING

The cost and related accumulated depreciation in respect of property plant and equipments held under finance leases were as follows:

Cost Accumulated depreciation Net book amount	As at 31 2005 HK$ 384,920 (19,246) 365,674	March 2006 HK$ 384,920 (76,984) 307,936	As at 30 September 2006 HK$ 384,920 (115,476)
			269,444

11. INVENTORIES

						As at
				As at 31 March		30 September
				2005	2006	2006
				HK$	HK$	HK$
General	merchandise,	at	cost	–	99,200	103,180

12. AMOUNTS DUE TO SHAREHOLDERS

The amounts due are unsecured, interest free and repayable on demand.

13. OBLIGATION UNDER FINANCE LEASE

The analysis of the obligation under finance lease is as follows:

Due within one year Due in the second to fifth years inclusive Future finance charges on finance lease Present value of finance lease liability	As at 31 2005 HK$ 127,164 211,940	March 2006 HK$ 127,164 84,776	As at 30 September 2006 HK$ 127,164 21,194
	339,104 (27,993)	211,940 (17,495)	148,358 (12,246)
	311,111	194,445	136,112

– 75 –

APPENDIX II

FINANCIAL INFORMATION OF CHEUNG SHING

The present value of finance lease liability is as follows:

Due within one year Due in the second to fifth years inclusive Less: Portion due within one year included under current liabilities Non-current portion included under non-current liabilities	As at 31 2005 HK$ 116,667 194,444	March 2006 HK$ 116,667 77,778	As at 30 September 2006 HK$ 116,667 19,445
	311,111 (116,667)	194,445 (116,667)	136,112 (116,667)
	194,444	77,778	19,445

14. SHARE CAPITAL

Ordinary shares of HK$1 each Authorised: At 31 March 2005, 2006 and 30 September 2006 Issued and fully paid: At date of incorporation and 31 March 2005 Issue of shares At 31 March 2006 and 30 September 2006	Number of shares 10,000	HK$ 10,000

	1 16	1 16
	17	17

15. ACCUMULATED LOSS

At beginning of the period/year Net (loss)/profit for the period/year At end of the period/year	Period from 30 July 2004 (date of incorporation) to 31 March 2005 HK$ – (317,109) (317,109)	Year ended 31 March 2006 HK$ (317,109) 45,525 (271,584)	Six months ended 30 September 2005 2006 HK$ HK$ (unaudited) (317,109) (271,584) (90,007) 168,066 (407,116) 103,518	Six months ended 30 September 2005 2006 HK$ HK$ (unaudited) (317,109) (271,584) (90,007) 168,066 (407,116) 103,518
				103,518

– 76 –

FINANCIAL INFORMATION OF CHEUNG SHING

APPENDIX II

16. RELATED PARTY TRANSACTIONS

Save as those disclosed elsewhere in the Financial Information, Cheung Shing entered into the following significant transaction with a related company Grand Sea Limited, in which all shareholders of Cheung Shing have equity interest.

				Period from
				30 July 2004
				(date of
				incorporation)	Year ended	Six months ended
				to 31 March	31 March	30 September
				2005	2006	2005	2006
				HK$	HK$	HK$	HK$
						(unaudited)
Paid	rental	expenses	thereto	103,500	300,000	138,000	138,000

17. RISK MANAGEMENT OBJECTIVES AND POLICIES

Cheung Shing does not have any significant exposure to liquidity risk, foreign currency risk, credit risk, cash flow and interest rate risks. The fair values of Cheung Shing’s current financial liabilities are not materially different from their carrying amounts because of the immediate or short term maturity. The fair values of non-current liabilities were not disclosed because the carrying amounts are not materially different from their fair values.

18. MAJOR NON-CASH TRANSACTION

During the period from 30 July 2004 (date of incorporation) to 31 March 2005, Cheung Shing entered into finance lease arrangement in respect of motor vehicles with total capital value at the inception of the leases of HK$350,000.

19. SEGMENT INFORMATION

No separate analysis of segment information by business or geographical segments is presented as Cheung Shing’s sole business is provision of funeral services. Cheung Shing’s revenue, expenses, results, assets and liabilities and capital expenditure are principally attributable to a single geographical region, which is Hong Kong.

20. CONTINGENT LIABILITIES

Cheung Shing did not have any significant contingent liabilities as at the respective balance sheet dates.

21. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared by Cheung Shing in respect of any period subsequent to 30 September 2006.

Yours faithfully, Grant Thornton Certified Public Accountants Hong Kong

– 77 –

APPENDIX II FINANCIAL INFORMATION OF CHEUNG SHING

2. MANAGEMENT DISCUSSION AND ANALYSIS OF CHEUNG SHING

For the period from 30 July 2004, the date of incorporation, to 31 March 2005

Financial and business performance

For the period from 30 July 2004, the date of incorporation, to 31 March 2005, Cheung Shing did not record any turnover since it had not commenced business until July 2005. Both audited loss before and after taxation for the period under review were approximately HK$0.3 million due to the accrual of start-up costs.

Liquidity and financial resources

As at 31 March 2005, Cheung Shing had net liabilities of approximately HK$0.3 million and net current liabilities of approximately HK$0.8 million. A shareholders’ loan was approximately HK$1.6 million as at 31 March 2005, which was mainly used for the acquisition of plant and equipment. Cheung Shing had a finance lease in respect of motor vehicles of approximately HK$0.3 million as at 31 March 2005. Cash at bank was approximately HK$0.9 million as at 31 March 2005.

Charges on assets

As at 31 March 2005, save for the above, Cheung Shing did not have any other outstanding secured borrowings, mortgages or charges.

Gearing ratio

As at 31 March 2005, Cheung Shing had a gearing ratio (being total debts net of payables under ordinary course of business over total assets) of approximately 119%.

Capital structure

As at 31 March 2005, Cheung Shing’s share capital was HK$1, comprised one issued and fully paid ordinary share of HK$1.

Contingent liabilities

As at 31 March 2005, Cheung Shing had no contingent liabilities.

Employee information

The total number of employees of Cheung Shing as at 31 March 2005 was 3 and the total remuneration for the period ended 31 March 2005 was about HK$0.04 million. The remuneration policy was basically performance-linked and was subject to reviews by the directors of Cheung Shing from time to time.

– 78 –

APPENDIX II FINANCIAL INFORMATION OF CHEUNG SHING

For the year ended 31 March 2006

Financial and business performance

For the year ended 31 March 2006, Cheung Shing recorded audited turnover of approximately HK$2.2 million, representing total service income. No comparison for the corresponding period in the last financial year can be made as Cheung Shing only commenced its business in July 2005.

Costs were maintained at a competitive level compared to the market trend. Cheung Shing began making profit shortly after the commencement of business and recorded audited profit of approximately HK$0.05 million for the year ended 31 March 2006.

Liquidity and financial resources

As at 31 March 2006, Cheung Shing had net liabilities of approximately HK$0.3 million and net current liabilities of approximately HK$1.4 million. Of the total liabilities of approximately HK$2.0 million, approximately HK$1.7 million was a loan from shareholders. Cheung Shing had a finance lease of approximately HK$0.2 million as at 31 March 2006. Cheung Shing had approximately HK$0.4 million cash and bank balances as at 31 March 2006.

Charges on assets

As at 31 March 2006, save for the above, Cheung Shing did not have any other outstanding secured borrowings, mortgages or charges.

Gearing ratio

As at 31 March 2006, Cheung Shing had a gearing ratio (being total debts net of payables under ordinary course of business over total assets) of approximately 115% (31 March 2005: approximately 119%).

Capital structure

Cheung Shing issued 16 ordinary shares of HK$1 each during the period under review. As at 31 March 2006, Cheung Shing’s share capital was HK$17, comprised 17 issued and fully paid ordinary shares of HK$1 each.

Contingent liabilities

As at 31 March 2006, Cheung Shing had no contingent liabilities.

– 79 –

FINANCIAL INFORMATION OF CHEUNG SHING

APPENDIX II

Employee information

The total number of employees was 7 as at 31 March 2006, and the total remuneration for the year ended 31 March 2006 was approximately HK$0.2 million. The remuneration policy was basically performance-linked and was subject to reviews by the directors of Cheung Shing from time to time.

For the six months ended 30 September 2006

Financial and business performance

For the six months ended 30 September 2006, Cheung Shing recorded audited turnover of approximately HK$1.6 million, representing an increase of approximately 117% compared to the six months ended 30 September 2005. The strong increase in turnover was partly because there were only 3 months of operation during the six-month period ended 30 September 2005, and partly due to the keen demand of funeral services.

Costs were maintained at a competitive level compared to the market trend. Cheung Shing made audited profit of approximately HK$0.2 million for the six months ended 30 September 2006, as compared to the loss of approximately HK$0.09 million recorded for the six months ended 30 September 2005.

Liquidity and financial resources

As at 30 September 2006, Cheung Shing had net liabilities of approximately HK$0.1 million and net current liabilities of approximately HK$1.2 million. Of the total liabilities of approximately HK$1.9 million, approximately HK$1.8 million was a loan from shareholders. Cheung Shing had a finance lease of approximately HK$0.1 million as at 30 September 2006. Cheung Shing had approximately HK$0.6 million cash and bank balances as at 30 September 2006.

Charges on assets

As at 30 September 2006, save for the above, Cheung Shing did not have any other outstanding secured borrowings, mortgages or charges.

Gearing ratio

As at 30 September 2006, Cheung Shing had a gearing ratio (being total debts net of payables under ordinary course of business over total assets) of approximately 106% (31 March 2006: approximately 115%).

Capital structure

There was no change in the capital structure of Cheung Shing during the period under review.

– 80 –

FINANCIAL INFORMATION OF CHEUNG SHING

APPENDIX II

Contingent liabilities

As at 30 September 2006, Cheung Shing had no contingent liabilities.

Employee information

The total number of employees was 4 as at 30 September 2006, and the total remuneration for the six months ended 30 September 2006 was approximately HK$0.09 million. The remuneration policy was basically performance-linked and was subject to reviews by the directors of Cheung Shing from time to time.

Prospects

It is generally believed that the ageing population and increasing death rate have driven the demand growth of funeral services in Hong Kong. The management believes that with its strong sales team, Cheung Shing will be able to benefit from the growing demand of funeral services and to increase its market share in the funeral service industry in Hong Kong.

– 81 –

FINANCIAL INFORMATION OF GRAND SEA

APPENDIX III

1. ACCOUNTANTS’ REPORT OF GRAND SEA

==> picture [136 x 40] intentionally omitted <==

22 December 2006

The Directors Galileo Capital Group Limited 19th Floor, Club Lusitano 16 Ice House Street Central Hong Kong

Dear Sirs,

We set out below our report on the financial information of Grand Sea Limited (“Grand Sea”) in Sections I and II below, including the balance sheets as at 31 March 2005 and 2006 and 30 September 2006, the income statements, the statements of changes in equity and the cash flow statements for the period from 16 July 2004 (date of incorporation) to 31 March 2005, year ended 31 March 2006 and the six months ended 30 September 2006 (the “Relevant Periods”), and the notes thereto (the “Financial Information”), for inclusion in the circular of Galileo Capital Group Limited (the “Company”) dated 22 December 2006 (the “Circular”) in connection with the proposed acquisition of the entire issued share capital of Grand Sea and the shareholders’ loan owed by Grand Sea to Ms. Cheung Kam Man, Mr. Woo Shik Man and Ms. Kong Sau Ping (the “Grand Sea Acquisition”).

Grand Sea was incorporated in Hong Kong with limited liability pursuant to the Hong Kong Companies Ordinance on 16 July 2004. The principal activity of Grand Sea is holding of investment properties.

The statutory financial statements of Grand Sea for the period from 16 July 2004 (date of incorporation) to 31 March 2005, which were prepared in accordance with the Small and Medium-sized Entity Financial Reporting Standard as issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) and the Hong Kong Companies Ordinance, were audited by Chan & Man Certified Public Accountants, a firm of certified public accountants registered in Hong Kong. No audited financial statements have been prepared by Grand Sea in respect of any period subsequent to 31 March 2005.

– 82 –

APPENDIX III

FINANCIAL INFORMATION OF GRAND SEA

The Financial Information prepared in accordance with the Hong Kong Financial Reporting Standards (“HKFRS”) issued by HKICPA for the Relevant Period set out in this report have been prepared by the directors of Grand Sea (the “Directors”). For the purpose of this report, we have examined the Financial Information and carried out such additional procedures as are necessary in accordance with Auditing Guideline 3.340 “Prospectus and the Reporting Accountant” issued by HKICPA.

In our opinion, the Financial Information gives, for the purpose of this report, a true and fair view of the state of affairs of Grand Sea as at 31 March 2005 and 2006 and 30 September 2006 and of Grand Sea’s results and cash flows for the period from 16 July 2004 (date of incorporation) to 31 March 2005, year ended 31 March 2006 and the six months ended 30 September 2006.

The unaudited comparative Financial Information (the “Comparative Financial Information”) of Grand Sea for the six months ended 30 September 2005 has been prepared solely for the purpose of this report. The Directors are responsible for preparing the Comparative Financial Information. It is our responsibility to form an independent conclusion, based on our review, on the Comparative Financial Information and to report our conclusion to you. For the purpose of this report, we have performed a review of the Comparative Financial Information for the six months ended 30 September 2005 in accordance with Statement of Auditing Standards 700 “Engagement to review interim financial reports” issued by the HKICPA. Our review consists principally of making enquiries of management and applying analytical procedures to the Comparative Financial Information and, based thereon, assessing whether the accounting policies and presentation has been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit and therefore provides a lower level of assurance than an audit. Accordingly, we do not express an audit opinion on the Comparative Financial Information for the six months ended 30 September 2005.

– 83 –

FINANCIAL INFORMATION OF GRAND SEA

APPENDIX III

I. FINANCIAL INFORMATION

1. Income statements

Period from 16 July 2004 (date of incorporation) to 31 March 2005 Notes HK$ Revenue 5 103,500 Valuation gain on investment properties 2,101,232 Administrative expenses (62,300) Operating profit 2,142,432 Finance cost 6 (29,012) Profit before income tax 7 2,113,420 Income tax expense 8 – Profit for the period/year 2,113,420	Year ended 31 March 2006 HK$ 300,000 100,000 (51,717)	Six months ended 30 September 2005 2006 HK$ HK$ (unaudited) 138,000 228,000 50,000 – (28,328) (25,398) 159,672 202,602 (34,573) (48,398) 125,099 154,204 (10,221) (24,962) 114,878 129,242	Six months ended 30 September 2005 2006 HK$ HK$ (unaudited) 138,000 228,000 50,000 – (28,328) (25,398) 159,672 202,602 (34,573) (48,398) 125,099 154,204 (10,221) (24,962) 114,878 129,242
2,142,432 (29,012) 2,113,420 –	348,283 (80,918) 267,365 (24,344)	159,672 (34,573) 125,099 (10,221)	202,602 (48,398
			154,204 (24,962
2,113,420	243,021	114,878

– 84 –

FINANCIAL INFORMATION OF GRAND SEA

APPENDIX III

2. Balance sheets

As at 31 2005 HK$ 6,300,000 48,000	March 2006 HK$ 6,400,000 36,000	As at 30 September 2006 HK$ 6,400,000 30,000 6,430,000 – 153,739 153,739 2,315,633 12,000 30,000 2,989 173,357 49,306 2,583,285 (2,429,546) 4,000,454 (1,514,768) 2,485,686 3 2,485,683 2,485,686
6,348,000 200 27,101 27,301 2,293,139 25,494 – 4,004 218,839 – 2,541,476 (2,514,175) 3,833,825 (1,720,402)	6,436,000 – 74,026 74,026 2,315,585 13,000 30,000 – 161,024 24,344 2,543,953 (2,469,927) 3,966,073 (1,609,629)	6,430,000 – 153,739
		153,739 2,315,633 12,000 30,000 2,989 173,357 49,306
		2,583,285
		(2,429,546
		4,000,454 (1,514,768
2,113,423	2,356,444
3 2,113,420	3 2,356,441	3 2,485,683
2,113,423	2,356,444

– 85 –

FINANCIAL INFORMATION OF GRAND SEA

APPENDIX III

3. Statements of changes in equity

Period from 16 July 2004 (date of incorporation) to 31 March 2005 HK$ Total equity at beginning of the period/year – Issue of shares (Note 14) 3 Net profit for the period/year (Note 15) 2,113,420 Total equity at end of the period/year 2,113,423	Year ended 31 March 2006 HK$ 2,113,423 – 243,021 2,356,444	Six months ended 30 September 2005 2006 HK$ HK$ (unaudited) 2,113,423 2,356,444 – – 114,878 129,242 2,228,301 2,485,686	Six months ended 30 September 2005 2006 HK$ HK$ (unaudited) 2,113,423 2,356,444 – – 114,878 129,242 2,228,301 2,485,686
			2,485,686

– 86 –

FINANCIAL INFORMATION OF GRAND SEA

APPENDIX III

4. Cash flow statements

Period from 16 July 2004 (date of incorporation) to 31 March 2005 HK$ 2,113,420 29,012 12,000 (2,101,232)	Year ended 31 March 2006 HK$ 267,365 80,918 12,000 (100,000)	Six months ended 30 September 2005 2006 HK$ HK$ (unaudited) 125,099 154,204 34,573 48,398 6,000 6,000 (50,000) – 115,672 208,602 200 – (16,494) (1,000) – – 99,378 207,602 (34,573) (48,398) 64,805 159,204 – – – – – – – – 22,000 48 – – (86,210) (82,528) (64,210) (82,480) 595 76,724 23,097 74,026 23,692 150,750 23,692 153,739 – (2,989) 23,692 150,750	Six months ended 30 September 2005 2006 HK$ HK$ (unaudited) 125,099 154,204 34,573 48,398 6,000 6,000 (50,000) – 115,672 208,602 200 – (16,494) (1,000) – – 99,378 207,602 (34,573) (48,398) 64,805 159,204 – – – – – – – – 22,000 48 – – (86,210) (82,528) (64,210) (82,480) 595 76,724 23,097 74,026 23,692 150,750 23,692 153,739 – (2,989) 23,692 150,750
53,200 (200) 25,494 – 78,494 (29,012) 49,482 (4,198,768) (60,000) (4,258,768) 3 2,293,139 2,045,000 (105,759) 4,232,383 23,097 –	260,283 200 (12,494) 30,000 277,989 (80,918) 197,071 – – – – 22,446 – (168,588) (146,142) 50,929 23,097	115,672 200 (16,494) – 99,378 (34,573) 64,805 – – – – 22,000 – (86,210) (64,210) 595 23,097	208,602 – (1,000 –
			207,602 (48,398
			159,204
			– –
			–
			– 48 – (82,528
			(82,480
			76,724 74,026
23,097	74,026	23,692
27,101 (4,004)	74,026 –	23,692 –	153,739 (2,989
23,097	74,026	23,692

– 87 –

FINANCIAL INFORMATION OF GRAND SEA

APPENDIX III

II. NOTES TO FINANCIAL INFORMATION

1. BASIS OF PRESENTATION

2. ADOPTION OF NEW AND REVISED HKFRS

Grand Sea has not early adopted the following standards or interpretations of HKFRS which are relevant to Grand Sea and that have been issued but are not yet effective.

HKAS 1 (Amendment) Capital Disclosures[1] HKFRS 7 Financial Instruments Disclosures[1]

1 Effective for annual periods beginning on or after 1 January 2007.

Grand Sea has already commenced an assessment of the impact of these new HKFRS and has concluded that the adoption of these new HKFRS is unlikely to have a significant impact on the disclosures of the Financial Information.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3.1 Basis of preparation

The significant accounting policies that have been used in the preparation of the Financial Information are summarised below.

The Financial Information has been prepared on the historical cost basis except for the revaluation of investment properties and certain financial assets and liabilities. The measurement bases are fully described in the accounting policies below.

The financial information has been prepared on a going concern basis which assumes the realisation of assets and satisfaction of liabilities in the ordinary course of business notwithstanding that at 31 March 2005, 31 March 2006 and 30 September 2006 Grand Sea had net current liabilities of HK$2,514,175, HK$2,469,927 and HK$2,429,546 respectively. Grand Sea’s continuance in business as a going concern is dependent upon the continuing financial support from all the shareholders of Grand Sea before and after the Grand Sea Acquisition, and their undertaking not to demand repayment of debt due from Grand Sea until such time when repayment will not affect Grand Sea’s ability to repay other creditors in the normal course of business.

Should Grand Sea be unable to continue in business as a going concern, adjustments would have to be made to reduce the value of assets to their recoverable amounts, to provide for any further liabilities which might arise, and to reclassify non-current assets and non-current liabilities as current assets and current liabilities respectively.

3.2 Revenue recognition

Revenue is recognised when it is probable that the economic benefits will flow to Grand Sea and when the revenue can be measured reliably on the following basis:

Rental income is recognised on a straight-line basis over the period of the relevant leases.

– 88 –

FINANCIAL INFORMATION OF GRAND SEA

APPENDIX III

3.3 Property, plant and equipment

Property, plant and equipment are stated at acquisition cost less accumulated depreciation and accumulated impairment losses.

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

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to Grand Sea and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the period in which they are incurred.

Depreciation on property, plant and equipment is calculated using the straight-line method to allocate their costs to their residual values over their estimated useful lives at the following rates:

Leasehold improvements

20%

The assets’ useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

3.4 Investment properties

On initial recognition, investment property is measured at cost, including any directly attributable expenditure. Subsequent to initial recognition, investment properties are measured using the fair value model.

Gains or losses arising from either changes in the fair value or the sale of an investment property are included in the profit or loss for the period in which they arise.

3.5 Impairment

Grand Sea assets are subject to impairment testing.

3.6 Operating leases

As lessor

Leases where substantially all the risks and rewards of ownership of assets remain with the lessor are accounted for as operating leases. Assets leased out under operating leases are included in investment properties. Annual rental income, net of any incentives given to lessees, is recognised in the income statement on a straight-line basis over the lease terms.

– 89 –

FINANCIAL INFORMATION OF GRAND SEA

APPENDIX III

3.7 Cash and cash equivalents

Cash comprises cash on hand and demand deposits repayable on demand with any bank or other financial institution.

Cash equivalents represent short-term, highly liquid investments which are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value. Bank overdrafts that are repayable on demand and form an integral part of Grand Sea’s cash management are also included as a component of cash and cash equivalents for the purpose of the cash flow statement.

3.8 Financial liabilities

Grand Sea’s financial liabilities include bank loans and amounts due to shareholders. They are recognised when Grand Sea becomes a party to the contractual agreements of the instrument. All interest related charges are recognised as an expense in finance cost in the income statement.

Financial liabilities are recognised initially at fair value, net of transaction costs incurred and are subsequently stated at amortised cost using the effective interest method.

Financial liabilities are classified as current liabilities unless Grand Sea has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

3.9 Income taxes

Income tax comprises current tax and deferred tax.

Changes in deferred tax assets or liabilities are recognised in the income statement or in equity if they relate to items that are charged or credited directly to equity.

3.10 Borrowing costs

All borrowing costs are expensed as incurred.

– 90 –

FINANCIAL INFORMATION OF GRAND SEA

APPENDIX III

3.11 Segment reporting

In accordance with Grand Sea’s internal financial reporting, Grand Sea has determined that business segments be presented as the primary reporting format and geographical segments as the secondary reporting format.

Capital expenditure comprises additions to property, plant and equipment and investment properties.

In respect of geographical segment reporting, revenue are based on the country in which the customer is located and total assets and capital expenditure are based on where the assets are located.

3.12 Related parties

Parties are considered to be related to Grand Sea if:

(i) directly, or indirectly through one or more intermediaries, the party:
controls, is controlled by, or is under common control with Grand Sea;
has an interest in Grand Sea that gives it significant influence over Grand Sea; or
has joint control over Grand Sea;
(ii) the party is an associate;
(iii) the party is a jointly-controlled entity;
(iv) the party is a member of the key management personnel of Grand Sea or its parent;
(v) the party is a close member of the family of any individual referred to in (i) or (iv);
(vi) the party is an entity that is controlled, jointly controlled or significantly influenced by or for which significant voting power in such entity resides with, directly or indirectly, any individual referred to in (iv) or (v); or
(vii) the party is a post-employment benefit plan for the benefit of employees of Grand Sea, or of any entity that is a related party of Grand Sea.

3.13 Share capital

Ordinary shares are classified as equity. Share capital is determined using the nominal value of shares that have been issued.

3.14 Provisions, contingent liabilities and contingent assets

Provisions are recognised when Grand Sea has a present obligation (legal or constructive) as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Where the time value of money is material, provisions are stated at the present value of the expenditure expected to settle the obligation.

All provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate.

– 91 –

FINANCIAL INFORMATION OF GRAND SEA

APPENDIX III

4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Grand Sea makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Depreciation

Grand Sea depreciates the property, plant and equipment on a straight-line basis over the estimated useful lives of 5 years, starting from the date on which the assets are placed into productive use. The estimated useful lives reflect the Directors’ estimate of the periods that Grand Sea intends to derive future economic benefits from the use of Grand Sea’s property, plant and equipment.

Estimate fair value of investment properties

The best evidence of fair value is current prices in an active market for similar lease and other contracts. In the absence of such information, Grand Sea determines the amount within a range of reasonable fair value estimates. In making its judgment, Grand Sea considers information from a variety of sources including:

(i) value as at period/year end which evaluated by professionally qualified valuers; and
(ii) recent prices of similar properties in less active markets for properties of similar nature, condition or location.

5. REVENUE

Revenue, which is Grand Sea’s turnover, represents rental income received from the lease of investment properties.

6. FINANCE COST

Bank charges Mortgage loan interest	Period from 16 July 2004 (date of incorporation) to 31 March 2005 HK$ 200 28,812 29,012	Year ended 31 March 2006 HK$ 1,100 79,818 80,918	Six months ended 30 September 2005 2006 HK$ HK$ (unaudited) 1,100 1,550 33,473 46,848 34,573 48,398	Six months ended 30 September 2005 2006 HK$ HK$ (unaudited) 1,100 1,550 33,473 46,848 34,573 48,398
				48,398

– 92 –

FINANCIAL INFORMATION OF GRAND SEA

APPENDIX III

7. PROFIT BEFORE INCOME TAX

Profit before income tax is arrived at after charging/(crediting):

Auditors’ remuneration Depreciation Gross rental income Less: Outgoings Net rental income	Period from 16 July 2004 (date of incorporation) to 31 March 2005 HK$ 5,000 12,000	Year ended 31 March 2006 HK$ 5,000 12,000	Six months ended 30 September 2005 2006 HK$ HK$ (unaudited) – – 6,000 6,000 (138,000) (228,000) 7,382 10,322 (130,618) (217,678)
	(103,500) 9,035	(300,000) 12,595	(138,000) 7,382
	(94,465)	(287,405)	(130,618)

8. INCOME TAX EXPENSE

Hong Kong profits tax has been provided at the rate of 17.5% on the estimated assessable profit for the period/year. No provision for income tax has been made for the period from 16 July 2004 (date of incorporation) to 31 March 2005 as Grand Sea did not have assessable profit for taxation purpose in this period.

Current tax – Hong Kong tax for the period/year Total income tax expense	Period from 16 July 2004 (date of incorporation) to 31 March 2005 HK$ – –	Year ended 31 March 2006 HK$ 24,344 24,344	Six months ended 30 September 2005 2006 HK$ HK$ (unaudited) 10,221 24,962 10,221 24,962

– 93 –

APPENDIX III

FINANCIAL INFORMATION OF GRAND SEA

Reconciliation between income tax expense and accounting profit at applicable tax rate is as follows:

Profit before income tax Tax at the applicable tax rate of 17.5% Tax effect of non-taxable income Tax effect of non-deductible expenses Tax effect of prior year’s tax losses utilised this year Tax effect of deductible temporary difference not recognised Tax effect on tax losses not recognised Income tax expense	From 16 July 2004 (date of incorporation) to 31 March 2006 HK$ 2,113,420	Year ended 31 March 2005 HK$ 267,365	Six months ended 30 September 2005 2006 HK$ HK$ (unaudited) 125,099 154,204	Six months ended 30 September 2005 2006 HK$ HK$ (unaudited) 125,099 154,204
	369,849 (367,716) 1,015 – (4,046) 898	46,788 (17,500) – (898) (4,046) –	21,892 (8,750) – (898) (2,023) –	26,985 – – – (2,023 –
	–	24,344	10,221	24,962

No deferred tax has been provided in the financial information as there are no material temporary differences.

9. DIRECTORS’ REMUNERATION

No remuneration was paid or payable to the directors which need to be disclosed. During the Relevant Periods, Grand Sea did not incur any staff costs.

10. INVESTMENT PROPERTIES

All Grand Sea’s property interests held under operating leases to earn rentals or for capital appreciation purposes are measured using the fair value model and are classified and accounted for as investment properties.

Changes to the carrying amounts presented in the balance sheet can be summarised as follows:

Carrying amount at the beginning of the period/year Acquisition during the period/year Net gain from fair value adjustments Carrying amount at the end of the period/year	As at 2005 HK$ – 4,198,768 2,101,232 6,300,000	31 March 2006 HK$ 6,300,000 – 100,000 6,400,000	As at 30 September 2006 HK$ 6,400,000 – –
			6,400,000

The investment properties at 31 March 2005, 31 March 2006 and 30 September 2006 were stated at fair value which has been arrived at on the basis of valuations carried out on these dates by RHL Appraisal Limited, which is a firm of independent qualified professional valuers. In valuating the investment properties, the “Direct Comparison Method” is adopted by the valuers where comparison based on prices information of comparable properties is made. Comparable properties of similar size, character and location are analysed and carefully weighted against all the respective advantages and disadvantages of each property in order to arrive at a fair comparison of capital values.

All investment properties of Grand Sea are pledged to secure banking facilities granted to Grand Sea (note 16). In addition, all investment properties are situated in Hong Kong and held under long-term leases over 50 years.

– 94 –

FINANCIAL INFORMATION OF GRAND SEA

APPENDIX III

11. PROPERTY, PLANT AND EQUIPMENT

Period from 16 July 2004 (date of incorporation) to 31 March 2005
Opening net book amount
Additions
Depreciation
Closing net book amount
At 31 March 2005
Cost
Accumulated depreciation
Net book amount
Year ended 31 March 2006
Opening net book amount
Depreciation
Closing net book amount
At 31 March 2006
Cost
Accumulated depreciation
Net book amount
Six months ended 30 September 2006
Opening net book amount
Depreciation
Closing net book amount
At 30 September 2006
Cost
Accumulated depreciation
Net book amount

Leasehold
improvements
HK$
–
60,000
(12,000)
48,000
60,000
(12,000)
48,000
48,000
(12,000)
36,000
60,000
(24,000)
36,000
36,000
(6,000)
30,000
60,000
(30,000)
30,000

12. AMOUNTS DUE TO SHAREHOLDERS

The amounts due are unsecured, interest free and repayable on demand.

– 95 –

FINANCIAL INFORMATION OF GRAND SEA

APPENDIX III

13. BANK LOANS

Grand Sea’s bank loans were repayable as follows:

Within one year In the second year In the third to fifth year After the fifth year Less: Portion due within one year included under current liabilities Non-current portion included under non-current liabilities	As at 2005 HK$ 218,839 167,964 567,425 985,013	31 March 2006 HK$ 161,024 178,402 600,926 830,301	As at 30 September 2006 HK$ 173,357 183,592 625,375 705,801
	1,939,241 (218,839)	1,770,653 (161,024)	1,688,125 (173,357
	1,720,402	1,609,629	1,514,768

14. SHARE CAPITAL

Ordinary shares of HK$1 each Authorised: At 31 March 2005, 2006 and 30 September 2006 Issued and fully paid: At date of incorporation Issue of shares At 31 March 2005, 2006 and 30 September 2006	Number of shares 10,000	HK$ 10,000

	1 2	1 2
	3	3

15. RETAINED PROFIT

At beginning of the period/year Net profit for the period/year At end of the period/year	Period from 16 July 2004 (date of incorporation) to 31 March 2005 HK$ – 2,113,420 2,113,420	Year ended 31 March 2006 HK$ 2,113,420 243,021 2,356,441	Six months ended 30 September 2005 2006 HK$ HK$ (unaudited) 2,113,420 2,356,441 114,878 129,242 2,228,298 2,485,686	Six months ended 30 September 2005 2006 HK$ HK$ (unaudited) 2,113,420 2,356,441 114,878 129,242 2,228,298 2,485,686
				2,485,686

16. BANKING FACILITIES

At 30 September 2006, the bank loans granted to Grand Sea were secured by the following:

(a) Pledge of Grand Sea’s investment properties (Note 10).
(b) Personal guarantee of all shareholders of Grand Sea.

– 96 –

FINANCIAL INFORMATION OF GRAND SEA

APPENDIX III

17. RELATED PARTY TRANSACTIONS

Save as those disclosed elsewhere in the Financial Information, Grand Sea entered into the following significant transaction with a related company Cheung Shing Funeral Limited, in which all shareholders of Grand Sea have equity interest.

				Period from
				16 July 2004
				(date of
				incorporation)	Year ended	Six months ended
				to 31 March	31 March	30 September
				2005	2006	2005	2006
				HK$	HK$	HK$	HK$
						(unaudited)
Received	rental	income	therefrom	103,500	300,000	138,000	138,000

18. FUTURE OPERATING LEASE ARRANGEMENTS

The total future aggregate minimum lease receipts under non-cancellable operating leases are as follows:

Land and buildings Within one year In the second to fifth years	As at 2005 HK$ – – –	31 March 2006 HK$ 180,000 180,000 360,000	As at 30 September 2006 HK$ 180,000 9,000
			270,000

Grand Sea leases its investment properties (note 10) under operating lease arrangements which run for an initial period of two years.

19. RISK MANAGEMENT OBJECTIVES AND POLICIES

Grand Sea does not have any significant exposure to liquidity risk, foreign currency risk, credit risk, cash flow and interest rate risks. The fair values of Grand Sea’s current financial liabilities are not materially different from their carrying amounts because of the immediate or short term maturity. The fair values of non-current liabilities were not disclosed because the carrying amounts are not materially different from their fair values.

20. SEGMENT INFORMATION

No separate analysis of segment information by business or geographical segments is presented as Grand Sea’s sole business is holding of investment properties. Grand Sea’s revenue, expenses, results, assets and liabilities and capital expenditure are principally attributable to a single geographical region, which is Hong Kong.

21. CONTINGENT LIABILITIES

Grand Sea did not have any significant contingent liabilities as at the respective balance sheet dates.

22. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared by Grand Sea in respect of any period subsequent to 30 September 2006.

Yours faithfully, Grant Thornton

Certified Public Accountants Hong Kong

– 97 –

FINANCIAL INFORMATION OF GRAND SEA

APPENDIX III

2. MANAGEMENT DISCUSSION AND ANALYSIS OF GRAND SEA

For the period from 16 July 2004, the date of incorporation, to 31 March 2005

Financial and business performance

Grand Sea recorded turnover of approximately HK$0.1 million for the period from 16 July 2004, the date of incorporation, to 31 March 2005, representing rental income received from the lease of investment properties. Both audited profit before and after taxation were approximately HK$2.1 million for the period under review mainly contributed by a valuation gain on investment properties of approximately HK$2.1 million.

Liquidity and financial resources

As at 31 March 2005, the audited net assets value of Grand Sea was approximately HK$2.1 million. Excluding a shareholders’ loan of approximately HK$2.3 million, Grand Sea would have net assets value of approximately HK$4.4 million as at 31 March 2005. Grand Sea had a secured mortgage loan of approximately HK$1.9 million as at 31 March 2005. Cash at bank amounted to approximately HK$0.03 million as at 31 March 2005.

Charges on assets

As at 31 March 2005, save for the above, Grand Sea did not have any other outstanding secured borrowings, mortgages or charges.

Gearing ratio

As at 31 March 2005, Grand Sea had a gearing ratio (being total debts net of payables under ordinary course of business over total assets) of approximately 66%.

Capital structure

As at 31 March 2005, Grand Sea’s share capital was HK$3, comprised three issued and fully paid ordinary shares of HK$1 each.

Contingent liabilities

As at 31 March 2005, Grand Sea had no contingent liabilities.

Employee information

Grand Sea did not have any employees as at 31 March 2005.

– 98 –

FINANCIAL INFORMATION OF GRAND SEA

APPENDIX III

For the year ended 31 March 2006

Financial and business performance

Grand Sea recorded audited turnover of approximately HK$0.3 million for the year ended 31 March 2006, representing a strong increase of approximately 190% over the turnover of approximately HK$0.1 million for the period from 16 July 2004, the date of incorporation, to 31 March 2005.

Net profit decreased by approximately HK$1.9 million from approximately HK$2.1 million for the period from 16 July 2004 to 31 March 2005 to approximately HK$0.2 million for the year ended 31 March 2006 mainly due to the absence of valuation gain on investment properties for the year under review.

Liquidity and financial resources

As at 31 March 2006, Grand Sea had net assets of approximately HK$2.4 million. It had approximately HK$0.07 million cash and bank balances as at 31 March 2006, representing an increase of nearly 173% compared with the balance as at 31 March 2005. As at 31 March 2006, Grand Sea had a shareholders’ loan of approximately HK$2.3 million and a secured mortgage loan of approximately HK$1.8 million.

Charges on assets

As at 31 March 2006, save for the above, Grand Sea did not have any other outstanding secured borrowings, mortgages or charges.

Gearing ratio

As at 31 March 2006, Grand Sea had a gearing ratio (being total debts net of payables under ordinary course of business over total assets) of approximately 63% (31 March 2005: approximately 66%).

Capital structure

There was no change in the capital structure of Grand Sea during the year.

Contingent liabilities

As at 31 March 2006, Grand Sea had no contingent liabilities.

Employee information

Grand Sea did not have any employees as at 31 March 2006.

– 99 –

FINANCIAL INFORMATION OF GRAND SEA

APPENDIX III

For the six months ended 30 September 2006

Financial and business performance

For the six months ended 30 September 2006, Grand Sea recorded audited turnover of approximately HK$0.2 million, representing an increase of approximately 65% compared to the corresponding period in 2005.

Costs were maintained at similar level as that of the same period in the previous year reflecting the effective control of overhead expenses. Grand Sea’s net profit for the six months ended 30 September 2006 was approximately HK$0.13 million compared to a net profit of approximately HK$0.11 million for the corresponding period in the previous year. The decrease in profit margin was mainly due to the absence of valuation gain on investment properties, higher finance cost and higher income tax expense.

Liquidity and financial resources

As at 30 September 2006, Grand Sea had net assets of approximately HK$2.5 million and net current liabilities of approximately HK$2.4 million. A loan from shareholders and a secured mortgage loan were approximately HK$2.3 million and approximately HK$1.7 million respectively as at 30 September 2006. Grand Sea had cash at bank of approximately HK$0.2 million as at 30 September 2006 (31 March 2006: approximately HK$0.07 million).

Charges on assets

As at 30 September 2006, save for the above, Grand Sea did not have any other outstanding secured borrowings, mortgages or charges.

Gearing ratio

As at 30 September 2006, Grand Sea had a gearing ratio (being total debts net of payables under ordinary course of business over total assets) of approximately 62% (31 March 2006: approximately 63%).

Capital structure

There was no change in the capital structure of Grand Sea during the period under review.

Contingent liabilities

As at 30 September 2006, Grand Sea had no contingent liabilities.

Employee information

Grand Sea did not have any employees as at 30 September 2006.

– 100 –

FINANCIAL INFORMATION OF GRAND SEA

APPENDIX III

Prospects

Of the Properties owned by Grand Sea, shops N and O are currently occupied by Cheung Shing for operating its funeral service business. Shop P is occupied by a third party who operates a florist shop. The Properties are suitable for operating funeral service business given their close proximity to the Kowloon Public Mortuary and three funeral parlours in Hunghom, Kowloon. The management is of the view that the property market in Hong Kong will continue its growth.

– 101 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX IV

1. LETTER ON UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

The following is the text of an accountants’ report, prepared for the sole purpose of inclusion in this circular, received from the independent reporting accountants, Grant Thornton, Certified Public Accountants, Hong Kong, in respect of the unaudited pro forma financial information of the Enlarged Group.

==> picture [136 x 40] intentionally omitted <==

22 December 2006

The Directors

Galileo Capital Group Limited 19th Floor, Club Lusitano 16 Ice House Street

Central Hong Kong

Dear Sirs,

We report on the unaudited pro forma financial information of Galileo Capital Group Limited (the “Company”) and its subsidiaries (collectively referred to as the “Group”), Cheung Shing Funeral Limited (“Cheung Shing”) and Grand Sea Limited (“Grand Sea”) (together with the Group collectively referred to as the “Enlarged Group”), which has been prepared by the directors of the Company for illustrative purposes only, to provide information about how the proposed acquisition of the entire issued share capital of Cheung Shing and Grand Sea and the shareholders’ loans owed by Cheung Shing and Grand Sea to Ms. Cheung Kam Man, Mr. Woo Shik Man and Ms. Kong Sau Ping (collectively referred to as the “Vendors”) (the “Proposed Acquisition”) might have affected the financial information presented, for inclusion in Appendix IV of the circular dated 22 December 2006 (the “Circular”). The basis of preparation of the unaudited pro forma financial information is set out in Appendix IV of the Circular.

RESPECTIVE RESPONSIBILITIES OF DIRECTORS OF THE COMPANY AND REPORTING ACCOUNTANTS

It is the responsibility solely of the directors of the Company to prepare the unaudited pro forma financial information in accordance with paragraph 31 of Chapter 7 of the Rules Governing the Listing of Securities on the Growth Enterprises Market of The Stock Exchange of Hong Kong Limited (the “GEM Listing Rules”) and with reference to Accounting Guideline 7 “Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars” issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”).

– 102 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX IV

It is our responsibility to form an opinion, as required by paragraph 31(7) of Chapter 7 of the GEM Listing Rules, on the unaudited pro forma financial information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the unaudited pro forma financial information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

BASIS OF OPINION

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

We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the unaudited pro forma financial information has been properly compiled by the directors of the Company on the basis stated, that such basis is consistent with the accounting policies of the Group and that the adjustments are appropriate for the purposes of the unaudited pro forma financial information as disclosed pursuant to paragraph 31(1) of Chapter 7 of the GEM Listing Rules.

The unaudited pro forma financial information is for illustrative purposes only, based on the judgements and assumptions of the directors of the Company, and because of its hypothetical nature, does not give any assurance or indication that any event will take place in the future and may not be indicative of the financial position of the Enlarged Group as at 30 September 2006 or any future date and the results and cash flows of the Enlarged Group for the six months ended 30 September 2006 or any future date.

– 103 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX IV

OPINION

In our opinion:

a. the unaudited pro forma financial information has been properly compiled by the directors of the Company on the basis stated;
b. such basis is consistent with the accounting policies of the Group; and
c. the adjustments are appropriate for the purposes of the unaudited pro forma financial information as disclosed pursuant to paragraph 31(1) of Chapter 7 of the GEM Listing Rules.

Yours faithfully, Grant Thornton Certified Public Accountants Hong Kong

– 104 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX IV

2. UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION OF THE ENLARGED GROUP

(a) Introduction

The following is the unaudited pro forma financial information of the Enlarged Group prepared in accordance with the Listing Rules for the purpose of illustrating the effect of the Proposed Acquisition on the financial position of the Group as at 30 September 2006 and the results and cash flows of the Group for the six months ended 30 September 2006. As it is prepared for illustrative purpose only, and because of its nature, it may not give a true picture of the financial position, results and cash flows of the Enlarged Group following completion of the Proposed Acquisition.

The unaudited pro forma balance sheet of the Enlarged Group is prepared based on the unaudited condensed consolidated balance sheet of the Group as at 30 September 2006 extracted from the published unaudited interim report of the Group as of 30 September 2006 as set out in Appendix I to this circular and the audited balance sheets of Cheung Shing and Grand Sea as at 30 September 2006 as extracted from the accountants’ reports set out in Appendix II and III to this circular as if the Proposed Acquisition had been completed on 30 September 2006.

The unaudited pro forma income statement and cash flow statement of the Enlarged Group are prepared based on the unaudited condensed consolidated income statement and cash flow statement of the Group for the six months ended 30 September 2006 extracted from the published unaudited interim report of the Group as of 30 September 2006 as set out in Appendix I to this circular and the audited income statements and cash flow statements of Cheung Shing and Grand Sea for the six months ended 30 September 2006 as extracted from the accountants’ reports set out in Appendix II and III to this circular as if the Proposed Acquisition had been completed on 1 April 2006.

The unaudited pro forma financial information of the Enlarged Group should be read in conjunction with the financial information of the Group as set out in Appendix I to this circular, the financial information of Cheung Shing and Grand Sea as set out in Appendix II and III to this circular and other financial information included elsewhere in this circular.

– 105 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX IV

(b) Unaudited pro forma income statement of the Enlarged Group For the six months ended 30 September 2006

The Group HK$ (unaudited) 450,000 (69,682)	Cheung Shing HK$ (audited) 1,613,853 (908,466)	Grand Sea HK$ (audited) 228,000 –	Sub-total Pro forma adjustments HK$ HK$ (unaudited) (unaudited) Note e(2) 2,291,853 (138,000) (978,148)	Pro forma Enlarged Group HK$ (unaudited) 2,153,853 (978,148) 1,175,705 4,792,741 (2,778,347) 3,190,099 (54,494) 3,135,605 (24,962) 3,110,643 – HK0.38 cents
380,318 4,792,741 (2,358,877) 2,814,182 (847) 2,813,335 –	705,387 – (532,072) 173,315 (5,249) 168,066 –	228,000 – (25,398) 202,602 (48,398) 154,204 (24,962)	1,313,705 4,792,741 (2,916,347) 138,000 3,190,099 (54,494) 3,135,605 (24,962)	1,175,705 4,792,741 (2,778,347
				3,190,099 (54,494
				3,135,605 (24,962
2,813,335 – HK0.34 cents	168,066 –	129,242 –	3,110,643 –

– 106 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX IV

(c) Unaudited pro forma balance sheet of the Enlarged Group As at 30 September 2006

The Group HK$ (unaudited) ASSETS AND LIABILITIES Non-current assets Property, plant and equipment 516,673 Leasehold interest in land – Investment properties – Goodwill – 516,673 Current assets Inventories – Trade receivables 20,000 Prepayments, deposits and other receivables 117,120 Amounts due from subsidiaries – Bank balance and cash 11,420,300 11,557,420 Current liabilities Bank overdraft – Accruals and other payables 1,352,509 Obligations under finance lease 7,810 Bank loans – Tax payable – Amount due to a director 788,576 Amounts due to shareholders – 2,148,895 Net current assets/ (liabilities) 9,408,525 Total assets less current liabilities 9,925,198 Non-current liabilities Bank loans – Obligations under finance lease 27,983 27,983 Net assets/(liabilities) 9,897,215 EQUITY Share capital 19,200,000 Accumulated (losses)/profits (9,302,785) Total equity/(capital deficiency) 9,897,215	Cheung Shing HK$ (audited) 1,116,586 – – –	Grand Sea Sub-total Pro forma adjustments Pro forma Enlarged Group HK$ HK$ HK$ HK$ HK$ HK$ (audited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Note e(1) Note e(2) Note e(3) 30,000 1,663,259 546,647 2,209,906 – – 3,253,353 3,253,353 6,400,000 6,400,000 (3,800,000) 2,600,000 – – 3,345,639 3,345,639	Grand Sea Sub-total Pro forma adjustments Pro forma Enlarged Group HK$ HK$ HK$ HK$ HK$ HK$ (audited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Note e(1) Note e(2) Note e(3) 30,000 1,663,259 546,647 2,209,906 – – 3,253,353 3,253,353 6,400,000 6,400,000 (3,800,000) 2,600,000 – – 3,345,639 3,345,639
516,673 – 20,000 117,120 – 11,420,300 11,557,420 – 1,352,509 7,810 – – 788,576 – 2,148,895 9,408,525 9,925,198 – 27,983 27,983	1,116,586 103,180 – 18,700 – 566,061 687,941 – 3,498 116,667 – – – 1,768,418 1,888,583 (1,200,642) (84,056) – 19,445 19,445	6,430,000 8,063,259 11,408,898 – 103,180 103,180 – 20,000 20,000 – 135,820 135,820 – – 4,084,051 (4,084,051) – 153,739 12,140,100 (11,500,000) 640,100 153,739 12,399,100 899,100 2,989 2,989 2,989 42,000 1,398,007 1,398,007 – 124,477 124,477 173,357 173,357 (173,357) – 49,306 49,306 49,306 – 788,576 788,576 2,315,633 4,084,051 (4,084,051) – 2,583,285 6,620,763 2,363,355 (2,429,546) 5,778,337 (1,464,255 4,000,454 13,841,596 9,944,643 1,514,768 1,514,768 (1,514,768) – – 47,428 47,428 1,514,768 1,562,196 47,428
			103,180 20,000 135,820 – 640,100
			899,100
			2,989 1,398,007 124,477 – 49,306 788,576 –
			2,363,355
			(1,464,255
			9,944,643
			– 47,428
			47,428
9,897,215	(103,501)	2,485,686 12,279,400	9,897,215

19,200,000 (9,302,785)	17 (103,518)	3 19,200,020 (20) 19,200,000 2,485,683 (6,920,620) (2,382,165) (9,302,785
9,897,215	(103,501)	2,485,686 12,279,400	9,897,215

– 107 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX IV

(d) Unaudited pro forma condensed cash flow statement of the Enlarged Group For the six months ended 30 September 2006

The Group HK$ (unaudited) (1,047,746) (57,130) 12,194,355	Cheung Shing HK$ (audited) 243,724 (9,018) (58,333)	Grand Sea HK$ (audited) 159,252 – (82,528)	Sub-total Pro forma adjustments HK$ HK$ (unaudited) (unaudited) Note e(4) (644,770) (66,148) (11,036,286) 12,053,494	Pro forma Enlarged Group HK$ (unaudited) (644,770) (11,102,434) 12,053,494 306,290 330,821 637,111 640,100 (2,989) 637,111
11,089,479 330,821	176,373 389,688	76,724 74,026	11,342,576 794,535 (463,714)	306,290 330,821
11,420,300	566,061	150,750	12,137,111
11,420,300 –	566,061 –	153,739 (2,989)	12,140,100 (11,500,000) (2,989)	640,100 (2,989
11,420,300	566,061	150,750	12,137,111

– 108 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX IV

(e) Notes to the unaudited pro forma financial information of the Enlarged Group

(1) On 6 November 2006, the Group entered into an agreement with the Vendors to purchase the entire issued share capital of Cheung Shing and Grand Sea and the shareholders’ loans owned by Cheung Shing and Grand Sea to the Vendors at a consideration of HK$11.5 million, which will be paid by the Group in cash.

Cheung Shing and Grand Sea are, therefore, considered by the Directors as a subsidiary of the Group because Cheung Shing and Grand Sea will be controlled by the Group after completion of the Proposed Acquisition. The balance sheets of Cheung Shing and Grand Sea will be consolidated with that of the Group from the date on which control is transferred to the Group.

The adjustment is to reflect the effect of the Proposed Acquisition on the consolidated balance sheet of the Group as if the Proposed Acquisition had taken place on 30 September 2006. The goodwill was determined based on consideration of HK$11.5 million and adjusting the following:

(i) Fair value of identifiable assets and liabilities of Cheung Shing and Grand Sea acquired by the Group which are assumed to be equal to the net liabilities and net assets value as at 30 September 2006 of HK$103,501 and HK$2,485,686 respectively as extracted from the accountants’ reports set out in Appendix II and III to this circular;
(ii) Shareholders’ loan owed by Cheung Shing and Grand Sea to the existing shareholders totalling HK$4,084,051 acquired by the Group;
(iii) Discharge of the bank loans of Grand Sea totalling HK$1,688,125 by the Vendors.

With reference to the above, goodwill of HK$3,345,639 arises on the Acquisition. Goodwill is stated at cost less accumulated impairment loss.

On completion of the Proposed Acquisition, the fair value of the consideration and the net identifiable assets and liabilities of Cheung Shing and Grand Sea will have to be assessed. As a result of the assessment, the amount of goodwill may be different from that estimated based on the basis stated above for the purpose of preparation of the unaudited pro forma financial information. Accordingly, the actual goodwill at the date of completion of the Proposed Acquisition may be different from that presented above.

(2) The adjustment for the unaudited pro forma income statement of the Enlarged Group represents the elimination of intercompany balances among the Company, Cheung Shing and Grand Sea as if Cheung Shing and Grand Sea become the subsidiaries of the Company. The adjustment for the unaudited pro forma balance sheet of the Enlarged Group represents the reclassification of the properties leased by Grand Sea to Cheung Shing on the assumption that these properties will be self-occupied by the Enlarged Group upon the completion of the Proposed Acquisition.
(3) The adjustment represents the elimination of intercompany balances among the Company, Cheung Shing and Grand Sea as if Cheung Shing and Grand Sea become the subsidiaries of the Company.
(4) The net cash outflow arising from the Proposed Acquisition totalling to HK$11,036,286 has been arrived at based on (i) the cash consideration payable by the Company totalling to HK$11,500,000, net of (ii) the cash and cash equivalents of Cheung Shing and Grand Sea totalling to HK$463,714 as at 1 April 2006, which was assumed to be acquired by the Group upon the Proposed Acquisition and therefore, for presentation purpose, such amount is deducted from the cash consideration.

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APPENDIX V

PROPERTY VALUATION OF THE ENLARGED GROUP

The following is the text of a letter and valuation certificate, prepared for the purpose of incorporation in this circular received from RHL Appraisal Ltd., an independent valuer, in connection with its valuation of the Properties as at 30 September 2006 held and rented by the Enlarged Group.

==> picture [76 x 81] intentionally omitted <==

22 December 2006

The Board of Directors Galileo Capital Group Limited 19th Floor, Club Lusitano 16 Ice House Street Central, Hong Kong

Dear Sirs,

Re: Shops N, O and P on G/F Cheong Lok Mansion, Nos. 1H, 1J & 1K Baker Street, Nos. 2F, 2G & 2H Cooke Street, Nos. 1-11 Lo Lung Hang Street, Nos. 2-12 Malacca Street, Kowloon, Hong Kong; shops N, O and P on M/F Cheong Lok Mansion, No. 1G Baker Street, Kowloon, Hong Kong; and 19th Floor, Club Lusitano, 16 Ice House Street, Central, Hong Kong.

In accordance with the instructions from Galileo Capital Group Limited (the “Company”) or its subsidiaries, Cheung Shing Funeral Liimted and Grand Sea Limited (hereinafter together referred to as the “Enlarged Group”), we have undertaken an appraisal on the interest in the captioned properties (together referred to as the “Property”). We confirm that we have carried out an inspection, made relevant enquiries and searches and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market value of the Property as at 30 September 2006 (the “date of valuation”).

Basis of Valuation

Our valuation of the Property represents the market value which we would define as intended to mean “the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion”.

Valuation Methodology

In valuating the Property, the “Direct Comparison Method” is adopted where comparison based on prices information of comparable properties is made. Comparable properties of similar size, character and location are analysed and carefully weighted against all the respective advantages and disadvantages of each property in order to arrive at a fair comparison of capital values.

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APPENDIX V

PROPERTY VALUATION OF THE ENLARGED GROUP

For the Property which is subject to existing tenancies, we have also adopted the “Investment Method” on the basis of capitalisation of the net incomes to be generated during the unexpired lease terms plus the present values of their reversionary interests (if any) upon expiry of the existing tenancies. The Comparison Method has been employed in valuating the reversionary interests of those properties.

Our valuation of the market value of the Property has been made on the assumption that the Property is to be transferred under normal commercial terms without the benefit of a deferred term contract, leaseback, joint venture, management agreement or any similar arrangement, which could serve to affect the value of the Property.

The Property rented by the Enlarged Group has no commercial value due to one or more of the following grounds:

the leasehold interest is in short term nature which renders immaterial profit rent (if any) to the Enlarged Group and low transferability; and
non-assignment clause is inserted, which preludes the Enlarged Group from assigning or transferring its leasehold interest on the market.

Limiting Conditions

No allowance has been made in our report for any charges, mortgages or amounts owing on the Property nor for any expenses or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the Property is free from encumbrances, restrictions and outgoings of an onerous nature, which could affect its value.

In valuating the Property, we have complied with all the requirements contained in Chapter 8 of the Rules Governing the Listing of Securities on the Growth Enterprise Market issued by The Stock Exchange of Hong Kong Limited; and the HKIS Valuation Standards on Properties (First Edition 2005) published by The Hong Kong Institute of Surveyors effective from 1 January 2005.

We have relied to a very considerable extent on the information given by the Enlarged Group and have accepted advice given to us on such matters as tenure, planning approvals, statutory notices, easements, particulars of occupancy, lettings, and all other relevant matters.

We have not been provided with copies of the title documents relating to the Property but have caused searches to be made at the Hong Kong Land Registry. However, we have not searched the original documents to verify ownership or to ascertain any amendment.

We have not carried out detailed site measurements to verify the correctness of the site areas in respect of the Property but have assumed that the site areas shown on the documents and official site plans handed to us are correct. All documents and contracts have been used as reference only and all dimensions, measurements and areas are approximations.

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PROPERTY VALUATION OF THE ENLARGED GROUP

APPENDIX V

We have inspected the exterior of the Property; however, no structural survey has been made, but in the course of our inspection, we did not note any serious defects. We are not, however, able to report whether the Property is free of rot, infestation or any other structural defects. No tests were carried out on any of the services.

We have had no reason to doubt the truth and accuracy of the information provided to us by the Enlarged Group. We have also sought confirmation from the Enlarged Group that no material factors have been omitted from the information supplied. We consider that we have been provided with sufficient information to reach an informed view, and we have no reason to suspect that any material information has been withheld.

Our summary of valuation and valuation certificate are attached herewith for your attention.

Yours faithfully, for and on behalf of RHL Appraisal Ltd. Sandra S.W. Lau MFin MHKIS AAPI RPS (GP) Director

Sandra S. W. Lau, who is a member of the Hong Kong Institute of Surveyors, an Associate of the Australian Property Institute and a Registered Professional Surveyor in General Practice. She has over ten years’ experience in valuation of properties in Hong Kong, in Macau and in the PRC.

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PROPERTY VALUATION OF THE ENLARGED GROUP

APPENDIX V

SUMMARY OF VALUATION

		Market value
		in existing state
		as at
		30 September
		2006
		HK$
Group I – Property held by the Enlarged Group for self occupation
1.	Shops N and O on	3,800,000
	G/F Cheong Lok Mansion
	Nos. 1H, 1J & 1K Baker Street
	Nos. 2F, 2G & 2H Cooke Street
	Nos. 1-11 Lo Lung Hang Street
	Nos. 2-12 Malacca Street and
	shops N and O on
	M/F Cheong Lok Mansion
	No. 1G Baker Street
	Kowloon
Group II – Property held by the Enlarged Group for investment
2.	Shop P on	2,600,000
	G/F Cheong Lok Mansion
	Nos. 1H, 1J & 1K Baker Street
	Nos. 2F, 2G & 2H Cooke Street
	Nos. 1-11 Lo Lung Hang Street
	Nos. 2-12 Malacca Street and
	shop P on
	M/F Cheong Lok Mansion
	No. 1G Baker Street
	Kowloon

Group III – Property rented by the Enlarged Group

3.	19th Floor	No commercial value
	Club Lusitano
	16 Ice House Street
	Central
	Hong Kong

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PROPERTY VALUATION OF THE ENLARGED GROUP

APPENDIX V

VALUATION CERTIFICATE

Group I – Property held by the Enlarged Group for self occupation

				Market value in
			Particulars of	existing state as at
	Property	Description and tenure	occupancy	30 September 2006
				HK$
1.	Shops N and O on	The property comprises 2 shop	The property is	3,800,000
	G/F Cheong Lok	units on ground floor and 3	occupied by Cheung
	Mansion	shops units on Mezzanine Floor	Shing Funeral
	Nos. 1H, 1J & 1K	of a 10-storey composite building	Limited.
	Baker Street	of reinforced concrete
	Nos. 2F, 2G & 2H	construction. The property was
	Cooke Street	completed in 1966.
	Nos. 1-11 Lo Lung
	Hang Street	The saleable area of the ground
	Nos. 2-12 Malacca	floor of the property is 559
	Street and shops N	square feet or thereabout, while
	and O on M/F	the saleable area of the cockloft
	Cheong Lok	is 659 square feet or thereabout.
	Mansion
	No. 1G Baker	The property is held under
	Street	Conditions of Exchange No.
	Kowloon	8802 for a term of 75 years
		renewable for 75 years
	4/236th parts or	commencing from 5 November
	shares of and in	1900. The rent per annum is
	Hung Hom Inland	HK$1,320.
	Lot No. 484.

Notes:

The registered owner of the property is Grand Sea Limited vide Memorial No. UB9327949 both dated 20 August 2004.
The property is subject to a legal charge/mortgage in favour of Standard Chartered Bank (Hong Kong) Limited vide Memorial No. UB9327950 dated 20 August 2004.
The property is subject to a Deed of Mutual Covenant vide Memorial No. UB557437 dated 20 October 1966.
Cheung Shing Funeral Limited was issued an Undertaker’s Licence (Undertakers of Burials Regulation) by Food and Environment Hygiene Department for carrying funeral business at shops N and O.
The cockloft of shops N and O has been enlarged by enclosing the void area thereof, as compared with the Approved Building Plan dated 6 August 2004. As at the date of valuation, there is no documentary consent available from the Buildings Department and such enlargement may be an unauthorised alteration and may subject to enforcement action for reinstatement by the Buildings Department. Nevertheless, such alteration may be rectified by qualified professionals and as confirmed by the Company, such reinstatement shall have no detrimental effect on the business operations in the property.

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PROPERTY VALUATION OF THE ENLARGED GROUP

APPENDIX V

Group II – Property held by the Enlarged Group for investment

				Market value in
			Particulars of	existing state as at
	Property	Description and tenure	occupancy	30 September 2006
				HK$
2.	Shop P on G/F	The property comprises a shop	The property is	2,600,000
	Cheong Lok	unit on ground floor of a	tenanted with monthly
	Mansion	10-storey composite building of	rent of HK$15,000
	Nos. 1H, 1J & 1K	reinforced concrete construction.	for a term of 2 years
	Baker Street	The property was completed in	commencing from 7
	Nos. 2F, 2G & 2H	1966.	April 2006 and
	Cooke Street		expiring on 6 April
	Nos. 1-11 Lo Lung	The saleable area of the ground	2008 exclusive of
	Hang Street	floor of the property is 384	management fee.
	Nos. 2-12 Malacca	square feet or thereabout, while
	Street and shop P	the saleable area of the cockloft
	on M/F Cheong	is 301 square feet or thereabout.
	Lok Mansion
	No. 1G Baker	The property is held under
	Street	Conditions of Exchange No.
	Kowloon	8802 for a term of 75 years
		renewable for 75 years
	2/236th parts or	commencing from 5 November
	shares of and in	1900. The rent per annum is
	Hung Hom Inland	HK$1,320.
	Lot No. 484.

Notes:

The registered owner of the property is Grand Sea Limited vide Memorial No. UB9327951 dated 20 August 2004.
The property is subject to a legal charge/mortgage in favour of Standard Chartered Bank (Hong Kong) Limited vide Memorial No. UB9327952 dated 20 August 2004.
The property is subject to a Deed of Mutual Covenant vide Memorial No. UB557437 dated 20 October 1966.
Pursuant to a tenancy agreement dated 15 March 2006, (Chow Wai Chun) and (Ng Shuk Yee) independent third parties, rented shop P from (Cheung Kam Man) and (Kong Sau Ping), the directors of Grand Sea Limited.

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PROPERTY VALUATION OF THE ENLARGED GROUP

APPENDIX V

Group III – Property rented by the Enlarged Group

				Market value in
			Particulars of	existing state as at
	Property	Description and tenure	occupancy	30 September 2006
				HK$
3.	19th Floor	The property comprises an office	The property is	No commercial value
	Club Lusitano	unit on 19th Floor of a 30-storey	occupied by the
	16 Ice House	office building of reinforced	Enlarged Group as
	Street	concrete construction. The	office.
	Central	property was completed in 2001.
	Hong Kong
		The lettable area of the property
		is 2,238 square feet or
	The Remaining	thereabout.
	Portion of Inland
	Lot No. 339.	The property is held by the
		Enlarged Group under a tenancy
		for a term of 3 years
		commencing on
		2 February 2004 and expiring on
		1 February 2007 at a monthly
		rent of HK$40,284 exclusive of
		rates, air-conditioning,
		management fee and other
		charges.

Notes:

According to the records in the relevant Land Registry, the registered owner of the property is The Club Lusitano, an independent third party.
Pursuant to a tenancy agreement dated 2 February 2004, Golden Harvest Trading Limited, a wholly owned subsidiary of the Company, rented the property from The Club Lusitano.

– 116 –

GENERAL INFORMATION

APPENDIX VI

1. RESPONSIBILITY STATEMENT

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

2. DIRECTORS AND SENIOR MANAGEMENT

Executive Directors

Mr. Chui Bing Sun

Mr. Chui Bing Sun, aged 30, has over seven years of experience in hedge fund and portfolio management, finance and accounting. He has been a fund manager of two global hedge funds for the last five years. Prior to this, Mr. Chui has worked for two international accounting firms. Mr. Chui is a certified public accountant and a Chartered Financial Analyst charterholder.

Mr. Lee Chi Shing, Caesar

Mr. Lee Chi Shing, Caesar, aged 43, is experienced in corporate management and internal control. He was an executive director of Tanrich Financial Holdings Limited, a company listed on the main board of the Stock Exchange, from 1 November 2004 to 29 June 2005. In 2000, he joined Ernst and Young, an international accounting firm, as a senior manager. He has worked in the Inland Revenue Department for over 15 years after his graduation. He is a fellow member of both the Hong Kong Institute of Certified Public Accountants and the Association of Chartered Certified Accountants. In addition, he is a member of the Society of Registered Financial Planners. Mr. Lee graduated from the Department of Accountancy of Hong Kong Polytechnic University in 1985. He later obtained a Master degree in International Accountancy in 2001.

Independent non-executive Directors

Mr. Siu Hi Lam, Alick

Mr. Siu Hi Lam, Alick, aged 52, is the managing director of Fortune Take International Limited, which has been engaging in consultancy services, since February 2004. Mr. Siu has worked in the finance and banking field for more than 25 years. He had been the senior vice president of AIG Finance (Hong Kong) Limited and the vice president of Bank of America. He was responsible for business development and credit risk management. Mr. Siu obtained a Master degree in Business Administration from the University of Hull in 1995.

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GENERAL INFORMATION

APPENDIX VI

Mr. Kwok Kwan Hung

Mr. Kwok Kwan Hung, aged 41, has extensive experience in investment banking, financial management and auditing. He has held various senior positions in two investment banking groups and an international accounting firm. Currently, he is a director and responsible officer of a licensed corporate finance firm in Hong Kong which provides corporate finance and other advisory services. He is also an independent non-executive director of Nam Hing Holdings Limited, a company listed on the main board of the Stock Exchange. Mr. Kwok is a qualified accountant. He is a fellow member of the Hong Kong Institute of Certified Public Accountants, the Association of Chartered Certified Accountants and the Hong Kong Institute of Directors. He holds a Bachelor degree in Science from the University of London.

Mr. Chien Hoe Yong

Mr. Chien Hoe Yong, aged 43, is currently an executive director of Mingyuan Medicare Development Company Limited, a company listed on the main board of the Stock Exchange. Mr. Chien has extensive experience in international investment banking, corporate advisory and financial accounting with international reputable companies and banks. He has held senior managerial positions in several major investment banking firms in Hong Kong.

Senior management

Ms. Chan Wai Hung , aged 37, joined the Group in September 2005 as the qualified accountant. Ms. Chan holds a Bachelor degree in Accounting from the University of Hong Kong and is a member of the Hong Kong Institute of Certified Public Accountants. She has 10 years’ experience in the accounting and auditing field.

The business address of the directors and the senior management of the Company is 19th Floor, Club Lusitano, 16 Ice House Street, Central, Hong Kong.

3. AUDIT COMMITTEE

The Company has established an audit committee with written terms of reference in compliance with the GEM Listing Rules. The duties of the audit committee are to review the Company’s annual and quarterly financial reports and to provide advice and comments thereon to the Board. The audit committee comprises three independent non-executive Directors, namely, Mr. Siu Hi Lam, Alick, Mr. Kwok Kwan Hung and Mr. Chien Hoe Yong. The biographies of members of the audit committee are set out in the paragraph headed “Directors and senior management” above.

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GENERAL INFORMATION

APPENDIX VI

4. DISCLOSURE OF INTERESTS

(a) Interests of the directors and chief executive of the Company

As at the Latest Practicable Date, the interests and short positions of the directors and chief executive of the Company in the shares, underlying shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which 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 otherwise required to be notified to the Company and the Stock Exchange pursuant to Rules 5.46 to 5.67 of the GEM Listing Rules relating to the securities transactions by the Directors, were as follows:

Long position in the Shares:

		Number of	Percentage of
Name of Director	Nature of interest	Shares held	shareholding
Mr. Chui Bing Sun	Corporate (Note)	586,450,000	61.1%

Note: These Shares were owned by New Brilliant, the issued share capital of which is beneficially owned as to 80% by 20/20 International Ltd. and as to 20% by Ms. Zhang Ze Mei. Mr. Chui Bing Sun beneficially owns 70.4% of the issued shares of 20/20 International Ltd.

Save as disclosed above, as at the Latest Practicable Date, none of the directors and chief executive of the Company had any interests or short positions in the shares, underlying shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which 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 otherwise required to be notified to the Company and the Stock Exchange pursuant to Rules 5.46 to 5.67 of the GEM Listing Rules relating to the securities transactions by the Directors.

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GENERAL INFORMATION

APPENDIX VI

(b) Interests of substantial Shareholders

As at the Latest Practicable Date, so far as was known to the directors and chief executive of the Company, the following entity or person had, or was taken or deemed to have, an interest or short position in the Shares or underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or, who is expected, directly or indirectly, to be interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group:

Long position in the Shares:

	Number of	Percentage of
Name	Shares held	shareholding
New Brilliant (Note)	586,450,000	61.1%
20/20 International Ltd. (Note)	586,450,000	61.1%
Mr. Chui Bing Sun (Note)	586,450,000	61.1%

Note: New Brilliant is beneficially owned as to 80% by 20/20 International Ltd. and as to 20% by Ms. Zhang Ze Mei. Mr. Chui Bing Sun beneficially owns 70.4% of the issued shares of 20/20 International Ltd. Accordingly, 20/20 International Ltd. and Mr. Chui Bing Sun are deemed to be interested in the 586,450,000 Shares held by New Brilliant.

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

5. COMPETING BUSINESS

None of the Directors and their respective associates has any interests in a business, which competes or is likely to compete with the business of the Group.

6. MATERIAL CONTRACTS

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

(a) the placing agreement dated 30 August 2006 entered into among the Company, New Brilliant and a placing agent, pursuant to which the placing agent has agreed, on a best effort basis, to procure purchasers to purchase, and New Brilliant has agreed to sell, up to 160,000,000 existing Shares, at the placing price of HK$0.07 per Share;

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GENERAL INFORMATION

APPENDIX VI

(b) the subscription agreement dated 30 August 2006 entered into between the Company and New Brilliant, pursuant to which New Brilliant has conditionally agreed to subscribe for up to 160,000,000 new Shares at a price of HK$0.07 per Share;
(c) the Sale and Purchase Agreement; and
(d) the Property Agreement.

7. LITIGATION

GAML has been claimed by a client for refund of fees in the amount of RMB0.8 million.

However, the Company’s legal adviser has advised GAML’s directors that such client has been in breach of the consultancy agreement between GAML and such client and that GAML is not obliged to return the sum of RMB0.8 million to the client but conversely GAML would have a potential claim against the client for breach of contract.

Save as disclosed above, as at the Latest Practicable Date, 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 was known to the Directors to be pending or threatened against the Company or any of its subsidiaries.

8. DIRECTORS’ SERVICE CONTRACTS

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

9. DIRECTORS’ INTERESTS IN CONTRACTS AND ASSETS

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.

As at the Latest Practicable Date, none of the Directors had, or has had, any direct or indirect interest in any assets which have been acquired, disposed of by or leased to, or which are proposed to be acquired, disposed of by or leased to, any member of the Group since 31 March 2006, the date to which the latest published audited consolidated financial statements of the Group were made.

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GENERAL INFORMATION

APPENDIX VI

10. EXPERTS AND CONSENTS

(a) The following are the qualifications of the experts who have given an opinion or advice, which is contained or referred to in this circular:

Name

Qualifications

Grant Thornton RHL Appraisal Ltd.

Certified public accountants

Professional property valuer

(b) As at the Latest Practicable Date, Grant Thornton and RHL Appraisal Ltd. did not have any direct or indirect shareholding in any member of the Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.
(c) Grant Thornton and RHL Appraisal Ltd. have given and have not withdrawn their written consents to the issue of this circular with the inclusion of their letters and reports and references to their name in the form and context in which they are included.
(d) Grant Thornton and RHL Appraisal Ltd. do not have any interest, direct or indirect, in any assets which have been acquired or disposed of by or leased to any member of the Group, or which are proposed to be acquired or disposed of by or leased to any member of the Group since 31 March 2006, the date to which the latest published audited financial statements of the Company were made.

11. GENERAL

(a) The secretary and compliance officer of the Company is Mr. Lee Chi Shing, Caesar whose qualification is detailed under the section headed “Directors and senior management” in this appendix.
(b) The qualified accountant of the Company is Ms. Chau Wai Hung whose qualification is detailed under the section headed “Directors and senior management” in this appendix.
(c) The registered office of the Company is at Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands and the principal place of business of the Company in Hong Kong is at 19th Floor, Club Lusitano, 16 Ice House Street, Central, Hong Kong.

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GENERAL INFORMATION

APPENDIX VI

(d) The share registrar and transfer office of the Company in the Cayman Islands is Butterfield Fund Services (Cayman) Limted, P.O. Box 705 GT, Butterfield House, 68 Fort Street, George Town, Grand Cayman, Cayman Islands. The branch share registrar and transfer office of the Company in Hong Kong is Tengis Limited, 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong.
(e) The English text of this circular shall prevail over the Chinese text.

12. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the principal office of the Company at 19th Floor, Club Lusitano, 16 Ice House Street, Central, Hong Kong during normal office hours on any weekday, except Saturdays, Sundays and public holidays, from the date of this circular up to and including 8 January 2007:

(a) the memorandum and articles of association of the Company;
(b) the annual reports of the Company for each of the three years ended 31 March 2006;
(c) the half-yearly report of the Company for the six months ended 30 September 2006;
(d) the accountants’ report of Cheung Shing for the period from 30 July 2004, the date of incorporation, to 31 March 2005, the year ended 31 March 2006 and the six months ended 30 September 2006, the text of which is set out in Appendix II to this circular;
(e) the accountants’ report of Grand Sea for the period from 16 July 2004, the date of incorporation, to 31 March 2005, the year ended 31 March 2006 and the six months ended 30 September 2006, the text of which is set out in Appendix III to this circular;
(f) the letter on the unaudited pro forma financial information of the Enlarged Group, the text of which is set out in Appendix IV to this circular;
(g) the valuation report of properties of the Enlarged Group, the text of which is set out in Appendix V to this circular;
(h) the material contracts referred to in the section headed “Material contracts” in this appendix;
(i) the written consents referred to in the section headed “Experts and consents” in this appendix;
(j) the composite offer document dated 18 July 2006 issued jointly by the Company and New Brilliant; and
(k) this circular.

– 123 –

NOTICE OF THE EGM

==> picture [356 x 51] intentionally omitted <==

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8029)

NOTICE IS HEREBY GIVEN that the extraordinary general meeting of Galileo Capital Group Limited (the “ Company ”) will be held at 19th Floor, Club Lusitano, 16 Ice House Street, Central, Hong Kong at 4:00 p.m. on Monday, 8 January 2007 to consider and, if thought fit, to pass with or without amendments the following resolution:

ORDINARY RESOLUTION

“THAT:

(i) the sale and purchase agreement dated 6 November 2006 (a copy of which has been tabled at the meeting and marked “A” and initialled by the chairman of the meeting for the purpose of identification) entered into between Galileo Financial Services Limited, a wholly owned subsidiary of the Company and Ms. Cheung Kam Man, Mr. Woo Shik Man and Ms. Kong Sau Ping in relation to the acquisition of the entire issued share capital and shareholders’ loan of Cheung Shing Funeral Limited (the “ Cheung Shing Agreement ”) and the transactions contemplated thereunder be and are hereby approved, confirmed and ratified;
(ii) the sale and purchase agreement dated 6 November 2006 (a copy of which has been tabled at the meeting and marked “B” and initialled by the chairman of the meeting for the purpose of identification) entered into between Galileo Financial Services Limited, a wholly owned subsidiary of the Company and Ms. Cheung Kam Man, Mr. Woo Shik Man and Ms. Kong Sau Ping in relation to the acquisition of the entire issued share capital and shareholders’ loan of Grand Sea Limited (the “ Grand Sea Agreement ”) and the transactions contemplated thereunder be and are hereby approved, confirmed and ratified; and

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NOTICE OF THE EGM

(iii) the directors of the Company be and are hereby authorised to do such acts and execute such other documents as they may consider necessary, desirable or expedient to carry out or give effect to or otherwise in connection with or in relation to the Cheung Shing Agreement and Grand Sea Agreement.”

By Order of the Board Galileo Capital Group Limited Chui Bing Sun Chairman

Hong Kong, 22 December 2006

Registered office: Principal place of business in Hong Kong: Cricket Square 19th Floor, Club Lusitano Hutchins Drive, P.O. Box 2681 16 Ice House Street Grand Cayman KY1-1111 Central Cayman Islands Hong Kong

Notes:

A member of the Company entitled to attend and vote at the meeting is entitled to appoint one or, if he is the holder of two or more shares, more proxies to attend and vote instead of him. A proxy need not be a member of the Company.
In the case of joint holders of shares in the Company, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the vote(s) of the other joint holder(s), seniority being determined by the order in which names stand in the register of members.
In order to be valid, the form of proxy must be in writing under the hand of the appointor or of his attorney duly authorised in writing, or if the appointor is a corporation, either under seal, or under the hand of an officer or attorney or other person duly authorised, and must be deposited at the Hong Kong branch share registrar of the Company, Tengis Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong (together with the power of attorney or other authority, if any, under which it is signed or a certified copy thereof) not less than 48 hours before the time fixed for holding of the meeting or any adjournment thereof. The completion and return of the proxy form will not preclude a shareholder of the Company from attending and voting in person at the meeting convened or any adjourned meeting and in such event, the form of proxy will be deemed to be revoked.

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AI assistant

Imperium Financial Group Limited — Proxy Solicitation & Information Statement 2006

51224_rns_2006-12-22_f9399ec7-402a-4410-ab70-9d336eae1309.pdf

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

(Stock Code: 8029)

VERY SUBSTANTIAL ACQUISITION

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

(Stock Code: 8029)

VERY SUBSTANTIAL ACQUISITION

INTRODUCTION

LETTER FROM THE BOARD

THE SALE AND PURCHASE AGREEMENT

Date

Parties

Assets to be acquired

Consideration

LETTER FROM THE BOARD

Conditions precedent

Completion

LETTER FROM THE BOARD

THE PROPERTY AGREEMENT

Date

Parties

Assets to be acquired

Consideration

LETTER FROM THE BOARD

Conditions precedent

Completion

INFORMATION ON CHEUNG SHING AND GRAND SEA

Information on Cheung Shing

Overview

LETTER FROM THE BOARD

Financial information

Information on Grand Sea

Overview

LETTER FROM THE BOARD

Financial information

REASONS FOR AND BENEFITS OF THE ACQUISITION

IMPACT OF THE ACQUISITION ON THE GROUP

EGM

PROCEDURES FOR DEMANDING A POLL

LETTER FROM THE BOARD

RECOMMENDATION

ADDITIONAL INFORMATION

1. FINANCIAL SUMMARY

CONSOLIDATED INCOME STATEMENTS

CONSOLIDATED BALANCE SHEETS

2. AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE YEAR ENDED 31 MARCH 2006

CONSOLIDATED INCOME STATEMENT

CONSOLIDATED BALANCE SHEET

BALANCE SHEET

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

CONSOLIDATED CASH FLOW STATEMENT

NOTES TO THE FINANCIAL STATEMENTS

1. GENERAL

2. APPLICATION OF HONG KONG FINANCIAL REPORTING STANDARDS/CHANGES IN ACCOUNTING POLICIES

Financial Instruments

Classification and measurement of financial assets and financial liabilities

Financial assets and financial liabilities other than debt and equity securities

Share-based Payments

3. POTENTIAL IMPACT ARISING ON THE NEW ACCOUNTING STANDARD NOT YET EFFECTIVE

4. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

5. SIGNIFICANT ACCOUNTING POLICIES

Basis of consolidation

Property, plant and equipment

Financial instruments

Financial assets

Loans and receivables

Financial liabilities and equity

Impairment losses

Revenue recognition

Provisions

Taxation

Leasing

Retirement benefit scheme

Borrowing costs

Imperium Financial Group Limited Proxy Solicitation & Information Statement 2006